Background: The current agreement approved by City Council per Resolution 411-16 is to allow Friend of Historic Claflin (FHC) to redevelop the school into an educational facility. The current approved schedule is for the abatement, stabilization, and replacement of roof to be completed by June 2017. The restoration is to begin in July 2017 and be completed by May 2020. Friends of Historic Claflin have not been successful in raising the required amount of funding to move forward with this project. They have been approached by an affordable housing developer, Oracle Housing, LLC (the Developer) with a proposal to redevelop the school by converting it into 44 (+/-) units of affordable housing, with a portion to remain dedicated to educational programs and to display the history of the school. The Developer would utilize Low-Income Housing Tax Credits (LIHTC) and Historic Tax Credits for the redevelopment. The development is estimated to cost approximately $12 million. Developer is aware of the educational deed restriction on the Claflin property which would require the federal government to release or interpret the educational use restrictions in order for the affordable housing development to go forward. Developer has agreed to undertake the preliminary phases of this project entirely at its own risk, bearing full responsibility for all costs incurred during the preliminary development period even if the deed restrictions are not removed and the project cannot move forward. If they are awarded the tax credits, and the deed restrictions are lifted, they anticipate this project will be completed by June 2019. FHC is requesting amendments to the existing lease agreement between itself and the City to make it possible for it to pursue this affordable housing project with the Developer. Based on the (FHC) request, staff is recommending that the lease agreement and any other agreements between the parties be revised as follows:

· Change the scope of the project to include the conversion of the school into 44 (+/-) units of affordable housing, with a portion of the school to remain set-aside for educational programs and to display the school’s history.
· Allow FHC to enter into an agreement, the terms of which shall be approved by the City, with Developer to carry out the redevelopment utilizing Low-Income Housing Tax Credits and Historic Tax Credits.
· In a separate letter of understanding address to the City, Developer will confirm that the previous Memorandum of Agreement it entered into with FHC on February 8, 2017 is no longer of any force or effect. In that letter, Developer shall also assume full financial responsibility for any loss it incurs as a result of any expenditures it makes for the benefit of the project in the event that the project cannot proceed because the Federal Government does not lift the deed restriction or because Developer is unsuccessful in obtaining the tax credits necessary for the project.
· The current lease between the City and FHC will be extended to 45 years due to the requirements of the tax credit programs.
· The amendment to the lease will also provide that the lessee, FHC agrees to submit annual audits prepared by a CPA, financial statements and tax returns as well as an outline of its educational programming for the year and that an update of the results of such required reporting will be made to the Council annually.
· The amended lease will contain a mechanism for replacing the current non-profit lessee with another non-profit or governmental entity in the event that lessee is non-compliant with the terms of the lease.

WHEREAS, the lease will be amended to (1) change the scope of the project to include

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