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HomeMy WebLinkAbout05 JTPH LACY & RAITTC~ER~ ®F C®19NC1~ llSE ®P~L.Y: JAN[1ARY 5, 2 0 0 9 T~'1"L.E: JOINT PUBLIC HEARING - TAX EXEMPT BOND FINANCING AND LOAN AGREEMENTS WITH LACY AND RAITT, LP {703 N. LACY/702 S. RAITT) APPROVE^ ^ As Recommended ^ As Amended © Ordinance on 1st Reading © Ordinance an 2nd Reading © Implementing Resolution © Set Public Hearing For 1. Conduct a Tax Equity and Financial Responsibility Act (TEFRA) Hearing in consideration of the issuance of multi-family housing revenue bonds by the Houszng Authority of the City of Santa Ana for the purpose of financing the acquisition and rehabilitation of 703 N. Lacy and 702 S. Raitt. 2. Adopt a resolution approving the issuance of tax exempt bands far the projects. 3. Direct the City Attorney tc prepare and authorize the City Manager to execute a loan agreement with Lacy and Raitt, LP for the acquisition and rehabilitation of 703 N. Lacy in a total amount not to exceed $1,330,643. 4. Direct the City Attorney to prepare and authorize the City Manager to execute a loan agreement with Lacy and Raitt, LP for the acquisition and rehabilitation of 702 S. Raitt in a total amount not to exceed $689,397. 5. Adopt a resolution approving the Relocation Plan for the property located at 703 N. Lacy. 5 Tax Exempt Bond Financing and T~oan Agreements with Lacy and Raitt, LP (703 N. Lacy/702 S. Raitt) January 5, 2009 Page 2 6. Adopt a resolution approving the Relocation Plan for the property located at 702 S. Raitt. COMMUNITY REDEVELOPMENT AGENCY ACTION 1. Direct the Agency General Counsel to prepare and authorize the Executive Director to execute a loan agreement with Lacy and Raitt, LP for the acquisition and rehabilitation of 703 N. Lacy in a total amount not to exceed X1,556,217. 2. Direct the Agency General Counsel to prepare and authorize the Executive Director to execute a loan agreement with Lacy and Raitt, LP for the acquisition and rehabilitation of 702 S. Raitt in a total amount not to exceed $806,265. 3. Adopt a resolution approving the Relocation Plan for the property located at 703 N. Lacy. 4. Adopt a resolution approving the Relocation Plan for the property located at 702 S. Raitt. 5. Adopt a resolution approving the Replacement Housing Plan for the property located at 702 S. Raitt. HOUSING AUTHORITY ACTION Adopt a resolution relating to the issuance of bonds for the purpose of financing the acquisition and rehabilitation of the properties located at 703 N. Lacy and 702 S. Raitt. COMMUNITY REDEVELOPMENT AND HOUSING COMMISSION RECOMMENDATION At its Regular Meeting of December 16, 2008, by a vote of 5:0, the Community Redevelopment and Housing Commission recommended the following; Recommended that the City Council: 1. Conduct a Tax Equity and Financial Responsibility Act (TEFRA) Hearing in consideration of the issuance of multi-family housing revenue bonds by the Housing Authority of the City of Santa Ana for the 5 Tax Exempt Bond Financing and Loan Agreements with Lacy and Raitt, LP (703 N. Lacy/702 S. Raitt) January 5, 2009 Page 3 purpose of financing the acquisition and rehabilitation of 703 N. Lacy and 702 S. Raitt. 2. Adopt a resolution approving the issuance of tax exempt bonds for the projects . 3. Direct the City Attorney to prepare and authorize the City Manager to execute a loan agreement with Lacy and Raitt, LP for the acquisition and rehabilitation of 703 N. Lacy in a total amount not to exceed $1,330,643. 4. Direct the City Attorney to prepare and authorize the City Manager to execute a loan agreement with Lacy and Raitt, LP for the acquisition and rehabilitation of 702 S. Raitt in a total amount not to exceed $689,397. 5. Adopt a resolution approving the Relocation Plan for the property located at 703 N. Lacy. 6. Adopt a resolution approving the Relocation Plan for the property located at 702 S. Raitt. Recommended that the Community Redevelopment Agency: 1. Direct the Agency General Counsel to prepare and authorize the Executive Director to execute a loan agreement with Lacy and Raitt, LP far the acquisition and rehabilitation of 703 N. Lacy ~.n a total amount not to exceed $1,556,217. 2. Direct the Agency General Counsel to prepare and authorize the Executive Director to execute a loan agreement with Lacy and Raitt, LP for the acquisition and rehabilitation of 702 S. Raitt in a total amount not to exceed $806,265. 3. Adopt a resolution approving the Relocation Plan for the property located at 703 N. Lacy. 4. Adopt a resolution approving the Relocation Plan for the property located at 702 S. Raitt. 5. Adopt a resolution approving the Replacement Housing Plan far the property located at 702 S. Raitt. 5 Tax Exempt Bond Financing and Loan Agreements with Lacy and Raitt, LP (703 N. Lacy/702 S. Raitt) January 5, 2009 Page 4 Recommended that the Housing Authority adopt a resolution relating to the issuance of bonds for the purpose of financing the acquisition and rehabilitation of the properties located at 703 N. Lacy and 702 S. Raitt. DISCUSSION Orange Housing Development Corporation (OHDC}, a 501(c}(3) nonprofit organization, and C & C Development Company, LLC (C & C) have formed a limited partnership, Lacy and Raitt, LP, to acquire and rehabilitate two apartment complexes. The first is a twenty-seven unit apartment building located at 703 N. Lacy (Exhibit 1}. The second is a ten unit apartment building located at 702 S. Raitt (Exhibit 2}. OHDC has successfully partnered with the City of Santa Ana and the Community Redevelopment Agency to acquire and rehabilitate 618 units in the City. In addition, OHDC owns and manages more than 2,600 apartment units throughout California. C & C has many years of residential development and management experience, and most recently partnered with OHDC in the `Townsend and Raitt project. The proposed projects wi11 build on the City's existing focus in the Townsend/Rant neighborhood and Santa Ana Boulevard area. The Lacy Street project is adjacent to properties currently owned by the Community Redevelopment Agency (Agency} in the Santa Ana Boulevard area. The acquisition and rehabilitation will assist in the long-term stabilization of the neighborhood, promote the City's goal of providing long-term, affordable housing, and assist in the revitalization of the corridor. The exterior rehabilitation will incorporate design details that are consistent with the draft Santa Ana Renaissance Specific Plan, to the extent possible. Although the building wi11 be rehabilitated, there will be no reconfiguration of units. The unit mix and rent restrictions are as follows: 30o AMI Extremely Low 50o AMI Very Low 703 N. Lacy No.Units Rent No.Units Rent Studio 3 $788 One-bedroom 15 $839 Two-bedroom 1 $589 7 $1,008 5 Tax Exempt Bond Financing and Loan Agreements with Lacy and Raitt, LP (703 N. Lacy/702 S. Raitt) January 5, 2009 Page 5 The Raitt Street property will be the sixth building in the Townsend/Raitt neighborhood that has been acquired and rehabilitated by OHDC. As part of the rehabilitation, the partnership is proposing to reconfigure the ten one-bedroom units into eight units. The unit mix and rent restrictions are as follows: 30o AMI Extremely Low 50% AMI Very Low 702 Raitt St. No.Units Rent No.Units Rent One-bedroom 1 $491 3 $838 Two-bedroom 2 $1,006 Three-bedroom 2 $1,144 The total project cost to acquire, rehabilitate and provide the proposed level of affordability in the two buildings is $7,925,358. The partners will be applying to the California Debt Limit Allocation Committee (CDLAC) for an allocation of $3, 961, 067 in tax exempt financing to help provide both construction and permanent financing. They are also applying to the California Tax Credit Allocation Committee (TCAC) far an allocation of $1,836,526 in low income housing tax credits that will be used for permanent and construction financing. There is a $4.4 million gap, and staff is recommending it be filled with approximately $2 million funded from HOME and $2.4 million from the Agency. The tables below summarize the proposed funding sources and anticipated costs for the projects: Permanent Etianding Sources 703 N. Lacy 702 S. Raitt Total Amount Tax Exempt Bonds $1,123,917 $582,293 $1,706,210 Community Redevelopment Agency/Housing Set-Aside $1,556,217 $806,265 $2,362,482 City of Santa Ana/HOME Funds $1,330,643 $689,397 $2,020,040 Capital Contribution - General Partner $66 $34 $100 Capital Contribution - Limited Partner (Tax Credits) $1,209,759 $626,767 $1,836,525 Total $5,220,601 $2,704,757 $7,925,358 5 Tax Exempt Bond Financing and T~oan Agreements with Lacy and Raitt, LP {703 N. Lacy/702 S. Raitt) January 5, 2009 Page 6 Project Costs 703 N. ~aay 702 S . Raitt Total. Amount Acquisition $3,530,250 $1,250,000 $4,780,250 Developer Fee $329,000 $329,000 $658,000 Construction and Related Costs $1,361,351 $1,125,757 $2,487,108 `T'otal $5,220,601 $2,704,757 $7,925,358 The loans will bear interest at .5o and repayments wi11 be based on residual receipts {annual gross revenues less operating expenses). These loans are contingent on approval of the tax exempt bands and tax credit allocations. All code deficiencies will be addressed, and both properties will receive extensive improvements both inside and out. Among many other items, the Lacy property will receive new landscaping, exterior deck repair, updates to the building fagade, new plumbing fixtures and kitchen appliances. In addition to the unit reconfigurations, the many repairs to be made to the Raitt property include a new roof, new water heaters, new trash enclosures, new flooring, new windows, and new kitchen cabinets. In order for the Housing Authority to apply for a bond allocation from CDLAC on behalf of the partnership, the Housing Authority must adopt an Inducement Resolution. The Inducement Resolution confirms the Housing Authority's intent to issue the bonds and identifies the time at which costs expended on the project qualify for financing with the tax-exempt bonds. The bonds are considered "conduit" obligations. This means that although the Housing Authority will issue the bonds, the owner is actually the borrower and has sole responsibility for repayment. The bonds will be repaid strictly out of the project's cash flow. There is no recourse to the Housing Authority, the City of Santa Ana or the Community Redevelopment Agency. ~'rior to bonds being sold, the City Council must hold a public hearing as required by the Tax Equity and Financial Responsibility Act (TEFRA). The public hearing is to solicit comments on the project and the issuance of the bands. The TEFRA hearing is also a precondition to applying for the bond allocation. Tax Exempt Bond Financing and Loan Agreements with Lacy and Raitt, LP (703 N. Lacy/702 S. Raitt) January 5, 2009 Page 7 The California Health and Safety Code (Code} requires that when a Redevelopment Agency enters into an agreement for the acquisition or disposition and development of property that would lead to displacement of people from their homes, the legislative body must adapt, by resolution, a Relocation Plan (Exhibits 3 and 4). Due to the reconfiguration of units at Raitt Street, two families will need to be permanently relocated. These households will be offered units at other OHDC projects such as Townsend & Raitt and Wilshire/Minnie. At Lacy Street, there are four families that are over income for that project and will need permanent relocation. Of the four, two have incomes between 500-50o AMI and will be offered the option to relocate into other OHDC projects. The remaining two households are at or above 600 AMI; and therefore, they will be given relocation benefits and assistance in locating to a new unit. Additionally, the Code requires the Agency to adopt, by resolution, a Replacement Housing Plan whenever it destroys or removes dwelling units from the low- and moderate-income housing stock. Among other things, this Replacement Housing Plan shall specify how and where the Agency shall provide replacement housing units. `lhe attached Replacement Housing Plan (Exhibit 5) has been prepared, due to the loss of units at 702 S. Raitt. Approval of these projects will assist the City and Agency in meeting their affordable housing goals a,s identified in the Housing Element, Consolidated Five Year Plan, and the Redevelopment Implementation Plan. ENVIRONMENTAL IMPACT In accordance with the California Environmental Quality Act and the National Environmental Policy Act, the proposed project is exempt from further review. Categorical Exemption No. ER 2008-235 (Lacy) and 2008- 221(Raitt) will be filed for this project. 5 Tax Exempt Bond Financing and Loan Agreements with Lacy and Raitt, LP (703 N. Lacy/702 S. Raitt) January 5, 2009 Page 8 FISCAL IMPACT Funds are available in the HOME Program. account in the amount of $2,020,040 (account no. 130-148-6951)' and Tax Increment Housing Set- Aside Fund in the amount of $2,362,482 (account no. 507-936-6951). APPROVED AS TO FI3NDS AND ACCOI3NTS: i - >/ S lly Landry-Bayl Francisco Gutierrez Housing Manager Executive Director Community Development Agency Finance and Management Services Agency CJN/SLB/mlr FI:\ACTION ITEMS\COI3NCIL\2D09\D1D509 JT PH CC-CRA-HA Lacy-Raitt (1).doc 5 703 N®rth Lacy Street Exhibit 1 RAYMAR STREET H u~ ~ ut ~ ~ ~ ~ H ~ ~ w w F n ~ ~ RICHLAND ST. z cn O a F MONTH VISTA AVENUE F ~ ' ~ HIGHLAND ST. z WISTERIA PL. O Q cr Exhibit 2