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Approval of Loan Agreements, Resolution, and Appropriation Adjustment
<br />Santa Ana Arts Collective Project
<br />July 5, 2017
<br />Page 2
<br />DISCUSSION
<br />On June 1, 2015, staff issued a Request for Proposals (RFP) soliciting applications for the
<br />development of affordable housing. The RFP indicated that the City would consider proposals for
<br />new construction and/or acquisition and rehabilitation projects. It also indicated that the City had
<br />approximately $1,875,000 in Inclusionary Housing funds; $500,000 in Community Development
<br />Block Grant (CDBG) funds; $830,000 in federal HOME Program funds to be committed by July
<br />31, 2016; $1,430,000 in federal HOME Program funds to be committed by July 31, 2017; and 24
<br />Project -Based Vouchers would be available.
<br />Following the RFP, on November 3, 2015, City Council awarded Meta Housing Corporation
<br />(Developer) a pre -loan commitment of Inclusionary Housing Funds, Community Development
<br />Block Grant (CDBG) and HOME Investment Partnerships Program (HOME) funds, not to exceed
<br />$4,635,000, for an affordable housing project called the Santa Ana Arts Collective (Project)
<br />located at 1666 N. Main Street (Exhibit 1). On February 3, 2016, the loan agreement for the
<br />CDBG and Inclusionary Housing Funds was approved by City Council. On September 6, 2016,
<br />City Council adopted a resolution to approve the Relocation Plan for the Project. On June 20,
<br />2017, City Council directed staff to amend the Inclusionary Housing loan agreement for an
<br />additional amount not to exceed $2,900,000 in Inclusionary Housing funds and provide for City
<br />Council consideration at the July 5, 2017 meeting.
<br />The purpose of the amended and restated Community Development Block Grant and Inclusionary
<br />Housing Funds loan agreement is to provide an additional $2.9 million to the Project which allows
<br />the Project to be feasible following a request submitted by the Developer in December 2016 due to
<br />a financial gap created by lower tax credit equity pricing and rising interest rates (Exhibit 2). The
<br />loan agreement with the Developer for $2,219,760 in HOME Investment Partnerships Program
<br />(HOME) funds follows a pre -commitment of $2,260,000 in HOME funds approved by City Council
<br />on November 3, 2015 (Exhibit 3). Under the federal regulations for the HOME Program, the City is
<br />not able to enter into a HOME loan agreement until the Developer obtains all of their other financing
<br />for the project. If the amended and restated Community Development Block Grant and Inclusionary
<br />Housing Funds loan agreement is approved by City Council, the Developer will have obtained all of
<br />their other financing and therefore the City may now enter into the HOME loan agreement for the
<br />project. Following a review of our total HOME Loan amount and the 2016 HOME maximum per-
<br />unit subsidies published by the Housing and Urban Development Department, the HOME Loan
<br />amount committed to the Project was reduced from $2,260,000 to $2,219,760.
<br />On June 7, 2016, City Council adopted a resolution authorizing submittal of a funding application as
<br />a joint applicant with Meta Housing Corporation for the Affordable Housing and Sustainable
<br />Communities Program (AHSC) in the amount not to exceed $12,028,626. Of that amount,
<br />$7,833,126 was requested as a loan for Affordable Housing Development and $1,288,000 was
<br />requested as a grant for a Sustainable Transportation Infrastructure Project for the Santa Ana Arts
<br />Collective Project, and $22,500 was requested as a grant to support the Southern California
<br />Association of Govemments' (SCAG) Go Human program. The application was submitted and on
<br />55C-2
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