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BACKGROUND Ridge View Commons, located at 5252 Case Avenue, is a 200 -unit affordable senior rental housing project that began operation in 1989 as an outcome of a substantial community effort to develop an affordable housing development and the efforts of Eden Housing Inc., which was the non profit developer for this project. The City owns the site which is ground leased to Ridge View Commons Associates, a California Limited Partnership (RVA). The RVA partnership, which is comprised of a limited partner, Chevron U.S.A, Inc., a Pennsylvania corporation, and a general partner, RVC Investments, Inc., a nonprofit public benefit corporation (RVC), owns all site improvements. RVC is affiliated with Eden Housing Inc., currently, the City contracts with Barcelon Associates for property management of the housing development. Ridge View Commons was financed using various sources in a manner consistent with many affordable housing projects developed in the late 1980's. The current project financing is as follows: First Mortgage (From the California Housing Finance Agency (CaIHFA)) Loan amount is $8,637,378 (Refinanced in 1998@ 5.5 Term is 30 years with repayment October 1, 2029. Second Mortgage (From the City) $4,000,000 0% interest with a term of 30 years. Current loan terms require payment of $2,000,000 by 2020 with the remaining payable if the as part of any ownership transfer or project refinancing. Funding for the loan came from a $4,000,000 grant awarded to the City from Department of Housing and Urban Development (HUD) for this development. Third Mortgage (From City) $2,250,000 0% interest. Loan terms require the City to receive all surplus cash from the project beginning July 1, 2001 and continuing for 30- years. This mortgage was issued to repay the City for payments made related to the project refinancing which occurred in 1998. Tax Credit Contributions Paid to the project from Chevron, U.S.A. Inc. Consistent with typical tax credit arrangements, the owner's limited partner (in our case Chevron, U.S.A., Inc.) sells its interest in the property after 15 years when the tax benefits resulting from its investment in the property expire. In most situations, (as in the case of Ridge View Commons) agreements are in place at the time of development that allow the project's general partner (in our case RVC /Eden Housing) to purchase this ownership interest at a fixed amount. Consistent with this process, the limited partner has informed RVC /Eden Housing of its intent to sell its interest in the project and RVC /Eden has expressed its interest to exercise its option to purchase Chevron U.S.A.'s interest. In accordance to project agreements, the sales price is $225,000, which the City agreed previously to fund as a loan to the project. In anticipation of this action, in March 2004, the City Council approved a staff recommendation (Attachment 2) that enables Eden Housing to form a new ownership Page 2 of 4