Exhibits

Exhibit B: Redevelopment Framework

Golden Gate Village Redevelopment Framework

Golden Gate Village (GGV) is a traditional public housing property owned and managed by the Marin Housing Authority (MHA). GGV is located in Marin City, CA, and MHA serves all of Marin County.

Like many public housing properties, GGV needs to be preserved as affordable rental housing and recapitalized to address physical needs. MHA has created a Redevelopment Plan to address the physical, financial, and social needs of GGV. This memo details the context and plans for the redevelopment of GGV.

Preserving GGV as affordable rental housing for current and future residents is in the best interest of residents and MHA.

Marin County is faced with a tremendous shortage of affordable housing. GGV provides 296 units of rental housing to the general public. Maintaining this open availability is critical to future residents, both those on the waiting list and those yet to come.

MHA's plan to preserve GGV will maintain income and rent restrictions. HUD and the state of California will regulate GGV as affordable housing for at least 55 years following the start of construction. With MHA as the managing general partner, the MHA board controls the future ownership and operations of GGV. Keeping control in the public realm ensures public policy is the controlling interest for the future use of the property.

Completing the maximum amount of rehabilitation possible is in the best interest of the residents and MHA, Affordable housing by definition is financially constrained. Attracting the greatest amount of capital to invest in physical improvements is good housing policy.

Marin City, and the Black community in Marin City, have experienced disinvestment and harm for decades. Racist actions toward the Black community have come from government policy and private citizens alike. MHA's plan will both invest in the physical and social fabric of Marin City and offer residents from communities of color the choice to make a decision that is in the best interest of their families.

1.0 Golden Gate Village Description

Marin Housing Authority (MHA) owns and operates GGV. The property includes a total of 300 units in 29 buildings. Of the 300 units, 294 operate as dwelling units, including 44 one-bedroom units, 132 two-bedroom units, 111 three-bedroom units, and 9 four-bedroom units. The site is 29.8 acres on two parcels.

GGV is income and rent-restricted. Incomes at initial occupancy are limited to 80% of the area median, adjusted for household size. Rents are restricted to 30% of the household’s adjusted income.

In 1957, MHA chose Frank Lloyd Wright's protege, Aaron Green, and another noted local architect, John Carl Warnecke, to design GGV. Construction was completed in 1961. In 2017, GGV was listed on the National Register of Historic Places.

Significant deferred maintenance and capital improvement are needed at the property. A 2021 Capital Needs Assessment completed by AEI Consultants reported $63,750,526 of immediate rehabilitation costs. This report relied on national construction cost data as the basis for estimating the cost of rehabilitation. This data provides the average construction cost in the country. The estimated total rehabilitation cast has not been adjusted by the geographic location factor for Marin County or inflation.

2.0 Preferred Repositioning Option: Section 18 Disposition

The obsolescence threshold will likely be met and the FMRs are nearly more than double RAD rents. Therefore, Section 18 Obsolescence is the most economically advantageous approach for GGV.

Under Section 18 Obsolescence, MHA is eligible to receive a net new Section 8 Tenant Protection Voucher (TPV) for every occupied unit. These TPVs can be used to enter a project Based Voucher (PBV) contract resulting in the leverage capital needed to make physical improvements. PBV contracts also require income and rent restrictions, and so will preserve affordable housing in Marin City.

Based on eligibility, economic analysis, and desired outcomes, Section 18 Obsolescence is the preferred Repositioning option for GGV.

3.0 GGV Redevelopment Plan

Using information received from residents and stakeholders, a review of affordable housing needs and trends in Marin County, an analysis of GGV needs, and financing options, MHA staff created a framework for redeveloping GGV.

Much of this plan embraces the goals and outcomes expressed by GGV residents. When completed, we will have accomplished a comprehensive renovation of GGV, incorporating “deep green” features, and preserving the historic integrity of the property.

• Preserve affordability for current and future residents.
• Bring resident services to GGV.
• Work with the Resident Council to enhance resident empowerment.
• Create pathways to homeownership and wealth creation. 

The remainder of this section will describe the Redevelopment Framework created for GGV.

3.1 Guiding Principles

In 2009, MHA’s board of commissioners adopted the Guiding Principles for the redevelopment of GGV. Having been adopted by the MHA Board, these Guiding Principles are policy statements that will inform the process and outcomes of a GGV redevelopment.

• Protect Existing Golden Gate Village Households and Residents
  Adopting resident protection mechanisms and using them throughout the process is critical to achieving this and must be a priority in any revitalization process. 
• Restore Golden Gate Village Economic Sustainability
  This requires creating a focus on the development of resident skills and access to "Good Jobs" and enhanced connections to job training and employment opportunities in growth areas and industries.
• Assure Resident Participation Throughout the Planning and Revitalization Process
  Participation looks like enhanced and increased resident outreach, engagement, and inclusion of residents in the process as both members of decision-making bodies, and through participation at meetings and convenings.
• Preserve Historic Marinship Heritage
  Adopting resident protection mechanisms and using them through the Preservation of this unique heritage should occur through inclusion in design (ex: art, architecture, infrastructure e.g. naming and signage, etc.) and through facilities (ex: kiosks) that teach about the area’s unique history as a manufacturing hub and home to a vibrant African American community. Throughout the process is critical to achieving this and must be a priority in any revitalization process.
• Promote High Quality Open Space
  These open spaces must be accessible, accommodate a wide variety of uses (ex: hiking, biking, play spaces, etc.) and be conducive to building community.
• Collaborate with the Marin County Community to Expand Economic Development and Job Training/Education Opportunities for GGV Residents
  Expanded economic development, job training, and education opportunities must create pipelines to growth industries and relevant education pathways.

3.2 Project Goals & Objectives

Goal 1: Preserve Golden Gate Village as affordable rental housing for current and future residents.

• Objective A: Make physical improvements that address the capital needs at GGV.
• Objective B: Invest in measures resulting in reduced consumption of energy and water, increase climate resiliency, and improved indoor air quality.
• Objective C: Complete renovation in a manner appropriate to the historic designation of GGV.

Goal 2: Protect Residents’ Rights. Strengthen and Expand Affordable Housing as a Social Safety Net.

• Objective A: All GGV residents have a right to return after renovation. No current GGV resident will lose their housing because of Repositioning.
• Objective B: Create a preference for former Marin City residents to return to GGV.
• Objective C: Work with residents to create a plan for resident involvement during the development/construction phase and long-term operating phase of GGV.
• Objective D: Recognize the role of the GGV Resident Council and sign an agreement with the GGV Resident Council memorializing roles, expectations, and outcomes.
• Objective E: Recommend and advocate with Marin County for the passage of an anti-displacement ordinance protecting existing regulated affordable rental housing in the county.

Goal 3: Create Economic Opportunity for GGV Residents

• Objective A: Work with Marin County, service providers, and GGV residents to develop a resident services plan focused on residents' needs.
• Objective B: Establish a Resident Services endowment with up to $5,000,000 commitment from Marin County.
• Objective C: Work with Marin County to provide additional investment in fee-simple homeownership opportunities for residents of Marin City.
• Objective D: Increase utilization of the Family Self Sufficiency program combined with a match savings account program (aka Individual Development Accounts) to assist GGV residents with creating wealth.

3.3 Resident Involvement in Plan
The involvement of residents of GGV is necessary for a successful redevelopment and harmonious community thereafter. MHA will work with residents of GGV to create an involvement plan that centers the needs of the residents in the redevelopment of the site and management of the community once the redevelopment is complete. This may include the creation of a training series that informs residents of the typical redevelopment process and overall management of a site such as GGV, so that residents may be fully informed participants in conversations with MHA and developers. In addition, the Plan will also include the joint creation of a Memorandum of Understanding between MHA and the Resident Coungil that outlines the function and responsibilities of each party

MHA intends to enter into an agreement with the Resident Council formalizing its role at GGV following conversion from public housing. This agreement will ensure that all interactions and communications with GGV residents will be carried out in an equitable manner, including holding meetings outside of normal business hours, providing necessary supports like childcare for residents to participate in discussions, and providing stipends to residents who attend training and participate in the drafting of agreements, policies, and operating procedures.

Specifically, MHA will seek the Resident Council's input in the selection of a developer partner for GGV. This will include seeking input on the Request for Qualifications and having a representative on the selection committee. MHA anticipated clear and measurable outcomes and process requirements for the project to be included in the RFQ.

MHA intends to work with the Resident Council to set specific and measurable outcomes for public benefits during the construction phase. This could include a number of resident construction-related jobs, or a percentage of construction contracts awarded to minorities, women, or emerging small businesses.

MHA also intends to work with the Resident Council to establish specific roles and outcomes for residents and the Resident Council post-rehabilitation. This could include contracts with the Resident Council or resident-owned businesses for the work to affirmatively further fair housing, landscaping, or an answering service. Additionally, MHA would like to establish a protocol for the review of operating budgets for resident services to ensure year-over-year input from residents on programs and budgets.

4.0 Implementation Approach

To achieve the Project Goals and Objective identified above, MHA should use three techniques available and common for Repositioning public housing. These are Section 18 Disposition, co- development and partnership with a developer partner, and leverage of capital using Low Income Housing Tax Credits (LIHTC) and debt. Combined use of these three techniques offers the best opportunity to redevelop GGV for the best interest of the residents (current and future) and MHA.

Section 18 Disposition: Obsolescence:

As a public housing authority, MHA will submit the Disposition application to HUD. Several elements of the application’s submittal requirements and process are bulleted below.

• Obsolescence evaluation requires the submission of a capital needs assessment. HUD will accept immediate capital needs, defined as within three years. An updated capital needs assessment will be required.
• Total Development Cost (TDCs) calculations for GGV should be based on the San Jose figures published by HUD rather than San Francisco. While San Francisco is closer geographically, the built environment of San Jose is more like Marin and therefore offers a better basis for determining setting TDCs.
• HUD’s NEPA Compliance is a submittal requirement for the Section 18 application. Section 18 utilizes HUD's Part 58 Environmental Review process. Due to the scope of work proposed, it is reasonable for the Responsible Entity to reach a Determination of Categorical Exclusion (DCE). Under the GGV Redevelopment Framework, square footage is not being added or removed, the use of the budlings is unchanged, and residents are provided a right to return.
• Despite setting the sale price of buildings / real estate by MHA to the limited partnership at the appraised value, the financing terms will be based on less than the market value, which will cause HUD to determine the sale is at less than Fair Market Value. As a result, HUD will require a Use Restriction against the property restricting occupancy to households earning less than 80% of the area median income for 30 years.
• While GGV is operating and regulated as traditional public housing, HUD's regulations prohibit the property from being used as collateral for financing. Because of these regulations, comprehensive capital impravements cannot accur until after the property is sold and the current HUD Declaration of Trust is released. Section 18 requires property transfer to a separate legal entity. The limited partnership created to make use of LIHTCs is a legal entity separate from MHA. When the property is sold and the existing HUD Declaration of Trust is removed, the real estate is available to be used as collateral for a loan.

Below is an overview of the Section 18 process.

Co-Developer / Development Partner:
Successful redevelopment of GGV will require MHA to select a co-developer / development partner. This partner will assist by carrying out development functions such as design management architect, preconstruction management of the general contractor, securing permits and entitlements, obtaining financing, and overseeing construction. During construction and the operating phase of the project, a development partner typically provides the necessary guarantees and experience needed to secure financing.

The property management function will be performed by the Co-Developer / Developer Partner or an identified third party. This is also a role important to the successful operations of GGV post redevelopment.

MHA should use a Request for Qualifications process to seek a partner. Evaluation of the partner should rely heavily on prospective partners' understanding and willingness to carry out the Project Goals and Objectives set for GGV. Successful experience with similar projects should be used as a basis for evaluating fit as a partner.

MHA should begin the process to select a partner immediately following the MHA board's adoption of a GGV Redevelopment Framework. Their participation in creating Section 18 submittal requirements will be necessary. MHA should involve the Resident Council in the process to select a Co-Developer / Development Partner.

MHA will aiso serve as a Co-Developer and partner in the development. As a public entity, their involvement in the limited partnership (ownership entity for GGV post redevelopment) will maintain public oversight of this long-held public asset. Maintaining public ownership or stake in a property is considered by housing professicnals a reliable means to ensure long-term affordability. The public sector does not operate with profit motives, but rather measures return by public benefit. The number of units remains affordable housing is a baseline measure of public benefit for affordable housing.

Leveraged Financing:

GGV is a large property with capital needs requirements expected for a property over 60 years old. Square footage of the site, original building design, and age contribute to the need for substantial rehabilitation. Creating additional pressure on the total project costs is the desire to complete a "deep green" rehabilitation, historic preservation requirements, relocation of residents to accommodate an occupied rehabilitation, and inflation pressures brought on by the overall economic outlook and the construction industry in the Bay Area.

To attract capital sufficient to redevelop GGV, MHA proposes to use a financing plan that will use LIHTC, Historic Tax Credit (HTC), permanent debt, seller financing, and deferred developer fee. This approach has been used hundreds of times in the past 10 years by public housing authorities wanting to recapitalize and preserve affordable housing. This approach is often combined with the Repositioning tools Section 18 Obsolescence, RAD / Section 18 Blend, and RAD. HUD actively promotes this approach as a preferred method to preserve and recapitalize public housing.

5.0 Ownership and Control

Using the Section 18 Disposition Repositioning tool and LIHTC establishes a statutory/regulatory and ownership structure for GGV. Within that required structure, MHA has the discretion to set development objectives, housing policy objectives, and exercise management decisions.

Statutory / Regulatory Requirements:

For using the Section 18 process, HUD will record a Use Agreement against the property since it is being sold for less than Fair Market Value. HUD will likely restrict the use of the property to households earning 80% of the area median income for 30 years. 

For using LIHTCs, the State of California, through TCAC, will record the Regulatory Agreement against the property. TCAC will restrict the incomes of households for 55 years. Restrictions will be less than 60% of the area's median income. The specific amount will mirror what MHA proposes in the competitive application seeking LIHTCs.  

For using Project Based Vouchers, HUD’s regulations will control the income and rents of families living at GGV. New families entering the Section 8 program must have incomes below 50% of the area median income. Existing residents in a public housing property converting to Section 8 are exempt from this rule. Rents are limited to 30% of the resident’s adjusted income. 

Ownership Structure

Use of the LIHTC and HTC requires the entity that owns the project to be a limited partnership. A limited partnership allows a limited partner to invest equity in return for federal tax credits. Percentage ownership among the partners is designed to provide the maximum allowable tax benefits to the investor limited partner. It is common for the investor limited partner to own 99.99% of the limited partnership. This entitles them to 99.99% of the federal tax credits. Their equity investment is based on the number of tax credits they receive.

Below is a diagram of the ownership structure of GGV assuming the financial plan described above. 

The rights and authorities of each partner in the limited partnership are detailed in an agreement called a Limited Partnership Agreement. Control and decision making is not set by the percentage of ownership. The LIHTC Investor, as a limited partner, has very few rights related to the operations of the property.

The managing general partner typically makes management decisions on behalf of the limited partnership. For example, the managing general partner will select and sign the contract with the property management company and is responsible for seeing that the annual audit is completed, setting operating annual budgets, and all reporting requirements, and setting policies related to housing admissions.

The administrative partner is typically responsible for the financial guarantees required of the lending and LIHTC investor. Due to this financial risk, they will pay close attention to the operations of the project.

Investor limited partners on most LIHTC projects are solely interested in the tax benefits. These include tax credits for ten years and deductions such as interest cost and depreciation for fifteen years. Investors are at risk of losing tax credits if the project falls out of compliance. Overincome households living at GGV are the main compliance risk to an investor. They will also provide oversight of the financial performance and physical condition of the property.

Compliance for tax credits is 15 years. At the end of the compliance period, LIHTC investors will leave the limited partnership. At this point, MHA will have the right to purchase the property from the limited partnership based on a predetermined formula. This is called the Option / Right of First Refusal (ROFR).

LIHTC investors do not have the right to take ownership or even purchase GGV. LIHTC investors do not have the right to change rents (increases or decreases). LIHTC investors do not have the right to evict residents.

6.0 Implementation Schedule

Move forward immediately with capital improvements is a priority for MHA. Given the nature of a design, construction and finance work alone, more information is needed to create a schedule. Below is a short term schedule reflecting the work MHA is ready to start. 

Exhibit A: Site

The land referred to is situated in the unincorporated area of the County of Marin, State of California, and is described as follows: 

Beginning at the most Easterly corner of Block 130, as said Block is shown on Sausalito land & Ferry Company Map, recorded April 26, 1869 in Rack 1, Pull 9, Marin County Records, and running thence on Lambert Grid bearings California Coordinate System Zone 3, as determined by California State Highway U.S. 101 Coordinates, on a curve to the left whose center bears North 51° 32' 30" East radius 1050.0 feet, through a central angle of 27° 02’ 30" for a distance of 495.564 feet; thence on a curve to the left whose center bears North 24° 30' East radius 360.0 feet, through a central angle of 44° 45' for a distance of 281.173 feet; thence on a curve to the left whose center bears North 20° 15' West radius 460.0 feet, through a central angle of 52° 55' for a distance of 424.842 feet; thence on a curve to the left whose center bears North 73° 10' West radius 820.0 feet, through a central angle of 26° 05’ for a distance of 373.297 feet; thence on a curve 1o the left whose center bears South 80° 45' West radius 1301. 686 feet through a central angle of 19° 16’ 44" for a distance of 437.991 feet; thence North 70° 35' East 308.687 feet to the Southwesterly right of way line of California State Highway No. 101; thence along said Highway line on a curve to the left whose center bears North 48° 43' 14", East radius 349.97 feet, through a central angle of 19° 56' 23" for a distance of 121. 794 feet; thence South 61° 13’ 09" East 132.952 feet; thence along the Westerly line of said Highway right of way on a curve to the right whose center bears South 57° 26' 18" West radius 1919.84 feet, through a central angle of 3° 25' 53" for a distance of 114.98 feet, thence South 00° 52' 1" West 1508.61 feet to a point distant North 00° 52' 11” East 103.0 feet, from monument set at an angle point in said Highway right of way line, having a coordinate of North 503, 841. 890 and East 1, 420, 851.250; thence leaving said right of way line and running South 83° 44' 20" West 1008.751 feet and North 38° 05' West 974.190 feet to the Southeasterly line of said Block 130, hereinabove mentioned, thence along said Southeasterly line, North 51° 32' 30" East 380.0 feet to the point of beginning. 

Excepting therefrom: The Parcel of land described in the Deed to the Redevelopment Agency of the County of Marin, recorded April 20, 1994, Series No. 94-034031, Marin County Official Records.

APN: 052-140-22 and 052-140-41 

Exhibit B: Insurance Requirements 

[To be attached]