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REQUEST FOR COUNCIL/ HOUSING AUTHORITY ACTION CITY COUNCIL MEETING DATE: NOVEMBER 20, 2018 TITLE: APPROVE COMMITMENT TO RESUBORDINATE THE EXISTING AFFORDABLE HOUSING LOANS FOR THE CORNERSTONE APARTMENTS TO $8,700,000 IN DEBT TO FUND REHABILITATION COSTS (STRATEGIC PLAN NO. 4, 5) ,F� P,J�� C TY MANAG EXECUTIVE DIRECTOR JOINT RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: ❑ As Recommended ❑ As Amended ❑ Ordinance on 16' Reading ❑ Ordinance on 2nd Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER Authorize the City Manager and Executive Director of the Housing Authority to execute a commitment letter to: Resubordinate the current affordable housing loans for the Cornerstone Apartments at 805 - 904 South Minnie Street, Santa Ana, California to tax-exempt multifamily bonds (Bonds) in an amount not to exceed $8,700,000. The Bond funds will be used to substantially rehabilitate the Project. 2. Authorize the City Manager and Executive Director of the Housing Authority to execute the necessary documents to level all rents onsite at the 50% TCAC rents instead of the existing Health and Safety Code rents. DISCUSSION The Cornerstone Apartments at 805 — 904 South Minnie Street is collectively a 126 -unit affordable housing project that is requiring more repairs as the project gets older. For a single- family homeowner, when their home gets older and in need of repair typically the homeowner will refinance their mortgage to take out a loan to do some rehabilitation work on their home. On the other hand for a multi -family affordable housing project owner, when their project gets older and in need of repair typically the owner will do something called "resyndicate" by applying for additional 4% tax credits and obtaining additional Bond proceeds to complete necessary repairs. This type of transaction using public funds is much more complicated than a single-family home 80A-1