SANTA ANA CITY COUNCIL
Valerie Amezcua
Mayor
[email protected]
Benjamin Vazquez
Mayor Pro Tem - Ward 2
[email protected]
Thai Viet Phan
Ward 1
[email protected]
Jessie Lopez
Ward 3
[email protected]
Phil Bacerra
Ward 4
[email protected]
Johnathan Ryan Hernandez
Ward 5
[email protected]
David Penaloza
Ward 6
[email protected]
MAYOR
Valerie Amezcua
MAYOR PRO TEM
Benjamin Vazquez
COUNCILMEMBERS
Phil Bacerra
Johnathan Ryan Hernandez
Jessie Lopez
David Penaloza
Thai Viet Phan
CITY OF SANTA ANA
COMMUNITY DEVELOPMENT AGENCY
20 Civic Center Plaza – M25
Santa Ana, California 92702
www.santa-ana.org
CITY MANAGER
Alvaro Nuñez
CITY ATTORNEY
Sonia R. Carvalho
CITY CLERK
Jennifer L. Hall
March 4, 2025
Michael Valentine
President & CEO
Habitat for Humanity of Orange County, Inc.
2200 Ritchey Street
Santa Ana, CA 92705
Re: Pre-Commitment Letter
621 W. Alton Ave.
Santa Ana, CA 92707
Dear Mr. Valentine,
Habitat for Humanity of Orange County , Inc. (referred to as the “Developer”), requested financial assistance in connection with the proposed development of 40 affordable ownership units (“Project”). The Property is located at 621 West Alton Avenue, Santa Ana, CA, 92707 (APN 410-351-02) (“Property”).
The Developer proposes to demolish the existing structures on the Property to build 40 new homes for affordable ownership. The Project will require relocation of the existing religious organizations currently occupying and renting the existing structures on the Property in compliance with the federal Uniform Relocation Assistance and Real Property Acquisition Policies Act, and all state and local relocation requirements. The Project will include 30 three -bedroom, one and a half -bath homes for Low-Income households earning up to 80% of the Orange County Area Median Income ( “AMI”) ("Low-Income Households") and 10 three -bedroom, one and a half -bath homes for Moderate-Income households earning up to 120% AMI ("Moderate-Income Households") . Each unit will have a two -story duplex configuration and will be approximately 1,070 square feet. At least two of the hom es will be Americans with Disabilities Act (“ADA”) accessible and compliant. There will be two parking spaces adjacent and dedicated to each home (one enclosed and one surface) and 16 additional surface parking stalls, including two ADA - accessible stalls. Households must also meet the eligibility requirements for the Developer’s Affordable Homeownership Program with a residency preference for local EXHIBIT 2
- 2 -
workers and residents of Santa Ana in accordance with Santa Ana Municipal Code Section 8-3500. Construction will comply with all City of Santa Ana, County, and State building codes.
The City of Santa Ana (“City”) has reviewed the Developer's request for financial assistance, and at the City Council meeting on March 4, 2025, the City Council authorized and approv ed the issuance of this pre -commitment letter evidencing the preliminary award of $ 9,807,571.00 in HOME Investment Partnerships (“HOME”) Program Funds consisting of:
- A Conditional Grant in the maximum amount of $9,807,571.00 from the HOME Program Fund held by the City for the Project (“Conditional HOME Grant”).
This letter shall evidence the City’s pre -commitment of the Conditional HOME Grant to the Developer for the Project subject to the conditions described below.
Conditional HOME Grant:
The amount of the proposed Conditional HOME Grant has been determined based upon the City’s review of the Developer's request for the receipt of the Conditional HOME Grant and the development proforma for the Project submitted by the Developer to the City (“Proforma”). The City Manager or his/her designee has the authority to approve revised development proformas for the Project; provided, however, that the Conditional HOME Grant is not increased or extended.
The Conditional HOME Grant shall be conditioned on and include the following terms:
The Conditional HOME Grant shall be for a maximum principal amount of $9,807,571.00, or as much thereof, as is disbursed for hard and soft costs in constructing the Project, provided from the HOME Program Fund. The terms and conditions of the Conditional HOME Grant shall be incorporated into a written agreement ("Grant Agreement"), which shall comply with all provisions and requirements of this Pre -Commitment Letter, and any additional terms or conditions that City determines are reasonably necessary to implement the Project and ensure compliance with federal, state and local law.
The disbursement of the Conditional HOME Grant shall be made according to a schedule of disbursements based on written milestone s set forth in the Grant Agreement.
The Grant Agreement shall require a performance deed of trust in favor of the City ("Performance Deed of Trust") securing the obligations of the Grant A greement against the Property ; the City may, in its sole and abso lute discretion, approve alternative security, such as a leasehold deed of trust or a security interest in a construction funding account, subject to terms and conditions agreeable to the City and compliant with the HOME Program . The Performance Deed of T rust (or EXHIBIT 2
- 3 -
alternative security) would terminate and , if applicable, be subject to re - conveyance based upon terms in the Grant Agreement. .
The Grant Agreement shall require that the owner of the Property execute a regulatory agreement with a declaration of covenants, conditions and restrictions ("Regulatory Agreement") to develop the Property with 40 affordable units, as described herein, on terms agreeable to the City. The Regulatory Agreement shall run with the land for the duration of the affordability covenants.
Developer will comply with the attached Schedule of Performance. The Schedule of Performance is designed to ensure timely progress and adherence to HOME Program Fund expenditure deadlines, as mandated by federal funding regulations.
Provided the Developer constructs the Project according to the Scope of Work and Schedule of Performance, the Developer will be subject to no repayment obligation. Upon the initial sale of all units to eligible households pursuant to the Regulatory Agreement, the Grant Agreement shall automatically terminate. In the event the Project is not constructed in compliance with the Scope of Work and Schedule of Performance, the City may terminate the Grant Agreement and may seek repayment of Grant monies not expended on development and construction of the Project pursuant to the default remedy provisions of the Grant Agreement.
The 40 affordable ownership units at the Project shall and will be restricted to an affordable home purchase price , which will require that 30 homes be sold to qualified Low-Income Households who earn up to 80% of the Orange County AMI and 10 homes be sold to qualified Moderate-Income Households who earn up to 120% of the Orange County AMI, as set by the Department of Housing and Urban Development (“HUD”). Future sales of such single-family homes will be restricted to income-qualified households for a period of at least forty-five (45) years, unless City and Developer agree upon an alternative resale model allowing homeowners to generate additional equity.
City and Developer shall evaluate and negotiate the restrictions on resale of the individual single -family homes to determine the benefit of generating additional equity for each household. Any resale restrictions shall comply with requirements of federal, state or local law.
Developer will have a local preference for families who live or work in the City of Santa Ana in the sel ection of Low- and Moderate-Income Households in compliance with Santa Ana Municipal Code Section 8-3500.
Developer will comply with the federal Uniform Relocation Assistance and Real Property Acquisition Policies Act (“URA”) and any other applicable federal, state, or local laws governing relocation or termination of tenancy (collectively, "Relocation Laws"). Developer shall provide the existing tenants on the Project EXHIBIT 2
- 4 -
Site with relocation assistance and any other benefits required by Relocation Laws.
This will include the review and approval by the City of a URA Relocation Plan.
Developer shall assume any and all responsibility and be solely responsible for compliance with all tenant and eviction protections, including but not limited to protections under the California Ten ant Protection Act (Civil Code § 1946.2), the Ellis Act (Government Code § 7060 et seq. ), and Santa Ana's Rent Stabilization and Just Cause Eviction Ordinance (Article XIX of Chapter 8 of the Santa Ana Municipal Code) (collectively, "Eviction Protections") . To the extent applicable, Developer shall comply with and be responsible for all costs of compliance with all relevant Eviction Protections.
Developer will ensure that each “Program Participant” (used interchangeably with “Homebuyer”) means the selected eligible person or family who will be purchasing a house. Each Program Participant will provide sweat equity or any other administrative work as may be designated by Developer . Each Program Participant is to be selected by the Developer as more fully set forth in its Affordable Home Ownership Program. The City shall have the right to review and approve the sweat equity requirements and all other criteria applied through the Affordable Home Ownership Program.
Developer’s Project to develop affordable ownership opportunities with financial support from the City is subject to Chapter 11B of the California Building Code as public housing . Accordingly, Developer’s Project must comply with California Building Code section 11B -233.3. Specifically, Developer’s Project must comply with the requirements for mobility features: “In facilities with residential dwelling units, at least 5 percent, but no fewer than one unit, of the total number of residential dwelling units shall provide mobility features.” Developer’s Project must also comply with the requirements for communication features: “In public housing facilities with residential dwelling units, at least 2 percent, but no f ewer than one unit, of the total number of residential dwelling units shall provide communication features complying with Section 11B -809.5.” Developer’s Project must also comply with the requirements for adaptable features: “In facilities with residentia l dwelling units, adaptable residential dwelling units complying with Sections 11B - 809.6 through 11B -809.12 shall be provided as required by Sections 11B - 233.3.1.2.1 through 11B-233.3.1.2.6. Adaptable residential dwelling units shall be on an accessible route as required by Section 11B-206.” Developer shall comply with these public housing requirements for their Project in the California Building Code by constructing two units in the Project that includes the required mobility , communication, and adaptable features.
Developer will comply with the requirements of the Davis-Bacon Act, as applicable due to the use of HOME federal funds, and any other applicable labor requirements arising from the receipt of the Conditional HOME Grant . This includes ensuring that all laborers and mechanics employed on the Project are paid wages at rates EXHIBIT 2
- 5 -
not less than those prevailing for similar projects in the area, as determined by the U.S. Department of Labor.
Developer will comply with the Build America, Buy America Act, ensuring that all iron, steel, manufactured products, and construction materials used in the Project are produced in the United St ates, subject to HOME Program and federal requirements.
Developer will comply with the environmental review requirements of the National Environmental Policy Act, as mandated for projects utilizing HOME federal funds, ensuring that the Project is evaluated and mitigated for potential environmental impacts in accordance with federal regulations.
At the close of escrow for the purchase of each affordable unit, the City will require each Low- and Moderate-Income Households purchasing such unit to execute the following documents:
o Affordable Housing Resale Restrictions – The Affordable Housing Resale Restrictions shall permit sales of a unit affordable to Low - and Moderate- Income Households to be sold only to a qualified Low- or Moderate-Income Household, according to the income restrictions for the particul ar unit, with a local preference for families who live or work in the City of Santa Ana , in each case, at an Affordable Housing Cost, subject to an alternative resales model agreed upon by City and Developer ; provided, however, that the resale restrictions must comply with the HOME Program requirements; o Notice of Affordability Restrictions on Transfer of Property – The Notice of Affordability Restrictions on Transfer of Property shall be for a term of at least forty-five (45) years;
o Promissory Note – The Homebuyer shall sign a promissory note ("City Promissory Note") for a principal amount equal to the difference between the affordable sales price of the affordable unit and the fair market value of such unit as if no restriction were placed thereon, as de termined by an appraisal, or other amount required by the HOME Program, which is reasonably acceptable to the City, and repayable upon the affordability term or earlier sale of the affordable unit for fair market value, subject to City's approval;
o Deed of Trust – The Homebuyer shall sign a deed of trust ("City Deed of Trust") that secures the City Promissory Note; and,
o Homebuyer Loan Agreement – The loan agreement shall reflect the obligations for the City Promissory Note and the City Deed of Trust. o Pending further negotiation and due diligence with the Developer, these documents may include an alternative resales model to accommodate generation of additional equity for each household or equity sharing agreements with Developer as required by state or local law.
EXHIBIT 2
- 6 -
General Provisions:
The City's obligation to provide the Conditional HOME Grant to the Project is subject to each of the following conditions:
Developer must provide proof that it has secured all of its remaining financing for the development of the Project in the form of enforceable funding commitments before staff will return to the City Council for consideration of the Grant Agreement for the Conditional HOME Grant. The evidence of financing must be submitted to the City and is subject to the City completing a final HOME Subsidy Layering Review.
All provided funding and Project requirements shall conform to the City’s most recently adopted Affordable Housing Funds Policies and Procedures unless alternative requirements are expressly provided in the executed Grant Agreement for the Conditional HOME Grant or any other documents related to the development of the Project.
Approval of all required entitlements and discretionary actions to allow the construction of 40 affordable ownership units to be located at 621 W est Alton Avenue, Santa Ana, CA, 92707 (APN 410-351-02).
The City's obligation to provide the Conditional HOME Grant is and shall remain subject to all covenants, conditions, and restrictions set forth in this pre - commitment letter and the Grant Agreement, and in particular, the City's analysis of the available funding sources and development and operating costs of the Project and the overall economic feasibility of the Project.
Developer's compliance with the Relocation Laws and Eviction Protections, and providing documentation to the City evidencing compliance.
Review and approval of the Grant Agreement evidencing the Conditional HOME Grant by the City Council , including the Grant Agreement and Regulatory Agreement.
The obligations of the Grant Agreement, including obligations of the HOME Program, shall be secured by a Performance Deed of Trust , or other form of security reasonably acceptable to the City and which comply with the HOME Program.
The owner of the Property shall execute the Regulatory Agreement, which shall impose covenants that run with the land to provide the affordable units at an affordable sales price as required by the Grant Agreement upon completion of the Project.
EXHIBIT 2
- 7 -
The Regulatory Agreement and, if applicable, the Performance Deed of Trust, shall be recorded against the Property prior to any disbursements of the Cond itional HOME Grant.
Developer shall establish site control of the Property to the reasonable satisfaction of the City, and City shall have the right to review and approve any conditions of title, as reflected on a preliminary title report, provided at Developer's sole cost and expense. City shall also have the right to require a policy of title insurance securing the Performance Deed of Trust or other security interest in favor of the City for the principal amount of the Conditional HOME Grant and a condition of title guarantee regarding the priority of the Regulatory Agreement.
City shall have received and approved an agreement between Developer and the current owner of the Property regarding transfer and development of the Project. Developer must comp ly with all conditions specified in the Grant Agreement for disbursements of the Conditional HOME Grant.
Subject to compliance with all other requirements of the Conditional HOME Grant, 90% of the City assistance will be disbursed upon issuance of a grading permit, and 10% (i.e., $980,757.00) of the City’s financial assistance will be retained by the City until construction of the Project is complete. Developer shall have provide d adequate construction security (such as performance, labor, and material bonds), as determined by the City; lien releases ensuring that the Property is lien -free, as required by the City; and evidence of insurance that City requires as part of the Grant Agreement. Compliance with applicable federal laws and regulations relating to the HOME Program, as set forth in Title II of the Cranston -Gonzalez National Affordable Housing Act (42 U.S.C. § 12701 -12839), implementing regulations at 24 C.F.R.
Part 92, and all other federal, state, and local laws and regulations relating to the Project.
The City Council's review and approval of the Grant Agreement, the Performance Deed of Trust, and the Regulatory Agreement.
Developer must indemnify, defend, and hold harmless City against loss or damage suffered by City as a result of any claim by any person or entity arising out of or relating to this pre -commitment or the transactions contemplated by this pre - commitment, excluding claims resulting from the City’s gross negligence and/or willful misconduct.
Any other terms and conditions the City determines are reasonably necessary for the Grant Agreement to protect the City's interest and comply with applicable law.
EXHIBIT 2
- 8 -
Developer, at its sole cost and expense, will be responsible for securing any and all permits and discretionary approvals that may be required for the Project by the City or any other federal, state, or local governmental entity having or claiming jurisdiction over the Property or Project. Notably, this pre-commitment letter shall not obligate the City or any department thereof to approve any application or request for or take any other action in connection with any planning approval, permit , or other action necessary for the construction, rehabilitation, installation or operation of the Project.
This pre-commitment letter for the Project will expire on March 4, 2027. The Schedule of Performance will determine any future requested amendments to this expiration date, subject to approval by the City Manager. The City will not allow any HOME Program funds to expire due to federal expenditure deadlines during the pre-development of the Project. As such, the City will reduce the Conditional HOME Grant as needed in order to avoid the City forfeiting any HOME Program funds with no adjustment to the unit mix , economics or structure of the Project. Developer will be responsible for any difference in cost.
If you have any questions or require any additional information regarding this pre - commitment letter, please contact Judson Brown, Housing Division Manager, by telephone at (714) 667-2241 or by e-mail at [email protected].
Sincerely,
On behalf of the City of Santa Ana:
_________________________________
Alvaro Nuñez
City Manager
Attest:
_________________________________
Jennifer L. Hall
City Clerk
RECOMMENDED FOR APPROVAL:
_________________________________
Michael L. Garcia
Executive Director
Community Development Agency
Attachment: Schedule of Performance
EXHIBIT 2
- 9 -
AGREED TO BY:
HABITAT FOR HUMANITY OF ORANGE COUNTY, INC.
______________________
Michael Valentine, President & CEO
EXHIBIT 2
Schedule of Performance
Standard Development Entitlement Path
621 West Alton Avenue
Santa Ana, CA
DEVELOPMENT & CONSTRUCTION ACTIVITY DURATION START FINISH CDR + Entitlements 18 months 01/01/25 07/01/26
Conceptual Design Review Prep & Submittal 3 months 01/01/25 03/31/25 Development Project Review (DPR) Package Submittal 12 months 04/01/25 04/01/26 Sunshine Meeting No. 1 1 month 04/15/25
DPR Comments 1 month 04/30/25
Sunshine Meeting No. 2 1 month 05/15/25
DPR Package Re-Submittal 1 month 05/31/25
Planning Department Approval 12 months 03/31/26
Community Development Commission Approval 3 months 05/31/26 Project Financing Secured (Finance & Fundraise) * 05/31/26 City Council Meeting & Approval 2 months 07/01/26
Demolition Permit & Demolition Complete 5 months 04/01/26 09/01/26 Grading Permit Process & Permitting (At Risk) 5 months 04/01/26 09/01/26 Home Grant Disbursement (90%) 1 month 09/01/26 10/01/26 Construction Drawing Development + Permitting 11 months 04/01/26 01/01/27 Prepare & Complete Construction Docs (At-Risk) 5 months 04/01/26 09/01/26 Submit for Permits (At-Risk) 6 months 09/01/26 03/01/27 Receive Building Permit 03/01/27
12 Months from Agreement being signed 07/01/26 07/01/27 Grant M-19-MC-06-0540 Expenditure Deadline 09/30/27
Grant M-20-MC-06-0539 Expenditure Deadline 09/30/28
Construction 23 months 03/01/27 02/01/29
Construction Complete 23 months 03/01/27 02/01/29
Final Inspection 0 month 02/01/29
Home Grant Disbursement (Final 10%) 1 month 02/01/29 03/01/29 Grant M-21-MC-06-0538 Expenditure Deadline 09/30/29
Grant M-22-MC-06-0537 Expenditure Deadline 09/30/30
Grant M-23-MC-06-0536 Expenditure Deadline 09/30/31
Grant M-24-MC-06-0535 Expenditure Deadline 09/30/32
Total estimate timeline from City processing entitlements and permits to house construction completion is estimated to be 49 months.
Habitat will begin the “at-risk” grading and building permit process upon receiving Planning Department approval. *This schedule aligns with Habitat OC’s resource development activities and schedule to finance the development of this project.
EXHIBIT 2