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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
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Department of Housing
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DATE:
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April 10, 2008
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BOARD MEETING DATE:
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April 22, 2008
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SPECIAL NOTICE/HEARING
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None
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VOTE REQUIRED
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Majority
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TO:
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Honorable Board of Supervisors
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FROM:
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Duane Bay, Director, Department of Housing
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SUBJECT:
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Authorize the acceleration of forgiveness of a loan in the amount of $125,000
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Recommendation
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Adopt a Resolution:
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1.
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Authorizing the acceleration of forgiveness of a loan to Caminar in the amount of $125,000; and
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2.
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Authorizing the Director of the Department of Housing to execute documents necessary to clear the lien from the title on the property.
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Vision Alignment
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Commitment: Offer a full range of housing choices.
Goal 9: Housing exists for people at all income levels and for all generations of families.
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The action contributes to this commitment and goal by ensuring the continued operation of an affordable group home for the mentally ill.
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Performance Measures:
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Measure
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FY 2006-07
Actual
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FY 2007-08
Target
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Number of County-supported affordable housing units completed and occupied
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321
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400
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Background
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In 1986 the County entered into an agreement with Community Living Centers (now Caminar) to provide a loan to assist with the acquisition and renovation of a multi-unit apartment house at 2 Edgewood Court in Daly City to be used as a large group home for the mentally ill. The renovations, while allowing the property to best meet the needs of this special needs population, effectively reduce the market value of the property by eliminating the separate units and converting it into a large group facility. The County loan, which has a remaining principal balance of $125,000 bears no interest and is forgivable in 2016. The loan is secured by a deed of trust to ensure that this property use continues for the duration of the loan.
In 1998 the County made a second loan to Caminar to deal with general rehabilitation of the property. This loan is also secured with a deed of trust and has similar requirements concerning continued use of the property until its maturity date in 2018.
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Discussion
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Last year the first mortgage from a commercial lender had a balloon payment due. To meet that payment, Caminar took out secondary financing on another property that they own. However, the State which provides much of their programmatic funding has indicated that they cannot charge the payments on this loan as a reimbursable expense for the Edgewood Court program because the loan is not linked directly to the property, thus causing a program shortfall for this operation. Caminar has been trying to obtain a new loan against the property but, because the original work done with the County funding reduced the value from its highest and best use as a multi-unit apartment building, there is too high a debt to value ratio. Caminar has requested that the County accelerate the forgiveness of the County loan in order to bring the overall debt to value ratio down to an acceptable level for the conventional lender.
This loan is already scheduled for forgiveness in 8 years; this action accelerates the forgiveness of the loan. The use restriction on the property is still guaranteed under the second County loan which does not mature for ten years.
County Counsel has reviewed and approved the Resolution as to form.
A complete electronic copy of this report and the referenced resolution and a complete paper version are available for review in the Clerk of the Board’s office.
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Fiscal Impact
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This action has no fiscal impact since the loan was already scheduled for forgiveness. There is no Net County Cost.
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