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Agenda Item
ASR
Control 25-000452 |
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MEETING
DATE: |
06/24/25 |
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legal entity taking action: |
Board
of Supervisors and Orange County Housing Authority |
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board of supervisors district(s): |
4 |
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SUBMITTING Agency/Department: |
OC
Community Resources (Approved) |
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Department contact person(s): |
Dylan
Wright (714) 480-2788 |
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Julia
Bidwell (714) 480-2991 |
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Subject: Approve and Authorize Resyndication
and Agreement for Dorado Senior Apartments
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ceo CONCUR |
County Counsel Review |
Clerk of the Board |
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Concur |
Approved
Agreement to Form |
Discussion |
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3
Votes Board Majority |
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Budgeted: N/A |
Current Year
Cost: N/A |
Annual Cost: N/A |
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Staffing Impact: |
No |
# of Positions: |
Sole Source: N/A |
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Current Fiscal Year Revenue: N/A
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Prior Board Action: N/A |
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RECOMMENDED
ACTION(S):
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Acting as the
Board of Supervisors: |
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1. |
Approve the sale
of Dorado Senior Apartments from Dorado Senior Apartments, L.P. to Spira
Equity Partners, Inc. and the subsequent transfer to Dorado Senior, L.P., a
newly formed ownership entity upon resyndication. |
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2. |
Approve the
Amended and Restated Regulatory Agreement and Declaration of Restrictive
Covenants to reflect the new ownership entity, Dorado Senior, L.P., and reset
the 55-year affordability period, upon resyndication and new tax-exempt bond
financing for Dorado Senior Apartments. |
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3. |
Authorize the OC
Community Resources Director or designee to execute an amended and restated
restrictive covenant, and such additional agreements, contracts, instructions
and instruments necessary or appropriate for the resyndication and bond
financing for Dorado Senior Apartments. |
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Acting as the
Board of Commissioners to the Orange County Housing Authority: |
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4. |
Approve the
Amended and Restated Regulatory Agreement and Declaration of Restrictive
Covenants to reflect the new ownership entity, Dorado Senior, L.P., and reset
the 55-year affordability period, upon resyndication and new tax-exempt bond
financing for Dorado Senior Apartments. |
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5. |
Authorize the
Orange County Housing Authority Executive Director or designee to execute an
amended and restated restrictive covenant, and such additional agreements,
contracts, instructions and instruments necessary or appropriate for the
resyndication and bond financing for Dorado Senior Apartments. |
SUMMARY:
Approval of the recommended actions
for Dorado Senior Apartments will facilitate further investments in the
property, allowing completion of necessary improvements and repairs to ensure
the continued operation of the 150-unit affordable housing development in
Orange County and reset the 55-year affordability term thus preserving
affordable housing in Orange County.
BACKGROUND
INFORMATION:
On June 25, 2002, the Board of
Supervisors (Board) approved a loan commitment in the amount of $200,000 in
Orange County Development Agency (OCDA) funds to Linc Housing, Pacific National
Development and Simpson Housing Solutions, LLC, for the construction and
development of 150 affordable rental housing units, Dorado Senior Apartments
(Development), located at 8622 Stanton Avenue in the City of Buena Park.
On July 31, 2007, the Board
approved committing an additional $1 million of HOME Investment Partnership
Program (HOME) funds for the Development, for a total loan amount of up to $1.2
million. Linc Housing, Pacific National Development, Simpson Housing Solutions,
LLC and Meta Housing Corporation formed Dorado Senior Apartments, L.P. as the
borrower of the County of Orange (County) loans and ownership entity of the
Development. The County loans were repaid in 2022 and Reconveyance Deeds for
both loans were recorded August 30, 2022.
The Orange County Housing Authority
is now the Housing Successor Agency (HSA), responsible for overseeing the
former OCDA funds. All units at the Development are restricted to households
with incomes between 30 and 60 percent of the area median income (AMI). Of the
150 units, the County is restricting 11 HOME units and 103 OCDA/HSA units for a
total of 114 County-restricted units.
The original 15-year Low-Income
Housing Tax Credit (LIHTC) compliance period for this Development has ended and
Spira Equity Partners (Developer) is acquiring the site from Dorado Senior
Apartments, L.P., with an outside financing closing date of June 30, 2025,
pursuant to the expiration of the Purchase and Sale Agreement. The Developer
applied for new tax credits to resyndicate (i.e., the process of applying for a
new reservation of tax credits to preserve an existing LIHTC project) with a
new four percent tax-exempt bond allocation and received an award on April 8,
2025.
The Developer has been operating
for over nine years and has partnered with the Foundation for Affordable
Housing (FFAH), a California tax-exempt 501(C)(3) public benefit nonprofit
corporation, on a 12-property portfolio of affordable housing projects in
California. FFAH have participated in the preservation and development of 319
properties totaling approximately 37,000 units nationwide. As the managing
general partner for this development FFAH will be responsible for ensuring
compliance, monitoring property management and resident services, along with
providing long-term oversight and management. As an established operator in the
affordable housing space, the Developer also manages an asset portfolio of $700
million encompassing nearly 3,200 affordable units across 19 properties. In
2024 and 2025, the Developer was recognized as a Freddie Mac Multifamily Impact
Sponsor for its measurable impact in expanding affordable housing, access to
affordable housing, offering resident-centered services and/or implementing
sustainability practices across their communities.
As proposed, and shown in the chart
below, Dorado Senior, L.P., (a newly formed limited partnership by Spira Equity
Partners) will be replacing Dorado Senior Apartments, L.P., as the new
ownership entity upon resyndication as seen in the chart below.
Organizational
Chart
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Name: Dorado Senior Apartments, L.P. (Current
Ownership Structure/ Before Sale) |
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Linc Housing
Corporation (Existing Managing
General Partner) |
Pacific National
Development (Existing
Administrative General Partner) |
Simpson Housing
Solutions, LLC (Existing
Special Limited Partner) |
Meta Housing
Corporation (Existing
Limited Partner) |
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After Sale/Transfer (Interim
Owner/Buyer) |
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Name: Spira
Equity Partners, Inc. |
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After Resyndication (New Tax Credit
Ownership Structure) |
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Name: Dorado
Senior, L.P. |
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FFAH II DS Apartments
CA, LLC (Managing General
Partner) |
Spira Dorado
Senior, LP (Administrative
General Partner) |
(To be formed) (Special Limited
Partner) |
(To be formed) (Limited Partner) |
As illustrated, the proposed
ownership structure reflects the new limited partnership led by the Developer.
This change in ownership supports the Developer’s goal of preserving the
property through resyndication efforts and plans to make key improvements to
the property to extends the property useful life.
In evaluating the resyndication
request, OC Community Resources (OCCR) staff conducted a thorough due diligence
review. This included evaluating key criteria such as the physical and
financial health of the project, continued compliance with affordability
restrictions, ensuring developer fee is within allowable limits and proposed
scope of work addresses property’s current and long-term needs. OCCR staff also
reviewed relevant documentation, including the original regulatory agreements,
current financials and financing plan, operating and replacement reserve
balances, the Capital Needs Assessment (CNA), cost estimate, property
management plan, tenant relocation plan and occupancy data. Additionally, OCCR
staff confirmed there were no identity of interest between appraiser,
development partners, intended partners or the General Contractor who all were
confirmed as third parties.
The Development is in fair
condition and has been consistently maintained. The Developer is taking this
opportunity to address necessary repairs that will become due within the next
one to three years and implement proactive repairs identified in the CNA to
prevent future physical distress and ensure the long-term sustainability of the
property. These improvements, include compliance with the Americans with Disabilities
Act (ADA), such as accessible paths of travel for the entire property and
accessibility features for the visually and hearing impaired- especially
relative to a large senior population served by this development. Additional
scope of work will encompass upgrading Heating Ventilation and Air
Conditioning, mechanical systems and water heaters, revised kitchen layouts in
all units, improving utility efficiencies, and solar carports.
Although the Development maintained
a modest reserve for routine repairs and unanticipated emergencies, the extent
of capital improvements identified in the CNA that are listed far exceeded the
balance. The upgrades will enhance livability, extend the useful life of the
building which is especially important because the original 55-year
affordability term will reset a resyndication closing.
In conjunction with rehabilitation
work being performed on the property, the Developer will be deepening the
affordability mix within the Development by increasing the number of 30 percent
AMI units from 16 to 77 while reducing the number of units at 45 percent AMI
from 45 to 12, 50 percent AMI from 53 to 27 and 60 percent AMI from 34 to
32. See below for the proposed changes
to the unit mix.
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Area
Median Income |
Current
Unit Mix |
Proposed
New Unit Mix |
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30% |
16 units |
77 units |
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45% |
45 units |
12 units |
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50% |
53 units |
27 units |
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60% |
34 units |
32 units |
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Property Management Unit (unrestricted) |
2 units |
2 units |
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Total |
150 units |
150 units |
This increase in 30 percent AMI
units will expand access for extremely low-income senior households. The
transition will be achieved through tenant turnover, without displacing
existing tenants. New leasing will be prioritized to meet updated affordability
targets, and the revised unit matrix will be memorialized in the Amended and
Restated Regulatory Agreement. OCCR staff also confirmed the proposed
resyndication will not result in the displacement of existing tenants and the
Development aligns with the County’s long-term affordability and rehabilitation
goals. As mentioned, the Developer will be required to extend the affordability
for another 55 years and will be required to pay a non-refundable deposit
$5,000 to offset County administrative costs.
Below are the financial summary
highlights of the Construction and Permanent Financing proposed for the
Development:
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Construction
Source of Funds |
Funding Amount |
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Tax Exempt Bond |
$22,700,000 |
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GAP & Recycled Bonds |
$5,800,000 |
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Spira Subordinate Loan |
$8,262,159 |
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Cashflow from Operations |
$1,524,909 |
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Deferred Developer Fee and Other Costs |
$3,574,135 |
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Tax Credit Equity (LP Equity) |
$7,000,000 |
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General Partner Equity |
$750,734 |
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Special Limited Partner Equity |
$100 |
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Total Sources of Funds |
$49,612,037 |
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Permanent
Sources of Funds |
Funding Amount |
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Tax Exempt Bond |
$22,700,000 |
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Spira Subordinate Loan |
$7,665,186 |
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Cashflow from Operations |
$1,524,909 |
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Deferred Developer Fee and Other Costs |
$701,190 |
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Tax Credit Equity (LP Equity) |
$16,269,918 |
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General Partner Equity |
$750,734 |
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Special Limited Partner Equity |
$100 |
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Total
Sources of Funds |
$49,612,037 |
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Rehabilitation
Uses of Funds |
Funding Amount |
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Acquisition |
$30,600,000 |
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Rehabilitation |
$10,656,000 |
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Architectural,
Survey, Engineering |
$125,000 |
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Loan Interest
& Fees |
$2,142,026 |
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Construction
Hard and Soft Cost Contingency |
$1,161,520 |
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Legal Fees |
$298,500 |
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Reserves |
$668,161 |
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Other Costs |
$386,695 |
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Developer Fee |
$3,574,135 |
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Total
Costs |
$49,612,037 |
The Developer is requesting
approval for the resyndication and is currently on the final extension of the
Purchase and Sale Agreement, with a closing deadline set for June 2025. The
Developer also aims to complete the resyndication process for the Development
by the California Debt Limit Allocation Committee’s deadline of October 27,
2025.
Approval of the requests and
recommended actions related to the Development will allow the Developer to
resyndicate and make improvements and repairs to the Development through the
new tax-exempt bond financing. It would also extend the County’s affordability
restrictions on the 114 units for another 55 years without any additional
funding from the County.
Staff has reviewed and recommends
approval of the sale and transfer and the Amended and Restated Regulatory
Agreement and Declaration of Restrictive Covenant for Dorado Senior Apartments.
Compliance
with CEQA:
This action is not a project within the meaning of CEQA (the California
Environmental Quality Act) 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 new ownership and Amended and Restated Regulatory Agreements
related to the continued operation of 150 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:
Office
of Care Coordination
ATTACHMENT(S):
Attachment
A – California Code of Regulations Title 14 Section 15378
Attachment B – Code of Federal Regulations Title 24 Subtitle A Part 58
Attachment C – Amended and Restated Regulatory Agreement and Declaration of
Restrictive Covenant