SUBJECT/RECOMMENDATION:
Title
Approve a loan in the amount of $1,000,000.00 to SAH Indigo Holdings LP for the acquisition of real property located at 801 Chestnut St. contingent upon the satisfactory outcome of, as determined by the Economic Development and Housing Director, a subsidy analysis, the receipt of a structural evaluation, approval of all funding sources, and a tenant relocation plan; and authorize the appropriate officials to execute documents required to effect closing of the loan.
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SUMMARY:
Indigo Apartments is comprised of 208 units and was originally developed for low-income senior housing. In 2015, the property was purchased and converted to market rate, excluding 20 units that are legally restricted by HOME funding that was previously provided to the property by the City of Clearwater.
Sunrise Affordable Housing Group, through their special purpose entity SAH Indigo Holdings LP (Sunrise), is currently under contract to acquire Indigo Apartments and is planning to convert it to legally restricted affordable housing under a 50-year affordability commitment through the Low-Income Housing Tax Credit (LIHTC) program, implementing income and rent restrictions on 100% of units with thresholds set at 30%, 60%, and 80% of area median income. The restrictions will result in significant rent reductions, resulting in an average +/- 51% discount when compared to today’s market-rate rents. The property will be placed in the Pinellas County Land Trust, which will provide a 99-year lease to Sunrise, placing 208 housing under the county’s land use restrictions.
To support the project, staff recommends approval of a deferred, 0% interest 40-year loan in the amount of $1,000,000.00, utilizing a combination of CDBG and SHIP funding. The loan will support the acquisition of the property. The CRA has agreed to provide a $2,000,000.00 loan to Sunrise to support the acquisition of the property. The city funding will assist a total of 6 units which will be restricted by a land use restriction agreement and monitored by City staff for the duration of the LURA. The final approval of the loan will be contingent upon the outcome of a subsidy analysis, the receipt of a structural evaluation of the subject property that justifies the rehabilitation component of the project, the approval of all funding sources, and a satisfactory tenant relocation plan as determined by City.
APPROPRIATION CODE AND AMOUNT:
Funding is to be provided by State Housing Initiatives Partnership (SHIP) Program, Community Development Block Grant (CDBG) and CDBG Revolving Loan Funds. No General Fund monies will be appropriated.
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.
