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Authorization Of Multi-Family Housing Revenue Refunding Bonds And Loan Agreements With Wakeham-Grant, LP January 5, 2004 Page 2 o Direct the City Attorney to prepare, and authorize the Executive Director of the Community Development Agency to execute agreements and all other required documents as necessary. DISCUSSION On March 5, 2001, the City Council held a public hearing and authorized the Housing Authority to issue tax-exempt bonds for the Wakeham-Grant Apartments. On July 16, 2001, the Housing Authority authorized the issuance of the tax-exempt bonds in an aggregate principal amount not to exceed $8,155,000. In addition, on December 3, 2001, the City Council authorized $150,000 of HOME funds for the project. The bond proceeds were used to acquire and rehabilitate the properties located at 805, 810, 815, 816, 825, 828, 835 and 904 S. Minnie Street (Exhibit 1). This project consists of 127 one- and two-bedroom units. Currently, the developer cannot convert from the construction financing to a permanent loan based on their original agreement. The developer has found a new lender, U.S. Bank, who will be providing a permanent loan of up to $6,000,000. Due to the reduction of the loan amount and extensive and unforeseen repairs during construction, which caused a significant cost over-run, there remains a financial gap. The additional funds, $1,900,000 of HOME funds and $1,000,000 of tax- increment funds, will allow for conversion and additional rehabilitation of units, and will require covenants for deeper affordability. Currently, Wakeham-Grant is required to have 25% or 32 units at 50% of the area median income (AMI) and the remaining 75% or 95 units at 60% AMI. As a condition of funding, Wakeham-Grant will be required to have all 127 units affordable at 50% AMI for a term of 55 years. The bonds are considered "conduit" obligations. This means that the Housing Authority will issue the bonds, but the developer is the borrower and is solely responsible for repayment. The bonds are repaid strictly from the developer under the project mortgage. There is no recourse to the City of Santa Ana, the Housing Authority or the Community Redevelopment Agency. The bonds will be purchased directly by the lender, U.S. Bank, as a private placement. The law firm of Jones Hall has been retained to serve as bond counsel, and CSG Advisors has been retained as financial advisor. Final issuance of the bonds is conditioned on the underwriting by the lender and approval by the Housing Authority. 25.1. Page 139