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Mayor Tarver asked the likelihood of being challenged on the use of Affordable Housing funds? Mr. Bocian stated that last year Council approved action which took $2.9 million of lower income housing funds for the purpose of the Case Avenue project. That $2.9 million was comprised of $2.2 million from the sale of the land and $700,000 as a fee waiver. If we assume that the $2.2 million is used to purchase the site, the City would be fine with AB 1600. If there were a change in the $2.2 million the City would be in a situation where there would have to be additional findings and we would need to identify other uses of the funds by 1997. Ms. Acosta stated that the AB 1600 process is one in which every five years the City is required to review the situation and determine if there is still a need for the money and if there are active plans to spend the money. Mr. Pico had been opposed to this project from the beginning because he does not feel it is a very equitable financial scheme for the City. The City is putting out $738,000 in fee waivers and that will be converted into a 2% simple interest loan with the principal balance repaid at the termination of the lease (55 years). Also being given is a $294,000 fee advance for growth management, a $626,000 lower income fee waiver, a $518,000 gap loan, and $260,000 in home funds. The City will pay $1.2 million to extend Junipero so that this project can happen. That comes to $3.6 million of the City's money. Plus, we're putting up the land which is another $2.2 million which we will own in 55 years and won't be worth much. The developer is investing only one thousand dollars and will be getting 40% of the cash flow for the 55 years. After the first year the developers are only investing the tax credits that they will get from this property. The City bears the risk in this project and the City can get better returns on its money. The City should reject the project. Ms. Dennis questioned the increased level of risk by the City and the loss of federal support for the project. If there is going to be a mixed housing and affordable housing projects, she wants the community to support it and for Council not to scrap all the work that went into the project. If the financing was reworked, it would be beneficial. Mayor Tarver commented if there was another proposal that could produce affordable housing in Pleasanton he would be willing to discuss it. If additional money is invested, the project will be under construction and the City will have affordable housing which no other City is producing. The City collects fees to produce affordable housing. The state and federal government is not coming up with monies to product affordable housing and this has to be a quality project with a swimming pool. If there is a way for other cities to buy-in and get their affordable housing credits invested in this project as a way of making it less financially risky for Pleasanton, he'll consider that. Ms. Michelotti asked that the developer address some of the concerns and questions that Council has raised. 08/22/95 -17-