55A - AGMT LEGACY APARTMENTS - Laserfiche WebLink

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Loan Agreement with Legacy Square LP December 15, 2020 Page 2 of financing the acquisition, construction, improvement, and equipping of the Legacy Square affordable housing project located at 609 N. Spurgeon Street, Santa Ana, CA 92701. EXECUTIVE SUMMARY Two years ago, City Council approved an award of $3.1 million in funding for the development of the Legacy Square affordable housing project by National Community Renaissance of California (National CORE). After two years of predevelopment in which National CORE worked with staff to secure all of their remaining sources of financing in their capital stack as a condition of the City's award of funds, staff are now returning to City Council with the City's financing documents required for this project, which include the loan agreement, subordination agreements, and a new TEFRA resolution. The terms of the loan agreement are provided for the City Council to consider approval of the loan agreement. The subordination agreements are required for the senior lenders with funds in the project. Finally, the City's previous TEFRA resolution expired after one year, so a new TEFRA resolution is also included. DISCUSSION On January 15, 2019, the City Council approved a pre -loan commitment of $3,170,547 in inclusionary housing funds for the development of the 93-unit Legacy Square affordable housing project located at 609 N Spurgeon Street, Santa Ana, CA 92701 (Project) to be developed by National Community Renaissance of California (Developer) by a unanimous vote. The $3,170,547 in funds from the City's Inclusionary Housing Funds are funds generated through the payment of in -lieu fees when developers opt -out of developing affordable housing on -site and instead pay a fee. The staff report from January 15, 2019 (Exhibit 1) and the pre -loan commitment (Exhibit 2), both provide further information on the Project. After the City Council approves a pre -loan commitment of funding for an affordable housing project, it can often take a substantial amount of time for a developer to secure the remaining financing. The majority of large multi -family affordable housing projects require low-income housing tax credits, which are very competitive for the higher value 9% tax credits with only two application deadlines a year, and more difficult to finance with the lower value 4% tax credits. After almost two years since the Legacy Square Project received a commitment of funding from City Council, the Developer has now secured the remaining financing and is prepared to close on financing prior to the end of the year and begin building the Project. Specifically, after receiving the pre -loan commitment letter from the City on January 15, 2019, the Developer secured entitlements from City Council on February 5, 2019 and then worked to secure all necessary financing for the construction and operation of the Project. The Developer worked with City staff to submit two applications for Affordable Housing and Sustainable Communities (AHSC) funds available through the State of California Department of Housing and Community Development. On both February 5, 2019, and one year later on February 4, 2020, City Council adopted a resolution supporting the Developer's submittal of a funding application for the AHSC Grant Program in an amount not to exceed $30 million (Exhibit 3 and 4). 55A-2