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<br />P. H. - Mortgage Revenue Bond Inducement <br />and TEFRA on Issuance of Tax-Exempt <br />and Loan Agreements with Wilshire/Minnie, L.P. <br />December 18, 2006 <br />Page 3 <br /> <br />addition, the partnership is proposing to provide a community/learning <br />center for the residents. <br /> <br />Rents will be restricted to those affordable low- and very low-income <br />households as described in Exhibit 2. The maximum occupancy will also <br />be restricted to three persons for one-bedroom, four persons for two- <br />bedrooms, six persons for three-bedrooms and eight persons for four- <br />bedrooms. <br /> <br />The total cost to acquire, rehabilitate and provide for the level of <br />affordabili ty for these properties will not be met solely through the <br />issuance of bonds and tax credit allocation. Staff is recommending the <br />gap be filled with $2.4 million funded from HOME and $8.1 million from <br />the Community Redevelopment Agency (Exhibit 3). Repayment will be based <br />on residual receipts. These loans are contingent on approval of the <br />bond allocation and tax credits, approval of the relocation plan and any <br />necessary variances by the Planning Commission. <br /> <br />In order for the Housing Authority to apply for a bond allocation from <br />the California Debt Limitation Allocation Committee on behalf of the <br />partnership, the Housing Authority must adopt an Inducement resolution <br />relating to the bonds. The Inducement resolution confirms the Housing <br />Authority's intent to issue the bonds and identifies the time at which <br />costs expended on the project qualify for financing with the tax-exempt <br />bonds. The bonds are considered "conduit" obligations. This means that <br />although the Housing Authority will issue the bonds, the owner is <br />actually the borrower and has sole responsibility for repayment. The <br />bonds will be repaid strictly out of the project's cash flow. There is <br />no recourse to the Housing Authority, the City of Santa Ana or the <br />Community Redevelopment Agency. <br /> <br />Prior to bonds being sold, the City Council must hold a public hearing <br />as required by the Tax Equity and Fiscal Responsibility Act (TEFRA). <br />The public hearing is to solicit comments on the project and the <br />issuance of the bonds. Holding the TEFRA is also a precondition to <br />applying for the bond allocation. <br /> <br />Approval of this project will ensure the future integrity and stability <br />of the neighborhood by retaining ownership of seventeen contiguous <br />buildings under one owner, which will be rehabilitated and will have <br />affordability and occupancy covenants. It will also increase the <br /> <br />808-3 <br /> <br />