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Mr. Sullivan noted that the benefits for this project were wanted and needed by the community. He asked staff if it believed the way in which this deal was structured and if there are mitigations in place, make this a reasonable risk to take for City funds to deliver a project of this magnitude. Mr. Bocian said there are mitigations in place that make this a reasonable risk to take. Staff believes this project has been reviewed from many different angles, and what is being presented this evening is a project that has the minimum amount of risk to the City. He reminded Council that BRIDGE has a significant amount of risk in this project and is obligated to pay the Certificates of Deposits. He believed the risk factors could be accessed in many different ways, but one of the ways to look at is the City has a low income housing fee that has been collected from developers in town for the purpose of trying to provide a level of affordability. The City is using the money that it has received towards this specific project. Staff believes it is an adequate use of this money and provides a need and service that is not currently available. He believed this project rounded off the entire continuum of care that the City has on the affordability level in town. Mr. Sullivan asked if the project crate red and the City lost its entire investment would the Affordable Housing In-Lieu Fee cover it? Mr. Bocian said yes accept for the property itself. The biggest risk is that the City could potentially lose the property, which is not cash to the City but a significant asset to the City. Staff would do whatever it could to step in and avoid this situation. With this agreement, Mr. Sullivan asked if staff believed the City had sufficient leverage with the way in which the facility is operated from an economical or financial standpoint to keep it whole over time as well as leverage or influence as to the quality of the project? Mr. Bocian said yes. The project has been designed so that the City has an operational interest. The project has also been specifically designed so that the City is not the Owner and Operator and making the day-to-day decisions; the City is clearly a major step removed from it. The City is entitled to receive all of the reports the owner receives and is allowed every opportunity to meet with the operator and make suggestions and recommendations to the operator. Staff believes the agreements set up a solid partnership that has formed and continue for many years in the future. Mr. Fialho said the relationship the City has with the Owner and the Operator is similar to what has been done with two existing projects in the City, the Promenade and Ridge View Commons where the concept of a subordination is in place and staff reviews on an annual basis its income statements and has some input and insight into the operations of these facilities, which are successful. In response to an inquiry by Mr. Sullivan, Mr. Bocian said it is staff's opinion that BRIDGE and Eskaton Properties are adequate companies that have demonstrated success and are perfect for this project. Ms. McGovern was excited about this project. She believed this project is part of the City's debt ratio because if there where any default on the Certificates of Participation, the City would step forward and save the project. She wanted to return the $2.49 million loan to the Lower Income Housing Fund to be utilized for another project. She asked if there could be as much as $800,000 projected to be surplus? Pleasanton City Council 10 08/16/05 Minutes