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Home My WebLink AboutSR - AGR-6230 - AFFORDABLE HOUSING LOAN AGREEMENTAGENDA ITEM June 9, 2015 f? " 4? . � TO: Honorable Mayor and Members of the City Council THRU: Rick Otto Interim City Manager FROM: Anna Pehoushek V Acting Assistant Community Development Director ReviewedNerified B . City Manager Finance Direc To Be Presented By: Mary Ellen Laster X Consent Calendar _ City Mgr Rpts Council Reports _ Legal Affairs Boards /Cmtes _ Public Hrgs Admin Reports Plan/Environ 1. SUBJECT Affordable Housing Loan Agreement by and between the City of Orange and Lemon Grove, LP Relating to 1148 North Lemon Street 2. SUMMARY 7-71 Lemon Grove, LP plans to develop the Lemon Grove Apartments, an 82 -unit affordable housing project to be located at 1148 North Lemon Street. The estimated total development cost of the project is $28,799,957. Proposed financing includes tax exempt bonds, private financing, two City loans funded with Low and Moderate Income Housing Asset Funds (LMIHAF) and HOME Investment Partnerships (HOME) funds, private financing, and tax credits. The Affordable Housing Loan Agreement under consideration sets forth the terms of the City's financial assistance. 3. RECOMMENDATION (1) Adopt Resolution No. 10869 - A Resolution of the City Council of the City of Orange Approving an Affordable Housing Loan Agreement by and between the City of Orange and Lemon Grove, LP relating to 1148 North Lemon Street and Making Certain Findings. (2) Authorize the City Manager to execute the Agreement and all related documents on behalf of the City. 4. FISCAL IMPACT A total of $8,050,000 was appropriated for this project as follows: • 921.9810.56571.20249 (LMIHAF Loan - Lemon Grove Apartments) - $6,750,000 • 317.9660.56571.20249 (HOME Loan - Lemon Grove Apartments) - 1,300,000. ITEM 1 R 6/9/15 ITEM: 3. DATE 0��y� Lemon Grove Apartments Affordable Housing Loan Agreement Page 2 5. STRATEGIC PLAN GOAL(S) Goal 3: Enhance and promote quality of life in the community. Strategy c.: Support and enhance attractive, diverse living environments. 6. GENERAL PLAN IMPLEMENTATION Land Use Goal 1.0: Meet the present and future needs of all residential and business sectors with a diverse and balanced mix of land uses. Policy 1.3: Provide a range of housing densities and types to meet the diverse needs and lifestyles of residents. Housing Goal 2.0 Assist in the development of adequate housing to meet the needs of Low and Moderate Income households. 7. DISCUSSION and BACKGROUND Lemon Grove, LP, a partnership of Orange Housing Development Corporation and C &C Development Co., LLC (the "Developer ") plans to develop the Lemon Grove Apartments, an 82- unit affordable housing project to be located at 1148 North Lemon Street. The project would consist of 24 two - bedroom units including one manager's unit and 58 three - bedroom units, and be in the same neighborhood as the 57 -unit Citrus Grove Apartments that were completed by the same development team. The total estimated development cost of the project is $28,799,957. Proposed financing includes the following: Permanent Funding Source Amount Tax Exempt Bond Financing $ 9,909,980 LMIHAF — City Loan 6,750,000 HOME - City Loan 1,300,000 Bank of America Settlement Funds Loan 1,600,000 Deferred Developer Fee 1,427,489 General Partner Equity 100 Four Percent Tax Credit Equity Investment 7,812,388 Total $ 28,799,957 On March 10, 2015, the City Council held a Tax Equity and Fiscal Responsibility ( "TEFRA ") public hearing to authorize the issuance of conduit tax exempt bonds by the California Municipal Finance Authority ( "CMFA ") for the project. The TEFRA hearing was conducted to comply with State and Federal law. The City has no obligation, liability or responsibility for the project or the repayment of the bonds issued by CMFA. ITEM 2 6/9/15 O Printed on Recycled Paper Lemon Grove Apartments Affordable Housing Loan Agreement Page 3 On March 10, 2015, Council also approved the entitlements for the project, and the preliminary award and appropriation of LMIHAF in the amount of $6,750,000 and HOME funds in the amount of $1,300,000 to fund the two City loans for the project. The LMIHAF account is funded with program income deposits held by the City in its capacity as the Housing Successor to the former Orange Redevelopment Agency. The HOME account is funded with HOME grant allocations from the U.S. Department of Housing and Urban Development. The attached Affordable Housing Loan Agreement sets forth the terms and conditions of the City's proposed financial assistance including repayment of the two loans on a residual receipts basis. In return for the assistance and the tax credits, 81 of the units would remain affordable to Extremely Low to Low Income families for 55 years including 33 units that would be restricted by the City through a recorded Regulatory Agreement. Staff believes that the project offers the City an excellent opportunity to address housing needs by providing quality, affordable apartments for families. Council action is being requested to approve, execute, and implement the Agreement. 8. ATTACHMENTS • Resolution No. 10869 • Affordable Housing Loan Agreement N: \CDD\HOUSING\Prcjects\Lamon Grove \Staff Reports \6 -9 -15 Aff Housing Loan Agmt ITEM 3 6/9/15 Q Printed on Recycled Paper RESOLUTION NO. 10869 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ORANGE APPROVING AN AFFORDABLE HOUSING LOAN AGREEMENT BY AND BETWEEN THE CITY OF ORANGE AND LEMON GROVE, LP RELATING TO 1148 NORTH LEMON STREET AND MAKING CERTAIN FINDINGS WHEREAS, the Orange Redevelopment Agency was created, and operated in the City of Orange, pursuant to the California Community Redevelopment Law (commencing with Section 33000 of the California Health and Safety Code) (as amended from time to time, the "CRL "); and WHEREAS, the Amended and Restated Redevelopment Plan for the Orange Merged and Amended Redevelopment Project Area (the "Merged Redevelopment Project Area ") was duly approved by the Orange City Council on November 27, 2001 by Ordinance No. 21 -01, pursuant to the CRL; and WHEREAS, Assembly Bill No. X1 26 (2011 -2012 1st Ex. Sess.) became effective on June 28, 2011, adding Part 1.8 (commencing with Section 34161) and Part 1.85 (commencing with Section 34170) to Division 24 of the CRL, which was amended by Assembly Bill No. 1484 (Chapter 26, Statutes 2012), which became effective on June 27, 2012; and WHEREAS, pursuant to Section 34176 of the CRL, the City adopted Resolution No. 10626, on January 24, 2012, electing to retain the housing assets, rights, powers, duties, obligations, and functions previously performed by the dissolved Orange Redevelopment Agency; and WHEREAS, pursuant to the CRL, the City has established a Low and Moderate Income Housing Asset Fund and has deposited therein certain revenues made available to the City under the CRL exclusively for the purpose of increasing, improving and preserving the community's supply of affordable low income housing, including very low income housing ( "Housing Asset Fund "); and WHEREAS, pursuant to the CRL, the City may use Housing Asset Funds to assist in the provision of housing for extremely low, very low, and low income households; and WHEREAS, pursuant to the CRL, the City may exercise any and all of its powers to carry out this purpose; and WHEREAS, the City is responsible for administering the use of certain funds made available to the City by the United States Department of Housing and Urban Development ( "HUD ") under the HOME Investment Partnerships Program (the "HOME Program ") in -1-