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, CITY OF RIVERSIDE REDEVELOPMENT AGENCY MEMORANDUM Honorable Mayor & Agency Members Date: Item No.: August 14, 200 I 5 Subject: Request to Assign an Affordable Housing Snbsidy Agreement and Note for 10628 Burton, 4221 Lively, and 10662,10622, and 10670 Collett Avenue (Village of La Sierra). Background Since 1995 the City of Riverside and the City of Riverside Redevelopment Agency has actively sought to stabilize a series of fifty four-plex housing units known as the Village of La Sierra, located at the corners of Polk Street and Collett Avenue in Riverside. Assistance to the Village of La Sierra has included an aggressive rehabilitation loan program with area owners, the acquisition of thirty-six (36) apartment units in conjunction with the Riverside Housing Development Corporation (RHDC), assistance in the establishment of a homeowners association, and implementation of Covenants, Conditions, and Restrictions (CC&R's) for the entire complex. The rehabilitation loan program, initiated in 1995, consisted of a maximum $50,000 fully forgivable assistance for the repair and/or replacement of major mechanical units in the Village of La Sierra four-plexes. Twenty-five percent of all units participating in the rehabilitation loan program must be reserved for persons earning a moderate income by state standards (120% of County median income). All four-plexes must be singly managed, and adhere to CC&R's. All rehabilitation loans must be assumed by successive owners for the term of assistance (30 years). Current Issue Agency staff has received a letter from John Kalmikov (DBA Magnolia Court LLC and Red87 LLC), the majority owner offour-plex buildings in the Village of La Sierra. Mr. Kalmikov wishes to purchase five additional four- plex buildings located at 10628 Burton, 4221 Lively, and 10662, 10622, and 10670 Collett Avenue ("Properties") and add them to the his majority holdings, making a total ofthirty-seven four-plex buildings (148 units) that will be under a single ownership. The Agency's consent is required to sell the Properties, and to assume the fully forgivable Trust Deeds that are on title for each of the five four-plex buildings. Mr. Kalmikov has also requested that the Redevelopment Agency subordinate its $50,000 Deeds of Trust to new acquisition financing. The Agency has traditionally granted subordination requests if all conditions of the original funding agreements are being carried out in a reasonable manner. Analysis Mr. Kalmikov has stated that he will sell his majority holdings in La Sierra Manor within a year. Mr. Kalmikov has been working with RHDC fo explore the feasibility ofRHDC acquiring the majority holdings in La Sierra Manor. It is anticipated that staff will return to the City Council and Agency board with future information and/or requests on this matter. Mr. Kalmikov has worked to secure financing and begin escrow procedures for the Properties, and has requested an expedited assumption approval from the Redevelopment Agency Board in or~er to c1os~ escrow in a timely fashion. Staff has analyzed Mr. Kalmikov's request, and sees no reason for demal at thiS time as all management and Agreement obligations for his majority holdings in the Village of La Sierra are being met, and all fourplex buildings are properly maintained. Fiscal Impact With the sale of the Properties, the Agency's position on land title with .respect to affordable housing restrictions and previous financing will not change. There will be no further fiscal Impacts to the Agency. 5-1