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While it is difficult to predict the replenishment of the fund, over the past four years, the fund has received approximately $1.9 million and staff anticipates that this is reflective of the pace anticipated in the future. However, there are some larger projects, including the Auf der Maur development that will provide at least $1,041,421 in approximately 18 to 24 months and the Pacific Pearl development in Staples Ranch that is estimated to provide $330,000. In general, the largest share of revenue to the LIHF will continue to be from lower income housing fees, with miscellaneous revenues from land leases, and other sources also contributing and therefore, there is reason to assume that the amount of annual revenue will remain consistent in the near future. Nevertheless, the City has made a commitment to use a significant portion of the LIHF on Kottinger Gardens since the potential of obtaining this level of affordability in the market place is highly unlikely and because there are not any competing affordable projects planned for the near future. Option 2 — Provide a combination of fee waivers and a financial contribution. The City's Inclusionary Zoning Ordinance provides that the City Council may waive or defer City development impact and/or building permit fees as an incentive for an affordable development. While the City has not historically waived city permit fees, at times it has waived development impact fees. However, while this later approach was at one time effective, state law currently requires a developer to employ prevailing wage labor if a governmental agency contributes financially to a development and therefore, the use of this incentive has diminished over the years. However, for this project, MidPen will be using prevailing wage labor and therefore, there will not be a financial impact from this requirement. In total, City fees are estimated at $2,356,232 for this development. Of this amount, the following combination of fee waivers and City financial appropriations could be used to reach the desired city contribution: Option 2 Financial Contributions Source Amount In Lieu Park Dedication Fee $645,500 Public Facilities Fee $275,000 _ Traffic Impact Fee $312,000 City Financial Contribution (LIHF) $2,518,000 Total $3,750,000 While the above would reduce the City's financial contribution, it would impact the City's ability to make other necessary community park, roadway and facility improvements made available through the fee revenue and therefore, it could have an overall negative impact on the community. To address this situation, when the City has waived development impact fees it has typically "backfilled" them through an allocation from the LIHF which assured that there would not be an overall impact to the areas intended to benefit from receipt of the development impact fees. Considering this financial arrangement, pursuing the backfilling concept is the same as simply selecting Option 1. Option 3- Do nothing and reassess the tax credit environment during the next round of funding in March 2016. Overall, while the tax credit environment may change prior to the next round of application submittals, MidPen's assessment is that awards will remain competitive for some time into the future and therefore, this approach may not yield timely results. Nevertheless, the potential exists that after multiple application Page 6of7