ARLINGTON COUNTY, VIRGINIA. County Board Agenda Item Meeting of June 15, 2013

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1 ARLINGTON COUNTY, VIRGINIA County Board Agenda Item Meeting of June 15, 2013 DATE: May 28, 2013 SUBJECT: Acceptance and appropriation of Arlington Community Foundation grant funds for permanent supportive housing at Marbella Apartments C. M. RECOMMENDATIONS: 1. Authorize the County Manager or her designee to accept $500,000 in Arlington Community Foundation (ACF) grant funds to fund rental assistance units and a Permanent Supportive Housing (PSH) Program at the Marbella Apartments. 2. Appropriate $500,000 in Arlington Community Foundation grant funds ( ) to the Department of Human Services ( ) and allocate $438,000 for rental assistance for up to ten permanent supportive housing rental units at the Marbella Apartments, allocate up to $52,000 for Marbella Development LLC, owner of Marbella Apartments, in order to reduce the existing VHDA first mortgage loan of $10,080,000 encumbering the Marbella Apartments, and allocate up to $10,000 for real estate closing costs incurred by the Arlington Partnership for Affordable Housing. 3. Allocate and Appropriate $500,000 from Non-Departmental ( ) to the Department of Human Services ( ) for Marbella Development LLC, owner of Marbella Apartments, in order to reduce the existing VHDA first mortgage loan of $10,080,000 encumbering the Marbella Apartments. 4. Approve a Memorandum of Understanding (MOU) between the Arlington Community Foundation and the County Board which sets forth agreements regarding the periodic transfer and disbursal of the $500,000 from the Arlington Community Foundation to the County Board in order to fund the reduction of the VHDA first mortgage loan encumbering the Marbella Apartments, certain real estate costs incurred by the Arlington Partnership for Affordable Housing, and certain rental assistance payments for up to ten permanent supportive housing rental units at the Marbella Apartments, and authorize the County Manager or her designee to execute the MOU, subject to approval as to form by the County Attorney. County Manager: ##### County Attorney: ***** 20. Staff: Cynthia Stevens, DHS; Maureen Markham, CPHD

2 5. Approve a between the County Board and Marbella Development LLC which sets forth Marbella Permanent Supportive Housing Program, and authorize the County Manager or her designee to execute the Funding and Program Agreement, subject to approval as to form by the County Attorney. 6. Authorize the County Manager or her designee to act as the County Board s representative in approving financing or program revisions necessary to remove any ambiguity or improve the County s financial security prior to or after execution of the County s funding documents, subject to approval as to form by the County Attorney. ISSUES: This is a request for County Board approval to accept and appropriate funds and to authorize a funding agreement and memorandum of understanding. The intent is to implement a permanent supportive housing program for vulnerable homeless individuals at Marbella Apartments. No issues have been identified. SUMMARY: The County Board and the Arlington Community Foundation have joined together to create a $1.0 million public / private partnership to house vulnerable homeless individuals. The funds will enable the Marbella Development LLC to dedicate 10 units at very low rents for homeless individuals identified through the County s 100 Homes Campaign. BACKGROUND: In October 2011, volunteers and civic leaders surveyed and identified 153 homeless persons as part of the 100 Homes Campaign, an initiative of the County s 10 Year Plan to End Homelessness. Of those persons surveyed, 83 scored at least a 1 on a vulnerability scale which is used to assess risk of dying on the street. To date, 55 vulnerable homeless individuals have been successfully placed in permanent housing. To help the 100 Homes Campaign house additional homeless persons, the Arlington Community Foundation created a 100 Homes Campaign Fund. A gift in early 2012 of $500,000 was made by John G. Shooshan of The Shooshan Company to the Fund. A commitment to match this gift was made by the County Board in November These funds were originally appropriated in the Closeout Board Report for FY 2011, Attachment 2D, and carried over from FY 2012 into FY The County staff determined that the most cost effective way to utilize the 100 Homes Campaign Fund would be to buy down the affordability of existing committed affordable units to 30 percent of Area Median Income (AMI), and to use remaining funds to reduce rents. The County invited nonprofit housing developers with properties in the County to partner with the 100 Homes Campaign. APAH responded with a plan to implement a supportive housing program at Marbella Apartments. Marbella Apartments is a 134-unit complex consisting of twelve (12) three-story brick walk-up garden apartment buildings located at 1301 North Queen Street, just south of Arlington Boulevard RPC Numbers , , , , , , and (see attached map). Marbella Apartments provides the County s committed affordable unit portfolio with 134 income-restricted units within 1-mile of two metro stations

3 These income-restricted units currently include 14 units affordable at 40 percent of AMI and 26 units affordable at 50 percent of AMI. On June 17, 2011, Marbella Development LLC, whose sole and managing member, Rosslyn Development Corporation, is a corporate affiliate of APAH, acquired the Marbella Apartments from Briarcliff Manor Associates, L.P. The financing package included (a) $10,080, first mortgage loan from the Virginia Housing Development authority (VHDA), (b) $2,775, County administered HOME Investment Partnerships federal program loan, (c) $1,255, County Affordable Housing Investment Fund (AHIF) program loan, and (d) $200, equity contribution from APAH. When Marbella Development LLC purchased Marbella Apartments, the County affordability income restrictions were extended through June 17, 2071, the sixtieth anniversary of the AHIF/HOME agreement effective date. DISCUSSION: Of the total $1,000,000 committed by the County Board and The Shooshan Company, $552,000 will be used as a loan reduction of the current VHDA mortgage at Marbella Apartments to write down the mortgage principal so that rents at ten units will be affordable to households at 30 percent AMI. APAH will allocate the permanent supportive housing units from units currently restricted by the existing covenants. First priority will be given to using five (5) units currently restricted to 40 percent AMI tenant households and five (5) units currently restricted to 50 percent AMI tenant households. If 40 percent AMI units are not available within six (6) months, the County agrees to accept reducing a 50% income restricted unit to a 40% income restricted unit. If subsequent to creating the 40% unit, a designated 40% unit becomes available, APAH will exchange the 40% unit to a 30% unit. Rental assistance funds available through the Arlington Community Foundation ($438,000) will be used to subsidize rents from 40 and 30 percent AMI (approximately $755 or 553/month) to resident ability to pay (approximately $200/month). This amount of rental assistance is projected to last approximately seven and one-half (7 ½) years. The attached defines the program and use of funds and stipulates that if additional funds are not available to sustain the rental subsidy beyond the seven and one-half years, the 10 units will continue to remain affordable at 30 percent AMI for the balance of the 30 year term. The funding agreement will in no way cancel or diminish any of the terms and conditions set forth in the existing Deeds of Easement and Declarations of Restrictive Covenants recorded on the Marbella Apartments. The $500,000 in County funds and $52,000 of Arlington Community Foundation funds will be granted to Marbella Development LLC within five (5) business day of execution of the funding and program agreement for the purpose of reducing the mortgage. The balance of Arlington Community Foundation funds will be transmitted to over the approximately seven and one-half year period to be used as rental assistance for homeless individuals living at Marbella Apartments. The attached Memorandum of Understanding between the Arlington Community Foundation and defines the use of Arlington Community Foundation funds at Marbella Apartments

4 The Department of Human Services will administer the rental assistance program through its Permanent Supportive Housing program in accordance with the attached Funding and Program Agreement. APAH agrees to house homeless individuals from the 100 Homes Campaign or referrals from the Permanent Supportive Housing Program. These individuals will receive case management and mental health services. FISCAL IMPACT: The County Board originally appropriated $500,000 for the purpose of permanent supportive housing for homeless individuals identified as vulnerable by the 100 Homes Campaign, in the FY 2011 Closeout Board Report, Attachment 2D, and subsequently carried over into FY The $500,000 carried over from Closeout combined with the requested ACF grant funds in this Board Report will bring the total commitment to the 100 Homes Campaign to $1,000,000. There is no additional impact on net tax support in FY Marbella Apartments 1301 North Queen Street (Buildings within cross-hatched parcels #1, #2, #3, #4, #5, & #6) - 4 -

5 ARLINGTON COUNTY, VIRGINIA 100 HOMES MARBELLA PERMANENT SUPPORTIVE HOUSING PROGRAM 1 P age MEMORANDUM OF UNDERSTANDING THIS 100 HOMES MARBELLA PERMANENT SUPPORTIVE HOUSING PROGRAM MEMORANDUM OF UNDERSTANDING (this MOU ) is entered into this day of, 2013 (the Effective Date ) by and between THE COUNTY BOARD OF ARLINGTON COUNTY, VIRGINIA, a body politic (the County Board ), acting through its County Attorney, County Manager, the Department of Human Services ( DHS ) Director, and the DHS Economic Independence Division, Housing Assistance Bureau Chief (the County Staff ) and ARLINGTON COMMUNITY FOUNDATION, a charitable Virginia non-stock corporation (the ACF ). Individually, the County Board and ACF may each be referred to hereinafter as Party, or collectively as the Parties. RECITALS WHEREAS, in October 2011, as part of an initiative of the 10 Year Plan to End Homelessness in, the Department of Human Services DHS Economic Independence Division launched s 100 Homes for 100 Homeless Arlingtonians Campaign (the 100 Homes Campaign ) for the purpose of helping to move 100 of the most vulnerable homeless people in off the streets and into affordable housing; and WHEREAS, on March 13, 2012, John G. Shooshan, President of the Shooshan Company, made a $500,000 contribution to ACF to help establish ACF s 100 Homes Campaign Fund (the ACF 100 Homes Campaign Fund ), which is dedicated to providing funds to assist the 100 Homes Campaign; and WHEREAS, on June 25, 2012, the Arlington Partnership for Affordable Housing ( APAH ) and Marbella Development LLC, the owner of Marbella Apartments and an affiliate of APAH (the Owner ), submitted a proposal to the DHS Economic Independence Division Housing Assistance Bureau Chief and a CPHD Housing Division Principal Planner to leverage the $500,000 contribution from John G. Shooshan to ACF with certain 100 Homes Campaign funds in order to provide initial funding for a supportive housing program at Marbella Apartments, a 134-unit affordable housing apartment complex located at 1301 North Queen Street in Arlington, Virginia RPC Numbers , , , , , , and Memorandum of Understanding Arlington Community Foundation

6 ( Marbella Apartments ) whereby the Owner would implement the supportive housing program (the Marbella PSH Program ) by (i) utilizing $552,000 in 100 Homes Campaign funds in order to reduce the principal amount of its outstanding first mortgage loan from the Virginia Housing Development Authority, (ii) designating ten (10) one-bedroom apartment units at the Marbella Apartments complex as permanent supportive housing income-restricted units (individually, a Marbella PSH Program Unit and collectively, the Marbella PSH Program Units ) which shall be solely rented for a period of not less than 25 years to eligible extremely low-income households with annual incomes at or below thirty percent (30%) of the area medium income levels for the Washington, DC statistical metropolitan area, and (iii) utilizing $438,000 in 100 Homes Campaign funds in order to provide rental assistance subsidies to the Owner for a period of seven and one-half 7½ years in order to make rental housing affordable to certain pre-screened extremely low-income vulnerable households who are eligible to occupy Marbella PSH Program Units and who (a) are homeless or have a critical housing need, (b) have high leasing barriers, (c) have a disability, and (d) are receiving services from either the Department of Human Services or a related nonprofit vendor (or both); and WHEREAS, on January 9, 2013, the ACF Board of Trustees agreed to enter into a public-private partnership with the County Board and disburse $500,000 from the ACF 100 Homes Campaign Fund into the 100 Homes Campaign -- Marbella PSH Program Account (the Marbella PSH Program Account ) in order to support the 100 Homes Campaign and partially fund the Marbella PSH Program, subject to the terms and conditions of this MOU, as set forth below; and WHEREAS, on June, 2013, the County Board (i) authorized the County Manager or her designee to accept the $500,000 in grant funds from the ACF 100 Homes Campaign Fund in order to partially fund and administer the Marbella PSH Program, as set forth below, and (ii) appropriated $500,000 in general funds to the Department of Human Services in order to partially fund and administer the Marbella PSH Program, subject to the terms and conditions of this MOU and that certain 100 Homes Marbella Permanent Supportive Housing Program (the County ), dated the date herewith, by and between the County Board and the Owner; and WHEREAS, the County Manager has designated the Department of Human Services DHS Economic Independence Division Housing Assistance Bureau, through its Permanent Supportive Housing Program (the Program Administrator ), to manage the Marbella PSH Program and administer and disburse 2 P age Memorandum of Understanding Arlington Community Foundation

7 funds from the Marbella PSH Program Account in support of the Marbella PSH Program; and WHEREAS, this MOU is intended to be a binding and enforceable agreement of the Parties, and reflect the mutual understanding of the Parties regarding those actions and/or agreements lawful and necessary to accomplish the funding of the Marbella PSH Program. NOW, THEREFORE, IN CONSIDERATION of the foregoing and the following covenants, warranties and agreements of the Parties hereto, as are hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged by each Party hereto, the Parties hereby mutually agree to the following: I. PURPOSE AND TERM. This MOU sets forth the terms of mutual agreement between the County Board and ACF with respect to how ACF and the County Board will each disburse $500,000 into the Marbella PSH Program Account in order to fund the Marbella PSH Program. This MOU shall be effective from the Effective Date until January 31, 2021 or until the ACF funds have been completely disbursed, whichever comes first, when this MOU will shall terminate. II. FUNDING OF THE Marbella PSH Program A. Funding by the County Board. As a material inducement for ACF s willingness to disburse $500,000 from the ACF 100 Homes Campaign Fund into the Marbella PSH Program Account, the County Manager, subject to appropriation and the terms and conditions herein, shall disburse and make available to the Marbella PSH Program Account on or before the Effective Date of this MOU certain general funds in the amount of Five Hundred Thousand 00/100 Dollars ($500,000) ( County Funds ). All of the County Funds shall be disbursed to the Owner, pursuant to the County, in order to reduce the principal amount of the Owner s outstanding first mortgage loan from the Virginia Housing Development Authority. B. Funding by ACF. As a material inducement for the County Board s willingness to appropriate $500,000 in general funds into the Marbella PSH Program Account, ACF, subject to the terms and conditions herein, shall disburse and make available to the Marbella PSH Program Account certain ACF 100 Homes 3 Page Memorandum of Understanding Arlington Community Foundation

8 Campaign Fund funds in the amount of Five Hundred Thousand 00/100 Dollars ($500,000) ( ACF Funds ). The ACF Funds shall be disbursed as follows: 1) $52,000 shall be wired by ACF to the Marbella PSH Program Account within five (5) business days of the Effective Date of this MOU. Once the funds have been received, the County staff shall disburse the $52,000 to the Owner, pursuant to the County, so the Owner can reduce the principal amount of its outstanding first mortgage loan from the Virginia Housing Development Authority pursuant to the Marbella PSH Program; 2) $10,000 shall be wired by ACF to the Marbella PSH Program Account within five (5) business days of the Effective Date of this MOU. Once the funds have been received, the Program Administrator shall disburse up to $10,000 to APAH as a reimbursement for certain transaction expenses related to reducing the principal amount of the Owner s outstanding first mortgage loan from the Virginia Housing Development Authority; and 3) (a) $438,000 shall be wired by ACF to the Marbella PSH Program Account in semi-annual installments as shown on Attachment A, beginning with the Effective Date of this MOU and continuing every six months thereafter (b) Once an installment of the ACF Funds has been wired by ACF to the Marbella PSH Program Account, the Program Administrator shall, pursuant to the County, disburse each such installment to the Owner as monthly rental assistance subsidy payments for certain pre-screened extremely low-income vulnerable households who (a) are homeless or have a critical housing need, (b) have high leasing barriers, (c) have a disability, and (d) are receiving services from either the Department of Human Services or a related nonprofit vendor (or both) ( Marbella PSH Qualified Households ) who are occupying and renting the Marbella PSH Program Units at Marbella Apartments. 4 P age (c) The Parties acknowledge that the fifteen (15) semi-annual installment payments from ACF to pay the rental subsidy for Marbella Qualified Households are based on good faith estimates. If the County Manager or her designee determines that the funds in the Marbella PSH Program Account are projected to be insufficient or to show a surplus for a subsequent six (6) month period, the Program Administrator shall ask the Memorandum of Understanding Arlington Community Foundation

9 ACF to adjust its next semi-annual installment payment to meet the projected funding need. The projections showing the required funds shall be submitted to the ACF 45 days after the receipt of the previous semiannual installment. C. Payments. All payments (including semi-annual payments and prepayments) made by ACF under this MOU shall be made without set-off or counterclaim and shall be made on or before the due date thereof in U.S. dollars to the County Board at: Bank Name: Routing Number: Address: For credit to: Account Number: Instructions: Incoming CHIPS: or by such other wire transfer as arranged by County Staff. III. EVENTS OF DEFAULT Each of the following shall constitute an event of default ( Event of Default ): A. Failure to Disburse Funds. 1) ACF. Failure by ACF to disburse ACF Funds into the Marbella PSH Program Account, when due, pursuant to Section II. B. above shall constitute an event of default ( Event of Default ) on the part of ACF, provided that an Event of Default shall not exist if cured within twenty (20) calendar days. 5 P age 2) County Board. Subject to appropriation, failure by the County Board to disburse County Funds into the Marbella PSH Program Account, when due, pursuant to Section II. A. above shall constitute an Event of Default on the part of the County Board, provided that an Event of Default shall not exist if Memorandum of Understanding Arlington Community Foundation

10 cured within five (5) calendar days. 3) Subject to ACF having made its scheduled semi-annual payments, failure by the Program Administrator to disburse Marbella PSH Program Account funds in a timely manner to the Owner, pursuant to Section II. B.3.b. above shall constitute an Event of Default on the part of the County Board, provided that an Event of Default shall not exist if cured within sixty (60) calendar days. B. Representation or Warranty Incorrect. Any ACF representation or warranty contained in this MOU, or in any application, financial statement, certificate, or report submitted by ACF to the County Board in connection with this MOU, which is incorrect in any material and adverse respect when made and continues to be materially adverse to the County Board, shall constitute an Event of Default provided that an Event of Default shall not exists if cured within thirty (30) calendar days. IV. REMEDIES The occurrence of any Event of Default, following the expiration of applicable cure periods will, either at the option of the applicable Party or automatically when so specified, give the applicable Party the right to proceed with any and all of the following remedies, as applicable: A. Specific Performance. The applicable Party shall have the right to mandamus or other suit, action or proceeding at law or in equity to require the other Party to perform its obligations and covenants under this MOU, or to enjoin acts on things which may be unlawful or in violation of the provisions of this MOU. B. Acceleration of Payment of ACF Funds. The County Board shall have the right to declare and cause two (2) semi-annual payments of ACF Funds under this MOU to become immediately due and payable. ACF waives all right to presentment, demand, protest or notice of protest or dishonor. C. All Other Remedies. Either Party shall have the right to pursue any other remedy provided or allowed by law or equity. D. Rights and Remedies are Cumulative. Except with respect to rights and remedies expressly declared to be exclusive in this MOU, the rights and remedies of the parties are cumulative and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or 6 P age Memorandum of Understanding Arlington Community Foundation

11 different time, of any other right or remedy for the same default or any other default by the other party. V. REPRESENTATIONS AND WARRANTIES OF THE PARTIES Each Party to his MOU hereby (i) makes the following representations and warranties to the other Party, as of the Effective Date, (ii) covenants that until the expiration of this Agreement, upon learning of any fact or condition which would cause any of the warranties and representations in this MOU not to be true, shall immediately give written notice of such fact or condition to the other Party, and (iii) acknowledges that the other Party shall rely upon the representations made herein and agrees that such representations and warranties shall survive termination of this MOU: A. Organization. The Party is duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia and has the power and authority to carry on its business as now being conducted. B. Authority of the Party. The Party has full power and authority to execute and deliver this MOU and to make and accept the disbursement of funds contemplated hereunder. C. Authority of Persons Executing MOU. This MOU has been executed and delivered by persons who are duly authorized to execute and deliver the same for and on behalf of the Party, and all actions required under the Party s organizational documents and applicable governing law for the authorization, execution, delivery and performance of this MOU have been duly taken (to the extent such actions are required as of the date of execution and delivery of the MOU). D. Valid Binding Agreement. This MOU constitutes or, if not yet executed or delivered, will when so executed and delivered constitute, legal, valid and binding obligations of the Party enforceable against it in accordance with its respective terms. VI. MISCELLANEOUS PROVISIONS A. Reports and Accounting of the ACF 100 Homes Campaign Fund. 7 P age 1) During the term of this MOU, ACF covenants and agrees to provide the Program Administrator with (i) copies of all annual reports and/or audits for Memorandum of Understanding Arlington Community Foundation

12 8 P age the preceding fiscal year within thirty (30) calendar days of the completion of the audit and its acceptance by the ACF Board, and (ii) on request from the County Manager or her designee, a report summarizing the fund balance, earned interest, disbursements and charges for the ACF 100 Homes Campaign Fund. 2) Books and Records. ACF covenants and agrees to keep and maintain at its principal place of business, full, materially complete and appropriate books, records and accounts relating to the ACF 100 Homes Campaign Fund. Books, records and accounts relating to ACF s compliance with the terms, provisions, covenants and conditions of this MOU shall be kept and maintained in accordance with generally accepted accounting principles consistently applied. All such books, records, and accounts shall be open to and available for inspection by County Staff, its auditors or other authorized representatives at reasonable intervals during normal business hours. B. Reports and Accounting of the Marbella PSH Program Account. 1) Upon request by ACF during the term of this MOU, the County Board covenants and agrees to provide ACF with a report summarizing the account balance, earned interest, disbursements and charges for the Marbella PSH Program Account. 2) Books and Records. The County Board covenants and agrees to keep and maintain at the Department of Human Services, full, materially complete and appropriate books, records and accounts relating to the Marbella PSH Program Account. Books, records and accounts relating to the County Board s compliance with the terms, provisions, covenants and conditions of this MOU shall be kept and maintained in accordance with generally accepted accounting principles consistently applied. All such books, records, and accounts shall be open to and available for inspection by ACF, its auditors or other authorized representatives at reasonable intervals during normal business hours. C. Notices, Demands, and Communications Between the Parties. Formal notices, demands, and communications between the ACF and the County Board shall be given either by (a) personal service, (b) delivery by reputable document delivery service such as Federal Express that provides a receipt showing date and time of delivery, (c) mailing utilizing a certified or first class mail postage prepaid service of the United States Postal Service that provides a receipt showing date and time Memorandum of Understanding Arlington Community Foundation

13 of delivery, or (d) delivery by facsimile or electronic mail ( ) with transmittal confirmation and confirmation of delivery, addressed to: To the County: With a Copy to: To the ACF: Department of Human Services 2100 Washington Blvd., 3 rd Floor Arlington, Virginia Attn: Cynthia Stevens, Housing Assistance Bureau Chief CStevens@ArlingtonVA.US Office of the Attorney 2100 Clarendon Blvd, Suite 403 Arlington, Virginia Attn: Robert E. Dawson, Assistant County Attorney Fax: (703) RDawson@ArlingtonVA.US Arlington Community Foundation 818 North Quincy Street Arlington, Virginia Attn: Wanda Pierce WPierce@arlcf.org 9 P age Notices personally delivered or delivered by document delivery service shall be deemed effective upon receipt. Notices mailed shall be deemed effective on the second business day following deposit in the United States mail. Notices delivered by facsimile or shall be deemed effective the next business day, not less than 24 hours, following the date of transmittal and confirmation of delivery to the intended recipient. Such written notices, demands, and communications shall be sent in the same manner to such other addresses as any Party may from time to time designate in writing. D. Relationship of Parties. The provisions of this MOU are intended solely for the purpose of defining the relative rights of the Parties and no relationship of partnership, joint venture or other joint enterprise shall be deemed to be created hereby by and among the Parties pursuant to this MOU. E. Interpretation. The terms of this MOU shall be construed in accordance with the meaning of the language used and shall not be construed for or against any Party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply. The Section headings are for purposes of Memorandum of Understanding Arlington Community Foundation

14 convenience only, and shall not be construed to limit or extend the meaning of this MOU. F. No Third-Party Beneficiaries. No provision of this MOU shall be construed to confer any rights upon any person or entity who is not a Party hereto, whether a third-party beneficiary or otherwise. G. Governing Law. This MOU shall be construed in accordance with and governed by the laws of the Commonwealth of Virginia. The Parties consent to the jurisdiction and venue of the courts of the Circuit Court for the County of Arlington, Virginia. H. Entire Agreement, Waivers and Amendments. This MOU integrates all of the terms and conditions mentioned herein, or incidental hereto, and supersedes all negotiations and previous agreements between the Parties. All waivers of the provisions of this Agreement must be in writing and signed by the appropriate authorities of the Party to be charged, and all amendments and modifications hereto must be in writing and signed by the appropriate authorities of the Parties. I. Time of the Essence. Time is of the essence in the performance of this MOU. J. No Waiver of Sovereign Immunity by County. Notwithstanding any other provisions of this MOU to the contrary, nothing in this MOU nor any action taken by the County Board pursuant to this MOU nor any document which arises out of this MOU shall constitute or be construed as a waiver of either the sovereign immunity or governmental immunity of the County s elected and appointed officials, officers and employees. K. Counterparts. This MOU may be executed in counterparts, each of which shall be deemed to be an original, and such counterparts shall constitute one and the same instrument. THE SIGNATURE(S) OF THE PERSON(S) EXECUTING THIS MEMORANDUM OF UNDERSTANDING ON BEHALF OF ACF AND THE COUNTY BOARD ARE SET FORTH ON THE EXECUTION PAGE(S) IMMEDIATELY FOLLOWING THIS PAGE. 10 P age Memorandum of Understanding Arlington Community Foundation

15 IN WITNESS WHEREOF, the County and the Arlington Community Foundation have each executed, or caused to be duly executed, this Memorandum of Understanding under seal in duplicate, in the name and behalf of each of them (acting individually or by their respective officers or appropriate legal representatives, as the case may be, thereunto duly authorized) as of the day and year first written above. Approved as to form: THE COUNTY BOARD OF ARLINGTON COUNTY, VIRGINIA, a body politic County Attorney By: Barbara Donnellan, County Manager ARLINGTON COMMUNITY FOUNDATION, a charitable Virginia non-stock corporation By: [Insert Name and Title] 11 P age Memorandum of Understanding Arlington Community Foundation

16 ATTACHMENT A July 1 January 1 Total 2013 $27,240 $27,240 $54, $27,785 $27,785 $55, $28,341 $28,340 $56, $28,908 $28,907 $57, $29,486 $29,485 $58, $30,075 $30,075 $60, $30,677 $30,676 $61, $32,980 $32, P age Memorandum of Understanding Arlington Community Foundation

17 ARLINGTON COUNTY, VIRGINIA 100 HOMES MARBELLA PERMANENT SUPPORTIVE HOUSING PROGRAM FUNDING AND PROGRAM AGREEMENT THIS 100 MARBELLA PERMANENT SUPPORTIVE HOUSING PROGRAM FUNDING AND PROGRAM AGREEMENT (this Agreement ) is entered into this day of, 2013 (the Effective Date ) by and between THE COUNTY BOARD OF ARLINGTON COUNTY, VIRGINIA, a body politic (the County Board ), acting through its County Attorney and County Manager, and MARBELLA DEVELOPMENT LLC, a Virginia limited liability company (the Owner ). Individually, the County Board and the Owner may each be referred to hereinafter as the Party, or collectively as the Parties. 1 P age RECITALS WHEREAS, Rosslyn Ridge Development Corporation, a Virginia non-stock corporation and corporate affiliate of the Arlington Partnership for Affordable Housing ( APAH ), formed and organized the Owner as a Virginia limited liability company for the sole purpose of acquiring and operating a 134-unit apartment complex located at 1301 North Queen Street in Arlington, Virginia RPC Numbers , , , , , , and (the Marbella Apartments ); and WHEREAS, on June 17, 2011, the Owner acquired the Marbella Apartments by obtaining from the Virginia Housing Development Authority a first mortgage loan of $10,080,000 (the VHDA Senior Debt ), a subordinated second mortgage residual receipts loan of $4,031,000 from the County Board, and a $200,000 equity contribution from APAH; and WHEREAS, pursuant to that certain Declaration of Restrictive Covenants, Conditions and Restrictions (the Owner Declarations ), dated June 17, 2011, and recorded in Deed Book at page in the Clerk s office of the Circuit Court of, Virginia, the Owner declared that during the term of the AHIF Affordability Compliance Period (as defined therein), ending June 17, 2071, all of the apartment units in the Marbella Apartments complex shall be designated as Income- Restricted Units and reserved for occupancy by a low-income households and very low-income households. In addition, the Owner declared that (a) fourteen (14) of the Income-Restricted Units shall be rented to and occupied by or, if vacant, held available for occupancy by very low-income households with annual incomes at or below forty percent (40%) of the area median income ( AMI ) levels as set forth in the current definitions established and updated from time to time by the U.S. Department of Housing and Urban Development ( HUD ) for the Washington, DC statistical metropolitan area (the 40% Income-Restricted Units ), (b) twenty-six (26) of the Income-Restricted Units shall be rented to and occupied by or, if vacant, held available for occupancy by very low-income households with annual incomes at or below fifty percent (50%) of the

18 AMI (the 50% Income-Restricted Units ), and (c) the remaining ninety four (94) Income-Restricted Units would all eventually be rented to and occupied by or, if vacant, held available for occupancy by low-income households with annual incomes at or below sixty percent (60%) of the AMI (the 60% Income-Restricted Units ); and WHEREAS, in October 2011, as part of an initiative of the 10 Year Plan to End Homelessness in, the Department of Human Services DHS Economic Independence Division launched s 100 Homes for 100 Homeless Arlingtonians Campaign (the 100 Homes Campaign ) for the purpose of helping to move 100 of the most vulnerable homeless people in off the streets and into affordable housing; and WHEREAS, on March 13, 2012, John G. Shooshan, President of the Shooshan Company, made a $500,000 contribution to the Arlington Community Foundation, a charitable non-stock Virginia corporation ( ACF ), in order to enable ACF to provide funds to support the 100 Homes Campaign; and WHEREAS, on June 25, 2012, the Owner and APAH submitted a proposal to the DHS Economic Independence Division Housing Assistance Bureau Chief and a CPHD Housing Division Principal Planner to leverage $1,000,000 to provide initial funding for a permanent supportive housing program at Marbella Apartments (the Marbella PSH Program ); and WHEREAS, pursuant to the Marbella PSH Program, the Owner agrees to utilize $552,000 in 100 Homes Campaign funds to reduce the principal amount of the VHDA Senior Debt ( Mortgage Reduction Program ) in exchange for designating no fewer than ten (10) one-bedroom Income-Restricted Units (the Mortgage Reduction Units ) which shall be solely rented for a period of not less than twenty-five (25) years ( Mortgage Reduction Compliance Period ) to eligible households with annual incomes compliant with the Mortgage Reduction Income Restrictions (as defined below); and WHEREAS, the Owner agrees to initially designate five (5) of the 50% Income- Restricted Units ( Type A Units ) and five (5) of the 40% Income-Restricted Units ( Type B Units ) as Mortgage Reduction Units, and reduce the applicable incomerestrictions on the Mortgage Reduction Units ( Mortgage Reduction Income Restrictions ) so they can be rented to and occupied by or, if vacant, held available for occupancy by extremely low-income households with annual incomes at or below thirty percent (30%) of the AMI; and WHEREAS, the Parties agree that if six-months following the Effective Date fewer than five (5) of the Type B Units have been rented to and occupied by extremely low-income households with annual incomes at or below thirty percent (30%) of the AMI, then the Owner shall designate additional 50% Income-Restricted Units as Mortgage Reduction Units in lieu of the unavailable Type B Units (the Type C Units ) and reduce the income-restriction on the Type C Units so they can be rented to and 2 Page

19 occupied by or, if vacant, held available for occupancy by very low-income households with annual incomes at or below forty percent (40%) of the AMI; and WHEREAS, the Parties agree that subsequent to the designation and occupancy of a Type C Unit, if a 40% Income-Restricted Unit becomes available for rent and occupancy, then the Owner shall designate the newly available 40% Income-Restricted Unit as a Type B Unit, and an existing Type C Unit shall be re-designated by the Owner as a 50% Income-Restricted Unit; and WHEREAS, subject to appropriation and the terms of this Agreement, the County Board agrees to provide certain 100 Homes Campaign funds to the Owner as rental assistance for certain pre-screened extremely low-income vulnerable households who are eligible to occupy Mortgage Reduction Units and who (i) are homeless, chronically homeless or have a critical housing need, (ii) have high leasing barriers, (iii) have a disability, and (iv) are receiving services from either the Arlington County Department of Human Services or a related nonprofit vendor (or both) ( Marbella PSH Qualified Households ); and WHEREAS, subject to the terms and conditions of this Agreement, the County Board desires to convey to the Owner, and the Owner desires to accept from the County Board, certain 100 Homes Campaign funds ( 100 Homes Marbella PSH Program Grant Funds ) of (a) up to $552,000 in order to enable the Owner to reduce the principal amount of the VHDA Senior Debt by $552,000, (b) $10,000 as a reimbursement for certain transaction expenses related to reducing the principal amount of the VHDA Senior Debt and implementation of the Marbella PSH Program including legal and staff time, and (c) up to $438,000 as rental subsidy payments for Marbella PSH Qualified Households (the Rental Subsidy Program ) renting and occupying Mortgage Reduction Units beginning the Effective Date until the earlier of the termination of this Agreement or January 30, 2021 (the Rental Subsidy Program Compliance Period ); and WHEREAS, the County Manager has designated the Department of Human Services DHS Economic Independence Division Housing Assistance Bureau, through its Permanent Supportive Housing Program (the Program Administrator ), to manage the Marbella PSH Program and administer and disburse the 100 Homes Marbella PSH Program Grant Funds in support of the Marbella PSH Program. NOW, THEREFORE, IN CONSIDERATION of the foregoing and the following covenants, warranties and agreements of the Parties hereto, as are hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged by each Party hereto, the Parties hereby agree as follows: 3 P age

20 100 HOMES MARBELLA PERMANENT SUPPORTIVE HOUSING PROGRAM TERMS AND CONDITIONS I. INCORPORATION OF RECITALS. The foregoing recitals above are an integral part of this Agreement and set forth the intentions of the Parties and the premises on which the Parties have decided to enter into this Agreement. Accordingly, the foregoing recitals are fully incorporated into this Agreement by this reference as if fully set forth herein. II. III. IV. GENERAL AGREEMENT. The purpose of this Agreement is to establish the Marbella PSH Program to be administered by the Department of Human Services Economic Independence Division Housing Assistance Bureau, through its Permanent Supportive Housing Program, in cooperation with the Owner of the Marbella Apartments. The Owner and the County Board agree to cooperate in undertaking Marbella PSH Program activities as set forth herein. TERM. The term of this Agreement (the Term ) shall commence as of the Effective Date and, unless earlier terminated pursuant to the terms hereof, shall expire twenty-five (25) years from the Effective Date. 100 HOMES MARBELLA PSH PROGRAM GRANT FUNDS A. Disbursement of 100 Homes Marbella PSH Program Grant Funds. Subject to the terms and conditions of this Agreement, the County Board agrees to disburse 100 Homes Marbella PSH Program Grant Funds to the Owner as follows: 4 P age (1) $552,000 to Reduce the Principal Amount of the VHDA Senior Debt. On or about the Effective Date, the Program Administrator shall authorize disbursement of Five Hundred and Fifty Two Thousand and 00/100 Dollars ($552,000) to the Owner for the sole purpose of enabling the Owner to reduce the principal amount of its currently outstanding VHDA Senior Debt by $552,000. The Owner covenants and agrees to use the $552,000 in 100 Homes Marbella PSH Program Grant Funds solely to pay down the outstanding principal amount of the VHDA Senior Debt on or before August 1, (2) Reimbursement for Transaction Related Expenses. On or about the Effective Date, the Program Administrator shall authorize disbursement of Ten Thousand and 00/100 Dollars ($10,000) to the Owner as a reimbursement for certain transaction expenses including staff time related to reducing the principal amount of the VHDA Senior Debt and implementation of the Marbella PSH Program.

21 (3) Rental Subsidy Program. Subject to the availability of sufficient 100 Homes Marbella PSH Program Grant Funds, the terms of this Agreement and the occupancy of the Mortgage Reduction Units by Marbella PSH Qualified Households, on about the 1 st day of each month, beginning 1, 2013 and ending no later than the earlier of the termination of the Agreement or January 30, 2021, the Program Administrator shall disburse a rental assistance subsidy payment ( Rental Subsidy Payment ) to the Owner for each Marbella PSH Qualified Household occupying and renting a Mortgage Reduction Unit pursuant to the terms of this Agreement. B. Availability of 100 Homes Marbella PSH Program Grant Funds. If in the event there are insufficient 100 Homes Marbella PSH Program Grant Funds available to permit the County Board to make Rental Subsidy Payments to the Owner for any Marbella PSH Qualified Household occupying and renting a Mortgage Reduction Unit, then the Rental Subsidy Payments to the Owner shall be eliminated which terminates the Rental Subsidy Program and the Mortgage Reduction Units available for occupancy by Marbella PSH Qualified Households will become available to the general public at the Mortgage Reduction Income Restrictions. 5 P age

22 V. ADMINISTRATION OF THE MARBELLA PSH PROGRAM As a material inducement for the County Board s willingness to enter into this Agreement, and in consideration of the County Board providing 100 Homes Marbella PSH Program Grant Funds to the Owner, the Owner hereby covenants and agrees for itself, its successors and its assigns, to comply with each restriction and covenant set forth in the Owner Declarations and this Article V from the Effective Date until the earlier of the termination of this Agreement or the end of the Mortgage Reduction Compliance Period. A. Designation of Marbella PSH Program Units (1) Initial Designation of Ten (10) Type A and Type B Units. The Owner covenants and agrees that, subject to the terms and conditions of this Agreement, five (5) Type A Units and five (5) Type B Units shall be rented to and occupied by or, if vacant, available for occupancy by Marbella PSH Qualified Households ( Marbella PSH Program Units ) during the term of the Mortgage Reduction Compliance Period. (2) Four (4) Marbella PSH Program Units As of the Effective Date. The Owner covenants and agrees that as of the Effective Date, four (4) Type A Units shall be immediately designated as Marbella PSH Program Units and shall be occupied and rented by or, if vacant, available for occupancy by Marbella PSH Qualified Households for the duration of the Rental Subsidy Program Compliance Period. (3) Designation of the Remaining Six (6) Marbella PSH Program Units. The Owner covenants and agrees that, subject to the terms of this Agreement, the first five Type B Units to become available for occupancy and the next Type A Unit to become available for occupancy in the Marbella Apartments complex following the Effective Date shall be designated as Marbella Mortgage Reduction Units and shall thereafter be rented to and occupied by or, if vacant, available for occupancy by Marbella PSH Qualified Households for the duration of the Rental Subsidy Program Compliance Period. (4) Designation of Type C Units as Marbella PSH Program Units. If at least six (6) months following the Effective Date fewer than five (5) of the Type B Units have been rented to and occupied by Marbella PSH Qualified Households with annual incomes at or below thirty percent (30%) of the AMI, then the Owner shall designate corresponding Type C Units as Marbella PSH Program Units in lieu of the unavailable Type B Units. The Type C Units designated as Marbella PSH Program Units shall thereafter be rented to and occupied by or, if vacant, available for occupancy by Marbella PSH Qualified Households with annual incomes at or below forty percent (40%) of the AMI 6 P age

23 for the duration of the Rental Subsidy Program Compliance Period. (5) The Parties agree that subsequent to the designation and occupancy of a Type C Unit, if a 40% Income-Restricted Unit becomes available for rent and occupancy, then the Owner shall designate the newly available 40% Income- Restricted Unit as a Type B Unit, and an existing Type C Unit shall be redesignated by the Owner as a 50% Income-Restricted Unit. B. Placement of Marbella PSH Qualified Households in Marbella PSH Program Units. (1) Vacancy Marbella PSH Program Unit. The Owner covenants and agrees to notify the Program Administrator each time a designated Marbella PSH Program Unit becomes available for occupancy by a Marbella PSH Qualified Household. The notification must be received by the Program Administrator within 5 business days of the availability (2) Selection of Pre-Screened Applicants by the Program Administrator. Upon receipt of a notification from the Owner that a Marbella PSH Program Unit is vacant and available for occupancy, the Program Administrator shall, within ten (10) business days of receipt of the Owner s notification, forward the name and contact information of a pre-screened eligible applicant household that has been designated as a Marbella PSH Qualified Household by the Program Administrator ( Pre-Screened Applicant ), to the Owner for consideration and selection to occupy and rent the vacant Marbella Marbella PSH Program Unit. (3) Application Process. (a) The Owner shall lease all Marbella PSH Program Units to Marbella PSH Qualified Households referred by the Program Administrator to the Owner. 7 P age (i) (ii) The Program Administrator, in her sole discretion, shall determine who is a Marbella PSH Qualified Household and may, at any time, determine that a person previously deemed a Marbella PSH Qualified Household shall no longer be eligible for participation in the Marbella PSH Program. The Program Administrator shall provide the Owner with the Department of Human Services basic criteria for selecting Marbella PSH Qualified Households. The Owner recognizes that referrals by the Program Administrator may include individuals with histories of crimes related to homelessness, including some non-violent misdemeanors and felonies. The Program Administrator and the Owner shall

24 work proactively together to develop apartment leasing eligibility criteria which will be reviewed on a periodic basis and adjusted as needed. (iii) (iv) The Owner will have sole discretion for leasing and unit assignment of Marbella PSH Qualified Households. The Marbella PSH Program Unit leased to each Marbella PSH Qualified Household must be appropriate for the size of the household. Due to the Rental Subsidy Payment provided by the County Board which is assigned to the Marbella PSH Qualified Household s lease with Owner, Owner shall waive the minimum income requirement for eligibility and consider only the reduced portion of the Marbella PSH Qualified Household s contribution to monthly rental payments and its ability to comply with that amount. For this reason, the Owner will also waive minimum credit criteria. (b) Lease of Marbella PSH Program Units. The Owner shall enter into a standard written Marbella Apartments lease ( Lease ) with each Marbella PSH Qualified Household selected by the Owner to occupy and rent a Marbella PSH Program Unit for a term of twelve (12) months. C. Placement of Non-Marbella PSH Qualified Households in Vacant Marbella PSH Program Units. (1) If 60 days after initial notice to the Program Administrator no Pre-Screened Applicants have executed a Lease agreement, the Program Administrator has the option of utilizing 100 Homes Marbella PSH Program Grant Funds to cover the eighty percent (80%) of vacancy costs of holding the unit available until a Pre-Screened Applicant moves into the unit. If the Program Administrator does not choose to cover eighty percent (80%) of the vacancy costs, then the Rental Subsidy Payments will terminate for that unit until it becomes available again on turnover. (2) At termination of the Rental Subsidy Program, the Owner shall be permitted to rent vacant Marbella PSH Program Units to extremely low-income household with an annual income at the Mortgage Reduction Income Restrictions. D. Marbella PSH Program Unit Rental Requirements (1) Maximum Allowable Rent. The maximum allowable monthly rent for the Marbella PSH Program Units shall: 8 P age