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279 and certainly those needs the Council has voted for in the past does not pro- hibit them being approved within that. He feels there is some other mechanism which allows those projects to be approved without having that exemption; the exemption has caused more problems than it has solved. Councilmember Butler stated he has argued many times when this has come up that there is a great difference between having the door open for a project to be approved and encouraging those kinds of projects through positive incentives and that is what the exemption process is; it is a mechanism at- tempting to encourage the type of housing which otherwise the need does not get recognized in the market place. Councilmember Mohr stated that the exemptions are always granted at the discretion of Council. Mayor Mercer stated he has supported low-income exemption before. He feels the low-income exemption as it was changed under a lot of pressure brought in rents that ran anywhere from $50-$70 above the current market rate; not affordable rate but market rate, and at the time the apartment projects were brought to Council under the auspices of being affordable he brought a newspaper to Council meeting and read many, many ads which listed apartments for rent in the community at $680.00, $650.00, $640.00, when the affordable rent that the developers were going to charge in those projects was at $725.00. The affordable housing formula that is up for vote now allowed those projects to come in above the market rate; to him that was not an affordable rate. All that really did was provide a way around the growth management plan by allowing 25% of the projects to be rented at above market rate and exempt them from the growth management plan. He did not think that was the intent. He stated Councilmember Brandes is correct: if a good low income project comes before Council, then the Council has every right to approve it. The General Plan Review Committee and the Planning Commission said that as well. They ask that it be averaged at 650 because if Council found a really good low income project, approve it and then average it out the next year. The Council has not elected to do that; the Council has elected to allow all of the substan- tial apartment and condo projects to come in including Mr. Ferreira's. It was an affordable project; it has now ended up that instead of building the proj- ect he was going to build at the prices he was going to build them at he changed the nature of the project and will not be building as many one and two bedrooms as originally planned; more will be two and three bedrooms and he has increased the price and design to make it more of a typical condo project. So there was not a one of those of the many 1500/1800 units that were approved that are really affordable. He feels the exemption that is going to be ap- proved will not provide for the housing. He is in favor of affordable housing but he does not see this as the mechanism to provide it. Councilmember Mohr stated her recollection of the staff report at the time that Council took that action was that the rents would come in at $50/100 be- low market; she requested staff to locate a copy of the report and provide her with a copy. Councilmember Butler stated the above figures are the builders estimate, not actual figures; he feels it is unfair to characterize that project as being overpriced it could not be rented over market. In the long run there are units on the market now that are helping balance the supply and demand situation than there otherwise would have been. - 21 - 5-3-88