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REQUEST FOR <br />COUNCIL ACTION <br />CITY COUNCIL MEETING DATE: <br />MAY 7, 2019 <br />TITLE: <br />APPROVE A SUBORDINATION <br />AGREEMENT WITH THE STATE OF <br />CALIFORNIA DEPARTMENT OF HOUSING <br />AND COMMUNITY DEVELOPMENT FOR <br />THE DEPOT AT SANTIAGO <br />(STRATEGIC PLAN NO. 4, 5) <br />CITY 9AAAGER <br />RECOMMENDED ACTION <br />CLERK OF COUNCIL USE ONLY: <br />APPROVED <br />❑ As Recommended <br />❑ As Amended <br />❑ Ordinance on 16' Reading <br />❑ Ordinance on 2ntl 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 with <br />the State of California Department of Housing and Community Development, for the City's <br />$3,000,000 Loan Agreement with Depot at Santiago L.P., subject to non -substantive changes <br />approved by the City Manager and City Attorney. <br />DISCUSSION <br />When an affordable housing developer builds a large multi -family affordable housing project, they <br />require various sources of financing to complete the project. In all cases when the City provides <br />funding for the project, a private market senior lender will require the City to subordinate our <br />smaller loan to their larger senior loan in order for the senior lender to provide their financing. In <br />some cases, where there is another government lender like the County of Orange or the State of <br />California, the other government lender will require the City to subordinate our smaller loan to <br />their larger senior loan in order for that government lender to provide their source of financing. <br />For the purposes of this action being recommended to City Council, the State of California as a <br />senior lender is requesting the City to subordinate our $3,000,000 loan to their larger senior loan <br />and grant of $5,925,000. <br />Specifically, the Depot at Santiago ("Depot) is located at 923 N. Santiago Street directly across <br />the street from the Santa Ana Regional Transportation Center, on 1.47 acres of land. The project <br />was developed by C&C Development and Orange Housing Development Corporation and <br />completed in June 2018. The Depot is a mixed-use affordable housing development comprised <br />of 70 affordable multifamily rental units, with 15 one -bedroom units, 24 two-bedroom units, and <br />31 three-bedroom units. The one -bedroom units range in size from 617-764 SF; the two-bedroom <br />units range from 925-1,024 SF; and the three-bedroom units range in size from 1,098-1,225 SF. <br />The Depot has large units to accommodate large families to meet the City's affordable housing <br />25A-1 <br />