Community Development Agency
www.santa-ana.org/cd
Item # 9
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
July 1, 2025
TOPIC: Pre-Commitment of $920,000 in Affordable Housing Funds for Habitat for Humanity of Orange County
AGENDA TITLE
Approve a Pre-Commitment of up to $920,000 in Inclusionary Housing Funds for Eligible Homebuyers to Purchase Nine (9) Existing Rental Units that will be Converted into Affordable Ownership Condominium Units Located at 425 E. Wellington Avenue
RECOMMENDED ACTION
Approve a pre-commitment letter with Habitat for Humanity of Orange County for up to $920,000 in Inclusionary Housing Funds for eligible homebuyers to purchase nine (9) existing rental units that will be converted into affordable ownership condominium units located at 425 E. Wellington Avenue, Santa Ana, CA (APN 398-028-12) (Agreement No. A-2025-XXX).
GOVERNMENT CODE §84308 APPLIES: No
COMMUNITY DEVELOPMENT COMMISSION RECOMMENDATION
At a special meeting on December 13, 2024, the Community Development Commission recommended the City Council to approve the recommended action by a vote of 5:0.
However, the recommended action was amended by staff following the Commission meeting to add $20,000 and adjust the language of the award to comply with California Government Code §§ 7260 or 66300.6 relocation assistance obligations regarding the conversion of market rate rental units.
DISCUSSION
On October 17, 2023, the City Council authorized the Community Development Agency (“CDA”) to release a Fiscal Year 2023-24 Request for Proposals (“RFP # 23-156”) to develop affordable ownership projects in the City of Santa Ana (“City”) (Exhibit 1). The RFP was prepared in compliance with the City’s Affordable Housing Funds Policies and Procedures. The RFP was published on the City’s website and Planet Bids; a public notice was published in the OC Register on October 25, 2023; and an e-mail was sent out to Orange County’s largest affordable housing membership associations, interested developers, and nonprofit organizations from CDA’s RFP Process Database.
Pre-Commitment of $920,000 in Affordable Housing Funds for Habitat for Humanity of Orange County
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A Review Panel, composed of City staff from the Community Development Agency and Planning and Building Agency together with an affordable housing consultant, used the Scoring and Selection Criteria from the RFP to review all of the proposals. Habitat for Humanity of Orange County, Jamboree Housing, THRIVE Santa Ana, Mary Erikson, and Orange County Community Housing Corporation (“OCCHC”) each submitted a proposal during the period that the RFP was open. Jamboree Housing and THRIVE Santa Ana ended up withdrawing their proposals. The proposal from OCCHC that was scored and reviewed did not meet the minimum threshold requirements and the proposal from Mary Erikson was determined to be infeasible because it was cost prohibitive. Following this review and scoring process, and substantial due diligence, the Review Panel is recommending the following award for a project with Habitat for Humanity to create nine (9) new affordable ownership opportunities:
Developer: Habitat for Humanity of Orange County
•425 E. Wellington Avenue: Up to $920,000 in Inclusionary Housing Funds for eligible homebuyers to purchase nine (9) existing rental units that will be converted into affordable ownership condominium units including: (1) an allocation of $720,000 to the City's Down Payment Assistance Program, and (2) a conditional award up to $200,000 for eligible relocation costs.
Background on Habitat for Humanity of Orange County
Habitat for Humanity of Orange County (“Habitat for Humanity”) is a nonprofit organization dedicated to providing affordable housing for qualifying families. Since 1988, the organization has completed and sold 239 homes in Orange County, including 32 affordable homes in the City of Santa Ana. Habitat for Humanity is currently building an additional six (6) new homes in the City at 1921 W. Washington Ave for low-income families at 80% of the AMI that was made possible with $2.2 million from the City’s Inclusionary Housing Fund. Habitat for Humanity also currently administers the City’s Residential Rehabilitation Grant Program with $500,000 per year in Community Development Block Grant funds. The organization is the largest provider of affordable ownership opportunities in Orange County and also advocates for fair housing policies, addresses substandard housing conditions, and offers families training and resources to achieve homeownership.
Project Description - 425 E. Wellington Avenue
The pre-commitment letter for 425 E. Wellington Avenue, Santa Ana, CA (APN 398- 028-12) between the City and Habitat for Humanity provides an enforceable funding commitment of up to $920,000 in Inclusionary Housing Funds for eligible homebuyers to purchase nine (9) existing rental units that will be converted into affordable ownership condominium units including: (1) an allocation of $720,000 to the City's Down Payment Assistance Program, and (2) a conditional award up to $200,000 for eligible relocation costs (Exhibit 2). The letter is referred to as a pre-commitment because the City has Pre-Commitment of $920,000 in Affordable Housing Funds for Habitat for Humanity of Orange County
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conditions and requirements that must be met before a full commitment can be issued in the form of a Memorandum of Understanding (MOU). The purpose of the pre- commitment letter is to award these program funds to the developer in compliance with the City’s adopted Affordable Housing Funds Policies and Procedures last amended by City Council on August 18, 2020. The letter states the maximum amount of program funds reserved for the project and lists all of the additional conditions, documents, and steps that must be taken before staff will return to City Council with the MOU.
Specifically, this project involves the conversion of an existing nine-unit apartment building into condominiums, which will be made available for homeownership to Low and Moderate-Income households earning less than 120% of the AMI. Habitat for Humanity currently owns the apartment building and purchased it after the building was rehabilitated in May 2024. The building includes one two-bedroom unit and eight one- bedroom units, each with a single bathroom. Unit sizes range from 420 to 846 square feet and are move-in ready. The building recently underwent over $1 million in renovations, which included new flooring, electrical upgrades (new outlets and fixtures), updated kitchen cabinets, and complete bathroom remodels. Doors, windows, shutters, garage doors, stairways, and railings were restored or replaced as needed to meet code compliance.
Current residents of the property with household incomes of less than 120% AMI and that qualify to purchase a unit within the Property will be given the right of first refusal to purchase a unit at an affordable purchase price (eight of the nine units are currently occupied). KMA estimates the moderate income affordable sales prices at $310,400 for the eight (8) one-bedroom units and $350,500 for the one (1) two-bedroom unit. The allocation of $720,000 to the City’s Down Payment Assistance Program will be available for down payment assistance to individual households to purchase a unit, structured as a silent mortgage based on homebuyer eligibility. Homebuyers must meet the eligibility requirements for Habitat for Humanity’s Affordable Homeownership Program with a residency preference for local workers and residents of Santa Ana in accordance with Santa Ana Municipal Code Section 8-3500. The conditional award of up to $200,000 for eligible relocation costs will be available upon a determination by the City that the Project is subject to relocation benefits under California Government Code §§7260 or 66300.6. The specific amounts utilized for relocation benefits will be based on actual amounts determined immediately prior to the relocation of existing tenants.
The City and Habitat for Humanity will enter into a Memorandum of Understanding ("MOU") that sets forth the terms under which the City will provide the homebuyer Down Payment Assistance and conditional relocation award. The MOU will specify that the project is not undertaken by the City and is not in furtherance of a City program. Rather, the MOU is a response to Habitat for Humanity’s request for financial assistance to enhance affordability for qualified homebuyers by providing homebuyer Down Payment Assistance through an existing City program. The MOU will require that Habitat for Humanity execute an affordable housing covenant to offer the nine (9) affordable units Pre-Commitment of $920,000 in Affordable Housing Funds for Habitat for Humanity of Orange County
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to households with income that does not exceed the limits for Low and Moderate- Income Households for an affordable sales price that complies with the limits for an "affordable housing cost," as defined in California Health and Safety Code §50052.5.
The affordable housing covenant will run with the land for a period of forty-five (45) years.
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. The pre-commitment letter will also be conditional on Habitat for Humanity obtaining approval of all required entitlements and discretionary actions to allow the construction, improvement, conversion, and/or development of nine (9) affordable ownership units at 425 E. Wellington Avenue.
In compliance with the City’s Affordable Housing Funds Policies and Procedures, KMA completed a preliminary financial gap analysis for this project (Exhibit 3). Following this analysis and completion of the procurement process, KMA confirmed the preliminary financial gap and need for the Review Panel’s recommendation to award up to $920,000 in Inclusionary Housing Funds. This second project’s economics are described in detail in KMA’s analysis attached as Exhibit 3 to this report.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action because the recommended action consists of a pre-commitment of funds.
FISCAL IMPACT
For 425 E. Wellington Avenue, the MOU is estimated to be finalized for City Council approval in FY 25-26. Upon future approval of the MOU, funds will be budgeted and available as shown below:
Fiscal
Year
Accounting Unit
– Account #
Fund
Description
Accounting Unit,
Account
Description
Amount
FY 25-26 41718820-69152 Inclusionary
Housing Fund Loans and Grants $920,000
Total $920,000
EXHIBITS
1. Staff Report from October 17, 2023
2. Pre-Commitment Letter for 425 E. Wellington Avenue
3. Preliminary Financial Gap Analysis for 425 E. Wellington Avenue Pre-Commitment of $920,000 in Affordable Housing Funds for Habitat for Humanity of Orange County
July 1, 2025
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Submitted By: Michael L. Garcia, Executive Director, Community Development Agency Approved By: Alvaro Nuñez, City Manager