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Appropriation Adjustment, Density Bonus and Development Impact Fee Deferral <br />Agreement for FX Residences <br />December 7, 2021 <br />Page 3 <br />2 <br />2 <br />6 <br />3 <br />recommending approval of $587,000 in additional funds, a $1,656,947 Loan Agreement, <br />a 99-year Ground Lease, a Density Bonus Agreement, and a Development Impact Fee <br />Deferral Agreement with HomeAid for the development of the FX Residences affordable <br />housing project (“Project”) located at 801, 807, 809 and 809 ½ E. Santa Ana Blvd. <br />$587,000 Award of Additional Funds <br />Due to unanticipated and additional construction costs associated with the Project since <br />approval of the pre-loan commitment on January 15, 2019, staff is recommending to <br />amend the Housing Authority’s original award for $587,000 in additional funds from the <br />Low and Moderate Income Housing Asset Fund. With approval by City Council, the total <br />award of funds would increase from $1,069,947 to $1,656,947. After receiving the <br />Housing Authority’s award of financial assistance, HomeAid revised their proposed <br />project to add five additional units instead of the 12 units previously proposed. In addition, <br />HomeAid received updated construction cost estimates, which increased the <br />development budget for the Project. The increase in costs is primarily due to the COVID- <br />19 pandemic and the increase in labor and materials since January 15, 2019. As such, <br />HomeAid is requesting the Housing Authority to provide an additional $587,000 in <br />additional financial assistance to the Project. <br />To address this gap, most recently HomeAid attempted to apply for these funds from <br />Wells Fargo and from the Affordable Housing Program General Fund through the Federal <br />Home Loan Bank of San Francisco. Although Wells Fargo provided a $25,000 grant, the <br />application to the Federal Home Loan Bank was not successful. Keyser Marston <br />Associates, Inc. prepared a financial gap analysis attached as Exhibit 3 and confirmed <br />this remaining financial gap amount. Staff recommends approval of the award of <br />$587,000 in order to move the Project forward and not continue to wait for HomeAid to <br />secure their remaining sources of financing. If not approved by City Council, the Project <br />will likely be delayed by another year before being recommended to City Council for <br />approval again. <br />Loan Agreement <br />The Housing Successor Agency Loan Agreement is attached as Exhibit 4. The following <br />loan terms are incorporated into the Loan Agreement: <br />Borrower: Shelter Providers of Orange County, Inc. DBA HomeAid Orange <br />County, Inc. <br />Loan Amount: $1,656,947 principal amount from the Low and Moderate Income <br />Housing Asset Fund (Housing Successor Agency) <br />Interest Rate: 3% simple interest compounded annually