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THE CITY OF CITY COUNCIL AGENDA REPORT pL£ASANTONo August 18, 2009 Assistant City Manager TITLE: APPROVAL OF AN EXTENSION FOR USE OF INCLUSIONARY UNIT CREDITS AS SET FORTH IN THE AFFORDABLE HOUSING AGREEMENT WITH PONDEROSA HOMES SUMMARY In March 2006, the City Council approved the First Amendment to the Affordable Housing Agreement (AHA) with Ponderosa Homes for its 363 unit Busch Road housing development. This Amendment provides Ponderosa with 51 Inclusionary Unit Credits (IUC'S) to use for meeting affordable housing requirements for future development on its Busch Road site or subject to City Council approval, at other unspecified sites in the City. Thirty -three of the IUC's were used recently for the 110 unit senior housing community for residents 55 years and older recently approved for the Busch site, leaving 18 IUC's. Section 1(a) of the Amendment establishes actions that determine the time period during which the IUC's may be used. Based on these actions, the IUC's will expire on March 26, 2012. The City has received a request from Ponderosa Homes for a five year extension (until March 26, 2017) for use of the 18 remaining Inclusionary Unit Credits (IUC's). The City's adopted guidelines for inclusionary unit credits provides that IUC's will expire five years from the date of approval or from the date that it is possible to use the credits unless further extended by the City Council. As a result of this discretion, staff is forwarding this matter to the City Council for consideration. RECOMMENDATION Staff recommends approval of a five year extension as requested by Ponderosa Homes (Option 1). If the City Council concurs with staff recommendation, staff will memorialize the extension in a letter to Ponderosa Homes. FINANCIAL STATEMENT The recommended action will not result in a financial impact for the City.