(OB-2012-21) OVERSIG HT BOARD RESOLUTION NUMBER OB-2012-21 A RESOLUTION OF THE OVERSIG HT BOARD F OR THE CITY OF SAN DIEGO REDEVELOPMENT SUCCESSOR AG ENCY APPROVING THE PROPOSED F IRST AMEND MENT TO THE D ISPOSITION AND D EVELOPMENT AG REEMENT WITH CONNECTIONS HOUSING , L.P. RELATED TO THE REHABILITATION OF THE BUILD ING LOCATED AT SIXTH AVENUE IN DOWNTOWN SAN DIEGO

WHEREAS, the former Redevelopment Agency of the City of San D iego (F ormer RD

A) administered the implementation of various redevelopment projects, programs, and activities within designated redevelopment project areas throughout the City of San D iego (City); and

WHEREAS, in accordance with Assembly Bill xl 26 (AB 26), the F ormer RD A dissolved as of F ebruary 1, 2012, at which time the City of San D iego, solely in its capacity as the designated successor agency to the Former RD A (Successor Agency), assumed the Former RDA's assets and obligations; and

WHEREAS, the Successor Agency is required to administer the winding down of the F ormer RDA's operations and to ensure compliance with the Former RDA's obligations in accordance with AB 26, as amended by Assembly Bil11484 (AB 1484); and

WHEREAS, before the enactment of AB in June 2011, the F ormer RD A and Connections Housing D owntown, L.P., a California limited partnership (D eveloper), executed a D isposition and D evelopment Agreement (D D

A) for the rehabilitation of the building commonly known as the former World Trade Center located at Sixth Avenue in downtown San Diego (Building) pursuant to Resolution No. R-04642 adopted effective March 1, 2011; and

WHEREAS, under the D D A, the D eveloper agreed to purchase the Building from the F ormer RD A for $4,300,000 and to rehabilitate the Building into a one-stop service center and housing for the homeless, which includes a multi-service homeless center, a medical clinic, Doc No. 414849 (OB-2012-21) administrative offices, 150 transitional housing beds, 73 permanent supportive housing units, and two manager's units (Project); and

WHEREAS, the D D A requires the D eveloper to operate the Project, upon completion of rehabilitation, for the benefit of very low and extremely low income households for a period of fifty-five (55) years; and

WHEREAS, to assist in financing the Developer's completion o f the Project, the DDA contemplates the F ormer RD A 's issuance o f two loans, including (1) a loan in an amount up to $13,000,000 from 20% set-aside low and moderate income housing funds (Agency 20% Loan), subject to a reduction o f up to $3,000,000 if the D eveloper is successful in securing alternative funding sources for the Project, and (2) a loan in an amount up to $3,000,000 from 80% tax increment funds (Agency 80% Loan); and

WHEREAS, in D ecember 2011, the D eveloper purchased the Building from the Former RD A and commenced the rehabilitation work, and the D eveloper presently anticipates completing the Project in D ecember 2012; and

WHEREAS, the D eveloper initially estimated that the total cost o f the Project would be $32,339,000, but has recently revised the cost estimate to be $36,638,000, which represents an increase of $4,299,000 primarily associated with the removal o f asbestos and several major structural issues in the Building; and

WHEREAS, before the Developer's acquisition of the Building, the D eveloper secured Community D evelopment Block G rant funds o f $950,000 for the Project, causing the Agency 20% Loan to be reduced to $12,050,000; and

WHEREAS, since the Developer's acquisition o f the Building, the D eveloper has secured Mental Health Services Act (MHSA) loan funds o f $787,000, which will cause the Agency 20% Loan to be reduced to $11 ,263, 000; and D oc No. 414849 (OB-2012-21)

WHEREAS, if the D eveloper is successful in a pending application for $4,000,000 in Historic Tax Credit (HTC) funds, then the Agency 20% Loan will be further reduced to $10,000,000, and the D eveloper proposes that any remaining HTC funds will be applied toward the increased costs ofthe Project; and

WHEREAS, the D eveloper and the Successor Agency now desire to enter into the First Amendment to the D D A (F irst Amendment) to revise the budget and the sources of financing for the Project, to reduce the Agency 20% Loan to reflect the availability of MHSA loan funds and the potential availability of HTC funds, and to revise the method of distribution of additional funding sources to allow the D eveloper to cover the increased costs of the Project; and

WHEREAS, the F irst Amendment will not modify the Agency 80% Loan and will not increase the D eveloper's fee for the Project; and

WHEREAS, the F irst Amendment will become binding on the City and will benefit the City at such time that the F ormer RDA's rights and obligations under the D D A, as amended, and the encumbered funds for the Project have been effectively assigned to the City, in its capacity as the successor housing entity under AB and AB 1484; and

WHEREAS, on July 31, 2012, the Successor A gency's board (i.e., the San D iego City Council) approved the Successor Agency's execution of the F irst Amendment, a copy of which is included as Attachment B to the Staff Report accompanying this item.

NOW, THEREFORE,

BE IT RESOLVED by the Oversight Board that the First Amendment to the D D A, including all attachments thereto, is hereby approved . PASSED AND ADOPTED by the Oversight Board at a duly noticed meeting of the Oversight Board held on August -:J:_ , 2012. Chai ~ D oc No. 414849