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BACKGROUND The Bernal Property's affordable homes are all subject to Restrictive Covenants that establish requirements related to home ownership, home sales and home purchases. In accordance with these requirements, the City is informed when an owner intends to sell and it provides the owner with the "Maximum Sales Price" for which the home may be sold. Basically, these requirements limit appreciation to adjustments to the HUD Area Median Income (AMI). In this case, the home's original sales price in 2004 was $199,000, and the 2014 sales price assuming a 7.7% adjustment in the AMI from 2004 to 2014 is $214,252. In addition, the City allows for reasonable real estate fees and in cases where the City has assumed ownership (which would yield a sales price of $226,252), it has also allowed for necessary home improvements. Because staff has not yet inspected the property, it is unaware what types, if any, improvements may be necessary. However assuming, costs of up to $8,500, the approved sales price for this home could be $234, 752. DISCUSSION While most Bernal affordable homes have sold through a typical real estate process, there have been a few instances where the City has exercised its right set forth in the Restrictive Covenants to be an "Eligible Purchaser" and has purchased homes and resold them utilizing the Tri-Valley Housing Opportunity Center to conduct the sales and qualification process. In this case, staff is of the opinion that this process is beneficial in that it allows the City to attempt to identify a buyer that would benefit from the unique improvements made to the property. Staff has had some preliminary discussion with local agencies and determined that there may be interest. However, if that interest, or the general market, does not result in a household that requires these improvements, staff would sell the home to any eligible household. Staff anticipates the sale process, which includes, pre-qualification, attendance at a first-time home buyer class through the THOC, and a City inspection of the property, will be finalized in approximately 120 days. In addition, the City's involvement allows it to amend the Restrictive Covenants to provide greater protection for retaining the property in the event of a foreclosure. Submitted by: Fiscal Review: Approved b G r/ S even Bocian Emily W gner Nelson Fialho Assistant City Manager Director of Finance City Manager Page 2 of 2