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To assure that the homes will be affordable to the targeted income group, staff and the developer applied the following factors: • Maximum Allowable Income for a 3 Person Household -- $63,700 • Annual Interest Rate — 5% • Loan Term — 30 years • Income to Housing Cost Ratio— 35% • Additional Monthly Cost such as HOA fees, utilities, etc -- 25% • Down Payment—3% Similar to the process used for determining qualifications for a market based mortgage loan, staff inserts the above factors into a basic spreadsheet which calculates the amount of loan that a buyer at this income would qualify for. It should also be noted that the program is designed so that the purchaser is free to obtain his/her own mortgage loan and therefore, he/she is subject to conditions established by the lender. However, based on history, the above formula has been successful in assuring that a homebuyer with this income would qualify for the loan required to purchase the home. While not directly related to staff's recommendation to have ten affordable units rather than fourteen affordable units, staff remains concerned regarding the significant administrative attention required for monitoring affordable ownership homes and programs. As an example, the City takes the lead for all re-sales, processes all refinancing and subordinations, including second mortgages or lines of credit, works with the bank and other institutions regarding any loan defaults or foreclosures and monitors requirements related to home occupancy, maintenance, etc. To address this situation, staff is currently working with the cities of Dublin and Livermore in an attempt to secure the services of a private sector firm specializing in this type of affordable ownership management. As a result, staff is hopeful, that some of this responsibility, for all three of the mentioned cities, will be addressed in a way that reduces the City's administrative burden. Nevertheless, until that occurs, the City will assume full responsibility for managing these units. Staff will be forwarding the Commission's recommendation to the City Council following the PUD review by the City Planning Commission. Page - 5 -