HomeMy WebLinkAboutAgenda Report - November 15, 1995 (37)Opt+ OF
CITY OF LODI COUNCIL COMMUNICATION
AGENDA TITLE: Approval ofCommunity Development Block Grant (CDBG) and HOME (federal
funds) loan to Dan Logue Development, Inc. for the construction of the Hotel
Lodi Rehabilitation project.
MEETING DATE: November 15, 1995
PREPARED BY: Community Development Director
RECONEVIENDED ACTION: Staff is recommending that the City. Council approve a loan in the amount
of $1,084,000 for the Hotel Lodi Rehabilitation project. The. loaned
funds will come from the City's Federal allocations of HOME and CDBG
funds.
BACKGROUND INFORMATION: The City Council approved a Use Permit by motion action on
June 7, 1995 to allow Dan Logue Development, Inc. to convert
the Hotel Lodi into senior apartments. Since that time, Dan Logue
Development, Inc. has acquired the property and is proceeding with their plans to rehabilitate the
structure into 75 units of senior apartments. As proposed, there will be 50 studio or efficiency units
renting for $323, and 25 one bedroom units renting for $343.
The total cost of the project is $4,837,920 and is broken down as follows: Federal and State proceeds
(tax credits), $2,483,221; permanent loan, $1,131,079; and City of Lodi loan, $1,084,000. An approved
loan from the City is a required component of the California Tax Credit Allocation Committee application
that Dan Logue Development, Inc. will submit prior to December 11, 1995 (See attachments).
FUNDING: Federal Funds; Community Development Block Grant (CDBG) and HOME.
r
Jam s B. Schroe er
munity Development Director
JB S/lw
AFPRCVED.
H. DIXON FLYNN I „�,c,ec,,,,,
City Manager
CC9534.DOC cc -1
Sources of Citv of Lodi Loan
The City of Lodi loan is one component of the Hotel Lodi project. The amount of the
loan is $1,084,000. Several Federal sources are being utilized; among them CDBG funds,
HOME funds, and other funds borrowed from San Joaquin County. The "Lodi Lake
Playground Remodel" and "Eastside Sanitary Sewer and Water Upgrades" projects were
approved this year. The Council is being asked to reallocate funds from these accounts to
the Hotel which means delaying the projects for one year. Individual fund amounts and
sources are listed below:
1) Community Development Block Grant (CDBG) funds:
Account #
Proiect or account
Amount
$207,822
name
$192,013
45.6-350.80
Hotel Lodi
$149,900
$174,669
Rehabilitation
45.1-760.65
Lodi Lake Playground
$105,650
Remodel
45.1-503.14
Eastside Sanitary
$50,000
Sewer and Water
Upgrades
not known
borrowed from
$68,000
available S.J. Co.
.................................................................................................................................
sources
2) HOME funds:
Source
City of Lodi allocation
City of Lodi allocation
City of Lodi allocation
City of Lodi allocation
Fiscal year allocation
Amount
1995-96
$207,822
1994-95
$192,013
1993-94
$115,510
1992-93
$174,669
EWV 11/07/95 CAWINW0RD1956CDBGUi0TL0AN.D0C
Loan Terms
The Federal funds will be loaned at the following terms. The Community Development
Block Grant funds will be loaned at 3%. HOME funds will be loaned at 6.5%, a rate tied
to Federal treasury notes.
Subordination
The City of Lodi will be in second position behind the long term lender for repayment of
the loan. It is necessary for the City to forgo repayment for up to 15 years following
completion of the project in order to insure that there is enough money to repay the hard
money lender.
Matching Requirement
The Federal government requires jurisdictions to provide a match of not less than 25% of
the total amount of HOME funds. For the proposed project, the permanent loan will
satisfy the matching requirement.
EWV 11/07/95 C:\WINWORD\956CDBG\HOTREGU.DOC
"IF4
October 20, 1995
DANIELS C. LOGUE
DEVELOPMENT & CONSTRUCTION, INC.
Jim Schroeder
Community Development Director
City of Lodi
P.O. Box 3006
Lodi, CA 95241
Dear Mr. Schroder,
LIC. NO. 675524
The purpose of this letter is to request a $1,154.000 loan from the City of Lodi for the purchase
and rehabilitation of the Lodi Hotel into a Seniors only residential community.
For your review, we have enclosed:
1. Development Budget
2. Uses and Sources of Funds
3. Income/Expenses, Projections - Cash Flow Analysis years 1-30
4. Current commercial rent roll
5. Updated development time table.
The issues we need to address are:
1. City of Lodi's loan documents
2. City of Lodi's Regulatory Agreement
3. City of Lodi's loan must be approved by the City Council by November, 1995 in order
to meet the tax credit deadline.
4. Review the Current Commercial Income
This income could not be filly recognized in the pro -forma due to the conventional
lender's guidelines that deeply discounts the commercial income as well as the California
Tax Credit Allocation Committee's policies. However, once we are in operation, if the
commercial income is actually realized, we certainly could utilize this income to further
reduce the rents.
1001 SIXTH STREET • SUITE 200 9 SACRAMENTO, CA 95814 . PHONE 916-446-4040 • FAX 916-446-4044
Jim Schroder
Page 2
We feel the CTCAC's application is very competitive; we have maximized both cost containment
and rent affordability criteria. Even though a very strong competition is anticipated for this tax
credit cycle, we believe we should do extremely welt
It seems, after years of working on this project, we finally have a package that is both workable
and viable. I believe you will find that it addresses both the community's as well as the city's
concerns and objectives.
Pm looking forward. to our meeting Wednesday, October 25, at 10:30.
Tax Credit Calculation for Federal and State Credits: Lodi Hotel
Qualified Basis (Zi 100% $3.947,260
ENTER THE APPLICABLE FEDERAL CREDIT FACTOR—>—> 8.650%
Equals 5341.138
TIMES 10 YEARS `C 10 years 10
Maximum Federal Credit S3.111.380
ENTER THE EXPECTED SYNDICATION FACTOR >---> 54.00000%_
Estimated Net Proceeds from Syndication of Federal Credits S1,843,765
Qualified Basis (a 100%
S3,947,260
ENTER THE APPLICABLE STATE CREDIT FACTOR >—>
30.0%
Maximum State Credit
S1,184,178
_ ENTER THE EXPECTED SYNDICATION FACTOR—>—>
54.00000%
Estimated Net Proceeds from Syndication on state credits
5639,456
Sources
Total Federal & State Proceeds
S2,483,221
—> SOURCE 1 Perm. Loan
51,131,079
—> SOURCE 2 City (2nd Mortgage)
$1,084,01
—> SOURCE 3 Deferred Developer Fee
$138,8
_> SOURCE 4 Deferred Prost & OH
SO
----> SOURCE 5 Deferred Equity
SO
LESS TOTAL PROJECT COSTS (PAGE 14)
1,837,920
NET PROJECTED EXCESS/(SHORTFALL)
0
Unit Type Units 221 (d)(3) Limits Calculation
Studio 50 1 66.906 1 3.345.300
IBR 25 1 76.894 1 1.922.350
5,2 ,630 Max Ttl Basis
0.80 Multiplier
4,214,120 Maximum Basis
3.941.260 Current Basis
(2�i m.860) Difference
PART VIII - PROJECT COSTS, OPERATING E<)TENSES & INCOME (USES OF FUNDS)
Wdi Haat 13-01t-95
A. Project Costs
State estimated or actual costs in the fust column. All estimated or actual costs includable in eligible basis are to be
repeated in the eligible basis column. Be sure all residential project costs are reflected below. All commercial space
costs should be on the separate line provided on page 14.
Land Cost
Legal/Broker Fees
Off-site Improvements
Demolition
Total Land Costs
Total Acquisition Costs .
Site Work
Structures
Contractor Overhead
Contractor Profit
Total New Construction Costs
Site Work
Structures
Contractor Overhead
Contractor Profit
Total Rehabilitation Costs
Design
Supervision
Total Architectural Costs
Total Survey and Engineering Costs
Construction Loan Interest
Bridge Loan Expense / Inspections - Lender
Origination Fee
Credit Enhancement And Application Fee
Bond Premium
Taxes
Insurance
Title And Recording
Total Construction Interest And Fees Costs
Loan Origination Fee
Credit Enhancement & Application Fee
Title and Recording
Other h4isc.
Total Permanent Financing Costs
Actual or Est.
Project Costs
$775.000
$0
$0
$0
$775,000
s0
$0
$0
s0
s0
s0
$0
$2.7 94.000
$0
$0
52,794,000
$0
$95.000
595,000
527,000
$63,000
s0
$30.000
$0
$0
$17.800
$15.000
$16.000
5141,800
$26.000
$0
s0
s0
$26.000
" The lesser amount of the purchase price or appraised value.
$0
$0
$0
$2,794.000
$0
$0
52,794,000
$0
$95,000
$95,000
$27,000
$63,000
190
$30,000
$0
$o
$17,800
$15,000
$16,000
$141,800
SO
so
30% PVC Rate
Eligible Basis
Effective January 20, 1995 Page 13
A. Project Costs (Continued) LoWM.I I9.Ottr95
Actual or Est.
Project Costs
Legal Fees
Lender Legal Costs Paid by Applicant $0
Other (Specify) Borrower Legal $10.000
Total Attorney Costs 510,000
(NOT TO INCLUDE REAL ESTATE OR SYNDICATION)
Total Appraisal Costs
Reserves
Rent Reserves
Other (Specify) Oper. Reserves
Total Rent Reserve Costs
Total Construction Contingency Costs
Other
TCAC App./Alloc./Monitoring fees
Environmental Audit
Local Permit Fees
Marketing
Utilities
Furmshings/Security
Other (specify) Const. Audit
Other (specify) Market Study
Total Other Costs
Sub -Total Residential Costs
Developer Costs
Developer Overhead/Profit
ConsuitantlProcessing Agent Fees
Project Administration
Other (specify)
Total Developer Fee "
Total Residential Costs
Total Commercial Space Costs
TOTAL PROJECT AND BASIS COSTS
58.500
$40.000
$0
540,000
5145,000
$41.660
$9,000
$25.000
$8,000
$12.000
$157,100
$5,000
$3.000
5260,760
54,323,060
$456,860
$40,000
$18,000
$0
$514,860
$4,837,920
$0
$4,837,920
70% PVC Rate
Eligible Basis
$0
$10.000
S10,000
$8,500
KXX=
5145,000
C=
$9.000
$25.000
$12,000
$157,100
$5,000
$3,000
5211,100
53,432,400
$456,860
$40,000
$18.000
$0
5514,860
$3,947,260
53,947,260
SYNDICATION EXPENSES ARE NOT TO BE INCLUDED IN THE TOTAL PROJECT COSTS
30% PVC Rate
Eligible Basis
'There is a limit on the amount of total developer fee allowed in project cost. The fees for new construction and
rehabilitation cannot exceed 15 % of eligible basis, the fee for acquisition cannot exceed 5% of the acquisition basis,
for a maximum total fee of $1.2 million. The acquisition fee for projects applying in the Acquisition/Rehabilitation
targeted category cannot exceed 5% of the acquisition basis, up to a maximum fee of $50,000 (in addition to the
rehabilitation developer fee). The basis for the fee may include costs financed with grant proceeds or below-market
federal funds. The fee limit is calculated before the addition of the fee and any High Cost Area Adjustment.
The developer fee includes compensation for any construction management oversight provided by the developer, the
value of any personal guarantees (but not real costs actually incurred) required by lenders or investors and a portion of
any reserves determined to be in excess of industry norms.
Effective January 20, 1995 Page 14
Development Name: -odi Hotel De. ..)pment Type Seniors
Total Number of Units: 75
RENTAL INCOME
Monthly No. of Annual
Rent Units Increase
Year -1
Year -2
Year -3
Studio (46% of Median)
323 50 3.00%
193.800
199.623
205,622
IBR 46% of Median)
346 25 3.00%
103.800
106.919
110,132
Other Income 3 (other)
3.00%
0
0
0
TOTAL OTHER INCOME
3.0011/6
1
0
0
0
TOTAL RENTAL INCOME
751
297,600
306,543
315.754
OTHER INCOME
Income Units Increase
Year -1
Year -2
Year -3
Other Income 1 laundry & vending)
5 75 1.00%
3.600
3.636
3.672
Other Income 2 (commercial)
0 0 0.00%
10,200
10.200
10,200
Other Income 3 (other)
0 0 0.00%
0
0
0
TOTAL OTHER INCOME
1 1
13.800 1
13.836 1
13.872
TOTAL INCOME
Per Unit %AGI
311.400
320.379
329.626
Less Vacancv Allowance & Rent Loss
5.00% 15,570
16,349
17.166
GROSS INCOME
16,847
295,830
304,030
312,460
OPERATING EXPENSES
Per Unit %AGI
Incr/vr
Year- I
Year -2
Year -3
Management Fees
5.00010
4.00%
16.200
16,847
17.520
Administration
3.26%
4.00%
9,650
10.036
10.436
Pavroll
16.12%
4.00%
47,680
49,585
51.566
Maintenance
3.43%
4.00%
10,140
10.545
10,966
Utilities
15.36%
4.00%
45.450
47,266
49,154
Insurance
3.89%
4.00%
11.500
11,959
12.437
Provertv Taxes
0.00%
2.00%
18.200 1
18.564
18.935
TOTAL OPER EXPENSES
2,318
158,820
164,802
171.015
NET OPERATING INCOME
137.010
139.228
141.445
Perm. 30 vrs ( 8.25%
1,131,079
1.20 101,969
101.969
101.969
0
0
0
0
0
0
ANNUAL CASH FLOW
20.041
L 26,009
1 28.226
10/18/95 ms C:\..ILODI HTL.W
Year -4
Year -5
Year -6
Year -7
Year -8
Year -9
Year -10
Year -11
Year -12
211,801
218.165
224.721
231.473
238.429
245,593
252.973
260,575
268.405
113.441
116.850
120,361
123,978
127,703
131,541
135,493
139,565
143,759
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
325.242
335.015
345,082
355.451
366.132
377,134
388.467
400,140
412164
Year4
Year -5
Year -6
Year -7
Year -8
Year -9
Year -10
Year -11
Year -12
3.709
3.746
3,784
3.821
3.860
3.898
3.937
3.977
4.016
10,200
10,200
10,200
10,200
10200
10.200
10.200
10.200
10,200
0
0
0
0
0
0
0
0
0
13.909 1
13.946 1
13,984 1
14.021 1
14.060 1
14.098
14.137 114.177
15,002
14.216
339.151
348.961
359.066
369.473
380,192
391.233
402,604
414.316
426.380
18.024
18.925
19,872
20.865
21,909
23.004
24.154
25.362
26,630
321.127
330.036
339.194
348.608
358.283
368.229
378.450
388.955
399.750
Year -1
Year -5
Year -6
Year -7
Year -8
Year -9
Year -10
Year -11
Year -12
18.220
18.948
19,705
20.492
21,311
22,162
23,048
23.968
24.926
10,853
11,287
11,738
12,207
12,694
13.202
13,729
14.277
14,848
53.626
55,768
57,996
60,313
62.723
65,228
67.834
70,544
73,362
11.404
11,860
12,334
12,827
13.339
13,872
14,426
15,002
15,602
51,118
53.160
55,284
57,492
59,789
62.178
64.662
67,245
69,931
12,934
13,451
13,988
14,547
15.128
15,732
16.361
17,015
17,694
19,314
19.700
20,094
20.496
20.906 1
21.324 1
21,751
22,186 1
22,629
177.470
184.174
191,139
198.374
205,890
213,698 1
221.810
230,238
238.993
143,657
145.862
148,055
150,234
152,393
1541530
L 156.640 1
158.717
160,757
101.969
101,969
101.969
101.969
101.969
101.969
101.969
101,969
101.969
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
30.438
32,643 1
34,836
1 37,015 1
39,174 1
41,311 1
43,421 1
45,498
47.538
10/18/95 ms C:\..\LODI_HTL.W
Year -13
Year -14
Year -15
Year -16
Year -17
Year -18
Year -19
Year -20
Year -21
276,•170
284,778
293.335
302,150
311,229
320,581
330.214
340.137
350.358
148.078
152,528
157,111
161,832
166,695
171,704
176,864
182.179
187.653
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
424,549
437.306
450.447
463.982
477,924
492,285
507,078
522.315
538.010
Year -13
Year -14
Year -15
Year -16
Year -17
Year -18
Year -19
Year -20
Year -21
4,057
4,097
4,138
4,179
4.221
4.263
4,306
4,349
4,393
10,200
10,200
10,200
10,200
10,200
10,200
10,200
10,200
10,200
0
0
0
0
0
0
0
0
0
14.257 f
14.297 1
14.338 1
14.379 1
14.421 1
14.463 1
14;5016 1
14,549
14.593
Year -13
Year -14
Year -15
Year -16
Year -17
Year -18
Year -19
Year -20
Year -21
25.922
26,957
28,034
29,154
30,319
31,530
32,790
34.100
35.462
15,441
16,058
16,699
17,367
18,060
18.782
19,532
20.313
21,124
76293
79,341
82.511
85,807
89.235
92.800
96,507
100,363
104,372
16.225
16.873
17,547
18,248
18,977
19,736
20,524
21.344
22.197
72,725
75,630
78,652
81,794
85.062
88.460
91.994
95.669
99,491
18,401
19,136
19,901
20,696
21,523
22,383
23.277
24,207
25,174
23,082
23,544
24,015
24.495
24,985
25.484
25.994
26.514 1
27.044
248,089
257,540
267,359
277.561
288.161
299,174
310.618
322.509
334,864
162,755
164,704
166,598
168,432
170.197
171,888
173.495
175,011
176,427
101,969
101.969
101.969
101,969
101.969
101,969
101,969
101,969
101,969
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
49,536
51,485
53,379
55,213 1
56.978
58,669
60.276
61,792
63,208
10/18/95 ms C:1..1LOD1 HTL.W
18 -Oct -95
RLM-1
Year -22
Year -23
Year -24
Year -25
Year -26
Year -27
Year -28
Year -29
Year -30
360,885
371.730
382,900
394,406
406,257
418.465
431.039
443,991
457,333
193,292
199,100
205,083
211,245
217,593
224,131
230,866
237,803
244,949
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
554,177
570,829
587,982
605,651
623,850
642,596
661.905
681.795
702,282
Year -22
Year -23
Year -24
Year -25
Year -26
Year -27
Year -28
Year -29
Year -30
4,437
4,-181
4,526
4,571
4,617
4,663
4,710
4,757
4.804
10,200
10,200
10,200
10,200
10,200
10,200
10,200
10.200
10.200
0
0
0
0
0
0
0
0
0
14,637
14,681
14,726
14.771
14,817
14,863
14,910
14.957
15.00ijI
568,814
585.510
602,708
620.422
638,667
657,459
676,815
696,751
717,286
43,377
45.546
47,824
50,215
52,726
55,362
58,130
61,036
64,088
525,436
539.964
554,884
570,207
585,941
602.097
618.685
635,715
653,198
Year -22
Year -23
Year -24
Year -25
Year -26
Year -27
Year -28
Year -29
Year -30
36,879
38,352
39,884
41,478
43,135
44,858
46,650
48.514
50.452
21,968
22,846
23.758
24,707
25,694
26,721
27.788
28.899
30,053
108.542
112.878
117.388
122,077
126.954
132.026
137.301
142.786
148,490
23,083
24.006
24,965
25,962
26,999
28,078
29,199
30.366
31,579
103,465
107,599
111,898
116,368
121,017
125,851
130,879
136.108
141,545
26,179
27,225
28,313
29,444
30,620
31.844
33,116
34,439
35,815
27,585
28,137 1
28,700 f
29,274 1
29,859 1
30,456 1
31,065 1
31.687 1
32,320
347,702
361,043
374,905
389,310
404,279
419,834
435,999
452.797
470,254
177,734
178,922
179,980
180,897
181,662
182.263
182,686
182,918
182.944
101,969
101,969
101,969
101.969
101,969
101.969
101,969
101,969
101,969
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
64,515
65,703
1 66,761
67,678
68,443
69,044
69,467
69,699
69,725
10/18/95 ms C:1..1LO01 HTL. W
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DANIELS C. LOGUE
DEVELOPMENT & CONSTRUCTION, INC.
LIC. NO. 675524
Tuesday, October 10, 1995
Development Time Table
Lodi Hotel
November 1995: City of Lodi Council Loan Approval
December 11, 1995: Submit CTCAC Application
Dec. 1995 to Jan. -Feb. 1996: Prepare Loan Documents For City of Lodi
March 15 1996: Close Escrow on the Property Disburse City of Lodi Loan
March -Sept. 1996: Prepare Working Drawing. Plan Check & Building Permit.
Oct. -Nov. 1996: Construction Preparation Bid Period
Dec. 1996: Begin Removal of Hazardous Materials
Jan. 1997: Construction Begins
March 1998: Construction Completion
April 1998: Occupancy Begins
4212 N. FREEWAY BLVD. - SUITE 4 - SACRAMENTO, CA 95834 - PHONE 916-648-1808 - FAX 996-648-1308
RESOLUTION NO. 95-148
A RESOLUTION OF THE LODI CITY COUNCIL
COMMITTING HOME AND CDBG FUNDS TO LODI HOTEL INVESTORS,
A CALIFORNIA LIMITED PARTNERSHIP FOR THE PURPOSE
OF THE DEVELOPMENT OF SENIOR HOUSING
WHEREAS, the City wishes to promote the development of affordable rental
housing to seniors in the community; and
WHEREAS, the Lodi Hotel, an historic building located in the core of the City's
downtown area is in need of rehabilitation; and
WHEREAS, the rehabilitation of the Lodi Hotel can possibly contribute
significantly to the revitalization of the downtown area; and
WHEREAS, Lodi Hotel Investors, a California Limited Partnership is committed to
preserve and restore the exterior of the Lodi Hotel structure to its original form; and
WHEREAS, the City believes that it is in the best interest of the citizens of the City
of Lodi to create decent, safe, sanitary and affordable housing for seniors in the
community.
NOW, THEREFORE, BE IT HEREBY RESOLVED that the City Council of the
City of Lodi commits to loan to Lodi Hotel Investors, a California Limited Partnership
CDBG and Home funds in a total amount of $1,084,000 contingent upon but not limited to
the following:
1. Receipt by Lodi Hotel Investors of a tax credit allocation applicable to this
project from the California Tax Credit Allocation Committee;
2. An interest rate of 3% percent on the CDBG loan amount of $373,550 and a
loan interest rate of 6.5% on the Home allocation amount of $710,100;
3. Housing units to be made available to seniors 55 years of age and older;
4. A screening process to be utilized for those who seek tenancy that is
designed to identify significant health issues;
5. The development of a regulatory agreement and loan documents which
when approved by the City provide for a default process which will assure
the City that the units will remain available for senior housing.
BE IT FURTHER RESOLVED, that the Mayor or the City Manager are authorized
to sign the necessary documents in order to complete this loan transaction on behalf of the
City of Lodi.
Dated: November 15, 1995
I hereby certify that Resolution No. 95-148 was passed and adopted by the City
Council of the City of Lodi in a regular meeting held November 15, 1995, by the following
vote:
AYES: COUNCIL MEMBERS - Davenport, Sieglock, Warner
and Mann (Mayor)
NOES: COUNCIL MEMBERS - None
ABSENT: COUNCIL MEMBERS - Pennino
ABSTAIN: COUNCIL MEMBERS - None
FE M. PERRIN
ity Cl
95-148