3 - LOAN AGREEMENT FOR AMCAL_2018-01-16 (2)

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Housing Successor Agency Funds Loan Agreement with AMCAL Multi -Housing, Inc. January 16, 2018 Page 2 DISCUSSION On June 20, 2017, the Housing Authority awarded $8,522,740 in Housing Successor Agency funds to AMCAL Multi -Housing, Inc. (AMCAL) for the development of the First Street Apartments project (Project) located at 1440 East First Street in Santa Ana (Exhibit 1). As a result, staff provided AMCAL with a pre -loan commitment letter evidencing the preliminary award of $8,522,740 of funds to the Project, funded exclusively from the Low and Moderate Income Housing Asset Fund (LMIHAF) held by the Housing Authority of the City of Santa Ana acting as the Housing Successor Agency (Exhibit 2). With this pre -loan commitment letter, AMCAL applied for 9% Low -Income Housing Tax Credits on June 28, 2017 and on September 20, 2017, the California Tax Credit Allocation Committee approved an award of Federal Tax Credits in the amount of $14,693,420 for the Project. As a result, AMCAL secured all necessary financing and funding for the construction and operation of the Project, which is a condition in their pre -loan commitment letter, and staff are now recommending the execution of a Loan Agreement with AMCAL for $8,522,740 in LMIHAF held by the Housing Successor Agency (Agency). The amount of the Agency Loan was determined based upon the City and Agency's review of the Developer's request for the receipt of the Agency Loan and the development proforma and projected cash flows for the Project submitted by the Developer to the City/Agency. The amount of the Loan was analyzed and confirmed by both Keyser Marston Associates and CSG Advisors as outside real estate advisors for the Agency. The Agency's Loan Agreement for $8,522,740 in Low and Moderate Income Housing Asset Funds will be provided by means of a 55 -year Agency Loan carrying a three percent interest rate (Exhibit 3). Repayment will be from 50% of residual receipts (after payment of operating expenses, debt service, any deferred developer fee, and partnership fees described in the Agency Loan Agreement) with the remaining 50% to be disbursed to AMCAL. The affordability restrictions for all of the units in the Project will be 55 years and units will be restricted to Santa Ana residents who live or work in the City. Regarding the Subordination Agreement with Bank of America, N.A., the Agency's total loan for this project is approximately 29% of the total Project cost (Exhibit 4). As a subordinate loan for a large affordable housing project such as this, it is not uncommon for a senior lender to request a Subordination Agreement for the Agency's smaller Loan Agreement that allow the senior lender to complete their underwriting and commit their private market financing. As such, this Subordination Agreement will allow Bank of American, N.A. to commit their private market financing for the Project. Project Description AMCAL's project, located at 1440 East First Street in Santa Ana, will provide 69 units of affordable workforce housing. The residential units will be located within six buildings. The rental units (less one manager's unit) are 100% affordable to family households earning between 30% and 60% of the Area Median Income (AMI). The unit mix currently consists of 6 four-bedroom 3-2