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HomeMy WebLinkAbout06.11.2025@631 SP Joint CC and SAWednesday, June 11, 2025 6:31 PM City of South San Francisco P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA Library Parks & Recreation Building, Council Chambers 901 Civic Campus Way, South San Francisco, CA Joint Special Meeting City Council and Successor Agency EDDIE FLORES, Mayor/Chair (District 5) MARK ADDIEGO, Vice Mayor/Vice Chair (District 1) JAMES COLEMAN, Councilmember/Boardmember (District 4) MARK NAGALES, Councilmember/Boardmembe (District 2) BUENAFLOR NICOLAS, Councilmember/Boardmembe (District 3) ROSA GOVEA ACOSTA, City Clerk FRANK RISSO, City Treasurer SHARON RANALS, City Manager SKY WOODRUFF, City Attorney Special Meeting Agenda 1 June 11, 2025Joint Special Meeting City Council and Successor Agency Special Meeting Agenda How to submit written Public Comment before the City Council Meeting: Members of the public are encouraged to submit public comments in writing in advance of the meeting via the eComment tab by 4:30 p.m. on the meeting date. Use the eComment portal by clicking on the following link : https://ci-ssf-ca.granicusideas.com/meetings or by visiting the City Council meeting's agenda page. eComments are also directly sent to the iLegislate application used by City Council and staff. American Disability Act: The City Clerk will provide materials in appropriate alternative formats to comply with the Americans with Disabilities Act. Please send a written request to Office of the City Clerk at 400 Grand Avenue, South San Francisco, CA 94080, or email at [email protected]. Include your name, address, phone number, a brief description of the requested materials, and preferred alternative format service at least 24-hours before the meeting. Accommodations: Individuals who require special assistance of a disability -related modification or accommodation to participate in the meeting, including Interpretation Services, should contact the Office of the City Clerk by email at [email protected], 24-hours before the meeting. Page 2 City of South San Francisco Printed on 6/6/2025 2 June 11, 2025Joint Special Meeting City Council and Successor Agency Special Meeting Agenda CALL TO ORDER ROLL CALL PUBLIC COMMENTS: Comments are limited to items on the Special Meeting Agenda. CONSENT CALENDAR Report regarding a Resolution approving the transfer of the Successor Agency to the former Redevelopment Agency real property from the Successor Agency to the City of South San Francisco as Housing Successor and a Resolution authorizing a Second Amendment to the Land Lease Agreement with Magnolia SSF LP for 630 Baden Avenue. (Elia Moreno, Management Analyst I) 1. Resolution of the Successor Agency to the Former Redevelopment Agency of the City of South San Francisco approving the transfer of certain former Redevelopment Agency real property located at 630 Baden Avenue from the Successor Agency to the City of South San Francisco as Housing Successor. 1a. Resolution of the City Council approving the transfer of certain former Redevelopment Agency real property from the Successor Agency to the Former Redevelopment Agency of the City of South San Francisco to the City of South San Francisco as Housing Successor and authorizing a Second Amendment to the Land Lease Agreement with Magnolia SSF LP for 630 Baden Avenue. 1b. ADJOURNMENT Page 3 City of South San Francisco Printed on 6/6/2025 3 City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:25-541 Agenda Date:6/11/2025 Version:1 Item #:1. Report regarding a Resolution approving the transfer of the Successor Agency to the former Redevelopment Agency real property from the Successor Agency to the City of South San Francisco as Housing Successor and a Resolution authorizing a Second Amendment to the Land Lease Agreement with Magnolia SSF LP for 630 Baden Avenue.(Elia Moreno, Management Analyst I) RECOMMENDATION Staff recommends that: 1.The Successor Agency to the Former Redevelopment Agency of the City of South San Francisco adopt a resolution approving the transfer of former Redevelopment Agency real property from the Successor Agency to the City of South San Francisco as Housing Successor; and 2.City Council adopt a resolution accepting the transfer of former Redevelopment Agency real property from the Successor Agency to the City of South San Francisco as Housing Successor and authorizing a Second Amendment to the Land Lease Agreement with Magnolia SSF LP for 630 Baden Avenue. BACKGROUND The Successor Agency to the Former Redevelopment Agency of the City of South San Francisco is the current owner of the land located at 630 Baden Avenue in South San Francisco.The Former Redevelopment Agency of the City of South San Francisco and South San Francisco Magnolia Plaza Associates,a California limited partnership,were original parties to a Land Lease dated May 1,1987,which enabled the development of a mix of market rate affordable senior housing units at Magnolia Plaza.BRIDGE Housing Corporation,along with a private owner,comprised South San Francisco Magnolia Plaza Associates. Following the dissolution of all redevelopment agencies in California under Assembly Bill x1 26 (ABx1 26),the City of South San Francisco elected to serve as the Successor Agency to the Former Redevelopment Agency.As the designated Successor Agency,the City assumed responsibility for managing the former agency’s enforceable obligations and real property assets, including the Land Lease for 630 Baden Avenue. On December 10,2021,the Successor Agency and South San Francisco Magnolia Plaza Associates executed an Assignment and Assumption of Land Lease,which was recorded on December 16,2021.Under the Assignment and Assumption of Land Lease,all right,title,and interest in the Land Lease were assigned to Magnolia SSF LP,a single- purpose entity wholly owned by BRIDGE Housing Corporation,a nonprofit affordable housing developer.Magnolia SSF LP assumed the remaining term and all obligations under the Land Lease.The Successor Agency formally acknowledged Magnolia SSF LP as the tenant under the Land Lease. DISCUSSION The Successor Agency and Magnolia SSF LP now seek to amend the Land Lease to accommodate modifications requested by Magnolia SSF LP. Magnolia SSF LP is in the process of securing a new loan from the County of San Mateo.The proposed County loan is a $3,000,000 low-interest,long-term loan from Measure K funds,through the County’s Affordable Housing Fund.The loan has a 55-year term and is intended to support rehabilitation and related project expenses.As a condition of this loan,the County requires that the Land Lease term with the City be extended to align with the loan term.Magnolia SSF LP has City of South San Francisco Printed on 6/6/2025Page 1 of 2 powered by Legistar™4 File #:25-541 Agenda Date:6/11/2025 Version:1 Item #:1. therefore requested an amendment to the Land Lease extending its term accordingly. To comply with this condition,Magnolia SSF LP has requested to enter into a Second Amendment to the Land Lease to extend its term accordingly.However,during preparation for this amendment,it was determined that the Successor Agency to the Former Redevelopment Agency of the City of South San Francisco remains the fee owner of the 630 Baden Avenue property. As such,to facilitate both the loan and the long-term preservation of affordable housing,staff recommends that the Successor Agency formally transfer the property to the City as Housing Successor.The City,acting as the Housing Successor, would then execute the Second Amendment to the Land Lease with Magnolia SSF LP. As part of the negotiations with BRIDGE Housing Corporation regarding the Second Amendment to the Land Lease,City staff proposed changes to the Land Lease Agreement that include marketing available units following current best practices,such as utilizing the Doorway portal,together with requirements for local preferences to apply under the extended 55-year lease term.A significant modification to the operation of the property is the conversion of 13 previously unrestricted,market-rate units to Low Income or 80%of the Area Median Income (AMI)for San Mateo County.Aside from two management units,all of the units at this property will now be subject to either City,County,or project-based voucher requirements to preserve affordability for tenants through the extended lease term. FISCAL IMPACT The proposed amendments to the Lease will not change the financial obligations of the Successor Agency or the City as Housing Successor. CONCLUSION Staff recommends that the Successor Agency to the Former Redevelopment Agency of the City of South San Francisco adopt a resolution approving the transfer of former Redevelopment Agency real property located at 630 Baden Avenue from the Successor Agency to the City of South San Francisco as Housing Successor and then for the City as Housing Successor to adopt a Resolution accepting the transfer and authorize the execution of a Second Amendment to the Land Lease Agreement with Magnolia SSF LP. City of South San Francisco Printed on 6/6/2025Page 2 of 2 powered by Legistar™5 City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:25-581 Agenda Date:6/11/2025 Version:1 Item #:1a. Resolution of the Successor Agency to the Former Redevelopment Agency of the City of South San Francisco approving the transfer of certain former Redevelopment Agency real property located at 630 Baden Avenue from the Successor Agency to the City of South San Francisco as Housing Successor. WHEREAS,the Successor Agency to the Former Redevelopment Agency of the City of South San Francisco is the current owner of real property located at 630 Baden Avenue in South San Francisco; and WHEREAS,following the dissolution of all redevelopment agencies in California under Assembly Bill x1 26 (ABx1 26), the City of South San Francisco serves as the Successor Agency to the Former Redevelopment Agency; and WHEREAS,pursuant to Resolution No.8-2012,adopted by the City Council of the City of South San Francisco on January 25,2012,the City of South San Francisco (“City”)agreed that upon dissolution of the Redevelopment Agency of the City of South San Francisco on February 1,2012,pursuant to Assembly Bill x1 26 (“ABx1 26”),the City would assume the housing functions of the Redevelopment Agency and serve as Housing Successor; and WHEREAS,Health and Safety Code Section 34176(a),added by Assembly Bill x1 26 and modified by Assembly Bill 1484 (“AB 1484”),provides that the housing assets of a former redevelopment agency shall be transferred to the entity that assumes the housing functions formerly performed by such redevelopment agency (the “Housing Successor”); and WHEREAS,on December 10,2021,the Successor Agency and South San Francisco Magnolia Plaza Associates executed an Assignment and Assumption of Land Lease,where all right,title,and interest in the Lease were assigned to Magnolia SSF LP, a single-purpose entity wholly owned by BRIDGE Housing Corporation; and WHEREAS,Magnolia SSF LP is in the process of securing a new loan from the County of San Mateo intended to support rehabilitation and related project expenses; and WHEREAS,to facilitate both the loan and the long-term preservation of affordable housing,the Successor Agency wishes to formally transfer the property located at 630 Baden Avenue to the City of South San Francisco as Housing Successor. NOW,THEREFORE,the Successor Agency to the Former Redevelopment Agency of the City of South San Francisco does hereby authorize and direct the Executive Director and designees to execute all documents and take all actions necessary to implement and carry out the intent of this Resolution,including without limitation the execution of grant deeds,certificates of acceptance,and all other necessary instruments,as applicable,subject to approval as to form by Agency Counsel. City of South San Francisco Printed on 6/6/2025Page 1 of 1 powered by Legistar™6 City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:25-548 Agenda Date:6/11/2025 Version:1 Item #:1b. Resolution of the City Council approving the transfer of certain former Redevelopment Agency real property from the Successor Agency to the Former Redevelopment Agency of the City of South San Francisco to the City of South San Francisco as Housing Successor and authorizing a Second Amendment to the Land Lease Agreement with Magnolia SSF LP for 630 Baden Avenue. WHEREAS,following the dissolution of all redevelopment agencies in California under Assembly Bill x1 26 (ABx1 26), the City of South San Francisco serves as the Successor Agency to the Former Redevelopment Agency; and WHEREAS,pursuant to Resolution No.8-2012,adopted by the City Council of the City of South San Francisco on January 25,2012,the City of South San Francisco (“City”)agreed that upon dissolution of the Redevelopment Agency of the City of South San Francisco on February 1,2012,pursuant to Assembly Bill x1 26 (“ABx1 26”),the City would assume the housing functions of the Redevelopment Agency and serve as Housing Successor; and WHEREAS,Health and Safety Code Section 34176(a),added by Assembly Bill x1 26 and modified by Assembly Bill 1484 (“AB 1484”),provides that the housing assets of a former redevelopment agency shall be transferred to the entity that assumes the housing functions formerly performed by such redevelopment agency (the “Housing Successor”); and WHEREAS,the Successor Agency to the Former Redevelopment Agency of the City of South San Francisco (“Successor Agency”) is the fee owner of the land located at 630 Baden Avenue in South San Francisco; and WHEREAS,the Former Redevelopment Agency of the City of South San Francisco and South San Francisco Magnolia Plaza Associates,a California limited partnership,were parties to that certain Land Lease dated as of May 1,1987 (“Original Lease”).Pursuant to the Original Lease,the Magnolia Plaza project was constructed at 630 Baden Avenue, including affordable residential units; and WHEREAS,pursuant to an Assignment and Assumption of Land Lease dated as of December 10,2021,and together with the Original Lease,(collectively the “Lease”),the Successor Agency and South San Francisco Magnolia Plaza Associates assigned all of its right, title, and interest, as tenant under the Original Lease, to Magnolia SSF LP; and WHEREAS,Magnolia SSF LP agreed to assume the Original Lease for the balance of the term and to perform all of the covenants,duties,and obligations of South San Francisco Magnolia Plaza Associates,as tenant under the Original Lease; and WHEREAS,Magnolia SSF LP is in the process of securing a new loan from the County of San Mateo intended to support rehabilitation and related project expenses; and WHEREAS,to facilitate both the loan and the long-term preservation of affordable housing,the Successor Agency wishes to formally transfer the property to the City as Housing Successor,and the City as Housing Successor wishes to formally accept the conveyance of the property. NOW,THEREFORE,BE IT RESOLVED by the City Council of the City of South San Francisco as Housing Successor that the City Council: 1.Hereby accepts the conveyance of real property located at 630 Baden Avenue by the Successor Agency to the City of South San Francisco Redevelopment Agency. 2.Hereby authorizes and directs the City Manager and designees to execute all documents and take all actions necessary to implement this Resolution,including without limitation the execution of grant deeds,certificates of City of South San Francisco Printed on 6/6/2025Page 1 of 2 powered by Legistar™7 File #:25-548 Agenda Date:6/11/2025 Version:1 Item #:1b. necessary to implement this Resolution,including without limitation the execution of grant deeds,certificates of acceptance,Second Amendment to the Land Lease Agreement in substantially the form as included as Exhibit A to this Resolution,and all other necessary instruments,as applicable,subject to approval as to form by the City Attorney. EXHIBIT A: Draft Second Amendment to the Land Lease Agreement ***** City of South San Francisco Printed on 6/6/2025Page 2 of 2 powered by Legistar™8 SECOND AMENDMENT TO LAND LEASE THIS SECOND AMENDMENT TO LAND LEASE (this “Second Amendment”) is entered into as of ________________, 2025, by and between the SUCCESSOR AGENCY TO THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF SOUTH SAN FRANCISCO, a public body, corporate and politic (“Agency”), and MAGNOLIA SSF, LP, a California limited partnership (“Magnolia”). Magnolia and Agency are collectively referred to herein as the “Parties.” RECITALS A. Agency is the Successor Agency to the former Redevelopment Agency of the City of South San Francisco (“Landlord’s Predecessor in Interest”), and is the fee owner of that certain real property located in the City of South San Francisco, California (the “City”), as more particularly described in Exhibit “A” attached hereto (the “Land”). B. Agency’s Predecessor in Interest and South San Francisco Magnolia Plaza Associates, a California limited partnership (“SSMPA”) entered into that certain Land Lease dated as of May 1, 1987 (“Original Lease”), which was recorded in the official records of San Mateo County on May 28, 1987 as Instrument No. 87080910, and of which a short form was recorded in the official records of San Mateo County on May 20, 1987 as Instrument No. 87078328. C. Pursuant to an Assignment and Assumption of Land Lease dated as of December 10, 2021 (the “Assignment”), which was recorded in the official records of San Mateo County on December 16, 2021 as Instrument No.2021-172432, SSMPA assigned all of its right, title and interest as tenant under the Original Lease to Magnolia, and Magnolia agreed to assume the Original Lease for the balance of the term thereof and to perform all of the covenants, duties, and obligations of SSMPA as tenant under the Original Lease, from and after the effective date of the Assignment. Agency, having consented to the Assignment, has acknowledged Magnolia as the tenant under the Lease. D. Agency and Magnolia entered into a First Amendment to Land Lease dated April 22, 2022, and recorded in the official records of San Mateo County on __________, 2022 as Instrument No. _____________________. The Original Lease, as amended by the First Amendment, is referred to herein as the “Lease.” E. The term of the Lease currently expires on May 1, 2062, and the parties desire to extend the term of the Lease to December 31, 2080 in connection with Magnolia’s refinancing of its leasehold estate in the Land, and to make other changes as set forth herein. NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and other good and valuable consideration, the Parties agree to amend the Lease as follows: 1. Term. The date of expiration of the Term of the Lease, as set forth in Sections 1.1(x) and 2.2 of the Lease, is hereby revised to December 31, 2080. 9 2. Elderly Household Definition. The definition of “Elderly Household,” as set forth in Section 1.1(i) of the Lease, is hereby revised as follows: “(i) ‘Elderly Household’ means a household containing at least one senior citizen, and which may also contain a qualified permanent resident, permitted health care resident or other person permitted to occupy the Dwelling Unit pursuant to California Civil Code Section 51.3 or successor statute.” 3. Use of Development. Paragraphs (a), (b) and (c) of Section 2.4 of the Lease are hereby revised to read as follows: (a) Elderly Households. The Development and the Land are to be used by Magnolia for housing solely for Elderly Households and related ancillary uses, except that up to two units of the Development may be set aside, one for a resident manager and one for an assistant resident manager, whose households need not qualify as Elderly Households (the “Manager’s Units”). (b) Compliance with Other Regulatory Agreements. Magnolia shall meet any requirements of any regulatory agreement executed by Magnolia which regulatory agreement shall enforce the requirements of any program or instruments of tax-exempt financing, low income housing tax credits, loans or grants, or other assistance to the Development provided by the County of San Mateo, the City of South San Francisco, the State of California, California Tax Credit Allocation Committee, or any other governmental agency. (c) Affordable Housing Requirements. (i) Affordable Units. During the Term, Magnolia shall rent seventy-five (75) Dwelling Units in the Development to, and ensure that these Units are occupied or, if vacant, available for occupancy by, Low- Income Households with incomes at or below 80% of the Area Median Income.(the “Affordable Units”). (ii) Allowable Rent. Magnolia shall charge Tenants of Affordable Units no more than the Allowable Housing Expenses for such Affordable Unit. Allowable Housing Expenses shall not exceed one-twelfth (1/12) of thirty percent (30%) of sixty percent (80%) of Area Median Income for a Household Size Appropriate for the Unit. For purposes hereof: “Allowable Housing Expenses” includes rent and a Reasonable Allowance for Utilities, as well as all monthly payments made by the Tenant to the lessor in connection with use and occupancy of the housing unit and land and facilities associated therewith, including any separately charged fees, utility charges, or service charges assessed by the lessor and payable by the tenant. “Household Size Appropriate for the Unit” means one person for a zero bedroom dwelling unit, two persons for a one bedroom dwelling unit, three persons for a two-bedroom dwelling unit, four persons for a three-bedroom dwelling unit, and five persons for a four-bedroom dwelling unit. 10 “Reasonable Allowance for Utilities” means the utility allowance published by the Housing Authority of the County of San Mateo from time to time. “Utilities” means garbage collection, sewer, water, electricity, gas and other heating, cooling, cooking and refrigeration fuels for a dwelling unit. Utilities does not include telephone, cable or internet service. (iii) Increased Income of Tenants Non-Qualifying Households in Affordable Units. If, upon recertification of the income of a Tenant of an Affordable Unit, Magnolia determines that a former Low- Income Household’s Adjusted Income has increased and exceeds the income limit for a Low- Income Household as defined above, upon sixty (60) days’ written notice to Tenant, such Tenant’s rent may be increased to 30% of the Tenant’s actual monthly household income or to a comparable rent for Low- Income Households occupying units of comparable size. If such an increase is expressly prohibited under a deed restriction of a lienholder, or federal IRS tax credit regulations applicable to the Property at the time, the rent shall remain at the then-current Low- Income Rent Limit, and the number of Low-Income Units occupied by Tenants with incomes over the Low- Income limit shall be reported to the Agency on an annual basis in Magnolia’s annual reports to the Agency as required herein. (iv) Over Income Households. Notwithstanding anything to the contrary contained herein, if any household’s income has been determined to be at or above 120% AMI for two consecutive annual income certifications, Magnolia may terminate such Tenant’s lease with a six month notice to vacate. (v) Termination of Occupancy. Upon termination of occupancy of an Affordable Unit by a Low-Income Tenant, such Affordable Unit shall be deemed to be continuously occupied by a Low-Income household, until such Affordable Unit is reoccupied, at which time the status of the Affordable Unit shall be determined based on the income level of the new Tenant. (vi) Lottery for Applications/ Waitlist. a. Listing of units on Doorway Housing Portal. Magnolia or its designee shall list all Affordable Housing Units on the Doorway Housing Portal (https://housingbayarea.mtc.ca.gov/), the regional affordable housing application platform administered by the Bay Area Housing Finance Authority (BAHFA). All public marketing, applications, and tenant selection for the Affordable Units shall be conducted through the Doorway system, unless otherwise approved in writing by the Agency. b. Lotteries through Doorway. The Owner or Owner’s designees shall use the Doorway platform to conduct a lottery for lease-up of the Affordable Units. The lottery shall be randomized and in accordance with an applicable Agency-approved 11 Marketing Plan. Following the lottery, Doorway will generate a rank ed list of applicants to determine the order of consideration for unit offers. c. Live/ Work Preference. In order to ensure that there is an adequate supply of affordable housing within the City for City residents and employees of businesses located within the City, to the extent permitted by fair housing laws and other applicable laws, and consistent with the program regulations for funding sources used for development of the Project, at initial lease up, Magnolia shall give a preference in the Development to households that include at least one member who lives or works in the City of South San Francisco. Magnolia will implement any preferences in the rental of Inclusionary Units in the Development pursuant to a preference plan approved by the Agency. Magnolia shall implement a preference policy prioritizing the selection of applicants who meet any of the following requirements: 1. At least one member of the applicant household performs at least 20 hours of work within each calendar week for an employer within the City; 2. At least one member of the applicant household currently resides within the City; 3. At least one member of the applicant household has previously resided in the City; 4. At least one member of the applicant household has received and accepted a bona fide offer of employment within the City. (vii) Income Certification. Magnolia shall obtain, complete, and maintain on file, immediately prior to initial occupancy and annually thereafter, income certifications from each Tenant renting any of the Affordable Units. Magnolia shall cause each Tenant in an Affordable Unit to execute a Certification of Tenant Eligibility in the form attached as Exhibit C. Magnolia shall fill out the "Development Owner" portion of the Certification of Tenant Eligibility and provide it to the Agency along with supporting documentation collected by Magnolia. Magnolia shall make a good faith effort to verify the accuracy of the income provided by all applicants or all members of the occupying household, as the case may be, in the income certification. To verify the information Magnolia shall take two or more of the following steps: (a) obtain pay stubs for the most recent two months; (b) obtain an income tax return for the most recent tax year; (c) conduct a credit agency or similar search; (d) obtain an income verification form from the applicant's current employer verifying employment for the last two months; (e) obtain an income verification form from the Social Security Administration and/or the California Department of Social Services if the applicant receives assistance from either of such agencies, verifying assistance for the last two months; or (f) if the applicant is unemployed and does not have a tax return, obtain another form of independent verification. Copies of the Certifications of Tenant Eligibility and accompanying documentation must be submitted to the Agency annually for each of the Affordable Units. 12 (viii) Annual Report to the Agency. Magnolia shall submit to the Agency: (a) not later than the ninety (90th) day after the close of each calendar year, or such other date as may be requested by the Agency, a signed copy of the Certification of Program Compliance in the form attached as Exhibit B; and (b) within fifteen (15) days after receipt of a written request, any other information or completed forms requested by the Agency in order to comply with reporting requirements of HUD, the State of California, and the Agency; including but not limited to reports, records, surveys evidencing compliance with the Agreement. (ix) Additional Information. Magnolia shall provide any additional information reasonably requested by the Agency to the Agency. The Agency shall have the right to examine and make copies of all books, records or other documents of Magnolia which pertain to the Project. (x) Records. Magnolia shall maintain complete, accurate and current records pertaining to the Development, and shall permit any duly authorized representative of the Agency to inspect records, including records pertaining to income and household size of Tenants and Rent charged to such Tenants. All Tenant lists, applications and waiting lists relating to the Development are to be at all times: (a) separate and identifiable from any other business of Magnolia; (b) maintained as required by the Agency, in a reasonable condition for proper audit; and (c) subject to examination during business hours by representatives of the Agency. Magnolia shall retain copies of all materials obtained or produced with respect to occupancy of the units for a period of at least five (5) years. The Agency may audit, examine and make copies of all books, records or other documents of Magnolia that pertain to the Development. (xi) On-site Inspection. The Agency may perform, or cause to be performed, an on-site inspection of the Development (including Affordable Units, subject to the rights of Tenants) at least one (1) time per year during all business hours and upon reasonable notice (if such inspection includes entering any occupied Affordable Unit, then twenty-four hours' notice shall be considered reasonable) to monitor compliance with this Regulatory Agreement and any other requirements of the Agreement. Magnolia shall cooperate in making the Development available for such inspection. After the completion of an inspection the Agency shall deliver a copy of the inspection report to Magnolia. If the Agency determines as a result of such inspection that there are any life-threatening health and safety related deficiencies, Magnolia has the obligation to correct such deficiencies immediately. If the Agency determines as a result of the inspection that there are any deficiencies for any of the inspectable items in the Development, Magnolia shall correct such deficiencies within fifteen (15) days from the delivery of the inspection report or if a period longer than fifteen (15) days is reasonably necessary to correct the deficiency, then Magnolia must begin to correct the deficiency within fifteen (15) days and correct the deficiency as soon as reasonably possible. In addition, Magnolia acknowledges that the Agency may re- inspect the Development to verify all deficiencies have been corrected or rely on third party documentation submitted by Magnolia for non-hazardous deficiencies. 4. No Modification or Waiver. Except as otherwise expressly set forth herein, all other terms and conditions of the Lease shall remain in full force and effect. 13 5. Counterparts. This Second Amendment may be executed in any number of identical counterparts (including by facsimile and by “.pdf” or other digital format), each of which shall be deemed to be an original, and all of which shall collectively constitute a single agreement. 6. Capitalized Terms. Capitalized terms used without definition herein have the meaning ascribed to such terms in the Lease. 7. Successors and Assigns. This Second Amendment shall be binding upon Agency and Magnolia and their respective successors and assigns. In the event that Agency transfers ownership of the Land to the City or to the City of South San Francisco, as Housing Successor to the former Redevelopment Agency of the City of South San Francisco (“Housing Successor”), and assigns its rights under the Lease to the City or to the Housing Successor, Magnolia hereby consents to such transfer and assignment. IN WITNESS WHEREOF, the Parties have executed this Second Amendment as of the date first written above. LESSOR: SUCCESSOR AGENCY TO THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF SOUTH SAN FRANCISCO, a public body, corporate and politic By: ___________________________ Sharon Ranals, Executive Director ATTEST: By: ___________________________ Rosa Govea Acosta, Successor Agency Clerk APPROVED AS TO FORM: By: _____________________________ Sky Woodruff, Successor Agency Attorney 14 LESSEE: MAGNOLIA SSF, LP, a California limited partnership By: _______________________________ 15 EXHIBIT A LEGAL DESCRIPTION [To Be Attached] 16 EXHIBIT B INITIAL/ANNUAL CERTIFICATE OF PROGRAM COMPLIANCE [To Be Attached] 17 EXHIBIT C FORM OF CERTIFICATION OF TENANT ELIGIBILITY [To Be Attached] 18 STATE OF CALIFORNIA ) ) COUNTY OF __________________ ) On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. ______________________________________ Name: _______________________________ Notary Public A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 19 STATE OF CALIFORNIA ) ) COUNTY OF __________________ ) On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. ______________________________________ Name: _______________________________ Notary Public A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 20