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CITY COUNCIL DRAFT <br />(e) The City Equity Share includes an amount equal to the "initial <br />subsidy" and "proportionate share of appreciation," in accordance with California Government <br />Code section 65915(c)(2), and shall be determined as follows: <br />(i) An amount equal to the difference between the fair market <br />value of the Affordable Unit at the time of the initial purchase and the Affordable Sales Price <br />(the "Initial Subsidy"), plus <br />(ii) An amount equal to the product of (1) the appreciation of <br />the Affordable Unit, as measured by the increase in the fair market value of the Affordable Unit <br />at the time of the sale to the Homebuyer and the resale of the Affordable Unit, and (2) the <br />percentage that the Initial Subsidy represented of the fair market value of the Affordable Unit <br />when it was purchased by the Homebuyer (the "Proportionate Share of Appreciation"). <br />(f) Payment of the City Equity Share is subject to the following: (1) <br />payment to satisfy a First Lien from a primary lender, as approved by City at the time of the initial <br />sale, or subsequent approval in the event of a refinance event, and (2) an amount equal to the down <br />payment and the cost of improvements paid by the Homebuyer. Following payment of the City <br />Equity Share, the Homebuyer shall receive the remainder of any closing proceeds, less any costs <br />of closing, including any and all real estate broker commissions. <br />(g) When the City Equity Share becomes due, the proceeds from the <br />sale of the Property shall first satisfy a First Lien, and the Homebuyer shall receive proceeds for <br />the value of any improvements and any down payment actually paid. The City Equity Share shall <br />be paid prior to disbursement of remaining sales proceeds to the Homebuyer. <br />3.5.4 In order to assist City with calculation of the City Equity Share, Developer <br />or a Homebuyer, as applicable, shall provide City with a calculation of the fair market value of <br />each Affordable Unit at the initial sale which shall be determined as follows: <br />(a) For the initial sale, Developer shall propose to the City a fair market <br />value based on a price per square foot that is based on comparable sales of other units within the <br />Project. <br />(b) Except for the initial sales subject to sub -paragraph (a), prior to the <br />sale of an Affordable Unit, a qualified appraiser shall conduct an appraisal of the Affordable Unit <br />to determine fair market value without the restrictions of this Agreement. If a seller or prospective <br />Homebuyer disputes the appraised value, then that party may pay for the costs of a second appraisal <br />and, if there is still disagreement, the average of the two appraisals shall be used to determine the <br />fair market value. <br />(c) The fair market value of the Affordable Unit, as determined in <br />accordance with the above, shall be provided to the City for approval or disapproval, which City <br />shall provide within thirty (30) days of receipt of the proposed fair market value. If City does not <br />provide a written response within such time period, then the proposed fair market value shall be <br />deemed approved by the City. <br />Page 13 <br />5 53 94.0010 1 \43721567.2 <br />