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Las Palmas Apartments -2- February 7, 2011 BACKGROUND Built in 1964, Las Palmas Apartments is a two -story, stucco 91 -unit multi - family rental development located at 15370 -15375 Tropic Court. In November 1998, non - profit housing developer Citizens Housing Corporation (Citizens Housing) requested financial assistance from the City of San Leandro to purchase and rehabilitate the property in order to convert it into an affordable housing property for primarily low- income households (60% AMI or below). The City Council approved a loan to Citizens Housing in December 1999 in the amount of $750,000 from federal Home Investment Partnership Act (HOME) funds, which Citizens Housing used to acquire Las Palmas. Citizens Housing leveraged City funds to obtain multi - family bonds and federal Low - Income Housing Tax Credit (LIHTC) equity funds to finance additional acquisition costs as well as interior and exterior rehabilitation work that was completed at Las Palmas. Along with the 1999 loan agreement, Citizens Housing executed a regulatory agreement that placed affordability restrictions on a total of forty-five (45) units (49% of the 91 total units at Las Palmas) designated for low- income households (60% AMI or below). Furthermore, eleven (11) of the forty -five (45) units were restricted for very low - income households (50% AMI or below). The regulatory agreement was amended in 2003 to revise the affordability period to a 15 -year term. In early 2009, Citizens Housing began experiencing financial difficulties resulting from the economic downturn. Once Citizens Housing determined it could no longer remain operational in the near term, it began seeking out experienced regional non - profit housing developers to assume property management and/or ownership of its affordable housing portfolio. Along with Las Palmas and the neighboring Surf Apartments (located at 15320 Tropic Court), Citizens Housing also transferred control of nine (9) other affordable housing developments containing over 800 units in the Bay Area. Eden Housing has been successfully managing Las Palmas to date. The property is nearly at full occupancy after experiencing higher vacancies in Citizens Housing's final months as manager, and Eden Housing has completed needed physical improvements and repairs to the property. The San Leandro Police Department, furthermore, has certified Las Palmas in its Crime Free Multi- Housing Program due to Eden Housing's work with the Police Department to ensure that the property is crime free. In addition, Eden Housing currently owns and manages five (5) other affordable housing rental properties in San Leandro. These properties include Eden Lodge (143 units), Fuller Gardens and Fuller Lodge (26 and 16 units, respectively), Surf Apartments (46 units), and the recently completed senior housing property Estabrook Place (51 units). DISCUSSION Eden Housing is requesting Agency approval for a $50,000 loan to assume complete ownership of Las Palmas. With the eventual transfer of the general partnership ownership from Citizens Housing to Eden Housing, there will be greater assurance that Las Palmas will be preserved as affordable housing for very low- and low - income households for the long -term.