Glendale approves purchase of Metro Loma first deed to prevent foreclosure, preserve 44 affordable units

The Glendale Housing Authority voted to buy the defaulted first deed of trust on Metro Loma Apartments on May 20, and the Glendale City Council approved a companion appropriation of $1,373,891 to help fund the city's share of a larger rescue package aimed at preventing foreclosure and preserving affordability at the 44-unit complex.

The item, presented by Mike Fortney, deputy director of housing, described Metro Loma as a 44-unit, 100% affordable project that has operated at a negative cash flow (about $200,000 last year) and whose first-lien lender, CCRC, began foreclosure after loan payments ceased in November. Fortney said staff and Los Angeles County partners crafted a long-term plan that combines a loan purchase, reserves, targeted repairs and limited rent adjustments to stabilize operations and protect the property's affordability covenants.

Why it matters: If foreclosure proceeded, affordability covenants held by the city and county could be extinguished and the property could convert to market-rate housing. Staff said the rescue is intended to keep the property affordable while making the operation financially feasible going forward.

Key details: Staff described the first trust deed as having an original loan amount of $1,890,000 and a current payoff of about $1,527,000. Glendale has two loans on the property totaling just over $5 million; Los Angeles County Development Authority (LACDA) holds a loan of roughly $1,472,000. The total capital package staff proposed is $2,255,000, apportioned on a pro rata basis (Glendale 77.6%, LACDA 22.4%) based on existing loan amounts. Under the proposal Glendale's aggregate share would be about $1,740,000, but the council was asked to appropriate $1,373,891 at this meeting, which reflects backing out $376,000 the housing authority had already approved in March.

Line items staff outlined include a property assessment that identified roughly $220,000 in immediate repairs (P&A reserve), a transition reserve to cover revenue losses during a lessee change, a replacement reserve increase (described as bringing the reserve to a level equal to approximately $250 per unit per year), an operating reserve (about $27,500 additional), a transaction fee intended to cover costs to a new developer and closing costs/contingency. Fortney said staff expects some rent increases as part of a multi-tranche approach: very low-income, rent-burdened tenants would receive the smallest increases or none in the near term; middle-income tenants would see modest increases; higher-income tenants (those well above the targeted income bands) would face larger increases to help restore fiscal viability.

During public comment, resident Beth Brooks asked how many of the 44 units are "actually affordable" and whether the presentation reflected HUD or Section 8 designations. Brooks also questioned public involvement in budget decisions and expressed concern that public priorities (including direct renter assistance) may be sidelined in favor of capital projects. Chairpersons and staff replied that Metro Loma is an affordable project and that staff would follow up to explain the affordability rules and rent-cap differences outside the meeting.

Council and housing authority members framed the action as preserving affordable housing rather than bailing out the developer. Members noted the city and county had worked through multiple closed-session briefings and transactions with other parties, and emphasized the goal of protecting affordability covenants.

Votes at a glance: The Glendale Housing Authority motion authorizing purchase of the first deed trust loan passed on a roll call. The City Council approved the related resolution appropriating $1,373,891 and the council motion authorizing release of funds; roll-call votes recorded the measures as approved.

What happens next: City staff and county partners will continue transaction work to finalize the takeover and to identify an operator/lessee for the property. City staff indicated a rental-assistance report will return to the Housing Authority and City Council on June 3 for further consideration.