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Subordination Agreement for the Eden Lodge Regulatory Agreement -2- December 6, 2010 On November 15, 2010, through a negotiated Amended and Restated Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants (Amended Regulatory Agreement), Eden Housing received Agency approval for Eden Housing to transfer the Eden Lodge property to a Limited Partnership (Eden Lodge, L.P.) controlled by an Eden Housing, Inc. affiliate called Eden Investments. Inc., in order to refinance and rehabilitate the property utilizing federal low- income tax credits. Eden Housing now has the ability to transfer and refinance in order to maintain the property's affordability for the senior residents and to rehabilitate the property to a level that will maintain the property for many more years to come. DISCUSSION The refinancing of Eden Lodge involves obtaining bond financing for the project. The Federal Home Loan Mortgage Corporation (Freddie Mac) requires that the Agency subordinate the • Amended Regulatory Agreement to Freddie Mac's Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing before it will provide financing for the project. Eden Housing has also indicated that it has been unable to find alternate sources that would enable it to finance the project without such subordination. The Agency has concluded that without subordination of the Amended Regulatory Agreement an economically feasible alternative for financing the project is not reasonably available and that the terms of the proposed Subordination Agreement provide the Agency with reasonable means of protecting the Agency's prior investment in the project in the event of default. Current Citv Council Policy Not applicable. Previous CIIV Council Action On April 7, 2003 the City Council approved a $163,883 grant from the Redevelopment Agency of the City of San Leandro to Eden Housing to assist with the rehabilitation construction costs of the Eden Lodge project (Resolution No. 2003 -004). The funding source for the grant was from Redevelopment Housing Set -Aside funds. Citv Council Committee Review and Action None. Applicable General Plan Policy The Housing Element of the General Plan contains several policies applicable to the Eden Lodge transfer and refinance project: Goal 56: Affordable 1-lousing Conservation — Encourage the preservation and rehabilitation of the existing affordable housing stock. Action 56.05 -8: Monitoring "At -Risk" Units — In addition to the units described above, monitor the status of other assisted housing units that are at risk of conversion beyond the tinnefrane of this Housing Element.