presented to City Council, March 4, 2008
"The Transit Oriented Development (TOD) Housing Program of the State Housing and Community Development Department (HCD) was funded by Proposition 1C, the Housing and Shelter Trust Fund Act of 2006. "
"The Derry project sponsor is interested in pursuing a TOD Housing Program infrastructure grant, stating that the combination of project revisions and changes in the housing market are a risk to the feasibility of the project."
"According to the project sponsor, at the time the Settlement Agreement between O'Brien Homes LLC and Menlo Park Tomorrow was negotiated in May 2007, the project profitability and other financial metrics were reduced to levels at or below the minimum levels required by construction lenders. The project sponsor asserts that this is as a result of the 20 percent reduction in the residential density while maintaining the quality of building materials and finishes and the supplemental payment of two million dollars to the City in addition to all normally required fees. Since that time, the residential market has not improved, construction costs have not dropped, and the lending environment has tightened considerably due to the sub-prime mortgage issue and related credit crunch. Consequently, the project sponsor has determined that there is a significant risk that the Derry project will not be viable without TOD Housing Program funding if an attempt to obtain construction financing for the project is made in the current marketplace."
"The infrastructure grant funding is based on the total number of units in the housing development. At $35,000 per unit, the Derry project with 108 units would be eligible for a maximum of $3,780,000. To provide some perspective for the grant funding, the current project valuation is estimated at $34 million. The grant funding would be provided to the City on a cost reimbursement basis."
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