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CITY COUNCIL AGENDA REPORT
City of Anaheim
HOUSING AND COMMUNITY DEVELOPMENT
DEPARTMENT
DATE: AUGUST 12, 2025
FROM: HOUSING AND COMMUNITY DEVELOPMENT DEPARTMENT
SUBJECT: FIRST AMENDMENT TO COOPERATION AGREEMENT WITH
THE ANAHEIM HOUSING AUTHORITY FOR THE TAMPICO
MOTEL CONVERSION AT 151 S. CENPLA WAY(FORMERLY
120 S. STATE COLLEGE BOULEVARD)
ATTACHMENT (Y/N): YES ITEM # 12
GOVERNMENT CODE § 84308 APPLIES: YES
RECOMMENDATION:
That the City Council, by Motion, approve the First Amendment to Cooperation Agreement (Tampico Motel Conversion), substantially in the form attached hereto, with the Anaheim Housing Authority, for the Tampico Motel Conversion located at 151 S.
Cenpla Way (formerly 120 S. State College Boulevard) (Project), to increase the amount of funds to be transferred to the Authority, by $587,839.34 in HHAP Round 5 Youth Set- Aside funds, for the Project; authorize de minimis changes that do not substantially change the terms and conditions of the agreement, as determined by the City Attorney’s Office; and authorize the Director of Housing and Community Development to execute the agreement and related documents and to take the necessary actions to implement and administer the agreement.
DISCUSSION:
On August 13, 2024, the Governing Board of the Anaheim Housing Authority (Governing Board) approved a Preliminary Award Letter (PAL) and Cooperation Agreement for the Tampico Motel Conversion located at 151 S. Cenpla Way. These documents outlined the terms and conditions under which financial assistance from the Anaheim Housing Authority (Authority) would be provided to support the project. Center Housing Partners, LP, a California limited partnership, which is comprised of Jamboree Housing Corporation (Developer) successfully secured 4% tax credits from the California Tax Credit Allocation Committee (TCAC) and an allocation of bonds from the California Debt Limit Allocation Committee (CDLAC). On April 22, 2025, the Governing Board approved the issuance of the bonds.
Subsequent to the April 22, 2025 approval, staff and the project team identified three unforeseen issues necessitating action prior to closing of project financing: tax-related complications for the tax credit investor, loss of social services funding and real property encumbrances. Given the complex nature of tax code, CDLAC approved a 90-day extension to close in order to identify potential solutions and seek necessary approvals.
In collaboration with the Authority, the tax credit investor, RBC Community Investments (RBC), and Jamboree proposed modifications to the soft loan structure to resolve the tax issues. Staff conducted a third-party financial analysis and concluded that the proposed First Amendment to the Cooperation Agreement - Tampico Motel Conversion August 12, 2025
modifications outlined below do not materially or negatively impact the loan repayment or terms.
PAL & Cooperation Agreement Amendments
The previously approved PAL outlines key funding commitments including a 55-year ground lease, 31 Project-based Vouchers, and $6,900,000 in gap financing sourced from HOME American Rescue Plan, Cal-Optima, and HHAP Youth Set Aside funds. All Authority funds, excluding the HHAP Youth Set-Aside, were loaned to the project at a simple 3% interest rate to be repaid from residual receipts. This includes the capitalized value of the ground lease. Staff requests the authority to execute an amendment to the PAL and Cooperation Agreement to reflect the following changes:
1. Increase in Interest Rate on a Portion of Authority Loan:
The amendment adjusts the interest rate on $658,802 of the Authority Improvements Acquisition Loan from three percent (3%) simple interest to the Applicable Federal Rate (AFR) at the time of closing, currently 4.90 percent with compounding interest.
This change is necessary to meet tax credit requirements for seller-financed improvements. Maintaining the existing structure would trigger the IRS to recategorize this portion of the loan as prepaid interest and reduce the project’s eligible tax credits. These tax considerations do not directly impact the Authority but would cause potential liabilities for the tax credit investor, RBC, and Jamboree. This adjustment is financially beneficial to the Authority, as the higher interest rate will generate greater long-term interest earnings over the life of the loan, without increasing the Authority’s upfront subsidy.
2. Change in Lien Priority:
The amendment reorders the $3,768,453 Authority Rehabilitation Loan to the lowest lien priority among all other project loans. This change is necessary to prevent the loss or reduction in tax credits during the Low-Income Housing Tax Credit (LIHTC) credit period, which runs through 2037. Notably, this revision does not affect the Authority’s repayment order from project cash flow, which remains unchanged.
3. Inclusion of HHAP 5 Youth Set-Aside Funds:
The amendment allocates $587,839.34 from the Homeless Housing, Assistance and Prevention (HHAP) Round 5 Youth Set-Aside to help address an unexpected shortfall in funding for on-site social services. Jamboree originally planned to use CalAIM funds, but changes in funding availability and restrictions on their use for this population in later operational years created a gap. The additional HHAP funds, together with a commitment from Jamboree to secure other funding sources or directly cover these costs, will ensure continued delivery of tailored supportive services for the young adult residents, including case management, life skills training, and connections to employment and education.
In the event additional funding is not approved, the development will continue to move forward; however, the supportive services will be scaled back from 2 full-time employees (FTE) to 1.3 FTE. This reduction would limit the capacity to deliver First Amendment to the Cooperation Agreement - Tampico Motel Conversion August 12, 2025
consistent, trauma-informed care. Reduced staffing would impact access to case management, life skills training, crisis response, and other essential services, while increasing the risk of staff burnout and disrupting continuity of care for the young adult residents.
The amendment to the Cooperation Agreement will authorize the transfer of the HHAP 5 Youth Set-Aside funds from the City of Anaheim to the Authority for disbursement at the close of project financing.
Project financing is expected to close by mid-August. Once finalized, construction is anticipated to begin in early September 2025.
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.
IMPACT ON BUDGET:
All proposed assistance to the Project is derived from restricted funds provided by the United States Department of Housing and Urban Development (HUD) and in the Housing and Community Development Department’s budget.
Respectfully submitted,
Grace Ruiz-Stepter
Director of Housing &
Community Development
Attachment:
1. First Amendment to Cooperation Agreement