Explanation
BACKGROUND:
To authorize the Director of the Department of Development to forgive the principal and accrued interest for the property located at 2421 Adonai Dr., Columbus, Ohio 43219 that was originally developed by four mission driven non-profits Dayspring Christian Community Development Corporation, Columbus Housing Partnership dba Homeport, My Brother’s Keeper (affiliated with Mt Hermon Missionary Baptist Church) and New Salem Real Estate Holdings (affiliated with New Salem Baptist Church) for low income family housing. A HOME loan was made on October 28, 1998 in the amount of $1,080,000.00 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 5.25% and the current balance of the loan exceeds $2,600,000.00. The required federal compliance period for this loan is complete and the restrictive covenant can be released. The project has never operated at a profit. The completion of the 20 year HOME affordability period has passed and the owner would like to recapitalize using 4% LIHTC funding and have requested gap funding from the City and other sources to do so.
The property is being refinanced and re-syndicated to allow the property to remain affordable housing for decades to come. In order 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 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.
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 b...
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