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Report regarding a resolution authorizing the City Manager or designee to execute a loan agreement of up to $7,867,409 with Rotary Plaza, Inc. or Rotary Gardens, L.P. for the development of affordable senior housing at 500 Linden Avenue. (Pierce Abrahamson, Management Analyst)
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RECOMMENDATION
Staff recommends that the City Council authorize the City Manager or designee to execute a loan agreement of up to $7,867,409 with Rotary Plaza, Inc. or Rotary Gardens, L.P. to support the development of affordable senior housing at 500 Linden Avenue, referred to as Phase One of the Rotary Gardens affordable housing project at 500 and 522 Linden Avenue.
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BACKGROUND
In Summer 2023, the South San Francisco Rotary Club informed the City of a potential affordable housing project at the Liberty Bank site located at 500 and 522 Linden. Since then, the Rotary Club and its development partner Beacon Development (together referred to as the “Project Team”) have collaborated closely with the City to advance a two-phase development project, known as Rotary Gardens. The first phase includes an 80-unit, 100% affordable senior housing building located at 500 Linden (“Senior Project”), and the second phase consists of a 64-unit affordable family building located at 522 Linden (“Family Project”). Both buildings were approved ministerially on July 2, 2025 - each standing six stories or approximately 75 feet tall.
On January 14, 2026, City Council adopted Resolution 01-2026 authorizing a loan of up to $7,867,409 and directed staff to draft, negotiate, and return to Council for the approval of a loan agreement. Additionally, the Senior Project received a Low-Income Housing Tax Credit (LIHTC) award and is advancing towards closing for its construction financing. The Project Team is now requesting the City approve the loan agreement.
Please note that the loan agreement leaves the Borrower blank as included in the agenda packet. This is because Rotary Plaza Inc. is seeking to assign its rights and obligations in the Senior Project to Rotary Gardens, L.P., and once assignment is completed (for which an assignment agreement would be executed between these two entities and the City), the loan agreement would be to Rotary Gardens, L.P. who would also be responsible for constructing the Senior Project.
DISCUSSION
The Senior Project has a project readiness deadline of November 9, 2026, for financial closing. This means that all funding commitments, such as the City’s loan agreements, must be fully executed by this deadline for the Senior Project to move forward on schedule. As such, the resolution being considered by the City Council would authorize the execution of a $7,867,409 Commercial Linkage Fee Fund loan agreement that Council previously authorized staff to draft, negotiate, and return to Council for approval. The Developers anticipate construction commencing in November 2026.
The Senior Project is estimated to cost $110 million. Funding sources include an approximately $30 million tax credit and bond award, Citibank loans totaling approximately $42 million, an approximately $17.8 million loan from the County of San Mateo, and a remainder amount from the City's loans and sponsor loans. The City’s total financial contribution toward the Senior Project is approximately $9.6 million. The involvement of various financial sources is a common and necessary practice for affordable housing projects. The City’s continued support plays a vital role in the overall success of this first phase of the Rotary Gardens affordable housing development. The financing path for Rotary Gardens’ phase two Family Project is being evaluated by the Project Team, which is likely to include applications to various state or federal funding sources, with updates provided to the City at a later date.
FISCAL IMPACT
During the January 14, 2026 City Council meeting, Council approved Budget Amendment Number 26.057 that appropriated unencumbered Commercial Linkage Fee Funds (Fund 823) toward Senior Project in an amount not to exceed $7,867,409. Because the Budget Amendment and carryforward appropriations have been approved, as has the approximate $1,227,935 impact fee waiver that was a secondary consideration of the January 14, 2026 resolution, there is no additional fiscal impact to approving this resolution concerning the loan agreement and related documents. There is no impact to the General Fund as a result of this recommended City Council action.
RELATIONSHIP TO CITY COUNCIL PRIORITIES ACTION PLAN
Approval of this action will contribute to the City’s Strategic Plan. It aligns with the Housing and Supportive Services major focus area, which is focused on encouraging a balanced housing supply.