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Agenda Item
ASR
Control 21-000742 |
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MEETING DATE: |
11/16/21 |
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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): |
All Districts |
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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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Dr. Clayton Chau (714) 834-2830 |
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Subject: Approve Transfer of Funding
for Supportive Housing Development
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ceo CONCUR |
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Clerk of the Board |
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Concur |
No Legal Objection |
Discussion |
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3 Votes Board Majority |
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Budgeted: Yes |
Current Year Cost:
See Financial Impact Section |
Annual Cost:
N/A |
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Staffing Impact: |
No |
# of Positions:
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Sole Source:
N/A |
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Current Fiscal Year Revenue: N/A
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Prior Board Action: 05/19/2020
#54, 07/30/2019 #15, 06/26/2018 #56, 06/12/2018 #1 |
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RECOMMENDED ACTION(S):
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1. |
Approve the Health Care Agency Director or designee to transfer up to $13,038,389 in anticipated and returned Special Needs Housing Program Mental Health Services Act funding from the State of California Housing Finance Agency to OC Community Resources for the development of supportive housing. |
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2. |
Authorize the Health Care Agency Director or designee and the OC Community Resources Director or designee to execute the Amendment to the existing Memorandum of Understanding between OC Community Resources and Health Care Agency for administration of up to an additional $13,038,389 in Mental Health Services Act funding for the development of supportive housing and execute the Amendment, in a form as approved by County Counsel. |
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3. |
Authorize the OC Community Resources Director or designee to provide funding commitments for loans and/or capitalized operating subsidy reserves to projects previously approved by the Board of Supervisors for allocations of Special Needs Housing Program Mental Health Services Act funding administered by the State of California Housing Finance Agency in the following amounts subject to terms outlined in this Agenda Staff Report:
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4. |
Authorize the Health Care Agency Director or designee to execute the Local Government Certification and Regulated Unit Occupancy Restrictions for the Lincoln Avenue Apartments for up to $2,917,680, as contained in Attachment E. |
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5. |
Authorize the OC Community Resources Director or designee to execute subordination agreements; standard set of loan documents and restrictive covenants; and such additional agreements, contracts, instructions and instruments necessary or appropriate for loan financing and capitalized operating subsidy reserves. |
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6. |
Authorize the OC Community Resources Director or designee to increase the 2020 Supportive Housing Notice of Funding Availability by up to $1,069,462 in Mental Health Services Act funding for the development of supportive housing and return to the Board of Supervisors for funding commitments to individual projects. |
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7. |
Authorize the Health Care Agency to utilize any unencumbered Special Needs Housing Program balance of funds to extend affordability for existing Mental Health Services Act Housing or Special Needs Housing Program projects and authorize the Health Care Agency Director or designee to execute the California Housing Finance Agency Special Needs Housing Program Mental Health Services Act Fund Release and Transfer Authorization form as contained in Attachment B. |
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8. |
Direct the Auditor-Controller to revise appropriations, revenues, transfers in and out and fund balance-assigned in Health Care Agency (Budget Control 042) and Mental Health Services Act Housing Fund 12A in accordance with Government Code Sections 29130, 29125 and 25252 as follows (Requires four-fifths vote): |
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Fund |
Dept. |
Budg. Ctrl. |
Unit |
Object/ Rev. Src./ BSA |
DObj./ DRSRC |
Revenue Inc/(Dec) |
Appropriations Inc/(Dec) |
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100 |
042 |
042 |
2100 |
1900 |
0000 |
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($13,038,389) |
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100 |
042 |
042 |
2100 |
4801 |
T12A |
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$13,038,389 |
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12A |
012 |
12A |
2300 |
7810 |
T042 |
$13,038,389 |
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12A |
012 |
12A |
2300 |
3800 |
0000 |
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$13,038,389 |
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9. |
Acting as the Orange County Housing Authority: Authorize the OC Community Resources Director or designee to increase the 2020 Supportive Housing Notice of Funding Availability to utilize up to 10 Project Based Veterans Affairs Supportive Housing vouchers and up to 100 Project Based Housing Choice vouchers for the development of supportive housing and return to the Board of Supervisors for funding commitments to individual projects. |
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SUMMARY:
Approval of transfer of Special Needs Housing Program Mental Health Services Act funds from Health Care Agency to OC Community Resources, Amendment to Memorandum of Understanding between OC Community Resources and Health Care Agency, authorization to provide funding commitments to previously approved projects, increase to the OC Community Resources 2020 Supportive Housing Notice of Funding Availability and approval of California Housing Finance Agency Special Needs Housing Program Mental Health Services Act Fund Release and Transfer Authorization form will facilitate the transfer and commitment of funds for the development of affordable and supportive housing throughout Orange County.
BACKGROUND INFORMATION:
On September 13, 2016, the Board of Supervisors (Board) approved the Participation Agreement with the California Housing Finance Agency (CalHFA) for the Local Government Special Needs Housing Program (SNHP) for purposes of creating permanent supportive housing for persons living with a serious mental illness, who are experiencing homelessness or are at-risk of homelessness.
On March 27, 2018, the Board directed $70.5 million from the County Mental Health Services Act (MHSA)/Community Services and Support fund toward the acquisition and/or renovation of properties for supportive housing for persons living with mental illness. On June 12, 2018, the Board approved the MHSA $70.5 million Permanent Supportive Housing Spending Plan and authorized the Health Care Agency (HCA) to submit project applications to the state for SNHP funding.
On June 26, 2018, the Board approved the allocation of $15 million and $25 million on October 30, 2018, for a total allocation of $40 million to SNHP.
On September 4, 2018, CalHFA announced the immediate termination of the SNHP. The Board supported HCA and OC Community Resources (OCCR) in advocating for the extension of this program in order for the County to continue to fund the housing projects in the SNHP pipeline. On November 29, 2018, CalHFA agreed to extend the timeline for ending SNHP and requested changes to the existing Participation Agreement Local Government SNHP with the County, which the Board approved on July 30, 2019.
Any funds that remain on deposit with CalHFA after June 30, 2022, and are not associated with developments that have closed their construction or acquisition/rehabilitation financing will be returned to the County.
As of August 2021, there are five developments that were previously approved by the Board for allocation of SNHP funding that may not be able to close their construction financing by the CalHFA deadline of June 30, 2022. The developers of these projects have pursued multiple rounds of funding and due to the competitive nature of the low-income housing tax credit, tax-exempt bond and other state funding application processes, these projects have not been able to secure all their remaining funding. Each project is actively pursuing funding; however, the allocation of those funds may not occur until after the June 30, 2022, deadline.
In order to continue to support the progress of these previously approved developments, HCA and OCCR are requesting the Board approve a transfer of any remaining SNHP funding sent from CalHFA to HCA to be transferred to OCCR to re-commit to these same developments in the terms outlined below.
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Project Name |
Developer |
SNHP Units |
SNHP Funding Commitment |
Commitment Terms |
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Lincoln Avenue Apartments |
C&C |
10 |
$2,917,680 ($1,574,810 Capital loan; and up to $1,342,870 Capitalized Operating Subsidy Reserve) |
3% simple interest; 55-year loan; 7.99% residual receipts split; 5th Trust Deed; funds available at construction close |
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Villa St. Joseph |
Mercy Housing |
18 |
$3,696,893 (Capital Loan only) |
3% simple interest; 55-year loan; 21.61% residual receipts split; 4th Trust Deed; funds available at Perm Loan Conversion |
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Cartwright Family Apartments |
C&C |
10 |
$1,574,810 (Capital Loan only) |
3% simple interest; 55-year loan; 5.31% residual receipts split; 5th Trust Deed; funds available at construction close |
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Orchard View Gardens |
National Community Renaissance (CORE) |
8 |
$1,259,848 (Capital Loan only) |
3% simple interest; 55-year loan; 25.14% residual receipts split; 3rd. Trust Deed; funds available at construction close |
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Santa Angelina Senior Community |
National CORE |
16 |
$2,519,696 (Capital Loan only) |
3% simple interest; 55-year loan; 14.62% residual receipts split; 4th Trust Deed; funds available at construction close |
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Total: |
62 |
$11,968,927 |
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*Other terms not outlined shall default to the 2020 OCCR Notice of Funding Availability (NOFA) requirements.
Additionally, CalHFA recently transferred a total of $1,069,462 in SNHP funding to HCA (from previous loan payments and interest earned). HCA and OCCR are recommending those funds also be transferred to OCCR to utilize in their 2020 Supportive NOFA, for the development of additional supportive housing. OCCR is also recommending to add 10 Project-Based Veterans Affairs Supportive Housing vouchers and 100 Project Based Housing Choice Vouchers to the 2020 Supportive Housing NOFA to support development of additional supportive housing for households experiencing homelessness with preference for Homekey developments.
Until all funding is transferred from CalHFA back to the County, additional interest and smaller amounts of unused funding may accrue. For the balance of any remaining funds not already committed to a specific development, OCCR and HCA recommend approval of the CalHFA SNHP MHSA Fund Release and Transfer Authorization form to allocate the funding to previously funded SNHP projects to extend the years of their operating reserve funds. The amounts and projects are listed in Attachment B.
On May 19, 2020, the Board approved a Memorandum of Understanding (MOU) between HCA and OCCR to transfer up to $36 million in MHSA funds from HCA to OCCR Fund 12A. Per the MOU, OCCR directed $15.5 million for its 2020 Supportive Housing NOFA and allocated the remaining $20.5 million to the Orange County Housing Finance Trust as match for the state Local Housing Trust Fund program. HCA and OCCR recommend amending the existing MOU to add $11,968,927 of SNHP funding for the five developments mentioned above and $1,069,462 for the OCCR 2020 Supportive Housing NOFA.
The actions in this Agenda Staff Report support the Housing Funding Strategy presented to your Board in June 2018, which summarizes the need for 2,700 supportive housing units in Orange County, to be developed for individuals and families experiencing homelessness and chronic homelessness.
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 in regard to a project since it is for approval to facilitate the transfer and commitment of funds for the development of affordable and supportive housing throughout Orange County. The 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.
FINANCIAL IMPACT:
Appropriations are included in the HCA’s Budget Control (BC) 042 FY 2021-22 Budget. The $11,968,927 identified for the five projects and up to $1,069,462 for the OCCR 2020 Supportive Housing NOFA can be absorbed within HCA’s current appropriations. However, the Operating Transfers required from BC 042 to Fund 12A, MHSA Housing Fund and appropriations in BC 12A were not budgeted. Recommended Action 8 will provide these necessary budget adjustments.
Appropriations and Revenues associated with these actions will be included in the FY 2021-22 Budgets for the MHSA Housing Fund, Fund 12A.
STAFFING IMPACT:
N/A
REVIEWING AGENCIES:
Health Care Agency
ATTACHMENT(S):
Attachment A – Memorandum of Understanding Between OC
Community Resources and Health Care Agency
Attachment B – Special Needs Housing Program Mental Health Services Act Fund
Release and Transfer Authorization
Attachment C – Government Codes 29125, 29130, 25252
Attachment D – California Code of Regulations Title 14 Section 15378
Attachment E – Lincoln Avenue Special Needs Housing Program Application Local
Government Certification and Regulated Unit Occupancy Restrictions forms