REPORT TO THE CITY COUNCIL FROM: JENNIFER K. CLARK, Director Planning and Development Department BY: PHIL SKEI, Assistant Director Planning and Development Department CORRINA NUNEZ, Project Manager Housing and Community Development Division SUBJECT ..Title Actions pertaining to the Assignment and Assumption of the OPS Villas, LP HOME Investment Partnerships loan documents and the Oak Park Senior Villas property located at 2597 S. Richelle Avenue, 93725, in southeast Fresno (District 5): 1. Invoke exception to the Better Business Act pursuant to Section 2(b), as amended by Resolution No. 2013-166 (Requires Five Affirmative Votes) 2. Approve write-down and write-off of the existing loans totaling $4,885,000 ($4,185,000 and $700,000) and approximately $1.4 million in accrued interest to a revised amount of $2,598,148 at 2% interest, payable from 50% of the property's annual residual receipts with principal and interest due in full on July 1, 2081, the loan maturity date 3. Approve Assignment and Assumption Agreement with OPS Villas, LP and Housing Authority of the City of Fresno 4. Authorize the City Manager to sign all implementing documents (Agreement, revised Declaration of Restrictions, and Note) required for the assignment and assumption, approved as to form by the City Attorney's Office. ..Body RECOMMENDATION Staff recommends the Council 1) invoke the exception to the Better Business Act (BBA); 2) approve the write-off and write-down of the existing loans and interest; 3) approve the Assignment and Assumption Agreement; and 3) authorize the City Manager to sign all implementing documents required for the assignment and assumption, approved as to form by the City Attorney's Office. EXECUTIVE SUMMARY On July 23, 2026, the Housing and Community Development Division received an assignment request from OPS Villas, LP (Exhibit "A") and an assumption request from the Housing Authority of the City of Fresno (Housing Authority) (Exhibit "B"). The Housing Authority is proposed to acquire the property from OPS Villas, LP at no cost and is requesting that the City expedite approval of an Assignment and Assumption Agreement (Exhibit "C") of the HOME loan documents and Oak Park Senior Villas property. In general, the BBA applies to loan write-offs or write-downs in excess of $1 million. However, pursuant to Resolution 2013-166 which amends the BBA, the proposed principal write-down and interest write-off are eligible for an exception to BBA as the City's HOME funds were essentially a grant structured as a loan to meet the Low-Income Housing Tax Credit requirement for debt service on the property. The Council may invoke the exception by a supermajority of 5 votes. If approved, the Oak Park Senior Villas' affordability period will be extended an additional 18 years, preserving 65 units of income-restricted rental housing for senior citizens. BACKGROUND On April 3, 2007, the City entered into a HOME Investment Partnerships (HOME) Program Agreement with OPS Villas, LP for the construction of the Oak Park Senior Villas, a 65-unit affordable (50% to 55% of area median income) senior housing property located at 2597 S. Richelle Avenue in southeast Fresno. The City provided OPS Villas, LP with two HOME loans totaling $4,885,000. The $4,185,000 loan carried an interest rate of 2% with repayment from 50% of the property's annual residual receipts, and the $700,000 loan carried zero percent interest with a deferred payoff to July 1, 2063. The HOME funds to OPS Villas, LP were set up as loans so that Ashwood Construction (the developer), could acquire debt on the property and thereby be eligible to apply for and receive an allocation of Low-Income Housing Tax Credit equity, which was one of the main sources of financing of the project. The construction cost was approximately $13 million of which 4 percent Low Income Housing Tax Credit equity and Bonds served as the primary financing. On or about February 20, 2026, OPS Villas, LP received a Notice of Mandatory Redemption from the Federal HOME Loan Mortgage Corporation (Freddie Mac), the Bond issuer, in the amount of $5.2 million. As outlined in the notice, $5.2 million is to be due and payable in full at the 180-day expiration date, which falls on September 1, 2026. Rather than pay off the Bond debt, OPS Villas, LP is requesting an assignment of the HOME loan documents (HOME Agreement, Amendment No. 1 to HOME Agreement, Deed of Trust with Assignment of Rents, Declaration of Restrictions, Amended Declaration of Restrictions, and Promissory Notes) to a Fresno Council approved successor. After discussions between OPS Villas, LP and the Housing Authority regarding the upcoming Bond expiration, the Housing Authority reached out to the City and requested an assignment and assumption of the HOME loan documents, thereby taking ownership of the Oak Park Senior Villas property on or before September 1, 2026. The Housing Authority has also requested a restructuring of the two outstanding HOME loans in the amount of $4,885,000 plus $1.4 million in accrued interest to a revised amount of $2,598,148 at 2% interest, payable from 50% of the property's annual residual receipts. The approximate $3,686,852 principal/interest reduction will bring the outstanding debt in line with the current property valuation. In return for the reduction, the Housing Authority has offered to extend the period of affordability (from 2063 to 2081) an additional 18 years. The Housing Authority owns and manages thousands of affordable housing units for lower income households in Fresno and is an appropriate successor for ownership and management of the HOME loan and the Oak Park Senior Villas property. Once the Housing Authority determines if it will hold the property or an affiliate of the Housing Authority will hold the property, staff will prepare the revised HOME loan documents for execution and recordation. ENVIRONMENTAL FINDINGS This is not a project for the purposes of the California Environmental Quality Act or the National Environmental Policy Act. LOCAL PREFERENCE Local preference is not applicable as this is not a solicitation for a contract or funding. FISCAL IMPACT The City will receive 50% of the Oak Park Senior Villas property's annual residual receipts as repayment of the $2,598,148 HOME loan with any balance of principal and interest due in full at loan maturity. Attachments: Exhibit A - Assignment Request from OPS Villas, LP Exhibit B - Assumption Request from Housing Authority of the City of Fresno Exhibit C - Assignment and Assumption Agreement for HOME Loan Documents