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Finally, the Bernal homes were part of a significant effort on the part of the City to generate below-market ownership housing for households with limited incomes. Generally, supporters of this effort felt that these homes provide a significant opportunity to extend home ownership to households that maintained employment in lower paying occupations. Further, many advocates looked at these homes as "bridge" housing that paved the way for the eventual purchase of market-rate housing. Clearly, in many ways the proposed option does not meet this vision and need fully -that is, it is doubfful that tenants will gain full financial independence to the degree that they would be expected to acquire market housing. Nevertheless, this target segment of the population is clearly in need of quality housing and has little or no opportunity of acquiring it without significant assistance from local groups such as HOUSE, Inc. Not directly related to the Restrictive Covenants, because there is no single household that owns the property, there may be concern regarding its ongoing maintenance. To that end, HOUSE, Inc. has a demonstrated record of success in maintaining and operating its existing Pleasanton residential properties at a very high standard, and staff is unaware of neighbor complaints regarding any of its existing properties (which currently include three homes in Pleasanton and three in Livermore). HOUSING COMMISSION RECOMMENDATION The Housing Commission reviewed this matter on three separate occasions at its monthly meetings in August, October, and November 2008. Please refer to the attached excerpts from the minutes of those meetings (Attachment 3). At the initial meeting in August, the Commission expressed a general concern regarding the amount of funds requested by HOUSE, Inc. ($450,000) and gave strong direction that the agency should try to minimize the amount of HOME funds and by leveraging funds from other sources. The Commission also requested additional information regarding the agency (e.g., budget, agency information/history, tenant profile, rent levels, etc.), the specific property to be purchased, and the method for securing the HOME funds (e.g., contract and loan documents). The October and November meetings were focused on the revised concept of HOUSE, Inc. acquiring a specific below-market priced home on the Bernal property. At the October meeting, the Commission was supportive of the new concept but requested that HOUSE, Inc. attempt to further reduce the amount of the proposed HOME loan from $205,000 (85% of the purchase price). In response, the agency returned at the November meeting with a proposal to increase its down payment to 20% of the purchase price ($50,000). At that time, staff also provided the Commission with models of the HOME contract, promissory note (addressing the terms of the equity share), and deed of trust. Based on this new information, the Commission recommended approval of the proposed allocation of HOME funds in the form of a $195,000 deferred shared equity loan as described earlier in this report. Page 5 of 6