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Housing Program Manager Steve Hernandez explained the presentation is to discuss proposals for modifying the City's Down Payment Assistance Program to expand to more residents. He explained the City has had a Down Payment Assistance (DPA) program since 2003 to assist low- and moderate- income first-time homebuyers. The DPA loans are for a maximum of $20,000 with a 3.5% interest rate for 20 years and 50 homeowners currently have a DPA loan with the City. Housing Program Manager Hernandez stated the program has been used only once since 2015 due to the City's high real estate costs rendering $20,000 insufficient to make a down payment in Pleasanton. Housing Program Manager Hernandez shared three proposals which include increasing the maximum value of the loan to $100,000, adjusting the loan to 30 years with 0% deferred interest, and adopting a Shared Appreciation Loan Policy. The City of Livermore and Alameda County both have a Shared Appreciation Loan Policy. Housing Program Manager Hernandez proposed the DPA loan terms match the Alameda County Boost Program (AC Boost) to allow AC Boost to layer its loans with Pleasanton's DPA loan and make homeownership easier for borrowers. Assistant City Manager Dolan reviewed a proposed Preferences Program which was omitted from the staff report. He reported the Housing Commission recommends preference be given to long-term Pleasanton residents (minimum of five years), teachers, firefighters, police, city or county employees, and employees of non-profit agencies among other groups including single parents and the disabled. He recommends the 2002 preference system be updated to apply to all DPA applicants and not merely Below-Market Rate (BMR) homeowners. He stated 46 of the 50 DPA applicants are in BMRs however these proposed changes would open the door to more market-rate buyers. Assistant City Manager Dolan advised he will bring back the Preference Program modifications before funding for the overall DPA program in the coming budget cycles. Housing Program Manager Hernandez reported staff recommends increasing the maximum loan amount to $100,000, restructuring the loan terms, adopting a shared appreciation loan policy, directing staff to include $100,000-$300,000 in the FY 2020/21 midterm budget for funding, and directing staff to bring a Preference Program to City Council for review. Housing Program Manager Hernandez presented an Alternative Policy Option which only services low- income buyers and not moderate-income buyers. He noted staff does not believe this would be effective due to low inventory in a low-income buyer's price range in Pleasanton. He noted that even with a DPA loan many low-income buyers could not meet the industry-standard 40% Debt-to-Income (DTI) ratio. In response to Councilmember Pentin's inquiries, Housing Program Manager Hernandez explained the City has an extra layer of income calculations which leads to the discrepancy between the report tabbing low- and moderate-income buyers at 80% and 120% of Area Median Income (AMI) instead of the AC Boost definitions. He noted the numbers are slightly lower to increase the affordability of Pleasanton homes. He also noted current DPA loan recipients could not refinance using the proposed DPA rates if adopted. Lastly, he explained the $100,000-$300,000 figure allows the City to "test drive" the proposed changes before getting more aggressive on the funding. Councilmember Testa expressed her affinity for the program and believes it will be in demand. In response to Councilmember Testa's inquiries, Assistant City Manager Dolan clarified the number of recipients would be limited to the level budgeted for the program. He also advised the changes would happen in 2021. He also clarified the program could be opened to more than three units but would be at the City Council's funding discretion. City Council Minutes Page 3 of 5 October 20. 2020