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HomeMy WebLinkAbout2019 CON CDC HA (NUTRITION CENTER FUNDING AGREEMENT) - George H. Waters Nutrition Center - 1415 D AvenueNUTRITION CENTER FUNDING AGREEMENT (George H. Waters Nutrition Center) THIS NUTRITION CENTER FUNDING AGREEMENT ("Agreement") is dated as of the 5411 day of March , 2019, by and between the City of National City ("City") and the Community Development Commission -Housing Authority of the City of National City ("Housing Authority"). RECITALS A. Housing Authority is the fee title owner of that certain real property located at 1317 D Avenue and 1415 D Avenue in the City of National City, which is more commonly known and referred to as the Kimball and Morgan Towers. B. Since 1979 the City has operated, or caused to be operated, the George H. Waters Nutrition Center ("Nutrition Center") at the Kimball and Morgan Towers. C. The Kimball and Morgan Towers are "housing projects" as defined in California Health and Safety Code Section 34212. California Health and Safety Code Section 34212 defines housing project to include "real or personal property for necessary, convenient or desirable appurtenances, streets, sewers, water service, parks, site preparation, gardening, administrative, community, health, recreational, educational, welfare or other purposes." The Nutrition Center provides important and necessary community, health, recreational educational, welfare and other benefits to low income residents of the Kimball and Morgan Towers housing projects and other low income persons in the City of National City. As such, the Nutrition Center is a portion of the housing project for purposes of California Health and Safety Code Section 34212. D. The Housing Authority is ground leasing the Kimball and Morgan Towers to two (2) affordable housing project developer/operators, who are required to rehabilitate the Kimball and Morgan Towers and operate the Kimball and Morgan Towers as low income affordable housing projects. A portion of the consideration payable by the Kimball and Morgan Towers developer/operators is in the form of seller carryback notes ("Kimball and Morgan Notes"). E. The Housing Authority and the City believe it will be beneficial to the health and welfare of the community and the citizens of the City of National City for the Nutrition Center to continue to be operated by the City for the benefit of its low income residents, rather than having the Nutrition Center run by private interests. Therefore, as a material consideration for the Housing Authority's entry into the ground leases for the Kimball and Morgan Towers, the Housing Authority is requiring the ground lessee of the Morgan Tower (the building in which the Nutrition Center is located) to enter into a 99 year lease with the City with respect to the Nutrition Center with an annual rent of $1.00. F. California Health and Safety Code Section 34312 empowers the Housing Authority to use its funds to operate housing projects. As part of the foregoing transaction and in lieu of having the ground lessee of the Morgan Tower operate and pay for the Nutrition Center, the Housing Authority has agreed to pay to the City a portion of the consideration received annually by the 1 Housing Authority from the Kimball and Morgan Notes. Which the City shall use to fund operation of the Nutrition Center (which is part of a housing project as defined in the California Health and Safety Code) in furtherance of the City's and the Housing Authority's goal of improving the health and welfare of the community and the citizens of the City of National City. AGREEMENT NOW, THEREFORE, for valid consideration, in furtherance of the recitals stated above, the mutual covenants set forth below, the City and the Housing Authority agree, promise and declare as follows: 1. Annual Payments. The Housing Authority shall make fifty-five (55) annual payments to the City. The first such payment shall be in the amount of $475,000.00, and further payments shall be increased by 3.5% each year thereafter. Such payments shall be made from the proceeds of the Kimball and Morgan Notes. The first annual payment shall be due and payable by the Housing Authority to the City ten (10) business days after receiving such annual payments from the Kimball and Morgan Towers ground lessees. 2. Use of Funds. The City shall use the funds received by the City pursuant to Section 1, above, solely for the purpose of funding operation of the Nutrition Center (which is part of a housing project as defined in the California Health and Safety Code). No portion of such funds shall be used for any purpose other than funding operation of the Nutrition Center without the express written consent of the Housing Authority, which consent shall be granted only in the event that the use of those funds by the City is allowed under the Housing Authorities Law, Health and Safety Code Section 34200, et seq. 3. General Conditions. (a) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (b) Captions. The captions in this Agreement are inserted for convenience of reference and in no way define, describe or limit the scope or intent of this Agreement or any of the provisions of this Agreement. (c) Partial Invalidity. Any provision of this Agreement which is unenforceable, invalid, or the inclusion of which would adversely affect the validity, legality, or enforcement of this Agreement shall have no effect, but all the remaining provisions of this Agreement shall remain in full effect. (d) No Third -Party Rights. Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the parties to this Agreement and their respective successors and assigns, any rights or remedies. 2 (e) Signature Authority. All individuals signing this Agreement for a party which is a corporation, limited liability company, partnership or other legal entity, or signing under a power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant to the each other party hereto that they have the necessary capacity and authority to act for, sign and bind the respective entity or principal on whose behalf they are signing. CITY: THE CITY OF NATIONAL CITY By: Les eese, City Manager HOUSING AUTHORITY: COMMUNITY DEVELOPMENT COMMISSION - HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY By: Lie, Executive Director APPROVED AS TO FORM: B ms-Jones, City Att APPROVED AS TO FORM: Christensen & Spath LLP City and Housi g Authority Special Counsel By: alter F. 3 RESOLUTION NO. 2019 — 69 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE A NUTRITION CENTER FUNDING AGREEMENT WITH THE CITY OF NATIONAL CITY FOR THE PURPOSE OF FUNDING THE OPERATION OF THE GEORGE H. WATERS NUTRITION CENTER, LOCATED AT 1415 "D" AVENUE IN NATIONAL CITY, IN THE AMOUNT OF $475,000 FOR THE FIRST ANNUAL PAYMENT AND INCREASED BY 3.5% EACH YEAR THEREAFTER FOR A TOTAL OF FIFTY-FIVE (55) YEARS WHEREAS, the Community Development Commission -Housing Authority of the City of National City ("Housing Authority") is the fee title owner of that certain real property located at 1317 D Avenue and 1415 D Avenue in the City of National City ("City"), which is more commonly known and referred to as the Kimball and Morgan Towers; and WHEREAS, since 1979 the City has operated, or caused to be operated, the George H. Waters Nutrition Center ("Nutrition Center") at the Kimball and Morgan Towers; and WHEREAS, the Kimball and Morgan Towers are "housing projects" as defined in California Health and Safety Code Section 34212. California Health and Safety Code Section 34212 defines housing project to include "real or personal property for necessary, convenient or desirable appurtenances, streets, sewers, water service, parks, site preparation, gardening, administrative, community, health, recreational, educational, welfare or other purposes." The Nutrition Center provides important and necessary community, health, recreational, educational, welfare and other benefits to low income residents of the Kimball and Morgan Towers housing projects and other low income persons in the City of National City. As such, the Nutrition Center is a portion of the housing project for purposes of California Health and Safety Code Section 34212; and WHEREAS, under the Disposition and Development Agreement for Kimball and Morgan Towers approved by the Housing Authority on June 19, 2018, the Housing Authority is ground leasing the Kimball and Morgan Towers to two (2) affordable housing project the developer/operators, who are required to rehabilitate the Kimball and Morgan Towers and operate the Kimball and Morgan Towers as low income affordable housing projects. A portion of the consideration payable by the Kimball and Morgan Towers developer/operators is in the form of seller carryback notes ("Kimball and Morgan Notes"); and WHEREAS, the Housing Authority and the City believe it will be beneficial to the health and welfare of the community and the citizens of the City of National City for the Nutrition Center to continue to be operated by the City for the benefit of its low income residents, rather than having the Nutrition Center run by private interests. Therefore, as a material consideration for the Housing Authority's entry into the ground leases for the Kimball and Morgan Towers, the Housing Authority is requiring Morgan Tower Housing Associates, L.P., ground lessee of the Morgan Tower, (the building in which the Nutrition Center is located) to enter into a 99 year lease with the City with respect to the Nutrition Center with an annual rent of $1.00; and Resolution No. 2019 — 69 Page Two WHEREAS, California Health and Safety Code Section 34312 empowers the Housing Authority to use its funds to operate housing projects. As part of the foregoing transaction and in lieu of having the ground lessee of the Morgan Tower operate and pay for the Nutrition Center, the Housing Authority has agreed to pay to the City a portion of the consideration received annually by the Housing Authority from the Kimball and Morgan Notes. The City shall use the fund for the operation of the Nutrition Center (which is part of a housing project as defined in the California Health and Safety Code) in furtherance of the City's and the Housing Authority's goal of improving the health and welfare of the community and the citizens of the City of National City; and WHEREAS, under the Nutrition Center Funding Agreement, the Housing Authority shall make fifty-five (55) annual payments to the City. The first such payment shall be in the amount of $475,000.00, and further payments shall be increased by 3.5% each year thereafter. Such payments shall be made from the proceeds of the Kimball and Morgan Notes. The first annual payment shall be due and payable by the Housing Authority to the City ten (10) business days after receiving such annual payments from the Kimball and Morgan Towers ground lessees; and WHEREAS, the City shall use the funds received by the City pursuant to the funding agreement referenced herein, solely for the purpose of funding operation of the Nutrition Center (which is part of a housing project as defined in the California Health and Safety Code). No portion of such funds shall be used for any purpose other than funding operation of the Nutrition Center without the express written consent of the Housing Authority, which consent shall be granted only in the event that the use of those funds by the City is allowed under the Housing Authorities Law, Health and Safety Code Section 34200, et seq. NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission -Housing Authority of the City of National City authorizes the Executive Director to execute a Nutrition Center Funding Agreement with the City of National City for the purpose of funding the operation of the George H. Waters Nutrition Center, located at 1415 "D" Avenue in National City, in the amount of $475,000 for the first annual payment and increased by 3.5% each year thereafter for a total of fifty-five (55) years. BE IT FURTHER RESOLVED that Nutrition Center Funding Agreement will be fully executed prior to the close of escrow with other necessary documents as may be required by the Disposition and Development Agreement for Kimball and Morgan Towers dated June 19, 2018. A fully executed copy of the Nutrition Center Funding Agreement will be on file with the City Clerk after the close of escrow. --- Signatures on page to follow --- Resolution No. 2019 — 69 Page Three PASSED and ADOPTED this 5th day of March, 201 A ejan ATTEST: Leslie Deese, Secretary APPROVED AS TO FORM: A Gen - r.T Counsel Chairwoman Passed and adopted by the Community Development Commission -Housing Authority of the City of National City, California, on March 5, 2019 by the following vote, to -wit: Ayes: Commissioners Cano, Morrison, Quintero, Rios, Sotelo-Solis. Nays: None. Absent: None. Abstain: None. AUTHENTICATED BY: ALEJANDRA SOTELO-SOLIS Chairman, Housing Authority LESLIE DEESE Secretary, Housing Authority By: Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2019-69 of the Community Development Commission -Housing Authority of the City of National City, California, passed and adopted on March 5, 2019. Secretary, Housing Authority By: Deputy CITY OF NATIONAL CITY, CALIFORNIA COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY COUNCIL AGENDA STATEMENT FETING DATE: March 5, 2019 AGENDA ITEM NO. 13 ITEM TITLE: Resolution of the Community Development Commission -Housing Authority of the City of National City authorizing the Executive Director to execute a Nutrition Center Funding Agreement with the City of National City for the purpose of funding the operation of the George H. Waters Nutrition Center, located at 1415 "D" Avenue in National City, in the amount of $475,000 for the first annual payment and increased by 3.5% each year thereafter for a total of fifty-five (55) years. PREPARED BY: Carlos Aguirre, Housing and Economic Dev. Mgr. PHONE: 619-336-4391 EXPLANATION: See Attachment No. 1 for an explanation. APPROVED BY: DEPARTMENT: Housing & Economic D:1-lopment 4L jolt. INANCIAL STATEMENT: APPROVED: ilg �'-�e Finance ACCOUNT NO. APPROVED: MIS See Attachment No. 1 for a financial statement. ENVIRONMENTAL REVIEW: The Funding Agreement is not considered a project as defined by the California Environmental Quality Act (CEQA), and is therefore not subject to CEQA. ORDINANCE: INTRODUCTION: FINAL ADOPTION: STAFF RECOMMENDATION: Adopt the Resolution. BOARD / COMMISSION RECOMMENDATION: N/A ,TTACHMENTS: 1. Staff Report 2. Nutrition Center Funding Agreement 3. Resolution ..soJ 720 . /aof y- /c Attachment No. 1 COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY STAFF REPORT March 5, 2019 Agenda Item Resolution of the Community Development Commission -Housing Authority of the City of National City authorizing the Executive Director to execute a Nutrition Center Funding Agreement with the City of National City for the purpose of funding the operation of the George H. Waters Nutrition Center, located at 1415 "D" Avenue in National City, in the amount of $475,000 for the first annual payment and increased by 3.5% each year thereafter for a total of fifty-five (55) years. Background The George H. Waters Senior Nutrition Center ("Nutrition Center") was built in conjunction with Morgan Senior Tower and has been operated by the City of National City ("City") since 1978. The goals of the Nutrition Center are to provide good nutrition, reduce isolation, and provide sound education and information to meet the needs of older adults, as well as providing the availability of appropriate exercise classes to enable the target population to maintain good health. The Nutrition Center provides National City's elderly population with information about the benefits of good nutrition and exercise as a way to avoid lengthy illnesses and nursing home confinement. The Nutrition Center serves over 40,000 congregate meals and makes over 17,000 meal deliveries to seniors each year. The Nutrition Center is funded in part by the City of National City, program donations and a grant through the federal Older American Act Title III. This federal grant is administered by both State of California and County of San Diego and is regulated by the California Department of Agriculture. Comprehensive Renovation of the Nutrition Center Since the Nutrition Center had not undergone renovations since it was placed in service and the facility is well overdue for rehabilitation, the Community Development Commission -Housing Authority of the City of National City ("Housing Authority") included the Nutrition Center in the Kimball and Morgan Towers ("Towers") Rehabilitation and Recapitalization Project ("Project") approved through a Development and Disposition Agreement ("DDA") on June 19, 2018 by Housing Authority Resolution 2018-66 to ensure full rehabilitation and financial sustainability of the Nutrition Center. As part of the Project, the Project developer/operators of the Towers will provide for a comprehensive rehabilitation and modernization of the Nutrition Center. 1 Attachment No. 1 Nutrition Center Lease Agreement at $1.00 per year As a material consideration for the Housing Authority's entry into the ground leases for the Towers as required by the Project's DDA, the Housing Authority is requiring the ground lessee of the Morgan Tower (the building in which the Nutrition Center is located) to enter into a 99 year Lease ("Lease") with the City with respect to the Nutrition Center with an annual rent of $1.00 so that the City may continue to operate the Nutrition Center. The Lease is a "Triple Net Lease" pursuant to which City shall pay (in addition to Rent) its own utilities, janitorial, trash removal, repairs, maintenance, and other operating expenses directly relating to the use of the Nutrition Center. Annual Payments to the City for Operation of the Nutrition Center Pursuant to the Project DDA, the Housing Authority is ground leasing the Towers to two (2) affordable housing project developer/operators, who are required to rehabilitate the Towers and operate them as low income affordable housing projects. A portion of the consideration payable by Towers developer/operators is in the form of seller carryback notes ("Kimball and Morgan Notes"). California Health and Safety Code Section 34312 empowers the Housing Authority to use its funds to operate housing projects. As part of the foregoing transaction and in lieu of having the ground lessee of the Morgan Tower operate and pay for the Nutrition Center, the Housing Authority has agreed to pay to the City a portion of the consideration received annually by the Housing Authority from annual loan payments received through the Kimball and Morgan Notes. The City would use said portion of funds received by the Housing Authority to operate the Nutrition Center (which is part of a housing project as defined in the California Health and Safety Code) in furtherance of the City's and the Housing Authority's goal of improving the health and welfare of the community and the citizens of the City of National City. Under a Nutrition Center Funding Agreement (Attachment No. 2 of this Staff Report), the City would receive fifty-five (55) annual payments from the Housing Authority for the operation of the Nutrition Center. The first such payment shall be in the amount of $475,000.00, and further payments shall be increased by 3.5% each year thereafter. Such payments shall be made from the proceeds of the Kimball and Morgan Notes. The City shall use the funds received by the City from the Housing Authority solely for the purpose of funding operation of the Nutrition Center (which is part of a housing project as defined in the California Health and Safety Code). No portion of such funds shall be used for any purpose other than funding operation of the Nutrition Center without the express written consent of the Housing Authority, which consent shall be granted only in the event that the use of those funds by the City is allowed under the Housing Authorities Law, Health and Safety Code Section 34200, et seq. 2 Attachment No. 1 Financial Statement and Staff Recommendation As part of the Kimball and Morgan Towers Rehabilitation and Recapitalization Project the City's Nutrition Center will receive a comprehensive rehabilitation and modernization without any out-of-pocket contribution from the City or the Housing Authority. The first annual payment of $475,000 shall be due and payable by the Housing Authority to the City ten (10) business days after receiving such annual payments from the Kimball and Morgan Towers developers at closing. The first payment will be made to the City in early April 2019. The annual payment represents a new revenue source to the Nutrition Center Fund. This new revenue source offsets the operating support that the City's General Fund has provided to the Nutrition Center. In anticipation of the receipt of this revenue source the operating support previously provided from the General Fund was not included in the Fiscal Year 2019 City budget. City staff recommends that the Community Development Commission -Housing Authority of City of National City authorize the Executive Director to execute attached Nutrition Center Funding Agreement at the close of escrow for the Project. 3 Attachment No. 2 NUTRITION CENTER FUNDING AGREEMENT (George H. Waters Nutrition Center) THIS NUTRITION CENTER FUNDING AGREEMENT ("Agreement") is dated as of the day of , 2019, by and between the City of National City ("City") and the Community Development Commission -Housing Authority of the City of National City ("Housing Authority"). RECITALS A. Housing Authority is the fee title owner of that certain real property located at 1317 D Avenue and 1415 D Avenue in the City of National City, which is more commonly known and referred to as the Kimball and Morgan Towers. B. Since 1979 the City has operated, or caused to be operated, the George H. Waters Nutrition Center ("Nutrition Center") at the Kimball and Morgan Towers. C. The Kimball and Morgan Towers are "housing projects" as defined in California Health and Safety Code Section 34212. California Health and Safety Code Section 34212 defines housing project to include "real or personal property for necessary, convenient or desirable appurtenances, streets, sewers, water service, parks, site preparation, gardening, administrative, community, health, recreational, educational, welfare or other purposes." The Nutrition Center provides important and necessary community, health, recreational educational, welfare and other benefits to low income residents of the Kimball and Morgan Towers housing projects and other low income persons in the City of National City. As such, the Nutrition Center is a portion of the housing project for purposes of California Health and Safety Code Section 34212. D. The Housing Authority is ground leasing the Kimball and Morgan Towers to two (2) affordable housing project developer/operators, who are required to rehabilitate the Kimball and Morgan Towers and operate the Kimball and Morgan Towers as low income affordable housing projects. A portion of the consideration payable by the Kimball and Morgan Towers developer/operators is in the form of seller carryback notes ("Kimball and Morgan Notes"). E. The Housing Authority and the City believe it will be beneficial to the health and welfare of the community and the citizens of the City of National City for the Nutrition Center to continue to be operated by the City for the benefit of its low income residents, rather than having the Nutrition Center run by private interests. Therefore, as a material consideration for the Housing Authority's entry into the ground leases for the Kimball and Morgan Towers, the Housing Authority is requiring the ground lessee of the Morgan Tower (the building in which the Nutrition Center is located) to enter into a 99 year lease with the City with respect to the Nutrition Center with an annual rent of $1.00. F. California Health and Safety Code Section 34312 empowers the Housing Authority to use its funds to operate housing projects. As part of the foregoing transaction and in lieu of having the ground lessee of the Morgan Tower operate and pay for the Nutrition Center, the Housing Authority has agreed to pay to the City a portion of the consideration received annually by the Attachment No. 2 Housing Authority from the Kimball and Morgan Notes. Which the City shall use to fund operation of the Nutrition Center (which is part of a housing project as defined in the California Health and Safety Code) in furtherance of the City's and the Housing Authority's goal of improving the health and welfare of the community and the citizens of the City of National City. AGREEMENT NOW, THEREFORE, for valid consideration, in furtherance of the recitals stated above, the mutual covenants set forth below, the City and the Housing Authority agree, promise and declare as follows: 1. Annual Payments. The Housing Authority shall make fifty-five (55) annual payments to the City. The first such payment shall be in the amount of $475,000.00, and further payments shall be increased by 3.5% each year thereafter. Such payments shall be made from the proceeds of the Kimball and Morgan Notes. The first annual payment shall be due and payable by the Housing Authority to the City ten (10) business days after receiving such annual payments from the Kimball and Morgan Towers ground lessees. 2. Use of Funds. The City shall use the funds received by the City pursuant to Section 1, above, solely for the purpose of funding operation of the Nutrition Center (which is part of a housing project as defined in the California Health and Safety Code). No portion of such funds shall be used for any purpose other than funding operation of the Nutrition Center without the express written consent of the Housing Authority, which consent shall be granted only in the event that the use of those funds by the City is allowed under the Housing Authorities Law, Health and Safety Code Section 34200, et seq. 3. General Conditions. (a) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (b) Captions. The captions in this Agreement are inserted for convenience of reference and in no way define, describe or limit the scope or intent of this Agreement or any of the provisions of this Agreement. (c) Partial Invalidity. Any provision of this Agreement which is unenforceable, invalid, or the inclusion of which would adversely affect the validity, legality, or enforcement of this Agreement shall have no effect, but all the remaining provisions of this Agreement shall remain in full effect. (d) No Third -Party Rights. Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the parties to this Agreement and their respective successors and assigns, any rights or remedies. Attachment No. 2 (e) Signature Authority. All individuals signing this Agreement for a party which is a corporation, limited liability company, partnership or other legal entity, or signing under a power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant to the each other party hereto that they have the necessary capacity and authority to act for, sign and bind the respective entity or principal on whose behalf they are signing. CITY: THE CITY OF NATIONAL CITY By: Leslie Deese, City Manager HOUSING AUTHORITY: COMMUNITY DEVELOPMENT COMMISSION - HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY By: Leslie Deese, Executive Director APPROVED AS TO FORM: By: Angil P Morris -Jones, City Attorney APPROVED AS TO FORM: Christensen & Spath LLP City and Housing Authority Special Counsel By: Walter F. Spath III RESOLUTION NO. 2019 — RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE A NUTRITION CENTER FUNDING AGREEMENT WITH THE CITY OF NATIONAL CITY FOR THE PURPOSE OF FUNDING THE OPERATION OF THE GEORGE H. WATERS NUTRITION CENTER, LOCATED AT 1415 "D" AVENUE IN NATIONAL CITY, IN THE AMOUNT OF $475,000 FOR THE FIRST ANNUAL PAYMENT AND INCREASED BY 3.5% EACH YEAR THEREAFTER FOR A TOTAL OF FIFTY-FIVE (55) YEARS WHEREAS, the Community Development Commission -Housing Authority of the City of National City ("Housing Authority") is the fee title owner of that certain real property located at 1317 D Avenue and 1415 D Avenue in the City of National City ("City"), which is more commonly known and referred to as the Kimball and Morgan Towers; and WHEREAS, since 1979 the City has operated, or caused to be operated, the George H. Waters Nutrition Center ("Nutrition Center") at the Kimball and Morgan Towers; and WHEREAS, the Kimball and Morgan Towers are "housing projects" as defined in California Health and Safety Code Section 34212. California Health and Safety Code Section 34212 defines housing project to include "real or personal property for necessary, convenient or desirable appurtenances, streets, sewers, water service, parks, site preparation, gardening, administrative, community, health, recreational, educational, welfare or other purposes." The Nutrition Center provides important and necessary community, health, recreational, educational, welfare and other benefits to low income residents of the Kimball and Morgan Towers housing projects and other low income persons in the City of National City. As such, the Nutrition Center is a portion of the housing project for purposes of California Health and Safety Code Section 34212; and WHEREAS, under the Disposition and Development Agreement for Kimball and Morgan Towers approved by the Housing Authority on June 19, 2018, the Housing Authority is ground leasing the Kimball and Morgan Towers to two (2) affordable housing project the developer/operators, who are required to rehabilitate the Kimball and Morgan Towers and operate the Kimball and Morgan Towers as low income affordable housing projects. A portion of the consideration payable by the Kimball and Morgan Towers developer/operators is in the form of seller carryback notes ("Kimball and Morgan Notes"); and WHEREAS, the Housing Authority and the City believe it will be beneficial to the health and welfare of the community and the citizens of the City of National City for the Nutrition Center to continue to be operated by the City for the benefit of its low income residents, rather than having the Nutrition Center run by private interests. Therefore, as a material consideration for the Housing Authority's entry into the ground leases for the Kimball and Morgan Towers, the Housing Authority is requiring Morgan Tower Housing Associates, L.P., ground lessee of the Morgan Tower, (the building in which the Nutrition Center is located) to enter into a 99 year lease with the City with respect to the Nutrition Center with an annual rent of $1.00; and Resolution No. 2019 — Page Two WHEREAS, California Health and Safety Code Section 34312 empowers the Housing Authority to use its funds to operate housing projects. As part of the foregoing transaction and in lieu of having the ground lessee of the Morgan Tower operate and pay for the Nutrition Center, the Housing Authority has agreed to pay to the City a portion of the consideration received annually by the Housing Authority from the Kimball and Morgan Notes. The City shall use the fund for the operation of the Nutrition Center (which is part of a housing project as defined in the California Health and Safety Code) in furtherance of the City's and the Housing Authority's goal of improving the health and welfare of the community and the citizens of the City of National City; and WHEREAS, under the Nutrition Center Funding Agreement, the Housing Authority shall make fifty-five (55) annual payments to the City. The first such payment shall be in the amount of $475,000.00, and further payments shall be increased by 3.5% each year thereafter. Such payments shall be made from the proceeds of the Kimball and Morgan Notes. The first annual payment shall be due and payable by the Housing Authority to the City ten (10) business days after receiving such annual payments from the Kimball and Morgan Towers ground lessees; and WHEREAS, the City shall use the funds received by the City pursuant to the funding agreement referenced herein, solely for the purpose of funding operation of the Nutrition Center (which is part of a housing project as defined in the California Health and Safety Code). No portion of such funds shall be used for any purpose other than funding operation of the Nutrition Center without the express written consent of the Housing Authority, which consent shall be granted only in the event that the use of those funds by the City is allowed under the Housing Authorities Law, Health and Safety Code Section 34200, et seq. NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission -Housing Authority of the City of National City authorizes the Executive Director to execute a Nutrition Center Funding Agreement with the City of National City for the purpose of funding the operation of the George H. Waters Nutrition Center, located at 1415 "D" Avenue in National City, in the amount of $475,000 for the first annual payment and increased by 3.5% each year thereafter for a total of fifty-five (55) years. BE IT FURTHER RESOLVED that Nutrition Center Funding Agreement will be fully executed prior to the close of escrow with other necessary documents as may be required by the Disposition and Development Agreement for Kimball and Morgan Towers dated June 19, 2018. A fully executed copy of the Nutrition Center Funding Agreement will be on file with the City Clerk after the close of escrow. --- Signatures on page to follow --- Resolution No. 2019 — Page Three PASSED and ADOPTED this 5th day of March, 2019. Alejandra Sotelo-Solis, Chairwoman ATTEST: Leslie Deese, Secretary APPROVED AS TO FORM: Angil P. Morris -Jones General Counsel CITY OF NATIONAL CITY Office of the City Clerk 1243 National City Blvd., National City, California 91950-4397 619-336-4228 Michael R. Dalla, CMC - City Clerk COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY (CDC -HA) George H. Waters Nutrition Center Funding Agreement Carlos Aguirre (Housing Authority) has a duplicate original Agreement on file.