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BACKGROUND <br /> The City's Policy for Write-Off of Uncollectible Accounts Receivable specifies criteria for <br /> designating an account as uncollectible states that accounts receivable should generally <br /> be written-off during the fiscal year in which an account is determined to be <br /> uncollectible, and requires City Council approval for write-off amounts in excess of <br /> $10,000. <br /> DISCUSSION <br /> Staff has identified an account receivable in excess of $10,000 which satisfies at least <br /> one of the criteria for designating an account as uncollectible. <br /> This is a second mortgage loan to a first-time homebuyer in the amount of $40,000 <br /> made through the City's Down Payment Assistance (DPA) program in March 2006 to <br /> assist in the purchase of the home at 2146 Arroyo Court in Pleasanton (this property <br /> was not one of the deed-restricted homes developed by the City in the past). The <br /> borrower repaid $8,825 of the loan through November 2010, but then defaulted on the <br /> City loan and the loan from the primary lender. The primary lender foreclosed on the <br /> property in 2012. The City's loan, as a junior security, was extinguished. <br /> The City's loan was a non-recourse loan (meaning that the only security pledged for <br /> loan repayment was the home and not the personal assets of the borrower). As such, <br /> the City's loan was legally extinguished in 2012 and cannot be collected from the <br /> borrower so, consistent with City policy, should be written off as uncollectible in this <br /> fiscal year. Because the loan is categorized as an account receivable in excess of <br /> $10,000, City Council approval is needed to write off this account. <br /> While Pleasanton has been fortunate not to have been impacted with a severe <br /> foreclosure crisis as seen in other communities, City staff has taken steps allowed <br /> under State law to receive earlier notices of loan defaults by persons in the City's <br /> affordable housing program. Such early notice from primary lenders will give the City <br /> greater opportunity to try to resolve situations without loan defaults or loss of affordable <br /> housing units, as applicable. <br /> Submitted by: Fiscal Review: Approve by: <br /> Steven Bocian Emily Wagner Nelson Fialho <br /> Assistant City Manager Finance Director City Manager <br /> Page 2 of 2 <br />