03 PH - MORT REV BOND INDUCEMENT EX 1 2012-08-06.doc

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PH -Mortgage Revenue Bond Inducement and TEFRA August 6, 2012 Page 2 iSCUSI The Vitus Group has developed and owns more than 70 projects in 13 states, with 15 of those projects located in California. They have successfully acquired and rehabilitated over 6,000 subsidized senior units. The developer is proposing to acquire and rehabilitate the project by utilizing tax-exempt bonds and low income housing tax credits. The current affordability restrictions are due to expire in 2017. By virtue of the proposed funding, the affordability will be extended for 55 years. Of the 200 units, 59 units will be designated for very low-income and 140 units for low income households. One unit will be set aside for an onsite manager. All cost to acquire, rehabilitate and provide forthe level of affordability for this project will be funded solely through the issuance of bonds and tax credit allocation. The project will undergo an extensive rehabilitation to address deferred maintenance, improve the physical condition of the property, and address long-term capital needs. Existing tenants will not be displaced during the rehabilitation, although may be temporarily relocated to a hotel or a renovated vacant unit should the need arise. The acquisition of the property is planned for December 2012 and the rehabilitation is anticipated to commence in February 2013 and be completed in June 2013. In order for the Housing Authority to apply for a bond allocation from the California Debt Limitation Allocation Committee on behalf of the developer, the Housing Authority must adopt an Inducement resolution relating to the bonds. The Inducement resolution confirms the Housing Authority's intent to issue the bonds and identifies the time at which costs expended on the project qualify for the financing with the tax-exempt bonds. The bonds are considered "conduit" obligations. This means that although the Housing Authority will issue the bonds, the owner is actually the borrower and has sole responsibility for repayment. The bonds will be repaid strictly out of the project's cash flow. There is no recourse to the Housing Authority or the City of Santa Ana. Prior to bonds being sold, the City Council must hold a public hearing as required by the Tax Equity and Fiscal Responsibility Act (TEFRA}. The public hearing is to solicit comments on the project and the issuance of bonds. Holding the TEFRA is also a precondition to applying for the