APPROVAL OF THE THIRD AMENDMENT TO THE DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE ONTARIO HOUSING AUTHORITY AND ONTARIO SENIOR HOUSING PARTNERS, L.P.

SUBJECT:

APPROVAL OF THE THIRD AMENDMENT TO THE DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE ONTARIO HOUSING AUTHORITY AND ONTARIO SENIOR HOUSING PARTNERS, L.P.

RECOMMENDATION: That the Board of the Ontario Housing Authority (“Authority”):

A. Adopt the attached Resolution approving the Third Amendment to the Disposition and Development Agreement (“Agreement”) between the Authority and Ontario Senior Housing Partners, L.P., (“Developer”) which is on file with the Records Management Department and

B. Authorize the Executive Director of the Authority to execute any and all documents necessary or desirable to implement the Agreement.

COUNCIL GOALS: Focus Resources in Ontario’s Commercial and Residential Neighborhoods

• Concentrate resources on preserving the City’s historic neighborhoods and housing stock and promote neighborhood identity in existing single-family neighborhoods.
• Provide new housing development opportunities to address the City’s regional housing needs.

FISCAL IMPACT: The Authority will increase the existing gap loan by $1,000,000, from $4,155,500 to a loan not to exceed $5,155,500. The $5,155,500 loan will be funded utilizing federal HOME funds ($1,871,573) and Low- and Moderate-Income Housing Funds (LMIHF) ($3,283,927). The loan will have a 55-year term with an interest rate of one percent (1%) simple interest. The loan will be paid back utilizing 85% of the residual cash flow. Any remaining balance at the end of the 55-year term is due and payable. In addition, the Authority has the option to purchase the property back from the Developer for $1.00 at the end of the 55-year term.

To date, $460,500 of the $1,871,573 in HOME funds has been expended by the Ontario Housing Authority to acquire from the City of Ontario the 1.16-acre site located in the existing City Hall parking lot adjacent to the Senior Center as shown on Exhibit A. The sales price was supported by an independent appraisal completed by a certified general appraiser.

BACKGROUND: On February 6, 2007, the Authority approved the Disposition and Development Agreement that provides the affordable senior housing component of the Ontario Town Square Project. The Ontario Town Square Senior Project will result in the construction of 76 affordable senior rental housing units for very low- and low-income seniors. All of the units in the proposed Project will remain affordable for a 55-year period as required under the tax credit guidelines and California Community Redevelopment Law. A breakdown of the current fiscal year rent schedule and unit mix is attached (Exhibit B). Rent increases are limited annually by the percentage increase in incomes established by the U.S. Department of Housing and Urban Development (“HUD”) for the San Bernardino Metropolitan Statistical Area.

On March 18, 2008, the Authority approved the First Amendment to the Disposition and Development Agreement that increased the original gap loan by $400,000, from $3,755,500 to $4,155,500. On December 16, 2008, the Authority approved the Second Amendment that extended the period of time for the Developer to apply for tax credits from June 30, 2008 to December 31, 2009.

The Developer is Ontario Senior Housing Partners, L.P., an affiliate of The Related Companies of California, located in Irvine, California. The Related Companies of California was formed in 1989 by William Witte and Stephen Ross to focus on the development of multifamily housing in California. The Related Companies of California has extensive experience in developing award winning housing developments. Since its inception, Related Companies of California has developed over 6,000 units of housing in California, with properties in San Francisco, Oakland, San Jose, Los Angeles, San Diego, Los Angeles County, Orange County, San Bernardino County, and San Diego County.

The primary source of funding for the project will be from the Federal Low-Income Housing Tax Credit (“LIHTC”) program and has been secured by the Developer. This program is administered by the California Tax Credit Allocation Committee (“TCAC”) with tax credits (sold to fund project equity). The Developer estimates construction will begin no later than August 2009 and would be completed within approximately 14 months from the start of construction. After completion of the Project, Agency staff will monitor the Project annually to certify that rents remain affordable and that the Project is being properly maintained.

The estimated total Project construction cost is $18,137,379. The following is a breakdown of the permanent funding sources for the Project: Tax Credit Equity ($11,757,879); Private Financing ($1,224,000); and Authority Gap Loan ($5,155,500). The requested increase of $1,000,000 in the Authority’s gap loan is due to a decrease in the value of tax credits sold to investors to provide the Developer’s equity portion of constructions costs and an increase in construction and financing costs. The repayment of the Authority gap loan is supported by the conclusions of an independent financial consultant. The Developer will be required to submit all construction bids to the Authority for review and approval. Any costs savings will reduce the Authority’s gap loan.

The Project has been designed with the highest level of architectural features to provide exceptional benefits to the City. The Developer has carefully designed the Project with an architectural style that is similar to the early work of Frank Lloyd Wright. This is expressed with substantial roof overhangs, a strong “base” of masonry extending to the upper story, warm colors and surface texture variety, large arches at primary entrances and strong linear elements. This character will harmonize with the other projects currently planned within the Ontario Town Square Project Area. The proposed site plan and architectural elevations are attached (Exhibit C).

The Ontario Town Square Senior Project is ideally located next to the City of Ontario Senior Center, City of Ontario Library, public transportation, and local shopping to enhance the quality of life for the future senior residents. The Project will share a common driveway with a City Hall parking lot that will be maintained by the City.

Environmental Review

On November 16, 2004, the City Council and the Authority Board certified a Final Environmental Impact Report (“EIR”) that covers the project.

All potential adverse direct, indirect and cumulative impacts have been thoroughly analyzed and discussed in the EIR including, but not limited to, potential traffic, noise, air quality and aesthetic impacts, and all feasible mitigation has been identified and incorporated into the proposed project. The proposed Project does not contemplate any actions that would require the preparation of a subsequent or supplemental environmental document under State CEQA Guidelines sections 15162 or 15163. The proposed Project is consistent with the development scenarios identified within the EIR and no further environmental review is required.

STAFF MEMBER PRESENTING: Brent Schultz, Housing & Neighborhood Revitalization Director

Exhibit A

Exhibit B

Exhibit C