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EXHIBIT 1 We therefore respectfully submit the following proposal requesting the subordination of $8,632,441 of the current City debt and accrued interest as well as approval to level rents at the full 50% TCAC level. This will allow us to recapitalize Cornerstone at a level necessary for a 60 year old asset, as well as address some of the major concerns expressed in the community needs assessment previously. Due to the significant level of rehabilitation currently proposed, we are hopeful that there will be sufficient contingency to install a modular community building where the new building was originally planned. However, until we get deeper into the rehab, we will not know if this is financially feasible. We believe the Cornerstone recapitalization will generate significant public benefits, with no new capital investment required from the City. Nearly $5.5 million in current and future rehabilitation needs have been identified in the previously submitted Physical Needs Assessment. Reviewing the cash flow in the last 4 years, there has been on average $201,000 of free cash flow available for distribution for payment of fees and subordinate loans. Over the next 15 years, assuming 3% annualized growth, this equates to less than $3.15 million. In short, even assuming capital needs will not increase with age, the property will not be able to fund the projected needs of the project in the next 15 years. Not recapitalizing Cornerstone will result in the loss of these units from the affordable inventory for the City as the property will not be able to support breakeven operations. Ultimately, this will affect the City Financial Stability Strategic Plan goal, with the potential foreclosure of the asset that is repaying the existing City debt. Furthermore, this also affects that Community Health, Livability, Engagement, & Sustainability goal with the potential loss of affordable units; the linkage between personal health and affordable housing is well established. Aside from addressing the projected capital needs of the project, we are also responding to what was communicated to us in the resident needs survey that was shared with City staff. While TCAC and ADA require us to convert 7 units to full mobility units, it is the loss of parking that is more impactful. The addition of 7 ADA parking spaces will result in the loss of 14 total parking spaces for residents. Consequently, we have prioritized adding parking lifts to offset the lost spaces. Instead of losing these spaces, we are now adding 30 new spaces. As anyone that has attempted to park in the neighborhood in the evening can attest, any reduction in parking will affect the quality of life for residents significantly. Recognizing that leveling rents at the 50% AMI TCAC rents results in rent increases to most units, we are also installing a large solar photovoltaic system that will reduce energy bills between 50-80% depending on current usage. This will help offset the increases in rents necessary to support the proper recapitalization of Cornerstone as well as supports the Community Health, Livability, Engagement, & Sustainability goal of the Strategic Plan. CELEBRATING 25YEARS OF STRONGER COMMUNITIES J A M a 0 R E E H 0 U S I N G C O R PC R AT I ON REGIONAL OFFICESSACRAMENTO AND SAN DIEGO 17701 COWAN AVENUE SUITE 200 IRVINE CA 92614 Pd 9.p638e676 F 949.263.0647 www.lamboreehausing.com