2014-006 - Santa Ana General Plan Housing Element and Public Safety Element Updates

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HOUSING RESOURCES Table C -12 Preservation Strategy: Rehabilitate and Acquire Units Project Details Senior Projects Family Projects Total Type of Units 3 projects 11 projects 14 projects 594 units 286units 880 units Rehabilitation Costs $55,000 to $85,000 per unit Acquisition /Rehabilitation $75,000 to $120,000 per unit Total Costs Rehabilitation $32.6 to $50.5 $15.7 to $24.3 million $48.3 to $74.8 million $21.4 to $34.3 million million Acquisition /Rehabilitation $44.5 to $71.3 $65.9 to $105.6 million million Source: The Planning Center I DC &E, 2013 Affordable Housing Refinancing The City or the Santa Ana Housing Authority could offer incentives for property owners to refinance their mortgage in return for continuation of income restrictions on units. Either agency could issue tax exempt bonds for the refinance or purchase of properties with expiring use restrictions. This strategy has been successfully used for numerous new construction and rehabilitation housing projects throughout Santa Ana. Wycliffe Plaza is a recent example of the issuance of mortgage revenue and tax - exempt bonds to finance the acquisition and rehabilitation of multifamily rental housing. This financing structure preserved 200 dwelling units, of which 140 were affordable. This extended the project affordability requirements. Other projects might be excellent candidates for bond refinancing or similar mechanisms to restructure outstanding loans. The success of the refinancing option depends on the financial incentives to the owner. If bond structures allow for interest rates well below the rates on the initial mortgage, the owner will have an incentive to refinance. If the City's lower interest rates are not competitive, this option becomes less feasible. Summary As noted above, the City has used nearly every one of these options to preserve or replace affordable housing that has converted to market rates. The particular option that is most suitable and affordable depends on the real estate market, the property owner's intentions, the condition of the property, and a wide range of other conditions. The key in choosing a strategy is to have advanced knowledge of the status of the project so that creative solutions can be devised to not only preserve the units, but do so in a manner that achieves the City's housing production goals set forth by the RHNA mandate. CITY OF SANTA ANA GENERAL PLAN HOUSING ELEMENT C -45 Wycliffe Plaza