STATEMENT OF ISSUE
Mr. Carl Calhoun has proposed to rehabilitate a 3-unit property to be leased to low-income residents. He has applied for a loan pursuant to the terms of the Rental Rehabilitation Program administered by the Department of Economic and Community Development. Mr. Calhoun is a licensed contractor who has successfully rehabilitated 17 other rental properties. Seven of those rehabilitations are located in Tallahassee; six of those have been leased to low-income households or special needs residents.

Mr. Calhoun is requesting a rehabilitation loan in an amount not to exceed $60,000. This will finance the rehabilitation of three rental units. Staff has inspected the property and reviewed the scope of work and determined that the plans are feasible. The loan will have a 10-year term and affordability period commencing when the rehabilitation is complete. The units will be restricted to those at or below 80% area median income for the duration of the affordability period. The interest rate will be 1.5% with payment based as if amortized over 20 years with a balloon payment of approximately $32,000 due at the end of the 10-year term.

City policy requires that contracts in excess of $50,000 be brought to the Commission for review and action.

RECOMMENDED ACTION
Approve Option 1: Approve a Rental Rehabilitation loan for Carl Calhoun in an amount not to exceed $60,000 for the rehabilitation of three units at 727 Efferson Street.

FISCAL IMPACT
In the 2007-2008 Annual Action Plan $400,000 was allocated for the Rental Rehabilitation Program. It was funded from the balance in the Rental Rehab Fund ($209,100) and the balance from the Affordable Housing Trust Fund. This loan will be funded from the Rental Rehab Fund (#104). The current balance in this fund is $209,100 and after funding this loan, the balance will be $149,100 and $349,100 in the Rental Rehab Program. The Office of Budget and Policy has reviewed and concurs with this agenda item.

Thomas H. Lewis, Economic & Community Development

Anita Favors Thompson, City Manager

For information, please contact: Joyce Martinez, Housing, 891-6526.

HISTORY/FACTS & ISSUES
Mr. Carl Calhoun has demonstrated that he is a successful developer of affordable rental housing units. Currently, he owns and operates more than 17 units of affordable housing. Mr. Calhoun has an excellent credit rating, and he is a licensed building contractor.

The proposed rehabilitation loan will be paid out on a reimbursement basis. A note and mortgage in favor of the City will be executed and recorded at the time of the initial construction draw. The loan amount per unit will not exceed $20,000. The loan will have a 10-year term and affordability period commencing when the rehabilitation is complete The interest rate will be 1.5% with payment based as if amortized over 20 years with a balloon payment of approximately $32,000 due at the end of the 10-year term. Since there is no existing debt on the property, there will be sufficient cash flow to support the loan. The property is located at 727 Efferson Street in the Greater Frenchtown neighborhood.

CHARITABLE CONTRIBUTIONS
N/A

OPTIONS

Option 1: Approve a Rental Rehabilitation Loan in an amount not to exceed $60,000 for Mr. Carl Calhoun for rehabilitation of three affordable housing rental units in accordance with the terms and conditions described above.

Pro:
• This loan will produce three affordable housing rental units.

Con:
• This will use up to $60,000 from the Rental Rehabilitation Program.

Option 2: Do not approve this financing request for TLC and provide staff with alternate policy direction.

Pro:
• $60,000 from the Rental Rehabilitation Program could be used for other projects.

Con:
• Three units of affordable rental housing will not be added to Tallahassee’s affordable rental housing stock.

ATTACHMENTS/REFERENCES
None.