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Home My WebLink About2021-12-07; City Council; ; Request from Chelsea Investment Corporation for a $1.5 million loan from the Housing Trust Fund for West Oaks Apartments and the Affordable Housing Agreement to satisfy t Meeting Date: Dec. 7, 2021 To: Mayor and City Council From: Scott Chadwick, City Manager Staff Contact: Mandy Mills, Director of Housing & Homeless Services mandy.mills@carlsbadca.gov, 760-434-2907 Subject: Request from Chelsea Investment Corporation for a $1.5 million loan from the Housing Trust Fund for West Oaks Apartments and the Affordable Housing Agreement to satisfy the Inclusionary Housing Requirement for West Oaks (DEV 13-018) District: 2 Recommended Action That the City Council adopt: 1. A resolution approving a $1.5 million loan from the Housing Trust Fund to Chelsea Investment Corporation for construction of the 42-unit West Oaks affordable apartment complex 2. A resolution approving an Affordable Housing Agreement to satisfy the inclusionary housing requirement for the West Oaks development Executive Summary Chelsea Investment Corporation (“Chelsea”) has partnered with Integral Communities to build the affordable housing portion of the West Oaks project. West Oaks was approved by the Planning Commission to provide 192 apartment units, 42 of which will be affordable to lower- income households. Chelsea is requesting $1.5 million in financial assistance from the city’s Housing Trust Fund. At the end of October 2021, the Housing Trust Fund, which is restricted to affordable housing and homelessness-related projects, programs and services, had an available balance of $9.85 million. City conditions on the project require the developer to provide a total of 42 units, or 22% of the total, that will be affordable to low-income households. The city and the developer must also execute an affordable housing agreement before the project’s final map can be recorded. The City Council’s approval of this agreement is required under Chapter 21.85 of the Carlsbad Municipal Code. The total estimated project cost is $18,538,265. City Council Policy No. 90 requires that the City Council make final decisions on Housing Trust Fund financial assistance requests after review Dec. 7, 2021 Item #11 Page 1 of 63 and recommendation by the Housing Commission. On Nov. 18, 2021, the Housing Commission reviewed the financial request and recommended it be approved by the City Council (Exhibit 3). Discussion Background On Jan. 20, 2021, the master developer, Integral Communities, received approval to build 192 apartment units located south of Palomar Airport Road and west of Palomar Oaks Way (Exhibit 4.) The overall project consists of a clubhouse and nine buildings for the apartments. The 42 affordable units will be integrated on the same site and will occupy two of the nine buildings with one-, two-, and three-bedroom units. The apartment community will include a recreation building, recreational areas, and a community pool. Since the project is changing the General Plan Land Use from Planned Industrial to Residential (R-30), a request for withdrawal of 192 dwelling units from the excess dwelling unit bank1 was required. Prior projects that involved a General Plan land use change and the removal of excess dwelling units were required to provide a minimum of 20% of the total housing units as affordable to low-income households, an increase over the typical 15% inclusionary housing requirement. The city’s approval requires that 42 of the apartments, or 22% of the total, be affordable to low-income households, with an average affordability of 60% of the area median income. This requirement fulfills the obligations of the city’s inclusionary housing policies, which are intended to create affordable housing for lower-income families. An affordable housing agreement that outlines how the affordable housing requirement will be satisfied must be executed before the final map for the overall development can be recorded. The draft agreement is included as Attachment 1 to Exhibit 2. Chelsea will own and operate the West Oaks affordable apartments. Its financial assistance request is for the affordable apartment project on the west end of the site. (Its funding assistance application is provided as Exhibit 5.) The company has extensive experience with affordable housing throughout California and the west. Chelsea owns and manages the Hunter’s Pointe, Glen Ridge, Juniper and Mariposa affordable apartments in Carlsbad (see more information below and in Exhibit 6). Subsidy analysis Chelsea intends to secure tax exempt bond and tax credit equity to finance the majority of the project’s cost. To improve its competitiveness for bond and tax credit financing, and to provide additional public benefit to the Carlsbad community, it is requesting $1.5 million in financial assistance from the city’s Housing Trust Fund. 1 When developers build fewer on a project than would be allocated by the General Plan, these units are held on account in the city’s Excess Dwelling Unit Bank, and later can be applied to other projects (Council Policy 43). Dec. 7, 2021 Item #11 Page 2 of 63 Summary of funding sources and uses of funds The developer’s detailed financial statement is attached as Exhibit 4. Below is a summary of the proposed sources and uses of funds: Source of funds Amount Per unit Senior Loan $5,977,000 $142,310 Tax Credit Equity 7,052,873 167,926 Chelsea Investments – deferred developer fee 599,307 14,269 City of Carlsbad loan 1,500,000 35,714 Integral Communities (master developer) 1,654,626 39,396 Integral Communities (land donation) 1,680,000 40,000 Soft loan-interest 74,459 1,773 TOTAL $18,538,265 $441,387 Permanent uses of funds Amount Per unit Property acquisition $1,680,000 $40,000 Construction 11,146,703 265,398 Construction interest and fees 895,970 21,333 Construction contingency 552,542 13,156 Soft costs, other 1,450,604 34,538 Reserves 94,039 2,239 Architecture and engineering 619,100 14,740 Developer fee 2,099,307 49,984 TOTAL $18,538,265 $441,387 Cost reasonableness Development costs are one of the key variables determining the need for subsidies, so it is important that those costs be reasonable. With approximately $18.5 million in total development costs, the average unit development cost of approximately $441,387 is reasonable in light of current market conditions and trends. For example, a recent Terner Center Report found in an analysis of low-income housing tax credit projects that the average inflation-adjusted per unit cost of new affordable housing rose from $411,000 to $480,000 in California between 2008 and 2019.2 The report also found that the cost of materials and labor are the primary drivers of recent cost increases of affordable housing financed through these tax credits. Another important consideration is that any financial assistance from the city should have the effect of making the units more affordable and not creating undue gain for any party. Under the state’s 4% tax credits program, Chelsea would be eligible to earn a developer fee of $2,099,307. It proposes to receive the full developer fee, but only $1.5 million of that would be paid upon close of permanent financing. The remaining developer fee would be deferred and invested 2 The Terner Center for Housing Innovation, “The Complexity of Financing Low-Income Housing Tax Credit Housing in the United States,” April 2021; https://ternercenter.berkeley.edu/wp-content/uploads/2021/04/LIHTC-Complexity-Final.pdf Dec. 7, 2021 Item #11 Page 3 of 63 back into the project, payable to Chelsea through the proceeds of the project over time, so that the city’s investment would not create an undue financial gain for the corporation. Additionally, the apartment proposal exceeds the project’s approved requirement to provide affordable housing by increasing the affordability of 10 of the 42 affordable units. The average affordability of the 42 units was required to be at 60% of the area median income. The proposed project will provide five units affordable at 30% and five units at 50% of the area median income. City Council Policy No. 90 funding guidelines The City Council adopted City Council Policy No. 90 (Exhibit 7) in December 2020 to guide administration of the city’s Housing Trust Fund. The policy identifies priority uses of the fund, provides criteria for evaluating financial assistance requests, and describes the review process, form of assistance and affordability covenants. Chelsea’s financial assistance request has been found consistent with City Council Policy No. 90 guidelines, as detailed in Exhibit 8. Other considerations Housing Element consistency The City Council has adopted the 2021-2029 Housing Element, an eight-year plan that describes how the city will accommodate Carlsbad’s housing needs for residents at all income levels and those with specialized needs. The project to be funded by this loan will serve extremely low, very low, and low-income households. In addition, the city is committed to affirmatively furthering fair housing by removing barriers to housing and encouraging affordable housing in high opportunity areas. The project site is located in a high opportunity area according to the Regional Opportunity Index (see Carlsbad Housing Element pages 10-90 through 10-92). Specifically, the project is consistent with the following provisions of the Housing Element: • Program 2.9 - Assistance for Special Needs Populations: “Certain groups have greater difficulty finding decent, affordable housing due to persons with special needs within a household. Households with special needs include seniors, persons with physical and/or mental disabilities (including developmental disabilities), large households, extremely low-income households, single-parent households, female head of households, veterans, farmworkers, students, and military personnel. The City will provide assistance to these households to encourage the provision of adequate housing to meet their needs.” • Program 4.2 – Affirmatively Furthering Fair Housing, Objective (a): “Encourage mixed- income developments accessible to lower income residents citywide, especially in high opportunity and resource-rich areas through use of the city’s Inclusionary Housing Ordinance, Housing Trust Funds, development of city-owned properties, and use of grant funding for housing.” Risk In its role as a lender to the project, the city is exposed to the risks inherent to real estate development. These risks come in: 1. Predevelopment, the project does not get to construction 2. Construction, the project cannot be completed, cost overruns, contractor problems Dec. 7, 2021 Item #11 Page 4 of 63 3. Operation, revenues do not cover expenses. In response to this risk, the requirement to repay any city financial assistance will be subordinated to repayments for any conventional and other financing as may be necessary to support the project’s financing success. Several factors mitigate the identified risks: • The development team has a strong track record with similar affordable housing projects throughout California. • Including other financing sources, including the master developer contribution, private loan, and tax credit investment, means that other stakeholders depend on the success of the project in both the short and long term. • Having city and other subordinated financing helps attract the necessary private, state and federal financing. • The city’s investment will be secured by a promissory note and deed of trust on the property. The developer will also be required to provide completion bonds to the city to ensure that construction is completed. Housing Commission review The financial assistance request was reviewed by the Housing Commission on Nov. 18, 2021, and the commission recommended the City Council approve Chelsea’s request for financial assistance based on the findings contained in the Housing Commission resolution. Options Staff is providing the following options for the City Council’s consideration: 1. Approve the loan of $1.5 million as presented Pros • This option allows for the new construction of 42 units for extremely low, very low and low-income households, subject to Chelsea successfully securing additional financing through bonds, tax credit equity or other sources. • The financial assistance is structured as a soft loan and will result in principal plus interest being returned to the Housing Trust Fund. • The Housing Trust Fund has a sufficient balance to cover this project as well as pending application requests for assistance. Cons • Reduces the Housing Trust Fund by $1.5 million 2. Revise funding assistance to a lower amount Pros • Lowers the amount allocated from the Housing Trust Fund Cons • Increases the funding gap for the affordable project, jeopardizing the viability of both the market rate and affordable projects. Master developer and affordable developer will have to evaluate and potentially restructure project financing. Dec. 7, 2021 Item #11 Page 5 of 63 3. Do not approve funding for this project. Pros • Maintains the current balance of the Housing Trust Fund Cons • Significantly increases the funding gap for the affordable project, jeopardizing the viability of both the market rate and affordable units. Master developer and affordable developer will have to evaluate and restructure the project with an alternate funding plan. Both the market rate and affordable units would be at risk of not being built in the near future. Fiscal Analysis If the recommended option is chosen, the City Council will have assigned the funding to the project for a period not to exceed 24 months. Staff request that the City Council authorize the appropriation of $1.5 million from the city’s Housing Trust Fund for the loan as presented, contingent upon the developer’s ability to secure all other project funding. As noted above, the Housing Trust Fund has an available balance of $9.85 million of the end of Oct. 2021. Next Steps If Option 1 is approved, staff will draft implementing agreements with Chelsea and appropriate funds. The resolution authorizes the City Manager, or designee, to execute all documents necessary to provide the financial assistance. Staff will process the affordable housing agreement with the master developer. The resolution authorizes the City Manager, or designee, to execute and record all necessary documents. Environmental Evaluation The Planning Commission certified an environmental impact report and adopted findings of fact and mitigation monitoring and reporting program for the West Oaks Apartments development project on Jan. 20, 2021 (Planning Commission Resolution No. 7397). As an integral component of the overall development, the West Oaks affordable apartments to be built on the west side of the site were adequately evaluated by the certified environmental impact report and the project is subject to applicable mitigation monitoring and reporting requirements. No further environmental review is required. Public Notification This item was noticed in keeping with the state's Ralph M. Brown Act and it was available for public viewing and review at least 72 hours before the scheduled meeting date. Exhibits 1. City Council resolution – funding request 2. City Council resolution – affordable housing agreement 3. Housing Commission Resolution 2021-010 4. Location map 5. Chelsea Investment Corporation housing financial assistance application and proforma 6. Chelsea housing brochures and list of tax credit-financed projects 7. City Council Policy No. 90 8. Policy 90 analysis Dec. 7, 2021 Item #11 Page 6 of 63 RESOLUTION NO. 2021-267 , A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING A $1,500,000 LOAN FROM THE HOUSING TRUST FUND TO CHELSEA INVESTMENT CORPORATION FOR THE WEST OAKS AFFORDABLE HOUSING PROJECT (DEV 2013-018) EXHIBIT 1 WHEREAS, Chelsea Investment Corporation has requested financial assistance for the construction of 42 apartment units to be affordable to extremely low (5 units), very low (5 units), and low-income (32 units) households located southwest of the intersection of Palomar Airport Road and Palomar Oaks Way; and WHEREAS, the request for financial assistance was submitted to the City of Carlsbad's Housing Commission for review and consideration at their public meeting on Nov. 18, 2021, on which date said Commission recommended that the City Council approve the requested financial assist,ance in the amount of $1,500,000; and WHEREAS, the Planning Commission approved said housing development on Jan. 20, 2021. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the request for financial assistance from Chelsea Investment Corporation is consistent with the goals and objectives of the City of Carlsbad's Housing Element, and the General Plan. 3. That the request for financial assistance will assist the affordable housing developer in constructing a total of 42 apartment units affordable to extremely low (5 units), very low (5 units), and low-income (32 units) households. The project, therefore, can effectively serve the city's housing needs and priorities expressed in the Housing Element. 4. That the City Council authorizes the Deputy City Manager, Administrative Services, to assign for a 24-month period from the Housing Trust Fund and to appropriate funds to provide a cash assistance loan in the amount of $1,500,000 to Chelsea Investment Corporation for the West Oaks affordable housing project once all project funding is secured by the developer. Dec. 7, 2021 Item #11 Page 7 of 63 RESOLUTION NO. 2021-268 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING AN AFFORDABLE HOUSING AGREEMENT TO SATISFY THE INCLUSIONARY HOUSING REQUIREMENT FOR THE WEST OAKS DEVELOPMENT (DEV 2013-018) EXHIBIT 2 WHEREAS, the developer of West Oaks has proposed to construct 42 apartment unit!: affordable to low and very low-income households as a means to satisfy their inclusionary housin§ obligation as permitted by Carlsbad Municipal Code Chapter 21.85 and Section 21.53.120; and WHEREAS, in exchange for providing additional affordable housing, the project receivec approval to increase the density on the project over what would normally be allowed and modification~. to development standards, including for height, setbacks and parking as allowed in Carlsbad Municipal Code Section 21.53.120, were granted; WHEREAS, Carlsbad Municipal Code Chapter 21.85 requires the developer of a project to receive approval of an Affordable Housing Agreement which details how the requirements of the lnclusionary Housing Ordinance shall be met. WHEREAS, the Planning Commission approved said housing development on Jan. 20, 2021. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the project is consistent with the goals and objectives of the City of Carlsbad'5 Housing Element, and the General Plan. The project will provide 42 units affordable to low and very low-income households. The project, therefore, can effectively serve the city's housing needs and priorities expressed in the Housing Element. 3. That the Affordable Housing Agreement (Attachment A) is hereby approved. 4. That the City Council authorizes the City Manager, or designee, to prepare and execut= all documents related to the provision of the Affordable Housing Agreement, subject t:1 review and approval by the City Attorney. Dec. 7, 2021 Item #11 Page 9 of 63 Attachment A Dec. 7, 2021 Item #11 Page 11 of 63 RECORDING REQUESTED BY: City of Carlsbad WHEN RECORDED MAIL TO: City of Carlsbad Housing and Homeless Services Department 1200 Carlsbad Village Drive Carlsbad, CA 92008 Attn: City Clerk This document is recorded at the request and for the benefit of the City of Carlsbad, and is exempt from the payment of a recording fee pursuant to Government Code Sections 6103, 27383, and 27388.1 (Space above for Recorder's Use) AFFORDABLE HOUSING AGREEMENT IMPOSING RESTRICTIONS ON REAL PROPERTY (DEV 13018) This AFFORDABLE HOUSING AGREEMENT IMPOSING RESTRICTIONS ON REAL PROPERTY ("Agreement"), entered into this ____ day of ________ , __ , by and between the CITY OF CARLSBAD, a municipal corporation ("City"), and The Carlsbad West Oaks Project Owner, LLC. a Delaware limited liabilitv company ("Developer") is made with reference to the following: A. Developer is the owner of certain real property in the City of Carlsbad, in the County of San Diego, California ("Property") described in Exhibit "A", which is attached hereto and incorporated herein by this reference. B. Developer currently intends to construct a total of 192 residential units on the Property ("Development"), consisting of 150 market rate and 42 affordable apartments (including 1 manager's unit) .. Developer has requested and the City has approved a General Plan land use amendment, zone change, Local Coastal Program amendment, a site development plan, coastal development permit, habitat management plan permit, minor subdivision, an allocation of residential units from the Excess Dwelling Unit Bank pursuant to City Council Policy 43, and a modification to development standards, subject to certain conditions in Planning Commission Resolution No. 7397 ("Conditions of Approval") with respect to affordable housing. Condition of Approval 15 requires that forty-two (42) of the units in the Development are to be affordable to lower-income households with incomes ranging between thirty-five percent (35%) and up to seventy percent (70% ), with average affordability to not exceed sixty percent ( 60% ), of the San Diego Area Median Income in fulfillment of the City's Inclusionary Housing Ordinance, Carlsbad Municipal Code, Chapter 21.85. C. Developer is required by the Conditions of Approval to enter into this Affordable Housing Agreement Imposing Restrictions on Real Property as required and with the content specified by the City's Inclusionary Housing Ordinance (CMC Chapter 21.85), and shall be 235/0 I 6909-0611 16714484.9 al 1/18/21 1 Dec. 7, 2021 Item #11 Page 12 of 63 executed and recorded prior to the approval of any final or parcel map for the Property or, where a map is not being processed, prior to issuance of building permits. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. Satisfaction of Affordable Housing Obligation and Conditions of Approval. The Conditions of Approval of the permits described in Recital B above and the requirements of the City's Inclusionary Housing Ordinance (CMC Chapter 21.85) shall not be satisfied unless forty-two (42) units of the Development are constructed for the purpose of providing housing to be affordable to lower-income households according to the schedule and terms contained herein ("Affordable Units"). A total of 150 market rate units and 42 Affordable Units (including 1 manager's unit) may be constructed with approval of this Agreement. 2. Terms Governing Provision of Affordable Units. Provision of the Affordable Units shall be governed by the following terms: 2.1 Income Level. Unit Size and Bedroom Count. The Affordable Units in the Development shall include forty-two ( 42) one, two, and three-bedroom dwelling units (22 percent of the total dwelling units) as affordable to lower-income households (with incomes ranging from 35% to 70% of the San Diego County Area Median Income ("AMI") for 55 years, in accordance with the requirements and process set forth in Chapter 21.85 of the Carlsbad Municipal Code. No fewer than four of the units shaJl be affordable to households with incomes at or below 35% AMI; no fewer than six of the units shall be three-bedroom units, at least one of which shall be affordable at or below 35% AMI; no unit shall exceed 70% AMI affordability; and the average affordability for all restricted units shall not exceed 60% AMI. The 42 units (including one unrestricted manager's unit) are expected to be provided in the unit size with the square footages and income restriction indicated in the table below. Unit mix may be adjusted to maximize ability to obtain tax credit financing as approved by the City, but in no event shall it deviate below the requirements of Section 2.1 above. Unit Size Number of Units by Income Level Total Number of Approx. Extremely Very low low Low bedrooms net square Low Income Income Income Income feet 35% 50% 60% 70% 1 bedroom 500-550 3 3 12 1 19 2 bedrooms 700-750 1 1 9 1 12 3 bedrooms 900-1020 1 1 7 1 10 5 5 28 3 41 • Plus 1 unrestricted manager's unit 2.2 Affordabilitv Requirements. The Affordable Units shall be restricted to occupancy by households with incomes ranging from 35% to 70% of AMI, adjusted for actual household size, as indicated in the table above. Monthly rents of the Affordable Units 2 Dec. 7, 2021 Item #11 Page 13 of 63 shall not exceed I/12th of 30% of the targeted household AMI for San Diego County, adjusted for assumed household size appropriate for the unit pursuant to the Regulatory Agreement. For purposes of this Agreement, "Rent" shall include a utility allowance as established and adopted by the City of Carlsbad Housing Authority, as well as all required monthly payments required by the lessor in connection with use and occupancy of a housing unit and land and facilities associated therewith, including any separately charged fees, utility charges, or service charges assessed by the lessor (but not including fees or charges resulting from any default by the tenant or damage caused by the tenant, or fees or charges paid by the tenant to third party utilities or other providers). Median income figures shall be those determined by the United States Department of Housing and Urban Development from time to time, and as published by the California Department of Housing and Community Development. For purposes of this Agreement, "assumed household size appropriate for the unit" shall mean a household of two persons in a one-bedroom unit, three persons in a two-bedroom unit, and four persons in a three bedroom unit unless the requirements of another funding source require an alternate method of calculating assumed household size which is less than these assumed household sizes. With respect to each Affordable Unit, the affordability requirements of this Section 2.2 shall continue for 55 years from the date of issuance of a Certificate of Occupancy by the City for such unit or another comparable unit based upon substitution provisions pursuant to the Regulatory Agreement. The affordability requirements of this Section 2.2 shall be set forth in the Regulatory Agreement between the Developer or its successors and the City, provided for below, which shall supersede this Agreement upon recordation of the Regulatory Agreement. 2.3 Schedule for Developing Affordable Multi-family Units. Developer shall provide the Affordable Units concurrent with the Project's market rate units. In order to satisfy this requirement Developer and/or its successor shall receive a release of building permits for the market rate and Affordable Units on the schedule set forth herein: (i) Building Permits for the Affordable Units may be released at any time following execution and recordation of this Agreement; (ii) Following execution and recordation of this Agreement, the Developer may begin to obtain building permits for the market rate units, with no more than 40% ( or 60 units total) of the market rate unit building permits released by the city in this phase, (iii) Upon submitting a copy of the Recorded Deed to the City of Carlsbad Housing and Homeless Services Director confirming full transfer of ownership of the identified property for the Affordable Units from the Developer and/or its successor to the Affordable Housing Developer, Developer may obtain building permits for an additional 32% of the market rate units ( or an additional 48 market rate building permits), and (iv) Developer may obtain a final release of building permits from the City for the remaining market rate units ( 42 total) upon commencement of construction of the Affordable Units on the Property. However, no certificate of occupancy or occupancy otherwise granted on for the final forty-two ( 42) market rate units until such time as the construction of the Affordable Units are complete and the Affordable Units are ready for occupancy. For purposes of this section, "building permit" shall mean a permit issued in accordance with the requirements of the California Building Code, California Code of Regulations, Title 24, Part 2, Volumes I and 2, Section 105, and as amended by Carlsbad Municipal Code Section 18.04.020. For purposes of this section, "commencement of construction" shall mean certification of building pads and initiation of framing construction activity consistent with the approved building permit(s) for the Affordable Units and which results in at least one approved inspection by the City. For purposes of this section, "construction of the Affordable Units is complete and the Affordable Units are ready for occupancy" shall mean shall mean final inspection of the Affordable Units by the City's Building Inspector ( or designee) has occurred confirming construction is in compliance with the issued 3 Dec. 7, 2021 Item #11 Page 14 of 63 building permit( s ), no additional corrections are required, and a certificate of occupancy or equivalent may issue. 3. City Approval of Documents. The following documents, to be approved in writing by the City, shall be used in connection with the rental of Affordable Units. 3.1 A marketing plan consistent with the terms of this Agreement, establishing the process for seeking, selecting and determining the eligibility of tenants of the Affordable Units. 3 .2 A form of Rental Agreement. 3.3 A Property Management Plan. 3.4 A form of regulatory agreement between the Developer and the City ("Regulatory Agreement"), in a form approved by the Housing and Homeless Services Director and City Attorney. The Regulatory Agreement shall incorporate the terms governing provision of Affordable Units set forth herein and shall be recorded against the Affordable Units for a term of 55 years. 4. Compliance Report. Following completion of construction of the Affordable Units, a Compliance Report meeting the requirements of CMC Section 21.85.140 of the Inclusionary Ordinance, verifying compliance of all completed Affordable Units with the terms of this Agreement and certified as correct by a third-party, shall be submitted annually to the Housing Services Manager, commencing on the first Report Date that is twelve (12) months from the completion of construction of the Affordable Units. If similar reports on some or all of the Affordable Units are required for regulatory compliance with other financing programs, those reports may be deemed satisfactory for the purpose of this section by the Housing Services Manager, with respect to the Affordable Units covered by such reports, provided that copies of those reports are provided on an annual basis to the Housing Services Manager with a third party certification addressed to the City. 5. Release of Subject Propertv from Agreement. The covenants and conditions herein contained shall apply to and bind the Developer and its heirs, executors, administrators, successors, transferees, and assignees having or acquiring any right, title or interest in or to any part of Property and shall run with and burden the Property until terminated in accordance with the provisions of Section 12 hereof. The Developer shall expressly make the conditions and covenants contained in this Agreement a part of any deed or other instrument conveying any interest in such property. The burdens of this Agreement, except for such burdens as may be released as set forth above or pursuant to Section 12, shall remain in full force and effect and recorded against the Development for the 55-year duration of this Agreement. 6. Default. Failure of the Developer to cure any default in the Developer's obligations under the terms of this Agreement within ninety (90) days after the delivery of a notice of default from the City (or where the default is of the nature which cannot be cured within such ninety (90) day period, the failure of the Developer to commence to cure such default within the ninety (90) day period or the Developer's failure to proceed diligently to complete the cure of such a default within a reasonable time period but in no event greater than one-hundred eighty (180) days) will 4 Dec. 7, 2021 Item #11 Page 15 of 63 constitute a failure to satisfy the Conditions of Approval with respect to the Property and the requirements of Chapters 21.85 and 21.86 of the CMC. The City may exercise any and all remedies available to it with respect to the Developer's failure to satisfy the Conditions of Approval and Chapters 21.85 and 21.86 of the CMC, including but not limited to, the withholding of further building permits and certificates of occupancy for the market rate units within the Development until such cure is completed. 7. Appointment of Other Agencies. At its sole discretion, City may designate, appoint or contract with any other public agency, for-profit or non-profit organization to perform the City's obligations under this Agreement. 8. Hold Harmless. Developer will indemnify and hold harmless (without limit as to amount) City and its elected officials, officers, employees and agents in their official capacity (hereinafter collectively referred to as "Indemnitees"), and any of them, from and against all loss, all risk of loss and all damage (including attorneys' fees and expenses) sustained or incurred because of or by reason of any and all claims, demands, suits, actions, judgments and executions for damages of any and every kind and by whomever and whenever made or obtained, allegedly caused by, arising out of or relating in any manner to Developer's actions or defaults pursuant to this Agreement, and shall protect and defend Indemnitees, and any of them with respect thereto. This provision shall survive the term of this Agreement. 9. Insurance Requirements. Prior to commencement of construction, Developer shall obtain, at its own expense, commercial general liability insurance for development of the Property naming Indemnitees as additional named insureds with aggregate limits of not less than five million dollars ($5,000,000), for bodily injury and death and property damage, including coverage for contractual liability and projects and completed operations, purchased by Developer or its successor or assigns from an insurance company duly licensed to engage in the business of issuing such insurance in the State, with a current Best's Key Rating of not less than A-:VII, such insurance to be evidenced by an endorsement which so provides and delivered to the Housing Services Manager prior to the issuance of any building permit for the Property. 10. Notices. All notices required pursuant to this Agreement shall be in writing and may be given by personal delivery or by registered or certified mail, return receipt requested, to the party to receive such notice at the addressed set forth below: 5 Dec. 7, 2021 Item #11 Page 16 of 63 TO THE CITY OF CARLSBAD: City of Carlsbad Housing and Homeless Services Department Housing Services Division 1200 Carlsbad Village Drive Carlsbad, CA 92008 Attn: Housing and Homeless Services Director Email: Housingra"1carlsbadca.gov Fax: 760-720-2037 TO THE DEVELOPER: The Carlsbad West Oaks Project Owner, LLC 888 San Clemente, Suite I 00 Newport Beach, CA 92660 Attn: Lance Waite, Principal Caren Read, Chief Legal Officer Telephone: (949) 720-3612 Facsimile No.:(949) 720-3613 E-Mail: Lwaite@integralcommunities.com cread@integralcommunities.com Any party may change the address to which notices are to be sent by notifying the other parties of the new address in the manner set forth above. 11. Integrated Agreement. This Agreement constitutes the entire Agreement between the parties and no modification hereof shall be binding unless reduced to writing and signed by the parties hereto. 12. Duration of Agreement. This Agreement shall remain in effect for fifty-five (55) years unless terminated by both of the following occuring: (i) recordation of the Regulatory Agreement, and (ii) construction of the Affordable Units is complete and the Affordable Units are ready for occupancy (as defined in Section 2.3). This Agreement, and any section, subsection, or covenant contained herein, may be amended only upon the written consent of the Developer and the Housing and Homeless Services Director. 13. Recordine of Agreement. The parties hereto shall cause this Agreement to be recorded against the Property in the Official Records of the County of San Diego. 14. Severabilitv. In the event any limitation, condition, restriction, covenant, or provision contained in this Agreement is to be held invalid, void or unenforceable by any court of competent jurisdiction, the remaining portions of this Agreement shall nevertheless be and remain in full force and effect. 6 Dec. 7, 2021 Item #11 Page 19 of 63 CAUFORNlA .ACKNOWil.EDGIViEl\rf CIVIL CODE § 1189 A notary public or otherofficer completing this certificate verifies onlythe identity-ofthe individual who signed the document to whkh this certificate is attached, and not the truthfulness, accuracy; or validity of that document. State of California C--} County of ..) 0\11"\ D~ 0 \\\ \Cf:> l-iozx . before me, C-0\'\t'\or \< V\O..c..\<:. I ~o½r11 Pub\~~ · Date Here /nseli: Name and Title of the Oi11Ler • personally appeared __ ...::.L_o._t\_u_e __ __cw __ c,..,_~_\.-_e. __________________ _ On Name(s) of Signer(s) 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 acknowledg.ed 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 in"'i.rument the person.(s), or the entity upon behalf of which the person(s) acted, executed the instrument. CONNOR KNACK Notary Public • California a; San Di~o County ~ ·commission It 2361885 y Comm. Expires Jun 19,"2025 Place Notary Seal and/or Stamp Above I certify under PENAL TY OF Pl::RJURY under the Jaws of the State of Californiq that the foregoing_ paragraph is true and correct. WITNESS my hand and official seal. Signatu~e . ~ Signature of Notary Public OPTION._AL Completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document Description of Attached Document Title o; Type of Document _A,!t"-t:ocJ~..!b;,,l\~e.~_rH~o~u!.::~~~~~........l.~rr_:.ie.i!'.!e.~W\~e~n2+~--------- DocumentDate: \ \ \~ '1-0'2.\ Numberof Pages: ____ _ Signer(s) Other Than Named Above: _________________________ _ Capacity(ies) Claimed by Signer(s) Signer's Name: ____________ _ Signer's Name: □ Corporate Officer -Titie(s): _______ _ □ Corporate Officer -Title(s): _______ _ □ Part.Iler -□ Limited □ General □ Partner -o Limited □ General D fndividua[ o Attorney in Fact □ Individual □ Attorney in Fact □ Trustee o Guardian or Conservator □ Trustee □ Guardian or Conservator □ Other: o Other: Signer is Representing: _________ _ · Signer is Representing: _________ _ ffl§ . ~ ~~======= ~ I ©2018 Nationaf Notary Association Dec. 7, 2021 Item #11 Page 20 of 63 235/016909-0811 16714484.9 a11/18/21 EXHIBIT A To be attached after recordation of the final map. LEGAL DESCRIPTION OF PROPERTY 8 Dec. 7, 2021 Item #11 Page 21 of 63 ATTACHMENT B PHASING SCHEDULE FOR WEST OAKS Schedule of Construction Activities/Triggers for Release of Buildinf! Permits Affordable Housing Agreement recorded concurrent with recording of Fina/Map Copy of Recorded Deed documenting formal transfer of property ownership for Affordable Unit parcel of land from Developer to Affordable Unit Developer Commencement of Construction ol 235/016909-0611 16714484.9 a11/18/21 Market Rate Number of Certificate of Building Market Rate Occupancy Permits Building Released Permits (150 total) Grading 0 permits Building Permits for 0 Affordable Units (42 total) Building Permit for 0 Club House No restriction Building 60 total on Certificate Permits for (40%) of Occupancy Buildinf!s 7-9 Building 48 total No restriction Permits for (32%) on Certificate Buildings 5-6 of Occupancy 9 Dec. 7, 2021 Item #11 Page 22 of 63 the Affordable Units, which means certification of pads and building framing construction activity underway 235/016909-0611 16714484.9 a11/18/21 Building Permits for Buildings 3-4 . 42 total Market rate (28%) units may proceed with construction, but will not be approved for certificate of occupancy until affordable housing units complete construction and receive certificate of occupancy or equivalent 10 RESOLUTION NO. 2021-010. A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY OF CARLSBAD, CALIFORNIA RECOMMENDING THAT THE CITY COUNCIL APPROVE A $1,500,000 LOAN FROM THE HOUSING TRUST FUND TO CHELSEA INVESTMENT CORPORATION FOR THE WEST OAKS AFFORDABLE APARTMENTS (DEV 13-018) WHEREAS, Integral Communities (Integral) sought the city’s approval to build 192 apartments located south of Palomar Airport Road and west of Palomar Oaks Way. The project will include 42 affordable apartments, consisting of 1, 2 and 3 bedrooms; and WHEREAS, the City Council approved said development, including the affordable apartments on Jan. 20. 2021; and WHEREAS, Chelsea Investment Corporation has partnered with Integral to build the West Oaks affordable apartments; and WHEREAS, Chelsea Investment Corporation applied to the City of Carlsbad for $1,500,000 in Housing Trust Fund assistance in order to create additional public benefit by serving lower income levels and improve project competitiveness for tax exempt bond and tax credit equity financing; and WHEREAS, the city’s Affordable Housing Policy Team evaluated the financial assistance request on Nov. 18, 2021, and recommended that it be forwarded to the Housing Commission for their consideration and recommendation to the City Council; and WHEREAS, the Housing Commission considered the financial assistance request, staff evaluation and recommendation, and the testimony of all persons desiring to be heard on the matter at a special meeting on Nov. 18, 2021. NOW, THEREFORE, BE IT RESOLVED by the Housing Commission of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the request for financial assistance from Chelsea Investment Corporation is consistent with the goals, objectives and programs of the City of Carlsbad's Housing Element, City Council Policy No. 90 guidelines, and the city’s Housing Trust Fund underwriting practices. 3. That the request for financial assistance will assist the affordable housing developer in constructing a total of 42 apartment units affordable to extremely low, very low, and Dec. 7, 2021 Item #11 Page 23 of 63 low income households, plus one unrestricted manager’s apartment. Specifically, the assistance will result in deeper affordability levels by providing five (5) extremely low- income (30% AMI), five (5) very low-income (50% AMI), twenty-eight (28) low-income (60% AMI), and three (3) low-income (70% AMI) apartments. 4. That, based on information provided in the Housing Commission staff report and considering testimony of all persons desiring to be heard at the Nov. 18, 2021 public meeting, the Housing Commission hereby recommends that the City Council approve $1,500,000 in financial assistance from the Housing Trust Fund to Chelsea Investment Corporation, subject to the following conditions: a. The financial assistance shall be in the form of a residual receipts loan for a term of 55 years at three percent simple interest per annum. Said loan shall be secured by a promissory note and deed of trust. b. The financial assistance is conditional and contingent upon Chelsea Investment Corporation receiving all other necessary funding commitments identified in the financial assistance application including private loans, tax credit financing, master developer contribution, and deferred developer fees. c. The city’s commitment of funds will be maintained for a period of twenty-four months upon City Council’s approval. The funding commitment will expire at the end of this term unless developer has secured all other necessary funding, has executed a loan agreement with the city, and the project is ready to construct; or unless a time extension is granted by the City Council. Dec. 7, 2021 Item #11 Page 24 of 63 PASSED, APPROVED AND ADOPTED at a Meeting of the Housing Commission of the City of Carlsbad on the 18th of November, 2021, by the following vote, to wit: AYES: EVANS, MANZANO, CORTES - TORRES, NGUYEN - CLEARY NAYS: NONE ABSENT: COLE Signature Pending JOHN NGUYEN-CLEARY, CHAIRPERSON CARLSBAD HOUSING COMMISSION ATTEST: MANDY MILLS Housing & Homeless Services Director Dec. 7, 2021 Item #11 Page 25 of 63 EXHIBIT 4 WEST OAKS LOCATION MAP Dec. 7, 2021 Item #11 Page 26 of 63 _________________________________________________________________________________ Finance Development Management 6339 Paseo Del Lago Carlsbad, CA 92011 Tel (760) 456-6000 Fax (760) 456-6001 www.chelseainvestco.com September 14, 2021 Mandy Mills Director of Housing & Homeless Services City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 RE: West Oaks Affordable Housing Housing Trust Fund – Financial Assistance Application Dear Mandy: Chelsea Investment Corporation has been working with Integral Communities to finance and develop the affordable housing at West Oaks (the “Project”), located at the Southwest Corner of Palomar Oaks Way and West Oaks Way in Carlsbad, California. The 42-unit project will be a part of the West Oaks Master Plan, consisting of 150 market rate apartment units. Chelsea Investment Corporation is pleased to submit a Housing Trust Fund Financial Assistance Application to the City of Carlsbad for the development of the Project. We are requesting $1,500,000 for the construction and permanent financing of the project. The proposed financing for the project utilizes the tax-exempt bond and 4% low-income housing tax credit program. As you are aware, for the first time in nearly 15 years, the bond finance program converted to a competitive process effective January 1, 2020. Securing financing from the City of Carlsbad will enhance the competitiveness of the West Oaks affordable project. We intend to submit the joint financing application to CDLAC and TCAC in the first round of 2022, and if successful, it will allow project construction to commence in 4th quarter 2022. The Project will be comprised of two, three-story garden style residential buildings, consisting of 19 one-bedroom, 12 two-bedroom, and 11 three-bedroom units. The Project is designed as a 100- percent affordable housing development for families making between 30 and 70-percent of area median income (AMI). The Project will have a separate on-site leasing office and will share a community recreation building and other common areas with the adjacent market-rate buildings. It is worth noting, the California Fair Housing Task Force has designated the census tract where the development of West Oaks will be located as a “High Resource” area due in part to the proximity of numerous employment opportunities, supporting positive economic and educational outcomes for families. EXHIBIT 5 Dec. 7, 2021 Item #11 Page 27 of 63 Consideration of this request for financing by the City of Carlsbad is greatly appreciated. I look forward to working with you to advance this request, together with working with you and the team from Integral the finalize the Affordable Housing Agreement for the Project. Please let me know if you have any questions or need any additional information in order to move forward. Sincerely, Cheri Hoffman President Chelsea Investment Corporation Dec. 7, 2021 Item #11 Page 28 of 63 HOUSING TRUST FUND FINANCIAL ASSISTANCE APPLICATION Community Development Housing Services 1200 Carlsbad Village Drive  Carlsbad, CA 92008  760-434-2810 t Please provide all known information as requested. Check all boxes that apply. PROJECT INFORMATION Project Name: Address: Zip Code: Type of project: New Construction Acquisition Conversion (check all that apply) Preservation Rehabilitation Target population to be served: Provide on a separate sheet or cover letter: a summary narrative of the project, any entitlements received from the city, the amount of financial assistance being requested, and description of the public benefits that would result from the assistance. APPLICANT INFORMATION Legal Name: Address: City: State: Zip: Telephone: Fax: Legal Status of Applicant: Individual General partnership Limited liability corporation Non-profit corporation Limited partnership CHDO For-profit corporation Joint venture Other: Contact Person: Title: Address: City: State: Zip: Telephone: Fax: Email: CO-APPLICANT (IF APPLICABLE) Legal Name: Address: City: State: Zip: Telephone: Fax: Email: Legal Status of Applicant: Individual General partnership Limited liability corporation Non-profit corporation Limited partnership CHDO For-profit corporation Joint venture Other: Contact Person: Title: Address: City: State: Zip: Telephone: Fax: Email: DocuSign Envelope ID: B9465266-9B5D-4F76-B02E-190F5B425C4A Southwest Corner of Palomar Oaks Way & West Oaks Way 760-456-6000 760-944-7577 Affordable Housing for Families between 30-70% AMI Greg Waite 2235 Encinitas Blvd, Suite 216 760-456-6000 Encinitas The Carlsbad Westoaks Project Owner, LLC a Delaware limited liability company 6339 Paseo Del Lago Carlsbad 92011 760-944-7577 West Oaks Chelsea Investment Corporation 760-456-6001 Carlsbad Project Manager 760-944-7511, ext 103 X 92011 CA CA 2235 Encinitas Blvd., Suite 216 President CA gwaite@integralcommunities.com 760-456-6001 6339 Paseo Del Lago 92024CA gwaite@integralcommunities.com 760-944-7511 x 103 92024 cherihoffman@chelseainvestco.com X Cheri Hoffman X Encinitas 92011 Dec. 7, 2021 Item #11 Page 29of 63 Community Development Housing Services 1200 Carlsbad Village Drive  Carlsbad, CA 92008  760-434-2810 t SOURCES & USES OF FUNDS ACQUISITION FUNDING (List all sources of funding) Name of Lender/Source Amount Term in Months Interest Rate Per Unit Cost Committed Yes No TOTAL CONSTRUCTION PERIOD FUNDING (List all sources of funding) Name of Lender/Source Contact Person and Phone Number Amount Term in Months Interest Rate Per Unit Cost Committed Yes No TOTAL PERMANENT FUNDING (List all sources of funding, including amount requested from City of Carlsbad) Name of Lender/Source Contact Person and Phone Number Amount Term in Months Interest Rate Per Unit Cost Committed Yes No TOTAL DocuSign Envelope ID: B9465266-9B5D-4F76-B02E-190F5B425C4A N/A SEE ATTACHED - "2.Sources" SEE ATTACHED - "2.Sources" Dec. 7, 2021 Item #11 Page 30 of 63 Community Development Housing Services 1200 Carlsbad Village Drive  Carlsbad, CA 92008  760-434-2810 t USES OF FUNDS Uses of Funds Amount Per Unit Cost Percentage of total Land Acquisition Cost Total Hard Costs (construction) Construction Interest & Fees Construction Contingency Architectural & Engineering Fees Soft Costs/Other Reserves (operating & other) Developer Fee TOTAL USES OF FUND $18,538,265 $441,387 100% NOTE: A current development proforma shall be attached to this application. The above sources and uses of funds must agree with the information shown in the attached development proforma. PREVAILING WAGE REQUIREMENTS – Check if either of the following wage requirements were included in the Total Development Cost of your project: Davis-Bacon Wages State Prevailing Wages SITE INFORMATION Current Owner/Seller Information: Email: Contact Person: Site Control: Deed Option to Purchase Other: Lot Size: sq. ft. acres APN: If ownership of the property has not yet transferred to applicant, what is the expected date for transfer of ownership? __________________ Legal Description: _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ Prior use of property: _______________________________________________________________________________ _______________________________________________________________________________ Name: Address: City: State: Zip: Telephone: Fax: DocuSign Envelope ID: B9465266-9B5D-4F76-B02E-190F5B425C4A 7.82% Portions of 212-110-05-00, 212-110-06-00, 212-110-07-00. Final Map still to be recorded will create exact legal parcel. $2,099,307 $14,740 The Carlsbad Westoaks Project Owner, LLC a Delaware limited liability company 2235 Encinitas Blvd, Suite 216 $552,542 60.13% gwaite@integralcommunities.com 760-944-7511, ext 103 $94,039 $1,450,604 $13,156 Encinitas 92024 $1,680,000 3.34% Greg Waite, Project Manager $895,970 Exact Legal Description to be provided once Final Map Records 760-944-7577 2.98% $34,538 9.06% 11/15/2022 $2,239 CA 4.83% $619,100 N/A - Vacant Land +/- 1.29 $265,398 $21,333 $40,000 X 11.32% $11,146,703 Purchase and Sale Agreement $49,984 0.51% Dec. 7, 2021 Item #11 Page 31 of 63 Community Development Housing Services 1200 Carlsbad Village Drive  Carlsbad, CA 92008  760-434-2810 t Current Number of occupied units on the property: _____ Number of potential households to relocate: ______ EXISTING or PROPOSED STRUCTURE INFORMATION Existing Building (if applicable) Proposed Configuration (after Rehab or New Construction) Units Bedrooms Buildings Stories Parking spaces Residential sq. ft. Common area sq. ft. Parking sq. ft. Commercial sq. ft. Total building sq. ft. Community Services sq. ft. UNIT MIX Unit Mix Existing Unit Mix Proposed Unit Mix (after rehab or construction) 0 bedroom/SRO 1 bedroom 2 bedrooms 3 bedrooms 4 bedrooms TOTAL UNITS Unit Type % of AMI (insert % of the area median income) Proposed Rent Total # of Units 0 bedroom/SRO 1 bedroom 2 bedrooms 3 bedrooms 4 bedrooms TOTAL UNITS Add additional rows if necessary. DocuSign Envelope ID: B9465266-9B5D-4F76-B02E-190F5B425C4A $1,889 community services rooms located in shared rec building 42 0 60% N/A $1,122, $668 1 $1,344, $799 $1,349 50%, 30% 28,320 26,560 0 60% N/A 3 0 N/A N/A 76 42 $2,185 $1,555 , $924 0 N/A N/A N/A 3,350%, 30% 42 70% 12 N/A 1,1 2 12 7 N/A 83 70% N/A 1,1 $1,576 $1,870 70% $1,617 1 N/A N/A Approximate 350sf leasing office exclusive for affordable plus access to approximate 3,800 on-site rec building shared with adjacent market rate project N/A 9 1 Building 1: 4,291 SF Building 2: 10,235 SF (Total: 14,526 SF) 11 50%, 30% 19 N/A 0 N/A 60% N/A N/A Dec. 7, 2021 Item #11 Page 32 of 63 Community Development Housing Services 1200 Carlsbad Village Drive  Carlsbad, CA 92008  760-434-2810 t ANTICIPATED PROJECT TIMELINE Activity Estimated Start Date Estimated Completion Date Site Acquisition Environmental Clearance – CEQA Environmental Clearance – NEPA (if applicable) Application for Land Use Permit/Entitlements Submission of plans to Building Department Application for Construction Financing Application for Permanent Conventional Financing Application for Tax Exempt Bonds Application for Other Loans/Grants: Application for Other Loans/Grants: Application for Other Loans/Grants: Application for Other Loans/Grants: Application for Other Loans/Grants: Application for Low-Income Housing Tax Credits (4% or 9%) Receipt of Construction Bids Commencement of Construction Completion of Construction 100% Lease-up Receipt of Permanent Financing DocuSign Envelope ID: B9465266-9B5D-4F76-B02E-190F5B425C4A 10/1/2021 6/1/2021 11/1/2023 2/1/2024 5/1/2022 6/1/2022 1/30/2022 N/A - Exempt 1/1/2022 1/15/2022 1/15/2022 7/15/2022 N/A 10/15/20225/1/2022 2/1/2022 11/1/2022 11/15/22 N/A 8/1/2024 1/1/2022 9/9/2021 N/A - Exempt 5/1/20222/1/2022 July 2021 Dec. 7, 2021 Item #11 Page 33 of 63 Community Development Housing Services 1200 Carlsbad Village Drive  Carlsbad, CA 92008  760-434-2810 t CITY OF CARLSBAD Housing Trust Fund Application Development Team Members Provide the name, address, contact person, telephone number, fax number, and e-mail address for all members of the development team. In addition, describe the development team’s experience in real estate development and/or management and ownership. Development team must include team members with a successful record of accomplishment in developing at least one affordable rental housing project of the type and scale proposed. Name of Developer Address Address City State, Zip Primary Contact Person/Title Phone FAX E-Mail Other names under which you have done business. Experience List of other affordable housing developments that you have developed Name of Co-Developer Address Address City State, Zip Primary Contact Person/Title Phone FAX E-Mail Other names under which you have done business. Experience List of other affordable housing developments that you have developed Name of General Contractor Address Address City State, Zip Primary Contact Person/Title Phone FAX E-Mail Other names under which you have done business. Experience List of other affordable housing developments that you have developed Name of Architectural Firm Address Address City State, Zip DocuSign Envelope ID: B9465266-9B5D-4F76-B02E-190F5B425C4A Bonsall cherihoffman@chel seainvestco.com 6339 Paseo Del Lago Chelsea Investment Corporation 6339 Paseo Del Lago Carlsbad 5256 South Mission Road jpatterson@emmers onconstruction.com Summa Architecture STE 404 See Attached - "3. CIC & ECI Experience List" 760-456-6001 CA, 92011 N/A Janice Patterson/Director of Construction 760-456-6001 See Attached - "3. CIC & ECI Experience List" 760-456-6000 Carlsbad N/A Cheri Hoffman Emmerson Construction, Inc. CA, 92011 760-456-6020 N/A CA, 92003 Dec. 7, 2021 Item #11 Page 34 of 63 Community Development Housing Services 1200 Carlsbad Village Drive  Carlsbad, CA 92008  760-434-2810 t Primary Contact Person/Title Phone FAX E-Mail Other names under which you have done business. Experience List of other affordable housing developments that you have developed Name of Property Mgmt Co Address Address City State, Zip Primary Contact Person/Title Phone FAX E-Mail Other names under which you have done business. Experience List of other affordable housing developments that you have developed Name of Legal Counsel Address Address City State, Zip Primary Contact Person/Title Phone FAX E-Mail Other names under which you have done business. Experience List of other affordable housing developments that you have developed Name of Tax Credit Syndicator Address Address City State, Zip Primary Contact Person/Title Phone FAX E-Mail Other names under which you have done business. Experience List of other affordable housing developments that you have developed DocuSign Envelope ID: B9465266-9B5D-4F76-B02E-190F5B425C4A Villa Storia Family Apts 38 – 3-Story Garden Oceanside, CA Oxnard Family Apts 125 – 3-Story Common Garage Oxnard, CA Woodglen Vista Apts 188 - 2-story Rehab Santee, CA agutteridge@chelse ainvestco.com.com Adam Gutteridge/Director of Strategic Planning CA, 92011 TBD See Attached - "4. Property Management Company Experience" 6339 Paseo Del Lago 760-724-1198 N/A CIC Management, Inc. 760-456-6000 760-456-6001 TBD Carlsbad Damian Taitano/Architect damian@summarch .com N/A N/A Dec. 7, 2021 Item #11 Page 35 of 63 Community Development Housing Services 1200 Carlsbad Village Drive  Carlsbad, CA 92008  760-434-2810 t Other Development Team Member Address Address City State, Zip Primary Contact Person/Title Phone FAX E-Mail Other names under which you have done business. Experience List of other affordable housing developments that you have developed Name of Service Provider Address Address City State, Zip Primary Contact Person/Title Phone FAX E-Mail Other names under which you have done business. Experience List of other affordable housing developments that you have developed DocuSign Envelope ID: B9465266-9B5D-4F76-B02E-190F5B425C4A N/A TBD Dec. 7, 2021 Item #11 Page 36 of 63 Community Development Housing Services 1200 Carlsbad Village Drive  Carlsbad, CA 92008  760-434-2810 t CITY OF CARLSBAD HOUSING TRUST FUND APPLICATION Borrower/Applicant/Developer Disclosure Statement For the purpose of this form Borrower shall mean: Any person or entity having 10% or more ownership interest in the development project; the General Partners or Principals of the development; and, if applicable, any non-profit entity associated with the development. The Borrower(s) shall provide the following information. Use a separate sheet of paper, if necessary. A response to each question is required. If an item is not applicable, type N/A. Name of Primary Borrower Address Address City State, Zip Primary Contact Person Phone FAX E-Mail Other names under which you have done business. Taxpayer Identification Number Borrower’s Organization Check One Corporation – Attach Articles of Incorporation Non-Profit – Attach Articles of Incorporation and verification of 501 C(3) status. Partnership – Attach Partnership Agreement General Partnership - General Partnership Agreement Limited Partnership - Attach Certificate of Limited Partnership A business association or a joint venture Co-Borrower Address Address City State, Zip Primary Contact Person Phone FAX E-Mail Other names under which you have done business. Taxpayer Identification Number Borrower’s Organization Check One Corporation – Attach Articles of Incorporation Non-Profit – Attach Articles of Incorporation and verification of 501 C(3) status. Partnership – Attach Partnership Agreement General Partnership - General Partnership Agreement Limited Partnership - Attach Certificate of Limited Partnership A business association or a joint venture DocuSign Envelope ID: B9465266-9B5D-4F76-B02E-190F5B425C4A cherihoffman@cels eainvestco.com Carlsbad Cheri Hoffman X 760-456-6000 6339 Paseo Del LagoChelsea Investment Corporation N/A 90-0151442 N/A CA, 92011 760-456-6001 Dec. 7, 2021 Item #11 Page 37 of 63 Community Development Housing Services 1200 Carlsbad Village Drive  Carlsbad, CA 92008  760-434-2810 t Provide names, addresses, business addresses, telephone numbers, title of position (if any) and nature and extent of the interest of the current officers, principal members, shareholders, and investors of the applicant entity. Name Address Phone Fax E-Mail Title of Position Nature of Interest Extent of Interest Name Address Phone Fax E-Mail Title of Position Nature of Interest Extent of Interest Name Address Phone Fax E-Mail Title of Position Nature of Interest Extent of Interest Name Address Phone Fax E-Mail Title of Position Nature of Interest Extent of Interest Name Address Phone Fax E-Mail Title of Position Nature of Interest Extent of Interest Add additional pages if necessary. DocuSign Envelope ID: B9465266-9B5D-4F76-B02E-190F5B425C4A Dec. 7, 2021 Item #11 Page 38 of 63 Community Development Housing Services 1200 Carlsbad Village Drive  Carlsbad, CA 92008  760-434-2810 t Has the Borrower had any professional license suspended, revoked, lapsed and/or terminated for any reason? If yes, please explain. YES NO EXPLANATION Has the Applicant filed for bankruptcy, either voluntarily or involuntarily, within the past 10 years? If yes, please explain and state the case number and the case name and whether the case was dismissed, discharged, or is current. YES NO EXPLANATION Has the Applicant defaulted on a financial obligation? If yes, please explain. YES NO EXPLANATION Is there, or has there ever been, a settlement and/or judgment filed or a case pending against the Applicant? If yes, please explain. YES NO EXPLANATION Has a lien ever been filed against real property owned by the Applicant as a result of a judgment or failure to pay taxes, etc? If yes, please explain. YES NO EXPLANATION Has the Applicant been convicted of any felony or any crime other than minor traffic violations and/or placed on probation, fined or given a suspended sentence in court within the past 10 years? If yes, please explain. YES NO EXPLANATION Has the Applicant or any of its partners or principals ever been cited and/or convicted of a misdemeanor, including but not limited to a conviction under local health, fire, environmental and/or building and safety laws, relating to the ownership and/or management of real property? If yes, please explain. YES NO EXPLANATION Does the Applicant – Contractor/Builder have an ownership/investor interest in the development? If yes, please explain. YES NO EXPLANATION DocuSign Envelope ID: B9465266-9B5D-4F76-B02E-190F5B425C4A X X not currently X Chelsea will form a tax credit limited partnership to serve as owner/borrower of the project in which a Chelsea affiliate will serve as a general partner. X X X X Dec. 7, 2021 Item #11 Page 39 of 63 Community Development Housing Services 1200 Carlsbad Village Drive  Carlsbad, CA 92008  760-434-2810 t Does the Applicant have any employees or relatives who have close associations with current or former employees of the City of Carlsbad to which the accompanying proposal is being made? If yes, state names, dates of employment, and interest. YES NO EXPLANATION Does the Applicant employ any current or former employee(s) of the City of Carlsbad? Does the Applicant employ relatives of employees of the City of Carlsbad? If yes, state names, dates of employment, and interest. YES NO EXPLANATION Are there any City of Carlsbad employees (current or former) who have a financial interest in this project? If yes, state names, dates of employment, and interest. YES NO EXPLANATION Has the contractor or builder, within the last 10 years, ever failed to qualify as a responsible bidder, refused to enter into a contract after an award has been made, or failed to complete a construction or development contract? If yes, please explain. YES NO EXPLANATION Is the proposed Applicant – Contractor/Builder currently involved in any construction-related litigation? If yes, please explain. YES NO EXPLANATION Has the Applicant – Contractor/Builder ever been disqualified, removed from, or otherwise prevented from bidding on or completing a federal, state, or local government project because of a violation of law or a safety regulation? If so, please explain the circumstances in detail. YES NO EXPLANATION Within the last five years, has the Applicant – Contractor/Builder been the subject of a complaint filed with the Contractor’s State License Board (CSLB)? Within the last five years, has the Applicant – Contractor/Builder had a revocation or suspension of a Contractor’s License? If yes, please explain. YES NO EXPLANATION Has the Applicant failed to comply with Davis-Bacon or State Prevailing Wage requirements on any previous development projects? If yes, please explain. YES NO EXPLANATION DocuSign Envelope ID: B9465266-9B5D-4F76-B02E-190F5B425C4A X X X X X X X X Dec. 7, 2021 Item #11 Page 40 of 63 Community Development Housing Services 1200 Carlsbad Village Drive  Carlsbad, CA 92008  760-434-2810 t Has the Applicant been the subject of an investigation of Fair Housing and Employment Practices or been in violation of affordability clauses in recorded regulatory agreements of the City of Carlsbad or any other federal, state, or local housing agency? If yes, explain the nature of the complaint and the outcome. YES NO EXPLANATION DocuSign Envelope ID: B9465266-9B5D-4F76-B02E-190F5B425C4A X Dec. 7, 2021 Item #11 Page 41 of 63 Community Development Housing Services 1200 Carlsbad Village Drive  Carlsbad, CA 92008  760-434-2810 t City of Carlsbad Housing Trust Fund Applicant Certification Applicant warrants and certifies that it will not during the term of the project, loan, contract, development and/or rendition of services discriminate against any employee, person, or applicant for employment because of race, age, sexual orientation, marital status, color, religion, sex, handicap, or national origin. The Applicant will take affirmative action to ensure persons who are employed are treated during employment, without regard to their race, age, sexual orientation, marital status, color, religion, sex, handicap or national origin. Such action shall include, but not be limited to the following: employment, upgrading, promotion or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The Applicant agrees to post in conspicuous places, available to employees and applicants for employment, notices regarding fair employment practices setting forth the provisions of this nondiscrimination clause. Applicant warrants and certifies that no member, commissioner, council-person, officer, or employee of the City of Carlsbad, no member of the governing body of the locality in which the City of Carlsbad was activated, and no other public official of such locality or localities who exercises any functions or responsibilities with respect to the assignment of work, has during his or her tenure, or will for one (1) year thereafter, have any interest, direct or indirect, in this PROJECT or the loan proceeds thereof. Borrower Signature Print Name Date Title Co-Borrower Signature Print Name Date Title DocuSign Envelope ID: B9465266-9B5D-4F76-B02E-190F5B425C4A 9/14/2021 Cheri Hoffman 9/14/2021 Project Manager President Lance M. Waite Dec. 7, 2021 Item #11 Page 42 of 63 Community Development Housing Services 1200 Carlsbad Village Drive  Carlsbad, CA 92008  760-434-2810 t CITY OF CARLSBAD HOUSING TRUST FUND LOAN APPLICATION AUTHORIZATION To Verify Applicant’s Creditworthiness PRIVACY NOTIFICATION. The information requested in this Application and Certification Statement is to be used by the City of Carlsbad to assess the applicant’s creditworthiness. Information provided that is contained in public records cannot be withheld from disclosure under the California Public Records Act Gov. Code Sections 6250 and 6254. All other information may be required to be disclosed outside the agency by state and/or federal law. All information requested on this form, is mandatory. Failure to provide such information may result in disqualification of the application or a withdrawal of City of Carlsbad’s commitment. CRIMINAL PENALTIES. Any person who shall knowingly make or cause to be made in writing, either directly or indirectly, any false statement, with the intent that it shall be relied upon, for the purpose of procuring the loan secured by real property, shall be guilty of a criminal offense, punishable by a fine not exceeding ten thousand dollars ($10,000.00), or by imprisonment in a county jail not exceeding six months, or by both the fine and imprisonment. California Penal Code sections 532(a) and 532(f). CONTINUING OBLIGATION. The applicant has a continuing obligation to provide the City of Carlsbad with current and accurate information. Applicant must provide to City of Carlsbad all requested information, with an Applicant’s Certification Statement for any individual or entity that City of Carlsbad, in its sole discretion, believes is necessary to evaluate the application (reasonably related to the applicant). By signing below, authorization is hereby provided to the City of Carlsbad to verify any and all information provided in the proposal, including, but not limited to, the organization’s credit rating, status and payment history of real estate loans and performance on contracts with third parties. The City of Carlsbad is further authorized to utilize photocopies of this authorization to obtain third party contractual and credit references and status of the organization’s obligations. I understand that the confidentiality of the information I have furnished will be preserved except where disclosure of this information is required by applicable law. CERTIFICATION/AUTHORIZATION. I, the undersigned, certify that the information provided to the City of Carlsbad in this application is true and correct as of the date set forth below. My signature on this application package is an acknowledgment that any false or misleading statements of the information contained, may result in civil liability and liability for monetary damages to the lender, its agents, successors, and assigns, insurers, and any other person who may suffer any loss due to reliance upon any false or misleading statements which I have made on this Applicant Disclosure Statement. Borrower Signature Print Name Date Title Co-Borrower Signature Print Name Date Title DocuSign Envelope ID: B9465266-9B5D-4F76-B02E-190F5B425C4A 9/14/21 Lance M. Waite President Managing Partner Cheri Hoffman 9/14/21 Dec. 7, 2021 Item #11 Page 43 of 63 Community Development Housing Services 1200 Carlsbad Village Drive  Carlsbad, CA 92008  760-434-2810 t CITY OF CARLSBAD HOUSING TRUST FUND APPLICATION CONSENT TO PUBLIC DISCLOSURE BY APPLICANT By providing the “Personal Information,” (if any) as defined in Section 1798.3(a) of the Civil Code of the State of California (to the extent that it is applicable, if at all), requested herein and by seeking a loan from, or a contract with, the sale of real estate to, the right to develop from and/or any and all other entitlements from the City of Carlsbad, the applicant consents to the disclosure of any and all “Personal Information” and of any and all other information contained in this Applicant Disclosure Statement. Applicant specifically, knowingly and intentionally waives any and all privileges and rights that may exist under State and/or Federal Law relating to the public Applicant, by executing this disclosure statement and providing the information requested, consents to its disclosure pursuant to the provisions of the Information Practices Act of 1977, Civil Code Section 1798.24. Applicant is aware that a disclosure of information contained herein will be made at a public meeting or meetings of the City of Carlsbad at such times as the meetings may be scheduled. Applicant hereby consents to the disclosure of said “Personal Information,” if any, more than thirty (30) days from the date of this statement at the duly scheduled meeting(s) of City of Carlsbad. Applicant acknowledges that public disclosure of the information contained herein may be made pursuant to the provisions of the Civil Code Section 1798.24(d). Applicant represents and warrants to City of Carlsbad that by providing the information requested herein and waiving any and all privileges available under the Evidence Code of the State of California, State and Federal Law, (to the extent of this disclosure that the information being submitted herein), the information constitutes a “Public Record” subject to disclosure to members of the public in accordance with the provisions of California Government Section 6250 et seq. Applicant specifically waives, by the production of the information disclosed herein, any and all rights that Applicant may have with respect to the information under the provisions of Government Code Section 6254 including its applicable subparagraphs, to the extent of the disclosure herein, as well as all rights of privacy, if any, under the State and Federal Law. Executed this ____ day of _______________, 202__, at _____________ County, California. APPLICANT Borrower Signature Print Name Date Title Co-Borrower Signature Print Name Date Title DocuSign Envelope ID: B9465266-9B5D-4F76-B02E-190F5B425C4A 9/14/2021 9/13/2021 14th September Managing Partner Cheri Hoffman 9/14/2021 San Diego President Lance M. Waite Dec. 7, 2021 Item #11 Page 44 of 63 CONSTRUCTION PERIOD FUNDING (List all sources of funding) Yes No Federal LIHTC Equity/TBD 705,287$ N/A N/A 16,793$ X Construction Loan/TBD 10,773,141$ 18 4.50%256,503$ X City of Carlsbad/Amanda Mills 760-434-5352 1,500,000$ 18 3.00%35,714$ X Integral Communities (Offsite Reimbursement Note)/Greg Waite 760-944-7511, ext 103 1,654,626$ 660 3.00%39,396$ X Integral Communities (Land Donation)/Greg Waite 760-944-7511, ext 103 1,680,000$ N/A N/A 40,000$ X Soft Loan Interest/Integral & City Notes 49,639$ N/A N/A 1,182$ Integral City Deferred Costs & Fees (CIC)/Cheri Hoffman 760-795-5606 2,175,571$ N/A N/A 51,799$ X TOTAL 18,538,265$ 441,387$ PERMANENT FUNDING (list all sources of funding, including amount reuqested from City) Yes NoFederal LIHTC Equity/TBD 7,052,873$ N/A N/A 167,926$ X Permenant Loan/TBD 5,977,000$ 216 4.50%142,310$ X City of Carlsbad/Amanda Mills 760-434-5352 1,500,000$ 660 3.00%35,714$ X Integral Communities (Offsite Reimbursement Note)/Greg Waite 760-944-7511, ext 103 1,654,626$ 660 3.00%39,396$ X Integral Communities (Land Donation)/Greg Waite 949-944-7511, ext 103 1,680,000$ N/A N/A 40,000$ X Soft Loan Interest/City & Integral Notes 74,458$ N/A N/A 1,773$ Integral City Deferred Developer Fee (CIC)/Cheri Hoffman 760-795-5606 599,307$ N/A N/A 14,269$ X TOTAL 18,538,265$ 441,387$ Interest Rate Per Unit Cost Committed CommittedName of Lender/Source Contact Person and Phone Number Amount Term in Months Interest Rate Per Unit Cost Name of Lender/Source Contact Person and Phone Number Amount Term in Months EXHIBIT 5 Dec. 7, 2021 Item #11 Page 45 of 63 Carlsbad-West Oaks_proforma 9.8.21_City Financing Application Carlsbad - West Oaks Modified on: 9/01/2021 Modified by: CH Closing Completion Conversion 8,609Value of Land Cost 9.1%$40,000/unit 1,680,000$ Equity Pay In 10%88%2% $46,573/unit 1,956,085 $119/unit 5,000 0.8600$ 3,641,085 N/A0.8600$ Fixed rate 4.00%Census Tract:22100 - High Resource 8,369,237$ $0/unitSite Work $21,739/unit 913,043 96.99% Parking Garage/Carports $0/unit 0Vertical0 stalls $161,071/unit 6,765,000GC Contingency #DIV/0!$9,141/unit 383,902 0 GC Overhead/Profit/ GR's 5.6%$26,873/unit 1,128,672 6.48% $10,941/unit 459,531 21.00% 0.0% $274.21/gsf 9,650,149 Construction Contract w/o OC 9,650,149 AMI Studio 1BR 2BR 3BR Totals 6,381 Sq. Ft.0 550 854 1,032 32,050 357 $14,740/unit 619,100 250 UA $0 $14 $19 $21 $21,333/unit 895,970 5.00%70%0 1 1 1 3 $5,000/unit 210,000 1.15 60%0 12 9 7 28 $2,239/unit 94,039 35 50%0 3 1 1 5 $24,738/unit 1,039,000 4.35%45%0 0 0 0 0 $49,984/unit 2,099,307 4.50%40%0 0 0 0 0 $4,681/unit 196,604 5,977,000$ 35%0 0 $2,215/unit 93,011 5,067,746$ 30%0 3 1 1 55,247,031 11,044,746$ Mgr.0 0 0 1 1 Totals 0 19 12 11 4218,538,265 54.05%10,020,000 55.85%Cash Developer Fee TCAC Max 1,920,000 1,500,000 130%Federal LIHTC Equity 7,052,873 NoPermanent Loan (Tranche A)5,977,000 62.14% 599,307 $35,714/unit 1,500,000 $301,459 Paid 1,654,626 Large Family 74,458 No 4/15/22 $0/unit 0 9/1/22 1,680,000 Solar State Fed 7/1/23 18,538,265 0 0 0 9/1/23 0 0 820,102 1/1/24 0 0 820,102 4/1/24 Master Developer Offsite Reimbursement Note Conversion/Stabilization 8609 Housing Set Aside 50% Test LP Interest IRR Opr. Exp./Unit/Year 4% credits, Bonds, City & Master Developer Subsidy 18,500Financing Sources: Debt Tax- Exempt/taxable Bonds - Construction Interest Rate - Construction LoanTax- Exempt Bonds - Construction/PermOwner Soft Cost Contingency Archcitect, Survey & Engineering Interest Rate - Permanent LoanReservesDevelopment Impact and Permit FeesDeveloper Fee Replacement Reserves/Unit/Year Vacancy Rate DCR Perm Loan Amort PROJECT UNIT & INCOME MIX Owner Contingency Services Exp./Unit/Year Tax Rate MSA:4 Person 50% AMI: Site (acres):Construction Type:No. of Stories: Parking Type: Impact Fees per Unit: 3 story walk-up surface Extraorindary Cond:No. of Stalls: Solar Credits CarlsbadSan Diego-Carlsbad-San Marcos$60,600Acquisition Closing costs Subtotal Acquisition $86,693/unit City: Equity FINANCING ASSUMPTIONS Proposed Loan from City of Carlsbad Total Development Costs 2nd Yr Credit Delivery Construction Begin - Initial Closing Soft Loan Interest Master Developer Land Donation Tax Credit Allocation Construction Complete - est 10 months Prevailing Wage (State, Federal, Both): Master Developer Gap Loan Total Development Sources Deferred Developer Fee $229,765/unit PROJECT SUMMARY Building Architecture Federal Tax Credit PriceState Tax Credit Price Hard Costs 9/14/21 12:00 AM SOURCES AND USES SUMMARY Development Costs Type V Seller Infrastructure/Offsite Costs PRELIM DEVELOPMENT PROGRAMMING SUMMARY 10 Yr Federal Tax Credits Solar Tax Credit Price4% Credit Rate Avg Affordability Financing Fees and Interest Tax Credit Considerations DDA/QCT BoostRural Designation PROJECT TIMING -TBD estimate only Subtotal Hard Costs Remaining Development Soft costs Sources Legal Fees Subtotal Soft Costs Total Bonds Lease Up Complete 1900 CA 9% Site Amenity Score $124,929/unit $441,387/unit 3rd Yr Credit Delivery 1st Yr Credit Delivery Dec. 7, 2021 Item #11 Page 46 of 63 ______________________________________________________________________________ Finance Development Management 6339 Paseo del Lago Carlsbad, CA 92011 Tel (760) 456-6000 Fax (760) 456-6001 www.chelseainvestco.com Chelsea Investment Corporation is a real estate company focused on the financing and development of affordable housing. Incorporated in 1986 by James J. Schmid, who still serves as CEO, Chelsea is a vertically integrated company with asset management, construction, and community investment affiliates. Having developed over 11,000 units throughout the western United States, at a total cost in excess of $2.5 billion, Chelsea meets and exceeds the level of experience necessary to develop affordable housing in today’s complex financing environment. Chelsea has developed infill, rural, inclusionary, senior, special needs, and mixed-use projects with a variety of non-profit partners, such as Father Joe’s Villages, Serving Seniors, Housing Development Partners, Alpha Project, Weingart Center Associates, and Southern California Housing Collaborative. Of the rental homes completed, approximately 4,000 are in urban infill sites, 4,500 are located in suburban locations, and 2,000 are in rural areas. Approximately 3,300 have satisfied inclusionary obligations, 2,000 apartments are senior housing and 1,400 apartments are supportive housing. Additionally, while Chelsea has primarily focused on new construction projects, the company has preserved about 1,400 affordable apartments through acquisition and rehabilitation. Virtually all projects have been developed with soft residual receipts loans through public-private partnerships with the federal, state or local government. Chelsea has successfully integrated AHP, AHSC, MHP, CDBG, HOME, IIG, TOD, MHSA and redevelopment housing set-aside funds into many projects, in addition to the 4% and 9% low income housing tax credits and tax-exempt bond financing. In one project alone, Chelsea utilized loan and grant subsidies from 14 different funding sources. •To date, Chelsea has developed over 120 affordable communities throughout California, New Mexico and Arizona. •Total tax credit equity of over $1 billion. •Total permanent loan and tax-exempt bond proceeds of over $750 million. •Ranked as 11th in Affordable Housing Finance Magazine’s Top 50 Developers of 2018. •2015 and 2018 Builder of the Year - Building Industry Association of San Diego. •Chelsea and its communities are consistently recognized in many categories, including awards for design excellence, preservation of affordable housing, housing for the developmentally disabled, and supportive housing. EXHIBIT 6 Dec. 7, 2021 Item #11 Page 47 of 63 ______________________________________________________________________________ Finance Development Management 6339 Paseo del Lago Carlsbad, CA 92011 Tel (760) 456-6000 Fax (760) 456-6001 www.chelseainvestco.com Company Profile Chelsea Investment Corporation is a dominant producer of affordable housing in California and the leading developer of affordable housing in San Diego County. Founded by CEO Jim Schmid in 1986 as a for-profit corporation, Chelsea’s officers have each been with the company for over 25 years: Cheri Hoffman, President, and Charles Schmid, Chief Operating Officer. Headquartered in Carlsbad, California, Chelsea is a vertically integrated company with asset management, construction, and community investment affiliates. Having developed over 10,000 affordable apartments throughout the western United States, at a total cost in excess of $2 billion, Chelsea meets and exceeds the level of experience necessary to develop affordable housing in today’s complex financing environment. Chelsea specializes in engineering financing solutions to deliver infill, rural, inclusionary, special needs, and mixed-use developments that complement and enhance their surrounding neighborhood. At each development, Chelsea identifies and partners with a leading non-profit service provider, such as Father Joe’s Villages, Serving Seniors, and Alpha Project, to customize a menu of supportive services that are available at no cost to residents. Chelsea has produced 65% of the inclusionary housing in San Diego and has had longstanding relationships with homebuilder clients such as Beazer, Brookfield, Centex, Lennar, McMillin, Pardee, Shea, and more. Of the rental homes completed, approximately 3,000 are in urban infill sites, 4,000 are located in suburban locations, and 2,000 are in rural areas. Over 3,000 apartments have been for residents with special needs, including vulnerable seniors, people facing homelessness, and people with developmental disabilities. Additionally, while Chelsea has primarily focused on new construction projects, the company has preserved about 1,000 apartments as affordable rentals through acquisition and rehabilitation. Virtually all projects have been developed with soft residual receipts loans through public-private partnerships with the federal, state or local government. Led by Cheri Hoffman, Chelsea’s innovative financing team has successfully integrated AHP, AHSC, MHP, CDBG, HOME, IIG, TOD, MHSA and redevelopment housing set-aside funds into many projects, in addition to the 4% and 9% low income housing tax credits and tax-exempt bond financing. In one project alone, Chelsea utilized loan and grant subsidies from 14 different funding sources. Chelsea is a long-term owner and operator of more than 85 communities that are consistently recognized in many categories, including awards for design excellence, preservation of affordable housing, housing for people with disabilities, and supportive housing. The company’s affiliates work as a cohesive team to ensure quality through each stage of a project’s development. Incorporated in 2000, Emmerson Construction specializes in delivering multifamily and mixed-use developments on time and within budget. Similarly, CIC Management, incorporated in 2003, provides asset management and property management oversight to Chelsea’s portfolio of properties. Dec. 7, 2021 Item #11 Page 48 of 63 •To date, Chelsea has developed over 100 affordable communities throughout California, New Mexico and Arizona. •Total tax credit equity of over $1 billion. •Total permanent loan and tax-exempt bond proceeds of over $750 million. •Ranked as 11th in Affordable Housing Finance Magazine’s Top 50 Affordable Housing Developers in the country. •2015 and 2018 Builder of the Year - Building Industry Association of San Diego. Dec. 7, 2021 Item #11 Page 49 of 63 Comparable Project Experience St. Theresa of Calcutta Villa (FKA 14th & Commercial) San Diego, CA TDC: $187,000,000 Owner: 14th & Commercial CIC, LP Developer: Chelsea Investment Corp. GC: Level 10 Construction Architect: Joseph Wong Design Associates Key Staff: Cheri Hoffman, Jodi Rothery, Rob Campbell Start Date: January 2020 Completion: 1Q 2022 Reference: Bill Bolstad Chief Development Officer Father Joe’s Villages 619-446-2128 Bill.Bolstad@neighbor.org 14th & Commercial is a 14-story mixed-use development that will provide 407 affordable apartments and supportive services to people facing homelessness in downtown San Diego. The design includes 13,700 square feet of related commercial space for amenities and services. Resident services will be provided by Father Joe’s Villages, the largest homeless services provider in San Diego County. Chelsea has secured $20 million in AHSC funds for the transit-oriented development, which will be adjacent to a major light rail and bus station. In addition to revitalizing a blighted infill site, development of 14th & Commercial implements a phase of the Downtown San Diego Mobility Plan that will install over two miles of cycle track to improve access for bicyclists and enhance safety and accessibility of walkways in the surrounding community. Alpha Square San Diego, CA TDC: $47,000,000 Owner: Alpha Square 4%, LP and Alpha Square 9%, LP Developer: Chelsea Investment Corp. GC: Emmerson Construction Architect: Joseph Wong Design Associates Key Staff: Cheri Hoffman, Matt Grosz, Bob Cummings Start Date: March 2014 Completion: December 2015 Dec. 7, 2021 Item #11 Page 50 of 63 Reference: Bob McElroy President & CEO Alpha Project 619-542-1877 bob@alphaproject.org Alpha Square is a mixed-use infill development in downtown San Diego providing 203 apartments as well as comprehensive supportive services for people experiencing homelessness. Chelsea implemented an innovative financing structure utilizing bifurcated 9% and 4% low income housing tax credits to develop the building for Alpha Project, a leading non-profit provider of services to homeless individuals. Construction included five floors of residential units above 6,000 sf of ground floor retail and service space, with a secure interior courtyard, underground parking and rooftop recreation space. This LEED Gold development is celebrated as a successful model of the Housing First approach to ending homelessness and was recognized as the BIA’s 2015 Best Affordable Project ICON Award as well as Affordable Development of the Year from Our City San Diego magazine. 16th & Market San Diego, CA TDC: $71,000,000 Owner: 16th and Market, LP Developer: Chelsea Investment Corp. GC: Suffolk Roel Architect: Joseph Wong Design Associates Key Staff: Cheri Hoffman, Jordan Penn Start Date: June 2007 Completion: January 2009 Reference: Bill Bolstad Chief Development Officer Father Joe’s Villages 619-446-2128 Bill.Bolstad@neighbor.org 16th and Market is a 136-unit mixed-use affordable apartment building constructed to fulfill the inclusionary housing requirement of Ballpark Village and serve households earning between 30% and 60% AMI. The project includes apartments set aside for people facing homelessness, as well as ground floor retail space and underground parking. Chelsea worked closely with St. Vincent De Paul/Father Joe’s Villages to create an affordable housing community that incorporated all of the best practices of high-rise mixed-use development. Chelsea secured an extensive array of financing for the $71,000,000 project by leveraging a significant amount of subsidy financing with 4% tax credit equity. Dec. 7, 2021 Item #11 Page 51 of 63 EXECUTIVE TEAM James J. Schmid Founder/CEO During his nearly 40-year career, Jim’s responsibilities have included project acquisition, financing, design, construction, marketing and property management of commercial, industrial and residential projects throughout the country. For the last 25 years, he has focused on development of affordable housing. A respected authority in all aspects of real estate development and management, Jim is a former lecturer for the MSRE degree program at University of San Diego, Past Chairman of the San Diego Building Industry Association, and sought-after panelist and speaker. He is a passionate advocate for the creation and preservation of safe, accessible, and affordable housing; his service to the industry has recently been acknowledged by his induction into the Building Industry of San Diego Hall of Fame. In addition to growing Chelsea to a company of over 80 employees and a development portfolio of $2 billion, Jim is an attorney with an advanced degree in tax law. As CEO, he is responsible for strategic management of Chelsea and its affiliates. Cheri Hoffman President Cheri has been part of the Chelsea development team since 1994 and has participated in the development of close to 100 affordable apartment communities, involving over $2 billion in financing. She is an authority in financial modeling incorporating tax credits and tax-exempt bonds, and has extensive experience securing multiple forms of local, state, federal and private funding sources. She is involved throughout the development process, from early feasibility analysis to lease up and stabilization. Cheri received her degree in Accounting from California State University in Fullerton and continued her education with finance studies at California Polytechnic University in Pomona. Charles A. Schmid Chief Operating Officer Charles has been with Chelsea since 1986, and also serves as President of Chelsea’s affiliated general contractor, Emmerson Construction. He applies experience with real estate finance, development and management to facilitate the needs of both companies. Charles, a licensed general contractor, has supervised the construction of more than 8,000 units throughout California and Arizona. With a degree from UC San Diego, he has a thorough understanding of the life cycle of apartment development, from feasibility analysis through lease-up. Shannon Vanderhei Capital Transactions Manager Shannon Vanderhei has over 15 years of experience working for real estate development, syndication, lending and property management companies. Her experience includes acquisitions, dispositions, Dec. 7, 2021 Item #11 Page 52 of 63 financing, property management, asset management, construction, rehabilitation and due diligence. Her role at Chelsea Investment Corporation includes financing and financial modeling of projects along with managing the closing and conversion transactions. Shannon earned a B.B.A. in Real Estate and Marketing from the University of Wisconsin at Milwaukee. Adam Gutteridge Director of Asset Management Adam manages the Asset Management portfolio, which includes some 6,000 units in over 60 properties. He has nearly 20 years of experience in affordable housing development, most recently as Vice President of Asset Management with Vitus Group, where he managed the design and construction of over 30 acquisition-rehabilitation projects financed with a mix of tax-exempt bonds, low income housing tax credits, and HUD and USDA-RD loan proceeds. Adam earned a BS in Business with an emphasis in Finance from the University of Florida, where he graduated with honors. Rob Campbell Director of Construction Formerly with JPI, Ledcor, Swinerton, and Roel, Rob has over 33 years of experience in high-rise, mis- rise, multi-family residential, hotel and commercial construction. Having gained his experience on large projects in the San Diego and Los Angeles areas, he is responsible for the day-to-day operations to ensure projects are completed on time and within budget, and that site safety, environmental standards, quality of materials and workmanship meet or exceed standards. Jim Andersen Chief Financial Officer Jim serves as the CFO of Chelsea Investment Corporation. He has over 30 years of experience in a variety of roles in the Real Estate industry. Proficient in both Financial Management and Development, Jim has served as a Development Partner and executive for Legacy Partners, Del Mar Development, Trammell Crow Company and NMS Properties. In his career, he has sourced, entitled, financed and/or completed several thousand units in California. In addition, Jim was Chief Financial Officer for Bay Apartment Communities (predecessor to Avalon Bay), and Trammell Crow Company. Jim is very active in the industry as a member of ULI and NMHC. He earned his CPA while at Peat Marwick and Company and graduated from Loyola Marymount University with A BS in Accounting. Dec. 7, 2021 Item #11 Page 53 of 63 Heidi W. Mather Director of Development Heidi W. Mather has been a real estate professional for over 30 years. Early in her career, Heidi’s responsibilities included land use planning for the city of San Diego and private sector entitlement processing. For the last 22 years she has focused on market-rate apartment development. Heidi has been responsible for the entire life cycle of a deal: due diligence, investment approvals, project design, consultant management, the entitlement and public approval process, permit processing, government and stakeholder interface, capitalization and loan management. She has also acted as the Owner’s Representative during the construction and lease-up phases and assisted with project disposition. Heidi has developed nearly 9,000 homes in California and Arizona represented by a variety of product types with an aggregate capitalization value in excess of $2.5 billion. With an Urban Studies and Planning degree from the University of California, San Diego, she has a deep understanding of the multi-family development process. Dec. 7, 2021 Item #11 Page 54 of 63 6339 Paseo Del Lago Carlsbad, CA 92011 Tel (760) 456-6000 Fax (760) 456-6001 Resume Formed in 2003 and led by Adam Gutteridge, Director of Asset Management, CIC Management is currently contracted to manage Chelsea Investment Corporation’s portfolio of 83 properties comprised of over 7,100 units. Geographically these properties are located throughout California and in New Mexico. Staff at the apartment communities is typically represented by an On-Site Community Manager and a Full Time Maintenance Technician. The larger apartment communities also have an Assistant Community Manager, additional Maintenance Staff and a Housekeeper. On a day-to-day basis, the On-Site Staff interact with the Regional Portfolio Managers with respect to operational issues and questions relating to policy and procedures. The Regional Portfolio Managers personally visit each site in their portfolio every two weeks. Complete physical inspections of the properties are conducted twice a year. The Regional Portfolio Manager is always present for any Investor, Lender or Agency audits and inspections. On a routine basis for tenant recertification or qualification at move in, the Compliance Staff works with the On-Site Community Manager, Assistant Community Manager and Regional Portfolio Managers to audit and approve files. Each quarter a full file audit is completed for new move-ins and income recertifications over the prior 90 days. Quarterly compliance training is provided to all site level personnel and Regional Portfolio Managers and ongoing as needed for refresher training and changes in regulatory requirements. Compliance Monitoring Software has recently been implemented for monitoring recertifications, income qualifications and set asides. In addition to external reporting to Investors, Lenders and Agencies, in-house financial statements are prepared and evaluated on a monthly basis to compare the property performance to budget. Audited Financial Statements are prepared by an Independent CPA on an annual basis. Due to the declining affordability of housing in the region, coupled with social and agency awareness to provide housing at the affordable level, new housing units will continue to come on line. Concurrently, since the affordability period of these housing units exceeding 50 years in most cases, the expertise and reputation that CIC Management continues to have in the industry and ensures the continued need for managers of CIC Management’s caliber who will understand the needs of maintaining existing units as they mature. Dec. 7, 2021 Item #11 Page 55 of 63 Attachment A 90 {cityof Carlsbad Policy No. Date Issued: Effective Date: Resolution No. Cancellation Date: 12-08-2020 12-08-2020 2020-233 Council Policy Statement Category: AFFORDABLE HOUSING Specific Subject: Administration of the Housing Trust Fund PURPOSE: Supersedes No. N/A Pursuant to Carlsbad Municipal Code (CMC} Sections 21.85.llO(D) and 21.85.120, all fees collected under the lnclusionary Housing Ordinance shall be deposited into a Housing Trust Fund and expended for the affordable housing needs of lower-income households, consistent with the General Plan Housing Element and the CMC. 21.85.110 In-lieu fees. (D) All in-lieu fees collected hereunder shall be deposited in a housing trust fund. Said fund shall be administered by the city and shall be used only for the purpose of providing funding assistance for the provision of affordable housing and reasonable costs of administration consistent with the policies and programs contained in the housing element of the general plan. 21.85.120 Collection of fees. All fees collected under this chapter shall be deposited into a housing trust fund and shall be expended only for the affordable housing needs of lower-income households, and reasonable costs of administration consistent with the purpose of this chapter. Funding from the fund, which should be leveraged to the extent feasible with state, federal and private sector subsidy capital, is intended to aid in the production, acquisition, rehabilitation and preservation of housing affordable to extremely low-, very low-and low-income households, and those experiencing homelessness. BACKGROUND: The city's lnclusionary Housing Ordinance was established in April 1993 and requires that all residential developments greater than six units restrict 15 percent of the total number of homes in a project as affordable to lower income households. This obligation is fulfilled through construction of a variety of rental or ownership units, both on-and off-site. Some developments have the option to satisfy a portion or all of their affordable housing obligation through payment of inclusionary housing in-lieu fees or by purchasing affordable housing credits, when available. For the city to receive and use these fee payments, an implementation mechanism was needed to ensure that the funds collected were applied appropriately. As a result, the Housing Trust Fund was established to confirm that fees collected were applied only towards the affordable housing needs of lower income households, and for reasonable costs of administration consistent with the purposes of the General Plan Housing Element and lnclusionary Housing Ordinance (Carlsbad Municipal Code Sections 21.85.110 and 21.85.120). The Housing Trust Fund receives revenue from other sources, including interest from loans, housing credit purchases, housing impact fees, and interest earned on the fund balance. Page 1 of 5 Exhibit 7 Dec. 7, 2021 Item #11 Page 56 of 63 Policy No. 90 Over the past 20-years, the Housing Trust Fund has been used to support a variety of affordable housing development and services for lower income and homeless individuals and families. As a local fund, the City Council determines how Housing Trust Fund money can be spent, provided expenditures are consistent with the purposes of the lnclusionary Housing Ordinance and the policies and programs in the General Plan Housing Element. POLICY: It is the policy of the City Council that the Housing Trust Fund shall be administered as follows. It is the expectation of the City Council that contractors and vendors who receive monies from the HTF shall also comply with these policies, as appropriate. 1.Use of the Funds a."Affordable housing" as used in this policy shall have the same meaning as in CMC Section 21.85.020(A). b.Housing Trust Fund dollars may be used for new construction, acquisition and/or rehabilitation, subsidy or other means to assist other governmental agencies, nonprofit groups and private organizations or individuals in creating or maintaining affordable housing. c.For new construction and acquisition/rehabilitation projects, Housing Trust Fund dollars are intended to offer "gap" financing. The subsidy required should be the minimum amount necessary to both ensure the feasibility of a project and the affordability of the units. Projects are expected to support as much debt as feasible and to attract as much equity investment as is typical for similar projects. d.Low-interest loans are the generally preferred form for distributing housing trust fund dollars for work in all stages of housing development. However, grants may also be considered. e.Housing Trust Fund dollars may be used to provide new affordable rental or ownership housing units. f.Housing Trust Fund dollars shall not be used to satisfy a development's inclusionary housing requirement but may be used to assist in exceeding the requirement by increasing the number of affordable units and/or expanding affordability to very low-or extremely low-income households, or to encourage a preferable product type. g.Financial assistance requests will be evaluated by the Affordable Housing Policy Team and presented to the Housing Commission for review and recommendation to the City Council. The City Council is the final decision-maker for financial assistance requests. h.Housing Trust Fund dollars may be used to cover reasonable administrative costs1 that are necessary to administer the fund. The level of administrative expenses will be determined by the City Council as part of the annual budget. However, administrative expenses shall not exceed 5% of the available housing trust fund balance as of the end of the prior fiscal year. 1 Administrative costs include, but not limited to personnel expenses and maintenance and operational (M&O) expenses that are specifically related to the administration of the HTF. Funds may also be used to supplement administrative and operational support for other housing programs such as Section 8 and CDBG. Housing Trust Fund dollars shall not be used for the following M&O costs: travel and training. Page 2 of 5 Dec. 7, 2021 Item #11 Page 57 of 63 Policy No. 90 i.The annual budget process for the housing trust fund shall be guided by General Plan Housing Element policies and programs, the lnclusionary Housing Ordinance, and the following general affordable housing priorities, in descending order: 1.Construction of new affordable housing 2.Preservation of housing at-risk of conversion to market rate 3.Acquisition/rehabilitation of distressed/at-risk affordable housing 4.Rental assistance and homelessness programs2 5.Land acquisition for future affordable units 6.Conversion of market rate units to affordable housing j.City HTF dollars must be expended within 24-months following fund commitment. 2.Housing Trust Fund Annual Report a.Staff shall provide a Housing Trust Fund Annual Report to the City Council. The report shall include the following: 1.Summary of the use of the funds consistent with this policy 2.Summary of the projects assisted with Housing Trust Fund dollars over the past year 3.Financial status of the Housing Trust Fund 4.A summary of administrative and non-project expenses made in the prior year 5.Review of prior year funding priorities and accomplishments 6.Summary of pending assistance requests and confirmation of upcoming year funding priorities 7.Summary of denied assistance requests, if any, and brief statement of reasons for the denial b.The Housing Trust Fund Annual Report shall be reviewed by the Affordable Housing Policy Team and the Housing Commission. The Housing Commission shall make a recommendation to the City Council. 3.Affordable Housing Project Evaluation a.In addition to the review requirements and evaluation criteria specified under CMC Sections 21.85.130, and 21.85.140 and City Council Policy 57 -Off-site and Combined lnclusionary Housing Projects, projects that provide the following will be given additional consideration when ranked against other projects. 1.Projects that provide the greatest benefit per dollar of funds spent towards the lowest household income groups. Priority shall be given to projects that best assist the following income categories, reflected in priority order. •Extremely low-income households •Very low-income households •Low-income households •Moderate-income households 2 "Rental assistance and homelessness programs" include, but not limited to programs and services that provide short-term rental assistance, short-term shelters, food delivery, and social services to vulnerable populations. Page 3 of 5 Dec. 7, 2021 Item #11 Page 58 of 63 2.Projects that demonstrate higher equity in the project. 3.Projects that demonstrate a lower loan-to-value ratio. 4.Projects that have other funding sources identified and committed. Policy No. 90 5.Projects that benefit the highest percentage of lower income families, provide the lowest affordability, include the greater percentage of affordable units or maintain longer periods of affordability. 6.Projects that use Housing Trust Fund dollars as a match or to leverage other conventual and below-market resources, including tax credits, state and federal funding programs and other funding sources. 7.Projects proposed by an applicant with a successful history of project development and/or property management, as appropriate. 4.Affordability Covenant and Form of Financial Assistance a.Whenever Housing Trust Fund dollars are used for the creation, acquisition, and/or rehabilitation of affordable housing, the city shall impose enforceable requirements on the owner of the housing units that the units remain affordable for a period of not less than 55 years for rental units, or 30 years for ownership units, in accordance with CMC Chapter 21.85. 1.When Housing Trust Fund dollars are used to create affordable rental housing, long term affordability shall be enforced by restricting rents that may be charged to tenants. 2.When Housing Trust Fund dollars are used to create affordable ownership housing, long-term affordability shall be enforced by imposing resale restrictions that maintain an equitable balance between the interests of the owner-occupant and the city. 3.When Housing Trust Fund dollars are used to fund programs which are not described above, the city shall develop appropriate mechanisms to ensure ongoing affordability. b.The affordability restriction requirements described in this section shall be enforced by a covenant running with the land. c.The financial assistance structure may take several forms and is tailored to the financial needs of the individual projects and is negotiated on an individual basis depending upon project cash flow and the senior lender's underwriting guidelines. Example forms of assistance may include: fixed interest rate loans, interest-only, deferred payment and/or residual receipts loans, land acquisition and ground lease-back. 5.Administration a.The annual Housing Trust Fund budget shall be administered by the Community Development Director or designee, who shall have the authority to govern the fund consistent with housing element policies and programs, CMC Chapter 21.85, and this policy. b.Housing Trust Fund dollars are held in a separate account until disbursed consistent with this policy. Page 4 of 5 Dec. 7, 2021 Item #11 Page 59 of 63 Policy No. 90 c.The Community Development Director, in coordination with the Finance Director, shall ensure that Housing Trust Fund dollars are awarded, encumbered or otherwise obligated for uses consistent with General Plan Housing Element policies and programs, CMC Chapter 21.85, and this policy, and in a manner consistent with the city's financial policies and ordinances. 6.Related Policies a.City Council Policy No. 57 -Off-site and Combined lnclusionary Housing Projects b.City Council Policy No. 73 -City Option to Purchase Resale Affordable Housing Page 5 of 5 Dec. 7, 2021 Item #11 Page 60 of 63 Exhibit 8 City Council Policy No. 90 Analysis Policy 90 General Guidelines Consistency Statement 1b. Housing Trust Fund dollars may be used for new construction, acquisition and/or rehabilitation, subsidy or other means to assist other governmental agencies, nonprofit groups and private organizations or individuals in creating or maintaining affordable housing (1b). Consistent. The request is to financially assist construction of a new affordable apartment project serving extremely low, very low, and low- income households. 1c. For new construction and acquisition/rehabilitation projects, Housing Trust Fund dollars are intended to offer “gap” financing. The subsidy required should be the minimum amount necessary to both ensure the feasibility of a project and the affordability of the units. Projects are expected to support as much debt as feasible and to attract as much equity investment as is typical for similar projects (1c). Consistent. The $1,500,000 request represents only 8% of total project cost $18,538,265. Other proposed funding sources include: Tax credit equity $7,052,873 (38%) Senior loan $5,977,000 (32%) Master developer $1,654,626 (9%) City of Carlsbad loan $1,500,000 (8%) Deferred developer fee $599,307 (4%) Loan donation $1,680,000 (9%) Soft Loan $74,459 (< 1%) Total: $18,538,265 (100%) 1d. Low-interest loans are the generally preferred form for distributing Housing Trust Fund dollars for work in all stages of housing development. However, grants may also be considered (1d). Consistent. The recommended form of assistance is a 55-year residual receipts loan at 3% simple interest per year. The loan would be secured by a promissory note and deed of trust and repaid in annual installments from surplus cash generated by operations. See Exhibit 4 for a detailed cash flow analysis. 1e. Housing Trust Fund dollars may be used to provide new affordable rental or ownership housing units (1e). Consistent. The subsidy would support creation of new affordable rental units. 1f. Housing Trust Fund dollars shall not be used to satisfy a development’s inclusionary housing requirement but may be used to assist in exceeding the requirement by increasing the number of affordable units and/or expanding affordability to very low- or extremely low-income households, or to encourage a preferable product type (1f). Consistent. The West Oaks development received a General Plan land use change, in exchange for providing affordable housing. To satisfy the inclusionary housing requirement, the city’s approval requires that 42 of the apartments be affordable to households at up to 70% AMI. Chelsea Investment Corporation’s proposal exceeds the city’s requirement by providing deeper affordability. 1g. Financial assistance requests will be evaluated by the Affordable Housing Policy Team and presented to the Housing Commission for review and recommendation to the City Council. The Consistent. The Affordable Housing Policy Team (consisting of city department representatives from community development, planning, housing, finance and city attorney’s office) reviewed the assistance request on Nov. 10, Dec. 7, 2021 Item #11 Page 61 of 63 City Council is the final decision-maker for financial assistance requests. 2021, and recommended that it be forwarded to the Housing Commission for their review and recommendation to the City Council. 1i. The annual budget process for the Housing Trust Fund shall be guided by General Plan Housing Element policies and programs, the Inclusionary Housing Ordinance, and the following general affordable housing priorities, in descending order: 1. Construction of new affordable housing 2. Preservation of housing at-risk of conversion to market rate 3. Acquisition/rehabilitation of distressed/at-risk affordable housing 4. Rental assistance and homelessness programs 5. Land acquisition for future affordable units 6. Conversion of market rate units to affordable housing Consistent. The West Oaks Affordable apartments meet Priority 1, construction of new affordable housing. 1j. City HTF dollars must be expended within 24-months following fund commitment. Consistent. If approved by City Council, the financial assistance award will be committed for 24 months, during which time the developer will need to secure all other financing and ready the project for construction. 3a. Project Evaluation Criteria 1. Projects that provide the greatest benefit per dollar of funds spent towards the lowest household income groups. Priority shall be given to projects that best assist the following income categories, reflected in priority order. •Extremely low-income households •Very low-income households •Low-income households A quarter of the project will serve the top two priority income categories: five apartments will be affordable to extremely-low income households, and 5 apartments will be affordable to very-low income households. The remaining thirty-one units will serve low-income households. 2. Projects that demonstrate higher equity in the project. The developer will seek approximately $7 million in tax credit equity. Additionally, the proposal includes $1.6 million investment from the master developer plus the contribution of land. 3. Projects that demonstrate a lower loan-to- value ratio. Loans account for $9.8 million, or 53% of the total permanent funding. The city’s loan would represent 8% of total project costs. 4. Projects that have other funding sources identified and committed. Identified funding sources include tax credits, senior loan or tax exempt bonds. Committed funding sources include master developer contribution ($1,654,626), deferred developer Dec. 7, 2021 Item #11 Page 62 of 63 fee ($599,307) and net operating income during construction ($74,459). Chelsea Investment Corporation intends to secure all funding by June 2022. If approved, release of the city’s financial assistance will be contingent upon developer securing all other needed funding for the project. 5. Projects that benefit the highest percentage of lower income families, provide the lowest affordability, include the greater percentage of affordable units or maintain longer periods of affordability. Twenty-four percent of the units would provide much-needed housing for extremely low-income (5 units) and very low-income households (5 units). All the affordable units would maintain their affordability for 55 years. 6. Projects that use Housing Trust Fund dollars as a match or to leverage other conventional and below-market resources, including tax credits, state and federal funding programs and other funding sources. The requested city contribution of $1,500,000 from the Housing Trust Fund provides a very high leveraging of other sources of funding. The city’s subsidy would be $37,714/unit, which represents only 8% of the total project cost. 7. Projects proposed by an applicant with a successful history of project development and/or property management, as appropriate. Chelsea Investment Corporation has extensive housing development and management experience, with more than 119 apartment communities in California, New Mexico, and Arizona, which include almost 11,000 affordable apartment units. They currently have 4 developments in Carlsbad with over 400 affordable units. Many Chelsea Investment Corporation projects were financed in part through low-income housing tax credits and tax exempt bonds. See Exhibit 5 for more information. Dec. 7, 2021 Item #11 Page 63 of 63 West Oaks Housing Trust Fund Request & Affordable Housing Agreement Mandy Mills, Housing & Homeless Services Director Dec. 7, 2021 TODAY’S PRESENTATION •Project Background •Subsidy Analysis •Staff recommendation •Applicant presentation ITEM 11: West Oaks SITE CHARACTERISTICS 192 apartments Designated for high density residential ITEM 11: West Oaks +12.5 acres Integrated on site AFFORDABLE SITE CHARACTERISTICS 42 units Onsite community space & services 3 stories Affordability mix ITEM 11: West Oaks Table 1 –Rent Ranges Income group Extremely Low (30% AMI) Very Low (50% AMI) Low (60% AMI) Low (70% AMI) Required 4 units 0 units 37 units 0 units Proposed 5 units 5 units 28 units 3 units Rents -1 Br $668 $1,122 $1,349 $1,576 Rents -2 Br $799 $1,344 $1,716 $1,889 Rents -3 Br $924 $1,555 $1,870 $2,185 ITEM 11: West Oaks ITEM 11 West Oaks Sources Total Per Unit Tax Credit Equity $7,052,873 $167,926 Senior Loan 5,977,000 142,310 Integral Communities (land donation)1,680,000 40,000 Integral Communities (master developer)1,654,626 39,396 City of Carlsbad 1,500,000 35,714 CIC –deferred developer fee 599,307 14,269 Soft Loan 74,459 1,773 Total Sources $18,538,265 $441,387 Rancho Carillo Apartments 116 affordable apts. Applicant Background •Extensive experience •Positive local project history ITEM 3: West Oaks SUBSIDY ANALYSIS City Council Policy 90 Public benefit Housing Element Risk ITEM 11: West Oaks ITEM 11: West Oaks AFFORDABLE HOUSING REQUIREMENTS •Affordable Housing Agreement for master-planned community •Regulatory Agreement for affordable project loan NEXT STEPS TAX CREDIT & BOND ALLOCATION REQUESTS LOAN & BOND DOCUMENTS CONSTRUCTION CITY COUNCIL CONSIDERS FUNDING REQUEST ITEM 11: West Oaks STAFF RECOMMENDATION •Approve a $1,500,000 loan to Chelsea Investment Corp. for the development of West Oaks Apts. •Approve Affordable Housing Agreement ITEM 11: West Oaks APPLICANT PRESENTATION ITEM 11: West Oaks