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FINANCIAL STATEMENT The proposed project funding for the ADU at the Hansen Drive property includes $241,176 in federal HOME Program funds, which together with the $58,824 of LIHF would amount to a $300,000 loan to REACH. Since the federal HOME Program is a reimbursable program, the City would need to initially fund the $300,000 loan using the LIHF and General Fund; the City would then submit a $241,176 reimbursement request to Alameda County Housing and Community Development Department (County HCD) for reimbursement to the General Fund. BACKGROUND REACH has been providing affordable homes to adults with developmental disabilities for the past 30 years. In its continuing efforts to explore options to expand its inventory of housing, REACH proposed a creative concept to use Measure Al funds to construct accessory dwelling units on two of the single-family properties it owns in Pleasanton — one on Tanager Drive and one on Hansen Drive. The construction of 2-bedroom ADUs was proposed as a cost-effective way for REACH to accommodate two additional tenants at each property and increase its capacity to house Pleasanton residents from 16 to 20 individuals, at a preliminary estimated cost of approximately $550,000. However, due to delays and escalating construction costs for labor and materials, REACH proposed securing the $552,772 Measure Al funds to only build the Tanager Drive ADU structure while securing this $300,000 City loan to close the funding gap and make it financially feasible for REACH to construct the Hansen Drive ADU structure. DISCUSSION On September 19, 2023, the Alameda County Board of Supervisors (BOS) approved the loan contract with REACH for the City's Measure Al "Base City Allocation" funds, and upon execution, REACH can begin to mobilize to construct the Tanager Drive ADU unit. Since then, City staff has negotiated with REACH the following loan documents which specifically address the requirements and expectations for the City's financing of the ADU structure at Hansen Drive. Major provisions of the documents are summarized as follows: HOME Loan Agreement, Promissory Note, and Deed of Trust • HOME Loan Agreement describes the terms and conditions for the use of the HOME loan in the amount of $241,176 and $58,824 in LIHF funds for a total loan amount of$300,000. The final loan amount is secured by a Deed of Trust recorded against the Hansen Drive property. • As described in the Promissory Note, the loan will bear a three percent (3%) simple, annual interest. • The term of the loan is 50 years from the date of the Promissory Note. • The entire outstanding balance of principal and interest shall be due and payable upon the earlier of the end of the 50-year term, or upon sale or transfer of the Hansen Drive property. Amendment to Regulatory Agreement • Amends the January 13, 1997, Regulatory Agreement, which imposes income and rental restrictions for the Hansen Drive property for providing affordable Page 2of3