Between 2004 and 2012, the City provided financial assistance to Tamerlane Associates, LLC, (“Owner”), for the acquisition of 15 multifamily properties with a total of 78 residential units known as “Tamerlane Properties”.  Pursuant to 15 separate affordable housing loan agreements, regulatory agreements, option agreements, and subsequent amendments, the City made 15 deferred payment loans to the Owner sourced from federal and local program funds to assist the Owner in his acquisition, rehabilitation, and operation of the 15 properties as affordable housing. Pursuant to the Affordable Housing Agreements, a total of 60 units (of 78) were restricted and covenanted for occupancy by households earning between 50% and 65% of the Orange County area median-income (“AMI”). The funding sources for the 15 loans issued by the City to the Owner when each property was acquired included a variation of CDBG, HOME, City General Funds, and Former Redevelopment Low to Moderate Housing Set-Aside Funds.         

The affordability covenants have expired for eight (8) properties (49 of 78 units). The City has a primary objective to preserve at-risk affordable housing, and as such, over the past two plus years, has been working with and negotiating in good faith with the Owner and his representatives about the potential restructure of the City loans, reset of the affordability covenants, and rehabilitation of all Tamerlane Properties, including potential payoff of all or part of, or restructure of, the CDBG, HOME, General Fund and Housing Successor-funded properties in order to meet the City and Federal objective of preserving affordable rental units.

The Owner has received a proposal from Affordable Housing Access, Inc., (“AHA”), to acquire and rehabilitate all 15 properties. AHA is a non-profit corporation founded in 1999 with a mission to create and preserve quality affordable housing and to empower low income individuals and communities through social services and community building. AHA and its development partners have constructed, or acquired and rehabilitated over 20,000 affordable housing apartments and homes throughout the West. 

The Tamerlane Properties are in need of rehabilitation, financial restructure, and reset of the affordable housing covenants. The Owner has requested the City Consider an Assignment and Assumption Agreement of all 15 properties to AHA. In connection with the sale of all 15 properties by the Owner to AHA, the Owner would assign all of its rights under the Garden Grove Loans and Regulatory Agreements to AHA; AHA would assume all duties, obligations, and responsibilities under the Garden Grove Loans and Regulatory Agreements.  

Subsequent to the approval of the Assignment and Assumption Agreement, AHA has requested an approval to amend 10 of the 15 Tamerlane Affordable Housing Loan Agreements and Regulatory Agreements to extend the maturity date and covenant period of each of the 10 loans until December 31, 2025, in order to create an interim extension period. During this interim extension period, AHA and the City intend to amend, restate, and restructure the terms and conditions of all 15 of the Affordable Housing Loan Agreements and Regulatory Agreements for a reset term of 55-years with affordable housing restrictions for all 78 units.     

Approval of the Assignment and Assumption Agreement would include a payoff by New Tamerlane, LLC, of an existing City First Trust Deed Affordable Housing Loan.  Revenue to the City’s General Fund would be approximately $1.5 Million.   

It is recommended that Housing Authority and City Council:

• Approve the Assignment and Assumption Agreement;
•  Approve the Amendment to the Tamerlane Affordable Housing Loan Agreements and Regulatory Agreements; and
•  Authorize the Director/City Manager to execute the agreements, and any pertinent related documents, and make minor modifications as needed on behalf of the Housing Authority and the City.

By:    Monica Covarrubias

Sr. Project Manager