RES-8849 Rehabilitation Loan Agreement Regarding 1837-1841 Adams AvenueRESOLUTION NO. 8849
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF ORANGE APPROVING A REHABILITATION LOAN
AGREEMENT BY AND BETWEEN THE CITY OF
ORANGE, THE ORANGE REDEVELOPMENT AGENCY
AND ORANGE HOUSING DEVELOPMENT
CORPORATION REGARDING 1837-1841 EAST
ADAMS AVENUE AND MAKING CERTAIN
FINDINGS.WHEREAS, pursuant to Sections 33334,2(a) and 33334,6(c) of the
Community Redevelopment Law (commencing with Section 33000 of the Health and Safety Code
and hereinafter referred to as the "CRL") not less than 20% of all taxes which are allocated to
the Orange Redevelopment Agency ("Agency") are set aside by the Agency in its Low-
and Moderate-Income Housing Fund ("Housing Fund") and used by the Agency for the
purpose of increasing. improving and preserving the community's supply of low-
and moderate-income housing available at affordable housing costs to persons and families of
low- and moderate-income, including very low income persons
and families; and WHEREAS, pursuant to Section 33334.2(e) of the CRL, the Agency
may exercise any and all of its powers to carry out
this purpose; and WHEREAS, pursuant to Section 33334,6(a) of the CRL, the
California State Legislature has found and declared that the provision of affordable housing outside
of redevelopment project areas can be of direct benefit to those projects in assisting the
accomplishment of
project objectives; and WHEREAS, pursuant to Section 33334.2(g) of the CRL, the Agency
may use Housing Funds to assist in the provision of housing for very low-, low-
and moderate-income households outside the boundaries of its redevelopment project areas upon resolution of
the City Council and the Agency that such use will be of benefit to
the redevelopment projects; and WHEREAS, Orange Housing Development
Corporation, a California nonprofit corporation ("OHDC"), has entered into an agreement for the acquisition
of certain improved real property located at 1837-1841 East Adams Avenue (the "Site"),
which is located outside the boundaries of the City'
s redevelopment project areas; and WHEREAS, the Site is improved with three dwelling
units, which units OHDC has inspected and believes to be suitable for the provision
and
maintenance of affordable housing;and WHEREAS, OHDC has requested the assistance of the
Agency to make available to OHDC $48,544 in Housing Funds to be used to rehabilitate the Site
and, thereafter, to cause the dwelling units at the Site to be made available and rented to persons
and families of low and moderate income for thirty (30) years (the "Project"), as more fully
set forth in a Rehabilitation Loan Agreement ("Agreement") by and among the City, the Agency
and OHDC in
WHEREAS, in addition to the Agency grant of funds, OHDC has requested the assistance
of the City to make available to OHDC a loan in the amount of$96,056 from funds made available
to the City by the U. S. Department of Housing and Urban Development ("HUD") under the
HOME Investment Partnerships Act Program (the "HOME Program") in accordance with the
regulations issued by HUD set forth in 24 CFR Part 92 (the "HOME Regulations"); and
WHEREAS, the City Council desires to make available to OHDC the loan of HOME
Program funds in the amount of $96,056 in accordance with the terms and provisions of the
Agreement; and
WHEREAS, the City Council desires to find and determine that the use of a portion of
the funds from the Housing Fund outside the boundaries of the City's redevelopment project
areas for the Project in accordance with the terms and provisions of the Agreement, is for the
benefit of the City's redevelopment project areas and is in the vital and best interests of the City
of Orange and the health, safety and welfare of its residents, and in accord with the public
purposes and provisions of applicable federal, state and local laws and requirements, and
contemplates the use of varied sources of private financing in counection with the acquisition of
the Site by OHDC; and
WHEREAS, while OHDC has attempted to obtain private financing on favorable terms
which would not require the subordination of long-term affordability covenants, all of
those lenders who have expressed an interest in providing financing for the proposed acquisition
have indicated that they will require that the lien securing repayment of their loan must be superior
to any long-term affordability covenants in favor of the
Agency; and WHEREAS, based upon the foregoing, as well as the past experience of
OHDC in connection with obtaining permanent financing, it is anticipated that it will be necessary
as a condition to obtaining private funding for the acquisition of the Site by OHDC that
the Agency subordinate its affordability
covenants; and WHEREAS, Section 33334.14 of the CRL provides, in part, that
affordability covenants of an Agency may be subordinated "where the agency makes a finding that
an economically feasible alternative method of financing, refinancing, or assisting the units or
parcels on substantially comparable terms and conditions, but without subordination, is
not reasonably available, and where the agency obtains written commitments reasonably designed to
protect the agency's investment in the
event
of
default..."; and WHEREAS, based upon material presented to the Agency, there is not
an economically feasible alternative method of financing available on substantially comparable
terms; and WHEREAS, in the event the Agency subordinates its affordability
covenants, the Agency shall have certain rights to notice and cure in the event of default under such loan
as to which the Agency subordinates its affordability
covenants; and WHEREAS, the City Council and the governing board of the Agency
have duly considered all terms and conditions of the Agreement and believes that the activities
described
the Agreement are in the best interests of the City and health, safety, morals and welfare of its
residents, and in accord with the public purposes and provisions of applicable State and local law
requirements, and that such activities promote the affordable housing objectives of the CRL as
well as the Redevelopment Plans for the Northwest, Southwest and Tustin Street Redevelopment
Projects;
NOW, THEREFORE, the City Council of the City of Orange resolves, on the basis of
the facts set forth in the agenda report presented to it and any testimony received at the meeting
at which this matter was considered, as follows:
Section 1. That the Agency's use of funds from the Housing Fund in the amount of
48,544 for the Project will be of benefit to the City's redevelopment projects.
Section 2. That the provision of affordable housing pursuant to the Agreement is of
benefit to each of the following redevelopment projects and their project areas: the Tustin Street
Redevelopment Project; the Southwest Redevelopment Project; and the Northwest
Redevelopment Project.
Section 3. That an economically feasible altemative method of financing, refinancing, or
assisting the units or parcels on substantially comparable terms and conditions, but without
subordination, is not reasonably available, and the Agency shall obtain written commitments
reasonably designed to protect the Agency's investment in the event of default.
Section 4. The City Council approves the terms and provisions of the Agreement and
hereby authorizes and directs the Executive Director of the Agency to execute the Agreement on
behalf of the Agency and to take all steps and sign all documents and instruments to carry out the
Agreement on behalf of the Agency, and such agreements or other instruments as may be
necessary or convenient to effectuate the subordination of affordability covenants unless it is
hereafter determined by the Executive Director of the Agency that such subordination is not
necessary,
Section 5. Moreover, the City Council hereby authorizes and directs the City Manager to
execute the Agreement on behalf of the City and to take all steps and sign all documents and
instruments to carry out the Agreement on behalf of the City, and such agreements or other
instruments as may be necessary or convenient to effectuate the subordination of affordability
covenants unless it is hereafter determined by the City Manager that such subordination is no1
necessary,
3
ADOPTED this ~ th day of December, 1997,
ATTEST:
jAd~4i/-u ~A''''~A"/-City
Clerk ofth ity of Orange I
hereby certify that the foregoing Resolution was duly and regularly adopted by the City Council
of the City of Orange at a regular meeting thereof held on the ~ th of Decembe~1997,
by the following vote:AYES:
NOES:
ABSENT:
COUNCIL
MEMBERS: Murphy I Slater I Coontz I Spurgeon I Al varez COUNCIL
MEMBERS: None COUNCIL
MEMBERS: None ABSTAIN:
COUMCIL MEMBERS: None fJA~
Jc~/L/lA'City
Clerk o~ City of Orange TJR:
dg Reso
No. 8849 4