Item 39 - Affordable Housing Project at 2530 & 2534 Westminster Avenue

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Affordable Housing Project at 2530 & 2534 Westminster Avenue May 17, 2022 Page 3 2 6 8 9 housing project located at 2530 and 2534 Westminster Avenue, Santa Ana, CA 92701 (APNs 198-132-21 and 198-132-23). The staff report from April 7, 2020 is attached as Exhibit 1 and the pre-commitment letter is attached as Exhibit 2. After the City Council approves a pre-commitment of funding for an affordable housing project, it takes a substantial amount of time for a developer to secure their remaining sources of financing in their capital stack. The majority of large multi-family affordable housing projects require Low-Income Housing Tax Credits which are very competitive for the higher value 9-percent Tax Credits with only two application deadlines a year and more difficult to finance with the lower-value 4-percent Tax Credits. In this case, Community Development Partners applied for various other sources of financing through the County of Orange, Orange County Housing Finance Trust, and 4-percent Tax Credits. After two years since Community Development Partners received a commitment of funding from the City, Community Development Partners is prepared to close on their financing and begin construction of the project. In order for Community Development Partners to develop Westview House and in accordance with the pre-commitment letter approved by the City Council on April 7, 2020, staff is recommending approval of a Loan Agreement for $2,003,705 in HOME Investment Partnerships Program funds, a Loan Agreement for $1,514,113 in Inclusionary Housing funds, a Loan Agreement for $386,523 in Rental Rehabilitation Program funds, a Subordination Agreement with Umpqua Bank as the senior lender, and a resolution for the issuance of revenue bonds, for the development of the Westview House affordable housing project (“Project”) located at 2530 and 2534 Westminster Avenue, Santa Ana, CA 92701. Loan Agreement – HOME Investment Partnerships Program Funds The HOME Investment Partnerships Program Loan Agreement is attached as Exhibit 3. The following loan terms are incorporated into the Loan Agreement: Borrower: Westview House LP Loan Amount: $2,003,705 principal amount from the HOME Investment Partnerships Program (the "HOME Program”) Interest Rate: 3% simple interest per year Term: fifty-five (55) years from the date of issuance of the Certificate of Completion for the Project. Terms of Repayment: Repaid from fifty percent (50%) of residual receipts (pro- rata with payments due in connection with other financing provided) calculated by taking the Annual Project Revenues from the Property for each year, less deductions for Annual Operating Expenses. Disbursement Schedule/Budget: 90 percent of the funds will be disbursed upfront for the construction, with a 10 percent contingency. $100,000 of the $2.50 million Developer Fee will be contributed to a surrounding community benefit.