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initial 10-year loan. This is similar to the second mortgage loans that the City funded directly through the Lower Income Housing Fund for PHAP homes on the Bernal property. Payments on the first 10-year loan would commence at the beginning of the third year and would be amortized over the remaining eight years of the loan. Therefore, the payments would be slightly higher (for example, about $550 per month versus about $300 per month fora $30,000 loan). However, borrowers would be able to increase their buying power by an additional $35,000 (or reduce their monthly housing payments by an additional $300). In addition, staff recommends that the Commission support using a 50/50 split between City and HELP funds. When the program was first developed, City funds were matched to Ca1HFA funds on a 25/75 basis (i.e., 25% City, 75% Ca1HFA). However, the transition to a 50/50 split will help to extend the Ca1HFA funds given the apparent demand that is developing for the DPA program. However, staff also recommends it have the flexibility to increase the CaIHFA portion of the loan if necessary to maximize the use of these funds. As an example, if the City was unable to use the Ca1HFA within its timeline, it would be beneficial to use the greatest amount of Ca1HFA funding available to avoid loosing the grant funds. 3) Increase Maximum Loan Amount The current loan limits are $60,000 for a low income household and $40,000 for a moderate income household. The logic behind the difference is related to an assumption that a moderate income household can theoretically afford more than a low income household and therefore would not need as much assistance. However, staff believes that the lower limit on moderate income borrowers has posed an impediment for some applicants, and the reality is that $60,000 is probably necessary even to a moderate income buyer. Nevertheless, staff has a concern with increasing the aggregate amount of assistance beyond $60,000 for either low or moderate income buyers and recommends that the limit be set at $60,000 regardless of income category. This change outlined above, in combination with the modifications discussed in item #2 above, would require the City to increase the amount of the City-funded DPA loan from $20,000 to $30,000. 4) Remove First-Time Buyer Restriction In late 2005, the Commission approved a modification to the DPA program to eliminate the first-time buyer requirement for "buyers who have owned a home in the past with resale restrictions through the Pleasanton Homeownership Assistance Program (PHAP)" (see section #2 in the attached program guidelines; in the event of a competing interest for funding, a priority is still given to true first-time homebuyers). Staff believes that this change resulted in a fair treatment of the first-time buyer issue and recommends that the guidelines be maintained as is for the present. Staff will continue to monitor demand for the Page-S-