higuera-heights-finalreport

BANK OF AMERICA AFFORDABLE HOUSING CHALLENGE

2014

CALIFORNIA POLYTECHNIC STATE UNIVERSITYSAN LUIS OBISPO

LIVE SLO | HOUSING STUDIO

3HIGUERA HEIGHTS

LIVE SLO HOUSING STUDIO

ACKNOWLEDGEMENTSThe Bank of America Affordable Housing Challenge has been a great opportunity to learn about the process of affordable housing development. This interdisciplinary competition mimics the collaborative nature of the development process, where developers, architects, planners, landscape architects and other disciplines all play vital roles in delivering high qual-ity affordable housing. Throughout the design process, Live SLO Housing Studio has received expert guidance and assistance from a number of teachers, professionals, and advisors. We would like to acknowledge the following individuals for their support and encouragement: Rob Rossi Owner, Rossi Enterprises Tyler Corey Housing Programs Manager, SLO Housing Authority Hemalata Dandekar Department Head, City and Regional Planning, Cal Poly SLO Menke Sethi Lecturer, Business, Cal Poly San Luis Obispo Marcus Carloni Associate Planner, San Luis Obispo Community DevelopmentKen Trigueiro Director of Real Estate Finance, People’s Self Help Housing Lori Saito Vice President, Wells Fargo Bank San Francisco Karen Davis Community Development Banker, Bank of America Suzan Ehdaie County of San Luis Obispo Kent MacDonald Lecturer, Architecture, Cal Poly San Luis Obispo William “Billy” Riggs Planning Commissioner, San Luis Obispo Michael Multari Planning Commissioner, San Luis Obispo Craig Gillet Founder and Board Partner, LifeSTEPS Jenna Smith Executive Director, Central Coast Grown Steve Carlin CEO, The Carlin Company and Oxbow Public Market Mark Shaffer FunRide, Inc. Vickey Farley Executive Assistant, Rossi Enterprises

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TABLE OF CONTENTS

1. Project Overview 1

2. Executive Summary 3

3. The Market 3

Income and Employment Characteristics 3

Housing Characteristics 3

Need Analysis 4

Project Need 4

4. The Site 7

Location 7

Site Context 8

5. Entitlements 9

Regulatory Context 9

Entitlements and Permit Process 10

Concessions 10

Environmental Review 11

6. Design Concept 13

Design Overview 13

SLO Grown Market 14

Office Space 14

Floor Plans 16

Building Elevations 20

Building Perspective 22

7. Sustainable Construction 25

LEED Project 27

Materials Selection 28

Native and Drought Tolerant Landscape 32

8. Resident Amenities and Services 33

Amenities 33

Resident Services 33

9. Community Engagement 35

Predevelopment 35

Construction 35

Post-Construction and Outreach 35

10. Financing Structure 37

11. Development Timeline 47

12. Developer Capacity 49

13. Live SLO Housing Studio 50

14. Appendix 52

6BANK OF AMERICA AFFORDABLE HOUSING CHALLENGE 2014CALIFORNIA POLYTECHNIC STATE UNIVERSITY

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1HIGUERA HEIGHTS


1. PROJECT OVERVIEW

DeveloperRob Rossi

Location1105 Higuera StreetSan Luis Obispo, CA 93401

Total Site Acreage0.97 Total acres0.97 Developable

Key Financing SourcesSeller Carry Back NoteConstruction to Permanent LoanSlo County Housing TrustFederal LIHTCDeferred Development Impact FeeHomefunds SLOFederal Home Loan Bank

Unit TypeRental 98% Affordable

Total Units51 Apartments

Unit Breakdown14 Studios20 Two Bedroom Apartments16 Three Bedroom Apartments1 Manager Studio

Target PopulationLow-income service working families

Total Commercial Space49,670 sq. ft. of total commercial38,670 sq. ft. of developable commercial

Commercial Space Breakdown5,560 sq. ft. Ground floor vendor10,220 sq. ft. Ground floor retail12,000 sq. ft. Second floor office10,800 sq. ft. Third floor office

AmenitiesCommunity LoungeComputer LabStudy RoomFitness CenterBike StoragePrivate Interior Courtyard with BBQOn-site Car SharingCovered Parking

2BANK OF AMERICA AFFORDABLE HOUSING CHALLENGE 2014CALIFORNIA POLYTECHNIC STATE UNIVERSITY2

2. EXECUTIVE SUMMARYLive SLO Housing Studio, in partnership with Rob Rossi, presents Higuera Heights, a new mixed-use affordable housing development in Downtown San Luis Obispo. Higuera Heights will augment the surrounding community, as it will offer a range of amenities to the area, including affordable housing, and commercial spaces. Taking advantage of its unique location, Higuera Heights will serve as a gateway to the City’s downtown area.

San Luis Obispo (SLO) is a city of approximately 45,000 residents, located on the Central Coast of California. San Luis Obispo is the largest city and County seat of San Luis Obispo County. San Luis Obispo County is bordered by Monterey County to the north, Santa Barbara County to the south, and Kern County to the east. The City is approximately ten miles from the Pacific Ocean, and as a result, enjoys mild, warm weather for at least three seasons of the year. It is home to California Polytechnic State University (Cal Poly), which enrolls approximately 19,000 students and focuses on “learn by doing”. The City has a large population of people between the ages of 20 and 24, due to the presence of the University. High housing demand from students and retirees means that housing is notoriously expensive, and the available housing stock is limited. The Oprah Winfrey Show famously dubbed the City “America’s happiest town” in 2011. However, with so many people unable to find an affordable place to live, due to high rental costs, the City may have simply priced-out those who are struggling to make ends meet.

PROJECT GOALSHiguera Heights will provide low-cost housing opportunities for downtown workers making approximately $20,000-$50,000 per year, thus making the City accessible to lower income families. Live SLO Housing studio intends to extend the envelope of the pedestrian downtown area across Santa Rosa Street by increasing density and attracting pedestrians outside the existing heavily pedestrian zone. The project is designed to maintain an aesthetic that is not too bold for San Luis Obispo’s traditional minded residents. The design is intended to be reviewed favorably by the City’s laters of review committees, but also to be contemporary and appealing to the younger demographic. The architecture ensures that all residents have access to light and air, as well as to indoor facilities that they would use on a daily or weekly basis for recreational and educational purposes. The project aims to satisfy both the needs of the onsite residents and the surrounding community. It will provide spaces for businesses and a permanent sustainable local and regional food market to ensure a healthy and diverse food supply.

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THE MARKET3.INCOME AND EMPLOYMENT CHARACTERISTICSApproximately 30% of SLO residents are be-low the poverty level, a figure that is almost double that of any other jurisdiction within the county. As of the most recent American Community Survey (2008-2012), the me-dian household income in San Luis Obispo was $46,651, while the average per-capita income was $27,400.

Cal Poly is the City’s largest employer, and as a result, approximately 24% of the city’s 25,576 employed residents work in the “ed-ucational, health and social” sector. The next largest industries are “retail” at 16%, and “arts, entertainment and recreation, and ac-commodation and food service” at 15% of workers. The large percent of employees in the latter two industries demonstrates the importance of the service sector to the City’s economy. Approximately 70% of workers drove alone to work, while 10% used a car-pool or vanpool. Just 2.9% took public trans-portation, while 8% walked and 5% took “other means”. The average commute time

was 15.4 minutes. According to the 2013 SLO Regional Housing Needs Plan, the City is the largest job center in the County, with an estimated 33,000 jobs. This leads to an average of 1.71 jobs per household, and .73 jobs per person. With high housing costs in SLO, many downtown workers choose to commute from more affordable surround-ing communities, including Paso Robles (29 miles away), Atascadero (17 miles away), and Santa Maria (33 miles away).

HOUSING CHARACTERISTICSIn 2010, there were a total of 19,193 house-holds in the City, with an average household size of 2.29 persons. Over half (11,581) of these households were “non-family” house-holds, meaning that members of the house-hold did not constitute a family unit. Approx-imately 60% percent of housing units were renter-occupied, while the remaining 39% were owner-occupied. Table 1 provides the average monthly rent in the City, as a per-centage of household income in the past 12 months.

Table 2: Monthly Income of Renters and Rent-‐burden Status

Income Renter-‐occupied housing % rent-‐burdened Less than $20,000 38.7% 38.2% $20,000 to $34,999 19.5% 16.6% $35,000 to $49,999 11.5% 4.7% $50,000 to $74,999 14.5% 4.6% $75,000 or more 10.3% 1% Zero or negative income 0.6% No cash rent 4.9% Total 100% 60.5%

Households paying more than 30% of their income towards rent are considered to be “burdened” by their rent payments. Thirty-‐eight point seven percent of renter-‐occupied households in San Luis Obispo earned less than $20,000 dollars per month, and almost all of those (98.7%), were rent burdened. Of households earning $20,000 to $34,999, 85% were rent burdened. Of households earning $35,000 to $49,999, 40.9% were rent-‐ burdened. Over 60% of SLO residents were rent-‐burdened, totaling almost 30,000 people. This indicates that the majority of the population in the City struggles to pay their rent, with the low-‐ and medium income households being the most burdened.

Needs Analysis

The regional housing need allocation (RHNA) is the share of regional housing needs that are expected to be borne by each jurisdiction within the region. Table two shows SLO’s regional housing need allocation by income level. 41.8% of the units allocated to SLO through the RHNA are “above moderate”, demonstrating the dire need for housing that is affordable to people making

Table 3: San Luis Obispo Housing Need Allocation by Income Level

Income Level Very Low Low Moderate Above Moderate Total

Number of Units 285 179 201 478 1,144 Percent of Units 24.9% 15.6% 17.6% 41.8% 100%

Table three shows the maximum monthly rent for various housing types which is affordable to low and moderate income groups.

Table 4: Maximum Monthly Rent Affordability Standards Dwelling Size Income Group Studio 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom Extremely Low $396 $452 $509 $588 $656 Very Low $660 $754 $848 $980 $1,093 Low $792 $905 $1,018 $1,176 $1,312 Moderate $1,100 $1,256 $1,256 $1,634 $1,822

Source: US Census American Community Survey (2008-2012)

Table 1: Monthly Income of Renters and Rent-burdened Status


THE MARKET3.Households paying more than 30% of their income towards rent are considered to be “burdened” by their rent payments. Thirty-eight point seven percent of renter-occupied households in San Luis Obispo earned less than $20,000 dollars per month, and almost all of those (98.7%), were rent burdened. Of households earning $20,000 to $34,999, 85% were rent burdened. Of households earning $35,000 to $49,999, 40.9% were rent- burdened. Over 60% of SLO residents were rent-burdened, totaling almost 30,000 people. This indicates that the majority of the population in the City struggles to pay their rent, with the low- and medium income households being the most burdened. This indicates that there is a great need for afford-able housing in SLO.

NEEDS ANALYSISThe regional housing need allocation (RHNA) is the share of regional housing needs that is expected to be borne by each jurisdiction within the region. Table 2 shows SLO’s re-gional housing need allocation by income level. Approximately 41% of the units allo-cated to SLO through the RHNA are “above moderate”, demonstrating the dire need for market rate housing in SLO. Table four shows the maximum monthly rent for various hous-ing types which is affordable to low- and moderate-income groups.

Table 4 shows actual average rents for vari-ous housing types within a .43 miles radius of the project site in San Luis Obispo.

When the maximum monthly rent affordabil-ity standards are compared to the prevailing rents near the project site, the need for af-fordable housing in this area becomes very clear. Only “moderate” income households can afford market rate housing near the proj-ect site. All income groups lower than moder-ate could not afford housing at market rates.

A typical three person moderate-income household in SLO County can earn up to $81,450 per year, and still qualify for subsi-dized housing. These households can likely afford market-rate housing in the area, so the project does not focus on them. Instead, the project will focus on providing a mix of hous-ing for very-low, and lower- income house-holds, as well as some moderate-income units.

Table 5W shows the State Income limits for various income groups in San Luis Obispo County. These categories are calculated based on a percentage of the Area Median Income (AMI), which is $75,400 in SLO County.

PROJECT NEEDThis project seeks to serve the housing needs of downtown service workers, entry-level professionals, and anyone who works in SLO but cannot afford its high rents and com-mutes from a more affordable city. These are the people who cook meals, clean streets, wait at retail stores, answer calls and process permit applications. Workers of this type in SLO can earn anywhere from $10 to $25 per




Needs Analysis






Table 4: Maximum Monthly Rent Affordability Standards Dwelling Size Income Group Studio 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom Extremely Low $396 $452 $509 $588 $656 Very Low $660 $754 $848 $980 $1,093 Low $792 $905 $1,018 $1,176 $1,312 Moderate $1,100 $1,256 $1,256 $1,634 $1,822

Source: San Luis Obispo County Regional Housing Needs Assessment, 2012


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Needs Analysis






Table 4: Maximum Monthly Rent Affordability Standards Dwelling Size Income Group Studio 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom Extremely Low $396 $452 $509 $588 $656 Very Low $660 $754 $848 $980 $1,093 Low $792 $905 $1,018 $1,176 $1,312 Moderate $1,100 $1,256 $1,256 $1,634 $1,822 Source: City of San Luis Obispo, Housing Element of the General Plan, 2010

Table three shows actual average rents for various housing types within a .43 miles radius of the project site in San Luis Obispo.

Table 5: Average Monthly Rents within .43 miles of project site Dwelling Size Studio 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom Rent ($) 839 1,018 1,422 2,164 2,400 Source: rentometer.com

When the maximum monthly rent affordability standards are compared to the prevailing rents near the project site, the need for affordable housing in this area becomes very clear. Only “moderate” income households can afford market rate housing near the project site. All income groups lower than moderate could not afford housing at market rates.

Table four shows the State Income limits for various income groups in San Luis Obispo County. These categories are calculated based on a percentage of the Area Median Income (AMI), which is $75,400 in SLO County.

Table 6: Income Limits by Family Size in SLO County Family Size 1 2 3 4 5 6 7 8

Extremely Low ($) 15,850 18,100 20,350 22,600 24,450 26,250 28,050 29,850

Very Low ($) 26,400 30,200 33,950 37,700 40,750 43,750 46,750 49,800

Lower ($) 42,250 48,250 54,300 60,300 65,150 69,950 74,800 79,600 Median ($) 52,800 60,300 67,850 75,400 81,450 87,450 93,500 99,550

Moderate ($) 63,350 72,400 81,450 90,500 97,750 105,000 112,200 119,450

A typical three person moderate-‐income household in SLO County can earn up to $81,450 per year. These households can likely afford market-‐rate housing in the area, so our project will not focus on them. Instead, the project will focus on providing a mix of housing for “very-‐low”, and “lower” income households, as well as some moderate-‐income units.

Project need

This project seeks to serve the housing needs of downtown service workers, entry-‐level professionals, and anyone who works in SLO but cannot afford its high rents and would otherwise choose to commute from a more affordable city. These are the people who cook our meals, clean our streets, wait on us at retail stores, answer our calls and process our permit applications. Workers of this type in SLO could earn anywhere from $10 to $25 per hour, which would equate to approximately $20,000 to $50,000 per year. A single person earning $15/hour would qualify as “lower” income in SLO County, while a couple both earning $10/ hour would qualify as “very low”. These workers are vital to the functioning of the City, but their needs are not being met by the current housing regime. There should be no problem

Table three shows actual average rents for various housing types within a .43 miles radius of the project site in San Luis Obispo.

Table 5: Average Monthly Rents within .43 miles of project site Dwelling Size Studio 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom Rent ($) 839 1,018 1,422 2,164 2,400 Source: rentometer.com

When the maximum monthly rent affordability standards are compared to the prevailing rents near the project site, the need for affordable housing in this area becomes very clear. Only “moderate” income households can afford market rate housing near the project site. All income groups lower than moderate could not afford housing at market rates.

Table four shows the State Income limits for various income groups in San Luis Obispo County. These categories are calculated based on a percentage of the Area Median Income (AMI), which is $75,400 in SLO County.

Table 6: Income Limits by Family Size in SLO County Family Size 1 2 3 4 5 6 7 8

Extremely Low ($) 15,850 18,100 20,350 22,600 24,450 26,250 28,050 29,850

Very Low ($) 26,400 30,200 33,950 37,700 40,750 43,750 46,750 49,800

Lower ($) 42,250 48,250 54,300 60,300 65,150 69,950 74,800 79,600 Median ($) 52,800 60,300 67,850 75,400 81,450 87,450 93,500 99,550

Moderate ($) 63,350 72,400 81,450 90,500 97,750 105,000 112,200 119,450

A typical three person moderate-‐income household in SLO County can earn up to $81,450 per year. These households can likely afford market-‐rate housing in the area, so our project will not focus on them. Instead, the project will focus on providing a mix of housing for “very-‐low”, and “lower” income households, as well as some moderate-‐income units.

Project need

This project seeks to serve the housing needs of downtown service workers, entry-‐level professionals, and anyone who works in SLO but cannot afford its high rents and would otherwise choose to commute from a more affordable city. These are the people who cook our meals, clean our streets, wait on us at retail stores, answer our calls and process our permit applications. Workers of this type in SLO could earn anywhere from $10 to $25 per hour, which would equate to approximately $20,000 to $50,000 per year. A single person earning $15/hour would qualify as “lower” income in SLO County, while a couple both earning $10/ hour would qualify as “very low”. These workers are vital to the functioning of the City, but their needs are not being met by the current housing regime. There should be no problem

Source: Rentometer.com

Source: San Luis Obispo County Regional Housing Needs Assessment, 2012

hour, which would equate to approximately $20,000 to $50,000 per year. A single person earning $15/hour would qualify as “lower” income in SLO County, while a couple both earning $10/ hour would qualify as “very low”. These workers are vital to the func-tioning of the City, but their needs are not be-ing met by the current housing stock. There should be no problem filling the affordable units, as over 60% of SLO’s renters are rent burdened, and 38% of those renters make less than $20,000 per year.

Table 3: Maximum Monthly Rent Affordability Standards

Table 4: Average Monthly Rents Within .43 miles of project site

Table 5: Income Limits by Family Size in SLO County

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THE SITE4.LOCATIONThe project site is located at the corner of Higuera Street and Santa Rosa Street, less then half-mile south of U.S. Route 101 in downtown San Luis Obispo. The site measures just under one acre and is surrounded by commercial, office, and government buildings. A 13,000-square feet Bank of America branch building currently occupies the site, which also provides around 25,000 square feet of parking. There is a great amount of vehicular and pedestrian traffic going through the site due to its proximity to the city’s downtown core and City and County government buildings.

The site is located at the northeastern end of downtown San Luis Obispo, just outside of the city’s commercial downtown zone. The project area is zoned Retail-Commercial

(C-R) so developments that provide both commercial and residential uses (mixed-use) are allowed. The site provides great views of the hills to the north and of Higuera Street, one of downtown’s main attractions. Office areas to the east and busy right-of-ways to the north and west, border the site.

Existing uses on the site include retail, services, a parking structure, a gas station and a bus stop for commuters. There are two major commercial developments at close proximity, including Downtown Center Mall and Court Street Mall. These two developments provide a wide array of retail and service options, as well as coffee shops, restaurants, a bookstore and a movie theater. Additionally, the site is also close to various amenities such as schools, a hospital, several parks and the downtown transit station.

Project Site

San Luis Obispo, CAU.S. Route 101

N

California

San Luis Obispo County


SITE CONTEXT

THE SITE4.

¯

LegendProject Site0.50 mi Radius0.25 mi RadiusHospitalGovernmentSchoolLibraryParkGrocery/Convenience Store

Bus Routes25Highway 101

DowntownSan Luis Obispo

To LA

To SFCal Poly

0 0.1 0.2 0.3 0.40.05Miles

12

5 6

8

10

12

1314

15

16

17

18113

9

7

4

0.25 miles 5 min. walk

0.50 miles10 min. walk

Table 1: Amenities within 0.5 miles of the project siteNumber Name Service Distance

1 SanLuisObispoCivicCenterArea PublicUse 0.1mi2 ShellStation GasStation 0.0mi3 Albertson's GroceryStore 0.2mi4 FrenchHospitalMedicalCenter Hospital 0.5mi5 SanLuisObispoLibrary Library 0.2mi6 RiteAid Pharmacy 0.0mi7 PalmStreetParkingStructure Parking 0.2mi8 ChengPark Park 0.1mi9 MitchellPark Park 0.2mi10 MissionPlaza Park 0.3mi11 Route2&5‐SantaRosaatHiguera PublicTransit 0.0mi12 USPSMissionSanLuisObispo PostOffice 0.2mi13 DowntownCenterMall Retail 0.2mi14 CourtStreetMall Retail 0.2mi15 AmtrakStation TrainStation 0.5mi16 VicenteEmentarySchool School 0.5mi17 SanLuisObispoHighSchool School 0.5mi18 AltaVistaAdultSchool School 0.5mi

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ENTITLEMENTS5.REGULATORY CONTEXTCurrent zoning for the project site is Retail-Residential (C-R), which allows up to 36 resi-dential dwelling units per net acre, and up to 140,000 square feet of gross floor area. Building height in the site is permitted up to 45 feet and the maximum floor area ratio is not to exceed 4.0. No building shall exceed 60,000 square feet of gross floor area.

Multi-family residential and commercial parking requirements are applicable to the project, which will require 1 space per studio apartment, 1.5 spaces for first bedroom plus ½ space for each additional bedroom in a unit, plus 1 space for each five units in devel-opments of more than five units. Additional-ly, 1 parking space will be required per every 300 square feet gross floor area and 1 space per every 60 square feet customer use area, including waiting seating, counter service ar-

eas, plus one space per every 100 square feet food preparation areas. The City may reduce the parking requirement for mixed- use proj-ects up to 20% by allowing shared parking.

According to the City’s Community Design Guidelines, the project plan should empha-size the needs of pedestrians and cyclists rather than cars. It should also create a pleas-ant, comfortable, safe, and distinct place for residents, without the project “turning its back” on the surrounding neighborhood. The height and scale of new buildings and altera-tions to existing buildings must fit within the context and vertical scale of existing devel-opment and provide human scale and pro-portion. New buildings that are significantly taller or shorter than adjacent buildings will have to provide appropriate visual transi-tions.

¯

0 0.08 0.16 0.24 0.320.04Miles

LegendProject Site

ZoningC-CC-DC-NC-RC-SC-TC/OSOPFR-1R-2R-3R-4


ENTITLEMENTS5.

ENTITLEMENT AND PERMIT PROCESSHiguera Heights is subject to a development plan review in compliance with the City of San Luis Obispo’s zoning and land use or-dinance. The permit application requires a submission of a site plan, preliminary floor plans, architectural elevations, a landscape plan, and a grading plan to the Planning De-partment for review. Due to the size of the project, the permit process may also include one or more public hearings. The public in-put process is a tried and tested way for the City to identify potential issues with the project that may be raised by neighbors and nearby businesses. The project site is not im-mediately adjacent to residential units, how-ever, all effort has been made to minimize the projects input on the surrounding area. After conclusion of a public hearing, the San Luis Obispo City Planning Commission may ap-prove, conditionally approve, or disapprove the issuance of a building permit. Live SLO

Housing Studio will work with the public and the Planning Department to mitigate po-tential issues that might arise. Although af-fordable housing projects can sometimes be controversial, the lack of affordable housing in San Luis Obispo and the absence of near-by residents should help to reduce potential challenges to Higuera Heights.

CONCESSIONSThe City of San Luis Obispo is required by the State Government Code section 65915 to grant incentives or concessions to an af-fordable housing development within its jurisdiction. Live SLO Housing is allowed to receive up to three concessions from the City as long as the project meets the following re-quirements:1. Provide more than 11 dwelling units of

multifamily rental units.2. Provide at least 15% of total units afford-

able to very-low-income housholds. 3. Ensure long-term housing affordability.

SUMMARY OF DEVELOPMENT STANDARDS AND REGULATIONS

Table 6: Summary of Development Standards and Regulations Development Standards Land Use Ordinance Development Standards

Compliance Zoning Designation (C-R) Commercial-Retail Yes Density 36 maximum units per acre No, 41% density bonus FAR 4.0 maximum (in downtown core) Yes Height 45 feet maximum No, 5 ft. Concession Setback 0 feet 0 Open Space NA NA Off-street Parking 1/ housing unit, 1/500 sq ft. for mixed

use projects Yes, partially satisfied with in-lieu fees

Maximum building size 60,000 sq. ft. (Retail only) Yes Landscaping N/A N/A Maximum lot coverage 100% Yes

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Higuera Heights will conform to the lot’s cur-rent zoning designation, but will also take ad-vantage of several incentives offered by the City for affordable housing. The City allows normally density bonuses of up to 35% for mixed income buildings that provide at least 20 affordable housing. However, projects ex-ceeding 30% affordable are allowed an ad-ditional density bonus. Higuera Heights will take advantage of a 41% density bonus, in re-turn for providing 100% affordable housing on site. Higuera Heights will take advantage of the density bonus, a height increase from 45 to 50 feet (for the affordable house build-ing only), and an expansion of the down-town parking district to include the site. The downtown parking district boundaries are currently one block from the site, but the City indicated that they were already considering extending it several blocks North and East.

ENVIRONMENTAL REVIEWThe California Environmental Quality Act, (CEQA) is a statute that requires state and local agencies to identify the significant en-vironmental impacts of their actions and to avoid or mitigate those impacts, if feasible. Certain types of projects, including urban in-fill projects, are “categorically except” from CEQA review, because they are assumed to not have a significant impact on the envi-ronment. Under CEQA Guidelines § 15332, a project is exempt from CEQA if:

(a) The project is consistent with the appli-cable general plan designation and all appli-cable general plan policies as well as with ap-plicable zoning designation and regulations.

(b) The proposed development occurs with-in city limits on a project site of no more than five acres substantially surrounded by urban uses.

(c) The project site has no value as habitat for endangered, rare or threatened species.

(d) Approval of the project would not result in any significant effects relating to traffic, noise, air quality, or water quality.

(e) The site can be adequately served by all required utilities and public services.

Higuera Heights meets the above urban infill criteria, and will be categorically except from CEQA review.



ENTITLEMENTS5.

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DESIGN CONCEPT6.DESIGN OVERVIEWHiguera Heights is nestled between down-town San Luis Obispo to the southwest, and the mountains of Reservoir Canyon Natural Reserve to the northeast. This location at the brim of downtown puts residents within walking distance of jobs, shopping, and tran-sit, while affording breathtaking views of the nearby mountains. The building’s traditional materials, sleek lines, and urban feel comple-ment the existing character of the downtown area. The pedestrian-oriented site plan flows seamlessly into its surroundings, allowing easy access to the nearby Higuera Street shopping area.

The project contains two primary compo-nents: the Higuera Heights affordable hous-ing complex, and the Higuera Heights Plaza. These components blend together to create a vibrant, mixed-use, urban lifestyle that is currently unprecedented in San Luis Obis-po. A resident can enjoy nearby amenities without sacrificing the safety and privacy of an all-residential site. This is accomplished through horizontal mixing of uses, by which the residents are physically separated from the market plaza, and given their own inte-rior landscaped space in which to relax and play.

Higuera Heights Affordable HousingThe affordable housing building is situated on the northeast of the site, in order to cap-ture mountain views and provide a buffer from the busy Santa Rosa Street traffic. The building consists of four residential floors above a ground floor parking garage. The unit mix includes fourteen, 456 square foot studio apartments, twenty two-bedroom apartments, each about 750 square feet, and sixteen three-bedroom apartments, each around 1,000 square feet. The first floor of the building contains a semi-sheltered, U-

shaped outdoor park that provides interior air, light, and privacy for residents. The park is landscaped using 100% native California plants, which have been selected for their drought tolerance and ability to absorb and filter stormwater runoff from the site dur-ing wet months. All of the units have oper-able windows, which allow ample access to natural light and air. Units are built using rustic, traditional materials like brick, wood, and steel. In the bathrooms, high efficiency toilets utilize the stormwater from the build-ing’s roof for flushing. Each floor includes a laundry room and multi-use community space, such as a computer lab, study room, or fitness center.

Higuera Heights PlazaHiguera Heights Plaza is an office and re-tail complex composed of the buildings at the southwest portion of the site. Higuera Heights Plaza includes an interior courtyard, an indoor/outdoor public market, restau-rants, shops, and upper-floor office spaces. On the interior of the plaza is a public mar-ket called SLO Grown Market. This market, which is based on the concepts of Pikes Place Market in Seattle, and Oxbow Market in Napa, contains 17 small stalls (300-400 square feet) that are rented to various local vendors selling produce, meat, handmade goods, and prepared food from a variety of different international cuisines. On the exte-rior of the buildings, facing Higuera and Santa Rosa Street, there are several larger “anchor” retail spaces occupied by businesses such as restaurants or a wine bar. The entrance to the interior SLO Grown Market is framed by a large arched sign, enticing pedestrians on Higuera St. to walk in for a meal, or to peruse the unique artisan goods that the community of San Luis Obispo has to offer.


DESIGN CONCEPT6.SLO GROWN MARKETThe concept of “market hall” type retail is an old model that began as a way for farmers to cut out the middle men who were using un-fair business practices. In recent years, Mar-ket halls have made a comeback, as interest in local food has increased. Examples of this type of market include San Francisco’s Ferry Building, Seattle’s Pikes Place Market, Los An-geles’s Grand Central Market, and numerous smaller market halls in smaller cities such as Alameda, Oakland, and Napa, CA. These market halls can range in size from 5,000 sq ft. to several acres, and typically contain per-manent vendor booths from 250 to 3,000 sq. ft. The vendor booths can be occupied by a range of artisans and food producers, from bakers to coffee roasters and ranchers. San Luis Obispo enjoys a very popular Thursday night downtown farmer’s market, located on Higuera St, that is a regional draw for resi-dents and tourists alike. However, the mar-ket is only open once a week and there are no grocery stores in downtown. SLO Grown Market will increase access to fresh foods in San Luis Obispo, while also providing a year-round, permanent market for local farmer’s goods.

Physical infrastructure provided for the SLO Grown Market includes a loading dock, cold storage, utility hook-ups (electricity, water, drainage, etc), common eating areas, and parking for cars and bikes.

OFFICE SPACEThe upper two floors of Higuera Plaza will be for office and professional use. The proj-ect site is located within several blocks of a number of important government buildings, including a courthouse and county govern-ment offices. This creates strong demand for offices for those who provide government services (such as lawyers). In addition, sever-al high-tech companies have recently moved to San Luis Obispo, including i-fixit, drawn by

the coastal lifestyle and the talent pool at Cal Poly. These types of businesses would also be a potential tenant. San Luis Obispo had a low-er office vacancy rate of 13.6% in 2012, low-er than the national average of 16.2%. While local vacancy data is not yet available after 2012, national rates have dropped to 15.4%. and anecdotal evidence suggests that SLO’s vacancy rate has dropped since 2012 as well. San Francisco currently has the lowest office vacancy rate in the nation, at 10.2%. This low vacancy rate suggests a hot market for office space. In San Luis Obispo, many homes near the downtown core have been converted to office, due to a lack of office supply. Higuera Plaza will help to address the lack of office space, and potentially allow for the conver-sion of some buildings back to residential uses, thereby increasing the housing supply.

15HIGUERA HEIGHTS


Parking

Of�ice

To Downtown

Gateway Corner

Extend the core

Parking Lot

Santa Rosa Street

Marsh Street

Number Name Service

1 County of San Luis Obispo Public Use2 Shell Station Gas Station3 Petra Restaurant4 Wells Fargo Advisors Bank5 San Luis Obispo Council of Governments Public Use

N

SITE CONTEXT AND ADJACENT USES

1 2 3

4

5


DESIGN CONCEPT6.

Studio Unit | 450 sq ft

2 Bedroom Unit | 750 sq ft


15 units total

20 units total

16 units total

Living/ Dining Room14’8” x 20’

Bedroom9’8” x 8‘8”’

Bedroom9’8” x 15’

Living/ Dining Room18’8” x 20’

Bedroom9’8” x 8’8”

Bedroom9’8” x 9’8”

Bedroom10’ x 14’

Living/ Dining Room22’6” x 11’8”

Bedroom Niche10’ x 8‘4”’

3 BEDROOM UNIT

2 BEDROOM UNIT

STUDIO UNIT

UNIT FLOOR PLANS

17HIGUERA HEIGHTS





15 units total

20 units total

16 units total

Community Spaces | 650-900 sq ft4 spaces total

Retail Spaces | SLO Grown Market23 spaces total

CommunityLounge

StudyRoom

Laundry Facilities

Of�ice Space1800 sq ft








Retail Space1100 sq ft







Vendor Space300 sq ft





Vendor Space250 sq ft Vendor Space

300 sq ftVendor Space

275 sq ft


Vend

or S

pace

300

sq ft

Vend

or S

pace

300

sq ft

Vend

or S

pace

350

sq ftVend

or S

pace

200

sq ft

Vend

or S

pace

200

sq ft

Vend

or S

pace

250

sq ft

Vend

or S

tora

ge25

0 sq

ft

Of�ice Spaces | 1000-2000 sq ft15 spaces total FIRST FLOOR

SECOND FLOOR

FLOOR PLANS

18




15 units total

20 units total

16 units total

Community Spaces | 650-900 sq ft4 spaces total

Retail Spaces | 300- 2000 sq ft23 spaces total

Laundry Facilities

FitnessCenter

Laundry Facilities








Of�ice Spaces | 1000-2000 sq ft15 spaces total THIRD FLOOR

FOURTH & FIFTH FLOOR [SIMILAR]

FLOOR PLANS

BANK OF AMERICA AFFORDABLE HOUSING CHALLENGE 2014CALIFORNIA POLYTECHNIC STATE UNIVERSITY

19HIGUERA HEIGHTS


DESIGN CONCEPT6.

VIEW FROM HIGUERA STREET AT SANTA ROSA STREET


EAST ELEVATION

WEST ELEVATION

ELEVATIONS

DESIGN CONCEPT6.

21HIGUERA HEIGHTS


SOUTH ELEVATION

NORTH ELEVATION

Green Screen TrellisA permeable metal trellis covered with vines allows for air to ventilate while providing visual screening of the interior parking.

Steel Fin and Overhang Shades

Brick Siding

Fiber Cement SidingProvides the look of a natural wood grain but more durable and requires less mainte-nance. This product also features 30% recycled material and utilizes the by-product �ly ash that is typically dumped into land�ills.

Dual Pane Low E with Argon Windows

Operable WindowsAllows the occupants to naturally ventilate their units based on their own needs.

Photovoltaic Panels Over 20,000 sq ft of PV panels will cover the roofs of Higuera Heights and Higuera Heights Plaza generating electricity that will help to offset the residents monthly energy costs

ELEVATIONS

22

PERSPECTIVE 1

LOOKING SOUTH-EAST FROM HIGUERA STREET


23HIGUERA HEIGHTS


LOOKING SOUTH-WEST FROM HIGUERA HEIGHTS

PERSPECTIVE 2

24



25HIGUERA HEIGHTS


DESIGN CONCEPT6.

Western Redbud

California Sycamore

Photovoltaic Panels

Residential Barbeque Area

Red Fescue

Green Roof (Field Sedge)

Permeable Pavers

ANNOTATED SITE PLAN


DESIGN CONCEPT6.NATIVE AND DROUGHT TOLERANT LANDSCAPE

Why Plant Native Species?In order to be as ecologically responsible, resource efficient, and regionally inspired as possible, Live SLO has made native land-scaping a priority in the design of Higuera Heights. There are many reasons native plants are beneficial to use in the urban land-scape. Native species save a considerable amount of water because they are adapted to California’s dry climate, and require lit-tle irrigation. They are also generally lower maintenance, and require fewer chemicals because they have developed tolerances to local diseases and pests. In addition, native

plant species provide habitat for wildlife like birds and butterflies, and increase the over-all biodiversity of the area by contributing to the local ecology.

The plants we have selected for the Higuera Heights plaza are all extremely hardy and low maintenance. They are also extremely drought tolerant. This means that once they are established, they can remain healthy without water for months at a time. This is especially important in California today, as Governor Brown has declared a state-wide drought emergency. We are currently expe-riencing the worst water shortage since the 1600’s, and native landscaping has the po-tential to put a significant dent in the amount of water California consumes.

Featured Natives

Trees California Sycamore, Platanus racemosa Western Redbud, Cercis occidentalis: Midlevel Plants California Wild Rose, Rosa californica Deer Grass, Muhlenbergia rigens

Ground Covers Clustered Field Sedge, Carex praegrasilis Red Fescue, Festuca rubra Beach Strawberry, Fragaria chiloensis

27HIGUERA HEIGHTS


SUSTAINABLE CONSTRUCTION7.LEEDLive SLO Housing Studio has followed Lead-ership in Energy and Environmental Design (LEED) New Construction and Major Reno-vations guidelines during its design process, in order to ensure a sustainable and energy efficient project. LEED, a program of the US Green Building Council (USGBC), is the indus-try standard for rating the sustainability of development projects, and rates each project based on an extensive point system in mul-tiple categories. Live SLO Housing Studio is confident that Higuera Heights could achieve a LEED Gold rating based on the 2009 rating system. Additional consultation with a LEED professional may be required during the de-velopment process.

Sustainable SitesHiguera Heights is located on a previously developed urban infill site, covered in imper-vious surfaces, and far away from protected areas like wetlands and nature reserves. The site is within 1/2 mile of a wide variety of ser-vices. It is very close to transit options, with a SLO Transit bus stop adjacent to it, and is .7 miles to the closest AMTRAK station. Also, many employment, shopping, and entertain-ment options are located nearby.

Indoor bike storage is provided for residents and workers. Onsite parking has been mini-mized, through several parking incentives for mixed-use, affordable housing projects and projects with bicycle parking. The on-site parking is set underneath the structure, reducing overall heat absorption and heat-island effect.

The project significantly increases the over-all permeability of the site, by using veg-etated roofs, bioswale systems, rainwater

catchment, and permeable paving. All non-emergency interior lighting is automatically controlled to turn off during atypical hours, and a manual override is provided.

Water EfficiencyThe landscaping of Higuera Heights is ex-tremely drought tolerant, and will require regular watering for only 1-2 years as the plants become established. After that, they will be watered only occasionally and if nec-essary can go completely without water for months at a time. Non-potable water is used for irrigation when available. Irrigation is kept to a minimum, and only used when nec-essary.

Indoor potable water use is kept to a mini-mum by incorporating water-saving faucets, showerheads, and recycled rainwater for toi-lets and urinals.

Energy and AtmosphereHiguera Heights will enter into a power pur-chase agreement (PPA) with a local solar company to install solar panels on its roof. A PPA will allow the solar panels to provide renewable energy for the development, at no


up-front cost. Higuera Heights has approxi-mately 20,000 square feet of usable roof area for solar infrastructure. Given the assump-tion that our residential component will use approximately 380,000 kWh annually (6.7 kWh per square foot annually), and that our retail component will use approximately 600,000 kWh annually (14.3 kWh per square foot annually), Higuera Heights should pro-duce over 13% of it’s electricity through pho-tovoltaic cells using only half of the total roof-top area. This would be accomplished using a 10,000 square feet, 80-kilowatt photovoltaic system provided by Sungevity, SunRun, or a similar provider.

MATERIALS SELECTIONSThere were two primary factors considered during material and product selection: sus-tainability and residential comfort. With those two objectives in mind, sustainable, high-performance, and high-recycled con-tent products were selected. These products positively benefit the residents through their durability, reduced energy consumption and healthier living conditions.

Sustainable Construction and Exterior FinishesMaterial sourcing focused on locally pro-duced and manufactured products. Sourcing materials locally helps cut down on the ship-ping expenses and carbon footprint associ-ated with long-distance transit. It also helps to stimulate the local economy and create economies of scale.

SUSTAINABLE CONSTRUCTION7.

Materials and ResourcesHiguera Heights is in a prime location to take advantage of locally sourced materials, as it is located within 500 miles of many mate-rial suppliers in both Northern and Southern California. Materials such as fly-ash concrete, lumber, and brick can all be found within a distance acceptable by LEED standards. Dur-ing the demolition process, nonhazardous materials such as concrete, asphalt and glass will be sorted and recycled. During construc-tion, waste such as packaging will be recycled, and excess materials such as weatherboard, brick, or glass will be salvaged for later con-struction use. The wood used in construction shall be a minimum of 50% (based on cost) certified by the Forest Stewardship council, in order to promote the responsible manage-ment of our forests.

Indoor Environmental QualityHiguera Heights will utilize low-emitting ma-terials for its interiors in order to contribute to a safe, healthy indoor living environment. Residents are provided with zoned lighting controls, occupancy-sensing light fixtures in common areas, and adjustable thermal con-trols for each unit. Residences will also have ample access to outdoor daylight and views.

*Please refer to Appendix for the attached 2009 LEED Project Checklist, which details the breakdown of credits which are applicable to Higuera Heights.

29HIGUERA HEIGHTS


Dual Pane Low E with Argon WindowsThe project will utilize dual-pane, low-e win-dows in order to increase insulation and save energy. One of the most important character-istics of windows is their rate of heat loss, or U-value. The U value of a traditional window is 1.3 whereas a dual-pane low-e window with argon gas is valued at 0.33, performing four times better than standard single pane windows.

Concrete with Fly-ash Podium Construc-tionFly-ash is a by-product of the coal manufac-turing process that can be utilized to par-tially replace Portland cement [up to 50%]. Fly ash notably increases the workability of the concrete mixture as well as increases the mixtures overall durability and strength once cured. To further reduce the environmental impact of the concrete structure, recycled ag-gregate material, such as old concrete mix-tures, can be utilized. This reduces raw mate-rial consumption and frees up landfill space that would otherwise have been taken up by used concrete.

Wood Stick Framing Construction [Floors 3-5]All wood utilized within the project will be Forest Stewardship Council (FSC) certified. FSC wood is sustainably harvested from re-sponsible sources, rather than through acts of illegal deforestation.

Brick Exterior FinishesThe project incorporates traditional materi-als, such as brick, into our design in order to maintain the character of historic downtown San Luis Obispo. Brick can also be sourced lo-cally, from the “Air-Vol” brick manufacturing plant, located within SLO city limits. Utilizing a local manufacturer will save on shipping costs associated with the transportation of the brick siding.

Certainteed Weatherboards Fiber Cement SidingCertainteed fiber cement will be used as sid-ing, as it offers the grain, coloring and look of wood siding, but with a longer lasting du-


SUSTAINABLE CONSTRUCTION7.rability. This product also features over 30% recycled content, including coal fly-ash. Fiber cement panels are non-combustible, termite and rot free, sealed against moisture and maintenance free.

Interior PaintTraditional interior paints and finishes con-tain volatile organic compounds (VOCs) that release low-levels of toxins into the air for years after the initial coating is applied. Zero VOC paints and finishes are made from raw and natural ingredients such as water, natu-ral minerals, plant oils and dyes; they do not contain any harmful chemicals or toxins and help to contribute to a healthier living envi-ronment for the occupants.

Marmoleum Flooring [Kitchen and Bathrooms]Marmoleum flooring is an all-natural prod-uct made from raw materials such as flax seed, pine resin, wood flour paste and natu-ral pigments and is poly-vinyl chloride (PVC) free. PVC is commonly seen in the form of white piping used for channeling water but it is also a common flooring material. PVC degrades over time, releasing microplastics into the environment that contain persistent

organic pollutants, which are undesirable for human health and safety.

Interface No Glue Carpet Tiles [Living and Bedrooms]Carpet tiles offer greater ease and flexibility of installation than traditional carpet rolls. They can be easily swapped out for a re-placement in the event of a spill or accident and can save the substantial costs associated with carpet replacement. By utilizing stick-down installation, rather than glue down, it also reduces the amount of harmful chemi-cals being applied within a residence. The In-terface company offers up to 100% recycled nylon face fiber carpeting. The recycled con-tent comes from old carpet rolls and squares that have been stripped down to their fibers and utilized again.

31HIGUERA HEIGHTS


Plywood and Bamboo CabinetryThe cabinetry will be made of ¾” prefinished plywood with a ½” bamboo veneer. Plywood is a very cheap and easy material to utilize in construction while the bamboo veneer offers a more attractive finished look using a rapidly renewable species of wood. Both wood products would be FSC certified to en-sure that their harvesting and manufacturing were conducted in a responsible and sustain-able fashion.

Recycled High-Density Polyethylene Countertops The project will utilize fully recycled coun-ter tops. The 3D Form company produces a 100% post-consumer recycled content coun-tertop surface that consists of recycled sham-poo, detergent, chemical and milk bottles.

Kitchen and Bathroom AppliancesAll kitchen applicances, including the refrig-erator, stove and dishwasher, will be certi-fied Energy Star. Energy Star products use 30-50% less water and utilize 50-60% less energy than conventional applicances; thus cutting back on water and energy consump-tion and monthly utilities expenses for the tenants.

All bathroom fixtures, faucets, showerheads will be specified “Water Sense” products, the equivalent of an energy star rating for non-appliances.

Toilets are the biggest indoor water users, consuming on average 23% of residential wa-ter use. By utilizing dual flush toilets one can save up to 68% of toilet water consumption. To further reduce the amount of potable wa-ter being consumed within the development the toilets can utilize recycled rainwater that is harvested and contained within the site.

33HIGUERA HEIGHTS


RESIDENT SERVICES AND AMENITIES8.Higuera Heights will offer a variety of ame-nities to its residents that promote a healthy lifestyle and personal development. These amenities include a community lounge, a computer lab, a study room, and a fitness center.

AMENITIES

Community LoungeThe lounge, approximately 900 square feet, provides common space for education, com-munity events and social gatherings. These activities might include family activities, ed-ucational opportunities, wellness programs and other social opportunities that support the residents’ general well-being and quality of life. The lounge features couches, a televi-sion, coffee tables, desks and chairs to en-courage social interactions.

Computer LabThe computer lab provides a vocational and technical environment that will guide, devel-op and encourage residents toward their ed-ucational and career goals. The computer lab is available to support individuals in carrying out educational, work, and skill building ob-jectives for job mobility. Residents have free access to all computers, printers, and Inter-net.

Study RoomThe 650 square foot study room is available for residents who need a space for studying, reading or other learning activities. In ad-dition, residents can use this room to hold meetings, do homework and even play board games. The study room contains tables and chairs to accommodate users during the day and the After School Program for kindergar-ten through 12th grade residents.

Fitness CenterA 650 square feet fitness center encourages residents to maintain a healthy lifestyle. Lo-cated on the fourth floor, the fitness center is a health, recreational, and social space geared towards exercise. Residents can en-gage in individual fitness opportunities such as cardiovascular training and weight train-ing, while promoting social interaction.

Laundry RoomsA 200 square feet laundry room with 3 sets of washer and dryers is located on each floor. This provides convenient and easy access for all residents.

RESIDENT SERVICES

After-School ProgramAn after-school program will be offered in the study room for kindergarten to 12th grade students, in order to support working parents and families. LifeSTEPS, a longstand-ing provider of educational and supportive services, will run the program. Their staff will also coordinate two to four educational classes per month, designed specifically to address the educational needs and interests of residents. In addition to this, the Cal Poly department of education will partner with Higuera Heights to provide student volun-teers, who will serve as mentors and tutors. The program will provide a safe environment for children to engage in educational, recre-ational, cultural, and social activities during after-school hours. Students will have the opportunity to explore interests, gain work skills, assume leadership roles, interact with similar aged peers, connect to adult role models and mentors, and become involved with their communities.


Computer Training ProgramIn today’s technological world, it is crucial for all adults to have basic computer skills. In or-der to encourage personal and professional development, Life Steps will offer computer training in the computer lab. These classes will start with computer basics and Internet for beginners and then progress to specific software applications such as Word, Excel, and PowerPoint. LifeSTEPS will also run this program.

FunRideFunRide is a car-sharing service, headquar-tered in San Luis Obispo. FunRide carsare located at various sites around the Central Coast, and can be rented for $6.50 per hour or by the day. Higuera Heights will partner with FunRide to provide deeply discounted yearly memberships to low-income residents. In ad-dition, a designated FunRide parking space “pod” is provided on site.

Onsite ManagementHiguera Heights will be operated and man-aged primarily by the developer, Rob Rossi. The manager will be responsible for main-taining the facilities, grounds, and landscap-ing with the assistance of staff. In addition to this, the manager will be instrumental in creating a safe and healthy environment for the residents and serve as a resource for the community.

The Carlin Company will be the master les-see and operator of the “SLO Grown Market” component of Higuera Plaza. The Carlin Com-pany has extensive experience in this arena, and is the operator of the Oxbow Market in Napa and developer of the Ferry Building Market in San Francisco.

The developer, Rob Rossi, will operate the of-fice space component of Higuera Plaza.

California Polytechnic State University | San Luis Obispo | CA | 93407-0389 www.soe.calpoly.edu

Office of the Dean Building 2, Room 123 (805) 756-‐1503 [email protected] Tuesday, May 6, 2014 Team LIVE SLO Attention: Erik Castillo Dear Mr. Castillo,

Thank you for the information you have provided regarding Team LIVE SLO’s project for the Higuera Heights project. Low income housing, when thoughtfully created and sustained, offers more than just a place to live, it offers a place for families to craft a life and to achieve their dreams. Your goals of creating a light-‐ and air-‐filled space with amenities for families and nearby businesses seem both well thought out and achievable. Considering the educational and care needs of the children who will live in Higuera Heights is, of course, part of the complete package that you are creating.

The School of Education at Cal Poly is proud of its rich Learn by Doing tradition. Our teacher candidates interact with school-‐age children throughout their teacher preparation programs. We are delighted to support your project by establishing placements for our teacher candidates in your planned after school tutoring and youth programs. The skill development you mention in your plan is in line with our thinking regarding age-‐appropriate play and school readiness activities. These will be of benefit to the children living in Higuera Heights and in turn leading these activities will benefit our teacher candidates. We look forward to participating in this partnership and expect that it will be of great benefit to the community.

Yours truly,

Jon Margerum-‐Leys, Dean Cal Poly School of Education

RESIDENT SERVICES & AMENITIES8.

35HIGUERA HEIGHTS


COMMUNITY ENGAGEMENT9.Live SLO Housing Studio has made it a prior-ity to engage with the San Luis Obispo com-munity and local government agencies in order to ensure the political feasibility and acceptance of the project. The Team has iden-tified the following key project stakeholders: • City of SLO Housing Authority • City of SLO Planning Commission • Local restaurants and retail establish-

ments • Local organizations serving low-income

families • Nearby residents • Cal Poly Students • Local farmers

PRE-DEVELOPMENTInitial meetings have already been conduct-ed with key stakeholders in order to gain support for the project, and to ensure that the project proposal will not face regulatory barriers or political opposition. The team has had face-to-face, or phone meetings with de-cision makers in the following institutions, corporations, and local government agen-cies: • San Luis Obispo Housing Authority • San Luis Obispo Community Develop-

ment Department • San Luis Obispo City Council Members • San Luis Obispo County • Cal Poly Department of Education • People’s Self Help Housing • Central Coast Grown • San Luis Obispo Thursday night Farmer’s

Market Vendors • The Carlin Company • FunRide • LifeSteps

CONSTRUCTIONThroughout the construction process Live SLO Housing Studio will host several meet-ings with local residents, community groups and stakeholders. These meetings will pro-vide the opportunity to rally community sup-port for the project, while identifying any po-tential negative impacts that the project may have. Feasible mitigation measures may be implemented to address potential concerns. Once construction is nearing completion, Live SLO Housing Studio will contact the City Housing Authority to obtain a list of poten-tial pre-qualified low-income and very-low income tenants. These families and persons will get priority in reserving a unit, based on-their early expression of need.

POST CONSTRUCTION AND OUTREACHUpon completion of the project, Live SLO Housing Studio will host a Grand Opening for residents, community members and partner organizations. The grand opening will high-light the amenities of the project, and include a tour and food samples from the local ven-dors.

37HIGUERA HEIGHTS


FINANCIAL STRUCTURE10.The Higuera Heights project includes the main affordable housing component known as Higuera Heights (A), and a commercial sub-component known as Higuera Heights Plaza (B). For the purposes of the Bank of America Low Income Housing Challenge, the main project and sub-components have been physically and financially separated. They are two separate buildings, owned by differ-ent legal entities, which operate under the greater project title of Higuera Heights. Proj-ect financing is presented in order of project size.

COSTS OVERVIEWThe Higuera Heights project has projected development costs of roughly $16.5 million to construct 50 new affordable housing units (69,000 sqft). The project is financially fea-sible primarily due to the following resourc-es: the Low Income Housing Tax Credit (LI-HTC) program, made available through the California Tax Credit Allocation Committee

(CTCAC), and the extremely favorable seller-carry back note which confers interest in the property in exchange for all residual income and returns subordinate to all expenses and debt service.

REVENUE OVERVIEWThe rental revenue generated by the project is limited by the allowable rents under San Luis Obispo affordable housing guidelines. The project targetss renters making 50% of area median income (AMI). The revenue generated is enough to cover operating ex-penses and debt service, while any remain-ing residual cash flow accrues value to the previous owner through the seller carry back note. Operating expenses and reserves account for roughly 46% of rental revenue, and a 6-month operating margin is under-written to be kept as reserve. A summarized breakdown of project development costs are shown in exhibit 1A, while funding is shown in Exhibit 2A.

Item Unit/Cost Funding Type Source Amount % totalProject Square Footage 69140 Loans: Seller Carry Back Note 2,800,000$ 17%Land Aqcuitision 2,800,000$ Permanent Loan 2,582,917$ 16%Unit and Common Construction 8,871,700$ Federal Home Loan Bank 500,000$ 3%Site Development 691,400$ Local Fees 525,000$ Equity: Federal LIHTC 9,713,436$ 59%Other Hard Costs 75,000$ Soft Costs 2,910,569$ Grants: Deferred Dev. Impact Fee 100,000$ 1%Hard Cost Contingency 506,905$ Homefunds SLO 300,000$ 2%Soft Cost contingency 115,778$ SLO County Housing Trust 500,000$ 3%Total Development Costs 16,496,353$ Total Developed $/SF 238.59$ Total Funding 16,496,353$ 100%

Higuera Heights Development Summary - Exhibit 1A Higuera Heights Funding Breakdown - Exhibit 2A

Item Unit/Cost Funding Type Source Amount % totalProject Square Footage 69140 Loans: Seller Carry Back Note 2,800,000$ 17%Land Aqcuitision 2,800,000$ Permanent Loan 2,582,917$ 16%Unit and Common Construction 8,871,700$ Federal Home Loan Bank 500,000$ 3%Site Development 691,400$ Local Fees 525,000$ Equity: Federal LIHTC 9,713,436$ 59%Other Hard Costs 75,000$ Soft Costs 2,910,569$ Grants: Deferred Dev. Impact Fee 100,000$ 1%Hard Cost Contingency 506,905$ Homefunds SLO 300,000$ 2%Soft Cost contingency 115,778$ SLO County Housing Trust 500,000$ 3%Total Development Costs 16,496,353$ Total Developed $/SF 238.59$ Total Funding 16,496,353$ 100%

Higuera Heights Development Summary - Exhibit 1A Higuera Heights Funding Breakdown - Exhibit 2A


FINANCIAL STRUCTURE10GRANTS OVERVIEW The Federal Home Loan Banks' Affordable Housing Program Grant: $500,000 Having exceeded most of the program’s eli-gibility requirements, Team Live Slo has esti-mated the grant to be $10,000 per unit based on historical data from local nonprofit, Peo-ples’ Self-Help Housing, for a grant total of $500,000 to be acquired after the 9% LIHTC funding is secured and applied to construc-tion costs incurred during development.

County of San Luis Obispo’s HOME Invest-ment Partnership (HOME) Funds: 300,000 In compliance with regulations in Title 24 of the Code of Federal Regulations, Part 92, San Luis Obispo County has allotted $300,000 to use for the construction in the Higuera Heights affordable project.

Deferred Development Impact Fee: $100,000 In an effort to encourage economic devel-opment within the County of San Luis Obis-po, the County has allotted Higuera Heights $100,000 to use in the deferral of local fee payments, for our long-term commitment to the benefit of all residents fee as a multi-fam-ily residential project.

County of San Luis Obispo Housing Trust Fund: $500,000 The County of San Luis Obispo Housing Trust provides funds to help finance affordable housing projects in the area, with most of the available funds to be limited to the devel-opment of low, very low, and extremely low income units. With our qualifications and the availability of funds in San Luis Obispo County, Housing Trust funds of $10,000 per unit are estimated and will assist in financing pre-development costs including environ-mental review, and early phase design devel-opment, along with preliminary construction costs.

UneligibleCostsAssumptionsforLIHTC TotalBudget

AffordableComponentTotal 16,496,353UneligableCostsTotal 3,995,569EligibleBasisforLIHTC 12,500,783

TotalEligibleBasis $11,814,326.00*QCTAllowance 130%TotalAdjustedEligibleBasis$15,358,623.80*ApplicableFraction 100%TotalQualifiedBasis $15,358,623.80

VoluntaryCreditPercentReduction

45.00%

TotalCreditReduction $6,911,381.19TotalAdjustedQualfiedBasis $8,447,242.61PresentValueCreditPercent 7.59%AnnualLIHTCAmount $641,145.71TotalTaxCreditAmount (x10) $6,411,457.14EquityValueofTaxCredits 1.05 $6,732,030.00

39HIGUERA HEIGHTS


Item Total Budget LIHTC BASIS Construction Loan

SLO CO HOME Funds

SLO County

Housing

Federal Home

Loan Bank

Deferred Developme

nt

Seller Carry- Back Note Perm Loan

Federal 9% LIHTC

Initial Equity Investment

Federal 9% LIHTC

Remaning Equity

Operating Expenses Monthly Annual % ofTotal

Land Purchase $ 2,800,000 $ 2,800,000 General & AdministrativeAdvertising and credit checks $ 40.00 $ 480.00 0.25%

Hard Costs $ 10,670,005 $ 10,645,005 $ 8,598,661 $ 300,000 $ 200,000 $ 500,000 $ 100,000 $ 2,582,917 $ 971,344 $ 6,015,744 Legal $ 40.00 $ 480.00 0.25%Unit and Common Construction $ 8,871,700 $ 8,871,700 $ 6,900,356 $ 300,000 $ 200,000 $ 500,000 $ 2,582,917 $ 971,344 $ 4,317,439 Accounting/audit $ 850.00 $ 10,200.00 5.33%Site Development $ 691,400 $ 691,400 $ 691,400 $ 691,400 Supplies $ 150.00 $ 1,800.00 0.94%Furnishings & Technology $ 50,000 $ 50,000 $ 50,000 $ 50,000 Management fees $ 2,400.00 $ 28,800.00 15.04%Local Fees. development impact, ceqa etc $ 525,000 $ 525,000 $ 425,000 $ 100,000 $ 425,000 Telephone $ 75.00 $ 900.00 0.47%

Hard Cost Contingency $ 506,905 $ 506,905 $ 506,905 $ 506,905 $ 42,660.00 22.28%Demolition $ 25,000 $ 25,000 $ 25,000 Utilities - Common Use

Electricity $ 350.00 $ 4,200.00 2.19%Soft Cost $ 3,026,348 $ 1,855,778 $ 2,726,348 $ 300,000 $ 2,726,348 Gas $ 200.00 $ 2,400.00 1.25%Architectural and Landscape $ 305,000 $ 305,000 $ 165,000 $ 140,000 165,000$ Water & Sewage $ 3,500.00 $ 42,000.00 21.94%Engineering $ 270,000 $ 270,000 $ 155,000 $ 115,000 155,000$ $ 48,600.00 25.39%Site Survey $ 20,000 $ 20,000 $ - $ 20,000 -$ PayrollParking In Lieu fees $ 85,000 $ 85,000 85,000$ Manager Salary $ 1,500.00 $ 18,000.00 9.40%Consultants (Land Use, Outreach, etc.) $ 25,000 $ - $ 25,000 -$ Maintenance personnel $ 1,000.00 $ 12,000.00 6.27%

Real Estate Taxes $ 46,200 $ 46,200 46,200$ Med insurance/benefits $ 800.00 $ 9,600.00 5.01%Construction Loan Interest Reserve $ 506,565 $ 506,565 506,565$ Payroll taxes $ 350.00 $ 4,200.00 2.19%Construction Loan Fee and Expenses (1%) $ 113,250 $ 113,250 113,250$ $ 43,800.00 22.88%

Construction Loan Inspection $ 20,000 $ 20,000 20,000$ Taxes and InsuranceConstruction Loan Title and Escrow $ 15,000 $ 15,000 15,000$ Property and liability insurance $ 824.00 $ 9,888.00 5.16%Operating Reserve $ 95,725 $ 95,725 95,725$ CA Partnership Tax $ 67.00 $ 804.00 0.42%Third Party Market Study $ 8,000 $ 8,000 8,000$ Real Estate Assessment Taxes (.1%) $ 1,158.00 $ 13,896.00 7.26%

TCAC Monitoring Fees $ 50,000 $ 50,000 50,000$ $ 24,588.00 12.84%Rent up & marketing $ 45,000 $ 45,000 45,000$ Operating & MaintenanceSyndication Consultant $ 50,000 $ 50,000 50,000$ Repairs $ 1,200.00 $ 14,400.00 7.52%Legal, Broker, Due Dil, Title & Org. Costs, escrow

$ 25,000 $ 25,000 25,000$ Trash and Recycling $ 250.00 $ 3,000.00 1.57%Tax Credit and Organization $ 40,000 $ 40,000 40,000$ Grounds $ 1,000.00 $ 12,000.00 6.27%Developer Fee $ 1,000,000 $ 1,000,000 $ 1,000,000 1,000,000$ Contract services $ 200.00 $ 2,400.00 1.25%Perm Loan Fee (1%) & Deposit $ 45,829 $ 45,829 45,829$ $ 31,800.00 16.61%Insurance $ 110,000 $ 110,000 $ 110,000 110,000$ Total Operating Expenses $ 15,954.00 $ 191,448.00 100%Audit $ 10,000 $ 10,000 $ 10,000 10,000$ Appraisal and lender review $ 15,000 $ 15,000 $ 15,000 15,000$ Rental Income Monthly AnnualEnvironmental Review Phase 1 $ 10,000 $ 10,000 $ 10,000 10,000$ From Rent Schedule $ 39,120 $ 469,440 Soft Cost Contingency (5%) $ 115,778 $ 115,778 $ 115,778 115,778$ Less: Vacancy (5%) $ (1,956) $ (23,472)LIHTC Subtotals $ 971,344 $ 8,742,093 Net Rental Income $ 37,164 $ 445,968

Total $ 16,496,353 $ 12,500,783 $ 11,325,009 $ 300,000 $ 500,000 $ 500,000 $ 100,000 $ 2,800,000 $ 2,582,917 LIHTC TOTAL: 9,713,436$

Development Budget Higuera Heights - Exhibit 3A Higuera Heights Operating Budget - 4A

40



41HIGUERA HEIGHTS


LOAN STRUCTUREThe structure of the Higuera Heights con-struction loan assumes an 18 month loan term with a commitment of 2.15% interest from Wells Fargo. The construction loan con-verts into a permanent loan with 6.50% an-nual percentage rate (APR) at expiry and is paid off through both the perm loan capital and the remaining tax credit equity financ-ing. The tax credit equity investor is assumed to put 10% of their investment up front to fi-nance the project, which allows the lender to assume the majority of the construction risk. The remaining 90% is used to pay off the loan 90-days after the building is delivered, and most likely fully leased. The project loan financing is underwritten at a standard 5% vacancy rate for affordable housing.

Although Wells Fargo has stipulated their expected loan commitment terms of 2.15% for the construction rate, and $86,500 in loan fees/origination, we have underwrit-ten the reserve to an implied rate of 4% and $113,250 in fees to account for any financial contingencies.

TAX CREDITSHiguera Heights anticipates securing fund-ing primarily through the Low Income Hous-ing Tax Credit (LIHTC) program based on the qualifications of the project and the very high tie-breaker score. Higuera Heights will pro-vide 50 affordable housing units for renters at 50% area median income (AMI). The proj-ect’s location in downtown San Luis Obispo, affords excellent access to every major ame-nity all within a 5 minute walking distance. The project will participate in funding as part of a quality census tract (QCT) zone, and vol-untarily surrender over $3.1 Million dollars (25%) of its LIHTC Eligible Basis to increase its competitive tie-breaker score.

The Higuera Heights Plaza project is expect-ed to cost roughly $14.4 Million to construct

a 40 unit, 49,500 sqft. retail and office plaza. It provides a vibrant market hall with farmer-vendors and sorely needed office space for the general downtown area. Refer to exhib-its 1B and 3B for more detailed development budget information for this component. The project is a relatively standard commercial development, with 30% equity in place by the existing developer and owner Rob Rossi, and a 70% loan to finance it, shown in exhibit 2B.

Uneligible Costs Assumptions for LIHTC Total Budget Uneligible Costs Assumptions for LIHTC Total Budget Affordable Component Total 16,496,353 Land Purchase $ 2,800,000 Uneligable Costs Total 3,995,569 Parking In Lieu fees $ 85,000 Eligible Basis for LIHTC 12,500,783 Consultants (Land Use, Outreach, etc.) $ 25,000

Real Estate Taxes $ 46,200 Operating Reserve $ 95,725

Total Eligible Basis $12,500,783 Third Party Market Study $ 8,000 QCT Allowance 1.30 Perm Loan Fee (1%) & Deposit $ 50,550 Total Adjusted Eligible Basis $ 16,251,017 TCAC Monitoring Fees $ 50,000 Applicable Fraction 1.00 Rent up & marketing $ 45,000 Total Qualified Basis $ 16,251,017 Syndication Consultant $ 50,000 Present Value Credit Percent 7.59% Legal, Broker, Due Dil, Title & Org. Costs, escrow $ 25,000 Annual LIHTC Amount $ 1,233,452 Tax Credit and Organization $ 40,000 Total Tax Credit Amount (x10) $ 12,334,522 Demolition $25,000 Equity Value of Tax Credits $ 1.05 $ 12,951,248 Construction Loan Interest Reserve $ 506,565

Construction Loan Fee and Expenses (1%) $ 113,250 Voluntary Surrender - Cut of 25.00% 3,083,631$ Construction Loan Inspection $ 20,000 New total tax credit Ask 75.00% 9,250,892$ Construction Loan Title and Escrow $ 15,000 New equity value of tax credits 1.05$ 9,713,436$ Total Uneligable Costs $3,995,569

Basis and Adjustments

Tax Credit Calculations - 6A

Uneligible Costs Assumptions for LIHTC Total Budget Uneligible Costs Assumptions for LIHTC Total Budget Affordable Component Total 16,496,353 Land Purchase $ 2,800,000 Uneligable Costs Total 3,995,569 Parking In Lieu fees $ 85,000 Eligible Basis for LIHTC 12,500,783 Consultants (Land Use, Outreach, etc.) $ 25,000





Tax Credit Calculations - 6AUneligible Costs Assumptions for LIHTC Total Budget Uneligible Costs Assumptions for LIHTC Total Budget

Affordable Component Total 16,496,353 Land Purchase $ 2,800,000 Uneligable Costs Total 3,995,569 Parking In Lieu fees $ 85,000 Eligible Basis for LIHTC 12,500,783 Consultants (Land Use, Outreach, etc.) $ 25,000





Tax Credit Calculations - 6A


Item Unit/Cost Funding Type Source Amount % totalProject Square Footage 49670 Loans: Construction to Perm Loan 10,221,339$ 70.88%Land Aqcuitision 4,200,000$ Equity: Investment Equity 4,200,000$ 29.12%Unit and Common Construction 6,350,500$ Total Funding 14,421,339$ 100.00%Site Development 251,079$ Local Fees 500,000$ Other Hard Costs 75,000$ Soft costs 2,558,030$ Hard Cost Contingency 358,828$ Soft cost contingency 127,901$ Total Development Costs 14,421,339$ Total Developed $/SF 290.34$

Higuera Heights Development Summary - Exhibit 1B Higuera Heights Plaza Funding Breakdown - Exhibit 2B

Item Total Budget Equity Investment Construction Loan Permanent Loan - Operating Expenses Monthly Annual % of

TotalLand Purchase $ 4,200,000 $ 4,200,000 General & Administrative

Advertising and credit checks $ 500.00 $ 6,000.00 1.68%Hard Costs $ 7,535,407 $ 7,535,407 $ 7,535,407 Legal $ 200.00 $ 2,400.00 0.67%Unit and Common Construction $ 6,350,500 $ 6,350,500 Accounting/audit $ 400.00 $ 4,800.00 1.35%Site Development $ 251,079 $ 251,079 Supplies $ 120.00 $ 1,440.00 0.40%Demolition $ 25,000 $ 25,000 Management fees 5% inclusive $ 5,581.11 $ 66,973.36 18.78%Furnishings & Technology $ 50,000 $ 50,000 Telephone $ 75.00 $ 900.00 0.25%Local Fees. development impact. Etc $ 500,000 $ 500,000 $ 82,513.36 23.14%Hard Cost Contingency (5%) $ 358,828 $ 358,828 Utilities - Common Use (CAMS applicable)

Electricity $ 300.00 $ 3,600.00 1.01%Soft Cost $ 2,685,931 $ 2,685,931 $ 2,685,931 Gas $ 100.00 $ 1,200.00 0.34%Architectural and Landscape $ 380,000 $ 380,000 Water & Sewage $ 2,500.00 $ 30,000.00 8.41%Engineering $ 350,000 $ 350,000 $ 34,800.00 9.76%Site Survey $ 20,000 $ 20,000 PayrollIn Lieu Parking fees $ 374,000 $ 374,000 Consultants (Land Use, Outreach, etc.) $ 25,000 $ 25,000 Maintenance personnel $ 1,000.00 $ 12,000.00 3.37%Real Estate Taxes $ 69,300 $ 69,300 Med insurance/benefits $ 800.00 $ 9,600.00 2.69%Construction Loan Interest Reserve $ 597,952 $ 597,952 Payroll taxes $ 350.00 $ 4,200.00 1.18%Construction Loan Fee and Expenses (1%) $ 102,214 $ 102,214 $ 25,800.00 7.24%Construction Loan Inspection $ 20,000 $ 20,000 Taxes and Insurance (CAMS applicable)Construction Loan Title and Escrow $ 15,000 $ 15,000 Property and liability insurance $ 600.00 $ 7,200.00 2.02%Insurance $ 110,000 $ 110,000 CA Partnership Tax $ 67.00 $ 804.00 0.23%Audit $ 10,000 $ 10,000 Real Estate Taxes (1.1%) $ 13,219.56 $ 158,634.73 Appraisal and lender review $ 15,000 $ 15,000 $ 166,638.73 46.74%Operating Reserve $ 81,000 $ 81,000 Operating & Maintenance (CAMS applicable)

Third Party Market Study $ 8,000 $ 8,000 Repairs $ 1,500.00 $ 18,000.00 5.05%Perm Loan Fee (1%) & Deposit $ 102,214 $ 102,214 Trash and Recycling $ 250.00 $ 3,000.00 0.84%Environmental Review Phase 1 $ 10,000 $ 10,000 Grounds $ 1,500.00 $ 18,000.00 5.05%Rent up & marketing $ 50,000 $ 50,000 Contract services $ 650.00 $ 7,800.00 2.19%TI Allowance $ 193,350 $ 193,350 $ 46,800.00 13.13%Legal, Broker, Due Dil, Title & Org. Costs, escrow $ 25,000 $ 25,000

Soft Cost Contingency (5%) $ 127,901 $ 127,901 Total Operating Expenses $ 29,712.67 $ 356,552.09 100%

Total $ 14,421,339 $ 4,200,000 $ 10,221,339 $ 10,221,339 Rental Income Monthly AnnualFrom Rent Schedule $ 171,727 $ 2,060,719 Less: Vacancy (35%) $ (77,277) $ (927,323)Net Rental Income $ 94,450 $ 1,133,395

Development Budget Higuera Heights Plaza - Exhibit 3B Higuera Heights Plaza Operating Budget - Exhibit 3B

Item Unit/Cost Funding Type Source Amount % totalProject Square Footage 49670 Loans: Construction to Perm Loan 10,221,339$ 70.88%Land Aqcuitision 4,200,000$ Equity: Investment Equity 4,200,000$ 29.12%Unit and Common Construction 6,350,500$ Total Funding 14,421,339$ 100.00%Site Development 251,079$ Local Fees 500,000$ Other Hard Costs 75,000$ Soft costs 2,558,030$ Hard Cost Contingency 358,828$ Soft cost contingency 127,901$ Total Development Costs 14,421,339$ Total Developed $/SF 290.34$

Higuera Heights Development Summary - Exhibit 1B Higuera Heights Plaza Funding Breakdown - Exhibit 2B

FINANCIAL STRUCTURE10.

43HIGUERA HEIGHTS


Item Total Budget Equity Investment Construction Loan Permanent Loan - Operating Expenses Monthly Annual % of

TotalLand Purchase $ 4,200,000 $ 4,200,000 General & Administrative

Advertising and credit checks $ 500.00 $ 6,000.00 1.68%Hard Costs $ 7,535,407 $ 7,535,407 $ 7,535,407 Legal $ 200.00 $ 2,400.00 0.67%Unit and Common Construction $ 6,350,500 $ 6,350,500 Accounting/audit $ 400.00 $ 4,800.00 1.35%Site Development $ 251,079 $ 251,079 Supplies $ 120.00 $ 1,440.00 0.40%Demolition $ 25,000 $ 25,000 Management fees 5% inclusive $ 5,581.11 $ 66,973.36 18.78%Furnishings & Technology $ 50,000 $ 50,000 Telephone $ 75.00 $ 900.00 0.25%Local Fees. development impact. Etc $ 500,000 $ 500,000 $ 82,513.36 23.14%Hard Cost Contingency (5%) $ 358,828 $ 358,828 Utilities - Common Use (CAMS applicable)

Electricity $ 300.00 $ 3,600.00 1.01%Soft Cost $ 2,685,931 $ 2,685,931 $ 2,685,931 Gas $ 100.00 $ 1,200.00 0.34%Architectural and Landscape $ 380,000 $ 380,000 Water & Sewage $ 2,500.00 $ 30,000.00 8.41%Engineering $ 350,000 $ 350,000 $ 34,800.00 9.76%Site Survey $ 20,000 $ 20,000 PayrollIn Lieu Parking fees $ 374,000 $ 374,000 Consultants (Land Use, Outreach, etc.) $ 25,000 $ 25,000 Maintenance personnel $ 1,000.00 $ 12,000.00 3.37%Real Estate Taxes $ 69,300 $ 69,300 Med insurance/benefits $ 800.00 $ 9,600.00 2.69%Construction Loan Interest Reserve $ 597,952 $ 597,952 Payroll taxes $ 350.00 $ 4,200.00 1.18%Construction Loan Fee and Expenses (1%) $ 102,214 $ 102,214 $ 25,800.00 7.24%Construction Loan Inspection $ 20,000 $ 20,000 Taxes and Insurance (CAMS applicable)Construction Loan Title and Escrow $ 15,000 $ 15,000 Property and liability insurance $ 600.00 $ 7,200.00 2.02%Insurance $ 110,000 $ 110,000 CA Partnership Tax $ 67.00 $ 804.00 0.23%Audit $ 10,000 $ 10,000 Real Estate Taxes (1.1%) $ 13,219.56 $ 158,634.73 Appraisal and lender review $ 15,000 $ 15,000 $ 166,638.73 46.74%Operating Reserve $ 81,000 $ 81,000 Operating & Maintenance (CAMS applicable)

Third Party Market Study $ 8,000 $ 8,000 Repairs $ 1,500.00 $ 18,000.00 5.05%Perm Loan Fee (1%) & Deposit $ 102,214 $ 102,214 Trash and Recycling $ 250.00 $ 3,000.00 0.84%Environmental Review Phase 1 $ 10,000 $ 10,000 Grounds $ 1,500.00 $ 18,000.00 5.05%Rent up & marketing $ 50,000 $ 50,000 Contract services $ 650.00 $ 7,800.00 2.19%TI Allowance $ 193,350 $ 193,350 $ 46,800.00 13.13%Legal, Broker, Due Dil, Title & Org. Costs, escrow $ 25,000 $ 25,000

Soft Cost Contingency (5%) $ 127,901 $ 127,901 Total Operating Expenses $ 29,712.67 $ 356,552.09 100%

Total $ 14,421,339 $ 4,200,000 $ 10,221,339 $ 10,221,339 Rental Income Monthly AnnualFrom Rent Schedule $ 171,727 $ 2,060,719 Less: Vacancy (35%) $ (77,277) $ (927,323)Net Rental Income $ 94,450 $ 1,133,395

Development Budget Higuera Heights Plaza - Exhibit 3B Higuera Heights Plaza Operating Budget - Exhibit 3B

HIGUERA HEIGHTS PLAZA The Higuera Heights Plaza loan is also struc-tured assuming an 18 month construction loan, which converts entirely into a perma-nent loan at expiry. The project is under-written at a 35% vacancy rate to comply with conservative assumptions required by lenders. It is also underwritten with an APR of 6.5% for the financing, and will cover op-erating expenses, reserves, and debt service at 50% occupancy.

A significant amount of pre-leasing would occur in the year preceding construction, and Higuera Heights Plaza would be delivered at 65% occupancy from pre-leasing alone. Our needs analysis of the market robustly justi-fies this occupancy assumption, which will be accomplished through charging lower rents than similar product types in the area. Our developer, Mr. Rob Rossi, has assured us, though his extensive experience as both a


FINANCIAL STRUCTURE10developer and land owner in downtown San Luis Obispo, that rent assumptions should range from $3.50-7.00 per square foot (psf)for this premier location. In order to prelease the project, Live SLO housing studio expects to bring in rents of only $3.25-5.00 psf in the pre-leasing stages of the project. Commercial and office occupancy rates in SLO County av-erage 88% currently, so we believe it is rea-sonable to assume we could achieve 65% in the first year alone.

LOAN TERMSLive SLO housing studio has obtained term sheets to indicate the loan rates that can be expected for the projects. The banks that supplied the term sheets required an in-depth justification of our assumptions for rental income, operating expenses, reserves, development budget, and compliance stan-dards. These term sheets exist for two pur-poses: to provide a concrete financing source to show the project is finanically feasible and viable as-is, and to provide a benchmark for all of the financial assumptions that relate to the development budget. Live SLO housing studio has applied both the rate types and terms stipulated in the term sheets for both Higuera Heights, and Higuera Heights Plaza directly to the development budget and debt service expense provisions of the project spreadsheets provided throughout this pro-posal.

The market hall concept will synergize well with the Higuera Heights affordable housing units by providing local produce and easy access to the intimate downtown pesestrian culture. The primary reason for developing Higuera Heights Plaza as a sub-component of the Higuera Heights project is to comply with the goals of the site’s C-R zoning dis-trict, which calls for a mix of housing, retail and commercial uses.

Both Higuera Heights and Higuera Heights Plaza are financed with construction loans

that are converted into permanent loans at expiry. The main difference between the fi-nancing of the two projects is that Higuera Heights project’s tax credit investor will pay the remainder of the loan’s equity at perma-nent loan conversion. The combination of tax credit equity and permanent loan will ful-ly repay the construction loan. Conversion of the construction loan to the permanent loan and final tax credit equity pay-in are subject to the project achieving 95% occupancy for 90-days stabilized operations. The project’s construction loan interest-only payments as-sume a 15-month construction development timeline with an additional 3-month lease-up and occupancy period. The construction loan includes two additional three-month options to extend should there be a delay in either construction or lease-up. The project financing assumes construction loan interest payments based on 0% of the outstanding loan balance between months 1-3, in order to make use of other funding sources first (HOME, AHP and County funds). Subsequently, it provides 50% of the out-standing balance between months 4-16. Fi-nally, the loan interest reserve then provides 100% of the outstanding balance between months 17-24 (including the two 3-month options to extend). The interest reserve un-derwriting rate is assumed to be 4% and includes an additional 1.85% interest rate cushion should rates fluctuate during the course of the construction loan.

45HIGUERA HEIGHTS


Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18Base Rental Revenues $ 469,440 $ 478,829 $ 488,405 $ 498,173 $ 508,137 $ 518,300 $ 528,666 $ 539,239 $ 550,024 $ 561,024 $ 572,245 $ 583,690 $ 595,363 $ 607,271 $ 619,416 $ 631,804 $ 644,441 $ 657,329 Ancillary Income $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Gross Rental Revenue $ 469,440 $ 478,829 $ 488,405 $ 498,173 $ 508,137 $ 518,300 $ 528,666 $ 539,239 $ 550,024 $ 561,024 $ 572,245 $ 583,690 $ 595,363 $ 607,271 $ 619,416 $ 631,804 $ 644,441 $ 657,329 Less: Vacancies @ 5% $ (23,472) $ (23,941) $ (24,420) $ (24,909) $ (25,407) $ (25,915) $ (26,433) $ (26,962) $ (27,501) $ (28,051) $ (28,612) $ (29,184) $ (29,768) $ (30,364) $ (30,971) $ (31,590) $ (32,222) $ (32,866)Effective Gross Income $ 445,968 $ 454,887 $ 463,985 $ 473,265 $ 482,730 $ 492,385 $ 502,232 $ 512,277 $ 522,523 $ 532,973 $ 543,633 $ 554,505 $ 565,595 $ 576,907 $ 588,445 $ 600,214 $ 612,218 $ 624,463

Less: Operating Expenses $ (191,448) $ (197,191) $ (203,107) $ (209,200) $ (215,476) $ (221,941) $ (228,599) $ (235,457) $ (242,521) $ (249,796) $ (257,290) $ (265,009) $ (272,959) $ (281,148) $ (289,582) $ (298,270) $ (307,218) $ (316,434)Replacement Reserves $ (20,000) $ (20,000) $ (20,000) $ (20,000) $ (20,000) $ (20,000) $ (20,000) $ (20,000) $ (20,000) $ (20,000) $ (20,000) $ (20,000) $ (20,000) $ (20,000) $ (20,000) $ (19,999) $ (19,998) $ (19,997)

Net Operating Income $ 234,520 $ 237,696 $ 240,878 $ 244,064 $ 247,254 $ 250,444 $ 253,633 $ 256,820 $ 260,002 $ 263,177 $ 266,342 $ 269,496 $ 272,636 $ 275,759 $ 278,863 $ 281,945 $ 285,003 $ 288,031

Debt Service (6.5% APR) $ (195,910) $ (195,910) $ (195,910) $ (195,910) $ (195,910) $ (195,910) $ (195,910) $ (195,910) $ (195,910) $ (195,910) $ (195,910) $ (195,910) $ (195,910) $ (195,910) $ (195,910) $ (195,910) $ (195,910) $ (195,910)

Debt Service Coverage Ratio 1.20 1.21 1.23 1.25 1.26 1.28 1.29 1.31 1.33 1.34 1.36 1.38 1.39 1.41 1.42 1.44 1.45 1.47

Annual Cash Flow $ 38,610.49 $ 41,786.41 $ 44,968.41 $ 48,154.90 $ 51,344.19 $ 54,534.50 $ 57,723.97 $ 60,910.65 $ 64,092.48 $ 67,267.32 $ 70,432.89 $ 73,586.84 $ 76,726.68 $ 79,849.81 $ 82,953.52 $ 86,035.96 $ 89,093.15 $ 92,121.98

Year 1 2 3 4 5 6 7 8 9 10Base Rental Revenues $ 2,060,719 $ 2,101,933 $ 2,143,972 $ 2,186,851 $ 2,230,588 $ 2,275,200 $ 2,320,704 $ 2,367,118 $ 2,414,460 $ 2,462,750 Ancillary Income $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Gross Rental Revenue $ 2,060,719 $ 2,101,933 $ 2,143,972 $ 2,186,851 $ 2,230,588 $ 2,275,200 $ 2,320,704 $ 2,367,118 $ 2,414,460 $ 2,462,750 Less: Vacancies @ 35% $ (721,252) $ (735,677) $ (750,390) $ (765,398) $ (780,706) $ (796,320) $ (812,246) $ (828,491) $ (845,061) $ (861,962)Effective Gross Income $ 1,339,467 $ 1,366,257 $ 1,393,582 $ 1,421,453 $ 1,449,882 $ 1,478,880 $ 1,508,458 $ 1,538,627 $ 1,569,399 $ 1,600,787

Less: Operating Expenses $ (356,552) $ (367,249) $ (378,266) $ (389,614) $ (401,303) $ (413,342) $ (425,742) $ (438,514) $ (451,670) $ (465,220)Replacement Reserves $ (20,000) $ (10,000) $ (10,000) $ (10,000) $ (10,000) $ (10,000) $ (10,000) $ (10,000) $ (10,000) $ (10,000)

Net Operating Income $ 962,915 $ 989,008 $ 1,005,316 $ 1,021,839 $ 1,038,580 $ 1,055,538 $ 1,072,716 $ 1,090,113 $ 1,107,730 $ 1,125,568

Debt Service (6.5% APR) $ (775,270) $ (775,270) $ (775,270) $ (775,270) $ (775,270) $ (775,270) $ (775,270) $ (775,270) $ (775,270) $ (775,270)

Debt Service Coverage Ratio 1.24 1.28 1.30 1.32 1.34 1.36 1.38 1.41 1.43 1.45

Annual Cash Flow $ 187,645 $ 213,738 $ 230,046 $ 246,569 $ 263,310 $ 280,269 $ 297,446 $ 314,843 $ 332,460 $ 350,298

Higuera Heights 18 Year Cashflow Analysis - Exhibit 5A

Higuera Heights Plaza 10 year Cashflow Analysis - Exhibit 5B

46



47HIGUERA HEIGHTS


DEVELOPMENT TABLE11.ID Task Name Start Finish

1 Entitlements 6/1/14 2/28/152 Development

Permitand6/1/14 8/7/14

3 CEQAInitialSt6/1/14 8/30/144 CEQDesign

andReview9/1/14 12/31/14

5 FinalReviewandApproval

1/1/15 2/28/156 Financing 6/1/14 8/15/157 Pre‐Developm

Financing‐SLOHousingTrustSecured

6/1/14 7/30/14

8 9%LowIncomeHousingTax

2/1/15 6/16/15

9 AHPCommittm8/1/14 12/31/1410 AHPSecured 1/16/15 8/14/1511 Construction

LoanSecured9/6/15 11/14/15

12 PermanentLoanSecured

1/16/17 3/15/1713 Design&

Construction10/10/14 8/29/15

14 DesignPhase‐DDSet

10/10/14 2/28/1515 Construction

Documents3/3/15 5/30/15

16 PlanCheck&Approval

6/2/15 8/1/1517 ContractorBid6/2/15 8/1/1518 BidSelection

&Contract8/4/15 8/29/15

19 Construction 9/1/15 4/7/1720 ConstructionP9/1/15 3/31/1721 Certificatesof

Occupancy4/1/17 4/7/17

22 RentUp&Property

9/30/16 6/30/17

23 Marketing&FairHousing

9/30/16 2/18/1724 TenantSelecti12/31/16 4/7/1725 Stabilized

75%4/1/17 6/30/17

Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 22015 2016 2017

48



49HIGUERA HEIGHTS


DEVELOPER CAPACITY12.

The Live SLO housing studio is partnered with Rob Rossi, a long standing California devel-oper with deep roots in San Luis Obispo. Mr. Rossi graduated from Cal Poly in 1976 with a degree in Architecture. He both develops and holds projects that have shaped the culture of San Luis Obispo. He started his business with a $5,000 project, and grew it into what Rossi Enterprises is today, a multimillion dollar company that has reshaped the future of San Luis Obispo through construction and innovation in both land use and design. An abbreviated list of his assets and developments include: the Promontory Office Complex after purchasing the famous Fremont Theater, co-ownership of the Ancient Peaks winery and vineyards, the Avila Village Inn off the Bob Jones Bike Trail, co-ownership in the buildings that compose the French Hospital Medical Center in San Luis Obispo, the Granada Building in downtown San Luis Obispo, and a nine-story office building on State Street in Santa Barbara.

Rossi has donated both his time and millions of dollars, philanthropically, here in SLO, and genuinely cares about the impact his projects have on the SLO community. He has differen-tiated himself as a developer with a keen eye for business and a great capacity to give back to the community with quality designs that embrace the cultural heritage of the City. When first meeting with Rob, he said he would “have no problem taking a short term financial hit, so long as it would benefit the growth of San Luis Obispo, and pencil out in the long term”. As our site’s land owner and developer partner, Rossi has allowed us to create an affordable housing project that caters to a very specific need, (large family affordable housing in SLO) while creating a vibrant, pedestrian-oriented project that contributes to an even more active downtown culture.


LIVE SLO HOUSING STUDIO13.

Reed S. Gordon Landscape ArchitectureNapa, CA

Reed is a third year student of Landscape Architecture with a strong interest in urban design. He is an analytical think-er with a passion for creating new concepts for built envi-ronments at the macro scale. He plans to pursue a master’s degree in planning, and to later work in a multidisciplinary team of designers and planners.

Orion Wise Business, Huntington BeachOrion is a graduating senior business student with a con-centration in finance. He enjoys broadening his level of expertise and challenging himself to try new and exciting things, both personally and professionally. His greatest professional accomplishment to-date was being an inte-gral member of $4.5 Million real estate acquisition with responsibilities that included financial pro-forma analy-sis, due-diligence consulting, and being the main liaison between the new ownership group and City of Corona to implement the permitting process of a new construction project on-site. In 10 years Orion hopes to be a very suc-cessful real estate investor and entrepreneur in the Orange County area

51HIGUERA HEIGHTS


Juan Alberto Bonilla City and Regional PlanningTijuana, Baja California, Mexico

Juan Alberto is a third year City and Regional Planning ma-jor with a minor in Sustainable Environments. His interests include urban design, sustainable growth, spatial planning, urban revitalization, and international development. After graduation from Cal Poly, he will pursue graduate school abroad to further study architecture and urban design.

Kerby OlsenMaster’s Candidate, City and Regional PlanningWalnut Creek, CA

Kerby is a second year graduate student in both City and Regional Planning and Engineering with an emphasis on transportation and urban design. He has an undergradu-ate degree in Environmental Studies from the University of California, Santa Cruz. He brings three years of experience in ecological design and project management. He is perus-ing a career as a City planner and urban designer.

Summer SpencerArchitectureSan Diego, CA

Summer is currently a third year student at Cal Poly pursu-ing a major in Architecture and a minor in Art History. She has a passion for residential real estate and strongly be-lieves in the potential for a symbiotic relationship between it and architecture. Summer hopes upon graduating from Cal Poly to pursue a career that bridges between architec-tural design and the residential real estate market.

Erik CastillioBusiness Administration, Central Valley, CAErik is a third year senior in the Orfalea College of Busi-ness with a concentration in finance. Having achieved the “Most Likely to Monetize” Award for a product concept of integrated management/employee evaluation surveys in Intuit’s HR Monetization Projects, Erik is passionate about expanding team collaboration in various leadership roles. With a background in courses of Economics of Poverty, Real Estate Finance, and Real Estate Investments, Erik is excited to apply these skills in a sustainable manner in sup-port of the local community.


APPENDIX14.

APPENDIX14.LETTERS OF SUPPORTBank of America Merrill Lynch Endorsement LetterWells Fargo Endorsement LetterRossi EnterprisesCity of San Luis Obispo Community Development DepartmentCentral Coast GrownWilliam Riggs, Planning CommissionerMichael Multari, Planning CommisionerCal Poly Organic FarmThe Carlin CompanyCal Poly Department of EducationFun RideLifeSTEPSSan Luis Obispo County Department of Planning and Building

LEED CHECKLIST

53HIGUERA HEIGHTS


Page 1 of 7

May 7, 2014 Higueroa Heights Re: Higueroa Heights LP, San Luis Obispo, CA Dear Mr. Wise: 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 rehabilitated 51 unit apartment complex located at San Luis Obispo, CA. Borrower: A to-be-determined special purpose entity - form and substance of Borrower

must be acceptable to the Bank. Reporting Requirements: Annually: Borrower and Guarantors’ financial statements and covenant compliance. Monthly: Property operating statements and rental summary report. Know Your Customer: 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.

Other Requirements: 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.


Page 2 of 7

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: 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) $9,846,672 2) 85% LTC based on final Bank approved construction budget or 3) 80% LTV based on an appraisal in form and substance acceptable to the

Bank. Construction Interest Rate: 30-Day LIBOR + 2.25%, 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% 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 .05% 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.

APPENDIX14.

55HIGUERA HEIGHTS


Page 3 of 7

Payment and Performance Guaranty: 100 % guarantee of completion, performance and repayment to be provided by

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: Least of 1) $2,430,200. 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 1:1.20 DSCR.

Term Loan Interest Rate: 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 6.05%. 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.

Month 25 of the construction loan term will be at the Term Loan Interest Rate on an interest-only basis. Amortization listed below will commence upon Month 30.

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: $250/unit/year Operating Reserve: $92,665 funded at or prior to conversion Subsidy Transition Reserve: N/A Term Loan Maturity: 18 (216 months) years from the term loan conversion and closing. Amortization: 30 (360 months) years


Page 4 of 7

Term Loan Fees: 1% 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 95% or greater physical and economic occupancy for each of the three months and achievement of 1:1.20 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 $1.05 for each $1.00 off Tax

Credits to which it will be entitled as a limited partner for a total Capital Contribution of $9,713,436 to be paid as follows:

Milestone Conditions to be satisfied prior to payment %

Equity $ Equity

Initial Capital Contribution

(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

15% $1,457,015

Conversion and

Stabilization Capital

Contribution

(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 6/30/2015.

80% $7,770,749

APPENDIX14.

57HIGUERA HEIGHTS


Page 5 of 7

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 This contribution will occur no earlier than 12/31/2015.

5% $485,672

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 $0.90 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;


Page 6 of 7

(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.

Other Conditions The following are subject to Bank’s approval in its sole and absolute discretion: N/A General Provisions: Fees and Expenses: 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.

Material Adverse Change: 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.

APPENDIX14.

59HIGUERA HEIGHTS


Page 7 of 7

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, Karen Davis Vice President Bank of America Merrill Lynch Community Development Banking


CONFIDENTIAL1

FOR EDUCATIONAL PURPOSES ONLYSummary of Terms and Conditions

Construction & Permanent Financing9% LIHTC

Higuera HeightsSan Luis Obispo, CA

Wells Fargo Construction Loan & Permanent Loan

May 6, 2014

Lender: Wells Fargo Bank, National Association (“Wells Fargo” or “WFB”)

Developer: Rossi Enterprises (“Rossi”)

Borrower: A limited partnership of which ROSSI or a ROSSI affiliate is the General Partner.

Guarantor: Including but not limited to Rob Rossi and ROSSI Enterprises (jointly “Guarantor”) as determined based on WFB’s sole and absolute discretion.Guarantor shall provide full completion, repayment and hazardous indemnity guarantees.

Purpose: The construction and permanent proceeds will be used to fund the new construction of a 50-unit affordable apartment community located in San Luis Obispo, California which will be developed and owned by the borrower. In addition to the Wells Fargo Construction loan & Permanent Loan, the project is expected to be financed with a combination of funds including a $500,000 San Luis County Trust, a $2,800,000 seller carry back note, $300,000 HOME Loan, a $500,000 AHP Loan, $100,000 deferred city fee, and 9% Low Income Housing Tax Credit equity in the amount of $9,713,436.

Construction Loan: The proposed construction loan sizing is based upon the financial projections dated April 29, 2014. The proposed construction loan is in an amount up to $11,325,010 or an amount that is no greater than 80% of the appraised value to be based upon the value of the property with restricted rents and the value of the low income housing tax credits.

Construction Period Recourse: Full Repayment and Completion Guaranties from Guarantor.

Construction Loan Term: 18 months from loan closing. There will be two 3-month construction term extension options provided at no additional fee, each subject to meeting completion and leasing requirements to be discussed.

Construction Interest Rate: LIBOR Rate Option: 1 Month LIBOR + 200bps. Interest will be payable monthly. 1 Month LIBOR as of 5/5/14 is 0.15%. The all in rate as of 5/5/14 is 2.15%.

Hedge Options: Wells Fargo offers a variety of interest rate protection products including caps, collars and swaps.

APPENDIX14.

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CONFIDENTIAL2

Construction Loan Fee 1% of the construction loan amount, payable at construction loan closing.

Subordination: Full subordination of all rent and use agreements to Wells Fargo loans will be required throughout term.

Reserves: The entirety of the $92,665 operating reserve will be funded at conversion, as indicated in the 4/29/2014 projections. After conversion, Borrower shall be required to fund replacement reserve of $400 per unit as indicated in the projections. Any change in reserve shall be subject to Lender’s approval, but such reserves shall not be lesser than those required by TCAC. Lender will not require a transition reserve in the event that ROSSI selects Wells Fargo equity financing. In the event that ROSSI selects an alternative equity investor to WFB, Lender mayrequire a transition reserve in the amount to be determined by Wells Fargo.

Extension Options: The construction loan will include two 3-month construction term extension options provided at no additional cost subject to meeting completion and leasing requirements to be discussed.

Permanent Loan: The Permanent Loan Commitment will consist of the following:

A Permanent Loan Commitment consisting of a Permanent Note (defined below) of approximately $2,582,917 or such other amount that is satisfactory to and agreed to by Bank, borrower and tax credit investor prior to closing. The Permanent Loan Commitment Amount is subject full underwriting of rents and expenses and a projected Permanent Note debt service coverage ratio (“DSCR”) of not less than 1.20x in the first stabilized year. All rents will be underwritten to a market advantage of at least 15% for each unit type. Replacement reserves of not less than $400 per unit per year shall be required.

Permanent Note in the amount of $2,582,917 having a term of 18 years, and amortizing based on a 30-year amortization schedule; and determined using underwritten LIHTC rents and expenses and a DSCR of 1.20x in the first stabilized year.

Permanent Note shall be referred to as the “Permanent Loan” or “Permanent Loan Commitment”.

The maximum Permanent Loan Amount shall not exceed 80% of the appraised value of the rental units based on the income restricted rents.

The Permanent Loan Commitment shall be secured by a Delivery Assurance Note and Delivery Assurance Mortgage.

Please note that the Bank reserves the right to assign the Permanent Loan and/or Permanent Loan Commitment to a third party at any time.

Forward CommitmentTerm: Twenty-Four (24) months, plus two 3-month extensions. The extensions will be

at no cost.

Interest Rate: The Permanent Note shall have a fixed rate determined by WFB and based on the 10-year Treasury bill yield plus a spread of 3.75%. By way of example, as


CONFIDENTIAL3

of 5/6/2014, the 10-year Treasuries yield was 2.75% resulting in a rate of 6.50%. The fixed rate and spread over treasury are subject to change and the calculated rate will vary as the index and overall market conditions vary.

Permanent Loan rate to be locked within 5 business days of the construction loan closing, and evidenced in the Permanent Loan Commitment letter.

Yield Maintenance: Yield maintenance penalties will be applied if (i) the loan fails to convert to the Permanent Loan within the Forward Commitment Term; and/or (ii) if the Permanent Loan amount is adjusted by more the 20%. If the Permanent Loan is prepaid during the permanent loan term, the Borrower shall pay Lender a fee in an amount equal to the greater of (a) 1% of the unpaid principal balance of the Permanent Loan Amount or (b) the Yield Maintenance Amount (standard formula will be provided.

Term/Amortization: The term of the Permanent Loan will be 18 years from the time of conversion, or mature at least two years prior to the maturity of any subordinate debt subject to Lender approval. In no event shall the term be longer than 18 years. The amortization of the Permanent Note will be 30.

Permanent Loan Fees: An Application/Legal/Document Review Fee of $5,000 due upon execution of the Permanent Loan Commitment; and

A Conversion Fee of $5,000 plus any third-party legal or title fees relating to the conversion shall be due as a condition to converting to the Permanent Loan.

Permanent Loan Terms: Conversion Criteria:

Borrower to provide evidence that the Property has achieved 90% physical and economic occupancy levels for 90 consecutive days; and

Borrower to provide evidence that the Property has for a 90 day period maintained a DSCR of at least 1.20:1.00, or such debt service coverage ratio necessary at origination of the Loan that will result in the Project maintaining aDSCR of 1.20:1.00 for the full term of the Loan based on inflationary increases of 2% on revenue and 3% on expenses. DSCR to be calculated in accordance with normal permanent loan standards including, but not limited to, actual revenue received during the 90-day period, and the greater of actual or appraisal estimated expenses, and a minimum replacement reserve expense equal to the greater of $400/unit or the amount determined in a property conditions report. Debt Service shall include debt service on the permanent loan as well as all “hard” or “must pay” debt associated with the project. The DSCR shall be determined by Lender in its sole discretion.

Borrower shall provide evidence that at least 90% of anticipated tax credit equity advances have been made.

Payment to Lender of the Conversion Fee.

Other Conditions: Subordinated Debt shall be prohibited, unless approved by Lender in its term, payment conditions and any recorded extended use restriction agreements. Subordinated lenders shall be required to execute a subordination and standstill agreement in form and substance approved by Wells Fargo.

Financing terms herein assume that any extended use agreement or similar encumbrance affecting the property, by its terms, must terminate upon

APPENDIX14.

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CONFIDENTIAL4

foreclosure or upon a transfer of the property in lieu of foreclosure, in accordance with Section 42(h)(6)(E) of the Internal Revenue Code.

Replacement Reserves in the amount of $400/unit, to be held by Lender.

Operating Reserves of not less than 3 months to be held by the limited partner (tax credit investor) or Lender.

Tax Credit Investor: Based on a pro forma form submitted to Wells Fargo, the project proposes a total 9% LITHC investment amount of $9,713,436 with an initial investment of $971,344 paid at construction loan closing (assumes Wells Fargo is chosen as the limited partner.) Should Wells Fargo not be chosen as the limited partner investor, Wells Fargo Bank may require up to 10% of the total tax credit equity proceeds to be disbursed at construction loan closing. 90% of the tax credit equity shall be made on or before the permanent loan conversion.

All Other Funds: Borrower will deliver to Wells Fargo Bank evidence that subordinate lenders have the approval and financial capacity necessary to fund upon meeting their respective conditions. Construction period funds shall be supported by executed documentation at the construction loan closing.

AHP Lender has the willingness and the capacity to sponsor a $500,000 AHP loan.

Collateral: Loan will be secured by (i) first deed of trust on the fee estate; (ii) assignment of all leases and rents; (iii) an assignment of the HAP contract, if any; and (iv)other customary security requirements (title insurance, UCCs, etc.) for transactions of this nature deemed necessary by Bank and Bank’s counsel. Terms and conditions contained herein assume all agreements and use/rent restrictions will be subordinate to construction and permanent loan.

Expenses: Borrower will reimburse WFB for all reasonable construction and permanent loan related expenses including but not limited to the following estimates. Legal fee is fixed, subject to increase if project experiences unusual negotiations or unforeseen complications. Wells Fargo will make every effort to contain legal costs.

ESTIMATED LOAN EXPENSES:Permanent Loan Document Fee $ 2,500Conversion Fee Appraisal – external

$2,000 $8,500

Appraisal - internal $2,000 Costing (inc. inspections) $18,500 Environmental $1,000 Legal $50,000 Document/UCC/Tax/Misc. $2,000 Total $86,500

Financial Reporting: During the loan term, ROSSI shall provide audited financial statements of the borrower and guarantor within 120 days of borrower’s fiscal year end; provide quarterly internally prepared borrower, guarantor and property specific financial information to include but not limited to rent rolls, balance sheet, income statement and property operations; and provide Borrower and Guarantor’s annual/year-to-date budgets and cash flow statements;


CONFIDENTIAL5

Wells Fargo strongly supports economic development and creating strong communities throughout the Wells Fargo geographies and has strongly supported those organizations that promote affordable housing development and sustainability. WFB supports long term solutions to financing affordable housing in California and is prepared to be actively engaged in this effort going forward.

While WFB will make every effort to maintain the pricing quotation contained herein, WFB reserves the right to revise its index and spreads if the financial markets affecting WFB's cost of funds change significantly. This term sheet will expire in 60 days if not accepted.

This term sheet is being issued pursuant to the Bank of America Affordable Housing Challenge. Nothing contained herein is intended to constitute in any way a commitment to lend or obligate Wells Fargo Bank to enter into any loan transactions. This summary of Terms and Conditions is a framework upon which a loan request may be submitted. Issuance of a commitment from the bank is subject to, among other things, completion of the Bank’s due diligence process and approval of a loan request under the Bank’s internalapproval process. This summary of Terms and Conditions is confidential and does not purport to list all terms, conditions, representations, warranties and other provisions which shall be mutually agreed upon and detailed in definitive legal documentation.

Lori A. SaitoVice PresidentWells Fargo Bank

FOR EDUCATIONAL PURPOSES ONLY

APPENDIX14.

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CONFIDENTIAL1

FOR EDUCATIONAL PURPOSES ONLYSummary of Terms and Conditions

Construction & Permanent Financing

Higuera Heights, Commercial DevelopmentSan Luis Obispo, CA

Wells Fargo Construction Loan & Permanent Loan

May 6, 2014

Lender: Wells Fargo Bank, National Association (“Wells Fargo” or “WFB”)

Developer: Rossi Enterprises (“Rossi”)

Borrower: A limited partnership of which ROSSI or a ROSSI affiliate is the General Partner.

Guarantor: Including but not limited to Rob Rossi and ROSSI Enterprises (jointly “Guarantor”) as determined based on WFB’s sole and absolute discretion. Guarantor shall provide full completion, repayment and hazardous indemnity guarantees.

Purpose: The construction and permanent proceeds will be used to fund the new construction of a 49,500 square foot commercial complex located in San Luis Obispo, California which will be developed and owned by the borrower. In addition to the Wells Fargo Construction loan & Permanent Loan, the project is expected to be financed with $4,200,000 developer equity (subject to WFB’sunderwriting and review).

Construction Loan: The proposed construction loan sizing is based upon the financial projections dated April 29, 2014. The proposed construction loan is in an amount up to $10,221,339 or an amount that is no greater than 70% of the appraised value to be based upon the value of the property with restricted rents and the value of the low income housing tax credits.

Construction Period Recourse: Full Repayment, Completion and Hazardous Indemnity Guaranties from Guarantor.

Construction Loan Term: 18 months from loan closing. There will be two 3-month construction term extension options provided at no additional fee, each subject to meeting completion and leasing requirements to be discussed.

Construction Interest Rate: LIBOR Rate Option: 1 Month LIBOR + 3.750bps. Interest will be payable monthly. 1 Month LIBOR as of 5/5/14 is 0.15%. The all in rate as of 5/5/14 is 3.90%.

Hedge Options: Wells Fargo offers a variety of interest rate protection products including caps, collars and swaps.

Construction Loan Fee 1% of the construction loan amount, payable at construction loan closing.


CONFIDENTIAL2

Subordination: Full subordination of all rent and use agreements to Wells Fargo loans will be required throughout term.

Reserves: The entirety of the $6-month operating reserve will be funded at conversion. After conversion, Borrower shall be required to fund replacement reserve to be determined based on full underwriting and at the sole discretion of WFB. Any change in reserve shall be subject to Lender’s approval.

Extension Options: The construction loan will include two 3-month construction term extension options provided at no additional cost subject to meeting completion and leasing requirements to be discussed.

Permanent Loan: The Permanent Loan Commitment will consist of the following:

A Permanent Loan Commitment consisting of a Permanent Note (defined below) of approximately $10,221,339 or such other amount that is satisfactory to and agreed to by Bank and borrower prior to closing. The Permanent Loan Commitment Amount is subject full underwriting of rents and expenses and a projected Permanent Note debt service coverage ratio (“DSCR”) of not less than 1.25x in the first stabilized year.

Permanent Note in the amount of $12,221,339 having a term of 10 years, and amortizing based on a 15-year amortization schedule; and determined using underwritten LIHTC rents and expenses and a DSCR of 1.25x in the first stabilized year.

Permanent Note shall be referred to as the “Permanent Loan” or “Permanent Loan Commitment”.

The maximum Permanent Loan Amount shall not exceed 70% of the appraised value of the rental units based on the income restricted rents.

The Permanent Loan Commitment shall be secured by a Delivery Assurance Note and Delivery Assurance Mortgage.

Please note that the Bank reserves the right to assign the Permanent Loan and/or Permanent Loan Commitment to a third party at any time.

Forward CommitmentTerm: Twenty-Four (24) months, plus two 3-month extensions. The extensions will be

at no cost.

Interest Rate: The Permanent Note shall have a fixed rate determined by WFB and based on the 10-year Treasury bill yield plus a spread of 4.00%. By way of example, as of 5/6/2014, the 10-year Treasuries yield was 2.75% resulting in a rate of 6.75%. The fixed rate and spread over treasury are subject to change and the calculated rate will vary as the index and overall market conditions vary.

Permanent Loan rate to be locked within 5 business days of the construction loan closing, and evidenced in the Permanent Loan Commitment letter.

Yield Maintenance: Yield maintenance penalties will be applied if (i) the loan fails to convert to the Permanent Loan within the Forward Commitment Term; and/or (ii) if the

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CONFIDENTIAL3

Permanent Loan amount is adjusted by more the 20%. If the Permanent Loan is prepaid during the permanent loan term, the Borrower shall pay Lender a fee in an amount equal to the greater of (a) 1% of the unpaid principal balance of the Permanent Loan Amount or (b) the Yield Maintenance Amount (standard formula will be provided.

Term/Amortization: The term of the Permanent Loan will be 5 years from the time of conversion. The amortization of the Permanent Note will be 30.

Permanent Loan Fees: An Application/Legal/Document Review Fee of $10,000 due upon execution of the Permanent Loan Commitment; and

A Conversion Fee of $10,000 plus any third-party legal or title fees relating to the conversion shall be due as a condition to converting to the Permanent Loan.

Permanent Loan Terms: Conversion Criteria:

Borrower to provide evidence that the Property has achieved 80% physical and economic occupancy levels for 90 consecutive days; and

Borrower to provide evidence that the Property has for a 90 day period maintained a DSCR of at least 1.25:1.00, or such debt service coverage ratio necessary at origination of the Loan that will result in the Project maintaining aDSCR of 1.25:1.00 for the full term of the Loan based on inflationary increases of 2% on revenue and 3% on expenses. DSCR to be calculated in accordance with normal permanent loan standards including, but not limited to, actual revenue received during the 90-day period, and the greater of actual or appraisal estimated expenses. Debt Service shall include debt service on the permanent loan as well as all “hard” or “must pay” debt associated with the project. The DSCR shall be determined by Lender in its sole discretion.

Payment to Lender of the Conversion Fee.

Other Conditions: Subordinated Debt, if any, shall be prohibited, unless approved by Lender in its term, payment conditions and any recorded extended use restriction agreements. Subordinated lenders shall be required to execute a subordination and standstill agreement in form and substance approved by Wells Fargo.

Operating Reserves of not less than 6 months to be held by WFB.

All Other Funds: Borrower will deliver to Wells Fargo Bank evidence that subordinate lenders, if any, have the approval and financial capacity necessary to fund upon meeting their respective conditions. Construction period funds shall be supported by executed documentation at the construction loan closing.

Collateral: Loan will be secured by (i) first deed of trust on the fee estate; (ii) assignment of all leases and rents; and (iii) other customary security requirements (title insurance, UCCs, etc.) for transactions of this nature deemed necessary by Bank and Bank’s counsel. Terms and conditions contained herein assume all agreements and use/rent restrictions will be subordinate to construction and permanent loan.

Expenses: Borrower will reimburse WFB for all reasonable construction and permanent loan related expenses including but not limited to the following estimates. Legal


CONFIDENTIAL4

fee is fixed, subject to increase if project experiences unusual negotiations or unforeseen complications. Wells Fargo will make every effort to contain legal costs.

ESTIMATED LOAN EXPENSES:Permanent Loan Document Fee $ 10,000Conversion Fee Appraisal – external

$10,000 $8,500

Appraisal - internal $2,000 Costing (inc. inspections) $18,500 Environmental $1,000 Legal $50,000 Document/UCC/Tax/Misc. $2,000 Total $102,000

Financial Reporting: During the loan term, ROSSI shall provide audited financial statements of the borrower and guarantor within 120 days of borrower’s fiscal year end; provide quarterly internally prepared borrower, guarantor and property specific financial information to include but not limited to rent rolls, balance sheet, income statement and property operations; and provide Borrower and Guarantor’s annual/year-to-date budgets and cash flow statements;

While WFB will make every effort to maintain the pricing quotation contained herein, WFB reserves the right to revise its index and spreads if the financial markets affecting WFB's cost of funds change significantly. This term sheet is for education purposely only and is not to be relied upon.

This term sheet is being issued pursuant to the Bank of America Affordable Housing Challenge. Nothing contained herein is intended to constitute in any way a commitment to lend or obligate Wells Fargo Bank to enter into any loan transactions. This summary of Terms and Conditions is a framework upon which a loan request may be submitted. Issuance of a commitment from the bank is subject to, among other things, completion of the Bank’s due diligence process and approval of a loan request under the Bank’s internalapproval process. This summary of Terms and Conditions is confidential and does not purport to list all terms, conditions, representations, warranties and other provisions which shall be mutually agreed upon and detailed in definitive legal documentation.

Lori A. SaitoVice PresidentWells Fargo Bank

FOR EDUCATIONAL PURPOSES ONLY

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ROSSI ENTERPRISES 750 PISMO STREET ▪ SAN LUIS OBISPO, CA 93401

TELEPHONE: (805) 543-4333 ▪ FACSIMILE: (805) 543-4220

May 6, 2014 Re: Higuera Heights & Higuera Heights Plaza Dear Mr. Wise: It is my pleasure to have worked with you and the group during the last several months regarding the Higuera Heights project. This site, presently occupied by the local Bank of America branch, is a highly prized commercial area within the community. This area of town is going through significant change given it was once auto dealerships now considered prime for multi-story, mixed-use intensification, adjacent to the downtown core. With the County Government Center and a variety of commercial and recreational facilities adjacent, this is an ideal location for certain expanded commercial uses combined with office and residential mixed-use components. We’ve received interest from a number of prospective tenants, including financial institutions, i.e., Bank of America and Umpqua, each interested in branches. Additionally, a number of local and national retailers, including H&M, desire larger “footprints” and would be highly desirable in this location. Technology companies are also looking downtown. We recently leased a 20,000 SF complex to iFixit and there are others looking in the 15,000 to 20,000 SF range looking. They can utilize existing City parking to accommodate their employees within the urban area. Certainly, there is no doubt urban housing is both desired and in demand for all levels of residential needs, including affordable, workforce and upper end. Because of a variety of urban demands, property values in the downtown have regained their values from the economic downturn. C/R zones properties are selling and/or leasing at values in excess of $200 PSF. We realize, to accommodate a project that is trying to provide a large component of affordable housing, economic arrangements need to take into account a reduced land value. Thus, the property ownership has investigated various possibilities of differed income and actual tax write-offs for making charitable contributions to a non-profit ownership as various options. To facilitate the project going forward, any of those possibilities, the current ownership would be willing to consider taking the current value that is clearly in excess of $10,000,000 for the land to a project level of desired investment of $7,000,000. The current land ownership is willing to take a tax deduction and write the current value of the land from its current market value in excess of $200 PSF, $10,000,000 down to $7,000,000. Dividing that $7,000,000 into the two (2) components: $4,200,000 for the Higuera Heights component and $2,800,000 for the Higuera Heights Plaza. The $2,800,000 will be carried by ownership as a subordinated debt to other project financing. It will earn, over the life of the project, all “excess” return after debt service. The portion of downtown which lies north of Santa Rosa Street and is often referred to as “Uptown,” is a unique, currently underdeveloped area that can certainly accommodate mixed-use and multi-story


For Educational Purposes Only May 6, 2014

Kerby Olsen Live SLO housing studio California Polytechnic State University San Luis Obispo, CA

Dear Mr. Olsen

I am writing to offer our support for team Live SLO’s proposal to construct the Higuera Heights mixed-use, low-income housing development in downtown San Luis Obispo. Higuera Heights will provide much needed low-income housing and commercial space, while helping to extend the walkable, pedestrian oriented core of our downtown. The City of San Luis Obispo recognizes that the construction low-income housing faces greater economic challenges than market-rate housing. Since the project provides housing that is 100% affordable to low-income households, City staff will support the following incentives that will help to make the project feasible:

1) Density bonus of 41% above the current maximum of 36 units per net acre 2) Modification of parking requirements, including an extension of the downtown parking district

to include the project site 3) Increase in maximum allowable building height from 45 to 50 feet

The project site is zoned C-R for “commercial-retail”, a zoning designation that is intended to provide a mix of housing and retail, business, entertainment and professional services. The land uses allowed in this zone will generally serve the entire community and the region, as well as tourists and travelers. The proposed project incorporates low-income housing, office, and ground floor retail uses, in keeping with the intention of the zoning designation. The project also meets the City’s design guidelines, which state that projects should emphasize the needs of pedestrians and cyclists rather than cars and create a pleasant, comfortable, safe, and distinct place for residents. In addition, The “SLO Grown Market” component will afford greater access to fresh, healthy food for residents of San Luis Obispo.

The City has long desired to extend the walkable core of the downtown to the east. Your pedestrian-oriented, mixed-use project will be a key component of realizing this vision. Your project is an example of the type of development that the City encourages in downtown, and will be a great addition our beautiful city.

Sincerely,

Tyler CoreyHousing Programs Manager

Community DevelopmentLong Range Planning919 Palm Street, San Luis Obispo, CA 93401-3218E [email protected] 805.781.7169slocity.org

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William Riggs Planning Commissioner City of San Luis Obispo

May 5, 2014 Juan Bonilla Live SLO Team 1 Grand Ave. San Luis Obispo, CA 93407 Re: Higuera Heights Project Proposal, Bank of America Affordable Housing Challenge Mr. Bonillas, I am writing to offer support for your Higuera Heights project proposed in downtown San Luis Obispo. As a planning commissioner for the City I feel that the project offers a unique vision for keystone parcel in our downtown. For a while, properties to the Northeast of our downtown have been somewhat fragmented – separated by Santa Rosa street which is also Highway 1. This project could be instrumental in revitalizing the area, bringing affordable housing for downtown employees and service workers, and attracting pedestrians past Santa Rosa. It is my understanding that the project team is asking for concessions, including an extension of the downtown parking district, and an increase in unit density. Given the project’s location and its’ clear contribution to the vibrant life of downtown, I believe these would be approved by the planning commission. It is of additional benefit that the project is consistent with the location of higher density development in the downtown and supports bike, ped and transit facilities which minimizes on-site parking need. I am excited to support this project and the potential contribution it could make to the vibrant street life in downtown San Luis Obispo. Please let me know if you have questions or need clarification. I would be happy to provide more information and support if needed. Regards,

William Riggs, PhD, AICP, LEED AP

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Planning Commissioner, San Luis Obispo


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California Polytechnic State University | San Luis Obispo | CA | 93407-0389 www.soe.calpoly.edu

Office of the Dean Building 2, Room 123 (805) 756-‐1503 [email protected] Tuesday, May 6, 2014 Team LIVE SLO Attention: Erik Castillo Dear Mr. Castillo,

Thank you for the information you have provided regarding Team LIVE SLO’s project for the Higuera Heights project. Low income housing, when thoughtfully created and sustained, offers more than just a place to live, it offers a place for families to craft a life and to achieve their dreams. Your goals of creating a light-‐ and air-‐filled space with amenities for families and nearby businesses seem both well thought out and achievable. Considering the educational and care needs of the children who will live in Higuera Heights is, of course, part of the complete package that you are creating.

The School of Education at Cal Poly is proud of its rich Learn by Doing tradition. Our teacher candidates interact with school-‐age children throughout their teacher preparation programs. We are delighted to support your project by establishing placements for our teacher candidates in your planned after school tutoring and youth programs. The skill development you mention in your plan is in line with our thinking regarding age-‐appropriate play and school readiness activities. These will be of benefit to the children living in Higuera Heights and in turn leading these activities will benefit our teacher candidates. We look forward to participating in this partnership and expect that it will be of great benefit to the community.

Yours truly,

Jon Margerum-‐Leys, Dean Cal Poly School of Education

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The mission of LifeSTEPS is to provide effective educational and supportive services to maximize the strengths of individuals and build resilient communities.

4041 Bridge Street, Fair Oaks, CA 95628 Phone: 916.965.0110 Fax: 916.965.0102 www.lifestepsusa.org

Empowerment. Impact. Community. One STEP at a time. Life Skills Training & Educational Programs

May6, 2014

LIVE SLO Housing StudioCalifornia Polytechnic State University San Luis ObispoSan Luis Obispo, CA 93407

RE: Higuera Heights AffordableHousingProject

DearTeam Live SLO Housing Studio:

TheLifeSTEPSteamwouldliketoendorsethedevelopmentproposalforHiguera Heights,anaffordablehousing projectlocatedat1105 Higuera St in downtown San Luis Obispo. As part of the expanding Downtown Core, this project is a wonderful complement to San Luis Obispo community, placing residents near public transit and ample walkable amenities such as parks, schools, restaurants, and daycare facilities.

We support the vision the Team LIVE SLO Housing Studio has for affordable housing. The quality of their design reflects a thoughtful approach in creating comfortable and inviting private and common area spaces that improve the quality of life for residents. The 51 apartments planned for Higuera Heights will help fulfill the significant demand for affordable housing among low-income households in San Luis Obispo.

LifeSTEPS is excited to partner with Team Live SLO, enabling Higuera Heights to meet its goal ofproviding ongoing social services for residents. As a longstanding provider of educational and supportive services that build resilient communities, LifeSTEPS is available, with sufficient funding, to extend our services for an onsite After School Program for school age children and education classes for adults. Our After School Programs generally provide 10 hours of homework help, tutoring, and educational games per week for K-12 students. Assuming sufficient funding, our staff will also coordinate two to four educational classes per month, designed specifically to address the educational needs and interests of residents. Our curriculum encompasses a variety of topics, including computer skills, disaster preparedness, healthy living, English as a second language and more.

The Community Space provided by Higuera Heights is well designed to support the services we provide. The centrally located spaces of the computer lab, main multiuse community room, and kitchen allow for flexibility and diversity in our After School Program curriculum and educational classes. We look forward to providing supportive services in a wonderfully designed facility, conducive to learning, play, and creativity.

Sincerely,

CraigGillett, JD, MFTLifeSTEPSFounder&BoardPresident

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!1

LEED 2009 for New Construction and Major Renovations Higuera Heights

Project Checklist Bank of America LIHC 2014

23 3 Possible Points: 26Y N Y N

Y Prereq 1 2 Credit 4 1 to 21 Credit 1 1 2 Credit 5 1 to 25 Credit 2 5 1 Credit 6 Rapidly Renewable Materials 1

1 Credit 3 Brownfield Redevelopment 1 1 Credit 7 16 Credit 4.1 61 Credit 4.2 1 8 7 Possible Points: 153 Credit 4.3 Alternative Transportation—Low-Emitting and Fuel-Efficient Vehicles 32 Credit 4.4 2 Y Prereq 1 01 Credit 5.1 Site Development—Protect or Restore Habitat 1 Y Prereq 2 0

1 Credit 5.2 Site Development—Maximize Open Space 1 1 Credit 1 11 Credit 6.1 Stormwater Design—Quantity Control 1 1 Credit 2 11 Credit 6.2 Stormwater Design—Quality Control 1 1 Credit 3.1 11 Credit 7.1 Heat Island Effect—Non-roof 1 1 Credit 3.2 1

1 Credit 7.2 1 1 Credit 4.1 11 Credit 8 Light Pollution Reduction 1 1 Credit 4.2 1

1 Credit 4.3 19 1 Possible Points: 10 1 Credit 4.4 1

1 Credit 5 1Y Prereq 1 1 Credit 6.1 Controllability of Systems—Lighting 14 Credit 1 Water Efficient Landscaping 2 to 4 1 Credit 6.2 12 Credit 2 Innovative Wastewater Technologies 2 1 Credit 7.1 13 1 Credit 3 2 to 4 1 Credit 7.2 Thermal Comfort—Verification 1


Y Prereq 1 0 6 Possible Points: 6Y Prereq 2 0Y Prereq 3 1 Credit 1.1 17 12 Credit 1 1 to 19 1 Credit 1.2 17 Credit 2 1 to 7 1 Credit 1.3 10 2 Credit 3 2 1 Credit 1.4 10 2 Credit 4 2 1 Credit 1.5 13 Credit 5 3 1 Credit 2 10 2 Credit 6 2

0 4 Possible Points: 45 9 Possible Points: 14

1 Credit 1.1 1Y Prereq 1 0 1 Credit 1.2 10 3 Credit 1.1 1 to 3 1 Credit 1.3 10 1 Credit 1.2 Building Reuse—Maintain 50% of Interior Non-Structural Elements 1 1 Credit 1.4 11 1 Credit 2 1 to 2

0 2 Credit 3 1 to 2 62 48 Possible Points: 110

Thermal Comfort—Design

LEED Accredited Professional

Daylight and Views—Views

Outdoor Air Delivery Monitoring

Regional Priority Credits

Innovation and Design Process

Materials and Resources, Continued

Total: 62 Points (LEED Gold)

Construction IAQ Management Plan—Before OccupancyLow-Emitting Materials—Adhesives and Sealants

Controllability of Systems—Thermal Comfort

Recycled ContentRegional Materials

Certified Wood

Construction IAQ Management Plan—During Construction

Indoor Environmental Quality

Increased Ventilation

Minimum Indoor Air Quality PerformanceEnvironmental Tobacco Smoke (ETS) Control

Low-Emitting Materials—Paints and Coatings

Low-Emitting Materials—Composite Wood and Agrifiber ProductsLow-Emitting Materials—Flooring Systems

Certified 40 to 49 points Silver 50 to 59 points Gold 60 to 79 points Platinum 80 to 110

Regional Priority: Specific CreditRegional Priority: Specific CreditRegional Priority: Specific CreditRegional Priority: Specific Credit

Alternative Transportation—Bicycle Storage and Changing Rooms

Sustainable Sites

Alternative Transportation—Public Transportation Access

Site SelectionDevelopment Density and Community Connectivity

Construction Activity Pollution Prevention

Water Efficiency

Daylight and Views—Daylight

Building Reuse—Maintain Existing Walls, Floors, and Roof

Alternative Transportation—Parking Capacity

Heat Island Effect—Roof

Optimize Energy Performance

Energy and Atmosphere

Innovation in Design: Specific Title

Water Use Reduction—20% Reduction

Minimum Energy PerformanceFundamental Refrigerant Management Innovation in Design: Specific Title


Innovation in Design: Specific TitleInnovation in Design: Specific Title

Indoor Chemical and Pollutant Source Control

Materials Reuse

Storage and Collection of Recyclables

Materials and Resources

Construction Waste Management

Enhanced CommissioningEnhanced Refrigerant ManagementMeasurement and VerificationGreen Power

Water Use Reduction

Fundamental Commissioning of Building Energy Systems

On-Site Renewable Energy

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!1

LEED 2009 for New Construction and Major Renovations Higuera Heights

Project Checklist Bank of America LIHC 2014

23 3 Possible Points: 26Y N Y N

Y Prereq 1 2 Credit 4 1 to 21 Credit 1 1 2 Credit 5 1 to 25 Credit 2 5 1 Credit 6 Rapidly Renewable Materials 1

1 Credit 3 Brownfield Redevelopment 1 1 Credit 7 16 Credit 4.1 61 Credit 4.2 1 8 7 Possible Points: 153 Credit 4.3 Alternative Transportation—Low-Emitting and Fuel-Efficient Vehicles 32 Credit 4.4 2 Y Prereq 1 01 Credit 5.1 Site Development—Protect or Restore Habitat 1 Y Prereq 2 0

1 Credit 5.2 Site Development—Maximize Open Space 1 1 Credit 1 11 Credit 6.1 Stormwater Design—Quantity Control 1 1 Credit 2 11 Credit 6.2 Stormwater Design—Quality Control 1 1 Credit 3.1 11 Credit 7.1 Heat Island Effect—Non-roof 1 1 Credit 3.2 1

1 Credit 7.2 1 1 Credit 4.1 11 Credit 8 Light Pollution Reduction 1 1 Credit 4.2 1


1 Credit 5 1Y Prereq 1 1 Credit 6.1 Controllability of Systems—Lighting 14 Credit 1 Water Efficient Landscaping 2 to 4 1 Credit 6.2 12 Credit 2 Innovative Wastewater Technologies 2 1 Credit 7.1 13 1 Credit 3 2 to 4 1 Credit 7.2 Thermal Comfort—Verification 1


Y Prereq 1 0 6 Possible Points: 6Y Prereq 2 0Y Prereq 3 1 Credit 1.1 17 12 Credit 1 1 to 19 1 Credit 1.2 17 Credit 2 1 to 7 1 Credit 1.3 10 2 Credit 3 2 1 Credit 1.4 10 2 Credit 4 2 1 Credit 1.5 13 Credit 5 3 1 Credit 2 10 2 Credit 6 2

0 4 Possible Points: 45 9 Possible Points: 14

1 Credit 1.1 1Y Prereq 1 0 1 Credit 1.2 10 3 Credit 1.1 1 to 3 1 Credit 1.3 10 1 Credit 1.2 Building Reuse—Maintain 50% of Interior Non-Structural Elements 1 1 Credit 1.4 11 1 Credit 2 1 to 2

0 2 Credit 3 1 to 2 62 48 Possible Points: 110

Thermal Comfort—Design

LEED Accredited Professional

Daylight and Views—Views

Outdoor Air Delivery Monitoring

Regional Priority Credits

Innovation and Design Process

Materials and Resources, Continued

Total: 62 Points (LEED Gold)

Construction IAQ Management Plan—Before OccupancyLow-Emitting Materials—Adhesives and Sealants

Controllability of Systems—Thermal Comfort

Recycled ContentRegional Materials

Certified Wood

Construction IAQ Management Plan—During Construction

Indoor Environmental Quality

Increased Ventilation

Minimum Indoor Air Quality PerformanceEnvironmental Tobacco Smoke (ETS) Control

Low-Emitting Materials—Paints and Coatings

Low-Emitting Materials—Composite Wood and Agrifiber ProductsLow-Emitting Materials—Flooring Systems

Certified 40 to 49 points Silver 50 to 59 points Gold 60 to 79 points Platinum 80 to 110

Regional Priority: Specific CreditRegional Priority: Specific CreditRegional Priority: Specific CreditRegional Priority: Specific Credit

Alternative Transportation—Bicycle Storage and Changing Rooms

Sustainable Sites

Alternative Transportation—Public Transportation Access

Site SelectionDevelopment Density and Community Connectivity

Construction Activity Pollution Prevention

Water Efficiency

Daylight and Views—Daylight

Building Reuse—Maintain Existing Walls, Floors, and Roof

Alternative Transportation—Parking Capacity

Heat Island Effect—Roof

Optimize Energy Performance

Energy and Atmosphere


Water Use Reduction—20% Reduction

Minimum Energy PerformanceFundamental Refrigerant Management Innovation in Design: Specific Title


Innovation in Design: Specific TitleInnovation in Design: Specific Title

Indoor Chemical and Pollutant Source Control

Materials Reuse

Storage and Collection of Recyclables

Materials and Resources

Construction Waste Management

Enhanced CommissioningEnhanced Refrigerant ManagementMeasurement and VerificationGreen Power

Water Use Reduction

Fundamental Commissioning of Building Energy Systems

On-Site Renewable Energy

higuera-heights-finalreport

Documents

housing characteristics

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design process

development timeline

project need

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leed project

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