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ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: August 19, 2008 Action Agen a Item No. - SUBJECT: Deferred Loan Request -Whiffed Forest Apartments DEPARTMENT: Housing/Comm. Development PUBLIC HEARING: (Y/N) No ATTACHMENT(S): INFORMATION CONTACT: Owner Letter Tara L. Fikes, 245-2490 Promissory Note Location Map PURPOSE: To consider approval of a two year deferral of principal and interest payments from the Whiffed Forest LLC for the CDBG loan awarded to them for the Whiffed Forest Apartments. BACKGROUND: In 1992, the County received a CDBG award in the amount of $250,000 to assist in the construction of the Whiffed Forest Apartments in Hillsborough. These funds were provided to the project for infrastructure costs as a loan that would be repaid to the County with a Promissory Note signed on April 21, 1994. A copy of this Promissory Note is attached to this abstract. Actual cash payments have been received since the year 2000 as prescribed in the Note with the last payment received in 2007. A total of $65,461.00 has been received as of this date. County staff received the attached letter from Shelter Resources Corporation (SRC), the General Partner of the Whiffed Forest Apartments, requesting deferment of the annual payment due in 2007. After some discussions, SRC also is requesting deferment for 2008 as well. SRC is making this request based on the County tax office withdrawing its tax-exempt status because the LLC is not anon-profit entity. According to SRC, assuming responsibility for the property taxes has strained the complex's operational budget. Additionally, in recent years, the apartment complex has had difficulty maintaining high occupancy rates and thus has lost potential rent revenue. Staff understands that the current management company is making strides to increase occupancy and thereby increase rent revenue that can be used to cover debt payments. There remains the need for these 35 units of affordable rental units for families in Hillsborough and, with proper management, the vacancies should be able to decrease. FINANCIAL IMPACT: Funds received from this CDBG loan are program income for the County and may be used for other local affordable housing initiatives. Deferment of these payments will delay the receipt of approximately $22,216 by the County until 2009. If this request is approved, the Whiffed Forest LLC will need to execute an amended Promissory Note that details the change in payment schedule. RECOMMENDATION(S): The Manager recommends that the Board approve a two year deferral of principal and interest payments from the Whiffed Forest LLC for the CDBG loan awarded for the Whiffed Forest Apartments.