South Stockton Redevelopment Project

SOUTH STOCKTON REDEVELOPMENT PROJECT BANK OF AMERICA MERRILL LYNCH: LOW-INCOME HOUSING CHALLENGE

FINAL COMPETITION PROPOSAL

The Team

ACKNOWLEDGEMENTS SPECIAL THANKS

We would like to thank the many individuals that contributed to this project for their help throughout this process. Without their support and expertise, this project would not have been possible. Special thanks to the Bank of America Merrill Lynch for this exciting opportunity to compete in the Low Income Housing Challenge.

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Lydia Tan

Senior Vice President, Head of Development, Bentall Kennedy

Fred Sheil

Administrator of STAND

Michael Tubbs

Mayor of Stockton

JesĂşs Andrade

District 6 member of Stockton City Council

Tristan Osborn

Principal / Founder, Cobblestone Placemaking

Dana Harvey

Executive Director, Mandela Marketplace

Lisa Salaices

Community Development Consultant, RGP

Art Feagles

Chief Financial Officer, Community Medical Centers

Melanie Vieux

Principal Architect, WSP Architects Inc.

PROJECT TEAM

The Team

MOOM JANYAPRASERT

ALEX PÁRAMO

PAUL SCHROEDER

Student, Stanford University

Student, Stanford University

Student, Stanford University

Moom is currently a junior studying Architectural Design. Prior to Stanford, he won a full-ride King’s Scholarship awarded annually to top 9 students in Thailand. His interests lie in real estate development and finance. He is also working for the Parkmerced Development Team at Maximus Real Estate Partners in San Francisco.

Alex is a current junior majoring in Management Science and Engineering. A co-founder of the Stanford Latinx Business Association, his interest lies within the economic development of the Latino community, especially that of immigrant entrepreneurs.

Paul is a masters student in the Sustainable Design & Construction program and also received a BS in Civil Engineering at Stanford. His previous work with the Stanford GUDP concerning affordable housing solutions in San Jose has sparked his interest for alternative solutions to issues in housing and transportation.

NIKHIL CHAUDHURI

DEREK OUYANG

Student, Stanford University

Lecturer, Stanford University

Nikhil is currently a sophomore in the Architectural Design program, and is also considering pursuing a secondary major in Civil Engineering. He co-leads the fabrication team for Stanford Seismic Design, and has interned for both residential and commercial architecture firms.

Derek Ouyang graduated from Stanford University in 2013 with dual Bachelor’s in Civil Engineering and Architectural Design, and in 2015 with a Master’s in Structural Engineering. Currently, he is Founder of Cloud Arch Studio as well as a lecturer at Stanford and the Nueva Upper School.

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SOUTH STOCK TON REDEVELOPMENT PROJEC T

TABLE OF CONTENTS FINAL COMPETITION PROPOSAL

Executive Summary Market Analysis Site Context Entitlements Design Concept Communal Living Mandela MarketPlace Community Medical Centers Community Engagement Finance Structure Appendix A (Finance) Appendix B (Letters of Support)

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6 8 10 11 12 20 21 22 23 25 31 41

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INTRODUCTION SOUTH STOCK TON REDEVELOPMENT PROJEC T

EXECUTIVE SUMMARY PROJECT AT A GLANCE

This proposal outlines the necessary current and future steps to develop the South Stockton Redevelopment Project, a mixed use development located on 8th & Airport Way in South Stockton, in partnership with Stocktonians Taking Action to Neutralize Drugs (STAND). STAND, a local nonprofit, is currently in an Exclusive Negotiating Rights Agreement (ENRA) with the City of Stockton’s Economic Department to develop a mixed-use infill development on the site. We are also closely working with representatives from Mandela Marketplace, Community Medical Centers (CMC), and the City of Stockton, all of whom have expressed interest in our project.

It is important to note, that although this proposal is written for the Bank of America Low Income Housing Challenge, this is the result of a culmination of efforts in a year-long process to develop this project in hopes of benefiting the residents and the community of South Stockton.

PROJECT OVERVIEW Developer Stocktonians Taking Action to Neutralize Drugs (STAND) Location 2222 & 2244 S. Airport Way, Stockton California Total Site Acreage 1.6 acres Program Uses • Housing • Community Medical Center • Mandela Marketplace • Retail • STAND Offices

Total Residential Units 62 units Unit Type 100% Affordable (Excluding Manager’s Unit) Unit Breakdown • One Bedroom - 18 • Two Bedroom - 16 • Three Bedroom - 11 • Three Bedroom (Communal Living) - 16 • One Manager’s Unit Target Population Families & elderly residents 30% - 60% AMI

Key Financing Sources Residential • Tax Credit Equity • Permanent Loan • HOME Investment Partnerships • City Develop Impact Fee Soft Loan • City Land Soft Loan Commercial • New Market Tax Credit • Dignity Health Fund • Department of HHS • Bank Loan • City of Stockton

MARKET ANALYSIS South Stockton was significantly impacted by the economic recession in 2008 and the subsequent city bankruptcy in 2012, which exacerbated many existing socioeconomic issues. Although the housing and rental markets in Stockton have rebounded, 21.8% of Stockton is currently below the federal poverty line and median incomes have fallen when accounting for inflation. [1] There is a significant demand for affordable housing in South Stockton and is listed as a crucial part of the city’s future direction.

SITE CONTEXT Our proposed 1.6 acre development site is located near many amenities and is in close proximity to two bus stops with frequent service. There are currently several vacant lots nearby, including 2135 Airport Way, which STAND has also shown interest in buying. Following initial proposals to the City of Stockton, an environmental review period will assess potential negative consequences of development and best mitigation measures.

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[ 1 ] “ A m e r i c a n C o m m u n i t y S u r v e y .” C e n s u s . g o v . U n i t e d S t a t e s C e n s u s B u r e a u , 2 0 1 0 . W e b .

ENTITLEMENTS

COMMUNITY MEDICAL CENTERS

STAND is in an Exclusive Negotiating Rights Agreement (ENRA) with the Stockton Economic Development Division, providing them with the exclusive rights to a mixed-use infill development on the currently vacant plot of land of interest. The zoning designation for our site is Commercial General allowing a mix of office, commercial or residential uses. The City of Stockton also allows a 35% unit density increase, increasing the allowable number of units to 62 onsite. Lastly, we will have 26 side-street and 93 off-street parking spaces. Although this is significantly lower than the required number of spaces stipulated

by Stockton Municipal Code, we believe the different times of use for office, retail and residential will allow us significant parking variances.

Community Medical Centers is a health provider for many low-income and vulnerable populations in Stockton and plans to open a clinic at our site specializing in primary care and family practice along with offering dental and behavioral health services. This will help address various health problems and increase access to quality care in South Stockton.

COMMUNAL LIVING Sixteen of the residential units will employ a communal living scheme, interchangeable in design to three bedroom units with an alternative management strategy, where three individual residents will have separate rooms but share common spaces. This not only encourages community building between residents, but also lowers the cost of living for residents, by dividing the rent of a single unit. This layout will be advantageous for young college students in the Stockton area, along with senior residents who prefer easy access to markets and the Community Medical Centers.

COMMUNITY ENGAGEMENT We have organized preliminary meetings to gather important stakeholders in the process including members of STAND, Mandela Marketplace, Community Medical Center and officials from the City of Stockton. In addition, we held a town hall meeting for South Stockton residents to gather input and ideas for additional design features, preferred retail, and critiques of our designs and concepts thus far. We have received positive input thus far in the process and business, non-profits, and residents alike are invested in the success of this project.

FINANCING

DESIGN CONCEPT The design consists of a C shape structure with retail and office space on the ground floor and residential units above. The design satisfies individual program needs, provides synergy between uses, maximizes daylighting and encourages public interaction with 8th & Airport Way while providing a safe enclosed central courtyard for residents and shoppers. Consistent unit floor plan layouts maximizes usable interior space and allows for flexible programming and the use of modular construction.

MANDELA MARKETPLACE Mandela Marketplace provides an important community approach to food markets for South Stockton by empowering local farmers and sellers and satisfies a growing demand for healthier and better food for residents. A variety of financial and support mechanisms promotes entrepreneurship and collaboration for local farmers and residents, while youth groups and the partnership with Community Medical Clinic will incentivize healthier eating habits and lifestyles.

Figure 1: Development Costs

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THE MARKET

MARKET ANALYSIS

DEMANDS IN STOCKTON

STOCKTON DEMOGRAPHICS Stockton has a diverse population of 298,118, with a relatively young median age of 30.7, an annual median household income of roughly $46,800, and roughly 21.8% of the population living below the poverty line. [2] Figure 2 shows how this compares to the rest of San Joaquin County and the state of California.

South Stockton has a population of 105,000 residents, or roughly one third of the population of Stockton. Compared to the rest of Stockton, it is defined by larger household sizes, lower incomes, and a higher incidence of poverty that can vary widely amongst different zip codes. Our project is located in the 95206 zip code, where the median home price is $129,155, average rent is $1,102 and the unemployment rate is 18.30%, along with roughly 46% of residents living below the poverty line. [3]

Figure 2: Stockton, San Joaquin County and California’s Demographic

Figure 3 shows roughly 73% of Stockton households are composed of families, and are composed of three or more residents and having one or two parents from the ages of 25 to 55. Alternatively, 27% of Stockton is made of non-family households; of these, 42% are senior residents, most of which live alone. [4] In order to best address the needs and demands of local Stockton residents we will offer a combination of family two to three bedroom units along with smaller units for individuals.

Figure 3: Stockton Household by Age

8 [ 2 ] “ A m e r i c a n C o m m u n i t y S u r v e y .” C e n s u s . g o v . U n i t e d S t a t e s C e n s u s B u r e a u , 2 0 1 0 . W e b .

[3] City- data.com. Advameg Inc., 2017. Web. [ 4 ] “ P o p u l a t i o n D e m o g r a p h i c s f o r S t o c k t o n , C a l i f o r n i a i n 2 0 1 6 a n d 2 0 1 7 .” S u b u r b a n s t a t s . o r g . N . p . , n . d . W e b .

Figure 4: Affordability Gap for 1-Person Household

Figure 5: Affordability Gap for 4-Person Household

LOCAL HOUSING MARKET The 2008 housing crisis had a significant negative impact on the City of Stockton and its housing market. Home prices fell more than 70% from 2006 to 2009 and Stockton led the nation in foreclosures with nearly one out of every thirty homes being foreclosed in 2008. [5] Stockton’s real estate market has rebounded since the recession and shows signs of steady positive growth. Stockton’s median home price is $251,350, as compared to $487,400 for the state of California.[6] However, due to the high upfront cost of owning a home, most of the Stockton real estate are rentals. 51.5% of Stockton households are renters which is significantly higher than the 37% national average.[7] Although housing prices have recovered and continue to steadily rise, household incomes are not increasing at similar rates. Since 2000, median rents have increased by 20%, while median incomes have decreased by 8%, when accounting

for inflation.[8] In addition, those that earn 50% of the San Joaquin County Median Income spend nearly two thirds of their income on rent, significantly greater than what is considered affordable.

Figures 4 and 5 below show the affordability gap for various income distributions in San Joaquin County for one and four person households, indicative of potential household sizes for our development. The affordability gap measures the difference between the average monthly rent, calculated as a percentage of HUD AMI for a given number of bedrooms (0.7 for 1 bedroom, and 1.04 for 3 bedrooms) and 30% of a household’s monthly income. 100% AMI and 30% AMI individuals necessitate between $73 to $795 in order to pay affordable rents. Similarly, 100% AMI and 30% AMI four person households necessitate between $59 and $1089 in order to make ends meet.

9 [ 5 ] E s a j i a n , P a u l . “ S t o c k t o n : R e a l E s t a t e a n d M a r k e t T r e n d s .” F o r t u n e b u i l d e r s . c o m . N . p . , 2 0 1 5 .

[6] City-data.com. Advameg Inc., 2017. [ 7 ] “ S t o c k t o n , C A .” D a t a u s a . i o . D a t a U S A , n . d . [ 8 ] “ C O N F R O N T I N G S A N J O A Q U I N C O U N T Y ’ S R E N T A N D P O V E R T Y C R I S I S : A C A L L F O R R E I N V E S T M E N T I N A F F O R D A B L E H O M E S .” A N D P O V E R T Y C R I S I S : A FOR (n.d.): n. pag.Visionaryhomebuilders.com. Visionary Homebuilders, 2016.

Web. Web. Web. CALL Web.

THE SITE

SITE CONTEXT

THE SURROUNDING

SITE DESCRIPTION Our 1.6 acre development site is located on 8th and Airport Way in South Stockton. The surrounding area is mainly composed of small to medium size low density housing. There are many amenities and civic institutions near our development including the San Joaquin County Fairgrounds, the Williams Brotherhood Park, and Dorothy Jones Community Center. There are also several open lots immediately surrounding our proposed site being considered for future development including 2135 Airport Way, an empty lot for sale on the northwest corner of 8th & Airport Way that STAND has showed interest in buying. Figure 6 below shows our site in relation to the surrounding community.

Figure 6: Site and South Stockton Context

There are two bus stops immediately surrounding our site, shown in Figure 5, that offer public transit options throughout the day. The Metro Express Line frequents our site every twenty minutes and the Metro Hopper bus service operates on an hourly basis. We hope to move the current 8th & Airport Bus Stop near Rancho Market to just west of our site to better facilitate bus transit.

Figure 7: South Stockton Land Use Designations 10

PARKING RESTRICTIONS

ENTITLEMENTS

In total, our development will contain 93 off-street and 26 sidestreet parking spaces to accommodate the various uses of our development. The total 119 spaces is significantly less than the required 233 spaces, as shown in Figure 9 , which lists the number of spaces by use based on the Stockton Municipal Code and recommendations made by Community Medical Centers Inc. ZONING REGULATIONS & PERMITS

STAND is currently in an Exclusive Negotiating Rights Agreement (ENRA) with the Stockton Economic Development Division giving them the exclusive rights to a mixed-use infill development on the currently vacant plot of land of interest.

The parcel of interest is currently zoned for Commercial General purposes along with neighboring properties along S. Airport Way. Our mixed-use development complies with Municipal Code standards which outline that Commercial General Land Uses

However, mixed use developments are advantageous due to the different periods of demand between residential, commercial and retail that allow for shared parking schemes. Figure 10 shows how parking would be shared between uses through various times of the week. Because of these different periods of use and increased density of the project as well as discussions with local developers, we believe the city of Stockton will allow significant variances in regards to parking requirements.

allow many general commercial uses including retail, office, commercial and residential uses. Figure 7 shows a breakdown of the land uses in proximity to our proposed development. In addition, Figure 8 summarizes the various development standards outlined by the city of Stockton based on general commercial land use requirements.

DENSITY BONUS Stockton’s Municipal Code allows a for a 35% density increase allowance provided that the development furthers the goals of the city outlined in Stockton’s General Plan and meets at least one of its several income restrictions, including a minimum of 20% of low income units or 11% very low income units. Because 100% of the units are at or below 60% AMI and 72% of units are at or below 50% AMI, we comfortably meet these requirements and can build a maximum of 62 units on site.

Figure 8: Stockton Development Standards

Figure 10: Allocated Parking Spaces for Mixed-Uses

ENVIRONMENTAL REVIEW PROCESS The California Environmental Quality Act (CEQA) necessitates an initial study to determine if the project causes significant environmental effects and a lead agency to establish a mitigation monitoring and reporting program to create and enforce appropriate mitigation measures. Once the project is deemed to have no adverse significant effects on the environment by city and county authorities, a Negative Declaration will be proposed signifying the project can move forward.

We will assess the various impacts of our development ranging from impacts on water and runoff to air pollution and hazardous waste and materials. Our development site contains no toxics and hazardous wastes, and will not require groundwater cleanup according to GeoTracker, California’s Water Resources online data management system. In addition, many of the negative impacts to existing land use and historical artifacts are minimal due to the nature of the existing infill site.

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Figure 9: Stockton Parking Requirements

DESIGN

DESIGN CONCEPT

DEVELOPMENT SITE

ACTIVATING SOUTH STOCKTON & PROMOTING SUSTAINABLE COMMUNITY DEVELOPMENT

OVERVIEW Figure 11: Site Map

The project’s design concept seeks to achieve three main goals: provide affordable housing for South Stockton, facilitate commerce and community through additional use types and programming, and create a model for sustainable development that will adapt with the surrounding community to accommodate and effect changing contexts.

Our design consists of two main structures, the first housing the Community Medical Center on the southwest corner along Airport Way and the other C-shaped structure consisting of Mandela Marketplace, retail and STAND offices on the ground floor with residential units on the upper floors.

Figure 13: RESIDENTIAL MASSING (PURPLE) w/ RETAIL BELOW

The mixed-use C shaped structure contains three main cores, for elevator and stairwell access. Wrap around double loaded corridors maximize useful square footage, and provide great views and outdoor patios for all residential units. A community courtyard sits in the middle of our mixed-use building with double-height access from the intersection of 8th & Airport Way. Easy access parking is located on the southeast section of our site. This organization engages the intersection of 8th & Airport Way and the main street, accommodates individual demands of uses and facilitates public access, while providing a sense of security for residents and shoppers.

Figure 15: GREEN COURTYARD & SITE THROUGHWAYS/ACCESS

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Figure 17: Design Concept Site Diagram

Figure 12: RETAIL STRIP ACTIVATING MAIN ROADS

PROGRAM REQUIREMENTS Community Medical Center (12,620 SF) Due to the additional systems and standards for the health center, along with necessary emergency access for ambulance vehicles, we separated the building from the rest of the development along the Southwest corner along Airport Way. STAND (2,330 SF) STAND’s central office location facilitates ease of access and management and is set back further from the street to allow space for community forums.

Figure 14: NON-RESIDENTIAL USE TYPE ORGANIZATION

Mandela Marketplace (5,850 SF) The marketplace is located on the north side of the development to allow back-of-house loading necessary for vendors.

Standard Retail (3,200 SF) Standard retail is placed on the west side of the development along Airport Way for ease of access and to encourage business for tenants.

Vendor Retail (6,260 SF) Vendor retail is on the corner of 8th & Airport Way for pedestrian traffic and easy access to the central courtyard during the day and can be be gated off for added security and safety at night. There are also outdoor vendor kiosks and tables that spill out of the building to encourage casual pedestrians to stop by.

Figure 16: ON & OFF STREET PARKING

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DESIGN

NOTABLE FEATURES Facade The residential component is composed of a wooden facade, while the retail and commercial components have a storefront glazing to emphasize the different uses of the building.

Parking Space Although our central courtyard acts as the main green space on our site, should parking requirements lax over time, the parking lot can easily be converted to additional green space that can be used for a community park, or various recreational activities.

Outdoor Terrace A large outdoor terrace is placed above the retail on the third floor that provides a prime location for residents to look down at the courtyard and the main intersection. Structural elements holding up the facade and corner sign allow for the use of hanging ivy vines and greenery. An outdoor walkway above connects the north and west side residential units on the fourth floor and provides additional aesthetic elements and views.

Sign & Murals The large glass facade contains a large sign and large blank panels to promote the development and local artists and gives the building character and a unique identity shaped by community members.

Photo View of courtyard from outdoor terrace

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SUSTAINABILITY The project will integrate sustainable design principles and flexible programming to ensure that the development evolves and adapts over time into a healthier, more vibrant community. The C-shaped form helps to optimize natural lighting for the residential spaces, orienting the longer facades facing north and south. Photovoltaic arrays will be installed on the rooftops to generate renewable electricity, reducing the building’s greenhouse gas and energy footprint. Lastly, permeable pavement will be used to increase groundwater absorption and reduce runoff. As mentioned above, as parking space requirements decrease, the parking spaces will be converted into additional green space.

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Photo Outdoor terrace environment

DESIGN

UNIT LAYOUT Our development contains 62 total residential units totaling 64,280 SF of gross square footage and accommodates approximately 185 residents. Figures 18-20 show the floor plans for each level, and Figures 21-23 show the floor plans for each type of unit. Here is the unit breakdown: One Bed, One Bath

530 SF

18 units

Two Bed, One Bath

790 SF

16 units

Manager’s

960 SF

1 unit

Three Bed, Two Bath

1060 SF

11 units

Three Bed, Two Bath (Co-living)

1060 SF

16 units

Every unit, regardless of unit type, has a similar floor plan and layout, including communal living units which are synonymous in design with three bedroom units. This maximizes our limited square footage and provides spacious rooms and common areas for each resident. Similar floor plans and layouts allows for flexibility of occupancy and units can easily be converted into smaller or larger units, depending on the housing demands over time. Consistent layouts also will significantly reduce construction costs due to efficient structural and HVAC layouts and allows the possibility for modular construction.

Notably, every room (other than bathrooms) in every unit has access to natural light due to the axial, exterior facing arrangement of the rooms within each unit. Together with the occupiable balconies that are integrated into every unit, the development will create a strong connection between the building and its residents and the outdoors, fostering healthy habits and a more vibrant South Stockton community and lifestyle.

Figure 18

LEVEL 2 - RESIDENTIAL PLAN

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Figure 19

LEVEL 3 - RESIDENTIAL PLAN

Figure 20

LEVEL 4 - RESIDENTIAL PLAN

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DESIGN

Figure 21

1 BEDROOM UNIT PLAN

Figure 22

TWO BEDROOM UNIT PLAN

Figure 23

THREE BEDROOM (INCL. CO-LIVING) UNIT PLAN

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Figure 24

TYP. LIVING ROOM

Figure 25

TYP. KITCHEN/DINING ROOM

Figure 26

TYP. BEDROOM W/ BALCONY

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LIVING

COMMUNAL LIVING

A NEW WAY OF SHARING Communal Living units incorporate the same design as other three bedroom units, but employ different management practices. Instead of one family occupying a three bedroom unit, three individuals will occupy the same Communal Living unit.

This encourages social interactions, and lowers the cost of living for its residents, as the price that would normally be paid for the unit is split between multiple residents.

The communal living model is not foreign to Northern California; residents live in individual apartments or houses, but share some meals, activities, and management duties, as described by the Bay Area Cooperative Initiative. The East Bay Co-Housing Collective and Coop Network reflect the support of residents for this urban sustainable model, and offer a larger community for residents.

FINANCING AND MANAGEMENT

census data, 4 census tracts were identified for South Stockton near the development site, where 907 students are currently living in the immediate vicinity of the site, but only 176 households in the same geographic area offer rents, with a range of $250-$499 per month, that are comparable to our site’s proposed maximum rent limit of $300 per month. Of the 5,603 single households in Stockton making under $15,000 a year, 202 households are near the development, adding to the demonstrated demand for the affordable communal living option proposed.

The communal living model also appeals to elderly residents with fixed incomes who prioritize safety and convenience, satisfied by the close proximity of Mandela Marketplace and the Community Medical Center. According to 2016 census block data, the population over 65 years of age that make less than $15,000 a year in Stockton is 3,214, with 177 seniors living in the immediate area, demonstrating the need for independent living options for seniors in the area.

Each prospective occupant for the communal living design will complete an individual income verification process to determine their eligibility for residency in a communal living unit. Groups of three occupants will be matched based on their collective income to meet the 30% AMI limit for San Joaquin County of $35,340. By splitting the rent of communal living spaces, units can be rented to extremely low income residents making wages of around $12,000 a year.

In the event of a single occupant needing to vacate the communal living unit, a wait list system will be implemented to ensure the seamless transition of an eligible occupant into the residency, guaranteeing that the two other occupants remain unaffected. This wait list will be populated with individuals expressing demand to enter into a communal living unit, with preference given on a first-come, first-serve basis, contingent on whether the individual’s verified income would satisfy the existing communal unit’s maximum income eligibility.

TARGET DEMOGRAPHICS The social and financial advantages of communal living appeal primarily to two distinct demographic groups: young part-time college students and the fixedincome elderly.

Due to the young median age of the surrounding area and the several colleges in Stockton, including the University of the Pacific and San Joaquin Delta College which contribute a combined student population of 28,901 (Refer to Figure 27), communal living meets the growing demand of the region.This living option would appeal to many young students and residents working part-time or low-wage jobs wanting close knit communities who are unable to live on-campus. According to 2016 20

Figure 27: College Populations

Robert Oakes, Executive Director, County Behavioral Health Directors Association of California (CBHDA) It is an excellent model for people with behavioral health challenges by grouping them together so they are better support each other.

KEY PARTNERS

MANDELA MARKETPLACE

QUALITY MARKET FOR THE LOCALS

Mandela Marketplace will provide South Stockton the opportunity to give local farmers and sellers a vibrant location to sell quality products to the community, provide jobs, and promote healthy nutritional habits to local residents. Over the past decade, the Mandela Marketplace in Oakland has provided a variety of benefits including $4 million of revenue for farmers and retailers, 26 new jobs, and improved the diet and health of over 700 residents.[9] This has been achieved through a variety of initiatives and financial support mechanisms.

Mandela Marketplace works to build community relationships throughout the entire food process, from the farmer to the consumer. For farmers, Mandela offers a reliable urban market for their products, provides the financing and means to obtain warehouse storage and transportation resources to ship their products, and helps encourage organic, sustainable farming methods. Mandela also supports a wide range of supportive and startup services for sellers, such as providing retail space in Mandela Food Cooperative stores and neighborhood corner stores, along with providing loan funds for local home businesses to expand. Lastly, Mandela initiates local youth development programs to help address problems related to obesity and malnutrition. Approximately 53% of 5th graders in South Stockton are obese leading to increased risk of heart disease, stroke and type 2 diabetes.[10] Collaborations between Mandela Marketplace, CMC, and STAND will promote a continued emphasis on working with the local community to address particular health needs and goals.

Mandela Marketplace satisfies a growing need in the South Stockton community for increased access to healthy and better food.

South Stockton is characterized by high retail grocery potential due to most grocery stores being located in North Stockton and the high density of local residents on food stamps necessitating healthy, affordable groceries. In the 2016 Consumer Expenditure Survey, identifying wanted and current opportunities for South Stockton, 70% of residents identified a need for a local sit down restaurant, 58.5% of residents desired a bakery, and 54% of residents desired a local grocery store.[11] Residents want local quality food options and Mandela Marketplace provides both organic locally grown food and the means to help local residents start their own businesses.

21 [ 9 ] “ T r a n s f o r m i n g W e s t O a k l a n d : A C a s e S t u d y S e r i e s o n M a n d e l a M a r k e t P l a c e .” ( n . d . ) : n . p a g . P o l i c y L i n k . M a n d e l a M a r k e t p l a c e . W e b . 2 0 1 5 . [ 1 0 ] R e i n v e n t S o u t h S t o c k t o n C o a l i t i o n . “ S o u t h S t o c k t o n P r o m i s e Z o n e ( S S P Z ) P l a n .” S j c p h s . o r g . S a n J o a q u i n C o u n t y P u b l i c H e a l t h S e r v i c e s , 2 0 1 6 . W e b . [ 1 1 ] “ C o n s u m e r E x p e n d i t u r e S u r v e y .” S a n J o a q u i n C o m m u n i t y D a t a C o - O p , 2 0 1 6 . W e b .

MEDICAL

COMMUNITY MEDICAL CENTERS

BUILDING A HEALTHY COMMUNITY Community Medical Centers Inc. (CMC) has expressed interest in opening a clinic and entering a long term lease with STAND. CMC is a Federally Qualified Health Center that focuses on providing medical services and expertise to low income and vulnerable populations and currently has seven locations throughout Stockton.

CMC plans on opening a clinic in our development specializing in primary care and family practice along with offering dental and behavioral health services.

Many key health problems in South Stockton are related to socioeconomic issues that contribute to health disparities and lower life expectancies. The average life expectancy for South Stockton is 75.9 as compared to 81.2 for the state of California. According to San Joaquin County Community Surveys, the top five main health concerns for citizens were youth violence, diabetes, breathing problems & asthma, mental health issues and obesity. [12] Recognizing the health disparities that exist in South Stockton, CMC is prepared to meet the needs of the immediate community and take full advantage of its adjacency to our residential development. In addition to providing primary and family care, CMC would dedicate social workers to provide behavioral health counseling, substance abuse counseling, smoking cessation and related services.

Art Feagles, Chief Financial Officer, Community Medical Centers, Inc. We would include primary care medical, with Family Practice, to see adults and children, as well as other services such as dental and behavioral health.

CMC will also have dedicated staff that would be capable to providing health education and program enrollment and onboarding for social benefits such as MediCal and food stamps.

22 [ 1 2 ] H a r d e r + C o m p a n y C o m m u n i t y R e s e a r c h . “ S a n J o a q u i n C o u n t y 2 0 1 6 C o m m u n i t y H e a l t h N e e d s A s s e s s m e n t .� H e a l t h i e r s a n j o a q u i n . o r g . C o m m u n i t y Health Assessment Core Planning Group, 2016. Web.

ENGAGEMENT

Photo Community Workshop: Mandela MarketPlace providing the design team with feedbacks

COMMUNITY ENGAGEMENT

UNDERSTANDING THE COMMUNITY’S NEEDS Feedback from various stakeholders and the community has been an important theme throughout the development process.This March, our team met with several key stakeholders to discuss current progress with the development and presented renderings and schemes to receive input from members of STAND, Mandela Marketplace and CMC, along with city council members and city managers from the City of Stockton, as well as city mayor, Michael Tubbs.

In April, the South Stockton team met with a select group of community members, including the president of STAND, city councilmen and the directors of other local area non-profits. Members of the community provided their input as to the types of businesses they would like to see in the Mandela MarketPlace, the services they felt were most needed for the residents of the development, as well as the types of activities and uses they wanted out of the shared plaza space. In addition, the team took the opportunity to seek feedback for our initial designs and communal living concepts, incorporating their voices as a critical component in our subsequent revisions. The session served as a pivotal moment in the project, allowing the community the opportunity to incorporate their vision for the project.

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Photo Stanford’s South Stockton Redevelopment Team with the Mayor of City of Stockton, Michael Tubbs

RESIDENT SERVICES In response to the demonstrated need in Stockton, as well as feedback received from community engagement, our project seeks to provide services and amenities which enrich the lives of our project’s residents.

We recognize that these services are crucial to any affordable housing development by helping build community and retain residents while providing them with the tools and resources to lift themselves from poverty.

STAND, our non-profit developer, aims to provide homebuyer education to its residents, leveraging its arm in purchasing dilapidated homes and refurbishing them to resell to low-income, first-time homeowners. In addition, STAND plans to incorporate its after-school tutoring programs into the South Stockton redevelopment, which is currently offered three times a week. Once the development is complete, STAND envisions the expansion of this tutoring program to include art and recreational activities.

24

Photo top Second Workshop in April 2017 with local community members, city councilmen, and directors of other non-profits

Photo bottom City of Stockton Council Meeting

FINANCE

FINANCE STRUCTURE

INJECTING CAPITAL INTO LOW-INCOME COMMUNITIES

OVERVIEW As a mixed-use development, this project’s financing structure is divided into two parts: residential and commercial. For the residential, the majority of the funding will come from 9% tax credit equity, loans from Bank of America, and soft financing from the City of Stockton. All 61 units (excluding manager’s unit) will be 100% affordable, targeting residents from 30% to 60% AMI. The commercial part will be financed mostly through New Market Tax Credit, Dignity Health Loan and permanent loans.

RESIDENTIAL DEVELOPMENT BUDGET The development budget for the residential portion is at $26.8 million.The table below summarizes the total budget allocation for the residential component. It includes a land cost of $1.37 million, construction hard costs of $18.8 million, soft costs of $5.04 million, and a developer and syndication fee of $1.53 million. Some of the main assumptions for the development cost are as follows: • • • • •

Architecture & Engineering Fee: 6% of total construction cost Site Improvement: $304,920 per acre (1.61 acres) Parking Stall: $15,000 per stall (56 stalls) Landscaping and Common Areas: $653,400 per acre (1.61 acres) Residential Structures: $208 per square foot (64,280 SF)

CONSTRUCTION SOURCES 1. Bank of America Merrill Lynch ◊ Construction Loan: $14,884,878 • Lesser of $17,359,145, 80% LTC or 80% LTV • The project will secure a $14.9 million interest-only loan to cover the cost incurred during the construction period with the interest rate of 30-Day LIBOR + 2.15% floating.

• Construction loan fees will equal 1.00% of total loan commitment, payable at loan close. ◊ 9% Tax Credit Equity: $2,775,866* • The project will obtain $2.8 million in tax credit equity from Bank of America Merrill Lynch during the construction period, representing 15% of their total capital contribution.

• In order obtain this equity, the project should ensure completion the following: commitment of permanent financing, fixed for at least 15 years, evidence of acquisition, or longterm leasehold, of land and building of the project, satisfactory completion of Bank of America due diligence.

• Tax credit equity rate: $0.98/credit 2. Costs Deferred Until Conversion: $1,950,000 • Some of the costs such as developer fee of $1.4 million will be deferred until the project conversion happens.

25

RESIDENTIAL COST BREAKDOWN DIAGRAM

5.0%

71.1%

Land Acquisition

Hard Cost

23.9%

Soft Cost & Developer Fee

PERMANENT FUNDING SOURCES DIAGRAM

5.1%

City of Stockton Land Loan

4.5%

City’s Development Impact Loan

9.3%

HOME Investment Partnership

2.2%

AHP Grant

69.1% 9% Tax Credit Equity

9.7%

CENTRAL VALLEY’S TIE BREAKER HISTORY 2016 Round 2 2016 Round 1 2015 Round 2 2015 Round 1 2014 Round 2 2014 Round 1 2013 Round 2 2013 Round 1

26

Bank of America Loan

Project’s Tie-Breaker: 41.74%

36.54 % 39.89 % 26.33 % 38.53 % 35.56 % 31.04 % 40.63 % 61.45 %

The average tiebreaker for projects that were awarded 9% tax credit in Central Valley is 38.4%. This project scores 41.74% in the tiebreaker, thus having high potential to obtain tax credit allocation.

FINANCE PERMANENT SOURCES 1. Bank of America Merrill Lynch ◊ Term Loan: $2,606,187 • Least of $2,590,918, 80% LTV, or principal amount to achieve 1.2 DSCR. • The interest rate is fixed at 5.50% for the life of the financing, based on market rates for when the letter was issued. This interest rate would be forward locked for 24 months.

• Loan will reach term maturity 16 years from loan conversion and closing with a 30-year amortization.

• Other requirements include a $323 per unit replacement reserve and $138,404 operating reserve at or prior to conversion. ◊ 9% Tax Credit Equity: $18,505,776 • The project will secure the remaining 85% equity, $15,729,910, in two phases: • The first, 84% or $15,544,852, will be released when the project

2.

3.

4.

5.

has: achieved three consecutive calendar months of minimum 1.15 to 1 debt-service-coverage ratio on permanent loans, achieved 90% occupancy, all tax credit units have been leased to qualified tenants at least once, and all reserves have funded or will fund concurrent with the 84% equity payment.

• The remaining 1% equity, $185,058, will be released when: Form 8609 is issued for each building, a cost certification, Extended Use Agreement, and compliance audit of initial tenants has been submitted to Bank of America, and final adjusters have been agreed.

City of Stockton Land Loan: $1,369,861 • The project will secure a $1.37 million soft loan from the City of Stockton for 55 years with a 4% simple interest rate.

• Should the project have surplus cash flow, a portion of that amount will be used to repay the city.

• Similar projects in Stockton such as Sierra Vista Redevelopment [13] have received this funding for land loans at similar term agreements.

City of Stockton Development Impact Fee Loan: $1,204,295 • The City of Stockton would provide a $1.2 million soft loan for the development impact fee. The soft loan would be a 55 year term with 4% fixed interest rate.

• Residual cash flows generated from the project would be used to pay back the debt.

HOME Investment Partnerships: $2,500,000 • Using historical data from the past fundings, the City of Stockton staffs have provided us an estimate of this number. As this project meets all four stated intent of HOME Program, we are confident that this project will be able to secure this funding. The four intents are are: to provide decent affordable housing; to expand non-profit developers’ capacity; to strengthen local government ability; and to provide housing and to leverage private-sector participation.

AHP Grant: $600,000 • $10,000 per unit is a conservative assumption that we used for calculation.

• Previous projects in San Joaquin County such as Zettie Miller’s Haven [14] received $15,000 per unit in 2016.

Total Soft Financing

$

8,280,343 USD

Total Basis Reduction

$

3,400,000 USD

PROJECT-BASED VOUCHERS (SECTION 8) Most units (except those intended to become communal living) will be designated to serving elderly and/or disabled demographic. Therefore, this project is eligible to obtain project-based voucher assistance greater than the 25% limit set by HUD. We are working with San Joaquin Public Housing Authority (PHA) to enter into an initial term of 15 years of subsidy, and potentially an extension of another 15 years.

TAX CREDIT TIEBREAKER SCORING This project is competitive to obtain the 9% tax credit. We have looked at tiebreaker scoring from 2013 to 2016 for the California’s Central Valley Region. The average score during this period is at 38.4%. As tiebreaker takes into account two factors: cost effectiveness and the amount of soft financing, we have employed several strategies in order to achieve competitive tiebreaker scoring. For cost effectiveness, we are able to have a basis reduction of $3.4 million. As to soft financing, we will receive over $8.3 million, which includes $2.6 million of Tranche B loan. Using the tiebreaker calculation formula, this project’s scoring is at 41.74%, which is higher than the average score for the past three years.

In fact, the only year that this project wouldn’t be able to secure the tax credit allocation is the first round of 2013.

These calculations reassure us that this project has strong potential to be financed through 9% tax credit.

27

[13] http://w w w.hacsj.com/home/docs/011917/A5.pdf [14] http://w w w.fhlbsf.com/community/grant/2016-ahp -recipients.aspx

COMMERCIAL COST BREAKDOWN DIAGRAM 4.6%

69.6%

Land Acquisition

Hard Cost

25.8%

Soft Cost & NMTC Fee

PERMANENT FUNDING SOURCES DIAGRAM

40.2%

4.2% HHS Grant

Bank Loan

4.6% 20.9% Dignity Health Loan

City of Stockton Land Loan

2.4%

Development Impact Fee Soft Loan

27.7%

New Market Tax Credit

COMMERCIAL DEVELOPMENT BUDGET The commercial development budget is at $14.4 million.The table above summarizes the total budget allocation for the residential component. It includes a land cost of $658k, construction hard costs of $10 million, soft costs of $2.8 million, and NMTC-related fee of $900k. Most of the assumptions are proportional to the residential budget. Some of the key difference are the following: • Core & Shell Construction: $200 per square foot (30260 SF) • Tenant Improvement: • $100 per square foot for medical center • $50 per square foot for STAND office • N/A for retail • Parking Stall: $15,000 per stall (63 stalls*)

FUNDING SOURCES 1. New Market Tax Credit (NMTC): $3,978,000 • Because few projects get full allocation amount of the project development cost, we assumed the qualified equity investment (QEI) at $12 million. Using this number, this project will be awarded $4.68 million of NMTC. Maria Joyce, the project’s underwriter at Bank of America, has provided us with feedback that we should assume the credit rate at $0.85 per credit.

Therefore, the total equity that this project will received through NMTC is $3.978 million.

28 *We allocated the parking construction cost propor tionally between residential (47% of 119 spots) and commercial (53% of 119 spots) according to the number of parking stalls required by the code for each program.

FINANCE

NSF

NNN per NSF

Community Medical Centers

12,620 SF

$2.65

Vendor Retail

6,260 SF

$1.5

Standard Retail

3,200 SF

$1.5

Mandela MarketPlace

5,850 SF

$1.5

STAND Office

2,330 SF

$1.0

• We assumed the legal cost for NMTC at $400k and Community Development Entity (CDE) expense at 7% of QEI, which is $840k.

• This site is situated in the area with “severely distressed qualified census tract” (06077002201). To serve the NMTC’s goal, we aim to activate South Airport Way Road to become a commercial corridor for South Stockton in the future. This plan will significantly increase flow of capital to businesses in this low-income community.

2. Dignity Health: $3,000,000 • As this project receives funding from NMTC, the capital received from Dignity Health will be in a form of 7-year interest only loan. The interest rate is at 4%. After 7 years, the project will either refinance or begin paying off the principal of the loan. This 7-year interest-only loan also helps ensure that the project’s cash flow is stabilized before we start to pay back the principal.

• We are confident that this amount of funding is possible as this project meets Dignity Health’s all five investment principles: to assist low-income communities, to revitalize urban or rural areas, to empower low-income people, to demonstrate a commitment to healthy communities, and to safeguard the environment.

Commercial Rents

3. U.S. Department of Health and Human Services (HHS): $600,000 • In Community Medical Centers’ previous projects, HHS has awarded grants to help fund the center. For instance, CMC’s 1031 Waterloo Road received a $691,667 grant from HHS in 2013.

4. Bank Loan: $5,777,087 • Bank of America has given us feedback that bank loan will also be in a form of 7-year interest only loan, similar to Dignity Health’s loan. The interest rate for this loan is at 5.5% with the amortization period of 30 years.

5. City of Stockton: $1,007,669 ◊ Soft Land Loan: $657,669 • This soft loan from the City of Stockton will be structured for 55 years with a 4% simple interest rate.

• Should the commercial generate surplus cash flow, a portion of that amount will be used to repay the city.

• Because the commercial portion takes up 32% of the project’s gross construction area, the total land cost of $2,054,727 will be split proportionally between the residential and the commercial. ◊ Permits & Development Impact Fee Soft Loan: $350,000 • The soft loan would be a 55 year term with 4% fixed interest rate.

• Residual cash flows generated from the project would be used to pay back the debt.

29

DEVELOPMENT TIMELINE Project Plan

June 2017

June 2017

August 2017

October 2017

November 2017

November 2017

February 2018

April 2018

July 2018

July 2018

August 2019

30

November 2019

Site Survey (1 month)

Land Acquisition (1 month)

Conceptual Design (6 months)

Preliminary Drawings (3 months)

Market Study (1 month)

Appraisals (1 month)

Environmental Studies (3 months)

Financing (5 months)

Building Permits (3 months)

Document Production (1 month)

Construction (14 months)

Lease-up Period (3 months)

APPENDIX A: FINANCE PROFORMA SUMMARY A. DEVELOPMENT BUDGET SUMMARY Description Acquisition & Related Acquisition Related Costs subtotal Construction Furnishings and Equipment Hard Cost Contingency

C. FINANCING ASSUMPTIONS Total

per

per

Amount

Resid. Unit

Resid. NSF

$ 1,369,861

$ 22,095

$ 26

$ 27,197

$ 439

$1

$ 1,397,058

$ 22,533

$ 27

$ 17,720,093

$ 285,808

$ 342

$ 200,000

$ 3,226

$4

CONSTRUCTION LOAN Lender:

Bank of America

Loan Amount:

$ 14,884,878

Loan Term:

2.93%

Draw Down Rate:

60%

$ 886,005

$ 14,290

$ 17

$ 18,806,097

$ 303,324

$ 363

Architecture/Engineering

$ 1,395,457

$ 22,507

$ 27

Loan Amount:

Permits and Fees

$ 1,652,295

$ 26,650

$ 32

Loan Term:

55

Construction Loan Interest/Fees

$ 1,162,123

$ 18,744

$ 22

Note Rate:

1% $0

subtotal

Permanent Loan Fees/Costs

HOME Investment Partnerships Lender:

City of Stockton $2,500,000 City of Stockton staffs provided this estimate and terms.

$ 81,062

$ 1,307

$2

Payment (annual):

Legal

$ 160,000

$ 2,581

$3

DCR:

Marketing/Lease-up

$ 124,000

$ 2,000

$2

Other Costs

$ 50,000

$ 806

$ 150,000

$ 2,419

$3

Lender:

$ 25,000

$ 403

$0

Loan Amount:

Soft Cost Contingency

$ 100,000

$ 1,613

$2

Loan Term:

Permanent Reserves

$ 138,404

$ 2,232

$3

Note Rate:

$ 5,038,341

$ 81,264

$ 97

Payment (annual):

$ 1,537,954

$ 24,806

$ 30

DCR:

------------------

------------------

------------------

$ 26,779,450

$ 431,927

$ 517

Accounting/Audit/Insurance Property Taxes

subtotal Syndication Costs/Developer Fee TOTAL DEVELOPMENT COSTS

$1

-

PERMANENT DEBT SOURCE 2 (Section 8 Overhang) $2,606,187 30 5.50% $177,572 1.20

Term of Section 8 Contract

=========== =========== =========== $26,779,450

Bank of America

check

30 (15+15)

City of Stockton's Development Impact Fee Soft Loan

City of Stockton's Land Loan

Lender:

Lender:

City of Stockton

Grant Amount B. SOURCES AND USES

1,204,295

Loan Term: Construction

Sources of Funds Construction Loan City Development Impact Fee Soft Loan Permanent Loan (from Section 8 Overhang)

Permanent

Period $ 14,884,878

Period $-

$ 1,204,295

$ 1,204,295

Investor Equity - Federal Credit

$ 2,606,187

Net Rate

$ 2,500,000

$-

$ 2,500,000

Net Pay-in

City Land Soft Loan

$ 1,369,861

$ 1,369,861

Initial Pay-in

Tax Credit Equity

$ 2,775,866

$ 18,505,776

Credit Rate

$ 600,000

$ 600,000

$ 1,950,000 $ 25,284,900

$$ 26,786,119

Costs Deferred Until Conversion TOTAL SOURCES

1,369,861

Loan Term:

4.00%

% Surplus Cash Flow Payment

HOME Investment Partnerships

AHP Grant

55

Note Rate (annual, simple interest):

City of Stockton

Grant Amount

55

Note Rate (annual, simple interest):

30%

% Surplus Cash Flow Payment

$0.980 $ 18,505,776 $ 2,775,866 7.56%

Investor Equity - State Credit Net Rate

$0.00

Net Pay-in

$0.00

Uses of Funds Acquisition

$ 1,397,058

$ 1,397,058

Construction

$ 18,806,097

$ 18,806,097

A/E, Permits

$ 3,047,752

$ 3,047,752

Indirect Expenses Financing and Carry Costs Other (Operating Reserve)

$ 609,000

$ 609,000

$ 1,381,138

$ 1,381,138

$-

Developer Fee

$-

TOTAL USES NET SURPLUS(SHORTFALL)

D. ANNUAL OPERATING EXPENSES ( /UNIT)

E. UNIT MIX & AFFORDABILITY Studio

One

Two

Three

$ 138,404

30% AMI

0

3

2

2

7

$ 1,400,000

40% AMI

0

7

6

0

13

$ 26,779,450

50% AMI

0

8

8

9

25

------------------

------------------

60% AMI

0

0

0

16

16

$ 43,854

$ 6,669

0

0

1

0

1

=========

=========

0

18

16

27

62

0%

29%

26%

44%

Mgr/Staff Units

G. OTHER ASSUMPTIONS 2014

2015

2016

2017

2018

Affordable Rents - Base Tax Credit

2.00%

$423,271

$431,737

$440,371

$449,179

$458,162

Section 8 Rent Increment

2.00%

$265,015

$270,316

$275,722

$281,236

$286,861

Misc. Income (Laundry)

2.00%

Gross Potential Income 5.00%

Effective Gross Income less Operating Expenses

3.00%

less Replacement Reserves

1.00%

Net Operating Income Debt Service, Soft Loan

$3,720

$3,794

$3,870

$3,948

$4,027

$692,006

$705,847

$719,963

$734,363

$749,050

($34,600)

($35,292)

($35,998)

($36,718)

($37,452)

$657,406

$670,554

$683,965

$697,645

$711,597

($424,320)

($20,200)

($20,402)

($20,606)

($20,812)

$213,305

$213,402

$213,373

$213,210

$0

$0

$0

$0

($177,572)

DISTRIBUTABLE CASH FLOW 3.00%

Net Cash Flow Debt Coverage Ratio

($437,050) ($450,161) ($463,666) ($477,576)

($20,000) $213,086 $0

Debt Service, Section 8 Overhang less Asset Mgt Fees

Total

$ 25,241,046

F. FIVE YEAR CASH FLOW

less Vacancy/Collection Loss

$6,844 per unit per year $424,320 per year

($177,572) ($177,572) ($177,572) ($177,572)

$35,514

$35,733

$35,830

$35,801

$0

$0

$0

$0

$35,638 $0

$35,514

$35,733

$35,830

$35,801

$35,638

1.20

1.20

1.20

1.20

1.20

Distribution of Net Cash Flow Residual Receipts

30.000%

($10,654)

($10,720)

($10,749)

($10,740)

($10,691)

Incentive Management Fee to GP

36.000%

($12,785)

($12,864)

($12,899)

($12,888)

($12,830)

LP Share

33.966%

($12,063)

($12,137)

($12,170)

($12,160)

($12,105)

GP Share

0.034%

($12)

($12)

($12)

($12)

($12)

100.0%

Construction Period Months to Perm Conversion

24 Mths 6 Mths

11% 21% 40% 26% 2%

4.00% 30%

DEVELOPMENT COSTS & TAX CREDIT CALCULATION

62 Units Budget

TCAC

TCAC

% Eligible Eligible Basis

ACQUISITION COSTS Housing Portion Land Cost

64280 SF out of

94540 SF

$1,369,861

0%

0

Total Land Cost

Other Acquisition Costs

64280 SF out of

94540 SF

$27,197

0%

0

Total Land Closing Cost

TOTAL ACQUISITION COSTS

1,397,058

$2,014,727

70445 SF

@ 28.6 $/SF

$40,000

0

PROFESSIONAL FEES Architecture & Engineering

6.00%

1,116,366

100%

Other Professional / Consulting

1.50%

279,091

100%

TOTAL PROFESSIONAL FEES

1,395,457

1,116,366 279,091 1,395,457

FEES AND PERMITS City/County Fees and Permits Development Impact Fees

$4,000 /DU

248,000

100%

248,000

$19,424 /DU

1,204,295

100%

1,204,295

200,000

100%

200,000

Utility Fees/Costs TOTAL FEES AND PERMITS

1,652,295

See estimate calculation in section D below.

1,652,295

CONSTRUCTION COSTS Demolition Offsite Improvements Site Improvements

1.61 Acres @ $304,920 Per Acre

Parking Facilities Landscaping / Common Areas

56 Stalls @

$12,000 Per Stall

1.61 Acres @ $653,400 Per Acre

Residential Structures

64,280 SF Subtotal

$208.00 PSF

0

0%

0

500,000

100%

500,000

490,921

100%

490,921

671,160

100%

671,160

1,051,974

100%

1,051,974

13,370,240

100%

13,370,240 643,372

Estimated by Focus & Flow Consultants We split the parking construction cost proportionally between residential (47%) and commercial (53%) according to the number of parking stalls required by code. $160/SF + 30% prevailing wage

Percent

General Conditions

16,084,295

4.00%

643,372

100%

Contractor Overhead

16,727,667

0.00%

0

100%

0

Contractor Profit

16,727,667

4.00%

669,107

100%

669,107

Contractor Insurance

17,396,774

0.85%

147,873

100%

147,873

Construction Bond Premiums

17,544,646

1.00%

175,446

100%

175,446

Construction Contingency

17,720,093

5.00%

886,005

100%

886,005

Residential Structures - Non GC

0

100%

0

Predevelopment Onsite Construction Work

0

100%

TOTAL CONSTRUCTION COSTS

18,606,097

0 18,606,097

FINANCING COSTS Acquisition Loan Costs Gap Loan Costs Construction Loan Costs

0

0%

0

200,000

0%

0

72,000

100%

72,000

Construction Loan Fees

1.00%

148,849

148,849

100%

148,849

Construction Period Interest

2.93%

523,252

523,252

100%

523,252

218,022

218,022

0%

0

55,000

0%

0

26,062

0%

0

0

0%

0

102,954

0%

0

35,000

0%

0

Post-Construction Interest Permanent Loan Costs Permanent Loan Fees

1.00%

26,062

Bond Issuance Costs TCAC Fees

4.00%

2,000

Misc. Finance Costs TOTAL FINANCING COSTS

1,381,138

744,101

OTHER COSTS Furnishings, Fixtures & Equipment Marketing Costs Legal Fees Property Taxes Soft Cost Contingency Relocation Expenses Accounting / Audit / Insurance Developer Overhead Developer Fees Operating Reserve Misc Costs TOTAL OTHER COSTS TOTAL DEVELOPMENT COSTS / TOTAL ELIGIBLE BASIS

2,000

200,000

100%

124,000

0%

200,000 0

160,000

30%

48,000

25,000

75%

18,750

100,000

100%

100,000

0

0% [1]

0

150,000

80%

120,000

0

100%

0

1,400,000

100%

1,400,000

138,404

0%

0

50,000

0%

0

2,347,404

1,886,750

$26,779,450

$24,284,701

TOTAL BASIS REDUCTION (Amount over Adjusted Threshold Basis Limit or Voluntary Exclusion)

(3,400,000)

TOTAL REQUESTED UNADJUSTED ELIGIBLE BASIS

20,884,701

TOTAL BASIS ALLOWED PER THRESHOLD LIMITS

25,207,372

ACTUAL BASIS (Lesser of Requested vs Allowed)

20,884,701

High Cost Area Adjustment TOTAL ADJUSTED ELIGIBLE BASIS

130% 27,150,111

Census Tract 0022.01

Applicable Fraction

100%

TOTAL QUALIFIED BASIS

27,150,111

Total Credit Reduction

8%

2,172,009

TOTAL ADJUSTED QUALIFIED BASIS

24,978,102

Credit Rate

7.56%

ANNUAL CREDIT

1,888,345

1,888,345

TOTAL CREDIT

18,883,445

TAX CREDIT EQUITY

0.98

18,505,776

BoA Termsheet

C. TCAC BASIS ANALYSIS: THRESHOLD BASIS LIMIT Special Features Threshold Basis Limit Increases 10% Increase: 95% of the project's upper floor units are serviced by an elevator

10.00%

20% Increase: State or Federal Prevailing Wage Requirement

20.00%

5% Increase: Skilled and Trained Workforce Defined by Section 25536.7 of the Health and Safety Code

5.00%

2% Increase: Day Care Center

0.00%

2% Increase: Special Needs Populations

0.00%

Total Percentage Increase to Unadjusted Eligible Basis (Combined not to exceed 39%)

35.00%

10% Increase: Energy Efficiency/Resource Conservation/Indoor Air Quality

10.00%

Seismic Upgrading or Environmental Mitigation (15% unadj. eligible basis max.)

0.00%

TOTAL ADJUSTMENTS

45.00%

2017 Threshold Basis Limits with Prevailing Wage, Elevator, Special Needs and Green Building Unit Type

# of Units

Basis Limit

Studio

0

$ 181,763

Basis

Adjustment

1 Bedroom

18

$ 209,571

$ 3,772,278

145%

2 Bedroom

16

$ 252,800

$ 4,044,800

145%

$ 5,864,960

3 Bedroom

27

$ 323,584

$ 8,736,768

145%

$ 12,668,314

$-

145%

61

Basis Allowed $$ 5,469,803

$ 24,003,077 Impact Fees*

1,204,295 -----------------

ADJUSTED THRESHOLD BASIS LIMIT (CAP)

$25,207,372

D. DEVELOPMENT IMPACT FEE ESTIMATE Total Dwelling Units Fee

62 Per Unit Fee

Total Amount

Air Quality

$127

$7,874

City Office Space

$391

$24,242

Community Recreation

$405

$25,110

Fire Station

$658

$40,796

Libraries

$761

$47,182

Parkland

$1,712

$106,144

Police Station Expansion

$497

$30,814

Street Improvements

$9,656

$598,672

Surface Water

$1,378

$85,436

Agricultural Mitigation (Flat Rate)

-

$12,841

County Facilities

$1,698

$105,276

Regional Transit

$1,934

$119,908

Total Fee

$1,204,295

Per Unit Average

$19,424

*Note: Currently, we are in discussion to get a 55-year 4% fixed-rate soft loan from the City of Stockton. We will repay the City with residual receipt.

UNIT MIX AND RENTS

A. UNIT MIX & RENTS

Bedroom Type -----------------------Studio

Unit Type SF* Qty NSF Rent ------------ ------------ ------------ -----------------------30% 400 0 0 256 40% 400 0 0 359 50% 400 0 0 462 60% 400 0 0 565

Section 8 Overhang SF Section 8 Qty S8 Annual Mthly Annual Revenue Revenue Rent Rent S8 Units Revenue ------------ ------------ ------------ ------------ ------------ -----------0 0 0.64 617 0 0 0 0 0.90 617 0 0 0 0 1.16 617 0 0 0 0 1.41 617 0 0

1 Bedroom

30% 40% 50% 60%

530 530 530 530

3 7 8 0

1,590 3,710 4,240 0

262 372 483 594

785 2,607 3,864 0

9,425 31,282 46,368 0

0.49 0.70 0.91 1.12

733 733 733 733

3 7 8 0

16,963 30,290 24,000

2 Bedroom

30% 40% 50% 60% Manager

790 790 790 790 960

2 6 8 0 1

1,580 4,740 6,320 0 960

320 452 585 718 0

640 2,714 4,680 0 0

7,675 32,573 56,160 0 0

0.40 0.57 0.74 0.91 -

967 967 967 967 967

2 6 8 0 0

15,533 37,051 36,672 0 0

3 Bedroom

30% 40% 50% 60%

1060 1060 1060 1060

2 0 9 16

2,120 0 9,540 16,960

366 519 672 825

731 0 6,048 13,203

8,774 0 72,576 158,438

0.34 0.49 0.63 0.78

1,408 1,408 1,408 1,408

2 0 9 0

25,018 0 79,488 0

62

51,760

7,809

35,273

423,271

45** 72.58%

265,015

Communal Living TOTAL

*California's Qualified Allocation Plan minimum requirements (updated March 15, 2017) **Most 1 and 2 bedroom units will be serving special needs demographic, so project-based Section 8 can exceed 25% limit.

B. TAX CREDIT RENT LIMITS RENT CALCULATIONS Unit Type ---------------------------Studio w/utility

2016 2016 100% Utility 100% 30% 40% 50% 60% Gross Rent Allowance Rent Rent Rent Rent Rent ------------ ------------ ------------ ------------ ------------ ------------ -----------1,032 54 978 256 359 462 565 310 413 516 619

1 Bedroom w/utility

1,106

70

1,036

262 332

372 442

483 553

594 664

2 Bedroom w/utility

1,326

78

1,248

320 398

452 530

585 663

718 796

3 Bedroom w/utility

1,532

94

1,438

366 460

519 613

672 766

825 919

0BR 1BR 2BR $ 11 $ 15 $ 16 $ 16 $ 22 $ 24 $ 13 $ 19 $ 24 $8 $ 12 $ 15 $ 23 $ 25 $ 29 $ 33 $ 33 $ 33 $ 22 $ 22 $ 22 $7 $7 $7 $7 $7 $7 $ 54 $ 70 $ 78

3BR $ 20 $ 30 $ 30 $ 18 $ 35 $ 33 $ 22 $7 $7 $ 94

C. UTILITY ALLOWANCE CALCULATION Utility Allowance Heating - Natural Gas Cooking - Electric Other Electric Water Heating (not included) Water (not included) Sewer (not included) Trash (not included) Range/Microwave Refrigerator TOTAL

D. DWELLING UNIT CALCULATIONS Land Size 1.608 Dwelling Units Per Acre 29 Total Dwelling Units 46 Density Bonus 35% Total DU (bonus included) 62

(11% must be at 50% AMI) including 1 Manager's Unit

0 0 0 0 0 26,388 61,572 70,368 0 0 23,208 69,624 92,832 0 0 0 33,792 0 152,064 158,438

OPERATING EXPENSES Number of Units

62 Per Unit Expense

Total Expense

ADMINISTRATIVE EXPENSE Communal Living Administration Advertising Credit Check Expense Administrator Salary Office Salaries

MAINTENANCE EXPENSE Trash Removal

$484

$30,000

$27

$1,674

$27

$1,674

$625

$38,750

Pest Control

$228

$14,136

$27

$1,674

Security Expense

$381

$23,622

Landscape Expense

$150

$9,300

Janitorial Expense

$190

$11,780

$63

$3,906

Maintenance Payroll

$381

$23,622

$135

$8,370

Maintenance Contracts

$134

$8,308

Office Expenses

$76

$4,712

Maintenance Supplies

$36

$2,232

Management Fee

$720

$44,640

HVAC Repair/Maintenance

$80

$4,960

$45

$2,790

Electrical Repair

$80

$4,960

$107

$6,634

Plumbing Repair

$80

$4,960

Bad Debt Expense

$47

$2,914

Decorating & Painting

$63

$3,906

Resident Services

$714

$44,268

Carpet Cleaning & Repair

$45

$2,790

$89

$5,518

Appliance Repair

$18

$1,116

Other Maintenance & Repair

$36

$2,232

Replacements

$27

Apartment Allowance

Legal Expense Audit & Accounting Expense

Telephone & Internet Total Administrative Expense

$195,850

UTILITY EXPENSE

Total Maintenance Expense

Electricity

$196

$12,152

Water

$653

$40,486

$65

$4,030

$300

$18,600

Payroll Tax

$75,268

Other Taxes

Gas Sewer Total Utility Expense

$1,674 $121,272

TAXES & INSURANCE Real Estate Taxes

$45

$2,790

$107

$6,634

$4

$248

$254

$15,748

Health Insurance

$80

$4,960

Workers' Comp Insurance

$21

$1,302

$4

$248

Property Insurance

Other Insurnace Total Taxes & Insurance TOTAL OPERATING EXPENSE AVERAGE COST PER UNIT

$31,930 $424,320 $6,844

15 YEAR CASH FLOW

Description Affordable Rents - Base Tax Credit Section 8 Rent Increment Misc. Income (Laundry) Gross Potential Income less Vacancy/Collection Loss Effective Gross Income less Operating Expenses less Replacement Reserves Net Operating Income Debt Service Debt Service, Section 8 Overhang DISTRIBUTABLE CASH FLOW less At-Risk Asset Mgt Fees Net Cash Flow Debt Coverage Ratio Distribution of Net Cash Flow Residual Receipts Incentive Management Fee to GP LP Share GP Share

2.00% 2.00% 2.00% 5.00% 3.00% 1.00%

1.00%

60.000% 36.000% 3.996% 0.004% 100.0%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 $423,271 $431,737 $440,371 $449,179 $458,162 $467,326 $476,672 $486,206 $495,930 $505,848 $515,965 $526,285 $536,810 $547,546 $558,497 $265,015 $270,316 $275,722 $281,236 $286,861 $292,598 $298,450 $304,419 $310,508 $316,718 $323,052 $329,513 $336,103 $342,825 $349,682 $3,720 $3,794 $3,870 $3,948 $4,027 $4,107 $4,189 $4,273 $4,359 $4,446 $4,535 $4,625 $4,718 $4,812 $4,908 $692,006 $705,847 $719,963 $734,363 $749,050 $764,031 $779,312 $794,898 $810,796 $827,012 $843,552 $860,423 $877,631 $895,184 $913,088 ($34,600) ($35,292) ($35,998) ($36,718) ($37,452) ($38,202) ($38,966) ($39,745) ($40,540) ($41,351) ($42,178) ($43,021) ($43,882) ($44,759) ($45,654) $657,406 $670,554 $683,965 $697,645 $711,597 $725,829 $740,346 $755,153 $770,256 $785,661 $801,374 $817,402 $833,750 $850,425 $867,433 ($424,320) ($437,050) ($450,161) ($463,666) ($477,576) ($491,903) ($506,660) ($521,860) ($537,516) ($553,641) ($570,251) ($587,358) ($604,979) ($623,128) ($641,822) ($20,000) ($20,200) ($20,402) ($20,606) ($20,812) ($21,020) ($21,230) ($21,443) ($21,657) ($21,874) ($22,092) ($22,313) ($22,537) ($22,762) ($22,989) $213,086 $213,305 $213,402 $213,373 $213,210 $212,906 $212,455 $211,850 $211,083 $210,146 $209,031 $207,730 $206,235 $204,535 $202,622 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 ($177,572) ($177,572) ($177,572) ($177,572) ($177,572) ($177,572) ($177,572) ($177,572) ($177,572) ($177,572) ($177,572) ($177,572) ($177,572) ($177,572) ($177,572) $35,514 $35,733 $35,830 $35,801 $35,638 $35,334 $34,884 $34,278 $33,511 $32,574 $31,460 $30,159 $28,663 $26,963 $25,050 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $35,514 $35,733 $35,830 $35,801 $35,638 $35,334 $34,884 $34,278 $33,511 $32,574 $31,460 $30,159 $28,663 $26,963 $25,050 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.19 1.19 1.18 1.18 1.17 1.16 1.15 1.14

($21,309) ($12,785) ($1,419) ($1)

($21,440) ($12,864) ($1,428) ($1)

($21,498) ($12,899) ($1,432) ($1)

($21,481) ($12,888) ($1,431) ($1)

($21,383) ($12,830) ($1,424) ($1)

($21,201) ($12,720) ($1,412) ($1)

($20,930) ($12,558) ($1,394) ($1)

($20,567) ($12,340) ($1,370) ($1)

($20,107) ($12,064) ($1,339) ($1)

($19,545) ($11,727) ($1,302) ($1)

($18,876) ($11,325) ($1,257) ($1)

($18,095) ($10,857) ($1,205) ($1)

($17,198) ($10,319) ($1,145) ($1)

($16,178) ($9,707) ($1,077) ($1)

($15,030) ($9,018) ($1,001) ($1)

RENTAL ASSUMPTIONS NNN per NSF $2.65 $1.5 $1.5 $1.5 $1.0

annual per NSF $31.8 $18.0 $18.0 $18.0 $12.0

Amount

$1,607,669 City Land Loan $657,669

Permits & Fee Loan $350,000

HHS $600,000

Total Amount Interest Amortization period Interest-Only Term Interest-Only Payment

$8,777,087 Bank Loan $5,777,087 5.5% 30 7 $317,740

Dignity Health $3,000,000 4% 30 7 $120,000

Mercy Loan $0 5.5% 30 7 $0

Annual Payment

$448,704

$201,927

$0

Medical Center Rent Vendor Retail Standard Retail Mandela MarketPlace STAND Office

NSF 12620 SF 6260 SF 3200 SF 5850 SF 2330 SF 30260 SF

FUNDING SOURCES NMTC

$3,978,000

Total Soft Loan

Total Loan

TOTAL

$14,362,756

DEVELOPMENT COSTS

SIZE

12620 SF

15310 SF

Medical Center

Retail

2330 SF

30260 SF

94540 SF

STAND Office Commercial Total

Project Total

ACQUISITION COSTS Land Cost Other Acquisition Costs TOTAL ACQUISITION COSTS

$268,943

$326,269

$49,654

$644,866

$5,340

$6,478

$986

$12,803

$ 2,014,727 $ 40,000

274,282

332,747

50,640

657,669

$ 2,054,727

PROFESSIONAL FEES Architecture & Engineering

6.00%

$292,219

$244,002

$63,656

$599,877

Other Professional / Consulting

1.50%

$73,055

$61,000

$15,914

$149,969

$365,274

$305,002

$79,570

$749,846

City/County Fees and Permits

$41,705

$50,595

$7,700

$100,000

Development Impact Fees

$62,558

$75,892

$11,550

$150,000

Utility Fees/Costs

$41,705

$50,595

$7,700

$100,000

$145,968

$177,082

$26,950

$350,000

TOTAL PROFESSIONAL FEES FEES AND PERMITS

TOTAL FEES AND PERMITS CONSTRUCTION COSTS Demolition Offsite Improvements Parking Facilities $15,000 Per Stall Landscaping / Common Areas Construction Tenant Improvement Subtotal Subtotal

$0

$0

$0

$0

$41,705

$50,595

$7,700

100,000

21 Slots

21 Slots

21 Slots

63 Slots

315,000

315,000

315,000

945,000

$83,410

$101,190

$15,400

200,000

200 $/SF

200 $/SF

200 $/SF

200 $/SF

$2,524,000

$3,062,000

$466,000

$6,052,000

100 $/SF

0 $/SF

50 $/SF

46 $/SF

$1,262,000

$0

$116,500

$1,378,500

$4,226,116

$3,528,785

$920,600

$8,675,500 $347,020

Percent

General Conditions

4,226,116

4.00%

$169,045

$141,151

$36,824

Contractor Overhead

4,395,160

0.00%

$0

$0

$0

$0

Contractor Profit

4,395,160

4.00%

$175,806

$146,797

$38,297

$360,901

Contractor Insurance

4,570,967

0.85%

$38,853

$32,442

$8,464

$79,759

Construction Bond Premiums

4,609,820

0.62%

$28,581

$23,865

$6,226

$58,672

Construction Contingency

4,638,401

5.00%

$231,920

$193,652

$50,521

$476,093

4,870,321

4,066,692

1,060,931

9,997,944

Gap Loan Costs

$20,853

$25,297

$3,850

$50,000

Construction Loan Costs

$30,028

$36,428

$5,544

$72,000

TOTAL CONSTRUCTION COSTS FINANCING COSTS

Construction Loan Fees

0.50%

49,990

$20,848

$25,292

$3,849

$49,990

Construction Period Interest

5.00%

449,907

$187,635

$227,630

$34,643

$449,907

249,949

$104,242

$126,461

$19,246

$249,949

$22,938

$27,827

$4,235

$55,000

$14,368

$17,430

$2,653

$34,451

NMTC Fees

$20,853

$25,297

$3,850

$50,000

Misc. Finance Costs

$14,597

$17,708

$2,695

$35,000

$436,360

$529,372

$80,564

$1,046,297

Post-Construction Interest Permanent Loan Costs Permanent Loan Fees

0.75%

34,451

TOTAL FINANCING COSTS OTHER COSTS Furnishings, Fixtures & Equipment

$0

$0

$0

$0

Marketing Costs

$0

$50,000

$0

$50,000

$187,673

$227,677

$34,650

$450,000

$3,753

$4,554

$693

$9,000

$41,705

$50,595

$7,700

$100,000

$5,005

$6,071

$924

$12,000

$0

$0

$0

$0

$41,705

$50,595

$7,700

$100,000

$350,324

$424,997

$64,679

$840,000

630,166

814,488

116,346

1,561,000

$6,722,372

$6,225,383

$1,415,001

$14,362,756

Legal Fees (inc. NMTC) Property Taxes Soft Cost Contingency Accounting / Audit / Insurance Developer Fees Operating Reserve CDE Expenses TOTAL OTHER COSTS TOTAL DEVELOPMENT COSTS

$12,000,000

7% of QEI

$-

NEW MARKET TAX CREDIT CALCULATION Total Development Cost

$14,362,756

Qualified Equity Investment (QEI)

$12,000,000

New Market Tax Credits

$4,680,000

Credit Rate

$0.85/credit

Tax Credit Equity

$3,978,000

39%

COMMERCIAL CASH FLOW Description Medical Center Rent Vendor Retail Standard Retail Mandela Market Place STAND Office Gross Potential Income less Vacancy/Collection Loss Effective Gross Income less Operating Expenses less Replacement Reserves Net Operating Income Debt Service, BoA Loan* Debt Service, Dignity Health* Debt Service, Mercy Loan Funds* DISTRIBUTABLE CASH FLOW less At-Risk Asset Mgt Fees Net Cash Flow Debt Coverage Ratio Distribution of Net Cash Flow Residual Receipts Incentive Management Fee to GP LP Share GP Share

2.00% 2.00% 2.00% 2.00% 2.00% 10.00% 3.00% 1.00%

1.00%

20.000% 36.000% 43.956% 0.044% 100.0%

1 2020 $401,316 $112,680 $57,600 $105,300 $27,960 $704,856 ($70,486) $634,370 ($20,000) $0 $614,370 ($317,740) ($120,000) $0 $176,631 $0 $176,631 1.40

2 2021 $409,342 $114,934 $58,752 $107,406 $28,519 $718,953 ($71,895) $647,058 ($20,600) $0 $626,458 ($317,740) ($120,000) $0 $188,718 $0 $188,718 1.43

3 2022 $417,529 $117,232 $59,927 $109,554 $29,090 $733,332 ($73,333) $659,999 ($21,218) $0 $638,781 ($317,740) ($120,000) $0 $201,041 $0 $201,041 1.46

4 2023 $425,880 $119,577 $61,126 $111,745 $29,671 $747,999 ($74,800) $673,199 ($21,855) $0 $651,344 ($317,740) ($120,000) $0 $213,605 $0 $213,605 1.49

5 2024 $434,397 $121,968 $62,348 $113,980 $30,265 $762,959 ($76,296) $686,663 ($22,510) $0 $664,153 ($317,740) ($120,000) $0 $226,413 $0 $226,413 1.52

6 2025 $443,085 $124,408 $63,595 $116,260 $30,870 $778,218 ($77,822) $700,396 ($23,185) $0 $677,211 ($317,740) ($120,000) $0 $239,471 $0 $239,471 1.55

7 2026 $451,947 $126,896 $64,867 $118,585 $31,488 $793,782 ($79,378) $714,404 ($23,881) $0 $690,523 ($317,740) ($120,000) $0 $252,783 $0 $252,783 1.58

8 2027 $460,986 $129,434 $66,164 $120,957 $32,117 $809,658 ($80,966) $728,692 ($24,597) $0 $704,095 ($448,704) ($201,927) $0 $53,463 $0 $53,463 1.08

9 2028 $470,206 $132,023 $67,488 $123,376 $32,760 $825,851 ($82,585) $743,266 ($25,335) $0 $717,931 ($448,704) ($201,927) $0 $67,299 $0 $67,299 1.10

10 2029 $479,610 $134,663 $68,837 $125,843 $33,415 $842,368 ($84,237) $758,131 ($26,095) $0 $732,036 ($448,704) ($201,927) $0 $81,404 $0 $81,404 1.13

11 2030 $489,202 $137,356 $70,214 $128,360 $34,083 $859,216 ($85,922) $773,294 ($26,878) $0 $746,416 ($448,704) ($201,927) $0 $95,784 $0 $95,784 1.15

12 2031 $498,986 $140,103 $71,618 $130,927 $34,765 $876,400 ($87,640) $788,760 ($27,685) $0 $761,075 ($448,704) ($201,927) $0 $110,444 $0 $110,444 1.17

13 2032 $508,966 $142,905 $73,051 $133,546 $35,460 $893,928 ($89,393) $804,535 ($28,515) $0 $776,020 ($448,704) ($201,927) $0 $125,388 $0 $125,388 1.19

14 2033 $519,145 $145,764 $74,512 $136,217 $36,169 $911,806 ($91,181) $820,626 ($29,371) $0 $791,255 ($448,704) ($201,927) $0 $140,624 $0 $140,624 1.22

15 2034 $529,528 $148,679 $76,002 $138,941 $36,893 $930,043 ($93,004) $837,038 ($30,252) $0 $806,786 ($448,704) ($201,927) $0 $156,155 $0 $156,155 1.24

($35,326) ($63,587) ($77,640) ($78)

($37,744) ($67,938) ($82,953) ($83)

($40,208) ($72,375) ($88,370) ($88)

($42,721) ($76,898) ($93,892) ($94)

($45,283) ($81,509) ($99,522) ($100)

($47,894) ($86,210) ($105,262) ($105)

($50,557) ($91,002) ($111,113) ($111)

($10,693) ($19,247) ($23,500) ($24)

($13,460) ($24,228) ($29,582) ($30)

($16,281) ($29,306) ($35,782) ($36)

($19,157) ($34,482) ($42,103) ($42)

($22,089) ($39,760) ($48,547) ($49)

($25,078) ($45,140) ($55,116) ($55)

($28,125) ($50,625) ($61,813) ($62)

($31,231) ($56,216) ($68,640) ($69)

*Interest-Only Period for 7 years

16 2035 $540,118 $151,652 $77,522 $141,720 $37,630 $948,643 ($94,864) $853,779 ($31,159) $0 $822,620 ($448,704) ($201,927) $0 $171,988 $0 $171,988 1.26

17 2036 $550,921 $154,685 $79,072 $144,554 $38,383 $967,616 ($96,762) $870,855 ($32,094) $0 $838,760 ($448,704) ($201,927) $0 $188,129 $0 $188,129 1.29

18 2037 $561,939 $157,779 $80,654 $147,445 $39,151 $986,969 ($98,697) $888,272 ($33,057) $0 $855,215 ($448,704) ($201,927) $0 $204,583 $0 $204,583 1.31

19 2038 $573,178 $160,935 $82,267 $150,394 $39,934 $1,006,708 ($100,671) $906,037 ($34,049) $0 $871,988 ($448,704) ($201,927) $0 $221,357 $0 $221,357 1.34

20 2039 $584,642 $164,153 $83,912 $153,402 $40,732 $1,026,842 ($102,684) $924,158 ($35,070) $0 $889,088 ($448,704) ($201,927) $0 $238,456 $0 $238,456 1.37

21 2040 $596,334 $167,437 $85,591 $156,470 $41,547 $1,047,379 ($104,738) $942,641 ($36,122) $0 $906,519 ($448,704) ($201,927) $0 $255,887 $0 $255,887 1.39

22 2041 $608,261 $170,785 $87,302 $159,600 $42,378 $1,068,327 ($106,833) $961,494 ($37,206) $0 $924,288 ($448,704) ($201,927) $0 $273,657 $0 $273,657 1.42

23 2042 $620,426 $174,201 $89,048 $162,792 $43,226 $1,089,693 ($108,969) $980,724 ($38,322) $0 $942,402 ($448,704) ($201,927) $0 $291,770 $0 $291,770 1.45

24 2043 $632,835 $177,685 $90,829 $166,047 $44,090 $1,111,487 ($111,149) $1,000,338 ($39,472) $0 $960,866 ($448,704) ($201,927) $0 $310,235 $0 $310,235 1.48

25 2044 $645,492 $181,239 $92,646 $169,368 $44,972 $1,133,717 ($113,372) $1,020,345 ($40,656) $0 $979,689 ($448,704) ($201,927) $0 $329,058 $0 $329,058 1.51

26 2045 $658,401 $184,863 $94,499 $172,756 $45,871 $1,156,391 ($115,639) $1,040,752 ($41,876) $0 $998,876 ($448,704) ($201,927) $0 $348,245 $0 $348,245 1.54

27 2046 $671,569 $188,561 $96,389 $176,211 $46,789 $1,179,519 ($117,952) $1,061,567 ($43,132) $0 $1,018,435 ($448,704) ($201,927) $0 $367,804 $0 $367,804 1.57

28 2047 $685,001 $192,332 $98,317 $179,735 $47,725 $1,203,109 ($120,311) $1,082,798 ($44,426) $0 $1,038,372 ($448,704) ($201,927) $0 $387,741 $0 $387,741 1.60

29 2048 $698,701 $196,179 $100,283 $183,330 $48,679 $1,227,171 ($122,717) $1,104,454 ($45,759) $0 $1,058,696 ($448,704) ($201,927) $0 $408,064 $0 $408,064 1.63

30 2049 $712,675 $200,102 $102,289 $186,996 $49,653 $1,251,715 ($125,171) $1,126,543 ($47,131) $0 $1,079,412 ($448,704) ($201,927) $0 $428,781 $0 $428,781 1.66

($34,398) ($61,916) ($75,599) ($76)

($37,626) ($67,726) ($82,694) ($83)

($40,917) ($73,650) ($89,927) ($90)

($44,271) ($79,689) ($97,300) ($97)

($47,691) ($85,844) ($104,816) ($105)

($51,177) ($92,119) ($112,478) ($113)

($54,731) ($98,516) ($120,288) ($120)

($58,354) ($105,037) ($128,251) ($128)

($62,047) ($111,685) ($136,367) ($137)

($65,812) ($118,461) ($144,641) ($145)

($69,649) ($125,368) ($153,075) ($153)

($73,561) ($132,409) ($161,672) ($162)

($77,548) ($139,587) ($170,435) ($171)

($81,613) ($146,903) ($179,369) ($180)

($85,756) ($154,361) ($188,475) ($189)

Appendix B: Letters of Support

May 1, 2017 Stanford Housing Project Team Stanford University 450 Serra Mall Stanford, CA 94305 Re:

South Stockton Project, Stockton, CA

Dear Stanford Team: This letter will serve as a preliminary outline of the terms under which Bank of America (the “Bank”) would consider a loan request and equity investment on the above referenced project. This letter does not represent an offer or commitment by the Bank for the proposed financing, nor does it define all the terms and conditions of a loan commitment, but is a framework upon which a loan request may be submitted. Issuance of a commitment by the Bank is subject to, among other things, the completion of the following items, and approval of the loan request under the Bank’s internal approval process. The Bank may decline to approve the loan request. Upon your response to this letter and after providing any additional information which may be necessary, the Bank will proceed with the necessary due diligence to submit the loan request. The proposed terms and conditions are as follows: Project:

To be construction 62-unit apartment complex located at Stockton, CA.

Borrower:

A to-be-determined special purpose entity - form and substance of Borrower must be acceptable to the Bank.

Reporting Requirements:

Know Your Customer:

Other Requirements:

Annually:

Borrower and Guarantors’ financial statements and covenant compliance.

Monthly:

Property operating statements and rental summary report.

Within five (5) business days of opening an account with Bank, Borrower shall have delivered to Bank all due diligence materials necessary and relevant to verifying Borrower's identity and background information, as deemed necessary

by Bank in its sole and absolute discretion.

All of the following to be acceptable to the Bank: documentation and submissions that are standard for loans of this type including, but not limited to, appraisal, ESA, legal documentation, title/survey, proposed standard lease form, front-end cost and document reviews and acceptance of final budget (includes adequate contingency, interest carry/operating deficit reserve, etc.), review of plans/specs, condition of markets/submarkets, revenue/expenses pro-formas, financial review

of Borrower, Guarantor, and general contractor, management agreement and subordination; and (as applicable), proof of tax credit award, equity investor and pay-in schedule, proof of tax-exempt status with respect to ad valorem taxes and other terms and conditions as may be required.

Confidentiality:

This term sheet is strictly confidential and may not be shared with anyone else other than the owners of Borrower.

Construction Loan Construction Loan Amount:

Construction Interest Rate:

Information obtained by the Bank is so far insufficient to establish a loan amount.

Based on our general underwriting parameters for what we believe to be similar transactions, the construction loan amount in this transaction would be the lesser of: 1) $17,359,145 2) 80% LTC based on final Bank approved construction budget or 3) 80% LTV based on an appraisal in form and substance acceptable to the Bank.

30-Day LIBOR + 2.15%, floating. Term Loan Interest Rate as further described below.

Construction Loan Term:

24 months from the loan closing.

Construction Loan Amortization:

Interest only for 24 months

Construction Loan Fee:

1.00% of the total Loan Commitment, payable at closing.

Construction Renewal Options:

One six-month extension options subject to the following: a) No less than 30 but no more than 90 day written notice of intention to exercise the option; b) No event of default having occurred or potential default occurring; c) Performance hurdles have been met, including but not limited to, lien-free construction completion and lease up hurdles; d) The loan is in balance, including sufficient interest reserve; e) Project must demonstrate the ability to be able to convert/payoff Bank’s loan within the extension period; f) All co-construction loans mature or are extended concurrent or past the Bank’s extension date; g) All takeout commitments expire or are extended concurrent or past the Bank’s extension date; h) All investor commitments include terms or are modified to be consistent with the extension of the Bank’s loan; i) No material adverse change in the financial condition of the Project, Borrower, and Guarantor; j) Payment of 0.50% renewal fee based on the committed Loan amount; and k) Rate adjustment or fee payment, as appropriate, to cover the cost of revising the forward rate lock, if any.

Payment and Performance Guaranty:

100 % guarantee of completion, performance and repayment to be provided by Moom Janyaprasert, Derek Ouyang, Nikhil Chaudhuri, Alex Paramo, and Paul Schroeder, and/or other guarantor acceptable to Bank. The guarantors shall be required to meet to-be-determined liquidity, leverage, and net-worth covenants.

For borrowers that are single-asset entities, principal(s) with general liability or guarantor(s) acceptable to the Bank must be jointly and severally liable for completion of the project and repayment of the financing, including interest and costs.

Collateral:

1) First Lien Deed of Trust on land and improvements constructed thereon.

2) UCC filing on furniture, fixtures and equipment.

3) Assignment of rents/leases and management/construction/architectural contracts, etc.

4) Assignment of interest rate hedge agreement, if any.

General Contractor:

To be acceptable to Bank.

Term Loan: Term Loan Amount:

Term Loan Interest Rate:

Least of 1) $2,590,918.00. 2) 80% LTV based on an appraisal in form and substance acceptable to the Bank, or 3) the principal amount based on debt service payments sufficient to achieve a 1:1.20X DSCR.

Fixed rate for the life of the financing. Note rate will be fixed immediately prior to construction closing based upon then applicable market rates for like tenor and character loans. The Bank estimates that, were the Note rate fixed as of the date of this letter, the rate would be approximately 5.50%. THIS RATE IS INDICATIVE ONLY AND THE ACTUAL NOTE RATE MAY DIFFER. The interest rate will be forward locked for a period of 24 months.

Forward rate lock extension for one six-month period will be available, subject to a fee of 0.25% if the Loan does not convert within the first ninety (90) days of the extension. Fee to be paid at the earliest of the conversion or expiration of the extension.

Replacement Reserves:

$323 per unit

Operating Reserve:

$138,404 funded at or prior to conversion

Subsidy Transition Reserve:

$917,329 funded at or prior to conversion

Term Loan Maturity:

16 years from the term loan conversion and closing.

Amortization:

30 years

Term Loan Fees:

1.00% of the Term Loan Amount, payable at closing.

Conversion Terms:

1) Lien free completion.

2) Property has stabilized over the prior three consecutive months as evidenced by 90% or greater physical and economic occupancy for each of the three months and achievement of 1:20X DSCR for that period.

3) Pay-off of the construction loan.

Guaranty:

Non-recourse exclusions from key principals relating to fraudulent acts, in form and substance acceptable to Bank.

Financial condition of key principals will be subject to Bank review and approval.

Equity: Partnership:

General Partner will own a 0.01% interest in the Partnership; Bank (the “Investor”) will own a 99.99% interest in the Partnership.

Capital Contributions: Bank will make a total Capital Contribution of $0.98 for each $1.00 off Tax Credits to which it will be entitled as a limited partner for a total Capital Contribution of $20,166,280 to be paid as follows: Milestone

Initial Capital Contribution

Conversion and Stabilization Capital Contribution

Conditions to be satisfied prior to payment

(i) closing of the Partnership (ii) closing and initial funding of all construction financing for the Project (iii) receipt of commitments for all permanent financing on the Project with the interest rate fixed for at least 15 years (iv) evidence of either acquisition of, or a long-term leasehold interest in, the land and building for the Project (v) evidence the Partnership has received an allocation from the Credit Agency of 9% credits in an amount equal to the Projected Federal Credits (vi) receipt by the Investor of a tax opinion prepared by special tax counsel for the Partnership in a form which is acceptable to the Investor (vii) satisfactory completion of Investor’s due diligence (i) the Project then has achieved at least three consecutive calendar months of a minimum of 1.15 to 1 debt service coverage on the Permanent Loans (which period must include the last day of the most recent calendar month), (ii) the Project is then at least 90% occupied (iii) all tax credit units have been leased to qualified tenants at least one time (v) permanent certificates of occupancy have been issued for each building (vi) all reserves have funded or will fund concurrent with this payment This contribution will occur no earlier than the conversion of the property.

% Equity

$ Equity

15%

$3,024,942

84%

$16,939,676

Final Capital Contribution (The balance of the unpaid Total Capital Contribution)

(i) the Credit Agency has issued a Form 8609 for each building (ii) a cost certification by a qualified accountant has been received in a form acceptable to Investor (iii) a copy of the recorded Extended Use Agreement has been received (iv) a copy of the compliance audit of the initial tenant files has been received (v) calculations of final adjusters have been prepared and agreed to

1%

$201,663

This contribution will occur no earlier than receipt of 8609.

Operating Deficit Guaranty.

General Partner and guarantors will agree to loan to the Partnership any amounts required to fund operating deficits. The Operating Deficit Guaranty will terminate upon the later of 60 months after the later of (i) the expiration of the Completion and Development Deficit Guaranty, or (ii) the Project’s achievement of 1.20 to 1 debt service coverage ratio on the Permanent Loans calculated over a period of 12 consecutive months. In addition, in order for the Operating Deficit Guaranty to terminate, the Project must average a 1.20 to 1 debt service coverage ratio for the last 12 months of the 60 month period or any subsequent 12 month period and the Operating Reserve must be replenished to its originally required balance.

Credit Adjuster.

To the extent such final projected amount of Low-Income Housing Tax Credits varies from the Original Projected Credits, Investor’s capital contribution will be adjusted by $0.98 per federal credit on such variance in the delivery of actual credits to Original Project Credit (as reflected in cost certifications or Form 8609).

Timing Adjuster.

Investor’s federal credit capital contribution will be adjusted to reflect the later or earlier than projected delivery of federal credits with respect to the first year and, if applicable, the second year, of the credit period, based on a reduction in price of 75 cents for every federal credit dollar deferred, or an increase based on 75% of the price per credit established in Section 6 above for every federal credit dollar accelerated.

Distribution of Operating Cash Flow.

Operating cash flow will be utilized as follows: (i) payment of debt service on the Permanent Loans and other operating expenses; (ii) additions to a funded capital replacement reserve as provided in the Partnership Agreement; (iii) payment of the Asset Management Fee ($25,000 per year increasing 3% per year) to the Special Limited Partner, which fee will accrue if not paid; (iv) payment of the Deferred Developer Fee, (v) payment of the Partnership Management Fee ($25,000 per year increasing 3% per year) to the General Partner, which fee will accrue if not paid; (vi) repayment of any Operating Deficit Loans made by General Partner; (vii) replenishment of the Operating Reserve Account;

(viii) payment of an incentive management fee, not to exceed 80% of cash flow; (ix) then to the partners in accordance with the Percentage Interests.

2.

Right of First Refusal. At the end of the 15 year tax credit compliance period, the General Partner will have a right of first refusal to purchase the Property for an amount equal to the greater of (a) fair market value of the Property, or (b) outstanding debt plus taxes payable as a result of the sale.

General Provisions: Fees and Expenses:

Material Adverse Change:

Borrower will pay all reasonable costs incurred by the Bank in connection with the loans including, but not limited to, legal, environmental, front end costs and document review/inspections, physical needs assessment (for existing projects only) and appraisal. Borrower acknowledges that Bank may receive a benefit, including, without limitation, a discount, credit or other accommodation, from outside counsel based on the fees such counsel may receive on account of their relationship with Bank including, without limitation, fees paid pursuant hereto.

Bank of America’s obligations hereunder shall terminate if, prior to closing, Bank of America determines, in its sole judgment, that there shall exist any conditions regarding the property, or the operations, business, assets, liabilities or condition (financial or otherwise, including credit rating) of Borrower or Guarantor, or there shall have occurred a material adverse change in, or there shall exist any material adverse conditions in, the market for syndicated bank credit facilities or the financial, banking, credit or debt capital markets generally, that could be expected to cause the loan to become delinquent or prevent any guarantor from performing its obligations under any guaranty or to materially and adversely affect the value or marketability of the loan or the property or Bank of America’s ability to syndicate the loan or the viability of obtaining permanent financing for the Project.

Assumptions made:

The terms discussed herein are presented, based on the credit conditions in the potential transaction as known by Bank of America. Should additional facts come to light that positively or negatively impact the situation, prices or other requirements quoted here may be adjusted.

Expiration:

This term sheet will expire at 5:00 p.m. Pacific time on that date which is five (5) business days from the date hereof unless you execute this term sheet and return it to us prior to that time, which may be by facsimile transmission. Please understand that this term sheet does not represent an offer or commitment by Bank of America, or any of its affiliated entities, for the proposed new financing, nor does it define all of the terms and conditions of a loan commitment, but is a framework upon which a loan request may be submitted. Issuance of a commitment by Bank of America is subject to, among other things, the approval of your loan request under the Bank’s approval process. If Bank of America issues a financing commitment in this transaction, it will in all respects supersede this letter.

The undersigned acknowledges and agrees that: (i) the transaction contemplated by this Term Sheet is an arm’s length, commercial transaction between you and Bank in which Bank is acting solely as a principal and for its own interest; (ii) Bank is not acting as a municipal advisor or financial advisor to you; (iii) Bank

has no fiduciary duty pursuant to Section 15B of the Securities Exchange Act of 1934 to you with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto (irrespective of whether Bank has provided other services or is currently providing other services to you on other matters); (iv) the only obligations Bank has to you with respect to the transaction contemplated hereby expressly are set forth in this Term Sheet; and (v) Bank is not recommending that you take an action with respect to the transaction contemplated by this Term Sheet, and before taking any action with respect to the contemplated transaction, you should discuss the information contained herein with its own legal, accounting, tax, financial and other advisors, as it deems appropriate. If you would like a municipal advisor in this transaction that has legal fiduciary duties to you, you are free to engage a municipal advisor to serve in that capacity. This Term Sheet is provided to you pursuant to and in reliance upon the “bank exemption� provided under the municipal advisor rules of the Securities and Exchange Commission, Rule 15Ba1-1 et seq.

Please review the above terms and conditions and feel free to call me with any questions or comments you may have. If you find the above terms and conditions to be acceptable, please indicate so by signing below and returning a faxed copy to my attention by the date which is five days from the date of this letter along with a good-faith deposit of $30,000.00. Upon receipt of the letter and the good-faith deposit, the Bank will proceed with the necessary due diligence to prepare and submit your loan request, provided, however that in any event, this term sheet will finally expire at 5:00 p.m. Pacific time on that date which is sixty (60) days from the date hereof. Your deposit is refundable, less the Bank’s out of pocket expenses incurred, should the Bank decline the financing opportunity discussed herein. I look forward to hearing from you and working with you on this and other transactions.

Sincerely, Maria Joyce Senior Vice President Client Manager Bank of America Merrill Lynch Community Development Banking

Please submit a loan application as outlined above: Name: _________________________________ Title: _________________________________ Date: _________________________________

OFFICE OF THE MAYOR CITY HALL 425 N. El Dorado Street Stockton, CA 95202-1997 209 / 937-8499 Fax 209 / 937-7149

April 14th, 2017 Mayor Michael D. Tubbs 425 N. El Dorado Street Stockton, CA 95202

To the Bank of America Merrill Lynch Low-Income Housing Challenge 2017, My name is Michael Tubbs and I am the Mayor of Stockton, CA. I have been involved in STAND’s 8th & Airport mixed-use development project from its formative stages, first as Councilmember of District 6 when I founded the Reinvent South Stockton Coalition, and now as Mayor. We have an incredible opportunity to revitalize District 6 through this transformative project which will bring affordable housing, medical services, and local food together in an exciting community-driven environment.

The Stanford students, led by lecturer Derek Ouyang, have been deeply involved in the design and development process, and have been instrumental in organizing and facilitating meetings in which we have brought together community and professional stakeholders. Their engagement in this real-world project is a great example of how we’ve partnered with youth and academic partners to represent the face of change in South Stockton. I fully endorse their engagement of the South Stockton community in their proposal to your challenge.

Sincerely,

Mayor Michael D. Tubbs Phone: (209) 937-8499 mayor@stocktonca.gov

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April 7, 2017

Mandela Marketplace 1364 7th Street Oakland, CA 94607 http://www.mandelamarketplace.org

To the Bank of America Merrill Lynch Low-Income Housing Challenge 2017, I am pleased to provide this letter of support to the Stanford student team working on the Airport Way development project in Stockton, CA. Mandela MarketPlace is one of the project team members working on the design, development and execution of a critical redevelopment project that will catalyze neighborhood health and wealth building. This project is innovative in that the development team, particularly STAND the lead non-profit developer in Stockton, works closely with community residents and City government to assure this development project creates real solutions – and meets communityidentified needs. After extensive community outreach, and surveying, the design team put together a model concept that includes affordable housing, an urgent care health clinic, and a community-owned grocery and market hall to spark local economic development, and improve access to healthy foods in a food desert community.

Mandela MarketPlace is a non-profit community development organization with a dedicated mission to work in partnership with local residents, family farmers and community-based businesses to improve health, create wealth and build assets through cooperative and local food enterprises in low-income communities. With a strong commitment to recognizing culture, centering voices and experiences of historically marginalized community residents, Mandela MarketPlace uses food oriented development as a pathway to shared wealth that sustains and elevates community power, opportunity and health. Our community health and wealth impacts are evident in creation of $6 million in new revenue generated through food enterprises, increased income to family farmers, support for 42 local businesses, and creation of over 30 jobs.

Mandela MarketPlace’s role in the Airport Way project as long-term tenants will be to establish a community-owned market retail space, adapting our successful grocery store, food kiosk, and distribution center model from West Oakland and Ashland to the ground floor retail space onsite. We expect to need standard parking ratios to sustain our business, but understand that the site will be located next to convenient transportation, and are open to designing our allocated parking to be convertible to open-air farmers market space at scheduled times.

The student team using this project as part of the BoA Low-Income Housing Challenge are critically helpful in engaging us as a stakeholder in the design and development process,

April 7, 2017 especially during an in-person workshop on March 7, 2017. We endorse their listing of our organization as a prospective tenant in their proposal to your challenge. Please feel free to contact me directly should you require any additional information.

Sincerely,

Dana Harvey Executive Director, Mandela Marketplace (510) 433-0993