Agenda Item

AGENDA STAFF REPORT

 

††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† ASR Control 19-000646

 

MEETING DATE:

06/25/19

legal entity taking action:

Board of Supervisors and Orange County Housing Authority

board of supervisors district(s):

3

SUBMITTING Agency/Department:

OC Community Resources†† (Approved)

Department contact person(s):

Dylan Wright (714) 480-2788

 

 

Julia Bidwell (714) 480-2991

 

 

Subject: Altrudy Lane Seniors Loan Request

 

††††† ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

No Legal Objection

Discussion

 

 

3 Votes Board Majority

 

 

 

††† Budgeted: Yes

Current Year Cost: $475,000

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: 05/07/2019 #19, 01/08/2019 #26, 12/18/2018 #24, 04/24/2018 #38

 

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 Partnership Act funds and/or Orange County Housing Successor Agency funds for permanent loan financing to a limited partnership to be formed by C&C Development and Orange Housing Development Corporation, for the development of Altrudy Lane Seniors, a 48-unit affordable housing development in the City of Yorba Linda, pursuant to the 2016 Permanent Supportive Housing Notice of Funding Availability and 2016 Permanent Supportive Housing Notice of Funding Availability Addendum 1.

 

2.

Approve the loan commitment to a partnership formed by C&C Development and Orange Housing Development Corporation, in an amount not to exceed $475,000, subject to contingencies outlined in this Agenda Staff Report including any final required City of Yorba Linda approvals.

 

3.

Approve subordination at permanent financing of the $475,000 permanent loan to an amortized first trust deed conventional loan of $4,602,580 as set forth in this staff report (Scenario A and B) 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.

 

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

 

4.

Approve the selection of Altrudy Lane Seniors for utilization of eight Project-Based Housing Choice 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.

 

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 permanent loan financing and 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 County permanent loan, commitment of eight Project-Based Housing Choice Vouchers and subordination of the County loan at permanent financing to senior debt for Altrudy Lane Seniors will allow the County to continue to support the production of supportive 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.

 

C&C Development and Orange Housing Development Corporation (Developers) responded to the 2016 PSH NOFA Addendum 1 with a funding application for a 48-unit affordable rental housing development, Altrudy Lane Seniors (Development). The Development will be located at 18551 Altrudy Lane in the City of Yorba Linda.

The Development is new construction of 48 units (47 rental units) of affordable housing for low- to extremely-low income senior households with 10 units set aside for senior individuals experiencing homelessness. The 2.5 acre site is comprised of a vacant lot that is owned by the City of Yorba Linda and consists of two parcels.

 

The Development will consist of 39 one-bedroom units and nine two-bedroom units (including a managerís unit). Of these, 10 one-bedroom units will receive capital funding and capitalized operating subsidy reserves under the No Place Like Home (NPLH) and/or Special Needs Housing Program (SNHP), of which eight of those units will receive capital funding and project-based vouchers under the 2016 PSH NOFA. These 10 units will house 10 senior individuals experiencing homelessness with household incomes at or below 30 percent of Area Median Income (AMI).These units will be supported by the eight project-based voucher rental subsidies from Orange County Housing Authority (OCHA). These 10 units will also be dedicated to tenants who meet Mental Health Services Act (MHSA) criteria. The two-bedroom managerís unit will not be income restricted.

 

Permanent Financing and Project-Based Housing Choice Vouchers

 

The Developer is requesting permanent loan financing under the 2016 PSH NOFA Addendum 1 in the amount of $475,000 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) and/or Housing Successor regulations, OC Community Resources (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, the Developer is requesting eight Project-Based HCVs to be available to the Development after construction has been completed and a Certificate of Occupancy has been issued. These eight Project-Based Vouchers will be guaranteed for 15 years consistent with HUD regulations and will provide rent subsidies to eight of the apartments funded under the 2016 PSH NOFA.

 

On January 8, 2019, the Board adopted a resolution authorizing Health Care Agency to submit and execute application and related documents to the State Department of Housing and Community Development for NPLH competitive Notice of Funding Availability to fund the Development, in an amount of $2,041,158. On May 7, 2019, the Board also approved the Development for a SNHP funding allocation, funded by the California Housing Finance Agency, in the amount of $1,514,240 in capital funding and $155,232 in capitalized operating subsidy reserve, to support 10 units dedicated to tenants who meet MHSA criteria.

†††††

The Developer is applying for 4 percent Low Income Housing Tax Credits with NPLH and SNHP funding (Scenario A) and 4 percent Low Income Housing Tax Credits with SNHP Funding and the 2016 PSH NOFA Funding (Scenario B) in order to maximize the funding options for the project.

 

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

 

Sources of Funds

Scenario A
(NPLH and SNHP)

Scenario B
(SNHP and 2016 PSH NOFA)

Conventional Loan

$4,602,580

$4,602,580

Orange County

$0

$475,000

City of Yorba Linda

$6,702,050

$6,702,050

No Place Like Home (NPLH)

$2,041,158

$0

Special Needs Housing Program (SNHP)

$800,000

$1,514,240

Tax Credit Equity

$6,410,694

$6,410,694

Deferred Developer Fee

$600,284

$1,452,202

Total Development Costs

$21,156,766

$21,156,766

 

 

County Loan Terms and Project-Based Vouchers:

Permanent Loan:

$475,000

Interest Rate:

3 percent Simple

Term:

55 years

Security:

Second and/or Third Deed of Trust

Payments:

Residual Receipts

 

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

OCHA will provide Project-Based HCVs to eight one-bedroom units for this project. These eight Project-Based HCVs will be guaranteed for 15 years consistent with HUD regulations.

 

Funding of the County loan, Project-Based HCV is contingent upon the following:

 

1.

Completion of entitlements and any other required necessary local approvals by the City of Yorba Linda

2.

Formation of the Limited Partnership

3.

Evidence of commitment of all construction and permanent financing sources

4.

Completion and approval of National Environmental Policy Act (NEPA)

 

The Project Advisory Committee of the Housing & Community Development Commission concurred with staff recommendations at their May 14, 2019, meeting.

 

This Development is part of the concerted effort to develop the System of Care. Approval of this loan request and project-based voucher award will contribute to the efforts on building a responsive System of Care in Orange County that provides solutions that meet the needs of the homeless populations. The proposed Development has the opportunity to end homelessness by providing supportive housing to 10 households. Additionally, the creation of 47 affordable housing units provides housing stability and security for senior households with low-income and 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 senior individuals and households experiencing homelessness. As such, these 10 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 regard to a project since it is for approval of the County permanent loan for commitment of eight Project-Based HCV, subordination of the County loan to senior debt for Altrudy Lane Seniors and to allow the 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 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:

 

Existing appropriations can absorb encumbering the funds in the current fiscal year to be paid upon issuance of the Certificate of Occupancy.This loan will be funded with 100 percent HOME Investment Partnership Act in Fund 15G and/or in Housing Asset Fund 170. The eight Project-Based Housing Choice Vouchers available to recipients 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