HomeMy WebLinkAbout2017-12-05; City Council; ; Accept the Housing Loan Status Reportresidential rehabilitation. Over time, some of the loans have been repaid. A total of 229 city
loans remain outstanding with a balance of nearly $25 million owed to the city.
The city also manages loans (approximately $25 million total) transferred from developers to
the city as a result of construction of affordable housing for home ownership purposes; these
loans are in addition to city loans made directly to individual homebuyers/owners.
Management of Loans
The City Council typically authorizes city staff (including City Attorney) to complete the process
for final preparation and execution of the loan documents on the city's behalf; the documents
include a Loan Agreement, Deed of Trust, Promissory Note and a Regulatory Agreement and
Declaration of Restrictive Covenant (and Resale Restrictions). With the standard loan
agreement, the City Manager or designee is authorized to act on the city's behalf in managing
the housing loans and to take appropriate action to ensure compliance. Sample language from
the loan agreement that authorizes staff to manage the loans on behalf of the City Council is
noted below:
Action by the City.
Except as may be otherwise specifically provided herein, whenever any approval, notice,
direction, consent, request, extension of time, waiver of condition, termination, or other
action by the city is required or permitted under this Agreement, such action may be
given, made, or taken by the City Manager, or designee, without further approval by the
City Council, and any such action shall be in writing.
If there is a financial or regulatory default on a loan, city staff (including City Attorney staff)
proceeds accordingly with the required notices to the borrower and pursues other actions to
cure the default. Because the city has a significant number of loans with varying terms and
conditions, it is difficult to discuss all of the potential default situations within this status report.
The loan agreements, however, are monitored by staff and any defaults are quickly pursued to
gain compliance with any financial or regulatory condition. At this time, there are no financial
or regulatory defaults on record for the city loans.
There are a couple of loans, primarily for property acquisition, that have unique terms which
set forth performance standards and deadlines for action (in addition to financial and
regulatory terms), such as applying for additional funding, processing permits, and other similar
development actions, and which limit city staff authority to act on behalf of the City Council.
For example, the loan for property acquisition for the Pacific Wind affordable development
limited staff's ability to extend any deadlines set forth within performance standards. Below is
the unique and additional language from that loan agreement:
The amount of the Loan and the deadlines for acquiring additional property,
constructing a new larger, higher density development or completing substantial
rehabilitation of the existing Development may not be increased and/or revised without
prior approval of the City Council.
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Generally, city staff uses a reasonableness test to determine if the borrower has complied with
a performance standard to the best of borrower's ability and within the intent of the standard.
In the professional opinion of staff, there are no defaults at this time on any of the outstanding
loans with performance standards.
Fiscal Analysis
Below is a summary of all loans issued to date by the City Council and by type for review and
discussion as deemed appropriate.
Project/Program Project/Type # of Loans Total Amount
Homebuyer {Carlsbad Individual 133 $1,680,000
Homebuyer Assist
Program)
Homebuyer Individual 274 $6,078,948
Down Payment Assistance Individual 22 $255,581
Minor Home Repair Individual 11 $27,877
Homebuyer Individual 31 $900,259
{Mobilehome conversions) (pad purchases)
Catholic Charities Homeless Shelter 4 $707,585
(acquisition &
construction
Solutions for Change Acquisition/Rehab 2 $3,426,000
Hospice of the North Coast Acquisition/Rehab 1 $1,065,000
New Affordable Acquisition &/or 15 $22,005,808
Developments Construction
Total 493 $36,147,058
As noted above, many of these loans have been repaid . As of June 30, 2017, there are 229
outstanding city loans with a total outstanding balance of approximately $25 million.
Management of the loans is a team effort between staff within Housing & Neighborhood
Services, Finance, and the City Attorney's Office.
Next Steps
Staff will continue to monitor and manage the housing loan portfolio for the City of Carlsbad
and respond as appropriate to any defaults, unless directed otherwise by the City Council.
Environmental Evaluation (CEQA)
Pursuant to Public Resources Code Section 21065, this action does not constitute a "project"
within the meaning of CEQA in that it has no potential to cause either a direct physical change
in the environment, or a reasonably forseeable indirect physical change in the environment,
and therefore does not require environmental review.
Public Notification
This item was noticed in accordance with the Ralph M. Brown Act and was available for viewing
at least 72 hours prior to the meeting date.
Exhibits
None
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