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Hemet council agrees to support refinancing plan for two senior complexes, waives interest claim
Summary
The council voted 5-0 to adopt a resolution supporting a HUD RAD refinance for Sahara and Oasis Senior Villas and to forgive interest on prior city housing loans so the properties can secure federal financing for capital repairs while preserving long-term affordability.
The Hemet City Council on Sept. 9 approved a resolution supporting a financing plan that would allow two existing affordable senior housing complexes — Sahara Senior Villas and Oasis Senior Villas — to refinance under a HUD Rental Assistance Demonstration (RAD) transaction and to recapitalize deferred loans so the properties can fund needed repairs.
Community Development Director Monique Alanisflater told the council that Sahara (75 units) and Oasis (65 units) were originally developed with federal and redevelopment agency funds and are subject to long-term affordability covenants. The property owners asked the city, as successor to the redevelopment agency, to subordinate its residual‑receipts loans and forgive accrued interest so the projects could obtain FHA‑insured financing under the RAD/Project Rental Assistance Contracts (PRAC) pathway.
Noelle Switzer of HDSI Management, who is working with the nonprofit owners, explained the refinancing would generate capital for building repairs and upgrades — new roofs, elevator modernization, security pendants and other deferred capital needs — without increasing tenant rents. “We're asking for your interest. It won't cost you — we're not asking for any money. We're asking to bring money to you by permitting our senior projects to be improved to approximately $2,000,000 each,” Switzer said.
Council members asked about the long‑term tradeoff of forgiving accrued interest. Staff and the owners explained the city’s loan is a residual receipts loan that is paid only after operating costs and senior lenders are satisfied; staff noted the interest is speculative revenue many years in the future and restricted to housing uses. City staff emphasized that the principal remains in place and that the RAD refinancing stabilizes project finances and extends affordability covenants.
Councilmember Lodge moved, and Mayor Pro Tem Linda Krupa seconded, to adopt the resolution and include forgiveness of the accrued interest on the city’s housing loans as discussed in staff materials. The motion passed 5-0.
Ending: The council’s action authorizes staff to prepare restated loan agreements and subordinate documentation consistent with the RAD refinancing; staff will return final documents for council review and recordation as required.
