Explanation
BACKGROUND: This legislation authorizes the assignment, assumption, and modification of a U.S. Department of Housing and Urban Development (HUD) HOME Investment Partnerships Program (HOME) funded loan package (inclusive of a loan agreement, promissory note, and mortgage, the HOME Loan) (the “HOME Loan Documents”) executed by the Director of the Department of Trade and Development now known as Department of Development, from the City of Columbus (the “City”) to George’s Creek Limited Partnership, an Ohio limited partnership. This legislation also authorizes the Director to execute subordination agreements and any other necessary agreements or instruments needed to assign, assume, and modify the HOME Loan Documents from George’s Creek Limited Partnership to George’s Creek Homes Rehab, LLC, an Ohio limited liability company and reduce the interest rate from 8.5% to 2.0%. This legislation also authorizes the forgiveness of the HOME Loan’s existing interest at the time of assignment and assumption, in an amount approximately up to $1,491,729.30.
The City of Columbus in 1995 entered into a HOME agreement with George’s Creek Limited Partnership, an Ohio limited partnership, to construct on a certain parcel of land located at 6300 George’s Creek Drive, Canal Winchester, Ohio and known as George’s Creek Apartments to develop 120 units of affordable housing. The housing has remained affordable through the twenty-year period of affordability, with 120 HOME assisted units leased and occupied to families with income at or below 50% of Area Median Income (AMI), in accordance with 24 CFR 92.252. The City’s HOME investment in 1995 was a $570,000 loan, together with an interest rate of 8.5% annum, as evidenced by a HOME Loan Agreement and Mortgage dated July 13, 1995, recorded on July 14, 1995.
Columbus Housing Partnership, Inc. (dba Homeport) received 2025 Low-Income Housing Tax Credit (“LIHTC”) funding from the Ohio Housing Finance Agency (OHFA) for the rehabilitation of the 120 unit property, which contains two, three, and four-bedroom units. The City has committed $4,800,000 in City Bond funds for the project. The Department of Development seeks authority for the Director to assign the HOME Loan Documents for the existing HOME loan of $570,000.00 with the authorized reduced interest rate from 8.5% to 2.0%, at the construction finance closing, to the new ownership entity, subordinate the loan to the new senior mortgage, and extend the loan’s term for a new 30-year period from the date of the new construction loan closing, and to execute all necessary documents to effect such assignment to George’s Creek Homes Rehab, LLC, and affiliate of Columbus Housing Partnership, Inc At the same time the developer has requested forgiveness of the accrued and unpaid interest of $1,491,729.30; thus, the Department is requesting authority for the Director to forgive said interest.
Contract Compliance: the vendor number is 055027 and expires on 04/14/2028
Fiscal Impact: None
Title
To authorize the Director of the Department of Development to execute an assignment, assumption, and modification agreement (“Assignment and Assumption Agreement”), and all other necessary agreements or instruments, which assign and modify the HOME Loan Documents for the rental development at 6300 George’s Creek Drive, Canal Winchester, Ohio; to authorize the Director of Development to enter into and execute all other necessary agreements, documents, or instruments related to this assignment with the new ownership entity George’s Creek Homes Rehab, LLC; to authorize the interest rate reduction from 8.5% to 2.0%; to authorize the forgiveness of the accrued and unpaid interest in an amount up to $1,491,729.30. ($0.00)
Body
WHEREAS, the Director of Development executed a HOME loan package in 1995 with George’s Creek Homes Limited Partnership for the development of a 120-unit affordable rental housing project known as George’s Creek Apartments located at 6300 George’s Creek Drive, Canal Winchester, Ohio; and
WHEREAS, the developer is requesting that the existing accrued but unpaid interest for said loan be forgiven in an amount totaling approximately $1,491,729.30; and
WHEREAS, the developer is requesting the interest rate be reduced from 8.5% to 2.0%; and
WHEREAS, the property is being re-developed by George’s Creek Homes Rehab LLC an affiliate of Columbus Housing Partnership, Inc. and therefore they are requesting the assignment of, and will be assuming the HOME loan and all the requirements set forth by HUD from George’s Creek Homes Limited Partnership to George’s Creek Homes Rehab LLC and the subordination of said Home loan to the new construction and permanent financing to preserve the project as affordable housing; and
WHEREAS, it is necessary in the usual and daily operation of the Department of Development in that it is necessary to authorize the Director to execute an assignment and assumption agreement and all other necessary agreements or instruments, which assign and modify the HOME loan package from George’s Creek Homes Limited Partnership to George’s Creek Homes Rehab, LLC., reduce the interest rate from 8.5% to 2.0% and forgive the existing and unpaid interest in an amount up to $1,491,729.30; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. That the Director of the Department of Development is authorized to execute an assignment and assumption agreement and all other necessary agreements or instruments which assign and modify the HOME loan in an amount up to $570,000.00 with George’s Creek Homes Limited Partnership to George’s Creek Homes Rehab LLC; to authorize the interest rate reduction from 8.5% to 2.0%; to authorize the forgiveness of the existing unpaid interest in on the existing HOME loan in an amount up to $1,491,729.30; and to consent to the re-setting of the HOME Loan maturity date to 30-years from the date of the construction finance closing.
SECTION 2. That this ordinance shall take effect and be in force from and after the earliest period allowed by law.