Item 21 - Affordable Housing Project at 1108 N. Harbor Blvd

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Affordable Housing Project at 1108 N. Harbor Blvd. April 20, 2021 Page 2 6 4 2 approved a two-year extension of the pre-loan commitment letter with Jamboree for the development of the project by a unanimous vote (Exhibit 2). After the approval of the two-year extension of their pre-loan commitment letter, Jamboree informed the City that they would not be able to determine if they could decline the City’s funds until after the project is complete. The details of that matter are discussed in the Staff Report attached as Exhibit 2. Specifically, Jamboree and their senior lender at JP Morgan Chase Bank will not know how the Internal Revenue Service (IRS) is going to allocate the 4% low-income housing tax credits for the project until a Form 8609 is approved by the IRS when the project’s construction loan is converted to a permanent loan. This IRS Form 8609 is submitted to the IRS for approval no more than 12 months after the project receives a Certificate of Occupancy from the City. If the IRS does not allocate 100% of the 4% low-income housing tax credits that Jamboree will be submitting on the IRS Form 8609, then Jamboree will need the entire $1.6 million from the City. On the other hand, if the IRS approves all of the 4% tax credits for the project than Jamboree will be able to return all or a portion of the $1.6 million of the City’s funds. The IRS determination on the final value of the project’s tax credits dictates whether or not the project will need our City’s $1.6 million. The reason why Jamboree does not have this information now is because the review of the IRS Form 8609 cannot be done until it is submitted to the IRS and the California Tax Credit Allocation Committee is unable to opine on financial matters pertaining to the IRS. Therefore, staff is recommending approval of the Community Development Block Grant loan agreement attached as Exhibit 3. The following loan terms are incorporated into the loan agreement: Borrower: North Harbor Housing Partners LP (c/o Jamboree Housing Corporation) Loan Amount: $1,687,047 principal amount from the Community Development Block Grant program 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 after construction is complete. 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.