TO: ADAM PIRRIE, CITY MANAGER
FROM: JAMIE EARL, ASSISTANT CITY MANAGER
DATE: FEBRUARY 13, 2024
Reviewed by:
City Manager: AP
SUBJECT:
Title
AUTHORIZATION TO EXECUTE AN AMENDED INTERCREDITOR AND SUBORDINATION AGREEMENT BETWEEN THE CITY OF CLAREMONT, RESTORE NEIGHBORHOODS, LA, INC. (RNLA), AND OTHER FUNDING AGENCIES OF THE 956 BASE LINE ROAD AFFORDABLE AND PERMANENT SUPPORTIVE HOUSING DEVELOPMENT (FUNDING SOURCE: SUCCESSOR HOUSING FUND)
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SUMMARY
On July 28, 2020, the City Council adopted a Resolution approving an Affordable Housing Agreement between the City of Claremont and Restore Neighborhoods, LA, Inc. (RNLA), for an affordable and permanent supportive housing development (Project) located at 956 Base Line Road. The City Council also appropriated $1.75 million from the Successor Housing Fund to fund the City of Claremont’s contribution to the development of the Project, which is in the form of a forgivable loan.
Since the City Council’s approval, additional funding agencies have committed to the Project with varying amounts of support. Due to these changes, the Subordination and Intercreditor Agreement, which was an original attachment to the Affordable Housing Agreement, must be revised. Since the City Council originally approved the Affordable Housing Agreement, which included the original version of the attachment, staff recommends that the City Council authorize the City Manager to execute an amended Intercreditor and Subordination Agreement between the City of Claremont, RNLA, and other funding agencies.
RECOMMENDATION
Recommended Action
Staff recommends the City Council authorize the City Manager to execute an amended Intercreditor and Subordination Agreement between the City of Claremont, RNLA, and other funding agencies of the 956 Base Line Road affordable and permanent supportive housing development.
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ALTERNATIVE TO RECOMMENDATION
In addition to the recommendation, there is:
• Request additional information from staff.
FINANCIAL REVIEW
On July 28, 2020, the City Council appropriated $1.75 million from the Successor Housing Fund to fund the City’s contribution to the development of the affordable and permanent supportive housing development at 956 Base Line Road. There are no additional financial impacts related to the execution of an amended Intercreditor and Subordination Agreement.
The staff cost to prepare this report and oversee this project is estimated at $8,916 and is included in the operating budget of the Administrative Services Department.
ANALYSIS
In July 2020, the City Council adopted a Resolution approving an Affordable Housing Agreement between the City and RNLA, the developer of a proposed 15-unit affordable and permanent supportive housing development for seniors at 956 Base Line Road. The City Council also appropriated $1.75 million from the Successor Housing Fund to fund the City’s contribution to the project, which is in the form of a forgivable loan. The Agreement consisted of several attachments relating to the City’s forgivable loan, one of which was an Intercreditor and Subordination Agreement.
At the time, financing for the project was to consist of public subsidies from the City of Claremont and the County of Los Angeles, as well as other funding from Tri-City Mental Health and Genesis LA Economic Growth Corporation (Genesis LA). Since that time, funding agencies, as well as amounts have changed, which has necessitated amending the aforementioned Intercreditor and Subordination Agreement. Since the City Council originally approved the Affordable Housing Agreement and its related attachments, staff recommends that the City Council authorize the City Manager to execute an amended Intercreditor and Subordination Agreement related to the 956 Base Line Road project.
Once approved and executed, the City will process all documents related to the forgivable loan with escrow. Now that RNLA has all funding secured for the Project and construction bids that fall within the project budget, RNLA is moving forward with processing and closing on all funding related to the project. Pending no delays with the escrow process, RNLA expects to start construction in the coming months.
LEGAL REVIEW
The amended Intercreditor and Subordination Agreement has been reviewed and approved as to form by the City’s special legal counsel.
RELATIONSHIP TO CITY PLANNING DOCUMENTS
Staff has evaluated the agenda item in relationship to the City’s strategic and visioning documents and finds that it applies to the following City Planning Documents: Council Priorities, General Plan, and the 2022-24 Budget.
CEQA REVIEW
This item is not subject to environmental review under the California Environmental Quality Act (CEQA).
PUBLIC NOTICE PROCESS
The agenda and staff report for this item have been posted on the City website and distributed to interested parties. If you desire a copy, please contact the City Clerk’s Office.
Submitted by:
Jamie Earl
Assistant City Manager
Attachment:
Amended Intercreditor and Subordination Agreement