AGENDA STAFF REPORT

Agenda Item AGENDA STAFF REPORT ASR Control 20-000069
MEETING DATE:	02/25/20
legal entity taking action:	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: Selection of Airport Inn Apartments for Rental Assistance

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:

# 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: 12/17/2019 #20, 11/05/2019 #S19E, 12/18/2018 #24, 04/24/2018 #38

RECOMMENDED ACTION(S):

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

Approve the selection of Airport Inn Apartments for utilization of 57 Project-Based Housing Choice Vouchers in accordance with the policies and procedures identified in the Orange County Housing Authority Administrative Plan and pursuant to the 2016 Permanent Supportive Housing Notice of Funding Availability Addendum 1 and 2020 Supportive Housing Notice of Funding Availability.

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

SUMMARY:

Approval of the 57 Project-Based Housing Choice Vouchers for Airport Inn Apartments will allow the County to continue to support the development of supportive affordable rental housing in Orange County.

BACKGROUND INFORMATION:

On November 10, 2015, the Board of Supervisors (Board) approved issuance of the 2016 Permanent Supportive Housing Notice of Funding Availability (2016 PSH NOFA). The objective of the 2016 PSH NOFA was to provide up to $8 million in HOME Investment Partnership Act (HOME) funds and/or Orange County Housing Successor Agency (HSA) funds and up to 100 Project-Based Vouchers (PBV) for the acquisition, new construction and acquisition/rehabilitation of supportive housing for extremely low-income households who are experiencing homelessness in Orange County. The 2016 PSH NOFA is one of the strategies implemented by the County of Orange (County) to align resources to end homelessness through the development of supportive housing. On April 24, 2018, the Board approved the issuance of Addendum 1 to this 2016 PSH NOFA, which increased the amount of funding by $4 million, to a total of $12 million, under this NOFA. The Addendum 1 also increased the number of Veterans Affairs Supportive Housing (VASH) and/or Housing Choice Vouchers (HCV) by 100, to a total of 200 vouchers, and approved modifications including, but not limited to, increases to the per unit subsidy limits for projects located in participating cities. On December 18, 2018, the Board approved an additional increase in funding by another $2 million, to a new combined total of $14 million in HOME and/or HSA funds and the utilization of up to 50 additional VASH vouchers.

On December 17, 2019, the 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 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 HSA, HOME and Mental Health Services Act (MHSA) funds and utilizing up to 200 Project-Based HCVs and return to the Board for funding commitments to individual projects.

On November 5, 2019, the Board approved the Airport Inn Apartments (also known as Commonwealth Airport Inn Apartments) (Development) for $4,409,468 in Special Needs Housing Program (SNHP) funding for 28 MHSA units. The Board also authorized the Health Care Agency (HCA) to submit a project application, in partnership with the developer, to the California Department of Housing and Community Development for $4,933,996 in No Place Like Home (NPLH) funding for 19 of the MHSA units in the Development.

Jamboree Housing Corporation (Developer) responded to the 2016 PSH NOFA Addendum 1 with a funding application for a 58-unit affordable rental housing development. However, only 30 HCVs remained in the amended 2016 PSH NOFA. The Developer applied for the additional 27 HCVs under the 2020 NOFA for a total of 57 Project-Based HCVs.

The Development will be located at 8180 Commonwealth Avenue in the City of Buena Park (City) and is an acquisition and rehabilitation of an existing 60-room motel into 58 units (57 rental units) of supportive housing for homeless households with 28 units set aside for individuals experiencing homelessness who meet MHSA criteria. The Development will consist of 57 studio units and one two-bedroom manager’s unit. All 57 studio units will be supported by the receipt of Project-Based HCVs under the 2016 PSH NOFA Addendum 1 and 2020 NOFA and administered by the Orange County Housing Authority (OCHA). Of these, 28 units will receive capital funding under the SNHP and will house individuals experiencing homelessness with household incomes at or below 30 percent of the Area Median Income (AMI) who meet MHSA criteria. The two-bedroom manager’s unit will not be income restricted.

The Developer was founded in 1990 and is an experienced developer, owner and operator of affordable housing. With an asset portfolio of $3.2 billion and over 9,000 units in 93 properties, the Developer is the second largest nonprofit builder of quality affordable housing in California – and among the nation’s top five largest nonprofit developers of affordable housing. The on-site Lead Service Provider for the Development is Housing with Heart (HWH), a nonprofit operating under the Developer’s umbrella. HWH will provide a wide-range of supportive services to the residents including Case Management and Service Coordination, education employment and training, financial literacy, social activities, life skills and other services. Supportive services for the MHSA units will be provided by HCA or HCA-contracted service provider. The John Stewart Company will provide property management services.

Financing and Project-Based Housing Choice Vouchers

The Developer is requesting 57 Project-Based HCVs to be available to the Development after construction is completed and a Certificate of Occupancy is issued. The value of the HCVs for the 15-year period is estimated to be $11,593,800 based on the current Voucher Payment Standard and anticipated Utility Allowance. These Project-Based HCVs will be guaranteed for 15 years consistent with U.S. Department of Housing and Urban Development (HUD) regulations and the OCHA Administrative Plan.

The Developer will submit an application for a reservation of 9 percent Low-Income Housing Tax Credits (LIHTC) in March 2020 with or without NPLH funds, depending on whether or not the project receives a NPLH award (Scenario A and B). If the Developer is unsuccessful with the 9 percent LIHTC application, they will apply for 4 percent LIHTC in August 2020 (Scenario C).

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

Source	Scenario A 9% w/ NPLH	Scenario B 9% w/o NPLH	Scenario C 4% w/ NPLH
Max. Conventional Loan	$5,853,352	$5,591,040	$5,354,165
Tax Credit Proceeds	$4,659,121	$7,422,491	$6,059,007
No Place Like Home	$3,625,000	$0	$3,625,000
Special Needs Housing (MHSA funds)	$4,409,468	$4,409,468	$4,409,468
Deferred Developer Fee	$4,187	$355,555	$271,949
Total Project Costs	$18,551,128	$17,778,554	$19,719,589

Rent and occupancy restrictions will be recorded on 28 MHSA units targeted to individuals experiencing homelessness who meet MHSA criteria earning at or below 30 percent AMI for a term of 55 years. An additional 29 units will be restricted by other lenders or the Tax Credit Allocation Committee to households with incomes at or below 30 percent AMI.

Commitment of the Project-Based HCVs is contingent upon the following:

1.	Completion and approval of National Environmental Policy Act (NEPA)
2.	Review and approval of a Phase 2 Environmental Report, and any additional environmental testing and reports, if needed
3.	Evidence of commitment of all construction and permanent financing sources
4.	Receipt and approval of final project development costs
5.	Approval of entitlements and any and all local approvals by the City of Buena Park

The Project Advisory Committee of the Housing & Community Development Commission concurred with staff recommendations at their January 15, 2020, meeting.

This Development is part of the concerted effort to develop the System of Care. Approval of the project-based voucher 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 end homelessness by providing supportive housing to 57 households. Additionally, the creation of 57 affordable housing units provides housing stability and security for formerly homeless households with extremely 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 households experiencing homelessness. As such, these 57 units of new supportive housing units will contribute to the progress of this Countywide 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 regards to a project since it is for the approval of 57 Project-Based HCVs for the Airport Inn Apartments, which will support the development 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 CFR 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:

The 57 Project-Based HCVs available to the recipient is funded 100 percent by Federal HUD funding and can be absorbed with existing appropriations within OC Housing Authority Fund 15F.

STAFFING IMPACT:

N/A