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interest. Therefore, the agency would have monthly debt service of approximately $99/month for 20 years (unless the loan is paid off earlier). Although the City would be the funding source for the DPA loan, the funds would not come from the City's federal HOME grant (but rather from the Lower Income Housing Fund), and HOUSE, Inc., would be making regular payments on the loan as soon as the transaction is closed. As stated earlier, staff believes that these additional modifications address the concerns expressed by the Commission at the October meeting while still maintaining the basic concept approved by the Commission. In addition to the modified financing concept, staff is providing the detailed fmancial and "application" materials that were requested by the Commission at the August meeting. [These items were not provided at the October meeting due to the presentation of a significantly revised concept to purchase the below-mazket priced PHAP home.] The attached information includes the items that are required when an agency applies to the City for funding through the City's federal grant programs (e.g., HOME and/or CDBG). Staff believes that this information further demonstrates the agency's depth of experience and commitment to its mission of providing housing for a special needs population through a unique and successful grass roots model. In addition to the application information, staff has included a draft sample contract for HOME funds and a sample promissory note and deed of trust. The draft contract is based on the model used for past allocation of HOME and CDBG funds (approved by HUD and Alameda County). The promissory note and deed are based on the documents utilized in the 2006 purchase by HOUSE, Inc., of its most recently purchased property on Tanager Drive. The terms of the promissory note state that, in the event the property is sold in the future, the City will receive a portion of any equity equivalent to the percentage of City funds in the total financing package. While HOUSE, Inc., has expressed that its priority is to retain the home, the promissory note secures the City's investment and provides the potential for a return in the event of a future sale. Prior to submission to the City Council, staff, including the law department, will review the documents to address current requirements and any inclusions requested by the Commission. STAFF RECOMMENDATION Staff recommends that the Commission recommend that the City Council approve the sale of a below-mazket home to HOUSE, Inc., for the purpose of providing additional housing units for developmentally disabled adults, and approve a loan in the amount of $195,000 from City HOME funds to assist with the purchase. In addition, staff recommends that the Commission indicate whether or not HOUSE, Inc., should also pursue a loan through the City's Down Payment Assistance program (either to reduce the amount of the HOME loan or the amount of the agency's down payment). The Page - 3 -