Approval of Montgomery County's offer to advance the City's $1.5 million General Fund loan to Rockville Housing Enterprises
Staff recommends that the Mayor and Council approve Montgomery County's offer to advance the City's remaining $1.5 million loan to Rockville Housing Enterprises (RHE), with a repayment schedule of $500,000 per year from the City of Rockville to Montgomery County for FY 2014, FY 2015 and FY 2016.
At the Mayor and Council meeting on November 5, 2012, the Mayor and Council approved RHE's request for $2.0 million in financial assistance for the acquisition of Fireside Park Apartments. Of the $2.0 million, staff recommends that $500,000 originate from the Housing Opportunities Fund (included in the November 19, 2012 budget amendment) in the form of a $200,000 grant and $300,000 loan;the remaining $1.5 million would come from the City's General Fund as a loan.
For the $1.5 million General Fund loan to RHE, Montgomery County has offered to ease the initial financial impact on the City by advancing the City's $1.5 million loan and receiving $500,000 in annual payments from the City for three years starting in FY 2014. This structure allows the City to spread the financial impact between three budget years. If Mayor and Council accept the County's offer, the City's $1.5 million contribution would be considered a loan to RHE and would be fully repaid in seven years. Details of the loan between the County and City will be established in a formal Memorandum Of Understanding.
RHE is tentatively scheduled to finalize the purchase transaction on December 17, 2012; accordingly, a decision on how the City provides the financing for the closing needs to be made.
Mayor and Council History
- RHE's potential purchase of Fireside Park Apartments was introduced to Mayor and Council on August 6, 2012. Mayor and Council approved RHE's effort to obtain the right of first refusal for the property.
- On September 10, 2012, RHE returned to Mayor and Council with a request for City financial assistance and to make a correction to the resolution approved on August 6, 2012.
- At the September 24, 2012 Mayor and Council meeting, RHE presented its plan for the acquisition and operation of Fireside Park.
- On October 8, 2012, Mayor and Council held a public hearing to gather input from citizens on the potential purchase.
- On October 22, 2012, Mayor and Council held a work session to discuss this matter.
- On November 5, 2012, Mayor and Council approved two resolutions. The first was a resolution to authorize RHE to acquire Fireside Park Apartments and undertake related actions necessary to complete the acquisition, including borrowing and accepting money to undertake a housing project, entering into a mortgage, and establishing a not-for-profit corporation to own Fireside Park Apartments. The second was a resolution of financial support for RHE to purchase Fireside Park Apartments.
If the Mayor and Council approve staff's recommendation, Montgomery County will advance the City's $1.5 million loan to RHE, and the City will repay Montgomery County $500,000 per year over a three-year period starting in FY 2014. This three-year repayment structure gives the Mayor and Council the opportunity to consider the first $500,000 repayment in the context of the entire FY 2014 operating and capital improvements program budgets.
Gavin Cohen, Chief Financial Officer
Approved on: 11/09/2012
Approved on: 11/13/2012