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BACKGROUND
The City of National City has received a loan request from T & T Community Properties
LLC (T & T) for $717,500 to assist with the acquisition and rehabilitation of an eight -unit
rental housing project located at 138 Norton Avenue, National City. T & T would buy
the 8 two -bedroom unit property for approximately $101,000 per unit (not to exceed
appraised value). The goal is to significantly enhance the curb appeal of the property as
a catalyst for improvements by other nearby property owners.
Constructed in 1960, the building on the property consist of eight 2-bedroom units
located at 138 Norton Avenue in a residential pocket just northwest of the corner of
Palm and 4th in National City. The vicinity is a mix of single-family and multi -family
housing with the long-term quality of the area tied to how well the multi -family is cared
for and managed. The health and desirability of the single-family homes as owner -
occupied housing is directly tied to the multi -family housing nearby. It is imperative that
the multi -family be kept up in order to maintain the quality of the neighborhood. All
residents appear to be income eligible and no permanent displacement is anticipated.
Rehabilitation
The proposed HOME loan of $717,500 will be used to acquire and rehabilitate the
property. Funds, totaling $305,300, will be used for the rehabilitation of individual unit
interiors and exterior building improvements. The cost of rehabilitation improvements
per unit is $38,163.
The contemplated rehabilitation includes:
1. New Roof covering, roof insulation to R-21 or higher, roof drains/gutters
2. Improved water quality control, permanent BMPS
3. Installation of new windows and doors with high performance glazing.
4. Improved window shading
5. Code compliant balcony railings and stair handrails
6. Balcony surface refinish.
7. Installation of high efficiency lighting.
8. New stucco including exterior acrylic finish for water intrusion protection.
9. Appropriate landscaping for solar heating and shading, low water usage and
visual enhancement.
10. Interior improvements to include, in most units as needed: heaters, plumbing
fixtures, flooring, bath and kitchen cabinets, tub enclosures, countertops,
painting, light fixtures, and drywall damage repair & asbestos abatement.
11. Electrical safety improvements, smoke detection, and make up air for interior
gas appliances.
12.Functional common area improvements for usable outdoor areas for
residents, a new entry treatment.
13. Re-routing exterior plumbing supply lines to inside the walls, new common
water heater.
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Financing and Loan Terms
The total sources of financing for the property purchase and substantial rehabilitation
include the $717,500 loan from the City of National City, a new first amortized loan of
$565,000 from Clearinghouse, deferred developer fee of $57,000, and other equity of
$31,850. The total acquisition and rehabilitation costs are $1,371,350.
The City loan will be a two (2%) percent simple interest loan with residual receipt
payments at 30% of cash flow beginning on the following November after the closing
date. Any unpaid balance will be due at the end of the 55 year term.
Unit Affordability
In exchange for the $717,500 loan, T & T will acquire, improve, and rehabilitate the units
to a safe and decent standard and maintain affordable rents for 55 years for the benefit
of low-income families earning at or below 50 percent and 60 percent of the area
median income (AMI). Three - 2 bedroom units will be restricted for families at or
below 50 percent of the area median income (AMI), four- 2 bedroom units for families at
or below 60 percent of the AMI and one- 2 bedroom unit for families at 80% AMI. The
restricted unit at 80% will be utilized for an on -site manager.
Area Median
Income (AMI)
.No. of units
Maximum income
(family of four)
Estimated Unit
Rents
50% AMI
3
$41,200
$898
60% AMI
4
$49,440
$1,000
80% AMI
1
$54,250
$1,000
The current market rent for an unrestricted two bedroom unit in National City is
approximately $1,150 per month.
Linkage to the National City Strategic Plan
The acquisition and rehabilitation of the subject property supports the City's "Develop
Affordable Housing by Leveraging 20% Set Aside, Home Funds, and Other Affordable
Housing Finance Programs" strategic initiative to help residents find safe and affordable
housing. Approval of this proposal will create affordable housing for low-income families
in the region.
Approval of the resolution by the City Council will allow staff to enter into a loan
agreement and proceed with contract negotiations, and upon completion of the
negotiations, execute all loan documents with T & T Community Partners, LLC.
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