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BACKGROUND Pleasanton has maintained a Down Payment Assistance (DPA) Program to assist first time homebuyers with obtaining home ownership since 2003. There is currently a total of fifty (50) homeowners who have a down payment assistance loan from the City. Of these loan borrowers, forty-six (46) reside in and own Below Market Rate (BMR) homeownership units', while the remaining four (4) own un -restricted, market -rate units. The purpose of the DPA Program is to provide low and deferred interest mortgages that supplement bank financing to assist low- (80% AMI) and moderate -income (120% AMI) households in purchasing homes in Pleasanton.2 The program, which is directed to first time homebuyers, is seen as an important addition to the City's other main home ownership effort which includes providing BMR homeownership units. On October 20, 20201 City Council approved modifications to the City's DPA Program to increase the maximum loan amount, restructure the loan terms, and adopt a "shared appreciation loan" policy for repayment to better assist prospective Pleasanton first time homebuyers. At that meeting, City Council also directed City staff to present a proposal to establish preferences in response to the Housing Commission's recommendation. The Housing Commission's recommendation included a request to provide preferences for "people who have been residents for at least five years and are employed as teachers, fire fighters, police, etc., or work with the City or County or non-profit agencies." DISCUSSION The modified Pleasanton Down Payment Assistance (DPA) Program currently provides up to $100,000 in down payment assistance for low- and moderate -income buyers. Assistance is in the form of a zero interest (0%) deferred loan that is amortized over 30 years. The DPA Program loan is also structured as a "shared appreciation loan" that is repaid with the principal balance amount plus a share of the appreciation either at the end of the 30 -year term or when the homeowner sells or transfers the property. With its new, favorable loan terms, it is anticipated that the DPA Program will receive a higher volume of applications from potential first time homebuyers hoping to be selected to receive a down payment assistance loan that will provide them the opportunity to purchase a home in Pleasanton. Consequently, as per the Housing Commission's recommendation, City staff is presenting a proposal to establish a preference system for specific public serving employees who are applying for a City DPA Program loan. This proposed DPA Program preference would ensure that a greater advantage is provided to these ' Below Market Rate (BMR) homeownership units have typically been provided through the Inclusionary Zoning program in Municipal Code Ch. 17.44. These units (single-family homes, townhouses and condos) are sold at an "affordable sales price", with appreciation limited, and the unit subject to resale restrictions. 2 The current maximum income limits for a 4 -person household is $95,350 for a 80% AMI household and $143,050 for a 120% AMI household. Page 2 of 5