REPORT TO THE HOUSING AUTHORITY OF THE CITY OF SAN DIEGO

ITEM 2 REPORT TO THE HOUSING AUTHORITY OF THE CITY OF SAN DIEGO DATE ISSUED: March 20, 2018 REPORT NO: HAR18-014 ATTENTION: SUBJECT: Chair and Members of the Housing Authority of the City of San Diego For the Agenda of April 9, 2018 Preliminary Bond Authorization for Harbor View Apartments COUNCIL DISTRICT: 4 REQUESTED ACTION Take the initial steps to issue Housing Authority of the City of San Diego tax-exempt Multifamily Housing Revenue Bonds to facilitate the rehabilitation of Harbor View Apartments, a 60-unit existing development, located at 404 North 47 th Street, San Diego 92102, which will include 59 units that will remain affordable for 55 years. STAFF RECOMMENDATION That the Housing Authority of the City of San Diego (Housing Authority) take the following actions, as described in this report. 1. Approve the following steps to issue Housing Authority tax-exempt Multifamily Housing Revenue Bonds for Harbor View Apartments, a 60-unit existing development, located at 404 North 47 th Street, San Diego 92102, which will include 59 units that will remain affordable for 55 years: a) Issue a bond inducement resolution (Declaration of Official Intent) for up to $10,000,000 in Multifamily Housing Revenue Bonds for the rehabilitation of Harbor View; 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 up to $10,000,000 for Harbor View Apartments; c) Approve the financing team of Jones Hall as Bond Counsel and PFM as Financial Advisor; and 2. Authorize the Housing Commission President & Chief Executive Officer (President & CEO), or designee, to execute any and all documents that are necessary to effectuate the transaction and implement these approvals in a form approved by General Counsel and Bond Counsel, and to take such actions as are necessary, convenient, and/or appropriate to implement these approvals upon advice of General Counsel and/or the Bond Counsel. SUMMARY A Development Summary is included as Attachment 1.

March 20, 2018 Preliminary Bond Authorization for Harbor View Apartments Page 2 Table 1 Development Details Address 404 North 47 th Street, San Diego 92102 Council District 4 Community Plan Area Encanto Development Type Rehabilitation Construction Type Type-V Parking Type Surface Housing Type Multifamily Lot Size 3.17 Acres Units 60 Density 18.9 dwelling units per acre Affordable Unit Mix 24 two-bedroom units, 35 three-bedroom units, and 1 three-bedroom manager unit Gross Building Area 58,340 square feet Net Rentable Area 57,640 square feet The Development Built in 1985, Harbor View Apartments is an existing 60-unit apartment complex located at 404 North 47 th Street in San Diego s Encanto neighborhood (Attachment 2 Site Map). In 2002, Harbor View Apartments was financed with a $900,000 Housing Commission loan, $3,590,000 Housing Authority bond issuance and low income housing tax credits. The project is currently subject to a Housing Commission Declaration, Bond Regulatory Agreement and California Tax Credit Allocation Committee (TCAC) Regulatory Agreement. The Housing Commission loan and bond issuance were paid off in February of 2018. The complex is composed of 10 two-story residential buildings, management office and a community room. Site amenities include laundry facilities, barbecue area and courtyard. The development is adjacent to the 47 th Street Trolley Station. Adjacent uses include single-family homes to the north and east, church to the south and Chollas-Mead Elementary School to the west. Building Conditions/Proposed Rehabilitation Work The owner, Harbor View SD Partners, L.P., intends to complete a comprehensive renovation of Harbor View Apartments. The scope of work includes new roofs, windows, kitchen cabinets and countertops, flooring, light fixtures and water heaters. The current estimate of rehabilitation cost is approximately $2,300,000 ($38,000/unit). Sustainability Features Harbor View Apartments will comply with the TCAC minimum energy efficiency standards for rehabilitation projects, which require demonstrating at least 10 percent post-rehabilitation improvement in energy efficiency over existing conditions. Prevailing Wages Prevailing wages are not applicable to the proposed rehabilitation because no Federal nor State funds will be used.

March 20, 2018 Preliminary Bond Authorization for Harbor View Apartments Page 3 Accessibility TCAC requires wheelchair accessibility in 10 percent of the units and 4 percent of the units accessible to residents with visual and/or hearing impairment. The development will include Universal Design features. Relocation The developers do not anticipate permanent relocation of tenants. Rehabilitation may require temporary relocation while improvements are made to unit interiors. Recent Sale Transaction On February 9, 2018, the development was sold by Harbor View Associates L.P. to Harbor View SD Partners, L.P. for $7,200,000. The Housing Commission loan of $900,000 plus accrued interest was paid off concurrently with the sale. Development Team The current owner of the project is Harbor View SD Partners, L.P. At closing, the Limited Partnership will be composed of Harbor View GP, LLC as Administrative General Partner, Central Valley Coalition for Affordable Housing as Managing General Partner, and a tax credit Investor Limited Partner. A disclosure statement for the administrative general partner and managing general partner are included as Attachment 3. Table 2 - Development Team Summary ROLE FIRM/CONTRACT Harbor View SD Partners, L.P. Administrative General Partner: Harbor View GP, LLC General Partner: Central Valley Coalition for Affordable Housing Investor Limited Partner: To Be Determined Architect Mark McKinney General Contractor Wilshire Pacific Builders Property Management Platinum Realty Management Construction Lender Chase Bank Permanent Lender Chase Bank Financing Structure Harbor View has an estimated total development cost of $12,096,463, ($201,608 per unit). Financing will include a combination of tax-exempt Multifamily Housing Revenue Bonds, Federal 4 percent tax credits, deferred developer fee and income during construction. There will be no Housing Commission loan proceeds provided to this development. The developer s project pro forma is provided as Attachment 4.

March 20, 2018 Preliminary Bond Authorization for Harbor View Apartments Page 4 Table 3 Estimated Sources and Uses of Financing Permanent Financing Sources Amounts Permanent Financing Uses Amounts Permanent Loan $ 7,918,749 Acquisition Costs $ 7,228,800 Tax Credit Equity 3,431,986 Construction Costs 2,297,614 Income During Construction 329,538 Soft Costs 387,641 Deferred Developer Fee 416,191 Financing Costs 620,894 Reserves 204,320 Developer Fee 1,357,195 Total Development Cost $ 12,096,464 Total Development Cost $ 12,096,464 Development Cost Key Performance Indicators Housing Commission staff has identified development cost performance indicators, which were used to evaluate the proposed development. The key performance indicators listed in Table 4 are commonly used by real estate industry professionals and affordable housing developers. Table 4 Key Performance Indicators Development Cost Per Unit $12,096,464 60 units = $201,608 Acquisition Cost Per Unit $7,228,000 60 units = $120,480 Net Rentable Square Foot Hard Cost $2,297,614 57,640 sq. ft. = $40 Gross Building Square Foot Hard Cost $2,297,614 58,340 sq. ft. = $39 Project Comparison Chart There are multiple factors and variables that influence the cost of developing multifamily affordable housing, including but not limited to project location, site conditions, site improvements needed, environmental factors, land use approval process, community involvement, construction type, design requirements/constraints, economies of scale, City impact fees, developer experience and capacity, and amenities necessary to gain tax credit approval. Table 5 shows a comparison of the subject property and other developments of the same construction type. Table 5 Comparable Rehabilitation Projects Project Name Year Construction Type Units Total Development Cost Cost Per Unit SDHC Subsidy Per Unit * Rehab Cost Rehab Cost Per Unit Subject 2018 V 60 $12,096,463 $201,608 $0 $2,297,614 $38,294 Parkside 2018 V 40 $9,519,645 $237,991 $49,058 $2,363,345 $59,083 Casa Puleta 2017 V 54 $10,797,804 $199,959 $0 $1,746,932 $32,350 Proposed Housing Bonds The Housing Commission utilizes the Housing Authority s tax-exempt borrowing status to pass on lower interest rate financing (and make four percent tax credits available) to developers of affordable rental housing. The Housing Authority s ability to issue bonds is limited under the U.S. Internal Revenue Code. To issue bonds for a development, the Housing Authority must first submit an application to the California Debt Limit Allocation Committee (CDLAC) for a bond allocation. Prior to submitting applications to CDLAC, developments are brought before the Housing Commission, Housing Authority, and City Council. Housing Authority bond inducement resolutions must be

March 20, 2018 Preliminary Bond Authorization for Harbor View Apartments Page 5 obtained prior to application submittal, and City Council Tax Equity and Fiscal Responsibility Act (TEFRA) resolutions must be secured no later than 30 days after application submittal. The developer plans to submit a bond allocation application to CDLAC in October 2018, for a December 2018 bond allocation meeting; however, if necessary, staff will submit additional applications to CDLAC to secure a bond allocation for the development. A general description of the 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 financings are described in Attachment 5. The developer will be seeking a CDLAC bond allocation of approximately $10,000,000. The bonds will meet all requirements of the Housing Commission s Multifamily Housing Revenue Bond Program policy and will fully comply with the City of San Diego s (City) ordinance on bond disclosure. The up to $10,000,000 bond allocation that will be sought from CDLAC is approximately 15 percent higher than the estimated $8,800,000 amount for which the development is being underwritten. This increased amount represents a bond contingency 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 development costs, revenues, and interest rates prevailing at the time of bond issuance. The developer proposes that the bonds will be used for acquisition, rehabilitation, and permanent financing. Housing Commission staff will later return to both the Housing Commission and Housing Authority for approval of the final bond amount. Staff recommends assigning Jones Hall as Bond Counsel and PFM as Financial Advisor to work on the development. The proposed financing team members have been selected in accordance with the existing policy for the issuance of bonds. Financial Advisors and Bond Counsels are selected in accordance with the Housing Commission s Bond Policy. AFFORDABLE HOUSING IMPACT Under the proposed bond financing, Harbor View Apartments would have 6 units restricted to households with incomes at or below 50 percent of San Diego Area Median Income (AMI), and 53 of the units to household with incomes at or below 60 percent of AMI. The remaining units will be an unrestricted manager unit. The affordable units will be restricted for a 55-year term. Table 6 summarizes the affordability: Table 6 Affordability & Monthly Estimated Rent Table Unit Type AMI Units TCAC/SDHC* Gross Rents 2-bedroom 50% AMI 2 $1,023 3-bedroom 50% AMI 4 $1,181 2-bedroom 60% AMI 22 $1,136 3-bedroom 60% AMI 31 $1,364 3-bedroom manager - 1 - Total 60

March 20, 2018 Preliminary Bond Authorization for Harbor View Apartments Page 6 *Harbor View is currently subject to a Housing Commission Declaration and Bond Regulatory Agreement from a 2001 loan and bond issuance; Housing Commission 3 bedroom gross rents are currently lower than TCAC gross rents Development Schedule The estimated development timeline is as follows. Milestones Estimated Dates Housing Authority Meeting Preliminary Bond Approval April 9, 2018 TCAC and CDLAC application submittals October 2018 TCAC and CDLAC allocation meetings January 2019 Housing Commission final bond authorization January 2019 Housing Authority final bond authorization January 2019 Estimated bond issuance and escrow closing March 2019 Estimated start of construction work March 2019 Estimated completion of construction work September 2019 FISCAL CONSIDERATIONS The proposed funding sources and uses approved by this action are included in the Housing Authorityapproved Fiscal Year (FY) 2018 Housing Commission Budget. Approving this action will not change the FY 2018 total budget. Funding sources approved by this action will be as follows: Bond Issuance Fees - $25,000 ($10,000,000 x.0025) Funding uses approved by this action will be as follows: Rental Housing Finance Program Administration Costs - $25,000 Approval of the bond inducement and TEFRA resolutions does not commit the Housing Authority to issue the bonds. The bonds would not constitute a debt of the City. If bonds are ultimately issued for the development, 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 of the development. Neither the faith and credit nor the taxing power of the City or the Housing Authority would 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 annual administrative fee, as well as Housing Commission Bond Council and Financial Advisor fees. COMMUNITY PARTICIPATION and PUBLIC OUTREACH EFFORTS As required by the Housing Commission Bonds Program, the developer will present their proposal for Harbor View to the Encanto Community Planning Group prior to the Housing Commission s later consideration of the final bond issuance approval. KEY STAKEHOLDERS and PROJECTED IMPACTS Stakeholders include: the residents of Harbor View, the City of San Diego, and the Encanto neighborhood. Development of the property is expected to have a positive impact on the community because it will improve and preserve existing affordable housing for low income tenants.

March 20, 2018 Preliminary Bond Authorization for Harbor View Apartments Page 7 ENVIRONMENTAL REVIEW This project s proposed rehabilitation is categorically exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Section 15301 of the State CEQA Guidelines because the Project is an existing facility and the proposed actions do not involve expansion of the existing use. Processing under the National Environmental Policy Act is not required as no Federal funds are involved in this action. Respectfully submitted, Tina Kessler Tina Kessler Housing Programs Manager Real Estate Division Approved by, Deborah N. Ruane Deborah N. Ruane Executive Vice President & Chief Strategy Officer Real Estate Division Attachments: 1) Development Summary 2) Site Map 3) Developer Disclosure Statements a. Harbor View GP LLC b. Central Valley Coalition for Affordable Housing 4) Developer s Project Pro forma 5) Multifamily Housing Revenue Bond Program Hard copies are available for review during business hours at the security information desk in the main lobby of the San Diego Housing Commission offices at 1122 Broadway, San Diego, CA 92101 and at the Office of the San Diego City Clerk, 202 C Street, San Diego, CA 92101. You may also review complete docket materials in the Public Meetings section of the San Diego Housing Commission website at www.sdhc.org.

Attachment 1 Table 1 Development Details Address 404 North 47 th Street, San Diego 92102 Council District 4 Community Plan Area Encanto Development Type Rehabilitation Construction Type Type-V Parking Type Surface Housing Type Multifamily Lot Size 3.17 Acres Units 60 Density 18.9 dwelling units per acre Affordable Unit Mix 24 two-bedroom units, 35 three-bedroom units, and 1 three-bedroom manager unit Gross Building Area 58,340 square feet Net Rentable Area 57,640 square feet Table 2 - Development Team Summary ROLE FIRM/CONTRACT Harbor View SD Partners, L.P., General Partner: Central Valley Coalition for Affordable Housing Administrative General Partner: 2301 Sycamore Drive LLC; Aryeh Aslan, Sofiya Machulskaya, Shaoul Levy, Jacob Levy Tax Credit Limited Partner: To Be Determined Architect Mark McKinney General Contractor Wilshire Pacific Builders Property Management Platinum Realty Management Construction Lender Chase Bank Permanent Lender Chase Bank Table 3 Estimated Sources and Uses of Financing Permanent Financing Sources Amounts Permanent Financing Uses Amounts Permanent Loan $ 7,918,749 Acquisition Costs $ 7,228,800 Tax Credit Equity 3,431,986 Construction Costs 2,297,614 Income During Construction 329,538 Soft Costs 387,641 Deferred Developer Fee 416,191 Financing Costs 620,894 Reserves 204,320 Developer Fee 1,357,195 Total Development Cost $ 12,096,464 Total Development Cost $ 12,096,464

Table 4 Key Performance Indicators Development Cost Per Unit $12,096,464 60 units = $201,608 Acquisition Cost Per Unit $7,228,000 60 units = $120,480 Net Rentable Square Foot Hard Cost $2,297,614 57,640 sq. ft. = $40 Gross Building Square Foot Hard Cost $2,297,614 58,340sq. ft. = $39 Table 5 Comparable Rehabilitation Projects Project Name Year Construction Type Units Total Development Cost Cost Per Unit SDHC Subsidy Per Unit * Rehab Cost Rehab Cost Per Unit Subject 2018 V 60 $12,096,463 $201,608 $0 $2,297,614 $38,294 Parkside 2018 V 40 $9,519,645 $237,991 $49,058 $2,363,345 $59,083 Casa Puleta 2017 V 54 $10,797,804 $199,959 $0 $1,746,932 $32,350 Table 6 Affordability & Monthly Estimated Rent Table Unit Type AMI Units TCAC/SDHC* Gross Rents 2-bedroom 50% AMI 2 $1,023 3-bedroom 50% AMI 4 $1,181 2-bedroom 60% AMI 22 $1,136 3-bedroom 60% AMI 31 $1,364 3-bedroom Managers - 1 - Total 60

Attachment 2

Attachment 3a

Attachment 3b

Attachment 4 Monthly Development Proforma Purchase 7,200,000 Harbor View Villas Construction Included In Included In Rehab Basis Completion Conversion/8609s Totals Acquisition Basis 1-Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Uses: Permanent Sources & Uses Construction Sources & Uses Acquisition Sources: Sources: Acquisition - Land 720,000 720,000 Permanent Loan 7,918,749 Construction Loan 8,852,000 Acquisition - Building 6,480,000 6,480,000 6,480,000 Tax-Credit Equity 3,431,986 Tax-Credit Equity 1,372,794 Title Insurance, Escrow, Recording 28,800 28,800 28,800 Cash Flow from Operations 329,538 Cash Flow from operations 164,769 Deferred Developer Fee 416,191 Deferred Developer Fee 0 Total Sources 12,096,463 Total Sources 10,389,563 Soft Costs ALTA Survey 10,000 10,000 Uses: Uses: 10,000 Appraisal & Market Study 12,500 12,500 12,500 Acquisition 7,228,800 Acquisition 7,228,800 Environmental - Phase I 5,000 5,000 5,000 Soft Costs 241,553 Soft Costs 241,553 Environmental - ACM, LBP, Mold Reports 5,000 5,000 5,000 Rehab 2,297,614 Rehab 2,297,614 Property Condition Report 7,500 7,500 7,500 Financing 291,356 Financing 291,356 Zoning Report 1,500 1,500 1,500 Construction Period Interest 329,538 Construction Period Interest 219,692 Architect & Engineer 70,000 70,000 70,000 Miscellaneous Costs 146,088 Miscellaneous Costs 146,088 Permitting Fees 15,000 2,000 2,000 2,000 2,000 2,000 2,000 27,000 27,000 Operating Reserve 204,320 Operating Reserve 0 Project Monitoring 2,300 2,300 2,300 2,300 2,300 2,300 13,800 13,800 Developer Fee 1,357,195 Developer Fee 0 Pest Inspection & Pest Control 2,500 5,000 7,500 7,500 Total Uses 12,096,463 Total Uses 10,425,102 Professional Fees / Accounting 22,000 25,000 47,000 47,000 Relocation Costs 3,875 3,875 3,875 3,875 3,875 3,875 23,250 23,250 Soft Cost Contingency 7,550 659 409 409 409 409 1,659 11,503 11,503 0 0 0 0 Loan & Bond Fees Bond Issuance Cost (SDHC) 22,130 22,130 Bond Counsel 45,000 45,000 Issuer Financial Consultant 40,000 40,000 First Year Trustee Fee 2,500 2,500 City Attorney 2,500 2,500 Permanent Loan Legal & Underwriting 76,832 76,832 Permanent Loan Fee 88,520 88,520 Financing Contingency 13,874 13,874 Construction Period Interest 329,538 27,462 27,462 27,462 27,462 27,462 27,462 27,462 27,462 27,462 27,462 27,462 27,462 Miscellaneous Costs TCAC Fees 39,488 39,488 CDLAC Fees 5,000 5,000 Developer Legal 50,000 50,000 Investor Due Diligence & Legal 50,000 50,000 Shipping/Mailing/Travel 1,000 100 100 100 100 100 100 1,600 Construction Hard Cost 257,143 257,143 257,143 257,143 257,143 257,143 257,143 1,800,000 1,800,000 General Conditions 15,429 15,429 15,429 15,429 15,429 15,429 15,429 108,000 108,000 Overhead 5,451 5,451 5,451 5,451 5,451 5,451 5,451 38,160 38,160 Profit 16,354 16,354 16,354 16,354 16,354 16,354 16,354 114,480 114,480 Contingency 29,438 29,438 29,438 29,438 29,438 29,438 29,438 206,064 206,064 P&P Bond 17,663 17,663 17,663 Insurance 13,247 13,247 13,247 Reserves Operating Deficit Reserve 204,320 204,320 Developer Fee 1,357,195 1,357,195 976,320 380,875 Total: $7,824,194 $396,120 $359,960 $359,960 $359,960 $359,960 $386,210 $351,276 $27,462 $27,462 $27,462 $27,462 $1,588,976 $12,096,463 $7,485,120 $2,920,041 Sources: Construction Loan 6,794,598 368,658 332,499 332,499 332,499 332,499 358,749-19,384 0 0-8,832,616 Permanent Loan 7,918,749 7,918,749 Tax Credit Equity 1,029,596 343,199 2,059,191 3,431,986 Total Developer Fee Deferred Developer Fee 416,191 416,191 $1,357,195 Operating Cash Flow 27,462 27,462 329,538 27,462 27,462 27,462 27,462 27,462 27,462 27,462 27,462 27,462 27,462 Total: $7,824,194 $396,120 $359,960 $359,960 $359,960 $359,960 $386,210 $351,276 $27,462 $27,462 $27,462 $27,462 $1,588,976 $12,096,463 Rate Construction Loan Balance 6,794,598 7,163,257 7,495,755 7,828,254 8,160,752 8,493,251 8,852,000 8,832,616 8,832,616 8,832,616

4% PV Credit: New Construction/R ehabilitation 4% PV Credit: Acquisition Total PV Credit Total Eligible Basis $2,920,041 $ 7,485,120 $ 10,405,161 Difficult To Develop Area Adjustment (DDA)/QCT 130.00% 100.00% Adjusted Eligible Basis $ 3,796,053 $ 7,485,120 $ 11,281,173 Low-Income Occupancy Percentage 100.00% 100.00% 100.00% Qualified Basis 3,796,053 7,485,120 11,281,173 Credit Reduction - - - Estimated Tax Credit Percentage 3.25% 3.23% Estimated Annual Credit-Federal Allowable $ 123,372 $ 241,769 $ 365,141 Estimated Total Credits-Federal Allowable $ 1,233,720 $ 2,417,694 $ 3,651,414 Estimated Total Credits Allocable to LP $ 1,233,597 $ 2,417,452 $ 3,651,049 Credit price $ 0.94000 Total Equity paid by Limited Partner $ 3,431,986 Admission 30% $1,029,596 Construction Completion 10% $343,199 Perm Loan Conversion 55% $1,887,592 8609 5% $171,599 100% $3,431,986 Tax Credit Calculation

Gross Potential Rent 903,010 Vacancy -45,150-5.0% Unit Mix AMI 2017 Max Est 2018 Max M2M Rents Other Income 30,000 2x1 50% 2 1,023 1,064-53 1,011 24,262 Net Rental Income 887,859 2x1 60% 22 1,228 1,277-53 1,224 323,168 2x1 50% 4 1,181 1,228-74 1,154 55,404 Per Unit 3x2 60% 31 1,364 1,419-74 1,345 500,176 Payroll 59 903,010 Resident Manager 40,000 Maintenance Tech 30,000 Taxes & Benefits 21,000 Total 91,000 1,517 Administrative Office Supplies 2,500 Telephone + Int. 3,000 Audit + TR 10,000 Legal 3,000 Issuer Fee 11,065 Servicing 2,000 Total 31,565 526 Utilities Electricity 8,666 Gas 16,276 Water 43,919 Sewer 39,553 Trash 16,599 Total 125,013 2,084 Repair & Maintenance 30,000 500 Management Fee 35,514 592 Taxes 160 3 Other Taxes 2,500 42 Insurance 13,000 217 Total 15,660 261 Replacement Reserve 18,000 300 Total Expenses 346,753 5,779 Net Operating Income 541,107 Loan Sizing 7,918,749 Rate 4.8500%

4.85% Harbor View Villas - Cash Flow Projection Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Gross Potential Rent 903,010 925,585 948,724 972,443 996,754 1,021,672 1,047,214 1,073,395 1,100,230 1,127,735 1,155,929 1,184,827 1,214,448 1,244,809 1,275,929 1,307,827 Other Income 30,000 30,750 31,519 32,307 33,114 33,942 34,791 35,661 36,552 37,466 38,403 39,363 40,347 41,355 42,389 43,449 Economic Vacancy (46,650) (47,817) (49,012) (50,237) (51,493) (52,781) (54,100) (55,453) (56,839) (58,260) (59,717) (61,209) (62,740) (64,308) (65,916) (67,564) Net Rental Income 886,359 908,518 931,231 954,512 978,375 1,002,834 1,027,905 1,053,602 1,079,943 1,106,941 1,134,615 1,162,980 1,192,054 1,221,856 1,252,402 1,283,712 Operating Expenses 346,753 358,889 371,450 384,451 397,907 411,833 426,247 441,166 456,607 472,588 489,129 506,248 523,967 542,306 561,287 580,932 Net Operating Income 539,607 549,629 559,781 570,061 580,468 591,001 601,657 612,436 623,336 634,353 645,486 656,732 668,087 679,550 691,116 702,781 First Mortgage Total Debt Service (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) Interest 384,059 379,866 375,469 370,858 366,024 360,956 355,642 350,070 344,227 338,102 331,679 324,945 317,884 310,481 302,719 294,580 Principal (86,468) (90,662) (95,059) (99,669) (104,503) (109,572) (114,886) (120,458) (126,300) (132,426) (138,848) (145,582) (152,643) (160,046) (167,808) (175,947) Loan Balance 7,918,749 7,832,281 7,741,619 7,646,560 7,546,891 7,442,388 7,332,816 7,217,930 7,097,472 6,971,172 6,838,747 6,699,899 6,554,316 6,401,673 6,241,627 6,073,819 5,897,871 DSCR 1.15x 1.17x 1.19x 1.21x 1.23x 1.26x 1.28x 1.30x 1.32x 1.35x 1.37x 1.40x 1.42x 1.44x 1.47x 1.49x Asset Management Fee 5,000 5,150 5,305 5,464 5,628 5,796 5,970 6,149 6,334 6,524 6,720 6,921 7,129 7,343 7,563 7,790 Cash Remaining 64,079 73,952 83,949 94,070 104,313 114,677 125,160 135,760 146,474 157,302 168,239 179,283 190,431 201,680 213,025 224,463 Developer Note Interest 13,526 11,883 9,866 7,458 4,643 1,404 - - - - - - - - - - Payment (64,079) (73,952) (83,949) (94,070) (104,313) (44,609) - - - - - - - - - - Loan Balance 416,191 365,638 303,569 229,486 142,874 43,205 - - - - - - - - - - - Cash Remaining 0 0 0 0 0 70,068 125,160 135,760 146,474 157,302 168,239 179,283 190,431 201,680 213,025 224,463 Cash Flow - GP - - - - - 63,061 112,644 122,184 131,827 141,571 151,415 161,355 171,388 181,512 191,723 202,017 Cash Flow - LP - - - - - 7,007 12,516 13,576 14,647 15,730 16,824 17,928 19,043 20,168 21,303 22,446

17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 1,340,523 1,374,036 1,408,387 1,443,596 1,479,686 1,516,679 1,554,595 1,593,460 1,633,297 1,674,129 1,715,983 1,758,882 1,802,854 1,847,926 1,894,124 1,941,477 1,990,014 2,039,764 2,090,758 44,535 45,649 46,790 47,960 49,158 50,387 51,647 52,938 54,262 55,618 57,009 58,434 59,895 61,392 62,927 64,500 66,113 67,766 69,460 (69,253) (70,984) (72,759) (74,578) (76,442) (78,353) (80,312) (82,320) (84,378) (86,487) (88,650) (90,866) (93,137) (95,466) (97,853) (100,299) (102,806) (105,376) (108,011) 1,315,805 1,348,700 1,382,418 1,416,978 1,452,403 1,488,713 1,525,931 1,564,079 1,603,181 1,643,260 1,684,342 1,726,450 1,769,612 1,813,852 1,859,198 1,905,678 1,953,320 2,002,153 2,052,207 601,264 622,308 644,089 666,632 689,964 714,113 739,107 764,976 791,750 819,461 848,143 877,828 908,551 940,351 973,263 1,007,327 1,042,584 1,079,074 1,116,842 714,541 726,392 738,328 750,346 762,438 774,599 786,823 799,103 811,431 823,799 836,199 848,623 861,060 873,501 885,935 898,351 910,736 923,079 935,365 (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) (470,527) 286,047 277,099 267,718 257,882 247,569 236,755 225,417 213,529 201,065 187,996 174,293 159,926 144,862 129,067 112,506 95,142 76,936 57,847 37,832 (184,481) (193,428) (202,809) (212,645) (222,959) (233,772) (245,110) (256,998) (269,462) (282,531) (296,234) (310,602) (325,666) (341,460) (358,021) (375,385) (393,592) (412,681) (432,696) 5,713,391 5,519,963 5,317,154 5,104,508 4,881,549 4,647,777 4,402,667 4,145,669 3,876,207 3,593,675 3,297,441 2,986,840 2,661,174 2,319,713 1,961,692 1,586,307 1,192,715 780,035 347,339 1.52x 1.54x 1.57x 1.59x 1.62x 1.65x 1.67x 1.70x 1.72x 1.75x 1.78x 1.80x 1.83x 1.86x 1.88x 1.91x 1.94x 1.96x 1.99x 8,024 8,264 8,512 8,768 9,031 9,301 9,581 9,868 10,164 10,469 10,783 11,106 11,440 11,783 12,136 12,500 12,875 13,262 13,660 235,990 247,600 259,289 271,051 282,880 294,771 306,715 318,707 330,739 342,803 354,889 366,989 379,093 391,191 403,271 415,323 427,334 439,290 451,178 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 235,990 247,600 259,289 271,051 282,880 294,771 306,715 318,707 330,739 342,803 354,889 366,989 379,093 391,191 403,271 415,323 427,334 439,290 451,178 212,391 222,840 233,360 243,946 254,592 265,294 276,044 286,837 297,665 308,522 319,400 330,290 341,184 352,072 362,944 373,791 384,600 395,361 406,060 23,599 24,760 25,929 27,105 28,288 29,477 30,672 31,871 33,074 34,280 35,489 36,699 37,909 39,119 40,327 41,532 42,733 43,929 45,118

ATTACHMENT 5 HOUSING COMMISSION MULTIFAMILY HOUSING REVENUE BOND PROGRAM SUMMARY General Description: The multifamily housing bond program provides below-market financing (based on bond interest being exempt from income tax) for developers willing to set aside a percentage of project units as affordable housing. Multifamily housing revenue bonds are also known as private activity bonds because the projects are owned by private entities, often including nonprofit sponsors and for-profit investors. Bond Issuer: Housing Authority of the City of San Diego. There is no direct legal liability to the City, the Housing Authority or the Housing Commission in connection with the issuance or repayment of bonds. There is no pledge of the City s faith, credit or taxing power nor of the Housing Authority s faith or credit. The bonds do not constitute a general obligation of the issuer because security for repayment of the bonds is limited to specific private revenue sources, such as project revenues. The developer is responsible for the payment of costs of issuance and all other costs under each financing. Affordability: Minimum requirement is that at least 20% of the units are affordable at 50% of Area Median Income (AMI). Alternatively, a minimum of 10% of the units may be affordable at 50% AMI with an additional 30% of the units affordable at 60% AMI. The Housing Commission requires that the affordability restriction be in place for a minimum of 15 years. Due to the combined requirements of state, local, and federal funding sources, projects financed under the Bond Program are normally affordable for 30-55 years and often provide deeper affordability levels than the minimum levels required under the Bond Program. Rating: Generally AAA or its equivalent with a minimum rating of A or, under conditions that meet IRS and Housing Commission requirements, bonds may be unrated for private placement with institutional investors (typically, large banks). Additional security is normally achieved through the provision of outside credit support ( credit enhancement ) by participating financial institutions that underwrite the project loans and guarantee the repayment of the bonds. The credit rating on the bonds reflects the credit quality of the credit enhancement provider. Approval Process: Inducement Resolution: The bond process is initiated when the issuer (Housing Authority) adopts an Inducement Resolution to establish the date from which project costs may be reimbursable from bond proceeds (if bonds are later issued) and to authorize staff to work with the financing team to perform a due diligence process. The Inducement Resolution does not represent any commitment by the Housing Commission, Housing Authority, or the developer to proceed with the financing. 4-1

TEFRA Hearing and Resolution (Tax Equity and Fiscal Responsibility Act of 1982): To assure that projects making use of tax-exempt financing meet appropriate governmental purposes and provide reasonable public benefits, the IRS Code requires that a public hearing be held and that the issuance of bonds be approved by representatives of the governmental unit with jurisdiction over the area in which the project is located (City Council). This process does not make the City financially or legally liable for the bonds or for the project. [Note: It is uncommon for the members of the City Council to be asked to take two actions at this stage in the bond process---one in their capacity as the City Council (TEFRA hearing and resolution) and another as the Housing Authority (bond inducement). Were the issuer (Housing Authority) a more remote entity, the TEFRA hearing and resolution would be the only opportunity for local elected officials to weigh in on the project.] Application for Bond Allocation: The issuance of these private activity bonds (bonds for projects owned by private developers, including projects with nonprofit sponsors and for-profit investors) requires an allocation of bond issuing authority from the State of California. To apply for an allocation, an application approved by the Housing Authority and supported by an adopted inducement resolution and by proof of credit enhancement (or bond rating) must be filed with the California Debt Limit Allocation Committee (CDLAC). In addition, evidence of a TEFRA hearing and approval must be submitted prior to the CDLAC meeting. Final Bond Approval: The Housing Authority retains absolute discretion over the issuance of bonds through adoption of a final resolution authorizing the issuance. Prior to final consideration of the proposed bond issuance, the project must comply with all applicable financing, affordability, and legal requirements and undergo all required planning procedures/reviews by local planning groups, etc. Funding and Bond Administration: All monies are held and accounted for by a third party trustee. The trustee disburses proceeds from bond sales to the developer in order to acquire and/or construct the housing project. Rental income used to make bond payments is collected from the developer by the trustee and disbursed to bond holders. If rents are insufficient to make bond payments, the trustee obtains funds from the credit enhancement provider. No monies are transferred through the Housing Commission or Housing Authority, and the trustee has no standing to ask the issuer for funds. Bond Disclosure: The offering document (typically a Preliminary Offering Statement or bond placement memorandum) discloses relevant information regarding the project, the developer, and the credit enhancement provider. Since the Housing Authority is not responsible in any way for bond repayment, there are no financial statements or summaries about the Housing Authority or the City that are included as part of the offering document. The offering document includes a paragraph that states that the 4-2

Housing Authority is a legal entity with the authority to issue multifamily housing bonds and that the Housing Commission acts on behalf of the Housing Authority to issue the bonds. The offering document also includes a paragraph that details that there is no pending or threatened litigation that would affect the validity of the bonds or curtail the ability of the Housing Authority to issue bonds. This is the extent of the disclosure required of the Housing Authority, Housing Commission, or the City. However, it is the obligation of members of the Housing Authority to disclose any material facts known about the project, not available to the general public, which might have an impact on the viability of the project. 4-3

(HA-2018-36) HOUSING AUTHORITY OF THE CITY OF SAN DIEGO RESOLUTION NUMBER HA- DATE OF FINAL PASSAGE A RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF SAN DIEGO SETTING FORTH ITS OFFICIAL INTENT TO ISSUE MULTIFAMILY HOUSING REVENUE BONDS TO FINANCE HARBOR VIEW APARTMENTS AND AUTHORIZING RELATED ACTIONS. WHEREAS, pursuant to Chapter 1 of Part 2 of Division 24 of the Health and Safety Code of the State of California, as amended (Act), the Housing Authority of the City of San Diego (Authority) is authorized to issue revenue bonds for the purpose of financing the acquisition, construction and rehabilitation of multifamily rental housing and for the provision of capital improvements in connection with and determined necessary to the multifamily rental housing; and WHEREAS, Harbor View SD Partners, L.P., as sponsor (HVSD), has requested that the Authority issue and sell multifamily housing revenue bonds (Bonds) pursuant to the Act for the purpose of making a loan to a limited partnership to be formed by HVSD (Borrower), to be used by the Borrower to finance the acquisition and rehabilitation of a multifamily rental housing development located at 404 North 47 th Street, San Diego, California, as more fully identified in Exhibit A hereto (Project); and WHEREAS, as a part of financing the Project, the Authority desires to reimburse the Borrower, but only from Bond proceeds, for expenditures (Reimbursement Expenditures) made in connection with the Project within the period from the date sixty (60) days prior to the date of adoption of this Resolution to the date of issuance of the Bonds; and -PAGE 1 OF 5-

(HA-2018-36) WHEREAS, sections 1.103-8(a)(5) and 1.150-2 of the United States Treasury Regulations require the Authority to declare its reasonable official intent to reimburse prior expenditures for the Project with proceeds of a subsequent tax-exempt borrowing; and WHEREAS, the Authority wishes to declare its intention to authorize the issuance of the Bonds for the purpose of financing costs of the Project (including reimbursement of the Reimbursement Expenditures, when so requested by the Borrower upon such terms and conditions as may then be agreed upon by the Authority, the Borrower and the purchaser of the Bonds) in an aggregate principal amount not to exceed $10,000,000, as set forth in Exhibit A; and WHEREAS, section 146 of the Internal Revenue Code of 1986 limits the amount of multifamily housing revenue bonds that may be issued in any calendar year by entities within a state and authorizes the governor or the legislature of a state to provide the method of allocation within the state; and WHEREAS, Chapter 11.8 of Division 1 of Title 2 of the California Government Code governs the allocation of the state ceiling among governmental units in the State of California having the authority to issue private activity bonds; and WHEREAS, Section 8869.85 of the California Government Code requires a local agency desiring an allocation of the state ceiling to file an application with the California Debt Limit Allocation Committee (CDLAC) for such allocation, and CDLAC has certain policies that are to be satisfied in connection with any such allocation; NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Housing Authority of the City of San Diego, as follows: -PAGE 2 OF 5-

(HA-2018-36) Section 1. (a) Findings and Determinations. The above recitals, and each of them, are true and correct. The Authority hereby determines that it is necessary and desirable to provide financing to the Borrower for the Project (including reimbursement of the Reimbursement Expenditures) by the issuance and sale of the Bonds pursuant to the Act in an aggregate principal amount not to exceed $10,000,000, as set forth in Exhibit A, subject to authorization of the issuance of the Bonds by resolution of the Authority at a meeting to be held for such purpose. The expected date of issue of the Bonds is within eighteen (18) months of the later of the date the first Reimbursement Expenditure was made and the first date the Project is placed in service and, in no event, later than three years after the date of the first Reimbursement Expenditure. (b) Proceeds of the Bonds to be used to reimburse for Project costs are not expected to be used directly or indirectly to pay debt service with respect to any obligation or to be held as a reasonably required reserve or replacement fund with respect to an obligation of the Authority or any entity related in any manner to the Authority, or to reimburse any expenditure that was originally paid with the proceeds of any obligation, or to replace funds that are or will be used in such manner. (c) As of the date hereof, the Authority has a reasonable expectation that the Bonds will be issued to reimburse Project costs. This Resolution is consistent with the budgetary and financial circumstances of the Authority, as of the date hereof. The Bonds will be repaid solely from proceeds of the Bonds and amounts paid by the Borrower. No other moneys are, or are reasonably expected to be, reserved, allocated on a long-term basis, or otherwise set aside by the Authority (or any related party) pursuant to its budget or financial policies to repay the Bonds. -PAGE 3 OF 5-

(HA-2018-36) Section 2. Declaration of Official Intent. This Resolution is being adopted by the Authority for purposes of establishing compliance with the requirements of sections 1.103-8(a)(5) and 1.150-2 of the Treasury Regulations. In such regard, the Authority hereby declares its official intent to use proceeds of indebtedness to reimburse the Reimbursement Expenditures. This action is taken expressly for the purpose of inducing the Borrower to undertake the Project, and nothing contained herein shall be construed to signify that the Project complies with the planning, zoning, subdivision and building laws and ordinances applicable thereto or to suggest that the Authority, the City of San Diego (City) or any officer or agent of the City will grant any such approval, consent or permit that may be required in connection with the acquisition and rehabilitation of the Project, or that either the Authority or the City will make any expenditure, incur any indebtedness, or proceed with the financing of the Project. Section 3. Applications to CDLAC. The officers and/or the program managers of the Authority are hereby authorized and directed to apply to CDLAC for an allocation from the state ceiling of private activity bonds to be issued by the Authority for the Project in an amount not to exceed $10,000,000, and to take any and all other actions as may be necessary or appropriate in connection with such application, including but not limited to the payment of fees, the posting of deposits and the provision of certificates, additional applications to CDLAC (if necessary), and any such actions heretofore taken by such officers and program managers are hereby ratified, approved and confirmed. Section 4. Effective Date. This Resolution shall take effect immediately upon its adoption. -PAGE 4 OF 5-

(HA-2018-36) Section 5. Approval of Bond Counsel and Financial Advisor. The financing team of Jones Hall, A Professional Law Corporation, as bond counsel and Public Financial Management, as financial advisor, is approved for the Project. Section 6. Authority of President & Chief Executive Officer of Housing Commission. The President & Chief Executive Officer of the Housing Commission, or designee, is hereby authorized to execute all necessary documents, in a form approved by its General Counsel and/or Bond Counsel, and to perform such acts as are necessary to implement the approvals provided for in this Resolution. APPROVED: MARA W. ELLIOTT, General Counsel By Bret A. Bartolotta Deputy General Counsel BAB:jdf 03/21/18 Or.Dept: San Diego Housing Commission Doc. No. 1713911 -PAGE 5 OF 5-

EXHIBIT A DESCRIPTION OF PROJECT Name: Location: Number of Units: Harbor View Apartments 404 North 47 th Street San Diego, CA 92102 60 units Maximum Bond Amount: $10,000,000

The City of San Diego Item Approvals 109239 Item Subject: Tax Equity & Fiscal Responsibility Act Public Hearing - Harbor View Apartments Contributing Department Approval Date DOCKET OFFICE 03/22/2018 Approving Authority Approver Approval Date HOUSING COMMISSION FINAL DEPARTMENT APPROVER DEPUTY CHIEF OPERATING OFFICER DAVIS, JEFF 03/21/2018 GRAHAM, DAVID 03/22/2018 CITY ATTORNEY BARTOLOTTA, BRET 03/23/2018