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BACKGROUND On November 12, 2013, the City Council approved a Disposition, Development and Loan Agreement ("DDLA") with MidPen Housing which established a scope, timeline and financing commitment for the development of a 185-unit, phased senior housing project proposed by MidPen Housing, referred to as "Kottinger Gardens" The project is under development in two phases, with the first 131-unit development currently under construction and scheduled to be completed in Spring 2017 The second phase will include a 54-unit development on the current 1 99 acre Pleasanton Gardens housing site, along with an assemblage of approximately 1 0 acre in adjacent parcel currently owned by the City The DDLA included a Memorandum of Understanding that established some essential terms of cooperation between the City and Pleasanton Gardens for transfer and development of their property in anticipation of a future Purchase and Sales Agreement DOSCUSSION In accordance with that MOU, the City and Pleasanton Gardens have now negotiated the terms of a Purchase and Sale Agreement This agreement will transfer the 40-unit housing project and the project's operating reserve funds to the City once MidPen Housing, the developer of Kottinger Gardens, has secured the financing necessary to commence with the development of project Phase 2 MidPen is completing the necessary steps to finalize a financing plan for Phase 2 which will include the remaining balance of City Lower Income Housing Funds already committed to the project, an application for Lower Income Housing Tax Credit financing from the California Tax Credit Allocation Committee ("TCAC"), and other Alameda County funding sources to assist with Phase 2 project development Prior to submittal of an application for tax credit or other funding, MidPen will need to demonstrate that the City has secured the Pleasanton Gardens site through a PSA with terms negotiated relative to the future transfer The PSA states that transfer of the site will occur once MidPen has secured all financing for Phase 2 and after all residents have been relocated from the site The relocation of current residents is anticipated to occur in October 2017, with transfer of the site and closing of construction financing to occur by the end of December 2017 In accordance with the PSA, remaining Pleasanton Gardens project reserves will be transferred to the City and contributed as funding for the new project Pleasanton Gardens has also agreed to secure HUD approval to assign the Section 8 Housing Assistance Payment Contract ("HAP Contract") from the existing project to the new development as a critical source of financing and support for tenant rents As with Phase 1, the City will negotiate a long term Ground Lease with MidPen for the site along with financing and regulatory agreements to be submitted to City Council for approval in the future Staff now recommends that City Council authorize execution of the Purchase and Sale Agreement with Pleasanton Gardens, Inc , and authorize the City Manager to take all steps and execute all of the documents necessary to carry out the transaction Page 2 of 3