SUBJECT/RECOMMENDATION:
Title
Approve a five-year payment deferral via a loan modification for 1101 Holt Avenue, also known as HEP West, and authorize the appropriate officials to execute documents required to affect closing of the loan modification. (consent)
Body
SUMMARY:
Homeless Emergency Project (HEP) is a 501 (c) (3) organization that was founded in 1986 to meet the needs of a growing number of homeless individuals and families. HEP provides emergency shelter, transitional housing, and family rental units for the homeless population. In addition to housing, the agency provides food, intensive case management, clinical services, free dental care, childcare and other supportive services to the homeless.
On August 31, 2010, the City provided a loan in the amount of $372,340 to HEP for the acquisition of 1101 Holt Avenue which was purchased for the development of a 32-unit apartment building for low-income veterans, now known as HEP West. A mortgage modification agreement was executed on December 9, 2013, to add an additional $725,000 to the project and to defer the loan repayment until January 1, 2015. On March 9, 2016, HEP requested and the City approved a deferment of payment until January 1, 2020. Toward the end of the deferral period, on October 7, 2019, HEP sent a written request asking for an additional deferment of payment. The request was approved for an additional five years with payments to commence on January 1, 2025.
On August 13, 2024, HEP sent a written request asking for an additional five-year deferment of payment. As demonstrated by the attachment in the request letter, HEP’s Homeless and Low-income program has resulted in a loss of $293,857.64. According to HEP, this deferment will provide an opportunity to offset deficiencies incurred over the past several years.
Staff recommends the approval of a payment deferral for the term of five years with payments to commence on January 1, 2030. Should HEP continue to operate the program at a similar loss, staff will likely recommend further deferment of the loan prior to the commencement of payments in 2030.
APPROPRIATION CODE AND AMOUNT: N/A
USE OF RESERVE FUNDS: N/A
STRATEGIC PRIORITY:
Objective 2.4 - Supports equitable housing programs that promote household stability and reduces the incidence of homelessness within Clearwater.
