Explanation
BACKGROUND:
To authorize the Director of the Department of Development to forgive the principal and accrued interest on a HOME note and mortgage as well as forgive the principal and accrued interest of a UDAG loan down to $1,000.00 and extend the maturity of the loan to December 31, 2099, as well as reduce the interest rate to 0% for Hilltop Senior Village (Hilltop I) currently owned by Hilltop Senior Housing Limited Partnership which is wholly owned by National Church Residences. The property located at 300 Overstreet Way, Columbus, Ohio 43228 was originally developed by Hilltop Senior Housing Limited Partnership for low-income senior housing. A HOME loan was made on June 23, 2000 in the amount of $960,000.00 from the City of Columbus for construction of the project which has been providing affordable senior housing for eligible residents since that time. The interest rate on the loan is 3.0% with a maturity date of December 31, 2024 which has resulted in approximately $460,085.00 in interest. The current balance of the loan with interest exceeds $1,420,085.00 The UDAG loan was made on June 23, 2000 in an amount of $140,000.00 with an interest rate of 3.0% and the interest that has accrued on said loan is in excess of $52,144.37. The current balance of the UDAG loan exceeds $192,144.37 and has a maturity date of December 31, 2024. The ground lease with the City of Columbus matures in 2097 and will remain in place. The required federal compliance period for this loan is complete and the restrictive covenant can be released. The completion of the 20-year HOME affordability period has passed and the owner would like to recapitalize soon.
Hilltop Senior Village is located within the Hilltop neighborhood. It was built in partnership with the City of Columbus in two phases in 2000 and 2004. Hilltop Senior Village (I and II) totals 200 units offering a wide range of one and two bedroom, midrise and cottage style apartments to senior residents (age 55+ years old) and of various income levels. Phase one (Hilltop Senior Village I) of the project has 80 Low Income Housing Tax Credit (LIHTC) units and 20 market-rate units. The 80 units are rent and income restricted to residents as follows: 76 units at 60% of Area Median Income (AMI) and 4 units at 30% AMI.
In addition to the City loans and land lease, the current debt profile includes a first-position $2.2 million Ohio Capital Finance Corporation (OCFC) bridge note that matures May 29, 2027.
The developer is planning to refinance and re-syndicate to allow the property to remain affordable housing for decades to come. In order to refinance, the owners must show the OCFC debt and the existing city debt can be paid in full for any new debt to not be considered a grant. If it is considered a grant, the low-income housing tax credit basis and the corresponding tax credit equity will be reduced causing a funding gap.
Emergency action is requested so that Hilltop Senior Housing Limited Partnership can remove the debt from its financial statements for the property to be refinanced and or recapitalized and allow the property to continue to remain affordable.
FISCAL IMPACT: There will be a loss of about $1,611,229.37 in fully reserved HOME and UDAG receivables.
Title
To authorize the Director of the Department of Development to forgive the principal and accrued interest for Hilltop Senior Village currently owned by Hilltop Senior Housing Limited Partnership on a HOME loan and UDAG loan due to the City of Columbus totaling over approximately $1,611,229.37; to reduce the UDAG Loan to $1,000.00; to reduce the interest rate to 0%; and to declare an emergency. ($0.00)
Body
WHEREAS, the Department of Development has approximately $1,611,229.37 in principal and accrued interest owed to it for a HOME loan and UDAG loan made to Hilltop Senior Housing Limited Partnership for the construction of the project located at 300 Overstreet Way, Columbus, Ohio 43228; and
WHEREAS, this legislation would forgive approximately $1,611,229.37 of principal and accrued interest on the HOME loan and UDAG loan; and
WHEREAS, this loan was made for the construction of these rental units for low-to-moderate income (60% or below area median income) rental housing with a mortgage and terms that the loan would be repaid upon sale or transfer of the property, and
WHEREAS, the restricted cash flows due to affordable rents along with the ongoing operation and maintenance of this project lead the owner to believe that the loans cannot be repaid; and
WHEREAS, the property will continue to provide affordable housing; and
WHEREAS, the City will have a loss of up to $1,611,229.37 in HOME and UDAG principal and accrued interest receivable; and
WHEREAS, the City would reduce the interest rate to 0% on the UDAG loan and forgive all but $1,000.00 of that loan and extend the maturity date of that loan to December 31, 2099.
WHEREAS, an emergency exists in the usual daily operation of the Department of Development, Housing Division, in that it is immediately necessary to authorize the forgiveness of the HOME loan and UDAG loan due to the City of Columbus in order to allow the loan to be removed from the project owner’s financial statements for it to be recapitalized in the future, for the immediate preservation of the public health, peace, property, safety and welfare; and NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. That the Director of the Department of Development be and is hereby authorized to forgive $960,000.00 of principal and all the accrued interest totaling approximately $460,085.00 for the City HOME loan and approximately $140,000.00 of principal and all the accrued interest totaling approximately $52,144.37 for the UDAG loan to Hilltop Senior Housing Limited Partnership and reduce it to $1,000.00, reduce the interest rate to 0% , and extend the term of the UDAG loan to mature on December 31, 2099. There will be a loss of approximately $1,611,229.37 in principal and accrued interest receivable for the HOME Investment Partnerships and UDAG program income
SECTION 2. That this modification is made pursuant to Chapter 329 of the Columbus City Code.
SECTION 3. That for the reasons stated in the preamble thereto, which is hereby made a part hereof, this Ordinance is declared to be an emergency measure and shall take effect and be in force from and after its passage and approval by the Mayor, or ten days after passage if the Mayor neither approves nor vetoes the same.