The Council approved an amendment to the City’s loan with Diamond Terrace to support the continued financial stability of an 86-unit senior housing development, including 81 income-restricted units, while improving the City’s ability to recover the full outstanding loan balance. The amendment replaces a large near term balloon payment with annual payments through 2040. In addition, the loan amendment eliminates a provision in the original agreement that would have forgiven $500,000 of principal and the end of the loan term.
Quantitatively, the City will receive the full principal ($2.2266 million) currently owed, rather than forgiving $500,000 under the original agreement. The new schedule provides $150,000 annually through 2039 and a final $126,600 payment in 2040. Qualitatively, the restructuring reduces the risk that a large repayment requirement could create financial distress for the property, while helping preserve affordable senior housing in Clayton. The original loan was itself part of the City’s affordable housing program, and City records confirm that Diamond Terrace has historically been financed through non-interest-bearing redevelopment housing loans.
