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AHA-2023-004RESOLUTION NO. AHA-2023-004 A RESOLUTION OF THE GOVERNING BOARD OF THE ANAHEIM HOUSING AUTHORITY APPROVING I.) A COOPERATION AGREEMENT FOR THE NORTH HARBOR ANAHEIM PERMANENT SUPPORTIVE HOUSING APARTMENTS, BY AND BETWEEN THE CITY OF ANAHEIM AND THE ANAHEIM HOUSING AUTHORITY, SUBSTANTIALLY IN THE FORM ATTACHED HEREWITH; II.) A PRELIMINARY FUNDING AWARD LETTER, SUBSTANTIALLY IN THE FORM ATTACHED HEREWITH BETWEEN THE ANAHEIM HOUSING AUTHORITY AND LINC HOUSING CORPORATION; III.) AUTHORIZING THE EXECUTIVE DIRECTOR OF THE ANAHEIM HOUSING AUTHORITY, OR HER DESIGNEE, TO NEGOTIATE THE TERMS OF AND FINALIZE AN AFFORDABLE HOUSING AGREEMENT; IV.) AUTHORIZING THE EXECUTIVE DIRECTOR OF THE ANAHEIM HOUSING AUTHORITY, OR HER DESIGNEE, TO EXECUTE AND ADMINISTER THE COOPERATION AGREEMENT AND PRELIMINARY FUNDING AWARD LETTER ON BEHALF OF THE ANAHEIM HOUSING AUTHORITY WITH THE CITY; V.) AUTHORIZING THE EXECUTIVE DIRECTOR OF THE ANAHEIM HOUSING AUTHORITY, TO ENTER INTO SUBSEQUENT AGREEMENTS NECESSARY TO IMPLEMENT THE PROJECT, PROVIDED THAT SUCH AGREEMENTS DO NOT MATERIALLY INCREASE OR EXTEND THE ASSISTANCE PROVIDED BY THE ANAHEIM HOUSING AUTHORITY UNDER THE COOPERATION AGREEMENT OR PRELIMINARY FUNDING AWARD LETTER. WHEREAS, the Anaheim Housing Authority ("Authority") is a California housing authority duly organized and existing under the California Housing Authorities Law, Part 2 of Division 24, Section 34200, et seq., of the Health and Safety Code ("HAL"), and has been authorized to transact business and exercise the power of a California housing authority pursuant to action of the City Council ("City Council") of the City of Anaheim; and WHEREAS, the City of Anaheim ("City") is a California municipal corporation and charter city; and WHEREAS, City is a participating jurisdiction with the United States Department of Housing and Urban Development ("HUD") that has received funds ("HOME -American Rescue Act Plan Funds" or "HOME -ARP") from HUD pursuant to section 217 of the Cranston Gonzalez National Affordable Housing Act of 1990, as amended (42 U.S.C. 12701 et seq.) (NAHA). On April 8, 2021, HUD allocation HOME -ARP funds to 651 grantees using the formula established at 24 CFR 92.50 and 92.60. WHEREAS, HOME -ARP provides funds for homelessness and supportive services assistance under the HOME statute of Title II of NAHA (42 U.S.C. 12721 et seq.) and authorizes the Secretary of HUD to waive or specify alternative requirements for any provision of NAHA or regulation for the administration of the HOME -ARP program, except requirements related to fair housing, civil rights, nondiscrimination, labor standards, and the environment, upon a finding that the waiver 3 or alternative requirement is necessary to expedite or facilitate the use of HOME -ARP funds. Pursuant to ARP, the per -unit cost limits (42 U.S.C. 12742(e)), commitment requirements (42 U.S.C. 12748(g)), matching requirements (42 U.S.C. 12750), and set -aside for housing developed, sponsored, or owned by community housing development organizations (CHDOs) (42 U.S.C. 12771) in NAHA do not apply to HOME -ARP funds. WHEREAS, the HOME -ARP Program funds are used by Authority, as a participating jurisdiction, to carry out multi -year housing strategies through acquisition, rehabilitation, and new construction of housing for target income persons and families; and WHEREAS the City has been allocated grant funding provided by HUD pursuant to the Housing Opportunities for Persons With AIDS ("HOPWA") program authorized under the AIDS Housing Opportunity Act (42 U.S.C. 12901 et seq.) (herein referred to as the "HOPWA Act") and the HOPWA program regulations (24 CFR Part 574); and WHEREAS Section 574.300 (Eligible Activities) of the HOPWA Regulations authorizes the use of HOPWA funds for acquisition, rehabilitation, conversion, lease, and repair of facilities to provide housing and services among other activities with HOPWA funds. WHEREAS, Authority additionally maintains a Low and Moderate Income Housing Asset Fund (the "Housing Asset Fund") pursuant to Health and Safety Code Section 34176 and 34176.1, which Housing Asset Funds are available to Authority to assist in the development and operation of rental housing in City that is affordable to persons and families of low, very low and extremely low income; and WHEREAS, on September 9, 2021, the Department of Housing and Community Development ("Department") released the Homekey Round 2 Notice of Funding Availability (NOFA) as an opportunity for state, regional, and local public entities to develop a broad range of housing types, including but not limited to hotels, motels, hostels, single-family homes and multifamily apartments, adult residential facilities, and manufactured housing, and to convert commercial properties and other existing buildings to Permanent or Interim Housing for the Target Population, as defined; and WHEREAS, the City ("Co -Applicant") jointly applied for Homekey grant funds with Line Housing Corporation, a California limited liability company ("Developer") and American Family Housing USA, a California non-profit benefit corporation, and was awarded Homekey grant funds for (i) acquisition of the Studio 6 Extended Stay Motel, located at 1251 N Harbor Boulevard and (ii) conversion and rehabilitation of (119) rooms in the Motel into an 89-unit professionally managed, interim housing project; WHEREAS, Developer has informed Authority and City that it is the intention of the Developer to convert and rehabilitate the existing improvements at the Site for use as an affordable rental housing project as allowed by the Homekey Program; and WHEREAS, Authority and Developer will enter into that certain Preliminary Award Letter dated as of April 18, 2023 (the "Letter"), pursuant to which Authority will make a preliminary award of HOME -ARP and/or Housing Asset Funds and/or HOPWA Funds to Developer, in the form of a loan, for the purpose of assisting the Developer with the rehabilitation and conversion of the Studio 6 Extended Stay Motel and long-term management and operation of a permanent supportive housing project thereon by Developer. The Letter sets forth certain basic business terms which will be augmented by a comprehensive affordable housing agreement containing terms customary to such agreements of Authority and including such additional terms as the Executive Director shall deem to be appropriate (the "Affordable Housing Agreement"); and WHEREAS, at the request of the Developer, Authority staff and legal counsel have prepared the form of Preliminary Award Letter (the "Letter"), which provides for (a) the Authority Executive 2 Director to enter into an Affordable Housing Agreement with the Developer for the rehabilitation and conversion of the Studio 6 Extended Stay Motel and operation and management by Developer of a 89-unit permanent supportive housing project at the Site for not fewer than 55-years (the "Project"); and (b) Authority to provide a loan not to exceed $4,900,649 to the Developer sourced from HOME - ARP Funds and/or Housing Asset Funds and/or HOPWA Funds, (c) 87 Project Based Vouchers (PBV), and other terms and conditions relating to the Project and Authority's assistance to Developer for the Project; and WHEREAS, all initially capitalized terms used in this Resolution without definition have the meanings set forth in the Letter; and WHEREAS, by this Resolution, Authority will request that City enter into the agreement with Authority as submitted herewith entitled "Cooperation Agreement (North Harbor Supportive Housing Anaheim Apartments)" (the "Cooperation Agreement"). By the Cooperation Agreement, City would transfer certain moneys as set forth therein to be applied by Authority as provided under the Cooperation Agreement substantially in the form submitted herewith; and WHEREAS, City and Authority will execute a Cooperation Agreement pursuant to which City agreed to contribute HOME -ARP Funds and/or HOPWA Funds to the Project; such Cooperation Agreement remains in full force and effect and shall apply to the Project as described herein and in the Letter; and WHEREAS, Developer is experienced in the construction, development, operation and management of high quality housing which is intended to be affordable to households exiting homelessness of extremely low income in Southern California, including, without limitation, dwelling units developed utilizing HOME -ARP Funds, HOPWA Funds and/or Housing Asset Funds; and WHEREAS, Developer (as "Applicant" to TCAC) has informed Authority and City that Developer intends to submit an application to TCAC ("Application") to obtain an allocation of nine percent (9%) Low Income Housing Tax Credits ("Tax Credits") for the Project; if Developer does not receive such allocation of 9% Tax Credits, Developer shall submit a second Application of 9% Tax Credits to TCAC following notification that Developer's first Application was not successful; If that second round is not successful, Developer may make an Application for 4% tax credits for one additional (third) successive round; provided, however, that the Authority shall have no obligation to increase the amount of the Anaheim Loan and, if one is proposed, such increase in the amount of the Anaheim Loan to be provided by Authority to Developer from the amount set forth in the Letter shall first be approved by the Authority Governing Board; and WHEREAS, by Authority's commitment of monies sourced in whole or in part from the Housing Asset Fund and/or HOME -ARP Funds and/or HOPWA Funds for the Agreement and/or the Anaheim Loan, neither Authority (or Successor Agency or City) nor Developer intends in any manner to waive any constitutional and/or legal rights under the Dissolution Act or any other applicable laws; therefore, Authority (and Successor Agency and City) and Developer expressly and intentionally reserve all rights under any and all applicable laws to challenge the validity of any or all provisions of the Dissolution Act in any legal manner or proceeding, including challenging determinations made by the Oversight Board and/or California Department of Finance, without prejudice to City or Successor Agency or Authority or Developer; and 3 WHEREAS, subject to satisfaction of the conditions set forth in the Letter and further subject to the Affordable Housing Agreement, Developer shall own and shall rehabilitate and operate the Site and shall cause the Site to be maintained and managed in accordance with the Letter and an Affordable Housing Agreement and other instruments to be executed by Authority and Developer with respect to the Project, during the entire 55-year Affordability Period contemplated by the Letter; and WHEREAS, the Project is vital to and in the best interest of City and the health, safety and welfare of its residents, and is in accordance with the public purposes of applicable state and local laws and requirements; and WHEREAS, Authority has prepared such notices, plans and reports as may be required prior to consideration of this matter and has made available for public inspection all such matters prior to the public consideration of this matter; and WHEREAS, Authority and City held a public hearing to consider the Letter and the transaction contemplated therein in accordance with the Housing Authorities Law, the California Community Redevelopment Law to the extent applicable, Health and Safety Code Section 33000, et seq., and the Dissolution Act; and WHEREAS, Authority has duly considered all terms and conditions of the proposed Agreement, including all attachments thereto, and believes that the Project is in the best interests of City and the health, safety, and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements. NOW, THEREFORE, BE IT RESOLVED BY THE ANAHEIM HOUSING AUTHORITY: Section 1. The Authority Board finds and determines that the foregoing recitals are true and correct and are a substantive part of this Resolution. Section 2. The Authority Board hereby finds and determines, based on all documentation, testimony and other evidence in the record before it, that (a) the proposed rehabilitation and conversion of the Site will assist in the elimination of blight by allowing a parcel (the Site) constrained with infrastructure deficiencies to be converted to a 89-unit permanent supportive housing project with the covenants and conditions and rehabilitation costs authorized by the Letter. Section 3. The Authority Board hereby approves the Letter between Authority and Linc Housing Corp., substantially in the form submitted herewith, and the Cooperation Agreement substantially in the form submitted herewith. The Authority Executive Director and the Authority Secretary/City Clerk are hereby authorized to execute and attest the Letter, and subsequently and subject to compliance with the conditions set forth in the Letter, prepare an Affordable Housing Agreement and various implementing documents on behalf of Authority, and execute and administer the Cooperation Agreement. In such regard, the Authority Executive Director (or her duly authorized representative) is authorized (a) to sign the final version of the Letter after completion of any such non -substantive, minor revisions, (b) to negotiate and execute the final versions of an Affordable Housing Agreement, and other instruments implementing the Project as set forth in the Letter; Copies of the final form of the Letter, when duly 4 executed and attested, shall be placed on file in the office of the City Clerk. Further, the Authority Executive Director (or her duly authorized representative) is authorized to implement the Letter and take all further actions and execute all documents referenced therein and/or necessary and appropriate to carry out the transaction contemplated by the Letter as well as the Cooperation Agreement. The Authority Executive Director (or her duly authorized representative) is hereby authorized to the extent necessary during the implementation of the Letter to make technical or minor changes and interpretations of the Letter after execution, as necessary, to properly implement and carry out the Letter, including all exhibits thereto, provided any and all such changes shall not in any manner materially affect the rights and obligations of Authority under the Letter. The authorization given to the Authority Executive Director shall not include amendments which would materially increase or extend the assistance to be provided by the Authority under the Cooperation Agreement or the Letter. Section 4. In addition to the authorization of Section 3 above, the Authority Executive Director is hereby authorized, on behalf of Authority, to sign all other documents necessary or appropriate to carry out and implement the Letter, including causing the issuance of warrants in implementation thereto, and to administer Authority's obligations, responsibilities and duties to be performed under the Letter and agreements subsequently executed to implement the Letter, including all exhibits thereto. In addition, the Executive Director is authorized to execute and administer on behalf of the Housing Authority the Cooperation Agreement substantially in the form submitted herewith. Section 5. Pursuant to AB 140, which establishes a statutory exemption from the California Environmental Quality Act (CEQA) for activities funded by Homekey Round 2, the following CEQA statutory exemption has been added to Health and Safety Code section 50675.1.4: (a) Notwithstanding any other law, the California Environmental Quality Act (Division 13 (commencing with section 21000) of the Public Resources Code) shall not apply to any project, including a phased project, funded pursuant to section 50675.1.3 if all of the following requirements, if applicable, are satisfied: (1) No units were acquired by eminent domain. (2) The units will be in decent, safe, and sanitary condition at the time of their occupancy. (3) The project proponent shall require all contractors and subcontractors performing work on the project to pay prevailing wages for any proposed rehabilitation, construction, or major alterations in accordance with Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code. (4) The project proponent obtains an enforceable commitment that all contractors and subcontractors performing work on the project will use a skilled and trained workforce for any proposed rehabilitation, construction, or major alterations in accordance with Chapter 2.9 (commencing with Section 2600) of Part 1 of Division 2 of the Public Contract Code. (5) The project proponent submits to the lead agency a letter of support from a county, city, or other local public entity for any proposed rehabilitation, construction, or major alteration work. (6) Any acquisition is paid for, in whole or part, with public funds. (7) The project provides housing units for individuals and families who are experiencing homelessness or who are at risk of homelessness. (8) Long-term covenants and restrictions require the units to be restricted to persons experiencing homelessness or who are at risk of homelessness, which may include lower income and very low income households, as defined by Section 50079.5, for no fewer than 55 years. (9) The project does not result in an increase in the existing onsite development footprint of structure, structures, or improvements by more than 10 percent. Any increase to the existing, onsite development footprint shall be exclusively to support the provision of or conversion to housing for the designated population, including, but not limited to, both of the following: (A) Achieving compliance with local, state, and federal requirements. (B) Providing sufficient space for the provision of services and amenities. (b) If the lead agency determines that a project is not subject to the California Environmental Quality Act pursuant to this section, and the lead agency determines to approve or to carry out that project, the lead agency shall file a notice of exemption with the Office of Planning and Research and the county clerk of the county in which the project is located in the manner specified in subdivisions (b) and (c) of section 21152 of the Public Resources Code. (c) This section shall remain in effect only until July 1, 2024. Section 6. In addition to the CEQA exemption, AB 140 provides significant land -use streamlining for projects utilizing Homekey Round 2 funds. This land use "exemption" is independent of the CEQA exemption and applies to all Homekey Round 2 funded projects. All Homekey Round 2 projects are eligible for such streamlining and are "deemed consistent and in conformity with any applicable local plan, standard, or requirement, and any applicable coastal plan, local or otherwise, and allowed as a permitted use, within the zone in which the structure is located, and shall not be subject to a conditional use permit, discretionary permit, or any other discretionary reviews or approvals." (Health & Saf. Code, § 50675.1.3, subd. (h).) Any project using money from Homekey Round 2 funds for any of the purposes listed in the Homekey Round 2 NOFA is deemed consistent with all applicable local regulatory plans and regulations such as the local general plan and local codes and ordinances. Such projects do not need to undergo any discretionary local permit review or approval process (e.g., a discretionary use permit process) before being able to proceed with the project. Notably, AB 140 did not place time limits on the use of this land use exemption, in contrast to the CEQA exemption, which is time limited. THE FOREGOING RESOLUTION IS PASSED, APPROVED AND ADOPTED BY THE GOVERNING BOARD OF THE ANAHEIM HOUSING AUTHORITY THIS EIGHTEENTH (18th) DAY OF APRIL, 2023, BY THE FOLLOWING ROLL CALL VOTE: Chairperson Aitken and Authority Members Rubalcava, AYES: Diaz, Leon, Kurtz, Faessel and Meeks NOES: None ABSTAIN: None ABSENT: None ANAHEI -SOUSING AUTHORITY By: Chair •son 'T . ': .Author ty Secretary ATTACHMENT TO RESOLUTION Page 1 of 1 ATTACHMENT 1 COOPERATION AGREEMENT (North Harbor Apartments) This COOPERATION AGREEMENT (North Harbor Apartments) ("Cooperation Agreement") dated as of April 18, 2023 ("Date of Agreement"), is entered into by and between the CITY OF ANAHEIM, a charter city and California municipal corporation ("City"), and the ANAHEIM HOUSING AUTHORITY, a public body, corporate and politic ("Authority"). RECITALS A. City is a California charter city and municipal corporation and a participating jurisdiction with the United States Department of Housing and Urban Development ("HUD") that has received funds ("HOME -American Rescue Plan Act Funds" or "HOME -ARP") from HUD pursuant to section 217 of the Cranston Gonzalez National Affordable Housing Act of 1990, as amended (42 U.S.C. 12701 et seq.) ("NAHA"). On April 8, 2021, HUD allocated HOME -ARP funds to 651 grantees using the formula established at 24 CFR 92.50 and 92.60. B. HOME -ARP provides funds for homelessness and supportive services assistance under the HOME statute of Title I1 of NAHA (42 U.S.C. 12721 et seq.) and authorizes the Secretary of HUD to waive or specify alternative requirements for any provision of NAHA or regulation for the administration of the HOME -ARP program, except requirements related to fair housing, civil rights, nondiscrimination, labor standards, and the environment, upon a finding that the waiver or alternative requirement is necessary to expedite or facilitate the use of HOME -ARP funds. Pursuant to ARP, the per -unit cost limits (42 U.S.C. 12742(e)), commitment requirements (42 U.S.C. 12748(g)), matching requirements (42 U.S.C. 12750), and set -aside for housing developed, sponsored, or owned by community housing development organizations ("CHDOs") (42 U.S.C. 12771) in NAHA do not apply to HOME -ARP funds. C. City has been allocated grant funding provided by HUD pursuant to the Housing Opportunities for Persons With AIDS ("HOPWA") program authorized under the AIDS Housing Opportunity Act (42 U.S.C. 12901 et seq.) (herein referred to as the "HOPWA Act") and the HOPWA program regulations (24 CFR Part 574); and Section 574.300 (Eligible Activities) of the HOPWA Regulations authorizes the use of HOPWA funds for acquisition, rehabilitation, conversion, lease, and repair of facilities to provide housing and services among other activities with HOPWA funds. D. Authority is a California housing authority acting under the California Housing Authorities Law, Part 2 of Division 24, Section 34200, et seq., of the Health and Safety Code ("HAL"). Authority serves as the housing successor to the former Anaheim Redevelopment Agency (the "Former Agency") and administers the Former Agency's Low and Moderate Housing Asset Fund (the "Housing Asset Fund") pursuant to Health and Safety Code Sections 34176 and 34176.1. E. Linc Housing Corporation, a California limited liability company ("Developer") is the owner of land consisting of approximately 1.47 acres located at 1251 N Harbor Boulevard (the "Site") and has proposed to develop and operate thereon an 89 unit affordable rental housing project, which includes 2 manager units (the "Project"). F. As part of its proposal, Developer has requested that City transfer Four Million Nine Hundred Thousand Six -hundred and Forty -Nine Dollars ($4,900,649) in whole or in part from (the "Designated HOME -ARP Amount") moneys available to City under the HOME -ARP Program and/or (the "Designated HOPWA Amount") under the HOPWA Act. Developer has indicated its intention to secure an allocation of Tax Credit as part of the funding of the Project. G. In order to eliminate deterioration and to revitalize the Site and the surrounding and nearby area, Authority and Developer are negotiating toward a comprehensive transactional agreement (an "Affordable Housing Agreement"). Pending the negotiation and preparation of the Affordable Housing Agreement, the Authority has executed a letter which sets forth certain preliminary and tentative deal points (the "Preliminary Commitment Letter"). H. In view of the proposal as received by Authority from Developer, the Authority and City are entering into this Cooperation Agreement pursuant to which the City agrees to contribute up to the Designated HOME -ARP Amount and/or the Designated HOPWA Amount in moneys sourced frorn the City's HOME -ARP Funds and/or HOPWA Act Funds for purposes of assisting in the development of the Project, as hereinafter further determined. I. Based upon the foregoing, the City desires to make available and transfer to the Authority by this Cooperation Agreement HOME -ARP Funds up to the Designated HOME -ARP Amount and/or HOPWA Act Funds up to the Designated HOPWA Amount. NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE MUTUAL PROMISES, COVENANTS AND CONDITIONS CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS: Section 1. TRANSFER OF FUNDS BY CITY TO AUTHORITY. City agrees to transfer to Authority up to the Designated HOME -ARP Amount of HOME -ARP Funds and/or up to the Designated HOPWA Amount (with the actual amount as transferred constituting "Project Funds") held by the City to enable the Authority to proceed with and complete those activities which Authority deems to be necessary and appropriate to accomplish the Project ("Activities"). (a) Further, Authority covenants and agrees to use the Project Funds (i) in strict conformance with Title II of the Cranston -Gonzalez National Affordable Housing Act (42 U.S.C. 12701-12839) and the HOME Program Regulations codified at 24 CFR Part 92, as amended by the 2013 HOME Final Rule, if applicable, (ii) in strict conformance with the HOPWA Regulations, if applicable, and (iii) to implement and perform the Activities in order to expand the supply of decent, safe, sanitary and affordable housing for Extremely Low, Very Low Income and Low Income Households, and in accordance with any other applicable rules. (b) Authority may elect to use Housing Asset Funds and/or HOPWA Funds to fund all or portion or combination thereof to fund the Project, in the sole discretion of the Authority Executive Director. Section 2. LIABILITY AND INDEMNIFICATION. In contemplation of the provision of Section 895.2 of the California Government Code imposing certain tort liability jointly upon public entities solely by reason of such entities being parties to an agreement as defined by Section 895.4 and 895.6 of such Code, each of the Parties, as between themselves, pursuant to the authorization contained in Section 895.4 and 895.6 of such Code, will each assume the full liability imposed on it, or any of its 2 officers, agents, or employees by law for injury caused by negligent or wrongful act or omission occurring in the performance of this Cooperation Agreement to the same extent that such liability would be imposed in the absence of Section 895.2 of such Code. (a) To achieve the above -stated purposes, each Party indemnifies and holds harmless the other Party for any loss, costs or expense that may be imposed upon such other Party solely by virtue of such Section 895.2. The provisions of Section 2778 of the California Civil Code are made part hereof as if fully set forth herein. Section 3. EFFECTIVE DATE. This Cooperation Agreement shall take effect from and after the date of approval hereof by the Authority Board and the City Council. Section 4. REPRESENTATIONS AND WARRANTIES. (a) Representations and Warranties ofAuthority. Authority hereby represents and warrants to City as follows: (i) Authority of Anaheim Housing Authority. Authority represents and warrants to City it is a public body, corporate and politic, duly existing pursuant to the HAL, and it has been authorized to transact business pursuant to action of the City Council. Authority has full power and authority to execute and deliver this Cooperation Agreement and to accept the funds contemplated hereunder, to execute and deliver documents or instruments, if any, executed and delivered, or to be executed and delivered, pursuant to this Cooperation Agreement, and to perform and observe the terms and provisions of all of the above. (ii) Authority of Persons Executing Documents. This Cooperation Agreement and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Cooperation Agreement have been executed and delivered by persons who are duly authorized to execute and deliver the same for and on behalf of Authority, and all actions required under Authority's organizational documents and applicable governing law for the authorization, execution, delivery and performance of this Cooperation Agreement and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Cooperation Agreement, have been duly taken. (b) Representations and Warranties of City. City represents and warrants to Authority that it is a charter city and municipal corporation. City has full right, power and lawful authority to enter into this Cooperation Agreement and the execution, performance and delivery of this Cooperation Agreement by City, and persons on behalf of City, have been fully authorized by all requisite actions on the part of the City Council. Section 5. DEFAULT AND REMEDIES. (a) Events of Default. Failure by either Party to duly perform, comply with, or observe any of the conditions, terms, or covenants of this Cooperation Agreement shall be an Event of Default. The Party who so fails or delays must immediately commence to cure, correct or remedy such failure or delay, and shall complete such cure, correction or remedy with reasonable diligence and during any period of curing shall not be in default. The injured Party shall give written notice of default to the Party in default, specifying the default complained of by the injured Party. If the default is not commenced to be cured within thirty (30) days after service of such notice of default and is not cured promptly in a continuous diligent manner in a reasonable period of time after commencement, the defaulting Party shall be liable for any damages caused by such default, and the non -defaulting Party may thereafter commence action for damages with respect to such default or for specific performance of this Cooperation Agreement. (b) Remedies. The occurrence of an Event of Default by Authority that is not cured within the time set forth herein shall relieve City of any obligation to disburse the Project Funds. The Authority may seek specific performance of this Cooperation Agreement for City's failure to provide the Project Funds as provided under this Cooperation Agreement. The non -defaulting Party may seek money damages or any other remedy available at law or equity against the defaulting Party for an Event of Default hereunder. Section 6. MISCELLANEOUS. (a) Time. Time is of the essence in this Cooperation Agreement. (b) No Third Parties Benefited. This Cooperation Agreement is made and entered into for the sole protection and benefit of City, its successors and assigns, and the Authority, its successors and assigns, and no other person or persons shall have the right of action hereon. (c) Successors and Assigns. The terms hereof shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto; provided, however, that no assignment of Authority's rights hereunder shall be made, voluntarily or by operation of law, without the prior written consent of City and that any such assignment without said consent shall be void. (d) Construction of Words. Except where the context otherwise requires, words imparting the singular number shall include the plural number and vice versa, words imparting persons shall include firms, associations, partnerships and corporations, and words or either gender shall include the other gender. (e) Partial Invalidity. If any provision of this Cooperation Agreement shall be declared invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions hereof shall not in any way be affected or impaired. (f) Governing Law. This Cooperation Agreement and any instruments given pursuant hereto shall be construed in accordance with and be governed by the laws of the State of California. (g) Amendment. This Cooperation Agreement may not be changed orally, but only by agreement in writing signed by Authority and City. (h) Captions and Headings. Captions and headings in this Cooperation Agreement are for convenience of reference only, and are not to be considered in construing the Cooperation Agreement. [signature blocks for Cooperation Agreement on next page] 9 IN WITNESS, THE PARTIES HAVE EXECUTED THIS COOPERATION AGREEMENT (NORTH HARBOR APARTMENTS) AS OF THE EFFECTIVE DATE IN THE FIRST PARAGRAPH ABOVE. "CITY" CITY OF ANAHEIM a charter city and municipal corporation an APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY Ryan Hodge Deputy City Attorney Grace Ruiz-Stepter, Director Housing and Community Development AUTHORITY: ANAHEIM HOUSING AUTHORITY, a public body, corporate and politic M. APPROVED AS TO FORM: BEST BEST & KRIEGER Melissa Crosthwaite, Special Counsel Grace Ruiz-Stepter, Executive Director City of Anaheim ANAHIm HOUSING AUTHORITY Tl� Est. 1975 April 18, 2023 Ms. Rebecca Clark Linc Housing Corporation 3590 Elm Avenue Long Beach, CA 90807 SUBJECT: Preliminary Award Letter regarding Certain Financial Assistance by the City of Anaheim and the Anaheim Housing Authority, including a Loan sourced from the HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds, 87 Section 8 PBVs for the Proposed Conversion and Rehabilitation of the previous 119-Unit Studio 6 Extended Stay Motel located at 1251 N Harbor Boulevard to a Permanent Supportive Housing Project in Anaheim. Dear Ms. Clark: This Preliminary Award Letter ("PAL") constitutes the City's commitment to provide certain financial assistance as herein contained to Linc Housing Corporation ("LH"), a California non-profit corporation, or another legal entity,under the control of LH (in either case, "Developer") for the project described, below, which financing will be evidenced by grant, loan and/or regulatory agreements setting forth the parties' rights and obligations. Background Developer submitted an application to the City of Anaheim ("City") and the Anaheim Housing Authority ("Authority")' for financial assistance for the proposed affordable housing project commonly known as "North Harbor (FKA Studio 6 Anaheim) located at 1251 N Harbor Boulevard, Anaheim, CA", which is a conversion and rehabilitation of the previous 119-unit Studio 6 Extended Stay Motel currently being used as an interim housing site for homeless individuals as part of the State's Project Homekey Round 2 Program. On January 25, 2022, the Anaheim City Council approved the submission of an application to the California Department of Housing and Community Development ("HCD") for Homekey grant funds ("Homekey Application"). The Application was submitted in partnership with the Developer and the project's supportive services provider, American Family Housing USA, a California non-profit corporation. On March 28, 2022, the City was notified by HCD that the Homekey Application was approved and the City would be awarded $26,537,559 to acquire and operate the The City is a California municipal corporation and charter city; and, the Authority is a public body corporate and politic organized and existing pursuant to the Housing Authorities Law, California Health and Safety Code Section 34200, et seq. ("HAL"). In this Preliminary Award Letter, the City and the Authority are referred to together as "Anaheim". Ms. Rebecca Clark Linc Housing Corporation Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California April 18, 2023 Page 2 of 15 Studio 6 Extended Stay Motel for interim housing. During the Interim Supportive Housing Phase (Phase' I), the Developer requested that the City provide a loan of approximately $2,877,959 from the Authority's Low and Moderate Income Housing Asset Fund ("LMIHAF") to support the capital match requirement of HCD and a grant of approximately $7,523,282 in Homeless Housing Assistance Program ("HHAP") funds to support the operational match requirement. The Authority and Developer entered into an Affordable Housing Agreement and associated document for the duration of the "Interim Housing Period asdefined by the Affordable Housing Agreement. The Interim Housing Period (or Phase 1) involved the rehabilitation of eighty-nine (89) units for the purposes of interim housing as required by the Homekey funding guidelines, with a 15 year affordability covenant. The eighty-nine (89) units were in fair condition and ready for occupancy after minor repairs, with the exception of units that required renovation to meet the Homekey accessibility and hearing/visual requirements. During Phase I, the leasing and temporary community space were updated and some of the units were utilized for counseling and office spaces. As contemplated when the Authority entered into an Affordable Housing Agreement with Developer for Phase I, the project will now be transitioning into the development of Permanent Supportive Housing (Phase II), which will involve converting the existing 119=unit motel currently being utilized for interim housing to an 89-unit affordable permanent supportive housing project ("Project"). The Project will include sixty-seven (67) studio units, twenty (20) one -bedroom units, plus two two -bedroom manager units. For Phase II, the Developer has requested that the City provide, and the City hereby commits to provide, a loan of up to $4,900,649 consisting of any or all of the following funding sources: HOME American Rescue Plan Act (HOME ARP) program funds, Housing Opportunities for Persons with Aids (HOPWA) and/or moneys from the Authority's Low and Moderate Income Housing Asset Fund ("LMIHAF") ("Anaheim Loan"). The Developer additionally requested that the Authority provide up to 87 Project -Based Section 8 Vouchers ("PBV Assistance") to the Developer for the Project pursuant to the Project Based Voucher Law, 42 U.S.C. 1437f(o)(13), and the federal regulations promulgated thereunder set forth at 24 CFR Part 983 (collectively, the "Section 8 Program"). As specifically referenced in Recital F of the Affordable Housing Agreement, and as authorized by Section 15.10, the Affordable Housing Agreement will be amended and restated to address Phase II, making various changes for consistency and compliance with this PAL, and extending the term of the Affordable Housing Agreement. In addition to extending the term of the Affordable Housing Agreement, the amended and restated Affordable Housing Agreement will specifically provide that the term of the $2,877,959 LMIHAF loan from the City will also be extended for a new term of 55 years and bear simple interest at 3% per annum. Any further references to an Affordable Housing Agreement, or AHA, in this PAL shall mean the Amended and Restated Affordable Housing Agreement (for Phase 1). Ms. Rebecca Clark Linc Housing Corporation Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California April 18, 2023 Page 3 of 15 It is required that Developer will also be applying for Tax Credit funding providing an estimated additional $20,447,388 in 9% tax credit equity for the project for Phase II, for two'(2) successive rounds, if unsuccessful in the first round, and for 4% tax credit equity for one additional (3rd) round, if necessary, in the manner and with any limitations that may be designated in this PAL and any additional agreements entered into in furtherance of this PAL. Land Use Entitlement and Anaheim Assistance In connection with seeking to undertake the Project (Phase II as noted), the Developer submitted to the City and the Authority a request for financial assistance and other benefits as. herein defined and described (together, "Anaheim Assistance"). As part of the State's Project Homekey Program, Developer submitted a request to the City for concurrence with the CEQA and Land use preemption pursuant to Assembly Bill 140 ("AB 140"). Homekey Round 2 Program projects are entitled to apply for and receive. a California Environmental Quality Act ("CEQA") exemption and land use streamlining per AB140 for interim housing projects that will subsequently be converted into permanent supportive housing units, subject to specific requirements enumerated in Health and Safety Code section 50675.1.4. Homekey Round 2 projects are eligible for such streamlining and are deemed consistent and in conformity with any applicable local plan, standard, or requirement, and any applicable coastal plan, local or otherwise and allowed as a permitted use, within the zone in which the structure is located, and shall not be subject to a conditional use permit, discretionary permit, or any other discretionary reviews or approvals. (Health and Safety Codes 50675.1.4 and 50675.1.3, Subdivision (h)). The Developer proposes that, with the written consent of the Authority, as applicable, the Developer shall prepare and submit to the City an application for Building Plan Check and, if approved, construction subject to the City's development standards, zoning and other laws and regulations unless otherwise exempt per AB140 (Health and Safety Codes 50675.1.4 and 50675.1.3, Subdivision (h).). In connection with implementation of the Project, the Developer has requested that Anaheim provide to the Developer, by this PAL, the Anaheim Assistance, more fully described herein, and has agreed to meet certain obligations in order to receive that Anaheim Assistance. • The Developer will submit applications for above, to complete Phase II (Permanent S of the site and satisfy the provisions of th e Tax Credit financing, as detailed upportive Housing) development California Tax Credit Allocation Ms. Rebecca Clark Linc Housing Corporation Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California April 18, 2023 Page 4 of 15 Committee ("TCAC") Regulations Implementing the Federal and State Low Income Housing Tax Credit Laws, California Code of Regulations, Title 4, Division 17, Chapter 1, Section 10300, et seq. ("TCAC Regulations"), in particular Section 10326, albeit there is no intention to violate HOME Program requirements, in particular 24 CFR 92.2. If the Developer receives an award of low-income housing tax credits ("Tax Credits"), then the Developer and Anaheim may negotiate and enter into a comprehensive agreement for the operation of affordable rental housing improvements (the "AHA") in implementation of the Tax Credits and the Anaheim Assistance. With respect to Tax Credits and for further clarification, the Developer is required to make an application to the California Tax Credit Allocation Committee (CTCAC) for first round 9% Tax Credits scheduled for April 2023. If the Developer's application for 9% Tax Credits is unsuccessful, the Authority will agree to one (1) additional successive application to CTCAC for an allocation of 9% Tax. Credits.. if that second round is not successful, Developer shall apply for California Debt Limit Allocation Committee (CDLAC) for tax exempt bonds and to CTCAC for 4% tax credits for one additional (third) successive round; provided, however, that the Authority shall have no obligation to increase the amount of Anaheim Assistance to the Project from that described in this PAL. If no award is made, Anaheim and Developer agree to meet and confer as to the next steps, as may be more fully memorialized in an agreement executed in furtherance of the PAL. Anaheim Assistance The City and Authority have reviewed the Developer's requests for assistance and on April 18, 2023 at a public meeting authorized and approved issuance of this letter evidencing the preliminary award and commitment of the Anaheim Assistance. Anaheim has made the Developer aware of the 2013 HOME Final Rule, specifically including the amendments to the definition of "commitment" in 24 CFR 92.2 that prohibits the City as a participating jurisdiction ("PY) from providing a commitment (as the term is defined therein) of HOME Program funds to any specific local project until "the [City] and project owner [Developer] have executed a written legally binding agreement under which HOME assistance will be provided to the owner for an identifiable project for which all necessary financing has been secured, a budget and schedule have been established, and underwriting has been completed and under which construction is scheduled to start within twelve months of the agreement date." (Italics added.) Notwithstanding the definition of "commitment" in 24 CFR 92.2 as amended by the 2013 HOME Final Rule, 24 CFR 92.504(c)(3) authorizes the City to "preliminarily award HOME funds for a proposed project, contingent on conditions such as obtaining other financing for the project" [italics added]; however, this section goes on to clearly confirm that "[t]his preliminary award is not a commitment to a project. The written agreement committing the HOME funds to the project must meet Ms. Rebecca Clark Linc Housing Corporation Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program, Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim; California April 18, 2023 Page 5 of 15 the requirements of 'commit to a specific local project' in the definition of `commitment' in §92.2 ..." Thus, while this letter is not a commitment as defined under the HOME Program of federal funds for Anaheim Assistance as the term commitment is defined therein, Anaheim intends that this letter evidence the City's and Authority's preliminary award of the Anaheim Assistance to the Developer for the Project subject to the conditions described below. Further, Anaheim states its objective for the Developer to satisfy the provisions of the TCAC Regulations, in particular Section 10326, albeit there is no intention to violate HOME Program requirements, in particular 24 CFR 92.2. The amount of the HOME ARP,.HOPWA and/or LMIHAF Loan and Project Based Voucher ("PBV") Assistance to be provided to the Project has been determined, and this letter is provided, and based on, Anaheim's review of the Developer's application for the HOME ARP, HOPWA and/or LMIHAF Loan and PBV Assistance and the development proforma and projected cash flows for the Project submitted by the Developer to Anaheim as part of its Application, as contained in Exhibit A, including the distribution of housing units ("Unit Mix") to which the PBV Assistance will be applied as set forth in the Proforma. The Unit Mix is an important part of the Developer's consideration to Anaheim because the Project is intended to serve a target population: Extremely Low' Income persons who currently reside in motel rooms, other unstable or substandard housing, or are otherwise homeless. The Authority Executive Director has authority to approve revised development proformas and projected cash flows for the Project; provided, however, that the Anaheim Assistance is not materially increased or extended. The AHA, which would'include the infusion of HOME ARP, HOPWA and/or LMIHAF Funds in the Anaheim Loan, would include the following terms as well as other provisions designated by the Authority which are customary to agreements of the Authority providing for the development or rehabilitation of affordable rental housing units and which involve the use of HOME or other federal funding; such AHA will also be subject to review by the City Attorney and/or special counsel engaged by the Authority: Covenants will be recorded which protect.the interests of the Authority in the affordable rental units developed; such covenants shall not be subordinated to deeds of trust or other instruments and, in addition, shall be enforceable by the City as well as the Authority. If a density bonus agreement is entered into, the provisions of such density bonus agreement shall also be senior to any deeds of trust or other instruments. • A loan of Four Million Nine Hundred Thousand Six Hundred and Forty -Nine Dollars ($.4,900,649) (the."Anaheim Loan"). The Anaheim Loan anticipated to be sourced from one or more of the following sources of money:, (1) moneys transferred to the Authority by the City, as such funds have been received by Ms. Rebecca Clark Linc Housing Corporation Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California April 18, 2023 Page 6 of 15 the City as a participating jurisdiction under the federal HOME Investment Partnerships Act and the HOME Investment Partnerships Program, in accordance with Title II of the Cranston -Gonzalez National Affordable Housing Act (42 U.S.C. 12701 et seq.) and the HOME Program regulations codified at 24 CFR Part 92, and provided there is and' shall be no "commitment" of funds to the requirements of Section 92.2 (described herein) are fully satisfied ("HOME Program") and/or (2) funding provided by HUD pursuant to the Housing Opportunities for Persons With AIDS ("HOPWA") program authorized under the AIDS Housing Opportunity Act (42 U.S.C. 12901 et seq.) and/or (3) money held in the Authority's LMIHAF pursuant to the Dissolution Law, Health and Safety Code Sections 34170, et seq., in particular. sections 341.76, and 34176.1 ("LMIHAF Moneys"). The Anaheim Loan will be a residual receipts loan in no lower than third lien position and subordinate to the Primary Loan. It is anticipated that approximately Four Million, Nine Hundred Thousand Six Hundred and Forty -Nine Dollars ($4,900,64.9)(the "Authority Amount") would consist of LMIHAF Moneys and/or HOME ARP Program funds and/or (3) HOPWA Funds2; • Disbursement procedures for release of the loan proceeds; • Principal amount shall bear three and No/1.00ths percent (3%) simple interest per annum; • Repayment from 70% of Residual Receipts (after payment of operating expenses, debt service, any deferred developer fee, and partnership fees to be described in the AHA); • Remaining principal and accrued interest due upon the 55th anniversary of the Closing or earlier upon sale, refinancing or default. • Construction of the Project must be competitively bid in accordance with applicable federal, state and local laws and regulations, in particular the HUD requirements; • This a federally -funded Project and is therefore subject to all federal and state labor laws, including without limitation, federal Davis Bacon and related prevailing wage, labor, contracting and contractor requirements. Additionally, the Project is also a "public works project" and is subject to all state and local laws and regulations for public works, including without limitation California Labor Code Section 1720, et seq. 2 In this PAL, Anaheim Loan and or "HOME ARP, HOPWA and/or LMIHAF Loan" are used interchangeably. Ms. Rebecca Clark Linc Housing Corporation Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California April 18, 2023 Page 7 of 15 • Developer shall include funding in the Project proforma to pay for the Authority's legal costs, including attorney's fees and other associated costs, related to any changes requested or proposed by the Developer after execution and closing of the AHA . • Cost savings from the Project, if any, will be applied first to pay down the Anaheim Loan, subject to compliance with the TCAC Regulations. If the Developer applies for and receives 9% Tax Credits from CTCAC, the Development Loan, if any, to be provided as part of the Anaheim Assistance described above would be in an amount to be determined upon the approval of Developer's 9% Tax Credit applications. Any requested increase in the amount of the Anaheim Loan described herein would require approval by the City Council and the Authority Board; provided that no increase in the Anaheim Loan is contemplated. • The Developer shall continue to apply for other funding sources; such additional funding sources, including the conditions related to the provision of such other funding, shall be subject to prior written approval by the Authority. If other funding is secured, the Anaheim Loan shall be reduced on a dollar for dollar basis. • Developer acknowledges it will be required to enter into agreements containing insurance provisions, as required and determined in the sole discretion of the Anaheim Risk Manager, that will include, but not be limited to the following: o Further, Developer shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to City and Authority duplicate originals or appropriate endorsements of commercial general liability insurance policies in the amount of at least Two Million Dollars ($2,000,000) combined single limits, naming City and Authority and its officers, employees, and agents as additional insureds or co -insureds. Developer shall also furnish or cause to be furnished to City and Authority evidence of builder's risk coverage written on a completed value basis in an amount equal to the full replacement cost of the improvements with coverage available on the so-called non -reporting "all risk" form of policy, including coverage against collapse, fire, and water damage, with such insurance to be in such amounts and form and written by such companies as shall be approved by City and Authority. Such policy shall name City and Authority as a loss payee. The foregoing insurance policies: ■ (a) shall be primary insurance and not contributory with any other insurance which City and Authority may have; Ms. Rebecca Clark Linc Housing Corporation Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California April 18, 2023 Page 8 of 15 ■ (b) shall contain no special limitations on the scope of protection afforded to City and Authority and its officers, employees, agents, and representatives; ■ (c) shall be "date of occurrence" and not "claims made" insurance; ■ (d) shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability; ■ (e) shall provide that the policy will not be cancelled by the insurer or Grantee unless there is a minimum of thirty (30) days prior written notice to City and Authority; ■ (f) shall be written by a good and solvent insurer admitted in California and registered with the California State Department of Insurance; and ■ (g) shall be endorsed to state that any failure to comply with the reporting provisions of the policies shall not affect coverage provided to City and Authority. o Developer shall also furnish or cause to be furnished to City and Authority evidence reasonably satisfactory to City and Authority that Developer's Contractor(s) carry workers' compensation insurance as required by law. Developer shall defend, indemnify, assume all responsibility for, and hold City and Authority and their officers, officials, members, employees, agents, and representatives harmless from all claims, demands, damages, defense costs or liability of any kind or nature relating to (a) any damages to property or death or injuries to persons (including reasonable attorneys' fees and costs and expert witness fees), which may be caused by any acts or omissions of Developer arising from or related to the Project and this PLA, whether such activities or performance be by Developer or by anyone directly or indirectly employed or contracted with by Developer and whether such damage shall accrue or be discovered before or after termination of any agreement, or (b) any litigation, administrative or adjudicative challenge by third parties to the validity, applicability, interpretation or implementation of any agreement, or the certification or approval of the environmental document(s) with respect to the Project and this PLA, or (c) any default of any agreement by Developer. The Anaheim Loan and additional subsidies to the Project and the PBV Assistance are subject to each of the following requirements: Ms. Rebecca Clark Linc Housing Corporation Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California April 18, 2023 Page 9 of 15 Entering into an AHA by and between the Authority and Developer that more specifically describes and authorizes the disbursement of the Anaheim Loan proceeds to the Developer for construction of specified housing units at the Project and the application and use of PBV Assistance for the Project, the restriction of the rents at 87 out of the 89 housing units at the Project to levels that are affordable at 30% of the Area Median Income ("AMI") for a minimum of 55 years. The City's HOME ARP Program funds and/or the HOPWA funds for the Anaheim Loan will be transferred to the Authority pursuant to a cooperation agreement to be entered into between the City and Authority pursuant to the HOME and HOPWA Program. 2. Compliance with the HOME Program, the HOPWA Program, the LMIHAF funds, the Section 8 Program, and applicable federal regulations set forth in 24 CFR Part 92 (as amended by the 2013 HOME Final Rule) and 24 CFR Part 983. 3. Compliance with the California Environmental Quality Act ("CEQA") requirements unless, pursuant to AB 140 or other basis, as a statutory exemption for this Project, as determined to be applicable and appropriate. Although Developer has requested concurrence with CEQA and Land use preemption, nothing herein shall be construed to limit Anaheim's discretion to conduct environmental review and/or determine one or more appropriate basis for exemption. (Health and Safety Codes 50675.1.4 and 50675.1.3, Subdivision (h)). 4. Compliance with the National Environmental Protection Act ("NEPA") and approval thereof must be adhered to. NEPA clearance for the Project is currently underway and must be completed and approved by HUD prior to issuance of funds. 5. Determination of federal Department of Housing and Urban Development ("HUD") "fair market rent" for purposes of implementing the PBV Assistance to the Project will be based and contingent upon approval of an independent appraisal. 6. Receipt of Subsidy Layering Review approval from the CTCAC. (Pursuant to July 2010 HUD Notice, CTCAC may, and is now, performing Subsidy Layering Review for and on behalf of HUD.) 7. Eighty -Seven (87) of the Eighty -Nine (89) "Housing Units" at the Project shall and will be restricted to "Affordable Rent" as defined by the TCAC Regulations for a period not less than 55 years pursuant to conditions, covenants and restrictions recorded against the Project in the Official Records, County of Orange, California. Two (2) Housing Units will be rented to on -site property managers; the manager's units shall not be required to be rent -restricted. 8. A unit matrix of all units in the Project of Eighty -Nine (89) units is attached hereto and fully incorporated by this reference as Exhibit A ("Unit Mix Matrix"). Ms. Rebecca Clark Linc Housing Corporation Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California April 18, 2023 Page 10 of 15 9. All designated HOME ARP units shall be covenanted as HOME ARP units with affordable rent charged to the tenant household. The number of units restricted at the low HOME ARP rent and/or high HOME ARP rent will be determined based on the total HOME ARP Program funds allocated to the Project. Further, all housing units at the Project shall be restricted as set forth herein and in the AHA for a minimum of fifty-five (55) years pursuant to a regulatory agreement with conditions, covenants and restrictions restricting the Developer's and successors' use, ownership, operation, management, maintenance, transfer and financing of the Project, and such fifty-five (55) year regulatory agreement shall be recorded against the Project and Site in the Official Records, County of Orange, California. No units within the Project shall be restricted on the basis of age. 10. Execution of the AHA shall be in a form to be reviewed and approved by Anaheim's City Attorney and/or special counsel. 11. The HOME ARP and/or HOPWA Program funds for the Anaheim Loan will be transferred by the City to the Authority pursuant to a cooperation agreement to be considered and action taken by and between the City and Authority. 12. If HOME ARP and/or HOPWA Program moneys are ultimately used to make any portion of the Anaheim Loan, the Developer shall comply with the HOME ARP, HOME Program and applicable federal regulations set forth in 24 CFR Part 92 (as amended by the 2013 HOME Final Rule) and 24 CFR Part 983 and/or applicable regulations and requirements for the HOPWA Program, including, but not limited to, 42 U.S.C. 12901 et seq. and 24 CFR Part 574. 13. If LMIHAF Moneys are used to make the Anaheim Loan, the Developer shall comply with 'all applicable requirements of the California Community Redevelopment Law, Health and Safety Code Section 33000, et seq., and the Dissolution Act, Health and Safety Code Section 34170, et seq., in particular Sections 34176 and 34176.1. 14. The Developer shall comply with the Housing Assistance Law (HAL) and any and all other applicable federal, state and local laws and regulations. 15. All Housing Units at the Project must pass Housing Quality Standard (or other standards as applicable) inspections as required by applicable funding sources and, including at the completion of construction, as required by applicable HUD regulations, specifically including the HOME Program regulations as amended by the 2013 HOME Final Rule. 16. Execution of an Agreement to Enter into a Housing Assistance Payment Contract ("AHAP") with respect to the provision of PBV Assistance to the Project for the anticipated 87 Housing Units to receive PBV Assistance. Ms. Rebecca Clark Linc Housing Corporation Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California April 18, 2023 Page 11 of 15 17. Execution of a Housing Assistance Payment Contract ("HAP Contract") with respect to the provision of PBV Assistance to the Project pursuant to the requirements of the AHAP. 18. This a federally -funded Project and is, therefore, subject to all federal and state labor laws, including without limitation federal Davis Bacon and related prevailing wage, labor, contracting and contractor requirements. Additionally, the Project is also a "public works project" and is subject to all state and local laws and regulations for public works, including without limitation California Labor Code Section 1720, et seq. 19. As and if applicable, the Developer will comply with the federal Davis -Bacon Act and California Labor Code Section 1720, et seq., relating to prevailing wages ("Prevailing Wage Laws"); in this regard, the Authority and the Developer understand that such laws and regulations include exemptions that may apply to the Project, but under the AHA, the Developer will assume responsibility for and indemnify the Authority (and the City) relating to the Prevailing Wage Laws as such may be applicable to the Project. 20. Compliance with the California Environmental Quality Act ("CEQA") requirements unless, pursuant to AB 140 or other basis, as a statutory exemption for this Project, as determined to be applicable and appropriate and the National Environmental Protection Act ("NEPA") and approval thereof, as applicable. 21. Receipt of Subsidy Layering Review approval from TCAC. (Pursuant to July 2010 HUD Notice, TCAC may, and is now, performing Subsidy Layering Review for and on behalf of HUD.) 22. Determination of the HUD "fair market rent" for purposes of implementing the PBVs for the Project will be based and contingent upon approval of an independent appraisal. 23. If HOME ARP funds are used to provide the Anaheim Loan, Developer will be required to comply with HOME ARP Regulations, which are incorporated herein by this reference. 24. If HOPWA funds are used to provide the Anaheim Loan, Developer will be required to comply with HOPWA Regulations, which are incorporated herein by this reference. 25. The Anaheim Loan proceeds will be disbursed during construction at such time as all funding sources are committed and available and subject to such terms and conditions precedent as are customary for AHA's entered into by the Authority and in accordance with any applicable requirements. Ms. Rebecca Clark Linc Housing Corporation Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California April 18, 2023 Page 12 of 15 25. The AHA shall provide that the Closing and each of the following conditions precedent shall be met prior to the disbursement of any portion of the Development Loan as well as such additional and other conditions as are customarily included by City and Authority in its affordable housing agreements: a. All grading and/or building permits shall have been issued, or be ready to issue, and the City shall have issued a letter stating that building permits are ready to issue, subject only to the completion of grading of the Site for the Project. b. The Developer shall have provided evidence to Anaheim that the Developer has obtained insurance policies, certificates, and additional insured or other endorsements therefor acceptable to Anaheim, as described in the AHA. The Developer shall have provided construction security in favor of Anaheim, which may include a completion guarantee or a letter of credit, and/or payment and performance bonds from the general contractor and subcontractors for the Project (or some combination of any or all of the above), with election at the sole discretion of Anaheim, in an amount sufficient to ensure the Project will be completed, all invoices paid, and all workers paid in conformity with applicable federal and state labor laws, and otherwise in compliance with applicable federal and state laws, and placed in service within the time set forth in the schedule for the Project as approved by Anaheim. d. The Developer shall submit and obtain approval of the Authority for: (i) the construction contract with its general contractor and the subcontracts therefor, (ii) the limited partnership agreement for the limited partnership entity to be formed to own and operate the Project, (iii) management, scope and funding for all required supportive services, and (iv) the marketing and tenant selection plans for the Project. 27. The AHA shall provide that each of the following conditions precedent shall be met prior to payment under the PBVs: a. A final certificate of occupancy for completion of the Project shall have been issued by the City's building official. b. The final HAP contract has been duly entered into between the Authority and the Developer pursuant to the Section 8 Laws and all other applicable federal, state and local laws and regulations. c. The Developer shall have maintained and have on file with Anaheim up-to-date insurance policies and certificates or endorsements therefor acceptable to Anaheim, as described in the AHA. Ms. Rebecca Clark Linc Housing Corporation Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California April 18, 2023 Page 13 of 15 d. The Developer shall have prepared, and the Authority shall have approved, a detailed Social and Supportive Services Plan ("Social Services Plan"), which shall describe the social and supportive services to be provided at the Project, and a detailed budget for the social and supportive services described in the Social Services Plan. The Social Services Plan shall further describe the goals and objectives of the social and supportive services to be provided at the Project. The approved Social Services Plan shall be made a part of the HAP contract and contingent on final HAP approval for the PBVs. The Social Services Plan shall include a robust level of social services offered at the Project and suitable for the residents' needs and provided by professionally trained staff. Services must include an assessment of clients' needs, link to services and verification of services obtained. The Social Services Plan must also provide clear outcome measurements related to services provided and must clearly identify if services will be provided by the Developer or by third party entity(ies). For services to be provided by the Developer, the Social Services Plan shall clearly identify the budget and resources available for the services. For services to be provided by third party entity(ies), the Social Services Plan must include copies of the agreements or memoranda of understanding that govern provision of the services. The Social Services Plan shall include strong programming that engages future tenants on a daily basis, and that will have a positive social impact on the residents as it relates to mental wellness and social integration. The fully programmed kitchen (to include stove, oven, refrigerator, microwave, dishwasher) must be well suited for strong programming. The Social Services Plan shall address how the proposed programming will support the small unit size concerns and dealing with socialization. In addition, Developer shall provide an Operational Services Budget for provision of the social services contemplated by this PAL, as contained in the Social Services Plan. 28. The AHA shall provide that each of the following conditions precedent shall be met prior to the disbursement of any portion of the Anaheim Loan and prior to execution of the AHAP: a. Developer shall have secured all necessary financing and funding for the construction and operation of the applicable phase of the Project. Such financing and funding shall be sufficient to pay all Project development costs, through lease -up, as set forth in a final budget (to be defined in the AHA) consistent with the approved Proforma (or as otherwise approved by Anaheim). 29. Anaheim's preliminary award of the Anaheim Assistance is and shall remain subject to all covenants, conditions, and restrictions set forth in the AHA, and in particular Anaheim's analysis of all the available funding sources and Ms. Rebecca Clark Linc Housing Corporation Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California April 18, 2023 Page 14 of 15 development and operating costs of the Project and the overall economic feasibility of the Project, including without limitation all funding sources and terms therefor including the supportable debt (construction and permanent financing), market value of Tax Credits and tax credit investor equity, deferred developer fee, if any, and other subordinate debt, if any. 30. Nothing herein shall be construed as a commitment to issue development entitlements, nor shall it limit in any way the City's discretion with respect to approval of development entitlements, which shall be independent of funding commitments. 31. By consideration and action to approve this PAL, Anaheim hereby authorizes the Executive Director to sign this Preliminary Award Letter on behalf of Anaheim (both the City and the Authority), with any non -substantive changes to be made by the City Attorney or Agency Counsel. Further, the Executive Director is authorized to cause to be prepared and executed the AHA, including the AHAP and HAP contracts for the PBVs, in implementation of this Preliminary Award Letter so long as the terms and provisions of the AHA and each and all implementing agreements and instruments therefor are substantially consistent, financially and legally, with this Preliminary Award Letter. 32. Further, the Executive Director (or his/her duly authorized representative) is authorized to implement the AHA and take all further actions and execute all documents referenced therein and/or necessary and appropriate to carry out the transaction contemplated by this PAL, and thereafter the AHA including all exhibits, instruments and implementing agreements thereto. To the extent necessary during the implementation hereof and thereof, the Executive Director is authorized to make technical or minor changes and interpretations of this PAL and the AHA, as necessary to properly implement and carry out the Project provided any and all such changes shall not in any manner substantially affect Anaheim's rights and obligations under this PAL and the AHA. 33. In addition, the Executive Director is authorized, on behalf of both the City and the Authority, to sign any and all other documents necessary or appropriate to carry out and implement this PAL, the AHA and the Project, including all exhibits thereto and including causing the issuance of warrants in implementation thereto, and to administer Anaheim's obligations, responsibilities and duties to be performed thereunder so long as substantially consistent with this PAL and the AHA. Any and all substantial changes to this PAL or to the terms and provisions of the AHA and implementing agreements and instruments thereto shall require the consideration and action of the City Council and/or the Authority Board, as applicable. 34. The City's obligation to provide the Anaheim Loan and additional local subsidies and the Authority's obligation to provide PBV Assistance to the Project are and shall remain subject to all covenants, conditions, and restrictions set forth in the Ms. Rebecca Clark Linc Housing Corporation Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California April 18, 2023 Page 15 of 15 AHA, and in particular Authority's analysis of the available funding sources and development and operating costs of the Project and the overall economic feasibility of the Project. 35. In addition to the foregoing, notwithstanding any statement set forth in this letter or provisions of the AHA, Developer, City and Authority agree and acknowledge that the AHA will not constitute a commitment of federal funds, and that such commitment of funds may occur only upon satisfactory completion of environmental review and receipt by Authority and/or City, as applicable, of a release of funds from the U.S. Department of Housing and Urban Development under 24 CFR Part 58. Developer and Authority will further agree in the AHA that the provision of any federal funds to the Project is and shall be conditioned on Anaheim's determination to proceed with, modify or cancel the Anaheim Assistance based on the results of a subsequent NEPA environmental review and the outcome of the Subsidy Layering Review. 36. Developer and Authority are further prohibited from undertaking or committing any federal funds to physical or choice -limiting actions, including property acquisition, demolition, movement, rehabilitation, conversion, repair or construction prior to the environmental clearance; Developer and Authority understand that the violation of this provision may result in the denial of any federal funds under the AHA. Should you have any questions or require additional information, please contact Grace Ruiz-Stepter, Executive Director, at (714) 765-4315 or by email at (gstepter@anaheim. net). Sincerely, Grace Ruiz-Stepter Executive Director cc: Andy Nogal, Deputy Director Housing and Community Development Department EXHIBIT A NORTH HARBOR APARTMENTS PROJECT AFFORDABLE HOUSING UNITS MATRIX OF UNIT -MIX BY INCOME AND BEDROOM SIZE Bedroom I Quantity I AMI Studio 1 67 1 30% 1-Bedroom 1 20 1 30% 2-Bedroom (Manager's Unit) 1 2 f Market Rate SECRETARY'S CERTIFICATE STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss. CITY OF ANAHEIM ) I, THERESA BASS, Secretary of the Anaheim Housing Authority, do hereby certify that the foregoing is the original Resolution No. AHA-2023-004 adopted at a regular meeting provided by law, of the Anaheim Housing Authority held on the 18' day of April, 2023, by the following vote of the members thereof: AYES: Chairperson Aitken and Authority Members Rubalcava, Diaz, Leon, Kurtz, Faessel, and Meeks NOES: None ABSTAIN: None ABSENT: None IN WITNESS WHEREOF, I have hereunto set my hand this 19' day of April, 2023. ET RY OF THE ANAHEIM HOUSING AUTHORITY (SEAL)