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Affordable Housing Project at 2530 & 2534 Westminster Avenue <br />May 17, 2022 <br />Page 4 <br />2 <br />6 <br />8 <br />9 <br />Selection of Tenants: Community Development Partners shall give preference in <br />leasing units to residents that live and/or work in the City of Santa Ana. <br />The Loan Agreement has been signed by Community Development Partners to <br />acknowledge their acceptance of the terms. <br />Loan Agreement – Inclusionary Housing Funds and Rental Rehabilitation Program Funds <br />The Inclusionary Housing Loan Agreement is attached as Exhibit 4 and the Rental <br />Rehabilitation Program Loan Agreement is attached as Exhibit 5. All of the loan terms <br />are the same as the HOME Loan Agreement above except for the Loan Amounts below: <br />Loan Amount: $1,514,113 principal amount from the Inclusionary Housing fund <br />o Disbursement Schedule/Budget: 90 percent of the funds will be disbursed <br />upfront for the construction, with a 10-percent contingency. Four hundred <br />thousand dollars ($400,000) of the loan proceeds will be set-aside as a <br />“City-Controlled Contingency Allowance.” Any funds remaining in the <br />Contingency Allowance at the end of construction must be utilized for a <br />surrounding community benefit. In addition, $100,000 of the $2.50 million <br />Developer Fee will be contributed to a surrounding community benefit.. <br />Loan Amount: $386,523 principal amount from the Rental Rehabilitation Program <br />fund <br />The Loan Agreements have been signed by Community Development Partners to <br />acknowledge their acceptance of the terms. <br />Subordination Agreements <br />Regarding the Subordination Agreement with Umpqua Bank, the City’s total loans for this <br />project is equal to $3,904,341, compared to Umpqua Bank’s larger loan of $40,200,000. <br />As a subordinate loan for a large affordable housing project such as this, it is standard <br />practice for a private market senior lender to request a Subordination Agreement for the <br />City’s smaller loans in order to permit the senior lender to complete their underwriting and <br />commit their private market financing. The Subordination Agreement will ensure the <br />senior lender will be paid back before the City’s loan. The Subordination Agreement is <br />attached as Exhibit 6. <br />Regarding the future Subordination Agreement with the State of California Department of <br />Housing and Community Development (HCD), HCD requires the City as a subordinate <br />government lender to enter into a Subordination Agreement. HCD’s loan will be disbursed <br />at the permanent loan conversion when the project is complete. Therefore, HCD has not <br />prepared this Subordination Agreement at this time and it will be provided after the project <br />is complete. <br />Regarding the future Subordination Agreement with Citibank, Citibank is the permanent <br />lender and will be purchasing the construction loan from Umpqua Bank. At that point, <br />Citibank will be requesting the City to enter into a Subordination Agreement to <br />subordinate the City’s three loans to Citibank’s permanent loan.