Finance committee to mull $2.2 million home loan on Monday – Pasadena Now

The Pasadena City Council Finance Committee will deliberate Monday on a proposal that the city enter into an affordable housing loan agreement with Heritage Housing Partners LLC, to rehabilitate two buildings at 2322 E. Foothill Blvd. and convert them into a Transition Age Student (TAY) housing project.

The two buildings – one built in 1924 and the other in 1972 – were acquired in receivership by Heritage Housing Partners (HHP) in January, a month after it went up for sale, with the intention of buying the property for $1.3 million. The escrow is due to close on May 25.

In February, HHP applied to the City for funding in the amount of $2.2 million to cover the purchase and its conversion into affordable rental housing for Pasadena’s TAY population, which includes Pasadena City College students.

The rehabilitation of the property will involve the conversion of five vacant residential units previously used as unauthorized residential tenancies into six TAY ​​housing units, with a potential focus on homeless CCP students assisted by a CCP rental subsidy, said the Pasadena Housing Department in an Agenda Report prepared for the City Council.

In the report, the housing department cited a recent UCLA study in which an estimated one in five students at a California community college are homeless or unsafe in their housing. Community colleges have the highest rates of homelessness and housing insecurity in the state’s three public post-secondary education systems, the study notes.

The Housing Department said it is now offering the Affordable Housing Loan Agreement in which the city is providing a loan to HHP in the amount of $2 million, of which $1.6 million will come from the housing fund. Inclusive Housing Trust and $400,000 from ARPA (American Rescue Plan Act 2021).

HHP and the housing department said the total budget for the project would be $2,215,950, consisting of $1.3 million for acquisition, $820,000 for construction, rehabilitation of the property, $69,450 for capitalized operating and replacement reserves, $15,000 for developer acquisition costs, $8,000 for construction period insurance, and $3,500. for transaction and title fees.

The agreement would stipulate that HHP, as the developer of the project, will use $200,000 of private funds, consisting of an advance grant from the Pasadena Community Foundation and a contribution of $15,950, to continue the housing project.

The housing department said HHP is also exploring other potential sources, including additional grants. If HHP obtains additional funding, the city loan can be reduced or can be used to subsidize operating costs as needed, the report said.

Another provision of the proposed agreement will state that if operating the project as TAY housing becomes financially unsustainable, the property may be operated as affordable rental housing for low-income people at 60% of the median income of the area (AMI).

Explaining the fiscal impact of the project, the Housing Department said approval of the agreement will increase the Housing Department’s operating budget for fiscal year 2022 by $1,600,000 from the unrestricted balance of the housing fund. housing earmark, leaving an unrestricted balance of approximately $1.26 million in the fund. . The City’s funding for this project will take the form of a loan secured by a deed of trust. Debt service on the City’s loan would be paid from the project’s annual residual revenues, which are not guaranteed.

The Housing Department said the recommendation was reviewed by the internal Home Loans Committee on April 7, 2022, and the committee recommended approval.

From the Finance Committee, the recommendation is expected to be presented to the full City Council on Monday, April 25.

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