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related processes (newly added to reflect the administrative work involved with the <br /> process). <br /> • Amends the definition of "Operating Cost" to include a $95,000 for a new annual <br /> replacement reserve which will be used to fund long term maintenance needs. As <br /> indicated above, this expense will result in higher operating costs and conversely <br /> less surplus cash. However, there are many elements involved with determining <br /> annual operating costs and project cost savings in certain expense categories or <br /> revenue increases, may offset the impact of this expense. <br /> • The ground lease has been amended to remove BRIDGE's anticipated annual <br /> contribution to the Bay Area Senior Services which was agreed to soon after project <br /> approval but not formally reflected in the documents. <br /> • Considering the extent of work involved with getting the development off to a firm <br /> footing, BRIDGE is requesting that the recommended annual asset management fee <br /> of $25,000 be retroactive for five years ($125,000) and that it be paid even though <br /> the City did not receive a loan payment during this period. (The waterfall has this <br /> payment being made after payment of the City loan and as mentioned, the City <br /> anticipates receiving its first loan payment of $249,000 for the year ending <br /> December 2011.) Staff concurs with this request. <br /> • While not included as part of the amendment, it should be noted that the $1.5 million <br /> HELP loan will be paid in full with during this fiscal year. The Council may recall <br /> that the loan was due in 2015. <br /> DISCUSSION <br /> With approval of the Second Amendment, staff anticipates that BRIDGE auditors, and <br /> City staff, will have clear direction regarding the terms of the City loan and related <br /> waterfall payments. Once an affordability reserve is adequately funded, staff and <br /> BRIDGE will establish guidelines for its usage. <br /> Submitted by: Fiscal Review: Approved by: <br /> Steven Bocian Emily Wagner Nelson Fialho <br /> Assistant City Manager Director of Finance City Manager <br /> Attachment <br /> 1. Second Amendment to Loan Agreement and Second Amendment to Ground Lease <br /> 2. Redlined version of Section 2.3 of the Loan Agreement <br /> Page 3 of 3 <br />