80B - JOINT - AFFORDABLE HOUSING FUNDS AMCAL

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Allen Matkins Leek Gamble Mallory & Natsis LLP Attomeys at Law Sonia R. Carvalho August 19, 2016 Page 2 and, as successor agency to the City's Redevelopment Agency, has approximately $3.5 million in its Low and Moderate Income Housing Fund ("Housing Fund"). It is anticipated that the first phase of the Heritage Village Project will obtain its first building permit toward the end of 2016. At that time the affordable housing in lieu fee that would be owed by the Developer for just the first phase of the Project would be approximately $2.6 million. Thus, following payment by the Developer of its in lieu fees for the first phase of development, the City will have on hand a total of about $9 million that it can utilize for affordable housing development. At that time the City would be able to provide the pledge letter needed by Ameal for purposes of obtaining its tax credit financing. Subsequent to that, the Developer will make additional affordable housing in lieu fee payments in conjunction with phases 2 and 3 of the Project. This will help replenish the City's in lieu fee fund. We are aware that some questions have arisen regarding the ability of the City to utilize the $3.5 million in its Housing Fund for the purpose described above. We have reviewed California's Community Development and Housing laws regarding the dissolution of redevelopment agencies and the use by successor agencies of funds taken over from dissolved redevelopment agencies. Based on our review it seems clear that the City can use these funds for the purposes described above. Assembly Bill 1793 was adopted in 2014 and amended section 34176.1 of the Health & Safety Code relating to redevelopment and, in particular, relating to funds received from successor agencies and how those funds may be used. Under existing law a city that authorizes the creation of a redevelopment agency, such as Santa Ana, may elect to retain the housing assets and functions previously performed by the redevelopment agency. The City has elected to do so. Existing law requires that any funds transferred to a city assuming the housing functions of the former redevelopment agency, together with any funds generated from housing assets, be maintained in a separate Housing Fund to be used in accordance with applicable housing related provisions of state law. Section 34176.1 creates an exception to use of Housing Funds. Instead of being subject to the provisions of the Community Redevelopment Law, Section, 34176.1 specifically provides for how those funds may be used. In particular, Section 34176. 1 (a)(3)(A) states that the housing successor shall expend all funds remaining in the Housing Fund, with the exception of certain minimal amounts for administrative expenditures and homeless prevention, for the development of housing affordable to and occupied by households earning 80% or less of the area median income. hi addition, pursuant to Section 34176.1(d), if a housing successor has an excess surplus, the housing successor shall encumber the excess surplus for the development of affordable housing or transfer the funds to an adjacent successor agency. If the housing successor fails to do either one of these then the excess funds will need to be transferred to the Department of Housing and Community Development. Based on all the above we feel that the concerns of the City, the Developer and Amcal can be met by taking the following steps: First, Amcal request that the City use both its in lieu fee fund and its Housing Fund toward the proposed Amcal project. Second, the City agrees that it can utilize both its in lieu fee fund and its Housing Fund, along with the Developer's payment of the first phase affordable housing in lieu fees, to provide a pledge letter on behalf of Amcal in support of its tax credit financing request. Third, the City and Developer enter into an agreement whereby both