DATE:
October 18, 2022
TO:
Chair and Board Members, Hesperia Housing Authority
FROM:
Nils Bentsen, City Manager
BY:
Pam Lee, City Attorney
SUBJECT:
Eagle Hesperia Housing Project Confirmation of Subordination in connection with $2,000,000 of Additional Bonds issued by Eagle Hesperia 55, L.P.
RECOMMENDED ACTION
It is recommended that the Board of Directors of the Hesperia Housing Authority consider approving the Confirmation of Subordination Agreement in connection with $2,000,000 of additional bonds being funded related to the Eagle Hesperia Affordable Housing Project.
BACKGROUND
In 2016, the Hesperia Housing Authority approved a Loan Agreement and other supporting documents (Including a regulatory agreement for 55 years, plus an option for an additional 25 years) for a new construction, affordable senior apartment project located in Hesperia with Eagle Hesperia 55, L.P. The project was completed in 2018. The project is an affordable housing 55+ senior project with 96 units on a portion of 9.41 acres; including 20 one-bedroom/one bath units at 50% Area Median Income (AMI), 44 one-bedroom/one bath units at 80% AMI and 32 two-bedroom/one and a half bath units at 80% AMI. Amenities include full gating and fencing, clubhouse, computer center, fitness center, lap pool and jacuzzi, individual washers and dryers, patio balconies, ceiling fans, refrigerators, security cameras, and elevators. The project consists of four two-story buildings containing 24 units each. The project was financed with certain debt, including bonds (approximately $8.2 Million), developer equity or debt and the $3,831,975 Agency Loan. The project was financed together with another Project by the same developer in Yucaipa.
A few months ago, the Developer approached the Housing Authority to issue additional bonds of approximately $2,000,000 to repay the Developer some of the funds it spent on the project.
The project is located on the north side of Avenal Street and east of Mariposa Road.
ISSUES/ANALYSIS
The Developer has requested that the Housing Authority, enter into a confirmation of subordination agreement with respect to its loan relative to the other debt present on the property. The Subordination Agreement was executed in connection with the original bonds and now those documents are being supplemented for the extra $2,000,000. The Successor Agency’s Loan Agreement does not deal with the situation and so staff is requesting the Housing Authority approve the Confirmation of Subordination Agreement. The Housing Authority, as successor housing authority for the Successor Agency, will receive approximately $312,000 from the proceeds of the additional bonds to use for housing projects. This will pay off part of the residual receipts loan.
FISCAL IMPACT
Eagle Hesperia estimates that the Housing Authority will receive approximately $312,000 on the bond upsize closing and approximately $3,750 monthly thereafter (representing 25% of the residual receipts).
ALTERNATIVE(S)
Provide alternative direction to staff.
ATTACHMENT(S)
Confirmation of Subordination Agreement.
01071.0032/825302.1
Page PAGE 2 of NUMPAGES 2
Staff Report to the Board Members of the Hesperia Housing Authority Eagle Hesperia Loan Subordination
October 18, 2022
01071.0032/825302.1
City of Hesperia
STAFF REPORT