RES-ORA-0294 Approving Affordable Housing AgreementRESOLUTION NO. ORA-
0294
A RESOLUTION OF THE ORANGE REDEVELOPMENT
AGENCY APPROVING THE AFFORDABLE HOUSING
AGREEMENT BETWEEN THE AGENCY AND FOREST
CITY PROPERTIES CORPORATION, PERTAINING TO
THE FINANCING AND REHABILITATION OF THE 260-
UNIT VILLA SANTIAGO APARTMENTS; AUTHORIZING
THE EXECUTIVE DIRECTOR TO EXECUTE, ON BEHALF
OF THE AGENCY, THE AFFORDABLE HOUSING
AGREEMENT AND RELATED DOCUMENTS AS
NECESSARY; AND MAKING CERTAIN FINDINGS WITH
RESPECT TO SUCH FINANCING
WHEREAS, Pursuant to the Community Redevelopment Law of the State of
California (the "Redevelopment Law"), the City of Orange has adopted a
redevelopment plan ("Redevelopment Plan") for each of the following Redevelopment
Project Areas, administered by the Orange Redevelopment Agency (the "Agency"):
the Tustin Street Redevelopment Project, the Southwest Redevelopment Project and
the Northwest Redevelopment Project (each one individually referred to as a
Redevelopment Project" and collectively referred to as the "Redevelopment
Projects"); and
WHEREAS, in connection with each of the Redevelopment Plans, the Agency
has established a Low and Moderate Income Housing Fund in accordance with
California Health and Safety Code Section 33334.2 et seq. (the "Housing Funds") , to
provide funding for housing within the City of Orange that is affordable to persons
and families of very low, low or moderate income; and
WHEREAS, Forest City Properties Corporation, a California corporation,
through a wholly owned subsidiary or a partnership in which such subsidiary is the
general partner (collectively, the "Developer") has proposed to acquire the 260-
unit Villa Santiago apartments (the "Project") , located at 11841 Prospect Avenue, in
the City of Orange (the "Property"), to rehabilitate the Property and operate the Project
as rental housing affordable to low income households;
and WHEREAS, Developer has requested the assistance of the Agency
in providing for the fmancing of the Project on the Property, and has submitted to
the Agency a proposal for such assistance (the "Proposal");
and WHEREAS, on the basis of the Proposal, the Agency has prepared a
proposed Affordable Housing Agreement (the "Agreement"), providing for a loan to
Developer in the amount of $3,750,000 and a grant in the amount of $3,750,000, subject to
terms and conditions set forth in the Agreement;
and RESO. NO.
WHEREAS, copies of the proposed Agreement in substantially fmal form
have been presented to this Agency and City Council; and
WHEREAS, pursuant to the proposed Agreement, all 260 of the apartment
units in the Project (the "Affordable Units") will be occupied by and restricted to low
income households, at affordable rents; and
WHEREAS, pursuant to the proposed Agreement, the Project Costs will be
paid from the combined proceeds of a loan and a grant to be made by the Agency to
Developer with Housing Funds from the Redevelopment Projects, Developer's Equity,
and the proceeds of bonds to be issued by the City or loans obtained by Developer;
and
WHEREAS, the Property is located in the City of Orange, but outside any of
the Redevelopment Projects, and, pursuant to the Redevelopment Law, in order to use
Housing I~unds to assist the Affordable Units outside the Redevelopment Projects, the
Agency and the City Council must find that the use of the Housing Funds will be of
benefit the Redevelopment Projects; and
WHEREAS, to implement the fmancing of the Project described in the
Agreement, the Agency is required to subordinate the covenants and restrictions of the
Agreement to the respective security interests and liens of the primary lender; and
WHEREAS, pursuant to the Redevelopment Law, in order to subordinate the
covenants and restrictions of the Agreement to the security interests and liens of a
lender, the Agency is required to fmd that an economically feasible alternative method
of financing the Affordable Units on substantially comparable terms and conditions,
but without subordination, is not reasonably available; and
YBEREAS, the Agency has dilly considered all of the terms and conditions of
the proposed Agreement, and believes that the proposed Agreement is in the best
interests of the City and the health, safety, morals and welfare of its residents, and in
accord with the public purposes and provisions of applicable State and local laws and
requirements; and
WHEREAS, this Agency and the City Council have each held a public
meeting on the proposed Project and the Agreement, after having dilly provided notice
of such public meeting in accordance with State law.
NOW, THEREFORE, mE ORANGE REDEVELOPMENT AGENCY
DOES HEREBY RESOLVE AS FOLLOWS:
RBSO. NO. ORA-0294
2-p-,----'- .m---_-.----.------------- .
1. The Agency recognizes that it has received and heard all oral and written
objections to the proposed Agreement, to the proposed financing of the Project
pursuant to the proposed Agreement, and to other matters pertaining to this
transaction, and that all such oral and written objections are hereby overruled.
2. The Agreement, including all Attachments and Exhibits thereto, is hereby
approved.
3. The Executive Director of the Agency or his designee is hereby authorized to
execute, on behalf of the Agency, the Agreement and each and every Attachment and
Exhibit thereto that is to be signed by the Agency, and to make such changes of a
nonsubstantive nature to such docwnents as the Executive Director or designee shall
deem appropriate. A copy of the Agreement, Attachments and Exhibits, when
executed, shall be placed on file in the office of the Clerk of the Agency.
4. The Executive Director of the Agency or his designee is hereby authorized, on
behalf of the Agency, to sign all docwnents necessary and appropriate to cany out and
implement the Agreement, and to administer the Agency's obligations, responsibilities
and duties to be performed under said Agreement.
5. The Agency hereby authorizes the use of Housing Funds from the
Redevelopment Projects to pay part of the cost of acquiring the Property, relocating
the occupants therefrom and rehabilitating the Project, as provided in the Agreement.
6. The Agency Executive Director or his designee is hereby authorized to execute
such subordination agreements as may be required, in order to subordinate the
Agency's security interest in the Property, as set forth in the Deed of Trust, and
covenants and restrictions set forth in the Agreement Containing Covenants, to the
security interests and liens of any senior lender.
7. The Agency fmds and determines, based on the information set forth in
Attachment No.1 to this Resolution, which. is incorporated herein by this reference,
that the use of the Housing Funds as authorized by this Resolution will be of benefit
to the respective Redevelopment Projects.
8. The Agency fmds and determines, based on the information set forth in
Attachment No.2 to this Resolution, which. is incorporated herein by this reference,
that an economically feasible alternative method of fmancing the Affordable Units on
substantially comparable terms and conditions, but without subordination, is not
reasonably available.
9. This Resolution shall take effect upon adoption.
RESO. NO. ORA-0294 - 3 -
day of August 1995.An OPTED this 22nd
I
r ~~{/tZ~JL-J{i/C--t>-
Z::' /.r C~an, Orange Redevelop
nt
Agency ATTEST:MARILYN ,
1 _ JENSEN Clerk, Orange
Redevelopment Agency BY:~.I-
J &k.
uA'Asslstant erk I hereby certify that the foregoing Resolution was duly
and regularly adopted by the Orange Redevelopment Agency at their regular meeting thereof
held on the 22nd _ day of August , 1995, by
the
following
vote:
AYES:
NOES:ABSENT:ABSTAIN:DIRECTORS: MURPHY, BARREID\,
COONTZ, SPURGEON,
SLATER DIRECTORS:
NONE DIRECTORS:
NONE DIRECTORS: NONE
MARILYN J. JENSEN Clerk,
Orange Redevelopment Agtl1CY
By:{1~~~
t1dv~SSlstant erk RESO.
ATfACBMENT NO.1
TO ORANGE REDEVELOPMENT AGENCY RESOLUTION NO. ORA-
0294 VILLA
SANTIAGO]Benefit to the Redevelopment Protect
Areas The use of funds from the Low and Moderate Income Housing Fund of the
Tustin Street Redevelopment Project, the Southwest Redevelopment Project and
the Northwest Redevelopment Project (collectively referred to as the "
Redevelopment Projects") for the fmancing and development of low income dwelling units in
the Villa Santiago complex located in the City of Orange (the "Villa Santiago
Project") ,will be of benefit to the Redevelopment Projects, as
follows:1. Land use in the Tustin Street Redevelopment Project is currently
limited to commercial, non-residential uses. Accordingly, there are no
reasonable or appropriate opportunities to develop affordable housing in the Tustin
Street Project.In Section 33334.6 of the California Health and Safety Code, the State
Legislature has found and declared that the provision and improvement of affordable
housing outside of redevelopment project areas can be of direct benefit to those projects
in assisting the accomplishment of project objectives whether or not those
redevelopment projects provide for housing within the project area. By improving the
currently deteriorated Villa Santiago complex and providing decent, safe and affordable housing
for low income households in the City of Orange, the Villa Santiago Project will
benefit the Tustin Street Redevelopment Project by providing affordable housing for a
segment of the population of the City, of Orange in need of affordable housing, and
by providing and enhancing the physical, economic and social conditions needed to
prevent the recurrence of blight in the Tustin Street Redevelopment Project and elsewhere
in the City
of Orange.2. Land use in the Southwest Redevelopment Project is limited
primarily to commercial, non-residential uses. Accordingly, there are no
reasonable or appropriate opportunities to develop affordable housing in the
Southwest Redevelopment Project.In Section 33334.6 of the California Health and Safety Code,
the State Legislature has found and declared that the provision and improvement
of affordable housing outside of redevelopment project areas can be of direct benefit to
those projects in assisting the accomplishment of project objectives whether
or not those redevelopment projects provide for housing within the project area.
By improving the currently deteriorated Villa Santiago complex and providing
decent, safe and affordable housing for low income households in the City of
Orange, the Villa Santiago Project will benefit the Southwest Redevelopment
Project by providing affordable housing for a segment of the population of the City of Orange
in need of affordable housing, and by providing and enhancing the physical,
economic and social conditions needed to prevent the recurrence of blight in
the Southwest Redevelopment Project and elsewhere in the
City of Orange.RESO. NO. ORA-
3. Land use in the Northwest Redevelopment Project is limited primarily to
industrial, non-residential uses. Accordingly, there are no reasonable or
appropriate opportunities to develop affordable housing in the Northwest Redevelopment
Project.In Section 33334.6 of the California Health and Safety Code, the State Legislature
has found and declared that the provision and improvement of affordable housing
outside of redevelopment project areas can be of direct benefit to those projects in
assisting the accomplishment of project objectives whether or not those redevelopment
projects provide for housing within the project area. By improving the currently
deteriorated Villa Santiago complex and providing decent, safe and affordable housing for
low income households in the City of Orange, the Villa Santiago Project will benefit
the Northwest Redevelopment Project by providing affordable housing for a segment
of the population of the City of Orange in need of affordable housing, and by
providing and enhancing the physical, economic and social conditions needed to prevent
the recurrence of blight in the Northwest Redevelopment Project and elsewhere in
the City of
Orange.b RESO. NO. ORA.0294 Attachment
No.
1 2-H.._._____~__..__.__._____._._ .--.....-.-..--------
ATTACHMENT NO.2
TO ORANGE REDEVELOPMENT AGENCY RESOLUTION NO. ORA-
0294 VILLA
SANTIAGO)Subordination of Use
Covenants
Section 33334.3(f) of the California Health and Safety Code requires that when the
Agency uses Low and Moderate Income Housing Funds to help fmance the
construction or substantial rehabilitation of rental housing units, the units must be
rented at affordable rents to persons or families of low, moderate or very low income
for the longest feasible time, but not less than fifteen (15) years, and the Agency shall
require covenants or restrictions implementing this requirement to be recorded against
the assisted property.
However, Section 33334.14(a)(4) provides in pertinent part that the covenants or
restrictions imposed pursuant to Section 33334.3 may be subordinated to a lien,
encwnbrance, or regulatory agreement of a lender other than the agency or from a
bond issuance providing fmancing of the rental units where the agency makes a
finding that an economically feasible alternative method of fmancing the units 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.
The structure of financing for the Project that is incorporated into the Agreement
includes the use of Agency Housing Funds and proceeds of bonds to be issued by the
City or a loan to be obtained from a lender, to fmance land acquisition, relocation
costs and rehabilitation of the Property. All potential lenders require that their
respective loans be secured by a fIrst priority deed of trust.
To effectuate the proposed fmancing, the Agency is being requested to subordinate its
low income housing covenants to the lien of the construction lender, bond trustee or
another lender, so that in the unlikely event of a default which leads to a foreclosure,
the trustee or lender, as the case may be, would be able to maximize the income from
the Project by attempting to rent all units at market rates.
Every reasonable alternative to the proposed fmancing structure would also require
subordination of the affordability covenants. The experience of Agency staff,
consultants and other parties in this transaction is that any primary lender will insist
on maximizing its security in return for participating in the fmancing of low income
housing. The Agency staff and the consultants working on this project are unaware of
any financial institution that will fmance the Project on substantially comparable
terms and conditions, but without subordination.
REBa. NO. ORA-0294 Attachment No.
However, pursuant to Section 5.10 of the proposed Affordable Housing Agreement,
the Agency will not subordinate its affordable housing covenants unless the lender
agrees to provide the Agency with written commitments reasonably designed to
protect the agency's investment in the event of default, as required by California
Health and Safety Code Section 33334.14.
RESO. NO. ORA-0294 Attachment No.
2
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