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PUSD's action and in accordance with the Ponderosa AHA, Ponderosa IUC's will expire March 26, 2012 (five years from March 27, 2007). A copy of the staff report discussing this issue and the City Council minutes are included as Attachments 4 and 5. It should also be noted that in accordance with the PUSD Option Agreement, the PUSD had until June 2011 to fully acquire the 23.1 acre Busch Road site. As a result, based the five year term of the IUC's, Ponderosa could have had, potentially until June 2016 to utilize the IUC's. As a result, Ponderosa's request to extend the term of the IUC's to March 2017, while five years beyond the actual option termination date, is approximately one year beyond the maximum deadline set forth when the City Council approved Amendment 1 to the Ponderosa AHA. Since acquiring the site, Ponderosa Homes has received PUD approval to develop the 23.1 -acre optioned site with 110 single family homes for residents aged 55 years and older. As part of that PUD Ponderosa applied 33 of its IUC's to meet its affordable housing requirement. (Determined as follows 110 total units X 20% IZO affordability requirement for single family homes 22 affordable units required X 1.5 [the ratio required to use the IUC's on single family senior homes] 33 units.) As a result, Ponderosa now has a total of 18 remaining IUC's (51 IUC's approved originally less 33 used on the new development.) that in accordance with its AHA, it must use by March 26, 2012. Ponderosa is requesting that its use of the remaining 18 IUC's be extended until March 27, 2017 to reflect the amount of time it has taken to acquire and process the recent Bush Road development. Based on staff interpretation of Amendment 1 to the Ponderosa AHA, March 26, 2012 is latest date that Ponderosa may request the Council approve the use for any of the 18 remaining IUC's. However, usage does not assume that a project will be fully constructed, or approved by, that date. DISCUSSION The Section 1 (G) of the IUC Guidelines and Amendment 1 of the AHA with Ponderosa Homes establish a term of five years for use of IUC's. However, as noted above the Guidelines allow this term to be extended by the City Council. The AHA does not include extension provisions. In addition, Section of 1(d) of the AHA establishes that the City has sole discretion to approve of deny the IUC's on any property other than the Bush Road Property. Since, there are no further development opportunities for Ponderosa Homes to use credits on the Busch Property, any use of the IUC is subject to City Council approval. Finally, it should be noted that the Ponderosa IUC's may only be used by Ponderosa and may not be transferred to another developer. The decision to approve Ponderosa's request of an extension of IUC units is at the sole discretion of the City Council. Staff has identified three options for dealing with this request as follows: Option 1 Approve Ponderosa's request to extend the IUC's until March 26, 2017. As noted above, even if the extension is granted, use of the IUC's is subject to City Council approval. As a result, the extension provides only a longer time frame during which Page 3 of 4