Agenda

Return

C. 18

To:	Board of Supervisors
From:	Sharon L. Anderson, County Counsel
Date:	February 4, 2014

Contra

Costa

County

Subject:

APPROVE AND AUTHORIZE CONFLICT WAIVER WITH GOLDFARB & LIPMAN LLP

APPROVE	OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR	RECOMMENDATION OF BOARD COMMITTEE

Action of Board On: 02/04/2014

APPROVED AS RECOMMENDED

OTHER

Clerks Notes:

VOTE OF SUPERVISORS

AYE:

John Gioia, District I Supervisor
Candace Andersen, District II Supervisor
Mary N. Piepho, District III Supervisor
Karen Mitchoff, District IV Supervisor
Federal D. Glover, District V Supervisor

Contact:	Kathleen M. Andrus, Deputy County Counsel, 925 335-1800
cc:	Kathleen M. Andrus, Deputy County Counsel Kara Douglas, Conservation and Development

I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown.
ATTESTED: February 4, 2014
David Twa,

BY:	, Deputy

RECOMMENDATION(S):

APPROVE and AUTHORIZE County Counsel or her designee to execute on behalf of the County a form acknowledging a conflict of interest and consent to Goldfarb and Lipman LLP representing the County in connection with a loan of approximately $2.2 million of Home Investment Partnership Act (HOME) funds and Housing Opportunities for Persons with AIDS Program (HOPWA) funds to the developer of Ohlone Gardens, an affordable housing project in El Cerrito.

FISCAL IMPACT:

There is no General Fund impact. HOME and HOPWA funds are provided to the County on a formula allocation basis through the U.S. Department of Housing and Urban Development (HUD).

BACKGROUND:

The County is an existing client of Goldfarb. Goldfarb represents the County on various legal issues related to redevelopment dissolution, new development financed by the County, and the preparation of legal documents for County-funded housing programs. Because Goldfarb’s concentration of work is in affordable housing, it is not uncommon for the firm to have an attorney-client relationship with more than one party to a complicated housing transaction.

Attached is a letter from Goldfarb that requests that the County acknowledge and waive the conflicts that exist in a transaction in which Goldfarb will represent the County and the City of El Cerrito (City), both of which are lending money to Oholone Gardens, L.P. (Developer), the developer of Ohlone Gardens, a 57-unit affordable housing project in El Cerrito (the Development). The letter sets forth the attorney-client relationships that could affect the firm’s representation of both the County and the City and states that different attorneys within Goldfarb will represent the County and the City. The proposed consent to Goldfarb’s dual role is attached to Goldfarb’s letter.

In the proposed transaction, the County will loan $1,440,000 of HOME funds and $750,000 of HOPWA funds, for a total loan of $2,190,000 (the County Loan) to the Developer. Proceeds from the loan will be used to construct the Development. The County loan will have a 55-year term and will be secured by a deed of trust.

In June 2009, the El Cerrito Redevelopment Agency loaned $3,500,000 to the Developer (the Agency/City Loan) to acquire real property and construct the Development. The Agency/City Loan has a 55-year term and is secured by a deed of trust. Goldfarb represented the Agency/City when it made the Agency/City Loan to the Borrower. In conjunction with the County Loan, the County and the City will enter into an intercreditor agreement that will result in the County’s deed of trust and the deed of trust that secures the Agency/City Loan to have equal lien priority. The intercreditor agreement will also set forth the terms under which the County and the City will share a portion of the cash generated by the Development and used to reduce the outstanding principal balances of the County Loan and the Agency/City Loan. Goldfarb intends to represent both the Agency/City and the County in the preparation of the intercreditor agreement.

In June 2013, the City loaned $2,860,000 to the Developer (the Infill Loan) to construct the Development. The Infill Loan has a 55-year term and is secured by a deed of trust. Goldfarb represented the City when it made the Infill Loan to the Borrower. In conjunction with the County Loan, the County and the City will enter into a subordination agreement under which the deed of trust that secures the Infill Loan will be subordinated to the County’s deed of trust. Goldfarb intends to represent both the City and the County in the preparation of the subordination agreement.

Staff for the Conservation and Development Department have advised the County Counsel’s office that they have selected Goldfarb to draft the loan documents to be used by the County when the County makes the loan to the Developer due to Goldfarb’s familiarity with the Ohlone Gardens project. In addition, as discussed above, if the conflict waiver is granted, Goldfarb will also be tasked with the preparation of the intercreditor agreement between the County and the Agency/City and the subordination agreement between the County and the City. All of these documents will be reviewed by the County Counsel’s office and approved as to form.

CONSEQUENCE OF NEGATIVE ACTION:

Goldfarb would not be able to continue to represent either the County or the City in connection with the project. The result would likely be increased costs for the County and a delay in the completion of the Development.