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Galt approves $438,712.35 PLHA loan to Mercy Housing to replace aging HVAC units at Grizzly Hollow

Galt City Council · February 18, 2026

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Summary

Facing a March deadline to secure state PLHA funds, the council approved a $438,712.35 deferred, low‑interest loan to Mercy Housing to rehabilitate HVAC systems at the 54‑unit Grizzly Hollow affordable rental community; funds will be drawn on reimbursement after invoice review.

The Galt City Council voted unanimously on Feb. 17 to accept a $438,712.35 allocation from the state's Permanent Local Housing Allocation (PLHA) program and to award a low‑interest, fully deferred 55‑year loan to Mercy Housing to rehabilitate Grizzly Hollow, a 54‑unit deed‑restricted affordable rental development built in 2006.

Community Development staff said the PLHA funds are time sensitive and would otherwise revert to the state if not committed by the March deadline. Director Carlooni explained the city will administer the PLHA allocation as a revolving loan fund; Mercy Housing will receive the award in last lien position behind other funding sources.

Wendy Mertens, asset manager for Mercy Housing, said the $438,712.35 budget covers HVAC replacement for about 32 units plus soft costs (title fees, prevailing‑wage consultant, legal review) and the state's $1,000 approval fee. ‘‘If there is any savings on this, we can reallocate any line items and everything is going to go to HVAC,’’ Mertens said.

Staff said the loan will be reimbursement‑based: Mercy will submit invoices, the city will review for compliance and then disburse funds. The council asked about tenant incomes and unit mix; staff provided a breakdown: 19 units at the extremely low tier (about $35,000 annual household income), 14 units at the very low tier (about $59,000), and 20 units at the low tier (about $65,000).

Council member Pratton moved and Council member Farmer seconded a resolution to accept the PLHA funds, establish a revolving loan fund, and approve the loan to Mercy Housing; the motion passed 5–0. Staff said the city has submitted draft loan documents to the California Department of Housing and Community Development and will finalize loan and escrow paperwork in the coming week.