80A - PH AGMT WITH COUNTY OF ORANGE 65 YR GROUND LEASE

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Joint Powers Authority, Ground Lease, and Option Agreement For the Crossroads at Washington February 18, 2020 Page 11 Substantial Amendment to the Neighborhood Stabilization Program Action Plan The City first applied for Neighborhood Stabilization Program ("NSP") funds during the Great Recession following the approval of the American Recovery and Reinvestment Act by Congress. With funds remaining from that program, on July 2, 2019 City Council authorized the City Manager to execute a pre -commitment letter with Related and ACOF for $3,971,440 in affordable housing funds for the development of the Crossroads at Washington consisting of $963,951 in NSP funds and $3,007,489 in HOME Investment Partnerships Program funds. In order for the City to commit and draw down the $963,951 in NSP funds, the United States Department of Housing and Urban Development ("HUD") requires an amendment to the NSP Annual Action Plan that was most recently amended by City Council in 2013. The proposed Substantial Amendment applies to NSP I, II and III and will reallocate funds to a new activity for all three grant sources (Exhibit 7). Specifically, the City is proposing to: 1) add the Crossroads at Washington affordable housing project as a new NSP Activity; and 2) reallocate $963,951 in NSP I, II and III funds to the Crossroads at Washington. The proposed use of NSP I, II and III funds will allow the City to increase the housing stock and provide suitable housing for low and moderate -income residents. In particular, the funds will be used to complete the development of the Crossroads at Washington affordable housing project. Due to the Project's development costs, the Project requires funding from the NSP Program that was committed by City Council on July 2. The reallocation and obligation of NSP I, II, and III dollars to this Project will allow the developer to secure their remaining financing, including Low -Income Housing Tax Credits, needed to complete the Project. Next Steps The Developer is planning to submit a 9% Low -Income Housing Tax Credit application on March 9, 2020 for the development of the Project. Staff are projecting that the Project will be the most competitive in Orange County. This funding is critical for the Project financing and is a key part of the Project's path forward. If the Recommended Actions are not approved, the Developer will not be able to move forward with their application and the Project will not be able to proceed as planned. After the Developer has secured all of their remaining financing, staff will return to City Council to request approval of the two sets of loan documents (Loan Agreement, Promissory Note, Affordability Restictions and Deed of Trust) for the City's investment of $963,951 in NSP funds and $3,007,489 in HOME Investment Partnerships Program funds. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal # 5 - Community Health, Livability, Engagement & Sustainability, Objective # 3 (facilitate diverse housing opportunities and support efforts to preserve and improve the livability of Santa Ana neighborhoods), Strategy C (provide that Santa Ana residents, employees, artists and veterans receive priority for affordable housing created under the City's Housing Opportunity Ordinance or with City funding to the extent allowed under state law). FISCAL IMPACT Based on the current financing and Project assumptions provided by the Developer (e.g. rents, operating expenses, hard debt, vacancies, etc.), the expected amount of the repayment of the 80A-11