Item 38 - 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 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 environmentally contaminated, staff is recommending to allocate the remaining balance of NSP funds. The origin of the City’s NSP funds is from the American Recovery and Reinvestment Act of 2009 and HUD will rescind these funds if the City does not use them. In addition, staff did not discover the Housing Authority’s property is environmentally contaminated until after the original Pre-Loan Commitment was approved by the City Council in July 2019. In addition, the Developer’s costs have increased since their initial award in July 2019. The main changes to their proforma are as follows: - Operating expenses: John Stewart Management provided an updated operating budget which includes increased material, utility, and vendor prices.