Agenda, first session — Fairfield City Council, June 21, 2022 (part 5 of 6)

Beginning at a point in the South line of said Lot which point is South 89° 27’ East a distance of

83.5 feet from the Southwest corner of said Lot; thence continuing along the South line South 89° 27’ East a distance of 11.5 feet; thence North 0° 52’ West 90 feet; thence North 89° 27’ West 11.5 feet; thence South 0° 52’ East 90 feet to the point of beginning.

PARCEL FOUR:

An easement for ingress and egress over that portion of Lot 18, as shown on the Map of Locke- Paddon Colony No. 5, filed on December 6, 1912, in Book 4 of Maps at Page 17, described as follows:

Beginning on the South line of said Lot 18, distant thereon South 89° 27’ East, 95 feet from the Southwest corner thereof; thence from said point of beginning North 0° 52’ West, 168.009 feet; thence South 89° 27’ East, 12.5 feet; thence South 0° 52’ East, 168.009 feet to the South line of said Lot 18; thence North 89° 27’ West, along said South line, 12.5 feet to the point of beginning.

APN: 0034-150-240

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EXHIBIT B

RIDER TO DEED OF TRUST _________________________________, as “Trustor”, to _____________________ Title Insurance Company, a California corporation, as Trustee, for the benefit of the CITY OF FAIRFIELD, as “Beneficiary” (“Deed of Trust”).

1. DUE ON SALE OR ENCUMBRANCE. In the event of any Transfer (as defined below) of the Property, or any portion thereof or interest therein, Beneficiary shall have the absolute right at its option, without prior demand or notice, to declare all sums secured hereby immediately due and payable. As used herein, the term “Transfer” means and includes the direct or indirect sale, transfer, conveyance, mortgage, further encumbrance, assignment, or other alienation of the Property, or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale contract, sales agreement or similar instrument affecting all or a portion of the Property, granting of an option to purchase any portion of or interest in the Property or any interest therein, or the lease of all or substantially all of the Property or of all or substantially all of the improvements situated on the Property. “Transfer” shall not include a Transfer permitted in the DLA so long as Trustor complies with the provisions of the Agreement relating to such activity. “Transfer” shall not include the leasing of individual dwelling units on the Property in compliance with applicable recorded Regulation Agreements with the Beneficiary. Failure of Beneficiary to exercise the option to declare all sums secured hereby immediately due and payable upon a Transfer will not constitute waiver of the right to exercise this option in the event of any subsequent Transfer.

2. NOTICE AND CURE RIGHTS BY LIMITED PARTNERS. CITY hereby agrees that any cure of any default made or tendered by Developer’s limited partners who shall have been identified in writing by Developer to CITY and shall be deemed to be a cure by Developer and shall be accepted or rejected on the same basis as if made or tendered by Developer; provided CITY shall have received written notice by Developer of the identity of, and address for notices for, such limited partners and a copy of the applicable limited partnership agreement and amendments.

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State of California )
County of ________ )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature (Seal)

A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

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EXHIBIT “D”

SCHEDULE OF PERFORMANCE
This Schedule of Performance requires the submission of plans or other documents at specific times. Some of the submissions are not described in the text of the Agreement. Such plans or other documents, as submitted, must be complete and adequate for review by the CITY or other applicable governmental entity when submitted. Prior to the time set forth for each particular submission, the Developer shall consult with CITY staff informally as necessary concerning such submission in order to assure that such submission will be complete and in a proper form within the time for submission set forth herein.

Action Date / Deadline

Items 1 – 10 Relate to Developer Actions and Requirements Prior to or through/at the Close of Escrow

1. Opening of Escrow. The Parties shall
open escrow with the Escrow Holder.

Within fifteen (15) business days after the award
of tax credits.

2. Preliminary Project Budget. The
Developer shall submit a preliminary
Project Budget for the Improvements.

As soon as reasonably possible, but an update to
the financing proposal heretofore delivered by
Developer to CITY shall be delivered to CITY no
later than twelve (12) months after the date of this
DLA, subject to written extension by the City
Manager.

3. Planning Commission Approval; Final
Plans and Specifications. The
Developer shall submit the Final Plans
and Specifications for City approval,
which shall be provided within ten (10)
days or thereafter shall be deemed
approved.

Developer shall obtain Final Planning Approval
within twelve (12) months after the date of this
DLA, subject to written extension by the City
Director of Community Development.

4. Building Permits. The Developer shall
obtain the Building Permit or permit
ready letter for the construction of the
Improvements.

Prior and as a condition to the Close of Escrow.

5. Construction Contract. The Developer
shall submit the construction contract
for the construction of the
Improvements to the City for approval.

Prior and as a condition to the Close of Escrow.

6. Performance and Payment Bonds. The
Developer shall deliver to the City
copies of the required performance and
payment bonds.

Prior and as a condition to the Close of Escrow.

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Action Date / Deadline

7. Insurance. The Developer shall submit
evidence of insurance to the City.

Prior and as a condition to the Close of Escrow.

8. Project Budget. The Developer shall
submit the final Project Budget to City
together with reasonable evidence that
all equity required will be available or
committed subject to the terms of the
Partnership Agreement at the Close of
Escrow.

Prior and as a condition to the Close of Escrow.

9. Tax Credit Applications/Award. Developer must reasonably apply for federal tax credits in all rounds (until awarded) and must
promptly provide evidence thereof to City.

Developer must be awarded tax credits and must
provide evidence thereof to City prior (and as a
condition) to Close of Escrow.

10. Tax Credit Equity. All tax credit equity
must have been committed to the
Developer entity and available for
Project Costs, as shown by reasonable
evidence delivered to City.

Prior and as a condition to Close of Escrow.

Items 11 – 15 Relate to the Conveyance of the Land and Developer Actions and Requirements After the Close of Escrow

11. Close of Escrow. The Developer shall
close the Construction Loan.

The earlier of (i) six (6) months after award of
tax credits, or (ii) two (2) calendar years after
the date of the DLA, subject to extension as
provided therein.

12. Commencement of Construction.

Developer shall substantially
commence the Improvements.

No later than 30 days after the Close of Escrow.

13. Completion of Grading. Developer
shall substantially complete the grading
for the Project.

Not later than twelve (12) months following the
commencement of construction.

14. Commencement of Vertical
Construction. Developer shall
commence vertical construction.

Not later than fourteen (14) months after the
commencement of construction.

15. Completion; Qualification for
Certificate of Completion. The Project
shall be completed and shall qualify for
a Certificate of Completion.

No later than thirty (30) calendar months after
the commencement of construction.

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EXHIBIT “E”

SCOPE OF DEVELOPMENT
Sixty-seven (67) apartment/rental units, including one manager’s unit, in two 3-story buildings and one (1) one-story community building. Building “A” is comprised of 14 one-bedroom, 14 two-bedroom, and nine three-bedroom rental units (37 total units). Building “B” is comprised of four one-bedroom, 17 two-bedroom, and nine three-bedroom rental units (30 total units). On-site amenities include a multi-purpose community room with kitchen, property management and tenant services offices, laundry facilities, active and passive outdoor recreation areas including a playground, a picnic area, a barbecue area, and quiet sitting areas. Off street, surface parking will be provided to residents and guests, with a total of 90 vehicle parking spaces and 21 bike parking spaces provided.

The development will encompass, seventeen (17) one-bedroom units, thirty (30) two-bedroom units and nineteen (19) three (3)-bedrooms.

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EXHIBIT “F”

FORMS OF AFFORDABILITY RESTRICTIONS AND REGULATORY AGREEMENTS (2)

RECORDING REQUESTED BY, AND
WHEN RECORDED RETURN TO:

Housing Services Department
1000 Webster Street, 1st Floor
Fairfield, CA 94533
Attn: Housing Services Director

with a copy to:

212 E. TABOR FAIRFIELD EAH, LLC
______________________

APNs: 0034-150-100 and
0034-150-240

(Space above for Recorder’s Use.)
This document is exempt from the payment of a recording fee pursuant to Government Code Section 6103.

AFFORDABILITY RESTRICTIONS AND REGULATORY AGREEMENT
(Fairfield Housing Trust Funds)
These AFFORDABILITY RESTRICTIONS AND REGULATORY AGREEMENT (“Regulatory Agreement”) is hereby entered, effective as of _______________, 202_, by and between the CITY OF FAIRFIELD (“City”), and _______________________ (“Developer”) (City and Developer are sometimes collectively referred to herein as the “Parties.”).

R E C I T A L S
WHEREAS, City and 212 E. Tabor Fairfield EAH LLC have entered into a Development Loan Agreement dated ______, 2022 (“DLA”) which was assigned to Developer, for the improvement and development of certain real property described in Exhibit “A” referred to as the “Site”, which DLA provides for the recordation of this Regulatory Agreement. The DLA is incorporated herein by this reference, and any capitalized term not defined herein shall have the meaning established therefor in the DLA.

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WHEREAS, the DLA requires these restrictive covenants apply to the Site, particularly the use of the Site for the provision of thirty-five (35) Units available to Extremely Low Income Households at Affordable Rents as those terms are defined therein, and an unrestricted manager’s unit.

NOW, THEREFORE, City and Developer (as owner of real property interests described hereinabove), declare that the Site shall be held, transferred, encumbered, used, sold, conveyed, leased and occupied subject to the covenants, conditions and restrictions hereinafter set forth expressly and exclusively for the use and benefit of said property. Each and all of the restrictions, limitations, conditions, covenants, liens, reservations and charges herein contained shall run with the land and be recorded on the property title and shall be binding on Parties, their grantees, successors, heirs, executors, administrators, devisees or assigns, and all subsequent owners of all or any part of the Site, during the term of this Regulatory Agreement.

ARTICLE I

DEFINITIONS
The definitions provided herein shall be applicable to this Regulatory Agreement and also to any amendment or supplement (unless the context implicitly or explicitly shall prohibit), recorded against the Site pursuant to the provision of this Regulatory Agreement.

Section 1. “Affordable Housing Development” means an affordable housing project operated in conformity with this Regulatory Agreement throughout the Required Covenant Period.

Section 2. “Affordable Rent”, per month, means, for an Extremely Low Income Household, a monthly rent (including a reasonable utility allowance) that does not exceed thirty percent (30%) of thirty percent (30%) of Median Income for a household size appropriate to the Unit.

Section 3. “Approved Housing Development” means all improvements as provided to be developed by Developer under the DLA. The Approved Housing Development must be completed in strict conformity with all specifications contained in or referred to in the DLA.

Section 4. “Area” means the Vallejo-Fairfield, CA Metropolitan Statistical Area, as periodically defined by HUD.

Section 5. “Certificate” or “Certification” is defined in Section 3(a).

Section 6. “City”, as defined in the first paragraph hereof, means the City of Fairfield, a municipal corporation.

Section 7. “City Code” means and refers to the City of Fairfield Municipal Code, as revised from time to time.

Section 8. “Common Areas” means all areas on the Site that are open or accessible to all tenants of the Site (such as grounds, but excluding interiors of Units).

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Section 9. “Extremely Low Income Household” means a household earning not greater than the extremely low income limit for Solano County, adjusted for household size, pursuant to Health and Safety Code Section 50106.

Section 10. “Household size appropriate to the unit” shall be one person for a studio, two persons for a one-bedroom unit, three persons for a two-bedroom unit, and four persons for a three-bedroom unit.

Section 11. Gross Income” means all payments from all sources received by a person (together with the gross income of all persons of the age of 18 years or older who intend to reside with such person in one residential unit) whether in cash or in kind as calculated pursuant to the Department of Housing and Urban Development (“HUD”) Regulations (24 C.F.R. § 813) and 25 California Code of Regulations Section 6914.

Section 12. “Median Income” or “Median Income for the Area” means the median income for the Sites most recently determined by the Secretary of Housing and Urban Development under Section 8 of the United States Housing Act of 1937, as amended, or, if programs under Section 8 are terminated, Median Income for the Area determined under the method used by the Secretary prior to such termination. Such Median Income is published at 25 California Code of Regulations Section 6932, as modified from time to time.

Section 13. “Prescribed Income Levels” means the following:

Type Income of Household as Percentage of AMI Number of Units

1BR/1BA 30% 17
2BR/1BA 30% 16
3BR/1.5 BA 30% 2

Section 14. “Regulatory Agreement” means this Regulatory Agreement and any amendments, modifications or supplements.

Section 15. “Rental Development” means the sixty-seven (67) Unit residential rental development on the Site.

Section 16. “Required Affordable Unit” means any of the thirty-five (35) of the dwelling units in the Rental Development, as constructed under the DLA, available to, occupied by, or held vacant for occupancy only by tenants qualifying as Extemely Low Income Households, and rented at Affordable Rent. (One dwelling unit shall be a manager’s unit.) Section 17. “Required Covenant Period” means the period commencing on the date all Required Affordable Units have been completed as evidenced by the issuance of a Final Certificate Packet Page 492 of 798Attachment 2 Page 48 of 97

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of Occupancy for the Rental Development, and ending as of the fifty-fifth (55th) anniversary thereof.

Section 18. “Site” means all of the real property and appurtenances as described in the Recitals above, including all structures and other improvements thereon, and those hereafter constructed.

Section 19. “Unit” means a dwelling unit on the Rental Development.

Section 20. “Year” means a calendar year, excepting that the last Year hereunder shall be deemed to end as of the expiration of this Regulatory Agreement.

ARTICLE II
LAND USE RESTRICTIONS; IMPROVEMENTS
Section 1. Uses. Developer shall develop the Approved Housing Development on the Site in conformity with the DLA. Thereafter, the Site shall be operated as an Affordable Housing Development and devoted only to the uses specified in the DLA for the periods of time specified herein. All uses conducted on the Site, including, without limitation, all activities undertaken by Developer pursuant to the DLA, shall conform to all applicable provisions of the City Code and the City Approvals.

The Site shall be used, maintained and operated in accordance with the DLA, the and this Regulatory Agreement for the Required Covenant Period. None of the units in the Rental Development shall at any time be utilized on a transient basis nor shall the Rental Development or any portion thereof ever be used as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium, rest home or trailer court or park. No part of the Site, from the date Developer acquired the Site, has been or will at any time be owned or used as a cooperative housing corporation or a community apartment project or a stock cooperative.

Section 2. Affordable Housing.

Affordability Restrictions. Throughout the Required Covenant Period, the Developer shall cause the Required Affordable Units to be rented in accordance with the definition of “Prescribed Income Levels” in Section 14 of Article I above at Affordable Rents.

Except to the extent prohibited by state or federal law or tax credit regulations, in the event a household’s income initially complies with the corresponding income restriction but the income of such household increases, such increase shall not be deemed to result in a violation of the restrictions of this Regulatory Agreement concerning limitations upon income of occupants, provided that the next available unit is leased to an Extremely Low Income Houshold until compliance with the Prescribed Income Levels is achieved.

Duration of Affordability Requirements. The restrictions shall apply throughout the Required Covenant Period. All tenants residing in any Required Affordable Unit for which rents are limited by virtue of this Regulatory Agreement or pursuant to other regulation during the last two (2) Years of the Required Covenant Period shall be given notice by Developer at least once every six (6) months prior to the expiration date of this requirement, that the rent payable on such Required Affordable Unit may be raised to a market rate rent at the end of the Required Covenant Period.

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Selection of Tenants. Developer shall demonstrate to City that the proposed tenants of the Required Affordable Unit of the Extremely Low Income Units constitute Extremely Low Income Households.

Prior to the rental or lease of a Required Affordable Unit to a tenant, and as set forth in this Section 2 of Article II of this Regulatory Agreement, Developer shall require the tenant to execute a written lease and to complete an Income Verification certifying that the tenant(s) occupying the Unit is/are in the appropriate income category. Developer shall verify the income of the tenant(s).

Developer shall accept as tenants on the same basis as all other prospective tenants, persons who are recipients of federal certificates for rent subsidies pursuant to the existing program under Section 8 of the United States Housing Act of 1937, or its successor. Developer shall not apply selection criteria to Section 8 certificate holders which are more burdensome than criteria applied to any other prospective tenants.

Determination of Affordable Rent for the Required Affordable Units. The Required Affordable Units shall be rented or leased at Affordable Rent. The maximum monthly rental for the Required Affordable Units shall be adjusted annually as permitted by Section 50053 of the California Health and Safety Code based on the annual adjustment to the Median Income for the Area established pursuant to Section 50093 of the California Health and Safety Code, as more particularly set forth in the Affordable Rent Worksheet.

Notwithstanding anything to the contrary herein, for so long as it is consistent with the published policies of HCD, any determination of Area Median Income under Section 2 with respect to any calendar year shall not be less than the Area Median Income determined under this Section 2 for the calendar year preceding the calendar year for which such determination is made.

DEVELOPER UNDERSTANDS AND KNOWINGLY AGREES THAT THE

MAXIMUM RENTAL FOR THE REQUIRED AFFORDABLE UNITS ESTABLISHED BY

THIS REGULATORY AGREEMENT IS SUBSTANTIALLY BELOW THE FAIR MARKET RENT FOR THE REQUIRED AFFORDABLE UNITS.

Section 3. Developer Verification and Program Compliance.

Income and Age Verification and Certification. Developer will obtain and maintain on file an Income and Age Verification from each tenant (for every Unit on the Site), dated immediately prior to the initial occupancy of such tenant in the Required Affordable Unit.

On or before July 1 following the completion of the Development, Developer shall file with Authority or its designee a Certificate, containing all information required pursuant to Health and Safety Code Section 33418. Each Certificate shall cover the immediately preceding Year.

Developer shall maintain on file throughout the Required Covenant Period each tenant’s executed lease and Income and Age Verification and rental records for the Required Affordable Units. Developer shall maintain complete and accurate records pertaining to the Required Affordable Units, and will permit any duly authorized representative of City to inspect the books and records of Developer pertaining to the occupancy of the Required Affordable Units.

Developer shall prepare and submit to City annually commencing the June 15 first following the recording of the Regulatory Agreement and continuing throughout the Required Covenant Period, Packet Page 494 of 798Attachment 2 Page 50 of 97

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a Certificate of Continuing Program Compliance. Such documentation shall state for each Unit, the Unit size, the rental amount, the number of occupants, and the income of the occupants and any other information which may be used to determined compliance with the terms of this Regulatory Agreement.

In addition, as part of its annual report, at City’s request, but not less frequently than prior to each initial and subsequent rental of each Required Affordable Unit to a new tenant household (but not lease renewals) and annually thereafter, Developer shall also provide to City completed income computation, asset evaluation, and certification forms, for any such tenant or tenants, in substantially the form provided by City from time to time. Developer shall obtain an annual certification from each household of each Required Affordable Unit demonstrating that such household is an Extremely Low Income Household. Developer shall verify the income certification of each tenant household. Developer shall submit to City copies of any and all tenant income and occupancy certifications upon request of City. City may request (and Developer shall provide) additional documentation to assist City’s evaluation of Developer’s compliance with this Agreement, if determined to be necessary in the reasonable discretion of the City Manager, specifically including (without limitation) any documentation or additional certifications that may be necessary to verify compliance with all requirements from all funding sources, and each tenant’s status as to each Required Affordable Unit. This requirement is in addition to and does not replace or supersede Developer’s obligation to annually submit the Certificate of Continuing Program Compliance to City. Further, City has the right, but not the obligation to monitor compliance with respect to each tenant household at the Rental Development, and City’s election to monitor some, but not all, of the Units shall not constitute a waiver of City’s right to monitor and enforce compliance with respect to all Units in the future.

Verification of Income of New and Continuing Tenants. Gross income calculations for prospective (and continuing) tenants shall be determined in accordance with 25 Cal. Code Regs. Section 6914. Developer shall verify the income and information provided in the income certification of the proposed tenant as set forth below. (a) Developer shall verify the income of each proposed tenant of the Required Affordable Units and by at least one of the following methods as appropriate to the proposed tenant:
(i) obtain two (2) paycheck stubs from the person’s two (2) most recent pay periods;
(ii) obtain a true copy of an income tax return from the person for the most recent tax year in which a return was filed; (iii) obtain an income verification certification from the employer of the person;
(iv) obtain an income verification certification from the Social Security Administration and/or the California Department of Social Services if the person receives assistance from such agencies; or
(v) obtain an alternate form of income verification reasonably requested by Authority, if none of the above forms of verification is available to Developer.

Verification Regarding Eligibility of New Tenants. Developer shall retain documentation regarding the eligibility of each new tenant household.

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Reporting Amounts. In the event Developer fails to submit to City or its designee the Certification as required by Section 3(a), Developer shall be in noncompliance with this Regulatory Agreement.

Section 4. Management of the Rental Development.

Manager. The Rental Development shall at all times be managed by an experienced manager (the “Manager”) reasonably acceptable to the City, with demonstrated ability to operate residential developments like the Rental Development in a manner that will provide decent, safe, and sanitary housing. The Developer shall submit for the City’s approval the identity of any proposed Manager. The Developer shall also submit such additional information about the background, experience and financial condition of any proposed Manager as is reasonably necessary for the City to determine whether the proposed Manager meets the standard for a qualified Manager set forth above. If the proposed Manager meets the standard for a qualified Manager set forth above, the City shall approve the proposed Manager by notifying Developer in writing.

Performance Review. The Developer shall cooperate with the City in an annual review of management practices, in connection with which the City shall have the right to review and approve the annual operations and management budget; provided, however, that the City reserves the right to conduct reviews more frequently at its sole discretion. The purpose of each annual review will be to enable the City to determine if the Improvements are being operated and managed in accordance with the requirements and standards of this Agreement.

Replacement of Manager.
(i) If, as a result of the annual review, the City determines in its reasonable judgment that the Improvements are not being operated and managed in accordance with any of the requirements and standards of this Agreement, the City shall deliver notice to the Developer of its intention to cause replacement of the Manager. Within fifteen (15) days of receipt by the Developer of such written notice, the City and the Developer shall meet in good faith to consider methods for improving the financial and operating status of the Rental Development, including, without limitation, replacement of the Manager.
(ii) If, after such meeting, the City elects to proceed with the replacement of the Manager, the City shall so notify the Developer in writing within fifteen (15) days following the meeting. Thereupon, the Developer shall promptly dismiss the then Manager, and shall appoint as the Manager a person or entity meeting the standards for a Manager set forth in this section and approved by the City in its reasonable discretion. City shall have the right to disapprove the replacement Manager within thirty (30) days, and in such case Developer shall promptly dismiss the replacement Manager and appoint another replacement Manager meeting the standards for a Manager set forth in this section and approved by the City in its reasonable discretion. Notwithstanding the foregoing, the City’s approval rights shall be subject and subordinate to the rights of senior lender under the senior deed of trust. (iii) Any contract for the operation or management of the Property entered into by the Developer shall provide that the contract can be terminated as set forth above.

The Developer agrees that the Rental Development shall be preserved and maintained throughout the term hereof in good condition and repair so as to provide decent, safe, Packet Page 496 of 798Attachment 2 Page 52 of 97

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and sanitary housing, and in conformance with all applicable ordinances, statutes and regulations promulgated by any governmental entity having jurisdiction over the Rental Development.

Annual Inspection. Subject to the rights of the occupants of the Units, City shall have the right to perform an annual on-site inspection of the units, common areas and grounds and to perform an annual tenant file review to ensure that Developer is managing the Rental Development in accordance with the requirements of this Agreement.

Annual Budget. Developer shall submit or shall cause its Property Manager to submit to the City Manager on or before the completion of the Rental Development, and each anniversary thereof, an annual budget for the ongoing operation of the Rental Development for approval by City, which will not be unreasonably withheld. At the City’s request, delivered within thirty (30) days after receipt of the budget, each of Developer and the City shall cause its respective representative(s) to meet within thirty (30) days following the receipt of request to review the budget. Such review is without obligation to either party to propose or agree to any modification of permitted operating expenses.

Management of Property. Developer shall be completely responsible for the management, administration and operation of the Rental Development including, but not limited to the hiring and discharge of employees, salaries and all other related Rental Development expenses, maintenance and repairs, including capital expenditures, the financial operations of the Rental Development, the rental and re-rental of the apartment units in accordance with the occupancy requirements set forth in this Agreement and all operational, maintenance and management responsibilities of an Developer in a typical multi-family residential housing Rental Development.

Reserves. The Developer will maintain replacement reserves in accordance with the DLA and will not withdraw funds from such reserves without the consent of the City, which will not be unreasonably withheld, subject and subordinate to the rights of the senior mortgage lender.

Manager’s Failure to Perform. In the event the manager appointed by Developer for management of the Rental Development fails to perform the obligations imposed upon Developer by this Section, such failure shall constitute a default under Section 10 hereof, and if Developer shall fail to cure such default as provided in Section 10 hereof, then City shall have the right, in addition to any other remedies of City, to require Developer, upon thirty (30) days’ prior written notice, to appoint a substitute management City, reasonably acceptable to both City and Developer, subject and subordinate to the rights of the senior mortgage lender.

Gross Mismanagement. During the Required Covenant Period, in the event of “Gross Mismanagement” (as defined below) of the Development, any acts of Gross Mismanagement shall cease immediately upon written notice from the City Manager, and any omissions constituting Gross Mismanagement shall be corrected within thirty (30) days after written notice from the City Manager. If such an act or omission is not timely ceased/cured, then, Developer shall within sixty (60) days replace the Property Manager with a new property manager reasonably acceptable to the City Manager, subject to the rights of the senior mortgage lender.

For purposes of this Agreement, the term “Gross Mismanagement” means management of the Development in a manner which materially violates the terms and/or intention Packet Page 497 of 798Attachment 2 Page 53 of 97

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of this Agreement to operate a first quality affordable housing complex, and shall include, but is not limited to, any one or more of the following:
(a) Leasing to tenants who exceed the prescribed income levels; (b) Subject to fair housing laws, allowing tenants to exceed the prescribed occupancy levels without taking immediate action to stop such overcrowding; (c) Under-funding required reserve accounts;
(d) Failing to submit timely and/or adequate annual reports to Authority as required herein;
(e) Failing to comply with this Regulatory Agreement;
(f) Fraud or embezzlement of Development funds, including without limitation funds in the reserve accounts;
(g) Failing to fully cooperate with the Fairfield Police Department or other local law enforcement agency(ies) with jurisdiction over the Development, in maintaining a crime-free environment within the Development;
(h) Failing to fully cooperate with the Fairfield Fire Department or other local public safety agency(ies) with jurisdiction over the Development, in maintaining a safe and accessible environment within the Development; and
(i) Failing to fully cooperate with the Fairfield Planning and Building and Safety Department, or other local health and safety enforcement agency(ies) with jurisdiction over the Development, in maintaining a decent, safe and sanitary environment within the Development.

Developer is obligated and shall use commercially reasonable efforts to correct any defects in property management or operations at the earliest feasible time.

Code Enforcement. Developer acknowledges and agrees that City and its employees and authorized agents, shall have the right to conduct code compliance and/or code enforcement inspections of the Development and the individual dwelling units at the Development (and not limited to the Required Affordable Units), both exterior and interior, at reasonable times and upon reasonable notice (not less than 48 hours prior notice, except in an emergency) to Developer and/or an individual tenant. If such notice is provided by Authority representative(s) to Developer, then Developer shall immediately and directly advise any affected tenant of such upcoming inspection and cause access to the area(s) and/or Units at the Rental Development to be made available and open for inspection. Developer shall include express advisement of such inspection rights within the lease/rental agreements for each Unit in the Development in order for each and every tenant and tenant household to be aware of this inspection right. The foregoing portion of this Section 5 is without limitation as to the exercise of police powers by City.

Section 6. Parking of Vehicles. Developer shall not permit the parking, storing or keeping of any vehicle except wholly within the parking areas designated for the Required Affordable Units.

Developer shall not permit the parking, storing or keeping of any large commercial type vehicle (dump truck, cement mixer truck, oil or gas truck, etc.), or any recreational vehicle over twenty (20) feet in length (camper unit, motor home, trailer, mobile home or other similar vehicle), boats over twenty (20) feet in length, or any vehicle other than a private passenger vehicle, upon any Packet Page 498 of 798Attachment 2 Page 54 of 97

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portion of the Common Areas, including parking spaces. For purposes of this section, a pickup truck with a pickup bed mounted camper shall be considered a private passenger vehicle; provided however, that no such vehicle shall be used for residential purposes while parked on the premises.

Developer shall not permit major repairs or major restorations of any motor vehicle, boat, trailer, aircraft or other vehicle to be conducted upon any portion of the Common Area, including the parking areas, except for emergency repairs thereto and then only to the extent necessary to enable movement of the vehicle to a proper repair facility. No inoperable vehicle shall be stored or kept in the Common Area. Developer shall give the vehicle owner not less than four (4) days, nor more than seven (7) days’ notice and an opportunity to remove any vehicle parked, stored or kept in violation of the provisions of this Regulatory Agreement. Notice shall consist minimally of a reasonably diligent attempt to personally notify the vehicle owner or alternatively leaving written notice on the subject vehicle. After due notice and opportunity have been given to the vehicle owner, Developer shall have the right to remove, at the vehicle owner’s expense, any vehicle parked, stored or kept in violation of the provisions of this Regulatory Agreement.

Section 7. Maximum Occupancies. No persons shall be permitted to occupy any Apartment within the Rental Development in excess of applicable limit of maximum occupancy set by the City of Fairfield and the laws of the State of California.

Section 8. Signs Required. “No loitering” signs will be posted at each building and enforced by Developer. “Illegally parked vehicles will be towed” signs in compliance with California Vehicle Code requirements will be posted and enforced by Developer.

Section 9. Fences and Electronic Installations. Developer shall not install or knowingly permit to be installed on the exterior of any improvement or building on any fences or any antenna or other television or radio receiving device, excepting satellite dishes having a diameter of eighteen inches (18”) or less, without prior written consent of City. This prohibition shall not prohibit the installation of cable television or subscription wires or receiving devices.

Section 10. Structural Change. Nothing shall be done on the Site in, on or to any building which would materially structurally change the exterior or the interior bearing walls of any such building or structure without the prior written consent of the City and any such changes shall be in compliance with all applicable laws including any required permits and ordinances of the City.

Nothing herein shall affect the rights of Developer to repair, alter or construct improvements on the buildings on the Site unless such repair, alteration or improvement would impair the structural integrity and/or exterior appearance of said buildings. Nothing herein shall be deemed to prohibit work ordered to be performed by the City building official.

Section 11. Compliance with Laws. Developer shall comply with all applicable laws in connection with the development and use of the Site, including without limitation the Fair Housing Act (42 U.S.C. § 3601, et seq., and 24 C.F.R. § 100.300, et seq.). Developer is a sophisticated party, with substantial experience in the acquisition, development, financing, obtaining financing for, marketing, and operation of affordable housing projects, and with the negotiation, review, and preparation of agreements and other documents in connection with such activities. Developer is familiar with and has reviewed all laws and regulations pertaining to the acquisition, development and operation of the Rental Development and has obtained advice from any advisers of its own choosing in connection with this Agreement.

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ARTICLE III
DUTIES OF DEVELOPER: SPECIFIC MAINTENANCE RESPONSIBILITIES Section 1. Exterior Building Maintenance. All exterior, painted surfaces shall be maintained at all times in a clean and presentable manner. Any defacing marks shall be cleaned or removed within a reasonable period of time as set forth herein.

Section 2. Front and Side Exteriors. Developer shall at all times maintain the front exterior and yard in a clean, safe and presentable manner, free from defacing marks or any disrepair and any visible side exteriors. Developer shall hire maintenance personnel to maintain and/or repair any front exterior or yard or visible side yard and exterior of any lot or building.

Section 3. Graffiti Removal. All graffiti, and defacement of any type, including marks, words and pictures must be removed and any necessary painting or repair completed by the later to occur of (i) seventy-two (72) hours of their creation or (ii) seventy-two (72) hours after notice to Developer.

Section 4. Driveways. All driveways must be paved and maintained with impervious material in accordance with the City Code. In addition, all water must be made to drain freely to the public part of the waterway without any pooling.

Section 5. Exterior Illumination. Developer shall at all times maintain adequate lighting in all entrance ways and parking areas. Adequate lighting means outdoor, night lighting designed and installed, which provides no less than one (1.0) foot candles in the parking areas and no less than one and one-half (1-1/2) foot candles in the walking areas or common areas and no less than 0.2 foot candles at the point of least illumination.

Section 6. Front Setbacks. All front setback areas that are not buildings, driveways or walkways shall be adequately and appropriately landscaped in accordance with minimum standards established by City and shall be maintained by Developer. The landscaping shall meet minimum standards set from time to time by City.

Section 7. Trash Bins. All trash shall be collected and placed at all times in an enclosable bin to be placed in a designated refuse/trash bin area. The designated area shall be located so that the bin will, to the extent possible, be readily accessible from the street.

Section 8.

ARTICLE IV

OBLIGATION TO MAINTAIN, REPAIR AND REBUILD
Section 1. Maintenance. If, at any time, Developer fails to maintain the Rental Development or any portion thereof, and said condition is not corrected after the expiration of forty -five (45) days from the date of written notice from City to Developer, City may perform the necessary maintenance and Developer shall pay such costs as are reasonably incurred for such maintenance.

Payment shall be due within fifteen (15) days of receipt of an invoice from City.

City hereby agrees that any cure of any default made or tendered by Developer’s limited partners who shall have been identified in writing by Developer to City and shall be deemed to be a cure by Developer and shall be accepted or rejected on the same basis as if made or tendered by Developer; provided City shall have received written notice by Developer of the identity of, and Packet Page 500 of 798Attachment 2 Page 56 of 97

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address for notices for, such limited partners and a copy of the applicable limited partnership agreement and amendments showing they are limited partners.

Developer agrees to assume full responsibility for the operation and maintenance of the Rental Development throughout the Required Covenant Period without expense to City, and to perform all repairs and replacements necessary to maintain and preserve the Rental Development and the Site in good repair, in a neat, clean, safe and orderly condition reasonably satisfactory to City and in compliance with all applicable laws. Developer agrees that City shall not be required to perform any maintenance, repairs or services or to assume any expense in connection with the Rental Development and the Site. Developer hereby waives all rights to make repairs or to cause any work to be performed at the expense of City as provided for in Section 1941 and 1942 of the California Civil Code.

The following standards shall be complied with by Developer and its maintenance staff, contractors or subcontractors:
(1) Developer shall maintain the Rental Development, including individual Required Affordable Units, all common areas, all interior and exterior facades, and all exterior project site areas, in a safe and sanitary fashion suitable for a high quality, rental housing project.

Developer agrees to provide utility services, administrative services, supplies, contract services, maintenance, maintenance reserves, and management for the entire project including interior tenant spaces, common area spaces and exterior common areas. The services provided by Developer shall include, but not be limited to, providing all common area electricity, gas, water, property, fire and liability insurance in the amounts set forth in this Regulatory Agreement, all property taxes and personal property taxes, any and all assessments, maintenance and replacement of all exterior landscaping, and all administration and overhead required for any property manager. (2) Landscape maintenance shall include, but not be limited to:
watering/irrigation; fertilization; mowing, edging, and trimming of grass; tree and shrub pruning; trimming and shaping of trees and shrubs to maintain a healthy, natural appearance and safe road conditions and visibility, and optimum irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees.
(3) Clean-up maintenance shall include, but not be limited to: maintenance of all private paths, parking areas, driveways and other paved areas in clean and weed-free condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; removal of all trash, litter and other debris from improvements and landscaping prior to mowing; clearance and cleaning of all areas maintained prior to the end of the day on which the maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris are properly disposed of by maintenance workers.
(4) The Rental Development shall be maintained in conformance and in compliance with the approved construction and architectural plans and design scheme, as the same may be amended from time to time with the approval of City. (5) All maintenance work shall conform to all applicable federal and state Occupational Safety and Health Act standards and regulations for the performance of maintenance.

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(6) Any and all chemicals, unhealthful substances, and pesticides used in and during maintenance shall be applied only by persons in strict accordance with all governing regulations.
(7) Parking lots, lighting fixtures, trash enclosures, and all areas shall be kept free from any accumulation of debris or waste materials by regularly scheduled maintenance.

Section 2. Damage and Destruction Affecting Development - Developer’s Duty to Rebuild.

If all or any portion of the Site and the improvements thereon is damaged or destroyed by fire or other casualty, Developer shall promptly proceed to obtain insurance proceeds and subject to the terms of the senior loan secured by the Site and improvements, take all steps necessary to begin reconstruction and, immediately upon receipt of insurance proceeds, to promptly and diligently commence the repair or replacement of the Rental Development to substantially the same condition as the Rental Development is required to be constructed pursuant to the DLA, subject to the sufficiency of the insurance proceeds to cover the actual cost of repair, replacement, or restoration, and Developer shall complete the same as soon as possible thereafter so that the Rental Development can be occupied as an affordable housing project in accordance with the DLA. In no event shall the repair, replacement, or restoration period exceed eighteen (18) months from the date Developer obtains insurance proceeds unless the City Manager, in his or her reasonable discretion, approves a longer period of time, subject to the terms of the senior loan secured by the Site and improvements. If the then-existing laws of any other governmental agencies with jurisdiction over the Site do not permit the repair, replacement, or restoration, Developer may elect not to repair, replace, or restore the Rental Development by giving notice to City (in which event the insurance proceeds shall be treated as Residual Receipts and shall be distributed to the Parties in accordance with the terms of the City Loan entered pursuant to the DLA, and Developer shall be required to remove all debris from the Site) or Developer may reconstruct such other Rental Development on the Site as is consistent with applicable land use regulations and approved by City, and any other governmental agency or agencies with jurisdiction, and City may pursue remedies of its choosing under this Agreement, including without limitation termination of the DLA and accelerating the payment of the City Loan in accordance with the terms of the City Loan.

In furtherance of the requirements of this Section 2, Developer shall keep the construction on the Site insured by carriers at all times reasonably satisfactory to City against loss by fire and such other hazards, casualties, liabilities and contingencies as included within an all risk extended coverage hazard insurance policy, in an amount of the full replacement cost of the constructions.

In the event of loss, Developer shall give prompt notice to the insurance carrier and to Authority.

If the Site is abandoned by Developer, or if Developer fails to respond to City within thirty (30) days from the date notice is mailed by City to Developer that the insurance carrier offers to settle a claim for insurance benefits, City is authorized to collect and apply the insurance proceeds at City’s option either to restoration or repair of the Site.

Section 3. Variance in Exterior Appearance and Design. In the event the Rental Development sustains substantial physical damage due to a casualty event, Developer may apply to City for approval to reconstruct, rebuild or repair in a manner which will provide different exterior appearance and lot design from that which existed prior to the date of the casualty.

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hereunder and commence reconstruction within twelve (12) months after the damage occurs and complete reconstruction within twenty-four (24) months after damage occurs or demolition and vacate within twenty-four (24) months, unless prevented by causes beyond their reasonable control, in which event reconstruction shall be commenced and completed at the earliest feasible time unless otherwise agreed to by the parties.

ARTICLE V

ENFORCEMENT
Section 1. Remedies. Breach of the covenants contained in the Regulatory Agreement may be enjoined, abated or remedied by appropriate legal proceeding by City. No remedies shall be instituted until the party complaining of a violation has provided written notice to the other party and such party has failed to cure the alleged violation within thirty (30) days after delivery of the written notice, provided that if the default is a default other than the violation of Article II, Section 2, Developer shall not be in default so long as Developer commences the cure within such 30 days and thereafter diligently prosecutes the cure to completion and completes the cure within one hundred and twenty (120) days after delivery of the notice. City hereby agrees that any cure of any default made or tendered by Developer’s limited partners who shall have been identified in writing by Developer to City and shall be deemed to be a cure by Developer and shall be accepted or rejected on the same basis as if made or tendered by Developer; provided City shall have received written notice by Developer of the identity of, and address for notices for, such limited partners and a copy of the applicable limited partnership agreement and amendments showing they are limited partners.

This Regulatory Agreement does not in any way infringe on the right or duties of City to enforce any of the provisions of the City Code including, but not limited to, the abatement of dangerous buildings.

Section 2. Nuisance. The result of every act or omission whereby any of the covenants contained in this Regulatory Agreement are violated in whole or in part is hereby declared to be and constitutes a nuisance, and every remedy allowable at law or equity, against a nuisance, either public or private, shall be applicable against every such result and may be exercised by any owner or its successors in interest, without derogation of City’s rights under law.

Section 3. Right of Entry. In addition to the above general rights of enforcement, City shall have the right through its agents and employees, to enter upon any part of the project area for the purpose of enforcing the California Vehicle Code, and the ordinances and other regulations of City, and for maintenance and/or repair of any or all publicly owned utilities. In addition, City has the right of entry at reasonable hours and upon and after reasonable attempts to contact Developer, on any lot to effect emergency repairs or maintenance which Developer has failed to perform.

Subsequent to sixty (60) days written notice to Developer specifically outlining Developer’s noncompliance, City shall have the right of entry on the Site at reasonable hours to enforce compliance with this Regulatory Agreement which Developer has failed to perform. This Section 3 is without limitation as to the exercise of police powers of City.

Section 4. Costs of Repair. The costs borne by City for any such repairs or maintenance emergency and/or non-emergency, shall become a charge for which Developer shall be responsible.

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Section 5. Cumulative Remedies. The remedies herein provided for breach of the covenants contained in this Regulatory Agreement shall be deemed cumulative, and none of such remedies shall be deemed exclusive.

Section 6. Failure to Enforce. The failure to enforce any of the covenants contained in this Regulatory Agreement shall not constitute a waiver of the right to enforce the same thereafter.

Section 7. Enforcement and Nonliability. City may from time to time make such efforts, if any, as it shall deem appropriate enforce and/or assist in enforcing this Regulatory Agreement.

However, City will not be subject to any liability for failure to affirmatively enforce any provision of this Regulatory Agreement.

ARTICLE VI

GENERAL PROVISIONS
Section 1. Covenant Against Partition. By acceptance of its interest in the Site, Developer shall be deemed to covenant for itself and for its heirs, representatives, successors and assigns, that it will not institute legal proceedings or otherwise seek to effect partition of its right and interest in the interest being conveyed to Developer, or the burdens running with the land as a result of this Regulatory Agreement.

Section 2. Severability. Invalidation of any one of these covenants or restrictions by judgment or court order shall in no way affect any other provisions which shall remain in all force and effect.

Section 3. Term. This Regulatory Agreement shall run with and bind the interest of Developer in the Site, and shall inure to the owner(s) of any property subject to this Regulatory Agreement, his legal representatives, heirs, successors and assigns, and as provided in Article VI, Sections 2 and 3, be enforceable by City, for a term equal to the Required Covenant Period as defined herein, provided; however, that the covenants regarding nondiscrimination set forth in Section 4 of Article II of this Regulatory Agreement shall remain in effect for perpetuity.

Section 4. Construction. The provisions of this Regulatory Agreement shall be liberally construed to effectuate its purpose of creating a uniform plan for the development and operation of the Required Affordable Units available at Affordable Rent for Very Low Income Households, and, to the extent provided herein, Low Income Households in conformity with the Prescribed Income Levels. The article and section headings have been inserted for convenience only, and shall not be considered or referred to in resolving questions of interpretation or construction.

Developer shall be obligated by this Regulatory Agreement to comply with the provisions hereof.

In the event of conflict, Developer shall comply with the most stringent requirements, in each case.

Section 5. Amendments. This Regulatory Agreement may be amended only by the written agreement of Developer and City.

Section 6. Encroachments. None of the rights and obligations of Developer created herein shall be altered in any way by encroachments due to settlement or shifting of structures or any other cause. There shall be valid easements for the maintenance of said encroachments so long as they shall exist; provided, however, that in no event shall a valid easement for encroachment be created in favor of Developer if said encroachment occurs due to the willful conduct of said Developer.

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Section 7. Notices. Any notice permitted or required to be delivered as provided herein to Developer shall be in writing and may be delivered either by reputable overnight service or certified mail to its address on the first page hereof, and shall be effective as of one business day after delivery to the messenger service for overnight delivery, or the date of delivery or attempted delivery shown on the return receipt. Such address may be changed from time to time by notice in writing.

Section 8. Notice of Transfer of Title; Notice of Property Manager. Developer shall promptly notify City in writing of the identity and address for notices for the initial Property Manager and any replacement thereof, and Developer shall also promptly notify the C in writing of any conveyance of the Approved Housing Development, including the name of any buyer and the address for notices of the buyer.

DEVELOPER:

CITY:

CITY OF FAIRFIELD
By:

David Gassaway,
Interim City Manager
ATTEST:

Karen L. Rees, City Clerk

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EXHIBIT A

LEGAL DESCRIPTION OF THE SITE
The land referred to is situated in the County of Solano, City of Fairfield, State of California, and is described as follows:

LOT 18, AS SHOWN ON THAT CERTAIN MAP ENTITLED, “MAP OF LOCKE-PADDON COLONY NO. 5”, FILED FOR RECORD IN THE OFFICE OF THE COUNTY RECORDER OF DECEMBER 6, 1912 IN BOOK 4 OF MAPS, PAGE 17, SOLANO COUNTY RECORDS.

EXCEPTING THEREFROM:

ALL THAT PARCEL OF LAND DESCRIBED IN THE DEED TO HILARION ANGELES AND LOURETTA G. ANGELES, HIS WIFE, RECORDED OCTOBER 10, 1940 IN BOOK 222 OF OFFICIAL RECORDS AT PAGE 250, INSTRUMENT NO. 6958.

APN: 0034-150-100

and;

PARCEL ONE:

Lot 18, as shown on that certain Map of Locke-Paddon Colony No. 5, filed December 6, 1912 in Book 4 of Maps, Page 17, Solano County Records, described as follows:

Beginning on the East line of the parcel of land described as Parcel 1 in the Deed from Walter C. Klein, et ux, to Hermosa Homes, Inc., dated August 11, 1958, recorded August 25, 1958, in Book 938 of Official Records, Page 396, Instrument No. 13649, distant thereon North 0° 52’ West, 168.009 feet from the Southeast corner thereof; thence from said point of beginning North 0° 52’ West, along said East line, 100.191 feet to the Northwest line of said Lot 18, said Northwest line being the Southeasterly line of the Sacramento Northern railway right of way; thence North 60° 26’ East, along the Northwest line of said Lot 18, 102.56 feet to the East line of the parcel of land described in the Deed from Joseph Musso, et al, to Fred Klein, dated April 16, 1952, recorded April 18, 1952, in Book 619 of Official Records, Page 21, Instrument No. 5449; thence South 0° 52’ East, along said East line, 151.991 feet to a point that bears South 89° 27’ East from the point of beginning; thence North 89° 27’ West, 90 feet to the point of beginning.

PARCEL TWO:

An easement for ingress and egress, granted in the Deed from Hermosa Homes, Inc., to Walter C. Klein, et ux, dated February 1, 1965, in Book 1320 of Official Records, Page 340, Instrument No. 2774, over that portion of Lot 18 as shown on the Map of Locke-Paddon Colony No. 5, filed December 6, 1912 in Book 4 of Maps at Page 17, described as follows:

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East, 11.5 feet; thence North 0° 52’ West, 90 feet to the actual point of beginning of the herein described parcel of land; thence from said point of beginning North 0° 52’ West to a point in a line which is parallel with and one foot distant, measure at right angles, Southeasterly from the Northwest line of said Lot 18; thence South 60° 26’ West, along said parallel line to a line which is parallel with and distant 11.5 feet Easterly at right angles from the Court first hereinabove mentioned as having a bearing of North 0° 52’ West; thence along said last mentioned parallel line South 0° 52’ East to a point that bears North 89° 27’ East from the point of beginning; thence South 89° 27’ East, 11.5 feet to the point of beginning.

PARCEL THREE:

An easement for ingress and egress over the following described property, being a portion of Lot 18, Locke Paddon Colony Unit No. 5, filed for record December 6, 1912, in Book 4 of Maps,

Page 17 ends

Beginning at a point in the South line of said Lot which point is South 89° 27’ East a distance of

PARCEL FOUR:

An easement for ingress and egress over that portion of Lot 18, as shown on the Map of Locke- Paddon Colony No. 5, filed on December 6, 1912, in Book 4 of Maps at Page 17, described as follows:

APN: 0034-150-240

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I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature (Seal)

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I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature (Seal)

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I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature (Seal)

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RECORDING REQUESTED BY, AND
WHEN RECORDED RETURN TO:

Housing Services Department
1000 Webster Street, 1st Floor
Fairfield, CA 94533
Attn: Housing Services Director

with a copy to:

_____________________

APNs: 034-150-100 and 0034-150-240

(Space above for Recorder’s Use.)
This document is exempt from the payment of a recording fee pursuant to Government Code Section 6103.

AFFORDABILITY RESTRICTIONS AND REGULATORY AGREEMENT
(DENSITY BONUS; FEE DEFERRAL; FEE CREDITS)
These AFFORDABILITY RESTRICTIONS AND REGULATORY AGREEMENT (“Regulatory Agreement”) is hereby entered, effective as of _______________, 20__, by and among the CITY OF FAIRFIELD, a municipal corporation (“City”), and ________________________ (“Developer”) (City and Developer are sometimes collectively referred to herein as the “Parties.”).

R E C I T A L S
WHEREAS, City and 212 E. Tabor Fairfield EAH LLC have entered into a Development Loan Agreement dated _______ 2022 (“DLA”) which was assigned to Developer, for a loan for the development of certain real property described in Exhibit “A” (“Site”).

WHEREAS, this Regulatory Agreement establishes a plan for the improvement, development and maintenance of the Site, for the benefit of City, and constitutes a “density bonus housing agreement” under the Fairfield Municipal Code for which Developer has been given incentives and waivers relating to parking, and open space as described in the applicable City Resolution.

WHEREAS, City and Developer wish to adopt this Regulatory Agreement to further govern the use of the Site to comply with the City’s density bonus ordinances and to satisfy requirements of the Fairfield Municipal Code with respect to fee deferrals and fee credits described in the DLA.

City shall not subordinate this Regulatory Agreement to any deed of trust or other liens.

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NOW, THEREFORE, City and Developer (as owner of real property interests described hereinabove), declare that the Site shall be held, transferred, encumbered, used, sold, conveyed, leased and occupied subject to the covenants, conditions and restrictions hereinafter set forth expressly and exclusively for the use and benefit of said property. Each and all of the restrictions, limitations, conditions, covenants, liens, reservations and charges herein contained shall run with the land and be recorded on the property title and shall be binding on Parties, their grantees, successors, heirs, executors, administrators, devisees or assigns, and all subsequent owners of all or any part of the Site, during the term of this Regulatory Agreement.

ARTICLE I

Section 1. “Affordable Housing Development” means an affordable housing project operated in conformity with this Regulatory Agreement throughout the Required Covenant Period.

Section 2. “Affordable Rent”, per month, means, for a Very Low Income Household, a monthly rent (including a reasonable utility allowance) which does not exceed one-twelfth (1/12th) of thirty percent (30%) of fifty percent (50%) of Median Income for a household size appropriate to the Unit, and for a Lower Income Household, a monthly rent (including a reasonable utility allowance) which does not exceed one-twelfth (1/12th) of thirty percent (30%) of sixty percent (60%) of Medium Income for a household size appropriate to the unit.

Section 3. “Area” means the Vallejo-Fairfeld, CA Metropolitan Statistical Area, as periodically defined by HUD.

Section 4. “Certificate” or “Certification” is defined in Section 3(a).

Section 5. “City”, as defined in the first paragraph hereof, means the City of Fairfield, a municipal corporation.

Section 6. “City Code” means and refers to the City of Fairfield Municipal Code, as revised from time to time.

Section 7. “Gross Income” means all payments from all sources received by a person (together with the gross income of all persons of the age of 18 years or older who intend to reside with such person in one residential unit) whether in cash or in kind as calculated pursuant to the Department of Housing and Urban Development (“HUD”) Regulations (24 C.F.R. § 813) and 25 California Code of Regulations Section 6914.

Section 8. “Household size appropriate to the unit” shall be one person for a studio unit, two persons for a one-bedroom unit, three persons for a two-bedroom unit, and four persons for a three-bedroom unit.

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Section 9. “Lower Income Household” means households earning not greater than the lower income limit for Solano County, adjusted for household size, pursuant to the California Health and Safety Code.

Section 10. ”Lower Income Unit” means a unit occupied at an Affordable Rent by a Lower Income Household.

Section 11. “Lower Income Required Units” means the Required Affordable Units which are required to be rented to Lower Income Households at an Affordable Rent.

Section 13. “Prescribed Income Levels” means the following:

Type Income of Household as Percentage of AMI Number of Units

1BR/1BA 30% 17
2BR/1BA 30% 16
3BR/1.5 BA 30% 2

Section 14. “Regulatory Agreement” means this Regulatory Agreement and any amendments, modifications or supplements.

Section 15. “Rental Development” means the sixty-seven (67) Unit residential rental development on the Site.

Section 16. “Required Affordable Units” means any of the thirty-five (35) of the dwelling units in the Rental Development, restricted and available to, occupied by, or held vacant for occupancy under this Agreement only by tenants qualifying as Very Low Income Households Packet Page 513 of 798Attachment 2 Page 69 of 97

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and Low Income Households and rented at an Affordable Rent. (Another dwelling unit must be a manager unit.)
Section 17. “Required Covenant Period” means the period commencing on the date all Required Affordable Units have been completed as evidenced by the City’s issuance of a Final Certificate of Occupancy for the Rental Development, and ending as of the fifty-fifth (55th) anniversary thereof.

Section 18. “Site” means all of the real property and appurtenances as described in the Recitals above, including all structures and other improvements thereon, and those hereafter constructed.

Section 19. “Unit” means a dwelling unit on the Rental Development.

Section 20. “Very Low Income Households” means households earning not greater than the very low income limit for Solano County, adjusted for household size, pursuant to Health and Safety Code Section 50105.

Section 21. “Very Low Income Unit” means a Unit occupied at an Affordable Rent by a Very Low Income Household.

Section 22. “Very Low Income Required Units” means the Required Affordable Units which are required to be rented to Very Low Income Households at an Affordable Rent.

Section 23. “Year” means a calendar year, excepting that the last Year hereunder shall be deemed to end as of the expiration of this Regulatory Agreement.

ARTICLE II
LAND USE RESTRICTIONS; IMPROVEMENTS
Section 1. Uses. The Site shall be operated as an Affordable Housing Development. All uses conducted on the Site, including, without limitation, all activities undertaken by Developer pursuant to the DLA, shall conform to all applicable provisions of the City Code and the City permits and approvals.

The Site shall be used, maintained and operated in accordance with this Regulatory Agreement for the Required Covenant Period.

Section 2. Affordable Housing.

Affordability Restrictions; Number of Units. Throughout the Required Covenant Period, the Developer shall cause the Required Affordable Units to be rented in accordance with the definition of “Prescribed Income Levels” in Section 14 of Article I above at Affordable Rents.

Except to the extent prohibited by state or federal law or tax credit regulations, in the event a household’s income initially complies with the corresponding income level/restriction but the income of such household increases, such increase shall not be deemed to result in a violation of the restrictions of this Regulatory Agreement concerning limitations upon income of occupants, provided that the next available unit is leased to a Very Low Income Houshold or Low Income Household, as applciable, until compliance with the Prescribed Income Levels is achieved.

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.

Duration of Affordability Requirements. The restriction shall apply throughout the Required Covenant Period. All tenants residing in any Required Affordable Unit for which rents are limited by virtue of this Regulatory Agreement or pursuant to other regulation during the last two (2) Years of the Required Covenant Period shall be given notice by Developer at least once every six (6) months prior to the expiration date of this requirement, that the rent payable on such Required Affordable Unit may be raised to a market rate rent at the end of the Required Covenant Period.

Selection of Tenants. Developer shall demonstrate to City that the proposed tenants of Required Affordable Units of the Extremely Low Income Units constitute Extremely Low Income Households, and that the proposed tenants of Very Low Income Required Units constitute Very Low Income Households.

Determination of Affordable Rent for the Required Affordable Units. The Required Affordable Units shall be rented or leased at an Affordable Rent. The maximum monthly rental for the Required Affordable Units shall be adjusted annually as permitted by Section 50053 of the California Health and Safety Code based on the annual adjustment to the Median Income for the Area established pursuant to Section 50093 of the California Health and Safety Code, as more particularly set forth in the Affordable Rent Worksheet.

DEVELOPER UNDERSTANDS AND KNOWINGLY AGREES THAT THE

MAXIMUM RENTAL FOR THE REQUIRED AFFORDABLE UNITS ESTABLISHED BY

THIS REGULATORY AGREEMENT IS SUBSTANTIALLY BELOW THE FAIR MARKET RENT FOR THE REQUIRED AFFORDABLE UNITS.

Section 3. Developer Verification and Program Compliance.

Income and Age Verification and Certification. Developer will obtain and maintain on file an Income and Age Verification from each tenant (for every Unit on the Site except the Manager’s unit), dated immediately prior to the initial occupancy of such tenant in the Required Affordable Units.

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On July 1 following the completion of the Development, and on or before each subsequent July 1, Developer shall file with City Manager or its designee a Certificate, containing all information required pursuant to Health and Safety Code Section 33418. Each Certificate shall cover the immediately preceding Year.

Developer shall maintain on file throughout the Required Covenant Period each tenant’s executed lease and Income and Age Verification and rental records for the Rental Development and the Required Affordable Units. Developer shall maintain complete and accurate records pertaining to the Units, and will permit any duly authorized representative of City to inspect the books and records of Developer pertaining to the occupancy of the Required Affordable Units. Developer shall prepare and submit to City annually commencing the June 15 first following the issuance of the Certificate of Ocupancy and continuing throughout the Required Covenant Period, a Certificate of Continuing Program Compliance. Such documentation shall state for each Required Affordable Unit in the Rental Development the Unit size, the rental amount, the number of occupants, and the income of the occupants and any other information which may be used to determined compliance with the terms of this Regulatory Agreement.

In addition, as part of its annual report, at City’s request, but not less frequently than prior to each initial and subsequent rental of each Required Affordable Unit to a new tenant household (but not lease renewals) and annually thereafter, Developer shall also provide to City completed income computation, asset evaluation, and certification forms, for any such tenant or tenants, in substantially the form provided by City from time to time. Developer shall obtain an annual certification from each household, Required Affordable Unit demonstrating that such household is a Low Income Household or Very Low Income Household, as applicable. Developer shall verify the income certification of each tenant household. Developer shall submit to City copies of any and all tenant income and occupancy certifications upon request of City. City may request (and Developer shall provide) additional documentation to assist City’s evaluation of Developer’s compliance with this Agreement, if determined to be necessary in the reasonable discretion of the City Manager, specifically including (without limitation) any documentation or additional certifications that may be necessary to verify compliance with all requirements from all funding sources, and each tenant’s status as to each Required Affordable Unit. This requirement is in addition to and does not replace or supersede Developer’s obligation to annually submit the Certificate of Continuing Program Compliance to City. Further, City has the right, but not the obligation to monitor compliance with respect to each tenant household at the Rental Development, and City’s election to monitor some, but not all, of the Units shall not constitute a waiver of City’s right to monitor and enforce compliance with respect to all Units in the future.

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(ii) obtain a true copy of an income tax return from the person for the most recent tax year in which a return was filed; (iii) obtain an income verification certification from the employer of the person;
(iv) obtain an income verification certification from the Social Security Administration and/or the California Department of Social Services if the person receives assistance from such agencies; or
(v) obtain an alternate form of income verification reasonably requested by Authority, if none of the above forms of verification is available to Developer.

Verification Regarding Eligibility of New Tenants. Developer shall retain documentation regarding the eligibility of each new tenant household.

Reporting Amounts. In the event Developer fails to submit to the City Manager or its designee the Certification as required by Section 3(a), Developer shall be in noncompliance with this Regulatory Agreement.

ARTICLE III

Section 3. Reserved.

Section 4. Reserved.

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Section 6. Failure to Enforce. The failure to enforce any of the covenants contained in this Regulatory Agreement shall not constitute a waiver of the right to enforce the same thereafter.

Section 7. Enforcement and Nonliability. City may from time to time make such efforts, if any, as it shall deem appropriate enforce and/or assist in enforcing this Regulatory Agreement.

However, City will not be subject to any liability for failure to affirmatively enforce any provision of this Regulatory Agreement.

ARTICLE VI

Section 2. Severability. Invalidation of any one of these covenants or restrictions by judgment or court order shall in no way affect any other provisions which shall remain in all force and effect.

This Regulatory Agreement shall not be subordinate to the lien of any financing obtained by Developer with respect to the Site.

Section 4. Construction. The provisions of this Regulatory Agreement shall be liberally construed to effectuate its purpose of creating a uniform plan for the development and operation of Required Affordable Units available at Affordable Rent for Very Low Income Households, and Low Income Households in conformity with the Prescribed Income Levels. The article and section headings have been inserted for convenience only, and shall not be considered or referred to in resolving questions of interpretation or construction.

Developer shall be obligated by this Regulatory Agreement to comply with the provisions hereof.

In the event of conflict, Developer shall comply with the most stringent requirements, in each case.

Section 5. Amendments. This Regulatory Agreement may be amended only by the written agreement of Developer and City.

Section 6. Reserved.

Section 7. Notices. Any notice permitted or required to be delivered as provided herein to Developer shall be in writing and may be delivered either by reputable overnight service or Packet Page 518 of 798Attachment 2 Page 74 of 97

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certified mail to its address on the first page hereof, and shall be effective as of one business day after delivery to the messenger service for overnight delivery, or the date of delivery or attempted delivery shown on the return receipt. Such address may be changed from time to time by notice in writing.

Section 8. Notice of Transfer of Title; Notice of Property Manager. Developer shall promptly notify City in writing of any conveyance of the Approved Housing Development, including the name of any buyer and the address for notices of the buyer.

DEVELOPER:

212 E. TABOR, FAIRFIELD EAH, LLC, a
California limited liability company
By: 212 E. TABOR, FAIRFIELD
EAH, LLC, a California limited
liability company, its general partner

By:

By: _____________________

CITY:

CITY OF FAIRFIELD,
a municipal corporation
By:

David Gassaway,
Interim City Manager
ATTEST:

Karen L. Rees, City Clerk

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EXHIBIT A

LEGAL DESCRIPTION OF THE SITE

The land referred to is situated in the County of Solano, City of Fairfield, State of California, and is described as follows:

EXCEPTING THEREFROM:

ALL THAT PARCEL OF LAND DESCRIBED IN THE DEED TO HILARION ANGELES AND LOURETTA G. ANGELES, HIS WIFE, RECORDED OCTOBER 10, 1940 IN BOOK 222 OF OFFICIAL RECORDS AT PAGE 250, INSTRUMENT NO. 6958.

APN: 0034-150-100

and;

PARCEL ONE:

Lot 18, as shown on that certain Map of Locke-Paddon Colony No. 5, filed December 6, 1912 in Book 4 of Maps, Page 17, Solano County Records, described as follows:

PARCEL TWO:

Commencing on the South line of said Lot 18, distant thereon South 89° 27’ East, 83.5 feet Packet Page 520 of 798Attachment 2 Page 76 of 97

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from the Southwest corner of said Lot; thence from said point of commencement South 89° 27’ East, 11.5 feet; thence North 0° 52’ West, 90 feet to the actual point of beginning of the herein described parcel of land; thence from said point of beginning North 0° 52’ West to a point in a line which is parallel with and one foot distant, measure at right angles, Southeasterly from the Northwest line of said Lot 18; thence South 60° 26’ West, along said parallel line to a line which is parallel with and distant 11.5 feet Easterly at right angles from the Court first hereinabove mentioned as having a bearing of North 0° 52’ West; thence along said last mentioned parallel line South 0° 52’ East to a point that bears North 89° 27’ East from the point of beginning; thence South 89° 27’ East, 11.5 feet to the point of beginning.

PARCEL THREE:

An easement for ingress and egress over the following described property, being a portion of Lot 18, Locke Paddon Colony Unit No. 5, filed for record December 6, 1912, in Book 4 of Maps,

Page 17 ends

Beginning at a point in the South line of said Lot which point is South 89° 27’ East a distance of

PARCEL FOUR:

An easement for ingress and egress over that portion of Lot 18, as shown on the Map of Locke- Paddon Colony No. 5, filed on December 6, 1912, in Book 4 of Maps at Page 17, described as follows:

APN: 0034-150-240

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I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature (Seal)

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I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature (Seal)

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I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature (Seal)

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EXHIBIT “G”

FORM OF CERTIFICATE OF COMPLETION

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

Housing Services
Department
1000 Webster Street, 1st Floor
Fairfield, CA 94533
Attn: Housing Services Director

With a copy to:

212 E. TABOR, FAIRFIELD EAH, LLC,
____________________________________

APNs: 0034-150-100
0034-1050-240

(Space Above for Recorder’s Use Only)
This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383.

CERTIFICATE OF COMPLETION
THIS CERTIFICATE OF COMPLETION (the “Certificate”) is made by the CITY OF FAIRFIELD (the “City”), in favor of 212 E. TABOR, FAIRFIELD EAH, LLC, a California limited liability company.

R E C I T A L S
A. City and Developer have entered into that certain unrecorded Development and Loan Agreement (the “DLA”) dated as of ______, 2022 concerning the development of certain real property situated in the City of Fairfield, California, described in Exhibit “A” attached hereto (the “Site”).

B. As referenced in Section 3.12 of the DLA, City is required to furnish Developer or its successors with a Certificate of Completion upon completion of construction of the “Project” (as defined in the DLA), which Certificate is required to be in such form as to permit it to be recorded in the Recorder’s Office of Solano County. This Certificate is conclusive determination of satisfactory completion of the construction and development required by the DLA.

C. City has conclusively determined that the construction and development of the Project has been satisfactorily completed.

NOW, THEREFORE, City hereby certifies as follows:

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1. City does hereby certify that the Project to be constructed by Developer has been fully and satisfactorily completed in full conformance with the DLA.

2. This Certificate shall not constitute evidence of compliance with or satisfaction of any obligation of Developer to any holder of a mortgage, or any insurer of a mortgage, securing money loaned to finance construction work on the Site, or any part thereof.

3. This Certificate shall not constitute evidence of Developer’s compliance with those covenants in the DLA that survive the issuance of this Certificate.

4. This Certificate is not a Notice of Completion as referred to in California Civil Code Section 3093.

5. Nothing contained in this instrument shall modify in any other way any other provisions of the DLA (including without limitation the attachments thereto).

IN WITNESS WHEREOF, City has executed this Certificate of Completion this ___ day of ________________, 20__.

FAIRFIELD HOUSING AUTHORITY
By:

David Gassaway, Interim City Manager

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I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature (Seal)

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EXHIBIT “A”

LEGAL DESCRIPTION
The land referred to is situated in the County of Solano, City of Fairfield, State of California, and is described as follows:

EXCEPTING THEREFROM:

ALL THAT PARCEL OF LAND DESCRIBED IN THE DEED TO HILARION ANGELES AND LOURETTA G. ANGELES, HIS WIFE, RECORDED OCTOBER 10, 1940 IN BOOK 222 OF OFFICIAL RECORDS AT PAGE 250, INSTRUMENT NO. 6958.

APN: 0034-150-100

and;

PARCEL ONE:

Lot 18, as shown on that certain Map of Locke-Paddon Colony No. 5, filed December 6, 1912 in Book 4 of Maps, Page 17, Solano County Records, described as follows:

PARCEL TWO:

G-5

PARCEL THREE:

An easement for ingress and egress over the following described property, being a portion of Lot 18, Locke Paddon Colony Unit No. 5, filed for record December 6, 1912, in Book 4 of Maps,

Page 17 ends

Beginning at a point in the South line of said Lot which point is South 89° 27’ East a distance of

PARCEL FOUR:

An easement for ingress and egress over that portion of Lot 18, as shown on the Map of Locke- Paddon Colony No. 5, filed on December 6, 1912, in Book 4 of Maps at Page 17, described as follows:

APN: 0034-150-240

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EXHIBIT "H"

BASE PROJECT FINANCING SUMMARY

1. Fairfield Housing Authority Loan: $1,000,000

2. Fee Credits in an amount not to
exceed:
$1,000,000

3. Fee Deferral approximate
amount*: $ 1,500,000
*Fee Deferrals will be paid at a later date Subtotal $3,500,000

4. Tax Credit Investor Equity,

5. Senior Project Loan

6. ___________________

$____________

$______________

Total Development
Costs
$_______________

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EXHIBIT "I"

FORM OF FEE DEFERRAL AGREEMENT
(Attached.)

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RECORDING REQUESTED BY AND
WHEN RECORDED, MAIL TO:

Housing Services Department
1000 Webster Street, 1st Floor
Fairfield, CA 94533
Attn: Housing Services Director

With a copy to:

212 E. TABOR, FAIRFIELD EAH, LLC
___________________________

APNs: 0034-150-100
0034-150-240
______________________________________________________________________________ (Exempt from recording fees pursuant to Gov’t Code § 6103)

FEE DEFERRAL AGREEMENT

THIS FEE DEFERRAL AGREEMENT (the “AGREEMENT”) is dated as of ____________________, 202__ and is entered into by and between CITY OF FAIRFIELD, a municipal corporation (the “CITY”), and ______________________ (the “DEVELOPER”).

RECITALS
A. The CITY has adopted a Fee Deferral Ordinance (Fairfield Municipal Code Section 5.4.3 in Chapter 5);
B. The purpose of the Fee Deferral Ordinance is to facilitate the development of affordable housing;
C. DEVELOPER is the owner of certain real property in the City of Fairfield, County of Solano as described more particularly on Exhibit “A” hereto (the “Property”); D. DEVELOPER intends to construct a project on the Property that will be rent- and income- restricted for very-low and low-income households (the “Project”); and E. The Fairfield Housing Authority (“C”) and 212 E. Tabor Fairfield EAH LLC have entered into a Developmen Loan Agreement dated _______ 2022 (“DLA”) which was assigned to Developer and which provided for the construction of the Project by Developer, and the recording of Affordable Restrictions and Regulatory Agreements restricting the Project, including this Agreement.

F. The DLA provides that the granting of the fee deferral described herein is a condition to City’s and Developer’s obligations to the construction of the Project by Developer, Packet Page 532 of 798Attachment 2 Page 88 of 97

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and the DLA contemplates that this Agreement will be recorded prior to any deed of trust, and shall remain senior to all deeds of trust encumbering the Property.

NOW, THEREFORE, in consideration of the above Recitals and of the mutual covenants contained herein, the Parties agree as follows:

AGREEMENT

1. Fee Deferral(s). The Director of Community Development of the City has approved the following fee deferral(s) for the Project:
a. ____________________________________________________________. b. ____________________________________________________________.

2. Payment of Deferral Fees. All deferred fees shall be due and payable upon the earlier of: (i) the closing of so-called “permit” financing (i.e., financing used to repay construction financing for the Project); or (ii) thirty (30) calendar months after the date on which the building permit for the Project issued.

3. Lien. Developer hereby grants to City a lien on the Property (and any improvements), with power of sale, to secure the payment of the deferred fees, and City may foreclose such lien non-judicially, in accordance with California Civil Code Sections 2924, et. seq.

4. DEVELOPER’S Covenant to Pay and Costs of Enforcement. DEVELOPER further agrees to pay the CITY’s and/or the COUNTY’s reasonable costs of collection enforcement or collection of the fees required to be paid hereunder and costs of foreclosure.

5. Attorneys’ Fees. If any legal action or proceeding arising out of or relating to this Agreement is brought by any party, the prevailing party shall be entitled to receive from the other party, in addition to any other relief that may be granted, the reasonable attorneys' fees, costs, and expenses incurred in the action or proceeding by the prevailing party.

DEVELOPER further agrees to pay the CITY’s reasonable attorneys’ fees related to collection of the fees required to be paid hereunder.

6. Notices. All notices required or permitted under the terms of this Agreement shall be in writing and sent to:

CITY: City of Fairfield
1000 Webster Street, 2nd Floor
Fairfield, CA 94533-4883
Attn: Director of Community Development

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DEVELOPER:

7. Consideration. CITY’s agreement to defer payment of the Fees has been made in consideration of DEVELOPER’s agreement to provide and maintain a certain number of affordable housing units as part of the Project, as reflected in the “Affordability Restrictions and Regulation Agreement (Density Bonus; Fee Deferral; Fee Credits) document recorded against the Property (which is not, and shall not be, subordinate to any deed of trust or liens, other than liens for property taxes and assessments not yet delinquent).

8. Entire Agreement. This Agreement constitutes the entire agreement between CITY and the DEVELOPER with respect to the specific subject matter hereof, and no alteration or amendment or any part thereof shall be effective unless in writing signed by parties sought to be charged or bound thereby.

IN WITNESS WHEREOF, this Fee Deferral Agreement has been executed by the parties as of the date and year first above written.

CITY:

CITY OF FAIRFIELD,
a municipal corporation

David Gassaway, Interim City Manager

DEVELOPER:

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CALIFORNIA ALL PURPOSE ACKNOWLEDGMENT

A notary public or other officer completing this
certificate verifies only the identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity of that document.

STATE OF CALIFORNIA

COUNTY OF LOS ANGELES

On before me, ________________________________________ Notary Public, personally appeared ________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity(ies) upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Place Notary Seal Above
Signature of Notary Public

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CALIFORNIA ALL PURPOSE ACKNOWLEDGMENT

A notary public or other officer completing this
certificate verifies only the identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity of that document.

STATE OF CALIFORNIA

COUNTY OF LOS ANGELES

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Place Notary Seal Above
Signature of Notary Public

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Exhibit “A”

Legal Description of the Property

The land referred to is situated in the County of Solano, City of Fairfield, State of California, and is described as follows:

LOT 18, AS SHOWN ON THAT CERTAIN MAP ENTITLED, “MAP OF LOCKE- PADDON COLONY NO. 5”, FILED FOR RECORD IN THE OFFICE OF THE COUNTY RECORDER OF DECEMBER 6, 1912 IN BOOK 4 OF MAPS, PAGE 17, SOLANO COUNTY RECORDS.

EXCEPTING THEREFROM:

ALL THAT PARCEL OF LAND DESCRIBED IN THE DEED TO HILARION ANGELES AND LOURETTA G. ANGELES, HIS WIFE, RECORDED OCTOBER 10, 1940 IN BOOK 222 OF OFFICIAL RECORDS AT PAGE 250, INSTRUMENT NO. 6958.

APN: 0034-150-100

and;

PARCEL ONE:

Lot 18, as shown on that certain Map of Locke-Paddon Colony No. 5, filed December 6, 1912 in
Book 4 of Maps, Page 17, Solano County Records, described as follows:

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of the parcel of land described in the Deed from Joseph Musso, et al, to Fred Klein, dated April
16, 1952, recorded April 18, 1952, in Book 619 of Official Records, Page 21, Instrument No.
5449; thence South 0° 52’ East, along said East line, 151.991 feet to a point that bears South
89° 27’ East from the point of beginning; thence North 89° 27’ West, 90 feet to the point of
beginning.

PARCEL TWO:

An easement for ingress and egress, granted in the Deed from Hermosa Homes, Inc., to Walter
C. Klein, et ux, dated February 1, 1965, in Book 1320 of Official Records, Page 340, Instrument
No. 2774, over that portion of Lot 18 as shown on the Map of Locke-Paddon Colony No. 5, filed
December 6, 1912 in Book 4 of Maps at Page 17, described as follows:

Commencing on the South line of said Lot 18, distant thereon South 89° 27’ East, 83.5 feet
from the Southwest corner of said Lot; thence from said point of commencement South 89° 27’
East, 11.5 feet; thence North 0° 52’ West, 90 feet to the actual point of beginning of the herein
described parcel of land; thence from said point of beginning North 0° 52’ West to a point in a
line which is parallel with and one foot distant, measure at right angles, Southeasterly from the
Northwest line of said Lot 18; thence South 60° 26’ West, along said parallel line to a line which
is parallel with and distant 11.5 feet Easterly at right angles from the Court first hereinabove
mentioned as having a bearing of North 0° 52’ West; thence along said last mentioned parallel
line South 0° 52’ East to a point that bears North 89° 27’ East from the point of beginning;
thence South 89° 27’ East, 11.5 feet to the point of beginning.

PARCEL THREE:

An easement for ingress and egress over the following described property, being a portion of
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Lot 18, Locke Paddon Colony Unit No. 5, filed for record December 6, 1912, in Book 4 of Maps,

Page 17 ends

Beginning at a point in the South line of said Lot which point is South 89° 27’ East a distance of

83.5 feet from the Southwest corner of said Lot; thence continuing along the South line South
89° 27’ East a distance of 11.5 feet; thence North 0° 52’ West 90 feet; thence North 89° 27’
West 11.5 feet; thence South 0° 52’ East 90 feet to the point of beginning.

PARCEL FOUR:

An easement for ingress and egress over that portion of Lot 18, as shown on the Map of Locke-
Paddon Colony No. 5, filed on December 6, 1912, in Book 4 of Maps at Page 17, described as
follows:

Beginning on the South line of said Lot 18, distant thereon South 89° 27’ East, 95 feet from the
Southwest corner thereof; thence from said point of beginning North 0° 52’ West, 168.009 feet;
thence South 89° 27’ East, 12.5 feet; thence South 0° 52’ East, 168.009 feet to the South line
of said Lot 18; thence North 89° 27’ West, along said South line, 12.5 feet to the point of beginning.

APN: 0034-150-240

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Agenda Item No: 28.

AGENDA REPORT
DATE:June 21, 2022
TO:Mayor and City Council
FROM:David Gassaway, Interim City Manager
SUBJECT:Resolution 2022144 of the City Council of the City of Fairfield Authorizing the Approval of Lending and Mortgage Revenue Bond Policies for Development Activities Sponsored by the City of Fairfield
RECOMMENDED ACTION
Adopt resolution.

STATEMENT OF ISSUE
The City of Fairfield Housing Services Department (HSD) desires to adopt Lending and Mortgage Revenue Bond Policies for development projects receiving gap financing from the City of Fairfield.

These policies provide standardized lending terms, application processes, and procedures the state requires when issuing development financing.

DISCUSSION
HSD provides gap financing, letters of credit, credit enhancements, issuance of mortgage revenue bonds, land for development, and rehabilitation of affordable housing. Under certain cooperation agreements, HSD may also help finance affordable housing developments in other areas within the County of Solano, depending on its effect on the housing market in the city of Fairfield. All housing financed by HSD typically contains affordability restrictions on some or all units.

The gap financing programs anticipated in this policy include other federal, state, or private financing.

These policies provide transparency and direction to potential applicants preparing their gap financing application to HSD and supersede all guidelines and terms related to gap financing and the issuance of multifamily revenue bonds.

The goals of the program are to:

Increase and preserve the supply of affordable forsale and rental housing for all income groups, including those requiring supportive services
Facilitate community and neighborhood revitalization through strategic investments in new construction and deteriorated properties
Encourage economic integration within neighborhoods and affordable developments to the greatest extent possible
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HSD will release Notices of Funding Availability (NOFA's) or Requests for Proposals (RFP) for projects that meet specific criteria. NOFAs or RFPs will specify the loan funds available and the type of development(s) sought. Selection criteria may include a specific housing need to be met, a particular location, or other development requirements being considered for funding under the NOFA or RFP. (Applications for the issuance of mortgage revenue bonds without a COF loan will be accepted at any time throughout the year.)
Applications will be accepted at the offices of the City of Fairfield Housing Services Department at 1000 Webster Street,1st floor, Fairfield, CA 945334836.

State and federal funds will be the primary source of financing for HSD gap funding. HSD administers HOME and the Federal Community Development Block Grant (CDBG) Program. Accepting federal funds for projects entails adhering to federal requirements, including the National Environmental Policy Act and Davis Bacon's prevailing wage requirements. HSD also administers fee credits and Low Mod income housing funds subject to local housing requirements and SB341 of the state of California regulations.

Additional elements of the Lending and Mortgage Revenue Bond Policies include but are not limited to the following:

Eligible Applicants:Nonprofit and forprofit housing corporations, joint ventures, limited liability companies, partnerships, and local governmental entities. Applicants must have previous experience owning affordable housing projects or partner with an entity that does have the required experience.

Eligible Uses of Funds:Acquisition/construction financing, Permanent Financing, Development, Substantial rehabilitation costs, and Predevelopment expenses.

Ineligible Uses of Funds: HSD financing is not provided for property acquisition, the acquisition and rehabilitation of properties needing less than substantial rehabilitation, land banking, or refinancing existing debt.

Loan to Value:The total loan amount, including hard and soft debt, shall be the lesser of 90% combined loantovalue rate or 100% of development costs.

Loan Amount: The loan amount shall not exceed the difference between the total development cost and the maximum potential equity and debt raised from private and public sources other than HSD.

Interest Rate:HSD will charge an interest rate of up to 3% simple interest on HSD loans.

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Interest Rate:HSD will charge an interest rate of up to 3% simple interest on HSD loans.

Affordability Term: The affordability requirements will be enforced through a recorded Regulatory Agreement over 55 years, except for HOMEassisted units that must meet Federal HOME regulatory requirements.

Application and Annual Fees:Applicants must submit a preapplication and a full application if requested. When a complete application for HSD is submitted, the developer must pay a "goodfaith" deposit of $10,000 to cover HSD staff costs and expenses in determining the project's feasibility and processing the loan application. COF will also charge an annual administrative fee of .125% of the original loan or bond amount as a monitoring fee. At no time will the annual fee exceed $25,000 for bond projects and $20,000 per year on nonbond projects.

Developer Fees:For the 9% and 4% tax credit programs, maximum developer fees will be consistent with TCAC regulations. For projects not using bonds and/or tax credits, such as supportive housing developments or small rehabilitation projects, the maximum developer fee shall be determined on a perunit basis: $25,000 per unit for the first ten units, $15,000 per unit for units 11 through 30, and $12,000 per unit for projects 31 and above.

Revenue and Operating Assumptions:Proforma revenues shall be inflated at a maximum rate of

2.5 percent per year and proforma operating expenses at a minimum rate of 3.5 percent per year or rates consistent with industry standards.

Physical Requirements:The project must meet COF's minimum construction standards and verify that all major systems have an expected life of at least 15 years upon completion of the renovation.

Resident Services and Community Space: All properties, regardless of project type (i.e., senior, family, or large family), must devote a minimum of 1,200 s.f. to actual resident services/community space unless otherwise approved by COF due to limiting conditions of existing space in the case of a rehabilitation project.

Accessibility:If the development uses federal financial assistance, a minimum of five percent of the total dwelling units (or at least one unit, whichever is greater) must be accessible for persons with mobility impairments to the maximum extent feasible. If the project is new construction, an additional minimum of two percent of the total units (or at least one unit, whichever is greater) must be suitable for occupancy by people with sensory impairments.

Property Management:All projects must include onsite management staff during regular business hours, and projects over 50 units must consist of livein onsite professional management staff.

Security Patrols:All projects with 100 or more units must include vehiclebased security patrol services in the project's operating budget and submit a security plan for approval.

Affirmative Marketing:Project owners must follow COF's Affirmative Marketing Policies (Exhibit 5) that require outreach to groups least likely to apply for the housing.

Rent Calculations:The maximum rent to be charged for an assisted unit may not exceed 30 percent of the median income limits for household size appropriate for the unit, less an allowance for utilities.

Rent Increases:For projects that set their rents below the maximum allowable rent levels, subsequent rent increases cannot exceed 10% annually.

Bond Liability:HSD has no direct legal liability for the issuance or repayment of bonds; there is no pledge of the City of Fairfield or the Fairfield Housing Authority's faith, credit, or taxing powers. The bonds do not constitute a general obligation of the issuer because the security for repayment of bonds Packet Page 544 of 798

Agenda Item No: 28.AGENDA REPORTDATE:June 21, 2022 TO:Mayor and City CouncilFROM:David Gassaway, Interim City ManagerSUBJECT:Resolution 2022144 of the City Council of the City of Fairfield Authorizing the Approvalof Lending and Mortgage Revenue Bond Policies for Development ActivitiesSponsored by the City of FairfieldRECOMMENDED ACTIONAdopt resolution.STATEMENT OF ISSUEThe City of Fairfield Housing Services Department (HSD) desires to adopt Lending and MortgageRevenue Bond Policies for development projects receiving gap financing from the City of Fairfield.These policies provide standardized lending terms, application processes, and procedures the staterequires when issuing development financing.DISCUSSIONHSD provides gap financing, letters of credit, credit enhancements, issuance of mortgage revenuebonds, land for development, and rehabilitation of affordable housing. Under certain cooperationagreements, HSD may also help finance affordable housing developments in other areas within theCounty of Solano, depending on its effect on the housing market in the city of Fairfield. All housingfinanced by HSD typically contains affordability restrictions on some or all units.The gap financing programs anticipated in this policy include other federal, state, or private financing.These policies provide transparency and direction to potential applicants preparing their gap financingapplication to HSD and supersede all guidelines and terms related to gap financing and the issuance ofmultifamily revenue bonds.The goals of the program are to:Increase and preserve the supply of affordable forsale and rental housing for all income groups,including those requiring supportive servicesFacilitate community and neighborhood revitalization through strategic investments in newconstruction and deteriorated propertiesEncourage economic integration within neighborhoods and affordable developments to thegreatest extent possibleMaintain quality and sustainable living environments for residents of assisted affordabledevelopments and surrounding propertiesIncrease the efficiency of COF funding by obtaining the most significant leverage of nonHSDfundsPreapplications for HSD financing will be accepted throughout the year. After preapplications arereviewed, considering available funding, HSD will provide a letter disclosing the determination of thepreapplication. The letter will indicate if the applicant is recommended to submit a completeapplication due to its compliance with the priorities described in the Lending and Mortgage RevenueBond Policies. The letter will also include the dates to submit the complete application in conjunctionwith other information related to the application process. Preapplicants will receive their approvalstatus within 60 days after submitting the preapplication. If an applicant is not invited to submit acomplete application, HSD will be available to meet with the development team to review futurefinancing opportunities.HSD will release Notices of Funding Availability (NOFA's) or Requests for Proposals (RFP) for projectsthat meet specific criteria. NOFAs or RFPs will specify the loan funds available and the type ofdevelopment(s) sought. Selection criteria may include a specific housing need to be met, a particularlocation, or other development requirements being considered for funding under the NOFA or RFP.(Applications for the issuance of mortgage revenue bonds without a COF loan will be accepted at anytime throughout the year.)Applications will be accepted at the offices of the City of Fairfield Housing Services Department at1000 Webster Street,1st floor, Fairfield, CA 945334836.State and federal funds will be the primary source of financing for HSD gap funding. HSD administersHOME and the Federal Community Development Block Grant (CDBG) Program. Accepting federalfunds for projects entails adhering to federal requirements, including the National Environmental PolicyAct and Davis Bacon's prevailing wage requirements. HSD also administers fee credits and Low Modincome housing funds subject to local housing requirements and SB341 of the state of Californiaregulations.Additional elements of the Lending and Mortgage Revenue Bond Policies include but are not limited tothe following:Eligible Applicants:Nonprofit and forprofit housing corporations, joint ventures, limited liabilitycompanies, partnerships, and local governmental entities. Applicants must have previous experienceowning affordable housing projects or partner with an entity that does have the required experience.Eligible Uses of Funds:Acquisition/construction financing, Permanent Financing, Development,Substantial rehabilitation costs, and Predevelopment expenses.Ineligible Uses of Funds: HSD financing is not provided for property acquisition, the acquisition andrehabilitation of properties needing less than substantial rehabilitation, land banking, or refinancingexisting debt.Loan to Value:The total loan amount, including hard and soft debt, shall be the lesser of 90%combined loantovalue rate or 100% of development costs.Loan Amount: The loan amount shall not exceed the difference between the total development costand the maximum potential equity and debt raised from private and public sources other than HSD.Interest Rate:HSD will charge an interest rate of up to 3% simple interest on HSD loans.Affordability Term: The affordability requirements will be enforced through a recorded RegulatoryAgreement over 55 years, except for HOMEassisted units that must meet Federal HOME regulatoryrequirements.Application and Annual Fees:Applicants must submit a preapplication and a full application ifrequested. When a complete application for HSD is submitted, the developer must pay a "goodfaith"deposit of $10,000 to cover HSD staff costs and expenses in determining the project's feasibility andprocessing the loan application. COF will also charge an annual administrative fee of .125% of theoriginal loan or bond amount as a monitoring fee. At no time will the annual fee exceed $25,000 forbond projects and $20,000 per year on nonbond projects.Developer Fees:For the 9% and 4% tax credit programs, maximum developer fees will be consistentwith TCAC regulations. For projects not using bonds and/or tax credits, such as supportive housingdevelopments or small rehabilitation projects, the maximum developer fee shall be determined on aperunit basis: $25,000 per unit for the first ten units, $15,000 per unit for units 11 through 30, and$12,000 per unit for projects 31 and above.Revenue and Operating Assumptions:Proforma revenues shall be inflated at a maximum rate of2.5 percent per year and proforma operating expenses at a minimum rate of 3.5 percent per year orrates consistent with industry standards.Physical Requirements:The project must meet COF's minimum construction standards and verifythat all major systems have an expected life of at least 15 years upon completion of the renovation.Resident Services and Community Space: All properties, regardless of project type (i.e., senior,family, or large family), must devote a minimum of 1,200 s.f. to actual resident services/communityspace unless otherwise approved by COF due to limiting conditions of existing space in the case of arehabilitation project.Accessibility:If the development uses federal financial assistance, a minimum of five percent of thetotal dwelling units (or at least one unit, whichever is greater) must be accessible for persons withmobility impairments to the maximum extent feasible. If the project is new construction, an additionalminimum of two percent of the total units (or at least one unit, whichever is greater) must be suitable foroccupancy by people with sensory impairments.Property Management:All projects must include onsite management staff during regular businesshours, and projects over 50 units must consist of livein onsite professional management staff.Security Patrols:All projects with 100 or more units must include vehiclebased security patrolservices in the project's operating budget and submit a security plan for approval.Affirmative Marketing:Project owners must follow COF's Affirmative Marketing Policies (Exhibit 5)that require outreach to groups least likely to apply for the housing.Rent Calculations:The maximum rent to be charged for an assisted unit may not exceed 30 percentof the median income limits for household size appropriate for the unit, less an allowance for utilities.Rent Increases:For projects that set their rents below the maximum allowable rent levels, subsequentrent increases cannot exceed 10% annually.

Use of Bond Proceeds:Projects must consist of complete rental units, including kitchens and bathrooms. Loan funds may cover land acquisition costs (limited to 25% of bond proceeds), construction, improvements, architectural and engineering services, construction interest, loan fees, and other project capital costs incurred 60 days before the bond inducement date. No more than 2% of the bond loan can be used to finance issuance costs, such as the services of the financing team members, rating and printing of bonds, bond allocation, etc.

Bond Issuance Fees:HSD is compensated for services preparing for bond issuance by charging an issuance fee of 25 basis points (0.25%) of the bond issuance amount payable at the bond closing. In addition, COF receives an Annual Administration Fee equal to 12.5 basis points (0.125%) of the original bond issuance amount as compensation for compliance monitoring of regulatory restrictions and the administration of outstanding bonds.

FINANCIAL IMPACT
The City of Fairfield will make project Loans based on the availability of funds from Low Mod Funds Fund 022, HOME Funds Fund 046, Housing Trust FundsFund 024, and CDBG FundsFund 031.

Application and administrative fees associated with the administration of the Lending program will be deposited into the Housing Authority Fund 023 Account.

PUBLIC CONTACT/ADVISORY BODY RECOMMENDATION
N/A
ALTERNATIVE ACTION
The Housing Authority Board and City Council may choose not to approve the Lending and Mortgage Revenue Bond Policies. However, if this action is taken, the City of Fairfield will not have a clear and transparent program to provide gap funding for development projects. It would make Fairfield policies and practices inconsistent with new state guidelines that condition the receipt of state funding on local jurisdictions having clear and defined lending and applicant selection processes. Moreover, the City of Fairfield would weaken its chances of getting a state Pro Housing Designation that requires Local jurisdictions to have transparent loan applications and lending policies to promote affordable housing development.

STAFF CONTACT
LaTanna Jones, Director of Housing Service
(707) 4287647
[email protected],gov
COORDINATED WITH
City Attorney's Office
ATTACHMENTS:

Description
Resolution
Policies
REVIEWERS:

Packet Page 545 of 798

Reviewer Action Date
MayaGuerrero, Iris Approved 6/10/2022 5:42 PM
Beavers, Esther Approved 6/10/2022 2:46 PM
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CITY OF FAIRFIELD

RESOLUTION NO. 2022-144

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FAIRFIELD AUTHORIZING THE APPROVAL

OF LENDING AND MORTGAGE REVENUE BOND POLICIES FOR DEVELOPMENT ACTIVITIES

SPONSORED BY THE CITY OF FAIRFIELD

WHEREAS, the City of Fairfield has developed a goal to increase the supply of affordable and mixed-income housing in Fairfield and standardize lending processes and terms for housing projects receiving city of Fairfield subsidies; and

WHEREAS, standardized lending policies and terms are typical for Local municipalities seeking to subsidize mixed-income and affordable housing projects with state and federal funding; and

WHEREAS, the state of California has established Pro Housing designations to prioritize funding to cities that have memorialized financial subsidy standards and programs; and

WHEREAS, the City of Fairfield Housing Services Department (HSD) seeks to continue providing gap financing, letters of credit, credit enhancements, issuance of mortgage revenue bonds, and land for the development and rehabilitation of affordable housing in the city of Fairfield; and

WHEREAS, the gap financing provided by HSD typically contains affordability restrictions on some or all the units; and

WHEREAS, the City of Fairfield seeks to memorialize and standardize its gap financing lending and bond revenue policies and programs to comply with state and federal practices and establish itself as a Pro Housing designated city; and

WHEREAS, the lending and bond revenue gap financing will generally include state, federal and/or private financing with the goals to:

 Increase and preserve the supply of affordable for-sale and rental housing for all income groups, including those requiring supportive services
 Facilitate community and neighborhood revitalization through strategic investments in new construction and deteriorated properties
 Encourage economic integration within neighborhoods and affordable developments to the greatest extent possible
 Maintain quality and sustainable living environments for residents of assisted affordable developments and surrounding properties
 Increase the efficiency of HSD funding by obtaining the greatest leverage of non-HSD funds; and

Packet Page 547 of 798Attachment 1 Page 1 of 2

RES. NO. 2022-144

Page 2 ends

WHEREAS, the Lending and Bond Revenue policies will help the City provide open and transparent lending and gap subsidy programs to applicants seeking to develop mixed-income and affordable housing in Fairfield.

NOW, THEREFORE, THE COUNCIL OF THE CITY OF FAIRFIELD HEREBY RESOLVES:

Section 1. To approve and adopt of the “Lending and Mortgage Revenue Bond Policies” for the city of Fairfield attached to this resolution as “Exhibit A” to provide affordable and mixed-income rental and ownership housing in Fairfield.

Section 2. The city manager, or his designee, is hereby authorized and directed, jointly and severally, to do all things they deem necessary or proper to effectuate the purpose of this resolution and any such actions that were previously taken are hereby ratified and confirmed .

Section 3. This resolution shall take effect immediately upon adoption.

PASSED AND ADOPTED this 21st day of June, 2022, by the following vote:

AYES: MEMBERS: PRICE / BERTANI / MOY / PANDURO / TIMM / TONNESEN / VACCARO

NOES: MEMBERS:

ABSENT: MEMBERS:

ABSTAIN: MEMBERS:

MAYOR

ATTEST:

____________________________

CITY CLERK

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City of Fairfield

Lending and Mortgage Revenue
Bond Policies

Adopted on: June __, 2022

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2 City of Fairfield
Lending and Mortgage Revenue Bond Policies

TABLE OF CONTENTS

INTRODUCTION
Goals and purpose

PROGRAM REGULATIONS

Section 1. Process and Funding Eligibility

1.1. Eligible projects and project priorities

1.2. Location policy

1.3. Eligible applicants

1.4. Eligible uses of funds

1.5. Ineligible uses of funds

1.6. Application process

Section 2. COF Loan Terms and Conditions

2.1. Loan to value

2.2 Debt coverage

2.3. Loan amount

2.4. Interest rate

2.5. Loan term

2.6. Affordability term

2.7. Loan repayment

2.8. Loan security

2.9. Subordination

2.10. Disbursement

2.11. Retention

2.12. Term of senior financing

2.13. Cost savings

2.14. Cost certification

2.15 Application and annual loan fees

2.16. Loan commitment terms

Section 3. Underwriting Guidelines

3.1. Replacement reserves

3.2. Operating reserves

3.3. Operating expenses

3.4. Developer fees

3.5. Asset management fees

3.6. Revenue assumptions

3.7. Builder overhead and profit and general conditions

3.8. Lease-up income

3.9 Commercial income

3.10 Miscellaneous income

3.11 HUD-subsidized projects

3.12 Pets

3.13 Exceptions to guidelines

3.14 Subsidy layering review
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3 Section 4. Threshold Requirements

General Requirements

4.1. Affordability

4.2. Financing eligibility

4.3. Unit distribution

4.4. Financing plan

4.5. Equity

4.6. Nonprofit ownership

4.7. Owner qualifications and experience

4.8. Identities of interest and related parties

4.9. Payment and performance bonds

4.10. Insurance requirements

Physical Requirements

4.11. Rehabilitation standards

4.12. Site control

4.13. Land use entitlements

4.14. Site and building design

4.15. Resident services and community space

4.16. Playground equipment

4.17 Accessibility

4.18. Security equipment

4.19. Sustainability standards

Property Management Requirements

4.20. Property management

4.21. Security patrols

4.22. Smoke-free environment

Resident Services Requirements

4.23. Resident services and budget

Compliance Requirements

4.24. Ongoing compliance

Section 5. Third Party Reports

5.1. Appraisal

5.2. Market study

5.3. Rehabilitation assessment

5.4. Environmental review

5.5. Phase I or Phase II environmental assessments

5.6. Lead-based paint

5.7. Asbestos

5.8. Soils report

5.9. Pest report

5.10 Landscape plan

5.11 Relocation

Section 6. Special Regulatory Requirements

6.1. Prevailing wages
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4 6.2. Section 3 MBE/WBE requirements

Section 7. Affordability and Rent Calculations

7.1. Income eligibility

7.2. Rent calculations

7.3. Rent increases

7.4. Utility allowances

7.5. Excess utility charges

7.6. Renters’ insurance

Section 8. Calculation of Restricted Units

Section 9. Mortgage Revenue Bond Policies

9.1 Summary

9.2 Types of bonds

9.3 Affordability requirements

9.4 Application process

Section 10. Application process

10.1. Pre-application

10.2. Full application

10.3 Communication with COF’s governing bodies and consultants

10.4. Approvals

Section 11. Housing Trust Funds

11.1 Projects financed with Housing Trust Funds

11.2 Affordability Target

Exhibits

1. Funding Sources

2. Rental Property Minimum Construction Standards

3. Management Agent and Resident Services Provider Checklist

4. Multifamily Resident Services Compliance Reporting and Procedures

5. Affirmative Marketing Policies

6. Compliance Violations and Actions

7. COF’s Guidelines for Preparation of Relocation Plans for Multifamily Developers Using COF Financial Assistance

8. Selection of Bond Counsel and Bond Underwriter

9. Pre-Application Requirements

10. Full Application Requirements

11. HCD Uniform Multifamily Regulations
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5 INTRODUCTION

The City of Fairfield Housing Services Department (COF) provides gap financing, issuance of mortgage revenue bonds, and land for the development and rehabilitation of affordable housing in the City of Fairfield. Under certain cooperation agreements, COF may also finance affordable housing developments in other areas within the County of Solano. All housing financed by COF carries affordability restrictions on some or all the units.

This gap financing program is structured to be layered with other Federal, State or private financing. The purpose of these Policies is to provide transparency and direction to potential applicants in preparing their gap financing application to COF.

These policies shall supersede all previous guidelines and policies related to gap financing and the issuance of multifamily revenue bonds.

The goals of the program are to:

 Increase and preserve the supply of affordable for sale and rental housing for all income groups, including those requiring supportive services  Facilitate community and neighborhood revitalization through strategic investments in new construction and deteriorated properties  Encourage economic integration within neighborhoods and within affordable developments, to the greatest extent possible
 Maintain quality and sustainable li ving environments for residents of assisted affordable developments and surrounding properties
 Increase the efficiency of COF funding by obtaining the greatest leverage of non-COF funds

Pre-applications for COF financing will be accepted throughout the ye ar. After pre- applications are reviewed, considering available funding, COF will provide a letter disclosing the determination of the pre-application. The letter will indicate if the applicant is recommended to submit a full application due to its compli ance with the priorities described in the Lending and Mortgage Revenue Bond Policies. The letter will also include the dates to submit the full application in conjunction with other information related to the application process. Pre-applicants will receive their approval status within 60 days after submitting the pre-application. If an applicant is not invited to submit a full application, COF will be available to meet with the development team to review future financing opportunities.

(Applications for the issuance of mortgage revenue bonds without a COF loan will be accepted at any time throughout the year.)

COF will release Notices of Funding Availability (NOFA’s) or Requests for Proposals (RFP’s) for projects which meet certain additional specific criteria. NOFAs or RFPs will specify the amount of loan funds available, and the type of development sought.

Selection criteria may include a specific housing need to be met, a particular location, or other requirements of the development being considered for funding under the NOFA or RFP.

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6 Applications are accepted at offices of the City of Fairfield Housing Service Department at 1000 Webster Street,1st floor, Fairfield, CA 94533-4836.

State and federal funds will be the primary source of financing for COF gap funding. COF administers HOME and the Federal Community Development Block Grant (CDBG) Program. Acceptance of federal funds for projects entails adhering to federal requirements, including the National Environmental Policy Act and Davis Bacon prevailing wage requirements. COF also administers fee credits and Low Mod income housing funds that are subject to local housing requirements and SB341 of the state of California regulations.

(For a listing of funding sources and their specific requirements, please see Exhibit 1.) Packet Page 554 of 798Attachment 2 Page 6 of 117

7 PROGRAM REGULATIONS

CITY OF FAIRFIELD

Section 1. Process and Funding Eligibility

All projects requesting multifamily lending assistance and/or a mortgage revenue bond issuance are subject to the requirements in these policies.

1.1. Eligible projects and project priorities. Funding recommendations for COF financing will be made based on the project priorities set out below and available funding sources. Pre-application approval, followed by approval of a full application, is required before being eligible for funding.

Applicants are expected to leverage additional resources to the maximum extent possible.

Affordable housing priorities:

In all priorities listed below, project readiness is important and will be evaluated as part of the selection process.

1. Preservation of Existing Affordable Housing at Risk of Losing Affordability

Preservation of projects which are currently publicly subsidized, but at risk of losing affordability restrictions due to sale, termination, or public subsidy reductions.

2. New Construction and Conversion of Non-Residential to Residential Use*

Projects will be prioritized as follows:
i. Permanent Supportive Housing and Homeless Housing
ii. Veterans
iii. Low income (30% AMI to 80% AMI)
iv. Mixed Income (80% or below & 81% to market rate)
v. Transit Oriented Developments
vi. Moderate income (up to 120% AMI)

* If financially feasible, applications with deeper affordability will be given preference.

3. Rehabilitation of Existing Affordable Housing

Substantial rehabilitation of projects with affordability restrictions, including projects that have reached the expiration of their 15-year tax credit compliance period, but only in conjunction with new mortgage revenue bonds, tax credits, and/or other affordable housing resources to the great est extent feasible.

4. Rehabilitation of Market Rate Housing into Affordable Housing

Substantial rehabilitation that results in the conversion of market rate to affordable housing. Preference is given to those properties in the City of Fairfield that are either blighted or designated as nuisances to the community.

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8 1.2. Location policy. COF will encourage funding for low-income housing on sites not adjacent to existing, regulated affordable housing.

New construction of affordable housing including low income, or mixed income housing, with preference to projects in census tracts where the poverty rate is less than 30 percent or the tract is subject to ongoing displacement of residents due to gentrification; projects which may be considered Transit Oriented Developments (TOD) according to the California Department of Housing and Community Development’s (HCD) Transit Oriented Development Housing Program requirements; or development of sites identified as being appropriate for affordable housing in the Housing Element.

1.3. Eligible applicants. Applications are accepted from non-profit and for-profit housing corporations, joint ventures, limited liability companies, partnerships, and local governmental entities. Applicants must have previous experience owning affordable housing projects or partner with an entity that does have the required experience (Section 4.7.2). All applicants seeking a COF loan must include a non- profit managing general partner.

1.3.1. Related parties. COF prohibits members of the boards of directors of nonprofit corporations and their immediate and extended families from participating financially in their organization’s projects.

1.3.2. Noncompliance. Applications are not accepted from entities that have been notified that they are not in compliance with their current obligations on any loans or tax-exempt mortgage revenue bonds issued by COF or any other government entity. Noncompliance, at the discretion of COF, may consist of any monetary or non-monetary provisions, such as failure to submit required financial statements in a timely manner, failure to comply with the requirements of the regulatory agreement, including but not limited to resident service and property management obligations, and failure to correct in a timely manner any building deficiency noted by any government agency.

1.3.3 Community Housing Development Organizations (CHDOs). COF strongly recommends that non-profit organizations complete the necessary steps to become certified by COF as a CHDO. A portion of COF federal HOME funds may only be committed to CHDOs.

1.4. Eligible uses of funds. Loan proceeds may be used for the following purposes:

1.4.1. Acquisition/construction financing. Funds may be used to finance normal and customary acquisition, development, and construction expenses, subject to COF approval. If loan funds are used for the purchase of property, the purchase price must be the lower of the sales contract or the property’s as- is appraisal value determined by a certified appraiser not more than six months prior to the property’s acquisition.

1.4.2. Permanent financing. Funds may be used as permanent financing, generally combined with a construction loan.

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9 1.4.3. Predevelopment expenses. In very limited situations, and at COF’s discretion, COF will provide unsecured loans to experienced 501 (c) (3) nonprofit housing corporations for third-party predevelopment expenses such as appraisals, architectural, engineering, and environmental reports, and market studies necessary to obtain financial commitments. This financing is available only to permanent supportive housing or homeless projects. COF requires the assignment of all predevelopment work performed (whether paid for by COF or not) and/or the land purchase or option agreement.

1.4.4. Substantial rehabilitation. Funds may be used to finance units that do not provide safe and adequate shelter, and in their present condition endanger the health, safety, or well-being of occupants; usually costs should not be less than 25% of the value of the property after rehabilitation

1.5. Ineligible uses of funds. COF financing is not provided for the sole purpose of property acquisition; the acquisition and rehabilitation of properties needing less than substantial rehabilitation; land banking; or for the sole purpose of refinancing existing debt.

1.6 Application process. Pre-applications for COF financing are accepted twice a year according to the schedule approved by the City Council and Housing Authority Commissioners, which is published annually. COF will publish available funding a minimum of 45 days in advance of the pre-application deadline. After review of the pre-application and subject to funding availability, COF will request full applications from applicants who meet project priorities described in Section 1.1 of these guidelines. COF pre-application deadlines will occur generally twice a year in alignment with the California Tax Credit Allocation Committee’s (TCAC) 9% and 4% application rounds. COF reserves the right to hold a third application round if sufficient funding is available. Pre-applicants will receive confirmation within 45 days after the pre-application deadline if they have or have not been invited to submit a full application.

Section 2. COF Loan Terms and Conditions

The following loan terms and conditions apply to loans from COF, regardless of the source of those funds. The terms and conditions of the senior loan will be in accordance with California Debt Limit Allocation Committee (CDLAC) and TCAC requirements and the requirements of the lending institution specific to the project.

2.1. Loan to value. Total loan amount, including hard and soft debt, shall be the lesser of 90% combined loan-to-value rate or 100% of development costs. The property value shall be based on a MAI (Member, Appraisal Institute) appraisal that takes restricted rents and the value of below-market financing and tax credits into consideration. In a rehabilitation project, the property value shall be the after- rehabilitation value unless otherwise allowed by COF.

2.2 Debt coverage. To determine the debt service schedule for the COF loan, a minimum combined debt service coverage ratio of 1.15 is required. The cost of resident services shall be included with other operating expenses in the calculation of net operating income for this determination.

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10 2.3. Loan amount. The loan amount shall not exceed the difference between total development cost and the maximum potential equity and debt raised from private and public sources other than COF. COF shall determine the financial gap based on review of the application.

2.4. Interest rate. An interest rate up to 3% simple interest will be applied to COF loans. Simple interest is calculated on the loan amount outstanding from date of first disbursement, based upon a 360-day year and actual number of days elapsed. Under limited circumstances, a lower interest rate may be approved if the project can show an inability to service the debt at the standard rate. Such modification of the interest rate will be approved on an individual project basis.

2.5. Loan term. Loan terms may extend up to 40 years from the date of conversion to permanent financing or up to 55 years when required by senior public lenders.

2.6. Affordability term. The affordability term will be 55 years, with the exception of HOME assisted units which must meet Federal HOME regulatory requirements. The affordability term will be enforced through a recorded regulatory agreement. The affordability covenant remains in effect for not less than the agreed upon term regardless of the date upon which the COF loan is fully repaid.

2.7. Loan repayment. Loan payments are deferred during construction and during repayment of any deferred developer fee and are then repaid over the remainder of the term. Balloon payments are permissible in instances where cash flow cannot repay the debt.

2.7.1 Residual receipts loans are only considered if required by other state or federal funding sources.

2.8. Loan security. Loans are evidenced by a promissory note and secured by a deed of trust. If a loan is repaid prior to the term of a regulatory agreement, the regulatory agreement shall remain in effect for the remainder of the original term.

2.9. Subordination. At its discretion, COF may subordinate repayment, security positions, and affordability covenants to a conventional lender or other public agency lender.

2.10. Disbursement. COF loan disbursements are made after all funding has been formally committed to the project and closed. COF shall pay each complete disbursement request within twenty (20) business days after the disbursement request is submitted.

2.11. Retention. COF will hold back a minimum of ten percent of the COF loan until project completion and the expiration of the lien period.

2.12. Term of senior financing. The term of any permanent loan senior to COF’s loan will be amortizing and carry a term of no less than 15 years from the date of conversion to permanent financing.

2.13. Cost savings. All projects are subject to COF’s cost savings provisions whereby if there are cost savings in a project, as evidenced in the final cost certification, COF, Packet Page 558 of 798Attachment 2 Page 10 of 117

11 in its sole discretion, will withhold one half of the cost savings from the retention and the loan balance shall be reduced by the amount withheld.

2.14. Cost certification. At completion of construction, Borrower shall submit to COF a cost certification prepared by a qualified, independent auditor acceptable to COF.

The cost certification shall indicate the amounts actually spent for each item in the cost breakdown and shall indicate the final sources of funding. Should additional sources of financing be awarded or received beyond those disclosed during the initial underwriting, any additional sources shall be subject to the review and approval of COF and may result in a reduction of the COF loan amount.

2.15. Application and annual fees. Applicants must submit a Pre-Application and a full Application, if requested, according to the procedure outlined in Section 10. At the time a full Application for COF funds is submitted, the developer must pay a “good- faith” deposit of $10,000 to cover COF staff costs and expenses in determining the feasibility of the project and processing the loan application. In addition, COF will receive an Annual Administration Fee equal to 12.5 basis points (0.125%) of the original loan amount or of the original bond amount if bonds are issued, as compensation for monitoring compliance with regulatory restrictions and the administration of the loan. For projects receiving both bonds and gap financing, the Annual Administration Fee will be based on the bond issuance amount. COF receives, in advance, a prorated semi -annual installment at loan closing and equal semi-annual installments following the Effective Date of the Regulatory Agreement during the term of the regulatory period. For projects receiving COF gap funding, COF will also receive a Fee equal to $100 per each COF-funded unit per year (e.g., HOME, Low Mod Funds, etc.). For mixed-income projects, the Annual Administration Fee amount shall be determined based on the number of affordable units. Fees payable to COF for a bond issuance are outlined in Section 9.1.10. The Annual Administration Fee shall not exceed $25,000 annually on bond projects or $20,000 per year on non-bond projects.

Fees may be subject to restrictions imposed by the funding sources.

2.16. Loan commitment terms. The conditional loan commitment will expire 18 months after its execution.

Section 3: Underwriting Guidelines

The following underwriting guidelines apply to all projects financed with an COF loan, mortgage revenue bonds, or Tax Equity and Fiscal Responsibility Act (TEFRA) hearing issued by the Authorities.

3.1. Replacement reserves. Minimum replacement reserves should be consistent with TCAC, CDLAC, California Department of Housing and Community Development (HCD), and/or California Housing Finance Agency (CalHFA) requirements, as appropriate. In the absence of senior lender requirements, COF will require replacement reserves consistent with TCAC standards.

3.1.1. COF may require an annual audited financial statement including the balance, deposits, and withdrawals from the replacement reserve account. If the senior lender and/or tax credit investor does not require approval of withdrawals, COF shall reserve the right to approve.

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12 3.2. Operating reserves. Minimum operating reserves should be consistent with TCAC, CDLAC, HCD, and/or CalHFA requirements, as appropriate. In the absence of senior lender requirements, COF will require operating reserves consistent with TCAC standards.

3.2.1. COF may require an annual audited financial statement including the balance, deposits, and withdrawals from the operating reserve account. If the senior lender and/or tax credit investor does not require approval of withdrawals, COF shall reserve the right to approve.

3.2.2. For projects with tenant-based assistance and/or other operating subsidies that are renewable or terminate prior to the end of the COF loan, reserves in excess of the TCAC requirements may be required.

3.3. Operating expenses. Total operating expenses shall be no less than the minimum amounts allowed by TCAC. Operating expenses shall include sufficient funds to provide on-going security services, property management, and resident services (Section 4), and shall be subject to COF review and approval.

3.4. Developer fees.

3.4.1. Developer fees include all funds paid at any time as compensation for developing the proposed project. They include all development consultant fees, processing agent fees, developer overhead and profit, construction management oversight fees if provided by the developer, personal guarantee fees, syndication consulting fees, and reserves in excess of those customarily required by multifamily housing lenders such as CDLAC or TCAC.

3.4.2. For the 9% and 4% tax credit programs, maximum developer fees will be consistent with TCAC regulations. Applicant will be required to provide TCAC credit calculation with their application.

3.4.3. For projects not using bonds and/or tax credits, such as small supportive housing developments or small rehabilitation projects, the maximum developer fee shall be determined on a per unit basis: $25,000 per unit for the first ten units, $15,000 per unit for units 11 through 30, and $12,000 per unit for units 31 and above.

3.4.4. For tax credit developments, developers shall defer the maximum developer fee allowable under tax law and tax credit regulations. The deferred developer fee loan shall bear interest at no greater rate than the interest rate on the COF loan. COF may adjust the deferral requirement in its sole discretion to achieve a stronger financial structure for the project and/or repayment of the COF debt.

3.5. Asset management fees. Limited partner and/or general partner asset management fees may be paid from the project’s cash flow after the payment of operating expenses and reserves, and senior loan debt. Asset management fees may not exceed a combined total of $25,000 annually to start, but may increase at up to 3 percent annually and may accrue interest. Any additional LP or GP asset management fees in excess of the maximum allowed may be paid from cash flow after the payment of the COF loan(s) or from the developer’s portion of a residual receipt’s payment, if applicable.

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13 3.6. Revenue and operating assumptions. Proforma revenues shall be inflated at a maximum rate of 2.5 percent per year and proforma operating expenses at a minimum rate of 3.5 percent per year or at rates consistent with industry standards. A vacancy rate of 5 percent shall be applied in underwriting. Exceptions to this vacancy rate assumption may be granted for special needs projects.

3.7. Builder overhead and profit and general conditions. Combined contractor overhead, profit and general conditions shall be consistent with TCAC regulations for on- and off-site improvements and building construction, excluding builder’s general liability insurance. COF, in its discretion, may make exceptions for small developments.

3.8. Lease-up income. Cash flow from project operations subsequent to loan approval and prior to the conversion of construction to permanent financing must be shown as a source of income in the pro forma.

3.9 Commercial income. Cash flow from commercial income will not be included in calculating the debt service for affordable housing units. The income may be included as a means of paying off any deferred developer fee, as necessary.

3.10 Miscellaneous income. Income from laundry, vending, storage units, and/or resident parking fees, if any, will be included in project income for purposes of underwriting. Though resident parking fees may be including in project income, parking fees must be voluntary and cannot be required of tenants in affordable units.

3.11 HUD-subsidized projects. Purchasers of HUD developments with expiring Housing Assistance Payment (HAP) contracts or project-based vouchers (“opt-outs” or HUD preservation projects) will be required to continue to renew project-based assistance for the term of the COF Regulatory Agreement. Any project-based vouchers provided by FHSD will be underwritten separately.

3.12 Pets. Owners may charge a one-time deposit (not to exceed $250) for pets, but may not charge ongoing, monthly fees to tenants with pets.

3.13 Exceptions to guidelines. Exceptions to COF’S underwriting policies will be granted in limited situations if COF concludes a waiver is appropriate and the governing board approves the request. Exceptions shall be at COF’s sole discretion to determine the appropriateness of the request and whether to bring the waiver before the governing board.

3.14 Subsidy Layering Review. COF’s underwriting policies and procedures will at all times conform with 24 CFR 92.250 regarding maximum per-unit subsidy amount, underwriting, and subsidy layering.

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14 Section 4. Threshold Requirements

General Requirements

4.1. Affordability. All projects assisted by COF must include at least 10 percent of a project’s total number of units affordable to and occupied by very low-income households (those earning less than 50 percent of the Area Median Income [AMI], as determined by HUD) and, at least 5 percent of a project’s total number of units affordable to and occupied by extremely low-income households (those earning less than 30 percent of the AMI, as determined by HUD), based on financial feasibility.

Restricted rents shall be at least 10 percent below market rents for a given type and size of unit unless expressly permitted by COF. The maximum amount of subsidy per restricted unit cannot exceed HUD’s latest Section 234 limits for Fairfield California.

For occupied, regulated affordable developments, COF’s income targeting may be met through unit turnover in order to prevent displacement.

4.2 Financing eligibility. Projects must utilize mortgage revenue bond, Low Income Housing Tax Credit and/or other State and federal programs to be eligible for COF funds.

4.3 Unit distribution. Assisted units must be spread proportionately across all unit types and sizes. The set-aside units must proportionately reflect the mix of all units in the project, be distributed throughout the project and have the same floor area, amenities, and access to project facilities as market -rate units. The objective of the program is to provide a set-aside of units with lower rents, not to create special “low-income sections” within larger developments.

4.3.1 Expiration of affordability period. The rent of "in-place” tenants at the conclusion of the required affordability period will continue to be governed by the applicable affordability restrictions, so long as those tenants continue to live in the development.

4.4. Financing plan. A detailed description of the financing plan must be submitted, and should include proposed sources and uses of construction, permanent and bridge loan funds; rent or operating subsidies; and reserves as relevant. All projects must demonstrate financial viability supported over the term of the loan by a cash flow proforma, using the underwriting criteria of these policies. The preliminary commitment status of all funding sources must be described, and non-traditional financing arrangements explained in narrative attachments to the application.

4.5. Equity. Ten percent of the project’s development costs must be in the form of equity contributions for tax credit projects.

4.6. Nonprofit ownership. Developments owned by not-for-profit organizations are eligible to qualify for a welfare exemption pursuant to state law for the payment of property taxes. In consideration of that benefit, the IRS requires the nonprofit organization to be the managing general partner, and have material and on-going involvement in the project on a day-to-day basis. The nonprofit must also assist in the provision of resident services and must follow Board of Equalization guidelines and Packet Page 562 of 798Attachment 2 Page 14 of 117

15 requirements in their activities as managing general partner. COF will review and approve the qualifications of all nonprofit partners.

4.7. Owner qualifications and experience. COF will review and approve the qualifications of the applicant and all partners in the ownership entity.

4.7.1 Applicants are required to submit proposed or executed organizational documents of the applicant and ownership entity, including a detailed description of the role of each, if separate entities, throughout the regulatory period of the project. Applicant shall submit Balance Sheets, Income Statements, and Statements of Cash Flows with notes for the last three years.

4.7.2 General partners, including all administrative and managing general partners, or a principal in each, are required to have previous experience in the development and ownership of multifamily rental affordable housing projects.

Development is defined as having applied for and received affordable housing finance resources, including tax-exempt mortgage revenue bonds and low- income housing tax credits. Applicants are required to submit evidence of successfully participating in at least two projects over 40 units in size and subject to a recorded regulatory agreement for at least three years prior to the application. COF may require evidence projects have maintained positive operating cash flows and that all required reserves have been funded throughout the ownership period. Applicants who are unable to meet this experience requirement on their own will be required to partner with an entity that satisfies each experience threshold.

4.7.3 Subsequent ownership transfers will be subject to the Owner qualifications and experience requirements in 4.7.1 and 4.7.2. Property management requirements in Section 4.20 will also apply.

4.8. Identities of interest and related parties. The applicant must identify any persons or entities (including affiliated entities) that plan to provide development or operational services to the proposed project in more than one capacity, and provide full disclosure of “related parties,” as defined in the TCAC Regulations.

4.9. Payment and performance bonds. Payment and performance bonds may be required on projects where COF’s participation exceeds 15 percent of the total development cost of the project or where funding sources require them.

4.9.1. Projects financed in whole or in part with low-income housing tax credits and/or tax-exempt mortgage revenue bonds issued by the Housing Authority of the City of Fairfield, are not required to provide payment and performance bonds.

4.9.2. In the event payment and/or performance bonds are required by another party, whether or not required by COF, COF shall be named on the policies as a co-obligee.

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16 4.10. Insurance requirements.

COF requires the insurance coverage listed below. The City of Fairfield/City of Fairfield Housing Authority and its constituent entities shall be named as an additional insured on comprehensive general liability insurance.

The Borrower shall comply with the following insurance requirements:

 All insurance shall be secured from carriers admitted in California, authorized to do business in California, and in good standing with the California Secretary of State’s Office and the California Department of Insurance, or must be included on the California Department of Insurance List of Eligible Surplus Line Insurers.

Carriers must have a minimum rating of or equivalent to A:VIII in A.M. Best’s Insurance Guide.

 The Borrower shall deliver satisfactory evidence of property insurance at such time that such exposures are at risk, but in no event later than the Close of Escrow.

 The Borrower shall deliver satisfactory evidence of professional liability insurance once the design professionals are hired for the housing Project, or the Developer begins to provide professional services, whichever comes first. (For purpose of these insurance requirements and the indemnity provisions for “design professional(s)” shall include, but not be limited to, the following:
architects, structural engineers, civil engineers, geotechnical engineers and environmental consultants.)

 Said insurance shall be in a form acceptable to the COF and may provide for such deductible(s) as may be acceptable to the COF. Any self-insurance program and self-insured retention must be separately approved by the City. In the event such insurance does provide for deductible(s) or self-insurance, the Developer agrees that it and/or the entities with which it contrac ts, will defend (with counsel acceptable to the COF), indemnify and hold harmless the City in the same manner as they would have been defended, indemnified and held harmless if full coverage under any applicable policy had been in effect.

 Each policy shall be endorsed to stipulate, that the COF be given at least thirty (30) days written notice in advance of any cancellation for any policy of insurance required herein, excepting ten (10) days written notice for non- payment of premium. The Developer shall give the COF immediate notice of any insurance claim or loss which may be covered by insurance.

 The Borrower represents and warrants that the insurance coverage required herein will be required of the Developer’s contracted third parties, including but not limited to, general contractors, subcontractors, architects, engineers and other design professionals.

 The aforementioned insurance policies shall each contain a waiver of subrogation, for the benefit of the COF.

 The Borrower, or any entity with which the Borrower contracts, shall name the COF as additional insureds on the general liability insurance policy set forth Packet Page 564 of 798Attachment 2 Page 16 of 117

17 below, then the Additional Insured Endorsement shall contain language similar to the language contained in ISO form CG 20 10 11 85. In the alternative and in the COF’s sole and absolute discretion, it may accept both CG 20 10 10 01 and CG 20 37 10 01, or their equivalents, in one place of CG 20 10 11 85. The Borrower shall not be required to provide completed operations liability insurance during the development period, which completed operations insurance shall be provided solely by its general contractor and its sub-tier contractors.

Physical Requirements

4.11 Rehabilitation of existing buildings must provide substantial rehabilitation per the minimum requirements as outlined by the California Tax Credit Allocation Committee. The project must meet COF’s minimum construction standards (Exhibit 2) in which all major systems have an expected life of at least 15 years upon completion of the renovation.

4.12. Site control. The property must be in the control of the applicant at the time the application is filed. Evidence of site control must be accompanied by a title report not older than 90 days, and may be demonstrated by any of the following:

 Fee title
 Long-term leasehold interest, with the minimum term no less than the term of the COF regulatory agreement
 Option to purchase or lease, with obtaining financing the sole impediment to exercising the option
 Executed disposition and development agreement with a public agency  Enforceable contingent purchase or sale agreement, with obtaining financing the sole contingency
 Donation agreement

4.13. Land use entitlements. The applicant must demonstrate that the proposed project has met all discretionary land use entitlements such as rezoning, special use permit, or variances prior to COF issuing a funding commitment. Evidence may be in the form of a letter from a City building or planning official stating the project is appropriately zoned and in compliance with land use ordinances.

4.14. Site and building design. All projects may be subject to architectural review and developers may be required to provide renderings of the project with their application.

Developers of new construction projects are required to meet with City design review staff prior to applying to COF. Developers of rehabilitation projects may be required to meet with design review staff prior to Council/Board approval. Developments should adhere to the City Multifamily Design Standards, which provide guidelines for site layout, parking, building differentiation and orientation, and materials, among other design standards. Developers should incorporate the principles of universal design by improving accessibility and ease of use for all residents.

4.15. Resident services and community space. All properties, regardless of project type (i.e. senior, family, or large family), must devote a minimum of 1,200 s.f. to actual resident services/community space. For existing buildings, these requirements shall apply unless COF deems there to be significant physical constraints. Common Packet Page 565 of 798Attachment 2 Page 17 of 117

18 kitchens are required in resident services/community space, including refrigerator, stove, and garbage disposal.

When calculating whether these requirements are met, resident services space may include common kitchens, computer rooms, meeting rooms and general gathering space. It does not include public restrooms, leasing offices, laundry facilities and lobbies.

4.16. Playground equipment. For family projects of 50 or more units, a minimum of one school age-appropriate play structure is required. For family projects of 100 or more units, a minimum of one school age and one toddler-appropriate play structure is required. COF may require play equipment for smaller complexes depending upon the unit mix (e.g., anticipated number of children) and feasibility of site lay out.

4.17. Accessibility. Title 24 of the California Code of Regulations applies to all multifamily development, and the Fair Housing Act Amendment of 1988 applies to new federally funded projects. While there are differences between the two, in general, all new multifamily housing with four or more units must provide an accessible route into and throughout all ground floor dwelling units; accessible public and common-use areas; doors that allow passage by a person in a wheelchair; light switches, thermostats and other environmental controls in accessible locations; reinforcements in bathroom walls for later installation of grab bars; and kitchens and bathrooms that allow a wheelchair to maneuver about the space. All units accessible by an elevator are considered ground floor units.

4.17.1. If the development uses federal financial assistance, Section 504 of the Rehabilitation Act of 1973 will apply to the project as follows: a mi nimum of five percent of the total dwelling units (or at least one unit, whichever is greater) must be accessible for persons with mobility impairments to the maximum extent feasible. If the project is new construction, an additional minimum of two percent of the total units (or at least one unit, whichever is greater) must be suitable for occupancy by people with sensory impairments.

4.17.2. COF expects the developer to be familiar with and comply with accessibility provisions of state and federal law, which are more extensive than this short summary. Information on federal requirements may be obtained from the U. S. Department of Housing and Urban Development and on state requirements may be obtained from the State of California Building Standards Commission.

4.17.3. All developments must comply with California Tax Credit Allocation Committee accessibility regulations.

4.18. Security equipment. The project must have adequate exterior security lights and security cameras. Cameras must cover all points of access and all enclosed stairways. The project’s construction and operating budgets must include funds for the installation and operation of all security equipment. It is recommended that all projects have an operating security gate and fence as relevant to maintain a secure perimeter.

4.19. Sustainability standards. All projects are subject to the requirements of the State of California’s CalGreen code and Title 24 for energy conservation measures. In addition, new construction projects applying for 9% tax credits Packet Page 566 of 798Attachment 2 Page 18 of 117

19 must maximize their sustainability points. Note specific projects may have additional requirements outside of these guidelines. COF encourages energy- efficiency measures that are cost effective and expects all applicants to identify all applicable rebates and savings programs through entities such as Pacific Gas and Electric Company (PG&E).

Property Management Requirements

4.20. Property management. All projects must include on-site management staff during normal business hours, and projects over 50 units must include live-in on-site professional management.

4.20.1. Qualifications. Qualifications of the management entity must be submitted with the application and must demonstrate experience in the management of affordable rental housing projects. The proposed management firm, or a principal in the firm, is required to submit evidence of successfully managing at least five projects over 40 units in size and subject to a recorded regulatory agreement for at least three years prior to the application. COF requires that management firms have experience managing at least one project within the San Francisco Bay Area and that all management agents have a dedicated compliance officer and experience with layered subsidy financing (for projects receiving gap financing). Specifically, the proposed property management firm and the principal must submit their portfolio of currently managed properties and those managed within the last five years; identification of any properties defaulted or foreclosed upon during the management period; a list of projects with regulatory agreements restricting rents and the designation of subsidy sources for those properties; and the qualifications of key staff persons to be involved in the project.

 4.20.2. Management plan and budget. A comprehensive management plan and lease agreement shall be submitted and approved with the application. Once approved, neither the management plan nor the lease agreement may be changed without COF approval. See Exhibit 3, Management Agent & Resident Services Provider Checklist for further detail.

4.20.3. COF reserves the right to approve or disapprove the property management company, management plan, and lease agreement as part of the loan commitment process and upon any subsequent change, and annually monitors all projects for occupancy, affordability, management and social service requirements.

4.20.4. COF reserves the right to require the management company be changed if, in its sole discretion, the COF determines the management company is not following policies and procedures specified in the approv ed management plan or lease agreement.

4.21. Security patrols. All projects with 100 or more units are required to include vehicle-based security patrol services in the project’s operating budget and submit a security plan for approval.

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20  Security must be provided by an experienced, professional security patrol with significant, local residential experience. If the project is in an area with a neighborhood association or Property-Based Improvement District, COF may encourage the use of the same security patrol utilized by these organizations. Security firm and plan are to be approved by COF, and any changes are to be pre-approved by COF.

Security patrols may be required for projects with less than 100 units, at the discretion of the COF. COF reserves the right to request security reports at any time.

Projects with desk coverage 24 hours a day and seven days a week are not subject to this requirement.

4.22. Smoke-free environment. 100% of the buildings and units must be smoke free (including all forms of smoking that create secondhand smoke that impacts the health of nonsmokers). In addition, all indoor common areas must be smoke-free. Clearly marked designated smoking areas must be provided. Exceptions may be given to supportive services developments and existing tenants may be grandfathered in for rehabilitation developments.

Resident Services Requirements

4.23. Resident services and budget. COF requires resident services and on-site community space for residents in all projects and reserves the right to approve or disapprove the resident services provider. Resident services must be described in a preliminary plan attached to the application and be appropriate for the anticipated population. The firm providing resident services must be identified with a letter of intent which indicates a specific commitment to provide the services, including the number of hours and budget. Funding for a resident services coordinator should be included in the project’s operating budget. The executed funding agreement between the resident services provider and the applicant must be submitted. See Exhibit 3, Management Agent & Resident Services Provider Checklist for further detail.

The minimum requirements for resident services are as follows:

Family Developments -
Required Hours per Week 50-100 units 100-200 units
Coordinator On-Site Admin 4 6
After School Programming
2 hours/day x
4 days/week

8 8
Additional Programming 3 6
TOTAL Hours per Week 15 20

Senior Developments -
Required Hours per Week 50-100 units 100-200 units
Coordinator On-Site Admin 4 6
Senior Programming 11 14
TOTAL Hours per Week 15 20

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21 Resident services requirements for projects of less than 50 units or more than 200 units will be determined on a project specific basis. Dependent on housing type, resident services shall be provided by an COF approved provider.

4.23.1. Types of services/reporting. Diversity of resident services is encouraged. The Multifamily Resident Services Compliance Reporting and Procedures (Exhibit 4) include details on the types of services accepted, and reporting requirements. Please note that an after-school component is required in all family projects.

4.23.2 Mixed-Income. For projects that include market-rate units, the number of resident services hours required will be determined based on the number of affordable units and the services required will be based on the needs of the low-income residents.

4.23.3. Special Needs. For special needs projects or for projects with more than 20% of the units affordable to extremely low income (ELI) households, more intensive services will be required. If intensive services for permanent supportive housing or special needs populations will be provided, a supportive services plan, contract and budget will be required and evaluated as part of the long-term viability of the project. COF shall require, at minimum, that front line staff delivering case management services have a College Degree in a field related to social services and one year of experience working with the special needs’ population proposed for the specific property.

Compliance Requirements

4.24. Ongoing compliance. All projects must be in compliance with COF’s and applicable federal and State funding, reporting and record-keeping requirements including but not limited to: resident services, property management, security, and income certification requirements; and HUD required physical inspection standards.

COF will conduct compliance reviews of the project annually, or more often if necessary, at the sole discretion of COF.

4.24.1 Recertification. Project owners must recertify the eligibility of residents as required by the appropriate Federal, State, or other funding source.

4.24.2. Requirements. Requirements are consistent with the California HCD MHP program and the Procedures Manual. The manual includes information on the following:

 Project set-up requirements
 Project close-out requirements
 Leasing procedures
 Ongoing certifications
 Compliance monitoring reviews
 Physical inspections
 Response to compliance violations

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22 4.24.3 Affirmative marketing. Project owners must follow COF’s Affirmative Marketing Policies (Exhibit 5) that require outreach to groups least likely to apply for the housing based on local demographic information, sufficient marketing time prior to lease up, and lotteries for most, new affordable units.

4.24.4. Regulatory agreement violations. Compliance Violations and Actions and HUD Property Standards (Exhibit 6) shall be included in the COF loan and bond Regulatory Agreements recorded on the property. COF shall have the right to enforce the actions detailed in Exhibit 6 and/or pursue any other legal remedy available to fully enforce all provisions of the Regulatory Agreements.

The Borrower shall pay to COF the additional program compliance fees and expenses set forth in Exhibit 6 in reimbursement of the amounts and time expended by COF to ensure Borrower’s compliance with State statutes and federal regulations and Borrower’s obligations under the Regulatory Agreements as a result of the Borrower not meeting its obligations and reporting requirements.

No compliance fee will be assessed provided the violation is corrected within the specified corrective time period as detailed in Exhibit 6. The second and subsequent violations will be assessed compliance fees as detailed in the Tenant Eligibility and Affordability Violations and HUD Property Standards tables.

4.24.5 Conflicts with State or Federal Regulations. All projects and applicants must adhere to all State and Federal laws, rules, and regulations including but not limited to funding eligibility requirements. To the extent these COF policies are in conflict with State and Federal laws, rules, and regulations, State and Federal laws shall control, and all project applicants shall be deemed to be aware of all State and Federal requirements.

Section 5. Third Party Reports

All third-party reports are due at the time a full application is submitted to COF.

5.1. Appraisal. All appraisers must be state-certified MAI appraisers who do not have an identity of interest with any member of the development team or sponsor.

Appraisals must be prepared no earlier than six months prior to the date of the land or building’s purchase contract, or if land or buildings have not been purchased, no earlier than six months prior to the COF application date. Appraisals prepared for the project’s lender(s) may be accepted with COF’s approval.

5.1.1. Appraisals for rehabilitation projects must include “as-is” and “post- rehabilitation” values. COF may use TCAC’s regulations regarding third party debt rather than the appraised value. Appraisals for new construction must include a land valuation and completed value. The property value shall be based on an appraisal that takes restricted rents and the value of below-market financing and tax credits into consideration, as applicable.

5.2. Market study. COF requires a Rent Comparability Study at time of full application. Market studies consistent with CDLAC and/or TCAC requirements, may be requested when available.

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23 5.3. Rehabilitation assessment. A Physical Needs Assessment (PNA) of the property must be submitted that details the conditions and remaining useful life of the building’s major components, including but not limited to electrical, plumbing, HVAC, foundation, and roofing. The scope of rehabilitation work identified in the application should match the findings of the Physical Needs Assessment.

5.3.1. The PNA must be prepared by the project architect or a qualified independent third party, neither of whom has an identity of interest with any member of the development team or sponsor. The PNA must be performed no earlier than 120 days prior to the application.

5.3.2. The PNA shall include a 15-year reserve study, which indicates the expected dates and costs of future replacements of all major building components that are not being replaced immediately. The PNA shall also include a schedule of reserve contributions needed to fund those replacements.

5.4. Environmental review. All projects must be reviewed for compliance with the California Environmental Quality Act (CEQA). Projects expected to receive federal funds, such as the HOME Investment Partnership Program or Community Development Block Grants, must also comply with HUD’s National Environmental Policy Act (NEPA) requirements (outlined in 24 CFR Part 58), and HUD’s environmental criteria and standards (outlined in 24 CFR Part 51). Additional environmental reports may be required pursuant to SHRA’s review, including, but not limited to, arborist reports, cultural resources reports, wetland delineation report, etc.

5.4.1. Federal regulations prohibit financing commitments, or any form of discretionary or choice-limiting action, by COF until the completion of the NEPA review, and physical work on the project must not begin prior to NEPA review.

5.4.2. NEPA and CEQA environmental laws differ in their requirements. Project approval under CEQA does not constitute NEPA project approval, and vice versa. Requirements for NEPA review for HUD-funded projects differ from NEPA requirements for other federal agencies. Therefore, previous NEPA review may not be sufficient to meet HUD NEPA requirements. NEPA requirements for HUD-funded projects are outlined in 24 CFR Part 58.

5.4.3. For new construction, demolition, or buildings that include or are adjacent to areas with historic or biological resources or occur in an area which may present hazardous or nuisance conditions for occupants, 90 days or more may be required to prepare and process environmental documentation and clearances.

5.5. Phase I or Phase II environmental assessments. Applications must include a Phase I Environmental Assessment following the standards outlined in the American Standards of Testing and Materials (ASTM) to discover the potential presence of on - site and neighboring property contamination. The assessment must have been completed within six months of the project’s application. If the Phase I assessment indicates the need for further study, a Phase II report must be submitted. The cost of any remediation must be included and discussed in the project’s budget. If necessary, a No Further Action Letter or remediation plan that outlines how the site will be cleaned up to meet standards for unrestricted residential use or residential use with controls will be required for completion of NEPA review.

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24 5.6. Lead-based paint. All applications for rehabilitation projects built before 1979 involving existing structure(s) and any new construction project that involves the demolition of existing structure(s) must submit a lead-based paint report completed within the previous 12 months. For occupied sites, assessment must include minimally invasive sampling of readily accessible surfaces. Lead testing must be conducted in accordance with HUD standards. If lead-based paint is present on the project site, a remediation plan or identification of the protocols that will be followed (including a citation to the law, regulation, or guidance document where the procedure is described) will be required for completion of NEPA review.

5.7. Asbestos. All applications for rehabilitation projects involving existing structure(s) built before 1979 and any new construction project that involves the demolition of existing structure(s) must submit an asbestos assessment completed within the previous 12 months if specified as necessary in the Phase 1 report. For occupied sites, assessment must include minimally invasive sampling of readily accessible surfaces. Asbestos testing must be conducted in accordance with AQMD standards. If asbestos is present on the project site, a remediation plan or identification of the protocols that will be followed (including a citation to the law, regulation, or guidance document where the procedure is described) will be required for completion of NEPA review.

5.8. Soils report. All new construction projects must submit a soils report that characterizes the subsurface soils in relation to the proposed residential construction.

Soils reports must have been completed no more than one year prior to the application’s submission. The soils report must be prepared by a geotechnical engineer licensed by the State of California.

5.9. Pest report. All applications for rehabilitation projects must submit a pest report completed within the previous 6 months. If the report shows repairs necessary, these costs must be included in the construction budget and scope, and a clear pest report will be required at the conclusion of construction. The pest report must be prepared by a company licensed by the State of California Pest Control Board .

5.10. Landscape plan. A landscape plan prepared by a licensed, third-party professional shall be required for all projects.

5.11. Relocation. A relocation plan shall be submitted for any project that contains persons residing within the project at the time of the project application to COF, and is subject to review by COF, the City and County. The components of the relocation plan shall be determined by the funding source for the project, and whether relocation will be temporary, permanent, or both. Plans shall be completed and carried out by a qualified third party in accordance with all state and/or federal relocation requirements associated with the funding source, unless an in-house relocation expert is approved by COF. COF does not permit keeping income-restricted units vacant to accommodate on-site relocation at any time prior to reservation of tax credits, per TCAC guidance.

5.11.1 In the absence of state or federal funding in the project, plans shall comply with COF’s Guidelines for Preparation of Relocation Plans for Multifamily Developers Using COF Financial Assistance (See Exhibit 7). Moving expenses shall be calculated according to the HUD standard for moving allowances, updated annually, based on the number of rooms. Relocation is considered an integral part of the project approval process and its cost estimates must be included in the project budget.

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25 5.11.2 A relocation plan must be prepared prior to submission of the full application by a qualified third party. COF discourages projects where more than 20 percent of residents will be permanently relocated (except in instances of overcrowding).

5.11.3 Depending upon the scope of the rehabilitation, COF may require implementation of relocation plans be overseen by a relocation specialist approved by COF.

Section 6. Special Regulatory Requirements

6.1. Prevailing wages. Current state and federal law require that prevailing wages be paid for projects receiving benefits from a governmental entity.

6.1.1. The current major exemption from state prevailing wages is if the subsidy is a below market rate loan on a project where 40% of the units are affordable at 80% of Area Median Income for a minimum of 20 years.

6.1.2. Projects receiving federal HOME funding for twelve or more units or federal CDBG funding for eight or more units are subject to the payment of federal (Davis Bacon) prevailing wages.

6.1.3. If a project is subject to both state and federal (Davis Bacon) prevailing wages, the developer, contractor, and all subcontractors shall pay the higher of the state prevailing wage or Davis Bacon for each construction trade, and must comply with the most restrictive requirements as specified by law. The state prevailing wage law does not recognize the exemptions under the federal HOME and CDBG programs.

6.2. Section 3 (local hiring) Minority Business Enterprises/Women Business Enterprises (MBE/WBE) requirements. Applicants using federal funding for housing, such as HOME or CDBG, are subject to the U. S. Department of Housing and Urban Development’s (HUD) Section 3 requirements to hire low- and very low-income persons and provide economic opportunities to local small businesses and minority- and women-owned businesses to the greatest extent feasible. All section 3 covered contracts, loans, and grants shall include the “Section 3 Clause” as found in 24 CFR 135.38.

Section 7. Affordability and Rent Calculations

7.1. Income eligibility. COF bases its affordability calculations on the Area Median Income (AMI) of Solano County. The AMI is established annually by HUD.

7.2. Rent calculations. The maximum rent to be charged for an assisted unit may not exceed 30 percent of the median income limits for household size appropriate for the unit, less an allowance for utilities. The most current schedule of rents and utility allowances will be provided by COF.

7.3 Rent increases. For projects that set their rents below the maximum allowable rent levels, subsequent rent increases cannot exceed 10% annually.

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26 7.4. Utility allowances. The methodology for determining utility allowances depends upon the source of the funds used to finance the project. Utility allowance schedules are required at full application submission and must be updated annually.

7.4.1 Projects that do not receive HOME Investment Partnership (HOME) funds:

Utility allowances are determined by the Housing Authority based on building type and energy used for heating and appliances (gas or electricity).

Developments meeting verifiable energy efficiency standards, completed by a qualified energy analyst described in 7.4.3, may present an alternate utility allowance for COF approval based on energy usage of comparable projects.

Developers will be notified by COF of increases in utility allowances published by the Fairfield Housing Authority by beginning of the calendar year.

7.4.2 Projects that received a commitment of HOME funds:

7.4.2a Projects using HOME funds and Low-Income Housing Tax Credits that are either new construction and adaptive reuse developments or existing tax credit developments shall use the California Utility Allowance Calculator (CUAC) energy consumption model, completed by a qualified energy analyst.

7.4.2b Projects that receive HOME funds and do not fall into a category described in 7.4.2a must use the HUD Utility Schedule Model or an alternate utility allowance for COF approval based on energy usage of comparable projects, completed by a qualified energy analyst, at full application submission and update annually for COF approval.

7.4.3 A qualified energy analyst must meet the current qualification requirements of TCAC.

7.5. Excess utility charges. Utility charges normally paid by owners, such as water, sewer, and garbage collection, may not be passed through to tenants as an add-on to their contracted rent.

7.6. Renters’ insurance. Owners may not make payment of rental insurance premiums a condition of occupancy. If owners require renters’ insurance, the policy premium must be deducted from the tenant’s rent. The owner may not add the insurance premium to the tenant’s lease in either the initial or subsequent years.

Section 8. Calculation of Restricted Units

COF utilizes a combination of the following methods to determine the number of units regulated as a result of its financial assistance to the project. COF policy for the minimum number of units regulated is as follows:

 At least 15 percent of the units must be rented to and occupied by very low- income households and 5 percent of the total number of units must be rented to and occupied by extremely low-income households based on financial feasibility, regardless of the funding source
 The proportion of regulated units can be no less than the proportion of COF funding to the project’s total development cost
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27  The maximum amount of subsidy per restricted unit cannot exceed HUD’s Section 234 limits.
 When multiple funding sources are layered together, the more restrictive income and affordability standards will be applied.
 When HOME funds are provided, the cost allocation methodology shall be applied, consistent with HOME regulations at 24 CFR Part 92 .205(d)(1).

Section 9. Mortgage Revenue Bond Policies

This section summarizes policies relating specifically to mortgage revenue bonds issued by the Authority (defined below). The lending requirements outlined elsewhere in these policies also apply to mortgage revenue bond projects, with the exception that Section 2 and 4.1, apply only to projects that also have an COF loan.

9.1 General Requirements

9.1.1. Authority to issue bonds. Federal, state, and local legislation authorizes the issuance of mortgage revenue bonds by local governments to finance the development, acquisition, construction and/or rehabilitation of multifamily rental projects. The interest on the bonds is exempt from federal and state taxation. As a result, bonds provide below-market financing for qualified rental projects located in the City of Fairfield and County of Solano. This program is administered COF and uses tax-exempt mortgage revenue bonds issued by the following entities (Authorities):

 Fairfield Housing Authority

9.1.2. Goals. The goals of the program are to increase and preserve the supply of affordable rental housing in the City of Fairfield and County of Solano; encourage economic integration within residential communities; maintain a quality living environment for the City of Fairfield and County of Solano residents; provide tenant services to the residents of assisted projects; and when public funds are committed toward the project, leverage private sector funds to the maximum extent possible.

9.1.3. Liability. There is no direct legal liability to COF in connection with the issuance or repayment of bonds; there is no pledge of the City of Fairfield or the Fairfield Housing Authority’s faith, credit or taxing powers or a moral obligation of any of the foregoing, within the meaning of any constitutional or statutory provisions. The bonds do not constitute a general obligation of the issuer because the security for repayment of bonds is limited to specific private revenue sources, such as project revenues and other sources specified under each project’s financing. Project loans are generally secured by a first deed of trust. The program is completely self- supporting, and the developer is responsible for the payment of costs of issuance and all other costs under each financing.

9.1.4. Bond rating. The bonds issued under the program should generally be rated "AAA," or its equivalent highest rating category, with the minimum rating being "A", or its equivalent, from the following nationally recognized rating agencies: Moody’s Investors Service, S&P Global Ratings, Fitch Packet Page 575 of 798Attachment 2 Page 27 of 117

28 Ratings, Inc. or Duff & Phelps Credit Rating Company. The same rating requirement applies in the case of a substitution of existing credit facility for bonds that are outstanding.

9.1.5. Private Placement. The rating requirement in Section 9.1.4 is waived if the entire bond issue is privately placed with accredited investors (as generally defined under Regulation D of the Securities Act of 1933 or qualified institutional buyers (as defined under Rule 144A of the Securities Act of 1933) who would be required to sign an investor letter (Investor Letter) certifying the investor's sophistication to understand the risk associated with the purchase of the debt instrument and restricting transfer of the bond issue to other accredited investors or qualified investors in denominations of $250,000 and greater. While the note remains unrated, its transferability will be restricted to accredited or qualified institutional buyers who sign an Investor Letter and who would represent to COF that they are accredited investors or qualified institutional buyers, are buying for investment and not for resale, and have made due investigation of the information they would deem material in connection with the purchase of the bonds.

9.1.6. Bond amount. There are no minimum or maximum limits on the amount of bonds that can be issued by the Authorities. However, the minimum amount for a project is often determined by the overall cost effectiveness of the financing, which includes payment for the costs of issuance, services of the financing team members, rating fees, etc. The maximum amount is generally set by the amount of debt the project’s cash flow can support. COF will consider multiple properties as part of a single bond financing.

9.1.7. Use of bond proceeds. Projects must consist of complete rental units, including kitchens and bathrooms. Loan funds may be used for costs of land acquisition (limited to less than 25% of bond proceeds), construction, improvements, architectural and engineering services, construction interest, loan fees, and other capital costs of the project incurred after the date that is 60 days prior to the bond inducement date specified in Section 9.4.2. No more than 2% of the bond loan can be used to finance the costs of issuance, such as the services of the financing team members, rating and printing of bonds, bond allocation, etc. Pursuant to federal requirements, if bonds are used for acquisition and rehabilitation, an amount equal to at least 15 percent of the portion of the acquisition cost of the building and related equipment financed with the proceeds of bonds must be used for the rehabilitation of the project.

9.1.8. Guarantees. If the proposed Borrower is a single asset entity, another party may be required to guarantee the Issuer's rights to indemnification under the applicable Regulatory Agreement and Loan Agreement. Additional guarantees may be required by other parties.

9.1.9. Transfer. Projects will be subject to certain requirements for transfer. Upon original issuance, the developer must enter into an agreement that restricts any change in ownership, either addition of new partners/investors or the elimination of partners/investors, without prior COF approval. COF will determine if the proposed ownership change adversely affects the project’s overall financial viability. Financial, Packet Page 576 of 798Attachment 2 Page 28 of 117

29 development, and management experience must be equal to or superior to the existing development/ownership team; otherwise, change in ownership will not be allowed. Any subsequent ownership transfers shall be subject to the Owner's qualifications and experience, Property management, and Resident services requirements outlined in Sections 4.7, 4.20, and 4.23, respectively.

9.1.10. Bond issuance fees. COF receives compensation for its services in preparing for a bond issuance by charging an issuance fee of 25 basis points (0.25%) of the bond issuance amount payable at the bond closing. In addition, COF receives an Annual Administration Fee equal to 12.5 basis points (0.125%) of the original bond issuance amount as compensation for compliance monitoring of regulatory restrictions and the administration of outstanding bonds. COF receives, in advance, a prorated semi-annual installment at bond closing and equal semi-annual installments following the Effective Date of the Regulatory Agreement for the later of the term of the regulatory period, or 55 years after the date on which at least fifty percent (50%) of the units in the project are first occupied. COF will also receive a Fee equal to $100 per each COF-regulated, non-bond unit per year. For mixed-income projects, the Annual Administration Fee amount shall be determined based on the number of affordable units. The Annual Administration Fee shall not exceed $25,000 annually.

9.1.11. Welfare exemption. Developments owned by not-for-profit organizations are eligible to qualify for a welfare exemption, pursuant to State law, for the payment of property taxes, and therefore the following additional requirements are specified for projects proposed to be owned by not-for-profit organizations. The not-for-profit organization must be the provider of resident services and/or other services (management, maintenance). In all circumstances, the not-for-profit organization must have material and ongoing involvement in the project on a day-to-day basis.

9.1.12. Annual reporting.

Owners of multifamily rental projects which receive a bond issuance shall comply with the annual reporting requirements of both CDLAC and the California Debt and Investment Advisory Commission (CDIAC).

CDLAC’s reporting requirements are referenced in Section 5145 of CDLAC Regulations, adopted December 15, 2016.

CDIAC’s reporting requirements are referenced in Section 8855(k)(1) of the California Government Code, amended January 1, 2017.

9.2 Types of Bonds

9.2.1. Tax-exempt or taxable bonds. The Authorities may issue either tax- exempt or taxable bonds. Taxable bonds would generally be issued only in combination with tax-exempt bonds. Taxable bonds do not require an allocation of bond authority from CDLAC.

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30 Tax-exempt mortgage revenue bonds (Non-Refunding) require an allocation of bond authority from CDLAC. To obtain an allocation, A development entity must apply to CDLAC on behalf of the COF. Submittal of the application must be coordinated with COF. The developer must pay all required CDLAC fees in advance of application submittal .

The interest on taxable bonds is not exempt from federal taxation. These bonds are not subject to federal volume cap limitations and therefore do not require allocation authority from CDLAC. Taxable bonds can be used in combination with 9% low-income housing tax credits awarded by the Tax Credit Allocation Committee. Taxable bond issues must meet all applicable requirements of these Policies (including rating requirements) and any such additional regulations which may, from time to time, be promulgated by COF.

9.2.2. 501 (c)(3) bonds. The Authorities may issue 501(c)(3) bonds on behalf of qualified not-for-profit organizations. 501(c)(3) bonds are tax- exempt but do not require an allocation from CDLAC. 501(c)(3) bonds cannot be used with the Low-Income Housing Tax Credit Program. The Authorities shall only issue 501(c)(3) bonds for qualified not -for-profit organizations that are actively involved in the development and operation of multifamily projects and have adequate staff to carry out the proposed development. Not-for-profit organizations must be involved in the day-to- day operations of the project and have the financial ability to operate, contribute to the project, and to avoid default. They must be the final recipient of at least 70 percent of the development fee for the project. Not- for-profit organizations must be able to demonstrate development of successful projects. Board members and their immediate and extended families cannot participate (profit) financially from the proposed t ransaction.

The minimum affordability period shall be 30 years for 501(c)(3) bond issues.

9.3 Affordability Requirements

9.3.1. Term of Rental and Affordability Restrictions. The project must remain as rental housing and continuously meet the underwriting requirements for operating reserves, operating expenses and developer fees as provided in Sections 3.2, 3.3 and 3.4 for the longest of (a) 55-years from the later of the date fifty percent (50%) of the units in the project are first occupied or the date of the original issuance, (b) as long as the bonds remain outstanding, or (c) such period as may be required in the opinion of Bond Counsel to meet federal or state law. COF reserves the right to impose additional affordability restrictions if the COF determines it necessary to be competitive in the state allocation process. Projects that are financed with Low Income Housing Tax Credits will be required to meet the requirements of TCAC.

A bond regulatory agreement containing the rental and affordability restrictions will be recorded against the property and must be complied with by subsequent owners. The bond regulatory agreement will incorporate the CDLAC resolution by reference and as an attachment. The Regulatory Agreement will be terminated upon expiration of restrictions or in the event Packet Page 578 of 798Attachment 2 Page 30 of 117

31 of casualty loss or foreclosure, and the subsequent retirement of bonds as a result of foreclosure, and with the consent of CDLAC for certain projects financed with cash flow permanent bonds.

9.3.2. Income Restrictions. To be eligible for new tax-exempt bond financing, federal law requires that the project meet one of the following conditions:

A. A minimum of 20% of the units in the project must be set aside for occupancy by households whose incomes do not exceed 50% of AMI as adjusted for family size; or

B. A minimum of 30% of the units in the project must be set aside for occupancy by households whose incomes do not exceed 60% of AMI and 10% set aside for households whose incomes do not exceed 50% of AMI, as adjusted by family size. (Reference Cal H&S 34312.3)

C. A non-competitive CTCAC project that includes low-income units targeted at greater than 60% of AMI shall have average targeting that does not exceed 59% of AMI.

Project owners must certify their tenants’ eligibility annually. If a tenant is no longer eligible, the next available unit must be rented to a new eligible tenant and the current tenant’s rent can be raised to a market level. A unit occupied only by students may not count towards the set-aside requirement.

Affordability definitions are based on the AMI for the County of Solano as established by the U.S. Department of Housing and Urban Development.

The median income is subject to change annually. Household size is determined according to CDLAC and/or CTCAC regulations. The more restrictive standard must be used for each project as appropriate.

9.3.3. Rent Restrictions. According to TCAC regulations, the maximum rent for the set-aside units may not exceed one-twelfth of 60% of AMI on average. To comply with minimum federal set aside requirements, either a. a minimum of 40% of total units must be both rent-restricted and occupied by households whose incomes a re 60% of AMI or less, adjusted for family size;
b. a minimum of 20% 0f the units must be both rent-restricted and occupied by households whose incomes are 50% of AMI or less, adjusted for family size;
c. a minimum of 40% of the units must be both rent-restricted and occupied by households whose incomes are 80% of AMI or less; adjusted for family size, and the average income and rent limitation must not exceed 60% of AMI.

In the event tax-exempt bonds are used with Low Income Housing Tax Credits, or any public funds, the more restrictive rents apply. The affordability of restricted units in relation to the project's market rents will be considered as part of COF’s approval of the financing. The maximum rent Packet Page 579 of 798Attachment 2 Page 31 of 117

32 amounts will also apply to the contract rent if Housing Choice Voucher (HCV) tenants occupy the set-aside units.

Please see https://www.treasurer.ca.gov/ctcac/rentincome/21/rent/rent- limits-pis-from-04012021.pdf for a list of Solano County maximum rents according to income level and household size.

9.3.4. Expiration or termination of Qualified Project Period. All projects shall comply with State Health and Safety Code 33760(d), 34312(d)(2), or 52080(g), as applicable, or any successor provisions.

9.3.5. Refundings. COF will allow refundings of bond issues that meet the following conditions:

A. Property must follow the current Regulatory Agreement and have no major immediate repairs required to the project, as determined by COF, or any major repairs will be completed within 12 months of the refunding, at the discretion of COF. All financing fees and other appropriate policies shall apply.

B. Projects must demonstrate that the proposed refunding furthers the City/County’s housing goals.

C. The project sponsor agrees to cover all costs and financing fees of the Issuer and COF.

D. Additional Affordability Restrictions. Additional public benefit in the form of deeper income targeting, additional rent restrictions, extension of the term of restrictions, additional number of restricted units, or any combination thereof, will be negotiated in connection with refunding’s or debt restructurings, including substitution of credit enhancement, of existing bond issues. The level of additional restrictions will be determined in the context of the overall financial feasibility of each financing and the financial benefit of the refunding/restructuring to the project owner. Should the bond restructuring result in an extension of the maturity of the bonds, a minimum of 10% of the units in the project shall be set aside for occupancy by households whose incomes do not exceed 50% of or 60% AMI, as adjusted for family size with rents at affordable levels for at least 15 years from the date of the refunding/restructuring or as long as the bonds remain outstanding.

The maximum rent amounts will also apply if the set-aside units are occupied by Section 8 tenants. A non-competitive CTCAC project that includes low-income units targeted at greater than 60% of AMI shall have average targeting that does not exceed 59% of AMI.

COF reserves the right to impose requirements in addition to the regulatory agreement extension. All specifics of refunding proposals must be approved by the appropriate Authority.

9.4 Application and Issuance Process

9.4.1. Application. Applicants must submit a Pre-Application and a full Application, if requested, according to the procedure outlined in Section 10.

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33 At the time of a full application for bonds, the developer must pay a $10,500 “good-faith” deposit to cover COF staff costs (at $100 per hour) and expenses in determining the feasibility of the proposed bond issuance, reissuance or restructuring. COF cost and expenses are in addition to COF’s issuance fee.

9.4.2. Inducement Resolution. All new-money projects must be induced.

An inducement resolution is a conditional expression of intent by the Authority with respect to the potential issuance of bonds for the project.

Approval of the inducement resolution establishes, through the public record, the date from which project costs incurred may be determined to be eligible for financing under the program. Therefore, applicants are encouraged to induce their projects as soon as practical to identify the project, its location, maximum number of units, the maximum amount of financing, and the ownership entity. To request an inducement resolution, the developer must complete and submit the Pre-Application, followed by a full Application if so, requested by COF.

Adoption of the inducement resolution does not represent any commitment by the Authority, COF, or the applicant to proceed with the financing. The Authority and COF retain absolute discretion over the issuance of bonds through adoption of a resolution authorizing such issuance.

9.4.3. TEFRA Hearing and Approval. In order for interest on the bonds to be tax-exempt and in accordance with the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982, Section 147(f) of the Internal Revenue Code of 1986, the issuance of bonds must be approved by representatives of the governmental unit with jurisdiction over the area in which the project is located after a public hearing for which a reasonable public notice was given. Therefore, federal regulations require that the City Council approve the issuance of bonds by the Authorities as the elected legislative body of the City. The purpose of the public hearing is to provide an opportunity for interested persons to express their views on the proposed bond issuance and on the nature and location of the project.

9.4.4. Credit Enhancement. The preferred method of obtaining the required rating on the bonds in accordance with Section 9.1.4 is through the provision of additional outside credit support for the bond issue by rated, financially strong private institutions, such as bond insurance companies; domestic and foreign banks, and insurance companies; savings and loans and smaller commercial banks willing to pledge ratable collateral to the bond trustee; FHA mortgage insurance or co-insurance, etc. The rating on the bonds is determined by the credit worthiness of the participating credit enhancement provider.

The applicant is required to identify and obtain credit enhancement for each public bond issuance. As the primary source of security for the repayment of bonds, the credit enhancement provider approves the borrower (credit, financial capability, experience, etc.), the project, and its feasibility, including the size of the loan and the terms of repayment, using its own underwriting criteria.

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34 9.4.5. Rated Bonds without Credit Enhancement. Fixed-rate bonds can be issued without credit enhancement if the proposed financing structure results in the required rating on the bonds by a rating agency.

9.4.6. Interest rate. Financing shall be structured to ensure the lowest possible interest rate for the bonds in the current market. Bonds that are offered at a “premium” to generate additional proceeds are not allowed.

9.4.7. Loan to value. COF will not issue bonds for projects where the combined loan to value exceeds 90% of the stabilized appraised value.

9.4.8. Other issuers. The California Housing Finance Agency does not require local governments to hold public hearings on their behalf to issue bonds. For other issuers, COF, in limited situations, will allow such issuers to issue bonds for multifamily housing projects located within the City of Fairfield. Applicants considering the use of other issuers should contact COF prior to proceeding with the project. The required City approval of a bond issuance by other issuers will be recommended after COF review of the developer, the project, and the overall cost-effectiveness of the financing proposal.

COF affordability levels, procedures, and requirements will apply to projects using other issuers. Other issuers must demonstrate that they have conducted proper due diligence of the developer and project comparable to COF’s process. COF will be reimbursed for their review of the project and preparation of the TEFRA hearing and notice, not exceeding 0.25 percent of the bond issuance amount upon issuance of the bonds (Section 9.1.10). As mutually agreed upon, an Annual Administration Fee will be charged (Section 9.1.10) when COF monitors compliance with the regulatory restrictions on the project.

9.4.9. Bond Counsel. COF will obtain a bond counsel firm and two alternate firms. Bond counsel will prepare the necessary legal documents, provide an opinion regarding the validity of the bonds and their tax exemption, and provide legal advice on all relevant issues to best protect the interests of the City and the Housing Authority.

The bond counsel specifically represents the interests and concerns of the Authority and the City in ensuring the integrity of the bond transaction. The project sponsor may, at its own expense, add additional members to the finance team to represent its interests.

9.4.10. Bond Underwriter/Remarketing Agent (A financial institution which purchases the bonds for resale). When required for the transaction, a bond underwriter/remarketing agent is to be proposed by the developer, subject to review and approval by COF. The underwriter is to be a nationally recognized firm experienced in underwriting mortgage revenue bond issuances. Approval criteria will include the experience of the firm and staff, cost of services, underwriting abilities, financial qualifications and abilities, and the location of the firm. The selection process for bond counsel and the bond underwriter is presented in Exhibit 8.

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35 The bond underwriter has a duty to deal fairly with the project sponsor, the Authority, and the City of Fairfield in ensuring the integrity of the bond transaction but does not have a fiduciary duty to any of the above. The project sponsor may, at its own expense, add additional members to the finance team to represent its interests.

9.4.11. Bond Trustee (A bank designated by the Authorities as the custodian of funds and official representative of bondholders). A bond trustee is to be proposed by the developer, subject to review and approval by COF. Approval criteria will include the experience of the firm and staff, cost of services, financial qualifications and abilities, and the location of the servicing office.

9.4.12. Approval of the Financing. COF’s recommendation to proceed with a proposed bond issuance, reissuance, or bond restructuring will be presented for approval by the Housing Authority Board and the Fairfield City Council. If approved, COF will work with the developer to structure the financing and to prepare the bond documents. The documents and the financing participants will be submitted for final approval by the Authority prior to closing.

9.4.13. Bond Allocation. Prior to the issuance of bonds for projects, COF must apply for and receive an allocation of bond issuing authority from CDLAC. To receive such an allocation, the Authority must document its readiness to issue the bonds promptly and meet other CDLAC requirements.

For projects receiving allocations after December 31, 2016, the Bond Regulatory Agreement must incorporate the CDLAC Resolution by reference and as an attachment.

At the time of the application to CDLAC, the developer must deposit with COF one-half of one percent of the requested allocation amount as a performance deposit, up to a maximum of $100,000. The deposit will be returned to the developer upon written notification from the State to do so. If the financing does not close within the time allowed by the State and the State requires that the deposit be forfeited, then the deposit will be remitted to the State.

Section 10. Application Process

10.1. Pre-Application. It is recommended that all applicants meet with COF prior to submitting a pre-application for the purpose of introducing their project to COF.

Following the meeting, the applicant may submit a pre-application for funding for their project (Exhibit 9). Applications will generally be accepted twice a year to align with the 9% TCAC application dates. COF reserves the right to hold a third application round if sufficient funding is available.

COF will conduct an analysis of each pre-application for feasibility and consistency with these lending policies. Based on funding availability, project readiness, and lending priorities, COF will either invite or decline to invite pre-applicants for a full application with the intention of recommending its approval.

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36 10.2 Full application. The Developer will receive confirmation within 30 days after the pre-application deadline regarding whether a full application (Exhibit 10) is invited.

COF will conduct a review of the full application, including the required third-party reports, and will determine whether the application is complete. If an application is deficient, COF will indicate the items missing and provide a deadline for submi ssion of the material.

10.3 Communication with COF’s governing bodies and consultants. COF strives to make project selection and underwriting a transparent, fair, impartial, and unbiased process. Attempts to influence underwriting standards jeopardize the impartiality of the process; therefore, once a full application has been submitted, t he applicant should not attempt to influence the process and should coordinate with COF staff before contacting members of COF’s governing bodies.

10.4. Approvals. Most COF loans and all bond issuances are subject to review and recommendation by the Housing Authority Board and the City Council. Depending on the funding source, additional approvals may be required by the Council and/or Housing Authority Board.

Section 11. Housing Trust Fund

11.1 Projects financed with Housing Trust Funds. Projects receiving gap financing in Housing Trust Funds will be subject to program guidelines outlines in Exhibit 11 - HCD Uniform Multifamily Regulations.

11.2 Affordability Target. All projects assisted with matching Housing Trust Funds must target project units to households averaging 60% of the Area Median Income (AMI) as determined by HUD.

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37 EXHIBIT 1

FUNDING SOURCES

Housing Trust Funds (HTF)
The City of Fairfield Housing Trust Fund (HTF) was developed to create and preserve mixed-income and affordable housing initiatives in the City for the benefit of extremely low- through moderate-income households using the Local Housing Trust Fund Program, authorized by California Health and Safety Code Sections 50842.1 through 50843.5, as implemented in the guidelines and regulations established by the California Department of Housing and Community Development. Housing trust funds are primarily used to develop and rehabilitate affordable housing, emergency shelters, transitional housing, permanent supportive housing, affordable homebuyer/homeowner projects, direct assistance for purchasing for-sale housing units, rehabilitating owner-occupied dwellings, and production of Jr Accessory and Accessory Dwelling Units.

 Incomes: The City Housing Trust Fund serves households up to 120 percent of AMI (“low-income”), prioritizing extremely low to low-income households.  Location preference: Preference is given to locations within the City of Fairfield.

Federal Funds
The COF uses Federal Home Investment Partnership (HOME) and Community Development Block Grant (CDBG) Program funds. A summary of the conditions and restrictions particular to each funding source is provided below.

Home Investment Partnership Program (HOME) funds. At least 20 percent of HOME- assisted units in each project of five or more HOME-assisted units must be reserved for households with incomes bel ow 50 percent of AMI and leased at rents affordable to such households. All remaining HOME-assisted units must be reserved for households below 60 percent of AMI with rents not to exceed rates that are affordable to households at 65 percent AMI. Minimum affordability restrictions range from a minimum term of 5 years to 55 years, depending on the amount of assistance provided.

Community Development Block Grant (CDBG) funds. Generally, at least 51 percent of units in a project assisted with CDBG funds must be affordable to households with incomes below 80 percent of AMI. New construction can only be assisted if it is carried out by a Community Based Development Organization.

HUD Capital Funds.

HUD Capital Funds may be available as part of HUD’s Mixed-Finance or Rental Assistance Demonstration programs. The Mixed-Finance program allows public housing authorities to mix public, private, and non-profit funds to develop and operate developments that include public housing units. New developments may be made up of a variety of housing types: rental, homeownership, private, subsidized, and public housing. These new communities are built for residents with a wide range of incomes and are designed to fit into the surrounding community. The Rental Assistance Demonstration program allows for the conversion of public housing to Section 8 units, and may also be eligible for HUD Capital Funds.

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38 Please see below for funding program requirements and resources:

HUD Mixed-Finance Public Housing: https://www.hud.gov/mixedfinance HUD Rental Assistance Demonstration Program : https://www.hud.gov/RAD

City Fee Credit/Deferral Program
COF assists in administering the City of Fairfield’s Impact Fee Credit and Deferral Program for affordable housing projects. Only projects located in the City of Fairfield are eligible for impact fee credits/deferrals. At the discretion of the Director of Housing Services or the City Manager, a project in the unincorporated area of Solano County may be eligible for a fee credit or deferral. Please use the following link for more information on the program.
https://www.codepublishing.com/CA/Fairfield/#!/Fairfield05.html#5.3.4

The total number of fee waivers is capped by the County annually at 200 dwelling units or 5 percent of the number of dwelling units for which residential building permits for new construction in the unincorporated County were issued in the previous year whichever is greater.

 Fee Credits & Deferrals. To qualify for fee deferrals and credits, a project must 1) enter into a written agreement with the City of Fairfield to maintain long - term affordability to households up to or less than 120% of the area median income and 2) the design the housing project must not distinguish in outward appearance or quality between the affordable and market-rate units (ord. No. 2019-08, & 3.)

Redevelopment Housing Successor Low and Mod income Asset Funds Eligible Uses of Funds include acquisition of vacant property, acquisition and rehabilitation of an existing development, construction of new development, capitalizing operating costs, and predevelopment costs associated with an eligible project proposal. Funds can be awarded as a grant or a loan, whichever assists in project feasibility and/or meets the requirements of other sources of funding. Project funds must be targeted to projects that serve households 120% or below the area median income.

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39 EXHIBIT 2

RENTAL PROPERTY MINIMUM CONSTRUCTION STANDARDS

The following is a list of the required minimum construction standards that must be incorporated into projects participating in COF’s Multifamily Financing and/or Mortgage Revenue Bond programs. All rental units and sites associated with these projects must meet or exceed these standards. In addition, developments must comply with COF municipal codes and/or HUD applicable building codes in all cases. Exceptions to these standards may be made for properties subject to U.S. Department of Housing and Urban Development replacement reserve requirements that allow for renovation over time rather than at recapitalization (e.g., Rental Assistance Demonstration conversions for conventional public housing).

Note: For rehabilitation projects, all of the following standards shall apply. The non- rehabilitation sections below shall apply to new construction projects.

Useful Life Expectancy – Rehabilitation only

Upon capital needs assessment of existing properties to be rehabilitated, COF shall reference the current edition of FannieMae’s “Instructions for Performing a Multifamily Property Condition Assessment, Appendix F. Estimated Useful Life Tables” in determining the useful life for all building components and systems located within the project. COF shall require the replacement of any building components with a useful life that is the lesser of: 1) 10% or less of total useful life, or 2) under 10 years of remaining useful life. Building components under these thresholds must be included in the initial scope of work of the project construction period. The capital and operating costs of building components with 10 years life expectancy or more shall be accounted for through allocated replacement reserves. For rehabilitation projects, applicants must meet an average useful life expectancy of [x] percentage or above to be in strong consideration.

General Requirements

A. All materials funded under this loan must be new unless previously approved.

Recycled items must be approved in writing by COF before their use.

B. All work shall comply with Federal and State ADA accessibility requirements, as well as any other requirements stipulated by the funding source(s). When there are differences, the stricter of the two shall apply. The developer is responsible for notifying their architect and/or engineer of all funding sources used on the project.

The architect and/or engineer must indicate these funding requirements in the project’s plans/scope.

C. All units shall be approved for occupancy by the local Building Department or any other Agency Having Jurisdiction (AHJ) at the conclusion of the work and prior to occupancy.

D. Web-based security cameras and the equipment to record events are required for primary ingress/egress points to and from the site and for the principal parking and indoor and outdoor common areas where people will be congregating. In general, monitoring and surveillance shall be conducted by site staff, but when possible, legal and feasible, opportunities to share camera surveillance with local law Packet Page 587 of 798Attachment 2 Page 39 of 117

40 enforcement shall be permitted for maximized site safety.

E. Site lighting is required for all parking and outside public spaces and shall be of LED or similarly energy efficient type. The lenses on the exterior lights shall be cleaned with all oxidation removed or replaced. Light poles shall be new or painted and shall be structurally sound and stable.

F. The developer’s architect is responsible for providing an Operating Procedure Outline Sheet (OPOS) for window washing systems where applicable, per Cal-OSHA requirements.

G. COF encourages the use of energy and water-efficient systems wherever they may be incorporated into the project.

General Requirements – Rehabilitation only

A. Any component of the project which does or may present a health or safety hazard to the public or tenants shall be corrected to the satisfaction of the local Building Department or AHJ.

B. A clear pest inspection report will be required at the conclusion of the construction work for rehabilitation projects.

C. For all structures where disturbance of any hazardous materials (e.g. lead, asbestos, mold, etc.) will occur, a clearance report from an environmental consultant is required.

D. Projects deemed historically significant landmarked by either the City of Fairfield or the National Register of Historic Places shall consult with the State Historic Preservation Officer (SHPO), and shall conform to the Secretary of the Interior Standards for the Treatment of Historic Properties.

Site Work

A. Trees and large shrubs must be trimmed, grass areas must be mowed, and all planter areas must be weed-free. The landscape design shall incorporate a sustainable design appropriate for the City of Fairfield. Vegetation that assists in minimizing crime and enhances public safety is preferred. Trees compromising building envelope materials (roofing, siding, windows, etc.) and/or structural integrity (including foundations) must be removed. An arborist shall be consulted for an opinion on trees prior to major branch trimming, root cutting or tree removal. All trees, bushes, and other plants that are to be removed shall have the root ball removed by grinding or by mechanical means. A landscape plan describing the above must be provided to COF for approval.

B. All landscaped areas must be served by a programmable automated irrigation system. The irrigation controller shall be a “Smart Controller” that senses rain to reduce water use. Irrigation shall be designed to use bubblers and other water saving measures. Irrigation must not spray on building. Sprinklers should minimize overspray that runs to storm drain drop inlets. Areas that show evidence of erosion of soil shall be landscaped to eliminate problems. The landscape plan must be approved by City of Fairfield and applied.

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41 C. For gated communities containing swinging vehicle gates, driveways shall be striped to show the area under the gate swings for safety purposes.

D. All projects shall contain trash enclosures with concrete aprons. Trash enclosures shall be made of cinder block or stucco. Trash enclosures shall be accessible to all tenants. Provisions for tenants with disabilities must be addressed in the project Scope of Development or the project plans.

E. All projects shall meet the parking requirements of the City of Fairfield or the local Agency Having Jurisdiction (AHJ) over the project. "Grandfathered Projects" will need to show that they are in fact “Grandfathered” or otherwise exempted by the local AHJ. Otherwise, all projects shall meet the governing ADA requirements for parking.

F. A two percent (2%) slope shall be maintained for a distance of five feet from all structures, and no standing water shall remain on the site. Provide an on -site drainage system if necessary.

G. Stairways in common areas must include closed risers and non-slip concrete finish or other slip-resistant material on the treads.

H. Exterior mounted electrical, mechanical, and plumbing systems must be protected from vandalism.

I. For family projects of 50 or more units, a minimum of one school age-appropriate play structure is required. For family projects of 100 or more units, a minimum of one school age and one toddler-appropriate play structure is required.

Site Work – Rehabilitation only

A. All landscaping and irrigation systems must be in a well -maintained condition.

B. All fencing must be in good and serviceable condition. Existing fencing that is to remain shall be free of flaking paint, rust, or any other signs of failure. If existing fencing shows any signs of failure, it shall be repaired, painted and restored to look new. All chain link fencing must be removed and replaced with fencing of another approved material. All pedestrian gates hardware must be functional and in new or near-new condition. Access Control systems are required at exterior pedestrian gates.

C. All driveways and sidewalks must be in good condition. All cracked or uplifted areas (more than ¼”) shall be repaired or replaced to resolve all tripping hazards.

D. The asphalt shall be in good condition, with no alligator cracking, longitudinal cracking, potholes, or standing water. Repairs to portions of parking lots not suitable for new coatings shall be performed by removing and replacing damaged paving. A new seal-coat or slurry-coat shall then be applied to the entire parking lot surface. Parking spaces shall be restriped, including ADA aisles and other applicable striping/painting.

E. All site accessories (bollards, benches, tables, play equipment, bike racks, mailboxes, shade structures, BBQs, sheds, etc.) shall be replaced or in good repair (cleaned, painted and/or re-coated).

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42 Building Envelope and Moisture Protection – Rehabilitation only

A. All areas exposed to moisture must be sealed and watertight. Buildings showing evidence of water intrusion shall have the areas inspected by a licensed architect/engineer or by a certified water intrusion expert. A water intrusion report shall be submitted to COF and shall include the cause of the issue and a resolution to eradicate the water intrusion. If the inspection cannot be completed until the demolition phase of the project, the report shall describe a procedure to inspect the issue during demolition.

B. Roofing must have 5 years or more of remaining life with no visible signs of leakage. For roofs containing composition shingles, a maximum of two layers of shingles are allowed (including any proposed new layers). Provide evidence that the roof system has a 10-year life remaining on the manufacturer’s warranty.

C. All siding must have 15 years or more of remaining life. Hairline cracks in stucco must be sealed and painted with elastomeric paint. If requested by COF, a statement by a licensed architect and/or engineer that the existing siding contains at least 15 years of useful life remaining shall be provided

D. Fireplaces must be clean and meet applicable air quality standards. Chimneys shall be clean and must be inspected by a certified chimney inspector for structural integrity. All recommended structural repairs shall be performed.

Building Ventilation – Rehabilitation Only

A. Bathroom areas must have one openable window or other adequate ventilation.

B. Air circulation must be checked to determine adequate ventilation. Air Conditioning (A/C), ceiling fans and vent fans provide adequate circulation according to HUD Section 8 Housing Quality Standards.

Doors and Windows

A. All dwelling/tenant units must have screens on all windows that are designed to open. Windows designed to open must have functional locks and must operate freely without excessive effort. All windows must be dual-paned (minimum) and shall meet or exceed the State of California’s currently applicable efficiency standards and any other efficiency standards that may be dictated by the funding source or other governing bodies for the project.

B. All doors must have matching hardware fi nishes.

C. All exterior doors must have deadbolt locks, keyed latch assemblies, viewers, and screws in strike plates long enough to penetrate the door jamb framing by at least one inch. The dwelling entry door hardware shall have single action hardware to release deadbolt and latch assembly.

D. All sliding exterior doors shall have screen doors and shall have functional locks , and must operate freely without excessive effort.

E. All doors and windows must meet current egress standards.

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43 Doors and Windows – Rehabilitation only

A. Any windows showing signs of condensation or leakage shall be investigated to determine the cause and addressed. COF allows window replacement using retrofit windows when those windows are installed by trained professionals following manufacturer’s specifications. Retrofit windows must have a similar useful life as “new, construction” (i.e., nail fin) windows.

B. All doors and doorjambs must be in good condition. No damaged or worn doorjambs or doors are allowed. Doors and/or jambs beyond their useful life shall be replaced.

Casework

A. New cabinet boxes shall be made of plywood or solid wood substitute of comparable quality such as medium density fiberboard (MDF). No particle board boxes will be allowed.

B. All counter tops shall be of solid surface, granite, or granite like surface and in very good condition with no significant scratches, burns or other imperfections.

C. Face frames, doors and drawer faces shall be solid hardwood. No plastic laminate finishes will be allowed.

Casework – Rehabilitation only

A. All cabinets shall be replaced or in very good condition, within their 1 0-15 year useful life, both structurally and in appearance.

Finishes

A. All dwelling unit kitchens shall contain luxury vinyl plank (LVP) flooring or equivalent. Bathrooms must be floored with LVP, sheet vinyl or ceramic tile to provide a cleanable, impervious surface. Bedrooms, hallways, and living and dining rooms may be floored with carpeting, LVP or hardwood. Wear layer of LVP shall be at least 12 mils inside dwelling units. Tenant unit entries shall be floored with LVP or ceramic tile.

In common areas, corridors may be floored with LVP, glue-down carpeting, or carpet tiles. Community rooms and kitchens shall be floored with LVP. Wear layer of LVP in common/commercial areas shall be a minimum of 20 mils thick.

Carpet shall meet or exceed the minimum standards as set by HUD’s UM -44D bulletin.

Finishes – Rehabilitation only

A. Floor coverings must be in good, useable condition - no holes, tears, rips, or stains.

B. All exterior and interior surfaces must be painted. No peeling, cracking, chipping, or otherwise failing paint will be allowed. All painted surfaces must be new, or in near new condition and appearance.

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44 B. Acoustic (popcorn) ceiling texture must be removed and refinished with new texture to match wall texture.

Equipment

A. Dishwashers, refrigerator/freezer, oven, stoves and garbage disposals are required in all dwelling unit kitchens. All appliances must be new or in very good operating condition. All appliances must be Energy Star rated, as applicable. Appliances slated for ADA units shall be per code requirements.

B. SRO projects are encouraged to provide the appliances listed above and will be reviewed and approved on a case-by-case basis.

C. All kitchens must have adequate cabinet and counter space. Installation of shelving for microwaves is highly recommended if over-the-range microwaves are not used, with the exception of ADA units.

Furnishings

A. Dwelling units must have window coverings on all windows.

Special Construction

A. Non-habitable structures on property must be painted to match primary buildings and must be structurally sound.

B. Laundry facilities must, at a minimum, be consistent with CTCAC requirements of one washer and dryer for every ten dwelling units for family housing and one for every 15 units for senior and special needs projects. Ten percent of the total number of washers/dryers must be ADA-accessible machines (unless the ADA units contain their own laundry facilities). Solid surface countertops will be required within laundry rooms, and countertops shall meet all ADA requirements.

C. Public pool areas shall have a self-closing gate(s). Fences and gates at pool areas shall meet applicable current codes and standards. Joints between coping and concrete deck shall be appropriately caulked. Existing pools shall have no cracks in plaster or tile grout joints. The Developer is responsible for ensuring pool and surroundings meet all applicable current codes and standards. If a project contains two or more pools, at least one must remain following rehabilitation.

Mechanical/Plumbing

A. Water heaters must be installed per current applicable codes.

B. All common areas and tenant units must have heating and air conditioning. Wall mount (i.e. PTAC units) or central systems are acceptable. Evaporative coolers are not acceptable. HVAC units should be protected from vandalism, pursuant to discretion of COF.

C. Toilets, showerheads, faucets, and mixing valves shall be new and meet current water conservation codes. COF review of all development proposals may require energy and water reducing building infrastructure.

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45 D. Tub surrounds must be one unbroken piece per wall and must be of solid surfaces (such as “Swanstone” or other solid acrylic materials, quartz composites), or other similar materials. Fiberglass/acrylic surrounds are acceptable.

Mechanical/Plumbing – Rehabilitation only

A. All toilets, sinks, and tubs shall be chip and stain free.

Electrical

A. All units must have smoke/carbon monoxide detectors installed per current code.

B. Wiring from telephone/data/cable suppliers shall be installed within walls, attic spaces, and/or crawl spaces. No conduits are allowed to be mounted on the exterior of the buildings in new construction.

C. Broadband infrastructure meeting the requirements of 24 CFR 5.100* is required in all new construction projects of 4 or more units.

*Broadband infrastructure means cables, fiber optics, wiring, or other permanent (integral to the structure) infrastructure, including wireless infrastructure, that is capable of providing access to Internet connections in individual housing units, and that meets the definition of “advanced telecommunications capability” determined by the Federal Communications Commission under section 706 of the Telecommunications Act of 1996 (47 U.S.C. 1302).

Electrical – Rehabilitation only

A. All electrical panels shall meet the current code.

B. Any rehabilitation projects with un-grounded electrical systems shall be re-wired with grounded systems to meet the current code.

C. For rehabilitation projects, switches, outlets, and light fixtures shall be replaced with devices that meet current applicable codes.

D. Wiring mounted on the exterior of the surface may be allowed if it is concealed in conduit and conduit is painted to match the exterior siding. For projects where exterior siding will be removed, this wiring shall be installed within walls, attic spaces, and/or crawl spaces.

Resident Services Community Space

All properties, regardless of project type (i.e. senior, family, or large family), must devote a minimum of 1,200 s.f. to actual resident services/community space. Resident services space includes common kitchens, computer rooms, meeting rooms and general gathering space. It does not include public restrooms, leasing offices, laundry facilities and lobbies. Common kitchens are required, including refrigerator, stove, garbage disposal, and dishwasher.

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46 For existing buildings, these requirements shall apply unless COF deems there to be significant physical constraints.

Amenity Standards

New Construction or substantial rehabilitation projects of either 50 units or mo re or $500,000 or more of construction costs must be located in an area that has amenities appropriate to the tenant population served. Projects must meet the following standards or apply to the city of Fairfield for a special waiver that will be considere d at the city’s discretion.

A. Transit - Transit such as bus, light rail, commuter rail, ferry or other public transportation is within 1/2 mile of project site or public bus stop within 1/3 mile of the project site with services at least every 30 minutes during the hours of 7am- 9am and 4pm-6pm.

B. Public Park – The project is within ½ mile of a public park or community center accessible to the general public. Schools can be included if the school grounds are accessible to the general public without restrictions.

C. Book-Lending Public Library – Project is within 1 mile of a book- lending public library that allows for inter-branch lending when in a multi-branch system.

D. Full- Scale Grocery Store, Supermarket, Neighborhood Market, or Farmers Market – The project is within 1.5 miles of a full -scale grocery store of at least 25,000 gross interior square feet with staples, fresh meat, and fresh produce are sold or 1/2 mile of a neighborhood market of 5000 gross interior square feet with staples, fresh meat, and fresh produce are sold.

E. Public Elementary, Middle School, or High School – The project is within ¼ mile of a public elementary school; or 1 mile of a public high school (an additional ½ mile for each public-school type for projects in rural areas) and the site is within the attendance area of that school.

F. Senior Development - The project site is within ¾ miles of a daily operated senior center or a facility offering daily services to seniors (not on the project site) G. Medical Clinic or Hospital – The project is within 1 mile (1.5 miles for projects in Rural areas) of a qualifying medical clinic with a physician, physician’s assistant, or nurse practitioner onsite for as minimum of 40 hours each week, or hospital (not merely a private doctor’s office).

H. Pharmacy – The project is within 1 mile of a pharmacy (2 miles if in a rural area).

I. In-unit High Speed Internet Service – High speed internet service with a 1.5 megabits/second capacity provided in each Low -Income Unit free of charge to the tenants for a minimum of 15 years, and available within 6 months of the project’s placed in-service date.

J. Public Services – The project is located in an area where Fire can access the site within 7 minutes from the nearest fire station and Police can access the site within ____ minutes from ______________________.

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47 EXHIBIT 3

Management Agent & Resident Services Provider Checklist

PROPERTY NAME:

MANAGEMENT AGENT:

DATE: RESIDENT SERVICES PROVIDER:

Management Agent Requirements (includes Security)

1. Qualifications, Staffing Plan and Budget

Organizational Chart

Description of duties by position

Specific staffing onsite including: positions, days worked and hours onsite

Compliance staffing

Salaries and annual budget

Evidence of successful management of a minimum of five projects over 40 units in size subject to affordable regulatory agreements. At least one of those projects must be within the State of California.

Property Management Position FTE

2. Management Plan:

Statement of Management Policy

 Role and Responsibility and/or delegation of Authority to the Management Company

Note: A copy of an executed Management Agreement is required prior to lease up.

Project Affordable Unit Schedule

 Number by bedroom size and affordability level of assisted units.

Marketing Plan

 Identification of demographic groups underrepresented in the community.

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48  Strategy for outreach to identified, underrepresented demographic groups including names of specific advertising, periodicals, community organizations, churches and businesses that will be used to attract eligible households.
 Equal Housing Opportunity logo (must be present on all marketing materials as well as on site).
 Affirmative Marketing Questionnaire

Waiting List Procedures

 Initial lease-up procedure. Initial lease-up must include a lottery or similarly equitable process for all income-restricted units and to build the initial waiting list. Initial lease-up may not occur in advance of affirmative marketing.
 Copy of waiting list that must include: date/time of application submission, head of household name, unit size, household size, mailing address and phone number.
 Notification procedure (selection from list)
 Updating procedure (including purging, opening and closing)  Notification of Non-eligibility
 Appeals process, if any.

Tenant Selection Plan and Eligibility Screening:

 Applicant Screening Criteria
 Recertification procedures
 Eligibility documentation forms
 Record-keeping procedures
 Criminal Background Check Procedure (including screening company)  Applicant Screening Report

Inspection, Maintenance, and Repair Procedures
 In-house Inspection schedule
 Work Order system
 Move In/Move Out Inspection Policies
 Unit Refresh Schedule

Rent Collection Policies

Plan for Maintaining Adequate Accounting Records

Resident - Management Relations

Security Deposits

Grievance Procedures (including appeals)
 Non-payment of rent
 Lease Violation or House rules
 Processing tenant complaints

Pet policies

Section 504/Reasonable Accommodations
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49 Live-in/Personal Care Attendants

3. Application

The name and age of each person that will occupy the unit.

All sources and amounts of current and anticipated annual income to be earned in the next twelve months. (Must provide a two-year history).

The current and anticipated student status of each applicant over the age of 23 during the twelve-month certification period

Felony conviction history for a prescribed number of years

Sex offender lifetime registry

The signature of the applicant and the date the application was completed.

Note: Screening information must be consistent with the tenant selection plan/policies.

4. Lease Agreement

The signatures of all heads of household and date of signatures.

The initial term of the lease must be for not less than one year unless mutually agreed upon by resident and Owner/Management.

Security Deposit and any additional charges the resident may incur while residing at property (e.g., washer/dryer, parking, community room, storage, replacement key, lock-out charges, etc.)

Assignment and sub-letting policies

Alterations and improvements to residence

Hazardous materials prohibitions

Maintenance and Repair Rules

Income eligibility and recertification requirement clause indicating the resident must comply with all requirements of the affordable housing program.

Surrender of Premises. The Owner must have specific language describing the steps taken to terminate or not renew a lease agreement.

Inspection of Premises

Pet rules and charges (note that a one-time pet deposit not to exceed $250 is acceptable but charging ongoing monthly fees or “pet rent” is prohibited)

Attorney Fees
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50 Governing law citations

Process for lease modifications

Visitation and Guest Policy (may be incorporated into House Rule addendum)
 Number of consecutive days a guest may stay overnight.  Maximum days a guest may stay overnight in unit during a 12-months period.
 Guest rule violations (including those that may be cause for resident’s eviction).

Additional Provisions and Disclosures
 Crime Free Lease Addendum
 House Rules
 Violence Against Women Act Addendum
 Smoke free Addendum (where applicable)

Note: Leases must conform to the requirements at 24 CFR 92.253 (attached for reference).

5. Required Forms (TCAC versions are accepted for LIHTC projects)

Agency Income Calculation Sheet (AICS) or TCAC version

Housing Composition Summary (HCS) Questionnaire and Certification or TCAC versions

6. Security Plan

N/A Less than 100 units

Included in Operating Budget

Roving vehicular and/or foot security patrols operating ten-hour shifts from approximately 7:30 pm to 5:30 am.

Security company on call 24 hours/day, 7 days per week, includi ng holidays

Electronic report service and incident reports

Completed Security Questionnaire approved by COF

Note: Any changes to the security plan must be approved by COF.

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51 Resident Service Provider Requirements

Contractual agreement or memorandum of understanding between owner and service provider

Included in Operating Budget

Organizational chart

Weekly Hours per proposed Regulatory Agreement.

Needs assessment procedure/questionnaire

Staffing Level (number per position)

Staffing Qualifications

Mission Statement

Program Description

Portfolio of Current Projects

Resident Services Position FTE

Resident Services Program Weekly Hours

Additional information required for Special Needs or Permanent Supportive Housing:

A description of the population to be served and its service needs

A description of the services to be provided, including the names of the agencies responsible for providing the services and evidence of the providers’ capability and experience

A description of the manner in which services will be provided (how, when, where, and how often)

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52 A plan for lowering barriers to access and affirmatively ensuring that units are made available for people exiting homelessness.

A plan for funding the services accompanied by

*A detailed Letters of Intent from service providers and/or funding sources indicating specific commitments to fund or provide the supportive services.

*If the applicant is a service provider using its own funds, a letter indicating its capability and commitment should be included

___________________________________________________
____________

Note: All proposed management agents and resident service providers new to COF must also provide three project-related references.

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53 Title 24: Housing and Urban Development
PART 92—HOME INVESTMENT PARTNERSHIPS PROGRAM
Subpart F—Project Requirements

§92.253 Tenant protections and selection.
(a) Lease. There must be a written lease between the tenant and the owner of rental housing assisted with HOME funds that is for a period of not less than 1 year, unless by mutual agreement between the tenant and the owner a shorter period is specified. The lease must incorporate the VAWA lease term/addendum required under §92.359(e), except as otherwise provided by §92.359(b). (b) Prohibited lease terms. The lease may not contain any of the following provisions:
(1) Agreement to be sued. Agreement by the tenant to be sued, to admit guilt, or to a judgment in favor of the owner in a lawsuit brought in connection with the lease; (2) Treatment of property. Agreement by the tenant that the owner may take, hold, or sell personal property of household members without notice to the tenant and a court decision on the rights of the parties. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the housing unit after the tenant has moved out of the unit. The owner may dispose of this personal property in accordance with State law; (3) Excusing owner from responsibility. Agreement by the tenant not to hold the owner or the owner's agents legally responsible for any action or failure to act, whether intentional or negligent;
(4) Waiver of notice. Agreement of the tenant that the owner may institute a lawsuit without notice to the tenant;
(5) Waiver of legal proceedings. Agreement by the tenant that the owner may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties;
(6) Waiver of a jury trial. Agreement by the tenant to waive any right to a trial by jury;
(7) Waiver of right to appeal court decision. Agreement by the tenant to waive the tenant's right to appeal, or to otherwise challenge in court, a court decision in connection with the lease;
(8) Tenant chargeable with cost of legal actions regardless of outcome. Agreement by the tenant to pay attorney's fees or other legal costs even if the tenant wins in a court proceeding by the owner against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses; and Packet Page 601 of 798Attachment 2 Page 53 of 117

54 (9) Mandatory supportive services. Agreement by the tenant (other than a tenant in transitional housing) to accept supportive services that are offered. (c) Termination of tenancy. An owner may not terminate the tenancy or refuse to renew the lease of a tenant of rental housing assisted with HOME funds, except for serious or repeated violation of the terms and conditions of the lease; for violation of applicable Federal, State, or local law; for completion of the tenancy period for transitional housing or failure to follow any required transitional housing supportive services plan; or for other good cause. Good cause does not include an increase in the tenant's income or refusal of the tenant to purchase the housing. To terminate or refuse to renew tenancy, the owner must serve written notice upon the tenant specifying the grounds for the action at least 30 days before the termination of tenancy.
(d) Tenant selection. An owner of rental housing assisted with HOME funds must comply with the affirmative marketing requirements established by the participating jurisdiction pursuant to §92.351(a). The owner must adopt and follow written tenant selection policies and criteria that:
(1) Limit the housing to very low- income and low-income families; (2) Are reasonably related to the applicants' ability to perform the obligations of the lease (i.e., to pay the rent, not to damage the housing; not to interfere with the rights and quiet enjoyment of other tenants);
(3) Limit eligibility or give a preference to a particular segment of the population if permitted in its written agreement with the participating jurisdiction (and only if the limitation or preference is described in the participating jurisdiction's consolidated plan).
(i) Any limitation or preference must not violate nondiscrimination requirements in §92.350. A limitation or preference does not violate nondiscrimination requirements if the housing also receives funding from a Federal program that limits eligibility to a particular segment of the population (e.g., the Housing Opportunity for Persons with AIDS program under 24 CFR part 574, the Shelter Plus Care program under 24 CFR part 582, the Supportive Housing program under 24 CFR part 583, supportive housing for the elderly or persons with disabilities under 24 CFR part 891), and the limit or preference is tailored to serve that segment of the population. (ii) If a project does not receive funding from a Federal program that limits eligibility to a particular segment of the population, the project may have a limitation or preference for persons with disabilities who need services offered at a project only if:
(A) The limitation or preference is limited to the population of families (including individuals) with disabilities that significantly interfere with their ability to obtain and maintain housing;
(B) Such families will not be able to obtain or maintain themselves in housing without appropriate supportive services; and
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55 (C) Such services cannot be provided in a nonsegregated setting. The families must not be required to accept the services offered at the project. In advertising the project, the owner may advertise the project as offering services for a particular type of disability; however, the project must be open to all otherwise eligible persons with disabilities who may benefit from the services provided in the project. (4) Do not exclude an applicant with a certificate or voucher under the Section 8 Tenant-Based Assistance: Housing Choice Voucher Program (24 CFR part 982) or an applicant participating in a HOME tenant-based rental assistance program because of the status of the prospective tenant as a holder of such certificate, voucher, or comparable HOME tenant-based assistance document.
(5) Provide for the selection of tenants from a written waiting list in the chronological order of their application, insofar as is practicable; (6) Give prompt written notification to any rejected applicant of the grounds for any rejection; and
(7) Comply with the VAWA requi rements prescribed in §92.359. [61 FR 48750, Sept. 16, 1996, as amended at 67 FR 61756, Oct. 1, 2002; 78 FR 44674, July 24, 2013; 81 FR 80803, Nov. 16, 2016]

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56 EXHIBIT 4

MULTIFAMILY RESIDENT SERVICES

COMPLIANCE REPORTING AND PROCEDURES

INTRODUCTION

All projects subject to these guidelines will be required to provide resident services. As a result of this requirement, the Managing General Partner (or the Developer if there is no Managing General Partner) (“Owner”) will be required to enter into an agreement with an experienced service provider. The Service Provider will be required to perform a needs assessment while the project is undergoing leasing or shortly thereafter to determine the services required for the residents. This assessment will serve as the basis for developing a Resident Services Plan which will be subject to review and approval by the City of Fairfield (COF). COF will then monitor the ongoing provision of services as outlined in the approved plan. See Exhibit 3 for the Management Agent and Resident Services Provider Approval checklist.

Needs Assessment

The Owner and Service Provider will compile a needs assessment.

a. New Projects – A needs assessment questionnaire must be completed by residents at the time of move-in.

b. Acquisition/rehabilitation projects – A needs assessment questionnaire must be completed by residents at the time of certification or new move-in.

c. Following the needs assessment, the Service Provider will determine which classes and activities they will be implementing for the appropriate service categories. After school programs are required for family properties. Only senior projects may include transportation to meet the SHRA minimum requirement.

d. Based on the needs assessment the Service Provider will compile a Resident Services Plan and Resident Services Schedule. The Plan and Schedule, with a copy of the needs assessment, are to be submitted to the Agency for approval once the affordable units are initially occupied.

Forms are available from SHRA.

Provision of Services

The Responsible Entity and the Service Provider are required to begin providing service hours beginning with initial occupancy.

Monitoring

a. The Owner is required to send written reports to COF on each January 5, April 5, July 5, and October 5 commencing on the first reporting date after the quarter in which services begin.

b. The report shall include the following:

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57  Resident Services Certification for the previous 3 months  Program Narrative
 Expense reports may be requested by COF

c. The Agency will review the quarterly reports and conduct a compliance review of the following:
 Compare the overall service hours that were scheduled to be provided to the service hours that were actually provided during the quarterly period.
 Review the program narratives to determine if the appropriate services are being provided.
 Review the attendance for the programs to determine if the residents are receptive to the content and delivery.
 Conduct telephone surveys periodically to confirm program activity.  Review the regularity and consistency with which the programs are being conducted, including a review of the staff/independent contractor attendance.

d. If the Owner proposes changes to the approved Resident Services Plan or Resident Services Schedule, the following procedure will be followed:

 The Owner will send COF a written request for a change of programs.

The request must include the reason for replacing the existing program, a description of the proposed new program, a description of the resident population to be served, and an estimate of the number of residents to be served .
 COF will review the proposal and if necessary meet with the Service Provider. If approved, COF will send the Owner a letter verifying the change.
 The Owner will then forward COF a revised Resident Services Plan(s) and a revised Resident Services Schedule.

e. COF staff will review the Resident Services program during the project’s annual on-site monitoring review.

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58 Exhibit 5

Affirmative Marketing Policies for COF-funded Residential Properties

Introduction

Federal law requires that all recipients of federal funds for housing construction, redevelopment, and rehabilitation comply with affirmative marketing requirements.1 Developers receiving funds from COF, whether federal or local/bond funds, must adopt affirmative marketing practices.

The purpose of an affirmative marketing plan, is to establish a marketing strategy to attract income-eligible prospects and demographic groups who might not normally seek housing in their project. Affirmative marketing does not limit choices; choices are expanded to include those that might not otherwise apply or be considered because of past discrimination in housing choice.

This document provides direction for affirmative marketing—a developer’s “tool kit for affirmative marketing”—based on industry best practices.

Developer Affirmative Marketing Tool Kit

1. Identify and Review Target Populations for Marketing

The first step in developing an affirmative marketing plan is to identify income-eligible target populations—i.e., those who would qualify for tenancy based on household income.

Where there are differences between the income-eligible population groups and typical applicants, developers should identify these segments as those least likely to apply for housing without affirmative marketing efforts.

At a minimum, developers should analyze data to determine differences in the demographics of the neighborhood in which the development is being built and demographics of the region to ensure that marketing is inclusive of all potential applicants. This section details how to obtain data to conduct that analysis.

1 24 CFR § 92.351: https://www.law.cornell.edu/cfr/text/24/92.351 The Fair Housing Act: https://www.justice.gov/crt/fair-housing-act-2 Executive Order 11063: https://www.archives.gov/federal-register/codification/executive-order/11063.html Section 504 of the Rehabilitation Act of 1973: https://www.dol.gov/oasam/regs/statutes/sec504.htm Packet Page 606 of 798Attachment 2 Page 58 of 117

59 1.a. Identify neighborhood population characteristics Search www. census.gov/programs-survey/acs for the table number shown below to pull demographic data for the Census tract in which the property is located. If needed, the Census tract can be determined through an internet search of the property address. Comparative regional data can typically be found in an Analysis of Impediments to Fair Housing Choice report (see 1b).

Population
Characteristics
ACS/Census Data
Table Number
Geography typically
available and used for
analysis
Race B02001 Census Tract
Hispanic/Latino B03002 Census Tract
Disability population S1810 Census tract

Review the differences in demographics—race, ethnicity, disability status—of the neighborhood where the property is located and the region overall. Are there meaningful differences? A meaningful difference is typi cally defined as a +/- 10 percentage point difference in urban/suburban areas. If there are meaningful differences, this suggests that regional populations should receive affirmative marketing outreach.

For example, if the neighborhood is 10 percent Hispanic/Latino and the region is 30 percent Hispanic/Latino, affirmative marketing could include ads with Hispanic/Latino models, a booth at Cinco de Mayo festivals, and direct outreach to Hispanic/Latino Churches.

1.b. Review the most recently available studies of barriers to housing choice, such as the Regional Analysis of Impediments to Fair Housing Choice or Assessment of Fair Housing component of the Housing Element, and Disproportionate Needs data in Consolidated Plans to:
1) Identify characteristics of households with disproportionate housing needs; 2) Identify characteristics of households who have experienced involuntary displacement; and
3) Identify populations for affirmative marketing of homeownership products.

1.c. Based on your analysis in parts 1.a. and 1.b. document your planned outreach and complete the Affirmative Marketing Plan questionnaire, which is attached to this policy.

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60 2. Develop marketing strategies and materials.

2.a. Develop affirmative marketing ads and messaging.

Like traditional marketing for leasing or home sales, affirmative marketing messaging should attract members of the target population to the property. Marketing messaging should include the following principles:

The advertising should convey an easily understood message that the target groups are welcome in the area in which the proposed project is located. When reviewing the messaging, ask: “Does this ad suggest that the development will be restricted to persons of a particular race, color, creed, sex, religious affiliation or national origin, or that families with children and persons with disabilities would feel unwelcome?”; Use both majority and minority models in pictorial advertising. Advertising should avoid overly gender-stereotyped roles;
The advertising may feature units that have been made accessible to individuals with disabilities or use other methods to convey the message that individuals with disabilities can fully enjoy the project’s services and facilities on the same basis as individuals without disabilities, and that reasonable accommodations can be made; Languages other than English should be used as deemed necessary (based on the target population analysis) to effectively communicate with target populations with Limited English Proficiency; and
The Equal Housing Opportunity Logo should be displayed on all advertising materials.

2.b. Conduct affirmative marketing advertising and outreach through community organizations, service providers, and faith-based organizations serving target populations.

Develop a list of community papers, news outlets (e.g., Spanish radio programs, minority - owned media), and trusted community organizations, including faith communities, that reach the target populations identified above. Best practices for ou treach include:

Advertising on community organization websites, social media pages, newsletters, worship service bulletins or other communications sent from the organization to the community;
Posting flyers, applications, or other visual materials in organization or service provider waiting rooms, community boards, etc;
Participating in or advertising on podcasts, facetime interviews, or other community conversations;
Advertising or sponsoring events likely to attract high proportion of target populati on residents;
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61 Hosting lease up or sales events at community locations or during community events; and
Asking community organizations for their advice on how best to let their consumers know about the housing opportunity and following that advice.

Ideas for types of organizations to contact to reach target populations:

Organizations serving low income families and individuals (e.g., Boys & Girls Clubs, elementary schools with a high proportion of Free/Reduced Lunch children attending the school, public recreation centers and libraries in low income or racially or ethnically concentrated neighborhoods, before and after school programs, HeadStart childcare providers);
Organizations serving people with disabilities (e.g., Resources for Independent Living, Alta California Regional Center, Disability Rights California, ARC, Society for the Blind, California Association for the Deaf, etc.);
Places of worship whose congregations/members are members of target populations (e.g., services held in languages other than English, located in a racially or ethnically concentrated neighborhood);
Organizations serving refugees and immigrants; and
Cultural organizations and celebratory cultural events (e.g., cultural community resource centers, international festivals, Juneteenth and Cinco de Mayo celebrations, Native American events, Chinese New Year celebrations).

2.c. Complete the Affirmative Marketing Plan, which contains a sample Outreach tool.

2.d. Evaluate barriers to submitting applications.

After you have identified the geographic areas from which target populations will be drawn, conduct an internal assessment of how well your application -acceptance policies will accommodate their needs. Advertisements must indicate a specific time-frame for which applications will be accepted, the date of when the lottery will be conducted, the total number of applications that will be selected for processing and the prospective waitlist from the applicants not selected for processing.

2.e. Conduct a lottery to process applications (Approximately 90 days prior to obtaining Certificate of Occupancy (CO)).

An online and paper lottery process must be used to accept applications. Applications cannot be accepted in a “first come first serve” method. The purpose of a lottery is to Packet Page 609 of 798Attachment 2 Page 61 of 117

62 ensure that applicants who have inflexible work schedules, need to balance family/caregiver obligations, or who have a disability that inhibits full mobility are not unfairly treated in the process.

Notify applicants of selection process and waitlist position in writing.

The lottery selection process can be developed using free tools online.

Exceptions to the lottery include: special needs housing where referrals are from a social service provider or Coordinated Entry System and developments with three units and fewer.

3. Timing of affirmative marketing activities.

A minimum marketing period of 120 days is required. A sample, ideal timeframe for marketing activities could include:

During construction. Conduct the analysis (item 1.) to identify target populations for affirmative marketing.
150 days before expected certificate of occupancy (CO). Contact the community contacts and organizations identified as resources for attracting persons who are “leas t likely to apply” for the housing. Inform them of the date that applications will be accepted and how to submit an application along with the date the lottery will be conducted. 120 days before expected certificate of occupancy (CO). Begin collecting completed application.
90 days before expected certificate of occupancy (CO). Conduct the lottery and notify successful applicants and complete certification process within 2 weeks of notification.

Beyond lease up. Affirmative marketing must continue after initial lease up or sales are complete and must be paired with all mainstream (non-targeted) marketing efforts. For example, if the property is regularly advertised in mainstream publications it must also be regularly promoted using Affirmative Marketing methods and messaging. For single-family homeownership dwellings, the plan remains in effect until all the dwelling units are sold.

Target population analysis must be re-examined every five years.

4. Assess appropriateness of the Affirmative Marketing.

Annually, review the demographics of tenants or unit owners. If one or more target groups are not represented, adjust the affirmative marketing plan to make the affirmative marketing efforts more effective. Refine Column 3 of the Affirmative Marketing Outreach Table upon completion of lease up and once per year for existing properties.

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63 5. Maintain Appropriate File Documentation

Maintain an “affirmative marketing file” for each development with:
 Copies of advertisements, social media posts, letters to community contacts;  Photographs of project signs (e.g., promoting people experiencing living in the property);
 A copy of instructions used to train sales/rental staff on Fair Housing laws;  Analysis of the effectiveness of affirmative marketing practices.

Reporting affirmative marketing efforts.

Developers will report their procedures to COF. All owners or developers must complete and submit an Affirmative Marketing Compliance form to COF. The “Affirmative Marketing Plan” form is to be completed prior to construction. The “Affirmative Marketing Compliance” form is to be submitted annually thereafter.

Ongoing. Monitor your applicant pool against the eligible applicants identified in the initial formation of your affirmative marketing plan. Adjust the pl an as needed to better attract eligible applicants missing from the applicant pool. Complete the Affirmative Marketing Compliance Questionnaire annually.

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64 EXHIBIT 6

COMPLIANCE VIOLATIONS AND ACTIONS
(All payments due and payable within 30-days of assessment)

Tenant Eligibility and Affordability Violations
Compliance
Violation
Fees and Actions* Corrective Time Period
Tenants over
income at
initial move-in
Initial $500 per unit, again every
90-days until another income
qualified tenant is housed.

Correction: Evict tenant if tenant
fraud. Otherwise, next available
unit must be Affordable and
rented to an Income-Qualified
tenant.
90 days from discovery date to avoid
additional $500 charge every 90-days
the problem is not corrected.

Incorrect
eligibility
documentation
Initial $50 per file for incorrect
calculations, verifications, or
required documents. Additional
$50 per month if not corrected.

Correction: Submit copies of
corrections to compliance staff as
applicable.
30 days from discovery date to submit
copies of corrections to compliance staff
to avoid additional $50 per month if not
corrected
Failure to
complete annual
recertifications
Initial $250 for each incomplete
file. Additional $50 per month if
not corrected.

Correction: Submit copies of
recertifications to compliance
staff.
30 days from discovery date to submit
corrections to avoid additional $50 per
month if not corrected.

Failure to
maintain
tenant eligibility
records
Initial $500 per unit, again every
90-days thereafter until new
records in place. Additional $100
per unit per month the project
remains out of compliance.

Correction: Immediately
establish new files/records.
30 days from discovery date to submit
copies of new records to avoid
additional $100 per unit per month the
project remains out of compliance.

Incorrect Rents Reimbursement to tenant of the
entire amount overcharged.
$100 payment to Agency for
each over-charged unit.

Correction: Refund tenant with
letter of correction.
30 days from discovery date to avoid
additional $100 per overcharged unit
per month fee to Agency.

Failure to submit
complete and
accurate monthly
Bond Report by
due date
Initial $100 per report.

Additional $100 per day until
complete and accurate report
submitted. Correction: Submit
copies of corrections to
compliance staff as applicable.
7 days from discovery date to submit
complete and accurate report to avoid
additional $100 per day charge.

Failure to comply
with approved
Management
Plan
Initial $100 per report.

Additional $100 per day until
complete and accurate report
submitted. Correction: Submit
30 days from discovery date to submit
corrections to avoid additional $100 per
day charge.

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65 copies of corrections to
compliance staff as applicable.

Failure to submit
complete and
accurate
quarterly
Resident
Services report
by due date
Initial $100 per report.

Failure to
provide a
resident service
required by
Resident
Services Plan
Initial $250 per service.

Additional $100 per day until
service is provided. Correction:

Implement required service or
new resident services plan
submitted and approved;
approved plan implemented..
7 days from discovery date to
implement required service or provide
new resident services plan to avoid
additional $100 per day charge; 30
days from discovery date to implement
new plan to avoid additional $100 per
day charge.

Noncompliant
lease
$100 per noncompliant lease.

Correction: Prepare and execute
approved lease or addendum to
address the deficiency.
30 days from discovery date to avoid
additional $100 per noncompliant lease
per month charge to Agency.

HUD Property Standards Violations
Compliance
Violation
Fees and Actions* Corrective Time Period
Verifiable
existence of
Toxic Mold
$200 per unit. Additional $75
per day charge each time efforts
fall outside of corrective
timeframes.

Correction: Prepare and submit
action plan that addresses scope
of work and timetable to
complete. Relocate tenant if
necessary. Obtain certified
clearance that mold has been
abated and unit is safe to occupy
once again.
3-days from discovery date to submit
action plan to address. 10-days to
relocate tenant if necessary. 30-days to
obtain certification that unit is mold
free. $75 per day additional charge
each time efforts fall outside of these
timeframes.

Broken pipes and
plumbing
facilities
$200 per unit. Additional $75
charge per day if not corrected.

Correction: Repair/replace as
necessary
7-days from discovery date to avoid
additional $75 per day each day
thereafter corrective action not taken.

Smoke detectors
not working in
the units
$200 per unit with non-functional
smoke detector. Additional $75
charge per day if not corrected.

Correction: Replace batteries or
non-working unit within 24
hours.

Within 24 hours of discovery date to
avoid $75 per day additional charge
each day thereafter corrective action
not taken.

Windows with
large cracks or
missing glass
$200 per unit. Additional $75
charge per day if not corrected.

Correction: Repair/replace as
necessary.
7-days from date of discovery to avoid
$75 per day additional charge each day
thereafter corrective action not taken.

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66 Infestation of
roaches or
vermin
$200 per infested unit.

Additional $75 charge per day if
not corrected.

Correction: Letter from pest
control company verifying
removal of pests with paid
invoice to compliance staff.
7-days from date of discovery to avoid
$75 per day additional charge each day
thereafter corrective action not taken.

Non-working
heating unit
(Winter) or air
conditioning unit
(Summer)
$500 per nonworking unit.

Additional $75 charge per day if
not corrected. $75 re-inspection
fee if necessary to verify problem
corrected.

Correction: Repair/replace as
necessary.

Within 24 hours of discovery date to
avoid $75 per day additional charge
each day thereafter corrective action
not taken.

Excessive
amount
of urine/ feces
$200 per unit. Additional $75
charge per day if not corrected.

Correction: Clean unit as
necessary and address problem
as the lease allows. Submit
correction letter with
documentation to compliance
staff.
7-days from date of discovery to avoid
$75 per day additional charge each day
thereafter corrective action not taken.

Excessive
amount of
trash/garbage in
the unit
$75 per unit. Additional $75
charge per day if not corrected.

Correction: Clean unit and send
letter of correction to compliance
staff.
14-days from date of discovery to avoid
an additional $75 per day thereafter
each day corrective action not taken.

Hazardous
exterior
conditions
$500 for hazardous conditions.

Additional $75 charge per day if
not corrected. $75 re-inspection
fee.

Correction: Clean and/or repair
as necessary. Re-inspection to
verify problem addressed.
7-days from date of discovery to avoid
$75 per day additional charge each day
corrective action not taken.

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67 Large holes
walls/ceiling
$100 per unit. Additional $75
charge per day if not corrected.

Correction: Submit correction
letter with documentation to
compliance staff.
30-days from date of discovery to
avoid $75 per day additional charge
each day corrective action not taken.

Non-Operable
Security Gate
$500 per non-working gate.

Additional $75 charge per day if
not corrected. $75 re-inspection
fee if necessary to verify
problem corrected.

Correction: Repair/replace as
necessary.
7-days from date of discovery to avoid
$75 per day additional charge each day
corrective action not taken.

No Security
Cameras (if
cameras required)
$250 per discovery. Additional
$75 charge per day if not
corrected. $75 re-inspection
charge to verify problem
corrected.

Correction: Replace cameras.
30-days from the date of discovery to
avoid $75 per day additional charge
each day thereafter corrective action
not taken.

Non-working
Security Cameras
$100 per camera per discovery.

Additional $75 charge per day if
not corrected. $75 re-inspection
charge to verify problem
corrected. Correction:

Repair/replace as necessary.
7-days from date of discovery to avoid
$75 per day additional charge each day
corrective action not taken.

Non-working or
non-accessible
amenities/services
$100 per item per discovery.

Additional $75 charge per day if
not corrected. $75 re-inspection
charge to verify problem
corrected. Correction:

Repair/replace as necessary.
7-days from date of discovery to avoid
$75 per day additional charge each day
corrective action not taken.

* No compliance fee will be assessed for one incident of each type of compliance violation per annual inspection provided the violation is corrected within the specified corrective time period. The second and subsequent violations will be assessed compliance fees as detailed in the Tenant Eligibility and Affordability Violations and HUD Property Standards Violations tables.

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68 EXHIBIT 7

COF’s Guidelines for Preparation of Relocation Plans for Multifamily Developers Using COF Financial Assistance

The City of Fairfield (COF) brings together financial resources and staff expertise to revitalize lower income communities, create affordable housing opportunities, and serve extremely low – moderate income households.

As an agency that provides direct support and assists with financing from local, state, and federal sources, many projects that COF oversees, partners in, and/or funds may require temporary relocation or the permanent displacement of residential and commercial occupants, as well as personal property. Depending on the source of funds, such a project may be required to provide relocation planning and assistance under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, or the California Government Code 7260 (California Relocation Assistance Law), and Title 25 of the California Code of Regulations, Chapter 6, Article 1, Section 6000 et seq. (California Relocation Assistance Guidelines). Additional programmatic requirements may also apply due to the type of federal and state funding utilized in the project. Additionally, SHRA has its own guidelines and requirements for projects that cause temporary relocation or permanent displacement.

COF has developed these Guidelines for the Preparation of Relocat ion Plans for Projects using COF or other Public Financing (Guidelines). These Guidelines are to assist applicants for certain financing, developers utilizing certain financing, and COF development partners to develop the appropriate relocation plan for th eir project in accordance with applicable relocation regulations and COF policy.

These guidelines describe the subject matter and content that should be part of a relocation plan as required under these Guidelines.

Sources of Funds That Trigger Federal Relocation Requirements

The following sources of funds trigger requirements under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended.

 HOME
 Community Development Block Grant (CDBG)
 Housing Opportunities for Persons With AIDS (HOPWA)
 Project Based Voucher Program
 Rental Assistance Demonstration Program

Note there may be additional sources not listed here. It is incumbent upon the applicant and the reviewer of the submitted relocation plan to determine if the proposed sources may trigger requirements under the URA.

Sources of State and Local Funds That Trigger California Relocation Requirements

The following sources of funds trigger requirements under the California Government Code 7260 (California Relocation Assistance Law), and Title 25 of the California Packet Page 616 of 798Attachment 2 Page 68 of 117

69 Code of Regulations, Chapter 6, Article 1, Section 6000 et seq. (California Relocation Assistance Guidelines).

 COF program funds
 State of California Housing and Community Development Department (HCD) funding programs
 Other funds from the City of Fairfield or County of Solano

Note there may be additional sources not listed here. It is incumbent upon the applicant and the reviewer of the submitted relocation plan to determine if proposed sources may trigger requirements under California law and guidelines for relocation.

Types of Projects Requiring a Relocation Plan for Review by COF

The following types of projects shall require that a relocation plan is prepared and submitted in accordance with these Guidelines:

1. Projects that apply for “gap” financing from COF and will cause the temporary relocation or permanent displacement of residential tenants or owner occupants.

2. Projects that plan or have a commitment to utilize a state or federal funding source described above and will cause the temporary relocation or permanent displacement of residential tenants or owner occupants. As stated above, additional sources other than those provided may require a plan.

3. Occupied properties that plan or have a commitment to utilize Low Income Housing Tax Credits and Tax-Exempt Bonds. This includes in-place rehabilitation projects.

4. Projects that will receive other forms of support from COF or other public agencies, including development on or the redevelopment of an agency-owned property, or property being sold or leased to a developer, and will cause the temporary relocation or permanent displacement of residential tenant or owner occupants.

Project Not Requiring a Relocation Plan
Projects that may cause the temporary or permanent relocation of five or less non- residential occupants and do not utilize federal funds do not require a relocation plan.

However, should a project cause displacement of non-residential uses that significantly impact a neighborhood or project area, COF, at its discretion, may require a relocation plan. Non-residential uses include, but are not limited to, grocery stores/markets, community facilities, and medical-related uses.

Minimum Content Requirements for Relocation Plans

Appendix A displays the minimum requirements under federal and state regulations, and COF guidelines for relocation plans.

COF Specific Requirements for Approval

In addition to what may be applicable under federal or state regulations as shown in Appendix A, COF has the following specific requirements for approval of relocation plans:

 Plans shall be completed and carried out by a qualified third party in accordanc e with all state and/or federal relocation requirements associated with the funding source, unless an in-house relocation expert is approved by COF.  Moving expenses for self-moves shall be calculated according to the Federal Highways Administration Federal Fixed Move Payment standard for moving Packet Page 617 of 798Attachment 2 Page 69 of 117

70 allowances (typically updated every three years) based on the number of moveable rooms.
 COF does not permit keeping income-restricted units vacant to accommodate on-site relocation at any time prior to closing and commencement of construction.
 Relocation budget, including budget breakdown, must be included as part of the relocation plan.
 COF prefers projects where less than 20 percent of residents will be permanently relocated (except in instances of overcrowding).
 Proper notification of residents is the responsibility of the applicant and will be coordinated and approved by COF’s qualified reviewer. COF will monitor the project for compliance with relocation requirements.
 Implementation of relocation plans shall be overseen by a professional relocation specialist as approved by COF. Exceptions may be granted at COF’s discretion.  A copy of the draft plan shall be submitted to COF for review and comment prior to release to tenants. Following review by COF, notice of the availability of the plan shall be given to all households. Any comments received by tenants shall be included as an addendum to the plan.

Process for Approval

Once COF has received a plan, COF shall assign its review to a qualified reviewer. The reviewer shall review the plan against these guidelines and issue an approval letter or a corrective action memo. The reviewer’s checklist shall be included with the reviewer’s approval or corrective action letter.

Appeal of Approval

Should the preparer of the plan feel the reviewer is in error based on the corrective actions provided, they shall provide COF with a written request for a review, including an outline of concerns, within five business days. The reviewer shall then have fi ve business days after the review to respond to the points discussed.

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71 APPENDIX A: RELOCATION PLAN REQUIREMENTS

Content Requirement
Federally
Funded
Project
(URA)
State or
Locally
Funded
(California)
COF
Requirement
Description of Entity Sponsoring and/or
Developing Project x
Description of Project x x
Scope of the Rehabilitation (Where
Applicable) x x
Location of Project Including
Maps/Diagrams x x
Description of the Surrounding
Neighborhood of Project Site x x
Description of Third Party Preparing the
Plan x
Description of How the Plan is
Consistent with the Local Housing
Element if Prepared by a Public Entity x x
Specific Sources of Funding Including
Name of Funding Agency and Program x
Anticipated Dates of Funding
Applications and Award of Funds x
Identification of Applicable Laws and
Regulations Pertaining to Relocation for
Funding Sources x
Declaration of Compliance with Civil
Rights and Fair Housing Laws and
Requirements x
Description of the Impacted Property
Including Address, APN, Type, Units and
Age x x
Description of Impacted Persons: x x x
Number of Households or
Businesses x x x
Number of Persons or Employees x x x
Age of Residential Occupants x x x
Race/Ethnicity of Residential
Occupants x x x
Disabilities Present x x x
Languages Spoken x x x
Special Needs of the Population x x x
Identification of Impacts to
Seniors, Children, and Large
Families x x x
Estimate of the Dwelling Units or
Commercial Spaces Impacted x x x
Current Rents of Units x x x
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72 Rents Post-Rehabilitation (Where
Applicable) x x x
Rental Subsidies Applicable to Minimize
Housing Cost Increases x x
Availability, Number of Units, and Rental
Rates of Comparable Permanent
Replacement Housing Resources, or
Temporary Housing x x x
Anticipated Economic Displacements for
Rehabilitation Projects x
Description of Any Phasing Plans x x
Description of Resident Outreach and
Engagement Process Used in Developing
the Plan and Relocation Program x x
Description of Any Alternative to Be
Used to Minimize Off-Site Relocations x x
Description of the Relocation Advisory
Services Provided Including the
Required Forms and Notices to Be Used x x
Description of Housing and Moving
Options Available x x
Description of Transportation, Meal, Per
Diem, and Other Special Services and
Payments x x
Identification of Relocation Staff Who
Will Implement the Plan Including Their
Roles and Responsibilities and Office
Location x x
Process for Public Review (Permanent
Displacement Only) x x
Identification of Source of Payment for
Relocation Costs x
Grievance/Appeals Procedures x x
Schedule for Implementation x x
Budget/Cost Estimate for Relocation
Assistance x x
Comments from Relocation Committee
(If Any) (Permanent Displacement Only) x x
Comments from Public During Comment
Period (If Any) (Permanent
Displacement Only)

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73 EXHIBIT 8

SELECTION OF BOND COUNSEL AND BOND

UNDERWRITER/REMARKETER

Selection of Bond Counsel: A bond counsel firm and two alternate firms will be named periodically at the discretion of City of Fairfield to serve as participants on bond issuances, bond refundings (reissuances) or bond restructurings. The selection will be made by a committee consisting of representatives from the City after a Request for Qualifications from interested parties. The committee will select three firms, one of which is designated the bond counsel and two of which are the alternates.

Bond counsel will prepare the necessary legal documentation for the bond issuance including provisions regarding compliance with continuing disclosure requirements, provide an opinion regarding the validity of the bonds and their tax exemption, and provide legal advice on all relevant issues to best protect the interests of the City and Housing Authority.

The bond counsel specifically represents the interests and concerns of the City and Housing Authority in ensuring the integrity of the bond transaction. The project sponsor may, at its own expense, add additional members to its financing team to represent its interests.

Selection of Bond Underwriter: When required for the transaction, a bond underwriter/remarketing agent is to be proposed by the developer, subject to review and approval by COF. The underwriter is to be a nationally recognized firm experienced in underwriting mortgage revenue bond issuances. Approval criteria will include the experience of the firm and staff, cost of services, underwriting abilities, financial qualifications and abilities, and the location of the firm.

The bond underwriter/remarketing agent specifically represents the interests and concerns of the City and Housing Authority. The project sponsor may, at its own expense, add additional members to the finance team to represent its interests.

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74 EXHIBIT 9

PRE-APPLICATION REQUIREMENTS

Following a meeting with COF to introduce a project, an applicant may submit a Pre- Application for multifamily financing. The Pre-Application is expected to include the items below:

1. Name and location of proposed project

2. Name of the applicant and development team

3. Amount of COF loan funds requested

4. If no previous experience with COF, a Tax Credit Allocation Committee “Previous Participation Certificate”

5. Type of construction: new construction or rehabilitation

6. Number of units and their size (# of bedrooms)

7. Affordability levels of the units

8. Timeline for financing and construction

9. Status of site control

10. Preliminary project budget and total development cost (complete COF Developer Submission worksheet)

11. Sources and uses of funds, including construction, bridge and permanent financing

12. Cash flow pro forma including all debt service obligations for the term of the longest proposed loan

13. Other items as may be requested by COF for particular projects

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75 EXHIBIT 10

FULL APPLICATION REQUIREMENTS

The applicant for financing from the City of Fairfield/Fairfield Housing Authority (COF) is expected to complete and submit all of the items described below. Developers applying for tax credits are encouraged to use Tax Credit Allocation Committee (TCAC) forms whenever possible. Developers are required to submit one complete hard copy of the required items as well as an electronic version of the materials.

Only complete applications will be analyzed and considered for funding. COF shall review applications for completeness and allow the applicant 10 days to provide missing items. If all required items are not provided within this time period, the application shall be considered incomplete and will be returned to the applicant. COF will not continue to process the application and the applicant will be encouraged to reapply for the following funding round.

1. Project Narrative
The project narrative should provide a brief summary of the project, and should include, but not be limited to, the following:
 Name and location of proposed project
 Name of the applicant and development team
 Type of construction: new construction or rehabilitation  Design and architectural features of the buildings
 Number of units and their size (# of bedrooms, # of bathrooms, and unit square footage)
 Affordability levels of the units
 Amenities and services offered at the complex
 Exceptional circumstances affecting the project’s development, site, or funding

2. Contact List
Contact information for the following parties should be provided, including the contact person, name of the firm, address, phone number, fax number, and e- mail:
 Applicant
 Developer
 Architect
 General contractor
 Legal counsel
 Financial institution(s)
 Bond underwriter
 Property management firm
 Consultant(s)

3. Applicant Information (Borrower)
Detailed information should be provided for the applicant, including:
 The Principal(s), Executive Director, or President of the firm  Project manager, if different from above
 Legal status of applicant: existing or date to be formed; federal ID number  Organizational documents, i.e. Certificate of Limited Partnership, etc.  Description of ownership interest in the borrower (incl. org chart): report whether the borrower or any limited or general partner is a nonprofit organization
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76  If borrower is a partnership, list the names, addresses and telephone numbers of all general and limited partners, and describe the interest(s) of each partner
 If borrower is a corporation, list all shareholders owning more than 20 percent of the outstanding stock
 Federal tax returns for the last three years for all ownership interests listed above with more than a 20 percent interest, including the general partner and/or sponsor

4. Development Team
A resume from each member of the development team should be included which demonstrates their qualifications to develop, own, and/or operate the proposed project, and should include specifically the qualifications listed below:
 Developer/general partner and co-developer/co-general partner, if applicable
 Provide an organizational chart
 List properties currently owned or managed with government financial assistance identified, and the type (i.e. TCAC, HCD, etc.), and whether the property is subject to a recorded regulatory agreement. Include role in project, year acquired, total number of projects, total number of units and total number of affordable units.  List properties owned or managed that defaulted or were foreclosed upon during the ownership or management period
 Qualifications of key staff persons
 DUNS and SAM registrations
 Execution of Authorization to Release Information form (attached)  Execution of Qualifications Disclosure form (attached)  Architect
 List projects within the last five years of a similar type and level of complexity
 Attorney
 Describe experience in real estate and public financing  Underwriter
 Describe experience of firm and lead underwriter
 Property management firm
 List properties currently managed by name, address, and contact information. Indicate whether the property received or receives government financial assistance, and the type (TCAC, CDLAC, HCD, etc.), and whether the property is subject to a recorded regulatory agreement. Include total number of projects, total number of units and total number of affordable units.
 List properties under management that defaulted or were foreclosed upon during the management period
 Qualifications of key staff persons
 General contractor
 If GC has been selected, list three similar projects and experience in the proposed project’s type of construction.
 If GC has not been selected, provide construction cost estimate methodology, and the resumes of, at least, three GC’s under consideration and their experience with the proposed construction type.
 Other consultants
 Description of qualifications
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77 5. Site Information
 Site Data form (attached)
 Evidence of site control
 Preliminary title report, not more than 90 days old
 Evidence project is not located in a flood plain
 Evidence of land use entitlements, or status of City/County application
 Map showing project location

6. Rehabilitation Projects Only
 Description of current buildings, including matrix of unit types  Relocation plan and budget completed by a qualified third-party consultant (Relocation Plan Requirements attached)

7. Project Description
 Narrative description of proposed construction and design  Complete scope of work with budget for each item (complete COF scope template and Developer Submission worksheet available online)
 Site plan, including number and location of all buildings and number of parking spaces (covered and uncovered), with resident services community space identified and square footage provided, and amenities
 Unit floor plans, including gross and net square footage of each unit type
 Building renderings
 Evidence of compliance with sustainability standards (See Section

4.19)

8. Third Party Reports
 Appraisal
 Rent comparability study
 Rehabilitation assessment (i.e., Physical Needs Assessment)  Phase I environmental assessment (and Phase II, if required)  Lead-based paint assessment (for projects built prior to 1979)  Asbestos assessment (if indicated by Phase 1 or if project built prior to 1979)
 Soils report (New construction only)
 Pest report (Rehab projects only)
 Utility allowance analysis prepared by a qualified energy analyst. (Developments anticipated to receive HOME funds refer to Section

7.4 of these Policies.)

9. Property Management and Resident Services
 See Exhibit 3 of Multifamily Lending Policies for requirements

10. Project Financing
 Narrative description of financing arrangements
 Sources and uses of funds, including construction, bridge and permanent financing
 Evidence of commitment, or commitment status of proposed financing
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78  For acquisition/rehabilitation projects using acquisition tax credits, evidence of satisfaction of TCAC’s ten-year hold requirements  Evidence of tenant-based or project-based assistance, such as rent or operating subsidies, if applicable
 Schedule of proposed rents by unit type
 Itemized operating expenses
 Itemized total development budget
 Cash flow proforma including all debt service obligations for the term of the longest proposed loan
 TCAC credit calculation

11. COF Underwriting and Processing Fee
Applications must include a $10,000 check made out to City of Fairfield for COF Housing Underwriting and Processing.

The following forms must be submitted with the application.

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79 Authorization to Release Information

A. I hereby authorize the City of Fairfield (COF) to make written inquiry relating to any information necessary to determine my eligibility for financing assistance.

B. Any information obtained by City of Fairfield will be used solely for the purpose of assisting me in obtaining financing offered by COF.

C. I understand that the information provided will be kept strictly confidential and that this authorization will be in effect for 12 months from the following date.

Date:

Signature of Applicant Name of Applicant (Printed)
Social Security Number or TIN
Date of Birth
Residence Address: Previous Residence Address:

Street Street
City, State Zip City, State Zip
Name of Business or Corporation
Business Address:

Street
City State Zip

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80 Please respond to each question. If a question does not apply to the discipline of the firm, insert “na”. The firm may be requested to submit documentation to verify or explain its responses to these questions during the proposal review process. This form must be signed by an officer or principal of each firm that is part of the proposer’s team.

The term “Affiliate” means a parent or subsidiary corporati on and an organization (such as a partnership, limited liability company, or professional corporation) that is currently, or in the past five years has been, related to the Firm by means of either (a) financial support; (b) the same or substantially similar: general, managing or limited partners, members, investors, or shareholders; or (c) by other means of control. The term “Officer” means a member of the Firm’s or an Affiliate’s governing board. The term “Principal” encompasses all persons and entities with at least 10% ownership interest in the Firm or an Affiliate.

Operating and Financial Capacity – Current Status: Yes No

1. DOES THE FIRM POSSESS VALID AND CURRENT BUSINESS AND

PROFESSIONAL LICENSES REQURED TO DEVELOP AND OPERATE
THE PROJECT PROPOSED?

2. DOES THE FIRM POSSESS A GENERAL LIABILITY INSURANCE
POLICY WITH A MINIMUM POLICY LIMIT OF AT LEAST $5 MILLION

PER OCCURANCE AND WORKERS COMPENSATION INSURANCE
COVERAGE AS REQUIRED BY CALIFORNIA LAW?

3. CAN THE FIRM OBTAIN PERFORMANCE AND PAYMENT BONDS

FROM AN ADMITTED SURETY EQUAL TO THE ESTIMATED PROJECT
CONSTRUCTION COST?

4. DOES THE FIRM HAVE RETAINED EARNINGS OR DOES ONE OF ITS PRINCIPALS HAVE A NET WORTH EQUAL TO AT LEAST 10% OF
THE ESTIMATED TOTAL PROJECT COST?

Background Information – Within the Last 10 Years: Yes No

LITIGATION

5. HAS THE FIRM, AFFILIATE, OR ANY OFFICER OR PRINCIPAL BEEN

INVESTIGATED, ARRESTED, CONVICTED, FOUND LIABLE,

ENTERED INTO A SETTLEMENT AGREEMENT, OR PAID A PENALTY

FOR FRAUD, PERJURY, FORGERY, THEFT, EMBEZZLEMENT, FALSE

CLAIMS, MATERIAL MISREPRESENTATION, OR ANY SIMILAR CRIME OR CIVIL ACTION?

6. IS THE FIRM OR AFFILIATE CURRENTLY A PARTY TO ANY CIVIL

ACTION, THE OUTCOME OF WHICH COULD MATERIALLY AND
ADVERSELY AFFECT ITS FINANCIAL CONDITION?

PENALTIES AND CITATIONS

7. HAS THE FIRM OR AFFILIATE BEEN DEBARRED, SUSPENDED, OR

OTHERWISE BEEN DEEMED INELIGIBLE TO BID ON CONTRACTS
BY ANY LOCAL, STATE OR FEDERAL AGENCY?

Qualifications Disclosure
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81 8. HAS THE CONTRACTORS LICENSE BOARD ISSUED A FINAL

DECISION OR ORDER AGAINST THE FIRM OR AFFILIATE RELATED TO A CITATION OR DISCIPLINARY ACTION?

9. HAS THE DEPT OF INDUSTRIAL RELATIONS (DIR) FOUND THAT

THE FIRM OR AFFILIATE VIOLATED ANY PROVISION OF THE LABOR

CODE, A DIR REGULATION, OR A WAGE AND HOUR ORDER, OR

ENTERED INTO A SETTLEMENT AGREEMENT RELATED TO SUCH
VIOLATIONS?

10. HAS CAL OSHA CITED AND ASSESSED PENALTIES AGAINST THE

FIRM OR AFFILIATE FOR ANY SERIOUS, WILFUL OR REPEAT
VIOLATIONS OF HEALTH AND SAFETY STANDARDS?

11. HAS THE FIRM OR AFFILIATE BEEN ISSUED A CODE

ENFORCEMENT CITATION RELATED TO ANY BUILDING OWNED OR

OPERATED BY THE FIRM OR AFFILIATE FOR VIOLATION OF
HEALTH AND SAFETY REGULATIONS OR BUILDING CODES?

FINANCIAL

12. HAS THE FIRM OR AFFILIATE FILED FOR, OR BEEN THE SUBJECT

OF THE INVOLUNTARY INITIATION OF, BANKRUPTCY,

REORGANIZATION, INSOLVENCY, DISSOLUTION OR
RECEIVERSHIP PROTECTION?

13. HAS THE FIRM OR AFFILIATE DEFAULTED ON ANY LOAN OR HAS

ANY PROPERTY OWNED BY THE FIRM OR AFFILIATE BEEN
FORECLOSED AGAINST?

14. HAS A SURETY COMPLETED A CONTRACT OR MADE PAYMENT ON

BEHALF OF THE FIRM OR AFFILIATE DUE ITS DEFAULT OF A
CONTRACTUAL OBLIGATION?

FIRM AND AFFILIATE INFORMATION

Please provide the following information:

1. Firm Organization status:

CA Corporation _____ Corporation Professional Corporation General Partnership Limited Partnership Limited Liability Company Sole Proprietor

2. How many years has the Firm been in business? Years

3. Firm Contractor’s License No. (if applicable): _______________________

4. Is the Firm a subsidiary, parent, holding company or Affiliate (as defined above) of another firm?
_____ Yes _____ No
If yes, please list below the names and relationship of each Affiliate firm:

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82 5. Has the ownership of any of the Principals in the Firm changed by more than 25% during the last three years? ______ Yes _______ No If yes, please provide a brief explanation below or in an attachment:

6. Does the Firm or an Affiliate currently own any property in the City of Fairfield or Solano County, other than its business office location(s) or the personal residences of Officers or Principals of the Firm or Affiliate? ______ Yes _______ No If yes, please list the addresses below or in an attachment:

I hereby certify that the foregoing responses are true and correct:

_________________________ _____________________
Signature Date

____________________________ _____________________
Name and Title Phone Number

____________________________ _____________________
Firm Name Address
_____________________

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83 Site Data

Project Name:

Project Address:

APN’s:

Zoning:

Site Acreage:

Number of Buildings:

Square Footage of
Buildings:

Number of Parking
Spaces:

Amenities (current):

Amenities (proposed):

SURROUNDING LAND USES:

North:

South:

East:

West:

INDICATE THE LOCATION OF THE FOLLOWING TO THE SITE:

Name Distance
from site
Street Location

Public Transportation:

Elementary School:

Intermediate School:

High School:

Park:

Day Care:

Grocery Store:

ADDITIONAL INFORMATION REGARDING SITE OR NEIGHBORHOOD:

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84 EXHIBIT 11

California Code of
Regulations Title 25,
Division 1
Chapter 7
Subchapter 19
Commencing with
Section 8300
Effective date: November 15, 2017

Section 8300. Purpose and Scope ................................................................

Section 8301. Definitions ............................................................................

Section 8302. Restrictions on Demolition ......................................................

Section 8303. Site Control Requirements and Scattered Site Projects ...............

Section 8304. Unit Standards. .....................................................................

Section 8305. Tenant Selection ...................................................................

Section 8306. Tenant Recertification .............................................................

Section 8307. Rental Agreement and Grievance Procedure. .............................

Section 8308. Operating Reserves. ..............................................................

Section 8309. Replacement Reserves ...........................................................

Section 8310. Underwriting Standards ..........................................................

Section 8311. Limits on Development Costs. .................................................

Section 8312. Developer Fee .......................................................................

Section 8313. Program Compatibility ...........................................................

Section 8313.1 Funding Source Surpluses ....................................................

Section 8313.2 Special Purpose Entity(ies). ..................................................

Section 8314. Use of Operating Cash Flow ...................................................

Section 8315. Subordination Policy ..............................................................

Section 8316. Leasehold Security ................................................................

Section 8317. Restructuring Transaction Fees ...............................................

Section 8318. Federal Loan Extensions .........................................................

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85 Section 8300. Purpose and Scope.

(a) These regulations provide uniform standards and program rules for multifamily rental housing developments assisted by the Department of Housing and Community Development.

(b) When expressly incorporated by reference, some or all of the provisions of this Chapter shall apply to: the Joe Serna, Jr.

Farmworker Housing Grant (JSJFWHG) Program (Chapter 7,
subchapter 3, commencing with Section 7200); the Multifamily Housing Program (MHP) (Chapter 7, subchapter 4, commencing with Section 7300); and the HOME Investment Partnerships (HOME) Program (Chapter 7, subchapter 17, commencing with Section 8200).

These regulations interpret and make specific the following statutes applicable to these programs: Health and Safety Code Division 31, Part 3.2, Chapter 2 (commencing with Section 50517.5), Chapter 6.7 (commencing with Section 50675), and Chapter 16 (commencing with Section 50896).

(c) The 2017 adoptions and amendments to subchapter 19 shall be effective on November 15, 2017 and shall apply prospectively to all standard agreements between the Department and Sponsors that are executed or amended on or after the foregoing effective date and are governed by the authorities set forth in subsection (b). These agreements are subject to the standard contract format referenced in the California State Contracting Manual.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(2), 50675.1(d), 50675.11 and 50896.3(b), Health and Safety Code. Reference: Sections 50517.5, 50675, 50896, 50896.1 and 50896.3, Health and Safety Code; and 24 CFR part 92.

Section 8301. Definitions.

The following definitions govern this subchapter.

(a) "Assisted Unit" means a Unit that is subject to the Program’s rent and/or occupancy restrictions as a result of the financial assistance provided by the Program, as specified in the Regulatory Agreement.

(b) “CalHFA” means the California Housing Finance Agency.

(c) “Commercial Space” means any nonresidential space located in or on the property of a Rental Housing Development that is, or is proposed to be, rented or leased by the owner of the Project, the income from which shall be included in Operating Income.

(d) “CPI” means the Consumer Price Index for All Urban Consumers, West Region, All Items, as published by the Bureau of Labor Statistics, United States Department of Labor.

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86 (e) “Debt Service Coverage Ratio" means the ratio of (1) Operating Income less the sum of Operating Expenses and required reserves to (2) debt service payments, excluding voluntary prepayments and non- mandatory debt service. In calculating Debt Service Coverage Ratio, the Department may include all Operating Income, and may exclude Operating Income that cannot be reasonably underwritten by lenders making amortized loans or that is approved by the Department to be deposited into a reserve account to defray projected operating deficits.

(f) "Department" means the Department of Housing and Community Development.

(g) “Developer Fee” means the same as the definition of that term in California Code of Regulations, Title 4, Section 10302.

(h) "Distributions" means the amount of cash or other benefits received from the operation of a Rental Housing Development and available to be distributed pursuant to Section 8314 to the Sponsor or any party having a beneficial interest in the Sponsor or the Project, after payment of all due and outstanding obligations incurred in connection with the Rental Housing Development. Distributions do not include payments for: deferred Developer Fee up to the limit set forth in Section 8312, approved partnership and asset management fees, mandatory debt service, approved reserve accounts established to prevent tenant displacement resulting from the termination of rent subsidies, operations, maintenance, payments to approved reserve accounts, land lease payments to parties that do not have a beneficial interest in the Sponsor entity, or payments for property management or other services as set forth in the Regulatory Agreement for the Rental Housing Development. Distributions include releases to the Sponsor or any other party of reserve funds, where the use of these funds have not been approved by the Department for Project costs.

(i) “Eligible Households” for MHP means “eligible household” as defined in Section 7301, for HOME this term means the same as “low income families” as defined in 24 CFR 92.2, and for JSJFWHG
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87 this term means the same as “agricultural household” as defined in Section 7202.

(j) “Native American Lands” means real property located within the geographic boundary of the State of California that meets both the following criteria: it is trust land for which the United States holds title to the tract or interest in trust for the benefit of one or more Indian tribes or individual Indians, or is restricted Indian land for which one or more tribes or individual Indians holds fee title to the tract or interest but can alienate or encumber it only with the approval of the United States; and the land may be leased for housing development and residenti al purposes under federal law.

(k) "Operating Expenses" means the amount approved by the Department that is necessary to pay for the recurring expenses of the Project, such as utilities, maintenance, management, taxes, licenses, and Supportive Services Costs, but not including debt service or required reserve account deposits.

(l) "Operating Income" means all income generated in connection with operation of the Rental Housing Development including rental income for Assisted Units and non-Assisted Units, rental income for Commercial Space or commercial use, laundry and equipment rental fees, rental subsidy payments, and interest on any accounts, other than approved reserve accounts, related to the Rental Housing Development. "Operating Income" does not include security and equipment deposits, payments to the Sponsor for Supportive Services not included in the Department-approved operating budget, cash contributed by the Sponsor, or tax benefits received by the Sponsor.

(m) "Program" means the Department funding program or programs providing assistance to the Project.

(n) "Project" means a Rental Housing Development, and includes the development, the construction or rehabilitation, and the operation thereof, and the financing structure and all agreements and documentation approved in connection therewith.

(o) “Regulatory Agreement” means the written agreement between the Department and the Sponsor that will be recorded as a lien on the Rental Housing Development to control the use and maintenance of the Project, including restricting the rent and occupancy of the Assisted Units.

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88 (p) "Rental Housing Development" means a structure or set of structures which collectively contains 5 or more Units (except that HOME projects may contain fewer than 5 Units.). “Rental Housing Development” does not include any “health facility” as defined by Section 1250 of the Health and Safety Code or any “alcoholism or drug abuse recovery or treatment facility” as defined by Section 11834.02 of the Health and Safety Code.

(q) “Restricted Unit” means any Assisted Unit and any Unit that is subject to Rent and occupancy restrictions that are comparable to those applicable to Assisted Units. Restricted Units include Units subject to a TCAC regulatory agreement, and all Units subject to similar long- term, low-income or occupancy restrictions imposed by other public agencies.

(r) "Rural Area" means the same as defined in Section 50199.21 of the Health and Safety Code.

(s) “Sponsor” means the legal entity or combination of legal entities with continuing control of the Rental Housing Development. Where the borrowing entity is or will be organized as a limited partnership, Sponsor includes the general partner or general partners who have effective control over the operation of the partnership, or, if the general partner is controlled by another entity, the controlling entity.

Sponsor does not include the seller of the property to be developed as the Project, unless the seller will retain control of the Project for the period of time necessary to ensure Project feasibility as determined by the Department.

(t) “Supportive Services” means social, health, educational, income support and employment services and benefits, coordination of community building and educational activities, individualized needs assessment, and individualized assistance with obtaining services and benefits.

(u) “Supportive Services Costs” means the costs of providing tenants service coordination, case management, and direct resident and Supportive Services. It includes:

(1) the cost of providing tenants with information on and referral to social, health, educational, income support and employment services and benefits, coordination of community building and educational activities, individualized needs assessment, and individualized assistance with obtaining services and benefits; Packet Page 636 of 798Attachment 2 Page 88 of 117

89 (2) salaries, benefits, contracted services, telecommunication expenses, travel costs, supplies, office expenses, staff training, maintenance of on-site equipment used in services programs, such as computer labs, incidental costs related to resident events, and other similar costs approved by the Department.

(v) “TCAC" means the California Tax Credit Allocation Committee.

(w) "Transitional Housing" means a Rental Housing Development operating under programmatic constraints that require the termination of assistance after a specified time or event, in no case less than 6 months after initial occupancy, and the re-renting of the Assisted Unit to another eligible participant.

(x) “Unit” means a residential Unit that is used as a primary residence by its occupants, including efficiency Units, residential hotel units, and units used as Transitional Housing.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5, 50675, 50675.1(c), 50675.2 and 50896.1(a), Health and Safety Code; and 24 CFR part 92.

Section 8302. Restrictions on Demolition.

(a) Proposed projects involving new construction and requiring the demolition of existing residential Units are eligible only if the number of bedrooms in the new Project is at least equal to the total number of bedrooms in the demolished structures. The new Units may exist on separate parcels provided all parcels are part of the same Rental Housing Development meeting the requirements of Section 8303(b).

(b) The Department may approve exceptions to subsection (a) where it determines that such exceptions will substantially improve the livability of the remaining units, or serve some other compelling public policy objective. For example, it may approve a reduction in the number of single room occupancy (SRO) units where necessary to add private cooking and bathing facilities, or a reduction in the number of bedrooms in public housing necessary to meet federal requirements.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(a)(1), 50517.5(d)(3), 50675.4, 50675.7 and 50896.1(a), Health and Safety Code; and 24 CFR Section 92.353(a).

Packet Page 637 of 798Attachment 2 Page 89 of 117

90 Section 8303. Site Control Requirements and Scattered Site Projects.

(a) At the time of application, a Sponsor must have site control of the of the proposed Project property, in the name of the Sponsor or an entity controlled by the Sponsor, by one of the following means:

(1) fee title, which, for tribal trust land, may be evidenced by a title status report or an attorney’s opinion regarding chain of title and current title status;

(2) a leasehold interest on the Project property with provisions that enable the lessee to make improvements on and
encumber the property provided that the terms and conditions of any proposed lease shall permit, prior to loan closing, compliance with all Program requirements, including
compliance with Section 8316;

(3) an enforceable option to purchase or lease which shall extend through the anticipated date of the Program award as specified in the Notice of Funding Availability (NOFA);

(4) a disposition and development agreement with a public agency;

(5) an agreement with a public agency that gives the Sponsor exclusive rights to negotiate with that agency for acquisition of the site, provided that the major terms of the acquisition have been agreed to by both parties; or

(6) a land sales contract, or other enforceable agreement for the acquisition of the property.

(b) If the Project has multiple contiguous or non-contiguous sites, the configuration of those sites must satisfy all provisions of the statutes governing the applicable Department funding program or programs, and meet the following additional requirements:

(1) all of the developments on the various sites must have a single owner and property manager at the time of the closing of the Department loan, with the exception of any non- residential condominium units;

(2) the debt and associated security instruments of all lenders senior to the Department must be the same for all sites, and multiple senior lenders shall not be allowed; there must be a single annual report, schedule of rental income, and annual audit of project operations covering all sites;

Packet Page 638 of 798Attachment 2 Page 90 of 117

91 (3) the Department must be secured against all sites, with lien priority relative to local public agency lenders and use of cash flow available for residual receipt loan payments
determined in accordance with Section 8314(a)(2)(A) and (B) of these regulations (with each lender’s share of residual receipts proportionate to their share of total Department and local government assistance for the entire multi-site project); and

(4) the Department must be named on applicable insurance policies subject to the Department’s approval covering all sites, including but not limited to title insurance policies and other policies with coverage for hazard and liability insurance for the Rental Housing Development, including flood insurance, if applicable. The Department shall be named as a loss payee or an additional insured on all such policies. Such policies also shall provide for notice to the Department in the event of any lapse of coverage and in the event of any claim thereunder.

Insurance must be obtained and maintained for the term of the Department’s program loan.

Note: Authority cited: Secti ons 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(d)(4)(A), 50675.6, 50675.7(c)(3) and 50896.1(a), Health and Safety Code; 42 U.S.C. Section 5304(b); and 24 CFR Section 92.35(a).

Section 8304. Unit Standards.

(a) Restricted Units shall not differ substantially in size or amenity level from non-Restricted Units with the same number of bedrooms, and Units shall not differ in size or amenity level on the basis of income- level restrictions. Restricted Units shall not be segregated from non-Restricted Units, and Units shall not be segregated from each other on the basis of income-level restrictions. Within these limits, Sponsors may change the designation of a particular Unit from Assisted to non-Assisted or from one income-restriction to another over time. For Projects involving rehabilitation or conversion, the Department may permit certain Units to be designated as exclusively market-rate Units where necessary for fiscal integrity and where all other Program requirements are satisfied.
(b) For the full loan term, the number, size, type, and amenity level of Assisted Units shall not be fewer than the number nor different from the size, type and amenity level described in the Regulatory Agreement.

(c) For projects assisted by MHP, the number of Assisted Units shall equal the number of Restricted Units to the extent allowed by the requirements of Article XXXIV of the California Constitution.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(c), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(d)(4)(A), 50517.5(d)(5), 50517.5(e)(2), 50675.1(c), Packet Page 639 of 798Attachment 2 Page 91 of 117

92 50675.2(b), 50675.7, 50675.8 and 50896.1(a), Health and Safety Code; and 24 CFR Sections 92.252(e) and 92.504(c).

Section 8305. Tenant Selection.

(a) Sponsors shall select only Eligible Households as tenants of vacant Assisted Units, using procedures approved by the Department that include:

(1) reasonable criteria for selection or rejection of tenant applications which shall not discriminate in violation of any federal, state or local law governing discrimination, or any other arbitrary factor;

(2) prohibition of local residency requirements;

(3) prohibition of local residency preferences, except where there is evidence satisfactory to the Department that the preference as applied will comply with fair housing law and:

(A) where accompanied by an equal preference for
employment in the local area and applied to areas not
smaller than municipal jurisdictions or recognized
communities within unincorporated areas, or

(B) where a local ordinance grants a preference to
neighborhood residents who have been or are about to
be displaced;
(4) tenant selection procedures that include the following components, and that are available to prospective tenants upon request:

(A) selection of tenants based on order of application, lottery or other reasonable method approved by the
Department, including priority status under a local
coordinated entry (also known as centralized or
coordinated assessment, or coordinated access) system
established pursuant to federal regulations governing
the Continuum of Care program, 24 Code of Federal
Regulations, Part 578 (June 6, 2017) hereby
incorporated by reference;

(B) does not encourage or require applicants to wait in a physical line;
(C) notification to tenant applicants of eligibility for residency and, based on turnover history for Units in
the Rental Housing Development, the approximate
date when a Unit may be available;

Packet Page 640 of 798Attachment 2 Page 92 of 117

93 (D) notification of tenant applicants who are found
ineligible to occupy an Assisted Unit of their
ineligibility and the reason for the ineligibility, and of their right to appeal this determination;

(E) maintenance of a waiting list of applicant households eligible to occupy Assisted Units and Units designated for various tenant income levels, which shall be made
available to prospective tenants upon request;

(F) targeting specific Special Needs Populations (“Special Needs Populations” has the same meaning as defined in
Section 7301(s)) in accordance with the Regulatory
Agreement and applicable laws; and

(G) affirmative fair housing marketing procedures as
specified in the Affirmative Fair Housing Marketing
Plan Compliance Regulations of the United States
Department of Housing and Urban Development, 24
CFR part 200.620 (a)-(c), or similar affirmative fair
marketing housing plan as approved by the
Department.

(b) Sponsors shall rent vacant units to households with no less than the number of people specified in the following schedule:

Unit Size Minimum Number of Persons in
Household
SRO 1
0-BR 1
1-BR 1
2-BR 2
3-BR 4
4-BR 6
5-BR 8

Exceptions:

(1) Live-in aids may be allocated a separate bedroom.

(2) A separate bedroom may be allocated as a reasonable accommodation for individuals with disabilities who have a need for such an accommodation.

(3) For units covered under Housing Choice Vouchers or
project-based Section 8 rental assistance contracts,
Sponsors may defer to the local housing authority’s
Packet Page 641 of 798Attachment 2 Page 93 of 117

94 determination of appropriate unit occupancy.

A Sponsor may assign tenant households to Units of sizes other than those indicated as appropriate in the table and exceptions listed above if the Sponsor reasonably determines that special circumstances warrant such an assignment and the reasons are documented in the tenant's file. The Sponsor’s determination is subject to approval by the Department. Through the Project’s tenant selection or management plan, a Sponsor may receive advance Department approval of additional categorical exceptions.

(c) The Department may approve exceptions to the requirements of this section for Projects located on Native American Lands, based on the unique legal requirements applicable to Native American Lands.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(a)(1), 50517.5(d)(3), 50517.5(d)(5), 50517.5(e)(2), 50675.1(c), 50675.8(a)(1) and 50896.1(a), Health and Safety Code; and 24 CFR Sections 92.303, 92.350 and 92.351.

Section 8306. Tenant Recertification.

(a) The Sponsor shall annually recertify household size and income for Assisted Units.

(b) If at the time of recertification, a tenant's household size has changed and no longer meets the occupancy standards pursuant to the previous section, the Sponsor may require the tenant household to move to the next available appropriately sized Unit.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(c), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(a)(1), 50517.5(d)(3), 50517.5(d)(5), 50517.5(e)(2), 50675.1(c), 50675.8(a)(1) and 50896.1(a), Health and Safety Code, and 24 CFR Sections 92.303, 92.350 and 92.351.

Section 8307. Rental Agreement and Grievance Procedure.

(a) All rental or occupancy agreements for Assisted Units are subject to Department approval and shall include:

(1) provisions requiring good cause for termination of tenancy.

One or more of the following constitutes "good cause":

(A) failure by the tenant to maintain applicable eligibility requirements under the Program or other eligibility
requirements as approved by the Department;

(B) material noncompliance by the tenant with the lease, Packet Page 642 of 798Attachment 2 Page 94 of 117

95 including one or more substantial violations of the
lease or habitual minor violations of the lease which:

1. adversely affect the health and safety of any
person or the right of any tenant to the quiet
enjoyment of the leased premises and related
Project facilities;

2. substantially interfere with the management,
maintenance, or operation of the Rental
Housing Development; or

3. result from the failure or refusal to pay, in a
timely fashion, Rent or other permitted charges
when due. Failure or refusal to pay in a timely
fashion is a minor violation if payment is made
during the 3-day notice period;

(D) subletting by the tenant of all or any portion of the Assisted Unit;

(E) any other action or conduct of the tenant constituting significant problems which can be reasonably resolved
only by eviction of the tenant, provided that the Sponsor has previously notified the tenant that the conduct or
action in question would be considered cause for
eviction. Examples of action or conduct in this category include the refusal of a tenant, after written notice, to accept reasonable rules or any reasonable changes in
the lease or the refusal to recertify income or household size; or

(F) for Transitional Housing, the end of the maximum term prescribed for tenant occupancy by the Program
operated in a particular Transitional Housing Project.

(2) a provision requiring that the facts constituting the grounds for any eviction be set forth in the notice provided to the tenant pursuant to state law;

(3) notice of grievance procedures for hearing complaints of tenants and appeal of management action; and

(4) a requirement that the tenant annually recertify household income and size.

Packet Page 643 of 798Attachment 2 Page 95 of 117

96 (b) The Sponsor shall adopt an appeal and grievance procedure to resolve grievances filed by tenants and appeals of actions taken by Sponsors with respect to tenants' occupancy in the Rental Housing Development, and prospective tenants' applications for occupancy.

The Sponsor’s appeal and grievance procedure shall be subject to Department approval and, at a minimum, shall include the following:

(1) a requirement for delivery to each tenant and applicant of a written copy of the appeal and grievance procedure;
(2) procedures for informal dispute resolution;

(3) a right to a hearing before an impartial body, which shall consist of one or more persons with the power to render a final decision on the appeal or grievance; and

(4) procedures for the conduct of an appeal or grievance hearing and the appointment of an impartial hearing body.

(c) Neither utilization of, nor participation in any of the appeal and grievance procedures shall constitute a waiver of or affect the rights of the tenant, prospective tenant, or Sponsor to a trial de novo or judicial review in any judicial proceeding which may thereafter be brought in the matter.

(d) This section shall not be construed to pre-empt or supersede requirements established by local government which further limit good cause for eviction.

(e) For Projects located on Native American Lands, the Department may approve exemptions to the requirements of this section, based on the unique legal requirements applicable to Native American Lands.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(d)(3), 50517.5(d)(5), 50517.5(e)(2), 50675.8(a)(1), 50675.8(a)(2) and 50896.1(a), Health and Safety Code; and 24 CFR Sections

92.253 and 92.303.

Section 8308. Operating Reserves.

The Sponsor shall establish an operating reserve for the purpose of defraying operating shortfalls resulting from Department-approved Operating Expenses exceeding Operating Income beyond the rent-up period.

a) Withdrawals from the operating reserve shall require prior written approval of the Department. Should the Department fail to take action on a request for an eligible withdrawal from the operating reserve within 30 days from documented receipt of the request, that request shall be deemed approved.

Packet Page 644 of 798Attachment 2 Page 96 of 117

97 b) The initial deposit to the operating reserve shall be funded from development funding sources in an amount determined by the Department, which shall be not less than the total of the following: 4 months of projected Operating Expenses (excluding the cost of on- site Supportive Services coordination), 4 months of required replacement reserve deposits, and 4 months of non-contingent debt service. For projects with tax credits, the requirement shall be 3 months of these items. In setting the initial funding requirement, the Department shall consider factors including, but not limited to the projected level of Project cash flow, the adequacy of the operating budget, Project location, local market characteristics, the number of sites, and Project design.

c) Sponsor shall fully replace any withdrawals from the Operating Reserve, up to the minimum initial deposit amount specified in subsection (b) above, as may be modified in accordance with subsection (d) or (e) below, using available cash flow prior to use of any cash flow to pay deferred Developer Fee, partnership management or similar fees, or Distributions.

d) In the absence of some extraordinary occurrences, such as litigation affecting the project or construction defects, and upon occurrence of both of the following events, the Department shall reduce the required minimum balance: (i) operation at a debt service coverage ratio of

1.15 or greater for 5 years; and (ii) operation at an Operating Expense coverage ratio of 1.08, where Operating Expense ratio is defined to equal effective gross income, less required replacement reserve deposits and non-contingent debt service, divided by total Operating Expenses, not including the approved cost of Supportive Services coordination.

e) The Department may agree with other financing sources to allocate authority regarding amounts deposited into or withdrawn from the Operating Reserve, where the Department determines that such arrangement would not jeopardize the fiscal integrity of the Project and the minimum reserve requirements woul d be maintained. For Projects subject to direct federal loan or grant programs, including the Native American Housing Assistance and Self Determination Act programs, or receiving a permanent loan from CalHFA, the Department may also defer to the operating reserve requirements of these agencies during the time such projects are regulated by a federal agency or CalHFA, and not require deposits in the amounts specified in subsection (b).

f) Where all Project development funding sources are legally precluded from using their funds to capitalize the operating reserve as required by subsection (b), the Sponsor may fund this account out of Operating Income, provided that cash flow is sufficient to reasonably ensure that the required balance can be accumulated within six years of initial occupancy.
g) In no event shall this reserve balance be used to fund limited partner exit costs, except for amounts in excess of the reserve Packet Page 645 of 798Attachment 2 Page 97 of 117

98 balance required by the Department.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5, 50675.5(b)(8) and 50896.1(a), Health and Safety Code.

Section 8309. Replacement Reserves.

The Sponsor shall establish a replacement reserve to repair or replace failed or damaged capital items and to cover extraordinary maintenance expenses, as approved by the Department. Extraordinary maintenance expenses are expenses for infrequent major repairs and replacements of building components too costly to be absorbed by the Project’s annual operating budget. In no event shall this reserve be used to fund limited partner exit costs.

(a) Withdrawals from the replacement reserve shall require prior written approval of the Department. Should the Department fail to take action on a request for an eligible withdrawal from the replacement reserve within 30 days of documented receipt of the request, that request shall be deemed approved.

(b) The replacement reserve shall be funded from Operating Income, development sources or a combination of Operating Income and development sources.

(1) For new construction or conversion Projects, the initial amount of annual deposits to the replacement reserve account shall be equal to at least the lesser of 0.6% of estimated
construction costs associated with structures in the Project, excluding construction contingency and general contractor profit, overhead and general requirements, or
$500 per unit. However, the Department may approve a
different amount based on the results of a third-party reserve analysis, which it may require, or other reliable indicators of the need for replacement reserve funds over the initial 20 years of operation, or, in the case of transactions involving restructuring of existing Department loans, 20 years of operations after the restructuring.

(2) For rehabilitation Projects, the initial amount of annual deposits to the replacement reserve account shall be
determined by the Department based on the results of a
third-party physical needs assessment or other reliable indicators of the need for replacement reserve funds over the initial 20 years of operation. In its initial underwriting, in the absence of an approved physical needs assessment or other reliable indicators of the need for replacement reserve funds, the Department may assume that the initial amount of annual deposits shall be $500 per unit.

(3) The Department may periodically adjust the amount of Packet Page 646 of 798Attachment 2 Page 98 of 117

99 required deposits to the replacement reserve for a particular Project based on the results of reserve analysis or other reliable indicators of the need for replacement reserve funds over time.

(4) The Department may agree with other financing sources to allocate authority regarding amounts deposited into or
withdrawn from the replacement reserve, where the
Department determines that such arrangement would not
jeopardize the fiscal integrity of the Project and the minimum reserve requirements would be maintained. For Projects
subject to direct federal loan or grant programs, including Native American Housing Assistance and Self Determination Act programs, or receiving a permanent loan from CalHFA, the Department may also defer to the replacement reserve
requirements of these agencies during the time such projects are regulated by a federal agency or CalHFA.

(5) If the Department requires a reserve analysis because the Department determines the reserve is inadequate due to
annual replacement costs exceeding or being reasonably likely to exceed the amounts deposited to the reserve, or due to a request by the Sponsor to adjust the required reserve amount, the analysis must result in a due diligence report that examines the current physical conditions at property(ies), specifies repairs or replacements needed immediately, and budgets for the long-term capital repair and replacement needs during the life of an asset, such as the results of using the Capital Needs Assessment eTool, developed by the U.S. Department of
Housing and Urban Development.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(d)(1), 50675.5(b)(8) and 50896.1(a), Health and Safety Code.

Section 8310. Underwriting Standards.

In analyzing Project feasibility, the Department shall, at a minimum, utilize the following assumptions and criteria:

(a) Residential vacancy rates shall be assumed to be 5%, unless a different figure is required by another funding source (including TCAC) or supported by compelling market evidence.

(b) Vacancy rates for Commercial Space shall be assumed to be 50%, except the Department may use the vacancy loss assumption of the Project’s senior lender or equity investor under either of the following circumstances:

(1) where the commercial income is guaranteed by the
Sponsor through a long-term master lease and the
Packet Page 647 of 798Attachment 2 Page 99 of 117

100
amount of the Sponsor’s annual master lease
payment is both:

(A) less than one percent of the Sponsor’s cash
and cash equivalent current assets; and

(B) less than or equal to the projected commercial
income, as evidenced by a market study or
appraisal commissioned by the first lien lender or
equity investor, and reflected in the final pro
forma approved by the first lien lender or equity
investor; or

(2) where the Commercial Space has been leased to a
national or regional firm widely recognized by the
general public, and the term of the lease extends at
least five years past the projected date of construction completion.

(c) Total Operating Expenses (not including property taxes or the approved costs of on-site service coordination) shall not be less than those specifically listed in California Code of Regulations, Title 4, Section 10327 as minimum Operating Expenses (without the reduction allowed by those regulations for bond-financed projects). The Department may project higher Operating Expenses where warranted by the experience of comparable properties and particular building characteristics, such as the nature of the tenant population or the level of rehabilitation. Prior to loan closing, the Department may approve total Operating Expenses that are less than those specified in Section 10327, supra, only if the Project has an extraordinary design feature, such as its own electrical generation system, which results in a quantifiable operating cost savings as documented by a qualified third party.

(d) All Operating Expenses, including property management fees, shall be within the normal market range, as periodically determined by the Department in surveys or based on costs observed in its portfolio.

(e) The first year Debt Service Coverage Ratio shall not be:

(1) less than 1.10:1 or

(2) greater than 1.20:1, except where a higher first-year ratio is necessary to:

(A) project first-year cash flow after debt service and required reserve deposits equal to or less than 12
percent of operating expenses;

Packet Page 648 of 798Attachment 2 Page 100 of 117

101
(B) meet the requirements of subsection (i);

(D) project a positive cash flow over 20 years, using the assumptions specified in subsection (i).

In applying the requirements of subsections (e)(1) and (e)(2), the annual MHP Program loan payment of 0.42% will be considered debt service.

The Department may modify the application of these requirements on a case-by-case basis for Projects receiving operating or rental subsidies structured to allow for breakeven operation, or for operation at a level of cash flow that differs from that resulting from application of these requirements in order to meet the cash flow obligations in this subsection.

(f) Balloon payments are not allowed on senior debt, except where the Department’s affordability covenant or regulatory agreement (collectively “Use Restriction”) is recorded in a position that is senior to the debt with a balloon payment. Any such Use Restriction may include provisions that, upon foreclosure of the debt instrument securing such debt, allow the Use Restriction to be amended to delete any portion of the Use Restriction that is not necessary to ensure the continued restriction of the project to the same affordability level for all occupants, rents or amounts charged pursuant thereto, reporting requirements not related to tenant occupancy and affordability, and level of operations and maintenance (collectively, the “Affordability Provisions”). The Sponsor may also include an executory provision in the original Use Restriction that immediately limits the effect of the Use Restriction to only those set forth in the Affordability Provisions.

Furthermore, in the event project-based rental assistance is terminated, the Affordability Provisions may include a provisi on allowing rents to increase to the minimum extent required for fiscal integrity, as defined in Section 7301(g), but not in any event shall rents exceed 30% of 50% of area median income, as such area median income is determined by the U. S. Department of Housing and Urban Development, adjusted by bedroom count by TCAC pursuant to 26 U.S. Code Section 42(g)(2)(C) with the annually published TCAC Income Limits and Maximum Rents posted on the TCAC website.

(g) Balloon payments are allowed on junior debt during the term of the Program loan only where the Department determines that the balloon payment will not jeopardize project feasibility.

(h) Variable interest rate debt shall be underwritten at the ceiling interest rate, unless the Department determines that using a lower interest rate assumption will not jeopardize project feasibility.

Packet Page 649 of 798Attachment 2 Page 101 of 117

102
(i) The Project must demonstrate a positive cash flow for 15 years, using income and expenses increase rate assumptions specified in California Code of Regulations, Title 4, Section 10327. If projected Project income includes rental assistance or operating subsidy payments under a renewable contract, the Department may assume that this contract will be renewed, where the renewal of the rental assistance or operating subsidy is likely.

(j) Where the Department is providing construction-period financing, the minimum budgeted construction contingency shall be 5 percent of construction costs for new construction projects and 10 percent of construction costs for rehabilitation and conversion projects.

(k) Local public agency loans shall not have required payments exceeding 0.5% per year of the original principal loan amount.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code. Reference: Sections 50517.5(d)(2), 50517.5(e)(2), 50675.7(b)(3) and 50896.1(a), Health and Safety Code; and 24 CFR Section 92.252.

Section 8311. Limits on Development Costs.

(a) Project development costs must be reasonable, as measured by the ratio of the project’s total eligible basis to its total adjusted threshold basis limits, calculated at the time of application for Department funds. Both total eligible basis and total adjusted basis limits shall be computed in accordance with TCAC regulations and procedures set forth in Title 4, California Code of Regulations, Sections 10325 - 10327, except as follows:

(1) There shall not be an adjustment of threshold basis limits based on units that will be income and rent restricted at or below certain area median income levels, such as that in Title 4, California Code of Regulations, Section
10327(c)(5)(C) as in effect as of September 2016.

(2) Costs shall be deemed reasonable under this section if the ratio calculated pursuant to the above subsection (a) is less than 160 percent.

(b) If the ratio calculated above in subsection (a) exceeds 170 percent, calculated based on actual development costs following completion of construction, the Sponsor shall incur up to 20 negative points which may, in the Department’s discretion, be assessed, and which negative points shall reduce the Sponsor’s score by the same amount for future applications to any of the Department’s Notice of Funding Availability for any of the Department’s programs, and may continue to be repeatedly assessed for any and all successive NOFAs for a period of up to three years following the date on which the Department determined that the cost exceeded the 170 percent limit.

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103

(c) Builder overhead, profit and general requirements shall be limited in accordance with California Code of Regulations, Title 4, Section 10327.

(d) Property acquisition prices shall not exceed appraised value, except where the increment above appraised value is fully covered by junior public agency financing that carries no mandatory debt service.

(e) Proposed Project sites shall not require site development work that is significantly more costly than that typical for other similar projects in the local market area, unless either:

(1) the proposed site acquisition cost together with the site development costs are less than the cost of a typical site together with typical site development costs in the Project’s market area; or

(2) there are no other sites available in the market area with a lower combined cost.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(a)(1), 50517.5(c)(2), 50517.5(e)(2), 50675(a), 50675.4(b)(2), 50675.4(c)(1), 50675.5 and 50896.(1)(a), Health and Safety Code.

Section 8312. Developer Fee.
(a) For Projects not utilizing low income housing tax credits, Developer Fee shall not exceed the amount calculated in accordance with subsections (1), (2) or (3) below. The per unit amounts will be adjusted in thousand dollar increments in accordance with changes in the CPI when, following the year 2016, the CPI has indicated the next full thousand dollar increment has been reached.

(1) For new construction Projects and Projects where the contract for the rehabilitation work equals or exceeds
$35,000 per Unit:

(A) For the first 30 Units, $26,000 per Unit.

(B) For each Unit in excess of 30, $10,500 per Unit.

(2) For other Projects involving acquisition and rehabilitation where the contract amount for the rehabilitation work,
excluding contractor profit and overhead, equals or exceeds $10,500 per Unit and is less than $35,000 per Unit:

(A) For the first 30 Units, $12,000 per Unit.

(B) For each Unit in excess of 30, $5,500 per Unit.

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(3) For all other Projects, $2,000 per Unit.

(b) For Projects utilizing 9% competitive low income housing tax credits, Developer Fee payments shall not exceed the amount that may be included in project costs pursuant to California Code of Regulations, Title 4, Section 10327.

(c) For Projects utilizing 4% percent tax credits, Developer Fee payments shall not exceed the lesser of $3,500,000 or the sum of:

(1) the amount that could be included in project costs pursuant to Title 4, California Code of Regulations, Section 10327 if the project was receiving 9% competitive credits; plus

(2) any remaining deferred Developer Fee (payable exclusively from operating income) that is allowed in eligible basis under Title 4, California Code of Regulations, Section 10327 of the TCAC regulations.

(Subsection (c) limits Developer Fee paid from development funding sources.)

(d) The dollar value of any capital contribution of funds or real property made by the Sponsor or an affiliate, as approved by the Department, for Project development costs shall increase the Developer Fee limit by the dollar value of the capital contribution.

(e) The limits set forth in this section shall apply to each Project pursuant to the terms of a program standard agreement, as memorialized in Department loan or grant documents entered into pursuant thereto (the “Original Award”). For any future work performed for the benefit of the Project, to the extent such work was not captured, set forth, or otherwise contemplated in any of the legal documents memorializing terms related to the Original Award, the fees for such new developer work benefiting the Project shall be recalculated in accordance with this section, treating that new work as if it were a separate project.

(f) For projects where less than 25 percent of total units are counted in the determination of maximum Department loan or grant amounts, the Department may defer to the limits on Developer Fees applicable to other public agency project funding sources, to the extent it deems necessary to attract sufficient applications to utilize available Department funding.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(a)(1), 50517.5(c)(2), 50517.5(e)(2), 50675.5(b)(5), 50675.8(a)(5) and 50896.1(a), Health and Safety Code.

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Section 8313. Program Compatibility.

(a) Where the requirements of federal funding for a Project (including low income housing tax credits and direct federal loans but excluding federal loan guarantees) would cause a violation of the requirements to these regulations, the Department may modify these requirements as minimally necessary to ensure program compatibility.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50896.1(a) and 50896.3(b), Health and Safety Code. Reference:

Sections 50406(n), 50675.1(d), 50675.9, 50517.5(a)(1), 50517.5(a)(3), 50896.1(a) and 50896.3(b), Health and Safety Code. Section 8313.1 Funding Source Surpluses.
(a) If, upon completion of construction, permanent development funding sources exceed actual total development costs the following requirements apply to the resulting funding surplus:

(1) If there are local public agency lenders providing construction–period financing, and the Department is
providing only permanent financing, the local lenders may reduce their loans by an amount not exceeding the
contingency shown in the loan documents approved by the Department at construction loan closing.

(2) In other cases, or to the extent that the surplus exceeds the budgeted contingency, the Department loan amount shall be reduced by an amount not less than the surplus multiplied by the ratio of the Department’s loan amount to total local government assistance, as defined in 8315(c)(3).

(3) As an alternative to (1) or (2), the Department may approve use of surplus funds to reduce tenant rents or for other direct tenant benefits.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50896.1(a) and 50896.3(b), Health and Safety Code. Reference:

Sections 50517.5(a)(1), 50517.5(c)(2), 50517.5(e)(2), 50675.5(b)(5), and 50896.1(a), Health and Safety Code.

Section 8313.2 Special Purpose Entity(ies).

(a) The Department may permit the ultimate borrower or recipient of Department funds to be a special purpose entity formed and controlled by the Sponsor if and only if the Sponsor can demonstrate to the satisfaction of the Department all the following criteria:

(1) The Sponsor will remain as equally liable to the Department as the special purpose entity with respect to the specific Packet Page 653 of 798Attachment 2 Page 105 of 117

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performance of the obligations of the loan or grant documents.

The Sponsor may be as equally liable to the Department as the special purpose entity with respect to the financial obligations of the loan or grant documents;

(2) The Sponsor shall not intentionally or in effect limit or abrogate its legal liability to the Department by utilizing the special purpose entity; and

(3) There shall be no more than two corporate entities between the Sponsor and the special purpose entity in the corporate control and organizational structure(s). For the purposes of this subsection, “corporate entity” may include a corporation, limited liability company, business trust, limited partnership, or general partnership. For the purposes of determining “control,” the Sponsor must provide, at the very minimum, evidence satisfactory to the Department that the Sponsor (or Sponsors) through direct control of the corporate entities between the Sponsor and the special purpose entity, performs the
substantial management duties on behalf of the special purpose entity that involves:

(A) renting, maintaining and repairing the low-income
housing property (or if these duties are delegated to
an agent, hiring and overseeing the agent’s duties);

(B) acquiring, holding, assigning or disposing of property or any interest in property;

(C) borrowing money on behalf of the special purpose
entity, encumbering the special purpose entity’s assets, placing title in the name of a nominee to obtain
financing, preparing items in whole or in part, in
connection to refinancing, increasing, modifying or
extending any obligation; and
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(D) determining the amount and timing of distributions to partners and establishing and maintaining all required
reserves.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50896.1(a) and 50896.3(b), Health and Safety Code. Reference:

Sections 50517.5(a)(1), 50517.5(c)(2), 50517.5(e)(2), 50675.2(g) and 50896.1(a), Health and Safety Code. Section

8314. Use of Operating Cash Flow.
(a) Operating income remaining after payment of approved current and prior year operating expenses, reserve deposits and mandatory debt service shall be applied in the following priority order:

(1) First, towards payment of any:

(A) Approved deferred Developer Fee, pursuant to
Section 8312;

(B) Asset management, partnership management and
similar fees, including fees paid to investors, in an
amount not to exceed the sum of:

1. An amount for the current year, equal to $30,000
for 2016 and increased at the rate of 3.5% for
each subsequent year, plus

2. Unpaid asset management, partnership
management, and similar fees accrued for a
period not to exceed three project fiscal years
following the year during which they are earned,
up to the difference between the limit for the year
and the amount paid for that year; and

(C) Supportive Services Costs that these regulations
would allow to be paid as operating costs, but that
other funding sources do not.

(2) Second, 50 percent to the Sponsor as Distributions and 50 percent to the Department as payments on the Program
loan.

(A) If the terms of other public agencies’ financing also require payments from remaining cash flow, the
Department may agree to share what would otherwise
be its 50 percent share of available cash flow with the public agencies in amounts proportional to the agencies’ respective assistance amounts (total local government
assistance, as defined in Section 8315, and total
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Department loans and grants).

(B) To be consistent with the terms of other public agency loans or leases, the Department may agree to set the
percentage payable to the Sponsor at an amount less
than 50 percent.

(C) For projects with income from project-based Section 8 or similar project-based rental assistance that is not
underwritten by other Project lenders, the Department
may reduce the Sponsor’s share to an amount
equivalent to the amount they would receive if one of
the other lender’s loan amount was based on an income
stream that included the income from the rental
assistance.

(b) A Sponsor may not accumulate Distributions from year to year. A Sponsor may deposit all or a portion of permitted Distributions into a Project account for distribution in subsequent years. These future Distributions shall not reduce the otherwise permitted Distribution in those subsequent years.

(c) The limits on payments for Developer Fee pursuant to subsection (a)(1)(A) and for asset management, partnership management, and similar fees pursuant to subsection (a)(1)(B) shall not apply to payments of those fees made from Distributions.

(d) Payment of Distributions, deferred Developer Fee, asset management fees, partnership management fees and similar fees shall be permitted only after the Sponsor submits a complete annual report and operating budget, and the Department determines that the report and budget demonstrate compliance with all Program requirements for the applicable year. Circumstances under which no Distributions, deferred Developer Fee, asset management fees, or partnership management fees, and similar fees shall be paid include:

(1) when written notice of default has been issued by any entity with an equitable or beneficial interest in the Project;

(2) when the Department determines that the Sponsor has failed to comply with the Department's written notice of any
reasonable requirement for proper maintenance or operation of the Rental Housing Development or use of Project income;

(3) if all currently required debt service, including mandatory payments on the Program loan, and Operating Expenses
have not been paid;

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pursuant to Sections 8308 and 8309 and the Regulatory
Agreement.

(e) For 2017, the following limits shall apply to total Supportive Services Costs paid as Operating Expenses. These limits shall be increased each year after 2017 at the rate of 2.5 percent per year:

(1) $4,080 per unit per year for supportive housing restricted to individuals or families experiencing chronic homelessness, as defined consistent with Health and Safety Code Section
50675.14;

(2) $3,060 per unit per year

(A) for supportive housing that is not restricted to
individuals or families experiencing chronic
homelessness as defined pursuant to Health and
Safety Code Section 50675.14; and

(B) for units restricted to occupancy by Special Needs
Populations under any Department programs
(“Special Needs Population” has the same meaning as
defined in Section 7301(s));

(3) $1,051 per unit per year for other units where the Sponsor, their affiliate, or a service provider under contract to provide Supportive Services at the Project has both:

(A) qualified staff devoted exclusively to oversight and quality control of resident services in affordable
housing, including the Project; and

(B) a system to track and report on tenant outcomes,
such as changes in employment status and income;
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(4) $250 per unit per year for other units, where the Sponsor, their affiliate, or a service provider under contract does not satisfy the requirements set forth in subsection (e)(3).

(f) The following limits shall apply to Supportive Services Costs paid as Operating Expenses:

(1) The cost of staff supervision shall not exceed 10% of the cost of on-site staff salaries.

(2) Administrative overhead expenses, including accounting and human relations, shall not exceed 15% of the total Supportive Services Costs paid as Operating Expenses.

(g) Sponsors paying Supportive Services Costs as Operating Expenses shall maintain onsite and available for Department inspection records of group activities (including calendars and sign- in sheets) and individualized services and referrals. The Department may also require annual reporting on these and related matters.

(h) For supportive housing, as defined pursuant to Health and Safety Code Section 50675.14, and upon approval by the Department, Sponsors may establish a reserve to cover unexpected shortfalls in revenues to pay for resident services coordination and case management costs. This reserve may be funded through project cash flow available after funding Operating Expenses and other required reserves, or through development sources. The maximum balance shall not exceed three times the per-unit, per- year limits specified in subsection (e).

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(a)(1), 50517.5(c)(2), 50517.5(e)(2), 50675.8(a)(5), and 50896.1(a), Health and Safety Code.

Section 8315. Subordination Policy.
(a) The Department may execute and cause to be recorded a subordination agreement subordinating the Department's lien so long as the subordination does not increase the Department's risk beyond that contemplated in the Program loan or grant commitment, as may be amended from time to time, and so long as the subordination would further the interest of the Program. However, and except for Projects assisted by the U.S. Department of Housing and Urban Development under the Section 811 or Section 202 programs, the D epartment shall not enter into a
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subordination agreement or other agreement that contains any of the following:

(1) Any limitation of, or condition on, the Department's exercise of its remedies including, but not limited to issuing a notice of default based on a breach under the Department's loan
documents, including a default based solely on a breach of the senior lienholder's documents.

(2) An agreement that the senior lienholder's acceptance of a deed in lieu of foreclosure would result in the senior
lienholder taking title to the Rental Housing Development free and clear of the Department's lien(s).

(3) An agreement permitting any modification or supplement of the senior lienholder's lien without the prior written consent of the Department except an agreement that permits a senior lienholder to make advances to: (i) cure a default under a lien with a higher priority than the Department's lien;
(ii) pay delinquent taxes on the security property; (iii) pay delinquent hazard or liability insurance premiums for the security property; or (iv) to protect the health and safety of the tenants.

(4) An agreement that would require the Department to
undertake additional obligations to any party.

(b) The Department's lien(s) shall not be subordinated to the liens of a local governmental entity unless either:

(1) the total local governmental assistance to the Project is more than twice the amount of the Department's total assistance to the Project (including both loans and grants); or

(2) the total local governmental assistance to the Project is more than the Department's total assistance to the Project (including both loans and grants) and the local government entity
manages a portfolio of their own loans that includes over 10,000 rental units with rent and occupancy restrictions.

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(1) “Department's lien” means a deed of trust,
regulatory agreement, or other agreement securing
payment or performance under an award of Program
funds that has been recorded in the office of the
recorder of the county in which the Rental Housing
Development is located.

(2) “Lien of a local government entity” means a recorded deed of trust, regulatory agreement, reversion, or other recorded agreement securing payment or performance,
or a covenant running with the land that affects the
maintenance, use, operation, or occupancy of the
Rental Housing Development. Except that covenants in
favor of a community redevelopment agency or
successor agency regarding the use, maintenance,
operation, or transferability of a Rental Housing
Development including rent limitations or income
restrictions on tenants, or prohibiting discrimination, shall not constitute liens subject to the requirements of this section.

(3) “Total local government assistance” means the sum of the original principal amounts of loans and grants made by the local government entity plus other direct project costs paid for by the local governmental entity and
approved by the Department including, but not limited
to, costs of site preparation, demolition, environmental remediation, and land acquisition. The value of
assistance in the form of land write- downs or donations shall be limited to the cost paid by the public agency to acquire the land, less any sales proceeds paid to the
agency; or in the case of a leasehold, the cost paid by the public agency less the present value of projected
lease payments.

(d) The Department's lien(s) shall not be subordinated to the liens of a lender affiliated with an entity that has an ownership interest in the Project unless a covenant, regulatory
agreement, or similar instrument is recorded senior to the lender’s documents that includes the provisions specified in Section 8310(f).

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11 and 50896.3(b), Health and Safety Code. Reference:

Sections 50517.5(d)(4)(D), 50675(e), 50675.1(b), 50675.6(d), 50896, 50896.1
and 50896.3, Health and Safety Code.

Section 8316. Leasehold Security.

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Project land through a long-term ground lease, either:

(1) the Regulatory Agreement and other Program
documents shall be recorded against both the
Sponsor’s interest in the Project and the fee interest
in the land, and the lease shall have a term remaining
at the time of recordation at least equal to the term of the Program loan or grant; or

(2) if the Regulatory agreement and other Program
documents are not recorded against the Project’s fee
interest, the ground lease shall be subject to the
Department’s approval, must not be subject to any
other mortgages, regulatory agreements, use
restrictions, or equivalent instruments on the fee
interest, and shall contain, or be amended to contain,
provisions which:

(A) establish a remaining term of at least ninety
(90) years from the date the Department
documents are recorded, provided that the
Department may accept a lesser term, not less
than 65 years, when the lessor is a public
agency;

(B) ensure the validity of the lien of the
Program loan and/or grant documents on
the lease;

(C) ensure that the lease permits the Project to
satisfy all Program requirements and permit the
Department to enforce the provisions of the
Program loan and/or grant without restriction;

(D) expressly consent to the lessee’s assignment of
the lease to the Department without further
consent of the lessor, and permit the
Department, after acquisition of the leasehold
property, to transfer or assign the lease to a
third party without consent of the lessor.

(E) provide that the lessor does not have the right to
terminate the lease or accelerate the rent upon
lessee’s breach without first giving the lessee
and the Department reasonable notice and
opportunity to cure within a reasonable period;

(F) provide that no termination, modification or
amendment to any terms of the lease shall
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be effective without the written consent of
the Department, and any attempt to take
such actions would be void without the
Department’s consent;

(G) require that, in the event of destruction of any
improvements on the land, neither the lessor
nor the lessee shall terminate the lease if and
so long as the lessee or Department pursues
reconstruction of the improvements with
reasonable diligence;

(H) provide that the Department shall not have any
liability for the performance of any of the
obligations of lessee under the lease until the
Department has acquired the leasehold interest,
and then only in accordance with the terms of
the lease and only with respect to obligations
that accrue during the Department’s ownership
of the leasehold interest;

(I) provide that neither the lessor nor the lessee, in
the event of bankruptcy by either, will take the
benefit of any provisions in the United States
Bankruptcy Code that would cause the
termination of the lease or otherwise render it
unenforceable in accordance with its terms;

(J) provide that the leasehold interest will not
merge into the fee in the event that the lessee
acquires the reversionary interest in the
Project; and

(K) provide that acquisition of the leasehold property
by the Department will not result in a
termination of the leasehold; and upon such
event, obligate the lessor to enter into a new
lease having a term at least as long as the term
remaining on the lease prior to acquisition by the
Department and on substantially the same terms
and conditions.

(b) If any other regulatory agreement, use restriction, or equivalent instrument is recorded against the fee, the
Department’s Regulatory Agreement or covenant must also be recorded against the fee. This subsection shall not apply if the total local governmental assistance to the Project is more than the Department's total assistance to the Project
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entity manages a portfolio of their own loans that includes over 10,000 rental units with rent and occupancy restrictions.

For the purposes of this subsection, the phrase “regulatory agreement, use restriction, or equivalent instrument” shall not be interpreted to include any instrument that does not relate in any way to affordability, or any affordability restriction that is not required as a condition of public financing.

(c) Where the lessee and lessor are related or affiliated parties, the Program loan and/or grant documents shall be recorded against both the Sponsor’s interest in the Project and the fee interest in the land.

(d) To the extent consistent with the statutes and regulations governing the Program, the Department may modify or waive the requirements of subparagraph (a)(2) where the lessor is a public agency that demonstrates that it is prohibited by law from meeting the requirements, or where the Project will be located on Native American Lands and there is a legal
prohibition on meeting these requirements, and the
Department determines that there remains adequate security for the Program loan.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11 and 50896.3(b), Health and Safety Code. Reference:

Sections 50517.5(d)(4)(A), 50675.7, 50896.1 and 50896.3, Health and Safety Code.

Section 8317. Restructuring Transaction Fees.

(a) To cover the Department’s costs of processing any specific Restructuring Transaction as defined in this section, the Department shall charge as authorized by subsections (f) and (n) of Section 50406 of the Health and Safety Code fees to cover the administrative costs incurred for the Department’s staff to negotiate and prepare the legal documents necessary to accomplish the subject Restructuring Transaction.

(b) For the purposes of this section, the term
“Restructuring Transaction” means one or more of
the following:

(1) extension of the Department’s loan term (or terms, if there are multiple Department loans),

(2) change of ownership (excluding transfer of ownership between two entities controlled by the same parent
entity),
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(3) a new subordination of the Department’s loan or loans to a senior loan or loans, and/or investment of tax
credit equity.

Other transactions, such as those limited to the placement of new junior public agency debt without required payments and assignments of limited partner interests, do not constitute a Restructuring Transaction.

(c) The fees charged by this section shall be calculated on a case- by- case basis, and shall be based on the number of work hours necessary for Department staff, at the respective rate for each staff’s classification, to negotiate and prepare final executable versions of all legal documents necessary to accomplish the subject Restructuring Transaction.

(d) Notwithstanding subsection (c), the Department shall not be authorized under this section to charge an amount exceeding the amount that the Department charges for the same or
similar restructuring activities that the Department performs under other programs administered by the Department in its Related Restructuring Programs, as defined by this section.

(e) For the purposes of this section, the term “Related Restructuring Programs” shall include but not be limited to the restructuring activities authorized by Section 50560(a) of the Health and Safety Code, and shall include any fees set forth by the Department pursuant to the guidelines (published on the Department’s website) adopted and authorized pursuant
thereto under Health and Safety Code Section 50560.

(f) The legal documents necessary to accomplish the subject Restructuring Transaction shall be subject to the
provisions set forth in this subchapter.

Note: Authority cited: Section 50406, Health and Safety Code. Reference:

Section 50406, Health and Safety Code.

Section 8318. Federal Loan Extensions.

(a) The term of any existing federal program loan or regulatory agreement enforced by the Department may be extended, if allowed by the subject federal statute. Such extensions shall not be for a period of less than 10 years nor more than 55 years.

Note: Authority cited: Sections 50406(n) and 50896.3(b), Health and Safety Code. Reference: 24 CFR part 92.

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Agenda Item No: 29.

AGENDA REPORT
DATE:June 21, 2022
TO:Mayor and City Council
FROM:David Gassaway, Interim City Manager
Kristina Chamberlin, Director of Parks & Recreation
SUBJECT:City Council Direction on Contract Renewals with KemperSports for Golf Course Management and with SRI for Food/Beverage/Banquet Services RECOMMENDED ACTION
Provide direction to staff.

STATEMENT OF ISSUE
The management service contract with KemperSports, Inc. (Kemper) for golf course management of Paradise Valley and Rancho Solano golf courses terminates December 31, 2022. The lease agreement with Sports Restaurants Incorporated (SRI) for food, beverage, and banquet services also terminates December 31, 2022.

DISCUSSION
Since 2003, and through a series of contract extension renewals, Kemper has remained the contract service provider for overall management, operations and maintenance of the city golf courses. The current contract agreement terminates December 31, 2022.

Sports Restaurants Inc. (SRI), formerly known as Sports Restaurant of Fairfield (SRF) and Sports Restaurant of Rancho Solano (SRR) concurrently, have remained the lessee of the restaurants, bars, and banquet facilities of the city golf courses. They have been the exclusive food, beverage, and banquet facilities operators of Paradise Valley since 1993 and Rancho Solano since 1998, under their proprietary business name “Legends and Heroes Sports Bar and Grill.”Through a series of contract extension renewals, their current contract terminates December 31, 2022.

Staff is seeking direction from City Council on how to proceed. We are providing four options for consideration:

1.Extend the contracts for a set period of time and keep fee structure, performance measures, etc. as status quo

2.Extend contracts and authorize staff to negotiate with existing providers; modification to terms, fee structure, updated performance measures, etc. for a set period of time Packet Page 666 of 798

Agenda Item No: 29.AGENDA REPORTDATE:June 21, 2022 TO:Mayor and City CouncilFROM:David Gassaway, Interim City ManagerKristina Chamberlin, Director of Parks & RecreationSUBJECT:City Council Direction on Contract Renewals with KemperSports for Golf CourseManagement and with SRI for Food/Beverage/Banquet ServicesRECOMMENDED ACTIONProvide direction to staff.STATEMENT OF ISSUEThe management service contract with KemperSports, Inc. (Kemper) for golf course management ofParadise Valley and Rancho Solano golf courses terminates December 31, 2022. The leaseagreement with Sports Restaurants Incorporated (SRI) for food, beverage, and banquet services alsoterminates December 31, 2022.DISCUSSIONSince 2003, and through a series of contract extension renewals, Kemper has remained the contractservice provider for overall management, operations and maintenance of the city golf courses. Thecurrent contract agreement terminates December 31, 2022.Sports Restaurants Inc. (SRI), formerly known as Sports Restaurant of Fairfield (SRF) and SportsRestaurant of Rancho Solano (SRR) concurrently, have remained the lessee of the restaurants, bars,and banquet facilities of the city golf courses. They have been the exclusive food, beverage, andbanquet facilities operators of Paradise Valley since 1993 and Rancho Solano since 1998, under theirproprietary business name “Legends and Heroes Sports Bar and Grill.”Through a series of contractextension renewals, their current contract terminates December 31, 2022.Staff is seeking direction from City Council on how to proceed. We are providing four options forconsideration:1.Extend the contracts for a set period of time and keep fee structure, performance measures, etc. as status quo

2.Extend contracts and authorize staff to negotiate with existing providers; modification to terms, fee structure, updated performance measures, etc. for a set period of time

3.Solicit RFP/RFQ seeking a single operator

4. Solicit RFP/RFQ separating the golf operation management from food and beverage service FINANCIAL IMPACT
None at this time. Dependent upon the direction given, staff will prepare appropriate staff report to be presented at a future Council meeting.

PUBLIC CONTACT/ADVISORY BODY RECOMMENDATION
N/A
ALTERNATIVE ACTION
City Council determine other options for management of golf courses, and providing food, beverage, banquet services at both city golf courses and direct staff accordingly.

STAFF CONTACT
Kristina Chamberlin, Director of Parks & Recreation
(707) 4287470
[email protected]
COORDINATED WITH
City Manager's Office
REVIEWERS:

Reviewer Action Date
Chamberlin, Kristina Approved 5/17/2022 12:06 PM
Beavers, Esther Approved 6/2/2022 2:03 PM
Beavers, Esther Approved 6/2/2022 2:03 PM
Packet Page 667 of 798

Agenda Item No: 30.

AGENDA REPORT
DATE:June 21, 2022
TO:Mayor and City Council
FROM:David Gassaway, Interim City Manager
SUBJECT:City Council of the City of Fairfield Fiscal Year 202223 Strategic Goals and Priorities RECOMMENDED ACTION
Approve Fiscal Year 202223 Strategic Goals and Priorities STATEMENT OF ISSUE
Each year, the City Council holds a strategic goalsetting session to identify goals and priorities for the City in the coming year. Goal setting helps the City organization establish, prioritize, or reform programs and projects for the coming fiscal year.

DISCUSSION
In late March 2022, the City Council, the Senior Leadership Team, and other key staff members held a twoday strategic goalsetting workshop. During both days, the council and staff discussed a longterm vision for the city organization, identified six overarching goals, and prioritized numerous other objectives for the coming year. Following the workshop, the Senior Leadership Team worked to expand on the objectives with various strategies and create a strategic goals document to highlight City priorities in the coming fiscal year.

The strategic goals document will guide City efforts in the coming year and identify areas where work is already underway or new programs or projects are needed. City management will use the goals and objectives outlined to hold departments accountable in responding to the community's priorities.

FINANCIAL IMPACT
There is no direct financial impact on the approval of the annual goals. However, some programs or projects stemming from the strategic goals may require financial resources to implement. Those items are already included in the budget or will require additional council authorization as they advance.

PUBLIC CONTACT/ADVISORY BODY RECOMMENDATION
N/A
ALTERNATIVE ACTION
The council may choose not to approve the strategic goals document or provide other direction to staff.

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Agenda Item No: 30.AGENDA REPORTDATE:June 21, 2022 TO:Mayor and City CouncilFROM:David Gassaway, Interim City ManagerSUBJECT:City Council of the City of Fairfield Fiscal Year 202223 Strategic Goals and PrioritiesRECOMMENDED ACTIONApprove Fiscal Year 202223 Strategic Goals and PrioritiesSTATEMENT OF ISSUEEach year, the City Council holds a strategic goalsetting session to identify goals and priorities for theCity in the coming year. Goal setting helps the City organization establish, prioritize, or reform programsand projects for the coming fiscal year.DISCUSSIONIn late March 2022, the City Council, the Senior Leadership Team, and other key staff members held atwoday strategic goalsetting workshop. During both days, the council and staff discussed a longtermvision for the city organization, identified six overarching goals, and prioritized numerous otherobjectives for the coming year. Following the workshop, the Senior Leadership Team worked to expandon the objectives with various strategies and create a strategic goals document to highlight Citypriorities in the coming fiscal year.The strategic goals document will guide City efforts in the coming year and identify areas where work isalready underway or new programs or projects are needed. City management will use the goals andobjectives outlined to hold departments accountable in responding to the community's priorities.FINANCIAL IMPACTThere is no direct financial impact on the approval of the annual goals. However, some programs orprojects stemming from the strategic goals may require financial resources to implement. Those itemsare already included in the budget or will require additional council authorization as they advance.PUBLIC CONTACT/ADVISORY BODY RECOMMENDATIONN/A ALTERNATIVE ACTION
The council may choose not to approve the strategic goals document or provide other direction to staff.

STAFF CONTACT
David Gassaway, Interim City Manager
(707) 4287400
[email protected]
COORDINATED WITH
ATTACHMENTS:

Description
2022 Fairfield Council Goals
REVIEWERS:

Reviewer Action Date
Beavers, Esther Approved 6/13/2022 8:24 AM
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City of Fairfield
City Council Strategic Goals – Fiscal Year 2022/23

City Vision:

Fairfield is a vibrant, safe, clean, affordable, and diverse community with robust commerce, thriving businesses, and has transitioned from being a bedroom community to a destination.

City Mission:

To foster a sense of pride in the community, improve the lives of our residents, and deliver dependable essential services through, integrity, professionalism, and fiscal responsibility.

We Value:
 Communication
 Diversity
 Inclusion
 Innovation
 Transparency

Council Priorities:

Homelessness Goal: Reduce homelessness and the impacts of homelessness Quality of Life Goal: Elevate Fairfield as the place to live, work, and play Downtown Development Goal: Create an economically vibrant and safe downtown with equal access to all
Housing Goal: Provide housing diversity affordable and accessible to all Organizational Excellence Goal: Become a leader in local government best practices Community Engagement Goal: Increase diversity of opportunity to engage the Fairfield community

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City of Fairfield
City Council Strategic Goals – Fiscal Year 2022/23

Homelessness
Goal: Reduce homelessness and the impacts of homelessness

Objective 1 – Strengthen Regional Capacity
A. Expand CAP Solano and the 2x2 Regional Committee - In Process B. Create regional navigation center - In Process
C. Coordinate regional approach for navigation and outreach - New D. Create regional registry of resources to assist those who need services - New

Objective 2 – Enhance Services and Local Partnerships
A. Create pallet shelter - In Process
B. Prevent non-Fairfield residents from being stuck here after jail release - New/In Process C. Create mobile crisis intervention - New
D. Partner with County behavioral health - New

Objective 3 – Improve Public Policy and Community Engagement A. Create homelessness data system to share performance metrics - New B. Support State efforts to develop CARE Courts - New C. Increase education to the community on City efforts and services - New

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City of Fairfield
City Council Strategic Goals – Fiscal Year 2022/23

Quality of Life
Goal: Elevate Fairfield as the place to live, work, and play

Objective 1 – Crime Reduction
A. Add more Flock Cameras to City systems - In Process B. Implement Compstat 360 - In Process
C. Enhance outreach through Community Action Team - New D. Bolster Neighborhood Watch & add events like National Night Out - New

Objective 2 – Infrastructure and Beautification
A. Undertake Facility and Park Master Plan to identify needs/gaps - In Process B. Develop new CIP and be deliberate about infrastructure improvements - New C. Enhance HEART efforts and host community cleanups - New/In Process D. Improve/upgrade roads, utilities, and transit service - In Process

Objective 3 – Programs, Services, and Events
A. Update CDBG Consolidated Plan - In Process
B. Develop more youth services and programming - New C. Increase programming in parks to support neighborhoods - New D. Conduct community needs assessment for recreation programming - New

Objective 4 – Economic Development
A. Rebrand the image of Fairfield for business attraction - In Process B. Attract new retail establishments for underserved areas - New C. Build partnerships with Suisun Valley Vintners to grow agritourism - New

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City of Fairfield
City Council Strategic Goals – Fiscal Year 2022/23

Downtown Development
Goal: Create an economically vibrant and safe downtown with equal access to all

Objective 1 – Increase Residential Housing
A. Develop 1600 Woolner Avenue - In Process
B. Develop former Sem Yeto school site - In Process C. Reduce fees for new development - New
D. Create parking enforcement program to support neighborhoods - New

Objective 2 – Improve Infrastructure
A. Advance next phase of Allan Witt Park master plan - In Process B. Improve walkability through streetscapes and new sidewalks - New/In Process C. Continue utility upgrades and undergrounding to support development - In Process D. Improve bollards with art and reflectivity for safety - New

Objective 3 – Commercial Development
A. Assist existing businesses and attract new businesses - In Process B. Reduce barriers to new commercial development (ministerial approval) - New C. Enhance incentive package for targeted development/businesses - New D. Recruit new development and anchor businesses - In Process

Objective 4 – Placemaking and Activation
A. Activate downtown through programming (famers market, events, etc.) - In Process B. Advance branding campaign to change perceptions of downtown - In Process C. Add more public art and art-based programming - New/In Process

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City of Fairfield
City Council Strategic Goals – Fiscal Year 2022/23

Housing
Goal: Provide housing diversity affordable and accessible to all

Objective 1 – Implement Plan for Affordable Housing
A. Achieve Pro-Housing designation from State HCD - In Process B. Enhance funding mechanisms from Feds, State, and local - In Process C. Create first time homebuyer program - New
D. Develop new tools (development/lending guidelines & ADU program) - New

Objective 2 – Plan for Needed Housing Mix
A. Adopt General Plan that accounts for all housing needs - In Process B. Reinstate homeowner rehabilitation loan program - New/In Process C. Identify housing needs to support Travis AFB - New D. Implement Crime Prevention Through Environmental Design (CPTED) - New E. Seek out opportunities for adding transitional housing for homeless - New

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City of Fairfield
City Council Strategic Goals – Fiscal Year 2022/23

Organizational Excellence
Goal: Become a Leader in Local Government Best Practices

Objective 1 – Retain, Recruit, and Develop and Empowered, Engaged, and Diverse Workforce A. Undertake comprehensive employee engagement program/strategy - In Process B. Develop leadership/supervisory training/academy - New C. Create formal succession and promotion plan to train needed skills - New D. Enhance employee accountability, empowerment, and transparency - New

Objective 2 – Develop Strong and Effective Systems and Processes A. Review current business systems/applications and needed projects - In Process B. Create disaster recovery and continuity of services plan - New C. Develop uniform department-based policies and procedure manuals - New D. Consolidate citywide purchasing and service contracts for efficiency - New

Objective 3 – Enhance the Customer Experience
A. Implement use of tech (ERP/LMS) to improve customer access - In Process B. Improve transparency of data and information – share info better - New C. Create and share new vision, mission, values, and goals - New

Objective 4 – Ensure Fiscal Sustainability
A. Assess areas of departmental overlap to identify cost saving strategies - New B. Review reserve funds and policies to address un/underfunded liabilities - New C. Implement updated internal service fund and cost allocation plans - In Process D. Support Travis AFB for continuing success - In Process

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City of Fairfield
City Council Strategic Goals – Fiscal Year 2022/23

Community Engagement
Goal: Increase Diversity of Opportunity to Engage Fairfield Community

Objective 1 – Improve Transparency and Info Sharing
A. Utilize community surveys including satisfaction and priorities - New B. Create more opportunities for two-way communication - New C. Develop robust annual report that covers major accomplishments - New D. Reinvent budget document to be more programmatic based - New

Objective 2 – Provide Opportunities for Community Dialogue A. Create more opportunities for two-way communication - In Process B. Increase staff participation in community events - New C. Establish/enhance community forums - New/In Process D. Enhance/support connection to Travis AFB community - New

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Agenda Item No: 31.

AGENDA REPORT
DATE:June 21, 2022
TO:Mayor and City Council
FROM:David Gassaway, Interim City Manager
SUBJECT:Resolution 2022145 of the City Council of the City of Fairfield Authorizing the City Manager to Execute a Memorandum of Understanding Between the City of Fairfield and SHELTER Solano, Inc. to Support the Kitchen Buildout Completion Project at 310 Beck Avenue in Fairfield and Authorizing an Update to the Fiscal Year 20222023 Budget
RECOMMENDED ACTION
Adopt resolution.

STATEMENT OF ISSUE
The Emergency Shelter facility at 310 Beck Avenue in Fairfield has been historically underutilized and unable to reach its full potential to serve the community. In 2019, SHELTER Solano, Inc. took over as operator of the Emergency Shelter. They had since then made strides to overcome a myriad of inherited concerns surrounding the campus, including deferred maintenance, previous operator debt, and a negative reputation associated with the shelter. To bring the campus up to its full capacity, SHELTER Solano, Inc. is working on completing the Kitchen Buildout Project, initially started by the previous operator but never broke ground. Adopting the proposed resolution approves a Memorandum of Understanding (MOU) with SHELTER Solano, Inc. to support the Kitchen Buildout Completion Project at 310 Beck Avenue in Fairfield for an amount not to exceed $1,000,000.

DISCUSSION
Mission Solano, the original operator of the City’s Emergency Shelter located at 310 Beck Avenue, struggled for many years to acquire funding to construct a muchneeded commercial kitchen. In February 2019, SHELTER Solano Inc. was selected as the new operator for the historically underutilized facility. No funding was available to be transferred from Mission Solano to the new operator to begin or complete construction. Since then, SHELTER Solano, Inc. has applied for funding specific to the construction of the commercial kitchen and, to date, has been able to acquire $3,723,974 of the needed $4,723,528 primarily in state and local grant funding. The initial cost for the kitchen construction was around $2,500,000 in February 2019. It has since been determined that the actual cost for the construction is $4,723,528, with the increase in costs due to several factors, including supply chain issues, rising construction costs, prevailing wage on grant funds, and inadequate budgeting from the initial operator.

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Part of the supportive services at SHELTER Solano, Inc. includes the healthy food that the body and mind need to operate at their best. And while the current site has always provided meals, the leadership of SHELTER Solano, Inc. aspire to do better – and the dining hall and kitchen envisioned as part of the original site plan is the first step. With the completion of this construction project, SHELTER Solano, Inc. will be able to maximize its impact by serving up to 125 people simultaneously. With no commercial kitchen on site, the current capacity is limited to approximately 70 participants being served premade heatandserve meals in shifts. The new facility will be able to operate a training program through which homeless and lowincome residents of Fairfield and Solano County can increase their economic mobility through an envisioned Culinary Arts job skills program, the very foundation of stable housing.

Further, SHELTER Solano, Inc. intends to enhance social enterprise programs that will provide ongoing funding for the operations of this project and support community groups that look to partner with the services of the shelter Culinary Arts program.

The proposed MOU will allow the City to support the Kitchen Buildout Completion Project at 310 Beck Avenue in Fairfield and assist the facility in reaching its full capacity. This MOU aligns with the City Council’s Homeless Strategy initiatives: 3) Strengthen System of Care Services & Programs; and 5) Strengthen Regional Capacity to Address Homelessness.

FINANCIAL IMPACT
The SHELTER Solano, Inc. MOU total contract price shall not exceed $1,000,000. Funding for this project will be paid from the Intergovernmental Services Fund (Fund 551). A budget adjustment of $1,000,000 is required to program the expense for the Fiscal Year 20222023.

PUBLIC CONTACT/ADVISORY BODY RECOMMENDATION
N/A
ALTERNATIVE ACTION
City Council may choose not to adopt the resolution authorizing the city manager to execute a MOU between the City of Fairfield and SHELTER Solano, Inc. to support the Kitchen Buildout Completion Project at 310 Beck Avenue. However, this is not recommended, as this resolution aligns with the City’s Homeless Strategy initiatives: 3) Strengthen System of Care Services & Programs and 5) Strengthen Regional Capacity to Address Homelessness.

STAFF CONTACT
Dawn M. La Bar, Homeless Services Manager
(707) 4287749
[email protected]
COORDINATED WITH
City Attorney's Office, Finance Department, Police Department ATTACHMENTS:

Description
Attachment 1. Proposed Resolution
Attachment 2. Proposed Agreement
REVIEWERS:

Reviewer Action Date
Beavers, Esther Approved 6/13/2022 5:28 PM
Beavers, Esther Approved 6/13/2022 5:29 PM
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Agenda Item No: 31.AGENDA REPORTDATE:June 21, 2022 TO:Mayor and City CouncilFROM:David Gassaway, Interim City ManagerSUBJECT:Resolution 2022145 of the City Council of the City of Fairfield Authorizing the CityManager to Execute a Memorandum of Understanding Between the City of Fairfieldand SHELTER Solano, Inc. to Support the Kitchen Buildout Completion Project at 310Beck Avenue in Fairfield and Authorizing an Update to the Fiscal Year 20222023Budget RECOMMENDED ACTIONAdopt resolution. STATEMENT OF ISSUEThe Emergency Shelter facility at 310 Beck Avenue in Fairfield has been historically underutilized andunable to reach its full potential to serve the community. In 2019, SHELTER Solano, Inc. took over asoperator of the Emergency Shelter. They had since then made strides to overcome a myriad ofinherited concerns surrounding the campus, including deferred maintenance, previous operator debt,and a negative reputation associated with the shelter. To bring the campus up to its full capacity,SHELTER Solano, Inc. is working on completing the Kitchen Buildout Project, initially started by theprevious operator but never broke ground. Adopting the proposed resolution approves a Memorandumof Understanding (MOU) with SHELTER Solano, Inc. to support the Kitchen Buildout CompletionProject at 310 Beck Avenue in Fairfield for an amount not to exceed $1,000,000.DISCUSSIONMission Solano, the original operator of the City’s Emergency Shelter located at 310 Beck Avenue,struggled for many years to acquire funding to construct a muchneeded commercial kitchen. InFebruary 2019, SHELTER Solano Inc. was selected as the new operator for the historicallyunderutilized facility. No funding was available to be transferred from Mission Solano to the newoperator to begin or complete construction. Since then, SHELTER Solano, Inc. has applied for fundingspecific to the construction of the commercial kitchen and, to date, has been able to acquire$3,723,974 of the needed $4,723,528 primarily in state and local grant funding. The initial cost for thekitchen construction was around $2,500,000 in February 2019. It has since been determined that theactual cost for the construction is $4,723,528, with the increase in costs due to several factors, includingsupply chain issues, rising construction costs, prevailing wage on grant funds, and inadequatebudgeting from the initial operator. Part of the supportive services at SHELTER Solano, Inc. includes the healthy food that the body andmind need to operate at their best. And while the current site has always provided meals, the leadershipof SHELTER Solano, Inc. aspire to do better – and the dining hall and kitchen envisioned as part of theoriginal site plan is the first step. With the completion of this construction project, SHELTER Solano, Inc.will be able to maximize its impact by serving up to 125 people simultaneously. With no commercialkitchen on site, the current capacity is limited to approximately 70 participants being served premadeheatandserve meals in shifts. The new facility will be able to operate a training program through whichhomeless and lowincome residents of Fairfield and Solano County can increase their economicmobility through an envisioned Culinary Arts job skills program, the very foundation of stable housing.Further, SHELTER Solano, Inc. intends to enhance social enterprise programs that will provide ongoingfunding for the operations of this project and support community groups that look to partner with theservices of the shelter Culinary Arts program.The proposed MOU will allow the City to support the Kitchen Buildout Completion Project at 310 BeckAvenue in Fairfield and assist the facility in reaching its full capacity. This MOU aligns with the CityCouncil’s Homeless Strategy initiatives: 3) Strengthen System of Care Services & Programs; and 5)Strengthen Regional Capacity to Address Homelessness.FINANCIAL IMPACTThe SHELTER Solano, Inc. MOU total contract price shall not exceed $1,000,000. Funding for thisproject will be paid from the Intergovernmental Services Fund (Fund 551). A budget adjustment of$1,000,000 is required to program the expense for the Fiscal Year 20222023. PUBLIC CONTACT/ADVISORY BODY RECOMMENDATIONN/AALTERNATIVE ACTIONCity Council may choose not to adopt the resolution authorizing the city manager to execute a MOUbetween the City of Fairfield and SHELTER Solano, Inc. to support the Kitchen Buildout CompletionProject at 310 Beck Avenue. However, this is not recommended, as this resolution aligns with the City’sHomeless Strategy initiatives: 3) Strengthen System of Care Services & Programs and 5) StrengthenRegional Capacity to Address Homelessness. STAFF CONTACTDawn M. La Bar, Homeless Services Manager(707) 4287749 [email protected] COORDINATED WITHCity Attorney's Office, Finance Department, Police DepartmentATTACHMENTS:DescriptionAttachment 1. Proposed ResolutionAttachment 2. Proposed AgreementREVIEWERS:Reviewer Action Date Beavers, Esther Approved 6/13/2022 5:28 PM
Beavers, Esther Approved 6/13/2022 5:29 PM
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CITY OF FAIRFIELD

RESOLUTION NO. 2022-145

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FAIRFIELD AUTHORIZING THE CITY

MANAGER TO EXECUTE A MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF FAIRFIELD AND SHELTER SOLANO, INC. TO SUPPORT THE KITCHEN BUILD-OUT COMPLETION PROJECT AT 310 BECK AVENUE IN FAIRFIELD AND AUTHORIZING AN UPDATE TO THE FISCAL YEAR 2022-2023 BUDGET

WHEREAS, since 2017, the Fairfield City Council has adopted, implemented, and followed comprehensive policies and procedures in line with the City’s formal Homeless Strategy to permanently reduce homelessness and increase permanent supportive housing ; and

WHEREAS, on September 4, 2018, the council adopted Resolution No. 2018-223 declaring a shelter crisis pursuant to SB 850 (Chapter 48, Statutes of 2018) and authorizing the City to participate in the State Homeless Emergency Aid Program; and

WHEREAS, permanently reducing homelessness continues to be a top priority for the council. As such, City staff continues to identify opportunities that provide safe and secure temporary shelter and transitional housing, while also limiting impacts to the surrounding community ; and

WHEREAS, according to the 2019 Solano County Homeless Point -In-Time Count, at any point in time, 1,151 individuals within Solano County are experiencing homelessness. This population includes veterans, women, children, individuals with disabilities, senior citizens, and other vulnerable groups; and

WHEREAS, like many other cities in California, the City of Fairfield has seen a rapid and troubling growth in chronic and newly homeless over the past several years, a condition that has been difficult to address given the high cost of housing and property in the area, and the shortage of emergency, transitional, and affordable housing available in the county to serve this population; and

WHEREAS, as a result, local jurisdictions throughout the region have experienced increased incidents of unlawful camping and loitering activities in and upon portions of the public rights- of-way, parks, and other public facilities (Public Property) in violation of local anti-camping, anti- loitering, and/or park closure ordinances and regulations (Anti-Camping Ordinances); and

WHEREAS, the use of Public Property in this manner creates health and safety risks to homeless persons due to traffic hazards, exposure to weather, inadequate sanitation, and other conditions detrimental to their well-being, and negatively impacts the health, safety, and general welfare of the community by degrading the environmental and physical condition of such Public Property, Packet Page 680 of 798Attachment 1 Page 1 of 4

RES. NO. 2022-145

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Fairfield City CouncilJune 21, 2022

Fairfield City Council
June 21, 2022