City Council Concord Senior Housing 275 E. Cordova Street

1. City CouncilConcord Senior Housing 275 E. Cordova Street James Wong, Senior Project Manager December 17, 2018

2. Recommendation • Find that the project is categorically exempt under Class 1 (Existing Facilities) of CEQA • Approve key business terms of Disposition, Development and Loan Agreement as described in agenda report

3. Concord Senior Housing

4. Background • The Concord is a low income senior apartment complex built in 1966 on City-owned land • Rent-subsidized under HUD Section 8 program • In 1986, developer Retirement Housing Foundation purchased the Concord from the original owner • In 1989, City purchased fee title to the land to preserve long-term affordability and entered into a 42-year ground lease with RHF as tenant • FPRS owns a 93% beneficial interest in the Concord, the City 7%

5. Background • In May 2015, RHF initiated negotiations on the financial restructuring and renovation of the Concord • Financial consultant services provided by David Rosen & Associates under City contract • The 52-year old apartment complex is in need of substantial rehab to extend the building’s useful life • Last major renovation in 1993 - fire sprinkler system

6. Background • City to sell to RHF the Concord property, less the Surface Parking Lot (to be held by City for future disposition) • The sale would be subject to City approval of a parcel map application that is currently being processed • FPRS/City to receive an estimated $22.27M cash sale proceeds in 3 installments over next 4 years • The transaction would financially restructure and substantially renovate the Concord, and preserve this source of affordable housing for seniors.

7. Key Business Terms of DDLA • RHF to secure 4% tax credits and tax-exempt bond financing from the state, and Section 8 project-based rent subsidy from HUD. • City to sell Concord property (less surface parking lot) to RHF, at current estimated sale price of $44.28M • HUD $1.1M loan to be repaid in full • RHF to pay to FPRS/City an estimated $22.27M cash sale proceeds in 3 installments over next 4 years

8. Key Business Terms of DDLA • City to provide a carryback Seller Loan in the estimated amount of $20.91M. • Seller Loan: secured by recorded trust deed; 55-year term; 2.5% simple; fixed rate interest; converts to permanent financing upon completion, repaid through annual residual receipts (93% to FPRS) • Scope of work includes substantial renovation of dwelling units, mechanical/building systems, common areas, building exterior, landscaping, and parking. • Affordable housing restrictions per 55-year covenant • RHF compliance w/ all city policies including First Source Hiring, Minimum Wage Ordinance

9. Concord Senior Housing Existing Parking

10. Parcel Split Existing Parking Relocated Parking

12. Schedule – Key Milestones • Feb 2019 – RHF submits Rent Application to HUD • July 2019 – RHF applies for tax credits and bond financing • Dec 2019 – Project Closing. City sells Concord to RHF. RHF pays 1st installment of sale proceeds to FPRS/City. Renovation commences. • Sept 2021 – Renovation completion • March 2022 – Permanent loan conversion. RHF pays 2nd installment of sale proceeds to FPRS/City. • March 2023 – RHF files first-year tax return and pays 3rd (final) installment of sale proceeds to FPRS/City