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TO: Mayor Richard C. Irvin
FROM: Chris Ragona, Director of Community Services, Community Services Department
DATE: February 13, 2025
SUBJECT:
A Resolution Authorizing the Execution of a Redevelopment Agreement Between the City of Aurora and North Island Apartments LP to Provide a Loan in the Amount of $400,000 in Community Development Block Grant (CDBG) Funds for a Roof Replacement of Affordable Senior Housing Development Building Located at 2 N. Stolp Avenue.
PURPOSE:
Funding the roof replacement of 2 North Stolp Avenue with CDBG funds will address the building’s rehabilitation needs and preserve affordable rental housing for the property’s 56 low- and moderate-income senior citizen households. The proposed $400,000 loan will be structured to reflect the terms of a 0% Interest loan with partial forgiveness; $200,000 will be repaid when the property is sold, transferred, or no longer designated as affordable. The remaining $200,000 will be forgiven 5 years from the rehabilitation completion date.
BACKGROUND:
North Island Apartments LP is a for-profit entity with an existing independent senior living apartment building in the former Aurora Hotel building located at 2 North Stolp Avenue in downtown Aurora. The building was originally built in 1913 and was redeveloped by the current ownership team in 1998. This property has been providing housing to approximately 56 Aurora low- to moderate-income senior citizen households for 27 years.
The current affordable senior housing requires certain rehabilitation to maintain the condition of the building that cannot be completely sourced from operating revenue.
City staff conducted an underwriting review that included multiple walkthroughs, financial underwriting, and the completion of a 3rd party capital needs assessment. During this review, the property owner completed a lengthy refinancing due to the property boundary discrepancies requiring assistance from the Army Corps of Engineers to review and provide guidance.
Additionally, during the COVID-19 pandemic, the property experienced a very high delinquency and vacancy rate that has now been corrected with the building routinely at or near full occupancy. Later, the property experienced an elevator outage which was repaired for a cost of approximately $125,000, which decreased funds to be used for other capital needs.
The North Island Apartments LP roof replacement project at 2 North Stolp Avenue will help provide long-term availability of decent and safe apartments to low- and moderate-income senior households. To preserve this property that provides affordable housing for low- and moderate-income senior households, the roof must be replaced.
The federal CDBG Program supports community development activities to build stronger and more resilient communities. To support community development, activities must meet the priority needs identified in the City of Aurora’s Consolidated Plan. One of the City’s priorities is the preservation and expansion of affordable housing. The roof rehabilitation project will provide an opportunity for the City to assist in preserving affordable senior housing.
DISCUSSION:
North Island Apartments LP plans to use CDBG funding in the amount of $400,000 for the roof replacement to ensure safe, adequate and decent housing for low- and moderate-income senior households. Seniors living in this property are mainly those that are living at 50% - 60% of the Medium Family Income (MFI). The $400,000 of CDBG funding will be structured as a 0% interest loan with partial to reflect the repayment of $200,000 and the forgiveness of $200,000 after 5 years from the rehabilitation completion date.
LOAN TERMS:
Term #1 - Based on a square footage calculation of the commercial space of the first floor, at least 3.6% of the total cost of the roof replacement will need to be paid for by the property owner and the city’s share will not exceed $400,000.
Term #2 - the City recognizes the long-term commitment made by North Island Apartments LP to the City and the many hardships, including financial losses and lasting impact from the pandemic. In recognition of this, the City has proposed the following formula to determine the payback terms if the property is sold or transferred or is no longer affordable senior housing or housing primarily for low- and moderate-income households:
Funding will be split into two categories with the first $200,000 being provided in the form of a 5-year forgivable loan from the project’s completion date. The remaining $200,000 will be provided in the form of a forgivable 0% deferred loan, subject to the payment conditions as outlined below if the property is sold, transferred or is no longer affordable senior housing or housing primarily for low- and moderate-income households.
#1 - All recorded debt related to the property is paid in full.
#2 - Outstanding fees owed to the City including utilities, permit fees, and fines are paid in full.
#3 - Deferred development fees are paid in full.
#4 - Return of any advances documented by the property owner needed due to the impact of the 2020 pandemic.
#5 - Any net proceeds from the sale will be divided between the City receiving a 50% share up to $200,000 and the remaining 50% to Realty and Mortgage; any amount not repaid to the City at that time will be forgiven.
IMPACT STATEMENT:
The roof rehabilitation will ensure the preservation of 56 affordable housing units for senior citizens living primarily at 50%-60% of the MFI. This project will assist the in achieving the City’s goal to preserve affordable housing in Aurora. The preservation of this affordable housing project will help the City to fulfill its Consolidated Plan housing goals and objectives.
RECOMMENDATIONS:
Staff recommends the approval of the resolution authorizing the execution of the redevelopment agreement that allows for the 2 North Stolp Avenue roof rehabilitation and sets forth other conditions and terms regarding the project’s loan agreement utilizing $400,000. Staff also requests authorization for the City's Mayor, Chief Community Services Officer, Director of Community Services, Community Development Manager, or their designees to execute any contracts as well as any other documents associated with Project CDBG-2025-01 including but not limited to HUD's program administration requirements.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution A Resolution Authorizing the Execution of a Redevelopment Agreement between the City of Aurora and North Island Apartments LP to Provide a Loan in the Amount of $400,000 in Community Development Block Grant (CDBG) funds for a Roof Replacement of Affordable Senior Housing Development Building located at 2 N. Stolp Avenue.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, WHEREAS, housing activities through funding by the U.S. Department of Housing and Urban Development; and
WHEREAS, the City of Aurora has a Consolidated Plan and Annual Action Plan which
have been adopted by the City Council and which have defined priorities for CDBG; and
WHEREAS, the 2020-2024 Consolidated Plan and all substantial amendments and proposed 2025-2029 Consolidate Plan will define priorities for community development funding and define obligations to inform the public on the proposed changes; and
WHEREAS, the Community Development Block Grant Program established guidelines established that the City would enter into an agreement with Developers to assist the City in implementing its programs in an effective and efficient manner; and
WHEREAS, CDBG funding will be available in the 2025 City Budget CDBG program account (213-1330-801.43-01);
WHEREAS, the City approved a Redevelopment Agreement for a CDBG Program loan between the City of Aurora and North Island Apartments LP for the purpose of providing CDBG funding for a roof replacement; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: finds as facts all of the preamble recitals of this Resolution and hereby approves Redevelopment Agreement CDBG-2025-01 between the City of Aurora and North Island Apartments LP to provide Community Development Block Grant for a roof replacement at 2 N. Stolp totaling $400,000; and authorizes the City's Mayor, Chief Community Services Officer, Director of Community Services, Community Development Manager, or their designees to execute any agreements, contracts and other documents associated with these approvals, including but not limited to HUD's program administration requirements.