REPORT TO THE CITY COUNCIL FROM: JENNIFER CLARK, Director Planning and Development Department BY: PHIL SKEI, Assistant Director Planning and Development Department CORRINA NUNEZ, Project Manager Community Development Division SUBJECT ..Title Actions pertaining to the Blythe Village LP Loan Amendments for the Blythe Village project located at 3572 N. Blythe Avenue, 93722 in west central Fresno (District 1): Approve a First Amendment to the Community Development Block Grant Program Agreement and a First Amendment to the Community Development Block Grant Promissory Note; and Approve a Second Amendment to the HOME Investment Partnerships Program Agreement and a Second Amendment to the HOME Investment Partnerships Program Promissory Note; and Authorize the City Manager to sign the amendments, approved as to form by the City Attorney’s Office. ..Body RECOMMENDATION Staff recommends the City Council approve a First Amendment to the Community Development Block Grant (CDBG) Program Agreement, a First Amendment to the CDBG Promissory Note, a Second Amendment to the HOME Investment Partnership (HOME) Program Agreement, a Second Amendment to the HOME Promissory Note, and authorize the City Manager to sign the amendments, approved as to form by the City Attorney’s office. EXECUTIVE SUMMARY The First Amendment to the CDBG Agreement, Second Amendment to the HOME Agreement, and amended Promissory Notes will provide for the developer to convert to permanent financing while paying off selected project costs such as the construction loan, developer fee, construction management fee, and equity capital investment. BACKGROUND On June 19, 2026, the Housing and Community Development Division received a request from the developer for the City’s subordination to a permanent loan in the amount of $15 million, a higher amount than that listed in the CDBG and HOME project budgets. This request did not fully conform with existing language in the HOME and CDBG agreements (section 2.7 Subordination) and so amendments are required. In order to accommodate the developer’s request to convert to a $15 million permanent financing loan and have the City subordinate to the senior lender, it is necessary to amend both the CDBG and HOME agreements (section 2.7 Subordination) to include other project related costs not listed in the budget and amend the related Promissory Notes to eliminate those items paid through the conversion so that those same items cannot be paid again from the project proceeds. In most projects, typically tax credit projects, some costs are paid as priority from the project’s annual cash flow and/or annual residual receipts. In this case, the project was primarily privately funded with the project cost items being paid at the conversion to permanent financing rather than incrementally with annual cash flow and/or residual receipts. All other terms and conditions of the CDBG and HOME agreements and Notes remain the same. The project items to be paid through the $15 million conversion are the $9.5 million construction loan, $861,782 developer fee, $355,000 construction management and administrative fee, $274,337 refinancing costs and reserves, and $4,008,880 capital equity investment. The developer’s close date on the permanent financing is September 24, 2026. If the developer cannot meet this deadline with the applicable City subordinations, the developer will be assessed a $285,000 penalty fee. An independent third-party appraisal of the Blythe Village property determined a valuation of $22,900,000, which is more than the combined sum of the $15,000,000 permanent senior financing, $2.6 million HOME funds, and the $400,000 CDBG funds. Therefore, there is more than sufficient equity in the property to fully secure the City's subordinate HOME and CDBG loans in addition to the senior debt. The 67-unit Blythe Village project was successfully completed and reported in HUD’s Integrated Disbursement and Information System on June 29, 2026, and is fully occupied with low-income and market rate tenants. ENVIRONMENTAL FINDINGS On May 2, 2024, the Council adopted a CEQA exemption for the project activities. On March 29, 2024, the City received HUD authorization to use grant funds on the proposed Blythe Village project. These agreement amendments are not a “project” under CEQA. LOCAL PREFERENCE Local preference was not used based on the conditions of federal funding. FISCAL IMPACT The HOME and CDBG residual receipts will be received as outlined in the amended Promissory Notes. There is no impact to the Planning and Development Department’s Fiscal Year 2027 Budget. Attachments: First Amendment to CDBG Agreement and Promissory Note Second Amendment to HOME Agreement and Promissory Note