25C - AGMT - INCREASE PERM LOAD DEPOT AT SANTIAGO

Home Browse Search

Request for Consent by C&C Development and Orange Housing Development Corporation October 2, 2018 Page 3 • The Deferred Developer Fee is set at $203,000 and is estimated to be repaid by Year 3. • It is estimated that the City will begin to receive residual receipts payments in Year 4. • The residual receipts payments to the City over the 55 -year loan term are estimated as follows: o $6.78 million in nominal dollars; and o $366,000 in net present value dollars. As such, it is anticipated that the City will receive residual receipts payments sooner with the Developer's requested higher permanent loan amount. Furthermore, it is estimated that the residual receipts payments to the City will be higher (in both nominal and net present value terms) under the requested higher permanent loan amount of $6.42 million rather than the $5.43 million permanent loan based on the 2016 financing assumptions. Under certain circumstances, KMA would recommend that the increase in permanent loan proceeds be utilized to pay down the principal balance of the City's loan rather than to pay increases in project costs or to pay down the deferred Developer Fee. However, this Project includes a variety of funding sources which were competitively awarded based on the assumption that the City would provide $3.0 million in financial assistance (9% Low -Income Housing Tax Credits, Affordable Housing and Sustainable Communities, and Mental Health Services Act funds). As such, reducing the City's financial assistance amount could create issues with the lenders of these other funding sources. Thus, KMA recommends that for this project, the increase in permanent loan proceeds be utilized to cover additional project costs or pay down the deferred Developer Fee given that it is estimated to result in higher residual receipts payments to the City. The Developer has agreed to both recommendations. If the request for consent is approved, the City Manager and Clerk of the Council will execute the Junior Lienholder's Consent which is an addendum to the Modification Agreement between Bank of America, N.A, CCRC, and Depot at Santiago, L.P., that will increase the permanent loan for the Depot at Santiago (Exhibit 3) and any related documents. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal # 4 Fiscal Sustainability, Objective # 1 (maintain a stable, efficient and transparent financial environment) and Goal # 5 - Community Health, Livability, Engagement & Sustainability, Objective # 3 (Facilitate diverse housing opportunities and support efforts to preserve and improve the livability of Santa Ana neighborhoods). FISCAL IMPACT Approval of the new loan structure is projected to result in the City's ability to begin to receive residual receipts payments sooner during the repayment period and an overall higher repayment total (in both nominal and net present value terms). Over the 55 -year repayment period, the estimated revenue amounts are shown below: 25C-3