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Home My WebLink About19F - HOUSING PROJECT REPORTREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: MARCH 5, 2019 TITLE: RECEIVE AND FILE QUARTERLY REPORT FOR HOUSING DIVISION PROJECTS AND ACTIVITIES OCTOBER 2018 — DECEMBER 2018 {STRATEGIC PLAN NO. 5,3C) ACTING CITY MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: ❑ As Recommended ❑ As Amended ❑ Ordinance on V Reading ❑ Ordinance on 2n' Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER Recommend that the City Council receive and file the Quarterly Report for Housing Division Projects and Activities for the period of October 2018 — December 2018. COMMUNITY REDEVELOPMENT AND HOUSING COMMISSION RECOMMENDATION At its regular meeting on January 23, 2019, the Community Redevelopment and Housing Commission (CRHC) by a vote of 7:0 recommended that the City Council receive and file the Quarterly Report for Housing Division Projects and Activities for the period of October 2018 — December 2018. DISCUSSION This report for the quarter beginning October 1, 2018 and ending on December 31, 2018 provides statistics for all of the affordable housing projects and activities for the Housing Division. The report is divided into three sections: Loan Activity, Loan Portfolio Management and Monitoring, Affordable Housing Funds and Commitments, and Development Projects. Loan Activity Applications The Housing Division offers several different programs including down payment assistance for first-time homebuyers and rehabilitation loans for mobile homes, single-family, multi -family, and historic homes. Inquiries are received from the public and applications are mailed out, received and approved for these programs on a continual basis. Table 1 shows the number of inquiries, applications sent out, received and approved by type for the quarter and for the total fiscal year. 19F-1 Quarterly Report for Housing Division March 5, 2019 Page 2 Table 1: Applications Sent Out, Received & Approved Program Inquiries Q2 Total FY Applications Sent Out Q2 Total FY Applications Received Q2 Total FY Applications A proved Q2 Total FY Single -Family Rehabilitation 20 51 51 82 5 7 0 1 Mobile Home Rehabilitation 4 6 2 4 0 0 0 1 Multi -Family Rehabilitation 0 0 0 0 0 0 0 0 Historic Home Restoration 0 0 0 0 0 0 0 0 Homeownership 28 57 53 86 5 7 0 2 The number of applications received is typically lower than the number of applications sent out in any given period due to the stringent program guidelines for eligibility regulated by the federal government, which makes it difficult for most applicants to qualify. Currently, due to the retirement of the City's Senior Residential Construction Specialist in December 2018 and the promotion of the Residential Construction Specialist into the position, the Housing Division does not have adequate staffing to implement the Home Rehabilitation Program. Any applications received have been put on hold. Staff is exploring options for contracting out the administration of the Home Rehabiliation Program or alternatively hiring for the position. Both solutions will require approximately six months to implement. Rehabilitation Loan Underwriting and Approval Progress For the rehabilitation loans, staff reviews applicant eligibility, verifies income and assets, and oversees underwriting to ensure compliance with program guidelines and requirements established by the funding source. In addition, staff conducts an inspection of the property, prepares a work write-up to determine rehabilitation work to be performed, and develops a budget for the work. Due to the complex funding requirements, applications may be in underwriting for several months. The length of time in underwriting is largely determined by the applicant's timely submittal of the necessary paperwork. Once approved, staff prepares all necessary loan documents, makes arrangements for loan execution, and reserves the required loan funds. During this quarter, one (1) home rehabilitation loan was funded, one (1) Habitat for Humanity home buyer was approved, two (2) inclusionary housing purchases at City Ventures were approved and closed escrow, and two (2) Habitat for Humanity buyers closed escrow. Rehabilitation Program Construction Progress During this phase, homeowners receiving rehabilitation loans are guided through an open selection of contractors to complete the work on their homes. Each homeowner is given a list of contractors that have been screened by staff for license and insurance requirements. However, homeowners are allowed to select any contractor that meets these same requirements. Staff assists the homeowners with the evaluation of bids and selection of a contractor. Staff also monitors the construction work, approves payments to contractors, and tracks expenditures to ensure compliance with the loan agreement and program guidelines. At the end of this quarter, there were two (2) homeowner rehabilitation projects out to bid and two (2) under construction. Down Payment Assistance Loan Program Progress For the Down Payment Assistance Loan Program, staff evaluates applicant eligibility and oversees underwriting to ensure compliance with program guidelines and requirements 19F-2 Quarterly Report Housing Division Projects and Activities March 5, 2019 Page 3 established by the U.S. Department of Housing and Urban Development (HUD). Applicants must meet established income requirements, complete an eight-hour pre -purchase counseling program from a HUD -approved housing counseling agency, be pre -qualified for a first mortgage and have a minimum of three percent of the purchase price from their own savings. Other HUD requirements apply, including a current maximum sales price of $513,000 for a single family home or condo. On March 6, 2018, City Council approved an update to the Down Payment Assistance Loan Program increasing the loan amount to $80,000 for low income households and approving the use of the Inclusionary Housing Fund to offer down payment assistance of up to $40,000 for moderate income households. The updated program requires the buyer must be a current resident of Santa Ana or work in Santa Ana at least 32 hour per week (except U.S Military Veterans). Additionally, the property needs to be in good condition and pass an inspection. During this quarter, staff conducted one (1) down payment assistance workshop in which a total of 24 people attended and performed outreach at a booth at the United for Housing Fair at the Orange County Fairgrounds. During this quarter, no down payment assistance applications were received. Loan Portfolio Management & Monitoring The Housing Division is responsible for managing the residential loan portfolio which includes all of the loans entered into by the City and Housing Authority acting as the Housing Successor Agency. As of the end of this quarter, the principal balance was $130,010,022. This is comprised of 410 loans of which 387 are deferred or residual receipt payment loans. As shown in Table 2, the loan portfolio generated $229,833 in payments of principal and interest during this quarter. Table 2: Portfolio Revenue Monitoring As part of the requirements for these funds, staff must monitor the owner -occupancy of single family homes that have received loans, and the building code compliance of units in rental projects with long-term affordability covenants. During this quarter, 54 owner -occupancy recertification letters were mailed and 44 were returned and processed. Staff also audited files for twenty-four loans (24) loans and conducted building code compliance inspections for 3 units in one (1) project. Regulations require that only a sample of units be selected for inspection. Staff also inspects the grounds and common areas such as laundry rooms to ensure they also meet municipal code requirements. The grounds, common areas and 19F-3 Funding Source HOME CDBG Redevelopment NSP CaIHOME Loan Payoffs $0 $46,070 $0 $12,058 $0 Residual Receipts $129,631 $0 $10,420 $0 $0 Payments Amortized Loan $3,881 $6,354 $21,419 $0 $0 Payments Total For 02 $133,512 $52,424 $31,839 $12,058 $0 Monitoring As part of the requirements for these funds, staff must monitor the owner -occupancy of single family homes that have received loans, and the building code compliance of units in rental projects with long-term affordability covenants. During this quarter, 54 owner -occupancy recertification letters were mailed and 44 were returned and processed. Staff also audited files for twenty-four loans (24) loans and conducted building code compliance inspections for 3 units in one (1) project. Regulations require that only a sample of units be selected for inspection. Staff also inspects the grounds and common areas such as laundry rooms to ensure they also meet municipal code requirements. The grounds, common areas and 19F-3 Quarterly Report Housing Division Projects and Activities March 5, 2019 Page 4 all of the inspected units were found to be in compliance at the time of initial inspection. During this quarter staff also audited 10 Housing Opportunities Ordinance rental files. Available Funds and Land Assets for Affordable Housing Development Projects The City of Santa Ana and the Housing Authority acting as the Housing Successor Agency manages multiple sources of local, state and federal funds to promote and facilitate the development of affordable housing as well as land assets held by the Housing Successor Agency. Exhibit 1 provides a summary of the funds available as of the end of this quarter. Exhibit 2 provides a summary of available land assets. Housing Opportunity Ordinance On -Site Develooment: Since 2011, a total of 33 units have been developed on-site as a result of the Ordinance, including 23 ownership units for -sale and 10 rental units: Units Built On -Site Ownership Rental TOTAL 23 10 33 In -Lieu Fees Generated. All in -lieu fees, penalties and other monies collected pursuant to the Housing Opportunity Ordinance, including interest, are deposited into the Inclusionary Housing Fund. Since inception, the Inclusionary Housing Fund has generated $13,885,436 to be used for the development of housing affordable to low and moderate income households, with a reasonable amount spent on administrative or related expenses associated with the administration of the Housing Opportunity Ordinance. These fees were generated from a total of 9 projects that opted to pay the in -lieu fee instead of building units on-site. If those 9 projects had instead built the inclusionary housing units on-site, a total of 393 low-income units or 263 very low-income units would have been created. By comparison, there were 2,589 market -rate units produced or are under construction. Affordable Housing Units under Construction/ Pre -Construction with /n -Lieu Fees: A total of 108 units are under construction / pre -construction with an investment of in -lieu fees generated. This includes a $4,775,000 loan of in -lieu fees to develop 57 units of affordable housing at the Santa Ana Arts Collective and a pre -loan commitment of $1.3 million of in -lieu fees to develop 51 units of affordable housing at the Tiny Tim Plaza project: Units Under Construction / Pre -Construction with In -Lieu Fees Project # of Units TOTAL Santa Ana Arts Collective 57 108 Tiny Tim Plaza 51 19F-4 Quarterly Report Housing Division Projects and Activities March 5, 2019 Page 5 In addition, $3,131,700 of in -lieu fees was committed by City Council on September 14, 2018 to create 200 emergency shelter beds at the Link interim emergency shelter. This report reflects the status of funds and projects for the period ending December.31, 2018 and does not include the award of funds for two projects made by City Council on January 15, 2019. Projects Under Development Below are brief summaries for projects under development. Exhibit 3 provides a development timeline for the larger development projects including the Santa Ana Arts Collective, First Street Apartments, Santa Ana Veterans Village, Aqua Housing, and Tiny Tim Plaza. For Sale Infill Housinq (4010 - 4026 E. McFadden Street) • Developer: Habitat for Humanity of Orange County • Description: Acquisition and new construction project comprised of five (5) affordable single-family homes to be sold to qualified low- to moderate -income buyers. • City Funds: Land provided by the Redevelopment Agency • Status: The project is complete. All five homes have been sold and are presently occupied Santa Ana Arts Collective (1666 N. Main Street) • Developer: Meta Housing Corporation • Description: Acquisition, adaptive reuse and new construction project comprised of 57 affordable rental units designated for professional artists of all disciplines, and 1 manager's unit. Permanent supportive housing for 10 units will be funded by MHSA/SNHP finds from the County of Orange. • City Funds: Inclusionary Housing ($5,275,000), HOME ($2,627.631), CDBG ($500,000) • Update: Construction is 30% complete. Four educational sessions will be held in March to inform artists on how to apply for housing. The applications will be due in June or July. Occupancy is expected in September 2019. First Street Apartments (1440 E. First Street) • Developer: AMCAL Multi -Housing, LLC. • Description: Demolition and new construction of an affordable multifamily apartment complex consisting of 68 units of rental housing serving very -low and extremely -low income families, and 1 manager's unit. • City Funds: Housing Successor Agency ($8,522,740) Update: Framing is in progress and 40% complete. Santa Ana Veterans Village (3312 W. First Street) • Developer: Jamboree Housing Corporation with Step Up on Second as the service provider • Description: New construction of an affordable multifamily apartment complex consisting of 75 units of permanent supportive housing with wrap-around supportive services for HUD -Veterans Affairs Supportive Housing (VASH) eligible homeless veterans and 1 manager's unit. 19F-5 Quarterly Report Housing Division Projects and Activities March 5, 2019 Page 6 • City Funds: 75 HUD-VASH Project -Based Vouchers ($9,790,000), HOME-CHDO ($352,963) • Update: Jamboree closed on their financing and a ceremonial ground breaking ceremony was held on Jnauary 7, 2019. Grading will begin as soon as the weather permits. . Aqua Housing (317 E. 17th Street) • Developer: Community Development Partners (CDP) with Mercy House as the service provider • Description: Acquisition, demolition and new construction of a former motel yielding 56 units of affordable permanent supportive housing with wrap-around supportive services for chronically homeless individuals and 1 manager's unit. • City Funds: 56 Project -Based Vouchers ($9,237,900) • Update: The City's Planning Department has reviewed CDP's submitted plans and provided comments, and CDP has resubmitted plans for final approval. They expect to pull building permits and close on their financing in early March. The tax credit deadline to close on their financing is April 15. Tiny Tim Plaza (2223 West 5th Street) • Developer: Community Development Partners • Description: New construction of an affordable multifamily apartment complex consisting of 51 units of rental housing serving very -low and extremely -low income families, and 1 manager's unit. • City Funds: Inclusionary Housing ($1,300,000), Housing Successor Agency ($4,700,000) • Update: CDP was successful in obtaining 9% tax credits and expects to close no later than the end of April this year. The tax credit deadline to close on their financing is May 6. The first set of architectural plans will be submitted to the City in early February. There will be no Special Needs Housing Program (SNHP) units since they were awarded 9% tax credits. NSP 1. 2 and 3 Programs The City is seeking proposals for $1,239,599 in NSP Program funds available in the Request for Proposals. Request for Proposals - RFP #18-056 - Affordable Housing Development The City of Santa Ana and the Housing Authority of the City of Santa Ana issued a Request for Proposals (RFP) on July 2, 2018 for the development of affordable housing in the City. Proposed developments may be for acquisition and/or rehabilitation of eligible properties for rental or transitional housing; acquisition and conversion of non-residential property to multifamily rental units; and/or new construction of housing units for rental housing. Land assets owned by the Housing Authority of the City of Santa Ana are also available for development under the RFP. Additional information regarding the RFP is available on the City of Santa Ana's website. 19F-6 Quarterly Report Housing Division Projects and Activities March 5, 2019 Page 7 The City of Santa Ana received thirteen (13) proposals that passed a minimum threshold review. The proposals were reviewed by a Review Panel of City employees. Interviews were held on October 30, 2018 and the Review Panel recommended four projects for approval on November 5, 2018. A Public Hearing was held and the Community Redevelopment and Housing Commission recommended the four projects for award at the December 19, 2018 Commission meeting. City Council approved two of the projects, Santa Ana United Methodist Church (aka Legacy Square) and Francis Xavier, on January 15, 201.9. One of the remaining two projects, Habitat for Humanity, will be recommended to City Council on February 5, 2019. The final remaining project, Budget Inn, will be recommended to City Council in March 2019 pending completion of the financial gap analysis. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal # 5 - Community Health, Livability, Engagement & Sustainability, Objective #3 (Facilitate diverse housing opportunities and support efforts to preserve and improve the livability of Santa Ana neighborhoods). FISCAL IMPACT There is no fiscal impact associated with this action. Steven A. Mendoza Executive Director Community Development Agency Exhibits: 1. Available Funds for Affordable Housing Development Projects 2. Available Land Assets for Affordable Housing Development 3. Project Timelines 19F-7 19F-8 Exhibit 1 Available Funds for Affordable Housing Development Projects As of December 31, 2018 Housing Successor Agency (Housing Authority) $6,532,524 Cash on Hand ($85,227) First Street Apartments Loan 1 ($167,253) First Street Apartments Project Costs ($4,700,000) Tiny Tim Plaza Conditional Pre -Commitment Loan 2 ($250,000) Habitat for Humanity Disposition and Development Agreement 3 ($250,000) Administrative Costs Allowance 4 $1,080,044 Available Funds Inclusionary Housing Funds $7,348,982 Cash on Hand 5 ($345,166) Santa Ana Arts Collective Project Costs 6 ($1,300,000) Tiny Tim Plaza Conditional Pre -Commitment Loan 2 ($402,365) Administrative Costs Allowance (CDAIPBA) ($360,000) Down Payment Assistance Program 7 ($1,666,275) Interim Emergency Homeless Shelter Agreement 8 $3,275,176 Available Funds HOME Program $3,256,575 Funds to Drawdown $3,256,575 Available Funds to Drawdown CDBG Program (Acquisition/Rehabilitation Projects Only) $1,687,047 Funds to Drawdown $1,687,047 Available Funds to Drawdown NSP Program (Abandoned, Foreclosed or Vacant Properties Only) $1,250,814 Funds to Drawdown ($321,495) Administrative Costs Allowance $929,319 Available Funds to Drawdown $10,228,161 Total Available Funds ' Approved by Housing Authority on January 16, 2018. 90% of ban paid on March 13, 2018: 10% remaining to be paid upon completion of construction - 2 Approved by City CouncillHousing Authority on June 20, 2017. ° Payment made in January 2019. ° The Housing Successor Agency relies on available cash to fund the monitoring and compliance functions related to the former Redevelopment Agency's housing bans. ° Cash Balance does not include $3,842,195.50 recetved from PR Broadstone Heritage Holdings, Phase III on January 14, 2019. ° Project costs ony, $4.SM in loans approved by City Council paid on July 26, 2017. $400,000 originally approved by City Council on March 6, 2018. One loan paid in September 2018. ° Approved by City Councd on September 18, 2018. Agreement with Mercy House Living Centers, Inc. On"nst year comm8ment reflected here. 19F-10 EXHIBIT 2 AVAILABLE LAND ASSETS FOR AFFORDABLE HOUSING DEVELOPMENT (1) 302 E. Twenty -Second Street a. APN:003-122-25 b. Lot Size: 27,817sf c. Current Zoning: R1 Single -Family Residence, which allows one house per lot. d. Parcel was acquired 10/30/2002 using Low and Moderate Income Housing Asset Fund - 20% Set Aside. e. Previous Use: Purchased from Cal Trans. It was a remnant parcel from the freeway widening project. The site was vacant and undeveloped at the time it was acquired. f. General Plan: Low Density Residential, which allows single-family residences and ancillary uses. g. Maximum du/ac: Seven units per acre. h. Site Condition / Environmental Conditions: Property is irregular in shape, is below the minimum lot size for a residential lot, and will most likely require the approval of several variances from the zoning code in order to facilitate a residential unit. (2) 826 N Lacy / 830 N. Lacy Street a. APN: 398-041-22 / 398-041-18 b. Lot Size: 8,843sf / 7,405sf c. Current Zoning: SD19 - this property is located within the French Park Historic District. d. Parcel was purchased using Low and Moderate Income Housing Asset Fund - 20% Set Aside (both parcels) e. 826 - Acquired 10/24/1990. f. Previous Use: 830 was formerly 412 E. Vance Street. Acquired 10/20/1994. Demolished a six -unit apartment building and garage in 1995. g. General Plan: Low Density Residential, which allows single-family residences and ancillary uses. h. Maximum du/ac: Seven units per acre. i. Site Condition / Environmental Conditions: This vacant site will need to comply with the design guidelines of the French Park Historic District and will require review by the French Park Design Committee. (3) 1126 & 1146 E. Washington Ave. a. APN:398-092-14 b. Lot Size: 62,347sf (1.43 Acres) c. Current Zoning: SD -84 d. Parcel was acquired 9/5/2007 using Low and Moderate Income Housing Asset Fund - 20% Set Aside e. Previous Use: Purchased from Cal Trans. Remnant parcel from freeway widening project. Cal Trans demolished five buildings on the site in the early 1990s. The site was vacant and undeveloped when it was acquired by the City. f. General Plan: District Center (DC), which is a designation that allows mixed-use development. g. Maximum du/ac: Up to 90 units per acre. h. Site Condition / Environmental Conditions: This property is located within the Transit Village sub -zoning district, which allows the most intense development within the SD - 84 district. Building types allowed include a Tuck Under product (3 stories/18 units per acre) up to a Tower on Podium (25 stories/90 units per acre). 19F-11 19F-12 EXHIBIT 3 Current Affordable Housing Development Project Timelines Jun -15 Santa Ana Arts Collective -1666 Ntain 5t RFP Issued Nov -15 Approved HOME/CDBG Funds Mar -16 Submitted Application for AHSC (Cap & Trade Funds) Sep -16 Awarded AHSC (Cap & Trade) Funds Nov -16 9% Low -Income Housing Tax Credits Awarded Dec -16 Relocation Plan Approved Jul -17 Final Loan Approved/ Close of Escrow Jul -17 Planning Entitlements Approved Jul -17 Building Permits Pulled/Construction Initiated Apr -19 Anticipated Construction Completion Aug -19 Revised Project Completion Date * (Foundation/Building Seismic Adjustments) llllllllllllll,FiEgE#ree# Apartments -1 E. Fi st St Oct -15 Developer Submitted Request for Funds to CDA Santa na V.eterans U Il Apr -16 Planning Entitlements Approved Jun -17 Awarded Successor Agency Funds Jun -17 Relocation Plan Approved Sep -17 9% Low -Income Housing Tax Credits Awarded Jan -18 Final Housing Authority Loan Approved Mar -18 Close of Escrow Mar -18 Construction Initiated Aug -19 Anticipated Construction Completion M3NJ First St ge Dec -16 RFP Issued for PBVs Apr -17 Approved HUD VASH PBVs Jun -17 Awarded HOME CHDO Funds Jun -17 Planning Entitlements Approved Jan -18 Awarded County Special Needs Housing Funds Feb -18 Submittal of 9% Low -Income Housing Tax Credit Application Jun -18 Award of 9% Low -Income Housing Tax Credits Dec -18 Close of Escrow Feb -19 Anticipated Construction Initiated Mar -20 Anticipated Construction Completion 1`19F=43 EXHIBIT 3 Dec -16 Aqua Housing - 347 E. 17th St RFP Issued for PBVs Apr -17 Approved PBVs Jun -17 Planning Entitlements Approved Jun -17 Approved AdditionalPBVs Jan -18 Awarded County Special Needs Housing Funds Jan -18 Submitted Application for HCD Infill Infrastructure Funds Jun -18 Award of HCD Infill Infrastructure Funds Aug -18 Submittal of 4% Low -Income Housing Tax Credit Application Oct -18 Allocation of 4% Low -Income Housing Tax Credits Mar -19 Anticipated Close of Escrow Apr -19 Anticipated Construction Initiated Tiny Tirn Plaza - 2223 W. 5th St Dec -16 Developer Submitted Request for Funds to CDA Jun -17 Awarded City and Housing Successor Agency Funds Jan -18 Planning Entitlements Approved Jul -18 Submittal of 9% Low-income Housing Tax Credit Application Oct -18 Award of 9% Low -Income Housing Tax Credits Apr -19 Anticipated Close of Escrow May -19 Anticipated Construction Initiated OV214