board of directors - calhfa.ca.gov · 15/02/2018 · fannie mae document ... needs and projected...

BOARD OF DIRECTORS

California Housing Finance Agency Board of Directors

February 15, 2018

Bank of the West Tower

500 Capitol Mall Conference Center, 18th Floor

Sacramento, California (916) 326-8000 (CalHFA Receptionist)

10:00 a.m.

1. Roll Call. 2. Approval of the minutes of the January 16, 2018 Board of Directors meeting ................ 01

3. Chairman/Executive Director comments. 4. Presentation by California Tax Credit Allocation Committee (CTCAC) Executive Director,

Mark Stivers on New CTCAC Policy Initiatives. 5. Discussion, recommendation and possible action regarding final loan commitments for

the following projects:

NUMBER DEVELOPMENT LOCALITY UNITS 16-003-N Chateau Lafayette Lafayette/Contra Costa 67 (Michael Carroll, Steve Lierly) Resolution No. 18-03 .................................................................................................... 06 17-017-S Ramona Seniors Apartments Ramona/San Diego 62 (Michael Carroll, Sabrina Saxton) Resolution No. 18-04 .................................................................................................... 33 17-029-N Arbor Park Apartments San Jose/Santa Clara 75 (Michael Carroll, Ruth Vakili) Resolution No. 18-05 .................................................................................................... 61 17-012-M/S Whittier and Downey SE Los Angeles/Los Angeles 71 (Michael Carroll, Ruth Vakili) Resolution No. 18-06 .................................................................................................... 90

6. Discussion, recommendation and possible action to approve policy for use of Home Purchase Assistance to non-first time homebuyers of low and moderate income impacted in disaster-declared counties. Resolution No. 18-07 (Tim Hsu) .................... 120

7. Presentation on Multifamily Conduit Issuance Program and Pipeline ............................ 128

8. Reports:

A. Summary of “The Economic Impact of Keep Your Home California” report

prepared for CalHFA MAC ........................................................................................ 130 B. CalHFA State Leadership Accountability Act Report on Agency risks as of

December 31, 2017 ................................................................................................... 144

C. Report Back to Board on Transitional Operating Reserve Policy and the Southlake Tower Senior Apartments ......................................................................................... 151

D. Legislative Update ..................................................................................................... 152

9. Discussion of other Board matters. 10. Public testimony: Discussion only of other matters to be brought to the Board’s attention. 11. Adjournment. 12. Handouts.

NOTES**

PARKING: Public parking at Bank of the West Tower – Entrance at 5th and N Streets. Public parking: 1) Bank of the West Parking structure ($1.75 per 20 minutes, $18 maximum); 2) Street parking available via meter ranging from 2 hours to 10 hours; 3) Other nearby parking structures.

REFRESHMENTS: Available for purchase at Specialty’s Café in the lobby.

FUTURE MEETING DATE: Next CalHFA Board of Directors Meeting will be March 15, 2018, at California State Teachers’ Retirement System (CalSTRS), 100 Waterfront Place (Boardroom located in Lobby), West Sacramento, CA

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MINUTES

California Housing Finance Agency (CalHFA) Board of Directors Meeting

January 16, 2018 Meeting noticed on January 5, 2018

1. ROLL CALL The California Housing Finance Agency Board meeting was called to order at 10:00 a.m. by Acting Chair Gunning. A quorum of members was present. MEMBERS PRESENT: Schaefer (for Chiang), Wong-Hernandez (for Cohen),

Gunning, Imbasciani, Amann (for Metcalf), Patterson, von Koch-Liebert (for Podesta), Prince, Russell, Sotelo

MEMBERS ARRIVING AFTER ROLL CALL: Avila Farias MEMBERS ABSENT: Alex, Gallagher, Hunter, Johnson-Hall STAFF PRESENT: Michael Carroll, Don Cavier, Melissa Flores, Oksana

Glushchenko, Steve Lierly, Ruth Vakili, Marc Victor 2. APPROVAL OF MINUTES – December 12, 2017 The motion made by Imbasciani to adopt the meeting minutes was approved. The votes were as follows: AYES: Schaefer (for Chiang), Imbasciani, Amann (for Metcalf), von Koch-Liebert

(for Podesta), Prince, Russell, Sotelo

NOES: None.

ABSTAIN: Gunning

ABSENT: Gallagher, Hunter, Johnson-Hall, Avila Farias 3. CHAIRMAN/EXECUTIVE DIRECTOR COMMENTS Acting Chair Gunning wished former Chair Falk a happy retirement in abstentia, as he was not present for the December 12, 2017 Board of Directors meeting. Executive Director comments: At our last Board Meeting, we increased our income limits, and made simplifications to our household size calculations. In addition to that, we have:

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a) reduced our interest rate extension fee; b) re-branded our Extra Credit Teachers Program with the School Teacher and

Employee Assistance Program; c) three new products set to launch on February 1, 2018: Leasehold Estates;

Community Land Trust, and a Limited 203k option on our FHA loans, and d) eliminated the use of Mortgage Credit Certificates as a qualifier for loans. e) Our new Director of Administration has worked to update employees’ duty

statements; implemented a process to ensure performance evaluations are timely completed; and

f) we have begun the process to fill the vacant positions of Director of Homeownership, General Counsel, and Director of Legislation.

g) The Governor has released his January 10, 2018 budget, and the administration will continue efforts to implement programs included in the 2017 legislative package.

Russell requested the floor and commented that he would like more information on community land trusts (CLTs). Executive Director briefly explained that CLTs and CalHFA’s regulatory agreements and guidelines are now aligned allowing them to use our loans for various affordable housing products, and will enable us to help with disaster recovery efforts.

4. Report of the Chair of the Audit Committee A. Chair Gunning reported on the results of the Housing Finance Fund Audit and

Single Audit of federal programs by CliftonLarsonAllen (CLA). The Fund’s operating income was offset by the effects of Senate Bill 837, resulting in a $190 million reduction in the Fund’s net position.

The Single Audit had a repeat finding: 1 of 15 projects did not make the required

monthly deposit to the replacement reserve account, and 1 of 12 projects did not have the management occupancy review completed within the 12 month period. CLA recommended that the Asset Management Division review staffing levels, and establish written procedures for its activities.

The Executive Office engaged a consultant to review the Asset Management

Division; the report will be available at the March Board meeting. The two remaining Agreed-Upon Procedure reports for the MyHome Program and

Fannie Mae Document Custodian had no findings. von Koch-Liebert requested the floor and asked if the consultant will be looking

at solutions regarding the reserves, or focusing solely on internal activities within the Division. Cavier replied that staff are working on the reserves issue, and the consultant will be reviewing overall operations in an effort to stop audit findings from occurring.

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B. Discussion of the Agency’s Comprehensive Annual Financial Report. Glushchenko reported that this is our first year preparing the Comprehensive

Annual Finance Report (CAFR) using guidelines established by the Government Finance Officers Association (GFOA), and explained the information it contains. We will be entering our CAFR into GFOA’s Certificate of Achievement for Excellence in Financial Reporting Program, and our Popular Annual Financial Report in the Popular Annual Financial Reporting Award Program. Glushchenko recognized all CalHFA and CLA staff for their contributions to the CAFR. Glushchenko and Executive Director especially thanked Cavier, and wished him luck in winning these awards.

BUSINESS ITEMS: 5. Final Loan Commitment for Southlake Tower Senior Apartments, No. 17-022-N, for

130 Units located in Oakland/Alameda – Resolution No. 18-01. Presented by Carroll, Lierly, and Tony Weng, Project Manager, Christian Church Homes. On a motion by Prince, the Board approved staff recommendation for Resolution 18-01. The votes were as follows: AYES: Avila Farias, Schaefer (for Chiang), Gunning, Imbasciani, Amann (for

Metcalf), von Koch-Liebert (for Podesta), Prince, Russell, Sotelo

NOES: None.

ABSTAIN: None.

ABSENT: Gallagher, Hunter, Johnson-Hall

Sotelo requested the floor and commented on her concerns re: a waiver of the transitional operating reserve in this transaction; asked that staff revisit the issue, and perhaps have the Board discuss the development of policy on this issue. Executive Director and Carroll committed to report back at the next meeting with an analysis and negotiations with the borrower around the reserves.

Final Loan Commitment for Susanville Garden Apartments, No. 17-013-A/N, for 64

Units located in Susanville/Lassen – Resolution No. 18-02. Presented by Carroll, Vakili, and Danielle Curtis Bennett, President, Alliance Property Group, Inc. On a motion by Sotelo, the Board approved staff recommendation for Resolution 18-02. The votes were as follows:

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AYES: Avila Farias, Schaefer (for Chiang), Gunning, Imbasciani, Amann (for Metcalf), von Koch-Liebert (for Podesta), Prince, Russell, Sotelo

NOES: None. ABSTAIN: None.

ABSENT: Gallagher, Hunter, Johnson-Hall 6. Discussion regarding the Housing Assistance Payments (HAP) Contract National

Support Services (HAPNSS) [Formerly known as Performance-Based Contract Administrator (PBCA) Program] federal solicitation released December 01, 2017.

Carroll reported on the 18 year history of HUD contracting out for the administration of the HAP, and CalHFA’s bidding history. Prince recused himself and left the room as his organization may be a potential

bidder. Unlike past solicitations, there is no requirement that a Public Housing Agency (PHA) be a part of the contracting entity, which is an issue for CalHFA, and would hamper our ability to bid on the process. We plan to comment that CalHFA would prefer there be a PHA requirement, but if there is none, we would be at a competitive disadvantage in bidding. 7. REPORTS Acting Chair Gunning asked Board members if they had any questions about the reports and there were none. 8. DISCUSSION OF OTHER BOARD MATTERS Executive Director extended her thanks to the Marketing Division as they were instrumental in working with Fiscal Services and Cavier in putting together the CAFR. Flores announced to the Board that the tentative February 15, 2018 Board Meeting will occur. 9. PUBLIC TESTIMONY: DISCUSSION ONLY OF OTHER MATTERS TO BE

BROUGHT TO THE BOARD’S ATTENTION None.

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10. ADJOURNMENT

As there was no further business to be conducted, Acting Chair Gunning adjourned the meeting at 11:12 a.m. 11. HANDOUTS CalHFA’s 2016/17 Comprehensive Annual Financial Report (CAFR) was distributed to Board Members. __________________________________

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MULTIFAMILY PROGRAMS DIVISION

Final Review & Request for Loan Approval FFB Permanent Refinancing with Equity Cash Out

Senior Loan Committee Approval: 1/19/2018 for Board Meeting on: 2/15/2018

Project Name (City, County) Chateau Lafayette (Lafayette, Contra Costa County)

CalHFA Project Number: 16-003-N

CalHFA Loan Amount(s) $12,750,000

CalHFA Loan Program: FFB Permanent Refinancing Loan

CalHFA Tax Exempt Bond Conduit Issuance Amount:

N/A

TRANSACTION FACTS

Loan Officer: Steve Lierly Underwriting Specialist: Steve Beckman

Asset Management: Richard Dewey Loan Administration: Josie Hernandez

Legal (Internal): Nicole Slaton Legal (External): N/A

Projected Closing Date: 4/1/2018 Approval Expiration Date: 9/28/2018

1. Address 3512 Moraga Boulevard, Lafayette, CA 94549

2. Legislative Districts Congress: #11 Mark

DeSaulnier

Assembly: #16 Catherine

Baker

State Senate:

#7 Steven Glazer

3. Brief Project Description The Project is a well-maintained senior apartment complex located in the City of Lafayette, Contra Costa County that is an expensive community between Moraga and Walnut Creek. The Project has been in CalHFA’s portfolio since 1978 and consists of five buildings from 1 to 3 stories in height located on a 1.88-acre parcel. There are 67 total units and all but 3 units are elevator assisted. The Project is restricted to seniors 62 and older by an existing and soon to expire, Section 8 HAP contract that will be replaced when the CalHFA loan is refinanced, by a new 20-year Section 8 HAP contract from the HUD Multifamily West Region/ San Francisco Region Center reflecting updated fair market rents. The Project’s amenities include a library, fitness room, computer room, and common dining room for special occasions. The grounds have mature trees, significant landscaping and an outdoor deck and gazebo. The Project has convenient access to public transportation and is within easy walking distance to the downtown core of Lafayette in the County of Contra Costa. The Borrower has been diligent in its property maintenance, as evidenced by the lack of findings in the Physical Needs Analysis (PNA) that found no substantive immediate needs and projected that the replacement reserves alone would sustain the remaining economic useful life through the 40-year term of the new CalHFA loan. The initial replacement reserve deposit is $67,000 or $1,000 per unit with annual replacement reserve deposits of $400 per unit per year, which exceeds the recommendations of the PNA provider’s replacement reserve analysis. The borrower has chosen to use loan proceeds to make voluntary improvements to the property for improved appearance and long-term sustainability. Proposed improvements include new siding, dual pane

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Chateau Lafayette: Permanent Refinancing Loan – 16-003-N Page - 2 Loan Amount: $12,750,000

windows, and the partial replacement of balconies, deck walkways and railings, including any revealed conditions of dry rot damage. The construction budget including a 10% contingency is $1,549,500. After anticipated rehab costs and repayment of the $325,000 CalHFA loan balance, the Borrower will obtain equity cash-out of approximately $11 million dollars for additional affordable housing endeavors.

4. Sponsor/Developer Barcelon Associates Management Corp., a California corporation / Lafayette Senior Housing Association, Inc., a California non-profit corporation

5. Borrower Lafayette Senior Housing Association, Inc., a California non-profit corporation

CALHFA LOAN TERMS

Acquisition & Rehabilitation Loan CalHFA Permanent Refinancing Loan

6. Total Loan Amount N/A $12,750,000

7. Loan Term N/A 40 years, Fully Amortizing

8. Interest Rate

N/A 10-Year Treasury + 1.85% Currently underwritten at 4.75%, which

includes a 25bp buffer. The rate is subject to change and will be locked up to 30 days prior

to loan closing.

9. Loan to Value N/A 68%

10. Loan to Cost N/A N/A

11. Equity Cash Out N/A $11,000,000 (estimated)

TRANSACTION CONCLUSIONS

12. Project Strengths

The new financing extends the CalHFA very-low income affordability restrictions for at least 20 years;

The Project has a commitment for a new, 20-year HAP contract for all of the units;

The CalHFA Regulatory Agreement will restrict rents on 20% of the units at 50% AMI;

The Project will remain in the CalHFA portfolio and preserve 66 units of affordable housing in Lafayette, California;

The Project will undergo rehabilitation to enhance sustainability;

The Project is in a high-cost area with an established need for senior units;

The Project has a history of staying fully occupied with an extensive waiting list.

13. Project Weaknesses with Mitigants:

The Borrower, Lafayette Senior Housing Associates, Inc., consists of a Board of Directors and no staff, however; Barcelon Associates Management Corp., is acting as agent for the Borrower and procured the Section 8 HAP renewal and is capable of managing the anticipated improvements;

CalHFA will relinquish administration to HUD of the new Section 8 HAP contract;

CalHFA intends to withhold $1,000,000 of the Equity Takeout amount as an incentive and potential contingency construction funding to provide for the expected Project improvements.

14. Underwriting Policy or Term Sheet Variations

There will be no requirement for an OER because the Project has a history of being fully leased and handling debt and expenses without the benefit of an OER for well over thirty years.

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15. Conclusion/Recommendation:

The Multifamily Lending Division supports approval of this loan at the amount requested and subject to the terms proposed.

MISSION & AFFORDABILITY

16. CalHFA Mission/Goals

This refinancing of an affordable senior project in the CalHFA portfolio preserves the affordability of senior housing in a high-cost area and upgrades the Project for a longer useful life. This transaction will also keep the Project in the CalHFA portfolio subject to continued CalHFA asset management oversight. The equity takeout will be available to an affiliated entity to develop additional affordable housing in the region and is consistent with our mission and goals.

17. Project Affordability Restrictions

100% of the units will be restricted to new tenants at less than 50% of AMI due to the HUD HAP contract.

Regulating Agency 50% AMI

Total Units Regulated

Restricted until

CalHFA 14 14 2038

In practice and application, the Project affordability will continue as is currently enforced by CalHFA and HUD.

18. CalHFA Affordability Restrictions

The CalHFA Regulatory Agreement will restrict 20% of the units to 50% AMI for a period up to 40 years but not less than 20 years

19. Geocoder Information

Development is in a former Redevelopment project area o Central City: No o Low/Mod Census Tract: Moderate o Minority Census Tract: No – 26.17% o Underserved: No o Below poverty line 12.69%

CURRENT PORTFOLIO LOAN

20. Previous CalHFA Loan: Yes No

21. Unpaid Principal Balance: $325,000

22. Loan Maturity Date: 9/1/19

23. Affordability Restriction Expiration: 9/1/19

24. Yield Maintenance Due: $0

25. Other CalHFA Debt: N/A

26. Other Debt Sources N/A

ANTICIPATED PROJECT MILESTONES & SCHEDULE

27. CDLAC/TCAC Closing Deadline: N/A

28. Estimated Permanent Loan Closing Date: 4/17/18

29. Estimated Construction Start: 4/30/18

30. Estimated Construction Completion: October 2018

31. Est. Stabilization & Conversion to Perm N/A

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PROJECT FINANCING STRUCTURE

32. Acq/Rehab Debt & Grants

Source Amount Lien Position Debt Type

N/A

33. Permanent Debt & Grants


CalHFA Permanent Loan $12,750,000 1 Fully Amortizing

34. Tax Credit Equity N/A Type: N/A

Expected Pricing: N/A Tax Credit Investor: N/A

35. Cash Flow Analysis

The CalHFA Permanent Refinance Loan was underwritten assuming HAP rents and an operating budget that is reasonable and consistent with the Project’s historical operations. The debt service coverage in the first year of operations is projected to be 1.16 and remains stable through Year 40. This is based on annual increases of 2.5% for rents, 1.5% for Section 8 subsidies for the term of the loan, and 3.5% for operating expenses with replacement reserves increasing 1% each year.

36. Exit Strategy

N/A

DEVELOPMENT SUMMARY

37. Total Development Costs N/A Per Unit: N/A

38. Hard Development Costs $1,226,500 Per Unit: $18,306

39. Hard Development Contingencies $123,000 % of Hard Development Costs: 10%

40. Site Description

The 1.88-acre square-shaped parcel is generally flat and contains the Project;

The site is in Flood Zone X which is a low risk area; and

The property is zoned for Multifamily and is a conforming use.

41. Form of Site Control & Expiration Date N/A –refinancing of existing property with no change of ownership.

42. Current Ownership Entity of Record Lafayette Senior Housing Association, Inc., a California nonprofit corporation

43. Environmental Review

A Phase I Environmental Site Assessment performed by Partner Engineering and Science, Inc. (“Partner”) is dated July 14, 2016. During Partner’s July 7, 2016 site reconnaissance, Partner observed the presence of a dry cleaning facility, identified as Marshall Steel Cleaners, on the western-adjacent property at 960 Moraga Road. This dry cleaning facility is located hydrologically up gradient relative to the Project. Partner suggested a limited subsurface investigation would be necessary to determine the presence or absence of soil and/or groundwater contamination beneath the subject property due to the current and former presence of dry cleaning facilities on the western-adjacent properties. Partner conducted sub-slab soil gas samples on August 25, 2016, which were analyzed by SunStar Laboratories. Based on the Sub-Slab Soil Gas Survey; there is a Volatile Organic Compounds (VOC) impact to the soil gas underlying the Project, the cancer risk to current and future residents at the Project is within the range typically considered acceptable by regulatory agencies and the detected concentrations of PCE and TCE in soil gas are not expected to represent a vapor intrusion concern to residential occupants.

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Partner recommended no further investigation with respect to the adjacent dry cleaners at that time. The Agency will require an updated Phase1 prior to close of escrow that includes the Borrower and Agency for CERCLA protection. The existing Phase 1 was provided by Barcelon and does not meet all Agency legal requirements but provided reliable due diligence assistance.

44. Seismic Review

The Borrower will continue to purchase earthquake insurance via the CalHFA pool.

45. Relocation

The scope of work will be primarily on the outside of the buildings so no permanent or temporary relocation is necessary. Any unforeseen relocation issues will be subject to a plan in compliance with the applicable laws and as approved by the Agency.

46. Construction Scope

The following work is to be performed by borrower for additional project sustainability and appearance using a portion of the loan proceeds:

o Repair and replacement of all siding and trim including new moisture barrier wrap; o Replacement of all residential windows; and o Replacement and or repair of any identified dry rot beneath siding or on decks, walkways and balconies including

beams, joists, railings, post and rails where indicated.

47. Budget Comments:

The budget for the voluntary Scope of Work is $1,226,500 or $18,306 per unit, and there is a 10% contingency of $130,000 which makes the total withheld for construction $1,549,500. The development budget includes $67,000 ($1,000 per unit) for the capitalized replacement reserve with annual per unit reserves of $400 each. The estimated net equity out to the borrower is $11,000,000. CalHFA will retain from the initial equity payout, $1,000,000 to be held as both an incentive for the completion of the voluntary improvements and as additional source for cost overruns if required. The equity retention shall be released to Borrower at the satisfactory completion of the improvements.

PROJECT DETAILS

48. Tenancy / Occupancy Type: Senior – age 62 and older

49. If Special Needs, Population to be Served:

N/A

50. Total Residential Units: 67

51. Property Construction One, two and three-story wood-frame buildings.

Buildings: 5 Stories: 1-2&3

Elevators: 2 Unit Style: Flats

Year Built: 1979 Year of Last Rehab: N/A

52. Total Land Area (acres) 1.88

Residential Sq. Footage: 41,872 Residential Units per Acre: 36.02

Covered Parking Spaces: 0 Total Parking Spaces: 27

53. Commercial Space: Yes No Square Footage: N/A

54. Appraisal Review

The appraisal valuation is based on an income capitalization approach and identified nine comparable properties located within two miles of the Project.

The appraiser reported that capitalization rates for comparable multifamily properties ranged from 3.60% to 5.75%. The appraiser chose a 5.25% capitalization rate for the Project.

A 5% vacancy rate was chosen that includes collection expense; historically the Project has experienced a 3% vacancy rate but 5% was used to account for additional future housing stock in the market.

The appraiser determined $18,670,000 as-restricted and renovated value.

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The CalHFA permanent refinancing loan is 68% of the as-restricted and renovated value.

55. Property Description

This 67-unit Project was developed in 1979 on a 1.88-acre site consisting of three, two and three-story buildings and one single story building.

The construction is wood frame with a concrete slab on grade foundation. Siding consists of painted plywood; the roof is flat and pitched with composition shingles.

Site amenities include a leasing/management office, community room with full kitchen, a laundry room, a library, a fitness room, outdoor barbecue area, and controlled building access for those units located in the multi-story buildings.

All units are one-bedroom/one-bath and have electric stoves; there is wall mounted combination air conditioning and electric heaters. All units include a refrigerator, garbage disposer, sink and vent hood. Basic wood cabinetry exists in the unit kitchens and bathrooms. All units face outward and have a balcony or patio.

Two central gas-fired boilers are provided for the hot water and hydronic heating systems. One central hot water storage tank is provided on the site.

There are 27 open parking spaces.

Each unit has standard lighting and hallways have fire sprinklers.

MARKET ANALYSIS

56. Market Study: Cushman and Wakefield Western, Inc. 11-18-16 Mark-Up-To-Market Report

57. Regional Market Overview

The unemployment rate in the Bay Area was 3.7 percent in June 2017, up from 3.6 percent in March and below the 4.2 percent one year ago. With a total labor force at 4.1 million, the region currently employs just under 4.0 million of its residents. The Bay Area continued its strong job growth momentum, adding 79,700 nonfarm jobs from a year ago. Since its unemployment peak of 11.7 percent in the first quarter of 2010, 699,800 jobs have been created across the region.

The average asking rent increased modestly to $2,639, up 4.6 percent from the second quarter 2016 to second quarter 2017. This shows a cooling trend compared to its growth of 8.9 percent over the previous one-year period. Average vacancy ticked up year-over-year in the Bay Area by 10 basis points to 3.9 percent. Both new construction and value-add properties are contributing a higher percentage of affordable housing to curb increasing rental rates. Moderate rent growth is expected for the coming year, adding further stress to the nation’s most expensive market.

58. Local Market Area Analysis

The East Bay has as average rental rate of $2,211, with a vacancy rate of approximately 3 percent. The East Bay average rental rate is below that of San Francisco, the Peninsula, and the South Bay and above that of the North Bay. The East Bay vacancy rate is second to lowest in the Bay Area, just above the North Bay and below that of San Francisco. Published market statistics by commercial brokerage firms over the past year, as well as discussions with local property managers and property owners indicate little change in rental and occupancy rates across the Bay Area apartment market. Lafayette is located in the San Ramon/Walnut Creek submarket of the East Bay, according to statistics published by REIS. As of the second quarter of 2017, Contra Costa County average rental rates were $1,900, up 2.7 percent since the prior year, while vacancy ticked up two basis points to 2.7 percent. In the subject submarket, rental rates were averaging approximately $2,300 at the end of the second quarter and vacancy was 2.5 percent. This represents an approximately two percent rental rate growth year over year, while vacancy remained relatively level, down just 10 basis points.

59. Supply

Based on our survey of affordable housing projects in the subject market area the rental rates range from $477 to $841 for TCAC affordable housing and from $1,280 to $1,761 per month for HUD Section 8 programs, in which the tenant pays 30 percent of their income. All of the affordable apartment rentals in the subject market area have waiting lists and two of the waiting lists are closed. There is very limited affordable housing in Lafayette.

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60. Demand/Absorption

The Project is fully leased and maintains a waiting list. The State Department of Finance projects nearly a doubling in the number of seniors over age 65 in Contra Costa County between 2000 and 2020. Of the increase, 71 percent, or approximately 39,000 people, will be between the ages of 65 and 75 years. Lafayette is expected to experience a similar increase. Many of the City’s seniors are expected to continue to live in their homes of long-standing.

DEVELOPMENT TEAM OVERVIEW

61. Borrower Lafayette Senior Housing Association, Inc.

Lafayette Senior Housing Corporation, Inc., a California nonprofit corporation was formed on January 6, 1976. The purpose of the corporation was to develop and operate a 67-unit affordable housing apartment complex for low and moderate-income senior citizens. The Board of Directors chose to operate the project under the name of Chateau Lafayette. The Board of Directors worked with CalHFA and HUD to finance the project and provide Federal project based Section 8 through a Housing Assistance Payment (HAP) contract. The Board of Directors have successfully managed the Borrower for 40 years. For over 30 years, the Board of Directors has worked with the same management company and has provided consistent and professional leadership for the Borrower, together with the management company, Barcelon Associates Management Corp., and the residents they serve.

62. Guarantor N/A

63. Developer/Sponsor See Borrower and Management Agent

Barcelon Associates Management Corp. is coordinating the refinancing and the intended property upgrades as management agents for Lafayette Senior Housing Association, Inc.

64. Management Agent Barcelon Associates Management Corporation

Barcelon Associates Management Corp. is coordinating the refinancing and the intended property upgrades as management agents for Lafayette Senior Housing Association, Inc. Barcelon Associates Management Corp. has managed affordable housing for more than 35 years, and manages both CalHFA and HUD funded properties with a specialization of Section 8 housing for seniors. Barcelon Associates Management Corp. has been involved in all aspects of property management including the ground up construction and development planning. In the past, several years Barcelon Associates Management Corp has helped a number of their clients preserve affordable housing by utilizing their existing cash and available financing.

65. Service Provider N/A

66. Contractor McDouglass Group Inc., a California corporation, dba AMAC Construction & Restoration (“AMAC Construction”)

AMAC Construction provided estimates for the proposed scope of work but no general contractor has been selected to date.

67. Architect N/A

CALHFA INTERNAL REVIEW

68. Loan Covenants or Special Terms & Conditions:

A new 20-year Section 8 HAP from HUD shall be executed prior to Loan closing.

CalHFA will retain $1,000,000 of equity until the scope of work is satisfactorily completed.

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EXHIBITS

A. Detailed Financial Analysis i. Project Summary ii. Unit Mix and Rent Summary iii. Sources and Uses of Funds iv. Projected Initial Annual Operating Budget v. Projected Permanent Loan Cash Flow

B. Site/location map C. Term Sheets

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PROJECT SUMMARY Senior Staff

Acquisition, Rehab, Construction & Permanent Loans Project Number

Project Full Name Chateau Lafayette Borrower Name:

Project Address 3512 Moraga Blvd. Managing GP:

Project City Lafayette Developer Name:

Project County Contra Costa Investor Name:

Project Zip Code 94549

Project Type: Permanent Loan Only Total Land Area (acres):

Tenancy/Occupancy: Senior Residential Square Footage:

Total Residential Units: 67 Residential Units Per Acre:

Total Number of Buildings: 4

Number of Stories: varies Covered Parking Spaces:

Unit Style: Flat Total Parking Spaces:

Elevators: 2

Loan Amort.

Loan Term Period

Fees (Mo.) (Yr.)

0.600% 23 --

-- -- --

-- 23 --

-- -- --

-- -- --

-- -- --

-- -- --

Loan Amort.

Loan Term Period

Fees (Yr.) (Yr.)

1.000% 40 40

-- -- --

-- -- --

-- 55 40

-- 55 --

-- 55 --

-- 55 --

-- -- --

-- -- --

NA NA NA

NA NA NA

NA NA NA

Appraisal Date: 9/18/17 Capitalization Rate:

Investment Value ($) 21,000,000 Restricted Value ($)

Construct/Rehab LTC N/A CalHFA Permanent Loan to Cost

Construct/Rehab LTV N/A CalHFA 1st Permanent Loan to Value

Combined CalHFA Perm Loan to Value

Payment/Performance Bond

Completion Guarantee Letter of Credit

Permanent Loan

Operating Expense Reserve Deposit

Initial Replacement Reserve Deposit

Annual Replacement Reserve Per Unit

12/1/17

68%

--

--

4.750%

--

--

--

3.000%

--

--

NA

--

3.000%

3.000%

3.000%

11/17/17

Cash

--

--

--

--

--

--

--

--

--

--

Additional Loan Terms, Conditions & Comments

Date Prepared:

Construction/Rehab Loan

Senior Staff Date:

Cash

$400

$67,000

$0

Required

Waived

NA

36.02

41,872

--

--

0

Starting

Interest

($)

4.410%

--

--

--

Interest

--

--

--

--

--

16-003-N

98%

68%

18,670,000

Prop Management:

1.86

Rate

27

--

5.25%

Appraised Values Upon Completion of Rehab/Construction

Loan

Amount

12,750,000

--

Starting

--

--

Tax Credits: None

--

--

Loan

Amount

--

Lafayette Senior Housing Asociates, Inc.

N/A

N/A

N/A

Barcelon Associates Management Corporation

NA

NA

Acq/Construction/Rehab Financing

Permanent Financing

--

--

--

--

--

--

--

--

--

CalHFA Permanent Loan

--

--

($) Rate

14

UNIT MIX AND RENT SUMMARY Senior Staff

Chateau Lafayette Project Number 16-003-N

Number of Number of Average Number of Est. No. of

Bedrooms Baths Size (Sq. Ft.) Units Tenants

1 1 623 64 64

1 1 623 2 2

2 1 754 1 2

- - - - 0

- - - - 0

- - - - 0

67 68

50% 30% 40% 50% 60% 120% 0%

CalHFA 14

Section 8 HAP 26 40

-

-

-

-

% of Area Average Average % of

Unit Type Restricting Median Number Unit Market Monthly Market

Agency Income of Units Rent Rents Savings Rents

Studios CalHFA 50% - - - - -

CalHFA 30% - - - -

CalHFA 40% - - - -

CalHFA 50% - - - -

CalHFA 50% - - - -

CalHFA 120% - - - -

CalHFA - - - - -

1 Bedroom CalHFA 50% - - $2,025 - -

CalHFA 30% 26 $560 $1,465 28%

CalHFA 40% - - - -

CalHFA 50% 38 $952 $1,073 47%

CalHFA 50% 2 $952 $1,073 47%

CalHFA 120% - - - -

CalHFA - - - - -

2 Bedrooms CalHFA 50% - - - - -

CalHFA 30% - - - -

CalHFA 40% - - - -

CalHFA 50% - - - -

CalHFA 50% - - - -

CalHFA - - - - -

CalHFA - - - - -


CalHFA 30% - - - -

CalHFA 40% - - - -

CalHFA 50% - - - -

CalHFA 50% - - - -

CalHFA 120% - - - -

CalHFA - - - - -


CalHFA 30% - - - -

CalHFA 40% - - - -

CalHFA 50% - - - -

CalHFA 50% - - - -

CalHFA 120% - - - -

CalHFA - - - - -


CalHFA 30% - - - -

CalHFA 40% - - - -

CalHFA 50% - - - -

CalHFA 50% - - - -

CalHFA 120% - - - -

CalHFA - - - - -

Date Prepared: 12/1/17 Senior Staff Date: 11/17/17

Average Restricted Rents

Agency

PROJECT UNIT MIX

Flat

COMPARISON OF AVERAGE MONTHLY RESTRICTED RENTS TO AVERAGE MARKET RENTS

NUMBER OF UNITS AND PERCENTAGE OF AMI RENTS RESTRICTED BY EACH AGENCY

Number of Units Restricted For Each AMI Category

-

-

-

Unit Type of Style

Flat

Flat

15

SOURCES & USES OF FUNDS

Chateau Lafayette Project Number

CONST/REHAB PERMANENT

$ $ SOURCES ($) PER UNIT ($) %

Tax Exempt Construction Loan - 0.0%

Permanent Loan - 0.0%

- - 0.0%

- - 0.0%

- - 0.0%

- - 0.0%

- - 0.0%

- - 0.0%

- - 0.0%

- - 0.0%

Construct/Rehab Net Oper. Inc. - 0.0%

Deferred Developer Fee - 0.0%

Developer Equity Contribution - 0.0%

Investor Equity Contribution - 0.0%

CalHFA Permanent Loan 12,750,000 12,750,000 190,299 97.9%

CalHFA Subsidy Loan - - - 0.0%

CalHFA Other Loan - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

Reserve Balances 276,110 276,110 4,121 2.1%

- - - - 0.0%

- - - - 0.0%

Construct/Rehab Net Oper. Inc. - - - 0.0%

Deferred Developer Fees - - - 0.0%

Developer Equity Contribution - - - 0.0%

Investor Equity Contributions - - - 0.0%

TOTAL SOURCES OF FUNDS - 13,026,110 13,026,110 194,420 97.9%

TOTAL USES OF FUNDS (BELOW) - 13,026,110 13,026,110 194,420 100.0%

FUNDING SURPLUS (DEFICIT) - - -


$ $ USES ($) PER UNIT ($) %

-

ACQUISITION COSTS

Lesser of Land Cost or Appraised Value - - - - 0.0%

Demolition Costs - - - - 0.0%

Legal & Other Closing Costs - - - - 0.0%

Escrow & other closing costs - - - - 0.0%

Verifiable Carrying Costs - - - - 0.0%

Existing Improvements Value - - - - 0.0%

Delinquent Taxes Paid @ Closing - - - - 0.0%

CalHFA Yield Maintenance Paid @ Closing - - - - 0.0%

Existing Replacement Reserve - - - - 0.0%

Broker Fees Paid to Related Party - - - - 0.0%

Payoff of Existing CalHFA Loan - 325,000 325,000 4,851 2.5%

Other (Specify) - - - - 0.0%

TOTAL ACQUISITION COSTS - 325,000 325,000 4,851 2.5%

CONSTRUCTION/REHAB COSTS

Offsite Improvements - - - - 0.0%

Environmental Remediation - - - - 0.0%

Elevator Upgrades - - - - 0.0%

Structures - 1,226,500 1,226,500 18,306 9.4%

General Requirements - - - - 0.0%

Contractor Overhead - - - - 0.0%

Contractor Profit - - - - 0.0%

Contractor Bond - - - - 0.0%

Contractor Liability Insurance - - - - 0.0%

Personal Property - - - - 0.0%

Joint Trench/Utility Work - - - - 0.0%

TOTAL CONSTRUCT/REHAB COSTS - 1,226,500 1,226,500 18,306 9.4%

Senior Staff

CONSTRUCTION/REHAB SOURCES OF FUNDS

TOTAL PROJECT SOURCES OF FUNDSSOURCES OF FUNDS

USES OF FUNDSTOTAL PROJECT USES OF FUNDS

16-003-N

Date Prepared: 1/31/2018 1 of 4

16



Senior Staff

16-003-NCONST/REHAB PERMANENT


RELOCATION COSTS

Relocation Expense - - - - 0.0%

Relocation Compliance Monitoring - - - - 0.0%


TOTAL RELOCATION COSTS - - - - 0.0%

ARCHITECTURAL FEES

Design - - - - 0.0%

Supervision - - - - 0.0%

TOTAL ARCHITECTURAL FEES - - - - 0.0%

SURVEY & ENGINEERING FEES

Engineering - - - - 0.0%


ALTA Land Survey - - - - 0.0%

TOTAL SURVEY & ENGINEERING FEES - - - - 0.0%

CONTINGENCY RESERVES

Hard Cost Contingency Reserve - 123,000 123,000 1,836 0.9%

Soft Cost Contingency Reserve - - - - 0.0%

TOTAL CONTINGENCY RESERVES - 123,000 123,000 1,836 0.9%

CONSTRUCT/REHAB PERIOD COSTS

Loan Interest Reserve

Tax Exempt Construction Loan - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%

Loan Fees

Tax Exempt Construction Loan - - - - 0.0%

Permanent Loan - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%

Other Const/Rehab Period Costs

Deficit Const/Rehab NOI (Net Operating Income) - - - - 0.0%

Credit Enhancement & Application Fees - - - - 0.0%

Owner Paid Bonds/Insurance - - - - 0.0%

CalHFA Inspection Fees - 1,000 1,000 15 0.0%

Real Estate Taxes During Rehab - - - - 0.0%

Completion Guaranty Fee - - - - 0.0%

Wage Monitoring Fee (Davis Bacon, Prevailing, etc.) - - - - 0.0%

Insurance During Rehab - - - - 0.0%

Title & Recording Fees - - - - 0.0%

Construction Management & Testing - - - - 0.0%

Predevelopment Interest Expense - - - - 0.0%

Bond Issuer Fee - - - - 0.0%

- - - - - 0.0%

TOTAL CONST/REHAB PERIOD COSTS - 1,000 1,000 15 0.0%



17



Senior Staff



PERMANENT LOAN COSTS

Loan Fees

CalHFA Application Fee - 5,000 5,000 75 0.0%

CalHFA Permanent Loan - 127,500 127,500 1,903 1.0%

CalHFA Subsidy Loan - - - - 0.0%

CalHFA Other Loan - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%


Title & Recording (closing costs) - 25,000 25,000 373 0.2%

Year 1 - Taxes & Special Assessments - - - - 0.0%

Year 1 - Insurance - - - - 0.0%

Tax Exempt Bond Allocation Fee - - - - 0.0%


TOTAL PERMANENT LOAN COSTS - 157,500 157,500 2,351 1.2%

LEGAL FEES

CalHFA Construction/Rehab Loan Legal Fees - - - - 0.0%

Other Construction/Rehab Loan Legal Fees - - - - 0.0%

CalHFA Permanent Loan Legal Fees - 25,000 25,000 373 0.2%

Other Permanent Loan Legal Fees - - - - 0.0%

Sponsor Legal Fees - 15,000 15,000 224 0.1%

Organizational Legal Fees - - - - 0.0%

Syndication Legal Fees - - - - 0.0%

Borrower Legal Fee - - - - 0.0%

CalHFA Bond Counsel - - - - 0.0%

TOTAL LEGAL FEES - 40,000 40,000 597 0.3%

OPERATING RESERVES

Operating Expense Reserve Deposit - - - - 0.0%

Initial Replacement Reserve Deposit - 67,000 67,000 1,000 0.5%

Construction Defects Reserve - - - - 0.0%

Rent-Up Reserve Deposit - - - - 0.0%

HOME Program Replacement Reserve - - - - 0.0%

Investor Required Reserve - - - - 0.0%


TOTAL OPERATING RESERVES - 67,000 67,000 1,000 0.5%

REPORTS & STUDIES

Appraisal Fee - 8,000 8,000 119 0.1%

Market Study Fee - 3,000 3,000 45 0.0%

Physical Needs Assessment Fee - 3,195 3,195 48 0.0%

Environmental Site Assessment Reports - 2,000 2,000 30 0.0%

HUD Risk Share Environmental Review Fee - 2,000 2,000 30 0.0%

CalHFA Earthquake Waiver Review Fee - - - - 0.0%

Relocation Consultant - - - - 0.0%

Soils Reports - - - - 0.0%

Acoustical Reports - - - - 0.0%

Termite/Dry Rot - - - - 0.0%

Consultant/Processing Agent - - - - 0.0%


TOTAL REPORTS & STUDIES - 18,195 18,195 272 0.1%



18



Senior Staff



OTHER COSTS

TCAC Application, Allocation & Monitor Fees - - - - 0.0%

CDLAC Fees - - - - 0.0%

Local Permits & Fees - - - - 0.0%

Local Impact Fees - - - - 0.0%

Other Local Fees - - - - 0.0%

Syndicator/Investor Fees & Expenses - - - - 0.0%

Furnishings - - - - 0.0%

Accounting & Audits - - - - 0.0%

Advertising & Marketing Expenses - - - - 0.0%

Financial Consulting - - - - 0.0%

Miscellaneous Administrative Fees - - - - 0.0%

HUD Risk Share Insurance (First Year Prepaid) - - - - 0.0%



TOTAL OTHER COSTS - - - - 0.0%

SUBTOTAL PROJECT COSTS - 1,958,195 1,958,195 29,227 15.0%

DEVELOPER FEES & COSTS

Developer Fees, Overhead & Profit - - - - 0.0%

Consultant Processing Agent - - - - 0.0%

Project Administration - - - - 0.0%

Syndicator Consultant Fees - - - - 0.0%

Guarantee Fees - - - - 0.0%

Construction Oversight & Management - - - - 0.0%

Other Adminstration Fees - - - - 0.0%

Other (Specify) correction to balance - - - - 0.0%

Cash Equity to Borrower - 11,067,915 11,067,915 165,193 85.0%

TOTAL DEVELOPER FEES & COSTS - 11,067,915 11,067,915 165,193 85.0%

TOTAL PROJECT COSTS - 13,026,110 13,026,110 194,420 100.0%



19

PROJECTED INITIAL ANNUAL RENTAL OPERATING BUDGET Senior Staff

Chateau Lafayette Project Number 16-003-N

AMOUNT PER UNIT %

Rental Income

Restricted Unit Rents 631,680$ 9,428$ 43.15%

Unrestricted Unit Rents - - 0.00%

Commercial Rents - - 0.00%

Rental & Operating Subsidies

Section 8 Rent Subsidies 905,664 13,517 61.87%

Shelter Care Plus Rent Subsidies - - 0.00%

Other Subsidy (Specify) - - 0.00%


Other Income

Laundry and Vending Income 3,484 52 0.24%

Garage and Parking Income - - 0.00%

Miscellaneous Income - - 0.00%

1,540,828$ 22,997$ 105.26%

Less: Vacancy Loss 77,041$ 1,150$ 5.26%

1,463,787$ 24,147$ 100.00%

AMOUNT PER UNIT %

Administrative Expenses 181,800$ 2,713$ 0$

Management Fee 55,476 828 3.79%

Social Programs & Services 31,306 467 2.14%

Utilities 47,572 710 3.25%

Operating & Maintenance 170,279 2,541 11.63%

Ground Lease Payments - - 0.00%

Real Estate Taxes 19,100 285 1.30%

Other Taxes & Insurance 107,558 1,605 7.35%

Assisted Living/Board & Care - - 0.00%

613,091$ 9,151$ 41.88%

Operating Reserves 26,800$ 400$ 1.83%

639,891$ 9,551$ 43.71%

823,896$ 12,297$ 56.29%

AMOUNT PER UNIT %

CalHFA Permanent Loan 712,610$ 10,636$ 48.68%

CalHFA Other Loan -$ - 0.00%

- -$ - 0.00%

- -$ - 0.00%

- -$ - 0.00%

- -$ - 0.00%

- -$ - 0.00%

712,610$ 10,636$ 48.68%

111,286$ 1,661$ 7.60%

1.16 to 1

Date: 12/1/17 Senior Staff Date: 11/17/17

OPERATING EXPENSES

INCOME

SUBTOTAL OPERATING EXPENSES

TOTAL OPERATING EXPENSES

DEBT SERVICE COVERAGE RATIO (DSCR)

NET OPERATING INCOME (NOI)

DEBT SERVICE PAYMENTS

TOTAL DEBT SERVICE PAYMENTS

EXCESS CASH FLOWS AFTER DEBT SERVICE

GROSS POTENTIAL INCOME (GPI)

EFFECTIVE GROSS INCOME (EGI)

20

PROJECTED PERMANENT LOAN CASH FL0WS Chateau Lafayette

Senior Staff Project Number 16-003-N

YEAR 1 2 3 4 5 6 7 8 9 10

RENTAL INCOME CPI

Restricted Unit Rents 2.50% 631,680 647,472 663,659 680,250 697,257 714,688 732,555 750,869 769,641 788,882

Unrestricted Unit Rents 0.00% - - - - - - - - - -

Commercial Rents 0.00% - - - - - - - - - -

Section 8 Rent Subsidies 1.50% 905,664 919,249 933,038 947,033 961,239 975,657 990,292 1,005,147 1,020,224 1,035,527

Shelter Care Plus Rent Subsidies 0.00% - - - - - - - - - -

Other Subsidy (Specify) 0.00% - - - - - - - - - -


Laundry and Vending Income 0.00% 3,484 3,484 3,484 3,484 3,484 3,484 3,484 3,484 3,484 3,484

Garage and Parking Income 0.00% - - - - - - - - - -

Miscellaneous Income 0.00% - - - - - - - - - -

1,540,828 1,570,205 1,600,180 1,630,768 1,661,979 1,693,829 1,726,331 1,759,500 1,793,349 1,827,893

VACANCY ASSUMPTIONS Vacancy




Section 8 Rent Subsidies 5.00% 45,283 45,962 46,652 47,352 48,062 48,783 49,515 50,257 51,011 51,776




Laundry and Vending Income 5.00% 174 174 174 174 174 174 174 174 174 174



77,041 78,510 80,009 81,538 83,099 84,691 86,317 87,975 89,667 91,395

1,463,787 1,491,695 1,520,171 1,549,229 1,578,880 1,609,138 1,640,015 1,671,525 1,703,681 1,736,498

OPERATING EXPENSES CPI / Fee

Administrative Expenses 3.50% 213,106 220,565 228,284 236,274 244,544 253,103 261,962 271,130 280,620 290,442

Management Fee 3.77% 55,185 56,237 57,310 58,406 59,524 60,664 61,829 63,016 64,229 65,466

Utilities 3.50% 47,572 49,237 50,960 52,744 54,590 56,501 58,478 60,525 62,643 64,836

Operating & Maintenance 3.50% 170,279 176,239 182,407 188,791 195,399 202,238 209,316 216,642 224,225 232,073

Ground Lease Payments 3.50% - - - - - - - - - -

Real Estate Taxes 1.25% 19,100 19,769 20,460 21,177 21,918 22,685 23,479 24,301 25,151 26,031

Other Taxes & Insurance 3.50% 107,558 111,323 115,219 119,251 123,425 127,745 132,216 136,844 141,633 146,591

Assisted Living/Board & Care 0.00% - - - - - - - - - -

Required Reserve Payments 1.00% 26,800 27,068 27,339 27,612 27,888 28,167 28,449 28,733 29,021 29,311

639,600 660,436 681,980 704,256 727,288 751,103 775,729 801,192 827,522 854,749

824,187 831,258 838,191 844,973 851,592 858,035 864,286 870,333 876,159 881,749

DEBT SERVICE PAYMENTS Lien #

CalHFA Permanent Loan 1 712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610

CalHFA Other Loan - - - - - - - - - - -

- 2 - - - - - - - - - -

- 3 - - - - - - - - - -

- 4 - - - - - - - - - -

- 5 - - - - - - - - - -

- - - - - - - - - - - -

- - - - - - - - - - - -

712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610

111,577 118,649 125,582 132,364 138,983 145,425 151,677 157,723 163,550 169,140

1.16 1.17 1.18 1.19 1.20 1.20 1.21 1.22 1.23 1.24


DEBT SERVICE COVERAGE RATIO

CASH FLOW AFTER DEBT SERVICE



TOTAL PROJECTED VACANCY LOSS




21

PROJECTED PERMANENT LOAN CASH FL0WS

Senior Staff

YEAR

RENTAL INCOME CPI

Restricted Unit Rents 2.50%

Unrestricted Unit Rents 0.00%

Commercial Rents 0.00%

Section 8 Rent Subsidies 1.50%

Shelter Care Plus Rent Subsidies 0.00%

Other Subsidy (Specify) 0.00%


Laundry and Vending Income 0.00%

Garage and Parking Income 0.00%

Miscellaneous Income 0.00%













Administrative Expenses 3.50%

Management Fee 3.77%

Utilities 3.50%

Operating & Maintenance 3.50%

Ground Lease Payments 3.50%

Real Estate Taxes 1.25%

Other Taxes & Insurance 3.50%

Assisted Living/Board & Care 0.00%

Required Reserve Payments 1.00%


CalHFA Permanent Loan 1

CalHFA Other Loan -

- 2

- 3

- 4

- 5

- -

- -

Date Prepared: 12/01/17









Chateau Lafayette

Project Number 16-003-N

11 12 13 14 15 16 17 18 19 20

808,604 828,819 849,539 870,778 892,547 914,861 937,733 961,176 985,205 1,009,835

- - - - - - - - - -

- - - - - - - - - -

1,051,060 1,066,826 1,082,828 1,099,071 1,115,557 1,132,290 1,149,275 1,166,514 1,184,011 1,201,772

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

3,484 3,484 3,484 3,484 3,484 3,484 3,484 3,484 3,484 3,484

- - - - - - - - - -

- - - - - - - - - -

1,863,148 1,899,129 1,935,852 1,973,333 2,011,588 2,050,635 2,090,491 2,131,173 2,172,701 2,215,091

40,430 41,441 42,477 43,539 44,627 45,743 46,887 48,059 49,260 50,492

- - - - - - - - - -

- - - - - - - - - -

52,553 53,341 54,141 54,954 55,778 56,615 57,464 58,326 59,201 60,089

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

174 174 174 174 174 174 174 174 174 174

- - - - - - - - - -

- - - - - - - - - -

93,157 94,956 96,793 98,667 100,579 102,532 104,525 106,559 108,635 110,755

1,769,990 1,804,172 1,839,059 1,874,666 1,911,009 1,948,103 1,985,966 2,024,615 2,064,066 2,104,336

300,607 311,128 322,018 333,288 344,954 357,027 369,523 382,456 395,842 409,697

66,729 68,017 69,333 70,675 72,045 73,443 74,871 76,328 77,815 79,333

67,105 69,454 71,885 74,401 77,005 79,700 82,489 85,376 88,364 91,457

240,195 248,602 257,303 266,309 275,630 285,277 295,261 305,596 316,291 327,362

- - - - - - - - - -

26,942 27,885 28,861 29,872 30,917 31,999 33,119 34,278 35,478 36,720

151,721 157,031 162,528 168,216 174,104 180,197 186,504 193,032 199,788 206,780

- - - - - - - - - -

29,604 29,900 30,199 30,501 30,806 31,114 31,425 31,739 32,057 32,377

882,904 912,018 942,126 973,261 1,005,459 1,038,757 1,073,193 1,108,805 1,145,636 1,183,726

887,087 892,154 896,933 901,405 905,549 909,346 912,774 915,809 918,430 920,610

712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610

174,477 179,545 184,324 188,795 192,940 196,737 200,164 203,200 205,820 208,000

1.24 1.25 1.26 1.26 1.27 1.28 1.28 1.29 1.29 1.29

Senior Staff Date: 11/17/17

22


Senior Staff

YEAR

RENTAL INCOME CPI

























Utilities 3.50%









CalHFA Other Loan -

- 2

- 3

- 4

- 5

- -

- -










Chateau Lafayette


21 22 23 24 25 26 27 28 29 30

1,035,081 1,060,958 1,087,482 1,114,669 1,142,536 1,171,099 1,200,377 1,230,386 1,261,146 1,292,675

- - - - - - - - - -

- - - - - - - - - -

1,219,798 1,238,095 1,256,666 1,275,516 1,294,649 1,314,069 1,333,780 1,353,787 1,374,094 1,394,705

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

3,484 3,484 3,484 3,484 3,484 3,484 3,484 3,484 3,484 3,484

- - - - - - - - - -

- - - - - - - - - -

2,258,363 2,302,537 2,347,633 2,393,670 2,440,669 2,488,652 2,537,641 2,587,657 2,638,723 2,690,864

51,754 53,048 54,374 55,733 57,127 58,555 60,019 61,519 63,057 64,634

- - - - - - - - - -

- - - - - - - - - -

60,990 61,905 62,833 63,776 64,732 65,703 66,689 67,689 68,705 69,735

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

174 174 174 174 174 174 174 174 174 174

- - - - - - - - - -

- - - - - - - - - -

112,918 115,127 117,382 119,683 122,033 124,433 126,882 129,383 131,936 134,543

2,145,445 2,187,410 2,230,251 2,273,986 2,318,636 2,364,220 2,410,759 2,458,274 2,506,787 2,556,320

424,036 438,877 454,238 470,136 486,591 503,622 521,248 539,492 558,374 577,917

80,883 82,465 84,080 85,729 87,413 89,131 90,886 92,677 94,506 96,373

94,658 97,971 101,400 104,949 108,623 112,424 116,359 120,432 124,647 129,009

338,819 350,678 362,952 375,655 388,803 402,411 416,495 431,073 446,160 461,776

- - - - - - - - - -

38,005 39,335 40,712 42,137 43,612 45,138 46,718 48,353 50,045 51,797

214,018 221,508 229,261 237,285 245,590 254,186 263,082 272,290 281,820 291,684

- - - - - - - - - -

32,701 33,028 33,358 33,692 34,029 34,369 34,713 35,060 35,411 35,765

1,223,120 1,263,863 1,306,002 1,349,584 1,394,660 1,441,281 1,489,502 1,539,377 1,590,964 1,644,322

922,325 923,547 924,249 924,402 923,976 922,939 921,257 918,897 915,824 911,999

712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610

209,715 210,938 211,640 211,793 211,367 210,329 208,648 206,288 203,214 199,389

1.29 1.30 1.30 1.30 1.30 1.30 1.29 1.29 1.29 1.28


23


Senior Staff

YEAR

RENTAL INCOME CPI

























Utilities 3.50%









CalHFA Other Loan -

- 2

- 3

- 4

- 5

- -

- -










Chateau Lafayette


31 32 33 34 35 36 37 38 39 40

1,324,991 1,358,116 1,392,069 1,426,871 1,462,543 1,499,106 1,536,584 1,574,999 1,614,373 1,654,733

- - - - - - - - - -

- - - - - - - - - -

1,415,625 1,436,860 1,458,413 1,480,289 1,502,493 1,525,031 1,547,906 1,571,125 1,594,692 1,618,612

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

3,484 3,484 3,484 3,484 3,484 3,484 3,484 3,484 3,484 3,484

- - - - - - - - - -

- - - - - - - - - -

2,744,101 2,798,460 2,853,966 2,910,644 2,968,520 3,027,621 3,087,974 3,149,607 3,212,549 3,276,829

66,250 67,906 69,603 71,344 73,127 74,955 76,829 78,750 80,719 82,737

- - - - - - - - - -

- - - - - - - - - -

70,781 71,843 72,921 74,014 75,125 76,252 77,395 78,556 79,735 80,931

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

174 174 174 174 174 174 174 174 174 174

- - - - - - - - - -

- - - - - - - - - -

137,205 139,923 142,698 145,532 148,426 151,381 154,399 157,480 160,627 163,841

2,606,896 2,658,537 2,711,268 2,765,112 2,820,094 2,876,240 2,933,575 2,992,127 3,051,922 3,112,987

598,145 619,080 640,747 663,174 686,385 710,408 735,272 761,007 787,642 815,210

98,280 100,227 102,215 104,245 106,318 108,434 110,596 112,803 115,057 117,360

133,525 138,198 143,035 148,041 153,223 158,586 164,136 169,881 175,827 181,981

477,938 494,666 511,979 529,898 548,445 567,640 587,508 608,071 629,353 651,380

- - - - - - - - - -

53,610 55,486 57,428 59,438 61,518 63,672 65,900 68,207 70,594 73,065

301,893 312,459 323,395 334,714 346,429 358,554 371,104 384,092 397,536 411,449

- - - - - - - - - -

36,122 36,484 36,848 37,217 37,589 37,965 38,345 38,728 39,115 39,506

1,699,513 1,756,600 1,815,648 1,876,727 1,939,907 2,005,259 2,072,861 2,142,789 2,215,124 2,289,951

907,383 901,938 895,619 888,384 880,187 870,981 860,715 849,338 836,798 823,037

712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610 712,610

194,774 189,328 183,010 175,775 167,578 158,371 148,105 136,729 124,188 110,427

1.27 1.27 1.26 1.25 1.24 1.22 1.21 1.19 1.17 1.15


24

DeLorme Street Atlas USA® 2010

Chateau Lafayette

Data use subject to license.

© DeLorme. DeLorme Street Atlas USA® 2010.

www.delorme.com

TN

MN (13.5°E)

0 180 360 540 720 900

0 40 80 120 160 200

ftm

Scale 1 : 6,400

1" = 533.3 ft Data Zoom 15-0

25


Chateau Lafayette



www.delorme.com

TN

MN (13.5°E)

0 6 12 18 24 30

0 10 20 30 40 50

mikm

Scale 1 : 1,100,000

1" = 17.36 mi Data Zoom 7-5

26

2017 CALIFORNIA HOUSING FINANCE AGENCY WWW.CALHFA.CA.GOV | 877.9.CALHFA (877.922.5432)

Ruth Vakili, Loan Officer500 Capitol Mall, Suite 1400 Sacramento, CA [email protected]

Steve Lierly, Loan Officer500 Capitol Mall, Suite 1400 Sacramento, CA [email protected]

Sabrina Saxton, Loan Officer100 Corporate Pointe, Suite 250 Culver City, CA [email protected]

The CalHFA Permanent Loan Program (“Permanent Loan Program”) provides competitive financing through its partnership with HUD and the U.S.

Treasury for the refinance of affordable housing developments that do not need substantial rehabilitation. Owners/Borrowers must agree to preserve

and/or increase the affordability restrictions.

PERMANENT Refinance LOAN PROGRAM

Qualifications • Available to for-profit, non-profit, and public agency sponsors.

• Taxable financing only (tax-exempt bonds will not be issued for these projects).

• For Section 8 projects, final commitment is conditioned upon review and acceptance by CalHFA of the

AHAP contract.

• For existing CalHFA portfolio loans, the current owner is required to pay off all outstanding CalHFA debt.

Visit www.calhfa.ca.gov for the CalHFA Portfolio Loan Prepayment Policy.

Loan Amount • Minimum 1.15x for debt service coverage ratio

• Lesser of 90% of restricted value or 100% of development costs

• For projects seeking a cash equity take-out, reduced loan to value and increased debt service coverage

may apply, subject to CalHFA approval.

Fees(subject to change)

• Application Fee: $5,000 non-refundable, due at time of application submittal

• Loan Fee: 1.00%, half due at final commitment, with balance due at CalHFA loan close

• Credit Enhancement Fee: included in the interest rate

• Monitoring Fee: included in the interest rate

• Legal Fee: $25,000, due at loan closing

Rate & Terms(subject to change)

Permanent Loan (fully amortized):

• Interest Rate: 10 year U.S. Treasury plus 1.85%-2.60%, fixed for the term of the loan

• Loan Payment/Term – fully amortized, up to 40 years

Interest Rate is locked up to 60 days prior to loan close.

CreditEnhancement

The Permanent Loan Program will be credit-enhanced through CalHFA’s HUD/FHA Risk Sharing program. If

applicable, projects financed through the Permanent Loan Program must comply with the Davis-Bacon Act and/

or California state prevailing wage requirements.

27

http://www.calhfa.ca.gov/multifamily/programs/forms/prepayment-policy.pdf



Prepayment The loan may be prepaid at par after 15 years of the permanent loan period. However, the loan may be prepaid

after 10 years of the permanent loan period subject to a yield maintenance calculation of:

• 5% of the principal balance after the end of year 10





All prepayments require a prior written 120-day notice to CalHFA.

Subordinate Financing

Loans or grants are encouraged from local governments and third parties to achieve project feasibility. All loans,

leases, development and regulatory agreements must be coterminous and subordinate to the CalHFA financing.

Any loans with amortized debt will be included in the minimum 1.15x debt service coverage ratio calculation.

OccupancyRequirements

Must maintain the greater of (A) existing affordability restrictions, or (B) either (i) 20% of the units must be rent

restricted and occupied by individuals whose incomes are 50% or less of the area (county) median gross income

as determined by HUD (“AMI”) with adjustments for household size (“20% @ 50% AMI”), or (ii) 40% or more of

the units must be both rent restricted and occupied by individuals whose income is 60% or less of the AMI, with

adjustments for household size (“40% @ 60% AMI”): however in the latter case, a minimum of 10% of the units

must be at 50% or less of AMI.

Term of Affordability Restrictions

• Affordable housing deed restriction for a minimum of 20 years

• For existing CalHFA portfolio loans, the term of the affordability Regulatory Agreement will be the greater

of (A) payment in full of the loan, (B) twenty (20) years, or (C) the term of the existing CalHFA Regulatory

Agreement plus five (5) years.

Due Diligence All of the following due diligence items are required and shall be provided at the Owner/Borrower’s expense:

• Property appraisal

• HUD 2530 - previous participation clearance required

• Market study (negotiable)

• Phase I Environmental Site Assessment report including but not limited to impact reviews that meet federal

environmental requirements (such as historic preservation and noise remediation)

• Physical Needs Assessment (PNA) for rehabilitation projects with “Needs Over Time” analysis for the term

of the loan

• Non-substantial rehabilitation may be required

• Rehabilitation period inspection fees are estimated at $500 - $1,000 per month

• Termite/Dry Rot reports by licensed company

• Seismic review and other studies may be required at CalHFA’s discretion

• Other studies/reports at CalHFA’s discretion

28



Required Reserves

• Replacement Reserve: Initial cash deposit required, annual deposit required, varies by project type and

PNA.

• Operating Expense Reserve: 10% of annual gross income due at permanent loan closing (letter of credit

or cash).

• Impounds: One year’s prepaid earthquake, hazard insurance premiums, and property tax assessments.

• Earthquake Insurance Waiver: Available for projects which have met CalHFA earthquake waiver standards

during construction.

• Transition Operating Reserve (TOR): may be required for projects with HAP contracts.

• Other reserves as required at CalHFA’s discretion.

Last revised: 08/2017

The information provided in this program description is for guidance only. While we have taken care to provide accurate information, we cannot cover every circumstance nor program nuance. This program description is subject to change from time to time without prior notice. The California Housing Finance Agency does not discriminate on any prohibited basis in employment or in the admission and access to its programs or activities. Not printed at taxpayer expense.

29

- 1 -

BOARD OF DIRECTORS 1 OF THE CALIFORNIA HOUSING FINANCE AGENCY 2

3 RESOLUTION NO. 18-03 4

5 RESOLUTION AUTHORIZING A FINAL LOAN COMMITMENT 6

7 WHEREAS, the California Housing Finance Agency (the “Agency”) has 8 received a loan application on behalf of Lafayette Senior Housing Association, Inc., a 9 California non-profit corporation (the “Borrower”), seeking a loan commitment, the 10 proceeds of which are to be used to provide financing for a multifamily housing 11 development located in the City of Lafayette, Contra Costa County, California, known as 12 Chateau Lafayette (the “Development”); and 13 14 WHEREAS, the loan application has been reviewed by Agency staff which 15 prepared a report presented to the Board on the meeting date recited below (the “Staff 16 Report”) recommending Board approval subject to certain recommended terms and 17 conditions; and 18 19 WHEREAS, Agency staff has determined or expects to determine prior to 20 making a binding commitment to fund the loan for which the application has been made, 21 that (i) the Agency can effectively and prudently raise capital to fund the loan for which 22 the application has been made, by direct access to the capital markets, by private 23 placement, or other means and (ii) any financial mechanisms needed to insure prudent 24 and reasonable financing of loans can be achieved; and 25 26 WHEREAS, the Board wishes to grant the staff the authority to enter into a loan 27 commitment upon Agency staff determining in its judgment that reasonable and prudent 28 financing mechanisms can be achieved; 29 30

NOW, THEREFORE, BE IT RESOLVED by the Board of Directors (the 31 “Board”) of the California Housing Finance Agency as follows: 32 33 1. The Executive Director, or in his/her absence, the Chief Deputy Director, 34 is hereby authorized to execute and deliver a final commitment letter, in a form 35 acceptable to the Agency, and subject to recommended terms and conditions set forth in 36 the Staff Report and any terms and conditions as the Board has designated in the Minutes 37 of the Board Meeting, in relation to the Development described above and as follows: 38 39 PROJECT DEVELOPMENT NAME/ MORTGAGE 40 NUMBER LOCALITY AMOUNT 41 42 16-003-N CHATEAU LAFAYETTE $12,750,000.0043 City of Lafayette, County of Contra Costa Permanent Mortgage44 State of California 45 46 47

48

30

- 2 -

The Board recognizes that in the event that staff cannot determine that reasonable and 1 prudent financing mechanisms can be achieved, the staff will not enter into loan 2 commitments to finance the Development. In addition, access to capital markets, or 3 financing related thereto, may require significant changes to the terms of loans submitted 4 to the Board. Notwithstanding paragraph 2 below, the staff is authorized to make any 5 needed modifications to the loan which in staff’s judgment are directly or indirectly the 6 result of the disruptions to the capital markets referred to above. 7 8 2. The Executive Director may modify the terms and conditions of the loan 9 or loans as described in the Staff Report, provided that major modifications, as defined 10 below, must be submitted to this Board for approval. “Major modifications” as used 11 herein means modifications which either (i) increase the total aggregate amount of any 12 loans made pursuant to the Resolution by more than 7%; or (ii) modifications which in 13 the judgment of the Executive Director, or in his/her absence, the Chief Deputy Director 14 of the Agency, adversely change the financial or public purpose aspects of the final 15 commitment in a substantial way. 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47

48

31

- 3 -

SECRETARY'S CERTIFICATE 1 2 I, Claire Tauriainen, the undersigned, do hereby certify that I am the duly 3 authorized Acting Secretary of the Board of Directors of the California Housing Finance 4 Agency, and hereby further certify that the foregoing is a full, true, and correct copy of 5 Resolution No. 18-03 duly adopted at a regular meeting of the Board of Directors of the 6 California Housing Finance Agency duly called and held on the 15th day of February 7 2018, at which meeting all said directors had due notice, a quorum was present and that at 8 said meeting said resolution was adopted by the following vote: 9 10 AYES: 11 12 NOES: 13 14 ABSTENTIONS: 15 16 ABSENT: 17 18 IN WITNESS WHEREOF, I have executed this certificate hereto this 15th 19 day of February 2018. 20 21 22 ATTEST: 23 CLAIRE TAURIAINEN 24

Acting Secretary of the Board of Directors 25 of the California Housing Finance Agency 26

27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47

32


Final Review & Request for Loan Approval Permanent Take-Out Financing

Senior Loan Committee Approval: 1/19/2018 for Board Meeting on: 2/15/2018

Project Name (City, County) Ramona Seniors Apartments (City of Ramona, San Diego County)

CalHFA Project Number: 17-017-S

CalHFA Loan Amount(s) $7,840,300 Permanent Take-Out Loan (funded with CalHFA internal funds; insured with HUD Risk Share)

CalHFA Loan Program: Permanent Take‐Out Loan


N/A

TRANSACTION FACTS

Loan Origination: Sabrina Saxton Underwriting: Sabrina Saxton

Asset Management: Cristina Green Loan Administration: Mirna Ramirez/Jennifer Beardwood

Legal (Internal): Paul Steinke/Torin Heenan Legal (External): N/A

Projected Closing Date: 3/15/2018 Approval Expiration Date: 9/1/2018

1. Address 430 16th Street, Ramona, San Diego, CA 92065

2. Legislative Districts Congress: #50 Duncan D. Hunter

Assembly: #71 Randy Voepel

State Senate:

#38 Joel Anderson

3. Brief Project Description Ramona Seniors Apartments (the “Project”) is the new construction of 62 units restricted to seniors (62 and older) at 50% AMI and below. The Project is a single two‐story, elevator served building with surface parking space available for residential use. The Project consists of one‐bedroom units and two‐bedroom units. All of the units except the manager’s will have project‐based vouchers that will assist tenant with rent and utility costs. The developer received 9% tax credits on September 20, 2017. Wells Fargo will be the construction lender and the tax credit investor for Federal and State Credits. San Diego County is providing a residual receipt subordinate loan of $1,840,000 that is funded by HOME funds. There will be an AHP deferred payment loan of $610,000 recorded in a last lien position.

4. Sponsor/Developer Chelsea Investment Corporation, a California corporation (“CIC”)

5. Borrower Ramona Seniors CIC LP, a California limited partnership

33

Ramona Seniors Apartments: Permanent Take-Out Loan – 17-017-S Page - 2 Loan Amount: $7,840,300

CALHFA LOAN TERMS

Acquisition & Rehabilitation Loan CalHFA Permanent Take-Out Loan


7. Loan Term N/A 40 years

8. Interest Rate

N/A 10-year treasury + 2.50% Currently underwritten at 5.05%

The rate is subject to change and will be locked up to 30 days prior to loan closing.

24 month forward commitment.

9. Loan to Value N/A TBD (not to exceed 90%)


11. Equity Cash Out N/A N/A



The Project has been awarded 9% tax credits which generate tax credit equity representing 52% of total financing sources. The Project will serve seniors, supported by a 15‐year Section 8 subsidy for each unit.

CIC is a strong developer with extensive experience in affordable property development and management in this market.

Vacancy at the Project will be low due the 100% HAP contract.

On‐site services provided free of charge to the residents include meal service, social services, mental health services, nurse case management, and socialization opportunities and outings.

13. Project Weaknesses with Mitigants:

The HAP Contract is for 15 years so a Transitional Operating Reserve (TOR) is required to ensure funds are available to assist the Project in the event the HAP Contract is not extended for year 16 of operations. Per our current policy, a TOR of $286,106 is required. The Operating Expense Reserve that CalHFA holds could fulfill one‐half of the required TOR . CalHFA staff is requesting a waiver of the requirement to fund the TOR on the basis of the following Project strengths:

The Developer, Chelsea Investment Corporation, is an experienced developer, owner, and property manager with an established track record;

The County of San Diego Health and Human Services Agency will administer the HAP subsidy, and is providing gap financing of $1.8M. The County is invested in the ongoing financial health of the Project, and likely to renew the contract;

Since the financing of this project requires soft funding sources, requiring the funding of a TOR will require another funding source to step in, or will increase the developer’s deferred developer fee (already nearly 50% of developer’s developer fee). Tying up funds in a TOR for 15 years is not a good use of scarce subsidies;

The HAP contract and the tax credit compliance period both end at year 15, so if the contract is not renewed the project can restructure / refinance at that time.

14. Underwriting Policy or Term Sheet Variations

Based on the Project strengths listed in section 13 above, CalHFA staff is requesting and recommending a waiver of the requirement to fund a Transitional Operating Reserve.

This Take‐Out Loan will be financed with CalHFA internal funds, not through our partnership with U.S. Treasury.

34






This project provides much needed affordable housing in a relatively rural area. CalHFA’s funding of this transaction will ensure the creation of 61 affordable units restricted for 55 years.

17. Project Affordability Restrictions


35% AMI

40% AMI

45% AMI

50% AMI

60% AMI

Total Units Regulated

Restricted until

CalHFA 13 19 32 2060

Tax Credits 8 7 7 7 32 61 2073

County of San Diego 15 14 32 61 2073

Summary 8 7 7 7 32 61

100% of the units will be restricted to households earning less than 50% of AMI.


The CalHFA Regulatory Agreement will restrict 20% of the units to 50% AMI and a total of 51% of the units at 60% AMI for 40 years.


Development is in a former Redevelopment project area o Central City: No o Low/Mod Census Tract: Moderate o Minority Census Tract: 35% o Underserved: No o Below poverty line 13%



21. Unpaid Principal Balance: N/A

22. Loan Maturity Date: N/A

23. Affordability Restriction Expiration: N/A

24. Yield Maintenance Due: N/A



35



27. CDLAC/TCAC Closing Deadline: April 2, 2018

28. Estimated Construction Loan Closing Date: March 15, 2018 (CalHFA Breakage Fee docs only)

29. Estimated Construction Start: April 1, 2018

30. Estimated Construction Completion: May 1, 2019

31. Est. Stabilization & Conversion to Perm March 15, 2020 (CalHFA loan closing)




Construction Loan $16,331,739 1 Interest Only

County of San Diego HOME $1,656,000 2 Deferred

AHP $610,000 n/a Grant



CalHFA Permanent Loan $7,840,300 1 Amortizing

County of San Diego HOME $1,840,000 2 Residual Receipts

AHP $610,000 n/a Grant

34. Tax Credit Equity $9,783,063 Federal / $2,582,988 State

Type: 9% equity

Expected Pricing: $1.01 / $0.80 Tax Credit Investor: Wells Fargo


The project achieves a 1.15 Debt Service Coverage Ratio in the first year of operation.

The cash flow analysis shows the Project achieving a debt coverage ratio of 1.15 in year 1, and increasing to 1.56 by year 40, assuming the Project based subsidy contract is renewed in year 15.

The analysis assumes that tenant rent trends at 2.5% and operating expenses trend at 3.5%.

Section 8 rents are trended at 1.5%, which is the historic rental increase achievement for this Project. According to the market study, the overall vacancy rate for multifamily housing is 0.3% in the Ramona Market

Area. The overall vacancy rate for income‐restricted complexes is 0.0%. Most complexes reported few if any vacancies and the affordable complexes reported a 1‐3 year wait list. Given the local market conditions, we have used a 5% vacancy rate for underwriting purposes.

36. Exit Strategy

Repayment of the CalHFA Permanent Loan will be via principal and interest payments amortized over 40 years. If the Project Based Subsidy contract is not renewed in year 15, the tenant rents will increase to the regulated rent levels.

36


DEVELOPMENT SUMMARY

37. Total Development Costs $23,726,238 Per Unit: $382,681


39. Hard Development Contingencies $615,250 % of Hard Development Costs: 5.0%


Ramona Seniors Apartments is the proposed new construction of a 62 unit affordable housing project targeting senior households.

The property is located on the south east side of 16th Street and south of Main Street, located in Ramona, San Diego County.

The site is currently a vacant lot with level topography at street grade

The site is approximately 2.86 acres or 125,017 square feet and is generally rectangular in shape.

The site has frontage along the east side of 16th Street

The site is zoned RM‐V5, Multifamily Residential Use Village 5 Zone of the Paseo Sub‐Area according to the Ramona Village Center Regulations.

The subject is located in Zone X or C, area of minimum flood hazard. Zone X is the area determined to be outside the 500‐year flood and protected by levee from 100‐year flood.

41. Form of Site Control & Expiration Date Title is vested in Ramona Seniors CIC, LP, a California limited partnership

42. Current Ownership Entity of Record

Title is vested in Ramona Seniors CIC, LP, a California limited partnership


A Phase I Environmental Site Assessment performed by Advantage Environmental Consultants, LLC, dated November 25, 2017 prepared for Borrower’s benefit and reliance, revealed no evidence of recognized environmental conditions in connection with the site. The report concludes that no additional investigation is recommended for this property.

44. Seismic Review

The Project is new construction and is to be built to State of California and City of Ramona Building Codes so no seismic study is required to waive earthquake insurance. According to a geotechnical report by Nova Services, Inc. dated July 28, 2017, the site is not located within a currently designated Alquist‐Priolo Earthquake Zone.

45. Relocation

N/A Vacant Lot


The new construction of 62 units includes the following major elements:

The residential units will consist of a total of fifty (50) one‐bedroom units, eleven (11) two‐bedroom units and one (1) two‐bedroom manager’s unit.

The residential units will be contained within a 2‐story type‐V wood‐frame residential building with 73 surface parking spaces available for residential use.

The applicable ratio for parking spaces for a residential project is 1.0 per unit per the Ramona Village Center Regulations. The site is already entitled for 62 residential units and 96 parking spaces.

Two elevators within one contiguous structure will serve the Project.

The property will include a 2,500 square‐foot community building (for resident use), computer room, picnic area, on‐site management, laundry room, and surface parking spaces.

Unit amenities will include central heating and air, blinds, carpet, coat closet, patio/balcony, refrigerator, stove/oven, dishwasher and garbage disposal.

37


Energy Savings: The Project will be designed in accordance with the minimum requirements of the GreenPoint Rating system. Water Savings: The Project will be designed with low‐water landscaping.


None.

PROJECT DETAILS

48. Tenancy / Occupancy Type: Seniors


All (61) units will be targeted to senior households, age 62 and above. Thirteen (13) of the units will be targeted to chronically homeless or formerly homeless tenants by the County of San Diego.


51. Property Construction New Construction, 2‐story type‐V wood‐framed residential building with surface parking spaces.

Buildings: 1 Stories: 2


Year Built: N/A Year of Last Rehab: N/A

52. Total Land Area (acres) 2.86

Residential Square Footage: 46,914 Residential Units per Acre: 22




Land Appraisal, dated August 16, 2016, prepared by Lea & Company, values the land at $1,860,000. A joint appraisal with Wells Fargo is expected by February 16, 2018. Prior to Construction Loan Closing, CalHFA will require an Appraisal acceptable to CalHFA in its sole discretion.


The Project is designed as a 62‐unit new construction housing development for qualified low‐income senior households in a 2‐story elevator served building. The Project unit mix will consist of 50 one‐bedroom units (approximately 560 sq. feet) and 12 two‐bedroom units (approximately 790 square feet). The property will include a community building, computer room, picnic area, on‐site management, and laundry room.

MARKET ANALYSIS

56. Market Study: Raney Planning & Management, Inc. /Laurin Associates February 22, 2017


The Project is located near the center portion of the census‐designated place (CDP) of Ramona. Ramona is a CDP in San Diego County. There are no city limits by which to measure its area because Ramona is not an incorporated city. There are primarily three geographic areas by which the land area of Ramona is measured. First, the boundaries of the Ramona Municipal water District (approximately 7 square miles). Then, the boundaries of the Ramona Unified School District (approximately 150 square miles). Last, the boundaries of the Ramona Community Planning Area.

38


The Ramona Primary Market Area (PMA) includes the Ramona census‐designated place (CDP) and the City of Poway. The secondary market area (SMA) for the project is San Diego County. San Diego County is the second most populous county in California. San Diego County is included in the San Diego‐Carlsbad, California Metropolitan Statistical Area (MSA). Currently the Ramona Market Area has a population is 82,568 persons with 12,054 seniors. The population has increased over the last seven years and is estimated to increase by 1.0 percent in the next year. By the year 2022, the population of the Market Area is estimated to increase to 86,737, an additional 4.0 percent above the 2018 total. Both market rate and affordable housing of all types is in strong demand. Rental housing in the PMA appears to have few vacancies.


The CDP is expected to continue to increase at a faster rate than the Market Area and County over the next five years. The Project’s neighborhood, city of Ramona, and the county of San Diego include many employment options for area residents, many of which are located in within the PMA. Numerous businesses offering a range of positions and skill levels exist throughout the PMA. Many employment opportunities exist within a short distance of the Project. The Project is located within a primarily residential and commercial neighborhood in the central portion of Ramona. The Project is within walking distance to transit, grocery store, and a pharmacy. These services enhance the marketability of the Project. The Project’s proposed service and onsite amenities will serve to promote the marketability of the Project, and are sufficient for the market. The proposed Project is expected to lease up and perform well, based on the market conditions, current affordable housing availability and demand.

59. Supply

The Market Area has twelve affordable multifamily projects, which are 100.00 percent occupied, with a 6 months to 3 year wait list. The overall vacancy rate for multifamily housing is 0.3 percent in the Ramona Market Area. The overall vacancy rate for income‐restricted complexes is 0.0 percent. The new construction of the project will be an asset to the Ramona Market Area, and the demand for senior housing. Given the overall capture rate of 31.3 percent, the proposed project will benefit the market, and not detract from other currently occupied affordable housing projects.


Demand for multifamily rental units in the PMA is expected to come from normal turnover and the limited supply of affordable properties in the area. There are no senior or general occupancy affordable projects currently being planned or proposed in the area. Given the lack of affordable senior housing within the Market Area, and the long wait lists at the affordable comparables, the project can reach 100 percent occupancy in four months or less.

39



61. Borrower Ramona Seniors CIC L.P., a California limited partnership

Ramona Seniors CIC LP, a California limited partnership

Managing General Partner: Ramona SHC Housing, LLC, a California limited liability company; 0.0051% interest o Sole Member: Senior Housing Corporation, a California nonprofit public benefit corporation

Administrative General Partner: CIC Ramona Seniors, LLC, a California limited liability company and an affiliate of CIC; 0.0049% interest

o Member: Sage Three LLC, a California limited liability company, 100% interest o Manager: Chelsea Investment Corporation, a California corporation

Investor Limited Partner: Wells Fargo; 99.99% interest

62. Guarantor N/A

N/A

63. Developer/Sponsor Chelsea Investment Corporation, a California Corporation

CIC has developed and financed nearly 10,000 affordable housing units at a cost of over $1.7 billion. Areas of expertise include inclusionary developments, rural communities, senior housing, mixed‐use, special needs housing, and housing for the homeless. Its record of completing projects on time, on budget, and in line with each client’s requirements demonstrates its commitment to providing superior solutions for affordable housing.

64. Management Agent CIC Management, Inc.

CIC Management, Inc. (CICM) oversees the operations of the Chelsea Investment Corporation portfolio of properties throughout California and New Mexico. As asset manager, CICM ensures the regulatory compliance of its properties, evaluates the financial performance of the properties, and reports to lenders, investors and regulatory agencies. CICM works in conjunction with ConAm Management Corporation who professionally manages and staffs the Chelsea properties.

65. Service Provider Serving Seniors, a California nonprofit public benefit corporation

Services will be provided by Serving Seniors and administered by one supportive service manager, a service coordinator, a supportive services director, one registered nurse, and an activity coordinator. Supportive services will be provided both on‐site free of charge to the residents and will include meal service, social services, mental health services, nurse case management, and socialization opportunities and outings. The budget for these services is part of the Project’s annual operating budget.

66. Contractor Emmerson Construction, Inc.

Emmerson Construction, Inc. (“Emmerson”), an affiliate of CIC, will be the General Contractor of the Project. Emmerson was formed in 2000 to construct affordable multifamily housing. By providing general contracting and construction management services, Emmerson supports its clients’ goals of securing competitive market pricing, consistent quality, and safe and sustainable building.

67. Architect Hedenkamp Architecture and Planning

Hedenkamp Architecture & Planning is an architecture firm based out of San Diego. Hedenkamp Architecture provides a wide range of Architectural services, has multifamily design experience, which includes new construction, in‐fill development and renovation projects.

40




A waiver of the Transitional Operating Reserve is requested and recommended for approval.

EXHIBITS

A. Detailed Financial Analysis i. Project Summary

ii. Unit Mix and Rent Summary iii. Sources and Uses of Funds iv. Projected Initial Annual Operating Budget v. Projected Permanent Loan Cash Flow


41

PROJECT SUMMARY Final CommitmentAcquisition, Rehab, Construction & Permanent Loans Project Number

Project Full Name Ramona Seniors Apartments Borrower Name:Project Address 16th & Main Street Managing GP:Project City Ramona Developer Name:Project County San Diego Investor Name:Project Zip Code 92065

Project Type: Permanent Loan Only Total Land Area (acres):Tenancy/Occupancy: Senior Residential Square Footage:Total Residential Units: 62 Residential Units Per Acre:Total Number of Buildings: 1 Number of Stories: 2 Covered Parking Spaces:Unit Style: Flat Total Parking Spaces:Elevators: 2

Loan Amort.Loan Term PeriodFees (Mo.) (Yr.)

1.000% 24 ---- 24 ---- -- ---- -- --

Loan Amort.Loan Term PeriodFees (Yr.) (Yr.)

1.000% 40 40-- 55 55-- -- --

NA NA NANA NA NANA NA NA

Appraisal Date: TBD Capitalization Rate:Investment Value ($) TBD Restricted Value ($)Construct/Rehab LTC N/A CalHFA Permanent Loan to CostConstruct/Rehab LTV N/A CalHFA 1st Permanent Loan to Value


Payment/Performance BondCompletion Guarantee Letter of Credit

Permanent LoanOperating Expense Reserve DepositInitial Replacement Reserve DepositAnnual Replacement Reserve Per Unit

1/12/18

Investor Equity Contributions

16th & Main Partners, LLCRamona SHC Housing LLC - MGPChelsea Investment CorporationWells FargoHyder & Company Management

NANA


Permanent Financing

Wells Fargo Construction LoanCounty of San Diego HOMEAHPInvestor Equity Contribution

AHP

CalHFA Permanent Loan($) Rate

17-017-S

TBDTBD

TBD

Prop Management:

2.86

Rate

73

TBDAppraised Values Upon Completion of Rehab/Construction

LoanAmount

7,840,300

--

Starting

610,000

Tax Credits: 9

State Credits

LoanAmount

21.6837,480

16,331,739

none

Starting Interest

($)4.600%

--

Interest

1,656,000 610,000

1,854,908

1/19/18

Cash

1,069,887

1,840,000

Deferred Developer Fees

County of San Diego HOME


Date Prepared:


Senior Staff Date:

NA$350$0

$93,957

WaivedWaived

Cash

TBD

--

5.050%

2,582,988 9,783,063

--NA

3.000%

42

UNIT MIX AND RENT SUMMARY Final Commitment

Ramona Seniors Apartments Project Number 17-017-S



1 1 560 50 50

2 1 790 12 24

- - - - 0

62 74

30% 35% 40% 45% 50% 60% 0%

CalHFA 13 19

Tax Credits 8 7 7 7 32

County of San Diego 15 14 32

-




Studios Senior 30% - - - - -

Senior 35% - - - -

Senior 40% - - - -

Senior 45% - - - -

Senior 50% - - - -

Senior 60% - - - -

Senior - - - - -

1 Bedroom Senior 30% 6 $438 $1,275 $837 34%

Senior 35% 6 $517 $758 41%

Senior 40% 6 $597 $678 47%

Senior 45% 6 $677 $598 53%

Senior 50% 26 $756 $519 59%

Senior 60% - - - -

Senior - - - - -

2 Bedrooms Senior 30% 2 $493 $1,575 $1,082 31%

Senior 35% 1 $584 $991 37%

Senior 40% 1 $675 $900 43%

Senior 45% 1 $766 $809 49%

Senior 50% 6 $857 $718 54%

Senior - - - - -

Senior - - - - -

3 Bedrooms Senior 30% - - - - -

Senior 35% - - - -

Senior 40% - - - -

Senior 45% - - - -

Senior 50% - - - -

Senior 60% - - - -

Senior - - - - -



Agency

PROJECT UNIT MIX




-

Unit Type of Style

Flat

Flat

43


Ramona Seniors Apartments Project Number



Wells Fargo Construction Loan 16,331,739 0.0%

- - 0.0%

County of San Diego HOME 1,656,000 0.0%

- - 0.0%




Investor Equity Contribution 1,854,908 0.0%


- - - - 0.0%

- - - - 0.0%

County of San Diego HOME 1,840,000 1,840,000 29,677 7.8%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

AHP 610,000 610,000 9,839 2.6%

- - - - 0.0%

- - - - 0.0%


Deferred Developer Fees 1,069,887 1,069,887 17,256 4.5%

State Credits 2,582,988 2,582,988 41,661 10.9%

Investor Equity Contributions 9,783,063 9,783,063 157,791 41.2%

TOTAL SOURCES OF FUNDS 20,452,647 23,726,238 23,726,238 382,681 100.0%

TOTAL USES OF FUNDS (BELOW) 20,452,647 23,726,238 23,726,238 382,681 100.0%




20,452,647

ACQUISITION COSTS

Lesser of Land Cost or Appraised Value 1,860,000 - 1,860,000 30,000 7.8%

Demolition Costs - - - - 0.0%

Legal & Other Closing Costs 75,000 - 75,000 1,210 0.3%

Escrow & other closing costs 5,000 - 5,000 81 0.0%








Mitigation 60,000 - 60,000 968 0.3%

TOTAL ACQUISITION COSTS 2,000,000 - 2,000,000 32,258 8.4%




Site Work 2,373,900 - 2,373,900 38,289 10.0%

Structures 7,905,967 - 7,905,967 127,516 33.3%

General Requirements 1,511,140 - 1,511,140 24,373 6.4%

Contractor Overhead - - - - 0.0%

Contractor Profit - - - - 0.0%


Contractor Liability Insurance - - - - 0.0%

GC Contingency 513,993 - 513,993 8,290 2.2%

Joint Trench/Utility Work - - - - 0.0%

TOTAL CONSTRUCT/REHAB COSTS 12,305,000 - 12,305,000 198,468 51.9%

17-017-S

Final Commitment





44



Final Commitment



RELOCATION COSTS





ARCHITECTURAL FEES

Design 231,600 - 231,600 3,735 1.0%

Supervision 36,000 - 36,000 581 0.2%

TOTAL ARCHITECTURAL FEES 267,600 - 267,600 4,316 1.1%


Engineering 338,795 - 338,795 5,464 1.4%


ALTA Land Survey 10,000 12,500 22,500 363 0.1%

TOTAL SURVEY & ENGINEERING FEES 348,795 12,500 361,295 5,827 1.5%


Hard Cost Contingency Reserve 615,250 - 615,250 9,923 2.6%

Soft Cost Contingency Reserve 102,798 - 102,798 1,658 0.4%

TOTAL CONTINGENCY RESERVES 718,048 - 718,048 11,581 3.0%



Wells Fargo Construction Loan 410,014 357,784 767,798 12,384 3.2%

County of San Diego HOME - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%

Loan Fees

Wells Fargo Construction Loan 167,442 - 167,442 2,701 0.7%

Union Bank Due Diligence 25,000 - 25,000 403 0.1%


- - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%





CalHFA Inspection Fees 12,000 - 12,000 194 0.1%

Real Estate Taxes During Rehab 7,500 - 7,500 121 0.0%


Wage Monitoring Fee (Davis Bacon, Prevailing, etc.) 65,000 - 65,000 1,048 0.3%

Insurance During Rehab 75,000 15,000 90,000 1,452 0.4%

Title & Recording Fees 30,000 - 30,000 484 0.1%

Construction Management & Testing - - - - 0.0%

Predevelopment Interest Expense 20,000 - 20,000 323 0.1%

Bond Issuer Fee - - - - 0.0%

other lenders inspection 18,000 - 18,000 290 0.1%

TOTAL CONST/REHAB PERIOD COSTS 829,956 372,784 1,202,740 19,399 5.1%



45



Final Commitment




Loan Fees

CalHFA Application Fee 5,000 - 5,000 81 0.0%

CalHFA Permanent Loan 39,202 39,202 78,403 1,265 0.3%

- - - - - 0.0%

- - - - - 0.0%


- - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%





Tax Exempt Bond Allocation Fee - - - - 0.0%


TOTAL PERMANENT LOAN COSTS 44,202 46,702 90,903 1,466 0.4%

LEGAL FEES

CalHFA Construction/Rehab Loan Legal Fees - - - - 0.0%

Other Construction/Rehab Loan Legal Fees 60,000 - 60,000 968 0.3%

CalHFA Permanent Loan Legal Fees - 10,000 10,000 161 0.0%

Other Permanent Loan Legal Fees - 10,000 10,000 161 0.0%

Sponsor Legal Fees 80,000 - 80,000 1,290 0.3%

Organizational Legal Fees 20,000 - 20,000 323 0.1%

Syndication Legal Fees - - - - 0.0%

Borrower Legal Fee 15,000 - 15,000 242 0.1%

CPA, opinion 5,000 - 5,000 81 0.0%

TOTAL LEGAL FEES 180,000 20,000 200,000 3,226 0.8%

OPERATING RESERVES

Operating Expense Reserve Deposit - 93,957 93,957 1,515 0.4%

Initial Replacement Reserve Deposit - - - - 0.0%



HOME Program Replacement Reserve - - - - 0.0%

Investor Required Reserve - 321,043 321,043 5,178 1.4%

Transitional Operating Reserve - - - - 0.0%

TOTAL OPERATING RESERVES - 415,000 415,000 6,694 1.7%

REPORTS & STUDIES

Appraisal Fee 7,500 - 7,500 121 0.0%

Market Study Fee 6,000 - 6,000 97 0.0%

Physical Needs Assessment Fee - - - - 0.0%

Environmental Site Assessment Reports - - - - 0.0%

HUD Risk Share Environmental Review Fee - - - - 0.0%

CalHFA Earthquake Waiver Review Fee - - - - 0.0%

Relocation Consultant - - - - 0.0%






TOTAL REPORTS & STUDIES 13,500 - 13,500 218 0.1%



46



Final Commitment



OTHER COSTS

TCAC Application, Allocation & Monitor Fees 66,169 - 66,169 1,067 0.3%

CDLAC Fees - - - - 0.0%

Local Permits & Fees 145,000 - 145,000 2,339 0.6%

Local Impact Fees 1,486,084 930,705 2,416,789 38,980 10.2%

Other Local Fees - - - - 0.0%

Syndicator/Investor Fees & Expenses - - - - 0.0%

Furnishings - - - - 0.0%

Accounting & Audits 127,500 - 127,500 2,056 0.5%

Advertising & Marketing Expenses 69,512 - 69,512 1,121 0.3%


Miscellaneous Administrative Fees - - - - 0.0%



MGP Partnership Service Fee 100,000 - 100,000 1,613 0.4%

TOTAL OTHER COSTS 1,994,265 930,705 2,924,970 47,177 12.3%

SUBTOTAL PROJECT COSTS 18,701,366 22,250,338 20,499,056 330,630 86.4%


Developer Fees, Overhead & Profit 724,100 1,475,901 2,200,000 35,484 9.3%








Other Soft costs TBD 1,027,182 - 1,027,182 16,567 4.3%

TOTAL DEVELOPER FEES & COSTS 1,751,282 1,475,901 3,227,182 52,051 13.6%

TOTAL PROJECT COSTS 20,452,647 23,726,238 23,726,238 382,681 100.0%



47

PROJECTED INITIAL ANNUAL RENTAL OPERATING BUDGET Final Commitment


AMOUNT PER UNIT %

Rental Income





Section 8 Rent Subsidies 437,448 7,056 48.99%




Other Income



Miscellaneous Income 1,978 32 0.22%

939,574$ 15,154$ 105.22%

Less: Vacancy Loss 46,582$ 751$ 5.22%

892,992$ 15,906$ 100.00%

AMOUNT PER UNIT %



Social Programs & Services - - 0.00%

Utilities 65,370 1,054 7.32%

Operating & Maintenance 55,650 898 6.23%



Other Taxes & Insurance 31,835 513 3.56%


345,746$ 5,577$ 38.72%


367,446$ 5,927$ 41.15%

525,546$ 8,477$ 58.85%

AMOUNT PER UNIT %


- -$ - 0.00%

County of San Diego HOME -$ - 0.00%

- -$ - 0.00%

- -$ - 0.00%

- -$ - 0.00%

- -$ - 0.00%

456,788$ 7,368$ 51.15%

68,758$ 1,109$ 7.70%

1.15 to 1


OPERATING EXPENSES

INCOME










48

PROJECTED PERMANENT LOAN CASH FL0WS Ramona Seniors Apartments

Final Commitment Project Number 17-017-S

YEAR 1 2 3 4 5 6 7 8 9 10

RENTAL INCOME CPI








Laundry and Vending Income 0.00% 5,952 5,952 5,952 5,952 5,952 5,952 5,952 5,952 5,952 5,952


Miscellaneous Income 0.00% 1,978 1,978 1,978 1,978 1,978 1,978 1,978 1,978 1,978 1,978

939,574 958,491 977,815 997,555 1,017,721 1,038,323 1,059,370 1,080,873 1,102,842 1,125,287









Laundry and Vending Income 0.00% - - - - - - - - - -



46,582 47,528 48,494 49,481 50,490 51,520 52,572 53,647 54,746 55,868

892,992 910,963 929,320 948,074 967,232 986,803 1,006,798 1,027,226 1,048,096 1,069,419


Administrative Expenses 3.50% 153,891 159,277 164,852 170,622 176,593 182,774 189,171 195,792 202,645 209,738

Management Fee 4.17% 37,200 37,949 38,713 39,495 40,293 41,108 41,941 42,792 43,661 44,550

Utilities 3.50% 65,370 67,658 70,026 72,477 75,014 77,639 80,356 83,169 86,080 89,093

Operating & Maintenance 3.50% 55,650 57,598 59,614 61,700 63,860 66,095 68,408 70,802 73,280 75,845

Ground Lease Payments 3.50% - - - - - - - - - -

Real Estate Taxes 1.25% 1,800 1,863 1,928 1,996 2,066 2,138 2,213 2,290 2,370 2,453

Other Taxes & Insurance 3.50% 33,635 34,812 36,031 37,292 38,597 39,948 41,346 42,793 44,291 45,841

Assisted Living/Board & Care 0.00% - - - - - - - - - -

Required Reserve Payments 1.00% 21,700 21,917 22,136 22,358 22,581 22,807 23,035 23,265 23,498 23,733

369,246 381,074 393,300 405,938 419,003 432,509 446,470 460,904 475,826 491,252

523,746 529,889 536,020 542,135 548,229 554,295 560,328 566,322 572,270 578,167


CalHFA Permanent Loan 1 456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788

- 1 - - - - - - - - - -

County of San Diego HOME 2 - - - - - - - - - -

- - - - - - - - - - - -

456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788

66,958 73,101 79,232 85,347 91,441 97,507 103,540 109,534 115,483 121,379

1.15 1.16 1.17 1.19 1.20 1.21 1.23 1.24 1.25 1.27










49


Final Commitment

YEAR

RENTAL INCOME CPI

























Utilities 3.50%









- 1

County of San Diego HOME 2

- -










Ramona Seniors Apartments

Project Number 17-017-S

11 12 13 14 15 16 17 18 19 20

632,613 648,428 664,639 681,255 698,286 715,743 733,637 751,978 770,777 790,047

- - - - - - - - - -

- - - - - - - - - -

507,676 515,291 523,021 530,866 538,829 546,912 555,115 563,442 571,894 580,472

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

5,952 5,952 5,952 5,952 5,952 5,952 5,952 5,952 5,952 5,952

- - - - - - - - - -

1,978 1,978 1,978 1,978 1,978 1,978 1,978 1,978 1,978 1,978

1,148,219 1,171,649 1,195,589 1,220,051 1,245,045 1,270,585 1,296,682 1,323,350 1,350,601 1,378,448

31,631 32,421 33,232 34,063 34,914 35,787 36,682 37,599 38,539 39,502

- - - - - - - - - -

- - - - - - - - - -

25,384 25,765 26,151 26,543 26,941 27,346 27,756 28,172 28,595 29,024

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

57,014 58,186 59,383 60,606 61,856 63,133 64,438 65,771 67,134 68,526

1,091,204 1,113,463 1,136,206 1,159,445 1,183,189 1,207,452 1,232,244 1,257,579 1,283,467 1,309,923

217,078 224,676 232,540 240,679 249,103 257,821 266,845 276,184 285,851 295,856

45,457 46,384 47,332 48,300 49,289 50,300 51,332 52,388 53,466 54,568

92,211 95,438 98,779 102,236 105,814 109,518 113,351 117,318 121,424 125,674

78,500 81,247 84,091 87,034 90,080 93,233 96,496 99,874 103,369 106,987

- - - - - - - - - -

2,539 2,628 2,720 2,815 2,914 3,016 3,121 3,230 3,343 3,461

47,445 49,106 50,825 52,604 54,445 56,350 58,323 60,364 62,477 64,663

- - - - - - - - - -

23,970 24,210 24,452 24,697 24,944 25,193 25,445 25,699 25,956 26,216

507,201 523,690 540,738 558,364 576,588 595,431 614,913 635,058 655,887 677,425

584,003 589,773 595,469 601,081 606,601 612,021 617,331 622,521 627,580 632,498

456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788

127,215 132,985 138,681 144,293 149,813 155,233 160,543 165,733 170,792 175,710

1.28 1.29 1.30 1.32 1.33 1.34 1.35 1.36 1.37 1.38


50


Final Commitment

YEAR

RENTAL INCOME CPI

























Utilities 3.50%









- 1


- -












21 22 23 24 25 26 27 28 29 30

809,798 830,043 850,794 872,064 893,865 916,212 939,117 962,595 986,660 1,011,326

- - - - - - - - - -

- - - - - - - - - -

589,179 598,017 606,987 616,092 625,333 634,713 644,234 653,897 663,706 673,661

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

5,952 5,952 5,952 5,952 5,952 5,952 5,952 5,952 5,952 5,952

- - - - - - - - - -

1,978 1,978 1,978 1,978 1,978 1,978 1,978 1,978 1,978 1,978

1,406,907 1,435,989 1,465,711 1,496,085 1,527,128 1,558,855 1,591,281 1,624,422 1,658,296 1,692,918

40,490 41,502 42,540 43,603 44,693 45,811 46,956 48,130 49,333 50,566

- - - - - - - - - -

- - - - - - - - - -

29,459 29,901 30,349 30,805 31,267 31,736 32,212 32,695 33,185 33,683

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

69,949 71,403 72,889 74,408 75,960 77,546 79,168 80,825 82,518 84,249

1,336,958 1,364,586 1,392,822 1,421,678 1,451,168 1,481,309 1,512,113 1,543,598 1,575,777 1,608,668

306,211 316,928 328,020 339,501 351,384 363,682 376,411 389,585 403,221 417,334

55,695 56,846 58,022 59,224 60,452 61,708 62,991 64,303 65,643 67,013

130,072 134,625 139,337 144,214 149,261 154,485 159,892 165,489 171,281 177,275

110,732 114,607 118,619 122,770 127,067 131,515 136,118 140,882 145,813 150,916

- - - - - - - - - -

3,582 3,707 3,837 3,971 4,110 4,254 4,403 4,557 4,716 4,881

66,927 69,269 71,693 74,203 76,800 79,488 82,270 85,149 88,129 91,214

- - - - - - - - - -

26,478 26,743 27,010 27,280 27,553 27,829 28,107 28,388 28,672 28,959

699,696 722,725 746,538 771,163 796,627 822,960 850,192 878,353 907,475 937,593

637,262 641,862 646,283 650,514 654,541 658,348 661,922 665,245 668,302 671,076

456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788

180,474 185,074 189,495 193,727 197,753 201,560 205,134 208,457 211,514 214,288

1.40 1.41 1.41 1.42 1.43 1.44 1.45 1.46 1.46 1.47


51


Final Commitment

YEAR

RENTAL INCOME CPI

























Utilities 3.50%









- 1


- -












31 32 33 34 35 36 37 38 39 40

1,036,610 1,062,525 1,089,088 1,116,315 1,144,223 1,172,829 1,202,149 1,232,203 1,263,008 1,294,583

- - - - - - - - - -

- - - - - - - - - -

683,766 694,023 704,433 715,000 725,725 736,611 747,660 758,875 770,258 781,812

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

5,952 5,952 5,952 5,952 5,952 5,952 5,952 5,952 5,952 5,952

- - - - - - - - - -

1,978 1,978 1,978 1,978 1,978 1,978 1,978 1,978 1,978 1,978

1,728,306 1,764,478 1,801,451 1,839,245 1,877,878 1,917,369 1,957,739 1,999,008 2,041,196 2,084,325

51,830 53,126 54,454 55,816 57,211 58,641 60,107 61,610 63,150 64,729

- - - - - - - - - -

- - - - - - - - - -

34,188 34,701 35,222 35,750 36,286 36,831 37,383 37,944 38,513 39,091

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

86,019 87,827 89,676 91,566 93,497 95,472 97,490 99,554 101,663 103,820

1,642,287 1,676,650 1,711,775 1,747,679 1,784,380 1,821,897 1,860,248 1,899,454 1,939,532 1,980,505

431,940 447,058 462,705 478,900 495,661 513,010 530,965 549,549 568,783 588,690

68,414 69,845 71,309 72,804 74,333 75,896 77,494 79,127 80,796 82,503

183,480 189,902 196,548 203,428 210,548 217,917 225,544 233,438 241,608 250,065

156,198 161,665 167,323 173,180 179,241 185,514 192,007 198,728 205,683 212,882

- - - - - - - - - -

5,052 5,229 5,412 5,601 5,798 6,000 6,210 6,428 6,653 6,886

94,407 97,711 101,131 104,670 108,334 112,125 116,050 120,111 124,315 128,666

- - - - - - - - - -

29,248 29,541 29,836 30,135 30,436 30,740 31,048 31,358 31,672 31,988

968,739 1,000,951 1,034,265 1,068,718 1,104,350 1,141,203 1,179,318 1,218,739 1,259,511 1,301,681

673,548 675,699 677,510 678,961 680,030 680,694 680,931 680,715 680,022 678,824

456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788 456,788

216,760 218,911 220,723 222,173 223,242 223,906 224,143 223,927 223,234 222,037

1.47 1.48 1.48 1.49 1.49 1.49 1.49 1.49 1.49 1.49


52





www.delorme.com

TN

MN (11.5°E)

0 180 360 540 720 900

0 40 80 120 160 200

ftm

Scale 1 : 6,400

1" = 533.3 ft Data Zoom 15-0

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www.delorme.com

TN

MN (11.5°E)

0 6 12 18 24 30

0 10 20 30 40 50

mikm

Scale 1 : 1,100,000

1" = 17.36 mi Data Zoom 7-5

54





The CalHFA Permanent Take-Out Loan Program (“Take-Out Financing Program”) provides competitive long term financing by partnering with

construction lenders and collaborating with HUD and the U.S. Treasury. Eligible affordable housing projects include new multifamily construction,

acquisition/rehabilitation, and special needs housing.

PERMANENT TAKE-OUT LOANPROGRAM


• The Take-Out Financing Program may be used with or without low income housing tax credits. For 4% tax

credit projects, CalHFA shall be used as the bond issuer (for more information, review the Conduit Issuer

Program Term Sheet).


AHAP contract.


This includes subordinate loans, deferred payment loans, residual receipts loans, indirect loans provided

by CalHFA to localities or other lending entities and made to a project, or any other financing provided

directly or indirectly by CalHFA at loan origination or anytime thereafter. Visit www.calhfa.ca.gov for the

CalHFA Portfolio Loan Prepayment Policy.

Loan Amount • Minimum loan amount of $1,000,000

• Minimum 1.15x for debt service coverage ratio






• Monitoring Fee and Trustee Fee: included in the interest rate


For 4% tax credit projects: See Conduit Issuer Program Term Sheet for information on conduit issuance fees



• Interest Rate - 10 year U.S. Treasury plus 2.10%-2.85%, forward rate commitment, fixed for the term

of the loan


• Permanent Loan Reduction – up to 10% reduction allowed at no cost

• Breakage Fee – applicable between construction loan close and permanent loan close. Calculated based

on hedge termination cost

Interest Rate is locked up to 30 days prior to construction loan close. The permanent loan rate can be locked

for up to 3 years.

55



PERMANENT TAKE-OUT LOAN PROGRAM

ConversionRequirements

• 90% stabilized occupancy for 90 days

• 90% of tax credit investor equity shall have been paid into project

• Property operations are sufficient to pay operating expense and the required debt service

CreditEnhancement

The Take-Out Financing Program will be credit-enhanced through CalHFA’s FHA Risk Sharing program.



















must be at 50% or less of AMI (“10% @ 50% AMI”).


• Property appraisal (construction lender’s appraisal may be acceptable)


• Construction Costs Review for new construction loans (construction lender’s review is acceptable)


of the loan (construction lender’s PNA is acceptable).



• Market study

• Inspection fees are estimated at $500 - $1,000 per month (can be shared with construction lender)




56



RequiredReserves


PNA.


or cash).





• Other reserves as required (at CalHFA’s discretion).



57

- 1 -




7 WHEREAS, the California Housing Finance Agency (the “Agency”) has 8 received a loan application on behalf of Ramona Seniors CIC, LP, a California limited 9 partnership (the “Borrower”), seeking a loan commitment, the proceeds of which are to 10 be used to provide financing for a multifamily housing development located in the City 11 of Ramona, San Diego County, California, known as Ramona Senior Apartments (the 12 “Development”); and 13 14 WHEREAS, the loan application has been reviewed by Agency staff which 15 prepared a report presented to the Board on the meeting date recited below (the “Staff 16 Report”), recommending Board approval subject to certain recommended terms and 17 conditions; and 18 19 WHEREAS, Agency staff has determined or expects to determine prior to 20 making a binding commitment to fund the loan for which the application has been made, 21 that (i) the Agency can effectively and prudently raise capital to fund the loan for which 22 the application has been made, by direct access to the capital markets, by private 23 placement, or other means and (ii) any financial mechanisms needed to insure prudent 24 and reasonable financing of loans can be achieved; and 25 26 WHEREAS, the Board wishes to grant the staff the authority to enter into a loan 27 commitment upon Agency staff determining in its judgment that reasonable and prudent 28 financing mechanisms can be achieved; 29 30

NOW, THEREFORE, BE IT RESOLVED by the Board of Directors (the 31 “Board”) of the California Housing Finance Agency as follows: 32 33 1. The Executive Director, or in his/her absence, the Chief Deputy Director, 34 is hereby authorized to execute and deliver a final commitment letter, in a form 35 acceptable to the Agency, and subject to recommended terms and conditions set forth in 36 the Staff Report and any terms and conditions as the Board has designated in the Minutes 37 of the Board Meeting, in relation to the Development described above and as follows: 38 39 PROJECT DEVELOPMENT NAME/ MORTGAGE 40 NUMBER LOCALITY AMOUNT 41 42 17-017-S RAMONA SENIOR APARTMENTS $7,840,300.00 43 City of Ramona, County of San Diego Permanent Mortgage44 State of California 45 46 47

48

58

- 2 -


48

59

- 3 -



27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47

60


Final Review & Request for Loan Approval FFB Permanent Refinancing with Equity Cash Out

Senior Loan Committee Review for Board Meeting on: February 15, 2018

Project Name (City, County) Arbor Park Apartments

CalHFA Project Number: 17-029-N

CalHFA Loan Amount(s) $7,500,000

CalHFA Loan Program: FFB Permanent Refinance


N/A

TRANSACTION FACTS

Loan Origination: Ruth Vakili Underwriting: Enoch Yeung

Asset Management: Stephenie Alstrom Loan Administration: Kevin Brown

Legal (Internal): Torin Henan Legal (External): N/A

Projected Closing Date: March 29, 2018 Approval Expiration Date: February 1, 2019

1. Address 899 North King Road, San Jose, Santa Clara County CA 95133

2. Legislative Districts Congress: #19 Zoe Lofgren

Assembly: #25 Kansen

Chu

State Senate: #14 Bob

Wieckowski

3. Brief Project Description Arbor Park Apartments (“Project”) is a 75-unit family apartment project in the City of San Jose. The property consists of one, two and three-bedroom units contained in two three-story garden-style buildings. There is a separate community building containing offices, social services area, meeting spaces and a laundry room. The project was built in 2001 and will undergo moderate rehab of about $21,700 per unit, consisting of ADA upgrades, parking lot lighting and paving upgrades, exterior painting, roof repairs, deck resurfacing, unit flooring, new cabinets, countertops, plumbing upgrades and bath fans. The original project financing included tax credits and funds from the City of San Jose (“City”). This refinancing transaction will include the City lowering the loan interest rate to 4%, extending their affordability restrictions by 10 years and approving a transfer of the limited partnership interest to an affiliate of MidPen Housing Corporation (“Developer”). The transfer of the limited partnership interest included a payment to the investor totaling $449,072. The project’s affordability levels are 30% AMI (7 units), 40% AMI (7 units), 50% AMI (32 units) and 60% AMI (28 units).

4. Sponsor/Developer MidPen Housing Corporation, a California corporation

5. Borrower Arbor Park Community, L.P., a California limited partnership

61

Arbor Park Apartments: – CalHFA Project Number 17-029-N Page - 2 Loan Amount: $7,500,000-Permanent Refinance

10/9/17

CALHFA LOAN TERMS

Acquisition & Rehabilitation Loan Permanent Loan


7. Loan Term N/A 40 years

8. Interest Rate

N/A 10-year treasury + 2.10% Currently underwritten at 4.80%




11. Equity Cash Out to Investor

$449,072



The project achieves a 1.15 debt coverage ratio (“DCR”) in the first year and maintains a strong DCR throughout the life of the loan.

The project is located in a very strong rental market. The historic occupancy rate over the past five years is 98.7% to 100%. There is currently 1 vacant unit in the project.

The project is 100% affordable to families earning less than 60% of AMI. The affordable rents range from 23% to 50% of market rents. This project serves primarily large families: 84% of the units contain two and three bedrooms. The moderate rehab of $21,700 per unit will extend the project’s useful life and increase the long-term

marketability of this project. The developer is a mission-based non-profit organization with over 45 years’ experience developing and

managing affordable housing properties, 24 of which are in CalHFA’s portfolio.

13. Project Weaknesses w/ Mitigants:

In consideration of the City approving this refinancing transaction, the City will modify their Regulatory Agreement and restrict the 7 extremely low-income units (30% AMI units) to tenants in the City’s Transition in Place (“TIP”) program. This program provides permanent, affordable housing to homeless residents that currently reside in temporary housing. The City will refer tenants and provide case management, (including supportive services, tenant advocacy and employment services) and a rent a subsidy for one year. Support can be extended if the tenant is still unable to afford the rent after one year. The City of San Jose Housing Department implements this program and has a dedicated source of approved funding. As the projects’ units in the 30% AMI category become available, they will be rented to tenants in the TIP program. The obligation to rent 30% AMI units to TIP tenants can be fulfilled at either the subject project or another property owned by the Developer in the City of San Jose. The Developer has identified another property that would be well suited for the TIP program and is in the process of finalizing a plan to comply with the City’s requirements. The potential impact of the additional City restriction is primarily the risk of increased turn-over. This is mitigated by the following:

Another property has been identified as the location to house the tenants in the TIP program. The City refers tenants, provides comprehensive case management and rent subsidies. The City will pay up to 30 days’ rent on a vacant TIP unit. The Developer and Property Manager have extensive experience in housing the proposed population.

CalHFA will hold an operating reserve of $112,900, which is available in case of an operating shortfall.

62


10/9/17

14. Term Sheet Variations

None.





This transaction extends project affordability for an additional 10 years. The upgrades will extend the useful life of the project.

17. Project Affordability Restrictions 74 Restricted Units (plus 1 manager’s unit):

Area Median Income Level 30% AMI 40% AMI 50% AMI 60% AMI

Existing Tax Credit Restrictions (expire

2057) 6 units 6 units 30 units 17 units

City of San Jose Restrictions (to expire

in-2067) 7 units 7 32 units 28 units

CalHFA Permanent Loan Restrictions

(expire 2058) 0 0 8 units 30 units

All 74 units will be restricted to at least 60% AMI and below. The deepest restrictions are broken out by the following: 8% of the units (7 units) affordable to tenants earning up to 30% of AMI; 8% of the units (7 units) up to 40% AMI, 40% of the units (32 units) up to 50% AMI and the remaining 23% of the units (28 units) to families earning up to 60% of AMI. The City of San Jose restrictions currently expire in 2057. As a condition of the refinancing transaction, the restrictions will be extended 10 more years, to 2067. The existing affordability restrictions will subordinate to the CalHFA loan documents.


The CalHFA Regulatory Agreement will restrict 40% of the units at 60% AMI, with 10% of the units restricted to 50% AMI for the term of the loan. The term of the restrictions is for 40 years.


Development is in a former Redevelopment project area o Central City: Yes o Low/Mod Census Tract: Middle o Minority Census Tract: 89.42% o Underserved: No o Below poverty line 5.29%

63


10/9/17










27. CDLAC/TCAC Closing Deadline: N/A

28. Estimated Loan Closing Date: March 2018

29. Estimated Construction Start: July 2018

30. Estimated Construction Completion: April 2019

31. Est. Stabilization & Conversion to Perm N/A




N/A N/A N/A N/A

N/A N/A N/A N/A



CalHFA Permanent Loan $7,500,000 First 40 years fully amortized.

City of San Jose $5,674,008 Second Residual Receipts

34. Tax Credit Equity N/A Type: N/A

Expected Pricing: N/A Tax Credit Investor: N/A


The cash flow analysis shows the project achieving a DCR of 1.15 in the first year and remains well above the minimum DCR of 1.15 for the life of the loan.

There are currently five tenants with tenant-based Section 8 vouchers, generating $93,000 annually. The Section 8 voucher income has remained steady, as reflected in audited financial statements over the last 4 years. However, this income is not counted in the cash flow analysis.

The cost for tenant services is paid out of net cash flow. For 2018, the cost for tenant services is estimated to be $52,700.

The City of San Jose monitoring fee is $4,148 and is paid out of net cash flow.

36. Exit Strategy

Repayment of the loan will be via principal and interest payments amortized over 40 years.

64


10/9/17

DEVELOPMENT SUMMARY



39. Hard Development Contingencies $421,937 % of Hard Development Costs: 26%


The site is 3.18 acres and is zoned A(PD) (agricultural, planned development) with a PD zoning approval for residential development.

The project is not in an Alquist-Priolo earthquake special studies zone and is not in a flood zone.

41. Form of Site Control & Expiration Date N/A –refinancing of existing property with no change of ownership.

42. Current Ownership Entity of Record Arbor Park Community, L.P., a California limited partnership.


A Phase 1 Environmental Assessment Report was conducted by EMG and is dated August 2, 2017. There were no recognized environmental conditions noted in the report and no further investigation is required.

44. Seismic Review

The Project is not in a special studies earthquake zone and is under CalHFA’s seismic risk criteria of a maximum PML of 20% or less. Therefore, earthquake insurance is not required.

45. Relocation

Residents will be able to return to their units at the end of the day and temporary relocation will not be required. However, a budget of $45,000 to cover any potential expenses for unknown conditions has been included.


Major elements include: o Parking lot paving and sidewalk repairs $78,000; o Site lighting upgrades $120,000 o Exterior stucco repairs and paint $110,000 o Roof repairs $5,000 o Unit deck/balcony repairs $183,425 o Community building interior upgrades $24,000 o Kitchen cabinets and countertops $663,400 o Unit flooring $50,440 o Bath fans and vanities $233,525 o Plumbing and electrical upgrades and central water heater replacement $98,430 o ADA/accessibility upgrades $61,000


The construction costs are based on a proposed scope of work and budget and final costs will be received prior to the permanent loan closing.

The equity out of $449,072 is the investor limited partner buy-out obligation. The MidPen Housing Corporation completed the buy-out in July 2017.

The first mortgage lender, Citibank, assigned all rights to the loan to MidPen Housing Corporation in July 2017 for $4,265,781. This was done because the terms of the note required a substantial yield maintenance fee if not paid off by August 2017.

An existing AHP loan of $347,250 is in the process of being forgiven by the lender and the affordability

65


10/9/17

restrictions removed from title. As part of the refinancing transaction, the City will lower the interest rate on its loan from 5.75% to 4%.

PROJECT DETAILS

48. Tenancy / Occupancy Type: Family


N/A


51. Property Construction Two and three-story wood-frame buildings.

Buildings: 3 Stories: One and three-story

Elevators: N/A Unit Style: Flats

Year Built: 2001 Year of Last Rehab: N/A

52. Total Land Area (acres) 3.18 acres


Covered Parking Spaces: None Total Parking Spaces: 136


54. Appraisal Review Novogradac & Company dated 12/5/17

The appraisal valuation is based on an income capitalization approach and identified 5 comparable affordable housing projects and 5 market rate projects in the subject’s market area.

The average vacancy for these comparable properties was 1.7%, with affordable projects achieving 100% occupancy.

The project is currently 99% occupied and has a historical vacancy rate of .7% to 1.2%. Based on the appraiser’s survey of the market, the appraiser selected a vacancy rate of 3% for the subject property.

The project offers units that are slightly larger than comparable affordable projects, but at rents that are slightly lower. Both of these factors contribute to the low vacancy rate.

Cap rates for the comparable affordable projects ranged from 4% to 5.8% for projects sold in 2015 and 2016. The appraiser selected a cap rate of 5.5% for the subject property, reflecting the fact that cap rates have increased slightly in 2017.

The CalHFA permanent loan to value is 63% of restricted value.


The 75 units are located in two residential buildings (1 two-story and 1 three-story building) totaling 72,688 square feet

The buildings are wood-framed on concrete slab foundation, with stucco exterior and asphalt composition shingle roofs.

There are 12 one-bedroom/1 bath units of 739 square feet, 40 two-bedroom/1 bath units of 895 square feet, 12 three-bedroom/1.5 bath units of 1,202 square feet and 11 three-bedroom/2 bath units of 1,236 square feet.

The units are equipped with a range, dishwasher, refrigerator and garbage disposal, ceiling fans and gas wall heaters. A central gas boiler system supplies the hot water to each building.

The community building is 2,100 square feet and contains leasing and service offices, a computer room and after school program space.

The site also offers 136 uncovered parking spaces and two fenced playgrounds.

MARKET ANALYSIS

56. Market Study: Novogradac & Company appraisal 12-5-17

66


10/9/17


The primary market area (“PMA”) consists of the City of San Jose and the secondary market area (“SMA”) includes Santa Clara and San Benito counties.

The population in the PMA is 142,581 and is expected to increase at an annual rate of 1.5% from 2016 to 2021.

There are 40,100 households in the PMA, 29% of which are renter-occupied. The median household income in the PMA is $78,039 and in the SMA, it is $93,391. The unemployment rate in the PMA as of June 2017 is 3.6%, which is a .2% decrease from June

2016. Major employment sectors are manufacturing, healthcare/social services, technology,

professional, scientific and retail/food services.


The project is located 3.5 miles from downtown San Jose and is in a neighborhood consisting a mix of single-family and multifamily homes that are in good condition.

The project is located adjacent to a bus stop and is within 1 mile of light rail, major shopping, healthcare, schools and employment centers.

Average market rents in the San Jose apartment market are $2,500 for a 1-bedroom unit, $2,800 for a two-bedroom unit and $3,350 for a three-bedroom unit. Rents are expected to increase annually due to an increase in employment and demand for rentals in the region.

59. Supply

There are five affordable comparable projects and five market rate projects located within .1 to 3 miles from the subject property.

The affordable projects were all 100% leased up and many had waiting lists. The market rate projects were 98% to 100% occupied.

The average vacancy rate was 1.7%, reflecting a very tight rental market. There have been 11 affordable tax credit properties approved in the San Jose market since 2014

totaling 1,714 units. However, high occupancy rates are expected to be maintained due to an acute shortage of affordable rental properties in the San Jose market.


All comparable affordable apartments surveyed in the appraisal are 100% occupied and the subject property is 99% occupied. The project has maintained a high level of occupancy and demand for the project is anticipated to continue.


61. Borrower Arbor Park Community, L.P., a California limited partnership

Arbor Park Community, L.P., a California limited partnership. The general partner is MP Santa Clara Inc. and the limited partner is MP Arbor Park LLC.

62. Guarantor N/A

67


10/9/17

63. Developer/Sponsor MidPen Housing Corporation

MidPen Housing Corporation (“MidPen”) is a well-known non-profit developer that has been in business for over 45 years, developing over 104 projects which total 7,360 units. Of these, 24 projects are in the CalHFA portfolio. MidPen specializes in housing that is affordable, service-enriched, supportive, and focused on the needs of populations with special needs. In addition, MidPen develops properties that are of high quality design and construction, sustainable and energy-efficient.

64. Management Agent MidPen Property Management Corporation

MidPen Property Management Corporation will be the property manager for the subject property and manages all of the properties in MidPen’s portfolio. Established in 1981, MidPen Property Management manages properties that range in size from small to large multi-family properties, mixed-use, special needs, farm worker housing and are located in ten counties ranging from Fairfield to Monterey. MidPen Property Management has substantial experience in property management, including compliance, operations, training, facility maintenance and community relations.

65. Contractor TBD

A general contractor will be selected prior to the construction loan closing and is subject to CalHFA approval.

66. Architect The Dahlin Group

The Dahlin Group Inc. was established in 1976 and is an architectural firm that focuses on designing sustainable and innovative projects ranging from single-family detached homes, affordable multifamily apartments, commercial and retail buildings, museums, community centers and master planned resort communities. The Dahlin Group Inc. designs sustainable projects that are LEED-certified and sustainable, and has won several AIA and Gold Nugget awards for design.



The City will extend the maturity date of their loan to 2057and extend the term of the Regulatory

Agreement to 2067. The City will subordinate its regulatory agreement and affordability covenants to CalHFA’s Regulatory

Agreement and Deed of Trust. An existing AHP loan will be re-conveyed prior to CalHFA loan closing and the affordability restrictions

removed. Prior to the permanent loan closing, the Developer and City are to agree on a plan to comply with the TIP

program. The plan is subject to approval by CalHFA. The CalHFA closing is contingent upon completion of the TCAC Transfer Event Process and TCAC’s

subordination of its Regulatory Agreement to the CalHFA Deed of Trust and Regulatory Agreement.

68


10/9/17

EXHIBITS

A. Detailed Financial Analysis i. Project Summary ii. Unit Mix and Rent Summary iii. Sources and Uses of Funds iv. Projected Initial Annual Operating Budget v. Projected Permanent Loan Cash Flow


69

PROJECT SUMMARY Senior Staff


Project Full Name Arbor Park Borrower Name:

Project Address 899 North King Road Managing GP:

Project City San Jose Developer Name:

Project County Santa Clara Investor Name:


Project Type: Permanent Loan Only Total Land Area (acres):

Tenancy/Occupancy: Family Residential Square Footage:



Number of Stories: 2 and 3 Covered Parking Spaces:


Elevators: none

Loan Amort.

Loan Term Period

Fees (Mo.) (Yr.)

-- -- --

-- -- --

-- -- --

Loan Amort.

Loan Term Period

Fees (Yr.) (Yr.)

1.000% 40 40

-- 55 40

-- -- --

-- -- --

-- -- --

NA NA NA

Appraisal Date: -- Capitalization Rate:

Investment Value ($) -- Restricted Value ($)

Construct/Rehab LTC N/A CalHFA Permanent Loan to Cost

Construct/Rehab LTV N/A CalHFA 1st Permanent Loan to Value




Permanent Loan




1/8/18

Arbor Park Community, L.P.

MP Santa Clara, Inc., a California nonprofit

public benefit corporationMid Pen Housing

--

Mid Pen Management

NA


Permanent Financing

--

--

--

CalHFA Permanent Loan

Existing Reserves

Energy Rebate

($) Rate

17-029-N

56%

63%

12,000,000

Prop Management:

3.18

Rate

138

5.50%


Loan

Amount

7,500,000

--

Starting

--

Tax Credits: None

--

Loan

Amount

23.58

72,688

--

--

0

Starting

Interest

($)

--

--

Interest

--

1/19/18

Cash

5,674,008

194,114

100,000

City of San Jose Loan


Date Prepared:


Senior Staff Date:

Cash

$450

$75,000

$112,753

Required

Waived

NA

63%

--

4.800%

--

--

--

--

--

70

UNIT MIX AND RENT SUMMARY Senior Staff

Arbor Park Project Number 17-029-N



1 1 739 12 18

2 1 895 40 120

3 1.5 1,202 12 54

3 2 1,236 11 49.5

- - - - 0

- - - - 0

75 241.5

30% 40% 50% 60% 65% 80% 120%

CalHFA 8 30

Tax Credits 6 6 30 17

City of San Jose 7 7 32 28

-

-

-




Studios TCAC 30% - - - - -

TCAC 40% - - - -

TCAC 50% - - - -

TCAC 60% - - - -

CalHFA 60% - - - -

CalHFA 120% - - - -

CalHFA - - - - -

1 Bedroom TCAC 30% 2 $584 $2,500 $1,916 23%

TCAC 40% - - - -

TCAC 50% 5 $1,003 $1,497 40%

TCAC 60% 5 $1,118 $1,382 45%

CalHFA 60% - - - -

CalHFA 120% - - - -

CalHFA - - - - -

2 Bedrooms TCAC 30% 4 $742 $2,800 $2,058 27%

TCAC 40% 5 $1,011 $1,789 36%

TCAC 50% 17 $1,174 $1,626 42%

TCAC 60% 14 $1,399 $1,401 50%

CalHFA 60% - - - -

CalHFA - - - - -

CalHFA - - - - -

3 Bedrooms TCAC 30% 1 $782 $3,350 $2,568 23%

TCAC 40% 2 $1,155 $2,195 34%

TCAC 50% 10 $1,368 $1,982 41%

TCAC 60% 9 $1,639 $1,711 49%

CalHFA 60% - - - -

CalHFA 120% - - - -

CalHFA - - - - -

4 Bedrooms TCAC 30% - - - - -

TCAC 40% - - - -

TCAC 50% - - - -

TCAC 60% - - - -

CalHFA 60% - - - -

CalHFA 120% - - - -

CalHFA - - - - -


TCAC 40% - - - -

TCAC 50% - - - -

TCAC 60% - - - -

CalHFA 60% - - - -

CalHFA 120% - - - -

CalHFA - - - - -



Agency

PROJECT UNIT MIX

-




-

-

-

Unit Type of Style

Flat

Flat

71


Arbor Park Project Number

PERMANENT

$ SOURCES ($) PER UNIT ($) %

CalHFA Refinance 0.0%

- 0.0%

- 0.0%

- 0.0%

- 0.0%

- 0.0%

- 0.0%

Existing Reserves 0.0%

- 0.0%

- 0.0%

Construct/Rehab Net Oper. Inc. 0.0%

Deferred Developer Fee 0.0%

Developer Equity Contribution 0.0%

Investor Equity Contribution 0.0%




City of San Jose Loan 5,674,008 5,674,008 75,653 42.1%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

Existing Reserves 194,114 194,114 2,588 1.4%

Energy Rebate 100,000 100,000 1,333 0.7%

- - - - 0.0%


Deferred Developer Fees - - - 0.0%


Investor Equity Contributions - - - 0.0%

TOTAL SOURCES OF FUNDS 13,468,122 13,468,122 179,575 97.8%

TOTAL USES OF FUNDS (BELOW) - 13,468,122 179,575 100.0%

FUNDING SURPLUS (DEFICIT) 13,468,122 -

PERMANENT

$ USES ($) PER UNIT ($) %

-

ACQUISITION COSTS

Lesser of Land Cost or Appraised Value - - - 0.0%

Demolition Costs - - - 0.0%

Legal & Other Closing Costs - - - 0.0%

Escrow & other closing costs - - - 0.0%

Verifiable Carrying Costs - - - 0.0%

Existing Improvements Value - - - 0.0%

Delinquent Taxes Paid @ Closing - - - 0.0%

CalHFA Yield Maintenance Paid @ Closing - - - 0.0%

Extended City of San Jose Loan - 5,674,008 75,653 42.1%

Equity Take Out to Owner - - - 0.0%

Pay-Off Existing Loan and Interest - 4,265,781 56,877 31.7%

Other (Investor Buy-Out) - 449,072 5,988 3.3%

TOTAL ACQUISITION COSTS - 10,388,861 138,518 77.1%


Offsite Improvements - - - 0.0%

Environmental Remediation (Hard Costs) - - - 0.0%

Site Work (Hard Cost) - - - 0.0%

Structures (Hard Cost) - 1,580,145 21,069 11.7%

General Requirements - 94,809 1,264 0.7%

Contractor Overhead - 23,702 316 0.2%

Contractor Profit - 23,702 316 0.2%

Contractor Bond - - - 0.0%

Contractor Liability Insurance - 15,801 211 0.1%

Personal Property - - - 0.0%

Other (GC Contingency) - 47,404 632 0.4%

TOTAL CONSTRUCT/REHAB COSTS - 1,785,563 23,808 13.3%

17-029-N

Senior Staff





72



Senior Staff

PERMANENT


RELOCATION COSTS

Relocation Expense - 45,000 600 0.3%

Relocation Compliance Monitoring - - - 0.0%

Other (Specify) - - - 0.0%

TOTAL RELOCATION COSTS - 45,000 600 0.3%

ARCHITECTURAL FEES

Design - 40,000 533 0.3%

Supervision - 30,000 400 0.2%

TOTAL ARCHITECTURAL FEES - 70,000 933 0.5%


Engineering - 18,000 240 0.1%

Supervision - - - 0.0%

ALTA Land Survey - 10,000 133 0.1%

TOTAL SURVEY & ENGINEERING FEES - 28,000 373 0.2%


Hard Cost Contingency Reserve - 421,937 5,626 3.1%

Soft Cost Contingency Reserve - 87,977 1,173 0.7%

TOTAL CONTINGENCY RESERVES - 509,914 6,799 3.8%



CalHFA Refinance - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

Loan Fees

CalHFA Refinance - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%


Deficit Const/Rehab NOI (Net Operating Income) - - - 0.0%

Credit Enhancement & Application Fees - - - 0.0%

Owner Paid Bonds/Insurance - - - 0.0%

CalHFA Inspection Fees - - - 0.0%

Real Estate Taxes During Rehab - 32,511 433 0.2%

Completion Guaranty Fee - - - 0.0%

Wage Monitoring Fee (Davis Bacon, Prevailing, etc.) - - - 0.0%

Insurance During Rehab - - - 0.0%

Title & Recording Fees - - - 0.0%

Construction Management & Testing - - - 0.0%

Predevelopment Interest Expense - - - 0.0%

Bond Issuer Fee - - - 0.0%

Other - - - 0.0%

TOTAL CONST/REHAB PERIOD COSTS - 32,511 433 0.2%



73



Senior Staff

PERMANENT



Loan Fees

CalHFA Application Fee - 5,000 67 0.0%

CalHFA Permanent Loan - 75,000 1,000 0.6%



Soft Lender Fee - 36,520 487 0.3%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

Credit Enhancement & Application Fees - - - 0.0%

Title & Recording (closing costs) - 15,000 200 0.1%

Year 1 - Taxes & Special Assessments - - - 0.0%

Year 1 - Insurance - - - 0.0%

Tax Exempt Bond Allocation Fee - - - 0.0%

CalHFA Administrative - 1,000 13 0.0%

TOTAL PERMANENT LOAN COSTS - 132,520 1,767 1.0%

LEGAL FEES

CalHFA Construction/Rehab Loan Legal Fees - - - 0.0%

Other Construction/Rehab Loan Legal Fees - 10,000 133 0.1%

CalHFA Permanent Loan Legal Fees - 25,000 333 0.2%

Other Permanent Loan Legal Fees - - - 0.0%

Sponsor Legal Fees - 30,000 400 0.2%

Organizational Legal Fees - - - 0.0%

Syndication Legal Fees - - - 0.0%

Borrower Legal Fee - - - 0.0%

CalHFA Bond Counsel - - - 0.0%

TOTAL LEGAL FEES - 65,000 867 0.5%

OPERATING RESERVES

Operating Expense Reserve Deposit - 112,753 1,503 0.8%

Initial Replacement Reserve Deposit - 75,000 1,000 0.6%

Construction Defects Reserve - - - 0.0%

Rent-Up Reserve Deposit - - - 0.0%

HOME Program Replacement Reserve - - - 0.0%

Investor Required Reserve - - - 0.0%


TOTAL OPERATING RESERVES - 187,753 2,503 1.4%

REPORTS & STUDIES

Appraisal Fee - 7,500 100 0.1%

Market Study Fee - - - 0.0%

Physical Needs Assessment Fee - 3,500 47 0.0%

Environmental Site Assessment Reports - 3,000 40 0.0%

HUD Risk Share Environmental Review Fee - - - 0.0%

CalHFA Earthquake Waiver Review Fee - - - 0.0%

Relocation Consultant - - - 0.0%

Soils Reports - - - 0.0%

Acoustical Reports - - - 0.0%

Termite/Dry Rot - - - 0.0%

Consultant/Processing Agent - - - 0.0%

Other (Lighting/Energy Consultant) - 20,000 267 0.1%

TOTAL REPORTS & STUDIES - 34,000 453 0.3%



74



Senior Staff

PERMANENT


OTHER COSTS

TCAC Application, Allocation & Monitor Fees - - - 0.0%

CDLAC Fees - - - 0.0%

Local Permits & Fees - - - 0.0%

Local Impact Fees - 75,000 1,000 0.6%

Other Local Fees - - - 0.0%

Syndicator/Investor Fees & Expenses - - - 0.0%

Furnishings - 10,000 133 0.1%

Accounting & Audits - 20,000 267 0.1%

Advertising & Marketing Expenses - - - 0.0%

Financial Consulting - - - 0.0%

Miscellaneous Administrative Fees - - - 0.0%

HUD Risk Share Insurance (First Year Prepaid) - - - 0.0%



TOTAL OTHER COSTS - 105,000 1,400 0.8%

SUBTOTAL PROJECT COSTS - 13,384,122 178,455 99.4%


Developer Fees, Overhead & Profit - - - 0.0%

Consultant Processing Agent - - - 0.0%

Project Administration - 84,000 1,120 0.6%

Syndicator Consultant Fees - - - 0.0%

Guarantee Fees - - - 0.0%

Construction Oversight & Management - - - 0.0%

Other Adminstration Fees - - - 0.0%

Other (Specify) correction to balance - - - 0.0%


TOTAL DEVELOPER FEES & COSTS - 84,000 1,120 0.6%

TOTAL PROJECT COSTS - 13,468,122 179,575 100.0%



75

PROJECTED INITIAL ANNUAL RENTAL OPERATING BUDGET Senior Staff


AMOUNT PER UNIT %

Rental Income

Restricted Unit Rents 1,090,356$ 14,538$ 101.79%

Unrestricted Unit Rents 22,356 298 2.09%



Section 8 Rent Subsidies - - 0.00%




Other Income




1,127,532$ 15,034$ 105.26%

Less: Vacancy Loss 56,377$ 752$ 5.26%

1,071,155$ 15,785$ 100.00%

AMOUNT PER UNIT %




Utilities 119,910 1,599 11.19%






551,593$ 7,355$ 51.50%


585,343$ 7,805$ 54.65%

485,812$ 6,477$ 45.35%

AMOUNT PER UNIT %



City of San Jose Loan -$ - 0.00%

- -$ - 0.00%

- -$ - 0.00%

- -$ - 0.00%

- -$ - 0.00%

422,124$ 5,628$ 39.41%

63,688$ 849$ 5.95%

1.15 to 1


OPERATING EXPENSES

INCOME










76


Senior Staff Project Number

YEAR 1 2 3 4 5 6 7 8 9

RENTAL INCOME CPI

Restricted Unit Rents 2.50% 1,090,356 1,117,615 1,145,555 1,174,194 1,203,549 1,233,638 1,264,479 1,296,091 1,328,493

Unrestricted Unit Rents 2.50% 22,356 22,915 23,488 24,075 24,677 25,294 25,926 26,574 27,239

Section 8 Rent Subsidies 2.00% - - - - - - - - -

Shelter Care Plus Rent Subsidies 1.00% - - - - - - - - -

Other Subsidy (Specify) 0.00% - - - - - - - - -


Laundry and Vending Income 2.50% 14,820 15,191 15,570 15,960 16,359 16,767 17,187 17,616 18,057

Garage and Parking Income 2.50% - - - - - - - - -

Miscellaneous Income 2.50% - - - - - - - - -

1,127,532 1,155,720 1,184,613 1,214,229 1,244,584 1,275,699 1,307,591 1,340,281 1,373,788


Restricted Unit Rents 5.00% 54,518 55,881 57,278 58,710 60,177 61,682 63,224 64,805 66,425

Unrestricted Unit Rents 5.00% 1,118 1,146 1,174 1,204 1,234 1,265 1,296 1,329 1,362

Section 8 Rent Subsidies 3.00% - - - - - - - - -

Shelter Care Plus Rent Subsidies 5.00% - - - - - - - - -



Laundry and Vending Income 5.00% 741 760 779 798 818 838 859 881 903

Garage and Parking Income 10.00% - - - - - - - - -

Miscellaneous Income 0.00% - - - - - - - - -

56,377 57,786 59,231 60,711 62,229 63,785 65,380 67,014 68,689

1,071,155 1,097,934 1,125,383 1,153,517 1,182,355 1,211,914 1,242,212 1,273,267 1,305,099


Administrative Expenses 3.50% 160,327 165,938 171,746 177,757 183,979 190,418 197,083 203,981 211,120

Management Fee 6.00% 64,269 65,876 67,523 69,211 70,941 72,715 74,533 76,396 78,306

Utilities 3.50% 119,910 124,107 128,451 132,946 137,599 142,415 147,400 152,559 157,899

Operating & Maintenance 3.50% 128,460 132,956 137,610 142,426 147,411 152,570 157,910 163,437 169,157

Ground Lease Payments 3.50% - - - - - - - - -

Real Estate Taxes 1.25% 10,204 10,332 10,461 10,591 10,724 10,858 10,994 11,131 11,270

Other Taxes & Insurance 3.50% 68,423 70,818 73,296 75,862 78,517 81,265 84,109 87,053 90,100

Assisted Living/Board & Care 0.00% - - - - - - - - -

Required Reserve Payments 1.00% 33,750 34,088 34,428 34,773 35,120 35,472 35,826 36,185 36,546

585,343 604,114 623,515 643,567 664,292 685,713 707,855 730,742 754,398

485,812 493,820 501,868 509,951 518,063 526,201 534,357 542,526 550,700


CalHFA Permanent Loan 1 422,124 422,124 422,124 422,124 422,124 422,124 422,124 422,124 422,124

CalHFA Other Loan - - - - - - - - - -

City of San Jose Loan 2 - - - - - - - - -

- 3 - - - - - - - - -

- - - - - - - - - - -

- - - - - - - - - - -

- - - - - - - - - - -

- - - - - - - - - - -

422,124 422,124 422,124 422,124 422,124 422,124 422,124 422,124 422,124

63,688 71,696 79,744 87,827 95,940 104,077 112,233 120,402 128,577

1.15 1.17 1.19 1.21 1.23 1.25 1.27 1.29 1.30

Date Prepared: 01/08/18 Senior Staff Date:









77


Senior Staff

YEAR

RENTAL INCOME CPI























Utilities 3.50%









CalHFA Other Loan -

City of San Jose Loan 2

- 3

- -

- -

- -

- -










Arbor Park

17-029-N Project Number

10 11 12 13 14 15 16 17 18

1,361,705 1,395,748 1,430,642 1,466,408 1,503,068 1,540,644 1,579,161 1,618,640 1,659,106

27,920 28,618 29,333 30,066 30,818 31,588 32,378 33,188 34,017

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

18,508 18,971 19,445 19,931 20,430 20,940 21,464 22,000 22,550

- - - - - - - - -

- - - - - - - - -

1,408,133 1,443,336 1,479,420 1,516,405 1,554,315 1,593,173 1,633,003 1,673,828 1,715,673

68,085 69,787 71,532 73,320 75,153 77,032 78,958 80,932 82,955

1,396 1,431 1,467 1,503 1,541 1,579 1,619 1,659 1,701

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

925 949 972 997 1,021 1,047 1,073 1,100 1,128

- - - - - - - - -

- - - - - - - - -

70,407 72,167 73,971 75,820 77,716 79,659 81,650 83,691 85,784

1,337,726 1,371,169 1,405,449 1,440,585 1,476,600 1,513,515 1,551,352 1,590,136 1,629,890

218,509 226,157 234,073 242,265 250,744 259,520 268,604 278,005 287,735

80,264 82,270 84,327 86,435 88,596 90,811 93,081 95,408 97,793

163,425 169,145 175,065 181,192 187,534 194,098 200,891 207,922 215,200

175,078 181,206 187,548 194,112 200,906 207,937 215,215 222,748 230,544

- - - - - - - - -

11,411 11,554 11,698 11,844 11,992 12,142 12,294 12,448 12,603

93,254 96,517 99,896 103,392 107,011 110,756 114,632 118,645 122,797

- - - - - - - - -

36,912 37,281 37,654 38,030 38,411 38,795 39,183 39,575 39,970

778,852 804,130 830,260 857,271 885,194 914,059 943,900 974,750 1,006,643

558,874 567,040 575,189 583,314 591,406 599,455 607,452 615,386 623,247

422,124 422,124 422,124 422,124 422,124 422,124 422,124 422,124 422,124

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

422,124 422,124 422,124 422,124 422,124 422,124 422,124 422,124 422,124

136,750 144,916 153,065 161,190 169,282 177,331 185,328 193,263 201,123

1.32 1.34 1.36 1.38 1.40 1.42 1.44 1.46 1.48

1/19/18 Senior Staff Date:

78


Senior Staff

YEAR

RENTAL INCOME CPI























Utilities 3.50%









CalHFA Other Loan -


- 3

- -

- -

- -

- -










Arbor Park


19 20 21 22 23 24 25 26 27

1,700,583 1,743,098 1,786,675 1,831,342 1,877,126 1,924,054 1,972,155 2,021,459 2,071,996

34,868 35,739 36,633 37,549 38,487 39,450 40,436 41,447 42,483

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

23,114 23,692 24,284 24,891 25,514 26,152 26,805 27,475 28,162

- - - - - - - - -

- - - - - - - - -

1,758,565 1,802,529 1,847,592 1,893,782 1,941,127 1,989,655 2,039,396 2,090,381 2,142,641

85,029 87,155 89,334 91,567 93,856 96,203 98,608 101,073 103,600

1,743 1,787 1,832 1,877 1,924 1,972 2,022 2,072 2,124

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

1,156 1,185 1,214 1,245 1,276 1,308 1,340 1,374 1,408

- - - - - - - - -

- - - - - - - - -

87,928 90,126 92,380 94,689 97,056 99,483 101,970 104,519 107,132

1,670,637 1,712,403 1,755,213 1,799,093 1,844,070 1,890,172 1,937,427 1,985,862 2,035,509

297,806 308,229 319,017 330,182 341,739 353,700 366,079 378,892 392,153

100,238 102,744 105,313 107,946 110,644 113,410 116,246 119,152 122,131

222,732 230,527 238,596 246,946 255,590 264,535 273,794 283,377 293,295

238,613 246,965 255,608 264,555 273,814 283,397 293,316 303,582 314,208

- - - - - - - - -

12,761 12,920 13,082 13,245 13,411 13,579 13,748 13,920 14,094

127,095 131,543 136,147 140,912 145,844 150,949 156,232 161,700 167,360

- - - - - - - - -

40,370 40,774 41,181 41,593 42,009 42,429 42,854 43,282 43,715

1,039,614 1,073,702 1,108,944 1,145,380 1,183,051 1,222,000 1,262,269 1,303,905 1,346,955

631,023 638,701 646,269 653,713 661,019 668,173 675,157 681,957 688,553

422,124 422,124 422,124 422,124 422,124 422,124 422,124 422,124 422,124

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

422,124 422,124 422,124 422,124 422,124 422,124 422,124 422,124 422,124

208,899 216,577 224,145 231,589 238,896 246,049 253,034 259,833 266,430

1.49 1.51 1.53 1.55 1.57 1.58 1.60 1.62 1.63


79


Senior Staff

YEAR

RENTAL INCOME CPI























Utilities 3.50%









CalHFA Other Loan -


- 3

- -

- -

- -

- -










Arbor Park


28 29 30 31 32 33 34 35 36

2,123,795 2,176,890 2,231,313 2,287,095 2,344,273 2,402,880 2,462,952 2,524,525 2,587,639

43,545 44,634 45,749 46,893 48,066 49,267 50,499 51,761 53,055

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

28,866 29,588 30,328 31,086 31,863 32,660 33,476 34,313 35,171

- - - - - - - - -

- - - - - - - - -

2,196,207 2,251,112 2,307,390 2,365,075 2,424,201 2,484,806 2,546,927 2,610,600 2,675,865

106,190 108,845 111,566 114,355 117,214 120,144 123,148 126,226 129,382

2,177 2,232 2,287 2,345 2,403 2,463 2,525 2,588 2,653

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

1,443 1,479 1,516 1,554 1,593 1,633 1,674 1,716 1,759

- - - - - - - - -

- - - - - - - - -

109,810 112,556 115,369 118,254 121,210 124,240 127,346 130,530 133,793

2,086,397 2,138,556 2,192,020 2,246,821 2,302,991 2,360,566 2,419,580 2,480,070 2,542,072

405,879 420,084 434,787 450,005 465,755 482,056 498,928 516,391 534,465

125,184 128,313 131,521 134,809 138,179 141,634 145,175 148,804 152,524

303,560 314,185 325,181 336,563 348,342 360,534 373,153 386,213 399,731

325,205 336,587 348,368 360,561 373,180 386,242 399,760 413,752 428,233

- - - - - - - - -

14,270 14,449 14,629 14,812 14,997 15,185 15,375 15,567 15,761

173,217 179,280 185,555 192,049 198,771 205,728 212,928 220,381 228,094

- - - - - - - - -

44,152 44,594 45,040 45,490 45,945 46,404 46,868 47,337 47,810

1,391,468 1,437,492 1,485,081 1,534,289 1,585,170 1,637,783 1,692,188 1,748,445 1,806,619

694,929 701,064 706,939 712,532 717,821 722,783 727,393 731,625 735,453

422,124 422,124 422,124 422,124 422,124 422,124 422,124 422,124 422,124

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

- - - - - - - - -

422,124 422,124 422,124 422,124 422,124 422,124 422,124 422,124 422,124

272,805 278,940 284,815 290,408 295,697 300,659 305,269 309,501 313,329

1.65 1.66 1.67 1.69 1.70 1.71 1.72 1.73 1.74


80


Senior Staff

YEAR

RENTAL INCOME CPI























Utilities 3.50%









CalHFA Other Loan -


- 3

- -

- -

- -

- -










Arbor Park


37 38 39 40

2,652,329 2,718,638 2,786,604 2,856,269

54,382 55,741 57,135 58,563

- - - -

- - - -

- - - -

- - - -

36,050 36,951 37,875 38,822

- - - -

- - - -

2,742,761 2,811,330 2,881,614 2,953,654

132,616 135,932 139,330 142,813

2,719 2,787 2,857 2,928

- - - -

- - - -

- - - -

- - - -

1,803 1,848 1,894 1,941

- - - -

- - - -

137,138 140,567 144,081 147,683

2,605,623 2,670,764 2,737,533 2,805,971

553,171 572,532 592,570 613,310

156,337 160,246 164,252 168,358

413,721 428,202 443,189 458,700

443,221 458,734 474,790 491,407

- - - -

15,958 16,158 16,360 16,564

236,078 244,340 252,892 261,743

- - - -

48,288 48,771 49,259 49,752

1,866,775 1,928,983 1,993,312 2,059,836

738,848 741,781 744,221 746,136

422,124 422,124 422,124 422,124

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

- - - -

422,124 422,124 422,124 422,124

316,724 319,657 322,097 324,012

1.75 1.76 1.76 1.77


81


Arbor Park Apartments



www.delorme.com

TN

MN (13.3°E)

0 180 360 540 720 900

0 40 80 120 160 200

ftm

Scale 1 : 6,400

1" = 533.3 ft Data Zoom 15-0

82


Arbor Park Apartments



www.delorme.com

TN

MN (13.3°E)

0 6 12 18 24 30

0 10 20 30 40 50

mikm

Scale 1 : 1,100,000

1" = 17.36 mi Data Zoom 7-5

83





The CalHFA Permanent Loan Program (“Permanent Loan Program”) provides competitive financing through its partnership with HUD and the U.S.

Treasury for the refinance of affordable housing developments that do not need substantial rehabilitation. Owners/Borrowers must agree to preserve

and/or increase the affordability restrictions.



• Taxable financing only (tax-exempt bonds will not be issued for these projects).


AHAP contract.


Visit www.calhfa.ca.gov for the CalHFA Portfolio Loan Prepayment Policy.

Loan Amount • Minimum 1.15x for debt service coverage ratio


• For projects seeking a cash equity take-out, reduced loan to value and increased debt service coverage

may apply, subject to CalHFA approval.





• Monitoring Fee: included in the interest rate




• Interest Rate: 10 year U.S. Treasury plus 1.85%-2.60%, fixed for the term of the loan


Interest Rate is locked up to 60 days prior to loan close.

CreditEnhancement

The Permanent Loan Program will be credit-enhanced through CalHFA’s HUD/FHA Risk Sharing program. If

applicable, projects financed through the Permanent Loan Program must comply with the Davis-Bacon Act and/

or California state prevailing wage requirements.

84






















must be at 50% or less of AMI.

Term of Affordability Restrictions

• Affordable housing deed restriction for a minimum of 20 years

• For existing CalHFA portfolio loans, the term of the affordability Regulatory Agreement will be the greater

of (A) payment in full of the loan, (B) twenty (20) years, or (C) the term of the existing CalHFA Regulatory

Agreement plus five (5) years.


• Property appraisal


• Market study (negotiable)




of the loan

• Non-substantial rehabilitation may be required

• Rehabilitation period inspection fees are estimated at $500 - $1,000 per month




85



Required Reserves


PNA.


or cash).





• Other reserves as required at CalHFA’s discretion.



86

- 1 -




7 WHEREAS, the California Housing Finance Agency (the “Agency”) has 8 received a loan application on behalf of Arbor Park Community, L.P., a California 9 limited partnership (the “Borrower”), seeking a loan commitment, the proceeds of which 10 are to be used to provide financing for a multifamily housing development located in 11 City of San Jose, Santa Clara County, California, known as Arbor Park Apartments (the 12 “Development”); and 13 14 WHEREAS, the loan application has been reviewed by Agency staff which 15 prepared a report presented to the Board on the meeting date recited below (the “Staff 16 Report”), recommending Board approval subject to certain recommended terms and 17 conditions; and 18 19 WHEREAS, Agency staff has determined or expects to determine prior to 20 making a binding commitment to fund the loan for which the application has been made, 21 that (i) the Agency can effectively and prudently raise capital to fund the loan for which 22 the application has been made, by direct access to the capital markets, by private 23 placement, or other means and (ii) any financial mechanisms needed to insure prudent 24 and reasonable financing of loans can be achieved; and 25 26 WHEREAS, the Board wishes to grant the staff the authority to enter into a loan 27 commitment upon Agency staff determining in its judgment that reasonable and prudent 28 financing mechanisms can be achieved; 29 30

NOW, THEREFORE, BE IT RESOLVED by the Board of Directors (the 31 “Board”) of the California Housing Finance Agency as follows: 32 33 1. The Executive Director, or in his/her absence, the Chief Deputy Director, 34 is hereby authorized to execute and deliver a final commitment letter, in a form 35 acceptable to the Agency, and subject to recommended terms and conditions set forth in 36 the Staff Report and any terms and conditions as the Board has designated in the Minutes 37 of the Board Meeting, in relation to the Development described above and as follows: 38 39 PROJECT DEVELOPMENT NAME/ MORTGAGE 40 NUMBER LOCALITY AMOUNT 41 42 17-029-N ARBOR PARK APARTMENTS $7,500,000.00 43 City of San Jose, County of Santa Clara Permanent Mortgage 44 State of California 45 46 47

48

87

- 2 -


48

88

- 3 -



27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47

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Final Review & Request for Loan Approval-FFB Permanent Take Out with SNHP Construction Financing

Senior Loan Committee Review for Board Meeting on: 2/15/18

Project Name (City, County) Whittier and Downey SE

CalHFA Project Number: 17-012-M/S

CalHFA Loan Amount(s) $6,500,000-Permanent Takeout/$3,325,000-SNHP

CalHFA Loan Program: FFB Permanent Take Out Program/SNHP Loan Program


N/A

TRANSACTION FACTS

Loan Origination: Ruth Vakili Underwriting: Enoch Yeung

Asset Management: Tom Armstrong Loan Administration: Kevin Brown

Legal (Internal): Paul Steinke Legal (External): N/A

Projected Closing Date: March 15, 2018 Approval Expiration Date: December 1, 2018

1. Address 4200-4224 Whittier Blvd., Los Angeles, 90023

2. Legislative Districts Congress: #40 Lucille

Roybal-Allard

Assembly: #51 Wendy Carillo

State Senate: #24 Kevin De

Leon

3. Brief Project Description Whittier and Downey SE is a new construction project of 71 units consisting of 1, 2, and 3 bedroom units ranging from 30% AMI to 60% AMI. The 4 story project will have two levels of parking, one at ground floor and one subterranean level. It is anticipated that there will be 33 commercial parking spaces and 60 residential parking spaces. The project will also include two ground level commercial spaces of 2,550 sq. ft. and 850 sq. ft. each, case management offices, community room and kitchen, computer room, communal laundry room and open courtyard. Meta Housing Corporation is the developer/sponsor and has secured 9% tax credits. The investor and construction lender will be Bank of America. Tax credit pricing is estimated to be $1.02. CalHFA will provide a Permanent Take Out loan of $6,500,000 along with an SNHP loan of $3,325,000. The SNHP loan will fund at the construction loan closing. The SNHP program will restrict 35 units serving mentally ill and homeless populations. SNHP tenants will be supported by the LA County Department of Health Services Flexible Housing Subsidy Program, which is a project based subsidy program (DHS Subsidy). The DHS subsidy contract is for a15 year term. The contract rents are based on HUD Section 8 fair market rents and have been approved by DHS. The project will provide supportive services from LA County Department of Mental Health (DMH), LA County Department of Public Health, LA County Department of Health Services (DHS) and LifeSteps. Services include: onsite service coordination, life skills workshops, education linkage and promotion, health and wellness classes, green living, social support, conflict resolution, housing retention and youth services.

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Project Name: Whittier and Downey SE – Loan Type (FFB/SNHP) – CalHFA Project #: 17-012-M/S Page - 2 Loan Amount: $6,500 000 (FFB Permanent Take Out)/$3,325,000 (SNHP)

4. Sponsor/Developer Meta Housing Corporation

5. Borrower WDSE, L.P. a California limited partnership

CALHFA LOAN TERMS

SNHP Permanent Loan FFB Permanent Take Out Loan

6. Total Loan Amount $3,325,000 $6,500,000

7. Loan Term 55 years 40 years

8. Interest Rate

3% 10-year treasury + 2.45% Currently underwritten at 5.15%



10. Loan to Cost N/A 17%

11. Equity Cash Out to Investor

N/A N/A



The project has received a 15-year commitment for project-based subsidies on 35 of the 71 units from LA County Department of Health Services.

The sponsor/developer is an experienced affordable housing developer with 24 years of experience. The project has received a commitment for 9% tax credits. The commercial income is not included in the loan underwriting; the CalHFA permanent take out loan is

sized to residential income only. However, the Borrower is anticipating rent for the retail space at $1.80 per sq. ft.which is $73,000 annually in commercial income. After operating expenses, the net cash flow for the commercial space is $9,365.

The debt coverage ratio is at 1.15 in year one and is estimated to be 1.65 in year 40.

13. Project Weaknesses w/ Mitigants:

The LA County DHS 15 year commitment for project based-subsidies does not contain language for renewal of the contract. CalHFA will hold the operating expense reserve (OER) of $223,019 for the term of the loan and a $173,000 transitional operating reserve (TOR) to mitigate the risk that the contract is not renewed. Future renewal of the contract may be considered by the Agency for release of the TOR.

The project has a high percentage (50% of the total units) of special needs units restricted at 30% AMI

levels. Therefore, a 7.5% blended vacancy rate has been applied to the underwriting to mitigate rent up and turn over risk.

14. Term Sheet Variations/Policy Exceptions:

N/A



91




This transaction will add new affordable units for 70 households with a wide range of affordability levels from 30% AMI, 50% AMI, and 60% AMI.

The project will serve homeless/at-risk of homeless/mental illness/special needs population which is underserved in the Los Angeles Area.

17. Project Affordability- Total Units in Project: 71


50% AMI

60% AMI

MGR Units Regulated

CalHFA 8 21 1 30 CalHFA-SNHP 35 1 36

Tax Credits 35 22 13 1 71 County of LA CDC 35 1 36

AHP 35 22 13 1 71

The affordability mix will be 35 units at 30% AMI, 22 units at 50% AMI, 13 units at 60% AMI.

The SNHP funding restricts 35 units at 30% AMI along with restricting to mentally ill and at-risk of homelessness or homeless. Per an agreement with LA DMH, the SNHP units will be distributed as follows: 27-one bedroom, 6-two bedroom, and 2-three bedroom units. The term of the restrictions is 55 years.

The County of LA CDC will also restrict 35 SNHP units and require that the units be designated for

homeless individuals and families. The restrictions will last for 55 years.

The County of LA will record a density bonus covenant that restricts 7 units to “very low income” which is 50% AMI.


The CalHFA Permanent Loan Regulatory Agreement will restrict a total of 40% of the units to 60% of AMI, with 10% of the total units restricted to 50% AMI. The term of the restrictions is for 40 years.


Development is in a former Redevelopment project area o Central City: Los Angeles o Low/Mod Census Tract: Moderate o Minority Census Tract: 98.78% o Underserved: No o Below poverty line: 36.99%









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27. CDLAC/TCAC Closing Deadline: March 19, 2018

28. Estimated Loan Closing Date: March 15, 2018

29. Estimated Construction Start: April 1, 2018

30. Estimated Construction Completion: October 1, 2019

31. Est. Stabilization & Conversion to Perm April 1, 2020


32. Debt & Grants


Bank of America $27,178,228 1 3.43% at 24 months

CalHFA-SNHP $3,325,000 2 55 years residual receipts, 3% simple interest

LA County CDC Funds $2,398,441 3 55 years residual receipts, 3% simple interest

AHP $700,000 4 55 years residual receipts, 3% simple interest



CalHFA Permanent Loan $6,500,000 1 5.15% at 40 years fully amortized

CalHFA-SNHP $3,325,000 2 55 years residual receipts, 3% simple interest

LA County CDC Funds $2,398,441 3 55 years residual receipts, 3% simple interest

AHP $700,000 4 55 years residual receipts, 3% simple interest

34. Tax Credit Equity $25,497,450 Type: 9% Tax Credits

Expected Pricing: $1.02 Tax Credit Investor: Bank of America

35. Cash Flow Analysis/Budget Comments

The cash flow analysis shows the project achieving a debt coverage ratio of 1.15 in year 1. The analysis assumes that rent trends at 2.5% and operating expenses trend at 3.5%. The DCR continues to grow through the life of the loan and is at 1.65 in year 40. Residual receipts are split between developer and residual receipt lenders 50/50. The residual receipt split between the CalHFA SNHP Loan and LA CDC County loan is as follows: 56.8%

for the CalHFA loan and 43.2% for the LA CDC loan. The DHS subsidy contract rents have been determined and committed for a contract term of 15 years for

35 units in the project. A Master Subsidy Agreement will be finalized prior to construction close providing a contract amount floor with the possibility of rents increasing prior to being placed in service if FMR’s increase. The Master Subsidy Agreement is subject to final CalHFA review and approval.

CalHFA standard underwriting practice is to underwrite subsidies for the full loan term of the loan, with the anticipation that the subsidies will be renewed. In this case, the contract from LA County DHS does not contain renewal language because by statute, the LA County Board of Supervisors is unable to commit to renewal language for this subsidy program. CalHFA will underwrite the cash flow generated from the 15 year project based subsidy for the full term of the loan for the following reasons:

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1. CalHFA desires to encourage local government agencies to provide project-based subsidies through local funding sources.

2. The project has secured two loans from two agencies: LA County DMH and LA County DHS to fund development costs. LA County has invested considerable resources to ensure project viability and will likely continue to do so when time comes to renew the DHS subsidy.

3. A transitional operating reserve of $173,000 and operating reserve of $223,019 will be held by CalHFA to offset any potential risks of non-renewal of the DHS subsidy.

36. Exit Strategy

Repayment of the CalHFA loan will be via principal and interest payments amortized over 40 years

DEVELOPMENT SUMMARY



39. Hard Development Contingencies $1,165,000 % of Hard Development Costs: 5%


The site is 1.46 acres The project site is zoned by the County of Los Angeles C-3 and R-3 for medium density

commercial and residential land use that allows for mixed use. The site is not located within an Alquist/Priolo earthquake special studies zone The site is not located in a flood zone

41. Form of Site Control & Expiration Date Fee Title Ownership is in the name of the borrowing entity WDSE, L.P., a California limited partnership. The site was purchased on 10/31/17 for $4,625,161.

42. Current Ownership Entity of Record Please note if A to B sale

WDSE, L.P., a California limited partnership


An Environmental Assessment was completed by AEM Consulting in October of 2017 with the following findings and mitigation measures:

Three existing buildings on site to be demolished contain asbestos materials and lead based paint. A licensed contractor will demolish the buildings and dispose of hazardous materials according to health and safety standards.

Past historical uses identified in the Phase II Subsurface investigation identified by Partners on February 1, 2016, found soil contaminants. Soil tests were conducted which found contaminants to be at low levels that would not harm residential occupants. OSHA safety measures will be taken to preclude any exposure to unsafe levels of soil-gases. Any contamination of the soil and groundwater from the contaminants will be remediated prior to the issuance of any land grading or building permit.

A conditional use permit approval is conditioned upon the completion of a Soil Management and Arsenic Remediation Plan approved by Los Angeles County Fired HHMD.

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44. Seismic Review

The Project is new construction and is to be built to State of California and County of Los Angeles Building Codes.

Therefore no seismic study is required to waive earthquake insurance.

45. Relocation

There will be no relocation for this project. Presently there are vacant commercial buildings on site that will be demolished.


Major elements include: o Site work and landscaping $1,515,750 o Building structures/parking $19,314,685 o General requirements $1,102,188 o Overhead and profit $847,158


The construction costs provided by the General Contractor are based on draft architectural plans. Final bid costs will be received prior to the construction loan closing.

Total project costs have increased 25% from the time of TCAC application in July 2017. The cost escalation is driven by constrained labor markets and high materials escalations. In addition, the up-front equity contribution was reduced, resulting in an increased construction loan interest cost. The construction loan closing will be subject to completion and approval of a 3rd party construction cost review and approval of the final development budget.

Total development costs and hard costs are high due to the following factors: a) subterranean parking. b) high demand for multifamily construction trades, leading to escalating construction costs in the past two years. c) local design requirements for sustainability (Energy Start Rated Construction Program, LEED certification d) substantial utility relocations.

PROJECT DETAILS

48. Tenancy / Occupancy Type: Family and Special Needs residents


35 units for those with Mental Illness/Homeless/At Risk of Homelessness.


51. Property Construction New construction

Buildings: 1 Stories: 4


Year Built: N/A Year of Last Rehab: N/A

52. Total Land Area (acres) 1.34 acres



53. Commercial Space: Yes No Square Footage: 3,400 sq. ft. (total 2 spaces: 2,550 sq ft. and 850 sq. ft.)

95



The appraisal valuation is based on the Direct Capitalization approach and identified 6 comparable properties in the project’s market area.

The appraiser reported that cap rates for market rate multifamily properties in the region ranged from 4.00% to 6.00%. The appraiser selected 5% for the cap rate for the subject property.

The appraiser assumed a vacancy of 5% for comparable projects. A survey done by the analyst showed comparable affordable properties vacancy rates from 3% to 5%. The project is being underwritten with a 7% vacancy rate given that ½ of the units will be occupied by special needs tenants.

The CalHFA permanent loan to value is 67% of the restricted value.


This is a 71-unit, 4-story new construction project on a 1.34 acre lot. The site is located in East Los Angeles on a major boulevard that contains a mix of commercial and

residential uses. The building has a below grade parking level along with an at-grade parking level. It is anticipated 33

of the 92 parking spaces are reserved for retail use. There subject site features 3,400 sq. ft. of ground floor retail (total 2 spaces: 2,550 sq ft. and 850 sq.

ft.). The ground floor common area will include: lobby, project offices, community room with attached

kitchen, two common use restrooms, computer area, gym, and common use laundry. The second floor will have an open interior courtyard with a playground. The project will pursue LEED Gold Certification. The roof will be covered with an energy smart

membrane. Landscape plantings will be native drought-resistant species. All appliances will use electrical power.

All units have full kitchen, ADA compliant bathrooms, HVAC and furnished with microwave and refrigerator. 100% of the units are adaptable. Ten percent of each unit type will be ADA accessible (12 in total-8 mobility & 4 sensory).

Project is located near bus rapid transit station, light rail station, ferry terminal, bus station and public bus stop within 1/3 mile from the project site.

Onsite resident supportive services will be provided to all residents.

MARKET ANALYSIS

56. Market Study: Novogradac & Company 12-4-17


The Regional/Market Economy is defined as Los Angeles County metro area. The Primary Market Area (PMA) is considered East Los Angeles. The total population of Los Angeles County metro area in 2016 was 13,320,613 with 4,354,894

households.

The 2017 median income for Los Angeles County was estimated at $59,613 which is approximately 9% below the median income for the State of California at $65,223. The PMA median income is $35,799.

The major employment sectors in the regional economy are: government with Los Angeles County, LA Unified School District, and the US Government being the major employers. The medical sector is the other major employer in the region.

Based on the 2017 Greater Los Angeles Homeless Count, there is a total homeless population of 55,188 in LA County.

96



The project is located on 4200 Whittier Blvd. which is a major arterial in East Los Angeles. The surrounding neighborhood is characterized by a mix of commercial retail/office, multifamily with single

family land uses. The project is located within walking distance of local bus routes. Average market rents in the primary market area are: $1,468 for a 1 bedroom/1bath, $1,737 for a 2

bedroom/2 bath and $2,256 for a 3 bedroom/2bath.

59. Supply

There are 23 tax credit projects in the primary market area dating back to 1995 according to the market study analyst. However, not all of them are comparable in terms of quality or tenancy to the project. Four of the projects are special needs, 6 are senior projects and the remainder are large family projects.

The market analyst lists 4 comparable affordable housing properties all within a 1.4 to 2.5 miles from the subject property. There are 5 comparable market rate communities within the primary market area.

A survey of market rate properties in the primary market area shows a vacancy of 3% and .21% for affordable properties.

Vacancies are anticipated to remain low as overall demand will continue to grow in spite of efforts to build more affordable housing in the area.


Vacancies in the in primary market area remain low for both affordable and market rate apartment projects.

The capture rates for the project are low by AMI unit type: 6% for 30%AMI units, 3% for 50% AMI units and 4.2% for the 60% AMI units. This indicates a strong demand of available renters that the project can accommodate in the market area.

There is an estimate of 5,189 homeless persons in the East Los Angeles area based on the 2017 Greater Los Angeles Homeless Count. The 35 restricted special needs units serving the homeless will help to address the unmet housing need in the area. Tenants will be referred to the project from LA DMH.

The absorption period for the project is estimated to be 4 months.


61. Borrower WDSE, L.P., a California limited partnership

WDSE, L.P. will be the borrowing entity and owner of the Whittier and Downey SE project. The ownership structure consists of WDSE, LLC as the administrative general partner with Meta AGP Investments, LLC as its sole member and Meta Housing Corporation as the sole member and manager. The managing general partner is WCH Affordable XXVI, LLC with Western Community Housing, Inc. as the sole member and manager. The Investor Limited Partner is Bank of America.

62. Guarantor N/A

63. Developer/Sponsor Meta Housing Corporation

Meta Housing Corporation (Meta) is a for-profit private developer and manager of affordable housing since 1993. Meta has developed more than 8,729 units and maintains a diverse portfolio of senior, family, mixed income and supportive housing projects. Their projects have been built throughout Southern California and in recent years have expanded to Northern California. Meta’s projects are distinguished by their award-winning designs, long term financial stability and customized on-site service programs that promote well-being, resilience, and community. Meta Housing Corporation has completed 6 new construction projects with CalHFA using the MHSA program. Some of these are Cotton’s Point Senior Apartments, Tavarua Senior Apartments, Lugo Senior Apartments, and Long Beach & 21st Apartments. Back in 2001, Meta completed a new construction project called Burbank Senior Artist Colony through CalHFA’s permanent loan program.

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64. Management Agent John Stewart Company

The John Stewart Company began in 1978 and provides management, development and consulting services. The company has a portfolio of 448 properties and 32,700 residential units. In addition to affordable housing units, the John Stewart Company has experience serving projects that target special needs residents including chronically homeless, developmentally disabled, and transitionary housing.

65. Supportive Services LA DMH/LifeSTEPS

The County of Los Angeles Department of Mental Health will provide mental health on/off site services for the 35 households. The qualified tenants will receive MHSA services targeting persons with mental illness and at-risk of homelessness/homelessness. Service coordination will be available to all residents at the project. LifeSTEPS, a non-profit direct service provider will provide services and service coordination for the project. LifeSTEPS provides a variety of various supportive services for affordable housing projects throughout the state of California. The organization was formed in 1996 and serves about 80,000 residents living in more than 30,000 units. MHSA residents will receive full service partnership resources from LA County DMH. Other services that are accessed by the project as well as the 1.75 FTE case managers are paid for by LA County Department of Health Services. The project will provide: life skills workshops, education linkage and promotion, health and wellness classes, green living, social support, conflict resolution, housing retention, and youth activities that will benefit all the residents of the property.

66. Contractor Westport Construction, Inc.

Westport Construction has been a general contractor on new construction and rehabilitation projects since 1987. The corporation focuses primarily on the construction of affordable housing and community service projects. Westport has constructed more than 3,000 units of affordable housing units in new construction and rehabilitation.

67. Architect Gonzalez Goodale Architects

The firm was established in 1980 serving the Southern California region with through design in civic, education, and mixed use residential projects. The architectural firm has an extensive portfolio of designing affordable housing projects throughout Southern California. The firm has designed approximately 25 affordable housing projects. Three of those projects are in CalHFA’s MHSA portfolio.



1) A legal opinion regarding conformance with the Olmstead Act and Article XXXIV compliance will be required

as a condition of CalHFA’s FFB Perm Loan and SNHP loan closing.

2) The LA County Density Bonus covenant is intended to record senior to the CalHFA loan. Prior to CalHFA final commitment, Cal HFA staff will review provisions in the density bonus land covenant to ensure provisions do not violate HUD Risk Share regulations or CalHFA underwriting guidelines and policies.

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EXHIBITS

A. Detailed Financial Analysis 1. Project Summary 2. Unit Mix and Rent Summary 3. Sources and Uses of Funds 4. Projected Initial Annual Operating Budget 5. Projected Permanent Loan Cash Flow


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PROJECT SUMMARY Final Commitment


Project Full Name Whittier & Downey Borrower Name:

Project Address 4200 Whittier Blvd. Managing GP:

Project City Los Angeles Developer Name:

Project County Los Angeles Investor Name:


Project Type: Perm Loan & MHSA Loan Total Land Area (acres):

Tenancy/Occupancy: Family Residential Square Footage:



Number of Stories: 4 Covered Parking Spaces:


Elevators: 2

Loan Amort.

Loan Term Period

Fees (Mo.) (Yr.)

-- 24 --

1.000% 24 --

-- 24 --

-- 24 --

-- -- --

-- -- --

Loan Amort.

Loan Term Period

Fees (Yr.) (Yr.)

1.000% 40 40

-- 55 --

-- 55 --

-- 55 --

NA NA NA

NA NA NA

NA NA NA

Appraisal Date: 12/11/17 Capitalization Rate:

Investment Value ($) 34,650,000 Restricted Value ($)

Construct/Rehab LTC 69% Permanent Loan to Cost

Construct/Rehab LTV 78% Permanent Loan to Value



Permanent Loan




Transitional Operating Reserve Deposit

1/9/18

17-012-M/S

WDSE, L.P. a California limited partnership

WCH Affordable XXVI, LLC

Meta Housing Corporation

TBD

Prop Management: John Stewart Company


Loan Starting

Tax Credits: 9%

1.34

53,805

52.99

Amount Interest

($) Rate

92

92

SNHP 3,325,000 3.000%

CDC County Funds 2,398,441 3.000%

Construction Loan 27,178,228 3.430%

Investor Equity Contribution 2,549,745 --

Permanent Financing

Loan Starting

AHP 700,000 3.000%

-- -- --

CalHFA Permanent Loan 6,500,000 5.150%

Amount Interest

($) Rate

CDC-County Funds 2,524,675 3.000%

AHP 700,000 3.000%

SNHP 3,325,000 3.000%

Deferred Developer Fees 597,553 NA


5.00%

9,650,000

17%

67%


-- -- NA

Investor Equity Contributions 25,497,450 NA

1/19/18

$0 Cash

$500 Cash

$173,000

Date Prepared: Senior Staff Date:


Required

Waived

$223,019 NA

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UNIT MIX AND RENT SUMMARY Final Commitment

Whittier & Downey Project Number 17-012-M/S



1 1 554 34 51

2 1 805 19 57

3 2 1,093 18 81

- - - - 0

- - - - 0

- - - - 0

71 189

30% 50% 60% 70% 80% 0% MGR

CalHFA 8 21 1

CalHFA-SNHP 35 1

Tax Credits 35 22 13 1

LA CDC 35 1

AHP 35 22 13 1

-




Studios TCAC 30% - - - - -

TCAC 50% - - - -

TCAC 60% - - - -

CalHFA 50% - - - -

CalHFA 80% - - - -

CalHFA - - - - -

CalHFA - - - - -

1 Bedroom TCAC 30% 27 $462 $1,468 $1,006 31%

TCAC 50% 7 $800 $668 54%

TCAC 60% - - - -

CalHFA 50% - - - -

CalHFA 80% - - - -

CalHFA - - - - -

CalHFA - - - - -

2 Bedrooms TCAC 30% 6 $553 $1,737 $1,184 32%

TCAC 50% 7 $958 $779 55%

TCAC 60% 5 $1,161 $576 67%

CalHFA 50% - - - -

CalHFA 80% - - - -

CalHFA - - - - -

CalHFA - - - - -

3 Bedrooms TCAC 30% 2 $633 $2,256 $1,623 28%

TCAC 50% 8 $1,101 $1,155 49%

TCAC 60% 8 $1,335 $921 59%

CalHFA 50% - - - -

CalHFA 80% - - - -

CalHFA - - - - -

CalHFA - - - - -


TCAC 50% - - - -

TCAC 60% - - - -

CalHFA 50% - - - -

CalHFA 80% - - - -

CalHFA - - - - -

CalHFA - - - - -


TCAC 50% - - - -

TCAC 60% - - - -

CalHFA 50% - - - -

CalHFA 80% - - - -

CalHFA - - - - -

CalHFA - - - - -


-

PROJECT UNIT MIX

Unit Type of Style

Flat

Flat

Flat


-

-


AgencyNumber of Units Restricted For Each AMI Category


101


Whittier & Downey Project Number



Construction Loan 27,178,228 0.0%

CalHFA Other Loan - 0.0%

SNHP 3,325,000 0.0%

AHP 700,000 0.0%

CDC County Funds 2,398,441 0.0%

- - 0.0%

- - 0.0%

- - 0.0%

- - 0.0%

- - 0.0%




Investor Equity Contribution 2,549,745 0.0%


CalHFA Bridge Loan - - - 0.0%


SNHP 3,325,000 3,325,000 46,831 8.5%

CDC-County Funds 2,524,675 2,524,675 35,559 6.4%

AHP 700,000 700,000 9,859 1.8%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%

- - - - 0.0%


Deferred Developer Fees 597,553 597,553 8,416 1.5%


Investor Equity Contributions 25,497,450 25,497,450 359,119 65.1%

TOTAL SOURCES OF FUNDS 36,151,414 39,144,678 39,144,678 551,333 33.3%

TOTAL USES OF FUNDS (BELOW) 36,151,414 39,144,678 39,144,678 551,333 100.0%




36,151,414

ACQUISITION COSTS

Lesser of Land Cost or Appraised Value 4,625,161 - 4,625,161 65,143 11.8%

Demolition Costs 181,000 - 181,000 2,549 0.5%

Legal & Other Closing Costs 3,000 - 3,000 42 0.0%

Escrow & other closing costs - - - - 0.0%







Offsite Improvements 195,000 - 195,000 2,746 0.5%


TOTAL ACQUISITION COSTS 5,004,161 - 5,004,161 70,481 12.8%




Site Work 1,515,750 - 1,515,750 21,349 3.9%

Structures 19,314,685 - 19,314,685 272,038 49.3%

General Requirements 1,102,188 - 1,102,188 15,524 2.8%

Contractor Overhead 423,579 - 423,579 5,966 1.1%

Contractor Profit 423,579 - 423,579 5,966 1.1%


Contractor Liability Insurance 275,326 - 275,326 3,878 0.7%

Personal Property - - - - 0.0%


TOTAL CONSTRUCT/REHAB COSTS 23,055,107 - 23,055,107 324,720 58.9%

Final Commitment

17-012-M/S

SOURCES OF FUNDSTOTAL PROJECT SOURCES OF FUNDS




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Final Commitment

17-012-M/SCONST/REHAB PERMANENT


RELOCATION COSTS





ARCHITECTURAL FEES

Design 424,000 - 424,000 5,972 1.1%

Supervision 412,000 - 412,000 5,803 1.1%

TOTAL ARCHITECTURAL FEES 836,000 - 836,000 11,775 2.1%


Engineering 997,305 - 997,305 14,047 2.5%


ALTA Land Survey - - - - 0.0%

TOTAL SURVEY & ENGINEERING FEES 997,305 - 997,305 14,047 2.5%


Hard Cost Contingency Reserve 1,165,000 - 1,165,000 16,408 3.0%

Soft Cost Contingency Reserve 275,000 - 275,000 3,873 0.7%

TOTAL CONTINGENCY RESERVES 1,440,000 - 1,440,000 20,282 3.7%



Construction Loan 1,586,732 - 1,586,732 22,348 4.1%

SNHP - - - - 0.0%

AHP - - - - 0.0%

CDC County Funds - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%

Loan Fees

Construction Loan 242,426 - 242,426 3,414 0.6%


SNHP 33,250 - 33,250 468 0.1%

AHP - - - - 0.0%

CDC County Funds - - - - 0.0%

- - - - - 0.0%





CalHFA Inspection Fees 12,000 - 12,000 169 0.0%

Real Estate Taxes During Rehab 6,000 - 6,000 85 0.0%


Wage Monitoring Fee (Davis Bacon, Prevailing, etc.) - - - - 0.0%

Insurance During Rehab 225,000 - 225,000 3,169 0.6%

Title & Recording Fees 51,500 - 51,500 725 0.1%

1% SNHP Government Fee-LA County DMH 33,250 - 33,250 468 0.1%

Predevelopment Interest Expense 182,285 - 182,285 2,567 0.5%

SNHP Annual Service Fee-24 months Prepaid 15,000 - 15,000 211 0.0%

Reimbursable Expense - - - - 0.0%

TOTAL CONST/REHAB PERIOD COSTS 2,387,443 - 2,387,443 33,626 6.1%



103



Final Commitment




Loan Fees

CalHFA Application Fee 5,000 - 5,000 70 0.0%

CalHFA Permanent Loan - 65,000 65,000 915 0.2%

CalHFA Bridge Loan - - - - 0.0%


SNHP - - - - 0.0%

CDC-County Funds - - - - 0.0%

AHP - - - - 0.0%

Other loan origination Fees - - - - 0.0%

- - - - - 0.0%

- - - - - 0.0%





CalHFA Admin Fee - 1,000 1,000 14 0.0%

SNHP/CalHFA Tax Service Contract Fee - 2,110 2,110 30 0.0%

TOTAL PERMANENT LOAN COSTS 5,000 86,610 91,610 1,290 0.2%

LEGAL FEES

CalHFA Construction/Rehab Loan Legal Fees 10,000 - 10,000 141 0.0%

Other Construction/Rehab Loan Legal Fees - - - - 0.0%

CalHFA Permanent Loan Legal Fees - - - - 0.0%

Other Permanent Loan Legal Fees - - - - 0.0%

Sponsor Legal Fees - - - - 0.0%

Organizational Legal Fees - - - - 0.0%

Syndication Legal Fees 120,000 - 120,000 1,690 0.3%

Borrower Legal Fee - - - - 0.0%

CalHFA Bond Counsel - - - - 0.0%

TOTAL LEGAL FEES 130,000 - 130,000 1,831 0.3%

OPERATING RESERVES

Operating Expense Reserve Deposit - 103,049 103,049 1,451 0.3%

Initial Replacement Reserve Deposit - - - - 0.0%



TI Reserve - 740,000 740,000 10,423 1.9%

Transition Reserve (24 months overhang) - 173,000 173,000 2,437 0.4%

Investor Required Reserve - 119,970 119,970 1,690 0.3%

TOTAL OPERATING RESERVES - 1,136,019 1,136,019 16,000 2.9%

REPORTS & STUDIES

Appraisal Fee 9,807 - 9,807 138 0.0%

Market Study Fee 5,750 - 5,750 81 0.0%

Physical Needs Assessment Fee - - - - 0.0%

Environmental Site Assessment Reports 82,050 - 82,050 1,156 0.2%

HUD Risk Share Environmental Review Fee 10,425 - 10,425 147 0.0%

CalHFA Earthquake Waiver Review Fee 7,500 - 7,500 106 0.0%

CalHFA Construction Cost Review - - - - 0.0%





Construction loan cost review/appraisal reports - - - - 0.0%

TOTAL REPORTS & STUDIES 115,532 - 115,532 1,627 0.3%



104



Final Commitment



OTHER COSTS

TCAC Application, Allocation & Monitor Fees 130,700 - 130,700 1,841 0.3%

CDLAC Fees - - - - 0.0%

Local Permits & Fees 324,716 - 324,716 4,573 0.8%

Local Impact Fees 815,805 - 815,805 11,490 2.1%

LACDC Compliance Fee 18,655 - 18,655 263 0.0%

LA County Density Bonus Monitoring Fee 48,125 - 48,125 678 0.1%

Furnishings 236,500 - 236,500 3,331 0.6%

Accounting & Audits - - - - 0.0%

Advertising & Marketing Expenses 55,000 - 55,000 775 0.1%


Miscellaneous Administrative Fees 30,000 - 30,000 423 0.1%


Accounting/Reimburseables 45,000 - 45,000 634 0.1%

Utilities 147,000 - 147,000 2,070 0.4%

TOTAL OTHER COSTS 1,851,501 - 1,851,501 26,077 4.7%

SUBTOTAL PROJECT COSTS 35,822,049 37,374,043 37,044,678 521,756 94.6%


Developer Fees, Overhead & Profit 329,365 1,770,635 2,100,000 29,577 5.4%









TOTAL DEVELOPER FEES & COSTS 329,365 1,770,635 2,100,000 29,577 5.4%

TOTAL PROJECT COSTS 36,151,414 39,144,678 39,144,678 551,333 100.0%



105

PROJECTED INITIAL ANNUAL RENTAL OPERATING BUDGET Final Commitment

Whittier & Downey Project Number 17-012-M/S

AMOUNT PER UNIT %

Rental Income





DHS FSP Rent Subsidies 364,380 5,132 38.23%




Other Income




1,030,487$ 14,514$ 108.11%

Less: Vacancy Loss 77,287$ 1,089$ 8.11%

953,200$ 15,602$ 100.00%

AMOUNT PER UNIT %




Utilities 98,650 1,389 10.35%





Assisted Living/Board & Care 34,800 490 3.65%

467,547$ 6,585$ 49.05%


503,047$ 7,085$ 52.77%

450,153$ 6,340$ 47.23%

AMOUNT PER UNIT %



SNHP 7,500$ 106 0.79%

CDC-County Funds -$ - 0.00%

AHP -$ - 0.00%

- -$ - 0.00%

- -$ - 0.00%

391,395$ 5,513$ 41.06%

58,758$ 828$ 6.16%

1.15 to 1



INCOME



OPERATING EXPENSES







106

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A B C D E F G H I J K L M N O P QPROJECTED PERMANENT LOAN CASH FL0WS Whittier & Downey

Final Commitment Project Number 17-012-M/S

YEAR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

RENTAL INCOME CPI

Restricted Unit Rents 2.50% 655,884 672,281 689,088 706,315 723,973 742,073 760,624 779,640 799,131 819,109 839,587 860,577 882,091 904,143 926,747

Unrestricted Unit Rents 0.00% - - - - - - - - - - - - - - -

Commercial Rents 2.00% - - - - - - - - - - - - - - -

DHS FSP Rent Subsidies 2.00% 364,380 371,668 379,101 386,683 394,417 402,305 410,351 418,558 426,929 435,468 444,177 453,061 462,122 471,364 480,792

Laundry and Vending Income 2.50% 10,223 10,479 10,741 11,009 11,284 11,567 11,856 12,152 12,456 12,767 13,086 13,414 13,749 14,093 14,445

Garage and Parking Income 0.00% - - - - - - - - - - - - - - -

Miscellaneous Income 0.00% - - - - - - - - - - - - - - -

1,030,487 1,054,427 1,078,930 1,104,008 1,129,674 1,155,944 1,182,831 1,210,350 1,238,516 1,267,344 1,296,851 1,327,051 1,357,962 1,389,600 1,421,984


Restricted Unit Rents 7.50% 49,191 50,421 51,682 52,974 54,298 55,655 57,047 58,473 59,935 61,433 62,969 64,543 66,157 67,811 69,506

Unrestricted Unit Rents 0.00% - - - - - - - - - - - - - - -

Commercial Rents 50.00% - - - - - - - - - - - - - - -

DHS FSP Rent Subsidies 7.50% 27,329 27,875 28,433 29,001 29,581 30,173 30,776 31,392 32,020 32,660 33,313 33,980 34,659 35,352 36,059

Laundry and Vending Income 7.50% 767 786 806 826 846 867 889 911 934 958 981 1,006 1,031 1,057 1,083

Garage and Parking Income 0.00% - - - - - - - - - - - - - - -

Miscellaneous Income 0.00% - - - - - - - - - - - - - - -

77,287 79,082 80,920 82,801 84,726 86,696 88,712 90,776 92,889 95,051 97,264 99,529 101,847 104,220 106,649

953,201 975,345 998,010 1,021,207 1,044,949 1,069,248 1,094,119 1,119,574 1,145,627 1,172,294 1,199,587 1,227,522 1,256,115 1,285,380 1,315,335


Administrative Expenses 3.50% 95,500 98,843 102,302 105,883 109,588 113,424 117,394 121,503 125,755 130,157 134,712 139,427 144,307 149,358 154,585

Management Fee 5.34% 50,887 52,069 53,279 54,517 55,785 57,082 58,410 59,768 61,159 62,583 64,040 65,531 67,058 68,620 70,219

Utilities 3.50% 98,650 102,103 105,676 109,375 113,203 117,165 121,266 125,510 129,903 134,450 139,156 144,026 149,067 154,284 159,684

Operating & Maintenance 3.50% 129,800 134,343 139,045 143,912 148,948 154,162 159,557 165,142 170,922 176,904 183,096 189,504 196,137 203,001 210,107

Ground Lease Payments 3.50% - - - - - - - - - - - - - - -

Real Estate Taxes 1.25% 7,750 7,847 7,945 8,044 8,145 8,247 8,350 8,454 8,560 8,667 8,775 8,885 8,996 9,108 9,222

Other Taxes & Insurance 3.50% 50,160 51,916 53,733 55,613 57,560 59,574 61,659 63,818 66,051 68,363 70,756 73,232 75,795 78,448 81,194

Assisted Living/Board & Care 2.00% 34,800 35,496 36,206 36,930 37,669 38,422 39,190 39,974 40,774 41,589 42,421 43,269 44,135 45,018 45,918

Required Reserve Payments 1.00% 35,500 35,855 36,214 36,576 36,941 37,311 37,684 38,061 38,441 38,826 39,214 39,606 40,002 40,402 40,806

503,047 518,471 534,399 550,850 567,839 585,387 603,510 622,230 641,566 661,538 682,169 703,481 725,497 748,240 771,735

450,154 456,875 463,611 470,357 477,109 483,862 490,608 497,344 504,062 510,755 517,418 524,041 530,618 537,141 543,600


CalHFA Permanent Loan 1 383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895

CalHFA Other Loan - - - - - - - - - - - - - - - -

SNHP 2 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500

CDC-County Funds 3 - - - - - - - - - - - - - - -

AHP 4 - - - - - - - - - - - - - - -

- 5 - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - -

391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395

58,759 65,480 72,216 78,962 85,714 92,467 99,213 105,949 112,667 119,360 126,023 132,646 139,223 145,746 152,204

1.15 1.17 1.18 1.20 1.22 1.24 1.25 1.27 1.29 1.30 1.32 1.34 1.36 1.37 1.39










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YEAR

RENTAL INCOME CPI




DHS FSP Rent Subsidies 2.00%















Utilities 3.50%









CalHFA Other Loan -

SNHP 2

CDC-County Funds 3

AHP 4

- 5

- -

- -










R S T U V W X Y Z AA AB AC AD AE AFWhittier & Downey Whittier & Downey

Project Number 17-012-M/S Project Number 17-012-M/S

16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

949,916 973,663 998,005 1,022,955 1,048,529 1,074,742 1,101,611 1,129,151 1,157,380 1,186,314 1,215,972 1,246,372 1,277,531 1,309,469 1,342,206

- - - - - - - - - - - - - - -

- - - - - - - - - - - - - - -

490,408 500,216 510,220 520,424 530,833 541,450 552,279 563,324 574,591 586,082 597,804 609,760 621,955 634,394 647,082

14,806 15,176 15,556 15,945 16,343 16,752 17,171 17,600 18,040 18,491 18,953 19,427 19,913 20,410 20,921

- - - - - - - - - - - - - - -

- - - - - - - - - - - - - - -

1,455,129 1,489,055 1,523,781 1,559,324 1,595,705 1,632,944 1,671,060 1,710,075 1,750,010 1,790,888 1,832,729 1,875,559 1,919,399 1,964,274 2,010,209

71,244 73,025 74,850 76,722 78,640 80,606 82,621 84,686 86,803 88,974 91,198 93,478 95,815 98,210 100,665

- - - - - - - - - - - - - - -

- - - - - - - - - - - - - - -

36,781 37,516 38,266 39,032 39,812 40,609 41,421 42,249 43,094 43,956 44,835 45,732 46,647 47,580 48,531

1,110 1,138 1,167 1,196 1,226 1,256 1,288 1,320 1,353 1,387 1,421 1,457 1,493 1,531 1,569

- - - - - - - - - - - - - - -

- - - - - - - - - - - - - - -

109,135 111,679 114,284 116,949 119,678 122,471 125,329 128,256 131,251 134,317 137,455 140,667 143,955 147,321 150,766

1,345,995 1,377,376 1,409,497 1,442,375 1,476,027 1,510,473 1,545,730 1,581,819 1,618,760 1,656,571 1,695,275 1,734,892 1,775,444 1,816,953 1,859,443

159,996 165,596 171,392 177,390 183,599 190,025 196,676 203,559 210,684 218,058 225,690 233,589 241,765 250,226 258,984

71,856 73,531 75,246 77,001 78,798 80,637 82,519 84,445 86,417 88,436 90,502 92,617 94,782 96,998 99,266

165,273 171,058 177,045 183,241 189,655 196,293 203,163 210,274 217,633 225,250 233,134 241,294 249,739 258,480 267,527

217,460 225,071 232,949 241,102 249,541 258,275 267,314 276,670 286,354 296,376 306,749 317,485 328,597 340,098 352,002

- - - - - - - - - - - - - - -

9,337 9,454 9,572 9,692 9,813 9,936 10,060 10,186 10,313 10,442 10,572 10,705 10,838 10,974 11,111

84,035 86,977 90,021 93,172 96,433 99,808 103,301 106,917 110,659 114,532 118,540 122,689 126,983 131,428 136,028

46,836 47,773 48,728 49,703 50,697 51,711 52,745 53,800 54,876 55,974 57,093 58,235 59,400 60,588 61,799

41,214 41,627 42,043 42,463 42,888 43,317 43,750 44,187 44,629 45,076 45,526 45,982 46,441 46,906 47,375

796,009 821,086 846,996 873,765 901,423 930,000 959,528 990,038 1,021,565 1,054,143 1,087,808 1,122,596 1,158,546 1,195,698 1,234,092

549,986 556,290 562,502 568,610 574,605 580,473 586,203 591,781 597,194 602,428 607,467 612,296 616,898 621,255 625,351

383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895

- - - - - - - - - - - - - - -

7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500

- - - - - - - - - - - - - - -

- - - - - - - - - - - - - - -

- - - - - - - - - - - - - - -

- - - - - - - - - - - - - - -

- - - - - - - - - - - - - - -

391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395

158,591 164,895 171,107 177,215 183,209 189,078 194,808 200,386 205,799 211,033 216,072 220,901 225,503 229,860 233,956

1.41 1.42 1.44 1.45 1.47 1.48 1.50 1.51 1.53 1.54 1.55 1.56 1.58 1.59 1.60

Senior Staff Date: 1/19/18 Senior Staff Date: 1/19/18

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YEAR

RENTAL INCOME CPI



















Utilities 3.50%









CalHFA Other Loan -

SNHP 2

CDC-County Funds 3

AHP 4

- 5

- -

- -










AG AH AI AJ AK AL AM AN AO APWhittier & Downey

Project Number 17-012-M/S

31 32 33 34 35 36 37 38 39 40

1,375,761 1,410,155 1,445,409 1,481,544 1,518,583 1,556,547 1,595,461 1,635,348 1,676,231 1,718,137

- - - - - - - - - -

- - - - - - - - - -

660,024 673,224 686,689 700,423 714,431 728,720 743,294 758,160 773,323 788,790

21,444 21,980 22,529 23,093 23,670 24,262 24,868 25,490 26,127 26,780

- - - - - - - - - -

- - - - - - - - - -

2,057,229 2,105,359 2,154,627 2,205,059 2,256,684 2,309,529 2,363,623 2,418,997 2,475,682 2,533,707

103,182 105,762 108,406 111,116 113,894 116,741 119,660 122,651 125,717 128,860

- - - - - - - - - -

- - - - - - - - - -

49,502 50,492 51,502 52,532 53,582 54,654 55,747 56,862 57,999 59,159

1,608 1,648 1,690 1,732 1,775 1,820 1,865 1,912 1,960 2,009

- - - - - - - - - -

- - - - - - - - - -

154,292 157,902 161,597 165,379 169,251 173,215 177,272 181,425 185,676 190,028

1,902,937 1,947,457 1,993,030 2,039,680 2,087,432 2,136,314 2,186,352 2,237,573 2,290,005 2,343,679

268,049 277,431 287,141 297,190 307,592 318,358 329,500 341,033 352,969 365,323

101,588 103,965 106,398 108,888 111,438 114,047 116,718 119,453 122,252 125,117

276,890 286,581 296,612 306,993 317,738 328,859 340,369 352,282 364,612 377,373

364,322 377,073 390,271 403,930 418,068 432,700 447,845 463,519 479,742 496,533

- - - - - - - - - -

11,250 11,391 11,533 11,677 11,823 11,971 12,121 12,272 12,425 12,581

140,789 145,716 150,816 156,095 161,558 167,213 173,065 179,123 185,392 191,881

63,035 64,296 65,582 66,894 68,232 69,596 70,988 72,408 73,856 75,333

47,849 48,327 48,810 49,298 49,791 50,289 50,792 51,300 51,813 52,331

1,273,772 1,314,780 1,357,163 1,400,966 1,446,240 1,493,033 1,541,398 1,591,389 1,643,061 1,696,472

629,165 632,677 635,867 638,714 641,193 643,281 644,953 646,183 646,944 647,207

383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895 383,895

- - - - - - - - - -

7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395 391,395

237,770 241,282 244,472 247,318 249,798 251,886 253,558 254,788 255,549 255,811

1.61 1.62 1.62 1.63 1.64 1.64 1.65 1.65 1.65 1.65


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111





The CalHFA Permanent Take-Out Loan Program (“Take-Out Financing Program”) provides competitive long term financing by partnering with

construction lenders and collaborating with HUD and the U.S. Treasury. Eligible affordable housing projects include new multifamily construction,

acquisition/rehabilitation, and special needs housing.

PERMANENT TAKE-OUT LOANPROGRAM


• The Take-Out Financing Program may be used with or without low income housing tax credits. For 4% tax

credit projects, CalHFA shall be used as the bond issuer (for more information, review the Conduit Issuer

Program Term Sheet).


AHAP contract.


This includes subordinate loans, deferred payment loans, residual receipts loans, indirect loans provided

by CalHFA to localities or other lending entities and made to a project, or any other financing provided

directly or indirectly by CalHFA at loan origination or anytime thereafter. Visit www.calhfa.ca.gov for the

CalHFA Portfolio Loan Prepayment Policy.

Loan Amount • Minimum loan amount of $1,000,000

• Minimum 1.15x for debt service coverage ratio






• Monitoring Fee and Trustee Fee: included in the interest rate


For 4% tax credit projects: See Conduit Issuer Program Term Sheet for information on conduit issuance fees



• Interest Rate - 10 year U.S. Treasury plus 2.10%-2.85%, forward rate commitment, fixed for the term

of the loan


• Permanent Loan Reduction – up to 10% reduction allowed at no cost

• Breakage Fee – applicable between construction loan close and permanent loan close. Calculated based

on hedge termination cost

Interest Rate is locked up to 30 days prior to construction loan close. The permanent loan rate can be locked

for up to 3 years.

112




ConversionRequirements

• 90% stabilized occupancy for 90 days

• 90% of tax credit investor equity shall have been paid into project

• Property operations are sufficient to pay operating expense and the required debt service

CreditEnhancement

The Take-Out Financing Program will be credit-enhanced through CalHFA’s FHA Risk Sharing program.



















must be at 50% or less of AMI (“10% @ 50% AMI”).


• Property appraisal (construction lender’s appraisal may be acceptable)


• Construction Costs Review for new construction loans (construction lender’s review is acceptable)


of the loan (construction lender’s PNA is acceptable).



• Market study

• Inspection fees are estimated at $500 - $1,000 per month (can be shared with construction lender)




113



RequiredReserves


PNA.


or cash).





• Other reserves as required (at CalHFA’s discretion).



114

LLOOCCAALL GGOOVVEERRNNMMEENNTT SSPPEECCIIAALL NNEEEEDDSS HHOOUUSSIINNGG PPRROOGGRRAAMM TTEERRMM SSHHEEEETT FFOORR PPAARRTTIICCIIPPAATTIINNGG AAGGEENNCCIIEESS

SNHP County Term Sheet Revised 12-13-2016 DS

The California Housing Finance Agency (“CalHFA”), on behalf of jurisdictions throughout California, operates the Local Government Special Needs Housing Program (“SNHP”). The SNHP allows local governments (“LG”) to use Mental Health Services Act (MHSA) funds with other local funds (collectively “SNHP Funds”), to provide financing for the development of permanent supportive rental housing (“Project”) that includes units restricted for occupancy by individuals with serious mental illness (and their families) who are homeless or at risk of homelessness (“MHSA Clients”). To participate, an LG must enter into a SNHP Participation Agreement with CalHFA.

• A participating LG assigns funds to CalHFA in advance of approving financing for Projects in its jurisdiction. • Eligible Projects are Rental Housing (5 or more units) or Shared Housing (1-4 units) for MHSA clients who

rent lockable bedrooms within a single family home, duplex, tri-plex or four-plex. Projects must reserve a minimum of 5 units (or bedrooms in shared housing) for referred MHSA Clients (each a “SNHP Regulated Unit”) and the minimum SNHP Loan amount per Project is $500,000. NOTE: Master Leasing is not a permitted use of funds.

• The LG may offer a capitalized operating subsidy reserve (“COSR”) to subsidize operating costs for the SNHP Regulated Units – or to supplement an existing MHSA Housing Loan Program COSR serviced by CalHFA. COSR’s must last a minimum of 17 full years unless waived by the LG. The LG may require the developer to fund the shortfall, or entire COSR amount if other subsidies aren’t available to the MHSA clients and the proposed rents aren’t deemed affordable for the MHSA clients.

• MHSA Clients in SNHP funded one bedroom units assisted with COSR must pay a minimum rent that is the higher of 30% of SSI/SSP or 30% of their household income (less utilities unless included in the rent). Larger units would pay rents that are the higher of an additional $100/month rent per additional bedroom, or 30% of household income (less utilities unless included in the rent).

• MHSA rents may not exceed 30% of HUD published 30% AMI levels (adjusted by family size). NOTE: There are no income limits imposed by the SNHP Regulatory Agreement. Any income restrictions, or occupancy restrictions overlaying the SNHP Regulated Units must be approved by the LG (per SNHP Financing Application Attachment B-1 signed by the Developer/Borrower and LG).

• Developer/Borrower is required to continually seek future commitments of rental or operating subsidies for the SNHP Regulated Units (e.g., project based Section 8) for the life of the SNHP Loan.

• The LG and Developer jointly submit an application to CalHFA for analysis of the financial viability of a proposal. CalHFA’s role is to recommend maximum loans and COSR funding levels so Projects aren’t over subsidized; provide evidence of Loan/COSR approvals to LG and Borrower; Issue a Commitment Letter following receipt of tax credits (if applicable); close and fund the SNHP Loan and COSR; monitor the Project during construction through occupancy; and service the SNHP Loan and administer the COSR for as long as COSR funds are available.

CCoouunnttyy PPaarrttiicciippaattiioonn FFeeeess ((non-refundable and payable upon receipt of LG funds assigned to CalHFA) • 3% Program Participation Fee: for unencumbered MHSA funds that the LG authorizes be transferred from

the MHSA Housing Program to the SNHP before March 31, 2017; or any disencumbered MHSA loan reservations or Capitalized Operating Subsidy Reserve funds that are transferred to the SNHP in the future.

• 5% Program Participation Fee: for any new LG funds transferred to CalHFA for use in the SNHP (including future MHSA Residual Receipt Loan payments received by CalHFA and authorized by LG to be transferred to the SNHP).

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LLOOCCAALL GGOOVVEERRNNMMEENNTT SSPPEECCIIAALL NNEEEEDDSS HHOOUUSSIINNGG PPRROOGGRRAAMM TTEERRMM SSHHEEEETT FFOORR PPAARRTTIICCIIPPAATTIINNGG AAGGEENNCCIIEESS

SNHP County Term Sheet Revised 12-13-2016 DS

chronically homeless); 4) any other Lender or subsidy required occupancy restrictions that overlay the SNHP regulated units that are more restrictive than required by the SNHP; 5)the maximum SNHP Loan; and 6) the required COSR term (if any) and who is responsible for funding the COSR.

• LG commits to provide supportive services that meet the needs of the MHSA Clients for the term of the SNHP Loan and develops a Supportive Service Plan (“SSP”) that addresses the Project’s MHSA client needs. A draft SSP is required as part of the CalHFA SNHP Application, and a final SSP is required prior to the SNHP Loan closing and will be an attachment to the SNHP Regulatory Agreement.

• LG negotiates a Memorandum of Understanding between the LG, Borrower, property manager, and primary service provider and provides a copy to CalHFA prior to occupancy of the SNHP regulated units.

• LG ensures adequate funds have been assigned to CalHFA to finance all proposed SNHP Projects and COSR’s before allowing a Developer to submit a SNHP Financing Application to CalHFA.

• LG is responsible for reporting the use of MHSA funds as required by State DHCS or other state agency. • To the greatest extent feasible, LG shall utilize the local coordinated entry system to screen for eligible

residents.

CCaallHHFFAA AApppplliiccaattiioonn PPrroocceessss • LG and Developer/Borrower jointly submit a CalHFA SNHP Financing Application with the required non-

refundable $2,500 Application Fee (paid by the Developer); the signed Local Government Certification (Attachment A); the Draft Supportive Service Plan (Attachment A-1); the signed Developer/Borrower Certification (Attachment B); and the signed and approved SNHP Regulated Unit Occupancy Restrictions (Attachment B-1).

• When the LG indicates a Project should have a COSR, CalHFA analyzes and recommends the COSR amount required to carry a Project through the first 17 years of operations. The Borrower is responsible for funding the difference between the LG COSR commitment and CalHFA’s recommended minimum COSR funding level. COSR funds are held and administered by CalHFA per a SNHP COSR Agreement.

• Application Submittal Instructions and the SNHP Financing Application (Universal Application), required Attachments and checklist items are available on CalHFA’s SNHP website - “Developer Application” tab.

• The SNHP Loan closing checklists, boilerplate non-negotiable SNHP loan docs, and COSR Agreement will also be posted on the CalHFA website on the “Boilerplate Documents” tab after January 3, 2017.

• The SNHP Regulatory Agreement and Deed of Trust shall be recorded in lien priority based on the SNHP Loan size in relation to other residual receipt loans, unless otherwise approved by the LG.

CCaallHHFFAA CCoonnttaacctt IInnffoorrmmaattiioonn:: Matt Mielewski, Lead SNHP Housing Finance Officer, Phone: 310.342.5417 [email protected] Sabrina Saxton, Housing Finance Officer, Phone: 310.342.5425 [email protected]

RReeffeerr ttoo CCaallHHFFAA’’ ss WWeebbssiittee ffoorr mmoorree SSNNHHPP IInnffoorrmmaattiioonn::

http://www.calhfa.ca.gov/multifamily/snhp/index.htm NOTE: This term sheet is subject to change.

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mailto:[email protected]

mailto:[email protected]

http://www.calhfa.ca.gov/multifamily/snhp/index.htm

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7 WHEREAS, the California Housing Finance Agency (the “Agency”) has 8 received a loan application on behalf of WDSE, L.P., a California limited partnership 9 (the “Borrower”), seeking a loan commitment, the proceeds of which are to be used to 10 provide financing for a multifamily housing development located in the City of Los 11 Angeles, Los Angeles County, California, known as Whittier and Downey SE (the 12 “Development”); and 13 14 WHEREAS, the loan application has been reviewed by Agency staff which 15 prepared a report presented to the Board on the meeting date recited below (the “Staff 16 Report”), recommending Board approval subject to certain recommended terms and 17 conditions; and 18 19 WHEREAS, Agency staff has determined or expects to determine prior to 20 making a binding commitment to fund the loan for which the application has been made, 21 that (i) the Agency can effectively and prudently raise capital to fund the loan for which 22 the application has been made, by direct access to the capital markets, by private 23 placement, or other means and (ii) any financial mechanisms needed to insure prudent 24 and reasonable financing of loans can be achieved; and 25 26 WHEREAS, the Board wishes to grant the staff the authority to enter into a loan 27 commitment upon Agency staff determining in its judgment that reasonable and prudent 28 financing mechanisms can be achieved; 29 30

NOW, THEREFORE, BE IT RESOLVED by the Board of Directors (the 31 “Board”) of the California Housing Finance Agency as follows: 32 33 1. The Executive Director, or in his/her absence, the Chief Deputy Director, 34 is hereby authorized to execute and deliver a final commitment letter, in a form 35 acceptable to the Agency, and subject to recommended terms and conditions set forth in 36 the Staff Report and any terms and conditions as the Board has designated in the Minutes 37 of the Board Meeting, in relation to the Development described above and as follows: 38 39 PROJECT DEVELOPMENT NAME/ MORTGAGE 40 NUMBER LOCALITY AMOUNT 41 42 17-012-M/S WHITTIER AND DOWNEY SE $6,500,000.00 43

City of Los Angeles, County of Los Angeles Permanent 44 State of California Mortgage 45

46 47

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27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47

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1

State of California

M E M O R A N D U M

To: Board of Directors Date: February 15, 2018

TIM HSU, Acting Director of Single Family Lending From: California Housing Finance Agency

Subject: USE OF HOME PURCHASE ASSISTANCE TO NON-FIRST TIME HOMEBUYERS OF LOW AND MODERATE INCOME IMPACTED IN DISASTER-DECLARED COUNTIES

Recommendation

In an effort to provide immediate and future relief to California homeowners impacted by natural disasters, CalHFA staff recommends the Board formally approve a change in policy providing for financial assistance as soon as practicable to non-first time homebuyers of low and moderate income impacted in a disaster-declared county under terms and conditions approved by the Executive Director.

Background

The 2017 state wild fire season was the worst in state history. In October 2017, 17 fires broke out throughout northern California resulting in loss of life, the displacement of tens of thousands and the destruction of thousands of homes and other structures valued in the billions of dollars. Governor Brown declared a state of emergency in six northern California counties (Solano, Napa, Sonoma, Yuba, Butte, Lake, Mendocino and Nevada) as well as Orange County causing the California Governor’s Office of Emergency Services (CalOES) to mobilize state resources under the California Disaster Assistance Act for emergency actions, restoration of public facilities and infrastructure and hazard mitigation. The President approved a major disaster declaration causing FEMA to mobilize federal resources in order to implement federal recovery programs for public assistance, individual assistance and hazard mitigation.

In December 2017, a new series of fires broke out in southern California resulting in further loss of life, the displacement of thousands and the destruction of hundreds of homes and other structures. Governor Brown declared a state of emergency in four southern California counties (Los Angeles, Ventura, Santa Barbara and San Diego), which was again followed by a Presidential major disaster declaration providing for further federal emergency assistance.

In January 2018, significant rainstorms in Santa Barbara County and the community of Montecito caused major mudslides, exacerbated by the fires, tragically resulting in more loss of life and further damage to homes and structures. Thereafter, FEMA granted the state’s request for expanded federal disaster assistance in order to support relief efforts.

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2

Immediate State Response

The state’s response in the wake of a natural disaster is generally managed by CalOES. Declarations of emergency often include one or more executive orders suspending certain laws and regulations in accordance with the California Emergency Services Act, providing policy guidance as well as deploying resources. This time was no different. Pursuant to Executive Order B-43-17, state agencies were ordered to, among other things, “…cooperate fully and act expeditiously in coordination with the California Resources Agency and the California Environmental Protection Agency, to facilitate the mitigation of the effects of fires and the environmental restoration of the affected areas…” Given this Order and Presidential major disaster declarations, CalOES and FEMA formed multiple joint task forces to coordinate relief efforts. Accordingly, CalHFA was asked and agreed to serve on the joint task force for housing recovery. 1

Since November 2017, CalHFA and HCD staff have been participating in weekly meetings along with other state and federal agencies to gather real time information such as the number of homes and families impacted by the disasters. CalHFA and HCD staff also participated in site visits within the impacted counties to survey damage and meet with local leaders exposing them to CalHFA and HCD programs, particularly CalHFA’s multi-family lending programs.

Because FEMA and CalOES are primarily designed to provide rapid, but temporary relief, it was determined fairly early on that an additional ad-hoc committee should be formed to address the state’s long term housing recovery response. Accordingly, CalHFA, along with HCD and certain federal agencies, including HUD and the Small Business Administration (SBA), have been meeting weekly to assess and quantify needs, catalog existing programs and resources, and provide possible solutions towards the long term housing recovery effort.

California Long Term Housing Recovery

In general, the vast majority of people who lost their homes have insurance. Less identifiable is the type and amount of coverage. Despite state anti-gouging laws, the problem has been exacerbated by the rising costs of materials and shortage of labor due to supply and demand. In many cases, insurance policies may only provide for 12-18 months of temporary housing. This causes pressure on the rebuilding effort. Currently, in many communities, hazardous debris is still being removed. In others, infrastructure such as sewer and water lines, as well as electricity, will need to be replaced. Once architects are hired, permits will need to be issued, but many localities are understaffed and under-resourced for the amount of homeowners wanting to rebuild. In light of the foregoing, some homeowners may wish to purchase a replacement home instead. For those choosing to rebuild as soon as possible, the SBA provides up to $200,000 in construction financing which may prove beneficial to a number of impacted homeowners.

The private sector is beginning to respond to the needs of the communities impacted by the disasters with at least one commercial lender providing constructions to permanent financing of up to $2,000,000. To further encourage private sector solutions, the California State Treasurer announced in November a plan to redirect state deposits to qualified community banks in disasters areas to encourage recovery lending.

1 See attached 4344-DR-CA Housing Task Force Organization Chart

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3

HCD’s role in the long term recovery solutions include taking the lead in housing policy with a more global approach; specifically, integrating resilience and equity concepts into planning and investments. HCD is collaborating with the Governor’s Office of Planning and Research to provide local jurisdictions with access to both technical assistance and funding for planning, including hazard mitigation and resiliency activities.

CalHFA Long Term Housing Recovery Solutions

To support and complement the efforts of the State Treasurer and our other state agencies, CalHFA’s most immediate response to the long term housing recovery would be to provide financial assistance towards the purchase of another home for those low to moderate income homeowners who lost their home in a declared disaster.

CalHFA’s home purchase assistance is currently limited to first-time homebuyers, particularly with respect to MyHome funds for down payment assistance and closing costs. In light of the 2017 wildfire season and the subsequent disaster declarations, CalHFA staff recommends the Board adopt the attached Resolution authorizing the use of home purchase assistance funds to non-first time homebuyers of low and moderate income impacted by a disaster. This, along with the recent program changes to increase income limits, will have a material impact on the Agency’s ability to assist homeowners impacted by the disaster. In terms of future initiatives, CalHFA staff is currently exploring CalHFA’s first-ever refinancing loan program to further assist impacted homeowners who want to rebuild. An eligible homeowner using a combination of insurance proceeds and construction financing from a commercial lender would be able to refinance into a CalHFA first lien loan product.

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DRAFT As of 10/31/2017

4344-DR-CAHousing Task Force Leads

Katrina Palomar (S)Ryan Buras (F)

Deputy Task Force LeadsNicole Meyer-Morse (S)

Chad Davis (F)

Short TermInsured

Co-LeadsKatrina Palomar, Cal OES

Emily Baumgartner, FEMA

Long TermNot Insured or Under Insured

Co-LeadsCal HCD (S)

HUD (F)

CalInsurance

HUD

Cal DSS

Cal HCD

BIA USACE Cal BCSH SBACal VAARC Cal DSSCal CSD USDA

Cal VA HUD ARCCal DPRCal DFA Cal CSD

Cal SGCCal HFA

Cal BCSH

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Chad Davis (F)

Cal Business, Consumer Services and Housing

AgencyLynn Von Koch-Liebert (S)

See Long Term Organization Chart

U.S. Department of Housing and Urban

DevelopmentPauline Louie (F)

Bureau of Indian AffairsJoshua Allan (F)

Cal Department of Food and AdministrationKalia Mitchelle (S)

U.S. Army Core of Engineers

Clyde Campbell (F)

Cal InsuranceLucy Jabourian (S)

Cal Department of Parks and RecreationLisa Mangat (S)

Cal Veterans AffairsTheresa Gunn (S)

Cal Department of Social Services

Mary Ann Johnson, (S)

American Red CrossDenise EverheartBrad Kieserman

Cal Department of Housing and Community

DevelopmentSusan Naramore (S)Chris Anderson (S)

Cal Department of Community Services and

DevelopmentTBD

Short TermInsured



Long TermNot Insured or Under

InsuredCo-Leads

Cal HCD (S)HUD (F)

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Chad Davis (F)

Cal Business, Consumer Services and Housing

AgencyLynn Von Koch-Liebert (S)

See Short Term Organization Chart

Cal Strategic Growth Council

Monica Palmeira (S)

Bureau of Indian AffairsJoshua Allan (F)

Cal Veterans AffairsTheresa Gunn (S)

Cal Department of Social Services

Mary Ann Johnson, (S)

American Red CrossDenise EverheartBrad Kieserman

Small Business AdministrationJennifer Sett (F)

Cal Department of Community Services and

DevelopmentTBD

Cal Housing Finance Agency

TBD

Short TermInsured



Long TermNot Insured or Under

InsuredCo-Leads

Susan Naramore, Cal HCDPauline Louie, HUD

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5 RESOLUTION AUTHORIZING THE USE OF HOME 6 PURCHASE ASSISTANCE FOR NON-FIRST TIME 7

HOMEBUYERS OF LOW AND MODERATE INCOME 8 IMPACTED IN DISASTER-DECLARED COUNTIES 9

10 WHEREAS, the 2017 California wildfire season was the worst on record, tragically 11

causing the loss of life, the displacement of tens of thousands of California residents and billions 12 of dollars in damage to private and public property prompting the Governor to make multiple 13 disaster declarations followed by similar Presidential major disaster declarations; 14

15 WHEREAS, the California Housing Finance Agency (the “Agency”), along with other 16

state and federal agencies, have been engaged in joint discussions seeking, among other things, 17 long term housing recovery solutions for the families impacted by the recent natural disasters as 18 well as to consider solutions to mitigate the housing impacts of future events; 19

20 WHEREAS, in light of the State’s need to respond to the recent natural disasters with 21

long term housing recovery solutions, the Agency desires to assist non-first time homebuyers of 22 low and moderate income impacted in a disaster-declared county. 23

24 NOW, THEREFORE, BE IT RESOLVED by the Board of Directors (the “Board”) of the 25

California Housing Finance Agency as follows: 26 27 1. The Agency may provide home purchase assistance to a non-first time homebuyer 28

of low and moderate income who has lost an owner-occupied home in a natural disaster as 29 declared by the Governor. 30

31 2. As soon as practicable, the Agency is directed to make necessary programmatic 32

changes to implement the foregoing under terms and conditions approved by the Executive 33 Director. 34

35 36 37 38 39

40

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SECRETARY'S CERTIFICATE 1 2

I, Claire Tauriainen, the undersigned, do hereby certify that I am the duly authorized 3 Acting Secretary of the Board of Directors of the California Housing Finance Agency, and 4 hereby further certify that the foregoing is a full, true, and correct copy of Resolution No. 18-07 5 duly adopted at a regular meeting of the Board of Directors of the California Housing Finance 6 Agency duly called and held on the 15th day of February 2018, at which meeting all said 7 directors had due notice, a quorum was present and that at said meeting said resolution was 8 adopted by the following vote: 9 10 AYES: 11 12 NOES: 13 14 ABSTENTIONS: 15 16 ABSENT: 17 18 IN WITNESS WHEREOF, I have executed this certificate hereto this 15th day of 19 February 2018. 20 21 22 ATTEST: 23 CLAIRE TAURIAINEN 24 Acting Secretary of the Board of Directors of the 25

California Housing Finance Agency 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46

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State of California

M E M O R A N D U M

To: Board of Directors Date: January 31, 2018

Michael D. Carroll, Director of Multifamily ProgramsFrom: CALIFORNIA HOUSING FINANCE AGENCY

Subject: UPDATE OF CONDUIT ISSUANCE PROGRAM

The CalHFA Conduit Issuer Program (Conduit Program) is designed to facilitate both for- profit and non-profit developers in accessing tax-exempt and taxable bonds for the financing of family and senior affordable and mixed-income housing developments. The goals of the program are to increase and preserve the supply of affordable rental housing, maintain a quality living environment, leverage private sector funds to the greatest extent possible, and to cooperate with local jurisdictions to advance affordable housing goals.

CalHFA made numerous program changes in March 2015 to be more competitive on fees and added a locality review process in place to address any of the locality concerns. In addition to generating fee income for the Agency, the Conduit Program is an entry point for developers, lenders, bond counsel, and financial advisors to become more familiar with all of CalHFA multifamily programs and resources. The Strategic Business Plan and Operating Budget for FY 17-18 estimated $300 million in new conduit issuance for the year and we are on track to meet or exceed that goal.

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Conduits Program - FY17-18:

Project Name City Project Type Units Closing Date Loan Amount

(Closed)

1 Verdes Del Oriente San Pedro Family 113 7/13/2017 43,000,000$

2 Oak Creek Family Apartments Oakley Family 75 8/17/2017 17,885,000

3 Premier Apartments Los Angeles Family 120 8/22/2017 15,000,000

4 Woods Grove Pittsburg Family 80 11/17/2017 11,500,000

5 Kottinger Gardens Pleasanton Family 54 12/7/2017 21,916,266

6 Riverside Street Apartments Ventura Family 23 1/25/2018 7,000,000$

465 116,301,266$

(In Process to Close in 2018)

7 Susanville Gardens Susanville Family 64 2/26/2018 4,300,000$

8 Market Street Redding Family 82 5/30/2018 18,630,924

9 Truckee Artist Lofts Truckee Family 90 5/1/2018 20,157,987

10 800 Block Sacramento Family 150 4/1/2018 55,344,536

386 98,433,447$

March 21, 2018 CDLAC Meeting- CDLAC Due 1/19/18

11 Willow Glen Senior Apartments San Jose Santa Clara 133 3/30/2018 17,170,000$

May 16, 2018 CDLAC Meeting- CDLAC Due 3/16/18

12 Curtis Johnson Apartments Los Angeles Family 48 4/27/2018 7,000,000$

13 Danbury Park Apartments Antelope Family 140 6/18/2018 19,000,000

14 Summer Park Fresno Family 248 7/18/2018 23,845,000

15 Sunrise Gardens Apartments El Dorado Senior 67 7/26/2018 8850000

16 Leigh Avenue Senior San Jose Senior/Special Needs 64 8/18/2018 26,907,500

567 85,602,500$

(Application)

17 North San Pedro Apartments San Jose Family 135 10/31/2018 44,000,000$

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State of California

M E M O R A N D U M To: Board of Directors Date: February 1, 2018 Tony Sertich, Director of Enterprise Risk Management & Compliance From: CALIFORNIA HOUSING FINANCE AGENCY Subject: Keep Your Home California (“KYHC”) Economic Impact Study

The CalHFA Mortgage Assistance Corporation (“CalHFA MAC”) has received an economic impact analysis to quantify the positive impact that the KYHC program has had on the state. Dr. Joseph Van Nessen of the Darla Moore School of Business at the University of South Carolina performed the study. He also created a presentation for the CalHFA MAC Board and staff explaining what the impact analysis includes as well as providing detailed results. A selection of slides from that presentation is attached. The full presentation and analysis results, including county by county details, can be found on the KYHC website at the following address: http://keepyourhomecalifornia.org/economic-impact/. The study shows that the program generated $3.0 billion in economic activity from 2010 through 2016. This economic activity was derived from $1.5 billion in assistance provided to homeowners. Over the same time period, KYHC has prevented the state from losing nearly $100 million in tax revenues. Please feel free to reach out to me with any questions.

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Joseph Von Nessen, Ph.D.

Research Economist

January 11, 2018

Joseph Von Nessen, Ph.D.

Research Economist

January 11, 2018

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“ KYHC facilitates foreclosure prevention programs and continues to operate

innovative housing programs tailored to help prevent foreclosures and stabilize

housing markets.”

“ KYHC facilitates foreclosure prevention programs and continues to operate

innovative housing programs tailored to help prevent foreclosures and stabilize

housing markets.”

Source: KYHC Mission Statement

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Why Economic Impact Analysis?Why Economic Impact Analysis?

• An accurate way to measure and put perspective on how KYHC affects California’s housing markets and the overall economy

• Quantify KYHC’s impact on both the overall economy and on various local regions

• An accurate way to measure and put perspective on how KYHC affects California’s housing markets and the overall economy

• Quantify KYHC’s impact on both the overall economy and on various local regions

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Economic Impact AnalysisEconomic Impact Analysis

Initial change in economic activity (e.g., new business formation)Initial change in economic activity (e.g., new business formation)

Spending activitySpending activity

Economic activity (GDP), Job creation, Income CreationEconomic activity (GDP), Job creation, Income Creation

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Three Sources KYHC Economic ImpactsThree Sources KYHC Economic Impacts

• Preservation of Consumer Spending Activity

• Preservation of Property Value

• Preservation of Industry Demand

• Preservation of Consumer Spending Activity

• Preservation of Property Value

• Preservation of Industry Demand

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• Prevents reduction in property value of house itself and adjacent properties

• California Association of REALTORS estimates that foreclosed homes are estimated to lose 14 percent of their value

• Foreclosures have been estimated to reduce adjacent properties within 0.1 miles by up to 3 percent

• Prevents reduction in property value of house itself and adjacent properties

• California Association of REALTORS estimates that foreclosed homes are estimated to lose 14 percent of their value

• Foreclosures have been estimated to reduce adjacent properties within 0.1 miles by up to 3 percent

Foreclosure PreventionForeclosure Prevention

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Primary ResultsPrimary Results

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Statewide Economic Impact

TimePeriod

Total Jobs Preserved

Total Labor Income

Preserved

TotalEconomic

Impact

Total Families Assisted

2010-2015 8,096 $441.4 million $2.5 billion 63,861

2010-2016 9,831 $536.0 million $3.0 billion 67,403

-----------------------------------------------------------------------------------------

Difference 1,735 $94.6 million $0.5 billion 3,542

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2.0 For every $100 invested through KYHC, a total economic impact of $200 is generated through the combined impacts of the economic multiplier effect and the preserved property value resulting from foreclosure prevention

The Multiplier Effect

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Increase in California Gross State Product

Increase in California Gross State Product

Increase in State Tax Revenue of $98.7 million;

up from $81.3 million previously

Increase in State Tax Revenue of $98.7 million;

up from $81.3 million previously

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• Highest impacts coalesce around the major metropolitan regions with highest housing and population densities

San Diego

Los Angeles

San Francisco

Sacramento

Fresno

San Bernardino

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Total Impact by Program (in millions)Total Impact by Program (in millions)

$0.0 $200.0 $400.0 $600.0 $800.0 $1,000.0 $1,200.0 $1,400.0

TAP

RevMAP

MRAP

PRP

UMA

$6.6

$8.1

$799.5

$860.4

$1,326.7

$6.1

$3.8

$647.8

$645.3

$1,157.2

2010-2015 2010-2016

+14.6%+33.3%

+23.4%

+113.2%

+8.2%

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KYHC an Important Resource for CaliforniaKYHC an Important Resource for California

• KYHC has preserved $3.0 billion in economic activity for the state of California (through 2016)

• Includes $1.4 billion in preserved property value, over 9,800 jobs and $536 million in labor income

• The state of California also benefits directly; KYHC has prevented the state from losing $98.7 million in tax revenue

• KYHC has preserved $3.0 billion in economic activity for the state of California (through 2016)

• Includes $1.4 billion in preserved property value, over 9,800 jobs and $536 million in labor income

• The state of California also benefits directly; KYHC has prevented the state from losing $98.7 million in tax revenue

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State of California M E M O R A N D U M To: Board of Directors Date: February 1, 2018 Tony Sertich, Director of Enterprise Risk Management & Compliance From: CALIFORNIA HOUSING FINANCE AGENCY Subject: 2017 State Leadership Accountability Act (“SLAA”) Report

CalHFA is required to complete a SLAA report detailing significant risks the Agency is monitoring every two years. The State of California Department of Finance collects and reviews the report. Semiannual updates on the progress in mitigating the risks must be provided as well.

The report lists four risks as a focus of our risk mitigation efforts in the coming two years:

1) Workforce Planning and Key-Person Dependency2) Single-Family Subservicer Monitoring3) Asset Management Process Development4) Data Management and Reporting Consistency

The full report is attached. The report is also available for viewing by the public on the CalHFA website.

This report has served as a guideline for high-level risk monitoring activities in the past. With the creation of the Enterprise Risk Management Division, we have moved to create a more comprehensive and consistent review and monitoring of Agency risks. The SLAA report will still serve as a public report of the Agency’s progress towards a more controlled riskenvironment.

Please feel free to reach out to me with any questions.

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California Housing Finance Agency 2017 SLAA REPORT

December 28, 2017 Alexis Podesta, Secretary California Business, Consumer Services and Housing Agency 915 Capitol Mall, Suite 350-A Sacramento, CA 95814 Dear Ms. Alexis Podesta, In accordance with the State Leadership Accountability Act (SLAA), the California Housing Finance Agency submits this report on the review of our internal control and monitoring systems for the biennial period ending December 31, 2017. Should you have any questions please contact Tony Sertich, Director of Enterprise Risk Management and Compliance, at (916) 326-8657 or [email protected]. BACKGROUND The California Housing Finance Agency (CalHFA) was established per Health and Safety Code (HSC) Sections 50900 - 52533. CalHFA's mission is to finance loans to create safe, decent and affordable rental housing and to assist first-time homebuyers in achieving the dream of homeownership. CalHFA was statutorily chartered in 1975 to be the State’s affordable housing bank. Per HSC 50956, “It shall be the policy of the agency to conduct its operations so as to be fiscally self-sufficient and so as not to require appropriations from the General Fund for payment of its administrative costs or to service bonds of the agency.” CalHFA is a professional organization charged with providing mortgages to the middle to low income home buyers and with lending to developers of affordable rental units. The agency sets the interest rates slightly above its cost of funds and charges fees for specific units. The agency sets loan interest rates slightly above its cost of funds and charges fees for specific services to cover its lending costs and risks. The housing programs offered by CalHFA are the primary source of income. Various economic and regulatory factors such as prevailing economic conditions, mortgage interest rates, investment rates, the demand for housing, the cost of housing and of operating housing programs, the volume of mortgage lending activity in the State and other factors affecting the supply of housing in the State can create significant challenges for the agency in single-family and multi-family housing programs as well as its overall operations. Historically, CalHFA has offered three main financial programs: 1) make loans to first-time homebuyers; 2) make loans to owners and developers of multifamily affordable rental units; 3) make loans to local governments to finance local housing initiatives. The objective of these programs is to finance housing at affordable interest rates using the proceeds of tax-exempt mortgage revenue bonds, State of California general obligation (GO) bonds, special federal program funds, and a limited amount of internal equity. CalHFA is administered by a Board of Directors consisting of 13 voting members and three non-voting members, including a chairperson selected by the Governor from among his or her appointees. Of the 13 voting members, seven are appointed by the Governor, four are ex-officio and two are appointed by the Legislature. The term of the appointed members of the board is six years.

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The California Housing Finance Fund is continuously appropriated and expenditures of the fund are not subject to the supervision or approval of any other officer or division of State government. The Executive Director prepares a preliminary budget on or before December 1 of each year for the ensuing fiscal year to be transmitted to the Secretary of the Business, Consumer Services and Housing Agency, the Director of Finance, and the Joint Legislative Budget Committee. This preliminary budget is included in the Governor’s January Budget Proposal for informational purposes. The agency’s final budget is reviewed and approved by the CalHFA Board at its May meeting of each year. According to HSC 51005, the agency shall, by November 1 of each year, submit an annual report of its activities under this division for the preceding year to the Governor, the Secretary of the Business, Consumer Services and Housing Agency, the Director of Housing and Community Development, the Treasurer, the Joint Legislative Budget Committee, the Legislative Analyst, and the Legislature. The report shall include specific information evaluating the extent to which the programs administered by the agency have attained the statutory objectives of the agency. ONGOING MONITORING As the head of California Housing Finance Agency, Tia Boatman Patterson, Executive Director, is responsible for the overall establishment and maintenance of the internal control and monitoring systems. Executive Monitoring Sponsor(s) The executive monitoring sponsor responsibilities include facilitating and verifying that the California Housing Finance Agency internal control monitoring practices are implemented and functioning as intended. The responsibilities as the executive monitoring sponsor(s) have been given to: Don Cavier, Chief Deputy Director.

Monitoring Activities While all employees and managers are empowered to identify risk and develop mitigation efforts to control the various risks, the Enterprise Risk Management (ERM) group is tasked with independent evaluations of program controls to identify and mitigate risk enterprise-wide. On an annual basis, the ERM team proactively meet with all divisions and program areas to conduct a risk assessment. On an ongoing basis, ERM reviews and monitors the agency's activities to ensure compliance with policies and to identify any possible risks. These discussions assist in establishing the priorities for the year and the areas of focus based on the highest and most critical risks to the agency.

Senior management meets biweekly to discuss current issues which include risks. They identify potential risks and provide a plan to mitigate the risk. Reconciliation of key agency accounts is conducted on a daily, monthly and quarterly basis. Collections and foreclosures are audited monthly by an external firm. Various loan servicing functions are audited quarterly by an external firm. Operating payments are regularly verified for accuracy and compliance with contract terms or agreements. CalHFA reviews monthly reports from outside servicers and compares them to internal reports for purposes of accuracy. CalHFA conducts an annual onsite lender inspection of operations and quality control. CalHFA's information technology unit continuously monitors security measures in the areas of technical support, application support, and information security. CalHFA engages a large reputable accountancy firm to conduct an annual review of internal controls.

For fiscal risk management and oversight, CalHFA is audited by an outside independent accounting firm that certifies the accuracy and authenticity of our financial statements.

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Addressing Vulnerabilities Collaboratively, ERM and the program areas work together to come up with an action plan to address, mitigate, and/or eliminate the vulnerabilities to risk. These vulnerabilities are elevated to senior management which are discussed and solutions proposed for immediate action. This progress is monitored through the quarterly status update reports to senior management.

Deficiencies identified by external auditors require formal documentation and communication of our progress on mitigating the deficiencies with the auditor until the issue is adequately addressed.

Communication Senior Staff meet on a bi-weekly basis to address the various issues of the agency. If there are critical risks, they are addressed at these meetings. In addition, emergency meetings are also held if the risk presented needs to be addressed right away. Quarterly updates on the status of the various identified risks are presented to senior management by ERM and ongoing monitoring and progress is discussed.

The top risks of the organization are included in the strategic planning and annual business planning process. The risks are also communicated to the organization by executive management. The Executive Director keeps the employees of CalHFA apprised of various issues and enterprise risk management initiatives through her "Director's Corner" page on the CalHFA internal website.

Ongoing Monitoring Compliance The California Housing Finance Agency has implemented and documented the ongoing monitoring processes as outlined in the monitoring requirements of California Government Code sections 13400-13407. These processes include reviews, evaluations, and improvements to the California Housing Finance Agency systems of controls and monitoring. RISK ASSESSMENT PROCESS The following personnel were involved in the California Housing Finance Agency risk assessment process: Executive Management, Middle Management, Front Line Management, and Staff.

Risk Identification The Enterprise Risk Management Division (ERM) was formally established in 2017. In addition, the position of Director of Enterprise Risk Management and Compliance was established and approved by the CalHFA Board in 2017. CalHFA is formalizing its Enterprise Risk Management framework. The first line of defense for managing risk and internal controls comes from operational management. Each employee and manager in their day to day work owns and manages risks for the organization by implementing risk mitigating processes and putting controls in place. The new ERM division functions as the second line of defense. ERM assists the organization with collecting, mitigating, monitoring and reporting the various enterprise risks. The third line of defense is independent oversight and auditing of the operations.

In the fall of 2017, ERM met with program leaders to review their risks, discuss their operational efficiencies, and analyze their budgetary management and spending reports. The division directors and managers were asked to discuss the operations and existing procedures in their unit with a focus on any risks that may exist in their program area and the impact it would have to CalHFA. Once the risks were collected, each risk was analyzed for its potential impact, probability of occurrence, timeframe of the risk, and the risk management controls needed to address each risk.

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Risk Ranking The ERM division ranked the risks based on various factors. These factors took into consideration operational risk, systematic risk, financial risk, environmental risk, risk to the sustainability of the agency, and conformity to regulatory compliance requirements.

RISKS AND CONTROLS 1 - Risk: Operations – Internal Staff – Key Person Dependence, Workforce Planning CalHFA is a smaller organization with less than 230 employees. The agency strives to operate efficiently and at an optimal level. Some positions are held by key employees with extensive agency knowledge and tenured expertise where they have become a significant resource to the agency. Over time, the agency has become dependent upon them. If and when these key employees leave the agency for purposes of retirement or other career opportunities, this leaves the agency with a lack of historical knowledge and existing staff not having the expertise and skills to smoothly continue the operational sustainability of the organization. This risk is due to the existence of long tenured key employees holding historical institutional knowledge. Transferring this expertise and knowledge to their co-workers and peers would mitigate this risk. In addition, CalHFA is beginning to actively implement their 2017-22 Workforce Plan. This will address both short-term and long-term staffing needs. The CalHFA Workforce Plan and Business Plan supports business continuity and a process to identify and supply a qualified and motivated workforce prepared to take over when senior staff and other key employees leave. As a result of this identified risk, CalHFA has started to implement efforts towards knowledge transfer among its employees. In addition, CalHFA participated in the CalHR pilot program for implementing an enterprise wide workforce plan.

Control A Senior management and managers are aware of the key employee dependency risk and are putting measures in place to mitigate the risk. Managers are setting up plans and schedules with key employees where they are to share their knowledge (knowledge transfer) with their peers and provide training and shadowing with staff to assure more than one person knows how to do that specific duty or work assignment.

2 - Risk, Compliance-External Service Provider-Internal Control System Adequacy CalHFA recently moved the Single Family Division loan servicing work to a third party provider through a sub-servicing agreement. This is a new operational framework for the Loan Administration Unit which resides in the Single Family Division. Although it is common to contract with a subservicer, CalHFA needs to set up formal oversight processes and procedures to assure that the subservicer operates according to the required compliance guidelines. The cause for this new risk is due to the change in the way the Loan Administration Unit within the Single Family Division now operates. Utilizing a subservicer realized cost savings and more efficient operations for CalHFA. By assuring compliance and oversight is adhered to, this risk will be mitigated.

Control A The Single Family Division has started establishing policies and procedures to be used to manage the

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new subservicer. The Loan Administration Unit within the Single Family Division will actively manage the subservicing agreement and assure compliance and oversight of the third party vendor.

3 - Risk: Operations-Internal-Oversight, Monitoring and Reporting Consistency The Asset Management Unit within the Multi-Family Lending Division is in need of stronger internal controls and oversight over their processes to ensure that CalHFA is in compliance with its agreement with the U.S. Department of Housing and Urban Development and other control agencies. Updated policies and procedures are necessary for staff to complete their jobs efficiently and completely. The cause of this risk is due to the lack of updated policies and procedures. Recent staff departures and existing staff taking on new roles have made this issue more pronounced. These issues led to a break down in the required oversight of some of the properties. This issue was discovered as a result of an independent audit in 2017 that recommended the Asset Management Unit formalize their policies and procedures. Staff are more aware of the importance of good oversight and monitoring activities. New leadership has been put in place with the recent hire of the Director of MultiFamily Programs. Management reports on the status of the portfolio and compliance requirements will be communicated regularly to Senior and Executive management.

Control A An outside consultant who specializes in operational efficiencies has been retained to provide an independent review of the Asset Management program area.

Control B Staff are working with the ERM team to formalize and implement updated policies and procedures to assist the Asset Management program in assuring tighter controls and program oversight.

4 - Risk: Operations-Internal-Data Management and Reporting Consistency CalHFA has many sources of information and data that need to be compiled, stored and analyzed to meet the agencies business goals. Currently CalHFA has multiple data storage systems for different programs and functions. These systems reside in different divisions throughout the agency. There is no single owner of the data or reviewer for purposes of data integrity and consistency. Reporting and analysis from the various systems could provide inconsistent or incomplete information to the end user.

Control A To help mitigate this risk, CalHFA will strive to achieve a better data interface between systems to ensure data consistency.

Control B The newly created Enterprise Risk Management Division will become the owner of the data and provide a single source of truth of data analysis and reporting. This will be a collaborative effort between the various units throughout the agency and the Enterprise Risk Management Division.

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CONCLUSION The California Housing Finance Agency strives to reduce the risks inherent in our work and accepts the responsibility to continuously improve by addressing newly recognized risks and revising controls to prevent those risks from happening. I certify our internal control and monitoring systems are adequate to identify and address current and potential risks facing the organization. Tia Boatman Patterson, Executive Director California Housing Finance Agency

cc: California Legislature California State Auditor

California State Library California State Controller Director, California Department of Finance Secretary, California Government Operations Agency

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State of California M E M O R A N D U M To: Board of Directors Date: January 31, 2018 From: Subject:

Michael D. Carroll, Director of Multifamily ProgramsCALIFORNIA HOUSING FINANCE AGENCY

Report Back to Board on Transitional Operating Reserve Policy and the Southlake Tower Senior Apartments

At the January 16, 2018 meeting, the Board of Directors approved a refinance loan for Southlake Tower Senior Apartments in the amount of $24,376,000. The Board discussed concerns about reserves and in particular, a transitional operating reserve and additional replacement reserves. Staff were asked to revist those two issues with the borrower and report back.

Following the meeting, we consulted with representatives of Christian Church Homes about the issues identified above. The borrower agreed to double the initial replacement reserve from $130,000 to $260,000. This is over and above our normal requirement but we welcome the additional reserves for the project and we are amending our final commitment to include them.

The staff report for the loan incorrectly addressed the issue of Transitional Operating Reserve(TOR) for the project by requesting a wavier of our usual requirement. Actually no waiver is required. Current CalHFA policy is that a TOR is not required for a project that has a Housing Assistance Program (HAP) contract of at least a 20 year term. In this case, there will be a new 20 year HAP contract renewal from HUD Multifamily Housing Programs, which is relatively stable compared to other project-based contracts. For projects with less than a 20 year contract, we normally require a TOR that would cover the income differential between HUD contract rents and restricted rents for a one year period.

We have further mitigated risks by limiting the Loan-to-Value ratio to 80% and by including the loan in our HUD Risk Share portfolio with 50% of losses covered by HUD. The new loan keeps the property in CalHFA’s portfolio for another 40 years. It has been a high- performing, well-maintained property throughout its history.

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State of California M E M O R A N D U M To: CalHFA Board of Directors Date: February 12, 2017 Melissa Flores, Assistant Director of Board Relations and Executive Communications From: CALIFORNIA HOUSING FINANCE AGENCY Subject: LEGISLATIVE REPORT In the interim between Di Richardson’s retirement and filling the Legislative Director’s vacancy, I will be assisting with Legislative communications. The new session kicked off just about a month ago. This is the second year of a two year cycle. I’ve included below a list of the bills we are keeping an eye on. Also, CalHFA has introduced a legislative proposal to modify our Annual Reporting due date from November 1 to December 31 of each year. As you may recall this was discussed at a prior Board meeting. Because this is strictly a technical change of our statutes, our proposal has been added to the 2018 Housing Omnibus Bill. At the Federal level, Congress passed a Continuing Resolution (CR) early Friday morning that will keep the government running for six more weeks. The CR keeps government programs operating at FY 2017 levels until March 23, giving appropriators time to draft FY 2018 funding bills for HUD, USDA, and other government agencies. The President rolled out his 2019 Budget proposal this morning. Housing was absent from the $1.5 trillion proposal in new investment and infrastructure. We will be learning more over the next few days and weeks. If you have any questions, please contact me at (916) 326-8092.

Housing Element

AB 1759 (McCarthy D) General plans: housing element: production report: withholding of transportation funds.

Status: 1/5/18 From printer. May be heard in committee February 4. Location: 1/4/2018-A. PRINT

Summary: Would require the Department of Housing and Community Development, on or before June 30, 2022, and on or before June 30 every year thereafter and until June 30, 2051, to review each production report submitted by a city or county in accordance with the provisions as specified to determine whether that city or county has met the applicable minimum production goal for that reporting period. The bill would provide that, if the department determines that a city or county has met its applicable minimum production goal for that reporting period, the department shall, no later than June 30 of that year, submit a certification of that result to the Controller. If a City or County does not obtain such a certification, certain transportation appropriation funds would be withheld in an escrow account until the City or County obtains certification.

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AB 1771 (Bloom D) Regional housing needs assessment. Status: 1/5/18 From printer. May be heard in committee February 4. Location: 1/4/2018-A. PRINT

Summary: Under existing law, the Legislature has declared that the availability of affordable housing is of vital statewide importance and requires cooperation at all levels of government. Existing law declares that local and state governments have a responsibility to use the powers vested in them to facilitate the improvement and development of housing to make adequate provisions for the housing needs of all economic segments of the community. Existing law provides for a council of governments, consisting of a single or multicounty council created by a joint powers agreement, and requires the Department of Housing and Community Development to consult with each council of governments to determine the existing and projected need for housing in each region, as specified. This bill would express the intent of the Legislature to enact legislation that would make changes to the process for distributing regional housing needs to various jurisdictions to ensure fairness and the achievement of stated goals regarding housing.

SB 828 (Wiener D) Land use: housing element. Status: 1/16/18 Referred to Com. on RLS. Location: 1/3/18 S-RLS

Summary: The Planning and Zoning Law requires a city or county to adopt a comprehensive, long-term general plan for the physical development of the city or county and of any land outside its boundaries that bears relation to its planning. That law also requires the general plan to include a housing element and requires a planning agency to submit a draft of the housing element to the Department of Housing and Community Development for review, as specified. This bill would state the intent of the Legislature to enact legislation that would, among other things, require the department to take certain actions relating to unmet housing needs, including completing a comprehensive assessment on unmet need for each region and including the results of the assessment in regional allocations for the next housing element cycle, and require a local jurisdiction to plan and accommodate for 200 percent of the local housing allocation for every income category in its housing element .

Land Use/Zoning

AB 827 (Wiener D) Planning and zoning: transit-rich housing bonus. Status: 1/16/18 Referred to Coms. on T. & H. and GOV. & F. Location: 1/16/18 S-T. & H.

Summary: The Planning and Zoning Law requires, when an applicant proposes a housing development within the jurisdiction of a local government, that the city, county, or city and county provide the developer with a density bonus and other incentives or concessions for the production of lower income housing units or for the donation of land within the development if the developer, among other things, agrees to construct a specified percentage of units for very low, low-, or moderate-income households or qualifying residents. This bill would authorize a transit-rich housing project to receive a transit-rich housing bonus. The bill would define a transit-rich housing project as a residential development project the parcels of which are all within a 1/2 mile radius of a major transit stop or a 1/4 mile radius of a high-quality transit corridor, as those terms are further defined. The bill would exempt a project awarded a housing opportunity bonus from various requirements, including maximum controls on residential density or floor area ratio, minimum automobile parking requirements, design standards that restrict the applicant’s ability to construct the maximum number of units consistent with any applicable building code, and maximum height limitations, as provided.

SB 831 (Wieckowski D) Land Use: accessory dwelling units. Status: 1/16/18 Referred to Coms. on T. & H. and GOV. & F.

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Location: 1/16/18 S-T. & H.

Summary: The Planning and Zoning Law authorizes a local agency to provide by ordinance for the creation of accessory dwelling units in single-family and multifamily residential zones and sets forth standards the ordinance is required to impose, including, among others, maximum unit size, parking, and height standards. Current law authorizes a local agency, special district, or water corporation to require a new or separate utility connection between the accessory dwelling unit and the utility and authorizes a fee to be charged, except as specified. Current law requires a local agency to submit an ordinance adopted for the creation of accessory dwelling units to the Department of Housing and Community Development and authorizes the department to review and comment on the ordinance. This bill would delete the requirement that the area be zoned to allow single-family or multifamily use

SB 893 (Nguyen R) Planning and Zoning: affordable housing: streamline. Status: 1/24/18 Referred to Coms. on T. & H. and GOV. & F. Location: 1/24/18 S-T. & H.

Summary: The Planning and Zoning Law requires, when a developer of housing proposes a housing development within the jurisdiction of a local government, that the city, county, or city and county provide the developer with a density bonus and other incentives or concessions for the production of lower income housing units or the donation of land within the development if the developer, among other things, agrees to construct a specified percentage of units for very low, low-, or moderate-income households or qualifying residents. Existing law prohibits a city, county, or city and county from requiring a vehicular parking ratio for a housing development that meets these criteria in excess of specified ratios. This prohibition applies only at the request of the developer and specifies that the developer may request additional parking incentives or concessions. This bill would delete these additional vehicular parking ratio provisions.

Proposed Prop. 13 Changes

AB 1748 (Steinorth R) Property taxation: base year value transfer. Status: 1/16/18 Referred to Com. on REV. & TAX. Location: 1/16/18 A-REV. & TAX

Summary: The California Constitution and existing property tax law authorize a person who is either severely disabled or over 55 years of age to transfer the base year value, as defined, of property that is eligible for the homeowners’ property tax exemption to a replacement dwelling that is of equal or lesser value located within the same county as the property from which the base year value is transferred, and if a county ordinance so providing has been adopted, to a replacement dwelling that is located in a different county. This bill, on and after January 1, 2019, would instead require, subject to specified procedures, the base year value of property that is eligible for the homeowner’s exemption of any person, regardless of age or disability, to be transferred to any replacement dwelling, regardless of the value of the replacement property or whether the replacement property is located within the same county.

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Proposed SB2 Changes

AB 1915 (Mathis R) Building Homes and Jobs Act: recording fee: mining claims. Status: 2/5/18 Referred to Com. on H. & C.D. Location: 2/5/18 A-H. & C.D.

Summary: Current law imposes a charge, except as provided, of $75 to be paid at the time of the recording of every real estate instrument, paper, or notice required or permitted by law to be recorded, per each single transaction per single parcel of real property, not to exceed $225. Current law defines “real estate instrument, paper, or notice” for this purpose as a document relating to real property and specifies a non-exhaustive list of documents deemed to be a “real estate instrument, paper, or notice.” This bill would exclude from this definition of “real estate instrument, paper, or notice,” and thereby exempt from the recording fee, any document recorded in relation to a mining claim, as provided.

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