CCMIN032090 - Laserfiche WebLink

125 Mr. Brandes expressed concern regarding the proceeds that the County will get. He stated that in 1994, there would be a major problem regarding the gravel trucks on E1 Charro Road and that he would like to see as much of the money from this project as possible go to that project. He asked if conditions can be put specifying where the proceeds from the development should go. Mr. Martinelli indicated that the County is obligated for one-half of the cost of the E1 Charro Road correction. He said that the philosophy of the transaction is to have the proceeds go back to the asset directly or indirectly. Ms. Mohr mentioned that in the past, when the affordable units hit the resale market, the units went on the market rate and the first buyers realized a windfall. She requested Mr. Martinelli to elaborate on the co-equity position mentioned in the staff report as a tool for controlling prices and inquired if the City shares in this co-equity. Mr. Martinelli explained that the County has not established the structure of the co-equity program, but it has committed to have the City oversee the program as co-administrator, if it wishes. The program features a silent second, representing a proportion of a subsidy of about 30%, which is reflected in the selling price. Ms. Mohr inquired if the County would realize the 30% value of the appreciation if the units were sold at some time in the future. Mr. Martinelli stated that the intent is to make the units available permanently to first-time homebuyers. The program is structured so that County or the agency responsible for the program would have the first right of refusal when there is a sale. There is a policy that the units will be re-sold to first- time homebuyers; otherwise, the agency can acquire the units back and resell them. An administrative cost would be included for holding the unit during the market transaction for the re-sale. To be legal, the agency holding the interest would have to be the lender rather than the equity owner, and the position will be a second deed of trust with a restriction that the interest rate will be paid by the buyer. Interest payments will not actually be made on it, but this will accrue and essentially build an equivalent amount of equity. When the unit is sold, the buyer will have his share of the equity. The program will also have its share, which will be put back into the subsidy for the second sale. Mr. Mercer inquired what would motivate a person to leave a house that he is able to purchase for $140,000. - 17 - 3-20-90