HomeMy WebLinkAboutIR 9982 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9982
To the Mayor and Members of the City Council January 31, 2017
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*a SUBJECT: REQUESTS FOR CITY TO SUBORDINATE ITS LOANS MADE WITH
rrn FEDERAL GRANT FUNDS
The City of Fort Worth ("City") has received requests from developers to subordinate City loans
made with federal grant funds to three projects located in the City. None of the projects had any
other financing at the time the City approved or made its loans so the City loans are currently in
first lien position. The three projects now require additional financing and the developers have
asked the City to subordinate its loans to enable the projects to obtain the necessary construction
or permanent loans.
Southeast and Northside Community Health Centers
North Texas Area Community Health Centers, Inc. ("NTACHC") received Community
Development Block Grant ("CDBG") funds from the City in 2011 and 2013 in the form of a
deferred forgivable loan for the costs of finishing out the building located at 2909 Mitchell
Boulevard for the Southeast Community Health Center (M&C C-24766 and M&C C-26220). The
City has filed a Deed of Trust against the property to secure performance of the CDBG
requirements and, if required, repayment of the CDBG funds. The CDBG loan is expected to
mature in December, 2018.
In 2016, the City Council approved a subordinate deferred forgivable loan of $300,000.00 in
CDBG funds to NTACHC for the new Northside Community Health Center to be located at 4900
and 4920 Jacksboro Highway (M&C C-27585 and M&C C-27731). This loan is also secured by a
Deed of Trust filed against the property. NTACHC expects to close in April 2017 on the New
Market Tax Credits that are a portion of the funding for the Northside Community Health Center.
To assist with the financing of this project, NTACHC has requested that the City subordinate its
lien on the Southeast Community Health Center so that property may be used as additional
collateral for the construction and permanent loans for the Northside Community Health Center.
Subordinating the City's lien on the Southeast Community Health Center is necessary in order for
NTACHC to obtain the remaining financing for the Northside Community Health Center so it can
complete the project.
Hardy Street Single Family Infill Development
Tarrant County Housing Partnership, Inc. ("TCHP"), a City-certified Community Housing
Development Organization ("CHDO"), received a loan of HOME Investment Partnership Grant
("HOME") funds from the City in 2015 for the costs of developing and constructing nine single
family houses in the Diamond-Hill/Jarvis neighborhood (M&C C-27967, among others), known as
the Hardy Street Single Family Infill Development.
In late 2015, the U.S. Housing and Urban Development Department ("HUD") published new
guidance for the use of HOME funds that clarifies and strengthens requirements for integration of
both public and private funding sources. This means HOME funds must be `gap financing' for
projects, not total financing. Because of this new guidance, TCHP has obtained a construction
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9982
To the Mayor and Members of the City Council January 31, 2017
h�T�i7 Page 2 of 2
�i
{i7 Y
*a SUBJECT: REQUESTS FOR CITY TO SUBORDINATE ITS LOANS MADE WITH
rrn FEDERAL GRANT FUNDS
loan to complete the remaining 12 houses for the project. The subordination of the City's HOME
loan on this project is necessary for TCHP to close on a construction loan so it can complete the
project and ensure the City's compliance with the updated HUD guidance.
Rehabilitation of Lowdon-Schutts Emergency Shelter for Single Homeless Women
Presbyterian Night Shelter of Tarrant County ("PNS") was awarded CDBG funds from the City in
2016 for rehabilitating its emergency shelter for homeless women (M&C G-18760). The Federal
Home Loan Bank has approved a forgivable loan of $500,000.00 for the remaining costs of the
project which must be secured by a 15 year first lien mortgage. Subordinating the City's lien for
its forgivable loan is necessary for PNS to fulfill the terms of its loan from the Federal Home Loan
Bank and complete the project.
It is the City's practice to subordinate its loans made with CDBG and HOME funds to developers'
construction and permanent financing. Staff believes it is in the City's best interest to subordinate
the City's loans for these projects made with federal funds to construction and permanent
financing so that the projects can be completed. Additionally, the City is ensuring federal funds
are leveraged with private dollars by agreeing to subordinate the City's loans thus sharing the
risks of these projects and building public/private partnerships. An M&C is not required to take
this action for these projects.
If you have questions regarding this IR, please contact Aubrey Thagard, Director of
Neighborhood Services, at 817-392-8187.
David Cooke
City Manager
Attachments: Map of Southeast Community Health Center
Map of Northside Community Health Center
Map of Hardy Street Single Family Infill Development
Map of Presbyterian Night Shelter
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS