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DISCUSSION MidPen has met the financing conditions described in the DDLA for Phase 1 of the project, including securing a commitment of 9% tax credit financing from TCAC, construction and permanent conventional financing in an amount of approximately $24,789,000 from MUFG Union Bank, N.A. to be recorded in a senior position to the City's loans, and the sources of other funding described previously. Project Based Section 8 funding through the Housing Authority of Alameda County for the 50 existing Kottinger tenants has also been secured. In accordance with the development scheduled set forth in the DDLA, and required by other project lenders, MidPen now intends to close all financing for Phase 1 in March 2016 and immediately commence with tenant relocation and project construction. Staff has negotiated agreements which will specifically address the requirements and expectations for the City's financing and lease of the property which were outlined in the DDLA. The form agreements are attached to the Resolution. Major provisions of the documents for Council's consideration are summarized as follows: Affordable Housing Loan Agreement, Promissory Notes, Leasehold Deeds of Trust • The Affordable Housing Loan Agreement describes the terms and conditions for use of the Lower Income Housing Fund loan in the amount of $13,750,000. The final loan amount will represent both the $2,800,000 predevelopment loan already provided to MidPen and the remaining balance of $10,950,000 to be secured in the interest of the City through the form of Promissory Note and City LIHF Leasehold Deed of Trust. • As described in the Promissory Note, the loan will bear three percent (3%) simple, annual interest and will require annual payments from residual receipts for the project (i.e. net cash flow after all approved project expenses and payments to reserves). • The term of the loan will be 55 years from the close of permanent financing at which time the entire outstanding balance of principal and interest shall be due. • Any additional funds to the project either through award of the AHP funds or a cost savings to Phase 1 shall be applied toward the City's future loan assistance for Phase 2. • The start of construction date is established as no later than June 30, 2016, with a completion date of no later than December 31, 2017. • The City has authority to approve future transfers of the project. • The HOME Leasehold Deed of Trust secures the previously executed HOME promissory note dated October 24, 2014 in the amount of$450,000. Regulatory Agreement: • Establishes project affordability, occupancy, use and property management requirements for the City LIHF loan and HOME Program loan. • Sets affordable unit levels as follows: sixty-four (64) units (including three HOME Program restricted units) to be rented to senior households whose incomes are at or below 60% of the Area Median Income (AMI), and sixty-six (66) units to be Page 3 of 4