Agenda Item AGENDA STAFF REPORT ASR Control 24-000221
MEETING DATE:	05/21/24
legal entity taking action:	Board of Supervisors and Orange County Housing Authority
board of supervisors district(s):	All Districts
SUBMITTING Agency/Department:	OC Community Resources (Approved)
Department contact person(s):	Dylan Wright (714) 480-2788
	Julia Bidwell (714) 480-2991

Subject: Jamboree Properties Partnership and Management Transfer

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

No Legal Objection

Consent Calendar

3 Votes Board Majority

Budgeted: N/A

Current Year Cost: N/A

Annual Cost: N/A

Staffing Impact:

# of Positions:

Sole Source: N/A

Current Fiscal Year Revenue: N/A

Funding Source: N/A	County Audit in last 3 years: No
Levine Act Review Completed: Yes

Prior Board Action: 6/19/2007 #81, 3/28/2006 #43

RECOMMENDED ACTION(S):

Acting as the Board of Supervisors:

Approve the transfer of Limited Partner and Special Limited Partner interest in Diamond Aisle, L.P. from WNC Housing L.P. and WNC Institutional Tax Credit Fund X California Series 8, L.P. to JHC-Diamond Aisle SPE LLC, a newly formed entity, wholly owned by Jamboree Housing Corporation, for Diamond Aisle Apartments.

Approve Quality Management Group, Inc. as the new property management company for Jamboree Housing Corporation’s affordable housing portfolio in Orange County.

Authorize OC Community Resources Director or designee to prepare and execute all documents related to these approvals as reviewed and approved as to form by County Counsel.

Authorize OC Community Resources Director or designee to approve future requests for substitutions of property management companies for projects within the County’s affordable housing portfolio so long as it is consistent with the Board of Supervisors approved Notice of Funding Availability policy and process.

Acting as the Board of Supervisors and as the Board of Commissioners to the Orange County Housing Authority:
5.	Approve Quality Management Group, Inc. as the new property management company for Jamboree Housing Corporation’s affordable housing portfolio in Orange County.
6.	Approve the transfer of Limited Partner and Special Limited Partner interest in JHC-Granite, L.P., from MMA Granite Court, LLC and BFIM Special Limited Partner, Inc. to JHC-Granite Court SPE, LLC, a newly formed entity, wholly owned by Jamboree Housing Corporation.
7.	Authorize Orange County Housing Authority Executive Director or designee to approve future requests for substitutions of property management companies for projects within the County’s affordable housing portfolio so long as it is consistent with the Board of Supervisors approved Notice of Funding Availability policy and process.

SUMMARY:

Approval of the partnership interest transfers related to Diamond Aisle Apartments, Granite Court Apartments and Quality Management Group, Inc. as Jamboree Housing Corporation’s property management company for properties in the County of Orange’s affordable housing portfolio will allow for the continued operation and management of over 800 affordable housing units within Orange County.

BACKGROUND INFORMATION:

Diamond Aisle Apartments:

On June 19, 2007, the Board of Supervisors (Board) approved a loan commitment in the amount of $1,029,600 of Mental Health Services Act (MHSA) funds to Jamboree Housing Corporation (Jamboree) for the construction and development of the Diamond Aisle Apartments (Diamond Aisle), located at 1310 W. Diamond Street in the City of Anaheim. To develop Diamond Aisle, a California limited partnership, Diamond Aisle, L.P., was formed in 2006 with JHC-Diamond Aisle, LLC (existing Managing General Partner), Helping Our Mentally Ill Experience Success, Incorporated (HOMES, Inc.) (existing Services General Partner), WNC Institutional Tax Credit Fund X California Series 8, L.P (formerly known as WNC Holding, LLC) (existing Special Limited Partner) and WNC Housing, L.P. (existing Limited Partner). Diamond Aisle is a 25-unit apartment building with 15 one-bedroom units and nine two-bedroom units dedicated to serving extremely low-income individuals experiencing homelessness living with a serious mental illness and one two-bedroom unit reserved for an onsite property manager. All units are restricted at 30 percent of the Area Median Income (AMI) rent levels by the County of Orange (County) via a recorded regulatory agreement dated December 22, 2009, for a term of 55 years and will remain affordable through December 23, 2064.

Each affordable housing development financed with tax credits is owned by a limited partnership (Partnership), which is a single-purpose entity formed by two or more entities with at least one limited partner and one general partner to finance, own and operate the development for the initial 15-year tax credit compliance period. The limited partner invests equity in a development to help finance its construction or rehabilitation in exchange for state or federal tax credits and associated tax benefits over a 10-year period. The limited partner may engage in and possess any interest in other business ventures (including limited partnerships) of every kind, nature and description, independently or with others, but does not take part in the management or control of the business of the Partnership or transact any business in the name of the Partnership, nor does it have the power of authority to bind the Partnership to any agreement or document in the name of the Partnership. The general partner has exclusive control over the business of the Partnership and has all rights, powers and authority to manage and control the business affairs of the Partnership and oversees its day-to-day operations.

The 15-year tax credit compliance period for this project has ended, and generally this is the period when certain limited partner(s) or investor(s) ask to divest themselves from affordable housing projects resulting in partnership transfer. As such, the limited partner (i.e., the investor) is exiting the partnership, and Jamboree is requesting County approval to transfer interests of the borrower’s constituent partners in the partnership. The existing Managing General Partner and Service General Partner for the Diamond Aisle, L.P. will remain the same. As proposed, and shown in the chart below, JHC-Diamond Aisle SPE, LLC (a newly formed Jamboree entity) will replace both WNC Institutional Tax Credit Fund X California Series 8, L.P. as the Limited Partner and WNC Housing, L.P. as the Special Limited Partner. JHC-Diamond Aisle, LLC, JHC-Diamond Aisle SPE, LLC and HOMES, Inc. are Jamboree-affiliated companies. Quality Management Group, Inc. (Quality) is the current property management company for Diamond Aisle and will continue to manage the property.

Organization Chart (Before):

Diamond Aisle, L.P.

JHC-Diamond Aisle, LLC

(Existing Managing General Partner)

Helping Our Mentally Ill Experience Success, Incorporated
(HOMES, Inc.)

(Existing Services General Partner)

WNC Institutional Tax Credit Fund X California Series 8, L.P (formerly known as WNC Holding, LLC)

(Existing Special Limited Partner)

WNC Housing, LP

(Existing Limited Partner)

Organization Chart (After) (As Proposed):

Diamond Aisle, L.P.

JHC-Diamond Aisle, LLC

(Existing Managing General Partner)

Helping Our Mentally Ill Experience Success, Incorporated
(HOMES, Inc.)

(Existing Services General Partner)

JHC-Diamond Aisle SPE, LLC
(a newly formed Jamboree entity)

(New Limited Partner and Special Limited Partner)

Jamboree has been in operation for over 30 years and is an experienced developer, owner and operator of affordable housing. With an asset portfolio of $3.2 billion and over 10,000 affordable homes in more than 100 properties, Jamboree is the largest nonprofit builder of quality affordable housing in California and among the nation’s top 20 largest nonprofit developers of affordable housing.

Approval of the partnership interest transfers related to Diamond Aisle will preserve and allow for continued operation and maintenance of the 24-units of affordable MHSA housing for the remaining 40 years under the County’s original regulatory agreement.

The County loan is current, and the partnership is not in default with any of its lenders. Diamond Aisle is being operated in compliance with all regulatory agreements. OC Community Resources (OCCR) staff has reviewed and recommends approval of the partnership interest transfers for Diamond Aisle.

Granite Court Apartments:

On March 28, 2006, the Board approved a loan commitment in the amount of $2,515,200 of Orange County Development Agency (OCDA) Housing Set-Aside funds and HOME Investment Partnership Act (HOME) funds to Jamboree for the construction and development of the Granite Court Apartments (Granite Court), located at 2853 Kelvin Avenue in the City of Irvine. To develop Granite Court, a California limited partnership, JHC-Granite, L.P., was formed in 2006 with JHC-Granite, LLC (existing General Partner), MMA Granite Court, LLC (MMA) (existing Administrative General Partner) and BFIM Special Limited Partner, Inc. (BFIM) (existing Special Limited Partner). Granite Court is a 71-unit apartment building with 20 one-bedroom units, 20 two-bedroom units and 30 three-bedroom units dedicated to serving extremely low, very low and low-income households and one two-bedroom unit reserved for an onsite property manager. Five units are restricted at 30 percent of the AMI and six units at 50 percent of the AMI, by the County via a recorded HOME regulatory agreement dated August 11, 2008, for a term of 55 years and will remain affordable through August 11, 2063. Another 24 units are restricted with seven units at 30 percent of the AMI, 11 units at 50 percent of the AMI and six units at 60 percent of the AMI, by the County via a recorded OCDA regulatory agreement dated February 9, 2010, for a term of 55 years and will remain affordable through February 9, 2065. The Orange County Housing Authority (OCHA) is now the Housing Successor Agency (HSA) overseeing the former OCDA funds.

Similar to Diamond Aisle, the 15-year tax credit compliance period for this project has also ended. As proposed, JHC-Granite, LLC will continue to be the Managing General Partner; JHC-Granite Court SPE, LLC (a newly formed Jamboree entity) will replace both MMA as the Limited Partner and BFIM as the Special Limited Partner. Both JHC-Granite LLC and JHC-Granite Court SPE, LLC are Jamboree-affiliated companies. Quality is also the current property management company for Granite Court and will continue to manage the property.

Organization Chart (Before):

JHC-Granite, L.P.

JHC-Granite LLC

(Existing Managing General Partner)

BFIM Special Limited Partner, Inc. (BFIM, formerly known as MMA Special Limited Partner, Inc.)

(Existing Special Limited Partner)

MMA Granite Court, LLC

(Existing Limited Partner)

Organization Chart (After) (As Proposed):

JHC-Granite, L.P.

JHC-Granite LLC

(Existing Managing General Partner)

JHC-Granite Court SPE, LLC

(a newly formed Jamboree entity)

(New Limited Partner and Special Limited Partner)

Approval of the partnership interest transfer related to Granite Court will preserve and allow for continued operation and maintenance of the 70-units of affordable housing at Granite Court for the remaining 39 years under the County’s original HOME regulatory agreement and 41 years under the OCDA regulatory agreement.

The County loans are current, and the partnership is not in default with any of its lenders. Granite Court is being operated in compliance with all regulatory agreements. OCCR staff has reviewed and recommends approval of the partnership interest transfers for Granite Court.

Property Management Substitutions:

Jamboree is transitioning management of its Southern California portfolio from FPI Management, Inc. and John Stewart Company to Quality over the next two years to streamline their processes while having more involvement with the day-to-day onsite operations with their increase in Permanent Supportive Housing (PSH) projects and overall growth. Jamboree has been working with Quality for many years and find that Quality is committed to their mission and will work closely with them to manage all properties, especially their PSH sites.

Jamboree’s transition plan includes nine existing County-funded properties:

	Property	Address	Funding Type	Number of Affordable Units
1	Birch Hills	255 S. Kraemer Boulevard Brea, CA 92821	HOME	114
2	Camden Place	4500 Montecito Drive La Palma, CA 90623	HOME	35
3	Doria I	1000 Crested Bird Irvine, CA 92614	HOME & MHSA	60
4	Doria II	1000 Crested Bird Irvine, CA 92614	HOME	74
5	Heritage Villa	26836 Oso Parkway Mission Viejo, CA 92691	HOME	143
6	Jackson Aisle	15432 Jackson Street Midway City, CA 92655	HSA*	30
7	Mendocino at Talega I	123 Calle Amistad San Clemente, CA 92673	HOME & HSA*	124
8	Mendocino at Talega II	123 Calle Amistad San Clemente, CA 92673	HSA*	62
9	Montecito Vista	4000 El Camino Real Irvine, CA	HOME & HSA*	162

*Formerly OCDA funds

Quality has been providing professional property management services since 1982, overseeing a diverse portfolio of single-family homes, affordable and conventional apartment communities, and specialty housing including permanent supportive, rural, senior, veterans and homeless housing throughout California.

The County loans for all Jamboree owned and developed projects are current and are being operated in compliance with all regulatory agreements. OCCR staff has reviewed and recommends approval of the replacement of property management from FPI Management, Inc. and John Stewart Company to Quality.

During the affordability period, changes to the property management agent or company are subject to County approval. As such, OCCR is requesting authorization to approve future requests for substitutions of property management agents or companies for properties within the County’s affordable housing portfolio pursuant to the current Board approved Notice of Funding Availability (NOFA) policy and process. Prior to approving the substitution, OCCR staff will perform the required due diligence to ensure that the new property management agent or company is vetted and consistent with the NOFA policy and process.

The authorization for OCCR Director or designee to approve property management agent or company substitutions would reduce administrative burden and lessen the lead time for developers to execute and implement transition of management needed for continued successful operation and maintenance of the properties.

Compliance with CEQA: This action is not a project within the meaning of CEQA Guidelines Section 15378 and is therefore not subject to CEQA, since it does not have the potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. The approval of this agenda item does not commit the County to a definite course of action regarding the project since it is for approval of the partnership interest transfer and change in property management company related to the continued operation of more than 800 affordable housing units within Orange County. This proposed activity is therefore not subject to CEQA. Any future action connected to this approval that constitutes a project will be reviewed for compliance with CEQA.

Compliance with NEPA: The proposed activity is exempt per 24 Code of Federal Regulations part 58.34 (a)(3).

FINANCIAL IMPACT:

N/A

STAFFING IMPACT:

N/A

REVIEWING AGENCIES:

OC Health Care Agency

ATTACHMENT(S):

Attachment A - Code of Federal Regulations Title 24 Part 58.34(a)(3)