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Agenda Item
ASR
Control 21-001164 |
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MEETING DATE: |
02/08/22 |
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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): |
5 |
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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: Approve Loan for Paseo
Adelanto Mixed-Use PSH
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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: N/A |
Current Year Cost:
N/A |
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: 11/16/2021
#22, 11/17/2020 #S28E, 10/20/2020 #S16G |
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RECOMMENDED ACTION(S):
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1. |
Authorize the OC Community Resources Director or designee to utilize Mental Health Services Act funds for permanent loan financing to Jamboree Housing Corporation for the development of Paseo Adelanto Mixed-Use PSH, a 50-unit affordable housing development in the City of San Juan Capistrano, pursuant to the 2020 Supportive Housing Notice of Funding Availability. |
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2. |
Approve the loan commitment to a limited partnership to be formed by Jamboree Housing Corporation, in an amount not to exceed $2,384,630, subject to contingencies outlined in this Agenda Staff Report. |
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3. |
Approve subordination at permanent financing of the up to $2,384,630 permanent loan to an amortized first trust deed conventional permanent loan of approximately $6,527,000, 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. |
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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. |
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Acting as the Board of Commissioners to the Orange County Housing Authority: |
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5. |
Approve the selection of Paseo Adelanto Mixed-Use PSH for utilization of up to 40 Veterans Affairs Supportive Housing, Mainstream and/or 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. |
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6. |
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 Project-Based Veterans Affairs Supportive Housing, Mainstream and/or Housing Choice 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 40 Project-Based Vouchers and subordination of the County loan at permanent financing to senior debt for Paseo Adelanto Mixed-Use PSH 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), HOME Investment Partnerships Program (HOME) and Mental Health Services Act (MHSA) funds and utilizing up to 200 Project-Based Vouchers (PBVs) and return to the Board for funding commitments to individual projects.
On October 20, 2020, the Board authorized the OCCR Director or designee to decrease the amount of MHSA funds in the 2020 NOFA by $1,085,000 and use the funds to fulfill the state’s local match requirement under the Homekey Program and the purchase of Stanton Inn and Suites.
On November 17, 2020, the Board authorized the OCCR Director or designee to increase the 2020 NOFA by up to $3.5 million in combined HSA, HOME, Fund 15B and Fund 135 funds and to decrease the amount of HSA funds in the 2020 NOFA by $2.4 million to include the loan commitment to the Tahiti Motel to allow a shift in funding to accommodate projects that have pending applications under the 2020 NOFA.
On November 16, 2021, the Board approved an increase to the 2020 NOFA to utilize up to 10 Veterans Affairs Supportive Housing (VASH) PBVs and up to 100 PBVs for the development of supportive housing and return to the Board for funding commitments to individual projects.
Jamboree Housing Corporation (Developer) responded to the 2020 NOFA with a funding application for a 50-unit affordable rental housing development, including one manager’s unit. Paseo Adelanto Mixed-Use PSH (Development) is a proposed new construction development located at 32400 Paseo Adelanto in the City of San Juan Capistrano (City).
The Developer has been in operation for the past 30 years and has participated in the development of more than 9,100 affordable homes in 95 communities. The Developer is the developer/contractor (licensed general contractor), owner, operator and service provider for all of its properties. Housing with Heart is an affiliate non-profit corporation that provides on-site social and supportive services to all of Jamboree Housing Corporation’s developments.
As proposed, the Development will provide units of housing to include 49 affordable rental units and one on-site property manager’s unit. The Developer is requesting capital funding, 30 Housing Choice PBVs and 10 VASH PBV rental subsidies from the Orange County Housing Authority (OCHA); the 40 one-bedroom units will be fully furnished and be affordable to households with incomes not exceeding 30 percent of the area median income (AMI), for persons who are currently experiencing homelessness; up to 14 units will be restricted by the County of Orange (County) for individuals experiencing homelessness who meet the MHSA eligibility criteria with 10 additional MHSA units restricted by the Orange County Housing Finance Trust, for a total of 24 MHSA units. Another six units at 30 percent of the AMI will be assisted by PBVs with supportive services provided by the Developer. The remaining nine units will be for individuals earning up to 50 percent of the AMI.
The Development is designed as a mixed-use development and will allow for construction of a new city hall and affordable housing on the same site. The Community Impact Team from the Developer, Housing with Heart, will be the lead service provider for the non-MHSA and non-VASH units in the development and provide care and support in the form of education, health and wellness and other skill building activities. OC Health Care Agency will provide case management services for the MSHA units and the Veterans Administration will provide services for the VASH units.
Upon approval of the County permanent loan and PBV request, the Developer intends on applying for a nine percent tax credit allocation under the California Tax Credit Allocation Committee’s first round application deadline in March 2022.
The Developer anticipates $5.9 million from the City from its Redevelopment Housing Successor Agency Loan Income Housing Asset Fund which will exceed the City match requirements as set forth in the 2020 NOFA. The City will also consider $1.3 million in Permanent Local Housing Allocation (PLHA) Funds along with the other City funds at a City Council meeting in February 2022.
Permanent Financing and PBVs
The Developer is requesting permanent loan financing under the 2020 NOFA in the amount of $2,384,630 in MHSA funds to be available to the Development 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, 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.
The following financial summary highlights the Permanent Financing phase of the Development:
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Source of Funds |
Funding Amount |
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Conventional Loan |
$6,527,000 |
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County of Orange/MHSA |
$2,384,630 |
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City |
$5,900,000 |
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County of Orange Housing Finance Trust |
$3,303,315 |
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City/Permanent Local Housing Allocation (PLHA) |
$1,347,800 |
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Low-Income Housing Tax Credits |
$16,169,342 |
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Total Project Costs |
$35,632,087 |
Note: Financing subject to change prior to completion of project. Underwriting guidelines per 2020 NOFA
County Loan Terms and Project-Based Vouchers:
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Permanent Loan: |
$2,384,630 |
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Interest Rate: |
3% simple |
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Term: |
55 years |
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Security: |
Second Deed of Trust |
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Payments: |
Residual Receipts share per the 2020 NOFA |
The County will record rent and occupancy restrictions on up to 14 units for MHSA eligible individuals experiencing homelessness for a period of 55 years via a regulatory agreement, which will not be subordinated to any conventional deed of trust. An additional 35 units will be restricted by other lenders or the Tax Credit Allocation Committee to households with incomes at or below 50 percent of the AMI.
OCHA will provide Housing Choice PBVs and VASH PBVs to up to 40 one-bedroom units for this project. These PBVs will be guaranteed for 20 years consistent with the U.S. Department of Housing and Urban Development (HUD) regulations. All referrals for units supported with a PBV must be via the Coordinated Entry System.
Funding of the County loan is contingent upon the following:
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1. |
Completion and approval of California Environmental Quality Act (CEQA) and National Environmental Policy Act (NEPA). |
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2. |
Evidence of commitment of all construction and permanent financing sources. |
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3. |
Approval of all entitlements and approvals by the City, anticipated on February 15, 2022. |
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4. |
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. |
The Project Advisory Committee of the County Housing and Community Development Commission concurred with staff recommendations at their January 13, 2022, 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 for up to 40 extremely low- and very low-income households experiencing homelessness or who were formerly homeless. Additionally, the creation of nine affordable housing units provides housing stability and security for households with low to moderate 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 40 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, subordination of the County loan at permanent financing to senior debt and utilization of 40 Housing Choice PBVs and/or VASH PBVs for Paseo Adelanto Mixed-Use PSH to allow the County to continue to support 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:
This loan will only affect the notes receivable balance sheet accounts of the fund. Per budgeting practice, the loan is not built into the fiscal year appropriations budget process. Upon issuance of the Certificate of Occupancy anticipated in fiscal year 2023-2024, this loan will be funded with 100 percent MHSA Fund 12A. The 40 PBVs available to recipients is funded 100 percent by Federal HUD funding and can be absorbed with existing appropriations within OCHA Fund 15F.
STAFFING IMPACT:
N/A
REVIEWING AGENCIES:
OC Health Care Agency
ATTACHMENT(S):
Attachment A - California Code of Regulations Title 14 Section 15378
Attachment B - Code of Federal Regulations Title 24 Subtitle A Part 58