CITY COUNCIL REGULAR MEETING AGENDA PACKET

Page 1 of 4 Item #12 CITY COUNCIL AGENDA REPORT August 20, 2024 Community Development TITLE: ADOPT A RESOLUTION APPROVING AN ASSIGNMENT AND ASSUMPTION OF GROUND LEASE, CONSENT TO TRANSFER OF PROJECT, AND GRANT OF OPTION TO EXTEND GROUND LEASE TERM FOR PROMENADE APARTMENTS AT 5300 CASE AVENUE SUMMARY The Promenade Apartments is a 146-unit multi-family rental project. Bayside Communities, LLC ("Bayside") is the current owner of Promenade Apartments buildings, and the City owns the underlying real property on 5300 Case Avenue, with a ground lease that includes the requirement that 68 of the 146 units be affordable units. Bayside has notified the City that it is selling the property to OAHS Promenades, LP ("OAHS Promenades"). Bayside requests the City Council approve the execution of an agreement in which the City consents to the assignment and assumption of the City ground lease to OAHS Promenades; consents to the conveyance of the Project to OAHS Promenades; and grants OAHS Promenades an option to extend the ground lease term to be eligible to apply for Low-Income Housing Tax Credits (LIHTC) to finance the rehabilitation of the Project and to convert the Project to a 100% LIHTC project. RECOMMENDATION Adopt a Resolution to: 1. Approve an Assignment and Assumption of Ground Lease, Consent to Transfer Project, and Grant of Option to Extend the Lease Term (Agreement) for the Promenade Apartments; 2. Authorize the City Manager and City Attorney to make minor modifications to the agreement, including any extensions or amendments that are necessary in the future; and 3. Authorize the City Manager or designee to execute such additional documents and take all necessary steps to implement the transactions described in the attached Resolution. BACKGROUND Promenade Apartments is a 146-unit mixed-income multi-family rental project consisting of 78 market rate units and 68 affordable units - 34 units at very low income 50% AMI and 34 units at low income 60% AMI (Project). In 1994, the City utilized $2.2 million from the Lower Income Housing Fund to purchase the property, and the City also made two loans ($2,016,576 and $432,532), which consisted of $2,189,108 funded with the Lower Income Housing Fund and $260,000 funded with federal HOME funds, to assist with construction financing; in addition, the Project received federal low-income housing tax credit construction funding. Consequently, the Project also had additional affordability requirements based on federal low-income housing tax credit financing and other programs. California Tax Credit Allocation Committee (CTCAC) Page 260 of 454