Agenda Item AGENDA STAFF REPORT ASR Control 23-001137
MEETING DATE:	02/27/24
legal entity taking action:	Orange County Housing Authority
board of supervisors district(s):	2
SUBMITTING Agency/Department:	OC Community Resources (Approved)
Department contact person(s):	Dylan Wright (714) 480-2788
	Julia Bidwell (714) 480-2991

Subject: Heritage Place at Tustin Senior Apartments Partnership Transfer

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

No Legal Objection

Consent Calendar

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: N/A	County Audit in last 3 years: No
Levine Act Review Completed: N/A

Prior Board Action: 5/11/2004 #5, 2/6/2001 #76

RECOMMENDED ACTION(S):

Approve the substitution of AH SUBGP 1092 Tustin LLC as the new Administrative General Partner of the partnership in place of USA Tustin HP, Inc. for Heritage Place at Tustin Senior Apartments.

Approve Cirrus Asset Management, Inc. as the new property management company replacing USA Multifamily Management, Inc. for Heritage Place at Tustin Senior Apartments.

Authorize OC Community Resources Director or designee to prepare and execute all documents related to these approvals as reviewed and approved as to form by County Counsel.

SUMMARY:

Approval of the partnership interest transfer and change in property management company related to Heritage Place at Tustin Senior Apartments will allow for the continued operation of 53 affordable housing units serving seniors within Orange County.

BACKGROUND INFORMATION:

On February 6, 2001, the Board of Supervisors (Board) acting as the Board of Commissioners for the Orange County Housing Authority (OCHA) approved a loan commitment in the amount of $541,903 of OCHA Reserve Funds to Tustin Heritage Place L.P. (Partnership) for the construction of Heritage Place at Tustin Senior Apartments (Heritage Place), located at 1101 Sycamore Avenue in the City of Tustin. Heritage Place is a 54-unit apartment building with 43 one-bedroom units and 10 two-bedroom units dedicated to serving low and very low-income seniors and one two-bedroom unit reserved for an onsite property manager. All units are restricted between 35 percent to 60 percent of the Area Median Income (AMI) rent levels by the County of Orange (County) via a recorded regulatory agreement dated August 15, 2006, for a term of 58 years and will remain affordable through August 15, 2064.

At the time of Board approval, the Partnership consisted of developer general partner Tustin Heritage Place, LLC, managing general partner Heritage Community Housing Inc. (Heritage GP) and limited partner SunAmerica Housing Fund 982 LP. However, owners/operators may choose to make business decisions such as changing partners, partnership interest or property management companies, pursuant to the terms and conditions of the Partnership agreement. On May 11, 2004, the Board approved the substitution of Riverside Charitable Corporation as the new managing general partner of the partnership in place of Heritage GP, replacement of American Senior Care, Inc. with USA Multifamily Management, Inc. as the new property manager, extension of the time to complete the transaction, and move of the County loan to second position on title.

The parties involved are now submitting a request to replace the current administrative general partner and property management company. The changes stem from business decisions made between partners and are not related to any performance issues. OC Community Resources (OCCR) staff has done due diligence pertaining to this request and have no concerns with the proposed changes.

USA Tustin HP, Inc. is requesting withdrawal from the partnership and will be replaced by AH SUBGP 1092 Tustin LLC, an affiliate of the limited partner AH Housing Fund 982 LP (formerly SunAmerica Housing Fund 982 LP), resulting in the property being 99.9 percent owned by affiliates of April Housing (April). Concurrently, Cirrus Asset Management, Inc. (Cirrus) will replace USA Multifamily Management, Inc. as the property manager.

April is a provider of solutions and capital for the creation and preservation of high-quality affordable housing throughout the United States. April’s initial portfolio comprises of over 90,000 affordable housing units recently acquired by Blackstone Real Estate Income Trust (BREIT). The company is headquartered in Los Angeles and oversees one of the nation’s largest Low-Income Housing Tax Credit portfolios.

Cirrus is responsible for the property management of over 12,000 apartments in six states, including 46 properties in California. Cirrus also offers management consulting services, financing originations, as well as deep construction management services for many of its clients.

The County loan is current, and the partnership is not in default with any of its lenders. Heritage Place is being operated in compliance with all regulatory agreements. OCCR staff has reviewed and recommends approval of the replacement of existing partner USA Tustin HP, Inc. with AH SUBGP 1092 Tustin LLC, and replacement of USA Multifamily Management, Inc. with Cirrus Asset Management, Inc. as the property management company.

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 regarding the project since it is for approval of the partnership interest transfer and change in property management company related to the continued operation of 53 affordable housing units serving senior citizens within 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: The proposed activity is Exempt per 24 Code of Federal Regulations part 58.34 (a)(3).

FINANCIAL IMPACT:

N/A

STAFFING IMPACT:

N/A

ATTACHMENT(S):

Attachment A - Code of Federal Regulations Title 24 Part 58.34(a)(3)