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Amendments to Mission Bell Apartment Agreements 2 June 15, 2009 The property is located in the San Leandro-Alameda County Joint Redevelopment Project Area. In May 2006, the City Council approved a $1.1 million loan to Allied Housing, Inc. (AH) for the purchase of Mission Bell from the private owner. The $1.1 million consisted of $158,260 in the City's federal HOME funds and approximately $941,741 in McKinney Act Refunding Agreement funds and went towards the $3.1 million sales price. AH leveraged the City loan with other public and private funding sources including Alameda County HOME funds and Fremont Bank in order to close the acquisition. AH also agreed to take over the balance of a $538,067 City Redevelopment Agency Housing Set-Aside funding note from the seller under modified terms and conditions. The City of San Leandro receives federal HOME funds annually through the Alameda County HOME Consortium for affordable housing activities. The Consortium contains all of the Alameda County cities, except Oakland and Berkeley, plus the Urban County area. The City was the recipient of bond refund proceeds related to a past project funded by the McKinney- Vento Homeless Assistance Act. AH, based in Fremont and incorporated in 1994, is anon-profit 501(c)(3) organization whose mission is to provide affordable housing linked to job training, employment opportunities, and supportive services for low-income families and individuals in order to achieve stability and self-sufficiency. Since its inception, AH has developed and operated five (5) affordable rental housing projects with one hundred twenty-three (123) units as well as thirty (30) affordable ownership houses. City staff routinely monitors Mission Bell Apartments and has, to date, determined that AH has complied with the existing regulatory agreement and managed the property well. DISCUSSION Refinancing and Residential Rehabilitation Needs for Mission Bell Apartments Allied Housing is seeking additional HOME funds from the City because they have incurred unexpected and costly rehabilitation and financing expenses since they acquired Mission Bell in Spring 2006. The rehabilitation expenses included maintenance related to higher than projected unit turnover as well as plumbing and electrical work due to the age of the building. Financing costs included interest payments due to delays in closing their private loan. These expenses depleted their operating and replacement reserves. Additional funding and increased rental income from a change in the income mix of tenants will ensure the long-term economic viability of Mission Bell Apartments as a quality, affordable rental development. These supplemental funds will allow AH to continue property improvements and pay down their permanent loan while replenishing their operating and capitalized replacement reserves. AH has also made good faith efforts to increase revenue by increasing the income eligibility of tenants and applying for additional funds from other lenders.