REPORT TO COUNCIL
SUBJECT
Title
Approve the Amended Request for Modification of 2003 CDBG Loan to Sunnyvale Community Services
Report
BACKGROUND
In 2003, Sunnyvale Community Services (SCS) acquired the property at 725 Kifer Road, where its main facility and offices are located, with the assistance of two loans from the City. One loan was a bridge loan funded by the City's general fund, which was paid back in full shortly after the acquisition, and the second was a long-term mortgage of $400,000 in CDBG funds.
The original 2003 loan terms included a thirty-five year term, 3 percent simple interest, and a fifteen-year deferral of all principal and interest payments (from 2003-2018). At the end of the fifteen-year deferral period, the loan became fully amortized for the remaining twenty years of the term. The required monthly amortized payment of principal and interest is approximately $3,217 per month. Because the loan was funded with federal funds, a special federal requirement also applies, known as the "reversion of assets" requirement, discussed in greater detail below.
In early 2013, SCS wrote a letter to the City asking it to forgive the CDBG loan in full. That request was considered by Council on August 27, 2013 as part of RTC 13-206 (Attachment 1). The request was not approved on that date, however Council directed staff to develop a modified version of one of the alternatives presented in that report for consideration at a later date (see August 27, 2013 meeting minutes, provided in Attachment 2, page 6).
On December 17, 2013, Council considered an alternative loan modification proposal which was recommended by staff and agreed to by SCS, as part of RTC 13-274 (Attachment 2). That proposal included three possible loan modifications, as follows:
* Option 1: Defer all payments of principal and interest to the end of term (2038);
* Option 2: Forgive interest accrued to date and reduce interest rate to zero 0 percent going forw...
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