HOUSING AUTHORITY AGENDA REPORT
City of Anaheim
HOUSING AND COMMUNITY DEVELOPMENT
DEPARTMENT
DATE: AUGUST 12, 2025
FROM: HOUSING & COMMUNITY DEVELOPMENT DEPARTMENT
SUBJECT: APPROVAL OF A PRELIMINARY AWARD LETTER, GROUND
LEASE OPTION AGREEMENT, AND RESOLUTION OF THE
ANAHEIM HOUSING AUTHORITY REGARDING ITS
INTENTION TO ISSUE TAX-EXEMPT OBLIGATIONS FOR THE
HERMOSA VILLAGE APARTMENTS PHASE III
RESYNDICATION PROJECT
ATTACHMENT (Y/N): YES ITEM # 05
GOVERNMENT CODE § 84308 APPLIES: YES
RECOMMENDATION:
That the Governing Board of the Anaheim Housing Authority, following a public hearing, by separate Resolutions:
1. Approving a Preliminary Award Letter and Ground Lease Option Agreement, in substantial form, for the resyndication of the Hermosa Village Phase III affordable rental housing project generally located at 1515 S. Calle Del Mar to be entered into between the Authority and Hermosa Village Phase III Housing Partners, L.P.; approving the disposition by an Option to Ground Lease the Phase III site; authorize the Executive Director to execute and administer the Option Agreement and Preliminary Award Letter on behalf of the Authority; authorize the Executive Director to enter into an Affordable Housing Agreement, a new or amended and restated Ground Lease, and related Agreements and instruments necessary to implement the Hermosa Village Phase III project, provided that such agreements do not materially increase or extend the financial assistance committed by the Authority by the Preliminary Award Letter; and making certain other findings in connection therewith; and
2. Adoption of an Inducement Resolution regarding its intention to issue tax- exempt obligations for the Hermosa Village Apartments Phase III Resyndication Project.
DISCUSSION:
On June 15, 1999, the Anaheim Housing Authority (Authority) approved the Jeffrey- Lynne Neighborhood Revitalization Plan (Plan) for the revitalization of the Jeffrey- Lynne Neighborhood generally located at 1515 S. Calle Del Mar. The Jeffrey-Lynne Preliminary Funding Award Letter for Hermosa Village Apartments Phase III Project August 12, 2025
Neighborhood was designated as a Level IV Priority Neighborhood due to over- crowding, extensive code violations, deferred maintenance, deteriorating buildings and gang violence. On July 13, 1999, the Authority approved the Affordable Housing and Neighborhood Revitalization Agreement with Anaheim Revitalization Partners, L.P. (The Related Companies of California and Southern California Housing Development Corporation) (Developer) providing for the comprehensive revitalization of the Jeffrey- Lynne Neighborhood, which was comprised of 726 apartment units distributed across 108 parcels spanning 31 acres. The Jeffrey-Lynne Neighborhood Revitalization Plan, now known as Hermosa Village Apartments Project, included the acquisition, ground leasing, and substantial rehabilitation of properties within the neighborhood. The rehabilitation of the units occurred in four separate phases:
Phase I - Referred to as the Core, the first phase was completed in January 2002, resulting in the acquisition and rehabilitation of 293 rental units. It also included the privatization of Jeffrey, Michelle, and part of Audre streets, the addition of professional on-site property management, construction of an 11,000 sq. ft. Recreation/Social Services Center, and 44,000 sq. ft. of additional living space. This phase ensured affordable rents at 60%, 50% and 45% of the median income for 55 years. In 2016, the first phase was resyndicated and was awarded 4% tax credits to substantially rehabilitate the aging units and the project was increased in size to 297 units.
Phase II - Referred to as the Perimeter, the second phase, was completed in December 2004 creating an additional 112 affordable rental units and the privatization of Lynne, Hampstead and the remainder of Audre streets. It also added an additional 15,000 sq. ft. of open space in the form of a Plaza/recreational area. Phase II was resyndicated in October 2020 and successfully secured tax credits to complete the rehabilitation of the units and make substantial enhancements to the common areas. These improvements included the addition of an aquaponics garden, centralized mailboxes, and the renovation of both the community preschool room and the community pool. Phase III – Completed in November 2006, Phase III consisted of the acquisition and rehabilitation of 76 affordable units.
Phase IV - In 2007, this final phase included the acquisition and rehabilitation of an additional 36 units.
Altogether, all four phases have added a total of 521 affordable housing units to the Hermosa Village neighborhood with long term affordability covenants.
In July 2024, the Authority received a request from the Developer to support the refinancing and resyndication of the Hermosa Village Phase III and IV Project (Project).
Proceeds from the refinancing will be used to fund substantial rehabilitation efforts aimed at improving aging units, enhance operations and supportive services, and ensure the long-term maintenance and management of the Project. The scope of work includes renovating 112 units and improving ADA accessibility, with 10% of the units upgraded to include mobility features and 4% enhanced with hearing and vision accommodations.
Additionally, the Developer is committed to upgrading outdoor community spaces by installing outdoor fitness equipment or similar amenities, along with nearby seating and improved lighting. The exterior will also be refreshed with new paint, updated landscaping and irrigation improvements, new signage, termite treatment, and enhanced Preliminary Funding Award Letter for Hermosa Village Apartments Phase III Project August 12, 2025
site security. Staff visited the housing site in February 2025 to assess the current conditions of the property, evaluate the visible wear and tear, and identify needed improvements. Based on this assessment, staff agrees that rehabilitation of the property is necessary to address wear and tear and ensure the long-term safety and habitability of the units. Rehabilitation of existing units is typically more cost-effective than new construction, which can often exceed $600,000 per unit. By investing in substantial rehabilitation, the Developer and the Authority can preserve much needed affordable housing at a significantly reduced cost. For this Project, the estimated cost to rehabilitate each unit is approximately $209,000. As noted previously, Phases 1 and 2 were resyndicated in 2016 and 2020, respectively, undergoing major upgrades to the units to bring them up to current standards. Completing the rehabilitation of the Hermosa Village Phase 3 and 4 properties will bring the entire site (phases 1 through 4) to current standards ensuring long-term habitability, safety, and quality of life for residents.
The estimated cost of the rehabilitation is approximately $23 million. Details of the rehabilitation costs are outlined in the table below:
Hermosa Village Project Approximate Cost Description
Construction/Other $16,723,853 Site improvements,
residential improvements
including kitchen and
bathroom improvements,
flooring, roof repairs,
repairs to balconies and
decks, landscaping and
lighting, improve site
security, etc.
Professional Fees $1,621,000 Architecture and
engineering.
Financing $3,751,311 Construction loan interest,
bond issuance fee,
financing fees, etc.
Temporary Relocation $1,358,000 Residents will be
temporarily relocated while
units are being
rehabilitated.
Total Cost $23,454,164
Cost Per Unit $209,412
The Authority will not be providing any new financing to the project. The Developer seeks to secure $15.2 million in 4% Low Income Housing Tax Credits through the California Tax Credit Allocation Committee (TCAC) in September 2025 and will seek a Multifamily Revenue Bonds allocation of up to $37 million from the California Debt Limit Allocation Committee (CDLAC). This is a not to exceed amount so the developer will only use the bond amount necessary to finance the project. Additionally, the Developer requests that the current Authority loan, in the amount of $18,793,383, that was originally provided in 2006 and 2007 to finance the acquisition and rehabilitation of Preliminary Funding Award Letter for Hermosa Village Apartments Phase III Project August 12, 2025
the Phase 3 and 4 properties remain in place. This is also a requirement under the CDLAC regulations in order to qualify and apply for 4% tax credits and bonds for the project. The Developer has also agreed to a $2,000,000 Ground Lease Extension Payment that will be paid to the Authority as part of the resyndication. Annual payment of the Ground Lease Extension is estimated to be $114,580. Additionally, the restructuring of the project’s financing will generate higher cash flow to the Authority.
Through the resyndication, the Authority and Developer will commit to extending the affordability period and term of the ground lease for 55 years. The Developer has requested that the Authority issue tax-exempt bonds to finance the Developer’s rehabilitation of the Project. The bonds are to be repaid from project revenues.
Accordingly, there is no risk of default to the City or Authority. Prior to issuance, the final bond documents will be brought before the Governing Board of the Housing Authority for consideration. Subject to the Authority’s approval, staff will work with the Developer to issue bonds within the next 18 months.
This project is in line with City’s Strategic Plan Goal B Enhance Livability, Strategy 2 - Develop strategies to stabilize and expand affordable, workforce, and home ownership housing options for low-income residents. This project will preserve long-term affordability and livability to enhance the quality of life for existing and future low- income households.
IMPACT ON BUDGET:
There is no impact to the Housing and Community Development Department’s FY 2025/2026 budget. All proposed assistance to the Project will be derived from the proceeds of the refinancing and resyndication.
Respectfully submitted,
Grace Ruiz-Stepter
Executive Director of
Anaheim Housing Authority
Attachments:
1. Housing Authority Resolution
2. Preliminary Funding Award Letter (Exhibit to Resolution)
3. Ground Lease Option (Exhibit A of the Preliminary Funding Award Letter)
4. Inducement Resolution