Housing Authority clarifies loan security for Zane Wolf Veterans Village, approves revision

The Housing Authority on Jan. 26 approved a revision to a prior conditional award for Zane Wolf Veterans Village to clarify that the $489,228 rehabilitation loan will be secured by a leasehold deed of trust, not a traditional deed of trust. The vote passed with six affirmative votes and Vice Chair Downey absent.

Rebecca Lane, program specialist, explained the 14-unit project is located on county-owned land within Santa Rosa city limits and that Community Housing Sonoma County (CHSC) does not own the parcel. Because CHSC cannot execute a traditional deed of trust on county-owned land, staff recommended clarifying the loan security instrument to a leasehold deed of trust and recording the regulatory agreement against the leasehold.

Lane said the award had been conditional and that the requested revision aligns the financing documents with the ownership structure. Public commenters and commissioners probed the enforcement and valuation implications of a leasehold security interest. General counsel acknowledged the risk that a leasehold interest depends on the terms and duration of the ground lease and said, "there is a risk that if it evaporates, our security interest evaporates much more so than it would if we were having a deed of trust on real property." Staff said they have begun conversations with the county about leasing extensions but had not received a written commitment at the time of the meeting.

Consultant Craig Meltzer explained how the $489,228 would be used: payment of deferred impact fees (about $206,000), replacement of temporary electrical service with permanent infrastructure (about $200,000), and other work needed to obtain permanent use permits. He said the project currently serves 14 formerly homeless veterans and uses VASH vouchers.

Commissioners asked staff to ensure loan and regulatory instruments have maturity dates that do not expire on the same day as the ground lease — giving a buffer to renegotiate or extend terms. General counsel and staff said draft loan documents will incorporate appropriate maturities and that particulars of the leasehold deed of trust are still being drafted.

Motion: Commissioner Gregory Farren moved to revise the prior conditional commitment to specify a leasehold deed of trust as the security instrument; motion was seconded and passed on roll call (6 yes, Vice Chair Downey absent).