Item 27 - Extension of Pre-Loan Commitment for North Harbor Village and TEFRA

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Extension of Pre-Loan Commitment for North Harbor Village and TEFRA Resolution March 2, 2021 Page 2 4 9 5 located at 1108 N. Harbor Blvd, by a unanimous vote. The staff report from March 5, 2019 is attached as Exhibit 1 and the pre-loan commitment is attached as Exhibit 2, both of which provide further information on the project. After the City Council approves a pre-loan commitment of funding for an affordable housing project, a developer is responsible to secure their entitlements and secure their remaining financing as a condition of the award of funds. The majority of large multi- family affordable housing projects require Low-Income Housing Tax Credits (LIHTC), which are very competitive for the higher value 9% tax credits with only two application deadlines a year and more difficult to finance with the lower value 4% tax credits. After almost two years since the North Harbor Village project received a commitment of funding from the City Council, Jamboree has now secured their remaining financing and are prepared to close on their financing before March 30, 2021 and begin building the project. To close on their financing, Jamboree secured an award of 4% tax credits for this project. To the benefit of this project, as well as the City’s Legacy Square project, the Consolidated Appropriations Act of 2021 included a new fixed rate for 4% tax credits. Specifically, after years of advocacy by affordable housing developers, one of the leading proposals from the Affordable Housing Credit Improvement Act and Moving Forward Act to establish a 4% minimum LIHTC rate for acquisition LIHTCs and tax- exempt private activity bond-financed developments was included in year-end tax legislation attached to the Consolidated Appropriations Act of 2021. The provision is effective for acquisition LIHTCs allocated after December 31, 2020 and for bond-financed properties placed in service and receiving allocations from private activity bonds issued after December 31, 2020. Affordable housing developers have been advocating for this 4% fixed rate for the past several years to help provide predictability to the marketplace and increase production by making more developments financially feasible. According to the Affordable Housing Tax Credit Coalition, the 4% housing credit rate has fallen to lows hovering between 3.07% and 3.09% in recent months due to COVID-19 and ensuing cuts to federal borrowing rates, putting housing developments’ financial feasibility at risk. With the new 4% floor, Novogradac & Co. estimates that an estimated 130,000 affordable homes could be created from 2021 to 2030. The new 4% fixed tax rate allowed Jamboree to generate additional tax credit equity for the development of the North Harbor Village project. This happened similarly with the Legacy Square project being developed by National CORE. After the approval by Congress of the new rate, National CORE was able to decline the City’s award of $3.1 million in Inclusionary Housing Funds after the City Council had approved their loan documents on December 15, 2020. However, the Legacy Square project is a new construction project and Jamboree’s North Harbor Village project is a motel rehabilitation project. Therefore, Jamboree is requesting the City to extend their pre-loan commitment of $1.6 million in CDBG funds in case Jamboree experiences any unexpected cost