The Award Letter pertains to the proposed St. Anselm Senior Apartments (the “Project”), an 81-unit affordable rental housing development to be located at 9473 Larson Avenue and adjacent parcels in Garden Grove’s Koreatown neighborhood. The Project will be a 100% senior project with a combination of permanent supportive housing (PSH) and affordable housing; including 21 units dedicated to chronically homeless seniors and 59 units for income- qualified seniors. The housing unit mix includes 31 studios, 37 one -bedroom units, and 13 two-bedroom units, one of which is designated as a manager’s unit. The Project includes approximately 63,750 square feet of residential and amenity space, incl uding 5,000 square feet of interior community areas and 13,000 square feet of open space. Onsite amenities and services will include case management, medical and mental health care, substance use disorder treatment, life skills training, and recreational p rogramming. The development will be subject to a 55 -year affordability covenant, ensuring long -term housing affordability for seniors at extremely low and very low-income levels.
To facilitate the Project’s financing and development, the City and the Garden Grove Housing Authority are recommending a commitment up to $2,000,000 in Permanent Local Housing Allocation (PLHA) funds and 21 project-based vouchers (PBVs), contingent on meeting certain funding and programmatic milestones, such as subsidy layering review and NEPA. The Project is being structured to meet funding eligibility criteria for the MHP Super NOFA, Low-Income Housing Tax Credit (LIHTC) program, and California Debt Limit Allocation Committee (CDLAC) bond financing. The Award Letter provides evidence of the City’s enforceable funding commitment as required by HCD, the Tax Credit Allocation Committee (TCAC), and CDLAC for the Developer’s funding applications. The Developer will assign the Award Letter and all related site control documentation to a new limited partnership entity that will serve as the legal owner of the Project. This new entity will include Domus Development LLC, Korean Community Services, Inc., and Spectrum GP LLC as general partners.
DISCUSSION
The Preliminary Award Letter formalizes the City’s commitment to support the development of the St. Anselm Senior Apartments, a deeply affordable and service -enriched housing project designed to address the housing needs of extremely low and very low-income senior residents, including chronically homeless individuals. The Developer proposes to leverage this local commitment as a critical component of its competitive applications to multiple state - level funding sources, including:
$16.9 million in State MHP funding through the 2025 Super NOFA Round 3, 4% Low -Income Housing Tax Credits from the California Tax Credit Allocation Committee (TCAC), and
Tax-exempt bond allocation from the California Debt Limit Allocation Committee (CDLAC).
The City’s assistance will be structured as a residual receipts loan of up to $2,000,000, funded by the PLHA program, as well as the commitment of 21 PBVs. These resources represent a significant local investment and demonstrate Garden Grove’s commitment to developing high-quality affordable housing solutions that prioritize its most vulnerable populations. 421
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Of the 81 total units proposed, 21 are designated as PSH units restricted to extremely low - income seniors (30% AMI), with priority given to individuals who are chronically homeless and/or eligible under the Mental Health Services Act. The remaining 59 units will be affordable to very low-income seniors at 40% and 50% AMI. The Developer will implement a reasonable referral and preference plan for the affordable units in the Project, including cooperation with the County in its implementation of the Coordinated Entry System, in the following order of reasonable preferences: (1) persons exiting from the Central Cities Navigation Center , (2) former recipients of, or exiting from Garden Grove’s tenant-based rental assistance programs, (3) persons who were previously displaced by Garden Grove, (4) persons on the Garden Grove Housing Authority’s waiting list, (5) persons who live, work or have been hired to work in Garden Grove, which coul d include persons from disadvantaged or low-income communities as defined by HCD, (6) other persons with ties to Garden Grove who qualify as senior, and (7) other persons without ties to Garden Grove who qualify as senior.
The development will be built on a site comprised of four contiguous parcels totaling approximately 1.25 acres, located within the Koreatown neighborhood of Garden Grove. This location is in close proximity to transit, services, and community amenities, making it ideal for senior housing . The project also takes advantage of “by -right” approval under state supportive housing laws, and is not subject to CEQA per Government Code Section 65651.
The proposed unit mix and supportive services are aligned with local and regional priorities to com bat homelessness, expand affordable housing, and serve aging populations with dignity. A robust service plan, led by Korean Community Services, will ensure wraparound services and ongoing support for residents’ physical and mental well-being, financial stability, and quality of life.
Approval of the Award Letter positions the City and Housing Authority to execute an Affordable Housing Agreement (AHA) upon successful award of outside funding, and enables the Developer to proceed with critical next steps, including finalizing project design, securing additional financing, and preparing for construction.
FINANCIAL IMPACT
Approval of the Preliminary Award Letter includes a Garden Grove Loan of: (1) a subsidy up to $2,000,000 funded from PLHA funds, and (2) twenty-one (21) Project Based Vouchers.
Funds are available presently from the PLHA previously allocated to the Housing Authority.
The approval of the Preliminary Award Letter will commit such funds pursuant to applicable laws and regulations.
RECOMMENDATION
It is recommended that the City Council and Housing Authority:
Approve the Preliminary Award Letter and authorize the City Manager/Director to make minor modifications as needed, and sign the Award Letter on behalf of the City and Housing Authority; and
Authorize the City Manager/Director on behalf of the City and the Housing Authority to execute the Affordable Housing Agreement, and any pertinent related documents, 422
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including all exhibits, instruments, implementing agreements (including assignment agreements), and to make minor modifications as needed on behalf of the City and Housing Authority.
ATTACHMENT(S)
1. Preliminary Award Letter
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April 8, 2025
Maurice Ramirez, President
DOMUS Development LLC
4601 Wilshire Blvd., Ste. 235
Los Angeles, California 90010
Ellen Ahn, JD, MSW, Executive Director
Korean Community Services, Inc.
451 W. Lincoln Ave., Ste. 100
Garden Grove, California 92805
Re: Preliminary Award Letter Issued by the City of Garden Grove and Garden Grove Housing Authority to DOMUS Development LLC and Korean Community Services, Inc. to Provide an HCD/MHP Enforceable Funding Commitment and TCAC and CDLAC Enforceable Financial Commitment of Garden Grove Assistance for Construction, Development, and Long -Term Operation of the 81-Unit St. Anselm Senior Affordable Housing Development at 9473 Larson Aven ue, Garden Grove, CA 92844 Pursuant to State HCD, TCAC, and CDLAC Requirements
Dear Mr. Ramirez and Ms. Ahn:
This Preliminary Award Letter (“Award Letter”) is issued by the City of Garden Grove, a California municipal corporation (“City”) and the Garden Grove Housing Authority, a public body corporate and politic (“Authority”) to Domus Development LLC and Korean Community Services, Inc. (together “ Developer”) and relates to Developer’s intended applications for financial assistance to: (1) the State of California, Housing and Community Development Department (“HCD”) for an award of MHP Funds under the California Multifamily Housing Program in the 2025 Multifamily Finance Super NOFA Round 3 (“MHP”)1, (2) the California Tax Credit Allocation Committee (“TCAC”) pursuant
1 MHP is administered by HCD to provide low -interest, long term deferred -payment loans for new construction, rehabilitation, and preservation of permanent and transitional affordable rental housing pursuant to HSC §50675, et seq.; the implementing Regulations at California Code of Regulations (“CCR”), Title 25, Division 1, Chapter 7, Subchapter 19, §8300, et seq., https://www.hcd.ca.gov/grants-funding/already-have-funding/uniform-multifamily- 424
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to the Tax Credit Rules 2 for a reservation of 4% Tax Credits in the 2026 Round 1 application process, and (3) the California Debt Limit Allocation Committee (“CDLAC”) under the Qualified Residential Rental Project (“QRRP”) Program pursuant to the CDLAC Regulations3 for an allocation of and authority for issuance by the Housing Authority of multi-family revenue housing bonds (“Bonds”) in the 2026 Round 1 application process.
After consideration at a duly noticed joint public meeting on April 8, 2025, the Garden Grove City Counc il and the Housing Authority Commission approved the issuance of this Award Letter and authorized the City Manager, who also serves as the Authority Director, (together referred to as the “Director”) to execute and implement this Award Letter on behalf of the City and Authority (together, “Garden Grove”).
This Award Letter sets forth the basic terms between the Parties to fulfill the requirements for the City and Authority to provide an enforceable commitment of financial assistance for construction, development, and operation of a new Senior4 affordable housing project as required by (i) HCD for an award of MHP funds, (ii) TCAC for a reservation of 4% Tax Credits, and (iii) CDLAC for an allocation to issue the Bonds . Under the respective program requirements of HCD, TCAC, and CDLAC, Developer, as applicant, must evidence certain funding and financial commitments that, as to Garden Grove, are intended to be evidenced by this Award Letter as further described herein.
In December 2023, t he City of Garden Grove issued a request for proposals for development of long-term affordable housing in Garden Grove. Developer submitted a proposal in January 2024, which proposal was selected and continued negotiations between the parties has resulted in this Award Letter.
The “Project” that is the subject of this Award Letter is an eighty-one (81)-unit Senior affordable rental housing complex, with twenty-one (21) units (of 81) covenanted for tenancy by chronically homeless individuals.5 The other fifty-nine ( 59) units shall be
regulations/docs/Uniform-Multifamily-Regulations-2017.pdf; and 2025 MHP Super NOFA Round 3 Guidelines, https://www.hcd.ca.gov/sites/default/files/docs/grants-and-funding/supernofa/2025-mhp-guidelines.pdf. 2 “Tax Credits” and “Tax Credit Rules” shall mean and refer to Section 42 of the Internal Revenue Code and California Revenue and Taxation Code §§17057.5, 17058, 23610.4 and 23610.5 and California Health and Safety Code (“HSC”) §50199, et seq., as applicable, as the foregoing may be amended from time to time, and the rules and regulations implementing the f oregoing at 4 CCR §10300, et seq ., https://www.treasurer.ca.gov/ctcac/programreg/regulations_committee.pdf. 3 CDLAC implements Section 1301, Federal Tax Reform Act of 1986 and Section 146(d) Internal Revenue Code, as amended by the Community Renewal Tax Relief Act of 2000; California Government Code §8869.80, et seq. and implementing regulations 4 CCR §5000, et seq., https://www.treasurer.ca.gov/cdlac/regulations.asp. 4 The term “Senior” as used herein means the definition in California Civil Code Section s 51.3 and 51.11 ”:
“ ‘Qualifying resident’ or ‘senior citizen’ means a person 62 years of age or older, or 55 years of age or older in a ‘senior citizen housing development.’“; and, as to the 21 PBV units the federal definition uses the term “elderly” as defined in 24 CFR 5.403: “Elderly” means “…family whose head (including co-head), spouse, or sole member is a person who is at least 62 years of age. It may include two or more persons who are at least 62 years of age living together, or one or more persons who are at least 62 years of age living with one or more live-in aides.” 5 For this Project, a “chronically homeless” Senior or Elderly person means one who has experienced homelessness for at least a year, or repeatedly, while struggling with a disabling condition such as a serious mental illness, substance use disorder, or physical disability. In this regard and for this Project, the term “Homelessness” means a Senior of Elderly person “living in a place not meant for human habitation, in emergency shelter, in transitional 425
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occupied by income -qualified Senior persons as head of household . As more fully described herein, Developer shall utilize the waterfall of preferences to select eligible Senior tenants to occupy the Housing Units, including homeless6 persons.
The Project will provide a mix of permanent suppor tive housing (“PSH”) for chronically homeless Senior Extremely Low Income households (“ELI”, at or below 30% Area Median Income (“AMI”)) and affordable housing for Senior Very Low Income households at or below 40% AMI as to certain units and 50% AMI as to certain units . The 21 PSH units (approximately 25% of 81 units) are targeted for occupancy by ELI 30% AMI households, 19 units or 24% of units for occupancy by 40% AMI households, and 40 units or 50% of units for occupancy by 50% AMI Very Low Income households. The Housing Unit type and mix consists of 31 Studios, 37 one-bedroom units, and 13 two-bedroom units, one 2- bedroom unit is the designated Manager Unit for occupancy by onsite property manager.
The Project’s gross building area is 63,750 square feet of residential and amenity uses.
This includes 5,000 SF of interior community space for community rooms and private offices for case m anagement, medical care, mental health care, SUD treatment, financial/benefits assistance, life skills, legal assistance and recrea tional activities and classes programmed by the social services provider. The Project provides 13,000 SF of open space area with a large entry courtyard, patios and greenspaces on the ground floor and roof deck patio. A central laundry facility is conveniently located on the ground floor adjacent to the elevators. All units will have energy efficient appliances, air condi tioning and the 21 ELI 30% units will be furnished.
The Project is located at 9473 Larson Avenue, 9471 Larson Avenue, 13091 Galway Street, 9710 Belfast Drive, Garden Grove, California 92844 (APN s: 098-222-13, 098-222-12, 098 -222-22, & 098 -206-04) ( together, “Site”). The four (4) parcels comprising the Site are part of the real property known as the St. Anselm Episcopal Church in Garden Grove7 at the northwest corner of the intersection of Galway Street and Larson Avenue, located in the Koreatown neighborhood , just 400 feet south of Garden Grove Boulevard between Brookhurst Street and Magnolia Street.
The “Garden Grove Assistance” committed herein, subject to the Award Letter Condition Precedent, evidences both (i) an “Enforceable Funding C ommitment”, specific ally a “[d]eferred-payment financing, residual receipts payment financing, and grants from public agenc[y]” in compliance with the HCD MHP Regulations and Guidelines, and (ii) an “enforceable financing commitment” under the Tax Credit Rules; both (i) and (ii) required for Developer’s application to HCD for an award of HCD/MHP Funds, by the Tax
housing, or exiting an institution where a person temporarily resided. Homelessness is subcategorized and defined by different levels based on timed conditions in an unstable living arrangement.” 6 The term “homeless” (versus chronically homeless) means a person who lacks a fixed, regular, and adequate nighttime residence, meaning they live in a public or private place not meant for habitation, a shelter, or transitional housing, or are exiting an institution after residing there for 90 days or less. 7 St. Anselm Episcopal Church is a parish of The Rector, Wardens and Vestrymen of St. Anselm of Canterbury Parish in Garden Grove, California, a California nonprofit religious corporation. 426
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Credit Rules for application to TCAC for a re servation of Tax Credits, and the CDLAC Regulations for an allocation to issue the Bonds.
Developer’s application to HCD, TCAC and CDLAC also requires evidence of “site control” of the Site, which Developer will evidence by (i) that certain Option to Lease dated as of March 21, 2023 entered into between The Protestant Episcopal Church in the Diocese of Los Angeles, a California nonprofit religious corporation, as ground lessor (“Church”), and Domus, as ground lessee, as to certain real property consisting of three separate parcels of a triangular shape commonly known as 9710 Belfast Drive, 13091 Galway Street and 9471 Larson Avenue (APN: 098-222-12) and legally described therein as the “Leasehold Parcels” that are part of the full Site (“Diocese Lease”); and (ii) that certain Option to Lease dated as of February 1, 2023 between KCS and Domus for the other part of the full Site that includes certain real property known as APN 098-222-13 with a common address of 9473 Larsen Avenue, which property is directly connected and adjacent to (i) above (“KCS Lease”).
Therefore, by this Award Letter, Garden Grove commits to Developer: (1) to provide the “Garden Grove Loan” of up to Two Million Dollars ($2,000,000) sourced from the Permanent Local Housing Allocation Program funds (“PLHA”)8 and ( 2) to allocate twenty-one (21) project-based housing vouchers (“PBVs”)9, expressly subject to Authority and City’s compliance with HUD requirements to convert twenty-one (21) tenant-based portable vouchers into PBVs.10
8 PLHA funds are City funds allocated by State HCD for housing -related projects and programs that assist in addressing the unmet housing needs of their local communities. See: https://www.hcd.ca.gov/grants-and- funding/programs-active/permanent-local-housing-allocation; and https://www.hcd.ca.gov/grants-funding/active- funding/docs/PLHA-Final-Guidelines-11-19.pdf.
9 “Section 8”, “Section 8 Laws”, and “Section 8 Federal Program Limitations” shall mean the Section 8 Housing Choice Vouchers Program, 24 C.F.R. part 882 (Rental Certificate Program), 24 CFR Part 983, rental vouchers under 24 C.F.R. part 887 (Rental Voucher Program) as such now exist and as may hereafter be amended, or other project-based and/or tenant-based rental assistance programs issued or otherwise administered by Garden Grove under the Section 8 Laws. The Section 8 Laws include and mean the Housing Choice Voucher Program, 42 U.S.C. 1437f and 3535(d), and the implementing regulations in the Code of Federal Regulations (“CFR”), Parts 982 and 983 and Section 8(o)(13) of the U.S. Housing Act of 1937, 42 U.S.C. Section 1437(f)(o)(13), and the implementing regulations at 24 CFR Part 983, and HR 3221, enacted July 30, 2008, under the Housing Opportunity through Modernization Act of 2016, Public Law 114–201, and implementing regulations and notices (together, “HOTMA”), and all other federal, state, and/or local laws, regulations, rules, Executive Orders, and other governmental or legal requirements relating or applicable to the federal Section 8 housing assistance program, including housing choice “Project Based Vouchers” (“PBVs”).
10 In this regard, on March 13, 2025, a HUD representative emailed Garden Grove Housing Authority Manager stating the following: “With publication of the final rule, Housing Opportunity Through Modernization Act of 2016-Housing Choice Voucher (HCV) and Project -Based Voucher Implementation; Additional Streamlining Changes, effective June 6, 2024, HUD PIH’s Office of Field Operations (OFO) will no longer review and approve PHA notifications of intent to project-base vouchers. PHAs are still required to notify HUD of their intent to project -base vouchers in accordance with 24 CFR 983.5(c). Notifications should be sent to this [email protected] mailbox until further notice, with a copy to the local HUD PIH Field Office. OFO will not respond beyond this autoreply, as OFO approval is no longer necessary.” This email was in response to Garden Grove’s action and notification to HUD and the community of its intention to convert a total of 21 tenant-based vouchers into project-based voucher (for the 21 PSH units). See: 24 CFR 983.6 and related regulations cited in 24 C FR 983.6 for the program cap requirements. Please also see 24 CFR 983 Subpart B for new requirements on selection of PBV proposals and projects.
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The Garden Grove Assistance is further described herein and in the implementing Affordable Housing Agreement (“AHA”) and is subject to all terms and conditions herein and therein.
1. Term of Award Letter. This Award Letter shall expire automatically on the earliest to occur of (i) June 30, 2026, or (ii) Developer’s failure to satisfy each or any component of the Award Letter Condition Precedent ( i.e., receive an award of HCD/MHP funding, TCAC reservation of 4% Tax Credits, or CDLAC allocation to issue Bonds) as further describe in Section 4. below) (“Letter Expiration Date”), at which time the terms set forth herein shall be null and void, unless prior to the Letter Expiration Da te this Award Letter is amended and extended in writing by the Director, which decision to amend and extend, or not, is and shall remain in the Director’s sole and absolute discretion.
2. Assignment by to New Limited Partnership Entity as Developer.
2.1 Developer Obligation to Assign Award Letter to Single Entity Limited Partnership. In connection with implementation of this Award Letter, the AHA, and Developer’s applications to HCD, TCAC and CDLAC for funding approvals, Developer must form and assign this Award Letter and the Options to a new limited partnership entity. Developer has informed Garden Grove that the new entity will be a California limited partnership entity, as required by the Tax Credit Rules and CDLAC , of which DOMUS Development LLC, a California limited liability company (“Domus”), or its wholly owned subsidiary or affiliate, and Korean Community Services, Inc., a California nonprofit public benefit corporation or its wholly owned subsidiary or Affiliate (“KCS”), and Spectrum GP LLC, a Californi a limited liability company (“Spectrum”), as co-general partners (“Non--Profits”), and Domus also as the initial limited partner. (a) Developer shall cause and complete the assignment of this Award Letter and the Options to the new limited partnership entity (“New LP”) as a condition precedent in connection with Developer submitting first its application to HCD (if applicable under HCD/MHP regulations), and to TCAC and CDLAC for the funding sources described herein.
(b) Developer shall provide the assignment and assumption agreement to Garden Grove and its legal counsel for review prior to execution of such instrument.
Once executed and recorded in the Official Records, the assignee Developer entity shall submit evidence of the formation of the new entity as filed with the Secretary of State; and thereafter, wherever the term Developer is used herein, it shall mean the legal limited partnership entity name of the New LP, of which Non-Profits (or their wholly owned subsidiary or Affiliate) are co-managing general partners.
3. Affordable Housing Agreement . Developer has applied to Garden Grove for issuance of this Award Letter, and subject to the satisfaction of the Award Letter Condition Precedent (defined below) and certain additional conditions precedent described herein, desires to implement this Award Letter and , after the Award Letter Condition Precedent is satisfied, the AHA. The complete terms, conditions, and provisions of the AHA will be negotiated and entered into between Garden Grove and Developer at a time concurrent 428
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with (a) the closing of Developer’s construction financing, (b) entering into a limited partnership agreement between Developer and its tax credit equity investor, and (c) related actions to commence construction of the P roject (together, “Closing of Financing”).
3.1 Project Unit Mix . If the Award Letter Condition Precedent is satisfied by Developer, then under the AHA, Developer will construct, operate, manage, and maintain on the Site a new 81-unit apartment complex consisting of a mix of PSH and affordable housing units for qualified Senior households at various income levels of affordability at an Affordable Rent.
(a) The 21 PSH units shall be restricted for occupancy by ELI 30% AMI households; 19 units shall be restricted for occupancy by Very Low Income 40% AMI households; and, 40 units shall be restricted for occupancy by Very Low Income 50% AMI -households. As noted above, the unit type and mix includes: 31 Studios, 37 one-bedroom units, and 13 two -bedroom units, including one (1) 2-bedroom unit designated as the Manager Unit.
(i) Reference is made to Exhibit A, attached and fully
incorporated, which is a table with unit type and income levels for all 81 Housing Units. (b) The t wenty-one (21) ELI 30% AMI units shall be covenanted for occupancy by Seniors who at initial occupancy were chronically homeless. (c) The remaining fifty -nine (59) Housing Units (excluding the one (1) unrestricted Manager Unit) shall be covenanted for occupancy by income-qualified Seniors.
(d) Under this Award Letter and the AHA:
(i) As to the 59 non -PSH units, the terms “Senior”,
“Senior Citizen” and “Senior Households” shall mean a household where at least one (1) person in residence is fifty-five (55) years of age or older and who intends to reside in a Housing Unit as his or her primary residence on a permanent basis, and any other person residing in the unit is a “qualified permanent resident” or a “permitted health care resident” as provided in California Civil Code Section 51, et seq., or in the Federal Fai r Housing Act, 42 U.S.C. Section 3607, and any other applicable federal, state or local laws and regulations governing the use and occupancy of the Project. The Project shall meet all requirements of Civil Code Section 51.3, et seq. and 51.11 for a “senior citizen housing development”.
(ii) As to the 21 PSH Units the term Elderly is as defined in 24 CFR 5.403 meaning “…family whose head (including co -head), spouse, or sole member is a person who is at least 62 years of age. It may include two or more persons who are at least 62 years of age living together, or one or more persons who are at least 62 years of age living with one or more live-in aides.” (e) “Senior Housing Units” and “Housing Units” shall mean eighty (80) Housing Units (excluding the one (1) Manager U nit) in the Project, which shall be 429
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restricted as to occupancy by income -qualified Extremely Low and Very Low Senior Households at an Affordable Rent.
3.2 Project Buildings and Amenities . The Project’s gross building area is 63,750 square feet of residential and amenity uses. This includes 5,000 SF of interior community space for community rooms and private offices that are intended for use to provide supportive services that will include case management and related services for the 21 ELI 30% units, and other supportive services that may include medical care, mental health care, SUD treatment, financial/benefits assistance, life skills, legal assistance and recreational activities and class es programmed by the social services provider. The Project provides 13,000 SF of open space area with a large entry courtyard, patios and greenspaces on the ground floor and roof deck patio. A central laundry facility is conveniently located on the ground floor adjacent to the elevators. All units will have energy efficient appliances, air conditioning and all ELI 30% AMI units will be furnished because as a prospective tenant and prior to initial occupancy such tenant qualified as chronically homeless.
4. Award Letter Condition Precedent. Developer agrees to prepare and submit a series of applications during FY 202 5-2026 for the funding in the amounts more particularly itemized in the February 24, 2025 Proforma. In this regard, Developer shall apply for and use diligent good faith efforts to pursue the HCD/MHP, 4% Tax Credits and Bond funding sources for the Project described in Section 4.1. The applications for and award of the Section 4.1 (a), (b), and (c) funding sources described below shall constitute the “Award Letter Condition Precedent” referred to herein, and shall be satisfied in fiscal year (“FY”) 2025-2026.
4.1 2025 Application for HCD/MHP Funding; Commitment of 21 PBVs; Application(s) to TCAC for Reservation of 4% Tax Credits in the 2025 Third Round and, if applicable, 2026 First Round; and, Application(s) to CDLAC for Allocation to Issue Bonds in 2025 QRRP Round 3, and if applicable, 2026 Round 1. (a) Developer shall apply for and obtain HCD/MHP funding pursuant to the 202 5 Round 3 Multifamily Finance Super Notice of Funding Availability (“ 2025 NOFA”) ( https://www.hcd.ca.gov/grants-and-funding/supernofa/final-program- guidelines) for an award of $16,907,455.00 which application shall be submitted to HCD by April 15, 2025.
(b) A reservation of 4% federal Tax Credits awarded by TCAC to Developer in the 2025 Third Round and, if applicable, 2026 First Round application cycles, which reservation and funding shall be paired with the HCD/MHP Funding described in 4.1(a) above.
(c) An allocation from CDLAC to issue the Bonds as awarded in the 2025 Round 3, or if applicable, 2026 Round 1 application cycles, which allocation and funding shall be paired with the HCD/MHP Funding and Tax Credit funding described in
4.1(a) and (b) above, which allocation and proceeds of the Bonds shall be paired with the HCD/MHP Funding and Tax Credit equity investment funding. 430
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4.2 Section 8 Laws. Authority agrees to comply with Section 8 Laws and other applicable HUD requirements to evidence HUD approval of the Authority’s conversion of twenty-one (21) tenant -based portable vouchers into 21 PBVs as part of the Garden Grove Assistance hereunder.
(i) In this regard, prior to the Date of Award Letter, the Authority commenced proceedings, including soliciting citizen participation, in accordance with federal regulations cited in footnotes 9 and 10 herein,) in administration of the Federal Housing Choice Voucher program for the selection of Developer’s PBV proposal to develop the Project that will include an allocation and award of twenty -one (21) PBVs as a part of the Garden Grove Assistance hereunder. This selection is subject to completion of the subsi dy layering review and a favorable environmental review under NEPA, and Developer acknowledges that such allocation to the Project may be rejected based on negative results of the reviews, if such were to occur. (A) Notwithstanding Garden Grove’s commitment of the 21 PBVs, such component of the Garden Grove Assistance is expressly subject to HUD requirements, including applicable regulations, rules, notices and other action, if any, existing or as hereafter amended, including HUD authority to reduce, eliminate, modify, or even terminate the Federal Housing Choice Voucher program.
4.3 Additional Secured Funding Sources. Developer has secured and shall include in the sources and uses for funding the Project on the Site the following:
(a) Orange County Housing Finance T rust (“OCHFT”) as sourced from Mental Health Services Act funds through a residual receipts loan of $2,579,220 as awarded to Domus on May 17, 2023.
(b) $2,500,000 awarded in April 2023 to KCS by the Orange County Housing Authority, a public body corporate and politic, which funds are sourced from and through CalOptima Health, a California public agency (“CalOptima”). KCS, as Managing General Partner of the Developer limited partnership, will provide Developer a residual receipts loan that shall close concurrent with the Closing of Financing (“KCS Loan”). (i) CalOptima was founded by the community as a County
Organized Health System that offers health insurance programs for low-income children, adults, Seniors and people with disabilities. CalOptima has an ongoing c ommitment to Orange County's vulnerable population of people experiencing homelessness, and operates a grant program to facilitate and accelerate the creation of affordable and permanent supportive housing units, including in Garden Grove.
4.4 Additional Other Funding Sources. Developer may seek and apply for additional sources of funding for the development and operation of the Project; this may include without limitation grants, loans, and other funding by or from governmental or non-governmental entities fo r development and operation of permanent supportive housing and programs to address homelessness, in particular homeless Seniors, that might include by way of example only public and private corporations such as Kaiser Permanente, Disneyland Resort, Samuel i Foundation, etc. If and to the extent Developer secures commitment(s) from such other and additional affordable housing 431
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programs, then such award(s) and amount(s) therefor shall be subject to a supplemental Financial Gap Analysis to determine if the Garden Grove Assistance amount will be adjusted, if at all. The award(s) described in this Section 4.3 may require, in the discretion and decision of the Director, an amendment of this Award Letter to evidence the terms and conditions related thereto.
4.5 Encumbrance and Lien Order. Based on the known funding sources to date, the lien priority of the monetary loans is listed below, provided however in all events the City Covenants Agreement, Density Bonus Agreement, and HCD Regulatory Agreement shall be and remain senior and nonsubordinate to all monetary liens for the Affordability Period:
(a) Primary loans for construction and permanent financing; (b) Garden Grove Loan;
(c) OCHFT loan;
(d) HCD/MHP loan; and
(e) KCS Loan (CalOptima funds through County)
5. Land Use Entitlement. As of the date of this Award Letter, the land use approvals (“Entitlement”) for the Project are ministerial and “by right” under California Government Code Sections 65650 to 65656, in particular Section 65651, as this is a development for supportive housing and meets the statutory requirements therein. Further, the Project is not a “project” under the California Environmental Quality Act, Public Resources Code, Division 13, Section 21000, et seq. and implementing guidelines therefor, as stated in Section 65651(b)(2).
5.1 Developer Site Plan Application . As a part of the Developer’s land use entitlement to develop the Project, Developer agrees to and shall prepare, submit , and make application to the City of the following:
(a) Architectural plan set (site plan, floor plans, elevations, and Tentative Parcel Map per Land Use Application Appendix A);
(b) Land Use Permit Application w/Letter of Authorization; (c) Density Bonus Application per Government Code Section 65915, et seq. and Garden Grove Municipal Code Section 9.60.040, et seq. (together, “DBL”); (d) Remit application fees of $2,773 ( that includes $600 Director Review, plus $2,138 for Parcel Map, plus $35 Record Retention); (e) Orange County Fire Authority Service Request Form, including $572 OCFA PR105 review fee;
(f) Sewer Capacity review;
(g) Preliminary Title Report with hyperlinks for the parcels that comprise the Site; and
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(h) If applicable, a replacement unit review shall be undertaken to determine if there are existing dwelling units on the Site, Developer shall provide supporting documentation evidencing the number of dwelling units, number of bedrooms in each unit to be demolished, income level of tenant occupants over the past five (5) years.
(i) In this regard, Developer acknowledges and agrees to comply with the Housing Crisis Act of 2019, as amended, (California Government Code Section 66300, et seq.), that prohibits the approval of any proposed housing development project on a site that will require demolition of existing dwelling units or occupied or vacant “protected units” unless the project replaces those units. Additionally, such law requires new housing development projects to provide at least as many residential dwelling units that exist on the site within the past five (5) years prior to the submission of the project application. Notwithstanding the preceding sentence, this Project qualifies for the exemption in Government Code Section 66300.6(b)( 4)(D)(ii) that such replacement obligation does not apply to “…a housing development in which 100 percent of the units, exclusive of a manager’s unit or units, are reserved for lower income households[;]” however, the tenant protection and relocation requirements of Government Code Section 66300.6(b)(3)(4) and supportive services requirements of Government Code Section 65652 do apply to development of the Project.
5.2 Density Bonus. In further clarification of Section 5.1(c) above, Developer is making application for a density bonus and when approved, Developer shall enter into (a) Density Bonus Agreement required by the DBL, which shall be recorded in the Official Records, County of Orange, State of California (“Official Records”) as a senior nonsubordinate encumbrance in pari passu to the City Covenants Agreement described and required by this Award Letter and the AHA.
6. Garden Grove Assistance : Commitment of PBVs and Garden Grove Loan; Garden Grove Loan and PBVs under AHA.
6.1 Project-Based Housing Choice Vouchers. Subject to Section 4.2 above and satisfaction of the Award Letter Condition Precedent, as a component of the Garden Grove Assistance, the Authority, as a participating jurisdiction, public housing authority, and direct recipient of HUD programs and funding, agrees to provide to Developer for operation of the Project twenty-one (21) Section 8 PBVs under and in compl iance with Section 8 Laws. The Authority and Developer shall enter into an Agreement to Enter into a Housing Assistance Payment Contract (“AHAP”) with respect to the PBVs and thereafter a Housing Assistance Payment Contract (“HAP”) for a term of fifteen (15) years with respect to the provision of the PBVs to the Project pursuant to the requirements of the AHAP.
(a) In qualification and clarification of the AHAP and HAP the commitment to award the 21 PBVs is subject to the express condition that in the event of an award, each and any extension, renewal, replacement and/or substitution, if at all, of one or more of the Authority -based vouchers each determination therefor shall be and remain in the sole and absolute discretion of the Authority and expressly subject to the Section 8 Laws and discretion therein vested with the Authority. 433
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6.2 Garden Grove Loan . Subject to the conditions described herein, the original principal amount of the Garden Grove Loan will be up to Two Million Dollars ($2,000,000.00), which will be evidenced by the Garden Grove Loan Note and secured by the Garden Grove Loan Deed of Trust. The Garden Grove Loan is a part of the financing for, and to facilitate, the planning, design, construction, completion, operation, management and mainte nance of the Project for not less than the 55 -year Affordability Period described herein and hereafter in the AHA, subject to satisfaction of the Award Letter Condition Precedent. The Garden Grove Loan Amount of up to $2,000,000 is hereby committed to Deve loper for implementation of the Project subject to satisfaction of the Award Letter Condition Precedent and the other terms and conditions of this Award Letter. The Garden Grove Loan Amount was evaluated in a Financial Gap Analysis, and such amount is subject additional review after all sources and uses and an updated proforma are received after Developer receives an award of HCD/MHP funds.
Further the Garden Grove Loan Amount and all other funding sources are subject to a subsidy layering analysis that sha ll occur prior to Closing of Financing. In this regard, Garden Grove will evaluate and establish more specifically in the AHA the terms and conditions of the Garden Grove Loan, the Garden Grove Note, the Garden Grove Deed of Trust, including its subordinat e lien position, and other implementing instruments, which will take into consideration all sources of financing, in particular governmental funding and the applicable program requirements therefor. (a) Garden Grove Loan Repaid from Residual Receipts . The Gar den Grove Loan will be a residual receipts loan in a lien position subordinate to the deed of trust securing the Developer’s loan obtained for construction financing and the loan take-out permanent financing (each a “Primary Loan”), and, if required by HCD/MHP Regulations and Guidelines, subordinate to the deed of trust securing the HCD/MHP Loan issued by HCD for the award of HCD/MHP Funds, all as will be more fully set forth in the AHA, but senior to the KCS Loan.
(i) Allocation of Shares of Residual Receipts . From Residual Receipts: (A) Garden Grove shall receive fifty percent (50%) share of Residual Receipts; (B) OCHFT will receive a percentage share of Residual Receipts toward repayment of the OCHFT Loan ; (C) KCS will receive a percentage share of Residual Receipts in repayment of the KCS Loan and payment of ground rent under the KCS Lease, (D) the Diocese will receive a percentage share of Residual Receipts toward payment of base ground lease rent and capitalized lease payment under the Diocese Lease, and (E) Developer shall retain the remaining percentage, if any, of Residual Receipts, but only if residual receipts remain after payment of KCS ground lease rent and Diocese base ground rent and capitalized lease payment.
(A) Notwithstanding subparagraph (i) above , if HCD or
OCHFT or other governmental funding source (s) require an allocation of Residual Receipts as between and/or among Garden Grove, Developer, and other governmental entity(ies), if any, the split thereof shall be established after Developer satisfi es the Award Letter Condition Precedent and after the Financial Gap Analysis described above, provided however the percentage allocations between or among the governmental 434
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funding entities shall be established in a fair, reasonable manner and in compliance with applicable legal requirements.
(ii) The term “Residual Receipts” will be fully defined in the AHA, but generally is defined as Project annual revenue less the sum of defined and eligible:
(1) operating expenses; (2) debt service on the Primary Loan, (3) required operating and capital reserve deposits, (4) repayment of permitted operating, development, or capital loans, if any, (5) property management fee, (6) eligible partnership related fees including an asset management fee, partnership management fee, and (7) unpaid Deferred Developer Fee.
7. Compliance with Law; Statutory Requirements. Developer acknowledges, and the AHA will affirm that (a) the City is subject to all PLHA statutory and regulatory requirements, including Health and Safety Code (“HSC”) Section 50470, et seq. and implementing HCD PLHA Guidelines (referenced in footnote 5) and (b) the Housing Authority also serves as the housing successor under the Dissolution Law, HSC Section 34170, et seq. as amen ded by Senate Bill 341, and the Housing Authorities Law, HSC Section 34200, et seq. (“HAL”). Therefore, this Award Letter, and then the AHA, and all other implementing documents and instruments are and shall remain subject to the applicable requirements of , and Developer covenants to comply with, all applicable requirements of: (i) PLHA laws, (ii) HAL, (iii) HSC Section 33334.2, et seq. as amended by SB 341, (i v) Dissolution Law, (v) Environmental Laws (as defined in AHA), (vi) Section 8 Law s, (vii) Prevailing Wage Laws as defined in Section 7.1 below, (viii) Build America Buy America Act, (ix) Section 3 of HUD Act of 1968, 12 U.S.C. 1701u, and implementing regulations at 24 CFR Part 75 , and ( x) all other applicable federal, state, and local laws and regulations.
7.1 Prevailing Wage Laws; Labor Compliance. Based on the Garden Grove Assistance, in particular HCD/MHP Funding and the allocation of 21 PBVs, the Project is subject to and Developer shall comply with California Labor Code Section 1720, et seq., and all federal labor laws, including without limitation Davis-Bacon, and related prevailing wage, labor, contracting, and contractor requirements (together, “Prevailing Wage Laws”). Under the AHA Developer shall assume all responsibility, liability, oblig ation for payment and will indemnify, hold harmless, and pay for all claims, suits, and liabilities affecting Authority (and City and their Indemnitees) relating to Prevailing Wage Laws as applicable to the Project, to Developer, its General Contractor and all Subcontractors. As between state and federal Prevailing Wage Laws, the most restrictive shall apply. Further, the Project may be subject to a negotiated “Project Labor Agreement” that may be entered into between or among the Developer and one or more building trades. (a) As of the Date of Award Letter, the HCD/MHP Regulations and Guidelines provide that funds awarded are subject to State prevailing wage law, Labor Code Section 1720, et seq ., and require the payment of prevailing wages unless the Project meets one of the exceptions of Labor Code 1720(c) as determined by the State Department of Industrial Relations (“DIR”).
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(b) Under federal Davis -Bacon law and Section 8 Law, the Authority’s allocation of 21 PBVs to the Project triggers compliance with Prevailing Wage Laws.
7.2 Receipt of Subsidy Layering Review Approval from TCAC. The Project and all sources of funding of the Project are subject to subsidy layering review (“SLR”) under applicable federal and state laws to ensure that excessive public assistance is not used when combining public assistance from federal, state, or local agencies including through HCD/MHP funding and/or Tax Credits. Pursuant to federal and state notices, TCAC may, and is now, performing SLRs for and on behalf of HUD, and TCAC may authorize the local jurisdiction to prepare the SLR for its review and approval.
8. Project Proforma. As of the Date of Award Letter, the Garden Grove Assistance has been evaluated and determined, and this Award Letter is provided, based on Garden Grove’s mater ial reliance on and review of the Developer's proposal and updated submittals related to the Project and Garden Grove Assistance, and review of Developer’s Project proforma with proposed sources and uses of funding and financing, development costs, and 55 -year projected cash flows for the Project, which proforma is dated as of February 24, 2025 (“Proforma”). The Proforma presumes approval of the funding sources described above based on Developer’s applications to HCD for MPH Funding , to TCAC for a reservation of Tax Credits , and to CDLAC for an allocation to issue the Bonds .
Developer shall update the Project proforma after the Award Letter Condition Precedent is satisfied, which will be a part of the updated Financial Gap Analysis and applicable SLR in connection with preparation of and entering into the AHA concurrent with the Closing of Financing. The Director has authority to approve one or more revised development proformas and projected cash flows for the Project; provided, howe ver, that the Garden Grove Assistance shall in no event be increased or extended without consideration and action by the City Council and Authority Commission.
9. Funding Applications; Cooperation. The Parties shall cooperate in good faith in connection with Developer’s application(s) to HCD for HCD/MHP Funding, to TCAC for the Tax Credits, to CDLAC for the allocation to issue the Bonds, and to defer payment of certain development impact fees for the Project.
9.1 Cooperation in Document Review. Each of Developer and Garden Grove agree to provide the other party reasonable lead time to review and comment on draft documents, such as but not limited to updated Proforma, construction and permanent lender commitment and implementing draft loan documents, equity investor commitment and limited partnership agreement, general contractor bid, selection and GC contract, etc.
In this regard, draft documents shall be provided in Word format . Further and in this regard, for submittals by Developer to Garden Grove, and submittals by Garden Grove to Developer a reasonable review period shall be not less than twenty (20) business days or a reasonably longer period depending on the complexity of the document.
10. Affordable Housing Agreement. Subject to the Developer’s satisfaction of the Award Letter Condition Precedent, Garden Grove and Developer will negotiate and enter into the AHA. The AHA will set forth a series of “Conditions Precedent”, to be satisfied by the Developer, as applicable, and Garden Grove, as applicable. 436
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10.1 Approval and Execution of AHA . The final form of the AHA shall be approved by Developer in its sole and absolute discretion; and, the Director, is hereby authorized to approve and execute in her sole discretion, provided how ever, she may elect in her sole and absolute discretion to present the AHA to the City Council and Authority Commission for consideration and action. The AHA is also subject to approval as for form by the City Attorney and shall be attested by the City Clerk/Authority Secretary.
10.2 Summary of Certain AHA Terms . A summary of the topics and basic terms to be set forth in the AHA will include the following:
(a) Garden Grove Loan . The Garden Grove Loan shall be fully described in the AHA, including:
(i) The Garden Grove Loan shall be for a maximum principal amount of up to $2,000,000, or as much thereof as is disbursed for hard and soft costs in constructing the Project, as sourced from the City’s PLHA funds. (A) A portion of the up to $2,000,000 will be in the form of capital funds, repayable from residual receipts.
(B) The remaining portion of the up to $2,000,000 will be in the form of capitalized operating subsidy reserve (authorized in PLHA Guidelines Section 301(a)(5).
(C) The exact amounts may be determined as a condition
to the Closing of Financing.
(ii) Interest Rate. Principal amount of Garden Grove Loan shall bear three percent (3%) simple interest per annum.
(iii) Term of Garden Grove Loan . Remaining principal and accrued interest on the Garden Grove Loan shall be due in full upon the 55th anniversary of the completion of construction of the Project or earlier upon transfer, sale, non-permitted refinancing, or default as will be set forth in the AHA. (iv) Monetary Lien Priorities . The lien position of the Garden Grove Loan will be subordinate to the Developer’s Primary Loan for construction and permanent financing of the Project and subordinate to the HCD/MHP deed of trust if required by the HCD/MHP Regulations and Guidelines and pursuant to the HCD MHP Standard Agreement, but senior to the OCHFT Loan and KCS Loan; (A) In this regard, if HCD/MHP Funding is awarded and
evidenced by an HCD/MHP loan and if the HCD/MHP Regulations and Guidelines require such loan to be senior to the Garden Grove Loan, then the Garden Grove Loan will be in third lien position.
(v) Residual Receipts Allocation . Repayment of the Garden Grove Loan shall be from Residual Receipts as described above. Calculation of Residual Receipts will be subject to and calculated after payment of eligible operating expenses, approved debt service, Deferred Developer Fee, if any remaining, and eligible partnership related fees, also as provided above.
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10.3 Affordable Housing Unit Mix; Income and Rent Levels. The unit mix at the Project is described in Section 3 above and in the table Exhibit A hereto.
10.4 Additional AHA Terms and Conditions Precedent. The AHA will include additional terms and set forth a series of conditions precedent to the Closing of Financing, including without limitation:
(a) Readiness for Construction . All grading permits shall have been issued, or be ready to issue with payment of fees, and the City shall have issued a letter stating that building permits are ready to issue with payment of fees, subject only to the completion of grading of the Site for the Project.
(i) In this regard, rather than actual issuance of building permits, Developer shall have received from the City a letter stating that the City is ready to issue all building permits to commence construction of the Project (“readiness letter”), which readiness letter shall include express conditions that no later than five (5) business days after the Closing of Financing: Developer shall pay al l fees charged and due to City, if any, as well as each and all other governmental agencies that charge fees in connection with the Project, including fees assessed by school districts, sanitary districts, water districts, utility company(ies) (subject to the provisions of Government Code Section 66007, et seq. and Senate Bill 937), if such payments are made to City and/or directly to the other governmental agency(ies) if such agency(ies) customarily collect such fees (with submittal of evidence to City fro m such governmental agency(ies) that full payment has been received) or shall have delivered to City evidence satisfactory to the City Manager that Developer has made arrangements mutually agreeable by Developer and corresponding governmental agency (other than City) with regard to the payment of the applicable fees. Upon such full payment by Developer, then Developer shall be eligible to obtain, and City will issue, the Building Permits for the Project. (ii) Further in this regard, Developer, at its sole cost and expense, will be responsible for securing any and all permits and discretionary approvals that may be required for the Project by the City or any other federal, state, or local governmental entity having jurisdiction over the Site or Project.
(iii) Notably, this Award Letter does not, and shall not, obligate the City or any department thereof to approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary for the construction, installation, maintenance or operation of the Project. (b) Primary Loan. The permanent financing funds will include the award issued by State H CD from the 2025 HCD/MHP NOFA. And, as applicable, paired with the HCD/MHP funding, Developer shall have secured all necessary institutional financing and funding for the Primary Loan to undertake and complete construction and thereafter operation of the Project and as approved by Garden Grove. The Primary Loan shall be sufficient to pay all development costs of the Project , through lease-up, as set forth in a final budget and approved by Garden Grove.
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Developer agrees that the issuer o f the Bonds shall be by the Garden Grove Housing Authority (or City of Garden Grove , but not by another governmental entity otherwise authorized to issues bonds.)
(ii) Developer will cause the lenders for the Primary Loan to provide Authority staff and legal counsel Word versions of all drafts of the loan documents, including the intercreditor and/or subordination agreements to be negotiated among the parties thereto.
(c) Investor Limited Partner . Developer will cause the investor limited partner for their equity investment into the Project to provide Authority staff and legal counsel Word versions of all drafts of the limited partnership agreement, including attachments and cash flow waterfall, to be negotiated between such investor limited partner and Developer. The Proforma shows such equity investment in the Project at approximately $16,721,046.
(d) Insurance. Developer shall have provided evidence to Garden Grove that Developer has obtained insurance policies, certificates, and additional insured or other endorsements acceptable to Garden Grove, the City Attorney, and City risk management staff for both Developer, its General Contractor and Subcontractors. (e) Indemnities. Developer shall provide certain indemnifications of Authority and City, inclusive of their elected and appointed officials, officers, employees, attorneys, representatives, volunteers, contractors and agents (collectively, “Indemnitees”), both general indemnity, Environmental Laws, indemnity, and compliance with Prevailing Wage Laws ind emnity, with no carve -outs or exceptions, excepting only the sole, intentional misconduct by Indemnitee or Indemnitees. (f) Construction Security. Developer shall have provided construction security naming and in favor of the Authority and City, which may include:
(i) a completion guaranty from an entity (or person) with adequate capital and available liquid assets to and as the guarantor is approved by the Director and legal counsel in their sole discretion; in this regard, by way of example, the guarantor will have a Dun & Bradstreet PAYDEX score of 80 to 100; or (ii) an unconditional standby letter of credit, or
(iii) payment and performance bonds from the general contractor and subcontractors for the Project, or
(iv) some combination of any or all of (i), (ii) or (iii) above), in an amount sufficient to ensure the Project will be completed, all invoices paid, and all workers paid in conformity with applicable federal and state labor laws, including Prevailing Wage Laws, and applicable Project documents and agreements, and plac ed in service within the time set forth in the schedule for the Project as approved by Garden Grove. (g) Additional Contracts. Developer shall submit and obtain approval of Garden Grove and legal counsel (which approval shall not be unreasonably withheld, conditioned or delayed) for:
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(i) the construction contract with its General Contractor and the subcontracts therefor;
(A) construction of the Project must be competitively bid in accordance with applicable federal, state and local laws and regulations, in particular the HCD and HUD requirements, if any.
(ii) the limited partnership agreement for the limited partnership entity formed to own and operate the Project under the AHA; (iii) qualifications and experience of the property manager to operate and manage affordable housing projects comparable to the Project and the property management agreement;
(iv) Developer has identified KCS as its primary social service provider for the Senior residents at the Project as set forth in the Social Services Plan (defined below) and each and all contracts with social service provider(s); (A) the detailed social and supportive services plan that describes the social and supportive services, goals and objective, with a detailed budget for Senior tenants (“Social Services Plan”);
(B) The Social Services Plan shall include a robust level of social services offered at the Project and suitable for the residents’ needs and provided by professionally trained staff. Services must include an assessment of clients’ needs, link to services and verification of services obtained. The Social Services Plan must also provide clear outcome measurements related to services provided and must clearly identify if services will be provided by the Developer or by third party entity(ies); (C) For services not provided by KCS, i.e., by a third party provider, if ever applicable, the Social Services Plan shall be amended and clearly identify the budget and resources available for the services. For services to be provided by third party entity(ies), the Social Services Plan must include co pies of the agreements or memoranda of understanding that govern provision of the services. (v) Marketing and Tenant Selection Plan . The marketing and tenant selection plans for the Project, including Garden Grove’s reasonable preferences waterfall described below.
(A) As to fourteen (14) of 21 Senior ELI units, the AHA and Developer’s Management Plan shall require Developer to comply with and obtain prospective tenant referral through (1) first, the County’s Coordinated Entry System (“CES”) for Senior homeless persons and persons at-risk of homelessness; thereby, with a reasonable first preference in implementing CES to refer persons with ties to Garden Grove (such as existing CCNC or CalOptima services in Garden Grove), Developer shall coordinate with and among stakeholders to implement the County’s CES , and each referred and selected tenant household shall include one or more persons who qualify under the Mental Health Services Act (“MHSA”), which means a person or persons who qualify as chronically homeless and who have a mental illness in accordance with California Welfare & Institutions Code Section 5600.3(a) and/or California Welfare & 440
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Institutions Code Section 5600.3(b)) (“MHSA Eligible Tenant”), but only during such time as the OCHFT Loan and covenants entered into between Developer and OCHFT remain in effect; and, ( 2) second, meet the Authority’s marketing requirements, wait list, and crossover preference to the County’s CES. Developer and Garden Grove will cooperate with the County in implement ation of CES, with an objective and preference that each MHSA Eligible Tenant have some current or prior ties to the Garden Grove community, such as work(ed) or live (d) in the community, family members live or work in or attend school in the community.
(B) As to seven (7) of 21 Senior ELI units (i.e., non-MHSA units) and the remaining 59 units, Authority and Developer shall implement a reasonable referral and preference plan, including cooperation with the County in its implementation of CES, all to prioritize occupancy for income-qualified Senior Citizens in the following order of reasonable preferences: (1) persons exiting from the Central Cities Navigation Center (“CCNC”), (2) former recipients of , or exiting from Garden Grove tenant-based rental assistance (TBRA), (3) persons who were previously displaced by Garden Grove, (4) persons on the Authority’s waiting list who require a mobility accessible unit , (5) persons on the Authority’s wait ing list who do not require a mobility accessible unit, (6) persons who live, work or have been hired to work in Garden Grove, which could include persons from Disadvantaged or Low Income Communities as defined by HCD, (7) other persons with ties to Garden Grove who qualify as Senior, and (8) other persons without ties to Garden Grove who qualify as Senior, all (1) to ( 8) above subject to applicable state and federal Fair Housing Laws and requirements to Affirmatively Furthering Fair Housing (“AFFH”).
(1) The term chronically homeless and home less
shall include persons satisfying any of the criteria of a., b., c. or d., below so long as such household also qualifies as a Senior Household , provided however that seven (7) of the ELI units (of 21) shall be tenanted by persons who satisfy the definition of chronically homeless as described in (B) above, and 14 ELI units (of 21) shall be tenanted through the County CES system and meet the MHSA requirements as described in (A) above. a. Senior persons who are living in a place
not meant for human habitation, in emergency shelter, in trans itional housing, or are exiting an institution where they temporarily resided, including households exiting an institution where they resided for up to 90 days, if they were in shelter or a place not meant for human habitation immediately prior to entering that institution. b. Senior persons who are losing their
primary nighttime residence, which may include a motel or hotel or a doubled-up situation, within 14 days and lack resources or support networks to remain in housing. c. Senior persons who are unstably housed
and likely to continue in that state, including persons who have not had a lease or ownership interest in a housing unit in the last 60 or more days, have had two or more moves in the last 60 days, and who are likely to continue to be unstably housed because of disability or multiple barriers to employment.
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d. Senior persons who are fleeing or
attempting to flee domestic violence, have no other residence, and lack the resources or support networks to obtain other permanent housing.
(C) As to 66 units, Developer shall provide Authority (and County and Authority as to 14 ELI units) written notice when one or more units will soon become, or have become , vacant at the Project ; then, Authority shall be afforded an exclusive right of tenant selection for thirty (30) calendar days including to provide Developer the name(s) of qualified Senior persons on the Authority’s waiting list as described in (B) above.
(1) If the vacant unit is not re -tenanted with a
qualified Senior household during such 30 -day period as described in (B) above, then Developer shall use commercially reasonable efforts to rent such vacant unit to a qualified Senior household in accordance with the approved tenant selection criteria. (h) Cost Savings . Cost savings from t he Project, if any, and/or permanent funding sources in excess of project costs shall be used and applied to pay down the Garden Grove Loan, first toward principal then accrued interest, subject to compliance with the applicable regulations for HCD/MHP and TCAC financing. (i) Reserves. Developer shall maintain capital and operating reserves.
For the capital reserve Developer shall administer and deposit the greater of (i) a per unit reserve fund as stated in Proforma, or (ii) such higher per unit or annual amount required by the Primary Lender, which reserve shall be established by Developer and maintained as set forth in the AHA. And for the operating reserve Developer shall administer and deposit an amount the greater of (x) the amount included and listed in the Proforma, or (y) the amount required by the Primary Lender that shall be established as a reserve for operating expenses.
(j) Permitted Refinancing, Sale, Transfer; Authority Due Certain Share of Net Sale or Refinancing Proceeds. Sale, transfer, and refinancing will be subject to the terms of the Garden Grove Loan and AHA.
(k) Limitation on Resyndication. Developer (including any successor or assign) shall not apply for or otherwise seek and cause resyndication of the Project after the initial Tax Credit compl iance period expires without Garden Grove’s prior written consent and such decision to approve or disapprove remains in the sole, reasonable discretion of Garden Grove.
(l) Post-Closing Conditions. The AHA will set forth terms and conditions related to construction and construction monitoring from commencement through completion, operations, financing, refinancing, transfer, management and maintenance of the Project.
10.5 Non-subordinate City Covenants Agreement; Affordability Period .
All units at the Project shall be restricted as set forth herein and in the AHA for a minimum of fifty-five (55) years (“Affordability Period”) and as set forth in a separate “City Covenants Agreement” to be recorded against the Site in senior, nonsubordinate priority, which sets forth conditions, covenants and restrictions affecting the use, ownership, operation, 442
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management, maintenance, transfer and financing of the Project on the Site. As a material condition of this Award Letter, and pursuant to the AHA, the City Covenants Agreement to be recorded in the Official Records, County of Orange, State of California shall be and remain a senior, nonsubordinate encumbrance against the Site.
All monetary liens shall be subject to and remain subordinate to the City Covenants Agreement.
(a) In this regard, in this transaction and Closing of Financing, then at closing of permanent financing and conversion at the end of the Tax Credit Compliance Period, there may be other and additional covenants , conditions, restrictions, or regulatory agreements to be recorded against the Site and Project, such as by State HCD for the HCD/MHP funding, by the Orange County Housing Authority and/or County of Orange for the OCHFT funding, and KCS for the KCS Loan sourced from CalOptima funds awarded by the County, but in all instances the City Covenants Agreement shall be senior to monetary liens albeit such other covenants and regulatory agreements may also be senior to monetary liens in pari passu priority among recorded covenants, with the most restrictive to apply in all events during the applicable periods that the same are in effect.
10.6 Affordable Rent. The AHA will require that the Developer will not charge more and shall state in each lease agreement with a tenant that monthly rent shall be an “Affordable Rent” pursuant to HSC Sections 50052.5 and 50053, and the implementing regulations in 25 CCR 6910, et seq. , as applicable to the Extremely Low 30% AMI , Very Low 40%AMI, and Very Low 50% AMI Households as tenants of the Housing Units.
The rent standards for the Project must comply with the strictest of the standards imposed among HCD MHP requirements, PLHA Guidelines and PLHA Regulations, or other funding sources contributed to the Project, as applicable based on the mu ltiple federal, state, and local funding sources.
(a) Notwithstanding the above statement, pursuant to Assembly Bill 846, Chapter 674, effective January 1, 2025, HSC 50053, subsection (b)(2), as amended, allows Garden Grove to apply affordable rent as defined under the Tax Credit Rules; that subsection, as amended, provides:
“Notwithstanding paragraph (1), for a rental housing development described in paragraph (1) that dedicates 80 percent of units, exclusive of a manager’s unit or units, to lower income households, “affordable rent,” including a reasonable utility allowance, shall not exceed the rent prescribed by deed restrictions or regulatory agreements pursuant to the terms of the public financing or public financial assistance for the rental housing development, if the rental housing development receives an award on or after January 1, 2025, of any of the following:
(A) Federal or state low-income housing tax credits.
(B) Tax-exempt private activity bonds or general obligation bonds. (C) Local, state, or federal loans or grants.”
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(b) The term “Affordable Rent” means the maximum amount of out-of-pocket housing cost to be charged monthly by Developer and paid for a Housing Unit by each Extremely Low 30% AMI, Very Low 40%AMI, and Very Low 50% AMI tenant based on the unit mix described in Exhibit A and herein. Affordable Rent will be determined and calculated pursuant to the Tax Credit Rules as allowed under HSC Section 50053 (b)(2). For purposes of Affordable Rent, the monthly housing payment shall mean the total of monthly payments by each tenant household of a Housing Unit, inclusive of payments attributable to Portable Vouchers (after expiration or earlier termination of the HAP for the PBVs) under the Section 8 Laws, other rental subsidies, or other public subsidies by the Authority or any other local, state, or federal governmental agency for use and occupancy of a Housing Unit and facilities associated therewith, including a reasonable allowance for utilities for an adequate level of service. (i) After expiration or earlier termination of the HAP for the PBVs, Developer shall accept tenants holding Section 8 portable vouchers or other tenant-based rental assistance certificates (each a “Portable Voucher”).
10.7 Minimum and Maximum Occupancy Standards . The minimum occupancy of the Housing Units shall be not less than one person per bedroom. The maximum occupancy of the Housing Units shall not exceed more than such number of persons as is equal to two persons per bedroom, plus one; thus: (i) for studio Housing Units the maximum occupancy is two (2) persons, (ii) for one-bedroom Housing Units the maximum occupancy shall not exceed three (3) persons, and (iii) for the two (2) bedroom Units the minimum occupancy is two (2) persons and the maximum occupancy shall not exceed five (5) persons.
10.8 Developer Fee; Deferred Developer Fee . In connection with the development of the Project and subject to compliance with the Tax Credit Rules, CDLAC rules, and HCD MHP Regulations and Guidelines, Developer will be entitled to a n estimated total developer fee of $6,126,421 as listed in the Proforma; provided however Developer shall contribute $ 3,626,421 of such total as “General Partner Equity/Contribution” t hereby the net eligible “Developer Fee” shall not exceed $2,500,000. Receipt of a portion of the Developer Fee will be deferred (“Deferred Developer Fee”), which is estimated at $1,750,000 in the Proforma.
10.9 Annual Monitoring Fee . Annually and concurrently with the delivery of each annual report and compliance certificate that will be required under the AHA, Developer shall pay a $75.00 per unit fee with annual adjustment (“Annual Monitoring Fee”) to Garden Grove that shall compe nsate Garden Grove for its costs incurred to monitor Developer’s compliance with the AHA.
(a) The Annual Monitoring Fee shall increase each Year during the Affordability Period by three percent (3%). This fee will be due each year as the Project, this Award L etter, the AHA, and Garden Grove Loan meet the exception set forth in Government Code Section 65915.3(d) as multiple sources of subordinate loans (PLHA, MHSA, CalOptima) require annual local monitoring activities that would not otherwise be conducted or required by TCAC.
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10.10 Annual Financial Report . The AHA will require Developer to submit an “Annual Financial Report”, which is a certified financial statement by Developer for the Project using generally accepted accounting principles (“GAAP”) and as separately accounted for by Developer.
11. Environmental Compliance.
11.1 CEQA and NEPA. Developer shall comply with applicable federal and state laws and regulations affecting environmental review of the Project pursuant to all, including the California Environmental Quality Act ("CEQA") and the National Environmental Protection Act (“NEPA”) and approval thereof. Reference is made to Section 5. above as the City’s Entitlement includes the CEQA determination.
11.2 Environmental Laws . Developer shall comply “Environmental Laws” including, all applicable laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the State of California, County of Orange, City of Garden Grove, or any other political subdivision, agency, or instrumentality exercising jurisdiction over the Developer, the Authority, the City or the Site and Project.
12. Financial Gap Analysis. This Award Letter for the Garden Grove Assistance has been determined based on a “Financial Gap Analysis” of the proposed development and operation of the Project, including all funding and financing sources, and the Proforma, and other supporting documentation. This Award Letter is and shall remain subject to the Award Letter Condition Precedent and the Financial Gap Analysis. After the Award Letter Condition Precedent is satisfied by Developer, Garden Grove will re -review and analyze all awarded and committed funding sources for all costs of development and operation of the Project. Developer shall update the Proforma and provide to Garden Grove requested supporting documentation. The Financial Gap Analysis will be conducted by Garden Grove’s economic and housing consultant to evaluate, without limitation, supportable debt (construction and permanent financing), structure, terms and market value of Tax Credits, amount of HCD/MHP Funding, tax credit investor equity, Developer Fee, Deferred Developer Fee, other subordinate debt, and grants, if any, and the terms therefor.
Developer agrees to cooperate with Garden Grove and its agents and provide complete, truthful supporting documentation in connection with conducting the Financial Gap Analysis. Developer and Garden Grove agree to cooperate in good faith toward achieving a financially fe asible Project and to that end each shall provide the other and their respective agents with complete, truthful, and timely supporting documentation in connection with conducting the Financial Gap Analysis.
13. Authorization to Implement Award Letter.
13.1 Director Authority . By consideration and action to approve this Award Letter, Garden Grove hereby authorizes the Director to sign this Award Letter on behalf of the City and Authority. Further the Director is authorized to cause to be prepared and executed the AHA, in implementation hereof, so long as the terms and provisions of the AHA, and each and all implementing agreements and instruments therefor, are substantially and materially consistent, financially and legally, with this Award Letter. 445
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(a) Further, the Dir ector (or her duly authorized representative) is authorized to implement the AHA and take all further actions and execute all documents referenced therein and/or necessary and appropriate to carry out the transaction contemplated by this Award Letter, and thereafter the AHA, including all exhibits, instruments and implementing agreements thereto , as well as the AHAP and HAP Agreement. To the extent necessary during the implementation hereof and thereof, the Director is authorized to make technical or minor changes and interpretations of this Award Letter, and thereafter the AHA, as reasonably necessary in her/his sole and absolute discretion, to properly implement and carry out the Project provided any and all such changes shall not in any manner substantia lly or materially affect Garden Grove’s rights and obligations, or increase the value and monetary amount(s) that comprise the Garden Grove Assistance under this Award Letter and the AHA, all subject to the Award Letter Condition Precedent.
(b) In addition, the Director is authorized, on behalf of Garden Grove, to sign all other documents necessary or appropriate to carry out and implement this Award Letter and the AHA for the Project on the Site , including all exhibits thereto and including causing the issuance of warrants in implementation thereto, and to administer Garden Grove’s obligations, responsibilities and duties to be performed thereunder so long as substantially and materially consistent with herewith. Any and all substantive changes, including monetary adjustments that increase the Garden Grove Assistance, to this Award Letter or to the terms and provisions of the AHA and implementing agreements and instruments thereto shall require the consideration and action of the City Council and Authority Commission.
14. City Council and Authority Commission Action. The City Council and Housing Authority Commission have reviewed Developer’s requests for each component of the Garden Grove Assistance described in this Award Letter, and on April 8, 2025 at a duly noticed and posted joint public meeting of the City Council and Housing Authority Commission, Garden Grove authorized and approved issuance of this Award Letter to evidence the preliminary award of the Garden Grove Assistance, and related matters described herein to satisfy the requirements of the HCD MHP Regulations and Guidelines, Tax Credit Rules, and CDLAC requirements.
If you have any questions or require any additional information regarding this pre - commitment letter, please contact Timothy Throne , Project Manager, by telephone at (714) 741-5144 or by e-mail at [email protected].
Sincerely,
Lisa L. Kim, City Manager and Housing Authority Director
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The Preliminary Award Letter to [____________, LP] is:
AGREED AND ACCEPTED
this 8th day of April, 2025:
DEVELOPER:
DOMUS DEVELOPMENT, LLC,
a California limited liability company
By:
Michael Limb, Authorized Signatory
and
KOREAN COMMUNITY SERVICES, INC.,
a California Non-Profit Corporation
By:
___________________________
Ellen Ahn, JD, MSW, Authorized
Signatory
cc: Rachel Rosner, Esq., Bocarsly, Emden, Cowan, Esmail & Arndt LLP
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EXHIBIT A
PRESCRIBED UNIT MIX WITH INCOME AMD RENT LEVELS
% of Area Median
Income
Unit Type # of Units Total # of Units
Per % of Area
Median Income
30%
Studio
1-Bedroom
2-Bedroom
7 9
5 21
40%
Studio
1-Bedroom
2-Bedroom
6 6
7 19
50%
Studio
1-Bedroom
2-Bedroom
18 22
0 40
No Restrictions
2-Bedroom
(Manager’s Unit)
1 1
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Item 124/2025
Final
City of Garden Grove
INTER-DEPARTMENT MEMORANDUM
To:
Lisa L. Kim From: Lizabeth Vasquez
Dept:
City Manager Dept: City Clerk
Date: 4/8/2025
Subject: Second reading and Adoption of Ordinance No. 2963, entitled:
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF GARDEN GROVE AMENDING SECTION 14.20.020 OF CHAPTER 14.20 OF TITLE 14 OF THE
GARDEN GROVE MUNICIPAL CODE PERTAINING TO THE CROSS-CONNECTION CONTROL PROGRAM. (Action item)
Attached for second reading is Ordinance No. 2963 recommended for adoption.
ATTACHMENT
Ordinance No. 2963
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ORDINANCE NO. 2963
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF GARDEN GROVE AMENDING SECTION 14.20.020 OF CHAPTER 14.20 OF TITLE 14 OF THE
GARDEN GROVE MUNICIPAL CODE PERTAINING TO THE CROSS-CONNECTION
CONTROL PROGRAM
CITY ATTORNEY SUMMARY
This Ordinance revises Section 14.20.020 of the Garden Grove Municipal Code to change the reference to the provisions regarding the control of potable water cross connections in former Title 17 of the California Code of Regulations with the new regulations established by the Division of Drinking Water of the State Water Resources Control Board established in the Cross Connection Control Policy Handbook. This change updates the City’s regulations to the latest standards adopted by the State of California.
THE CITY COUNCIL OF THE CITY OF GARDEN GROVE DOES ORDAIN AS FOLLOWS:
Section 1. Section 14.20.020 of Chapter 14.20 of Title 14 of the Garden Grove Municipal Code is hereby amended to read as follows (additions underlined, deletions strikedthrough):
Sec. 14.20.020 Cross-Connection Control Program.
A. To comply with the regulations of the Department of Health Services State Water Resources Control Board, Division of Drinking Water, the City Manager or his or her designee shall establish, and from time to time amend, rules and regulations regarding the state -mandated Cross-Connection Control Program. These rules and regulations shall be in compliance with the Regulation Rules of Service, as found in the Cross-Connection Control Policy Handbook (CCCPH), Title 17 of the California Code of Regulations and may adopt and/or incorporate all or part of the current edition of the Manual of Cross -Connection Control published by the University of Southern California. A copy of the rules and regulations as so adopted shall be on file with the City Clerk.
B. Any violation of any of the rules and regulations shall constitute a misdemeanor.
Section 2. City Clerk Certification and Publication. The City Clerk shall certify the passage and adoption of this Ordinance and shall cause this Ordinance to be published as required by law.
Section 3. Severability. If any section, subsection, subdivision, sentence, clause, phrase, or portion of this Ordinance is, for any reason, held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance and eac h section, subsection, subdivision, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more section, subsection, subdivision, sentence, clause, phrase, or portion thereof be declared invalid or unconstitutional.
Section 4. Effective Date. This Ordinance shall be in full force and effect thirty (30) days after passage.
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The foregoing Ordinance was passed by the City Council of the City of Garden Grove on the ___ day of ____________.
MAYOR
ATTEST:
_______________________________
CITY CLERK
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS:
CITY OF GARDEN GROVE )
I, LIZABETH VASQUEZ, City Clerk of the City of Garden Grove, do hereby certify that the foregoing Ordinance was introduced for first reading and passed to second reading on March 25, 2025, with a vote as follows:
AYES: COUNCIL MEMBERS: (7) BRIETIGAM, NGUYEN, TRAN, MUÑETON
ARESTEGUI, DOVINH, KLOPFENSTEIN
NOES: COUNCIL MEMBERS: (0) NONE
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