REPORT TO COUNCIL
SUBJECT
Title
Approve New First Mortgage Refinance Loan of $3.3 Million in Housing Funds to MidPen Housing Corp. and Modification of Outstanding Loans to Finance Phase Two of Eight Trees Apartments Rehabilitation at 183 Acalanes Drive, Sunnyvale; and Approve Budget Modification No. 26 to Appropriate Funding from the Housing Fund for the New Loan
Report
BACKGROUND
Eight Trees Apartments (Eight Trees) was acquired in 2002 by a non-profit homeless shelter operator now known as HomeFirst SCC (HomeFirst) with City assistance in the form of several Housing loans and a private first mortgage (the "Combs loan"). The outstanding loan amounts and related details are provided in Attachment 5. Eight Trees was built in the early 1960's as a two-story market-rate apartment building with 24 modest units, surface and carport parking, limited perimeter landscaping and a small pool in a central courtyard.
HomeFirst was not able to obtain the project-based vouchers it had hoped to obtain to support its vision for the property to provide affordable housing to: clients transitioning out of homelessness, and other very low income households. After struggling to maintain and manage the property and make the required loan payments for the first 10-12 years, HomeFirst staff approached City of Sunnyvale Housing staff to discuss options for stabilizing Eight Trees. Ultimately, following some executive staff turnover at HomeFirst, by 2016 HomeFirst had decided that it wanted to exit the business of rental housing management and focus on its core mission of operating homeless shelters and providing services to homeless clients. HomeFirst notified staff that it was seeking a non-profit rental housing provider to take over the property and the existing debt. Around that time, MidPen Housing Corp. (MidPen) was looking for sites in Sunnyvale for a new affordable housing project, including possible acquisition and rehabilitation of existing housing. The high price of market...
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