55A - AGMT LEGACY APARTMENTS - Laserfiche WebLink

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Loan Agreement with Legacy Square LP December 15, 2020 Page 3 On June 25, 2020, the Strategic Growth Council awarded the Developer $25,431,865 in AHSC funds. This was the third project in five rounds of funding for the State's AHSC program that has received an award of funds; the Depot at Santiago and Santa Ana Arts Collective were two previous projects that were awarded funds under this competitive funding source. The $25.4 million award includes approximately $2,000,000 to develop the surrounding transportation -related improvements around the Project by the City's Public Works Agency. Approximately $430,000 will also be allocated to transit programs and transit -related amenities to build and operate a bicycle kiosk, car share program, three years of transit passes for each household, and onsite urban greening components. Following their award of AHSC program funds, the Developer applied for 4% tax credits. By September 2020, the Developer had secured all of their necessary financing to develop the Project and must now close on their financing and pull their building permit before their 4% tax credits and AHSC program funds expire. The inclusionary housing loan agreement is attached as Exhibit 5. The following loan terms are incorporated into the loan agreement: • Borrower: Legacy Square LP (c/o National Community Renaissance of California) • Loan Amount: $3,170,547 principal amount from the inclusionary housing fund • Interest Rate: 3% simple interest compounded annually • Term: 55 years from the date of issuance of the Certificate of Occupancy for the Project • Terms of Repayment: Repaid from 50% of residual receipts (pro-rata with payments due in connection with other financing provided) calculated after payment of operating expenses including debt service on the senior loan, property management fee, owner administration fee, required reserves, and any deferred developer fee. The borrower shall retain the other 50% of the residual receipts. • Disbursement Schedule: 90% of the funds will be disbursed upfront for the construction, with a 10% contingency. • Selection of Tenants: The Developer shall give preference in leasing units to households that live and/or work in the City of Santa Ana. Implementation of the preference will be monitored by staff in the Community Development Agency. Regarding the subordination agreement with Bank of America, N.A. (Exhibit 6), the City's total loan for this project is $3,170,547 compared to Bank of America's larger loan of $5,258,706. 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 City's smaller loan agreement in order to permit the senior lender to complete their underwriting and commit their private market financing. Regarding the Subordination Agreement with the State of California Department of Housing and Community Development (HCD), the City's total loan for this project is $3,170,547 compared to HCD's larger loan of $15,000,000. HCD requires the City to enter into a subordination agreement. HCD's loan will be disbursed at the permanent loan conversion when the project is complete in approximately a year and a half. Therefore, HCD has not prepared this subordination agreement at this time and it will be provided after the project is complete. 55A-3