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various units, the difference between market rate rents and deed-restricted rents has the potential to vary widely and could potentially be quite small in some instances. Critics of the CSCDA program have pointed out that affordability benefits are sometimes negligible, but the fees that accrue to the parties involved in a transaction can be considerable. A December 2021 article in Forbes' (Attachment 3) noted the high transaction costs attached to many recent projects in the state, in many instances resulting in a municipal debt that was 10 to 25 percent above the selling price of the project. Attachment 4 summarizes a number of recent bond issuances by CSCDA-CIA, based on data published by the organization. As shown in the table, issuance costs for those transactions have ranged between 1.72 percent at the low end, to as high as 15.3 percent. The City's Financial Adviser, who reviewed this data, suggested that values over three percent would be considered to reflect relatively high costs. It was also noted that, in addition to third parties, CSCDA also accrues annual "authority fees" over time, adding many more millions of dollars in costs over the 30-year life of the bond. The City of San Jose report (Attachment 2) also noted that interest on repayments made through the Series B or C bonds had been set at a relatively high interest rate of 10 percent. However, it was noted that this could be mitigated to some degree through negotiation of terms, capping of fees or creating an incentive structure. The CSCDA representative with whom City staff has been in contact, confirmed 10 percent as a typical Series C bond interest rate, and this is confirmed in the summary of recent CSCDA-CIA bond issuances, in Attachment 4. While these fees are of concern, staff notes that the specific balance between costs and benefits can only fairly be evaluated on a case-by-case basis with respect to a particular acquisition, since it will be market and transaction specific. If the City Council chose to pursue a project, the details of the transaction would need to be carefully scrutinized and evaluated. Review by an independent consultant with expertise in this field and input from a financial adviser on any negotiated deal terms would be strongly recommended also. With respect to affordability benefits, the proponents of the Workforce Housing Program have noted that market rents in Pleasanton are rapidly increasing and have historically been at relatively high levels compared to the County and the region; they have indicated that projects typically target a rent saving of at least 10 percent over current market-rate rents. For example, with respect to rent savings, data provided by CSCDA for the Avana Stoneridge Apartments showed a projected average monthly rent savings of between $364 and $680 a month or an average of 17.7 percent, and an aggregate rent savings (assuming all units are deed-restricted) of over $2 million annually. Actual rent savings would likely vary since not all units would be subject to immediate deed restriction, and other factors such as market-rental rates and affordability levels would come into play. https://www.forbes.com/sites/schifrin/2021/12/02/california-scheming-municipal-bonds-workforce-housing-crisis- luxury-apartments/?sh=9d8086030010 Page 6 of 9