Item 29 - Amendments to Loan Agreements for the Santa Ana Arts Collective

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Amendments to Loan Agreements for the Santa Ana Arts Collective June 15, 2021 Page 2 1 8 0 1 amount of $22,500 in revenue account (no. 41818002-52025) and appropriating the same amount to the Payment to Other Agencies expenditure account (no. 41818832-69142). DISCUSSION On November 9, 2020, Meta Housing Corporation (Meta) contacted the City to request amendments to the Amended and Restated CDBG and Inclusionary Housing Funds Loan Agreements and HOME Loan Agreement for the Santa Ana Arts Collective (Loan Agreements). Meta is seeking to amend the Loan Agreement’s affordability restrictions in order to accommodate 15 Mental Health Services Act (MHSA) units that were incorporated into the project after the project started construction. The funding for these 15 MHSA units comes from the California Housing Finance Agency and were accepted by Meta in order to finance the development of the Santa Ana Arts Collective. Specifically, Meta is requesting to adjust the Loan Agreement’s unit affordability levels as follows: one 1 bedroom (BR) unit from 40% Area Median Income (AMI) to 30% AMI, five 1 BR units from 40% AMI to 50% AMI, and seven 2 BR units from 60% AMI to 50% AMI. Five units would increase in affordability, and eight units would decrease in affordability. The average affordability of all the project units would go from 43.97% to 40.86%, resulting in greater affordability overall for tenants in the project. This adjustment to the affordability levels will match the requirements of the CalHFA Special Needs Housing Program (SNHP) that provided funding to Meta for the development of the Santa Ana Arts Collective. The project’s unit mix and level of affordability would be adjusted to: Regarding the eight units that would decrease in affordability, Meta will not be raising the rents for these eight units. Specifically, the project’s original unit mix was used at the time the eight units were leased up, instead of the unit mix proposed above. The current rents for these eight units will not be changed and none of the eight tenants will be impacted. When tenants move out of those eight units and the units turn over / become vacant, Meta will implement the new unit mix above. Meta issued a side letter to the City regarding this information. In addition, the CalHFA SNHP funding also requires a change to the residual receipt split between the various lenders for the project. The City’s residual receipt is split between the City’s Community Development Block Grant (CDBG) Loan, and HOME Program Loan, Inclusionary Housing Loan. The residual receipts are then shared with the State of Unit Size 30% AMI 35% AMI 50% AMI 60% AMI Total 1 Bedroom 15 6 5 --26 2 Bedroom 2 --7 5 14 3 Bedroom 4 ----13 17 Total 21 6 12 18 57