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If similar reductions could in fact be achieved, this could be a meaningful rent decrease for tenants, which, when considering ongoing deed restrictions and limitations on rent increases, and assuming some escalation of market rents over time, could improve the longer-term affordability benefits. However, as noted, actual rent savings compared to overall costs will be highly project- and market-specific, and potentially variable over time. Again, these benefits could only be effectively evaluated when a project came forward. Long-Term Risks. The great majority of projects acquired through the CSCDA program have been relatively recently constructed housing developments; they are therefore attractive because they do not require significant rehabilitation or investment up front. Program proponents note that every transaction is supported by a 12-year property condition report that evaluates and establishes a reserve to address expected property maintenance and repairs. However, if the City (or another entity such as a non-profit housing organization) chooses to acquire a property at the 15-year mark, it would be taking on an aging asset with likely escalating maintenance costs over time. And, as rents are restricted, by definition, and rent increases capped, there remains the risk that additional debt or costs may accrue to the project in the future as maintenance costs escalate to an extent that may outpace allowable rent increases. An important item to note is that the City does not have any control over new debt that may be incurred during the first 15 years of the project, meaning that there could be considerable uncertainty about the total obligation being assumed at the end of the 15- year period if the City wished to acquire or transfer the property to a housing non-profit to ensure permanent affordability. However, CSCDA has indicated that the due-diligence process should be able to sufficiently project repairs and maintenance, and it would only be in the case of a catastrophic event that any new debt would need to be incurred. Other Considerations Ability to Establish Project-Specific Preferences. Staff has been asked if there is the ability to establish particular preferences (e.g., for veterans, or the City's existing Preference Priority Program), in rental of deed-restricted units. There is some flexibility in this regard, particularly since a WHP acquisition would not involve any federal funds, and the City could request inclusion of additional preference for veterans or others as part of the regulatory agreement. However, the property owner, like any landlord, is required to abide by state and federal Fair Housing laws, and it may not be possible to offer an exclusive ability to rent to a single group, such as veterans, even if a degree of preference could be established. Staff also notes that any tenant would need to be qualified on all counts (e.g., income, rental history, etc.), and not all veteran applicants may be eligible or qualified as a result. Regional Housing Needs Allocation (RHNA). Pursuant to state housing law, the City is assigned a RHNA, which includes a target number of housing units for which it must plan, at various affordability levels. Existing state law does include some provisions for conversion of market-rate to deed-restricted housing, and how those units may be "counted" against the City's RHNA obligations. These provisions are most favorably applied in the conversion of market-rate to lower-income (low- and very-low) units, which Page 7 of 9