010708 Loan Agmts Townsend-Raitt, LLC an Auth Reloc Plan 701 and 709 Townsend

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Loan Agreements with Townsend & Raitt, LLC and Authorization of Relocation Plan 701 and 709 Townsend January 7, 2008 Page 3 2006 the median household income in this area was $33,304, while it was $54,000 for the City as a whole and $78,300 for Orange County. Townsend & Raitt, LLC is comprised of Orange Housing Development Corporation, a non - profit 501(c) (3) (OHDC), and C & C Development Co., LLC. They are currently in escrow to purchase and rehabilitate two 10 unit. These units are located at 701 and 709 S. Townsend Street (Exhibit 1). Both OHDC and C & C Development have many years of successful experience owning and operating apartment buildings in other areas facing similar challenges. In Santa Ana they own and operate twenty buildings in the Cornerstone Village project area and recently acquired seventeen buildings in the Wilshire - Minnie area. Part of their success stems from their practice of hands -on management with an emphasis on fair and consistent enforcement of lease agreement conditions. All twenty units will be restricted to occupancy by fifty percent (very low - income) of the Area Median Income (AMI) . Rents for one - bedroom units will be $781. Current residents whose incomes exceed eighty percent of the AMI will be allowed to remain. Rents for these households will be increased to either thirty percent of their monthly household income or market rent for the neighborhood, whichever is lower. The total cost to acquire and rehabilitate the five buildings is $4,254,156. In addition to the City and Agency loans, funding sources include below market rate community investment loans in a total amount of $762,080 from Washington Mutual Bank. Exhibit 2 includes a summary of the sources and uses. Other funding sources were evaluated by CSG Advisors, the Agency's financial advisor, to determine if the City and Agency resources could be further leveraged. These sources included tax - exempt mortgage revenue bonds and Low - Income Housing Tax Credits (LIHTC). The difference between the interest rates available through tax exempt bonds and the Washington Mutual loan offered through its Community Lending Division was negligible due to the nominal amount of supportable first trust deed and the high cost of issuance of tax exempt bonds. In regard to the LIHTCs, there would be an exit tax liability of approximately $1 million to the tax credit partners. This liability occurs because the financial benefit received by the tax credit partners exceeds the initial investment. As a result of the very low - income rents, it is not 4 -5