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Mr. Hirst suggested the following addition to Section 1. "Provided, however, that since a manufactured housing or mobile home park project will or may negatively rate the mortgage revenue bond program the word 'substantial' shall as to such a project mean not to exceed 8% of the dwelling units therein, or whatever lesser percentage would preclude a negative rating". Mr. Hirst felt that the use of this language would take care of his client's concern while leaving intact the ordinance. Mr. Levine indicated that if Council is interested in indicating its interest, it is not necessary to change the ordinance, but to prepare draft agreements with each property owner. It is clear 'substantial' may not mean the same thing in every project, therefore details should be worked out in the agreements. Discussion ensued regarding whether exemptions would be granted by ordinance or by agreement and if the exemptions from the Residential Allocation Program would be retained in the event the bond program did not succeed. Staff an~ Council discussed the percentage of participation and proposed that it should be 20-25% at least. Mr. Ted Fairfield, civil engineer, disagreed with the number of units to be built, indicating that persons per household is declining, which will allow more units to be built. He proposed some changes to the draft ordinance, as follows: (1) add subsection to 2-20.02 (Objectives) to provide for. stable and predictable annual programs for developers and builders; (2) page 4, 2-20.06 (c)(2) minimum of 100 or no more than 120 units; (3) tentative map to be submitted without having Residential Allocation Program approval; and (4) agree with problem in RAP alloca- tions not built. He stated he would be good if this could be resolved by a statement of intent. He further added that Council should take some action on those permits coming up, to extend or not to extend. Mayor Mercer indicated that Council cannot grant Mr. Parfish an exemption until his project has been approved. He would not exempt it until he finds out what the development consists of and its proposed build out. Mr. Ed Parrish, 2499 Westgate Avenue, San Jose, th~n spoke to Council regarding his project. He indicated (a) if Ordinance 1006 means he can quality for mortgage bond program at 8% of the project, he will proceed; (b) if mortgage bonds do not succeed, will he lose his RAP exemption. He stated he can sell 20% of his project at a price affordable to 80% of the medium family incomes. Mr. Levine indicated that if Council comes up with the appropriate figure for participation and if the developer delivers that amny units at the specified price and financing is available, then arguably they could be granted the exemption. Mr. Steven Tyler, of Ty-Cal Development Company, indicated his concern about a lot of people trying to get exemptions using bonds as a loophole. In his project all units are qualified and designed to FHA specifications. There is FHA and VA financing available so he is not using the bond program as a loophole. Mayor Mercer asked if all his units will be in the bond program. Mr. Tyler responded that 15% would be. Mr. Walker Indicated that the Council need~ to encourage participation or there will be no bond issue; even if everyone puts in 10-15% of their projects there will probably not be a bond program. Councilmember Butler stated what we are trying to do is to encourage low-cost housing and to make mortgage revenue bonds happen if possible. What do we need to do to put those two things together to make it work? We are asking whether we need a guideline to establish the agreements to be written. 10. 11/24/81