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CITY COUNCIL DRAFT <br />to the greater of. (a) all amounts paid for the Property in excess of the Affordable Sales Price shall <br />be forfeited to the City, or (b) the City Equity Share. <br />4.5 Equity Sharing Agreement. <br />4.5.1 Following the expiration of the Affordability Term, Homebuyer agrees to <br />pay to the City the City Equity Share, as follows: <br />4.5.2 The City Equity Share shall be paid out of proceeds from a Transfer of the <br />Property after the Affordability Term. <br />4.5.3 The City Equity Share includes the following: <br />(a) An amount equal to the difference between the fair market value of <br />the Affordable Unit at the time of the initial purchase and the Affordable Sales Price (the "Initial <br />Subsidy"). <br />(b) An amount equal to the product of (1) the appreciation of the <br />Affordable Unit, as measured by the increase in the fair market value of the Affordable Unit at the <br />time of the sale to the Homebuyer and the resale of the Affordable Unit, and (2) the percentage <br />that the initial subsidy represented of the fair market value of the Affordable Unit when it was <br />purchased by the Homebuyer (the "Proportionate Share of Appreciation"). <br />4.6 The City Equity Share shall only be subordinate to a First Lien, as approved by <br />the City at the time of the initial sale (or subsequent approval in the event of a refinance or resale <br />during the Affordability Term), and amounts owed to Homebuyer for the value of improvements <br />to the Property and the down payment paid by Homebuyer. <br />4.7 For purposes of determining the City Equity Share, at the time of the initial sale <br />of the Property, and each re -sale during the Affordability Term, the fair market value shall be <br />determined as follows: <br />4.7.1 For the initial sale, Developer may propose to the City a fair market value <br />based on a price per square foot that is based on comparable sales of other units within the Project. <br />4.7.2 Except as approved in writing by the City, prior to the sale of an Affordable <br />Unit, a qualified appraiser shall conduct an appraisal of the Affordable Unit to determine fair <br />market value without the restrictions of this Agreement. If the Developer or a 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 />4.7.3 The fair market value of the Affordable Unit, as determined in accordance <br />with the above, shall be provided to the City for approval or disapproval, which City shall provide <br />within thirty (30) days of receipt of the proposed fair market value. If City does not provide a <br />written response within such time period, then the proposed fair market value shall be deemed <br />approved by the City. <br />Exhibit B <br />Page 34 <br />5 53 94.0010 1 \43721567.2 <br />