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Agenda Item
ASR
Control 24-000269 |
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MEETING
DATE: |
06/04/24 |
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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): |
5 |
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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
Agreements for Mendocino at Talega I and II Resyndications
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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:
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No |
#
of Positions: |
Sole
Source: N/A |
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Current Fiscal Year Revenue: N/A
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Prior Board Action: 5/21/2002 #42, 3/20/2001 #44 |
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RECOMMENDED
ACTION(S):
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Acting as the Board of Supervisors: |
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1. |
Approve Assignment and Assumption
Agreements to assign the County $500,000 HOME Investment Partnerships Program
Loan and Regulatory Agreement with Jamboree-Tal Housing, L.P. to a new
limited partnership, Amistad Housing Partners I LP., upon resyndication and
new tax-exempt bond financing for Mendocino at Talega I. |
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2. |
Approve Amended and Restated Regulatory
Agreement for the $500,000 HOME Investment Partnerships Program loan for
Mendocino at Talega I to extend affordability period for 55 years. |
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3. |
Approve Subordination Agreements for
Mendocino at Talega I to subordinate the County $500,000 HOME Investment
Partnerships Program loan plus accrued interest to a new first trust deed
loan of approximately $21 million at construction financing and $10.6 million
at permanent financing and a second trust deed loan of approximately $6.3
million plus accrued interest at construction and permanent financing, with
the ability to increase 10 percent due to an increase of construction costs,
as set forth in this Agenda Staff Report, and authorize the OC Community
Resources Director or designee to subordinate to additional senior debt up to
100 percent of the cumulative loan to value based on the as-built appraised
market value, if necessary, based on any future changes in the project
financing. |
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4. |
Authorize the OC Community Resources
Director or designee to execute subordination agreements; assignment and
assumption agreements; an amended and restated set of loan documents and
restrictive covenants; and such additional agreements, contracts,
instructions and instruments necessary or appropriate for construction and
permanent loan financing for Mendocino at Talega I. |
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5. |
Approve waiving the requirement for a
$5,000 deposit and pay down of the outstanding $500,000 HOME Investment
Partnerships Program loan amount by one percent of the current outstanding
balance under the transfer provisions of the Loan and Regulatory Agreement
for Mendocino at Talega I. |
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Acting as the Board of Commissioners to
the Orange County Housing Authority: |
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6. |
Approve Assignment and Assumption
Agreements to assign the Housing Successor $2,423,384 Loan and Regulatory
Agreement with Jamboree-Tal Housing, L.P. to a new limited partnership,
Amistad Housing Partners I LP., upon resyndication and new tax-exempt bond
financing for Mendocino at Talega I. |
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7. |
Approve Amended and Restated Regulatory
Agreement for the Housing Successor $2,423,384 loan for Mendocino at Talega I
to extend the affordability period for 55 years. |
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8. |
Approve Subordination Agreements for
Mendocino at Talega I to subordinate the Housing Successor $2,423,384 loan
plus accrued interest to a new first trust deed loan of approximately $21
million at construction financing and $10.6 million at permanent financing
and a second trust deed loan of approximately $6.3 million plus accrued interest
at construction and permanent financing, with the ability to increase 10
percent due to an increase of construction costs, as set forth in this Agenda
Staff Report, and authorize the Orange County Housing Authority Executive
Director or designee to subordinate to additional senior debt up to 100
percent of the cumulative loan to value based on the as-built appraised
market value, if necessary, based on any future changes in the project
financing. |
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9. |
Approve Assignment and Assumption
Agreement to assign the Housing Successor $728,176 Loan and Regulatory
Agreements with Jamboree-Tal II Housing, L.P. to a new limited partnership,
Amistad Housing Partners II LP., upon resyndication and new tax-exempt bond
financing for Mendocino at Talega II. |
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10. |
Approve Amended and Restated Regulatory
Agreement for the $728,176 Housing Successor loan for Mendocino at Talega II
to extend the affordability period for another 55 years. |
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11. |
Approve Subordination Agreements for
Mendocino at Talega II to subordinate the Housing Successor $728,176 loan
plus accrued interest to a new first trust deed loan of approximately $11.5
million at construction financing and $6.5 million at permanent financing and
approximately $4.7 million plus accrued interest at permanent financing; with
the ability to increase 10 percent due to an increase of construction costs,
as set forth in this Agenda Staff Report, and authorize the Orange County
Housing Authority Executive Director or designee to subordinate to additional
senior debt up to 100 percent of the cumulative loan to value based on the
as-built appraised market value, if necessary, based on any future changes in
the project financing. |
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12. |
Approve waiving the requirement for a
$5,000 deposit and pay down of the outstanding $2,423,384 Housing Successor
loan for Mendocino at Talega I and $728,176 loan for Mendocino at Talega II
by one percent of the current outstanding balance under the transfer
provisions of the Loan and Regulatory Agreement for Mendocino at Talega II. |
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13. |
Authorize the Orange County Housing
Authority Executive Director or designee to execute subordination agreements;
assignment and assumption agreements; an amended and restated set of loan
documents and restrictive covenants; and such additional agreements,
contracts, instructions and instruments necessary or appropriate for
construction and permanent loan financing for Mendocino at Talega I and
Mendocino at Talega II. |
SUMMARY:
Approval of the
recommended actions related to Mendocino at Talega I and Talega II will support
additional investments in these properties, allowing completion of necessary
improvements and repairs for the continued operation of 186 rent and income
restricted affordable housing units within Orange County for another 55 years.
BACKGROUND
INFORMATION:
On March 20, 2001,
the Board of Supervisors (Board) approved a combined loan commitment in the
amount of $500,000 in HOME Improvement Partnerships Program (HOME) funds and
$3,151,821 in Orange County Development Agency (OCDA) funds to Jamboree Housing
Corporation, Inc. (Jamboree) for the construction and development of 124
large-family affordable rental housing units, Mendocino at Talega I (Talega I),
and 62 large-family affordable rental housing units, Mendocino at Talega II
(Talega II), located at 1123 Calle Amistad in the City of San Clemente. All
units at Talega I and II are restricted to households with incomes between 40
percent and 60 percent of the area median income.
On May 21, 2002,
the Board approved increases to the previously approved OCDA loans to a revised
amount of $2,953,438 for Talega I and $728,176 for Talega II. The Board also
approved and authorized subordination of the Talega I OCDA loan to a First Deed
of Trust in the amount of $4.8 million, State of California Multi-Family
Housing Program (MHP) loan of $4.5 million and a Federal Home Bank loan of
$837,000 and subordination of the Talega II OCDA loan to a First Deed of Trust
in the amount of $3 million and MHP loan of $3.3 million. The Orange County
Housing Authority (OCHA) is now the Housing Successor Agency (HSA) overseeing
the former OCDA funds.
The original
15-year Low-Income Housing Tax Credit (LIHTC) compliance period for these
projects has ended and Jamboree is resyndicating (i.e., the process of seeking
a new reservation of tax credits to preserve an existing LIHTC project) Talega
I and Talega II with new four percent tax-exempt bond allocations with a bond
closing deadline of June 17, 2024. With resyndication, the owner can use the
new tax credit proceeds for rehabilitation and upgrades to address life and
safety or accessibility concerns and/or make an older property more marketable
and sustainable. The affordability of the project will also get extended
through the process of resyndication. Jamboree is also working on securing
approvals from the City of San Clemente for these resyndications and necessary
subordinations prior to the June 17, 2024 deadline.
For Talega I,
Jamboree is requesting: approval of the Assignment and Assumption Agreements to
assign the Talega I HSA and HOME loan and regulatory agreements from the
current partnership entity, Jamboree-Tal Housing, L.P., to the new project
limited partnership, Amistad Housing Partners I, LP. formed by JHC-Amistad LLC,
the Managing General Partner, whose sole member is Jamboree, and the Investor
Limited Partner (Attachments B, C, D and E); approval of the Amended and
Restated Regulatory Agreements to extend the term of the affordability period
for another 55 years (Attachments F and G); approval of the Subordination
Agreements to subordinate the Talega I HOME loans to a First Deed of Trust in
the amount of approximately $19 million at construction financing and $8.6 million
at permanent financing and a second trust deed loan of approximately $6.3
million at construction and permanent financing (Attachments H, I, J and K).
For Talega II,
Jamboree is requesting: approval of the Assignment and Assumption Agreements to
assign the Talega II OCDA loan and regulatory agreements from the current
partnership entity, Jamboree-Tal II Housing, L.P., to the new project limited
partnership, Amistad Housing Partners II, LP., formed by JHC-Amistad II LLC,
the Managing General Partner, whose sole member is Jamboree, and the Investor
Limited Partner (Attachment L and M); approval of the Amended and Restated
Regulatory Agreement to extend the term of the affordability period for another
55 years (Attachment N); approval of the Subordination Agreements to
subordinate the Talega II HSA loan to a First Deed of Trust in the amount of
approximately $10.5 million at construction financing and $5.5 million plus
accrued interest at permanent financing and a second trust deed loan of
approximately $4.7 million at permanent financing (Attachments O and P).
These approvals
will allow Jamboree to complete the resyndication process for Talega I and
Talega II by the California Debt Limit Allocation Committee (CDLAC) deadline to
ensure the ongoing economic viability of the properties throughout the 15-year
LIHTC compliance period. The original CDLAC readiness deadline was June 17,
2024, but CDLAC approved a 90-day extension at their May 15, 2024 meeting which
will allow Jamboree to close on the resyndications by mid-September. Jamboree
will be making improvements to the property to be in compliance with the
Americans with Disabilities Act (ADA), including accessible paths of travel for
the entire property and accessibility features for the visually and hearing
impaired. Additional scope of work includes revised bathroom and kitchen
layouts in all 48 ground floor units, improvements to the trash enclosure and
laundry rooms and replacement of the plumbing system.
As part of the
resyndication of Talega I and Talega II, Jamboree is also requesting a waiver
of the transfer provision under Section 7.7 of the Loan Agreements which will:
(1) allow the County of Orange (County) to collect a $5,000 deposit to defray
the County's review and out of pocket expenses and costs and (2) require the
pay down of the outstanding loan by one percent of the current outstanding
balance due. These two requirements will create a financial burden for these
properties as they do not have an ongoing rental or operating subsidy, such as
project-based vouchers, and have had constrained cashflows during the 20 years
in operations, preventing Jamboree from being able to pay down the loans. These
assumed loans, including the accrued interest, are now about 50 percent larger
than the principal amount. Jamboree also found that the required scope of work
required to assure compliance with Fair Housing Law and ADA requirements was
more extensive than originally anticipated. While the waiver will not offset
the costs related to addressing the additional scope of work or guarantee
Jamboree the ability to pay down more debt, it will make it more feasible. In
addition to any potential annual residual receipts payments owed to the County
as a soft lender, these loans, including accrued interest and the one percent
pay down that is currently being waived, will be repaid as the loans become due
and payable. Additionally, these resyndications will also extend the Countys
affordability terms on these two properties and preserve these 186 affordable
units for another 55 years.
Below are the
financial summary highlights of the Construction and Permanent Financing
proposed for Talega I:
|
Construction Source of Funds |
Funding Amount |
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Tax Exempt Bond |
$18,883,000 |
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Construction
Loan Taxable Tail |
$2,117,000 |
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State HCD MHP
Loan (assumed) |
$6,317,091 |
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County of Orange
HSA (formerly OCDA) Loan (assumed) |
$3,539,769 |
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County of Orange
HOME Loan (assumed) |
$726,328 |
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City of San
Clemente Loan (assumed) |
$613,080 |
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Seller Carryback
Note |
$2,996,647 |
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Replacement
Reserves |
$235,065 |
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Operating
Reserves/Short Term Work Credit |
$237,347 |
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Deferred
Developer Fee and Other Costs |
$1,986,416 |
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Tax Credit
Equity (GP/LP Equity) |
$2,078,330 |
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Net Operating
Income During Construction |
$117,376 |
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Total Sources of Funds |
$39,847,449 |
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Permanent Sources of Funds |
Funding Amount |
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Conventional
Permanent Loan |
$10,600,000 |
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State HCD MHP
Loan (assumed) |
$6,317,091 |
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City of San
Clemente Loan (assumed) |
$613,080 |
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County of Orange
OCDA Loan (assumed) |
$3,539,769 |
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County of Orange
HOME Loan (assumed) |
$726,328 |
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Seller Carryback
Note |
$2,996,647 |
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Replacement
Reserves |
$235,065 |
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Operating Reserves/Short
Term Work Credit |
$237,347 |
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Deferred
Developer Fee and Other Costs |
$609,212 |
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Tax Credit
Equity (GP/LP Equity) |
$13,855,534 |
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Net Operating
Income During Construction |
$117,376 |
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Total Sources of Funds |
$39,847,449 |
Below are the
financial summary highlights of the Construction and Permanent Financing
proposed for Talega II:
|
Construction Source of Funds |
Funding Amount |
|
Tax Exempt Bond |
$9,910,368 |
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Construction
Loan Taxable Tail |
$1,589,632 |
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State HCD MHP
Loan (assumed) |
$4,648,045 |
|
County of Orange
OCDA Loan (assumed) |
$1,073,943 |
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City of San
Clemente Loan (assumed) |
$351,540 |
|
Seller Carryback
Note |
$1,265,447 |
|
Replacement
Reserves |
$100,777 |
|
Deferred
Developer Fee and Other Costs |
$1,544,941 |
|
Tax Credit
Equity (GP/LP Equity) |
$690,089 |
|
Net Operating
Income During Construction |
$68,621 |
|
Total Sources of Funds |
$21,243,403 |
|
Permanent Sources of Funds |
Funding Amount |
|
Conventional
Permanent Loan |
$6,500,000
|
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State HCD MHP
Loan (assumed) |
$4,648,045 |
|
City of San
Clemente Loan (assumed) |
$351,540 |
|
County of Orange
OCDA Loan (assumed) |
$1,073,943 |
|
Seller Carryback
Note |
$1,265,447 |
|
Replacement
Reserves |
$100,777 |
|
Operating
Reserves |
$138,900 |
|
Deferred
Developer Fee and Other Costs |
$195,245 |
|
Tax Credit
Equity (GP/LP Equity) |
$6,900,885 |
|
Net Operating
Income During Construction |
$68,621 |
|
Total Sources of Funds |
$21,243,403 |
Jamboree has been
in operation for over 34 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 one of
the largest nonprofit builders of quality affordable housing in California and
among the nations top 20 largest nonprofit developers of affordable housing.
Approval of the
requests and recommended actions related to Talega I and Talega II will allow
Jamboree to make much needed improvements and repairs to the properties through
the new tax-exempt bond financing. It would also preserve the Countys
affordability restrictions on the 186 units at Talega I and Talega II and allow
for continued operation and maintenance of these units for another 55 years.
The County loans
are current, and Jamboree is not in default with any of its lenders. Talega I
and Talega II are both being operated in compliance with all regulatory
agreements. OC Community Resources staff has reviewed and recommends approval
of the recommended actions for Talega I and Talega II.
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 assignment of existing County debt and affordability
restrictions on Talega I and Talega II to new project limited partnerships with
new tax-exempt bond financing related to the continued operation of 186
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
ATTACHMENT(S):
Attachment A Code of Federal
Regulations Title 24 Part 58.34(a)(3)
Attachment B Assignment and Assumption Agreement for $500,000 HOME Loan
Agreement (Talega I)
Attachment C Assignment and Assumption Agreement for HOME Regulatory
Agreement (Talega I)
Attachment D Assignment and Assumption Agreement for $2,423,384 Housing
Successor Loan Agreement (Talega I)
Attachment E Assignment and Assumption Agreement for $2,423,384 Housing
Successor Regulatory Agreement (Talega I)
Attachment F Amended and Restated Regulatory Agreement for $500,000 HOME Loan
(Talega I)
Attachment G Amended and Restated Regulatory Agreement $2,423,384 Housing
Successor Loan (Talega I)
Attachment H Subordination Agreement with First Trust Deed for $500,000 HOME
Loan (Talega I)
Attachment I Subordination Agreement with California Department of Housing
and Community Development for $500,000 HOME Loan and Regulatory Agreement
(Talega I)
Attachment J Subordination Agreement with First Trust Deed for Agreement
$2,423,384 Housing Successor Loan (Talega I)
Attachment K Subordination Agreement with California Department of Housing
and Community Development for $2,423,384 Housing Successor Loan and Regulatory
Agreement (Talega I)
Attachment L Assignment and Assumption Agreement for $728,176 Housing
Successor Loan Agreement (Talega II)
Attachment M Assignment and Assumption Agreement for $728,176 Housing
Successor Regulatory Agreement (Talega II)
Attachment N Amended and Restated Regulatory Agreement for $728,176 Housing
Successor Loan (Talega II)
Attachment O Subordination Agreement with First Trust Deed for Agreement
$728,176 Housing Successor Loan (Talega II)
Attachment P Subordination Agreement with California Department of Housing
and Community Development for $728,176 Housing Successor Loan and Regulatory
Agreement (Talega II)