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HomeMy WebLinkAbout8.1 California Statewide Communities Development Authority Middle-Income Rental Housing Program (2)STAFF REPORT CITY COUNCIL Page 1 of 4 Agenda Item 8.1 DATE:May 4, 2021 TO:Honorable Mayor and City Councilmembers FROM:Linda Smith, City Manager SUBJECT:California Statewide Communities Development Authority Middle-Income Rental Housing Program Prepared by: Jim Bergdoll, Senior Planner and Kristie Wheeler, Assistant Community Development Director EXECUTIVE SUMMARY: The City Council will consider whether to join the Community Improvement Authority, which is an affiliate of the California Statewide Communities Development Authority (CSCDA). The Authority supports the issuance of bonds for the production, preservation, and protection of middle-income rental housing. The Authority proposes to acquire the Waterford Place Apartments located at 4800 Tassajara Boulevard for that purpose. More specifically, the City Council will consider authorizing the City to become an Additional Member of the Authority, approving the form of a Public Benefit Agreement, and approving the issuance of bonds for the acquisition of the Waterford Place Apartments. STAFF RECOMMENDATION: Receive the presentation and provide direction on joining the Authority. If the City Council wishes to join the Authority, adopt the Resolution Approving, Authorizing, and Directing Execution of a Joint Exercise of Powers Agreement Relating to the CSCDA Community Improvement Authority, and the Form of a Public Benefit Agreement; and Approving the Issuance of Revenue Bonds by the Authority for the Purpose of Financing the Acquisition of the Waterford Place Apartments. FINANCIAL IMPACT: There are no financial expenditures, liabilities, or obligations created by joining the CSCDA Community Improvement Authority. It is a public entity separate and apart from its members, and any debts or obligations incurred by the Authority will not constitute debts or obligations of its member agencies. In this case, bonds issued for the Authority’s acquisition of the Waterford Place Apartments will be indebtedness solely of the Authority, and payable only from revenues of the project. 222 Page 2 of 4 The Waterford Place Apartments currently provides close to $385,000 annual property tax revenue, which the City would no longer receive. Eliminating property tax burden enables the Authority to charge lower rents and target middle-income households. To offset the loss of property tax revenue, a Public Benefit Agreement would grant any net surplus project revenues to the City when the property is later sold. DESCRIPTION: Background The California Statewide Communities Development Authority (CSCDA) is a joint powers authority founded and sponsored by the League of California Cities and the California State Association of Counties. The CSCDA was created in 1988 to enable local government and eligible private entities access to low-cost, tax-exempt financing for projects that provide a tangible public benefit, contribute to social and economic growth and improve the overall quality of life in local communities throughout California. CSCDA comprises more than 530 cities, counties, and special districts, and has issued more than $65 billion through approximately 1,700 transactions across its public benefit financing programs. The City of Dublin has been a member of the CSCDA since 2003, but the affiliate CSCDA Community Improvement Authority (the Authority) was created more recently specifically to focus on middle income housing preservation and development. The Authority enables CSCDA to acquire public-benefit-oriented capital projects through the issuance of tax-exempt governmental purpose bonds. Through the Authority’s Workforce Housing Program, it issues government bonds to acquire market-rate apartment buildings. These properties are then converted to income and rent-restricted units for moderate/middle income households, which are typically households earning 60% to 120% of area median income (AMI). The Authority owns the projects it acquires and retains a Project Administrator (also known as a Project Sponsor) who manages the ownership and operation of projects on behalf of the Authority, including qualifying prospective tenants to ensure their total household income complies with the program parameters. The Workforce Housing Program is similar to the California Community Housing Agency (CalCHA) joint powers authority that the City Council authorized joining in September 2020. Both programs support the issuance of bonds for the production, preservation, and protection of middle-income rental housing. Most state, federal, and local affordable housing funding sources are targeted to households below 60% AMI. The CSCDA financing model, similar to that of CalCHA, would reduce project financing costs and eliminate the property tax burden for the Authority. This enables CSCDA to charge lower rents and target middle-income households. A key difference between the CSCDA and CalCHA programs is CSCDA proposes to bring each project that it is negotiating to acquire to the City Council to approve the issuance of bonds, whereas CalCHA received approval to acquire up to four properties with a total of up to 1,000 units over five years under certain conditions to be verified by Staff. For the Authority to use the proposed financing model in Dublin, the City would need to: 223 Page 3 of 4 Become an Additional Member of the Authority for the limited purpose of financing or refinancing specific projects in Dublin by the Authority’s issuance of tax-exempt bonds; and Enter into a Public Benefit Agreement with the Authority for any project to be acquired or developed. When a property is acquired by the Authority, the City would execute a Public Benefit Agreement, which is like the Purchase Option Agreement for CalCHA properties and would incorporate the same key terms and conditions negotiated with CalCHA. Among other things, this agreement ensures that the selection criteria for new tenants for vacant units in the Authority’s project(s) include the preference point system in the City’s Inclusionary Zoning Regulations (DMC Section 8.68.050.D). The City Council is being asked to approve the Agreement (Attachment 3) as to form. CSCDA would then prepare such Agreement for each project that they propose to acquire in the future, after the City Council approves the sale of bonds to acquire a property. Under the Public Benefit Agreement, the City, at its sole discretion, may purchase or force a sale of the property between Year 15 and Year 30 (the end of the life) of the bonds. If the property is sold during this 15-year period, the net proceeds of the sale (after paying off debt), could either be received by the City or transferred to a new non-profit owner to maintain affordability. Public benefit is achieved through the execution of a regulatory agreement between the Authority and the bond issuing company that restricts the use of the property, and by granting all net surplus project revenues to the City. The regulatory agreement that restricts use of the property would: Restrict occupancy to low-income, median-income, and moderate-income households; Limit annual rent increases to a maximum of four percent of a tenant’s rent; and Prevent displacement of existing residents that do not meet the income eligibility requirements. Because the Authority would request approval of the issuance of bonds from the City Council for each property, the City can limit the number of total acquisitions and consider geographic proximity to other income restricted properties with each individual approval. This would achieve the same conditions imposed on CalCHA. Proposed Project In addition to requesting that the City become an additional member of the CSCDA Community Improvement Authority, the Authority has requested approval of the issuance of bonds for the acquisition of the 390-unit Waterford Place Apartments (the Project) at 4800 Tassajara Road. As mentioned above, the Project would be owned by the Authority and converted to income and rent- restricted units for moderate/middle income households, which are generally households earning 60% to 120% of AMI. The Project Sponsor would be BLVD Capital, who has experience owning and operating multi-family housing rental projects, including projects with affordability restrictions. 224 Page 4 of 4 If the City Council approves the acquisition, CSCDA would submit a specific Public Benefit Agreement that would be reviewed for consistency with the form of the Public Benefit Agreement approved by City Council. As noted above, the form of the Public Benefit Agreement includes the same key terms and conditions negotiated with CalCHA, including the following: The City shall have ongoing input on property management issues starting immediately and is allowed to exercise due diligence and inspection rights prior to City acquisition of each property. CSCDA shall provide annual reports to the City regarding the status of the Authority’s acquisition, financing and operation of properties. In addition, as previously mentioned, the selection criteria for new tenants for vacant units in the project shall include the preference for existing Dublin residents. Staff is recommending that the City Council receive the information, discuss, and provide direction on the Resolution (Attachment 1) authorizing the execution of a Joint Exercise of Powers Agreement (Attachment 2) relating to the CSCDA Community Improvement Authority, and the Form of a Public Benefit Agreement (Attachment 3); and approving the issuance of bonds for the acquisition of the Waterford Place Apartments located at 4800 Tassajara Road. STRATEGIC PLAN INITIATIVE: Strategy 3: Create More Affordable Housing Opportunities Objective D: Seek opportunities to preserve the stock of housing that is affordable to moderate and middle-income households. NOTICING REQUIREMENTS/PUBLIC OUTREACH: The City Council Agenda was posted. ATTACHMENTS: 1) Resolution Approving, Authorizing, and Directing Execution of a Joint Exercise of Powers Agreement Relating to the CSCDA Community Improvement Authority, and the Form of a Public Benefit Agreement; and Approving the Issuance of Revenue Bonds by the Authority for the Purpose of Financing the Acquisition of the Waterford Place Apartments 2) Joint Exercise of Powers Agreement 3) Proposed Form of Public Benefit Agreement 225 Attachment 1 Reso. No. XX-21, Item X.X, Adopted XX/XX/21 Page 1 of 3 RESOLUTION NO. XX-21 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN APPROVING, AUTHORIZING, AND DIRECTING EXECUTION OF A JOINT EXERCISE OF POWERS AGREEMENT RELATING TO THE CSCDA COMMUNITY IMPROVEMENT AUTHORITY, AND THE FORM OF A PUBLIC BENEFIT AGREEMENT; AND APPROVING THE ISSUANCE OF REVENUE BONDS BY THE AUTHORITY FOR THE PURPOSE OF FINANCING THE ACQUISITION OF THE WATERFORD PLACE APARTMENTS WHEREAS, pursuant to Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the Act), certain public agencies (the Members) have entered into a Joint Exercise of Powers Agreement Relating to the CSCDA Community Improvement Authority, dated as of October 15, 2020 (the Agreement), a copy of which has been filed with the City, in order to form the CSCDA Community Improvement Authority (the Authority), for the purpose of promoting economic, cultural and community development, and in order to exercise any powers common to the Members or granted by the Act, including by the issuance of bonds, notes or other evidences of indebtedness; and WHEREAS, the City of Dublin has determined that it is in the public interest and for the public benefit that the City become an Additional Member of the Authority pursuant to Section 12 of the Agreement in order to facilitate the promotion of economic, cultural and community development activities in the City, including the financing of projects therefor by the Authority; and WHEREAS, the Agreement has been filed with the City, and the members of the City Council of the City, with the assistance of its staff, have reviewed said document; and WHEREAS, the Authority is authorized to issue and sell revenue bonds for the purpose, among others, of financing or refinancing the construction, acquisition and rehabilitation of capital projects; and WHEREAS, the Authority proposes to issue its governmental purpose revenue bonds (the Bonds) to finance the acquisition and certain related costs of the Waterford Place Apartments (the Project) located at 4800 Tassajara Road, Dublin, which contains approximately 390 apartment units; and WHEREAS, the Authority proposes to grant to the City in connection with the financing of the Project the option for the City or its designee to acquire the Project, starting upon the date 15 years from the issuance of the Bonds pursuant to a Public Benefit Agreement, by and between the Authority and the City, the form of which has 226 Reso. No. XX-21, Item X.X, Adopted XX/XX/21 Page 2 of 3 been filed with the City Council, subject to such non-material modifications as have been approved by the City Manager and approved as to form by the City Attorney; and WHEREAS, it is in the public interest and for the public benefit that the City Council approve the issuance of the Bonds by the Authority for the aforesaid purposes; and WHEREAS, Section 3(A) of the Agreement and Section 6508.1 of the California Government Code expressly provide that the Authority’s “Bonds, and other debts, liabilities and obligations do not constitute debts, liabilities, or obligations of any Members…” NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL, AS FOLLOWS: Section 1.The foregoing recitals are true and correct. Section 2.The City hereby requests to become an Additional Member of the Authority pursuant to Section 12 of the Agreement. The Agreement is hereby approved and the Mayor or the designee thereof is hereby authorized and directed to execute said document, and the City Clerk or such Clerk’s designee is hereby authorized and directed to attest thereto. Section 3.The proposed form of Public Benefit Agreement on file with the City Council is hereby approved. In connection with the Project, the City Manager or the designee thereof is hereby authorized and directed to execute an agreement in substantially said form, with the addition of a requirement for the City to be adequately protected from liability arising from the Project as an additionally insured party on insurance policies covering the Project, and with such other non-material changes therein as such officer executing the same may require consistent with this Resolution and its basic purpose, and subject to approval as to form of the City Attorney, such approval to be conclusively evidenced by the execution and delivery thereof. Any material changes to the form of Public Benefit Agreement must be approved by the City Council. Section 4.The City Council hereby approves the issuance of Bonds by the Authority to finance the Project within the City, provided that such Bonds are issued within two years from the date of this Resolution. Section 5.The issuance of Bonds shall be subject to the approval of the Authority of all financing documents relating thereto to which the Authority is a party. The City shall have no responsibility or liability whatsoever with respect to the Bonds. Section 6.The adoption of this Resolution shall not obligate the City or any department thereof to (i) provide any financing to acquire or construct any Project or any refinancing of any Project; (ii) approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary for the acquisition, construction, rehabilitation or operation of any Project; (iii) make any 227 Reso. No. XX-21, Item X.X, Adopted XX/XX/21 Page 3 of 3 contribution or advance any funds whatsoever to the Authority; or (iv) except as provided in this Resolution, take any further action with respect to the Authority or its membership therein. Section 7.The executing officers(s), the City Clerk and all other proper officers and officials of the City are hereby authorized and directed to execute such other agreements, documents and certificates, and to perform such other acts and deeds, as may be necessary or convenient to effect the purposes of this Resolution and the transactions herein authorized. Section 8.The City Clerk shall forward a certified copy of this Resolution and an originally executed Agreement to the Authority: CSCDA Community Improvement Authority 1100 K Street, Suite 101 Sacramento, California 95814 Attention: Chair Section 9.This Resolution shall take effect immediately upon its passage. PASSED, APPROVED AND ADOPTED this 4th day of May 2021, by the following vote: AYES: NOES: ABSENT: ABSTAIN: __________________________ Mayor ATTEST: _________________________________ City Clerk 228 Attachment 1 [SIGNATURE PAGE FOR JPA AGREEMENT] IN WITNESS WHEREOF, the CITY OF DUBLIN has caused this Agreement to be executed and attested by its duly authorized representatives as of the ___ day of _____________, 2021. Additional Member: CITY OF DUBLIN By Name: Title: ATTEST: __________________________________ City Clerk 229 Attachment 2 230 231 232 233 234 235 236 237 238 239 240 241 Attachment 3 4123-2472-0938.4 RECORDING REQUESTED BY CSCDA Community Improvement Authority WHEN RECORDED RETURN TO: Orrick, Herrington & Sutcliffe LLP 405 Howard Street San Francisco, CA 94105 Attention: Steffi Chan THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE PUBLIC BENEFIT AGREEMENT By and Between CSCDA COMMUNITY IMPROVEMENT AUTHORITY and CITY OF DUBLIN _________________________ Dated as of ___________ _________________________ Relating to CSCDA COMMUNITY IMPROVEMENT AUTHORITY ESSENTIAL HOUSING REVENUE BONDS, SERIES _____A (WATERFORD PLACE APARTMENTS) (SOCIAL BONDS) and CSCDA COMMUNITY IMPROVEMENT AUTHORITY SUBORDINATE ESSENTIAL HOUSING REVENUE BONDS, SERIES _____B (WATERFORD PLACE APARTMENTS) 242 1 4123-2472-0938.4 PUBLIC BENEFIT AGREEMENT This PUBLIC BENEFIT AGREEMENT (“Agreement ”) is dated as of ______________by and between the CSCDA COMMUNITY IMPROVEMENT AUTHORITY, a joint exercise of powers agency organized and existing under the laws of the State of California (including its successors and assigns, “Owner”), and the CITY OF DUBLIN, a California municipal corporation (“Host”). BACKGROUND WHEREAS, the Owner proposes to issue Bonds (as hereinafter defined) to finance Owner’s acquisition of the certain multifamily rental housing project (the “Project”) located at 4800 Tassajara Road, , Dublin, California, located on the real property site described in Exhibit A hereto; and WHEREAS, the Owner has executed a Regulatory Agreement and Declaration of Restrictive Covenants between Owner and Wilmington Trust, National Association, dated concurrently and recorded in the official records of Alameda County, California, which imposes requirements upon the Project with respect to maximum income levels of tenants, maximum rents payable by tenants, maintenance of the Project in accordance with industry standards, and certain other matters, and Host is entering into this Agreement in reliance on Owner’s compliance with such requirements; and WHEREAS, the Owner intends to sell the Project at the instigation of the Host or upon the retirement of all Project Debt (as defined herein) pursuant to this Agreement. AGREEMENT In consideration of the mutual covenants herein contained, and such other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, Owner and Host mutually agree as follows: Section 1.Right to Cause Sale.Host shall have the right to cause (“Sale Right”) the Owner to sell the Property (as herein defined) to Host or Host’s designee upon payment by the purchaser thereof (the “Purchaser”) of the Sale Price (as herein provided) within the Sale Right Term (as herein defined) and in compliance with and observance of all of the terms and conditions of this Agreement. Section 2.Definitions.Capitalized terms used in this Agreement shall have the meanings assigned to them in this Section 2; capitalized terms used in this Agreement and not defined in this Section 2 or elsewhere herein shall have the meanings assigned to them in the Indenture (herein defined). (a)“Bonds” – collectively, (i) the CSCDA Community Improvement Authority Essential Housing Revenue Bonds, Series _____A (Waterford Place Apartments) (Social Bonds) (the “Series A Bonds”) and (ii) the CSCDA Community Improvement Authority Subordinate Essential Housing Revenue Bonds, Series _____B (Waterford Place Apartments) (the “Series B Bonds”), with such other series and sub-series designations as may be set forth in the Indenture, 243 2 4123-2472-0938.4 originally issued to finance Owner’s acquisition of the Project and related transaction costs. The original principal amount of the Series B Bonds shall not exceed $____________, provided the original principal amount of the Series B Bonds may be up to $___________upon approval of the City Manager of Host. (b)“Bond Trustee” – Wilmington Trust, National Association, or any successor trustee under the Indenture. (c)“Closing” – shall have the meaning set forth in Section 8 hereof. (d)“Conveyance” – that transaction or series of transactions by which Owner shall transfer, bargain, sell and convey any and all right, title or interest in and to the Property. (e)“Extraordinary Costs and Expenses” – shall have the meaning set forth in the Indenture. (f)“Host Indemnified Person” – the Host and each of its officers, governing members, directors, officials, employees, attorneys, agents and members. (g)“Indenture” – the Indenture of Trust between Owner, as issuer, and the Bond Trustee, as trustee, pursuant to which the Bonds were issued. (h)“Minimum Sale Price” – means the lowest price at which the Property may be sold, as described in Section 4(c) hereof. (i)“Outstanding” – with respect to Bonds, as of any given date, all Bonds which have been authenticated and delivered by the Trustee under the Indenture, except: (i) Bonds cancelled at or prior to such date or delivered to or acquired by the Trustee at or prior to such date for cancellation; (ii) Bonds deemed to be paid in accordance with Article VIII of the Indenture; and (iii) Bonds in lieu of which other Bonds have been authenticated under the Indenture. (j)“Owner Indemnified Person” – the Owner and each of its officers, governing members, directors, officials, employees, attorneys, agents and members. (k)“Project Administrator” – ___________________________and its successors and assigns. (l)“Project Debt” – any debt secured by the Project and incurred to finance or refinance Owner’s acquisition of the Project and related transaction costs, including any portion of the Bonds and any bonds, notes or other indebtedness issued by Owner to improve the Project or to refund the Bonds in whole or in part. (m) “Property” – means all of Owner’s right, title and interest (which includes fee simple title to the real property) in and to all property and assets used in or otherwise related to the operation of the Project including, without limitation, all real property and interests in real property, all tangible and intangible personal property including furniture, fixtures, equipment, supplies, intellectual property, licenses, permits, approvals, and contractual rights of any kind or nature together with the right to own and carry on the business and operations of the Project. 244 3 4123-2472-0938.4 (n)“Regulatory Agreement” – means the Regulatory Agreement and Declaration of Restrictive Covenants by and between the Owner and the Bond Trustee, relating to the Bonds. (o)“Sale Price” – purchase price of the Property to be paid by the Purchaser upon sale of the Property by the Owner pursuant to Host’s Sale Right in compliance with Section 4 hereof or sale by the Owner pursuant to Section 5 hereof. (p)“Sale Right” – means the right of the Host to cause the Owner to sell the Property pursuant to Section 1 hereof. (q)“Sale Right Exercise Date” – the date fifteen (15) years from the issuance of the Bonds. (r)“Sale Right Term” – shall commence on the Sale Right Exercise Date and, if not exercised, shall terminate at 11:59 p.m. local time on the date that is the earlier of fourteen (14) years from the Sale Right Exercise Date or the date on which no Project Debt remains Outstanding. (s)“Transaction Costs” – to the extent not otherwise described herein, any costs or expenses of any kind or nature associated with or incurred by Owner and Bond Trustee in connection with the consummation of the Conveyance, including but not limited to taxes, recording fees and other impositions, Owner’s and Bond Trustee’s legal and other professional fees,fees for verification agents, bidding agents, escrow agents, custodians or trustees, assumption fees, prepayment fees, the cost of the appraisal, brokers’ fees and expenses, surveys, inspections, title commitments, title insurance premiums and other title-related fees, and all amounts required for indemnification of Authority, Trustee and Project Administrator. Section 3.Effectiveness; Term and Termination.The Sale Right shall become effective on the Sale Right Exercise Dateand may be exercised during the Sale Right Term. Owner agrees that it will not enter into any agreement to sell all or any part of the Property during the Sale Right Term other than as may be required by the Indenture (e.g., in the event of default), without the specific written request of the Host and delivery of an Opinion of Bond Counsel to the Owner substantially to the effect that such sale will not, in and of itself, adversely affect the exclusion of interest on the Bonds from gross income for purposes of federal income taxation. Section 4.Manner of Exercise. (a)Host’s Notice. To exercise the Sale Right, Host shall provide a notice (an “Exercise Notice”) to Owner (with a copy to the Project Administrator) at any time during the Sale Right Term. (b)Owner’s Best Efforts to Sell. Unless Host notifies Owner in writing that it is withdrawing its Exercise Notice within fifteen (15) business daysof delivering the Exercise Notice under Section 4(a) hereof, Owner shall exercise its best efforts to enter into a purchase agreement for the sale of the Property in accordance with Section 7(d) and to sell and convey good and marketable title to the Property to Host or its designee within ninety (90) days following receipt of the Exercise Notice, or as soon as possible thereafter, in accordance with the purchase agreement, but only if it can sell at or above the Minimum Sale Price. The obligation of the Owner 245 4 4123-2472-0938.4 to enter into the purchase agreement for the sale and conveyance of the Property to Host or its designee shall be on a best efforts basis. The Owner shall endeavor to sell the Property at a commercially reasonable price, subject to subsection (c) of this Section, by such means as the parties to the purchase agreement shall determine to be suitable for such purpose; provided that Owner shall incur no liability to any party as a result of or otherwise in connection with the sale or failure to sell. Subject to subsection (c), nothing herein shall require or prevent Owner selling the Property subject to the restrictions set forth in the Regulatory Agreement. The Owner shall direct the Bond Trustee in the foregoing as and to the extent necessary or appropriate. (c)Sale Price. The Sale Price shall be at least equal to the sum of the amounts set forth below (net of any adjustments or prorations of the type described in Section 8(b)) (the “Minimum Sale Price”): i.an amount sufficient to either prepay, redeem in whole or fully defease for redemption on the earliest call date all Project Debt; plus ii.any fees or other amounts not identified in clause (i) that may be necessary to effect the complete release from and discharge of any lien, mortgage or other encumbrance on the Property; plus iii.any amounts due to Owner (including the Owner Indemnified Persons, as provided in the Indenture), the Bond Trustee or any predecessor or successor, or any other Person under any indenture, loan agreement, bond, note or other instrument relating to any Project Debt (including, without limitation, indemnification amounts, Owner’s Extraordinary Costs and Expenses, recurrent and extraordinary fees and expenses, and reimbursable costs and expenses of any kind or nature); plus iv.Transaction Costs; minus v.Any funds held by or for Owner under the Indenture applied to the retirement of Project Debt. Owner may retain such portion of moneys in the Extraordinary Expense Fund or similar fund under the Indenture it deems reasonable as a reserve against future expected costs and expenses of the type described in subparagraph (iii) provided such action is reasonable and in accordance with the Indenture. Section 5.Mandatory Conveyance.Upon the retirement of all Project Debt, the Owner shall use its best efforts to effect a Conveyance within ninety (90) days thereafter, subject to Section 4(c) hereof. Owner shall give notice to Host of its intent to convey the Property, and Host (or its designee) shall have the first right to acquire the Property by delivery of an Exercise Notice to Owner within thirty (30) days after receipt of Owner’s notice. Nothing herein shall require or prevent Owner selling the Property subject to the restrictions set forth in the Regulatory Agreement. 246 5 4123-2472-0938.4 Section 6.Surplus Cash; Surplus Conveyance Proceeds. Upon a Conveyance of the Property, the Owner shall apply the proceeds of such Conveyance (i) to redeem the Bonds then Outstanding, (ii) to prepay, redeem in whole or fully defease any other Project Debt, and (iii) to pay any fees or other amounts listed in Section 4(c)(ii) – (iv). Any proceeds remaining following the foregoing payments (such remaining amounts hereinafter referred to as “Surplus Conveyance Proceeds”) shall be transferred to the Host, which funds may be applied by Host in its sole discretion. Section 7.Terms of Conveyance. (a)The Conveyance shall be in the nature of a grant deed to Purchaser in which Owner shall deliver one or more deeds, bills of sale, or other instruments of transfer without recourse or warranty of any kind or nature. (b)The Property will be conveyed to Purchaser in AS IS CONDITION, WITH ALL FAULTS, and without representations or warranties of any kind or nature as to the condition of the Property, except as may otherwise be set forth in the purchase agreement. (c)There shall be no partial transfer and that, upon consummation of the Conveyance, Owner shall be fully divested of any and all right, title or interest in and to the Property. (d)Upon Purchaser’s delivery of the Exercise Notice, Owner shall deliver to Purchaser a purchase agreement for the Property, and the parties shall negotiate in good faith towards a mutually satisfactory purchase agreement in form and substance satisfactory to Owner and Purchaser and their counsel subject to the terms and conditions of this Agreement. The purchase agreement shall permit Purchaser to conduct physical inspections of the Property and conduct due diligence related to the purchase of the Property, including without limitation its value and physical and environmental condition, and shall provide Purchaser a due diligence approval period of not less than sixty (60) days after the date of the purchase agreement. The purchase agreement shall provide for Owner to deliver to Purchaser copies of all plans, studies, records, reports, governmental notices and approvals, and other written materials related to the use, occupancy or condition of the Property that Owner has in its possession, including without limitation environmental, structural, mechanical, engineering and land surveys. Purchaser shall provide Owner with comments to the form of purchase agreement within fifteen (15) business days of its receipt thereof, and Owner and Purchaser shall use good faith efforts to negotiate, draft and execute a mutually acceptable purchase agreement as soon as practicable thereafter. The purchase agreement shall provide for closing for the conveyance to Purchaser of good and marketable title to the Property at the Sales Price within the time set forth in Section 8(a) hereof. 247 6 4123-2472-0938.4 Section 8.Closing. (a)The closing of the Conveyance (“Closing”) shall take place, in the case of a Conveyancepursuant to Section 4 hereof,not later than the ninetieth (90th) calendar day following the Owner’s receipt of the Exercise Notice, or as soon as possible thereafter, and in the case of a mandatory conveyance pursuant to Section 5 hereof, not later than the ninetieth (90th) calendar day following the retirement of all Project Debt, or as soon as possible thereafter. (b)All general and special real property taxes and assessments, and rents shall be prorated as of the Closing, with Purchaser responsible for all such items to the extent arising or due at any time following the closing. General real property taxes shall be prorated at the time of Closing based on the net general real property taxes for the year of Closing. Section 9.Recording.This Agreement, and any amendment thereto, shall be recorded with the recorder’s office of the County; provided, that upon termination of the term of this Agreement, Host shall cooperate with Owner to remove any such recorded Agreement or amendment thereto from title to the Propertyupon Owner’s reasonable request therefor and, in any event, by no later than thirty (30) days after the expiration of the original term of this Agreement. Section 10.Subordination. This Agreement shall be subordinate to any claim, pledge or interest in the Property securing the Bonds or any Project Debt. Section 11.Maintenance of Membership. In order to preserve the Property’s exemption from property tax, Host agrees to remain a member of the Owner joint powers authority so long as any Bonds remain outstanding. Section 12.Assignment. Neither party to this Agreement shall assign its interests, obligations, rights and/or responsibilities under this Agreement without the prior written consent of the other party, except as provided herein. Section 13.Limitation on Liability. (a)The Owner and Host shall not be directly, indirectly, contingently or otherwise liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reason of or in connection with this Agreement or any sale or Conveyance or failure or price thereof or application of proceeds thereof, except only as to moneys available therefor under and in accordance with the Indenture or this Agreement. (b)No Owner Indemnified Person or Host Indemnified Person shall be individually or personally liable for the payment of any sum hereunder or be subject to any personal liability or accountability by reason of the execution and delivery of this Agreement, or by any proceedings for the sale or Conveyance or failure or price thereof, or Host’s exercise or waiver of same, or otherwise except in the case of such Owner Indemnified Person’s or Host Indemnified Person’s own willful misconduct. (c)The Bonds will not be a debt, liabilityor obligation of Host but rather, solely indebtedness of the Owner, limited to the Trust Estate pledged and available therefor under the Indenture. Under no circumstances shall Host be obligated to (i) provide any financing to acquire 248 7 4123-2472-0938.4 or construct the Project or any refinancing of the Project; (ii) approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary for the acquisition, construction, rehabilitation or operation of the Project; or (iii) make any contribution or advance any funds whatsoever to the Owner. Section 14.Notices, Governing Law, Binding Effect and Other Miscellaneous Provisions. (a)Notices. All notices provided for in this Agreement shall be in writing and shall be given to Owner or Host at the address set forth below or at such other address as they individually may specify thereafter by written notice in accordance herewith: If to Owner or:CSCDA Community Improvement Authority Designated Agent 1700 North Broadway, Suite 405 Walnut Creek, California 94596 Attention: Jon Penkower Email: jpenkower@cscda.org With a copy to:___________________________ ___________________________ ___________________________ ___________________________ If to Host: City of Dublin 100 Civic Plaza Dublin, California 94568 Attention: City Manager Such notices shall be deemed effective upon actual delivery or upon the date that any such delivery was attempted and acceptance thereof was refused, or if mailed, certified return receipt requested, postage prepaid, properly addressed, three (3) days after posting. (b)Consents and Approvals. All consents and approvals and waivers required or asserted hereunder shall be in writing, signed by the party from whom such consent, approval, waiver or notice is requested. (c)Non-liability of Host Officers and Employees. No officer or employee of Host shall be personally liable to the Owner, or any successorin interest, in the event of any default or breach by Host of any obligation of the terms of this Agreement. (d)Pronouns. Where appropriate to the context, words of one gender include all genders, and the singular includes the plural and vice versa. (e)Amendments. This Agreement may not be modified except in a written instrument signed by Host and Owner. 249 8 4123-2472-0938.4 (f)Complete Agreement; Benefits. This Agreement together with all schedules and exhibits attached hereto and made part thereof supersedes all previous agreements, understandings and representations made by or between the parties hereto. This Agreement shall inure solely and exclusively to the benefit of the Owner and Host, and no other party shall have any right, remedy or claim under or by reason of this Agreement. (g)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to conflicts of law principles. All claims of whatever character arising out of this Agreement, or under any statute or common law relating in any way, directly or indirectly, to the subject matter hereof or to the dealings between Owner and any other party hereto, if and to the extent that such claim potentially could or actually does involve Owner, shall be filed and maintained in the Superior Court of California, County of Alameda, California. By executing and delivering this Agreement, each party hereto irrevocably: (i) accepts generally and unconditionally the exclusive jurisdiction and venue of such court; (ii) waives any defense of forum non-conveniens; and (iii) agrees not to seek removal of such proceedings to any court or forum other than as specified above. The foregoing shall not be deemed or construed to constitute a waiver by Owner of any prior notice or procedural requirements applicable to actions or claims against or involving governmental units and/or political subdivisions of the State of California that may exist at the time of and in connection with such matter. (h)Legal Construction. In case any one or more of the provisions contained in this Agreement shall for any reason be held by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such invalid provision shall be deemed severable, and shall not affect the validity or enforceability of any other provisions of this Agreement, all of which shall remain fully enforceable. (i)Term. This Agreement shall terminate upon the Conveyance. (j)Captions. The captions used in this Agreement are solely for convenience, and shall not be deemed to constitute a part of the substance of the Agreement for purpose of its construction. (k)Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts shall together constitute but one and the same Agreement. (l)Regulatory Agreement. The Regulatory Agreement shall establish maximum income levels of tenants and maximum rents of the Affordable Units at levels reasonably acceptable to Host and shall permit existing tenants to remain in the Project upon acquisition by Owner. Owner shall not amend the Regulatory Agreement to increase the maximum income levels or maximum rents of the Affordable Units, or to revise the percentages of units to be rented as Low Income Units, Median Income Units and Moderate Income Units, without the prior written approval of Host, which approval shall not unreasonably be withheld. Owner shall annually provide Host a copy of its Certificate of Continuing Program Compliance for the Project. 250 9 4123-2472-0938.4 (m)For the term of the Regulatory Agreement, the Owner hereby represents, covenants, warrants and agrees as follows: The Project will be owned and operated for the purpose of providing multifamily residential rental property. The Owner will own, and cause the Project to be managed and operated, as a project to provide multifamily residential rental property comprised of a building or structure or several interrelated buildings or structures, together with any functionally related and subordinate facilities. (n)Property Management. During the term of this Agreement, Host shall have the authority to review the selection of the original and any replacement property management company and the management agreement with that company for the Project. If Host determines that the management of the Project during the term of this Option Agreement is deficient in any manner, Host may provide notice of the deficiency to Owner, and Host and Owner shall meet and confer in good faith to discuss the alleged management deficiency and attempt to reach agreement upon one or more appropriate remedies to address the alleged management deficiency. Upon Host’s acquisition of the Project, Host shall not be obligated to continue the contracts with any property management company for the Project. (o)Preferences for New Residents. Selection criteria for new tenants for vacant units in the Authority’s project(s) shall include the preference point system in Section 8.68.050 D of the Dublin Municipal Code. [SIGNATURE PAGE TO FOLLOW] 251 10 4123-2472-0938.4 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above. CSCDA COMMUNITY IMPROVEMENT AUTHORITY By: Jon Penkower Authorized Signatory CITY OF DUBLIN By: Linda Smith, City Manager Approved as to Form: By:___________________________ John D. Bakker, City Attorney Signature Page to Public Benefit Agreement 252 11 4123-2472-0938.4 A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California ) County of ______________________) On _________________________, before me, , (insert name and title of the officer) Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) 253 4123-2472-0938.4 EXHIBIT A LEGAL DESCRIPTION OF REAL PROPERTY The Land referred to herein is situated in the State of California, County of Alameda, City of Dublin, and described as follows: 254 Item 8.1: California Statewide Communities Development Authority Middle-Income Rental Housing Program May 4, 2021 Background •CSCDA was created in 1988 to enable local government and private entities access to low-cost, tax-exempt financing for projects with public benefit •Affiliate CSCDA Community Improvement Authority created more recently to focus on middle- income housing •Authority’s Workforce Housing Program issues government bonds to acquire market-rate apartment buildings and converts them to rent-restricted units Background •Workforce Housing Program similar to CalCHA Middle-Income Rental Housing Program •Both support issuance of bonds for production, preservation and protection of middle-income rental housing •Both reduce financing costs and property tax burden to enable lower rents •Key difference is CSCDA would bring projects that it is negotiating to acquire to City Council to approve issuance of bonds City Participation •To use proposed financing model in Dublin, the City would need to: –Become an Additional Member of the Authority for limited purpose of financing or refinancing specific projects in Dublin by the Authority’s issuance of tax- exempt bonds; and –Enter into a Public Benefit Agreement with the Authority for any project to be acquired or developed Public Benefit Agreement •When a property is acquired by the Authority, the City would execute a Public Benefit Agreement •Public Benefit Agreement includes same key terms and conditions negotiated with CalCHA: –Selection criteria for vacant units would include preference system in City’s Inclusionary Zoning Regulations; –City would have ongoing input on property management issues; and –CSCDA would provide annual reports to the City regarding the status of the Authority’s acquisition, financing and operation of properties Public Benefit Agreement •Under Public Benefit Agreement, City may purchase or force a sale of a property between Year 15 and Year 30 •If property is sold during this 15-year period, net proceeds of sale could either be received by City or transferred to non-profit owner to maintain affordability •Public benefit is achieved through execution of a regulatory agreement between the Authority and the bond issuing company that restricts use of the property Regulatory Agreement •Regulatory agreement would: –Restrict occupancy to low-income, median-income, and moderate-income households; –Limit annual rent increases to a maximum of four percent of a tenant’s rent; and –Prevent displacement of existing residents that do not meet income eligibility requirements Proposed Project •Authority has requested approval of issuance of bonds for acquisition of Waterford Place Apartments •Project would be owned by the Authority and converted to moderate/middle income units •Project sponsor would be BLVD Capital •Because the Authority would request approval from City Council for each property, number of acquisitions can be limited Recommendation •Receive presentation and provide direction on joining the Authority •If City Council wishes to join the Authority: –Adopt the Resolution Approving, Authorizing, and Directing Execution of a Joint Exercise of Powers Agreement Relating to the CSCDA Community Improvement Authority, and the Form of a Public Benefit Agreement; and Approving the Issuance of Revenue Bonds by the Authority for the Purpose of Financing the Acquisition of the Waterford Place Apartments