80A - HOUSING AND SUBORDINATION LOANS

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Approve Affordable Housing Loans for the Rehabilitation of Cornerstone Apartments September 17, 2019 Page 2 Housing Successor Agency Loan Agreement with Cornerstone Housing Partners LP (c/o Jamboree Housing Corporation), subject to non -substantive changes approved by the Executive Director and Authority General Counsel. On November 20, 2018, the City Council and Housing Authority authorized 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, 810, 815, 816, 825, 828, 835, and 904 S. Minnie Street, Santa Ana, California, to tax-exempt multifamily housing bonds (tax exempt bonds) in an amount not to exceed $8,700,000 in order to substantially rehabilitate Cornerstone Apartments. The City Council and Housing Authority also authorized the City Manager and Executive Director of the Housing Authority to execute the necessary documents to level all rents onsite at the 50% Tax Credit Allocation Committee (TCAC) rents instead of the existing Health and Safety Code rents. Following this approval, staff executed and provided a commitment letter to Cornerstone Housing Partners LP c/o Jamboree Housing Corporation (Exhibit 1). Using the commitment letter as the City and Housing Authority's enforceable commitment, Jamboree Housing Corporation (Jamboree) submitted an application on January 18, 2019 for non-competitive 4% tax credits (tax-exempt bonds) to rehabilitate the Cornerstone Apartments. Specifically, the Cornerstone Apartments at 805, 810, 815, 816, 825, 828, 835, and 904 S. Minnie Street, in Santa Ana, California is collectively a 126-unit affordable housing project that requires substantial repair and rehabilitation (Project). The Project was originally built in 1961. 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 pay for the 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 tax-exempt bond proceeds to complete the rehabilitation work on their rental units. The term "resyndication" is used to describe an existing Low -Income Housing Tax Credit project that receives a new allocation of tax credits. This can only happen after the property completes the initial 15-year compliance period for their original tax credits. This resyndication involving the City and Housing Authority's existing affordable housing loans is much more complicated than simply refinancing a single-family home. The resyndication required approval by the City and Housing Authority to resubordinate existing affordable housing loans to a new senior loan in order for the senior lender to provide their loan. The City's existing affordable housing loans consists of ten (10) different HOME Investment Partnerships Program (HOME) Loan Agreements and the Housing Authority's existing affordable housing loans consists of thirty-three (33) different Housing Successor Agency Loan Agreements. For the resyndication and rehabilitation of the project, Jamboree did not receive any additional funds from the City or Housing Authority. Instead, Jamboree is actually paying off $2,204,000 of the principle balance of the Housing Authority's loans. The original loan terms were all relatively the same: 30 or 55 year term with 3% simple interest repaid through residual 80A-2