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Staff is proposing that this matter be submitted to the City Council for authorization to have staff meet with Eden to negotiate modified agreements to implement Option 1. Mr. Bocian summarized that staffs recommendation is for the Housing Commission to approve Option 1 and to recommend that the City Council adopt it as well. Chairperson Jones asked Mr. Bocian if the agreement provides that the City assumes ownership of the project after 55 years. Mr. Bocian affirmed this and stated further that the City could take over ownership now if desired. Mr. Bocian discussed the benefits of having Eden Housing own the project. Eden would charge a nominal management fee of approximately $20,000 per year and financial management fee of approximately $15,000 per year. In response to a question from Commissioner Wiest, Mr. Bocian stated that Eden does not currently receive an asset management fee. He noted that Eden currently receives only an accounting fee on a regular basis but further clarified that Eden received a developer fee early on in the project. Commissioner Whisnand asked about the new ownership entity. Steven Bocian explained that typically the nonprofit forms additional limited partnerships that own each individual development. The board of Eden would serve as the board of for the new nonprofit. For example, an agency may have fifteen different housing projects, each of which is owned by a separate legal entity, but all of which are controlled by the same board. Chairperson Jones indicated he supports Option 1. He noted that Eden has been a pleasure to work with over the years and has done a great job. Commissioner Whisnand asked about Ridge View Commons funding. Steven Bocian replied that as part of the funding for this project the City received payments from the tax credit investor. That money served three purposes: (1) to repay the City for financial contributions that it made to the project; (2) to form a security deposit for the California Housing Finance Agency inasmuch as the project did not have cash flow; and (3) to provide a "pot of money" from which the City could draw in the event the project had operating deficits. Eden has suggested $20,000 annually, and staff will meet with them to work out the details. Vice Chairperson Stark agrees that Eden is an excellent asset manager. He feels that the proposed $20,000 annual asset management fee is nominal. He queried the funding source. Steven Bocian replied that the funds would come from the Ridge View Commons reserve fund. The goal is for the project to be financially self sufficient. However, he noted that the project will never be expected to turn a profit. Page -2-