2505012v2.MV.TRB
16040.013.001
SUMMARY REPORT PURSUANT TO
CALIFORNIA HEALTH AND SAFETY CODE SECTION 33433
ON A
HOME INVESTMENT PARTNERSHIP AND AFFORDABLE HOUSING AGREEMENT
BY AND BETWEEN
THE MORENO VALLEY HOUSING AUTHORITY
AND
MARY ERICKSON COMMUNITY HOUSING,
A CALIFORNIA NONPROFIT CORPORATION
The following Summary Report has been prepared pursuant to California Health and Safety Code (H&SC) Section 33433 (Section 33433). The report sets forth certain details of the proposed HOME Investment Partnership and Affordable Housing Agreement (Agreement) between the following parties:
1. The Moreno Valley Housing Authority (Authority); and
2. Mary Erickson Community Housing, a California nonprofit corporation (Developer).
The Agreement provides for the Authority to convey an approximately 1.4-acre Authority-owned site located generally on the north side of Eucalyptus Avenue to the east of Heacock Street (Site). The Site has been subdivided into eight separate parcels for the purposes of developing a seven-unit affordable ownership project restricted to Low Income households with one parcel used for the new public street (Project).
The Authority-owned Site was acquired by the now dissolved Moreno Valley Redevelopment Agency (Former Agency) with property tax increment housing set aside funds. As such, the proposed conveyance of the Site may be subject to Section 33433, which includes a public hearing, disclosure and reporting requirements. The following report provides the information related to the proposed disposition.
The basic disposition terms embodied in the Agreement can be summarized as follows:
1. The Authority will sell the Site to the Developer for $8.
2. The Authority’s total financial assistance is estimated at $3,447,000, which is comprised of the following:
a. $1.69 million in HOME Program (HOME) funds allocated to the City of Moreno Valley (City) by the United States Department of Housing and Urban Development (HUD), and transferred to the Housing Authority; b. $550,000 in Low and Moderate Income Housing Asset Funds (LMIHAF);
2 2505012v2.MV.TRB
16040.013.001
c. $850,000 in Measure A funds; and
d. $360,000 of in-kind professional services incurred by the City and Authority including:
i. Engineering plans for the off-site improvements street construction; ii. Engineering and surveying to prepare legal descriptions; and iii. Water Quality Management Plan (WQMP).
3. The Authority’s financial assistance will be structured as two components:
a. Authority Loan to Developer: The Authority will loan the entirety of the Authority’s financial assistance to the Developer during the construction period. Upon completion of the Project, the loan made by the Authority to the Developer will be forgiven in 1/7th increments upon sale of each unit to a Low Income household. b. Reconveyance of Authority Loan to Homebuyers: Upon sale of each unit, a portion of the Authority’s Loan to the Developer will be reconveyed as silent mortgages secured against each unit. The remaining amount of financial assistance will be forgiven as a grant to the Project.
4. The Developer is required to construct the following improvements on the Site:
a. Onsite Improvements: Seven (7) affordable ownership units, which shall be sold to Low Income homebuyers; and
b. Offsite Improvements: The Developer is required to complete the Offsite Improvements, including the new public street that will provide access to the units, pursuant to the terms and conditions of the Reimbursement Agreement for Public Improvements (Lantana Court Affordable Housing Project) (Reimbursement Agreement).
The following Summary Report is based upon information contained within the Agreement, and is organized into the following seven sections:
I. Salient Points of the Agreement: This section summarizes the major responsibilities imposed on the Developer and the Authority by the Agreement.
II. Cost of the Agreement to the Authority: This section details the total cost to the Authority associated with implementing the Agreement.
III. Estimated Value of the Interests to be Conveyed Determined at the Highest Use Permitted under the Redevelopment Plan: This section estimates the value of the
3 2505012v2.MV.TRB
16040.013.001
interests to be conveyed determined at the highest use permitted under the Site’s existing zoning requirements.
IV. Estimated Reuse Value of the Interests to be Conveyed: This section summarizes the valuation estimate for the Site based on the scope of development, and the other conditions and covenants required by the Authority.
V. Consideration Received and Comparison with the Established Value: This section describes the compensation to be received by the Authority, and explains any difference between the compensation to be received and the established value of the Site.
VI. Blight Elimination: This section explains how the Agreement will assist in alleviating blight.
VII. Conformance with the AB1290 Implementation Plan: This section describes how the Agreement achieves goals identified in the Former Agency’s adopted AB1290 Implementation Plan.
This report and the Agreement are to be made available for public inspection prior to the approval of the Agreement.
I. SALIENT POINTS OF THE AGREEMENT
A. Project Description
The Developer will purchase the Site from the Authority to construct the following Project:
1. The Project will consist of seven for-sale detached single family units. The proposed unit mix can be described as follows:
Number of
Units
Unit Size
(Sf)
Two-bedroom Units 4 1,620
Three-bedroom Units 3 1,635
Totals & Averages 7 1,626
2. The units will be manufactured homes which shall comply with the MH Advantage for HUD-authorized manufactured residential structures.
3. Each unit shall have a double-car garage, landscaped front yards, and water efficient landscaping. In addition, each unit shall meet the City’s “Village Special” design features and the Department of Energy standards for a “Zero-Energy Ready Home” with installed photovoltaic solar and battery storage.
4 2505012v2.MV.TRB
16040.013.001
4. One of the seven units will be an Americans with Disabilities Act (ADA)-accessible home meeting the Uniform Federal Accessibility Standards (UFAS).
5. The Project may include a preference to sell a subset of the units to veterans households (with respect to the initial sale of the units only).
6. The units will be sold to Low Income households per the more stringent of the requirements imposed by the following:
a. H&SC Sections 50079.5 and 50052.5; and
b. The HOME Program.
B. Developer Responsibilities
The Agreement requires the Developer to accept the following responsibilities:
1. The Developer must purchase the Site from the Authority for $8.
2. Prior to conveyance, the Developer must provide the required documentation to the Authority, including the following:
a. Final Financing Plan;
b. Homebuyer Financing Plan;
c. Executed Project Documents;
d. Approved Permits;
e. Approved Land Use Approvals;
f. Required Insurance;
g. Construction contract for the offsite improvements.
3. The Developer must develop the Site in accordance with the Scope of Development and Schedule of Performance attachments to the Agreement.
4. The Developer must sell each unit to a qualified Low Income household as defined in the Agreement.
5. The Agreement requires that the income and affordability requirements will not be subordinated to any Project financing.
5 2505012v2.MV.TRB
16040.013.001
C. Authority Responsibilities
The Agreement imposes the following responsibilities on the Authority:
1. The Authority must sell the Site to the Developer for $8.
2. The Authority must provide the required site preparation and rough grading prior to conveyance to the Developer.
3. The Authority must provide a $3,447,000 Authority Loan to the Developer, which consists of the following:
a. $1.69 million in HOME funds;
b. $550,000 in LMIHAF funds;
c. $850,000 in Measure A funds; and
d. $360,000 of in-kind professional services incurred by the City and Authority including:
i. Engineering plans for the off-site improvements street construction; ii. Engineering and surveying to prepare legal descriptions; and iii. Water Quality Management Plan (WQMP).
4. The Authority Loan to the Developer will be a deferred payment loan with a 1% simple interest rate. The Authority shall forgive the Authority Loan made to the Developer in 1/7th increments upon the sale of each unit to a qualified Low Income homebuyer.
5. Upon the initial sale of each unit, the Authority will reconvey a portion of the Authority Loan made to the Developer as silent mortgages for each of the seven homebuyers. Any amount of the Authority Loan that cannot be secured by a silent mortgage will be converted to a grant to the Project.
II. COST OF THE AGREEMENT TO THE AUTHORITY
The net costs incurred by the Authority to implement the Agreement are estimated as follows:
6 2505012v2.MV.TRB
16040.013.001
Authority Costs
Site Acquisition Cost $144,000
Authority Loan 3,447,000
Total Authority Cost $3,591,000
(Less) Authority Revenue - Purchase Price ($8)
Net Cost to Authority $3,590,992
A portion of the Authority Loan will be converted to silent mortgages and secured against each unit. However, the Authority will place resale restrictions on the units which requires that the units must be sold to Low Income households for the entirety of the 45-year affordability period.
As such, the only instance in which the repayment of principal and interest will be due is when a unit is not sold to a qualified Low Income homebuyer. Therefore, it is not possible to accurately predict the amount of repayment the Authority will ultimately receive. As such, the repayment amount and timing are too speculative to project as part of this analysis.
III. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT
THE HIGHEST USE PERMITTED UNDER THE REDEVELOPMENT PLAN
Section 33433 requires the Authority to identify the value of the interests being conveyed at the highest use allowed by the requirements imposed by the Site’s existing zoning. The valuation must also be based on the assumption that near-term development is required, but the valuation does not take into consideration any extraordinary use, quality and/or income restrictions that are being imposed on the development by the Authority.
In a highest and best use appraisal of the Site prepared by Cushman & Wakefield and dated April 28, 2025, the appraiser concluded that the fair market value of the Site is $700,000 or $100,000 per subdivided parcel.
IV. ESTIMATED REUSE VALUE OF THE INTERESTS TO BE CONVEYED
Keyser Marston Associates, Inc. (KMA), the Authority’s financial consultant, prepared a reuse valuation analysis of the Project based on the financial terms and conditions imposed by the Agreement. The KMA analysis concluded that the fair reuse value of the Site is negative $3.51 million. This means that the Site would have to be donated to the Project at no cost, and $3.51 million in direct financial assistance would need to be provided, to make the Project financially feasible.
7 2505012v2.MV.TRB
16040.013.001
V. CONSIDERATION RECEIVED AND COMPARISON WITH THE ESTABLISHED VALUE
The Agreement imposes extraordinary controls on the Project. Specifically, the Developer must impose income and affordability restrictions on the 7 units in the Project. The impacts created by these requirements reduce the $700,000 value of the Site at the highest and best use allowed by the existing zoning, to the established fair reuse value of approximately negative $3.51 million.
The Agreement requires the Authority to convey the Site to the Developer for $8, and to provide the Developer with approximately $3.45 million in direct financial assistance. The Agreement provides the Project with approximately $3.45 million in assistance to fill the financial gap associated with the Project. Therefore, it can be concluded that the Authority is receiving fair compensation for the interests to be conveyed.
The Authority will provide approximately $3.45 million in direct financial assistance to the Project. A portion of this financial assistance will be converted to silent deed mortgages as the units are sold to Low Income homebuyers. Any revenues generated from future sales to non- qualified Low Income homebuyers will accrue to the Authority’s benefit.
VI. BLIGHT ELIMINATION
Section 33433 requires the Authority to demonstrate how the implementation of the Agreement will assist in eliminating blighting conditions. Section 33433 specifically states that the sale of property that results in the provision of housing for low- or moderate income persons satisfies the blight elimination criteria imposed by Section 33433.
The Agreement requires the Developer to construct a 7-unit for-sale affordable housing project with units restricted to low income households. Therefore, it can be concluded that the Project fulfills the blight elimination requirement imposed by Section 33433.
VII. CONFORMANCE WITH THE AB1290 IMPLEMENTATION PLAN
Former redevelopment agencies were required to complete AB1290 Implementation Plans.
Upon dissolution of redevelopment, these plans were no longer required or updated. However, the Project is identified in the Moreno Valley Housing Successor’s Senate Bill 341 Annual Report.