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BACKGROUND The City currently ground leases a 3.59 acre site on the corner of Sunol Blvd., and Junipero Street to BLP Partnership, Inc., a California nonprofit public benefit corporation affiliated with BRIDGE Housing, for the purpose of operating the 105 -unit Parkview assisted living facility that provides 31 affordable rooms to seniors in need of assisted living. Project development and construction represents a ten year effort by residents, BRIDGE Housing, a citizen's task force and the City Council. As can be imagined with a project of this nature, financing was complex and multi - layered. One important component of this financing was a CaIHFA HELP loan awarded to the City with a 3% annual interest rate. Loan terms require the City to repay the loan in full no later than September 8, 2015. Because the City assumed that the loan would eventually be repaid with proceeds from the Parkview, it entered into a loan agreement and Promissory Note with BLP requiring repayment of the loan. Because the City was uncertain regarding the short term finances of the project, it agreed to pay off the loan in full in the event the Parkview did not have the funds necessary to make the payment. However, in the event the City made the loan payment to CaIHFA, BLP was still required to repay the City in full over a period of thirty five years. Staff and BRIDGE have determined that it's in the interest of both parties to take advantage of CaIHFA's early loan payment program that provides a $90,000 discount if the HELP loan is paid off by the end of January 2011. (The actual program guidelines set the pay off date at end of year 2010, but the City was granted a 30 day extension to allow for all parties to agree to the transaction.) To memorialize this transaction, it's necessary to enter into an amended and restated Promissory Note between the City and BLP setting forth the terms of Note for repayment of the City's $450,000 payment to CaIHFA. As a result, while the original Promissory Note and loan agreement were intended to repay the City for funds it received from CaIHFA (a pass through loan), the Amended and and Restate Promissory Note reflects repayment to the City for the $450,000 payment the City will make to CaIHFA to pay off the existing HELP loan. The recommended amendment reflects the City's contribution of approximately $450,000 from its Lower Income Housing Fund to assist with the loan payment and requires the loan to be repaid in full no later than end of year 2015. However, since the loan payments will be made from project surplus cash, the actual payoff may occur at a later date. The tables below summarize this transaction. Page 2 of 3