Title
Authorization to Amend Contract between City of Phoenix and Central and Fillmore Associates, LP (Ordinance S-47048)
Description
Request authorization for the City Manager, or his designee, to amend the Affordable Housing Loan Agreement #105833 (Loan Agreement) between the City of Phoenix (City) and Central and Fillmore Associates, LP, an Arizona limited partnership, (Owner) to extend the term of the City Loan by up to five years for the Westward Ho Apartments. Authorization is also requested for the City Manager, or his designee, to execute all necessary documents. There is no impact to the General Fund.
Report
Summary
The Loan Agreement, in the original amount of $1,400,000 of taxable General Obligation Bond funds, was executed on April 1, 2003 to assist with the development of the 289-unit Westward Ho Apartments located at 618 N. Central Ave. The Westward Ho Apartments provides affordable housing to seniors and persons with mobility impairments. The Loan Agreement was last modified in 2015 to facilitate a transfer of ownership of the property. The Loan Agreement currently secures 65 City Affordable units serving households whose income does not exceed 50 percent of the Area Median Income. The Loan Agreement is currently in a subordinate position to a U.S. Department of Housing and Urban Development (HUD) insured 221(d)(4) Primary Mortgage.
The Owner desires to refinance the Primary Mortgage with a new HUD insured 221(d)(4) loan with a lower interest rate. A requirement for this financing is that all subordinate debt have a term which coincides with the Primary Mortgage. The Owner has requested that the City amend the term of its Loan Agreement by up to five years to facilitate this transaction. All other conditions of the City’s Loan Agreement will remain the same and no additional City funds are being requested.
The proposed refinance will lower the Primary Mortgage debt obligation on the property. As a result, the transaction is expected to increase payments made to the City Loan which is paid from surplus cash from the operation of the property. The equity position of the property will remain the same as 221(d)(4) loans do not allow cash out.
Financial Impact
There is no impact to the General Fund.
Location
618 N. Central Ave.
Council District: 7
Department
Responsible Department
This item is submitted by Deputy City Manager Inger Erickson and the Housing Department.