HomeMy WebLinkAbout11233Docusign Envelope ID: F7DAOB00-303A-89D5-80B1-1872730DE4E3
ORDINANCE NO.11233
AN ORDINANCE AUTHORIZING THE DIRECTOR OF FINANCE
TO FORGIVE INTEREST ACCRUED TO A 2005 AFFORDABLE
HOUSING DEVELOPMENT LOAN AGREEMENT UPON
REPAYMENT IN FULL OF THE PRINCIPAL BALANCE,
RELATED TO THE VILLAS OF PUEBLO II AFFORDABLE
HOUSING PROJECT, AND TO DIRECT THE REPAID FUNDS
TO THE CITY'S HOME PROGRAM AS PROGRAM INCOME
WHEREAS, In October of 2005, Council approved Resolution No. 10547 authorizing a
HOME fund loan in the amount of $500,000 to finance the development of the Villas at Pueblo II
Affordable Housing Project, and
WHEREAS, to secure repayment of the full loan principal debt and in furtherance of the
City's affordable housing initiatives, it is in the City's best interest to forgive outstanding interest
accrued upon repayment of the full principal sum; NOW, THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that:
SECTION 1
Upon repayment of the full principal balance of $500,000 of the Affordable Housing
Development Loan Agreement, the Director of Finance is authorized to forgive interest accrued
under the Agreement and Promissory Note and conclude repayment of the Note.
SECTION 2.
Upon repayment of the full principal balance of $500,000 of the Affordable Housing
Development Loan Agreement, the Director of Finance is authorized to forgive interest accrued
under the Agreement and Promissory Note and conclude repayment of the Note.
SECTION 3.
The officers of the City are authorized and directed to perform any and all acts
consistent with the intent of this Ordinance to effectuate the policies and procedures described
herein.
SECTION 4.
This Ordinance shall become effective immediately upon final passage.
Action by City Council:
Introduced and initial adoption of Ordinance by City Council on July 13, 2026.
Final adoption of Ordinance by City Council on July 27, 2026. FDOCUSigned by:
auff
President of City Council
Docusign Envelope ID: F7DAOB00-303A-89D5-80B1-1872730DE4E3
Action by the Mayor:
5� Approved on 07/29/2026
❑ Disapproved on
based on the following objections:
Mayor
Action by City Council After Disapproval by the Mayor:
❑ Council did not act to override the Mayor's veto.
❑ Ordinance re -adopted on a vote of , on
❑ Council action on failed to override the Mayor's veto.
President of City Council
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Docusign Envelope ID: F7DAOB00-303A-89D5-8OB1-1872730DE4E3
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Background Paper for Proposed
Ordinance
COUNCIL MEETING DATE: July 27, 2026
TO: President Mark Aliff and Members of City Council
CC: Mayor Heather Graham
VIA: Clyde Bishop, City Clerk
FROM: Melissa Cook, Director Department of Housing & Citizen Services
SUBJECT: AN ORDINANCE AUTHORIZING THE DIRECTOR OF FINANCE TO
FORGIVE INTEREST ACCRUED TO A 2005 AFFORDABLE HOUSING
DEVELOPMENT LOAN AGREEMENT UPON REPAYMENT IN FULL OF
THE PRINCIPAL BALANCE, RELATED TO THE VILLAS OF PUEBLO II
AFFORDABLE HOUSING PROJECT, AND TO DIRECT THE REPAID
FUNDS TO THE CITY'S HOME PROGRAM AS PROGRAM INCOME
SUMMARY:
Attached is a proposed Ordinance authorizing the Director of Finance to grant
forgiveness of outstanding interest owed pursuant to a 2005 Affordable Housing
Development Loan Agreement ("Agreement") and associated Promissory Note as
requested by the developer of the Village at Pueblo II.
The purpose of this Ordinance is to formally conclude the repayment of the Villas at
Pueblo II affordable housing development, accept repayment of the original principal
investment of $500,000, authorize the forgiveness of all accrued interest, and return the
repaid principal to the City's HOME Program as program income for future affordable
housing initiatives.
PREVIOUS COUNCIL ACTION:
In October of 2005, Council approved Resolution No. 10547 approving an Affordable
Housing Development Loan Agreement with Opportunity Builders.
BACKGROUND:
The City of Pueblo entered into an Agreement with Opportunity Builders ("Developer")
for the purpose of creating long term, deed restricted affordable housing. Under this
Agreement, the City provided a HOME funded loan in the principal amount of $500,000
to support the development. The Villas at Pueblo II is a 42-unit family duplex
development located along Westview Drive, east of Pueblo Boulevard and west of
Perry Avenue.
Docusign Envelope ID: F7DAOB00-303A-89D5-80B1-1872730DE4E3
Under the terms of the promissory note, monthly payments made in satisfaction of this
debt are capped at 100% of net cash flow from the project. Due to project financing
limitations and the long-term affordability requirements, the project is not financially able
to repay the interest accrued over the development and stabilization period. Requiring
repayment of both principal and interest would prevent the project from successfully
refinancing and would result in the project not repaying the principal balance.
The project has now reached the point of refinancing and long-term permanent
financing. As part of this refinancing, the Developer is prepared to make a balloon
payment that fully repays the original $500,000 principal debt.
As of June 2026, approximately $353,344.57 has accrued in interest upon the debt. In
the national affordable housing finance sector, forgiving accumulated interest on long-
term, deed -restricted affordable housing loans is a common practice. Public lenders
such as municipalities, state housing finance agencies, and federal HOME participating
jurisdictions routinely forgive or reduce accrued interest, particularly where repayment
would create a financial burden that threatens project sustainability or interferes with
long-term affordability obligations. The HOME Program's administrative guidance, HUD
technical assistance materials, and industry professionals widely recognize this
practice.
FINANCIAL IMPLICATIONS:
This ordinance will authorize the Director of Finance to forgive approximately
$353,344.57 in accrued interest upon the receipt of the full principal payment of
$500,000.00.
The funds received would be recorded as HOME Investment Partnership Program
Income and recorded in account HOLA26 for future housing initiatives.
BOARD/COMMISSION RECOMMENDATION:
Not applicable to this Ordinance.
STAKEHOLDER PROCESS:
Not applicable to this Ordinance.
ALTERNATIVES:
The City may choose not to forgive accrued interest on Villas at Pueblo II Project,
however, doing so would jeopardize its ability to secure full repayment of the principal
amount.
RECOMMENDATION:
Approve the Ordinance.
ATTACHMENTS:
1. Villas at Pueblo 2 Promissory Note
2. Resolution 10547