Item 03 - Crossroads at Washington Affordable Housing Project

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Crossroads at Washington Affordable Housing Project August 17, 2021 Page 3 1 9 7 8 payments for the required TCAC Allocation Fee ($107,386) and TCAC Performance Deposit ($107,386). The Developer is committed to investing more staff time to develop the Project. The First Amendment to the Option Agreement provided for reimbursement to the Developer for a portion of the costs should the Project not move forward (Exhibit 1). In partnership with the California Department of Toxic Substances Control (“DTSC”), the Housing Authority, and the County, the Developer is coordinating additional site investigations and testing through DTSC’s Targeted Site Investigation Plus (“TSI+”) program. DTSC and their environmental consultant are currently preparing preliminary lab results and cleanup options based on field investigations of both properties. These findings and recommendations will inform updates to the Project’s overall financial feasibility. The Second Amendment to the Option Agreement will provide for an environmental remediation backstop to support project feasibility if the Developer, Housing Authority, and County are not able to secure additional funding for the cost of remediation and cleanup through a separate DTSC remediation program. The Second Amendment to the Option Agreement will commit the Housing Authority and County to pay up to $300,000 for an environmental remediation, payable equally in a 50-50 split. This remediation backstop will serve as a de facto insurance policy for the Developer in case they are unable to secure funding for the cleanup in order to meet their tax credit reservation deadline to complete the project. Environmental Assessments The Developer retained Altec Testing & Engineering, Inc. (“Altec”) during the due diligence period to conduct environmental investigations for the sites. An initial Phase I environmental investigation was conducted on October 19, 2019, indicating the likely presence of hydrocarbon contamination on the site in view of past uses that would require some offsite disposal of soil, a manageable mitigation. A Phase II Environmental Site Assessment (“Phase II ESA”) Report was warranted based on the Phase I findings and was prepared by Altec on February 19, 2020. The Phase II ESA Report identified unexpected contaminants (e.g., Tetrachloroethylene, also known as PCE) and recommended additional environmental investigations to determine the vertical and horizontal extent of the soil contamination on the County and Housing Authority properties. The source of this environmental contamination is currently unknown so the County and City are unable to pursue the contaminator for damages at this time. Subsequently, the County retained Geosyntec Consultants, Inc. to provide environmental peer review services and to act as the County’s consultant with respect to environmental issues on the site, for the benefit of both the County and the Housing Authority. Additional environmental assessments in May and September 2020 concluded that the levels of contaminants might warrant environmental oversight by a public agency. As a preemptive measure, all parties agreed to reach out to the Orange County Health Care