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 Tussing Road Homes 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 Tussing Road Homes Limited Partnership to Pheasant Run Homes Rehab, LLC, an Ohio limited liability company. This legislation also authorizes the forgiveness of the HOME Loan’s existing interest at the time of assignment and assumption, in an amount up to $838,648.00
The City of Columbus in 1999 entered into a HOME agreement with Tussing Road Homes Limited Partnership, an Ohio limited partnership, to construct on a certain parcel of land located at 2680 Orono Pike, Reynoldsburg, Ohio and known as Pheasant Run Apartments to develop 136 units of affordable housing. The housing has remained affordable through the twenty-year period of affordability, with seven 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, as amended on November 2, 2006. The City’s HOME investment in 1999 was a $512,000 loan, together with an interest rate of 6.5% annum, as evidenced by a HOME Loan Agreement and Mortgage dated September 13, 1999, recorded on September 15, 1999, in Official Record Volume 104, page 222, in the Recorder's Office of Fairfield County, Ohio, and modified by the Amendment to the Open-End Mortgage by Tussing Road Homes Limited Partnership, an Ohio limited partnership, for the benefit of the City of Columbus, Department of Trade and Development, dated November 2, 2006, recorded on December 6, 2006, in Official Record Volume 1450, page 2240 in the Recorder's Office of Fairfield County, Ohio. From and after February 1, 2016, the Note and Mortgage were modified and amended so that the maturity date of the HOME loan was to reflect March 1, 2051, no interest was charged on the outstanding principal balance of the Note, and the interest rate is forever charged as zero percent.
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 136 unit property, which contains two, three, and four-bedroom units. The City has committed $5,000,000 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 $512,000.00, 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 Pheasant Run 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 $838,648.00; thus, the Department is requesting authority for the Director to forgive said interest.
Contract Compliance: the vendor number is 055091 and expires on 04/24/2028
Fiscal Impact: No funding is required for this legislation
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 2680 Orono Pike, Reynoldsburg, OH; 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 Pheasant Run Homes Rehab, LLC; to authorize the forgiveness of the accrued and unpaid interest in an amount up to $838,648.00. ($0.00)
Body
WHEREAS, the Director of Development executed a HOME loan package in 1999 with Tussing Road Homes Limited Partnership for the development of a 136-unit affordable rental housing project known as Pheasant Run located at 2680 Orono Pike, Reynoldsburg, OH; and
WHEREAS, on February 1, 2016 the note and mortgage were modified and amended to reduce the interest rate to zero percent from and after that date; and
WHEREAS, the developer is requesting that the existing accrued but unpaid interest for said loan be forgiven in an amount totaling approximately $838,648.00; and
WHEREAS, the property is being re-developed by Pheasant Run 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 Tussing Road Homes Limited Partnership to Pheasant Run 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 Tussing Road Homes Limited Partnership to Pheasant Run Homes Rehab, LLC., and forgive the existing and unpaid interest in an amount up to $838,648.00; 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 $512,000.00 with Tussing Road Homes Limited Partnership to Columbus Pheasant Run Homes Rehab LLC; to authorize the forgiveness of the existing unpaid interest in on the existing HOME loan in an amount up to $838,648.00; 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.