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Authorization Of Multi- Family Housing <br />Revenue Refunding Bonds And Loan <br />Agreements With Wakeham- Grant, LP <br />January 5, 2004 <br />Page 2 <br />2. Direct the City Attorney to prepare, and authorize the Executive <br />Director of the Community Development Agency to execute agreements <br />and all other required documents as necessary. <br />DISCUSSION <br />On March 5, 2001, the City Council held a public hearing and authorized <br />the Housing Authority to issue tax - exempt bonds for the Wakeham -Grant <br />Apartments. On July 16, 2001, the Housing Authority authorized the <br />issuance of the tax - exempt bonds in an aggregate principal amount not to <br />exceed $8,155,000. In addition, on December 3, 2001, the City Council <br />authorized $150,000 of HOME funds for the project. The bond proceeds <br />were used to acquire and rehabilitate the properties located at 805, <br />810, 815, 816, 825, 828, 835 and 904 S. Minnie Street (Exhibit 1). This <br />project consists of 127 one- and two - bedroom units. <br />Currently, the developer cannot convert from the construction financing <br />to a permanent loan based on their original agreement. The developer <br />has found a new lender, U.S. Bank, who will be providing a permanent <br />loan of up to $6,000,000. Due to the reduction of the loan amount and <br />extensive and unforeseen repairs during construction, which caused a <br />significant cost over -run, there remains a financial gap. The <br />additional funds, $1,900,000 of HOME funds and $1,000,000 of tax - <br />increment funds, will allow for conversion and additional rehabilitation <br />of units, and will require covenants for deeper affordability. <br />Currently, Wakeham -Grant is required to have 25% or 32 units at 50% of <br />the area median income (AMI) and the remaining 75% or 95 units at 600 <br />AMI. As a condition of funding, Wakeham -Grant will be required to have <br />all 127 units affordable at 50% AMI for a term of 55 years. <br />The bonds are considered "conduit" obligations. This means that the <br />Housing Authority will issue the bonds, but the developer is the <br />borrower and is solely responsible for repayment. The bonds are repaid <br />strictly from the developer under the project mortgage. There is no <br />recourse to the City of Santa Ana, the Housing Authority or the <br />Community Redevelopment Agency. The bonds will be purchased directly by <br />the lender, U.S. Bank, as a private placement. The law firm of Jones <br />Hall has been retained to serve as bond counsel, and CSG Advisors has <br />been retained as financial advisor. Final issuance of the bonds is <br />conditioned on the underwriting by the lender and approval by the <br />Housing Authority. <br />