Submitted By
Jonathan Burch, Assistant Village Manager/ Neighborhood Services Director
Reviewed By
Erin E. Baynes, Assistant to the Village Manager
Agenda Item Title
Title
A Resolution Approving a Subordination and Standby Agreement with the Oak Park Residence Corporation and Hinsdale Bank & Trust Company, National Association, and Authorizing its Execution
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Overview
Overview
The Oak Park Residence Corporation (“OPRC”) has requested that the Village resubordinate $1,320,533.33 in Village housing loans. This will enable OPRC to access up to $4 million in financing to rehabilitate existing buildings.
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Recommendation
Recommendation
Staff recommends approving the subordination request, as it involves no change in the terms of the Village’s loans with OPRC and allows them to invest in their existing buildings, the maintenance of which furthers the Village’s housing goals as outlined in the Strategic Vision for Housing.
Background
Over the course of the last several decades, the Village of Oak Park has provided loans to OPRC for the acquisition and/or rehabilitation of multi-family properties from a variety of sources including the Village’s Revolving Loan Fund (CDBG), Village of Oak Park Housing Bond Funds, and the Multi-Family Housing Incentive Grant Program (General Funds).
To continue reinvesting in their portfolio, OPRC requests that the Village subordinate eight (8) loans for five properties. These loans total $1,320,533.33.
Background on these loans is as follows:
• Four (4) loans totaling $541,000 are from the Village’s Revolving Loan Fund. Funded with Community Development Block Grant (“CDBG”) funds, the intent of these loans was to support the acquisition, rehabilitation, and - ultimately - resale of the properties once stabilized. The Revolving Loan Fund was established with the intention that upon repayment of the loans, the funds would be deposited into the revolving loan fund with the intent to support OPRC in the acquisition and rehabilitation of additional buildings at risk of disinvestment. However, the OPRC model has changed and their mission is to provide for long-term holding of properties to secure affordable housing. To further this mission, the Village has extended the maturity and re-subordinated these loans several times since their origination. These four loans are now due December 31, 2026.
• One loan for $750,000 is from the Village of Oak Park Housing Bond Funds. This loan is part of Village support to acquire and rehabilitate 20 apartment buildings owned and managed by the Oak Park Residence Corporation using tax-exempt bonds issued by the Illinois Finance Authority. The proceeds of the Village’s housing bonds have been depleted. The loan is due April 3, 2031.
• Three (3) loans for $29,533.33 are from the Multi-Family Housing Incentive Grant Program. These loans were funded with General Funds via the 2023 program round. Upon successful completion of the three-year affirmative marketing period, the loans are forgiven (estimated to be May 15, 2026).
OPRC requests that the Village Board approve the draft Subordination and Standby Agreement as presented and empower the Village Manager to execute a document substantially similar.
Fiscal Impact
The subordination does not involve a direct cost to the General Fund. Staff time in document preparation, a regular part of loan portfolio management, is the only cost.
DEI Impact
In Spring 2024, OPRC evaluated the affordability of their units. That analysis showed that more than 99% of OPRC units in 2023 were affordable to households earning less than 70% of the area median income, with almost 10% of units affordable to households earning less than 50% of the area median income. Supporting OPRC’s efforts to refinance its loans on these properties will help OPRC continue to provide housing affordable to households with low to moderate incomes.
Alternatives
The Village Board could not approve the resolution, instructing staff to revisit the agreement with OPRC.
Previous Board Action
In 2016, the Village Board has considered and approved such subordinations in support of OPRC (RES-16-245).
Citizen Advisory Commission Action
N/A
Anticipated Future Actions/Commitments
N/A
Intergovernmental Cooperation Opportunities
This subordination is part of the overall cooperation between the Village and OPRC related to Village housing initiatives.