Housing Department Northwest Manors II City Council through Economic Development and Technology Committee James Wong Senior Project Manager July 20,

Housing Department Staff Recommendation Find that the proposed acquisition/rehab of the Northwest Manors II apartment buildings is categorically exempt under Class 1 (“Existing Facilities”) of CEQA Approve key terms of HOME Loan Agmt with Community Housing Works as a City-Certified Community Housing Dev’t Organization Recognize HOME revenues and appropriate $470,000 the Housing and Career Services FY 2016 Operating Budget for Northwest Manors II project. 2

Housing Department Northwest Manors II 3

Housing Department 700 E. Mountain St. (26 units) 4

Housing Department 965 N. Raymond Ave. (18 units) 5

Housing Department Background Northwest Manors II: 44-unit HUD rental project for low/very low income families, built in 1956 and 1963, owned and operated last 40 years by nonprofit Westminster Housing Group Proposed to be acquired by Community Housing Works, a San Diego-based nonprofit housing developer with 33-year track record including 32 rental projects (over 2,000 units) completed and operating in Southern California and 750 more units in the pipeline. 6

Housing Department Background CHW currently in purchase escrow with Westminster Group Project to be acquired, owned, rehabilitated, and operated under a limited partnership formed by CHW which will be the General Partner member/manager $14.5M total dev’t cost to be financed primarily w/ State sources: 4% low income housing tax credits and multifamily housing bond -- applied on 5/15/15, awarded on 7/17/15 7

Housing Department Background CHW will obtain a 20-year extension of the HUD project-based Section 8 rental subsidies which currently serve Northwest Manors Long-term housing affordability will also be achieved with a 55-year regulatory agreement under the State tax credits Add’l $470,000 City funding is proposed, primarily to assist with rehab, capital upgrades and energy efficiency and sustainability improvements -- $10,682/unit subsidy CHW to re-name the project 8

Housing Department Loan Agmt-Key Business Terms City loan to be funded with federal HOME and HOME/CHDO monies Funds to be used for hard and soft costs related to rehab, capital upgrades, energy and water efficiency upgrades, purchase escrow costs, and project management costs (less than10% of loan) City loan to be secured by a deed of trust, repaid from project residual receipts at 3% simple fixed interest w/ 20-year term 9

Housing Department Loan Agmt-Key Business Terms The City’s HOME loan will also have an affordable housing regulatory agreement w/ a 20-year term (operating under the 55-year tax credit affordable housing covenants) City loan assignable to the limited partnership formed by CHW to own, rehabilitate, and operate the project. CHW shall comply with all applicable City policies including First Source local hiring. 10

Housing Department Project Schedule EDTech Council Committee – 7/9/15 Northwest Commission – 7/14/15 – recommended City Council approval State awarded tax credits and bond financing to project – 7/17/15 Acquisition closing – mid-October 2015 Rehab completion – April 2017 (TCAC req’t) 11