|
Agenda Item
ASR
Control 24-000269 |
||
|
MEETING
DATE: |
06/04/24 |
|
|
legal entity taking action: |
Board
of Supervisors and Orange County Housing Authority |
|
|
board of supervisors district(s): |
5 |
|
|
SUBMITTING Agency/Department: |
OC
Community Resources (Approved) |
|
|
Department contact person(s): |
Dylan
Wright (714) 480-2788 |
|
|
|
Julia
Bidwell (714) 480-2991 |
|
Subject: Approve Agreements for Mendocino at
Talega I and II Resyndications
|
ceo CONCUR |
County Counsel Review |
Clerk of the Board |
||||||||
|
Concur |
Approved
Agreement to Form |
Discussion |
||||||||
|
|
|
3
Votes Board Majority |
||||||||
|
|
|
|
||||||||
|
Budgeted: N/A |
Current Year
Cost: N/A |
Annual Cost: N/A |
||||||||
|
|
|
|
||||||||
|
Staffing Impact: |
No |
# of Positions: |
Sole Source: N/A |
|||||||
|
Current Fiscal Year Revenue: N/A
|
||||||||||
|
Prior Board Action: 5/21/2002 #42, 3/20/2001 #44 |
||||||||||
RECOMMENDED
ACTION(S):
|
Acting as the Board of Supervisors: |
|
|
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. |
|
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. |
|
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. |
|
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. |
|
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. |
|
Acting as the Board of Commissioners to
the Orange County Housing Authority: |
|
|
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. |
|
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. |
|
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. |
|
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. |
|
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. |
|
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. |
|
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. |
|
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 |
|
Tax Exempt Bond |
$18,883,000 |
|
Construction Loan Taxable Tail |
$2,117,000 |
|
State HCD MHP Loan (assumed) |
$6,317,091 |
|
County of Orange HSA (formerly OCDA)
Loan (assumed) |
$3,539,769 |
|
County of Orange HOME Loan (assumed) |
$726,328 |
|
City of San Clemente Loan (assumed) |
$613,080 |
|
Seller Carryback Note |
$2,996,647 |
|
Replacement Reserves |
$235,065 |
|
Operating Reserves/Short Term Work
Credit |
$237,347 |
|
Deferred Developer Fee and Other Costs |
$1,986,416 |
|
Tax Credit Equity (GP/LP Equity) |
$2,078,330 |
|
Net Operating Income During Construction |
$117,376 |
|
Total
Sources of Funds |
$39,847,449 |
|
Permanent
Sources of Funds |
Funding Amount |
|
Conventional Permanent Loan |
$10,600,000 |
|
State HCD MHP Loan (assumed) |
$6,317,091 |
|
City of San Clemente Loan (assumed) |
$613,080 |
|
County of Orange OCDA Loan (assumed) |
$3,539,769 |
|
County of Orange HOME Loan (assumed) |
$726,328 |
|
Seller Carryback Note |
$2,996,647 |
|
Replacement Reserves |
$235,065 |
|
Operating Reserves/Short Term Work
Credit |
$237,347 |
|
Deferred Developer Fee and Other Costs |
$609,212 |
|
Tax Credit Equity (GP/LP Equity) |
$13,855,534 |
|
Net Operating Income During Construction |
$117,376 |
|
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 |
|
Construction Loan Taxable Tail |
$1,589,632 |
|
State HCD MHP Loan (assumed) |
$4,648,045 |
|
County of Orange OCDA Loan (assumed) |
$1,073,943 |
|
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 |
|
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)