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SAN LEANDRO REDEVELORI�'llENT AGENCY Notes to the Financial Staterneuts For the Year Ended June 30, 201.1 NOTE 9 — COIF AI- ITAUNTS AND CONTLNGENCIES A. Downtown Plaza Shopping Center 1°w'J<OREA An agreement was entered into between Sari Leandro Plaza. Associates, Plaza Partners, and flee San Leandro Redevelopment Agency (Agency) for the maintenance and operation of the public parking and common area of the shopping center. The Agency's share of the costs associated with the Maintenance, Operation and Reciprocal Easement Agreement (MOREA) is 22.2%. The Agency's share for 2010 -11 was approximately $62,650. B. Bayfair Mall Contract Dispnte Bayfair Mall was included within the San Leandro Redevelopment Agency Joint Project Area in 1993. A series of agreements between the Redevelopment Agency, developers, Mali tenancies and property owners (Kings) were entered into to facilitate the development and improvements of the Mall. The Kings are owners of real property located -within the footprint of the Mall that is being used for parking pursuant to a 1959 ground lease with the developer, as amended. Amendments to the lease and other agreements have been entered into that purportedly require the Redevelopment Agency to guarantee lease payments to the Kings in the event of default. The developers ( Bayfair 580, LLC c/o M & J Wilkow of California, Ltd) gave notice to the parties on July 12, 2011 that Bayfair Sublessee LLC would not be making any further payments of rent to the Kings under the Sublease. The Kings have demanded payment from. the parties, including the Redevelopment Agency, as a guarantor of the lease and payments there under. (Note: the validity of the lease is in dispute). if the Redevelopment Agency is ultimately responsible to guarantee the lease and make the payments, the potential liability could be in approximately $800,000 + a year. The San .Leandro Redevelopment Agency does not have the financial capacity to make such a payment. The parties are in discussions and negotiations to attempt to resolve the issues, without litigation. C. The Alameda at San Leandro Crossings The Alameda at San Leandro Crossings, a 100 -unit affordable rental housing project which will be developed by the nonprofit BRIDGE Housing Corporation, is part of the proposed 300 unit Phase I proposal in the .San Leandro Crossings Development, Westlake Development Partners LLC will develop the remainder of Phase 1. The Redevelopment Agency approved a development loan of $9.1. million in Set - .Aside Funds in .April 2009. Due to unforeseen factors beyond the developers' control, the Alameda was delayed in April 2011. The RDA will be assisting in financing $6.9 million (of the $9.1 million loan) through the future bond financing. The RDA designated the remaining $2.2 million for eligible pre - development costs for BRIDGE. BRIDGE is expected to apply for low income rental housing tax credits from the State in early 2012 and the Agency will then proceed with bond issuance /financing process. Pending the current State Supreme Court decision by January 2012 on the lawsuit between the State and California Redevelopment Association/League of California Cities, the Agency anticipates fulfilling its Set -Aside funded loan obligation to BRIDGE Housing Corporation as the $9.1 million loan was contractually executed between Agency and BRIDGE well before the passage of AB 26 and AB 27 in June 2011. 43