REPORT TO CITY COUNCIL
February 8, 2018
FROM: MARLENE MURPHEY, Executive Director
Successor Agency to the Redevelopment Agency of the City of Fresno
SUBJECT
Title
Fresno Revitalization Corporation and the City of Fresno in its capacity as Housing Successor to the Redevelopment Agency of the City of Fresno to:
1. Authorize the Executive Director to Execute a Subordination Agreement for the Sale of Fulton Village located at 1715 and 1759 Fulton Street (FRC and City Action)
Body
EXECUTIVE SUMMARY
The Fulton Village project located at 1715 and 1759 Fulton Street is being sold and in order to get financing, the Buyer's lender requires subordination of the Agency's loan. The Agency's Subordination Agreement (attached) has been negotiated to include a guaranty by the principals of the Buyer.
BACKGROUND
The Redevelopment Agency of the City of Fresno ("Agency") entered into an Owner Participation Agreement ("OPA") with FFDA Properties, LLC on December 23, 2009 for the 48 unit Fulton Village project located at 1715 and 1759 Fulton Street. A thirty year 1% low interest loan in the amount of $800,000 provided development assistance in consideration of 55 year affordability covenants.
The Fulton Village property is currently in escrow with Fulton Village, LLC ("Buyer"), a single asset limited liability company, currently in formation, with an estimated filing date of February 7, 2018. The purchase price of $7,992,750 will be paid from a $4,220,000 first trust deed loan from City National Bank ("CNB"); the $800,000 Agency second trust deed loan; $2,621,000 in 1031 exchange proceeds; and, $351,750 of additional developer equity. The loan to value including both the first and second trust deed loans is 63% based upon a current appraisal obtained by CNB. Developer equity including the 1031 exchange proceeds is 37% of the property's value.
Sam Deutsch, one of the principals of the Buyer and one of the guarantor's (as discussed below), is a real estate inv...
Click here for full text