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Board approves DHCD loan modification, forgives interest and extends affordability for Reservoir Hill properties
Summary
The Board of Estimates approved a loan modification with Reservoir Hill LLP that includes a cash payment to DHCD, forgiveness of interest, and a five-year extension of affordability restrictions.
The Baltimore City Board of Estimates approved on Jan. 8 a loan modification with Reservoir Hill LLP that will deliver a cash payment to the Department of Housing and Community Development (DHCD), forgive a large portion of accrued interest and extend affordability restrictions for multiple Reservoir Hill properties.
DHCD staff presented the amendment and the terms. Stephanie Estrada, Director of Project Finance at DHCD, told the board the department will receive $1,152,599.70 and will forgive $11,401,340.60 in interest in exchange for extending affordability by five years at 60% AMI or below. Estrada said rent increases will be capped at 20% over the five-year period and rents must not exceed stated HOME rent limits; DHCD provided specific rent limits for two- through four-bedroom units.
Estrada summarized the affordability terms: “affordability will be extended by 5 years at 60% AMI or below. Brent increases will be capped at 20% over 5 years, not exceeding low home rent limits. Low home rent limits, 2 bedrooms is 1, 1,375. 3 bedrooms is 1,588. 4 bedrooms is 1,772. And the new rent cap that the, developer, is proposing is no new tenants. Rent will exceed $1200 a month. Majority of existing tenant rents will remain below 1200.”
Board members asked for enforcement details. DHCD said staff will review rent rolls annually and require owners to provide leases and proof of income for new tenants; DHCD staff noted possible remedies for violations include adjusting rents or, as a last resort, triggering payback of the loan under the Home program covenant. The department said it will record a restrictive covenant in the land records to prevent sale during the affordability period.
Board members also raised a prior commitment in the original agreement that tenant equity ownership might be pursued; DHCD staff said that effort had not succeeded previously and no formal tenant-purchase mechanism is in place now, but the owner indicated willingness to sell to tenants if they organize and express interest.
A motion to approve the loan modification was made and approved by voice vote.
