May 10, 2022
Orange Senior Housing, Inc.
Attn: Paul Abbondante, President
555 S. Shaffer Street
Orange, CA 92866
Re: Preliminary Award of HOME Funds to the Affordable Housing Project 1249 East Katella Avenue, Orange, California 92867
Dear Mr. Abbondante,
On May 10, 2022, the City Council of Orange approved a preliminary award of HOME Investment Partnerships Program (HOME) funds in the amount Seven Hundred Eighty Thousand ($780,000) in fiscal year 2022-2023 for a 74-unit affordable housing complex for seniors (Project) to be constructed at 1249 East Katella Avenue, Orange, California 92867. The Borrower is Katella Terrace, L.P., a California limited partnership that will include a nonprofit managing general partner that is a certified HUD Community Housing Development Organization (CHDO). The Borrower is requesting a loan in the amount of Seven Hundred Eighty Thousand Dollars ($780,000) to be committed from fiscal year 2022-2023. The funds will be reserved for the Project until May 10, 2023 for the purpose of providing gap financing for the Project.
The City must receive copies of firm commitments from all funding sources, including formal notification by the State of California for an award of low income housing tax credits on or before this date.
The HOME funds will be provided to the Borrower in the form of a non-recourse loan (HOME Loan) in the original principal amount of at least Seven Hundred Eighty Thousand Dollars ($780,000) from fiscal year 2022-2023, with interest at the greater of (a) one-quarter percent (0.25%) per annum, or (b) the Applicable Federal Rate, from the date that the loan is funded to the Borrower. The term of the HOME Loan is 60 years. HOME Loan payments will be payable exclusively from 3.25% of annual residual receipts, which will be allocated exclusively to repayment of the HOME Loan. Any other residual receipts loan to the Project will be paid from a separate portion of residual receipts as specified in the documents related to that loan.
To receive the HOME Loan funds, Borrower must execute City loan documents evidencing and securing the HOME Loan in forms to be approved by the City Manager. No more than eleven (11) of the units in the Project will be designated as HOME units and the rents on those units will be restricted in conformance with the Federal regulations governing the HOME Program (24 CFR Part 92). The HUD compliance period is 20 years. The City Council has delegated to the City Manager all City approval rights over the HOME Loan documents.
The following are required in order to receive the HOME Loan fund:
1. Firm commitments from all financing sources, including reservation of low income tax credits and allocation, of tax-exempt bonds as well as funding from the City and commitments by investors, in sufficient amounts to complete the Project;
2. The Project must meet all applicable requirements of the HOME Program (24 CFR Part 92);
3. Completion of environmental review required under the National Environmental Policy Act and authority to use federal funds by HUD. Note that no activity may occur at the site that would adversely affect or would otherwise be choice limiting including the acquisition, demolition, construction or relocation of building or structure or otherwise making a physical change to the property (including moving dirt) until the authority to use federal funds has been provided;
4. Subsidy layering requirements have been met as defined by the U.S. Department of Housing and Urban Development (HUD);
5. A budget and schedule must be established and Borrower must certify that construction is ready to begin within 12 months; and
6. Execution of City’s HOME Loan documents.
When all funding sources are secured, the City’s Community Development Administrative Analyst will work diligently toward obtaining approval and execution of City loans by the City Manager.
If you have any questions, please call or email Jessica Herrera at (714) 744-7270 or [email protected]. Please acknowledge your consent to the foregoing terms and conditions by signing and returning a copy of this letter.
Sincerely,
Rob Houston
City Manager
Orange Senior Housing, Inc., on behalf of the Borrower, hereby acknowledges and agrees to all of the terms and conditions set forth in this letter.
By: __________________________________
Paul Abbondante, President
By: __________________________________
Katherine Connaghan, Vice President