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Appropriation Adjustment, Density Bonus and Development Impact Fee Deferral <br />Agreement for FX Residences <br />December 7, 2021 <br />Page 2 <br />2 <br />2 <br />6 <br />3 <br />Frances Xavier Residence (renamed to “FX Residences”) worked with staff to secure all <br />of their remaining sources of financing in their capital stack as a condition of the Housing <br />Authority’s award of funds and Ground Lease, staff is now returning to the Housing <br />Authority / City Council for approval of their Loan Agreement and Ground Lease. Due to <br />additional construction costs associated with the project since approval of the award on <br />January 15, 2019, staff is also recommending to amend their award of funds for an <br />additional $587,000. In addition, staff is also recommending approval of a Density Bonus <br />Agreement required for HomeAid’s entitlements to develop FX Residences and a <br />Development Impact Fee Deferral Agreement to offset their costs of construction. A <br />future Subordination Agreement may be necessary at a later date and is included as a <br />Recommended Action. <br />DISCUSSION <br />On January 15, 2019, City Council approved a pre-loan commitment with HomeAid <br />Orange County (“HomeAid”) with Mercy House Living Centers (“Mercy House”) as the <br />service provider for $1,069,947 in Low and Moderate Income Housing Asset Funds and <br />a 99-year Ground Lease of 801, 807, 809 and 809 ½ E. Santa Ana Blvd for the <br />development of the Frances Xavier Residence affordable housing project. The <br />$1,069,947 are former redevelopment agency funds held by the Housing Authority acting <br />as the Housing Successor Agency. The funds are generated from proceeds from the <br />sale of former Redevelopment Agency housing assets, residual receipts from former <br />Redevelopment Agency assets (i.e. loans), as well as a portion of the loan repayments <br />from the former Redevelopment Agency to the City. The Housing Authority owns the land <br />at 801, 807, 809 and 809 ½ E. Santa Ana Blvd after it was transferred by the former <br />Redevelopment Agency. The project was renamed from Frances Xavier Residences to <br />FX Residences after City Council approved the pre-loan commitment. The Staff Report <br />from January 15, 2019 is attached as Exhibit 1 and the pre-loan commitment letter is <br />attached as Exhibit 2. <br /> <br />After City Council approves a pre-loan commitment of funding for an affordable housing <br />project, it typically takes a substantial amount of time for a developer to secure their <br />remaining sources of financing in their capital stack. The majority of large multi-family <br />affordable housing projects require Low-Income Housing Tax Credits which are very <br />competitive for the higher value 9% Tax Credits with only two application deadlines a year <br />and more difficult to finance with the lower value 4% Tax Credits. In this case, HomeAid <br />did not apply for Low-Income Housing Tax Credits, but applied for various other sources <br />of financing through the County of Orange, Orange County Housing Finance Trust and <br />Wells Fargo, among other grantees and lenders. After almost three years since HomeAid <br />received a commitment of funding and land from the Housing Authority, HomeAid is <br />prepared to close on their financing and begin construction of the project. <br />In order for HomeAid to develop FX Residences and in accordinace with the pre-loan <br />commitment letter approved by the Housing Authority on January 15, 2019, staff is