DATE: 04/15/2026
TO: Honorable Chair and Authority Board
Honorable Mayor and City Council Members
FROM: Housing and Homeless Solutions, City Manager’s Office 2026-104
REQUEST FOR CITY COUNCIL AND
CORONA HOUSING AUTHORITY ACTION
SUBJECT:
CORONA DEL REY AMENDED AGREEMENTS
EXECUTIVE SUMMARY:
This staff report asks the Corona Housing Authority and the City Council to approve the Amended and Restated Promissory Note, Second Amendment to Operation and Maintenance Agreement and Assignment of Agreement between National Community Renaissance of California, NCRC CDR LLC and the City of Corona Housing Authority as well as approval of a Subordination Agreement between JPMorgan Chase Bank, N.A. and the City of Corona Housing Authority for the Corona Del Rey affordable housing units.
RECOMMENDED ACTION:
That the City Council:
a. Approve the Amended and Restated Promissory Note between the City of Corona Housing Authority and National Community Renaissance of California, NCRC CDR LLC.
b. Approve the Second Amendment to Operation and Maintenance Agreement between the City of Corona Housing Authority and National Community Renaissance of California, NCRC CDR LLC and authorize the City Manager or his designee to execute the agreement.
c. Approve the Assignment and Assumption of Agreement between the City of Corona Housing Authority and National Community Renaissance of California, NCRC CDR LLC and authorize the City Manager or his designee to execute the agreement.
d. Approve the Subordination Agreement between the City of Corona Housing Authority and JPMorgan Chase Bank, N.A. and authorize the City Manager or his designee to execute the agreement.
That the Corona Housing Authority review, ratify, and to the extent necessary, direct that the City Council take the above actions.
BACKGROUND & HISTORY:
Overview of City’s $1.2 Million Construction Loan
In 1996, the City’s former Redevelopment Agency entered into an affordable housing development agreement with Southern California Housing Development Corporation, now known as National Community Renaissance of California (NCRC), for the acquisition and rehabilitation of Corona Del Rey. The term of affordability under the affordable housing agreement is in perpetuity.
Further, on February 4, 1998, the City’s Redevelopment Agency approved a construction loan in the amount of $1.2 million to provide gap financing to complete necessary rehabilitation repairs on Corona Del Rey. Interest on the construction loan was 15% simple interest. A total of $347,936 was disbursed from the $1.2 million construction loan to NCRC. Interest accrued to date brings the current loan balance to $1.7 million. In 2011 at the dissolution of Redevelopment, the Corona Housing Authority became the Successor Agency to the City’s former Redevelopment Agency.
Catalyst for State Pass-Through Grant Agreement for Substantial Rehabilitation Corona Del Rey was built in the mid-1960s. Due to the age of these apartments, ongoing
maintenance and repair needs have impacted the cashflow of this project. For the past several years, NCRC has been assessing short-term and long-term project needs. In January 2020, NCRC met with City staff to discuss rehabilitation and financing plans for their existing two housing developments and was seeking to partner with the City on its rehabilitation effort. Discussions between the City and NCRC included renegotiating loan
terms on both Corona Del Rey and Corona De Oro to support the long-term viability of these older affordable housing projects.
Due to proactive discussions between NCRC, Senator Cervantes (then Assemblywoman
Cervantes), and the City, on October 14, 2021, State HCD issued an award letter stating
the City of Corona was allocated $8,000,000 to renovate NCRC’s two Corona Properties:
Corona Del Rey (160 units) and Corona De Oro (72 units). On December 15, 2021, City Council adopted Resolution No. 2021-130 accepting the State funding and authorizing the City Manager to execute the pass-through grant agreement.
A total of $5,500,000 of the $8,000,000 was used to substantially rehabilitate Corona Del
Rey. The remaining $2,500,000 in State funds was used to substantially rehabilitate Corona De Oro. The $5,500,000 in State funds was combined with approximately $8.6 million in other public and private funds secured by NCRC to complete the necessary repairs on Corona Del Rey. The rehabilitation project was successfully completed for both
sites and the City partnered with NCRC, the County, and the State to celebrate the Grand
Re-Opening on June 18, 2025.
STAFF ANALYSIS
Development of Long-Term Plan Financing Plan
To ensure the ongoing success and viability of Corona Del Rey, the long-term plan was for NCRC to secure tax credit financing to pay off other construction loans and bridge loans as well as to renegotiate the City’s loan terms. These discussions have been ongoing with the City since 2020. Unfortunately, due to extreme demands for tax credits and rules favoring the production of new units over rehabilitation, NCRC was unsuccessful in securing tax credits but remained vigilant in seeking alternative funding opportunities.
In keeping with this plan, NCRC has identified alternate long-term financing and is in the process of finalizing approval for a new permanent loan from JPMorgan Chase Bank, N.A. The new permanent loan of approximately $12 million is a Freddie Mac Agency Loan originated and administered by JPMorgan Chase Bank, N.A. The proceeds of the new permanent loan will be used to pay off existing NCRC construction and bridge loans
and a small County HOME funded loan, as well as cover closing legal, title and financing
costs associated with the new loan.
Freddie Mac also requires that the Corona Housing Authority loan documents, except for
the existing Regulatory Agreement, be subordinated to the new permanent loan deed of trust, which is common in the affordable housing industry. While the new loan proceeds will pay off a small County HOME funded loan of $42,483 due in 2028, the County’s existing $5 million ARPA loan will remain on the property and be junior to the City’s $1.2 million loan.
Summary of Major Deal Points for Amended Loan Agreements The successful conversion to new permanent financing is consistent with discussions with
the City over the past several years and will result in an important milestone achievement
in the 30-year partnership between the City and NCRC to preserve Corona Del Rey in perpetuity as a reliable source of quality affordable housing for low and moderate incomes families.
The following is an overview of the major deal points associated with the amendments to the City’s agreements and other related documents that need to be approved:
Amended and Restated $1,200,000 Promissory Note
Extend maturity date from January 31, 2000, to December 31, 2078, to align with the maturity date for the Riverside County ARPA loan and establish a maturity date after the maturity of the new permanent loan from JPMorgan Chase Bank, N.A. Revise the interest rate from fifteen percent (15%) to three percent (3%) simple interest per annum to align with affordable housing industry standards Second Amendment to Operation and Maintenance Agreement To comply with Freddie Mac requirements and align closer to Affordable Housing Industry Standards, amendments to the Operation and Maintenance Agreement are required. The following provides an overview of the existing reserve accounts and proposed reserve account changes:
Existing Operations & Maintenance Agreement Accounts and Balances Capital Replacement Reserve Account $ 78,992
Operating Reserve Account $652,418
Debt Service Account $178,475
Total $909,886
Proposed Amendments to Operations & Maintenance Reserve Accounts Create Supplemental Replacement Reserve Account
Deposit approximately $830,894 upon funding of Chase Loan by transferring total balance of existing operating reserve and debt service account balances
Supplemental Replacement Reserve Account replaces the Operating Reserve and Debt Service Accounts
NCRC draw approval rights to Supplemental Replacement Reserve held by City exclusively
$820,000 required reserve threshold
NCRC required to submit annual operating budget for City approval Withdraws for unbudgeted expenses exceeding $10,000 require City approval
Capital Replacement Reserve Account
$78,992 balance to remain
Annual required deposit of $48,000 (equal to $300 per unit) NCRC draw approval rights held by Chase Bank and City NCRC required to submit annual operating budget for City approval Withdraws for unbudgeted expenses exceeding $10,000 require approval Allocation of Net Operating Income (aka Residual Receipts) Net Operating Income (NOI) defined as all income from the project remaining “after” payment of senior debt, required capital reserve account deposits, and necessary operating expenses of project such as:
Utility fees and costs not paid by tenants
Insurance
Ad Valorem taxes and assessment payments
Cost of social programs provided to residents
Compliance, monitoring, reporting
NOI Distribution
First: Up to 50% of NOI to reach account threshold shall be deposited into the Supplemental Replacement Reserve Account
Second: 50% of remaining NOI as payment to City for City Loan Third: 25% of remaining NOI to County for County Loan Fourth: 25% to NCRC to repay any owner loans for the project and/or other project related administrative expenses
Assignment of Agreement
Assign City loan documents from NCRC to NCRC CDR LLC, a newly formed Single Asset Entity (SAE) which will be a Borrower entity that does not own any real or personal property other than Corona Del Rey real and personal property related to its ownership and maintenance. This new entity will be a Single Member LLC Entity with National Community Renaissance of California as the sole member and is required by Chase Bank and Freddie Mac. SAEs are common in the affordable housing industry
Subordination Agreement with JPMorgan Chase Bank
Subordination of City loan to the new JPMorgan Chase Bank Loan which is a requirement of Chase Bank and Freddie Mac
City regulatory agreement for affordability in perpetuity will remain senior to the new JPMorgan loan
County ARPA loan will remain junior to the City loan
Planning and Housing Commission Approval
Per City policy, Corona Housing Authority projects and related loan agreements must first be presented to the Planning and Housing Commission for approval consideration. On April 6, 2026, the Planning and Housing Commission recommended that the City Council and the Corona Housing Authority approve the Corona Del Rey amended and related agreements as outlined in this agenda staff report.
FINANCIAL IMPACT:
The City’s $1.2 million loan, issued in 1998 at 15 percent simple interest, has accumulated approximately $1,383,625 in interest to date, with projections estimating a total of $1,405,371 in interest earned by the end of the fiscal year. This loan is recorded in the Corona Housing Authority Fund 291.
Extending the loan’s maturity date to December 2078 and adjusting the interest rate to 3 percent simple interest would increase total projected interest earnings to approximately $1,941,889 over the life of the loan. Under these terms, and assuming no residual receipts are applied toward principal reduction, the loan’s payoff balance in 2078 would be about $2,289,925.
If approved, the revised 3 percent interest rate would take effect on March 17, 2026, or on the date the Chase loan is funded and provided to NCRC, whichever occurs later.
ENVIRONMENTAL ANALYSIS:
This action is exempt pursuant to Section 15061(b)(3) of the Guidelines for the California Environmental Quality Act (CEQA), which states that a project is exempt from CEQA if the activity is covered by the common sense exemption that CEQA applies only to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. This action relates to amendment of loan terms and related agreements for an affordable housing project. There is no possibility approval of these agreements will have a significant effect on the environment. Therefore, no environmental analysis is required.
PREPARED BY: KAREN ROPER, HOUSING & HOMELESS SOLUTIONS MANAGER REVIEWED BY: JACOB ELLIS, CITY MANAGER
ATTACHMENTS:
1. Exhibit 1 – Amended and Restated Promissory Note
2. Exhibit 2 – Redline Amended and Restated Promissory Note
3. Exhibit 3 – Second Amendment to Operation and Maintenance Agreement
4. Exhibit 4 – Redline Second Amendment to Operation and Maintenance Agreement
5. Exhibit 5 – Assignment of Agreement
6. Exhibit 6 – Subordination Agreement with JPMorgan Chase Bank
7. Exhibit 7 – Location Map