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County Administrator's Report 10. 9.
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| BCC Regular Meeting |
Budget & Finance Consent |
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| RECOMMENDATION: |
Recommendation Concerning Mortgage Modification for BRACE, LLC, Concerning the Heritage Oaks Mobile Home Park Redevelopment Loan - Keith Wilkins, Community & Environment Department Director
That the Board take the following action regarding a Mortgage Modification Agreement for BRACE, LLC, concerning the Heritage Oaks Mobile Home Park Redevelopment Fund 124 Loan:
A. Approve a Mortgage Modification Agreement and Substitute Promissory Note revising the terms and conditions of the Mortgage and Note for the $300,000 loan provided to BRACE, LLC, as financed from the Escambia Affordable Housing Fund 124, and currently secured by a first mortgage on the property and improvements known as Heritage Oaks Mobile Home Park, located at 1523 Gulf Beach Highway (Property Reference Number 35-2S-31-1000-004-149) to: (1) extend the interest only monthly payment provision of the Loan from 24 months to the full 180 month duration of the Loan; and (2) provide for a $300,000 principal balloon payment at Loan maturity;
B. Authorize the County Attorney’s Office to direct the closing on the Loan Modification, including any necessary subordination of the existing Neighborhood Stabilization Program (NSP) mortgage filed on the property; and
C. Acknowledge that BRACE, LLC, shall be responsible for paying all closing, recording, legal and related costs associated with the Loan Modification and/or any Subordination.
[Funding: Fund 124, Affordable Housing Fund, Cost Center 220406]
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| BACKGROUND: |
BRACE, LLC, a local non-profit corporation, was awarded HUD Neighborhood Stabilization Program (NSP) funds to support the acquisition and redevelopment of the foreclosed Heritage Oaks Mobile Home Park located on Gulf Beach Highway in Warrington for the purpose of preserving the affordable workforce housing which would have been lost to the market without BRACE’s intervention. As part of the response to a dire housing situation, the County/NEFI utilized a combination of HUD NSP grant funds and a $300,000 Fund 124 loan to enable BRACE, LLC to acquire and extensively renovate/redevelop the foreclosed/abandoned mobile home park (see Exhibit I for Board Resumes). Through that effort, the property was acquired by BRACE, LLC; the deficient site/infrastructure upgraded/replaced; dilapidated mobile homes were replaced with code compliant units; and general site improvements were completed. The Fund 124 Loan, as currently structured, is for 15 years at 3% with the initial 24 months requiring interest only payments. The purpose was and continues to be the preservation of the affordable workforce housing on the site. Though it took some time to overcome the prior negative publicity about Heritage Oaks Mobile Home Park, the park reached initial 100% occupancy in very late 2012 and after some initial tenant issues, it has largely stabilized, but at rents significantly below that originally envisioned or allowed by HUD Regulations. The current economy, combined with an abundance of competing rental stock (largely due to rental of properties that cannot be sold because of deflated property values), has required lower rents to maintain occupancy, which has in turn negatively impacted the BRACE/Heritage Oaks cash flow/operating pro forma to the degree that it is impacting the non-profit’s overall financial health. In addition to its role with Heritage Oaks, BRACE also provides other important community based services in support of community disaster preparedness. To ensure the long term financial viability of Heritage Oaks Mobile Home Park given the realities of the necessary rent structure; and to minimize compounding the negative impact of Heritage Oaks on the overall finances of BRACE, this recommendation modifies the terms of the existing mortgage to provide for: an amortized 15 year loan at 3% interest, with interest-only monthly payments of $750 for the full 15 years (180 payments) and a $300,000 principal balloon payment due at maturity. The loan will continue to be secured by a first mortgage and deed restriction on the Heritage Oaks property and improvements (see Exhibit II for the Mortgage Modification Agreement and accompanying Substitute Promissory Note).
Heritage Oaks provides 50 improved mobile home pads with HUD/DCA code compliant mobile homes on each site. The property is currently 100% occupied by income eligible families.
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| BUDGETARY IMPACT: |
| Repayments deposited into the Fund 124 revenue code will continue under modified terms provided through this recommendation. Fund 124 can only be utilized for affordable housing and community development programs. |
| LEGAL CONSIDERATIONS/SIGN-OFF: |
| The Mortgage Modification Agreement and Substitute Promissory Note have been reviewed by Steve West, Senior Assistant County Attorney. BRACE has also reviewed the documents. |
| PERSONNEL: |
| N/A |
| POLICY/REQUIREMENT FOR BOARD ACTION: |
| Affordable housing loans and revisions thereto must be authorized by the Board. |
| IMPLEMENTATION/COORDINATION: |
The loan modification closing will be coordinated with the County Attorney’s Office. BRACE will be responsible for all closing costs. Subsequent loan oversight will be provided by NEFI and the Clerk’s Finance Division. BRACE has a copy of this recommendation and is aware of the approval schedules and related procedures.
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