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Agenda Item 40.

City Council Meeting

Meeting Date:	02/07/2017
FROM:	City Manager

Subject:

Modification of Affordable Housing Regulatory Agreement for Olen Companies

RECOMMENDATION

Approve modifications to existing Affordable Housing Regulatory Agreement

BACKGROUND/DISCUSSION

In 2011 Brea entered into a regulatory agreement and loan with Olen Companies to provide 26 Moderate level affordable housing units at its new 260 unit apartment project at Olen Pointe Brea. A $1.32M loan was provided by Redevelopment Agency Housing funds to achieve the affordable units. The loan from Brea was in "first position" as Olen provided its own financing to realize the project.

Today, Olen desires to finance some of its properties to realize new capital and proposes to pay off its loan to Brea (with interest) in order to clear this encumbrance toward its new financing. Several modifications to the Affordable Housing Regulatory Agreement between Olen and Brea are proposed in order to facilitate Olen's financing.

Olen's proposed repayment of its loan will not reduce or otherwise impact the 26 affordable housing units at the site. These units are secured via the Affordable Housing Regulatory Agreement with Olen which will remain in place. To satisfy several requests of its lender, Olen is requesting select modifications to the regulatory agreement.

The proposed modifications have been discussed with staff and our legal counsel, but have not been completed in final form to allow delivery to the City Council at the time of staff report publication. The proposed modifications will be provided as soon as possible for the Council's review. Generally, the proposed modifications are clean-up of several items which are viewed as impediments to a lender. Staff will confirm that the proposed final, modified, agreement provides the necessary and desired protections, and assures for proper management of the affordable units consistent with Brea practice and expectation and State law.

FISCAL IMPACT/SUMMARY

This action will realize an additional $1.3M, plus interest, to the City's Housing Successor fund.

RESPECTFULLY SUBMITTED:

William Gallardo, City Manager
Prepared by:David Crabtree, AICP