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Ms. Hosterman asked what the worst thing that could happen on this project? Mr. Bocian said the worst thing would be a major default of the loan payments for the project. At that point, the holder of the note could foreclose and transfer the project to someone else. In the course of that transfer, the City potentially could lose its ground lease and the affordability requirements. Ms. Hosterman said if the City wants 105 assisted living units, it must do everything it can to make this work. She was concerned there is no remedy for the City in cage something should go wrong in the future. Mr. Bocian felt there were remedies because the City has the option to purchase the property, if it is for sale, and the City has the right to acquire the property in the event of a default of the ground lease. What would most likely happen is that the City would work with the lender and try to find a new owner for the property that would agree to adhere to all the terms of the ground lease and regulatory agreement, etc. He agreed it comes down to having a good management company that has a long term commitment to the development. That is the case in all the City's projects. Ms. Hosterman asked if the financing package is similar to the City's two previous projects? Mr. Bocian said yes. Mayor Pico said the only way to have certainty is for the City to own the project 100% and to contract with a developer to build the project and to contract with an operator to operate the project. The City has elected not to get into the business of operating and building these kinds of projects. The reality is that all the money is being financed by the City and it is parmering with Bridge because of its excellent reputation in building these kinds of facilities and with Lytton because of its reputation in operating them. If there is a default, it is possible the City could ultimately own the property. Because it owns the ground under the facility, the City has long term contractual and financial rights to be exercised If there were a problem, there could be significant masons not to do that, but that is for a future Council to determine. Ms. Ayala referred to a possible pilot program from the State and asked if such a program existed that would allow for Medicare payments. Mr. Bocian said staffis unaware of any such programs. Ms. Ayala asked if the project would pay school fees and whether it had asked for a waiver? Mr. Bocian said it would be required to pay the fees and no waiver is available. Under the new agreement, if it is an affordable project and the project pays the fee, then the School District would work with the developer to get reimbursement for the fees from the state. That Pleasanton City Council 19 05/06/03 Minutes