HomeMy WebLinkAboutHABITAT FOR HUMANITY OF ORANGE COUNTY (6) 0. G Q A (ep)
David Flores (Dz) A-2025-094
MAYOR ., CITY MANAGER
Valerie Amezcua *R! ' Alvaro Nunez
MAYOR PRO TEM et .r� CITY ATTORNEY
Benjamin Vazquez Sonia R.Carvalho
COU l Bacer MBERS CITY CLERK
Phil Bacerra ; Jennifer L. Hall
Johnathan Ryan Hernandez `''
Jessie Lopez
David Penaloza
Thai Viet Phan
CITY OF SANTA ANA
COMMUNITY DEVELOPMENT AGENCY
20 Civic Center Plaza—M25
Santa Ana,California 92702
www.santa-ana.orca
July 1, 2025
Michael Valentine
President & CEO
Habitat for Humanity of Orange County, Inc.
2200 Ritchey Street
Santa Ana, CA 92705
Re: Pre-Commitment Letter
425 E. Wellington Ave.
Santa Ana, CA 92701
Dear Mr, Valentine,
Habitat for Humanity of Orange County, Inc. (referred to as the "Developer"), requested
financial assistance for eligible homebuyers to purchase nine (9) existing rental units
that will be converted into affordable ownership condominium units ("Project"). The
Project would be located at 425 East Wellington Avenue, Santa Ana, CA, 92701 (APN
398-028-12) ("Property").
The Project involves the conversion of an existing nine-unit apartment building into
condominiums, which will be made available for homeownership to Low and Moderate-
Income households earning less than 120% of the Area Median Income (°AMI") ("Low
and Moderate-Income Households"). The existing building on the Property was
rehabilitated in May 2024 and includes one two-bedroom unit and eight one-bedroom
units, each with a single bathroom. All units are equipped with essential appliances:
stoves, refrigerators and stacked washer/dryer units in the laundry space. Unit sizes
range from 420 to 846 square feet. The building recently underwent over $1 million in
renovations, which included new flooring, electrical upgrades (new outlets and fixtures),
updated kitchen cabinets, and complete bathroom remodels. Doors, windows, shutters,
garage doors, stairways, and railings were restored or replaced as needed to meet code
compliance.
SANTA ANA CITY COUNCIL
Valerie Amezcua Beaiamin Vazquez Thai Viet Phan Jessie Lopez Phil Bacerra Johnalhan Ryan Hemandez David Penaloza
Mayor Mayor Pro Tam-ward 2 Ward 1 Ward 3 Ward 4 Ward 5 Ward 6
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The City of Santa Ana ("City") has reviewed the Developer's request for financial
assistance, and at the City Council meeting on July 1, 2025, the City Council authorized
and approved the issuance of this pre-commitment letter evidencing a commitment to
reserve $920,000.00 (the "City Assistance") in Inclusionary Housing Funds as follows:
(1) an allocation of$720,000 to the City's Down Payment Assistance Program (the
"Down Payment Assistance Program Allocation"), and (2) a conditional award up to
$200,000 for eligible relocation costs (the "Conditional Relocation Allocation"). The City
Assistance will be available to Low and Moderate-Income households. Current
residents of the Property with household incomes of less than 120% AMI and that
qualify to purchase a unit within the Property will be given the right of first refusal to
purchase a unit. The Down Payment Assistance Allocation shall be available for down
payment assistance to individual households, structured as a silent mortgage based on
homebuyer eligibility (the "Homebuyer Down Payment Assistance"). Homebuyers must
meet the eligibility requirements for the Developer's Affordable Homeownership
Program with a residency preference for local workers and residents of Santa Ana in
accordance with Santa Ana Municipal Code Section $-3500. Conversion and
construction will comply with all City of Santa Ana, County, and State building codes.
The Conditional Relocation Allocation will be available upon a determination by the City
that the Project is subject to relocation benefits under California Government Code §§
7260 or 66300.6.
This letter shall evidence the City's pre-commitment of the City Assistance to the
Developer for the Project subject to the conditions described below.
City__Assistance:
The amount of the proposed City Assistance has been determined based upon the
City's review of the Developer's request for the receipt of the City Assistance targeting
Low and Moderate Income Households,
The City Assistance shall be conditioned on and include the following terms:
• City and Developer shall enter into a Memorandum of Understanding ("MOU")
that sets forth terms under which the City shall provide the Homebuyer Down
Payment Assistance and Conditional Relocation Allocation.
• The Homebuyer Down Payment Assistance shall be available for Low and
Moderate Income Households with income that does not exceed 120% of the
Orange County AMI as set by the Department of Housing and Urban
Development ("HUD").
• The MOU may, but is not required to, include provisions that govern if and how
the City Assistance may be used in the event the total authorized Homebuyer
Down Payment Assistance loans are less than the amount of the award in this
pre-commitment ($720,000.00). The MOU may make these provisions subject to
approval from the City Manager of an amended MOU.
• The MOU shall specify that the Project is not undertaken by the City and is not in
furtherance of a City program. Rather, the MOU is a response to Developer's
request for financial assistance to enhance affordability for qualified homebuyers
by providing Homebuyer Down Payment Assistance through an existing City
program.
• The MOU shall require that Developer execute an affordable housing covenant
("Affordable Housing Covenant") to offer the nine (9) affordable units to
households with income that does not exceed the limits for Low and Moderate-
Income Households for an affordable sales price that complies with the limits for
an "affordable housing cost," as defined in California Health and Safety Code §
50052.5. In addition to the available Homebuyer Down Payment Assistance, the
existing residents shall have a right of first refusal, which shall provide those
households with the right to purchase an affordable unit. The Affordable Housing
Covenant shall run with the land for a period of forty-five (45) years.
• Developer shall assume any and all responsibility and be solely responsible for
determining whether the project must comply with the relocation requirements
under California Government Code § 7260 et seq. and implementing regulations
and any other applicable federal, state, or local laws governing relocation of
residential tenants, including but not limited to Division 2 of Article IX of Chapter
34 of the Santa Ana Municipal Code (§ 34-331 et seq.) (collectively, "Relocation
Laws"). To the extent applicable, Developer shall comply with and be responsible
for all costs of compliance with relevant Relocation Laws.
• Developer shall assume any and all responsibility and be solely responsible for
compliance with all tenant and eviction protections, including but not limited to
protections under the California Tenant Protection Act (Civil Code § 1946.2), the
Ellis Act(Government Code § 7060 et seq.), Santa Ana's Rent Stabilization and
Just Cause Eviction Ordinance (Article XIX of Chapter 8 of the Santa Ana
Municipal Code) (collectively, "Eviction Protections"). To the extent applicable,
Developer shall comply with and be responsible for all costs of compliance with
all relevant Eviction Protections.
• Because the MOU will provide City Assistance as part of Homebuyer Down
Payment Assistance for qualified homebuyers, the repayment obligation is based
on the City's existing Down Payment Assistance Program. City shall not be
obligated to make any payments to qualified homebuyers under the MOU unless
and until Developer meets all conditions provided for in the MOU and qualified
Low and Moderate-Income Households comply with all requirements to receive
the Homebuyer Down Payment Assistance.
• The nine (9) affordable ownership units at the Project shall be restricted by an
Affordable Housing Covenant to an affordable home purchase price, which will
require that the nine (9) homes be sold to qualified Low and Moderate-Income
Households. Future sales of such single-family homes will be restricted to
qualified Low and Moderate-income Households for a period of at least forty-five
(45) years.
• Developer will have a local preference for families who live or work in the City of
Santa Ana in the selection of qualified Low and Moderate-Income Households in
compliance with Santa Ana Municipal Code Section 8-3500. The local
preference will be applied after all existing residents have the opportunity to
exercise the right of first refusal.
• Developer will ensure that each "Program Participant" (used interchangeably
with "Homebuyer") means the selected eligible person or family who will be
purchasing a house. Each Program Participant will provide voluntary work as
sweat equity or any other administrative work as may be designated by the
Developer. Each Program Participant is to be selected by the Developer as more
fully set forth in its Affordable Homeownership Program. The City shall have the
right to review and approve the sweat equity requirements and related criteria
(including a residency preference for Santa Ana residents or workers) applied
through the Affordable Homeownership Program.
• Developer will comply with the City's Community Workforce Agreement and
union labor will be used for all necessary upgrades when volunteer labor is not
used.
• Developer will provide existing tenants with the right of first refusal to purchase a
unit, provided they meet the eligibility requirements for Habitat for Humanity's
Affordable Homeownership Program and the City of Santa Ana's Down Payment
Assistance Program; provided, however, Developer shall at all times comply with
the Relocation Laws. If an eligible and qualified household exercises the right of
first refusal, Developer shall sell the Affordable Unit to that household.
• Developer shall comply with all requirements of the California Building Code. If
the Project requires a building permit that is subject to Chapter 11 B of the
California Building Code, including but not limited to any requirements for "public
housing" under Section 11 B-233.3, then Developer shall comply with applicable
requirements of the California Building Code.
• At the close of escrow for the purchase of each affordable unit, the City will
require each household purchasing such unit to execute all documents and
instruments required by the City's Down Payment Assistance Program.
• The MOU shall set forth the terms and conditions for disbursement of the
Conditional Relocation Allocation. All disbursements of the Conditional
Relocation Allocation shall be subject to compliance with the Relocation Laws,
and disbursed only on a reimbursement basis after the City has been provided
reasonable documentation of compliance with the Relocation Laws.
General Provisions:
The City's obligation to provide the City Assistance to the Project is subject to each of
the following conditions:
• Developer must provide proof that it has secured all of its remaining financing for
the conversion of the Project in the form of enforceable funding commitments
and agrees that Developer shall be solely and exclusively responsible for any
and all Project costs in the event all or some of the City Assistance is not
approved or authorized.
• Developer and City shall enter into the MOU setting forth the terms and
conditions for the Homebuyer Down Payment Assistance loans for individual
homeowners and any other uses of the City Assistance, and the disbursements
of the Conditional Relocation Allocation, if any.
• Execution of an Affordable Housing Covenant and recording the same against
the Property.
• Developer shall assume any and all responsibility and be solely responsible for
determining whether laborers employed relative to the construction or installation
of the Project must be paid the prevailing per diem wage rate for their labor
classification, as determined by the state, pursuant to labor code sections 1720,
et seq. If applicable, Developer shall comply with the City's Community
Workforce Agreement.
• All provided funding and Project requirements shall conform to the City's most
recently adopted Affordable Housing Funds Policies and Procedures and the
City's Down Payment Assistance Program, unless alternative requirements (e.g.,
reduction of 3% down payment requirement to 1%) are expressly provided in the
executed MOU or any other documents related to the conversion of the Project.
• Approval of all required entitlements and discretionary actions to allow the
construction, improvement, conversion, and/or development of nine (9)
affordable ownership units to be located at 425 East Wellington Avenue, Santa
Ana, CA, 92701 (APN 398-028-12).
• The City's obligation to provide the City Assistance is and shall remain subject to
all covenants, conditions, and restrictions set forth in this pre-commitment letter
and the MOU, and in particular, the City's analysis of the available funding
sources and development and operating costs of the Project and the overall
economic feasibility of the Project.
• Developer's compliance with any applicable Relocation Laws.
• For any disbursement of the Homebuyer Down Payment Assistance, each
Homebuyer shall comply with the City's Down Payment Assistance Program.
• Developer must comply with all other conditions specified in the MOU for
disbursement of funds, including execution and recordation of the Affordable
Housing Covenant.
• City shall have the right to review and approve any conditions of title, as reflected
on a preliminary title report, and a condition of title guarantee, at Developer's
expense, regarding the priority of the Affordable Housing Covenant, subject to
City's review and approval.
• Developer must indemnify, defend, and hold harmless, City against loss or
damage suffered by City as a result of any claim by any person or entity arising
out of or relating to this pre-commitment or the transactions contemplated by this
pre-commitment, excluding claims resulting from the City's gross negligence
and/or willful misconduct.
• Any other terms and conditions the City determines are reasonably necessary for
the MOU to protect the City's interest and comply with applicable law.
Developer, at its sole cost and expense, will be responsible for securing any and all
permits and discretionary approvals that may be required for the Project by the City or
any other federal, state, or local governmental entity having or claiming jurisdiction over
the Property or Project. Notably, this pre-commitment letter shall not obligate the City or
any department thereof to approve any application or request for or take any other
action in connection with any planning approval, permit, or other action necessary for
the construction, rehabilitation, installation or operation of the Project.
This pre-commitment letter for the Project will expire on July 1 , 2027.
If you have any questions or require any additional information regarding this pre-
commitment letter, please contact Judson Brown, Housing Division Manager, by
telephone at (714) 667-2241 or by e-mail at jbrown(c_santa-ana.org.
Sincerely,
On behalf qpthe City of S Ana:
varo Nunez
City Manager
, kxn'f
Attest:
ennifer L all
Cit r
RECOMMENDED FOR APPROVAL:
Michael L. Garcia
Executive Director
Community Development Agency
AGREED TO BY:
HABITAT FOR HUMANIT OF ORANGE COUNTY, INC.
Michael Valentine, resident & CEO