On November 13, 2017 City Council awarded the City’s Local Government Preference under the Florida Housing Finance Corporation (FHFC) Request for Application #2017-113 (RFA 2017-113) to Pendana Phase II, by LIFT Orlando (LIFT).  As part of this approval, City Council authorized the CAO to execute the appropriate FHFC forms indicating the City’s financial support of $800,000 to LIFT if Pendana Phase II was successful in being awarded tax credits.  In March 2016, the Florida Housing Board of Directors approved the project for tax credits.

This second phase of Pendana at West Lakes is referred to as the Senior Residences, and is located on the original site of the Orange Manor apartments (2205 Orange Center Blvd). This project will add 120 units of affordable housing to the community. Phase II is being developed in partnership with Columbia Residential and will be a three story, interior corridor, mid-rise building exclusive to senior citizens (62 years and older). Ninety percent (108 units) of the building will be one-bedroom, one-bathroom plans and 12 units (10%) two-bedroom, one-bathroom plans.  Ninety percent (90%) of the units are reserved for tenants with incomes at 60% or less of the Area Median Income. Ten percent (10%) will be reserved for tenants with incomes at 40% or less of the Area Median Income, eight of which will be designated as HOME-assisted units.

The total project budget is $23,930,661. Tax credit investor equity will provide $21,097,890. Funding sources in addition to the City’s commitment of $800,000 include a permanent loan of $1,250,000 and a contribution from LIFT of $150,000. LIFT and Columbia Residential are deferring $382,771 of the development fee on the project until it can be funded by cash flow operations, which could take several decades.  Due to the increase in construction costs, a funding gap of $250,000 remains.

LIFT has requested $250,000 in federal HOME funds to fill the gap.  The City’s Housing Review Committee met on August 6, 2018 to review their request and is recommending City Council approve the use of federal HOME funds to fulfill the City’s original $800,000 commitment as well as the project’s remaining $250,000 funding gap.  The total amount of HOME funds recommended for this project is $1,050,000.

City staff is requesting City Council accept the Housing Review Committee’s recommendation and approve the attached HOME Loan Agreement with West Lakes Phase II, LP and LIFT Orlando and their partners to provide $1,050,000 in federal HOME funds for the construction of Pendana at West Lakes Senior Residences. Pursuant to the Agreement, a lien for $1,050,000 will be placed on the property. The City’s Mortgage will be subordinate to the senior lender and potentially other project financing secured for the Low Income Housing Tax Credits project. Due to the junior lien position and due to the complex nature of the financing of Low Income Housing Tax Credit projects, in the unlikely event if the owner defaults, or if the property has to be liquidated to repay all of the funding sources, it is doubtful that the City will be able to recover its investment from the tax credit consortium or from the sale of the property. In such a situation, the City would be responsible for any repayments to HUD.

Approve and authorize the Mayor/Pro Tem and City Clerk to execute the attached HOME Loan Agreement in the amount of $1,050,000, subordination agreements, and all related documents between the City of Orlando, West Lakes Phase II, LP and LIFT Orlando, Inc. for the construction of the Pendana at West Lakes Senior Residences after review and approval of the City's Attorney Office.