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Board authorizes subordinate financing cap for Ridge at Loop 12 after soils cost increase
Summary
The DHFC approved authorizing subordinate financing (up to $3 million per motion) to cover unexpected sitework and soil remediation costs at Ridge at Loop 12 after field diligence found higher earthwork needs.
The DHFC board approved partnership resolutions authorizing subordinate financing to support the Ridge at Loop 12, a multifamily development at 1100 North Walton Walker Boulevard, following developer and staff presentations that field soils work revealed greater earthwork needs than initially budgeted.
Background and rationale: Staff and the developer described an original construction allowance for soils/sitework near $4 million and said additional due diligence found conditions requiring increased sitework. The developer and staff reported they had reduced the expected allowance through further site work diligence but recommended authorizing a subordinate financing cap to avoid repeated board returns if final amounts rose before closing. Staff proposed a round figure authorization of up to $3 million (the motion and resolution were discussed in the meeting as a not‑to‑exceed amount to give flexibility) so final loan documents could reflect the subordinate loan without reopening the board for minor adjustments.
Underwriting and pro forma issues: Directors emphasized the board’s policy of reviewing and approving pro formas; staff said sources and uses in the underwriting currently show a subordinate note in the sources (initially shown at $1.6M in underwriting) and that raising the authorized not‑to‑exceed amount to $3M would preserve flexibility while they finalize construction bids and closing documents. Directors asked whether the loan would be limited to sitework or be a general construction contingency; staff said the subordinate financing would be drawn against construction sources and used for general construction costs (sitework, framing, etc.) but would not be an unrestricted general operating fund.
Approval and conditions: The board approved the requested authorization by recorded vote and asked staff to return with final loan documents and detailed pro forma analysis. The transcript indicates the board also requested evidence of required pedestrian connections and the development plan, which the developer agreed to provide.
