The Housing Authority’s criminal background check policy is the minimum required for a public housing authority. Specifically, the Housing Authority does not implement any additional barrier that is not a statutorily mandated prohibition which would limit a vulnerable population from accessing the program. This policy was adopted by City Council on March 15, 2016, and meets HUD’s goal to “help ex-offenders gain access to one of the most fundamental building blocks of a stable life – a place to live.” National Credit Reporting screens for these minimum requirements, which includes searching for any use of illegal drugs during the previous three months and sex offenders.
National Credit Reporting has successfully been providing background screening information to thousands of business owners, managers, and government agencies for over 30 years. They are a member of the National Association of Housing and Redevelopment Officials and Affordable Housing Management Association. Their progressive screening program has enabled them to secure relationships with many public housing agencies. National Credit Reporting is also constantly staying up to date with the latest technologies available to the affordable housing industry. Their unique website provides organizations of all sizes and locations a streamlined process for increased efficiency and security.
The First Amendment to the Agreement is attached as Exhibit 1. If City Council does not approve the Agreement, staff will not be able to conduct criminal background checks and sex offender checks on applicants for the Housing Choice Voucher Program and the Housing Authority will be out of compliance with the federal regulations for the program.
FISCAL IMPACT
Funds are available in the Housing Authority Admin Fund, Contractual Services account (No. 14018760-62300), Housing Authority Mainstream Fund, contractual Services account (No. 13918780-62300) and ARPA Fund, Contractual Services account (No. 18018760-62300). $30,000 has been budgeted in this account for National Credit Reporting for FY 2022-2023 and the remaining $20,000 will be budgeted in FY 2023- 2024.
EXHIBIT(S)
1. First Amendment to Agreement with National Credit Reporting Submitted By: Steven Mendoza, Assistant City Manager
Approved By: Kristine Ridge, City Manager
City Council 2 – 2 6/21/2022
FIRST AMENDMENT TO CONSULTANT AGREEMENT
HOUSING AUTHORITY OF THE CITY OF SANTA ANA
THIS FIRST AMENDMENT to the above-referenced agreement is entered into on June , 2022, by and between National Credit Reporting (“Consultant”), and the Housing Authority of the City of Santa Ana, a public body, corporate and politic (“Authority”).
RECITALS
A. On August 1, 2019, the Authority and Consultant entered into Agreement (1920-H-002) (“Agreement”) for Consultant to provide background screening information services. The Agreement is current and in-effect.
B. In accordance with the terms and conditions of the Agreement, the Parties desire to amend the Agreement to extend the term of the Agreement and increase the compensation for services provided during the remainder of the term for this Agreement.
The Parties therefore agree:
1. Section 2, Compensation, is amended to increase the compensation for services provided by $50,000. The total amount to be expended during the term of this Agreement shall not exceed $95,000.
2. Section 3, Term, is hereby amended to extend the term of the Agreement by two (2) years through June 30, 2024.
3. Except as modified by this First Amendment, all other terms and conditions of the Agreement shall remain in full force and effect.
[signature page to follow]
EXHIBIT 1
City Council 2 – 3 6/21/2022
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to the Agreement on the date and year first written above.
ATTEST: HOUSING AUTHORITY OF THE CITY
OF SANTA ANA
_______________________________ ______________________________
DAISY GOMEZ KRISTINE RIDGE
Housing Authority Recording Secretary City Manager
APPROVED AS TO FORM: CONSULTANT
SONIA R. CARVALHO
Authority Counsel
By:___________________________ _______________________________ RYAN O. HODGE Name:
Assistant Authority Counsel Title:
RECOMMENDED FOR APPROVAL:
_______________________________
STEVEN A. MENDOZA
Executive Director
Community Development Agency
EXHIBIT 1
City Council 2 – 4 6/21/2022
Housing Authority
santa-ana.org/cd
Item # 3
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
June 21, 2022
TOPIC: Pre-Commitment of Affordable Housing Funds for Jamboree Housing Corporation and WISEPlace; Density Bonus Agreement; Loan Forgiveness AGENDA TITLE:
Approve a pre-commitment of $5,256,327 in HOME - American Rescue Plan funds, $484,000 in Inclusionary Housing Funds, twenty-five (25) project-based vouchers, a Density Bonus Agreement, and loan forgiveness for Jamboree Housing Corporation and WISEPlace for the development of the WISEPlace Permanent Supportive Housing project located at 1411 N. Broadway. (Contingent upon approval of City Council Item # 62).
RECOMMENDED ACTION
HOUSING AUTHORITY
Approve an award of twenty-five (25) project-based vouchers and authorize the Executive Director of the Housing Authority to execute an Agreement to Enter into a Project-Based Vouchers Housing Assistance Payments Contract with Jamboree and WISEPlace for the development of the WISEPlace Permanent Supportive Housing project located at 1411 N. Broadway, Santa Ana, CA 92706, (APN 398-523-04), subject to non-substantive changes approved by the Executive Director of the Housing Authority and Authority General Counsel.
COMMUNITY DEVELOPMENT COMMISSION RECOMMENDATION
At its regular meeting on May 25, 2022, the Community Development Commission recommended approval of the Recommended Action by a vote of 7:0.
PLANNING COMMISSION RECOMMENDATION
At its regular meeting on May 9, 2022, the Planning Commission recommended approval of Density Bonus Agreement Application No. 2022-01, by a vote of 5:0 (Commissioners McLoughlin and Pham absent).
City Council 3 – 1 6/21/2022
Pre-Commitment of Affordable Housing Funds for Jamboree Housing Corporation and WISEPlace; Density Bonus Agreement; Loan Forgiveness
June 21, 2022
HISTORIC RESOURCES COMMISSION ACTION
At its regular meeting on March 3, 2022, the Historic Resources Commission (“HRC”) considered Historic Exterior Modification Application (“HEMA”) No. 2022-02 to allow exterior modifications to the historic Santa Ana-Tustin Young Women’s Christian Association building located on the subject property. The HRC recommended approval of HEMA No. 2022-02, with added conditions, by a vote of 8:0 (Commissioner Frazier absent).
DISCUSSION
On December 7, 2021, the City Council authorized the Community Development Agency (“CDA”) to release a FY 2021-2022 Request for Proposals (“RFP # 21-136”) to develop affordable rental and ownership project(s) in the City of Santa Ana with available funds from the Inclusionary Housing Fund, HOME Investment Partnerships (“HOME”) Program, HOME-American Rescue Plan (“HOME-ARP”) Program, Project-Based Voucher Program, and the Neighborhood Stabilization Program fund (Exhibit 1). The RFP also included one land asset owned by the Housing Authority of the City of Santa Ana. The RFP was prepared in compliance with the City’s Affordable Housing Funds Policies and Procedures amended by City Council on August 18, 2020.
Following this approval, on December 8, 2021, CDA issued RFP # 21-136 for Affordable Housing Development. The RFP was published on both the City and Housing Authority’s websites and Planet Bids; a public notice was published in the OC Register on December 10, 2021; an e-mail was sent out by Orange County’s largest affordable housing membership associations including the Kennedy Commission, 2-1-1 Orange County, and the Southern California Association of Nonprofit Housing; and a letter was e-mailed to interested developers and nonprofit organizations who had previously requested to be informed of development opportunities on CDA’s RFP Process Database.
The deadline for the City’s RFP # 21-136 for Affordable Housing Development closed on Monday, February 28, 2022 at 5:00 p.m. The City received three (3) eligible proposals prior to the deadline (two proposals were determined to be ineligible). The affordable housing developers that submitted a proposal are:
Affordable Housing Developers
Jamboree / WISEPlace
C&C Development
Habitat for Humanity
After the deadline, staff conducted a minimum threshold review of each proposal to ensure compliance with the RFP requirements. Following the minimum threshold review, staff formed a Review Panel that consisted of the Assistant City Manager/Executive Director of the Community Development Agency, the Executive Director of the Planning and Building Agency, the Principal Civil Engineer of the City’s Public Works Agency, the City Council 3 – 2 6/21/2022
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June 21, 2022
Housing Division Manager and the Housing Programs Analyst. Keyser Marston Associates and RSG, Inc. also served as third party advisors to the Review Panel.
In compliance with the City’s Affordable Housing Funds Policies and Procedures, the Review Panel used the proposal Scoring and Selection Criteria from the RFP to conduct their review and analysis of each proposal. In addition to the Scoring and Selection Criteria from the RFP, the Review Panel also reviewed the proposed project design for appropriateness for the proposed target group, compatibility with surrounding uses, cost effectiveness of construction, and appropriateness of the design and construction for low maintenance and long term durability.
On May 4, 2022, the Review Panel interviewed all of the developers who submitted a proposal. Following these interviews, the Review Panel discussed and deliberated upon the final scoring and selection of the proposals. The Review Panel agreed upon the final scores below based on an average of the individual reviewer scores:
Developer Name Project Name Final Score
Jamboree/WISEPlace WISEPlace Permanent
Supportive Housing 95
Habitat for Humanity Washington Ave. 75
C & C Development Borchard & Minnie
Apartments
Pending Further
Negotiation
Based on the scores above and the deliberative selection and review process followed by the City, the Review Panel recommends the following award for this project:
Developer: Jamboree / WISEPlace
Project Name: WISEPlace Permanent Supportive Housing
Award Recommendation:
HOME-American Rescue Plan
(“HOME-ARP”) Funds $5,256,327
Inclusionary Housing Funds $484,000
Project-Based Vouchers Twenty-Five
(25)
The pre-commitment letter for Jamboree and WISEPlace provides the enforceable funding commitment from the City for $5,256,327 in HOME-ARP funds, and twenty-five (25) project-based vouchers for the development of the WISEPlace permanent supportive housing project located at 1411 N. Broadway, Santa Ana, CA 92706 (APN 398-523-04) (Exhibit 2).
City Council 3 – 3 6/21/2022
Pre-Commitment of Affordable Housing Funds for Jamboree Housing Corporation and WISEPlace; Density Bonus Agreement; Loan Forgiveness
June 21, 2022
The pre-commitment letter also includes a provision for an additional award of $484,000 in Inclusionary Housing Funds for relocation benefits, if necessary. This is because there are currently 20 shelter residents at WISEPlace. As occupants of transitional housing/an emergency shelter, WISEPlace clients do not meet the definition of a displaced person, because the housing they occupy is not permanent housing, and they do not pay for the housing. The purpose of the housing they currently occupy is temporary housing until they are matched with a permanent housing option. The units/beds they occupy does not meet the definition of a “dwelling” under the Uniform Relocation Act (“URA”), and further, the Department of Housing and Community Development issued guidance indicating that the temporary sheltering of homeless persons does not trigger “tenancy” under Civil Code section 1940 and related provisions.
However, while WISEPlace and Jamboree nor the City of Santa Ana have a legal requirement to provide relocation assistance to WISEPlace residents in the event they are not matched with an alternative housing or shelter option prior to the start of construction and would need to vacate the site, WISEPlace and the City will each provide $484,000 in a 50/50 split, if relocation assistance are to be provided to the site occupants per the same requirements of the URA or CA Relocation Regulations. If the 20 current WISEPlace residents are provided relocation assistance as calculated per the requirements as the URA and California State Relocation Regulations, the estimated total for relocation payments will be $968,000. WISEPlace will work with staff to relocate their 20 residents prior to the start of construction of the project. However, this additional assistance will provide a guarantee that full relocation benefits are available, if necessary, to the current residents if WISEPlace is unable to relocate them.
Among various other conditions in the pre-commitment letter, one of the primary conditions is that the developer must provide verification that it has secured all of its remaining financing for the development of the project in the form of the other enforceable funding commitments in the project’s capital stack, which may include 9% or 4% Federal Low Income Housing Tax Credits, State Housing Tax Credits, a commitment of affordable housing funds from the County of Orange or State of California, Section 8 project-based vouchers from the Orange County Housing Authority, or any other funding source needed in the project’s capital stack to develop the Project and close on the financing, before staff will return to the City Council for consideration of the Loan Agreements for this project.
The pre-commitment letter is also conditional on the developer securing any and all permits and discretionary approvals that may be required for the Project by the City. The pre-commitment does 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 of the Project.
In compliance with the City’s Affordable Housing Funds Policies and Procedures, KMA has conducted a preliminary financial gap analysis to confirm the project’s underwriting, the financial gap, and other programmatic requirements related to the funding sources City Council 3 – 4 6/21/2022
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(Exhibit 3). KMA reviewed the developer’s estimates and projections of rents, expenses, reserves and development costs in accordance with industry-standard underwriting guidelines. Following this preliminary financial gap analysis and the procurement and deliberative process described above, staff recommends the full amount of the award to City Council for final approval.
Project Description
Following the RFP process, Jamboree in partnership with WISEPlace is being recommended by staff as the developers to co-develop an affordable housing community at 1411 N. Broadway (the “Project”). The proposed name for the Project is WISEPlace Permanent Supportive Housing (“WISEPlace PSH”). Renderings of the Project are attached as Exhibit 4.
Jamboree is an experienced affordable and permanent supportive housing developer focused on developing and rehabilitating housing throughout California. Since 1990, Jamboree has successfully built a portfolio of over 100 projects comprising over 10,000 units. Jamboree currently has $1.1 billion in permanent supportive housing, affordable and special needs housing projects under development and an estimated $3.2 billion in developments in its portfolio. Jamboree has extensive affordable housing financing experience, including securing 4% and 9% low income housing tax credits, and is well versed in navigating regulatory complexities.
Jamboree is one of the leading non-profit developers of a wide range of housing and community developments that serve families and individuals not served by traditional market rate developers. Jamboree develops, acquires, renovates, and manages high quality and permanently affordable family, senior and supportive housing communities throughout the State of California. Jamboree has experience developing and operating communities in Santa Ana including the recently opened permanent supportive housing project Heroes Landing, which is exclusively for veterans. Additionally, Jamboree has four completed developments in Santa Ana including Heroes’ Landing, First Point I and II, Metro East and Cornerstone, and one development under construction, North Harbor Village.
Jamboree has formed a qualified team to design and partner with in supporting the ongoing mission of the property. This includes, as Administrative General Partner and supportive services provider, the local non-profit WISEPlace, architecture firm Architecture Design Collaborative, the Orange County Health Care Agency, the Orange County Housing Finance Trust, and experienced property management firm Quality Management Group. On May 18, 2022, the Orange County Housing Finance Trust (“OCHFT”) approved an award of $2,480,030 in funding. Councilmember Penaloza voted in support of this award as City Council’s appointee to the OCHFT Board.
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Since 1924, WISEPlace has served our homeless population, including unaccompanied women. WISEPlace has transformed the lives of more than 8,400 individuals experiencing homelessness since inception in the 1920s. Through the “WISEPlace Way”, clients can achieve personal stability through case management and counseling, financial empowerment, employment assistance, health and wellness, socialization activities, addiction recovery, housing retention assistance and the setting of and completion of personal goals. WISEPlace’s 90+ year history of serving the community has shown that these are the components necessary to help prevent and end homelessness.
Project Site
Jamboree, in partnership with WISEPlace, is proposing to develop 0.6 acres located on the site of WISEPlace’s current headquarters at 1411 N. Broadway. The site is located along Broadway and Sycamore Street, between 15th Street and Washington Avenue.
Main Street, one block east of Sycamore Street, has regular Orange County Transportation Authority bus service including Routes 53 and 83. The site is within onequarter mile of the Orange County Transportation Authority Route 60, with a stop at 17th Street and Broadway. The Project is within one mile of the Santa Ana Regional Transportation Center.
The Project site consists of an L-shaped parcel developed with a one- to two-story institutional building located within the Broadway Corridor District of the Midtown Specific Plan (SP-3) zoning designation. Through the City’s Adaptive Reuse Ordinance (“ARO”), residential use will be allowable by right. The existing one-story East-West wing facing Broadway will be renovated as part of an adaptive reuse, including three (3) units with the existing landmark building. The four-story new construction portion will face Sycamore and will have an additional 45 units. The Project will not require a zone change or amendment to the current land use through the ARO. The proposed development gained unanimous approval from the Historic Resources Commission on March 3, 2022 and the Planning Commission on May 9, 2022.
Proposed Project
The proposed Project includes 47 studio Permanent Supportive Housing (“PSH”) units and one (1) two-bedroom manager’s unit. 100% of the units will be set aside for extremely low-income households at 30% Area Median Income. The studio units will be designated as PSH for persons experiencing chronic homelessness. Fourteen (14) units will serve individuals experiencing chronic homelessness with a mental illness, financed by the Mental Health Services Act (“MHSA”). Services will be provided for these residents on site by the Orange County Health Care Agency.
The project consists of the adaptive reuse of the one-story East-West wing facing Broadway, in order to preserve the landmark status of the existing building. The existing North-South wing facing Sycamore will be demolished to accommodate the new construction of a four-story building, with a podium-parking garage on the ground floor City Council 3 – 6 6/21/2022
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and three levels of wood frame construction above. The massing on the fourth floor facing Broadway is stepped back to provide a seamless indoor-outdoor community room space on the fourth floor. The building architecture is complementary to the existing building’s Spanish Colonial Revival style, while being differentiated and distinguishable from the existing architecture. The sight lines along Broadway are preserved to maintain the historic character from that street frontage. The ground floor amenities include a community garden, barbeque area and seating, dog run, and renovation of the existing patio and planters. The indoor amenities include two community rooms, a community kitchen, laundry rooms on each floor, a computer room, and a fitness center.
Resident Services
WISEPlace will coordinate the delivery of all services, including those anticipated to be committed through the Orange County Health Care Agency. A comprehensive range of services will be offered to assist residents achieve and maintain self-sufficient, healthy and purposeful lives. Working under the Housing First model and the “WISEPlace Way”, WISEPlace will utilize strategies from an array of evidence-based models and practices to ensure residents have access to all required services.
Thanks to the customized WISEPlace Way of comprehensive, person-centered wrap around services, even in highly vulnerable populations, personal self-sufficiency can be reached. In 2021, WISEPlace achieved the following outcomes:
77% of clients transitioned into stable housing
72% of clients increased their savings
39% of clients decreased their mental health symptoms 100% of clients were linked with benefits and resources 95% of clients retained housing
The Project will provide on-site supportive services for the PSH residents that provide stability, community, and life skills training to adults diagnosed with a mental illness who are homeless. An on-site Resident Clinical Services Coordinator will provide case management services for the MHSA units.
WISEPlace will provide wrap-around services and coordination to activate the community amenity spaces on site to meet the needs of all residents. An on-site Case Worker and Resident Services Coordinator will create a Supportive Services Plan for the PSH community, ensuring residents have access to needed services to maintain housing, onsite community building activities, and links to partner organizations.
Community Inclusion
As part of the development process, the development team has engaged local partners to provide input on the proposed development. The Project team held two community outreach meetings open to the public in February and March 2022. The team also met with the Willard, Downtown, and Floral Park Neighborhood Associations. The City Council 3 – 7 6/21/2022
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development has also received letters of support from several community organizations including but not limited to Santa Ana Rotary, Dr. Snow of UC Irvine, Santa Ana Elks, United Way, United to End Homelessness, Providence, Assistance League, Mariposa, Working Wardrobes, Santa Ana Kiwanis, and Justice League.
The one-story adaptive reuse project will include commercial in the existing community room space facing Broadway. A museum displaying the history of the Y.W.C.A. and landmark building will be open to the public during regular business hours. WISEPlace plans to partner with community organizations such as Orange County School of the Arts for periodic art installations as well.
Finally, WISEPlace will continue to serve the broader community out of the development as it will maintain its headquarters on-site upon completion.
Parking
The proposed site plan includes 20 covered parking spaces in the gated parking garage with an entrance on Sycamore Street. The parking ratio is 0.42 spaces per PSH unit.
While the development team has included 20 parking stalls, PSH located near transit is not required to provide any parking under State law. The developer has agreed to provide a Parking Management Plan as part of the Density Bonus Agreement.
Unit Mix
The target population for WISEPlace PSH includes individuals experiencing chronic homelessness with a local preference for residents of the Santa Ana community.
Fourteen (14) units will serve special needs formerly homeless with a mental illness. A total of 47 studio units (100%) are reserved for extremely low-income individuals at or below 30% of the Area Median Income (AMI). These 47 units are specifically designated for permanent supportive housing for persons who are experiencing chronic homelessness. The proposed unit mix and rent restrictions are as follows:
Bedroom
Size
30%
AMI (PSH)
Manager’s
Unit Total Units
Studio 47 47
Two-Bedroom 1 1
TOTAL 47 1 48
Density Bonus Agreement
Jamboree requires approval of a Density Bonus Agreement (“DBA”) to allow the construction of the WISEPlace PSH Project (Exhibit 5). The Planning Commission recommended approval of the Density Bonus Agreement on May 9, 2022 by a vote of 5:0 (Commissioners McLoughlin and Pham absent) (Exhibit 6). In order for the Planning Commission to recommend approval of the Density Bonus Agreement, the Historic Resources Commission recommended approval of the Project on March 3, 2022 by a City Council 3 – 8 6/21/2022
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vote of 8:0 (Commissioner Frazier absent) (Exhibit 7). Jamboree has paid the City's Density Bonus Setup fee in the amount of $22,097.27 to prepare the agreement.
The California Density Bonus law allows developers proposing five or more residential units to seek increases in base density for providing on-site housing units in exchange for providing affordable units on site. To help make constructing on-site affordable units feasible, the law allows developers to seek up to three incentives/concessions and an unlimited number of waivers, which are essentially variances from development standards that would help a project be built without significant burden and without detriment to public health. The first version of the Density Bonus Law was adopted in 1979 and has since been amended at various times. Recent revisions allow affordable housing developers to request incentives/concessions and/or waivers for 100-percent affordable developments, even if they do not require a numerical density bonus.
Moreover, in early 2017, the law was amended to restrict the ability of local jurisdictions to require studies to “justify” the density bonus and requested incentives/waivers and places the onus on local jurisdictions to prove that the incentives/concessions or waivers are not financially warranted.
The purpose of the State Density Bonus Law is to encourage the development and availability of affordable housing by requiring the inclusion of affordable housing units within new developments. Pursuant to California Government Code sections 65915 (d)(1) and 65915 (e)(1), a local jurisdiction is limited in its ability to deny requested concessions and waivers and is preempted from denying the Density Bonus Agreement application. Due to the project’s 100-percent affordability the developer can seek up to three density bonus concessions and unlimited waivers, pursuant to Section 65915 et al. of the California Government Code (Density Bonuses and Other Incentives). Although the City has analyzed the Project for several areas of concern, the conditions of approval proposed for the Project are intended to address any of the Project’s potential impacts. Table 1 outlines the incentives/concessions and waivers requested by Jamboree and WISEPlace:
Table 1 Requested Incentives/Concessions
Standard Required Provided
Building Height and
Number of Stories
The maximum building height for all
buildings is 35 feet, or three stories,
whichever is less – Broadway Corridor
District of the Midtown Specific Plan
(SP-3) zoning designation
The new building is proposed at a
height of 54 feet and 6-inches and
four stories –
Requires Concession (1 of 3),
Cal. Gov’t Code Sec. 65915
(d)(1)(2)(B)
Underground Utility
Installations
All utilities as part of the proposed project
shall be required to be installed
underground – Section 41-626 of SAMC
- Underground utility installations.
All proposed utilities will be
undergrounded with the exception
of existing
overhead power lines over the
existing building along with recorded
Southern California Easement (to
remain) –
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Standard Required Provided
Requires Concession (2 of 3),
Cal. Gov’t Code Sec. 65915
(d)(1)(2)(B)
As designed, the Project is eligible to exercise its ability to seek State density bonus incentives and/or concessions because it is a 100-percent affordable project for permanent supportive housing. However, the Project does not seek an increase in allowable dwelling units as the Project is designed as an adaptive reuse project. Pursuant to Article XVI.II (Adaptive Reuse) in the SAMC, adaptive reuse projects can exceed the maximum general plan density provided the adaptive reuse project complies with the development standards.
In addition, the site is parked in compliance with California Government Code Section Cal. 65915 (p)(4). Pursuant to the California Density Bonus Law, and upon the request of the developer, a City cannot impose any minimum vehicular parking requirement for a rental supportive housing development, as defined in Section 50675.14 of the California Health and Safety Code. Although not required to provide parking, the site provides twenty (20) total parking spaces, or 0.42 spaces per unit, which includes two accessible parking stalls.
Lastly, pursuant to the adaptive reuse ordinance, parking spaces are not required for any converted use within the building. Therefore, no parking is required for the administrative/residential portions of the converted building within the one-story portion of the building.
Key Terms in the Density Bonus Agreement
The following is a list of key terms in the Density Bonus Agreement:
Term of Agreement. The term of the Agreement shall commence on June 21, 2022 and shall continue until the date that is fifty-five (55) years after the City issues the last certificate of occupancy for the Project. Project. Developer shall develop, operate, and maintain, or cause the development, operation and maintenance of, the Property as a forty-eight (48) unit rental residential community, with forty-seven (47) Affordable Units for Extremely Low Income Tenants.
Unit Mix. No less than forty-eight (48) Units, which shall be comprised of fortyseven (47) studio units designated as Affordable Units pursuant to the terms and conditions of the Agreement.
Affordable Rent Schedule. The rents shall be the maximum Monthly Rent that may be charged to and paid by an Extremely-Low Income Tenant whose income does not exceed thirty (30%) of the area median income for Orange County. Selection of Tenants. Each Affordable Unit shall be leased to Eligible Households that are chronically homeless and document-ready individuals on the Coordinated Entry List. All residents will be referred from the County of Orange Coordinated Entry System. Developer shall give preference in leasing units to households that City Council 3 – 10 6/21/2022
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live and/or work in the City of Santa Ana or who have an active Housing Choice Voucher.
Onsite Supportive Services, Programs and Amenities. Developer shall provide residents of the Project, or cause to be provided to residents of the Project, access to discounted or no-cost onsite supportive services, programming and amenities that promote independent living and economic mobility and include but are not limited to health and wellness services, social activities, and physical or recreational amenities.
Maintenance. Owner shall, at all times during the term of this Agreement, cause the Property and the Project to be maintained in a decent, safe and sanitary manner, regardless of cause of the disrepair, to the extent commercially reasonable.
Onsite Parking Management Plan. Developer has agreed to provide twenty (20) onsite parking stalls for residents and visitors of the Project and actively monitor the parking demand of the Project site. Developer shall continually monitor and take commercially reasonable measures to manage the parking demand of the Project site - to mitigate the use of offsite parking spaces on private or public properties and/or right-of-way. Prior to issuance of the Certificate of Occupancy, Developer shall submit and obtain approval from the Planning and Building Agency of a Parking Management Plan ("PMP") to address the parking demands of the Project. The approved PMP shall be adhered to and be enforced by the Project at all times.
The Density Bonus Agreement has been pre-signed by the developer indicating their acceptance of the terms. The agreement is not considered final until the City Council has reviewed and approved the agreement, and the agreement is executed by all parties.
CDBG Loan Forgiveness
In 1993, the former Community Redevelopment Agency of the City of Santa Ana (“Former Agency”) provided WISEPlace, formerly known as the YWCA of South Orange County, a $50,000 predevelopment loan of tax increment funds for the purposes of developing a Single Room Occupancy Hotel (“SRO”) project on the site. However, this project was deemed financially infeasible by the Former Agency, and in August 1999, the $50,000 predevelopment loan was forgiven by the Former Agency.
In 1996, the City provided WISEPlace a $900,000 loan of Community Development Block Grant (“CDBG”) funds (“CDBG Loan”) to finance the rehabilitation of the site for the purposes of providing permanent affordable rental housing. The CDBG Loan was structured with a 55-year term and a 1% simple interest rate. The loan repayments were to be made from 50% of the project’s residual receipts.
In 2001, the City amended the terms of the CDBG Loan. At that time, the outstanding principal balance of the loan was set at $916,265, which consisted of two components:
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(1) a $250,000 component, and (2) a $666,616 component. The amended promissory note set the loan term at 55 years – starting in 2002 and ending in 2056. The interest rate was set at 1% and was applied to the $666,265 component of the CDBG Loan, which resulted in annual interest payment of $6,662.65 per year.
WISEPlace was required to make interest only payments of $6,662.65 per year for the 55-year loan term. However, as long as the project was not in default, the amended promissory note required the City to forgive $16,666 of the CDGB Loan per year for the first 15 years. This resulted in $250,000 of the $916,265 CDBG Loan being forgiven. The current outstanding loan balance is currently $723,446.41. Per the terms of the amended promissory note, WISEPlace is required to continue paying annual interest only payments until the end of the loan term in 2056. The entire balance of the CDBG Loan ($723,446.41 plus interest) will become due and payable at that time.
The current financial structure of the Project requires WISEPlace to enter into a long-term ground lease with a to-be-formed Tax Credit partnership. The Tax Credit partnership will consist of WISEPlace, Jamboree and a Tax Credit Investor. However, per discussions with Jamboree and WISEPlace, the Tax Credit partnership cannot assume any of WISEPlace’s existing debt – including the existing CDBG Loan. Furthermore, given that the Tax Credit partnership will be ground leasing the site from WISEPlace, there are no available sales proceeds to pay off the existing CDBG Loan. As such, to effectuate the proposed WISEPlace PSH project, WISEPlace is requesting forgiveness of the existing CDBG Loan.
Staff recommends that the City Council approve WISEPlace’s CDBG Loan forgiveness request. As discussed above, the amended promissory note already allowed for loan forgiveness during the first 15 years of the loan term. The additional loan forgiveness would be in line with past City actions regarding loans provided to WISEPlace. In addition, the CDBG Loan is structured with interest only payments; therefore, none of the outstanding principal balance is currently being paid down. This would leave an outstanding balance of $723,446.41 plus interest to be repaid in full in Year 2056.
Additionally, as part of the proposed Project, the City will be placing new City loan(s) on the Project. Thus, the City will still be entitled to receive residual receipts from the PSH project.
ENVIRONMENTAL IMPACT
Pursuant to the Adaptive Reuse Ordinance (Ordinance No. NS-2874), the proposed project is found and determined to be consistent with the General Plan of the City of Santa Ana. Therefore, in accordance with the California Environmental Quality Act, the recommended action is exempt from further review under Section 15194 (Affordable Housing Exemption), as this project meets all the required criteria as a 100-percent affordable/permanent supportive housing development. Based on this analysis, a Notice of Exemption, Environmental Review No. 2022-05 will be filed for this project.
City Council 3 – 12 6/21/2022
Pre-Commitment of Affordable Housing Funds for Jamboree Housing Corporation and WISEPlace; Density Bonus Agreement; Loan Forgiveness
June 21, 2022
FISCAL IMPACT
The various agreements, including the loan agreements, are estimated to be finalized for City Council approval in FY 2022-23. Upon future approval of the loan agreements, funds will be budgeted and available as shown below:
Fiscal
Year
Accounting Unit –
Account #
Fund
Description
Accounting
Unit, Account
Description
Amount
FY 22-23 18218780-69152 HOME-ARP
Program Loans & Grants $5,256,327
FY 22-23 41718820-69152 Inclusionary
Housing Fund
Loans and
Grants $484,000
Total Loans $5,740,327
The forgiveness of the CDBG Loan will have two impacts. First, the $6,662.65 per year for the remainder of the loan term will no longer be paid to the City. Second, the entire balance of the CDBG Loan due to the City will be forgiven and no longer payable to the City.
EXHIBITS (Please see City Council agenda item #62 for exhibits)
1. Staff Report from December 7, 2021
2. Pre-Commitment Letter with Jamboree and WISEPlace
3. Preliminary Financial Gap Analysis by Keyser Marston Associates
4. Proposed Project Renderings / Preliminary Site Plan
5. Density Bonus Agreement
6. Planning Commission Staff Report from May 9, 2022
7. Historic Resources Commission Staff Report from March 3, 2022 Submitted By: Steven Mendoza, Assistant City Manager
Approved By: Kristine Ridge, City Manager
City Council 3 – 13 6/21/2022
Community Development Agency
santa-ana.org/cd
Item # 4
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
June 21, 2022
TOPIC: Memorandum of Understanding with Required WIOA Partners AGENDA TITLE:
Renew Memorandum of Understanding with required WIOA Partners (Contingent upon approval of City Council Item # 61).
RECOMMENDED ACTION
HOUSING AUTHORITY ACTION
1. Authorize the Executive Director and Recording Secretary to execute a Memorandum of Understanding with the Santa Ana Workforce Development Board which outlines the sharing of resources and expenses associated with the operations of a comprehensive one stop center for a one-year term expiring June 30, 2023 and payment to the City of Santa Ana in an estimated amount of $8,054 subject to non-substantive changes approved by the Executive Director and Authority General Counsel.
2. Authorize the Executive Director and Recording Secretary to execute nonsubstantive amendments such as adjustment of shared operational expenses during the term of the Memorandum of Understanding.
DISCUSSION
At the May 25, 2022 special meeting of the Workforce Development Board by a vote of 13:0 (Gail Araujo, David Elliott and Robert Ruiz absent), the Board recommended the above action for City Council approval.
In order to establish a high quality America’s Job Centers of California (AJCC) delivery system and enhance collaboration among partner programs, Workforce Innovation and Opportunity Act (WIOA) requires Local Workforce Boards to develop Memorandum of Understanding (MOU’s) with a list of AJCC required partners within the Local Workforce Area. These MOU’s will serve as a functional tool as well as a plan for how the Local Board and AJCC partners will work together to create a unified service delivery system that best meets the needs of their shared customers. WIOA does not require all partners to be physically co-located at the AJCC, but those that do co-locate are required to share City Council 4 – 1 6/21/2022
Memorandum of Understanding with Required WIOA Partners June 21, 2022
in the operational costs. Currently, the City, Employment Development Department, Department of Rehabilitation, SER Jobs for Progress, County of Orange Social Services Agency, and Santa Ana Housing Authority are co-located at the Santa Ana WORK Center and share the operational costs that are calculated based on square footage of occupancy by each agency and is outlined in Attachment 3 of the MOU agreement.
The current partner MOUs will expire at the end of this fiscal year. Typically, the term would be for three years, but because the master AJCC office lease expires next year, the City Attorney’s Office advised a one-year term. When the new lease details are finalized, the MOU exhibits will be updated to reflect the shared costs of the one-stop system and then return to the City Council for approval (Exhibit 1 and 2).
The programs and services the WDB is required to have an MOU with are as follows:
Program Organization
WIOA Title I – Adult, Dislocated Worker
and Youth City of Santa Ana WORK Center
WIOA Title II – Adult Education and
Literacy
Santa Ana College/Rancho Santiago
Community College District
WIOA Wagner-Peyser, Veterans, Trade
Adjustment Assistance Act
California Employment Development
Department
WIOA Title IV Vocational Rehabilitation California Department of Rehabilitation Carl Perkins Career Technical Education Santa Ana College/Rancho Santiago Community College District
Title V Older Americans Act SER – Jobs for Progress
Job Corps Long Beach Job Corps
Native American Programs – Section 166 United American Indian Involvement, Inc.
Community Services Block Grant Community Action Partnership of OC Housing and Urban Development City of Santa Ana Housing Authority Unemployment Compensation (UI) California Employment Development Department
Temporary Assistance for Needy
Families/CalWORKS Orange County Social Services Agency
FISCAL IMPACT
The City Council approved the master lease agreement for the office space at 801 W.
Civic Center Drive on October 3, 2017. The WORK Center share of the AJCC monthly operation costs are budgeted and available in the PY 2021-22 WIOA and Orange County Grant account (nos. 123xxx-various and 12418xxx-various). Funds for the WORK City Council 4 – 2 6/21/2022
Memorandum of Understanding with Required WIOA Partners June 21, 2022
Center’s share of the operation costs FY 2022-23 will be available upon City Council’s adoption of the annual budget
Funds in the amount of $8,054 for the Housing Authority’s share of the monthly operational cost for expenditure in PY 2022-23 are available in the following Housing Authority Voucher Admin accounts and will be available upon City Council’s adoption of the annual budget.
Account No. Account Description Amount
14018760-62010 Communications $ 539
14018760-62300 Contract Services 1,028
14018760-62500 Rent Payments 6,487
TOTAL $8,054
The table below reflects the estimated amounts to be received from the State of California Employment Development Department, County of Orange Social Services Agency, SER Jobs for Progress, Inc., State of California Department of Rehabilitation, and the Santa Ana Housing Authority for the duration of the MOU. The partner organizations will be invoiced for their share of the AJCC monthly operations and the funds will be deposited upon receipt into the following accounts:
Account No. Account Description PY 2022-23 Total
02501001-25000 Balance Sheet: Deferred RevenuesAdvances $ 6,172 $ 6,172 02518002-5700 CDA Special Revenue: Expense
Reimbursement 1,870 1,870
12318002-57960 WIOA Revenues: Rental of Property 341,808 341,808 12318002-57000 WIOA Revenues: Expenses
Reimbursement 368 368
12318748-61000 WDB Admin: Salaries Regular 4,356 4,356
12318751-various One Stop Program: Various 41,212 41,212 TOTAL $395,786 $395,786
EXHIBIT(S) (Please see City Council agenda item #61 for exhibits)
1. Memorandum of Understanding – Master Boilerplate
2. Memorandum of Understanding – County of Orange Social Services Agency Submitted By: Steven Mendoza, Assistant City Manager
Approved By: Kristine Ridge, City Manager
City Council 4 – 3 6/21/2022
Housing Authority
santa-ana.org/cd
Item # 5
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
June 21, 2022
TOPIC: Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue
AGENDA TITLE:
Public Hearing - For the Crossroads at Washington affordable housing project located at 1126, 1136, & 1146 East Washington Avenue: Approve two Loan Agreements for a total combined amount of $4,644,909 and a Development Impact Fee Deferral Agreement with Washington Santa Ana Housing Partners, L.P.; Approve two Subordination Agreements with U.S. Bank and the County of Orange; Approve an Additional Award of up to Eight Project-Based Vouchers for a combined total of 15 Project-Based Vouchers; Approve revisions to the joint sixty-five (65) year Ground Lease with Washington Santa Ana Housing Partners, L.P. and the County of Orange; and Approve a draft Land Use Covenant and Equitable Community Revitalization Grant Agreement with the State of California Department of Toxic Substances Control (Non-General Fund) (Contingent upon approval of City Council Item # 68).
RECOMMENDED ACTION
HOUSING AUTHORITY
1. Approve an award of up to eight additional project-based vouchers, for a combined total of 15 project-based vouchers, and authorize the Executive Director of the Housing Authority to execute an Agreement to enter into a Project-Based Vouchers Housing Assistance Payments Contract with Washington Santa Ana Housing Partners, L.P. for the development of the Crossroads at Washington affordable housing project located at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-14 and 398-092-13), subject to non-substantive changes approved by the Executive Director of the Housing Authority and Authority General Counsel.
2. Authorize the Executive Director of the Housing Authority to execute proposed revisions to the joint sixty-five (65) year Ground Lease with Washington Santa Ana Housing Partners, L.P. and the County of Orange, for the development of the City Council 5 – 1 6/21/2022
Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue
June 21, 2022
Crossroads at Washington affordable housing project located at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-14 and 398-092- 13), subject to non-substantive changes approved by the Executive Director of the Housing Authority and Authority General Counsel.
3. Authorize the Executive Director of the Housing Authority to execute a Land Use Covenant with the State of California Department of Toxic Substances Control to protect present or future human health or safety or the environment as a result of the presence of hazardous materials on the property at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-14 and 398-092-13), subject to approval as to form by the Authority General Counsel.
4. Authorize the Executive Director of the Housing Authority to execute an Equitable Community Revitalization Grant Agreement with the State of California Department of Toxic Substances Control to address and remediate present or future human health or safety or the environment as a result of the presence of hazardous materials on the property at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-14 and 398-092-13), subject to approval as to form by the Authority General Counsel.
5. Adopt a Resolution approving the Ground Lease of the Housing Authority-owned property at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-14 and 398-092-13) as required under California Health and Safety Code Section 33433.
EXECUTIVE SUMMARY
On five separate meetings, City Council has unanimously approved various actions for the development of the Crossroads at Washington project. This Staff Report is the culmination of all of the previous actions by City Council and will allow The Related Companies of California to close on their financing and develop the project on the Housing Authority-owned property that has been joined with the County’s property. The Crossroads at Washington project will have 85 new affordable units and 1 manager’s unit, with 42 three- and four-bedroom units for large families, and 43 one- and two-bedroom affordable units for persons experiencing homelessness. 100% of the units will be for extremely low-income households at 30% Area Median Income.
For the City Council actions, regarding the two Loan Agreements, on July 2, 2019, City Council approved an award of $3,971,440 in funding and on August 17, 2021, City Council increased that award by $333,742 to pay for an increase in development costs.
The action herein includes another increase of $339,727 in additional funds to pay for an unanticipated increase in development costs. Regarding the Development Impact Fee Deferral Agreement, this will further assist the project to offset their increase in development costs. Regarding the Subordination Agreements, U.S. Bank and the County City Council 5 – 2 6/21/2022
Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue
June 21, 2022
of Orange require the City to subordinate our loans to their senior loans. Staff is also seeking approval for future Subordination Agreements by various lenders that may be required after the project is completed.
For the Housing Authority actions, the eight additional project-based vouchers are necessary to pay for an unanticipated increase in development costs. Combined the project will have up to 15 project-based vouchers from Santa Ana together with 43 projectbased vouchers from the Orange County Housing Authority. Regarding the amendments to the Ground Lease, revisions were requested by U.S. Bank in order for the bank to approve their senior loan for the project. Finally, the Land Use Covenant and the Equitable Community Revitalization Grant (“ECRG”) Agreement with the State of California Department of Toxic Substances Control are required because the joint Housing Authority and County property was found to have environmental contaminants.
The Land Use Covenant restricts all future development on the specific portions of the property with remaining environmental contaminants and the ECRG funds will support additional remediation activities.
DISCUSSION
On July 2, 2019, City Council authorized the City Manager to execute a pre-commitment letter with The Related Companies of California (“Related”) and A Community of Friends (“ACOF”) for $3,971,440 in affordable housing funds consisting of $3,007,489 in HOME Investment Partnerships Program funds and $963,951 in Neighborhood Stabilization Program (“NSP”) funds for the development of the Crossroads at Washington affordable housing project located at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-14 and 398-092-13) (the “Project”). The Staff Report from July 2, 2019 is attached as Exhibit 1 and the pre-commitment letter is attached as Exhibit 2.
On August 17, 2021, City Council authorized the City Manager to execute a First Amended and Restated pre-commitment letter for an additional $333,742 in Neighborhood Stabilization Program funds to pay for an unanticipated increase in development costs. The Staff Report from August 17, 2021 is attached as Exhibit 3 and the first amended and restated pre-commitment letter is attached as Exhibit 4.
After City Council approves a pre-commitment of funding for an affordable housing project, it takes a substantial amount of time for a developer to address all development issues and secure their remaining sources of financing in their capital stack. After three years since Related and ACOF received a pre-commitment of funding from the City, Related and ACOF are prepared to close on their financing and begin construction of the Project.
In order for Related and ACOF (the “Developer”) to develop the Crossroads at Washington Project and in accordance with the first amended and restated precommitment letter approved by City Council on August 17, 2021, staff is recommending City Council 5 – 3 6/21/2022
Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue
June 21, 2022
approval of a Loan Agreement for $3,007,489 in HOME Investment Partnerships Program funds, a Loan Agreement for $1,637,420 in Neighborhood Stabilization Program (“NSP”) funds (which includes an additional award of $339,727 in NSP funds), a Development Impact Fee Deferral Agreement, and two Subordination Agreements with U.S. Bank, National Association and the County of Orange as senior lenders. In addition, the following items are also required for this Project to move forward: 1) an award of eight additional project-based vouchers; 2) a revised joint sixty-five (65) year Ground Lease; 3) a Land Use Covenant; and 4) an Equitable Community Revitalization Grant Agreement.
These various actions and Agreements are summarized in detail below, followed by a description of the Project.
Loan Agreement – HOME Investment Partnerships Program Funds The HOME Investment Partnerships Program Loan Agreement is attached as Exhibit 5.
The following loan terms are incorporated into the Loan Agreement:
Borrower: Washington Santa Ana Housing Partners, L.P., which is a California limited partnership formed by Related and ACOF.
Loan Amount: $3,007,489 principal amount from the HOME Investment Partnerships Program (the "HOME Program”)
Interest Rate: 3% simple interest per year
Term: Sixty-two (62) years from the date of issuance of the Certificate of Completion for the Project.
Terms of Repayment: Repaid from twenty-four (24%) of residual receipts (prorata with payments due in connection with other financing provided) calculated by taking the Gross Revenues from the Property for each year, less deductions for annual Operating Expenses.
Disbursement Schedule/Budget: 90 percent of the funds will be disbursed upfront for the construction, with a 10 percent contingency. Selection of Tenants: Except for the permanent supportive housing units covered by the 43 project-based vouchers provided by the Orange County Housing Authority, a local preference shall be given to residents that live and/or work in the City of Santa Ana. [On February 18, 2020, City Council adopted a resolution granting consent to the Orange County Housing Authority to administer project - based vouchers in the City of Santa Ana for the development of the Project.] The HOME Loan Agreement has been pre-signed by Related to acknowledge their acceptance of the terms.
City Council 5 – 4 6/21/2022
Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue
June 21, 2022
Loan Agreement – Neighborhood Stabilization Program Funds The Neighborhood Stabilization Program Loan Agreement is attached as Exhibit 6. All of the loan terms are the same as the HOME Loan Agreement above except for the Loan Amount below:
Loan Amount: $1,637,420 principal amount from the Neighborhood Stabilization Program
Disbursement Procedures: 100% of the NSP Loan will be disbursed by the City after the Agreement is recorded
This Loan Amount includes $339,727 in additional NSP funds to pay for an unanticipated increase in development costs. On August 17, 2021, City Council authorized the City Manager to execute a first amended and restated pre-commitment letter for an additional $333,742 in NSP funds to pay for an unanticipated increase in development costs. Since that date, the Developer’s costs have continued to increase due to an increase in the interest rate on the permanent loan and increase in construction costs. The increase in construction costs is primarily due to inflation and the increase in construction labor and materials. With City Council’s approval of the NSP Loan Agreement, the new combined total amount of NSP funds for the Project is $1,637,420. The origin of the City’s NSP funds is from the American Recovery and Reinvestment Act of 2009 and HUD will rescind these funds if the City does not use them.
The NSP Loan Agreement has been pre-signed by Related to acknowledge their acceptance of the terms.
Subordination Agreements
Regarding the Subordination Agreement with U.S. Bank, National Association (“U.S.
Bank”) the City’s total loans for this Project is equal to $4,644,909 compared to U.S.
Bank’s larger loan for over $33.8 million. As a subordinate loan for a large affordable housing project such as this, it is standard practice for a private market senior lender to request a Subordination Agreement for the City’s smaller loans in order to permit the senior lender to complete their underwriting and commit their private market financing. In the case of default, the Subordination Agreement will ensure the senior lender will be paid back before the City’s loans. The Subordination Agreement is attached as Exhibit 7.
Regarding the Subordination Agreement with the County of Orange (the “County”), the City’s total capital contribution for this Project is larger than the County’s capital contribution for $2,650,701. However, when the County’s capital contribution is combined with the 43 project-based vouchers being provided from the Orange County Housing Authority, the County’s total financial contribution for the Project exceeds the City and Housing Authority’s contribution. As a result, the County requires a Subordination City Council 5 – 5 6/21/2022
Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue
June 21, 2022
Agreement for the City’s loans in order to complete their underwriting and commit their financing. The Subordination Agreement is attached as Exhibit 8.
Regarding the future Subordination Agreements, if needed, with the State of California Department of Housing and Community Development (“HCD”), the California Community Reinvestment Corporation (“CCRC”), and/or the Orange County Housing Finance Trust, these other lenders may request or require the City to subordinate our loans to their loans after the Project is complete and the construction loan is replaced by a permanent loan.
For example, HCD requires the City as a subordinate local government lender to enter into a Subordination Agreement. HCD’s loan will be disbursed at the permanent loan conversion through the Orange County Housing Finance Trust. Therefore, HCD and/or the Orange County Housing Finance Trust may require a Subordination Agreement with the City after the Project is complete.
Regarding the future Subordination Agreement with CCRC, CCRC is the permanent lender and will be purchasing the construction loan from U.S. Bank. At that point, CCRC will be requesting the City to enter into a Subordination Agreement to subordinate the City’s two loans to CCRC’s permanent loan.
Any future Subordination Agreement will be approved as to form by the City Attorney’s Office prior to execution by the City Manager.
Development Impact Fee Deferral Agreement
The Development Impact Fee Deferral Agreement will defer the collection of the Project’s development impact fees until prior to issuance of the certificate of occupancy instead of requiring payment of the fees at the time of building permit issuance. The Agreement is attached as Exhibit 9. The Developer is entitled by State law to deferred payment of fees intended for public facilities or improvements because the deferral of such development impact fees will help facilitate the financing, development and construction of the project.
Specifically, California Government Code Section 66007 states that “any local agency that imposes any fees or charges on residential development for the construction of public improvements or facilities shall not require the payment of those fees or charges, notwithstanding any other provision of law, until the date of the final inspection, or the date the certificate of occupancy is issued, whichever occurs first.” The specific development impact fees that are part of this deferral request includes the following:
Fee Description Factor Factor Total
Transit Zoning Code Traffic
Impact Mitigation Fair Share $1,333.54 per unit 86 Units $114,685 Drainage Area Assessment Fee $7,748.21 per acre 2.286 Acres $17,712 City Council 5 – 6 6/21/2022
Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue
June 21, 2022
Sewer Connection Fee $49.00 per F.U. 562 F.U.
(est.) $25,774
Park Acquisition and
Development Fee $400,448
Fire Facilities $0.94psf 100,104 SF $94,098
TOTAL $652,717
As an affordable housing project, the Project qualifies for this request for deferral of their development impact fees. The Development Impact Fee Deferral Agreement will defer approximately $652,717 of the development impact fees for the development of the Project.
The following terms are incorporated into the Agreement:
Fee Deferral and Amount: The deferred collection of the development impact fees in the estimated amount of approximately $652,717. Deferral Period: The development impact fees will be deferred until the final inspection or issuance of a certificate of occupancy for the Project, whichever comes first.
Extension: An extension of the Agreement may only be granted by the City Council.
Payment Security: Payment of fee is a personal obligation of the owner, or any successor secured by the property, and if left unpaid, shall be collected as a special lien against the property.
Recordation of Agreement and Lien against Property: The Agreement will be recorded in the Official Records of the County of Orange and the Agreement shall contractually bind the owner to pay the development impact fees and shall constitute a lien against the property.
The intended goal of the collection of development impact fees at the time of building permit issuance is to ensure that the payment of the fees is completed prior to the vesting of development rights by a project developer. Development impact fees for development projects include customary fees to defray costs for the City to provide development services under the permit, outside agency fees as applicable, and established development impact fees. While deferral of collection of development impact fees is not City Council 5 – 7 6/21/2022
Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue
June 21, 2022
a routine practice, the Developer submitted their request under California Government Code Section 66007 and the City is required to consider their request.
The collection of the development impact fees for a new residential development is to generally fund planned acquisition and development of parks and open space within the City to mitigate the impacts that new developments will have on the demand for parks and open space within the City. While the request will defer the collection of the development impact fees to a later time in the development process, it will not waive or prevent the City from collecting the fees through protections and securities provided to the City under the agreement. Furthermore, the fees will be paid prior to the actual impact, as no residents will be allowed to occupy the Project until payment is received by the City.
The Development Impact Fee Deferral Agreement has been pre-signed by Related to acknowledge their acceptance of the terms.
Award of up to Eight Additional Project-Based Vouchers
On August 17, 2021, City Council approved an award of up to seven project-based vouchers and authorized the Executive Director of the Housing Authority to execute an Agreement to enter into a Project-Based Vouchers Housing Assistance Payments Contract. At the time of that approval, staff reported to City Council that the Developer’s costs had increased since their initial award in July 2019. Since that date, the Developer’s costs have increased further. On May 6, 2022, Keyser Marston Associates (“KMA”) reviewed the Developer’s pro forma (as of April 22, 2022) and determined that the Project has an approximately $1.0 million additional financial gap due to an increase in the interest rate on the permanent loan and increase in construction costs. Given the extreme volatility within the construction industry at this time, the cost estimates appear reasonable, and are similar to other affordable housing projects that KMA has recently reviewed.
Therefore, staff are recommending approval of up to eight additional project-based vouchers for the development of the Project to pay for an unanticipated increase in development costs. This will bring the Housing Authority’s total contribution to the Project to 15 project-based vouchers (“PBVs”). Staff is recommending an amount up to eight additional project-based vouchers contingent upon a review of the Developer’s proforma prior to closing to determine if a full award of eight additional PBVs is necessary. If the Developer does not need the full award of 15 PBVs, staff will reduce the PBVs according to the Developer’s need prior to closing on their construction loan and/or permanent loan financing.
Proposed Revisions to the Joint Sixty-Five (65) Year Ground Lease On February 18, 2020, City Council authorized the Executive Director of the Housing Authority to enter into a Joint Powers Agreement with the County of Orange for the joint City Council 5 – 8 6/21/2022
Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue
June 21, 2022
ownership of the adjacent properties located at 1126 and 1146 E Washington Avenue. At that same meeting, City Council also authorized the Executive Director of the Housing Authority to execute a joint sixty- five (65) year Ground Lease and an Option Agreement with Washington Santa Ana Housing Partners, L. P., a California limited partnership formed by the Developer. The Staff Report from February 18, 2020, is attached as Exhibit
10. Since that date and during the option term, the Developer conducted a site assessment of the Project area and identified a number of unexpected environmental contaminants.
This issue was communicated to City Council on December 15, 2020 and August 17, 2021. To summarize the environmental contamination issue, the Developer retained Altec Testing & Engineering, Inc. (“Altec”) during their due diligence period to conduct environmental investigations for the sites. An initial Phase I environmental investigation was conducted on October 19, 2019. A Phase II Environmental Site Assessment (“Phase II”) Report was warranted based on the Phase I findings and was prepared by Altec on February 19, 2020. The Phase II identified unexpected contaminants and recommended additional environmental investigations to determine the extent of the soil contamination on the County and Housing Authority-owned properties. In addition, the County retained Geosyntec Consultants, Inc. to provide environmental peer review services and to act as the County’s consultant with respect to environmental issues on the property (the City retained services from a City consultant only as needed). Thereafter, and following approval by the Board of Supervisor on August 21, 2021, the County entered into a voluntary oversight agreement with the State of California Department of Toxic Substances Control (“DTSC”) that authorized DTSC to serve as the oversight agency for the Project. The Agreement allowed DTSC the ability to facilitate and help coordinate further inspections and investigations, review and approve appropriate remediation measures and documents, and engage the public, as necessary.
Since the Developer did not contribute to the existing on-site environmental contaminants, the Developer has requested to amend the indemnity obligations in the Ground Lease to reflect the preexisting condition of the property related to the existing contaminants. As a result, the County and the Housing Authority staff have negotiated a revised Ground Lease to eliminate the Developer’s indemnity obligations associated only with these existing hazardous materials in Section 4.4.4 of the Ground Lease, but to maintain all prior indemnity provisions. With the DTSC approved remediation plan, this should not result in any additional obligations or liability to the Housing Authority or City.
In addition, U.S. Bank as the senior lender for the Project, requested revisions to the Ground Lease as part of their due diligence in order to approve their senior loan. In general, U.S. Bank’s revisions seek to protect and enhance their rights as a senior lender.
Specifically, U.S. Bank requested revisions throughout the Ground Lease in the following Sections: Annual Operating Expenses, Effective Date, Net Refinancing Proceeds, Net Syndication Proceeds, Preconditions, Ownership of Improvements, contributions to the City Council 5 – 9 6/21/2022
Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue
June 21, 2022
Capital Improvement Fund, Damage and Restoration, Transfer of Mortgages of Lessor’s Interest, Tenant’s Right to Encumber Leasehold Estate, Limitation on Lessor’s Termination Right, Leasehold Mortgagee Foreclosure Period, Multiple Leasehold Mortgages, Condemnation and Insurance Proceeds, and Effect of Foreclosure upon Base Rent, Successors and Assigns.
Finally, the City and the County needed to make revisions to the County and Housing Authority’s base rents in order incorporate a loan from the Orange County Housing Finance Trust and adjust the residual receipt split.
The revised Ground Lease is attached as Exhibit 11 with these revisions in redline format.
The revised Ground Lease has been pre-signed by Related to acknowledge their acceptance of the terms.
Land Use Covenant with the Department of Toxic Substances Control The property at 1126, 1136, & 1146 East Washington Avenue (the “Property”) has been found to have existing on-site environmental contaminants. Following their oversight of the Project, the State of California Department of Toxic Substances Control (“DTSC”) has determined that a Land Use Covenant is reasonably necessary to protect present or future human health or safety or the environment as a result of the presence on the property of hazardous materials as defined in Health and Safety Code section 25260. A limited portion of the Property will be subject to the restrictions of the Land Use Covenant (“Restricted Area”), and is more particularly described in Exhibit C of the Land Use Covenant. The Restricted Area is defined and bound by specific GPS coordinates.
The Property has been investigated and/or remediated under DTSC’s oversight. DTSC approved a Supplemental Site Investigation, Screening Level Human Health Risk Assessment, and Removal Action Workplan in accordance with Health and Safety Code, division 20, chapter 6.8. The remediation activities conducted at the Property include (1) excavation and offsite disposal of soil contaminated with arsenic, lead, chromium, and petroleum hydrocarbons, and (2) institutional controls to restrict construction over the area of soil vapor contaminated with Tetrachloroethene beneath the western portion of the North parcel. However, hazardous substances, including Tetrachloroethene, remain at the Property above levels acceptable for unrestricted land use.
As a result of the continued presence of hazardous substances, which are also hazardous materials as defined in Health and Safety Code section 25260, at the Property, DTSC has concluded that it is reasonably necessary to restrict the use of the Restricted Area, in order to protect present or future human health or safety or the environment, and that the Land Use Covenant is required as part of the DTSC-approved remedy for the Property. DTSC has also concluded that the Property, as remediated and when used in compliance with the Environmental Restrictions of the Land Use Covenant, does not present an unacceptable risk to present and future human health or safety or the City Council 5 – 10 6/21/2022
Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue
June 21, 2022
environment, which is a vital provision relative to the Project’s future residents. The specific Restrictions and Requirements for the Restricted Area are listed in Section 4 of the Land Use Covenant.
The draft Land Use Covenant is attached as Exhibit 12. The final version of the Land Use Covenant will be subject to approval as to form by the City Attorney. Staff anticipates DTSC to finalize the Land Use Covenant after the agenda is published for the June 21, 2022 Housing Authority meeting. Considering that the DTSC is a Department of the State of California and the Land Use Covenant is a standard template agreement used across the State, the revisions that may be recommended by the City and County are limited.
Equitable Community Revitalization Grant Agreement
In 2021, the State of California adopted Senate Bill 158 referred to as the Cleanup in Vulnerable Communities Initiative, allocating $500 million to expedite the cleanup and beneficial reuse of contaminated properties, with priority given to properties in historically vulnerable and disadvantaged communities. DTSC’s Office of Brownfields Equitable Communities Revitalization Grant (“ECRG”) provides financial assistance to communities via reimbursable grants to investigate and clean up brownfields through a competitive process. DTSC will provide more than $250 million in ECRG grants to incentivize cleanup and investment in disadvantaged areas of the State. The ECRG program:
Makes grants for eligible expenses up to $7 million;
Focuses on environmental justice areas; and
Supports applicants with free technical assistance and other expert guidance.
Local governments, nonprofits and federally and non-federally recognized tribes are eligible to apply. As such, the City and the County submitted an ECRG application prior to the deadline on April 8, 2022. A total of 74 applications were received from across the State requesting a total of $112.3 million, less than the amount of funds DTSC made available. However, as of the date of submission of this Staff Report, DTSC is still reviewing the applications and has not made any award announcements.
In preparation for award announcements, DTSC has provided a template ECRG Agreement that will be used for all grantees. The template ECRG Agreement is attached as Exhibit 13. The final version of the ECRG Agreement will be subject to approval as to form by the City Attorney. Staff anticipates DTSC to make award announcements after the agenda is published for the June 21, 2022 Housing Authority meeting. Considering that the DTSC is a Department of the State of California and the ECRG Agreement is a new standard template agreement that will be used across the State for all grantees, the revisions to the Agreement that may be recommended by the City and County are limited.
Summary Report Pursuant to Section 33433
The California Health and Safety Code (“H&SC”), Section 33433, requires that if a Housing Successor of a former redevelopment agency wishes to sell or lease property to City Council 5 – 11 6/21/2022
Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue
June 21, 2022
which it holds title and if that property was acquired in whole or in part with property tax increment funds, the Housing Successor must first secure approval of the proposed sale or lease agreement from its local legislative body after a public hearing.
The Housing Authority of the City of Santa Ana, acting as the Housing Successor Agency, wishes to lease the property at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701, (APNs 398-092-14 and 398-092-13). The property was originally purchased with Low and Moderate Income Housing Asset Funds (also known as property tax increment funds). Therefore, a resolution and summary report pursuant to H&SC Section 33433 has been prepared (Exhibits 14 and 15). The Housing Authority has also conducted the required 14-day public notice period. Notice of the time and place of the hearing was published in the OC Register once per week for two successive weeks, on June 7, 2022, and June 13, 2022, as specified in Government Code section 6066, prior to the public hearing.
Project Description
The Crossroads at Washington will be 100% affordable to households earning no more than 30 percent of Area Median Income (AMI) of which 43 units will be set-aside for permanent supportive housing, with one exempt 2-bedroom managers unit. The large bedroom units align with the City’s priorities and needs while the permanent supportive housing units meets the County’s priorities for their financial contribution and property.
The unit mix and rent restrictions are as follows:
Bedroom
Size
30%
AMI (PSH)
30%
AMI
Manager’s
Unit Total Units
Studios 16 16
One-Bedroom 26 26
Two-Bedroom 1 20 1 22
Three-Bedroom 17 17
Four-Bedroom 5 5
TOTAL 43 42 1 86
Related has partnered with A Community of Friends (“ACOF”) as its non-profit partner to develop the Crossroads at Washington (the “Project”) to provide the services and expertise for serving the permanent supportive housing units. [Any future reference to “Developer” refers to Washington Santa Ana Housing Partners, L.P., a California limited partnership formed by the Developer.] ACOF is one of the most experienced developers of permanent supportive housing in Los Angeles County and Southern California, with a long track record of delivering high quality supportive housing for people who were formerly homeless. ACOF has completed 50 housing developments with supportive housing for homeless individuals and families.
City Council 5 – 12 6/21/2022
Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue
June 21, 2022
The Crossroads at Washington will be a new transit-oriented affordable housing community on 2.286 acres located at 1126, 1136, & 1146 East Washington Avenue, Santa Ana, CA 92701. The site is currently vacant, and positioned within walking distance from the Santa Ana Regional Transportation Center – a key transit hub for not only Orange County, but all of Southern California. The Project is located on two (2) contiguous undeveloped parcels, one fronting E. Washington Avenue on the northern half of the site (Housing Authority-owned parcel) and one parcel directly south of the City parcel (Countyowned parcel). The five original buildings located on the site were demolished in the 1990s by Caltrans during a freeway-widening project. As a vacant and undeveloped site, there is an opportunity to create a newly designed site that will truly meet the needs of the local community. The entire site is designated District Center (DC) in the City of Santa Ana’s 1998 General Plan and zoned Transit Village (TV) in the Transit Zoning Code.
The Project includes the development of two residential buildings, of which one building will be subdivided into two (2) residential portions, with 86 units surrounding two interior, landscaped courtyard/amenity spaces. Developed at an overall density of 37.7 units per acre, there will be 16 studios, 26 one-bedroom units, 22 two-bedroom units, 17 threebedroom units, and 5 four-bedroom units. All units will be flat apartments located on the first, second, third, and fourth floors. Currently, the buildings have been designed to buffer courtyards, open green areas, and the pool area from highway noise and visual pollution.
In addition, a proposed sound wall is being positioned along the eastern property line adjacent to the US Interstate 5 ramp. Approximately 5,800 square foot of interior community amenities and leasing offices is designed to accommodate supportive and management services. The Project also includes approximately 1,060 square feet of community service retail/commercial space. One vehicular entry point to the site is provided off of E. Washington Avenue. The entry point has a small driveway roundabout with deliberate urban greening features, to reduce vehicle speeds and create a welcoming and aesthetically pleasing entrance and pickup/drop-off area for pedestrians, bike riders, and motor vehicles alike. Careful consideration for the character and scale of the surrounding neighborhood and buildings were taken into account, to ensure that the Project’s architecture and massing blends-in with the existing surrounding uses.
The Project proposes a Mission Revival architectural style to complement adjoining neighborhoods and buildings. In particular, the design is envisioned to complement nearby buildings, similar to the Santa Ana Regional Transportation Center and the Triada at the Station District Apartments (also developed by Related), which are part of Santa Ana’s extensive history of prominent architecture. Overall, the layout of the buildings and common areas are designed to create several unique areas to best utilize outdoor space.
Outdoor amenities include a pool, tot-lot, dog wash, and a BBQ and picnic area.
The proposed Site Plan includes approximately 120 surface parking spaces, of which 38 spaces would be tandem spaces, which will be assigned to the three-bedroom and fourbedroom apartments, along with some two-bedroom apartments. Residents will not be City Council 5 – 13 6/21/2022
Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue
June 21, 2022
charged for parking. As a transit-oriented development, the Project is at the start of the OC Streetcar and directly across the street from the Santa Ana Regional Transportation Center. A total of 120 parking spaces will be sufficient for this type of transit-oriented development.
FISCAL IMPACT
Funds for the HOME Investment Partnerships Program Loan Agreement in the amount of $2,706,740.10 (90% of the original award amount) are available in the HOME Investment Partnerships Program, Loans and Grants account (no. 13018780-69152) for expenditure in the current fiscal year. The remaining $300,748.90 (10%) will be budgeted and included in the FY 2022-23 annual budget.
Funds for the Neighborhood Stabilization Program Loan Agreement in the amount of $1,637,420 (100% of the original award amount) are available in the Neighborhood Stabilization Program 1, 2, and 3, Loans and Grants accounts (nos. 14218760-69152, 14218761-69152, and 14218762-69152) for expenditure in the current fiscal year.
Recognize and appropriate Neighborhood Stabilization Program 1-3 revenue from prior year fund balance of $237,371 and grant funds of $246,501. This additional funding is to complete the necessary $1,637,420.
Appropriation Adjustment
From Accounting
Unit Amount To Accounting Unit Amount
14218760-69152 $240,042 Federal Grant
Direct
14218002-
52000 $246,501
Neighborhood
Stabilization
Program 1 & 3 14218762-69152 $6,459
14218760-69152 $103,004
Prior Year 14218761-69152 $121,549
Fund Balance
14218002-
50001 $237,371
Neighborhood
Stabilization
Program 1-3 14218761-69152 $12,818
The total estimated development impact fees to be deferred for the project is estimated to be $652,717 as follows:
Fee Description Factor Factor Total
Transit Zoning Code Traffic
Impact Mitigation Fair Share $1,333.54 per unit 86 Units $114,685 Drainage Area
Assessment Fee $7,748.21 per acre 2.286 Acres $17,712
City Council 5 – 14 6/21/2022
Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue
June 21, 2022
Sewer Connection Fee $49.00 per F.U. 562 F.U. (est.) $25,774 Park Acquisition and
Development Fee $400,448
Fire Facilities $0.94psf 100,104 SF $94,098
TOTAL $652,717
The final fee amount to be deferred will be calculated at the time of the final inspection or issuance of a certificate of occupancy for the project, whichever comes first. There is no negative fiscal impact as the deferred amount will be paid back to the City. However, it should be noted that the FY 21-22 deferred amount may be received in FY 22-23.
Each project-based voucher is estimated to be valued at $1,255 monthly or $15,060 annually, based on HUD’s renewal funding of vouchers from May 9, 2022. The approximate value of the eight additional project-based vouchers on an annual basis totals $120,480. The approximate value of the combined 15 project-based vouchers on an annual basis totals $225,900. The actual annual expenditure for the 15 project-based vouchers may be different based on when the development of the project is completed and the units are leased. Funds will be budgeted in future fiscal years in the Housing Choice Voucher Program, Project Based Vouchers account (no. 13618760-69171).
If the City receives an award of funds from DTSC’s Office of Brownfields Equitable Communities Revitalization Grant, the grant funds will be appropriated by the City Manager in the FY 22-23 Budget.
Fiscal Impact Verified By: Kathryn Downs, CPA, Executive Director – Finance and Management Services Agency
EXHIBITS (Please see City Council agenda item #68 for exhibits)
1. Staff Report from July 2, 2019
2. Pre-Commitment Letter
3. Staff Report from August 17, 2021
4. First Amended and Restated Pre-Commitment Letter
5. HOME Investment Partnerships Program Loan Agreement
6. Neighborhood Stabilization Program Loan Agreement
7. Subordination Agreement with U.S. Bank, National Association
8. Subordination Agreement with the County of Orange
9. Development Impact Fee Deferral Agreement
10.Staff Report from February 18, 2020
11.Revised Ground Lease
12.Land Use Covenant
City Council 5 – 15 6/21/2022
Crossroads at Washington Affordable Housing Project at 1126, 1136, & 1146 East Washington Avenue
June 21, 2022
13.Equitable Community Revitalization Grant Agreement
14.Summary Report Pursuant to Section 33433
15.Resolution
Submitted By: Steven Mendoza, Assistant City Manager
Approved By: Kristine Ridge, City Manager
City Council 5 – 16 6/21/2022