Wednesday, July 28, 2004
Redevelopment Agency gave Futrell $200,000 "deferred loan" for Seventh Street Apartments
At that time, the Redevelopment Agency members were Chairman John Picchi, William Arnone, Charles Evans, Wally Lowry, and Mike McKeon. Redevelopment Programs Coordinator Jocelyn Lundgren introduced the item, commenting that:
"This is being proposed as a market rate project, consistent with the Agency's Downtown Housing Demonstration Program. The objective of that program was to facilitate market rate residential units downtown."
The minutes detail,
Staff recommends that the Agency, by resolution, approve this loan commitment in the amount of $200,000. A precommitment letter is included in the Agency packet that lays out the specific terms. Also, Debbie Kerns from Keyser Marston is present as well as Hugh Futrell should there be questions.
Mr. Lowry discussed wording used in the documents and thought it may be confusing. Ms. Lundgren stated it is a policy decision as to whether there is a grant or not, and staff is recommending that it be in the format of a deferred loan. Wording will be corrected in the final version of the loan documents." [emphasis added]
"Mr. Arnone asked if the loan would be forgiven if the developer retains ownership and doesn't refinance for 20 years. Ms. Lundgren stated that is correct. She stated the logic behind forgiving a loan at 20 years is that, after 20 years pass, it is pretty much already forgiven." [emphasis added]
The board had apparently discussed the proposal before, and some members were familiar with it:
"Mr. Arnone referred to pages 42-45. He asked if the punitive conditions were going to be retained that were discussed in the January proposal. Ms. Lundgren referenced the precommitment letter, starting at page 16 and going through 23, as being the terms that are being proposed today to the agency for approval.
Ms. Lundgren commented there had been a meeting of the Project Review Committee where this project was discussed. Mr. Lowry stated the Agency should know that what is being proposed today evolved as a compromise between the proposal from Mr. Futrell and what was agreed to by Keyser Marston."
The San Francisco office of Keyser Marston Associates, Inc. apparently helped put the deal together. Its website says,
"Keyser Marston excels at fostering creative partnerships between public entities and the private marketplace, resulting in the creation of exciting and revived places where people want to shop, play, work and live.
Our team provides comprehensive consulting services spanning a myriad of land uses - from affordable housing and transit-oriented developments to military base reuse and major mixed-use developments. While we have been instrumental in making major developments happen, our resume also includes many smaller scale projects that are equally important to us."
The minutes report,
"Debbie Kern, Keyser Marston Associates, commented her group had compromised and agreed to exclude those provisions from the final agreement. The 22% is against all of the income in the entire project and includes the rent from the apartments and the office space. We are not just looking at only the restricted units; it is against everything and it wasn't a true reflection of the economics of the project. It is in Mr. Futrell's economic interest to refinance to get more money out. After he receipts all of his deferred fees, we'll be sharing 50/50."
The Redevelopment Agency apparently intended Futrell's $200,000 "deferred loan" to be no more than a one-time "demonstration":
"[Executive Director Stephen F. Burke] commented this arrangement is based upon a demonstration program. This is an opportunity to see what other projects might come forward and is not precedent setting.
Chairman Picchi stated that the resolution is clear that the circumstances are unique. On the down side, there are more than 20 units so we are paying less than $10,000 per unit and that, compared to money we have put out on other projects, is a good deal and puts the housing downtown where we want the housing." [emphasis added]
And in conclusion,
"Mr. Lowry stated Mr. Futrell has been the only developer willing to put housing downtown." [emphasis added]
The Other Santa Rosa wonders whether Futrell was also the only developer the Redevelopment Agency gave $200,000 to support a downtown housing project...