Riverbank Redevelopment Agency and the Riverbank City Council have approved a loan agreement for the Riverbank Family Apartments and for security advanced the payment date for the well construction and other development fees.
The city acted at its July 27 meeting despite some strong objections by resident and former councilmember Charles Neal who asked the city if "we are in the loan business" and charged it with "circumventing state and federal law."
The apartments are a proposed 65-unit rental housing project for low-income households to be built by Riverbank Pacific Associates at Patterson and Claus roads.
The Redevelopment Agency has agreed to provide a loan of $3,200,000 and already disbursed $800,000 of it from the 20 percent set aside of tax increment funds as required under the redevelopment act.
The agency approved a participation agreement last April but now wants the developer to pay the system development fees including the cost of the well construction prior to issuance of the building permit rather than later at issuance of an occupancy permit as first agreed.
Both the Agency and the Council will be involved in what city Director of Economic Development Tim Ogden called "a rather complex" but legal financial arrangement.
The Agency initially planned to use funds from its tax exempt bond proceeds to make the loan but now finds it is unable to do so "due to the impact of such funding under the state and federal low income housing tax credit programs," which are also being used in financing the project.
As the Agency currently does not have sufficient tax increment revenues available to fund its loan to the developer, the city will cooperate with the Agency and provide it a loan to pass on to the developer.
The city will loan the Agency the remaining $2,400,000 required to ensure the development of the housing project and be refunded within the next 30 days by the development fees, which are largely those for well construction.
Neal called it "a shell game" and said the city will lose money in loaning it at 3 percent for 30 years when it is paying 3 to 5 percent to borrow that money.
Ogden and the city's attorney for redevelopment, however, said the purpose of issuing bonds is to "jump start redevelopment" and the city cannot afford to wait for tax increments.
The city acted at its July 27 meeting despite some strong objections by resident and former councilmember Charles Neal who asked the city if "we are in the loan business" and charged it with "circumventing state and federal law."
The apartments are a proposed 65-unit rental housing project for low-income households to be built by Riverbank Pacific Associates at Patterson and Claus roads.
The Redevelopment Agency has agreed to provide a loan of $3,200,000 and already disbursed $800,000 of it from the 20 percent set aside of tax increment funds as required under the redevelopment act.
The agency approved a participation agreement last April but now wants the developer to pay the system development fees including the cost of the well construction prior to issuance of the building permit rather than later at issuance of an occupancy permit as first agreed.
Both the Agency and the Council will be involved in what city Director of Economic Development Tim Ogden called "a rather complex" but legal financial arrangement.
The Agency initially planned to use funds from its tax exempt bond proceeds to make the loan but now finds it is unable to do so "due to the impact of such funding under the state and federal low income housing tax credit programs," which are also being used in financing the project.
As the Agency currently does not have sufficient tax increment revenues available to fund its loan to the developer, the city will cooperate with the Agency and provide it a loan to pass on to the developer.
The city will loan the Agency the remaining $2,400,000 required to ensure the development of the housing project and be refunded within the next 30 days by the development fees, which are largely those for well construction.
Neal called it "a shell game" and said the city will lose money in loaning it at 3 percent for 30 years when it is paying 3 to 5 percent to borrow that money.
Ogden and the city's attorney for redevelopment, however, said the purpose of issuing bonds is to "jump start redevelopment" and the city cannot afford to wait for tax increments.
