Item 03 - Crossroads at Washington Affordable Housing Project

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Ground Lease: The Project will be located on the Property at 1126 and 1146 E. Washington Avenue, currently owned by the Housing Authority, as well as the adjacent parcel owned by the County (APNs: 398-092-13 and 398-092-14). The Housing Authority will be working with the County to draft and negotiate the necessary documents to join ownership so that the Project may be constructed over the combined Property under a master lease with the Housing Authority and County, as joint owners. The ground lease payment will be structured as capitalized ground rent payment based on the appraised fair market value of the Property. The Developer estimates the current value of the Property at $5,580,000. This figure will need to be con firmed through an appraisal, but based on the Developer’s assessment, the capitalized ground rent payments are estimated as follows:  The capitalized ground rent payment for the County parcel is estimated at $2,500,000; and,  The capitalized ground rent payments for the Housing Authority parcel is estimated at $3,080,000. These amounts will be paid at closing with funds provided by loans made by the City and County which will be secured by promissory notes on the Property and be repaid through a share of the Project’s Residual Receipts as noted above (i.e., 33.4% to the County and 33.3% to the Housing Authority). This will not be a cash transaction; the closing escrow statement will show a credit and debit of $3,080,000. Based on the above, the Housing Authority Board authorized a preliminary award of a 62- year lease of the Housing Authority portion of the Property to the Developer for the Project. After Developer secures a commitment from the County for a 62 -year lease of the County portion of the Property, staff will return to the Housing Authority for consideration of a 62-year Ground Lease Agreement. There will only be one Ground Lease Agreement that will have all three parties: the County, City (as tenants in common) and the Developer. The Ground Lease Agreement will require the successful development of the Project by the Developer. Project-Based Vouchers:  Funding Source: The seven (7) PBVs will be funded out of the Housing Choice Voucher Program annual budget authority received by the Housing Authority from HUD.  Rents: The Project-Based Voucher Housing Assistance Payments (HAP) Contract rents below are preliminary and contingent upon a reasonable rent determination to be conducted by the Housing Authority at the time of execution of the HAP Contract: o Two PBVs for the 3-bedroom Units: $2,937 o Five PBVs for the 4-bedroom Units: $3,382 EXHIBIT 3