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Amendment to HOME Loan Agreement for the Santa Ana Arts Collective <br />August 21, 2018 <br />Page 3 <br />2) Execute a loan agreement with Santa Ana Arts Collective, L.P. for $2,219,760 in HOME <br />Program funds as approved by City Council on November 3, 2015; <br />Following the approvals by City Council on July 5, 2017, the amended and restated Community <br />Development Block Grant and Inclusionary Housing Funds loan agreement with Santa Ana Arts <br />Collective, L.P. was executed for a total loan amount not to exceed $5,275,000, and a loan <br />agreement with Santa Ana Arts Collective, L.P. for $2,219,760 in HOME Program funds was also <br />executed for the development of the project. The total amount of both loans together is <br />$7,494,760. With these two loan agreements approved and recorded against the property, the <br />developer Santa Ana Arts Collective, L.P., closed on their financing in July 2017. <br />The Amendment to the original HOME Program loan will keep the same terms as the existing loan <br />including the same affordability restrictions and covenants. (Exhibit 3) The Amendment adds <br />$407,871 to the existing HOME loan amount of $2,219,760 for a new total loan amount of <br />$2,627,631. The additional $407,871 will be used to pay for unanticipated hard costs of <br />construction that increased after the project closed on their financing. This Amendment will <br />increase the total loans for the project to $7,902,631. <br />The Santa Ana Arts Collective is the first project entitled under the City of Santa Ana's Adaptive <br />Reuse Ordinance, which was adopted in December 2014, to encourage the recycling of historic, <br />underutilized, commercial buildings into housing. Though challenges are common for adaptive <br />reuse buildings, Meta Housing Corporation has found cost effective ways of overcoming many of <br />them. Still the project needs $407,871 in additional gap financing. Keyser Marston Associates <br />completed a subsidy layering analysis and confirmed that the $407,871 in additional funds is <br />necessary for the development of the project (Exhibit 4). Specifically, these additional funds will <br />pay for: <br />- General contract (hard cost) work completed during July 2018 <br />- Deputy inspections completed in June 2018 <br />- Architecture, structural engineering, and soils engineering completed from January 2018 to <br />June 2018. <br />- Utility engineering started in March 2018. <br />In order to reduce their financial gap, Meta Housing Corporation is also currently applying for <br />additional financing through the County of Orange Special Needs Housing Program for Mental <br />Health Services Act funds. If approved, ten of the 57 units would be assisted by the Special Needs <br />Housing Program for eligible persons with a disability who qualify under the project's artist <br />preference. <br />If approved by City Council, $407,871 will be drawn down from HUD before September 14, 2018 <br />and expended for the project. <br />25J-3 <br />