The URL can be used to link to this page

Home My WebLink About _ 4.2(b)--Loan Conversion for Housing and Community Development � � �' � � � � � � ' � �' � � ' � ` CITY OF REDDING REPORT TO THE CITY COUNCIL MEETING DATE: July 16, 2024 FROM: Steve Bade, Assistant City ITElVI NO. 4.2(b) Manager ***APPROVED BY*** n � t�� ; s' �r �r`1»I�C�?4 rS' �P�it�,C�i ��t t� 7i'9��'2{}? sbade@cityofredding.org btippin@cityofredding.org SUBJECT: 4.2(b)--Housing and Community Development Loan Conversion Recommendation Authorize and approve the following: (1) Conversion of the internal short-term loan between the City of Redding Housing and Community Development Division and Water, Wastewater, Redding Electric and Solid Waste LJtilities to a long-term loan in the amount of$2,000,693.48 with a five-year term and annual payments; (2) Autharize the City Manager to sign the new Internal Loan Promissory Note and any other documents necessary for the loan conversion; (3) Find that a loan is not considered a project under the California Environmental Quality Act (CEQA). The actual construction of the project was previously reviewed for CEQA compliance; and (4) Find that a loan is exempt under the National Environmental Policy Act under Title 24 CFR 58.34(a)(3). Fiscal Impact The long-term internal loan will not have a fiscal impact to the Water, Wastewater, Redding Electric and/or Solid Waste Utilities as interest paid will equal to the pooled-cash rate for the funds, presently a two-percent return, and wi11 be compounded on a monthly basis. The long- term note is five-years with annual payments. The current balance of the loan is $2,000,693.48. The Housing Division will utilize Successor Housing Agency or Affordable Housing Loan Funds to repay the loan. Using either of these funds wi11 not impact other projects or activities. Alte�^native Action City Council (Council) may decline to approve the long-term internal loan as proposed and provide alternative direction to staff. Report to Redding City Council Ju1y 11,2024 Re: 4.2(b)--Loan Conversion for Housing and Community Development Page 2 Background/Analysis On April 21, 2020, Council approved a short-term internal loan that funded the temporary cash flow demands of the Housing Division for the Block 7 Project (Project). The funds were borrowed from the Water, Wastewater, Electric, and Solid Waste Utilities and made available to the Housing Division to frontload project payments while the reimbursement request was being process by the California Department of Housing and Community Development Affordable Housing and Sustainable Communities Program grant. The Project, now known as California Place Apartments, has 79 total units, with 78 income gualifying units and one manager's unit. California Place is fully leased with a 55-year affordability covenant on the property. At the conclusion of construction, forecasted grant funds and revolving loan funds fell short of the obligated $7,862,000 pledged to the project. Therefore, a portion of the $4 million short-term loan was utilized to cover the project shortfall. With this in mind, the Housing Division is requesting that the current short-term loan be converted to a long- term note in the amount of$2,000,693.48 with a five-year loan repayment term. Generally accepted Account Principles (GAAP) require receivables that are not available within 12 months to be classified as long-term. For internal loans this classification is Advances Receivable/Payable. In order to stay in compliance with GAAP, Finance has reclassed this loan from Interfund Receivable/Payable (short-term) to Advances to/from other funds (long-term) for fiscal year ending June 30, 2024. Envi�^onmental IZeview Refinancing a loan is not considered a project under the California Environmental Quality Act (CEQA). The actual construction of the project was previously reviewed for CEQA compliance. Under the National Environmental Policy Act (NEPA), administrative and management activities such refinancing a loan is considered an exempt activity and no further action is required. The actual construction project was reviewed for NEPA requirements before the project started. Council Prio�ity/City ManageN Goals • This agenda item is a routine operational item. Attachments 04212020 Staff Report 4.10(a) Internal Loan ��n� ; � �� " CITY OF REDDING � �� , � REPORT TO THE CITY COUNCIL MEETING DATE: Apri121,2020 FROM: Allyn Feci Van Hooser, ITEIVI NO. 4.10(a) Director of Finance/City Treasurer ***APPROVED BY*** �� A ��,, �,�� ,,, � �a � ,�tt � s t 0�`�rs ��n�r e �r ufFinaa t"�y'!`��us�r� � -�;l4'�'(��t?� �� S� i��'?tC1.��t� �� S�" � [�.l��f.��)�� avanhooser@cityofredding.org btippin@cityofredding.org SUBJECT: 4.10(a)--Authorization for Internal Temporary Loans Recommendation Authorize the internal laan of funds from the cash balances of Water, Wastewater, Redding Electric Utility (REU), and Solid Waste Utilities to accom�modate cash flow needs of the Block 7 Downtown project, during construction, for a not to exceed amount of$4,000,000; and authorize the City Manager to execute the agreement. Fiscal Impact The internal loan will not have a fiscal impact other than the projected interest paid to the funds loaning cash balances to the projects. Because the interest rate is the pooled-cash rate which is currently two-percent adjusted monthly, as noted in the February 2020 Treasurer's Report (Item 4(c)), and the loans are short-term in nature, impact will be minimal to the project. Alternative Action The City Council (Council) may decline tio approve the internal loan, thereby impacting the ability of the project to meet cash flow demands, or provide alternative direction to staff, Backg�ound/Analysis Funding for the Downtown Block 7 project is primarily from grants with a matching requirement. Grants are expenditure driven in that the project costs will need to be paid up front with reimbursement from the grants coming later. There are phases of the project where cash flow demand exceeds availability of funds until grant reimbursement occurs. The internal loan funds are intended to accommodate this temporary cash flow demand, To keep costs down for the project, an internal loan makes sense for economic and efficiency reasons. This process charges interest at the pooled-cash rate which is often a lower rate than that of an outside commercial loan.. Report to Redding City Council Apri114,2020 Re: 4.10(a)--Authorize Internal Temporary Loan Page 2 During the past two years, the Council has deliberated numerous times on the B1ock 7 project, most recently on September 30, 2019, when Council approved the Development Agreement (item 9.4(c)). The loan wi11 be made to the IHousing Community Development Fund from the Water, Wastewater, Electric, and Solid Waste Utilites based on their audited cash balances at June 30, 2019. The allocation is as stated below: Electric Utility Fund 56 % Water Utility Fund 22 % Wastewater Utility Fund 15 % Solid Waste Utility Fund 7 % The loan is short-term in nature. The period during which funds have been expended on the project and reimbursement is pending from the granting agency will be the duration when the funding is needed. As this is anticipated to occur many times during the project, the loan will be utilized throughout the construction term of the project. The Water, Wastewater, Solid Waste, and Electric funds making the loans will earn interest in accordance with outstanding loan balances calculated monthly at the pooled-cash rate adjusted monthly. Council Prior�ity/City ManageN Goals • Budget and Financial Management — "Achieve balance and stable Ten Year Financial Plans for all funds." • Communication and TNansparency — "Improve the quality of communication with the public and City employees to enhance knowledge and increase transparency to improve public trust." • GoveNnment of the 21St Centul^y — `Be relevant and proactive to the opportunities and challenges of today's residents and workforce. Anticipate the future to make better decisions today." • Economic Development— "Facilitate and become a catalyst for economic development in Redding to create jobs, retain current businesses and attract new ones, and encourage investment in the community." Attachments Unsecured Promissory Note