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AGENDA REPORT
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| | | | | | | | DATE:
| April 6, 2021
| TO:
| Fairfield Housing Authority Chair and Commissioners
| FROM:
| Stefan T. Chatwin, Executive Director
| | SUBJECT: | Resolution HA2021-05 of the Fairfield Housing Authority Approving the Execution of a Subordination Agreement for Regulatory Agreement between the Fairfield Housing Authority, as Successor in Interest to the Redevelopment Agency of the City of Fairfield, and Eden Woodside Court, L.P., for the Benefit of Citibank, N.A. |
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| | | | | | | | | RECOMMENDED ACTION | | Adopt resolution. |
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| | | | | | | | | STATEMENT OF ISSUE | | Eden Woodside Court, L.P (Eden) is seeking Fairfield Housing Authority (FHA) approval, as Successor in Interest to the former Redevelopment Agency of the City of Fairfield (RDA), and execution of the Subordination Agreement. The Subordination Agreement is solely for the former RDA’s Affordable Housing Covenant, dated July 31, 2000. There is no debt associated with the Covenant. Eden is refinancing an existing permanent loan that matures in June 2021 with a new loan from Fannie Mae. RDA’s Affordable Housing Covenant must be subordinate to the new loan. |
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| | | | | | | | | DISCUSSION | On February 2, 1999, the Fairfield City Council held a public hearing and approved Resolution No. 99-40 approving the issuance of multifamily housing revenue bonds by the California Statewide Communities Development Authority. The purpose of the bond issuance was to provide funding for the acquisition and rehabilitation of the Woodside Court apartments, a 129-unit rental project located at 555 Alaska Avenue. The bond issue was not an obligation of the City nor was there any local financing involved in this project. The developer was also utilizing 4% tax credits in conjunction with the bond issuance for the acquisition and rehabilitation of this development. As a condition of receiving the tax credit financing, all of the units will be rented, and income restricted for families earning no more than 60% of area median income for at least 55 years.
The developer had also agreed to allow the RDA to record the Affordable Housing Covenant against the property in order for the RDA to get credit for 63.5 low-income inclusionary housing units that would assist the RDA in meeting its unmet inclusionary housing obligation at no cost to the RDA. The RDA’s Affordable Housing Covenant has a term of 25 years and will expire in August 2025.
Eden is seeking to refinance a permanent loan that is scheduled to mature in June 2021 with a new loan from Fannie Mae. Fannie Mae requires that the RDA’s Affordable Housing Covenant be subordinate to the new loan. The new loan will be a Fannie Mae loan amortized for 30 years with a term of 7 years for $9.79MM, which will be used for paying off the existing permanent loan and to replenish the property’s replacement reserve to address capital needs improvements. Eden has informed staff that all Fannie Mae Loan products require subordination of the RDA’s Affordable Housing Covenant. Staff has consequently worked with legal counsel and determined that the proposed Subordination Agreement contains provisions that would protect FHA’s interests in the event of default under the Fannie Mae loan.
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| | | | | | | | | FINANCIAL IMPACT | | No financial expenditures, liabilities or obligations are created by consenting to the execution of the Subordination Agreement for Regulatory Agreement. |
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| | | | | | | | | PUBLIC CONTACT/ADVISORY BODY RECOMMENDATION | None.
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| | | | | | | | | ALTERNATIVE ACTION | | The Fairfield Housing Authority may choose not to consent to subordinating the Affordable Housing Covenant to the new Fannie Mae loan which could result in the cancellation of the loan and the developer’s inability to refinance the current loan that matures in June 2021. A default under that loan could lead to a foreclosure of the property and the loss of the affordable housing units. |
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| | | | | | | | | COORDINATED WITH | City Attorney's Office
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| REVIEWERS: | | Reviewer | Action | Date | | Alexander, Amber | Approved | 3/29/2021 - 3:47 PM |
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