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Bill McClure, A. F. Evans Co. Inc., stated that his company has built 25-30 affordable housing projects in the last fifteen years. His partner is putting $2.2 million into this project. The rules changed when HUD redesignated Pleasanton as a difficult and expensive area to develop. The only way to do this project was to go for the 9% tax credits. Because certain cities were redesignated as difficult to develop, a lot of projects then had to go to the tax credit allocation committee and try to get additional tax credits in order to make up the gap. In addition, the Northridge earthquake resulted in the City of Los Angeles receiving many millions of dollars to put into their projects. The new tax credit allocations that come out next year will make it more difficult for suburban communities to get tax credits. Ms. Michelotti asked about the point process, what happened with the process and how would this project have measured up under different guidelines, or if the Northridge earthquake had not happened. Mr. McClure replied that a perfect score is 100 points (the project is designed the way the rules ask). Above that, you can received bonus points on the amount of financial support that was contributed by local agencies, housing authorities, cities, redevelopment agencies. This project received 108 points. In a normal year, the 108 score would have been more than enough to have this project approved without any problems. Because of competition, it took 110 points. When the calculations are done, those that got 110 points were those that put X-percent of money (local grants or contributions) to the project. This project, based on the costs of the project, would have required the City of Pleasanton to have put in $4.5 million. That would have almost depleted the City's affordable housing fund. Mr. Pico asked how much money the City is putting into the project or is at risk for. Mr. McClure stated that certain qualifications are consideied contributions. Ms. Michelotti asked what the City's contribution was? Mr. McClure stated the contribution was the fee waiver ($738,000). The land lease did not count towards the contribution. Mr. Pico clarified Mr. McClure's statement that Mr. McClure's partners are putting in $2.2 million. Those are 4% tax credits that investors are getting; not new money being added. Mr. McClure stated that is how all affordable housing is financed. Mayor Tarvet clarified that the 60/40 return on cash flow was based on how much money the City put into the project. There was discussion about making sure the City got the seven year loan repaid and nothing should go to the development fees or to the partners until such time as the loan obligation is met. 08/22/95 -18-