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Approve Commitment to Resubordinate Loans for Cornerstone Apartments November 20, 2018 Page 2 and it requires approvals from all of the various lenders (e.g. the City and Housing Authority) who have a financial interest in the project. Jamboree Housing Corporation (Jamboree), owner of the Cornerstone Apartments, is undertaking this complicated process in order to ensure the long- term viability of their asset which will protect the health and safety of the residents and extend the term of affordability for the project. Specifically, in 2001 and 2003 the City of Santa Ana and Housing Authority of the City of Santa Ana made a series of forty-two (42) loans (City Loans) to Wakeham -Grant Apartments, LP for the Cornerstone Apartments (Project). The Project consists of 8 apartment buildings consisting of 126 units in total. These loans were for the acquisition and rehabilitation of existing market rate units that were converted to affordable units that were in part financed with Low Income Housing Tax Credits (tax credits). Jamboree is now requesting to resyndicate and recapitalize the project in order to rehabilitate the 126 affordable rental units at Cornerstone Apartments (Exhibit 1). A request for resyndication and recapitalization of a project such as this one involves Jamboree submitting an application for non-competitive 4% tax credits, tax-exempt bonds, and including a new tax credit investor into the Project's ownership structure. Commitment to Resubordinate Current Affordable Housing Loans As was the case when the Project was originally undertaken, it will be necessary for the City Loans to be subordinated to the Bonds in the Project's loan hierarchy (e.g. financing stack). Currently, the City Loans are subordinated to a senior lien of approximately $3.95 million. Under the proposed transaction, the City Loans will be resubordinated for up to $8,700,000 in Bond debt. The proposed Commitment to Resubordinate Existing Affordable Housing Loans is presented as Exhibit 2. The acquisition of the former Limited Partner's interest in the Project, and the proposed rehabilitation activities will be funded with the proposed Bonds, the equity generated from the sale of 4% tax credits, the resubordination of the City Loans, a Seller carryback note, and the deferral of a portion of the Developer Fee included in the Project's rehabilitation budget. Due to the insufficient rehabilitation scope by the original developer in 2001 and 2003, there are significant capital needs to address through the proposed rehabilitation. An approximate budget of over $7.4 million will be used to install new windows, roofs, Americans with Disabilities Act improvements, install new kitchen and bathroom cabinets / countertops, new sinks and plumbing fixtures, new flooring throughout the units, install new appliances, install new hot water heaters with solar hot water collectors, and reline all waste lines. A more comprehensive rehabilitation scope was provided to City staff. A site needs assessment was conducted in March 2018 and found that parking is one of the most significant concerns of existing residents (Exhibit 3). Therefore, Jamboree is also addressing the significant parking issues in the neighborhood by installing parking lifts for residents. Another significant part of the rehabilitation scope is the addition of a large solar installation, with a portion of the energy savings going to offset resident electricity demand, reducing their electricity bills. 80A-2