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Consider/Discuss/Act on a Resolution Approving the McKinney Housing Authority (MHA) Request for City Funding for Newsome Homes Redevelopment and Authorization for the Interim City Manager to Enter into a Chapter 393 Loan Agreement Between the City of McKinney and the McKinney Housing Authority
Summary
MEETING DATE: August 4, 2014
DEPARTMENT: Housing and Community Development
CONTACT: Janay Tieken, Housing and Community Development
RECOMMENDED CITY COUNCIL ACTION:
· Approve Finance Structure and Amount of City-Funded Portion of McKinney Housing Authority (MHA) Redevelopment of Newsome Homes.
· Authorize the Interim City Manager to enter into a Chapter 393 loan agreement between the City of McKinney and the McKinney Housing Authority.
ITEM SUMMARY:
· The McKinney Housing Authority (MHA) is requesting City funding and fee credits for the redevelopment of Newsome Homes.
· Staff recommends a combination of fee waivers, fee reimbursements through the Empowerment Zone Process, and a low interest, revolving loan facility as outlined in the Financial Summary table below.
BACKGROUND INFORMATION:
· On July 14th, Carleton Development, representing the McKinney Housing Authority, presented a request to City Council for a portion of the cost of the Newsome Homes redevelopment.
· City Council directed Carleton to find cost savings within the development budget. Carleton has presented a new funding request that reflects a $174,575 reduction from the original request. Further, staff was asked to present a City financing structure that minimizes impact to the General Fund.
· Chapter 393 of the Local Government Code allows the City to provide a low interest, revolving loan facility for a portion of the request. The loan will include the following terms:
o Principal Amount: $1,156,052
o Interest Rate: 2.75%
o First advance: $116,000 park fees at issuance of building permit
o Second Advance: $269,350 on January 1, 2015
o Third Advance: $385,350 on January 1, 2016
o Fourth Advance: $385,350 on January 1, 2017
o Repayment: $25,000 annual payments beginning on January 1, 2020 through January 1, 2030; then increasing to $50,000 from January 1, 2031 through January 1, 2035; then increasing to $100,000 from January 1, 2036 to January 1, 2039, and with a final payment of the balance of principal and interest due on January 1, 2040.
o Payments will remain in the revolving fund for future MHA projects, as available, and upon qualifying and as approved by the City Council
o Loan will contain a savings provision whereby City and Developer will share savings below an agreed GMP.
· The original request also included an anticipated Federal Home Loan Bank (FHLB) grant of $250,000 that was not received. These costs were absorbed into the project.
· The MHA's annual payment-in-lieu of taxes to the City will also be waived during the term of the loan.
· Project Sources and Uses as of 7/29/14 are attached.
FINANCIAL SUMMARY:
BOARD OR COMMISSION RECOMMENDATION: N/A