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this option could address a primary concern of the Commission including the amount of loan and the leveraging of funding to HOUSE, Inc., from other lending institutions. While this opportunity represented some potential, it raised a number of issues including lack of availability, an architectural design and floor plan that may not be suitable for the proposed use, and conformity with the Restrictive Covenants placed on the properly by the City that restrict the sale of these homes to afirst-time home buyer as part of a single household with no rental of units. Staff has put together a financial proposal in which the City's financial contribution would be $205,000 which represents 85% of the total purchase price. HOUSE, Inc., would provide a financial contribution of $50,000 including a down payment of $40,000 (15% of sales price) and approximately $10,000 worth of improvements to the property so that it is suitable for its proposed use. This amount is consistent with the $50,000 proposed previously by HOUSE, Inc., but represents a greater percentage contribution to the property. In addition, the City's contribution is significantly reduced from the $450,000 anticipated previously. Necessary improvements would include installation of rear yard landscaping and interior touch-ups. In addition to the above issues, the proposed option has added benefit to HOUSE, Inc., in that it would not be required to incur debt which places a burden on ongoing operations and the goal of increasing housing inventory to meet community needs. The City assumes no payment on its HOME financial contribution for the term of ownership, but as discussed below, it will share in any equity earnings on the property when the property is sold. While this option provides financial benefits that address many of the Commission's issues, there are some non-financial issues that should be discussed. First, as mentioned, the City's Restrictive Covenants, require that the property be sold to first time home buyers with low incomes and state that the property must be owner occupied with no ongoing rental of units. As a result of this situation, the City Attorney's office has reviewed the Restrictive Covenants and has determined that the proposed use of the property is generally consistent with their intent and the "spirit" of the City's focus in that the home will be occupied by individuals with low incomes and that there will not be any profiting by making rooms available to tenants. As a matter of fact, as an outcome of no debt on the property, HOUSE, Inc., has the opportunity to make the property available to individuals with very limited incomes. Nevertheless, the City will require that rooms be made available to individual who meet low income levels. Mr. Erickson noted that Julie Testa was unable to attend tonight's meeting due to a personal emergency. However, Norm Guest, a former board member, has agreed to attend the meeting in case the Commission has any questions. Vice Chairperson Casey asked whether the City would draw upon the "oldest" unused HOME funds to ensure that we do not run up against any problems with HUD expenditure deadlines. Scott Erickson confirmed that the City always draws upon the oldest funds first. In response to a follow-up question from Mr. Casey, Mr. Erickson Page - 2 -