Report to Housing Authority
Tuesday, September 03, 2024
Consent
SUBJECT:
Title
CONSIDER 1ST AMENDMENT TO SECOND AMENDED AND RESTATED PROMISSORY NOTES FOR VILLAGGIO 1 AND VILLAGGIO 2 PROJECTS LOCATED AT 535 EAST CARSON STREET AND 555 EAST CARSON STREET, WITH GRACE HOUSING RESIDENTIAL PARTNERSHIP, A CALIFORNIA LIMITED PARTNERSHIP, AND CARSON HOUSING LIMITED PARTNERSHIP, A CALIFORNIA LIMITED PARTNERSHIP, RESPECTIVELY (HOUSING AUTHORITY)
Body
I. SUMMARY
In December, 2023 the Housing Authority approved a number of amendments with Grace Housing Residential Partnership, LP and Carson Housing Limited Partnership, LP (the "Borrowers") to allow for the properties' financing to be resyndicated and provide cash to be available for substantial improvements to the properties. Authority staff and the Borrowers have collaborated since the January 2024 closing to increase the interest rate from 3% simple (as provided for in the Second Amended and Restated Promissory Notes) to 6.5% simple for the benefit of the Housing Authority. In order to ensure the modified debt is treated as new debt under the tax code, and so the new debt is exchanged for the old debt, the parties would need to agree to increase the interest rate. Rising interest rates since conception of the refinances make the new rate closer to "market" conditions vs. the now below-market 3%. This benefits the Housing Authority and the Board had inquired about this while taking action on the previous amendments as well.
II. RECOMMENDATION
Recommendation
1. APPROVE the 1st Amendment to Second Amended and Restated Promissory Note with Grace Housing Residential Partnership, LP (Villaggio I), increasing the interest rate on the Note from 3% simple interest to 6.5% simple interest, and clarifying the project name to "Villaggio I - formerly Grace Residential Partnership" in project documents; and
2. APPROVE the 1st Amendment to Second Amended and Restated Promissory Note with Carson Housing Limited Partnership, L...
Click here for full text