Explanation
BACKGROUND:
East Fifth Avenue Apartments, LLC is a thirty eight unit affordable supportive housing project located at 3005-3025 East Fifth Avenue on the east side within the City of Columbus. In 2003, East Fifth Avenue Apartments obtained a loan of $432,000 in HOME funds 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 4.17% and the loan balance is approximately $652,224. The required federal compliance period for this loan is complete and the restrictive covenant was released in 2009. The project has never operated at a profit. The completion of the 15 year compliance period for housing tax credits was December 31, 2018.
Due to the ongoing losses of the project and the upcoming maturity of the City mortgage loan, the property owner, Community Housing Network, has requested forgiveness of the loan. It is CHN’s intent to have the property continue to serve women with a history of homelessness and disabilities. The Housing Division is recommending that all but $5,000 be forgiven and the loan term extended to December 31, 2118.
The City of Columbus Policy for Requests for Debt Forgiveness for Multifamily Rental Projects does not address the outright forgiveness of debt. In this situation, the Housing Division recommends the forgiveness request because it contributes to being able to operate with as much stability as possible.
Emergency action is requested so that East Fifth Avenue can remove the debt from its financial statements before the maturity date is reached.
FISCAL IMPACT:
There will be a loss of approximately $647,224 in HOME receivables.
Title
To authorize the Director of the Department of Development to modify loan documents for East Fifth Avenue Apartments, LLC to forgive the principal and accrued interest on a HOME loan due to the City of Columbus totaling approximately $...
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