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Status of Low and Moderate Income Housing Funds Sch C Agency Financial and Program Detail SAN LEANDRO Achievements Description Of the 68 rental units, there are one (1) an-site managerZs unit, 65 studios, and 2one-bedroom units. Each unit contains a kitchen and bath. The 67 rental units are 100% affordable: 7 for extremely low income and 60 for very low Income small household renters. The project will remain affordable for at least 55 years via a regulatory agreement with the nonprofit project developer and property manager, Mercy Housing California (MHC). The Agency purchased and continues to own the land and building. The project also has an on-site resident services coordinator who works with tenants to make sure they have access to available local social services. The total project cost was approximately $19.4 million, including $4.5 million for acquisition; $200,000 for relocation; and $7.8 million for construction. One of the unique features of Casa Verde is the Agency~,s annually capped, long-term 30 year operating subsidy commitment (described further below) to MHC beyond the total project cost. In addition to Redevelopment Housing Set-Aside funds, the other project financing revenue sources were 9% federal and State low income housing tax credits and Federal Home Loan Bank Affordable Housing Program funding. History The Agency closed escrow on the property in September 2005 and Casa Verde was rehabilitated and fully occupied by August 2008. In 2005, the Agency conducted a competitive Request for Qualifications (RFQ) process for an experienced project developer and properly manager and selected MHC. Because of the Islander Motets well known and negative reputation as a blight and center for illegal activities, there was nearly unanimous political and public support for the project. There were a few notable problems that had to be addressed in order for the project to be successful. The key problem was relocation of several existing and longer-term motel residents. The Agency took apro-active approach to comply with State residential relocation law by approving (via a public hearing) and implementing a LRelocation Impact Study and Last Resort Housing Plank and working closely with the 18 qualified households who were longer-term renters at the motel to ensure they found permanent replacement housing through appropriate advisory and financial assistance. The Agency hired an experienced relocation consulting firm to ensure that the process was accessible, informative and efficient for eligible residents. The Agency also contacted each of the 18 households upon completion of the project to invite them back to apply, but unfortunately none responded. With relocation, a key lesson learned was the need for constant communications with the motel residents to make certain that they understood their relocation rights and received adequate assistance in finding permanent new housing. Overall, the Agency successfully relocated all 18 eligible households within five months of escrow closing, in compliance with State law and well below projected relocation costs. Another key problem which the Agency addressed and overcame was the anticipated negative cash flow for Casa Verde due to deep targeting to very low and extremely low income renters. In order to ensure the long-term success of the project and commitment to helping renters with the greatest affordable rental housing needs, the Agency agreed to a cumulative operating subsidy not to exceed $5.7 million over 30 years to MHC as needed. The AgencyZs annual operating subsidy contribution is capped annually and MHC must submit annual financial statements for review by the Agency to calculate whether the operating subsidy is necessary, and if so, how much. Lastly, the Agency encountered the problem of managing the property immediately upon closing with some existing motel residents still remaining and when it became vacant after relocation was completed. The Agency entered into an interim property management agreement with MHC to begin managing the building on the day escrow closed until all eligible motel residents were finally relocated. MHC~s experienced property management arm came in immediately and operated the building effectively (including collecting rent from remaining residents and maintaining order) until all units were vacated due to relocation. The Agency staff then assumed property management responsibilities from MHC when the property became vacant as acost-saving measure. The Agency managed the vacant property (including landscape maintenance, pest control, security fencing and alarm) for a year until MHC applied for and received low income housing tax credits and planning/permit Page 6 of 7 12/22/08