REPORT. Atmosphere Loan Recommendation and Atmosphere II Preliminary Bond Items

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1 REPORT DATE ISSUED: May 5, 2014 REPORT NO: HCR ATTENTION: SUBJECT: Chair and Members of the San Diego Housing Commission For the Agenda of June 20, 2014 Atmosphere Loan Recommendation and Atmosphere II Preliminary Bond Items COUNCIL DISTRICT: 3 REQUESTED ACTION Recommend Housing Authority of the City of San Diego (Housing Authority) approval of certain actions to facilitate new construction of a 205-unit affordable rental housing development structured as two projects, to be located at th Avenue, San Diego, 92101, including for (i) Atmosphere I, approval of a $3,000,000 San Diego Housing Commission residual receipts loan, and for (ii) Atmosphere II, take the initial steps for the Housing Authority to issue tax-exempt multifamily housing revenue bonds. STAFF RECOMMENDATION That the San Diego Housing Commission (Housing Commission) recommend Housing Authority of the City of San Diego (Housing Authority) approval, as described in this report, for the following: A. Proposed Actions for Atmosphere (Atmosphere I 9%) units: 1) Approve a Housing Commission residual receipts loan of up to $3,000,000 to Wakeland Atmosphere L.P., a California limited partnership, to facilitate the proposed new construction of Atmosphere I, with 100 new affordable units. The Housing Commission s proposed loan would be contingent upon the developer receiving all necessary third party funding commitments including the California Tax Credit Allocation Committee (TCAC) award of 9 percent tax credits to the project. This loan commitment is for the 2014 round 2 tax credit competition and may be extended to subsequent tax credit competition rounds with the prior written approval of the Housing Commission President and Chief Executive Officer (President & CEO). Such third-party funding commitments would be subject to the Housing Commission s General Counsel s approval. 2) Authorize the President & CEO, or his designee, a. To execute any and all documents that he deems necessary to effectuate the transaction and implement the project in a form approved by General Counsel, and to take such actions as are necessary, convenient and/or appropriate to implement the approvals upon advice of General Counsel; b. To adjust financing terms/conditions as necessary for consistency with requirements of other funding sources or to accommodate market changes that may occur; c. To substitute approved funding sources with any other available funds as deemed appropriate, contingent upon budget availability, to approve allocation of the affordable units

2 May 1, 2014 Atmosphere Proposed Loan and Atmosphere II Tax Exempt Multifamily Housing Bond Items Page 2 between the two phases of the project; and further authorize the President & CEO, or designee, to take such actions as are necessary, convenient and/or appropriate to implement this approval and delegation of authority by the Housing Commission upon advice of General Counsel. d. The proposed $3,000,000 maximum loan amount may not increase. B. Proposed Actions for Atmosphere II 4% units: 1) Approve initial steps to issue Housing Authority tax-exempt multifamily housing revenue bonds for this project, including: a. Issue a bond inducement resolution (Declaration of Official Intent) for up to $28,750,000 in tax-exempt multifamily housing revenue bonds for new construction of Atmosphere II (with 105 units) by Wakeland Atmosphere II L.P., a California limited partnership. b. Authorize an application (and subsequent applications if necessary) to the California Debt Limit Allocation Committee (CDLAC) for an allocation of authority to issue tax-exempt private activity bonds in an amount of up to $28,750,000 for Atmosphere II. c. Approve a bond financing team of Orrick Herrington & Sutcliffe as bond counsel, and CSG Advisors as bond financial advisor. d. Request that the San Diego City Council (City Council) hold a Tax Equity and Fiscal Responsibility Act (TEFRA) public hearing, and adopt a resolution approving the Housing Authority s issuance of tax-exempt multifamily housing revenue bonds in an amount of up to $28,750,000. e. Final issuance of the tax-exempt multifamily housing revenue bonds will require Housing Commission and Housing Authority final approval at a later date. 2) Authorize the President & CEO, or his designee: a. To execute any and all documents and instruments, as approved by the President & CEO, General Counsel and bond counsel, and authorize the President & CEO to perform such acts as are necessary, convenient and/or appropriate to implement the approvals upon advice of General Counsel; b. To adjust terms/conditions as necessary for consistency with requirements of third-party funding sources or to accommodate market changes that may occur after approval of this report but before close of escrow. SUMMARY Atmosphere is Wakeland Housing & Development Corporation s (Wakeland) proposed 205-unit, new construction affordable rental housing development to be located at th Avenue in the Cortez neighborhood (Attachment 1 site map) on land leased from the City of San Diego (City). The project will include 51 supportive housing units with project based Section 8 vouchers (provided via the Housing Commission). These 51 supportive housing units will be designated for those who are homeless or at risk of becoming homeless, including 31 units targeted to adults with mental illness who are homeless or at risk of homelessness and an additional 10 units targeted to seniors who are homeless or at risk of homelessness, plus an additional 10 units targeted to adults who are homeless or at risk of homelessness. In order to maximize project financing sources, the 205-unit development is being financed as two separate condominium modules (Atmosphere I and Atmosphere II) although the project is one 12-story building. Each financial/ownership structure will include co-ownership of indoor/outdoor common areas plus cross-easements for all residents access to common areas. Each of the two condominium modules will include units that will be non-contiguously scattered throughout the

3 May 1, 2014 Atmosphere Proposed Loan and Atmosphere II Tax Exempt Multifamily Housing Bond Items Page 3 12-story tower. Atmosphere I and Atmosphere II will be financed and developed as two separate projects with separate legal ownership, separate deeds of trust, and separate project financing. If financed as one combined project, the development would generate significantly less tax credit financing and would not be feasible. One Site with Two Proposed Projects 1) The Atmosphere I module (100 units) will have 41 studios, 12 one-bedroom apartments, 16 twobedroom apartments, and 31 three-bedroom apartments. The proposed financing uses 9 percent tax credits along with California Housing Finance Agency Mental Health Services Act funds (MHSA), City funds, and certain sources funded by the State of California (State). Wakeland Atmosphere L.P., a California limited partnership, will be the ownership entity. Developer s Request For Atmosphere I, Wakeland previously applied to TCAC for highly competitive 9 percent tax credits in the 2014 round 1 tax credit competition, but did not receive funding. Wakeland wishes to apply in TCAC s July 1, 2014, tax credit competition. The developer is requesting a $3,000,000 residual receipts loan from the Housing Commission in order to increase the project s TCAC tiebreaker points for an improved TCAC application score in round 2. 2) The Atmosphere II module (105 units) will have 30 one-bedroom apartments, 60 two-bedroom apartments, and 15 three-bedroom apartments. Its proposed financing uses 4 percent tax credits along with tax-exempt multifamily housing revenue bonds, and Civic funds. Wakeland Atmosphere II L.P., a California limited partnership, will be the ownership entity. Atmosphere II includes approximately 1,000 square feet of retail space. Developer s Request The developer is requesting Housing Authority approval for issuance of up to $28,750,000 of tax-exempt multifamily housing revenue bonds. There are no Housing Commission direct loan funds for the Atmosphere II project s financing. The Development The combined two Atmosphere projects will provide 202 affordable rental units (and three manager s units) comprised of 41 studios, 42 one-bedroom apartments, 76 two-bedroom apartments, and 46 threebedroom apartments. The development will be a 12-story high-rise over a three-level subterranean garage that will provide 179 parking spaces, along with motorcycle and bicycle parking areas. Site amenities include approximately 6,800 square feet of indoor common space, 15,000 square feet of outdoor common space, approximately 1,000 square feet of ground-floor retail space, a computer center, a laundry room, two community rooms, and a children s play area. For the apartments restricted by funding from the federal HOME Investment Partnerships Program, a minimum of 5 percent will be fully wheelchair accessible and an additional 2 percent will be accessible to residents with visual and/or hearing impairment. The projects will include Universal Design features and will comply with all federal accessibility standards. Security features will include controlled entrance/exit, with 24-hour front desk security personnel, and card-key controlled entrance to the parking garage. The development will be transit-oriented, located three blocks from the trolley stop at Fifth Avenue/C Street.

4 May 1, 2014 Atmosphere Proposed Loan and Atmosphere II Tax Exempt Multifamily Housing Bond Items Page 4 Prevailing Wages For Atmosphere I, payment of Federal Davis-Bacon prevailing wages will be required because the project will utilize Federal and State funds, plus federal housing vouchers. For Atmosphere II it has not yet been definitively determined whether State or Federal prevailing wages will apply. The developer s pro forma includes sufficient source funds to pay Davis-Bacon prevailing wages on Atmosphere II should such Davis-Bacon applicability be definitely determined by General Counsel. The Housing Commission s loan will be contingent upon the General Counsel s satisfaction with both of the construction agreements terms and conditions regarding the process, procedure, and efficacy for Davis-Bacon prevailing wage monitoring for both Atmosphere I and Atmosphere II. Project Sustainability The two projects will be built to Leadership in Energy and Environmental Design (LEED) Silver standards, with sustainable features, such as energy-efficient windows, photovoltaic panels for common area electrical needs, Energy Star-rated efficient appliances, use of Low Volatile Organic Compound (VOC) paints and stains for all interior surfaces, low water use landscaping, and low-flow water fixtures. Green and recycled materials will be used during construction. The projects will comply with Housing Commission Sustainability Guidelines. The Atmosphere projects will comply with TCAC-required State of California s 2013 Energy Efficiency Standards. Property Management The projects will be managed by FPI Property Management (FPI), a privately owned management company with a regional office in Costa Mesa, California. FPI is highly qualified, with more than 24 years of property management experience. It manages approximately 42,000 market rate units and more than 28,000 affordable housing units developed with tax credits throughout eleven states. The Property A previous effort to construct 74 condominium units on a portion of this site was halted in In 2010 and 2011, the former Redevelopment Agency of the City of San Diego (Agency) acquired this site. After the Agency was dissolved, the site was transferred in 2013 to the City as the Agency s successor. On June 18, 2013, the City Council approved (by Resolution R Attachment 2) certain actions requested by Civic, including a Disposition and Development Agreement (DDA) along with an $11,600,000 loan for Atmosphere. Wakeland and the City have negotiated a $1 per year, 70-year ground lease, with an additional 20-year option, which will be executed at the close of escrow. The irregularly shaped, 32,000-square-feet site is on five separate contiguous parcels. The site is bounded by Ash and Beech Streets and by Fourth and Fifth Avenues in Downtown San Diego. Abutting the site to the south are the San Diego Superior Court Probate and Family Court building and the Toussaint Academy of the Arts and Sciences. Abutting the site to the north is the two-story historical Beechwood Apartments. Located to the east and west are Ace Parking lots. Relocation The City-owned property consists mostly of a vacant lot and includes two separate one-story commercial structures (San Diego Stamp Company and a law office) with businesses operating on a month-to-month tenancy. Wakeland plans to demolish both existing structures. Wakeland estimates no relocation costs for the existing businesses. However, Civic San Diego staff will be reviewing whether any displaced businesses are eligible for relocation assistance, and will ensure any necessary relocation noticing is provided, as required under the federal Uniform Relocation Act and under California relocation law.

5 May 1, 2014 Atmosphere Proposed Loan and Atmosphere II Tax Exempt Multifamily Housing Bond Items Page 5 The Development Team The developer is Wakeland, a 501(c)(3) nonprofit corporation. Wakeland has received many awards. It has substantial development experience in a wide range of housing projects. Formed in 1998, with its for-profit and nonprofit partners, Wakeland has developed, acquired and rehabilitated more than 5,500 units of affordable housing throughout California. Wakeland has been the managing general partner on several affordable housing projects that were developed utilizing Housing Commission loans. The three most recent developments are: City Heights 10 is a 132-unit apartment development acquisition with rehabilitation. Taxexempt multifamily housing revenue bonds were issued in March Rehabilitation is currently in process on 10 scattered sites in San Diego. Juniper Gardens, at 4251 Juniper Street, San Diego, is a 40-unit apartment development acquisition with rehabilitation that was completed on November 19, Vista Grande, at 5391 Santa Margarita Street, San Diego, is a 49-unit apartment development acquisition with rehabilitation. It was completed on August 2, Wakeland is in full compliance on its previous Housing Commission loans. Additional Atmosphere development partners are listed below: ROLE Developer Architect Civil Engineering General Contractor Property Management Prevailing Wage Monitor Service Provider Construction Lender Table 1 Development Team Summary FIRM/CONTACT Wakeland Housing and Development Corporation, a 501(c)(3) nonprofit, located in San Diego. Joseph Wong Design Associates, located in San Diego. Latitude 33, located in San Diego. Suffolk Roel, headquartered in Boston with an office in San Diego. FPI Management Inc., located in Costa Mesa, California. Prevailing Wage monitor is yet to be determined. Service Coordinator provided by Wakeland for all tenants. Services provided by Community Resource Foundation for MHSA tenants. Multifamily revenue bond issue. Lender bank is yet to be determined. AFFORDABLE HOUSING IMPACT The development will be subject to a Housing Commission Declaration of Covenants and Restrictions in addition to applicable tax credit and bond regulatory agreements that will restrict affordability of 202 units for 55 years. The City s DDA will restrict the project s affordability for 55 years. The HOME Investment Partnerships Program s funds will have affordability and rent restrictions for 20 years, and Inclusionary Housing funds will have affordability and rent restrictions for 55 years. The projects 202 units will be affordable to tenants with income levels ranging from 30 percent of Area Median Income (AMI), $16,600/year for a studio, one-person household, to 60 percent of AMI, $47,340/year for a threebedroom, four-person household. Atmosphere I s 100 units will have 51 Project Based Housing Vouchers (41 studios and 10 onebedroom apartments), awarded by the Housing Commission, along with California MHSA program

6 May 1, 2014 Atmosphere Proposed Loan and Atmosphere II Tax Exempt Multifamily Housing Bond Items Page 6 capital contribution-only funds for 31 of those units. These 51 housing units will be restricted at levels ranging from 30 percent of AMI to 50 percent of AMI and will include: 1) 31 studio units specifically targeted for adults with mental illness who are homeless or at risk of becoming homeless; and 2) 10 supportive housing studio units targeted to, but not restricted to, seniors (age 55 plus) who are homeless or at risk of becoming homeless, plus 10 supportive housing one-bedroom units targeted to but not restricted to adults who are homeless or at-risk of becoming homeless. Wakeland plans multiple categories of services for residents: 1) For all residents, there will be on-site enrichment services including a Services Coordinator, workforce development training, and financial literacy workshops. 2) For MHSA tenants, services and tenants referrals will be provided by supportive services partners, including Community Research Foundation, Senior Community Centers, St. Paul s Senior Homes & Services, and PATH San Diego. Table 2 Atmosphere Affordability & Monthly Estimated Rent Table * Studio Units (367 sq. feet) One Bedroom Units (536 to 579 sq. feet) Two Bedroom Units (770 to 882 sq feet) Three Bedrooms (1029 to 1115 sq. feet) Affordability Mix Atmosphere I 9% Estimated Estimated Estimated Estimated (100 units portion): Units Net Rent Units Net Rent Units Net Rent Units Net Rent Total HOME Units: ** 50% AMI units ** $716 1 $854 1 $ % AMI units ** $884 3 $1,032 4 $1,187 8 Subtotal HOME Non-HOME Units: ** 30% AMI Tax Cr 22 $397 2 $420 2 $499 4 $ % AMI Tax Cr 2 $605 4 $642 7 $765 9 $ % AMI Tax Cr 17 $674 3 $716 2 $854 0 $ % AMI units 0 $812 1 $884 0 $1, $1, Manager s unit Subtotal Non HOME Atmosphere I Subtotal Atmosphere II 4% (105 units portion): Units Estimated Net Rent Units Estimated Net Rent * Units Estimated Net Rent * Units Estimated Net Rent * Total 50% AMI units $716 6 $854 2 $ % AMI units $ $1, $1, Managers units Atmosphere II Subtotal Combined Total Units * - Estimated net rents after utilities allowance deduction. ** -The HOME restricted units are also restricted as tax credit units. The more stringent of the funding sources affordability/rent restrictions will take precedence during the term of their applicability. TCAC s AMI formula calculations will differ from the U.S. Department of Housing and Urban Development s (HUD) AMI formula calculations. The tax credit restricted units and the HOME restricted units may be counted against the same specific units. FINANCING CONSIDERATIONS Atmosphere I - Proposed Loan For the Atmosphere I proposed loan, a Letter of Intent is included at Attachment 3.

7 May 1, 2014 Atmosphere Proposed Loan and Atmosphere II Tax Exempt Multifamily Housing Bond Items Page 7 Atmosphere II - Proposed Bond Financing The Housing Commission utilizes the Housing Authority s tax-exempt borrowing status to pass on lower interest rate financing (and make federal 4 percent tax credits available) to developers of affordable housing. The Housing Authority s ability to issue bonds is limited under the U.S. Internal Revenue Code. To issue bonds for a project, the Housing Authority must first submit an application to CDLAC for a tax-exempt multifamily housing revenue bonds allocation. Prior to submitting applications to CDLAC, projects are brought before the Housing Commission, Housing Authority, and City Council. Housing Authority bond inducement resolutions must be obtained prior to CDLAC application submittal and a City Council TEFRA resolution must be secured no later than 30 days after application submittal. These actions do not obligate the Housing Authority to issue bonds. It is estimated that in January 2015, final authorization to issue bonds will be brought to the Housing Commission and Housing Authority. The developer estimates a bond application to CDLAC on October 10, 2014, and a bond allocation at CDLAC s December 10, 2014, meeting. The developer then has 90 days to close the bond financing unless there is a CDLAC time extension. If necessary, staff can submit additional applications to CDLAC to secure a bond allocation for the project. For a summary of the Housing Commission s Multifamily Housing Revenue Bond Program and the actions that must be taken by the Housing Authority and by the City Council to initiate and finalize proposed financing, please see Attachment 4. The developer will be seeking a CDLAC bond allocation of approximately $28,750,000. The developer proposes to issue the bonds through a tax-exempt private placement bond issuance. The bonds will meet all requirements of the Housing Commission s Multifamily Housing Revenue Bond Program policy and will fully comply with the City s ordinance on bond disclosure. The $28,750,000 bond allocation that will be sought from CDLAC is approximately 20 percent higher than the $23,964,429 amount for which the Atmosphere II project is currently being underwritten. This increased amount represents a cushion to account for possible increases in the bond amount due to increases in construction costs, and/or decreases in the assumed interest rate, and/or the loss of other planned funding sources. The bond amount that is ultimately issued will be based upon project costs, revenues and interest rates prevailing at the time of bond issuance. The developer proposes that the bonds will be used for construction financing and permanent financing. The Housing Commission staff will later return to both the Housing Commission and the Housing Authority for approval of the final bond amount. Staff will work with the City Attorney and the City s Disclosure Practices Working Group to ensure that the issuance of Housing Authority bonds is in conformance with the City s disclosure requirements. Staff recommends assigning CSG Advisors as bond financial advisor and Orrick, Herrington & Sutcliffe LLP as bond counsel to work on the project. These proposed bond financing team members have been selected in accordance with the existing Housing Commission policy for the issuance of bonds. Financial advisors and bond counsels are designated on a rotating basis from the firms selected through a competitive Request for Proposals (RFP) process. Commercial Space Neither tax-exempt multifamily housing revenue bond funds, nor HOME funds, may be used for the construction or operation of the projects commercial space.

8 May 1, 2014 Atmosphere Proposed Loan and Atmosphere II Tax Exempt Multifamily Housing Bond Items Page 8 Sources of Financing The estimated total development cost (TDC) of Atmosphere I is $39,881,424 and Atmosphere II s TDC is $43,950,164, with a combined TDC of $83,831,588 (combined per unit of $408,935 for 205 units). The Housing Commission s proposed $3,000,000 loan, at $30,303 per unit for 202 affordable units, compares favorably with recent Housing Commission-funded family affordable housing projects. The financing sources are summarized below. The developer s current pro formas are provided as Attachment 5, and a development summary is provided as Attachment 6. Table 3 Atmosphere I Estimated Sources of Financing (This Table is Only for the Atmosphere I Unit Portion of the Total 205-Unit Development) Construction Financing Sources Amounts Permanent Financing Sources Amounts Bank construction loan $21,067,566 Permanent loan tranche A Permanent loan tranche B $986,500 +$2,049,000 $3,035,500 Subtotal California MHSA Program loan $3,487,066 California MHSA Program loan $3,487,066 Housing Commission proposed loan $3,000,000 Housing Commission proposed loan $3,000,000 Federal Home Loan Bank AHP loan 0 Federal Home Loan Bank AHP loan $1,000,000 California Infill Infrastructure grant $3,127,165 California Infill Infrastructure grant $3,127,165 City of San Diego land donation $3,258,537 City of San Diego land donation $3,258,537 City of San Diego fee waiver $205,900 City of San Diego fee waiver $205,900 Deferred to Perm Loan Conversion: Developer Fee $600,000 Operating Reserve $254,443 Perm Loan Fees $ 45,355 Audit/Cost Cert $ 20,000 Legal Perm $ 10,000 Title/Escrow + $ 8,500 Subtotal $938,298 General Partner Capital Contribution $200,000 General Partner Capital Contribution $200,000 9% Tax Credit equity $4,596,892 9% Tax Credit equity $22,567,256 Total Development Cost (TDC) $39,881,424 Total Development Cost (TDC) $39,881,424 TDC Per Unit (for 100 units) $398,814 TDC Per Unit (for 100 units) $398,814 Housing Commission s proposed $3,000,000 loan per affordable unit (99 Units) $30,303 Table 4 Atmosphere II Estimated Sources of Financing (This Table is Only for the Atmosphere II Unit Portion of the Total 205-Unit Development) Construction Financing Sources Amounts Permanent Financing Sources Amounts Construction loan (tax-exempt multifamily housing revenue bonds) $23,964,429 Permanent loan (tax-exempt multifamily housing revenue bonds) $8,214,500 City of San Diego loan $11,600,000 Civic loan $11,600,000 City of San Diego loan $414,800 Civic loan accrued/deferred interest $414,800 accrued/deferred interest City of San Diego land donation $3,772,957 City of San Diego land donation $3,772,957 Deferred to perm loan conversion: Developer Fee $500,000 Operating Reserve $273,952 Perm Loan Fees $ 61,600 Audit/Cost Cert $ 20,000 Legal Perm $ 10,000 Title/Escrow + $ 5,000

9 May 1, 2014 Atmosphere Proposed Loan and Atmosphere II Tax Exempt Multifamily Housing Bond Items Page 9 Subtotal $870,552 Deferred developer fee $600,000 Deferred developer fee $600,000 Solar rebate $120,000 General Partner Contribution $900,000 General Partner Contribution $900,000 4% Tax Credit equity $1,827,426 4% Tax Credit equity $18,327,907 Total Development Cost (TDC) $43,950,164 Total Development Cost (TDC) $43,950,164 TDC Per Unit (for 105 units) $418,573 TDC Per Unit (for 105 units) $418,573 Combined TDC for Atmosphere I & Atmosphere II (205 units) $83,831,588 Combined TDC Per Unit (for 205 units) $408,935 Developer s Fee The City s executed DDA has approved a $3,900,000 combined developer fee with $900,000 to be contributed to the project as developer s equity. Due to the complexity of the development and financing structures, staff concurs with the City s DDA. Development Schedule The estimated development timeline is as follows: Milestone Housing Commission preliminary meeting Housing Authority preliminary approval / Estimated Dates June 20, 2014 City Council TEFRA hearing June 24, 2014 Atmosphere I - TCAC tax credit application Atmosphere I - TCAC allocation meeting Atmosphere II - TCAC tax credit application Atmosphere II - CDLAC bond allocation CDLAC and TCAC allocation meetings Housing Commission final bond authorization Housing Authority final bond authorization Estimated bond issuance and escrow closing Estimated start of construction work Estimated completion of construction work July 1, 2014 September 24, 2014 October 10, 2014 October 10, 2014 December 10, 2014 Mid-January 2015 Late-January 2015 March 2015 March 2015 December 2016 FISCAL CONSIDERATIONS The proposed funding sources and uses approved by this action were included in the proposed Fiscal Year 2015 Budget. Approving this action will not change the Fiscal Year 2015 Budget. Approving this action will result in the development of 99 affordable housing units in the Atmosphere I development at an average cost to the Housing Commission of $30,303 per affordable unit, and the development of an additional 103 affordable housing units in the Atmosphere II development at zero net cost to the Housing Commission. Funding sources approved by this action will be as follows: HOME Investment Partnerships Program Funds - Up to $2,000,000 Inclusionary Housing Funds - Up to $1,000,000 Bond Issuance Fees - $71,875 Total Funding Sources - Up to $3,071,875

10 May 1, 2014 Atmosphere Proposed Loan and Atmosphere II Tax Exempt Multifamily Housing Bond Items Page 10 Funding uses approved by this action will be as follows: Loans - Up to $3,000,000 Administrative Costs - $71,875 Total Funding Uses Up to $3,071,875 Approving this action will further grant the President & CEO, or designee, the authority to substitute the above funding sources with other available funding sources so long as the total Housing Commission loan amount does not exceed the approved total loan amount, should the operational need arise or should such actions be to the benefit of the Housing Commission. Should this occur, funding substitutions will be memorialized in an Informational Report at the next scheduled Housing Commission Board meeting. There are no fiscal impacts to the Housing Commission, the City, or the Housing Authority associated with the requested bond actions. Approval of the bond inducement and TEFRA resolutions do not commit the Housing Authority to issue bonds. The bonds will not constitute a debt of the City. If bonds are ultimately issued for the project, the bonds will not financially obligate the City, the Housing Authority, or the Housing Commission because security for the repayment of the bonds will be limited to specific private revenue sources. Neither the faith and credit, nor the taxing power of the City, nor the faith and credit of the Housing Authority will be pledged to the payment of the bonds. The developer is responsible for the payment of all costs under the financing, including the Housing Commission s.0025 bond amount issuer fee (estimated at $71,875 with a $28,750,000 bond issue), the Housing Commission s annual administrative fee which is yet to be determined, and the Housing Commission bond counsel and financial advisor fees. COMMUNITY PARTICIPATION and PUBLIC OUTREACH EFFORTS Atmosphere is in the Cortez neighborhood of the Downtown Community Plan Area. On April 17, 2013, the Atmosphere project was presented to and discussed with the Downtown Community Planning Council (DCPC) formerly named the Centre City Advisory Committee. The DCPC represents downtown residential homeowners and tenants, commercial property owners and business people, charitable, civic and cultural groups. The DCPC voted 21-0 to approve the DDA and City ground lease. PREVIOUS COUNCIL and/or COMMITTEE ACTION On June 18, 2013, pursuant to Civic s City Council report No.CSD-13-08, and Resolution R , the City Council approved funding the Atmosphere Affordable Housing Development. KEY STAKEHOLDERS & PROJECTED IMPACTS Stakeholders include Wakeland as the developer, the City as the land owner and lessor of the land to the partnerships, the County of San Diego, which administers the local MHSA program, the Housing Authority as bond issuer, the State of California as a lender, and the homeless population that will benefit from the portion of the project reserved for those who are homeless or at risk of becoming homeless. The project is anticipated to have a positive impact on the community as it will contribute to the quality of the surrounding neighborhood and provide affordable housing for low-income persons. STATEMENT for PUBLIC DISCLOSURE The developers Disclosure Statements are at Attachment 7. An Atmosphere rendering is at Attachment 8.

11 May 1, 2014 Atmosphere Proposed Loan and Atmosphere II Tax Exempt Multifamily Housing Bond Items Page 11 ENVIRONMENTAL REVIEW This project, including the proposed staff-recommended actions described in this report, is covered under the Final Environmental Impact Report (FEIR) for the San Diego Downtown Community Plan (DCP), the Centre City Planned District Ordinance, and the 10th Amendment to the Centre City Redevelopment Plan, certified by the Agency and City Council on March 14, 2006 (Resolutions R and R respectively), and subsequent addenda to the FEIR certified by the Agency on August 3, 2007 (Agency Resolution R-04193), April 21, 2010 (Agency Resolutions R and R ), and August 3, 2010 (Agency Resolution R-04544). The FEIR is a Program EIR prepared in compliance with State of California Environmental Quality Act (CEQA) Guidelines Section In connection with the approval of the DDA for the project on June 4, 2013, an FEIR Consistency Evaluation (Evaluation) was prepared in accordance with CEQA Guidelines Section and Section The Evaluation concluded that the environmental impacts of the project were adequately addressed in the FEIR, and the project is within the scope of the development program described in the FEIR; therefore, no further environmental documentation is required under CEQA. In connection with the conditional allocation of Project-Based Housing Vouchers, an Environmental Assessment was previously prepared for the project with a Finding of No Significant Impact (FONSI) in accordance with the requirements of 24 CFR of the National Environmental Policy Act (NEPA). Authorization for the use of grant funds was subsequently issued by HUD on January 23, The approval of supplemental assistance in the form of HOME funds is categorically excluded under NEPA pursuant to 24 CFR 58.35(b)(7). Respectfully submitted, J.P. Correia J.P. Correia Real Estate Manager Real Estate Division Approved by, Deborah N. Ruane Deborah N. Ruane Senior Vice President Real Estate Division Attachments: 1) Site Map 2) City Council Resolution R ) Letter of Intent 4) Multifamily Bond Program Summary 5) Projects Pro formas 6) Development Summary 7) Developer Disclosure Statement - Wakeland 8) Atmosphere Rendering Hard copies are available for review during business hours in the main lobby of the San Diego Housing Commission offices at 1122 Broadway, San Diego, CA and at the Office of the San Diego City Clerk, 202 C Street, San Diego, CA You may also review complete docket materials on the San Diego Housing Commission website at

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