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Home My WebLink About121806 PH Mtg Rev Bond TEFRA Issuance Tax-Exempt Bonds Loan Agmt Wilshire-Minnie, L.P.REQUEST FOR COUNCIL/ AGENCY /HOUSING AUTHORITY ACTION MEETING DATE: DECEMBER 18, 2006 PUBLIC HEARING - MORTGAGE REVENUE BOND INDUCEMENT AND TEFRA ON ISSUANCE OF TAX- EXEMPT BONDS AND LOAN AGREEMENTS WITH WILSHIRE /MINNIE, L.P. CITY MANAGER EX CUTIVE (RECTOR RECOMMENDED ACTION CITY COUNCIL ACTION CLERK OF COUNCIL USE ONLY: Jt APPROVED P, As Recommended ❑ As Amended 0 UCAcovicy ) ❑ Ordinance on 1st Reading ❑ Ordinance on 2nd Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER 1. Hold a TEFRA (Tax Equity and Financial Responsibility Act) Hearing in consideration of the issuance of multi - family housing revenue bonds by the Housing Authority of the City of Santa Ana for the purpose of financing the acquisition and rehabilitation of seventeen properties located at 1201, 1209, 1213, 1221, 1225, 1229, ,and 1233 East Wilshire and 1401, 1403, 1409, 1413, 1421, 1425, 1429, 1433, 1437, and 1439 South Minnie by Wilshire /Minnie, L.P. 2. Adopt a resolution approving the issuance of tax - exempt bonds for the project. 3. Direct the City Attorney to prepare a loan agreement with Wilshire /Minnie, L.P., for the acquisition and rehabilitation of 1201, 1209, 1213, 1221, 1225, 1229, and 1233 East Wilshire and 1401, 1403, 1409, 1413, 1421, 1425, 1429, 1433, 1437, and 1439 South Minnie in a total amount not to exceed $2.4 million. COMMUNITY REDEVELOPMENT AGENCY ACTION Direct the Agency General Counsel to prepare and authorize the Executive Director to execute loan agreements for the acquisition and rehabilitation of 1201, 1209,1213,1221,1225,1229,and 1233 East Wilshire and 1401, 1403, 1409, 1413, 1421, 1425, 1429, 1433, 1437, and 1439 South 7 -21 P. H. - Mortgage Revenue Bond Inducement and TEFRA on Issuance of Tax - Exempt and Loan Agreements with Wilshire /Minnie, L.P. December 18, 2006 Page 2 Minnie with Wilshire /Minnie, L.P. in a total amount not to exceed $8.1 million. HOUSING AUTHORITY ACTION Adopt a resolution relating to the issuance of bonds for the purpose of financing the acquisition and rehabilitation of seventeen properties located at 1201, 1209, 1213, 1221, 1225, 1229, and 1233 East Wilshire and 1401, 1403, 1409, 1413, 1421, 1425, 1429, 1433, 1437, and 1439 South Minnie by Wilshire /Minnie, L.P. COMMUNITY REDEVELOPMENT AND HOUSING COMMISSION RECOMMENDATION At its Regular Meeting of December 5, 2006, the Community Redevelopment and Housing Commission voted 6:0 (Turner absent) to continue this item to a Special Meeting on December 13, 2006. The results will be reported to the City Council. Orange Housing Development Corporation, a non - profit 501(c) (3) (OHDC) , and C & C Development Company, LLC (C & C) have formed a partnership, Wilshire /Minnie, L.P. to acquire and rehabilitate seventeen apartment buildings containing 164 units located at 1201, 1209, 1213, 1221, 1225, 1229, and 1233 East Wilshire and 1401, 1403, 1409, 1413, 1421, 1425, 1429, 1433, 1437, and 1439 South Minnie (Exhibit 1). OHDC has successfully partnered with the City of Santa Ana and the Community Redevelopment Agency to acquire and rehabilitate 424 units in the City. Its projects include Santiago Villas, an 89 unit seniors only project, Ross - Durant, an acquisition - reconfiguration project offering larger units for families, and the acquisition and rehabilitation of 178 units in Cornerstone Village. OHDC owns and manages 2,626 units located throughout California. C & C has many years of residential development and management experience and previously partnered with OHDC in the Santiago Villas and Ross - Durant projects. As part of the rehabilitation, the partnership is proposing to reconfigure the 164 one - bedroom units into 144 one, two, three and four bedrooms. After the reconfiguration, the unit mix will be 108 one - bedroom, 16 two - bedroom, 18 three - bedroom and 2 four - bedroom units. In 7 -22 P. H. - Mortgage Revenue Bond Inducement and TEFRA on Issuance of Tax - Exempt and Loan Agreements with Wilshire /Minnie, L.P. December 18, 2006 Page 3 addition, the partnership is proposing to provide a community/ learning center for the residents. Rents will be restricted to those affordable low- and very low- income households as described in Exhibit 2. The maximum occupancy will also be restricted to three persons for one - bedroom, four persons for two - bedrooms, six persons for three - bedrooms and eight persons for four - bedrooms. The total cost to acquire, rehabilitate and provide for the level of affordability for these properties will not be met solely through the issuance of bonds and tax credit allocation. Staff is recommending the gap be filled with $2.4 million funded from HOME and $8.1 million from the Community Redevelopment Agency (Exhibit 3). Repayment will be based on residual receipts. These loans are contingent on approval of the bond allocation and tax credits, approval of the relocation plan and any necessary variances by the Planning Commission. In order for the Housing Authority to apply for a bond allocation from the California Debt Limitation Allocation Committee on behalf of the partnership, the Housing Authority must adopt an Inducement resolution relating to the bonds. The Inducement resolution confirms the Housing Authority's intent to issue the bonds and identifies the time at which costs expended on the project qualify for financing with the tax - exempt bonds. The bonds are considered "conduit" obligations. This means that although the Housing Authority will issue the bonds, the owner is actually the borrower and has sole responsibility for repayment. The bonds will be repaid strictly out of the project's cash flow. There is no recourse to the Housing Authority, the City of Santa Ana or the Community Redevelopment Agency. Prior to bonds being sold, the City Council must hold a public hearing as required by the Tax Equity and Fiscal Responsibility Act ( TEFRA) . The public hearing is to solicit comments on the project and the issuance of the bonds. Holding the TEFRA is also a precondition to applying for the bond allocation. Approval of this project will ensure the future integrity and stability of the neighborhood by retaining ownership of seventeen contiguous buildings under one owner, which will be rehabilitated and will have affordability and occupancy covenants. It will also increase the 7 -23 P. H. - Mortgage Revenue Bond Inducement and TEFRA on Issuance of Tax - Exempt and Loan Agreements with Wilshire /Minnie, L.P. December 18, 2006 Page 4 availability of larger affordable housing units. The acquisition and rehabilitation of these properties will assist the City and Agency to meet their affordable housing goals as identified in the Consolidated Plan, Redevelopment Implementation Plan and Housing Element. ENVIRONMENTAL IMPACT In accordance with the California Environmental Quality Act and the National Environmental Policy Act, the proposed project is exempt from further review. Categorical Exemption No. ER 06 -203 will be filed for this project. FISCAL IMPACT Funds for the acquisitions and rehabilitation loans are available in the HOME Program in the amount of $2.4 million (account no.130- 148 -6951) and Tax Increment Housing Set -Aside Fund in the amount of $8.1 million (account no. 507- 936 - 6951). `Yl Nancy T. wards Assistant irector Community Development Agency SGH /SLB /mlr APPROVED AS TO FUNDS AND ACCOUNTS: 4 ��" �" -& fir, ancisco Gutierrez �j Executive Director Finance and Management Services Agency/.,. H: \ACTIONS \2006 CC \JT CC- CRA -HA MortRevBondInduceTefra 12- 18- 06.doc 7-24 7-25 APARTMENT AFFORDABILITY AND UNIT MIX WILSHIRE /MINNIE APARTMENTS Affordability Level Bedrooms N0. of Units Max. Allowable Rent 400 (very -low) 1 11 $581 2 2 $696 3 2 $788 50% (very -low) 1 34 $733 2 3 $878 3 5 $999 4 1 $1,115 60% (low) 1 63 $885 2 10 $1,0611 3 11 $1,210 4 1 $1,350 EXHIBIT 2 7 -26 WILSHIRE /MINNIE SOURCES AND USES BUDGET Funding Sources Amount Tax Exempt Bonds $7,967,109.00 Community Redevelopment Agency (Housing Setaside) $8,100,000.00 City of Santa Ana (HOME Funds) $2,400,000.00 Capital Contribution - General Partner $1,100,000.00 Capital Contribution - Limited Partner (Tax Credits) $7,804,080.00 $27,371,189.00 Funding Uses Amount Acquisition $16,750,000.00 Residential Construction and Related Costs $10,621,189.00 $27,371,189.00 EXHIBIT 3 7-27