Item 03 - Affordable Housing Project at 801, 807, 809 and 809 ½ E. Santa Ana Blvd.

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