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Second Amendment to Joseph House Loan Agreement <br />and Affordable Housing Covenants <br />November 7, 2017 <br />Page 2 <br />DISCUSSION <br />On April 11, 2006, the City of Santa Ana and the former Community Redevelopment Agency of <br />the City of Santa Ana (RDA) entered into a Housing Development Loan Agreement and <br />Affordable Housing Covenants with Mercy House Transitional Living Centers (Mercy House) for <br />the rehabilitation of the Joseph House Project located at 210 E. 16th Street. Mercy House has <br />operated Joseph House as a transitional housing program for homeless single men in the <br />community since 1990. At the time of the loan agreement in 2006, the City provided HOME <br />Investment Partnerships Program (HOME Program) and RDA tax increment funds for the <br />rehabilitation of the property. At the time of committing the HOME funds, the HOME Program <br />allowed funds to be used for transitional housing. In accordance with the loan agreement and <br />funding regulations, the City has continued to monitor Joseph House to ensure compliance with <br />the loan documents, regulations, and affordable housing covenants. <br />Due to funding and policy changes at the federal level, a First Amendment to the Agreement was <br />entered into on December 1, 2016, to modify the Joseph House transitional housing program to <br />become a dual-purpose facility offering both transitional housing and permanent housing with <br />supportive services for single homeless men from the community. The proposed program <br />modification from a transitional shelter to a dual-purpose model included the following: (1) convert <br />two units of transitional housing into permanent housing with supportive services, offering low <br />rental costs in compliance with low HOME rents to meet the needs of low-income homeless <br />individuals in the community; (2) one unit to continue to operate as a transitional housing <br />program; and (3) leverage rapid re -housing funds to reduce the length of time clients stay at the <br />shelter with the goal of connecting them to permanent affordable housing opportunities. <br />In May 2017, Mercy House began operation of the Bridges at Kraemer Place, a 200 -bed year <br />round emergency shelter located in the City of Anaheim that serves single men and women. The <br />advent of this large year round shelter for single adults as well as the Courtyard in Santa Ana, <br />has replaced the need for Mercy House to continue to operate Joseph House as a transitional <br />shelter. Furthermore, as demonstrated in the Business Plan and analysis of Orange County's <br />housing market (Exhibit 1), there is a strong need in the community for the development of <br />affordable housing for low-income including formerly homeless individuals. As such, Mercy <br />House now seeks to amend the Housing Development Loan Agreement and Affordable Housing <br />Covenants a second time to allow for the remaining transitional housing unit to be turned into <br />affordable housing and dissolve transitional housing at the site (Exhibit 2). <br />STRATEGIC PLAN ALIGNMENT <br />The activities covered by this report allow the City to meet Goal # 5 (Community Health, <br />Livability, Engagement & Sustainability), Objective # 3 (Facilitate diverse housing opportunities <br />and support efforts to preserve and improve the livability of Santa Ana neighborhoods). <br />80A-2 <br />