OCII approves $19.1 million loan and ground-lease option for Carroll Avenue senior housing

The Commission on Community Investment and Infrastructure on Sept. 3 authorized a $19,111,224 amended and restated loan agreement and a ground-lease option to support the Carroll Avenue Senior Housing development in Bayview Hunters Point.

Pam Sims, project manager in the Mayor's Office of Housing and Community Development, told commissioners the loan request comprises $3,800,000 in predevelopment funds and $15,100,000 for construction and permanent financing. "The loan request is for $19,111,224, which is comprised of $3,800,000 in predevelopment funding and $15,100,000 related to the construction and permanent financing," Sims said, describing the project as the first phase of off-site housing tied to the Alice Griffith revitalization and a component of the HUD Choice Neighborhoods grant.

Sims said the development will include 121 units (117 one-bedroom and 4 two-bedroom), one manager's unit, common-area amenities and a ground-floor Bayview Senior Center intended to serve both residents and the larger neighborhood. All units will be offered at 50 percent of area median income (AMI) or lower; 37 units are targeted at 30 percent AMI because of specific funding restrictions. Sims also said 23 units will be set aside for formerly chronically homeless residents referred by the Department of Public Health's Direct Access to Housing program.

On financing, Sims outlined a multi-source plan that includes tax credit equity, tax-exempt bond financing, state infill and infrastructure grants, project-based Section 8 subsidy and private debt. She said loan terms include a 3 percent interest rate for 55 years and that residual receipts will be applied first to ground-lease payments and then toward loan repayment. The ground-lease option will establish interim site control and be returned to the commission for approval prior to construction.

Youssef Freeman of McCormack Baron Salazar explained that lowering the debt-coverage ratio from 1.3 to 1.2 allowed the project to borrow more private debt; "by lowering that debt coverage ratio, we were able to borrow an additional $600,000 from the first mortgage lender," he said.

Commissioners asked follow-up questions about the Section 8 structure, residual receipts and eligibility rules for the formerly homeless set-aside; Sims and Freeman replied that project-based Section 8 is expected to produce adequate cash flow and does not reduce residual receipts. Chair Johnson and other commissioners confirmed the development has broad community support.

Commissioner Singh moved to approve Resolution 42-2013 authorizing the loan and ground-lease option; the motion was seconded and carried on a roll call vote (5 ayes). The commission was told the ground lease will return for formal approval in November, the tax-credit and CDLAC applications would be filed in mid-September, and the team expects to close financing by March 2014 at the latest.