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REQUEST FOR <br />COUNCIL ACTION <br />CITY COUNCIL MEETING DATE: <br />AUGUST 21, 2018 <br />TITLE: <br />APPROVE AMENDMENT TO LOAN <br />AGREEMENT FOR THE SANTA ANA <br />ARTS COLLECTIVE GRANT FUNDED <br />(STRATEGIC PLAN NOS. 5,3A; 5,3C) <br />J' <br />CITY ANAGER <br />RECOMMENDED ACTION <br />CLERK OF COUNCIL USE ONLY: <br />APPROVED <br />❑ As Recommended <br />❑ As Amended <br />❑ Ordinance on 1s' Reading <br />❑ Ordinance on 2n° Reading <br />❑ Implementing Resolution <br />❑ Set Public Hearing For <br />CONTINUED TO <br />FILE NUMBER <br />Authorize the City Manager and the Clerk of the Council to execute an Amendment to the Loan <br />Agreement with Santa Ana Arts Collective, L.P. for an additional $407,871 in HOME Investment <br />Partnerships Program funds for a total loan amount not to exceed $2,627,631, subject to non - <br />substantive changes approved by the City Manager and City Attorney. <br />DISCUSSION <br />As an entitlement jurisdiction, the City of Santa Ana annually receives federal grant funds through <br />the HOME Investment Partnerships Program (HOME) for the development of affordable housing. <br />However, the National Defense Authorization Act of 1991 (Act) established rules and deadlines <br />governing the availability of federal appropriations for expenditure. This legislation mandated a <br />statutory and non-waiveable eight-year expenditure deadline for HOME Program grants. As a <br />result of this Act, any HOME Program funds appropriated to the City in FY 2011 will not be <br />available to expend after September 20, 2018 and HOME Program funds remaining in the City's <br />FY 2011 HOME Program grant on this date will be recaptured by the United States Treasury. <br />The City currently has $384,573.41 remaining from the City's FY 2011 grant that will be <br />recaptured on September 20, 2018 if the City is unable to commit and expend the funds before <br />that date. Other similar -sized cities throughout the country also have FY 2011 HOME Program <br />grant funds that are subject to recapture on that date as well as show on HUD's HOME Expiring <br />Funds Report from July 2, 2018. (Exhibit 1) <br />In addition to the $384,573.41 remaining from the City's FY 2011 HOME Program grant funds <br />that are subject to recapture on September 20, 2018, the City also has earned $24,710.24 in <br />program income during FY 2017 that has not been expended. Under the, HOME Grant -Based <br />Accounting Interim Rule, the $24,710.24 in program income must be drawn down before the <br />$384,573.41 of expiring FY 2011 HOME Program grant funds. Therefore, the City must draw <br />down and expend a total of $409,283.65, equal to the $384,573.41 remaining from the City's FY <br />;I <br />25J-1 <br />