07-29-19 ORANGE SENIOR HOUSING CUP 3083-19 1249 E Katella Ave SUPPLEMENTAL packet
City of Orange
Community Development Department
Transmittal
To: City of Orange Planning Commission
From: Ashley Brodkin, Associate Planner
Date: July 25, 2019
Re: Conditional Use Permit No. 3083-19, Orange Senior Housing –
Supplemental Information Packet
Since the posting of the legal notice of the Planning Commission Public Hearing for
Conditional Use Permit 3083-19, there have been requests for additional information
and for clarification of the project description. In response to information requests,
please find attached supplemental information for the Orange Senior Housing project
before the Planning Commission Public Hearing on July 29, 2019. The attachments
provide additional information regarding the requested waivers under the State Density
Bonus Law, provide clarification on the project description and the limits of the project
site, provide additional information on an existing easement between the project site
and the site adjacent to the west, and information regarding the agreement between
Orange Senior Housing and the City for the reinvestment of proceeds from the sale of
Triangle Terrace. The agreement commits Orange Senior Housing to reinvest the
proceeds for rental housing that is affordable to low income seniors. Also included are
any additional public comment letters received since the publication of the staff report
on July 19, 2019. The following attachments are included:
Attachment 1 – Economic Analysis of Waiver from Masonry Wall
Attachment 2 – Economic Analysis of Waiver from Tree Count
Attachment 3 – Project Description Clarification Letter
Attachment 4 – Declaration of Reciprocal Easement
Attachment 5 – ALTA/NSPS Land Title Survey for 1249 E. Katella Avenue
Attachment 6 – City Council Staff Reports from July 12, 2016
Attachment 7 – Public Comment letter received from 7/19/19 through 7/25/19
ATTACHMENT 1
Orange Senior Housing, Inc. Page 1 of 2
Major Site Plan Review No. 0970-19
1249 E. Katella Ave.
Economic Impact of the Concession to Eliminate a Block Wall
at a Border with an Adjacent Residential Use
Commentary
This senior affordable apartment project is proposed as a conditionally permitted use on
Commercial property that is adjacent to a residential zone. Developments in the
Commercial zone are required to construct a block wall along property lines that are
adjacent to a residential district.
The single family homes in the residential district to the north of the site were
constructed prior to the development of the subject site. The development of the homes
included the construction of a masonry block wall on the residential side of the property
demising line. The wall varies from 5 feet to 6 feet in height along the natural slope of
the property line, consistent with the code requirement for a wall with a maximum of 6
feet in height. When the existing commercial bank building was developed in the
1970s, the bank was not required to construct a redundant wall at the property line .
Thus, there is not presently a wall located on commercial side of the property demising
line.
The code requires that parallel walls be constructed either (a) without separation, or (b)
separated by a minimum distance of 5 feet. Constructing parallel walls with 5 feet of
separation would be detrimental to the quality of life in the neighborhood and a gross
underutilization of the subject site. Meanwhile, constructing parallel walls with no
separation would result in (1) the destruction of 16 mature trees on the subject site that
provide visual and auditory screening between the land uses, (2) unquantified risks of
loss to the trees, shrubs, and ground cover near the property line on the residential
properties, and (3) the likely destruction of the existing block wall on the residential side
of the property line as a result of construction of a structural foundation for a new
masonry block wall at the property line. The project’s side of the property line contains
16 mature Brisbane Box trees, 40+ years old, with heights of 15 to 20 feet. The trunks
are less than 2 feet from the property line and the existing masonry block wall. Trees
and shrubs on the residential properties are not documented, but it is apparent that that
there are trees and shrubs on the residential properties that exceed the height of the
Brisbane Box trees on the subject property.
Orange Senior Housing, Inc. Page 2 of 2
Outcome A – Cost of a Successful Effort to Negotiate for the
Construction of a New Wall
The cost of demolishing the existing wall, along with the adjacent trees, shrubs and
groundcover, plus the construction of a new masonry block wall and replacement of
similar plant materials on the residential properties is estimated at $30,000; the cost of
professional time in a reasonable effort to pursue an agreement for this purpose among
all the affected parties is estimated to be a minimum of $50,000; for a total cost of
$80,000. (The cost of new plant materials on the project side of the wall is not
considered in this estimate.) It should be noted that the environmental benefits of the
existing mature plant materials on both sides of the existing block wall would not be
restored until the new plant materials are fully mature. It is beyond the Applicant’s
expertise to express in economic terms a temporary loss to the environment of the fresh
and filtered air provided by the plant materials, in addition to aesthetics, shade, and
visual and auditory privacy between the properties, all of which are benefits of the
existing trees, shrubs, and groundcover along both sides of the existing masonry block
wall.
Outcome B - Cost of an Unsuccessful Effort to Negotiate for the
Construction of a New Wall
What would likely become the greatest economic impact regarding the requirement to
construct a new masonry block wall at the common property line with the residential
district would be the unknown and uncertain length of time that would be required to
obtain cooperation, consent, and agreement among all of the affected parties. Two of
the adjacent residential properties extend beyond the limits of the subject property to
share a common property line with 2 other commercial property owners. At least one
residential occupant is a tenant of the property owner. The Applicant will not proceed to
purchase the property without full entitlement, and to date, only one of the owners of the
4 adjacent residential properties has elected to become engaged in a discussion about
the replacement of the existing wall and adjacent trees, shrubs, and groundco ver. In
this context, we offer that the cost to the Applicant of pursuing an agreement to remove
the existing wall and all adjacent landscaping is likely to result the frustration of the
project and the loss of over $300,000 of nonprofit community resources that the
Applicant has invested in the subject application for entitlement. Finally, it is beyond the
Applicant’s expertise to express in economic terms the loss of 74 units senior affordable
housing, in perpetuity, to the community.
ATTACHMENT 2
Orange Senior Housing, Inc. Page 1 of 2
Major Site Plan Review No. 0970-19
1249 E. Katella Ave.
Economic Impact of the Concession Regarding the Number of Trees
that is Proposed on the Site
Number of Trees Proposed: 48
Number of Trees Required: 66
Commentary
The City’s tree requirement is calculated by adding the sum of the site perimeter, the
building perimeter, and the length of parking aisles. The subject site is encumbered by
a storm drain easement that runs diagonally through the site. Public Works prohibits
trees within a storm drain easement. In order for the site to accommodate
development, the storm drain easement and facility is proposed to be relocated along
the westerly property line. The easement consumes the building’s interior side set
back, which results in the Applicant’s inability to plant trees along a length that is
counted twice for the purposes of calculating the tree requirement – one time for the
length of the property line, and a second time for the length of the building.
Further, the zoning code specifies that the building is to be sited not more than 10 feet
from the front property line, with a maximum of 20 feet under certain conditions. Siting
the building in this manner supports the applicant’s goal of increasing the distance from
between the building and the residential zone to the north of the property. However,
this provision in the code reduces the landscaped area in front of the building that is
available for planting, making it infeasible to plant a second row of trees along a
dimension that is, again, counted twice in the calculation of required trees.
Thus, three significant dimensions of the site perimeter and the building perimeter that
are included in the calculation of the City’s tree requirement are not available to the
project for planting trees. The project’s landscape architect and the City’s Senior
Landscape Project Coordinator have agreed that it is not appropriate to increase the
density of tree planting in other areas of the site for reasons of safety (i.e., potential
impacts on the distribution of site lighting, and the provision of visible pedestrian
pathways), and for the health of the tree specimens.
We note that the City’s tree “requirement” is considered a guideline in the administration
of the code, and an administrative waiver is frequently provided for projects in the urban
context, which should apply to the subject site and project.
Orange Senior Housing, Inc. Page 2 of 2
Alternative A – Increase the West Building Set Back
The alternative that would bring the project into compliance with the tree requirement is
an increase to the westerly building set back that would allow rows of trees to be
planted, both at the property line and along the building frontage. This would require
increasing the building set back by 20 feet in order to allow for the growth of mature tree
canopies. As the building set back on the east side of the project is currently at the
minimum allowed, an increase to the west building set back would require reducing the
east-west dimension of the building by 20 feet. That reduction would require the
elimination of 1 apartment unit on the ground floor and 2 units each on the second and
third floors. In addition, the first floor common areas would be reduced below the Code -
required threshold, and require the conversion of another apartment unit to common
area somewhere in the building. Therefore, the project would be reduced by a total of 6
apartment units.
The project budget includes significant fixed costs, including land, site development,
financing costs, and legal costs related to the tax-exempt bonds and tax credit
financing. Each apartment unit is accretive to the project value, which offsets the fixe d
costs and reduces the budget gap that must be filled by community resources. A
reduction in the number of apartment units generates an increased need for community
financial resources to fill the budget gap. Community financial resources are scarce
and must be allocated rationally, which has resulted in our request for an
incentive/concession to provide fewer than the number of trees that is required by the
City.
As has been shown in the preceding analysis of the concession regarding Building
Height, a reduction of the number of apartment units in the project increases the use of
community resources to fill the gap in providing affordable housing is on the order of
$83,333 to $110,000 per dwelling unit when apartment units are lost to an alternative
scheme. Applying the lower end of the range to the concession regarding the number
of trees, we determine that approximately $500,000 of additional community resources
would be required in order to bring the project into compliance with the required number
of trees on the site. This amount is in addition to the cost of purchasing and installing
the required trees.
Alternative B – Increase the Front Building Set Back
This alternative is not considered appropriate for the project because it would violate the
intent of the zoning code with regard to this building type, and it would result in siting the
building closer to the residential zone to the north.
ATTACHMENT 3
ATTACHMENT 4
ATTACHMENT 5
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1249 EAST KATELLA AVENUE
CITY OF ORANGE, COUNTY OF ORANGE, STATE OF CALIFORNIADATE: 12-14-1816-581.44of 11ALTA/NSPS LAND TITLE SURVEY 1249 EAST KATELLA AVENUE, ORANGE, CA 92867ALTA/NSPS LAND TITLE SURVEYBASIS OF BEARINGSFLOOD ZONEUTILITY NOTECERTIFICATIONSURVEYOR'S NOTESEXCEPTIONS TO COVERAGE IN P.T.R.MISCELLANEOUS NOTESADJACENT OWNERSHIP TABLELEGAL DESCRIPTION PER P.T.R.BENCHMARKPOTENTIAL ENCROACHMENTSN.T.S.SITEVICINITY MAPALLEYEAST KATELLA AVENUEN. CALIFORNIA
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ATTACHMENT 6
1.
SUBJECT Agreement
by and between the City of Orange ( "City ") and Orange Senior Housing, Inc.OSH ")
Relating to the Commitment and Reinvestment of Triangle Terrace Sale Proceeds 2.
SUMMARY OSH
currently owns Triangle Terrace (the "Project "), a 75 -unit, senior, federally- subsidized housing
project located on City -owned land. OSH has entered into a Purchase and Sale Agreement
with Triangle Terrace Affordable, L.P. to sell the Project.OSH
will receive net proceeds of approximately $7.4million from the sale. The attached Agreement
commits OSH to reinvest the proceeds for rental housing that is affordable to Low Income
seniors (62 +) and sets forth the City's requirements for the use of funds.13.
RECOMMENDATION 1)
Approve the attached Agreement.2)
Authorize the City Manager to execute the Agreement on behalf of the City.4.
FISCAL IMPACT There
will be no cost or revenue to the City for this transaction.S
STRATEGIC PLAN GOAL(S) I Goal
3: Enhance and promote quality of life in the community.Strategy
c.: Support and enhance attractive, diverse living environments.
City -OSH Agreement Relating Triangle Terrace Sale Proceeds
Page 2
6. GENERAL PLAN IMPLEMENTATION
Housing Goal 2.0 Assist in the development of adequate housing to meet the needs of Low and
Moderate Income households.
17. DISCUSSION and BACKGROUND J
OSH has entered into a partnership with Reiner Communities, Triangle Terrace Affordable, L.P.,
which plans to acquire and rehabilitate the Project. Reiner Communities has experience with the
acquisition and rehabilitation of senior rental housing.
OSH has also entered into a Purchase and Sale Agreement with Triangle Terrace Affordable, L.P.
to sell the Project to the new partnership. OSH will receive net proceeds of approximately $7.4
million from the sale.
The City and OSH have agreed that the proceeds should be used for rental housing that is
affordable to Low Income seniors (62 +). The attached Agreement sets forth the City's
requirements for the use of funds. Key provisions follow:
Proceeds must be used within the incorporated boundaries of the City for five years from
the sale date.
Proceeds may be used in the City or in any other city that shares a border with the City
after the five -year period.
Use of the proceeds within or outside of the City is subject to the City's approval.
Council action is being requested to approve and authorize the execution of the Agreement. The
proposed new Ground Lease with Triangle Terrace Affordable, L.P. and bond issuance for the
Project are discussed under separate staff reports.
18. ATTACHMENTS
Agreement by and between the City of Orange ( "City ") and Orange Senior Housing, Inc.
OSH ") Relating to the Commitment and Reinvestment of Triangle Terrace Sale
Proceeds
AGREEMENT
THIS AGREEMENT ( "Agreement ") is made effective as of July 1 -, 2016, by and
between the CITY OF ORANGE, a municipal corporation (the "City "), and ORANGE
SENIOR HOUSING, INC., a California nonprofit public benefit corporation ( "OSH ").
RECITALS
A.WHEREAS, the City is the owner of a fee interest in certain real property
located at 555 S. Shaffer Street in the City of Orange, California (the "Property ").
B.WHEREAS, pursuant to that certain ground lease, dated as of May 8,
1985, between OSH and the City (the "Original Ground Lease "), OSH is the owner of
leasehold interest in the Property and fee owner to certain apartment buildings and
ancillary community buildings located upon the Property in use as senior affordable
housing and commonly known as Triangle Terrace (the "Project ").
C.WHEREAS, OSH and the City have determined that the Project requires
substantial renovation and wish to rehabilitate the Project in order to, among other
things, (i) access federal rent subsidies, (ii) improve the operational efficiency of the
Project, and (iii) better meet the needs of its tenants (the "Rehabilitation ").
D. WHEREAS, in order to implement and finance the Rehabilitation, OSH
intends to (i) sell all of its right, title and interest in and to the Project to a single - purpose
limited partnership in which OSH will act as managing general partner with an investor
providing equity as the investor limited partner (the "Partnership ") for an aggregate
purchase price of $13,500,000 (the "Purchase Price "), (ii) repay existing debt on the
Project, (iii) terminate the Original Ground Lease and cause the Partnership to enter into
a new ground lease with the City which will include a capitalized lease payment and
annual rents, and (iv) obtain permanent financing to fund the Rehabilitation.
E.WHEREAS, OSH anticipates that the Purchase Price, net of certain
expenses to be incurred by OSH in connection with the sale of the Project to the
Partnership (including, without limitation, repayment of existing debt associated with the
Project and payment of ground rent) will generate net sales proceeds which it will use
toward the development of additional affordable senior housing pursuant to the terms of
this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1.Determination of Proceeds. OSH estimates that the net sales proceeds
available to OSH from the Purchase Price, after payment of costs associated with the
transfer and sale of the Project to the Partnership (the "Net Sales Proceeds "), will be
approximately $7,429,000, as estimated on Exhibit A attached hereto. The actual Net
Sales Proceeds will be determined as follows:
1
Recapitalization Proceeds Agreement (Triangle Terrace)
50138810.1
a) Within five (5) business days following OSH's receipt of the initial
installment of the Purchase Price from the Partnership, OSH will deliver to the City
written confirmation setting forth the Net Sales Proceeds available upon receipt of such
installment.
b) Within ten (10) days following OSH's receipt of the final installment
of the Purchase Price (the "Final Purchase Price Payment Date "), OSH will deliver
written notice to the City summarizing the aggregate Net Sales Proceeds generated by
the Purchase Price.
2.Use of Proceeds.
a) OSH will use the Net Sales Proceeds only for acquisition,
development and /or operation of affordable rental housing for seniors (age 62 or older)
with household income at or below 60% of Area Median Income for Orange County,
California (each, an "Affordable Housing Development ").
b) For a period of five (5) years from the date of the Final Purchase
Price Payment Date (the "Initial Period "), OSH may use the Net Sales Proceeds solely
for Affordable Housing Developments located within the incorporated boundaries of the
City.
c) Following the Initial Period, OSH may use the Net Sales Proceeds
for Affordable Housing Developments either in the City or in any other city which shares
a border with the City (each, an "Adjacent Area ").
d) If OSH uses the Net Sales Proceeds for development in an
Adjacent Area, subject to all applicable federal, state and local fair housing laws such
Affordable Housing Development(s) shall have a preference for residents that live or
work in the City.
3.City Approval.
a) During the Initial Period, OSH shall be required to obtain the prior
written approval of the City (which shall not be unreasonably withheld, conditioned or
delayed) to use of all or any portion of the Net Sales Proceeds. In order to obtain such
prior written approval of the City, OSH shall send written notice to the City (a
Development Notice ") at least sixty (60) days prior to OSH's proposed use of all or any
portion of the Net Sales Proceeds. OSH's Development Notice shall include a
description of the proposed Affordable Housing Development in which OSH proposes to
use the Net Sales Proceeds, including the number of units and bedroom types, location
of the Affordable Housing Development and affordability limits. OSH shall not use the
Net Sales Proceeds to undertake the proposed Affordable Housing Development unless
and until the City approves the Development Notice in writing. The City shall approve or
disapprove the Development Notice within such sixty (60) day period. Any disapproval
of the Development Notice by the City shall be in writing and shall specifically state the
reasons for such disapproval.
2
Recapitalization Proceeds Agreement (Triangle Terrace)
50138810.1
b) After the expiration of the Initial Period, OSH shall be required to
obtain the prior written approval of the City (which shall not be unreasonably withheld,
conditioned or delayed) to any use of all or any portion of the Net Sales Proceeds for
development outside the incorporated boundaries of City. In order to obtain such prior
written approval of the City, OSH shall send a Development Notice at least sixty (60)
days prior to OSH's proposed use of the Net Sales Proceeds. The City shall approve or
disapprove the Development Notice within such sixty (60) day period. Any disapproval
of the Development Notice by the City shall be in writing and shall specifically state the
reasons for such disapproval. If the City fails to approve or disapprove the
Development Notice within such sixty (60) day period, the City shall be deemed to have
approved the Development Notice and OSH may thereafter use the Net Sales Proceeds
for the Affordable Housing Development described in the applicable Development
Notice.
4.Remedies. Any party seeking enforcement of this Agreement shall be
entitled to pursue all remedies available at law or in equity, including, without limitation,
injunctive relief.
5.Notice. All notices to be sent pursuant to this Agreement shall be made in
writing, and sent to the parties at their respective addresses specified below or to such
other address as a party may designate by written notice delivered to the other parties
in accordance with this Section. All such notices shall be sent by (i) personal delivery,
in which case notice is effective upon delivery; (ii) certified or registered mail, return
receipt requested, in which case notice shall be deemed delivered on receipt if delivery
is confirmed by a return receipt; or (iii) nationally recognized overnight courier, with
charges prepaid or charged to the sender's account, in which case notice is effective on
delivery if delivery is confirmed by the delivery service.
CITY:City of Orange
300 E. Chapman Ave.
Orange, CA 92866
Attn: City Manager
OSH:Orange Senior Housing, Inc.
555 S. Shaffer St.
Orange, CA 92866
Attn: President
6.Attorney's Fees. In the event any legal action is commenced to interpret
or to enforce the terms of this Agreement or to collect damages as a result of any
breach thereof, the party prevailing in any such action shall be entitled to recover
against the other party all reasonable attorneys' fees and costs incurred in such action.
3
Recapitalization Proceeds Agreement (Triangle Terrace)
50138810.1
7.Relationship of Parties. Nothing contained in this Agreement shall be
deemed or construed by the parties or any third party to create the relationship of
partners or joint venturers between OSH and the City. Nothing in this Agreement shall
be deemed to provide any right of the City to participate in the solicitation, negotiation,
or financial benefit of the investment(s) of the Net Sales Proceeds by OSH.
8.Severability of Provisions. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction.
9.Applicable Law. This Agreement, and the application or interpretation
hereof, shall be governed by the laws of the State of California applicable to
agreements made and to be performed entirely therein.
10. Reliance. No person other than the parties to this Agreement may directly
or indirectly rely upon or enforce the provisions of this Agreement, whether as a third
party beneficiary or otherwise.
11. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be an original and all of which together shall constitute one and the
same instrument.
SIGNATURES ON FOLLOWING PAGE]
4
Recapitalization Proceeds Agreement (Triangle Terrace)
50138810.1
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
CITY:
CITY OF ORANGE,
a California municipal corporation
tto, City Manager
By:
W. fn- Winthers, City Attorney
OSH:
ORANGE SENIOR HOUSING, INC.,
a Californi. • • •rofit corporation
I
By:x,11
1:e S'"rer, President
S -1
Recapitalization Proceeds Agreement (Triangle Terrace)
50138810.1
EXHIBIT A
Estimate of Net Sales Proceeds
Purchase Price 13,500,000 Target Dates)
Less estimated costs to OSH:
Seller carry Note 7,700,000
Payoff HUD 202 Loan 2,250,000
Seller's closing costs 25,000
Brokerage Fee 516,000
Prepaid ground rent 600,000
Ground rent reserve 180,000
Total costs of first closing 11,271,000
Estimated cash proceeds to OSH from first closing 2,229,000 August 2016)
Second Closing
Reduction of Seller Note ($7,700,000 to 5,200,000 September 2016)
1,500,000
Net Proceeds (cash) of recapitalization to OSH 7,429,000
Completion of Renovation May 2017)
Closing of Permanent Financing
OSH's guarantee obligations may erode the Net Proceeds)October 2017)
OSH's final report of Net Proceeds to the City of Orange November 2017)
Exhibit - A
Recapitalization Proceeds Agreement (Triangle Terrace)
50138810.1 52-
CITY COUNCIL MINUTES JULY 12, 2016
5.REPORTS FROM COUNCILMEMBERS — None
6.REPORTS FROM BOARDS, COMMITTEES, AND COMMISSIONS — None
7.ADMINISTRATIVE REPORTS
NOTE: Items 7.1 and 7.2 were re- ordered to be heard after Item 11.3.
7.1 Ground Lease by and between City of Orange and Triangle Terrace Affordable, L.P.
for Triangle Terrace Apartments. (A2100.0; Agr -6368)
NOTE: Mayor Smith recorded an abstention on Items 7.1, 7.2, and 11.4 due to a potential
conflict with her employer and left the dais at 8:21 p.m.
City Manager Rick Otto introduced the item and Senior Housing Manager Mary Ellen
Laster provided a staff report. During discussion, City Attorney Winthers clarified that the
Mayor is still authorized to sign the agreements related to this project even though she has
recused from all three items. The applicant briefly thanked Council and staff for their
support on this project.
MOTION — Whitaker
SECOND — Alvarez
AYES Alvarez, Whitaker, Murphy
ABSENT (RECUSED) — Smith
ABSENT Nichols
Moved to: 1) Approve the Ground Lease with Triangle Terrace Affordable, L.P.; 2)
Authorize the Mayor to execute the Ground Lease with Triangle Terrace Affordable, L.P.
and all related documents on behalf of the City; and 3) Authorize the Mayor to terminate
the existing Ground Lease with Orange Senior Housing, Inc. (OSH, Inc.) on behalf of the
City.
7.2 Agreement by and between the City of Orange ( "City ") and Orange Senior Housing,
Inc. ( "OSH ") Relating to the Commitment and Reinvestment of Triangle Terrace
Sale Proceeds. (A2100.0; Agr -6369)
NOTE: Mayor Smith recorded an abstention on Items 7.1, 7.2, and 11.4 due to a potential
conflict with her employer. She left the dais prior to Item 7.1 being heard.
MOTION — Alvarez
SECOND — Whitaker
AYES Alvarez, Whitaker, Murphy
ABSENT (RECUSED) — Smith
ABSENT Nichols
Moved to approve the agreement with OSH and authorize the City Manager and City Clerk
to execute the agreement on behalf of the City.
PAGE 8
1. SUBJECT Conduit bond
financing for
Triangle Terrace Apartments 2. SUMMARY Triangle Terrace Affordable, L.P. ( "the Borrower ") plans to
acquire and rehabilitate the Triangle Terrace Apartments. Proposed financing includes
bond proceeds from multifamily housing revenue bonds issued by the
California Statewide Communities Development Authority CSCDA "). The City is required to conduct a public hearing for
the requested bond issuance to comply with State and federal law. The City would have
no obligation, liability or responsibility for the project or
the repayment of
the bonds.3 RECOMMENDATION I Adopt Resolution No. 10955 - A Resolution of the City Council of
the City of Orange approving the issuance by the California Statewide
Communities Development Authority of multifamily housing revenue bonds
for the Triangle
Terrace Apartments 4. FISCAL IMPACT There will be no cost to
the City for the bonds.5
STRATEGIC PLAN GOAL(S) I Goal 3: Enhance and promote quality
of life in the community.Strategy c.: Support and
enhance attractive, diverse living environments.
TEFRA Hearing - Triangle Terrace
Page 2
6. GENERAL PLAN IMPLEMENTATION
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
The Borrower, a partnership of Reiner Communities and Orange Senior Housing, Inc. ( "OSH,
Inc. "), plans to acquire and rehabilitate the Triangle Terrace Apartments, a 75 -unit, senior,
federally- subsidized housing project located at 555 South Shaffer Street (the "Project ")
The Project is located on City -owned land and is currently owned by OSH, Inc., which leases the
land from the City. The proposed new ground lease with the Borrower and the commitment
agreement with OSH, Inc. relating to the reinvestment of the proceeds from the sale of the
Project are discussed under separate staff reports.
The Borrower has requested that CSCDA serve as the municipal issuer of multifamily revenue
bonds in an aggregate principal amount not to exceed $14,000,000. The proceeds of the bonds
would be used for the purpose of making a loan to the Borrower to finance the acquisition and
construction of the Project, which would be owned and operated by the Borrower.
In order for all or a portion of the bonds to qualify as tax - exempt bonds, the City of Orange is
required to conduct a public hearing to comply with the Tax Equity and Fiscal Responsibility Act
TEFRA ") and the Internal Revenue Code of 1986, as amended (the "Code "). The TEFRA
Hearing provides members of the community an opportunity to speak in favor of or against the
use of tax- exempt bonds for the financing of the Project. Prior to this TEFRA Hearing, a public
hearing notice was published to provide notice to the members of the community. Following the
close of the TEFRA Hearing, an "applicable elected representative" of the governmental unit
hosting the Project must provide its approval of the issuance of the Bonds for the financing of the Project.
The City is a member of CSCDA, but would have no financial, legal or moral obligation, liability
or responsibility for the project or the repayment of the bonds. Staff is recommending that
Council adopt the attached Resolution No. 10955 to authorize CSCDA to issue the bonds for the
Project and satisfy the requirements of TEFRA, the Code, and California Government Code
Section 6500.
18. ATTACHMENTS
Resolution No. 10955
RESOLUTION NO. 10955
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF ORANGE APPROVING THE ISSUANCE BY
THE CALIFORNIA STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY OF MULTIFAMILY
HOUSING REVENUE BONDS FOR THE TRIANGLE
TERRACE APARTMENTS.
WHEREAS, the California Statewide Communities Development Authority (the
Authority ") is authorized pursuant to the provisions of California Government Code Section 6500
et seq. and the terms of an Amended and Restated Joint Exercise of Powers Agreement, dated as of
June 1, 1988 (the "Agreement'), among certain local agencies throughout the State of California,
including the City of Orange (the "City "), to issue revenue bonds in accordance with Chapter 7 of
Part 5 of Division 31 of the California Health and Safety Code for the purpose of financing
multifamily rental housing projects; and
WHEREAS, Triangle Terrace Affordable, L.P. or a partnership created by Reiner
Communities (the "Developer "), consisting at least of the Developer or a related entity to the
Developer, including but not limited to Orange Senior Housing, Inc. and one or more limited partners,
has requested that the Authority adopt a plan of financing providing for the issuance of multifamily
housing revenue bonds (the "Bonds ") in one or more series issued from time to time, including bonds
issued to refund such revenue bonds in one or more series from time to time, and at no time to exceed
14,000,000 in outstanding aggregate principal amount, to finance the acquisition and
rehabilitation of a 75 -unit senior multifamily rental housing project located at 555 S. Shaffer Street,
Orange, California, generally known as Triangle Terrace Apartments (the "Project') and operated
by Living Opportunities Management Company (LOMCO); and
WHEREAS, the Bonds or a portion thereof will be "private activity bonds" for purposes of
the Internal Revenue Code of 1986 (the "Code "); and
WHEREAS, pursuant to Section 147(f) of the Code, prior to their issuance, private activity
bonds are required to be approved by the "applicable elected representative" of the governmental
units on whose behalf such bonds are expected to be issued and by a governmental unit having
jurisdiction over the entire area in which any facility financed by such bonds is to be located, after a
public hearing held following reasonable public notice; and
WHEREAS, the members of this City Council (this "City Council ") are the applicable
elected representatives of the City of Orange (the "City "); and
WHEREAS, there has been published, at least 14 days prior to the date hereof, in a newspaper
of general circulation within the City, a notice that a public hearing regarding the Bonds would be
held on a date specified in such notice; and
CITY COUNCIL MINUTES JULY 12, 2016
11. PUBLIC HEARINGS (Continued)
11.4 Conduit Bond Financing for Triangle Terrace Apartments. (C2500.G.1.5)
NOTE: Mayor Smith recorded an abstention on Items 7.1, 7.2, and 11.4 due to a potential
conflict with her employer. She left the dais prior to Item 7.1 being heard.
Time set for a public hearing to consider the issuance by the California Statewide
Communities Development Authority of multifamily housing revenue bonds for the
Triangle Terrace Apartments.
Triangle Terrace Affordable, L.P. plans to acquire and rehabilitate the Triangle Terrace
Apartments. Proposed financing includes bond proceeds from multifamily housing
revenue bonds issued by the California Statewide Communities Development Authority.
MAYOR PRO TEM OPENED THE PUBLIC HEARING; AND THERE BEING NO
SPEAKERS, MAYOR PRO TEM CLOSED THE PUBLIC HEARING.
RESOLUTION NO. 10955
A Resolution of the City Council of the City of Orange approving the issuance by the
California Statewide Communities Development Authority of multifamily housing
revenue bonds for the Triangle Terrace Apartments.
MOTION — Whitaker
SECOND — Alvarez
AYES Alvarez, Whitaker, Murphy
ABSENT (RECUSED) — Smith
ABSENT Nichols
Moved to approve Resolution No. 10955.
12. ADJOURNMENT — The City Council adjourned at 8:30 p.m.
The next Regular City Council Meeting will be held on Tuesday, August 9, 2016, at 6:00
p.m. in the Council Chamber, with Closed Session beginning at 5:00 p.m., if necessary.
cy4/0.41.42 OYP-P-;
MA'v RPHY TERESA E. SMITH
ITY CLERK MAYOR
PAGE 14
ATTACHMENT 7