Title
Rental Construction Program- $200,000 Due on Sale Loan to Gardenia Gardens, Inc. (B)
This item involves a request for the City Commission to approve a $200,000 due on sale loan to Gardenia Gardens, Inc. to rehabilitate an affordable housing rental project, Gardenia Gardens Apartments to provide decent, safe and affordable rental housing for income eligible tenant households.
Explanation
Gardenia Gardens, Inc. (GGI) is a non-profit 501(C) (3) corporation whose primary activity is the ownership and management of Gardenia Gardens Apartments, a 100-unit affordable housing apartment complex located at 1727 NE 8th Avenue in the Duval Area neighborhood. The apartment complex is a HUD tenant based Section 8 facility and was built around 1968. The property contains 36 (2-bedroom/1 bath) and 64 (3-bedroom/1 bath) dwelling units. In efforts to leverage the rental project and meet certain project thresholds required by the Florida Housing Finance Corporation State HOME Program, GGI is seeking funds from the City to be used toward the local match for the rental project. GGI is proposing to invest $5,424,412 to cover the hard and soft cost associated with renovating the apartment complex. GGI is applying for $4,024,412 State HOME funding from the State of Florida; and has been approved for a $1,200,000 private loan by Mercantile Bank. The City's $200,000 due on sale loan will assist in leveraging the funding gap for the rental project.
In March 2009, GGI submitted an application to apply for Rental Construction Program funds. The application process is competitive and open to interested applicants. Applicants may submit applications for funding consideration at any time for assistance based on funding availability. To date, GGI is the only rental housing application received requesting funding through the City's Rental Construction Program. After reviewing the preliminary project documentation submitted by GGI, staff has determined that the project is eligible to receive local match funding from the City. The City's Rental Construction Program guidelines allow SHIP Program funding up to $100,000 per project; and HOME Program funding up to $8,500/unit (2-bedroom) and $9,500/unit (3-bedroom). The applicant is required to provide a 50% match or greater for the rental project. The match may include sources such as other state/federal public funding, private funding and owner contributions. All match funding requirements are being met for this project. Attached for reference is a copy of the proposed loan commitment and the HOME and SHIP funding breakdown for the project.
A component of the City Commission's Strategic Initiatives is to improve the quality of life in our "neighborhoods" for the benefit of all residents; and to increase the amount of affordable and low cost housing in the City. Overall, the City's participation in this project will create a public/private partnership that will preserve affordable housing, provide affordable housing opportunities for City residents and assist the City in meeting its goal to accomplish this initiative.
Fiscal Note
Funds in the amount of $200,000 for this project are available in the Housing & Community Development, SHIP and HOME Rental Construction Program FY09 budget to fund this project.
Recommendation
The City Commission: 1) approve a $200,000 due on sale loan to Gardenia Gardens, Inc.; 2) authorize the City Manager or his designee to execute and submit a $200,000 loan commitment to Gardenia Gardens, Inc., subject to the approval by the City Attorney; 3) authorize the City Manager or his designee to execute the appropriate State HOME Application forms related to the Gardenia Gardens, Inc. rental project, subject to the approval by the City Attorney; and 4) authorize the City Manager or designee to utilize the standard Rental Construction Program documents, State HOME program documents and other applicable documents necessary to consummate the funding award to Gardenia Gardens, Inc., subject to approval by the City Attorney.