Explanation
BACKGROUND:
This legislation authorizes the Director of the Department of Development to forgive the principal and interest accrued at the property located at 398 S Grant Ave., Columbus, Ohio 43215 which was originally developed by National Church Residences as The Commons at Grant Limited Partnership and was the first property of significant size (100 units) to serve as permanent supportive housing in Ohio. A HOME loan was made on January 17, 2002 in the amount of $1,500,000.00 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 5.46% and the current balance of the loan exceeds $4,374,025.00. The required federal compliance period for this loan is complete and the restrictive covenant can be released. The project has not had sufficient cash flow for most of its existence due to the population served and the cost of wrap around services. The completion of the 20 year HOME affordability period has passed and the property remains as a permanent supportive housing provider for those who were homeless or at risk of homelessness.
The City HOME loan matured on June 27, 2023 and because of limited rental income and higher operating costs that include extensive supportive services to assist the tenant population, the development is not able to repay the debt. The property owner has requested and the Development Department supports the request to forgive the loan.
Emergency action is requested so that The Commons at Grant Limited Partnership can remove the debt from its financial statements since the 20 year HOME affordability period is completed and the development is not able to repay the debt although the property remains as a permanent supportive housing provider for those who were homeless or at risk of homelessness.
FISCAL IMPACT: There will be a loss of about $4,372,025.00 in fully reserved HOME receivables.
Title
To authorize the Director of the Department of Development to forgive the principal and accrued interest for The Commons at Grant Limited Partnership on a HOME loan due to the City of Columbus totaling approximately $4,375,025.00; and to declare an emergency. ($4,375,025.00)
Body
WHEREAS, the Department of Development has approximately $4,375,025.00 in principal and accrued interest owed to it for a HOME loan made to the Commons at Grant Limited Partnership for the acquisition and construction of the project located at 398 S Grant Ave., in Columbus; and
WHEREAS, this legislation would forgive approximately $4,375,025.00 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 those who are homeless or at risk of homelessness with a mortgage and terms that the loan would be repaid on June 27, 2023; and
WHEREAS, the owner has sustained significant losses on the ongoing operation and maintenance of this project and has no belief that the loan can be repaid; and
WHEREAS, the property will continue to provide affordable housing to those who are homeless or at risk of homelessness; and
WHEREAS, the City will have a loss of up to $4,375,025.00 in HOME principal and accrued interest receivable; and
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 due to the City of Columbus in order to allow the loan to be removed from the project owner’s financial statements since the 20 year HOME affordability period is completed; 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 $1,500,000.00 of principal and all of the accrued interest totaling approximately $2,875,025.00 for the City HOME loan to The Commons at Grant Limited Partnership. There will be a loss of approximately $4,375,025.00 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 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.