HomeMy WebLinkAboutRDA O2 SR. HSNG 05-21-01AGENDA REPORT
550-10 5-21-01
TO: WILLIAM A. HUSTON, EXECUTIVE DIRECTOR
FROM: REDEVELOPMENT AGENCY STAFF j~"
SUBJECT: CONDITIONAL COMMITMENT LETTER FOR FINANCIAL ASSISTANCE
FOR THE HERITAGE PLACE TUSTIN SENIOR HOUSING PROJECT
SUMMARY
This action is to authorize the Executive Director to issue a conditional commitment
letter to American Senior Living, Inc. for the proposed Heritage Place Tustin Senior
apartment project and to enter negotiations for providing financial assistance to be
subject to the Agency's future approval.
RECOMMENDATION
It is recommended that the Agency:
1. Authorize the Executive Director to issue a conditional commitment letter for the
proposed Heritage Place Tustin Senior apartment project for the purpose of
enabling American Senior Living, Inc. to submit an application for housing tax
credit bond financing.
2. Authorize Agency staff to negotiate appropriate loan terms and prepare
agreements to be submitted to the Agency for approval.
FISCAL IMPACT
This action will have no fiscal impact on the Redevelopment Agency at this time. If the
negotiations result in a loan agreement, the fiscal impact of such an agreement will be
discussed if Agency approval is requested in the future.
DISCUSSION
American Senior Living, Inc. is proposing to construct a 54-unit senior, independent
living apartment project located at 1101 Sycamore Street consisting of 42 one-bedroom
units and 12 two-bedroom units. All of the apartments will have affordable rents for a
period of 55 years for households at 60% of the area median income, with the exception
of 10% of the total units will be affordable to households at 50% of the area median
William A. Huston
Heritage Place Tustin Commitment Letter
May 21, 2001
Page 2
income. Agency staff and Community Development have worked with the developer for
some time evaluating the development design and the financial feasibility for the project.
The Planning Commission reviewed the project at their meeting on May 14 and
approved the design review and Conditional Use Permit conditioned on the City
Council's approval of the Zone Change and General Plan Amendment to be reviewed at
the Council's meeting on May 21, 2001.
The estimated development cost for the project is approximately $6,775,000 of which
approximately $3,594,100 would be financed using housing revenue bonds. The bonds
will be privately placed by Bank of America, which will also provide construction
financing for the project. American Senior Living, Inc. will partner with Sun America,
Inc. to back the bonds in the event of a default by the apartment owner and also serve
as the tax credit equity partner who will contribute approximately $1,613,198 to the
project. American Senior Living, Inc. anticipates receiving a $300,000 loan from the
Federal Home Loan Bank Affordable Housing Program and the developer will defer
approximately $91,000 in developer fees. In addition, the County of Orange Housing
and Community Development will fund a Iow interest loan in an amount not to exceed
$541,903, as approved by the Board of Supervisors on February 6, 2001. The City of
Tustin Redevelopment Agency is being requested to fund up to $600,000 to complete
the financing for the project. Funds for any Agency financing could come from the
Agency's Low and Moderate Income Housing Set-Aside Fund and the California
Housing Finance Authority "HELP" program loan funds, which were awarded to the City
in January 2001 for the purpose of making short-term loans to leverage other public
financing commitments.
American Senior Living, Inc. has submitted a request for the County of Orange to issue
housing revenue bonds for financing the project. As part of the bond financing
application process, the County has agreed to conduct a Taxing Entity Financial
Responsibility Act (TEFRA) hearing on May 22 and is expected to adopt an Inducement
Resolution supporting the application for revenue bond financing and an allocation of
4% Iow-income tax credits. The revenue bond financing and tax credit allocation is
subject to the California Debt Limit Allocation Committee (CDLAC) approval of a private
activity bond allocation in August, 2001 for which the Developer and County must
submit an application by June 1, 2001. If CDLAC approves the bond application, the
County will finalize the terms of the bond financing and prepare the bond documents
and Agency staff will finalize financing agreements with the developer to be submitted to
the Agency for consideration. If the Developer is successful in obtaining all of the
aforementioned funding, including the City's assistance, construction of the project is
expected to be completed in 2002.
William A. Huston
Heritage Place Tustin Commitment Letter
May 21, 2001
Page 3
It is recommended that the Agency authorize the Executive Director to issue a
conditional commitment letter to American Senior Living, Inc. and negotiate the terms of
the Agency's financial assistance so that the Developer and County may prepare and
submit the bond application to CDLAC by June 1, 2001. Staff will be available to
answer any questions the Board may have.
C h rist i n e"'S I~i gr~et'of~ James Draug~hon,/
Assistant City Manager Redevelopm~rogram Manager