Agenda Item   

AGENDA STAFF REPORT

 

                                                                                                                        ASR Control  20-000901

 

MEETING DATE:

12/15/20

legal entity taking action:

Board of Supervisors and Orange County Housing Authority

board of supervisors district(s):

4

SUBMITTING Agency/Department:

OC Community Resources   (Approved)

Department contact person(s):

Dylan Wright (714) 480-2788 

 

 

Julia Bidwell (714) 480-2991

 

 

Subject:  Approve Loan and Project-Based Vouchers for Orchard View Gardens

 

      ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

No Legal Objection

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

  Funding Source: See Financial Impact Section

County Audit in last 3 years: No

 

 

    Prior Board Action: 06/02/2020 #32, 12/17/2019 #20, 11/05/2019 #S19E

 

RECOMMENDED ACTION(S):

 

 

Acting as the Board of Supervisors and as the Board of Commissioners to the Orange County Housing Authority, acting in its capacity as Housing Successor Agency:

 

1.

Authorize the OC Community Resources Director or designee to utilize HOME Investment Partnerships Program funds and/or Orange County Housing Successor Agency funds for permanent loan financing to a limited partnership to be formed by National Community Renaissance of California, for the development of Orchard View Gardens, a 66-unit affordable housing development in the City of Buena Park, pursuant to the 2020 Supportive Housing Notice of Funding Availability.

 

2.

Approve the loan commitment to a limited partnership to be formed by National Community Renaissance of California, in an amount not to exceed $453,600, subject to contingencies outlined in this Agenda Staff Report.

 

3.

Approve subordination at permanent financing of the $453,600 permanent loan to an amortized first trust deed conventional permanent loan of $3,815,706 and a second trust deed loan of $2,975,154 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 project financing.

 

4.

 

 

 

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 permanent loan financing.

 

5.

Approve the City of Buena Park’s request for waiver of matching funds pursuant to the 2020 Supportive Housing Notice of Funding Availability.

 

 

Acting as the Board of Commissioners to the Orange County Housing Authority:

 

6.

Approve the selection of Orchard View Gardens for utilization of eight Housing Choice Project-Based Vouchers in accordance with the policies and procedures identified in the Orange County Housing Authority Administrative Plan and authorize the execution of related documents, instruments and agreements.

 

7.

Authorize the Executive Director of the Orange County Housing Authority to execute any document related to the commitment of the U.S. Department of Housing and Urban Development Housing Choice Project-Based Vouchers, which incorporates the business and financial terms set forth in this Agenda Staff Report in a form as approved by County Counsel.

 

 

 

 

SUMMARY:

 

Approval of the County permanent loan, commitment of eight Housing Choice Project-Based Vouchers, subordination of the County loan at permanent financing to senior debt and waiver of City of Buena Park match funds for Orchard View Gardens will allow the County of Orange to continue to support the production of supportive housing in Orange County.

 

 

BACKGROUND INFORMATION:

 

On December 17, 2019, the Board of Supervisors (Board) approved the recommended changes in policy and process for the 2020 Supportive Housing Notice of Funding Availability (2020 NOFA) and authorized the OC Community Resources (OCCR) Director or designee to issue the 2020 NOFA with an emphasis on development of extremely low-income housing in a combination of up to $13 million in Orange County Housing Successor Agency (HSA), Federal HOME Investment Partnerships Program (HOME) and Mental Health Services Act (MHSA) funds and utilizing up to 200 Project-Based Vouchers (PBV) and return to the Board for funding commitments to individual projects.

 

National Community Renaissance of California (National CORE), a nonprofit Developer, responded to the 2020 NOFA with a funding application for a 66-unit affordable rental housing development. Orchard View Gardens (Development), will repurpose an underutilized portion of a 3.2 acre site, currently home to the St. Joseph’s Episcopal Church, located at 8300 Valley View Street in the City of Buena Park.             

 

National CORE has been in operation for more than 20 years and has participated in the development of more than 9,000 affordable homes in 85 developments throughout California, Texas, Arkansas and Florida, with 7,000 of those units located in California. National CORE is the developer/contractor (licensed general contractor), owner, operator and service provider for all its properties. Hope Through Housing Foundation is an affiliate nonprofit corporation that provides on-site social services to all National CORE developments.

 

As proposed, the Development will provide units of housing, including 65 rental units to senior households earning between 30 and 60 percent of the Area Median Income (AMI) and one unit for the property manager. The Development will consist of three separate buildings accommodating 62 one-bedroom units, three two-bedroom units and an additional two-bedroom unit for the property manager. Eight one-bedroom rental units will be restricted to MHSA eligible individuals experiencing homelessness with rents set at 30 percent AMI. Capital funding and Orange County Housing Authority PBVs are being requested for eight one-bedroom units under the 2020 NOFA. 

 

The Development will provide recreational spaces including a 3,000-square-foot community center, outdoor fireplace with seating areas and landscaped areas that include both passive and active spaces. A range of supportive services will be provided onsite by the Orange County Health Care Agency and National CORE’s services team for the supportive housing and affordable housing units based on the specific needs of the households residing in the community. Typical supportive services include counseling, financial literacy, healthy living education and senior wellness classes.

 

On November 5, 2019, the Board approved the Development for Special Needs Housing Program funding for eight MHSA units, a 20-year services commitment and submittal of a joint application with National CORE to apply for $1,769,795 in California Department of Housing and Community Development (State HCD) No Place Like Home (NPLH) Round 2 Competitive Allocation funding. However, National CORE’s NPLH application was deemed ineligible for further review based on the program being oversubscribed and did not receive a funding award. National CORE applied for additional gap funding from the Orange County Housing Finance Trust (OCHFT) NOFA and on June 2, 2020, the Board concurred with the OCHFT approval of this project for previously transferred County general funds.

 

Upon approval of the County permanent loan and PBV request, National CORE intends on applying for funding under State HCD’s NPLH Round 3 Competitive Allocation by the January 19, 2021, application deadline.

 

National CORE’s initial response to the 2020 NOFA included a commitment of $1 million from the City of Buena Park, however, due to the COVID-19 pandemic, the City subsequently withdrew their financial commitment indicating they have exhausted all housing and housing-related funds and is requesting a waiver of the required match funds.

 

Permanent Financing and Housing Choice PBVs

 

National CORE is requesting permanent loan financing under the 2020 NOFA in the amount of $453,600 to be available to the project after construction has been completed, a Certificate of Occupancy has been issued and conditions placed on the loan have been satisfied. The County loan will be subordinate to financing as outlined in financial summary below. To encumber funds per the U.S. Department of Housing and Urban Development (HUD) requirements, OCCR intends to close the loan at construction closing but fund at permanent loan closing. OCCR is requesting authorization 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 project financing. In determining the maximum additional senior debt to which the County will subordinate its loan, OCCR will calculate the senior debt plus the County loan and subtract that total from the current (within last six months) as-built appraised market value. If the current as-built appraised market value exceeds the cumulative senior debt plus the County loan, the County may subordinate to additional senior debt, if necessary, for the viability of the project.

 

Additionally, National CORE is requesting eight Housing Choice PBVs to be available to the Development after construction is completed and a Certificate of Occupancy is issued. These eight PBVs will be guaranteed for 20 years, consistent with HUD regulations and will provide rental subsidies to eight of the apartments restricted to 30percent AMI by County and/or state funding sources.

 

The following financial summary highlights the Permanent Financing phase of the Development:

 

Source of Funds

Funding Amount

Conventional Permanent Loan

     $3,815,706

State HCD - No Place Like Home

$2,975,154

County of Orange

$453,600

California Housing Finance Agency – Special Needs Housing Program

$1,259,848

Orange County Housing Finance Trust

$818,900

Tax Credit Proceeds

$12,803,011

Total Project Costs

$22,126,219  

 

 

County Loan Terms and Project-Based Vouchers:

Permanent Loan: 

$453,600

Interest Rate:

3% simple

Term:

55 years

Security:

Third Deed of Trust

Payments:

Residual Receipts (4.19 percent)

 

The County will record rent and occupancy restrictions on eight one-bedroom units for MHSA eligible individuals experiencing homelessness earning at or below 30percent AMI for a period of 55 years.

 

Funding of the County loan and commitment of the Housing Choice PBVs are contingent upon the following:

 

1.

Completion and approval of California Environmental Quality Act (CEQA) and National Environmental Policy Act (NEPA).

2.

Evidence of commitment of all construction and permanent financing sources.

3.

Receipt and approval of final project development costs and revised final development proforma and financing plan (including cash flow analysis) to reflect all final funding approvals.

4.

Formation of a limited partnership.

 

The Project Advisory Committee of the Housing and Community Development Commission concurred with staff recommendations at their October 8, 2020, meeting.

 

This Development is part of the concerted effort to further develop the System of Care. The loan request and PBVs award will contribute to the efforts on building a responsive System of Care in Orange County that provides housing solutions that meet the needs of the homeless populations. The proposed Development has the opportunity to address homelessness by providing supportive housing to eight extremely low-income seniors experiencing homelessness or who were formerly homeless. Additionally, the creation of 58 affordable housing units provides housing stability and security for households with low and/or very-low income. The supportive housing units in this Development are part of the 2,700 permanent supportive housing units identified in the Housing Funding Strategy to address housing needs for individuals and households experiencing homelessness. As such, these eight units of new supportive housing units will contribute to the progress of this effort.

 

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 of County permanent loan and eight Housing Choice PBVs, subordination of the County loan to senior debt for the Development and to allow the County’s continued support of the production of supportive housing in 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: Per 24 Code of Federal Regulations Part 58, an Environmental Assessment of the project is currently being conducted and, upon completion, a Request for Release of Funds will be sent to HUD.

 

 

 

FINANCIAL IMPACT:

 

Upon issuance of the Certificate of Occupancy, this loan will be funded at 100 percent Federal HOME Investment Partnerships Program funding in OC Housing Fund 15G and/or in Housing Asset Fund 170. The eight Housing Choice PBVs available to recipients will be funded at 100 percent federal HUD funding in OC Housing Authority Fund 15F.

 

 

 

STAFFING IMPACT:

 

N/A