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Crossroads at Washington Affordable Housing Project <br />August 17, 2021 <br />Page 3 <br />1 <br />9 <br />7 <br />8 <br />findings and recommendations will inform updates to the Project’s overall financial <br />feasibility. <br />The Second Amendment to the Option Agreement will provide for an environmental <br />remediation backstop to support project feasibility if the Developer, Housing Authority, <br />and County are not able to secure additional funding for the cost of remediation and <br />cleanup through a separate DTSC remediation program. The Second Amendment to the <br />Option Agreement will commit the Housing Authority and County to pay up to $300,000 <br />for an environmental remediation, payable equally in a 50-50 split. This remediation <br />backstop will serve as a de facto insurance policy for the Developer in case they are <br />unable to secure funding for the cleanup in order to meet their tax credit reservation <br />deadline to complete the project. <br />Environmental Assessments <br />The Developer retained Altec Testing & Engineering, Inc. (“Altec”) during the due <br />diligence period to conduct environmental investigations for the sites. An initial Phase I <br />environmental investigation was conducted on October 19, 2019, indicating the likely <br />presence of hydrocarbon contamination on the site in view of past uses that would require <br />some offsite disposal of soil, a manageable mitigation. A Phase II Environmental Site <br />Assessment (“Phase II ESA”) Report was warranted based on the Phase I findings and <br />was prepared by Altec on February 19, 2020. The Phase II ESA Report identified <br />unexpected contaminants (e.g., Tetrachloroethylene, also known as PCE) and <br />recommended additional environmental investigations to determine the vertical and <br />horizontal extent of the soil contamination on the County and Housing Authority <br />properties. The source of this environmental contamination is currently unknown so the <br />County and City are unable to pursue the contaminator for damages at this time. <br />Subsequently, the County retained Geosyntec Consultants, Inc. to provide environmental <br />peer review services and to act as the County’s consultant with respect to environmental <br />issues on the site, for the benefit of both the County and the Housing Authority. <br />Additional environmental assessments in May and September 2020 concluded that the <br />levels of contaminants might warrant environmental oversight by a public agency. As a <br />preemptive measure, all parties agreed to reach out to the Orange County Health Care <br />Agency (“OCHCA”) to serve as the oversight agency under its voluntary environmental <br />oversight program. The involvement of an oversight agency provides regulatory direction <br />on further assessments and mitigation/remediation options for the site. The May and <br />September 2020 investigations warranted additional assessments to determine the full <br />extent of contamination before mitigation measures can be pursued. As a result on <br />December 18, 2020, OCHCA advised to transfer their environmental oversight <br />responsibilities to the DTSC. <br />On April 27, 2021, the County and City staff submitted a Request for Agency Oversight <br />Application to the Department of Toxic Substances Control (“DTSC”). The application was <br />reviewed and accepted by DTSC. A Standard Voluntary Agreement allows DTSC to act