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Agenda Item
ASR
Control 19-000647 |
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MEETING DATE: |
06/25/19 |
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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): |
1 |
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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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Julia Bidwell (714) 480-2991 |
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Subject: Fountain Valley Housing Loan
Request
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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:
$453,600 |
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: 12/18/2018
#24, 04/24/2018 #38, 11/10/2015 #26 |
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RECOMMENDED ACTION(S):
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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: |
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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 The Related Companies of California, LLC and the Foundation for Affordable Housing V, Inc., for the development of Fountain Valley Housing, a 50-unit affordable housing development in the City of Fountain Valley, pursuant to the 2016 Permanent Supportive Housing Notice of Funding Availability and 2016 Permanent Supportive Housing Notice of Funding Availability Addendum 1. |
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2. |
Approve the loan commitment to a partnership formed by The Related Companies of California, LLC and the Foundation for Affordable Housing V, Inc., in an amount not to exceed $453,600, subject to contingencies outlined in this staff report including any final required City of Fountain Valley approvals. |
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3. |
Approve subordination at permanent financing of the $453,600 permanent loan to an amortized first trust deed conventional loan of $2,569,000 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. |
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Acting as the Board of Commissioners to the Orange County Housing Authority: |
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4. |
Approve the selection of Fountain Valley Housing for utilization of 8 Project-Based Veterans Affairs Supportive Housing 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. |
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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 permanent loan financing and commitment of the U.S. Department of Housing and Urban Development Project-Based Veterans Affairs Supportive Housing Vouchers, which incorporate the business and financial terms set forth in this Agenda Staff Report in a form as approved by County Counsel. |
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SUMMARY:
Approval of the County permanent loan, commitment of eight Project-Based Veterans Affairs Supportive Housing Vouchers and subordination of the County loan at permanent financing to senior debt for Fountain Valley Housing 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.
The Related Companies of California, LLC and the Foundation for Affordable Housing V, Inc. (Developers) responded to the 2016 PSH NOFA Addendum 1 with a funding application for a 50-unit affordable rental housing development, Fountain Valley Housing (Development). The Development will be located at 16790 Harbor Boulevard in the City of Fountain Valley.
The Development is new construction of 50 units (49 rental units) of affordable housing for low- to extremely-low income households. The 1.96 acre site is comprised of a vacant lot that is owned by Harbor Blvd Storage, LLC.
The Development will consist of 23 one-bedroom units, 14 two-bedroom units (including a manager’s unit) and 13 three-bedroom units, of which 8 one-bedroom units would receive capital funding and Project-Based VASH Vouchers under the 2016 PSH NOFA and will house eight veterans experiencing homelessness with household incomes at or below 30% of Area Median Income (AMI). These units will be supported by the eight project-based voucher rental subsidies from Orange County Housing Authority (OCHA).
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 $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 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 VASH Vouchers to be available to the Development after construction has been completed and a Certificate of Occupancy has been issued. These eight Project-Based VASH 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.
The following financial summary highlights the Permanent Financing phase of the Development:
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Sources of Funds |
Amount |
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Conventional Loan |
$1,851,000 |
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Perm Loan Tranche B |
$718,000 |
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County of Orange |
$453,600 |
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City of Fountain Valley |
$8,200,000 |
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Tax Credit Equity |
$14,573,736 |
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Total Development Costs |
$25,796,336 |
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County Loan Terms and Project-Based Vouchers: |
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Permanent Loan: |
$453,600 |
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Interest Rate: |
3% Simple |
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Term: |
55 years |
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Security: |
Second and/or Third Deed of Trust |
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Payments: |
Residual Receipts (25% of cash flow) |
The County will record rent and occupancy restrictions on eight one-bedroom units to veteran households experiencing homelessness earning at or below 30 percent AMI for a term of 55 years.
OCHA will provide Project-Based VASH Vouchers to eight one-bedroom units for this project. These eight Project-Based VASH Vouchers will be guaranteed for 15 years consistent with HUD regulations.
Funding of the County loan, Project-Based VASH Vouchers is contingent upon the following:
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1. |
Completion of entitlements and any other required necessary local approvals by the City of Fountain Valley |
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2. |
Formation of the Limited Partnership |
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3. |
Evidence of commitment of all construction and permanent financing sources |
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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 PBV 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 eight households. Additionally, the creation of 49 affordable housing units provides housing stability and security for 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 homeless individuals and households. As such, these eight 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 8 Project-Based Housing Choice Vouchers, subordination of the County loan to senior debt for Fountain Valley Housing 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 VASH 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