Explanation
BACKGROUND:
This legislation authorizes the Director of the Department of Development to forgive the principal and accrued interest for the property located at 2393 Canal Bay Way, Columbus, Ohio 43232 that was originally developed by the non-profit housing owner Columbus Housing Partnership dba Homeport for low income and affordable housing. A HOME loan was made on February 16, 1998, in the amount of $1,840,000.00 from the City of Columbus for site acquisition and construction of the project which has been providing affordable housing for eligible residents since that time. The interest rate on the loan is 1.00% and the current total balance exceeds $2,150,000.00. The required federal compliance period for this loan is complete and the restrictive covenant can be released. The property has never operated at a profit. The completion of the 20-year HOME affordability period was completed on September 6, 2020.
The property is being refinanced and syndicated to allow the property to remain affordable housing for decades to come. The owner has completed OHFA’s threshold and underwriting process and is expecting final approval to recapitalize using 4% LIHTC funding. Homeport will remain the managing member of the property. The owner is not requesting any additional funds or competitive resources from the City to do so.
To recapitalize the property, it must take on additional debt. The owners must show the additional debt, and the existing city debt can be paid in full for the new debt not to 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 which would create a need for additional funds or competitive resources for the City, County, or State.
The debt forgiveness policy of the Development Department allows debt forgiveness in those instances in which the affordability period has been completed, and debt forgiveness will facilitate recapitalization of the project with a new affordability period and monitoring by an outside agency - in this case, it will be monitored by OHFA for an additional 30 years.
FISCAL IMPACT: There will be a loss of approximately $2,150,000.00 in fully reserved HOME receivables.
Title
To authorize the Director of the Department of Development to forgive the principal and accrued interest for CHP Kimberly, Inc. on a HOME loan due to the City of Columbus totaling approximately $2,150,000.00 ($2,150,000.00)
Body
WHEREAS, the Department of Development has approximately $2,150,000.00 in principal and accrued interest owed to it for a HOME loan made to CHP Kimberly, Inc. for the acquisition and construction of the project located at 2393 Canal Bay Way in Columbus; and
WHEREAS, this legislation would forgiven approximately $2,150,000.00 of principal and accrued interest on the HOME loan; and
WHEREAS, this loan was made for the acquisition and construction of these rental units for low-to-moderate income rental housing with a mortgage and terms that the loan would be repaid upon sale or transfer of the property; and
WHEREAS, the owner has sustained significant losses on the ongoing operating and maintenance of this project and has no belief that the loan can be repaid; and
WHEREAS, by recapitalizing the property, it will continue to provide affordable housing to families; and
WHEREAS, the City will have a loss of approximately $2,150,000.00 in HOME principal and accrued interest receivable; 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 hereby is authorized to forgive the $1,840,000.00 principal and all of the accrued interest totaling approximately $310,000.00 for the City HOME loan to CHP Kimberly, Inc. at the time that the project is recapitalized. There will be a loss of approximately $2,150,000 in principal and accrued interest receivable for the HOME Investment Partnerships program income.
SECTION 2. That this modification is made pursuant to Chapter 329 of the Columbus City Code.
SECTION 3. That this ordinance shall take effect and be in force from and after the earliest period allowed by law.