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Regarding the second option requiring a payment of payment of $4.5 million rather than providing affordable units, is intended to provide the City with a portion of the funding needed to develop, or assist in developing, future inclusionary affordable housing. Further, it could be used to develop programs or services for creating housing for lower income households. An example would be funds to expand the Tri- Valley Housing Scholarship Program or funding for housing for developmentally disabled adults. In addition, the City has committed $10 million from its Lower Income Housing Fund (LIHF) to the Kottinger Gardens project and this in lieu payment would represent a significant contribution toward replacing or enhancing that contribution. Finally, because the fee is not technically a Lower Income Housing fee, a case could be made that the portion of the fee above the current required LIHF amount ($3,458,579) could be used for non - housing related projects such as one -time improvements to City parks, facilities or services. Note that if the City elects to accept the cash payment, the Developer will still be required to include three units designed for the physically disabled as set forth in the AHA. However, the units will not be BMR affordable units. The AHA requires the City Council to notify the developer of its selection of the fee versus the rent restricted unit option within 45 days after being notified of the developer's intent to begin project construction or within one year from the effective date of the AHA and as such, staff intends make a recommendation to the City Council at a later date consistent with that timeline. Notwithstanding the timeline, the developer has approved the current schedule for this matter. The Housing Commission approved the AHA at its meeting of June 20, 2013 and that action did not include a preference for either of the two options. Further, the AHA clearly states that the decision rests solely with the City Council and as such the Housing Commission has not been asked to weigh in further on this issue. Finally, as a reminder, in addition to the cash payment option included in the Ring AHA, the recently approved Summerhill project on West Las Positas Blvd. also includes a cash payment option. Included as Attachment 4 is a table detailing the amount and type of affordability in similar projects approved recently by the City Council. DISCUSSION While there are many alternatives that can be developed on this matter, there are two fundamental questions that should be addressed at this time. The first is should the City Council require inclusion of the BMR affordable units included in the AHA or accept a $4.5 million cash payment. The second is, if the City Council selects the cash payment option, how those funds should be used. Based on this staff has identified the following three alternatives: Page 4 of 9