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DeForest CDA authorizes $3.5 million loan commitment for Yahara Crossing DeForest
Summary
The Village of DeForest Community Development Authority voted to authorize the chairperson to sign a $3.5 million loan commitment for the Yahara Crossing DeForest housing project; the funding is contingent on receiving housing tax credits and carries cash‑flow based repayments and a $50,000 minimum payment provision.
The Village of DeForest Community Development Authority voted to authorize the chairperson to execute a $3.5 million loan commitment letter for the Yahara Crossing DeForest housing development.
A staff member explained the loan language was revised to meet WEDA requirements, which require a fixed committed amount rather than an "up to" loan. "So this is a $3.5 million loan to the project to say this funding is committed," the staff member said, and noted the commitment will be included in the project's housing tax credit application to demonstrate 80% of funding sources are in place.
Why it matters: the commitment is time‑sensitive because the tax credit application window is opening. The village's participation is written as a fixed loan; if the project does not receive housing tax credits, the village will not make the loan.
Key terms and repayment: staff said the loan would mirror prior agreements but with firmed terms: an estimated interest rate tied to the village's borrowing (a village consultant estimated about 4.75%), a 35‑year amortization, and repayment based on available cash flow from operating the new building. The CDA would receive an annual deferred developer fee that staff estimated at roughly $800,000 total in the development pro forma; staff said loan repayments could be deferred while that fee is unpaid. A minimum payment provision of $50,000 (or available cash flow) remains in the agreement, and the CDA would cover any shortfall to meet that minimum as originally contemplated.
Board questions and risk: when a board member asked whether the CDA's exposure if payments were missed was limited to the $50,000 minimum, staff replied the exposure depends on the CDA's ability to make annual payments from the property and on whether the CDA can buy out the village's loan by selling another property. Staff said the pro forma projects residential cash flow of about $70,000–$100,000 per year and commercial receipts of about $12,000–$30,000, but added there is always risk if those projections do not materialize.
Sequencing and buyout mechanism: staff described a separate loan purchase agreement that the village will review at its June 2 meeting and the CDA will review at its June 11 meeting. That agreement would obligate the CDA to purchase (buy out) the village's loan to the LLC if the CDA sells the other discussed property and has sufficient funds. "We would buy out the village if that happens," staff said.
Approval: a motion to authorize the chairperson to execute the commitment letter on behalf of the CDA and the project LLC was made and seconded; all present signaled assent and the motion passed. The transcript records the motion passed but does not include a roll‑call tally.
What’s next: the village board will review related documents at its June 2 meeting and the CDA will consider the loan purchase agreement at its June 11 meeting. The loan commitment is contingent on receiving housing tax credits, and staff said the CDA will proceed with the application packet to meet the tax credit deadline.
