Item 03 - Crossroads at Washington Affordable Housing Project

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Crossroads at Washington Affordable Housing Project August 17, 2021 Page 5 1 9 7 8 As prescribed by the TCAC regulations, if the Developer chooses to accept the reservation of the FCAA credits, the Developer would be subject to $214,772 of non- refundable payments for the required TCAC Allocation Fee ($107,386) and TCAC Performance Deposit ($107,386). If the Developer returns the credits, TCAC will not return the fees. Additionally, the TCAC regulations allow the Developer to return the FCAA credits no later than September 1, 2021 to avoid being assessed negative points for future TCAC applications. Unlike typical 9% TCAC projects which require competitive 9% projects to start construction within 180/194 days of the tax credit award, TCAC’s September 1, 2021 deadline to return FCAA credits for the Project allows flexibility for the Developer to start construction whenever feasible, as long as the Project is completed by December 31, 2023. If the Developer does not complete the Project by December 31, 2023, TCAC will assess the Developer with negative points that could adversely impact their ability to pursue future affordable development anywhere the Developer does business. Second Amendment to the Option Agreement With the understanding of this context and background, the Second Amendment to the Option Agreement provides for an environmental remediation backstop to the Developer if the Developer accepts the FCAA Credits, but the Developer, Housing Authority, and County are not able to secure additional remediation and cleanup funding from DTSC (Exhibit 2). This backstop will commit the the Housing Authority and County to pay up to $300,000 for an environmental remediation, payable equally in a 50-50 split. The Developer would be eligible for the environmental remediation only in the event that the following conditions are met: (a) On or before August 31, 2021, the Developer determines that it can complete the Project by December 31, 2023 and chooses not to return the FCAA Credits to TCAC; and (b) The Developer, Housing Authority, and County are unsuccessful in securing additional remediation and cleanup funding from DTSC is not awarded to the Project. Additionally, if the Developer does not move forward with the Project, the Housing Authority would still be responsible for the terms pursuant to the First Amendment to the Option Agreement. First Amended and Restated Pre-Loan Commitment In July 2019, the Housing Authority and City committed $3,971,440 in affordable housing funds consisting of $963,951 in Neighborhood Stabilization Program funds and $3,007,489 in HOME Investment Partnerships Program funds, for the development of the Project. To date, the existing Neighborhood Stabilization Program (“NSP”) funds account has accrued an additional $333,742 in interest and repayments. In order to provide additional financial support for the development of the Project because the site is