Agenda Item   



                                                                                                                        ASR Control  23-000939




legal entity taking action:

Orange County Housing Authority

board of supervisors district(s):


SUBMITTING Agency/Department:

OC Community Resources   (Approved)

Department contact person(s):

Dylan Wright (714) 480-2788 



Julia Bidwell  (714) 480-2991



Subject:  Approve Additional Project-Based Vouchers for Motel 6


      ceo CONCUR

County Counsel Review

Clerk of the Board


No Legal Objection




3 Votes Board Majority




    Budgeted: Yes

Current Year Cost:   See Financial Impact Section

Annual Cost: N/A




    Staffing Impact:


# of Positions:            

Sole Source:   No

    Current Fiscal Year Revenue: See Financial Impact Section

   Funding Source:     See Financial Impact Section

County Audit in last 3 years: No

   Levine Act Review Completed: Yes


    Prior Board Action:         12/20/2022 #3, 12/6/2022 #17, 10/18/2022 #S42F, 10/4/2022 #5






Approve the selection of Mesa Vista (formerly Motel 6) for the utilization of 10 additional 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. 



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 Housing Choice Project-Based Vouchers, which incorporates the business and financial terms set forth in this Agenda Staff Report in a form as approved by County Counsel.







Approval of the County commitment to the additional 10 Housing Choice Project-Based Vouchers will allow the County of Orange to continue to support the production of supportive housing in Orange County.






On December 14, 2021, the Board of Supervisors (Board) approved the selection of Mesa Vista (formerly Motel 6) (Development) for utilization of 30 Veterans Affairs Supportive Housing (VASH), Mainstream and/or Housing Choice Project-Based Vouchers (PBVs) and up to $2 million for loan financing to Community Development Partners (CDP). The Board also approved submission of the Development for Homekey Program Round 2 (Homekey) funding, which was later awarded $10.55 million in funding. Pursuant to Homekey requirements and the Homekey Standard Agreement, CDP will have to complete the acquisition and rehabilitation of the Development (construction) by December 2023.


Mercy House CHDO LLC (Mercy House) is the lead service provider for Mesa Vista and was brought on as CDP’s non-profit partner and Co-Applicant to the 2020 Notice of Funding Availability (2020 NOFA) application. On October 18, 2022, the Board adopted an amended Homekey authorizing resolution to include Mercy House as an additional Co-Applicant to the Homekey funding application and approved a $2.5 million increase to the previously approved $2 million in County funds for loan financing to CDP and Mercy House (Developers) for the development of Mesa Vista. On December 6, 2022, the Board approved increasing the 2020 Supportive Housing NOFA by another $850,000 for the additional loan financing to the Developers. In total to date, the Board has approved up to $5.35 million in capital funding and 30 PBVs to the Developers for the Development.


The Development is the rehabilitation of a former 94-unit motel located in the City of Costa Mesa (City) and will be completed and financed in two phases. Phase I financing utilizes a combination of Homekey funds, County and City funds as well as a $7.9 million acquisition loan for the conversion of 40 units to Permanent Supportive Housing (PSH), which is planned to include 10 PSH units for individuals who are at risk of homelessness and meet the Mental Health Services Act (MHSA) eligibility criteria and 30 PSH units for veterans experiencing homelessness under the 2020 NOFA. At the time of the Developers’ 2020 NOFA application, OC Community Resources (OCCR) did not have sufficient PBVs available to subsidize rents on the 10 MHSA units, so the Developers later applied for additional 10 PBVs under the County’s 2023 NOFA.


If approved, the Orange County Housing Authority (OCHA) will provide Housing Choice PBVs for up to 10 studio units, in addition to the previously committed VASH PBVs for up to 30 studio units, which will be available to the Development after construction is completed and a Certificate of Occupancy has been issued. 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.


All 40 PSH units are restricted by the County for 55 years as required under the Homekey Program, including up to 10 studio units for MHSA eligible individuals at-risk of homelessness earning at or below 30 percent Area Median Income (AMI) and 30 units for VASH eligible veterans experiencing homelessness earning at or below 30 percent AMI.


Since the Board’s approval of additional funding on December 6, 2022, the Developers have begun construction on Phase I and are simultaneously working on securing financing on Phase II. The Developers applied for and were awarded $3,015,072 from Orange County Housing Finance Trust 2023 NOFA for two MHSA units and $8 million from CalOptima Health under their Notice of Funding Opportunity for Housing and Homeless Incentive Program.


The Developers also applied for funding under State California Tax Credit Allocation Committee in May 2023 to finance the Phase II portion of this development but were unsuccessful. They reapplied in September 2023, and at the time this Agenda Staff Report was prepared, are awaiting the award decision on December 6, 2023.


The Development’s financing has not changed and the $5.35 million in County loans for Phase I will remain in place and be converted to a permanent loan at permanent loan closing for Phase II financing once both phases are complete and occupied. The specific rent and occupancy restrictions may ultimately change based on the final financing structure of the Development.


The recommended action in this Agenda Staff Report supports the 2022 Housing Funding Strategy Update received and filed by the Board on December 20, 2022, which outlines the recommendations for a strategic approach to achieve an updated goal of developing 2,396 supportive housing units by 2029. The Development will continue to follow the best practices, guiding principles and commitments of the Homeless Service System Pillars Report which was created by the Commission to End Homelessness and received and filed by the Board on October 4, 2022.


Compliance with CEQA: This action is not a project within the meaning of CEQA Guidelines Section 15378 and therefore is 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 to utilize 10 additional Housing Choice PBVs for the Development and support the production of supportive housing in Orange County. Therefore, this proposed activity is 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 was completed and the Authority to Use Grant Funds was issued by HUD on May 21, 2022, for HOME Investment Partnership Program funds, on May 23, 2022, for 30 VASH PBVs. Upon Board approval of the 10 Housing Choice PBVs, an Environmental Review for Supplemental Assistance for the Activity/Project that is Categorically Excluded Not Subject to Section 58.5 Pursuant to 24 CFR Part 58.34(a) and 58.35(b) will be completed and retained on file by the County, as the Responsible Entity, in an Environmental Review Record for the activity/project.






The 30 VASH and 10 additional Housing Choice PBVs are funded 100 percent by Federal HUD funding. The cost of the VASH and Housing Choice PBVs can be absorbed with existing appropriations within OCHA Fund 15F. These PBVs are available to the recipient upon issuance of the Certificate of Occupancy anticipated in FY 2023-24.










OC Health Care Agency




Attachment A – Code of Federal Regulations Title 24 Subtitle A Part 58
Attachment B – Code of Federal Regulations Title 24 Part 58.34(a) and 58.35(b)