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REQUEST FOR <br />COUNCIL ACTION <br />CITY COUNCIL MEETING DATE: <br />4, 2018 <br />TITLE: <br />APPROVE SUBORDINATION AGREEMENT <br />WITH CALIFORNIA HOUSING FINANCE <br />AGENCY FOR THE SANTA ANA VETERANS <br />VILLAGE PROJECT <br />{STRATEGIC PLAN NO 5, 3} <br />r <br />Cit MANAGER <br />RECOMMENDED ACTION <br />CLERK OF COUNCIL USE ONLY: <br />APPROVED <br />❑ As Recommended <br />❑ As Amended <br />❑ Ordinance onI�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 Clerk of the Council to execute a Subordination Agreement to a <br />$2.912 million loan from the County of Orange provided through the California Housing Finance <br />Agency, for the Loan Agreement with Santa Ana Village LP (c/o Jamboree Housing Corporation) <br />for $352,962.90 in HOME Investment Partnerships Program funds, subject to non -substantive <br />changes approved by the City Manager and City Attorney. <br />DISCUSSION <br />On August 21, 2018, the City Council authorized the City Manager and the Clerk of the Council to <br />execute a Loan Agreement with Santa Ana Village LP (c/o Jamboree Housing Corporation) for <br />$352,962.90 in HOME Investment Partnerships Program (HOME Program) funds to create 75 units <br />of permanent supportive housing at 3312 West 1st Street in Santa Ana. On that same date, the <br />City Council also authorized the City Manager and Clerk of the Council to execute a Subordination <br />Agreement with Union Bank as the senior lender for the project. Following the approvals on August <br />21, 2018, Jamboree requested the City to execute a second Subordination Agreement to a $2.912 <br />million loan from the County of Orange provided through the California Housing Finance Agency <br />(CaIHFA). Through this $2.912 million loan, the County of Orange will have an additional layer of <br />eligibility criteria on 20 of the 75 units for Mental Health Services Act eligible homeless veterans. <br />This additional financing is necessary for the project to be financially feasible and to secure a 9% <br />low-income housing tax credit award. Nonetheless, the Housing Authority's 75 project -based <br />vouchers, approved by the Housing Authority Board on April 4, 2017, will have the superior eligibility <br />criteria to all of the other financing for the project. <br />The City's $352,963 HOME Program loan for this project is approximately 1.2% of the total Project <br />budget of $29,355,487 (Exhibit 1). As a subordinate loan for a large multifamily affordable housing <br />project such as this one, it is not uncommon for a senior lender to request a Subordination Agreement <br />for the City's smaller Loan Agreement that allow the senior lender to complete their underwriting and <br />2513-1 <br />