Berkeley City Council
November 3, 2022

79 To address the remaining down payment cost,
the CA Dream for All program should maximize
flexibility so that it can be paired with other
programs providing down payment assistance
and financial support. This could mean educating
housing counselors so that they can help potential
buyers with all existing subsidy programs for
which they are eligible, increasing the size of the
CA Dream for All loan up to 30% for lower-income
borrowers, or some combination of the two
Marketing and Outreach
The RFP stated that “Outreach efforts to
target beneficiaries of the Program will be
made to: (1) underrepresented homeownership
communities, (2) those who have not returned to
homeownership after losing homes in the Great
Recession and (3) those with high student debts.”
Issues and Needs in Targeting
Disadvantaged Communities
Keep in mind lack of experience. Stakeholders,
especially housing counselors, emphasized the
importance of understanding that first-time
homebuyer programs target individuals who
have no personal experience in the homebuying
process and who likely come from communities
that have been formally and informally shut out
of homeownership. In addition, many potential
borrowers may come from families negatively
impacted by the Great Recession, and so their only
personal connection to homeownership may be
through the lens of foreclosure and its aftermath.

Simplicity will be key. A shared appreciation
mortgage is a new concept for most housing
professionals, so outreach and marketing to first-
time homebuyers (who have almost certainly
never heard the term) must use plain language,
simple visuals and a clear articulation of the
process (including benefits and drawbacks of the
program). Resources should be set aside for the
design of clear, explanatory visual materials.

Leverage existing networks and nonprofit
organizations. A critical component to success
will be the program’s ability to work with existing
organizations and networks that are based in
and trusted by disadvantaged populations. To do
so, it will be important that these organizations
and networks, especially housing counselors, be
educated on the program and understand how to
relay and guide potential borrowers. Resources
must be set aside to help these organizations and
their staff learn about the programs.

Cultural competency. A new statewide program—
especially one based on targeting disadvantaged
communities, non-English speaking communities,
communities that have been historically targeted
by predatory lenders and those from families that
have never owned homes—will need to prioritize
cultural competency in marketing and outreach,
service delivery and administration of the program.

Suggestions to promote this outcome include:
§ Translation services: A successful CA Dream
for All program needs to ensure adequate
resources for translation services and prioritize
culturally competent marketing and outreach.

Language access was a common theme
throughout our interviews, especially related
to the Asian American and Pacific Islander
community. There are numerous economically
and culturally diverse communities within
the Asian American and Pacific Islander
community whose unique language needs
often go overlooked.
§ Ethnic media: Often, first-time borrowers
come from communities that are not well
served by the mainstream media. It is
important that ethnic media—both English
and non-English outlets—be incorporated into
the outreach and marketing of the CA Dream
for All program.
§ Big impact of digital divide: Digital access
and the impact of the digital divide vary
greatly across communities. The CA Dream
for All program should balance the need
for efficiency through digital and online
services with the understanding that, for
many families, particularly those that come
from disadvantaged and formerly redlined
communities, these services are not always as
readily accessible.

Educate the real estate community on the
program. Several interviewees working in the for-
profit real estate sector noted that the flexibility
built into this program would likely be appealing to
brokers and mortgage originators, but that there
should still be a concerted effort to reach out to
and educate real estate professionals, including
real estate brokers. There was consensus that this
program could be underutilized and less effective
without buy-in from the realtor community.

Marketing and outreach need to be resourced
to facilitate effective partnerships. Interviewees
consistently noted that without resources
dedicated to marketing and outreach, the onus
will fall on nonprofit and community-based
organizations that are often stretched thin.

Interviewees pointed out that some local down
payment assistance programs, such as San
Francisco’s program, include marketing as a
reimbursed cost, and recommended that the CA
Dream for All program follow that model.

80 Housing Counseling
Primary Themes We Heard From Counselors
Complexity. All interviewees agreed this would
be a very complex program to explain, with
borrowers who know less than average compared
to the typical buyer. The program needs to
maximize outreach, education and support for
these borrowers. Participants also emphasized
making the program as simple as possible so
that buyers who have never purchased a home,
and potentially come from families that have
never purchased homes, can easily understand
and evaluate the program. That said, one
interviewee noted that the proposed program is
not especially more complicated than other public
DPA programs that require repayment and that
many of the fundamental issues were the same:
lack of general borrower knowledge, excitement
to purchase a home obscuring critical issues
that need consideration and the likelihood that
borrowers will forget the specifics of what they
agreed to post-purchase.

Protection against predatory instruments.

A number of interviewees noted that, in their
experience, families that have recently purchased
a home often begin to receive offers for home
renovation loans, reverse mortgages and other
costly products that do not necessarily benefit the
borrower. Interviewees reported that people who
are unfamiliar with the process and excited to own
a home can be very trusting and overwhelmed
with information. Since most housing counselors
do not see first-time homebuyer clients again
unless they need foreclosure prevention help,
new homebuyers are often left without support.

Further, since everyone in the real estate
industry aside from housing counselors works
on commission, there is a real need to protect
borrowers. The simplest, most effective way
to protect against these predatory financial
instruments is for the CA Dream for All program
to invest in resource-enhanced, long-term access
to housing counselors and homeowner education.

Resources for Housing Counselor Services and
Capacity Building. Interviewees consistently noted
that the lack of resources for housing counselors
is a significant inhibiting factor in the number of
families helped and support provided. Stakeholder
feedback called for current homebuyer education
funds to be significantly increased due to the high-
touch nature of the work and inherently inefficient
process of working with people who are both low/
moderate income and have never purchased a
home. Language barriers and the digital divide
also require more time and energy to serve clients.

Interviewees also called for additional funds for
capacity building. Lastly, numerous interviewees
mentioned that there should be investment in
capacity building for nonprofit organizations
serving these populations since the current
funding structure is not conducive to helping these
organizations grow the infrastructure needed to
serve clients in the long term.

Leverage housing counselors, CDFIs, and
other community groups beyond just
homebuyer education and outreach. The most
straightforward way to engage housing groups
is through their role in marketing, outreach
and homebuyer education, but numerous
interviewees also requested that the broader
housing community be engaged on issues around
administration of the program and given the
opportunity to provide feedback on operations
through formal administrative channels.

Timing and ease of execution. Real estate is a
field full of deadlines, and in almost all markets
in California there is no room for error. For the
program to work, it must be run by people who
understand how these transactions operate and
who recognize that delays hurt the people the
program intends to help, in addition to harming
the program’s reputation among real estate
professionals.

CA Dream for All must be accepted by the
real estate industry to be successful. Several
interviewees noted that if the CA Dream for
All program does not successfully integrate
the realtor community, mortgage originators
and other real estate professionals then many
families that could otherwise benefit may
miss out. There were also examples given of
how existing programs were not favored by
realtors representing home sellers due to timing
inefficiencies, and so families with down payment
assistance loans were often left with few options.

At least one interviewee stated there should be
an incentive for realtors and sellers to work with
this program. Interviewee sentiment was that
the CA Dream for All program will only reach its
maximum potential if it is seen as an effective and
efficient program by the real estate community.

Additional Feedback We Received
Interviewees also shared additional observations
that did not arise as consistent themes in every
interview, but were still valuable and worthwhile
to consider as the program is implemented.
§ “Low-cost areas”: Even “low-cost” regions
of the state have expensive markets where
buyers at 120% AMI have a difficult time
finding opportunities.

81 § The reality of the market: Buyers in Los
Angeles and other high-cost markets are
routinely asked to engage in a bidding war
with other buyers. It is important that CA
Dream for All borrowers are able to compete
effectively in the market as it exists today.
§ Lender participation: Large banks do
participate widely in existing down payment
assistance programs, and these programs
often have high-cost fees.
§ Reporting: Reporting can be burdensome
on small nonprofits, and streamlining should
be prioritized. CalHFA was highlighted as a
reasonable reporting agency.
§ Implementation: For some down payment
assistance programs that were not structured
well, money does not actually make it out to
borrowers and allocated funds are not used.
§ Hardship and mortgage modification: If a
borrower is selling to pay for hardship such as
medical debt, the CA Dream for All program
could carve out an exception and lower the
requirement on some or all of the shared
appreciation paid back.
§ Community Land Trusts: The CA Dream for
All program should be structured to ensure
that limited equity co-ops and Community
Land Trusts can participate fully, including
allowances for long term ground leases and
other cooperative structures.
§ Prioritizing wealth building: The CA Dream
for All program should strike a balance
between providing as much support to
families as needed without over subsidizing
and eliminating the wealth building potential
of the program.
§ Bank participation: Large bank participation
would significantly improve the program’s
reach, effectiveness and uptake by borrowers.

The administrator of the CA Dream for All
program should explore ways to ensure large
bank participation.
§ Synergy with existing programs: There are
numerous down payment assistance programs
at the state and local levels, especially in large
cities. The CA Dream for All program should
consider how these programs can integrate
into its statewide program and add value
where possible to borrowers.
§ Multifamily homeownership: The CA Dream
for All program should be flexible in the type
of home purchased and be useful for condo
and co-op buyers, along with more traditional
single-family homes.
§ Geographic awareness: While a buyer may
live in a high-cost market like Los Angeles,
many low- and moderate-income borrowers
are looking to purchase in lower-cost areas,
such as the Inland Empire.

Monitoring and Evaluation
Post-Purchase Counseling
The project team has intentionally designed the
CA Dream for All program to be as accessible,
affordable and adopted as broadly as possible
throughout the state’s various regions and
communities. Since examples of well-run pre-
purchase and outreach counseling programs
exist throughout the state, traditional housing
counseling is not likely to be especially difficult
for the program administrator to institute and
run. What may require more time, effort and
innovation will be a new post-purchase counseling
program that can be a resource for buyers—ideally
throughout the life of their CA Dream for All loan.

Housing counselors interviewed reported that
most of the financial support for their work was
limited to pre-purchase counseling. When available
for post-purchase counseling, most resources were
limited to pre-foreclosure support or restricted
to the first few years after the home purchase.

Housing counselors also reported that even for
pre-purchase counseling, resources did not cover
the full time and energy spent to qualify first-
time buyers. One interviewee noted that, once a
program ends, borrowers have old phone numbers
and emails to reach out to, and often receive no
response from the administering agency.

With additional resources, housing counselors
can remain a touch point for homebuyers as they
navigate the process, especially if there is no
additional support from loan servicers.

Trade-Offs of Long-Term Housing
Counseling and Support
While long-term, well-resourced housing counseling
and borrower outreach can address issues around
program unfamiliarity and complexity, they also
involve significant financial costs. That said, the
driving purpose of the CA Dream for All program
is to create wealth through homeownership in a
safe and sustainable manner. To truly achieve that
primary objective, adequate resources—detailed
in other sections of this report—must be set aside
for the administration of this program, including
all necessary funding for long-term, appropriate
counseling and outreach for borrowers who have
taken out a CA Dream for All loan.

82 Additional Efforts to Ensure Equity:

HMDA Disclosure and Community
Advisory Board
There are additional ways in which a
program administrator can ensure equitable
implementation of the CA Dream for All program
during the monitoring and evaluation phase. First,
the project team recommends that the program
administrator release an annual report using
Home Mortgage Disclosure Data to disclose,
in the aggregate, the program’s uptake among
different geographies throughout the state by
ethnicity, gender and income. This information
is already collected by mortgage lenders and
should not be particularly onerous to aggregate
and publish annually, especially considering
the overall size and cost of the program. If the
annual HMDA data shows that the program is not
reaching priority disadvantaged communities,
then solutions can be proposed and implemented
to address that misalignment.

Second, the CA FWD team strongly recommends
the program administrator create a community
advisory committee made up of housing
professionals—including nonprofit housing
counselors, realtors, CDFI professionals and
mortgage originators—directly serving low-
and moderate-income clients to ensure that
the implementation of the program meets its
strategic vision and goals. Consistent feedback
provided during stakeholder interviews noted that
programs are often well designed on paper but
do not meet the realities of the housing market in
different regions. By creating an advisory council
of nonprofit and for-profit organizations, the CA
Dream for All program administrator can ensure
that feedback from stakeholders essential to the
success of the program is given a formal channel
to be evaluated and potentially implemented.

Equity Analysis
Building on 2021’s successful CA House
Resolution 39 (Gipson) – “Equity Impact Analysis
of Legislation,” the CA Dream for All program can
use an equity analysis framework to help ensure it
is reducing or eliminating inequities experienced
by historically marginalized communities. The
equity analysis below, adapted from questions
that could also be asked by a committee
consultant reviewing potentially enabling
legislation, is intended to: provide space to
consider specific, structural questions concerning
the program and the equity outcomes it could
produce; summarize the feedback received
116 Questions adapted from March 26, 2022 “Equity Impact Assessment of Bills” briefing held by PolicyLink/Greenlining/EdTrust West. from stakeholder interviewees and proposals
from the project team into recommendations
that will provide a minimum baseline for the
project to achieve equitable outcomes; and offer
suggestions for the CA Dream for All program
that will provide enhanced equity outcomes in
excess of what would be accomplished by only
adopting the baseline.
116
TARGETED SUPPORT: Will the CA Dream for
All program increase opportunities, services
or support for low- or moderate-income
communities?
Baseline: The underlying and structural goal of the
CA Dream for All shared appreciation mortgage
program is to directly target low- and moderate-
income communities, including enhanced support
for borrowers that struggle with student debt
and other significant obstacles to achieving
homeownership.

Enhancement: To maximize equity and benefits
delivered to disadvantaged communities, the
CA Dream for All program administrator should
track borrower demographics through annual
HMDA demographics information and make that
data public. While the unequivocal goal of the
program is to support low- and moderate-income
communities, the implementation of public policy
goals can often fall short. Annual HMDA data
disclosures directly tied to the CA Dream for All
program would allow for adjustments to be made
to the program’s targeting and improvements to
its overall adoption by target communities.

WEALTH BUILDING: If implemented, will
this program help close the wealth gap for
communities historically impacted by redlining?
Baseline: The program framework has been
structured to maximize wealth building
opportunities for current disadvantaged
borrowers while still protecting the ability of the
program to generate enough returns to serve
future borrowers. For instance, the project team
has not imposed resale restrictions related to
income on CA Dream for All borrowers, which
would have limited the homeowner’s ability to
realize the equity they have built in their home.

Enhancement: To further enhance wealth building,
housing counselors should be provided with long-
term resources (direct and capacity building)
to support buyers in making financial decisions
that will most benefit them. Annual contact and
long-term relationships between borrowers and
housing counselors will mean that homebuyers

83 will have at least one resource to call on that
is not motivated by profit. This is especially
important since the wealth building benefits of
the CA Dream for All program accrue slightly
more slowly than those of standard fixed interest
rate down payment programs, and it is important
that homeowners understand the benefits and
drawbacks of paying off their CA Dream for All
mortgage in the first ten years.

BORROWER PROTECTIONS: Are there
protections embedded in the program to ensure
that borrowers are educated and protected from
predatory lending?
Baseline: Pre-purchase borrower education
through accredited housing counselors will be
required, and the program has been structured
so that it will be limited to lenders approved by
the public agency administering the program.

As discussed earlier in this report, shared
appreciation mortgages ensure that borrowers
are also more protected in a market downturn
compared to traditional fixed interest rate down
payment assistance programs.

Enhancement: In the same way that long-
term access to housing counseling can help to
maximize wealth creation for CA Dream for All
borrowers, long-term counseling can also help
to protect borrowers from the type of predatory
offers that interviewees indicated often start
to appear after a borrower purchases a home.

Investing the resources necessary to create a
strong, long-term infrastructure of borrower
resources and support—primarily through long-
term access to housing counselors—will be vital.

LANGUAGE DIVERSITY: Will this program
have any limitations or negative impacts for
households that are predominantly non-English
speaking?
Baseline: No, but there should be resources to
ensure cultural competency, including translation
services for outreach, counseling organizations and
all program materials. Without specific targeted
117 Park, K. A., & Quercia, R. G. “Who Lends Beyond the Red Line? The Community Reinvestment Act and the Legacy of Redlining.” Housing Policy Debate 30, no. 1: 4–26, 2020. https:/ /doi.org/10.1080/10511482.2019.1665839. As cited in Reid, Carolina. “Crisis, Response, and Recovery: The Federal Government and the Black/White Homeownership.” The Terner Center for Housing Innovation, UC Berkeley, 2021. Retrieved from: https:/ /ternercenter.berkeley.edu/research-and-policy/crisis-response-and-recovery-the- federal-government-and-the-black-white-homeownership-gap/ 118 Krimmel, J. “Persis tence of Prejudice: Estimating the Long Term Effects of Redlining.” Working Paper. Philadelphia, PA: University of Pennsylvania., 2018. Retrieved from:
https:/ /osf.io/uxeaz/. As cited in Reid, Carolina. “Crisis, Response, and Recovery: The Federal Government and the Black/White Homeownership.” The Terner Center for Housing Innovation, UC Berkeley, 2021. Retrieved from: https:/ /ternercenter.berkeley.edu/research-and-policy/crisis-response-and-recovery-the-federal-government-and- the-black-white-homeownership-gap/
119 “Redlining and Neighborhood Health.” National Community Reinvestment Coalition, 2010. Retrieved from: https:/ /ncrc.org/holc-health/.

As cited in Reid, Carolina. “Crisis, Response, and Recovery: The Federal Government and the Black/White Homeownership.” The Terner Center for Housing Innovation, UC Berkeley, 2021. Retrieved from: https:/ /ternercenter.berkeley.edu/research-and-policy/crisis-response-and-recovery-the-federal-government-and-the-black-white- homeownership-gap/
120 Aaronson, D., Hartley, D., & Mazumder, B. “The Effects of the 1930s HOLC ‘Redlining’ Maps.” Chicago, IL: Federal Reserve Bank of Chicago, 2020. Retrieved from:
https:/ /www.chicagofed.org/publications/working-papers/2017/wp2017-12.

As cited in Reid, Carolina. “Crisis, Response, and Recovery: The Federal Government and the Black/White Homeownership.” The Terner Center for Housing Innovation, UC Berkeley, 2021.. Retrieved from: https:/ /ternercenter.berkeley.edu/research-and-policy/crisis-response-and-recovery-the-federal-government-and-the-black-white- homeownership-gap/
resources for non-English speaking communities,
the CA Dream for All program will not be able to
reach all Californians, especially those that come
from low- and moderate-income communities the
program is directly charged with serving.

Enhancement: Maximize the use of ethnic
media to advertise and outreach to non-English
speaking communities and other communities not
well served by mass media outreach strategies,
especially those in languages other than English.

This approach will not only expand outreach to
eligible borrowers; it will also offer Californian
communities that are often left out of housing
conversations information about the benefits of a
shared appreciation mortgage program.

HEALTH AND QUALITY OF LIFE: If implemented,
will this program reduce health inequities and
disparities in quality of life for communities that
have been historically impacted by redlining and
environmental injustice?
Baseline: As noted earlier in this chapter,
neighborhoods that were previously redlined
still have higher poverty rates, less economic
mobility for children,
117 reduced housing supply,118
lower life expectancy, higher incidence of chronic
diseases
119 and lower quality broadband access as
well as lower house values and homeownership
rates.
120 The CA Dream for All program intends
to implement special targeting to areas
identified by CalEnviroScreen as Disadvantaged
Communities, which are defined as areas with
higher rates of pollution and illness and lower
socioeconomic assets.

Enhancement: Identify additional resources for
Disadvantaged Communities that can be used
to strengthen the CA Dream for All program,
such as additional funds that can be used for
environmental remediation or other issues directly
related to past environmental injustice.

84 Conclusion & Final
Recommendations
The stakeholders we interviewed broadly agreed
that the CA Dream for All program could fill
a critical need in California’s difficult housing
market, in which 20% down payments have
become a nearly insurmountable obstacle for
otherwise qualified buyers. Sustainable down
payment assistance can make it possible for
many who otherwise have no viable path to
homeownership to make use of this critical
avenue for building wealth and financial security.

We discovered considerable consensus around
elements the program will need in order to
be truly successful and maximize benefits to
disadvantaged communities. In brief, these crucial
recommendations are:
§ Prioritize disadvantaged communities,
including previously redlined neighborhoods
and historically marginalized groups.
§ Support and fund housing counseling and
incorporate counseling into every stage of
the program. Because this program revolves
around a concept that is unfamiliar to many,
participants will need ongoing support and
information, not just during the initial purchase
but long after. The CA Dream for All program
must ensure that counseling efforts are
adequately resourced and should work closely
with nonprofits and CDFIs.
§ Make marketing and other program materials
clear and easy to understand. Use plain
language and clear, straightforward visuals.

Ensure that the benefits and drawbacks of
participation are explained in a way that is
easy to grasp.
§ Emphasize cultural competency. Use of
translation services will be critical, as many
in the target audience do not speak or read
English as their first language, but that is just
a start. Cultural knowledge and awareness
will also be crucial. Make use of ethnic media
outlets, which may be the most trusted in
certain communities and can reach those not
well served by the mainstream media. To do
all of this properly, marketing efforts must be
adequately resourced.
§ Make sure the real estate industry
understands and accepts the program. This
goal will require education and outreach. Real
estate professionals need to be able to trust
that the program will be run efficiently and
not cause unnecessary delays in transactions—
meaning that administration and operations
must be well-planned and adequately
resourced. If the program works well, they will
use it; if it does not, they will not use it.
§ Build equity analysis into the program
and its evaluation. Following the lead of
HR-39, passed in 2021, the program must
systematically examine its impact in delivering
benefits to disadvantaged communities.

Existing data collection and analysis tools
such as the Home Mortgage Disclosure Act
and CalEnviroScreen can be used to help
facilitate this process.

The CA Dream for All program can go a long
way toward alleviating one major obstacle to
homeownership that has disproportionately
impacted marginalized communities, but getting
the details right will make the difference between
a program that creates a positive impact and
a disappointing effort with only marginal
benefits. The concerns and recommendations
that emerged from these stakeholder interviews
provide important guidance to help ensure
maximum impact as the program is finalized.

85 APPENDIX A
Glossary
121 “FHA Single Family Housing Polic y Handbook: Glossary.” Federal Housing Administration, 2016. https:/ /www.hud.gov/sites/documents/40001GAHSGH.PDF 122 Lush, Minnie. California Real Estate Finance, 9th Edition. 2016. 123 “Accessory Dwelling Units (ADUs) and Junior Accessory Dwelling Units (JADUs).” California Department of Housing and Community Development. 2021. https:/ /www.hcd.ca.gov/policy-research/accessorydwellingunits.shtml#adu 124 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 125 Cornell Legal Information Institute. https:/ /www.law.cornell.edu/ 126 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 127 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 128 Ibid.
129 Ibid.
130 Lush, Minnie. California Real Estate Finance, 9th Edition. 2016. 131 “What is Area Median Income?” Planetizen, 2022. https:/ /www.planetizen.com/definition/area-median-income-ami 132 Lush, Minnie. California Real Estate Finance, 9th Edition. 2016.

Acquisition Price: The purchase
price of the real property, including
closing costs, prepaid costs,
and commissions, if paid by the
purchaser, but not including
the cost of any repairs that the
purchaser makes to the property
subsequent to acquisition.
121
Administrative Cost: Costs incurred
to support the functioning of a
program or fund, but which are not
directly related to the production or
servicing of a mortgage.
122
Accessory Dwelling Units (ADUs):

Housing options also known as
granny flats, in-law units, backyard
cottages, secondary units and more.

ADUs are an innovative, affordable,
effective option for adding much-
needed housing in California.
123
Amortization: Paying off a loan
with regular payments over time,
so that the amount a borrower
owes decreases with each payment.

Most home loans amortize, but
some mortgage loans do not fully
amortize, meaning that a borrower
would still owe money after making
all of a borrower’s payments. Some
home loans allow payments that
cover only the amount of interest
due, or an amount less than the
interest due. If payments are less
than the amount of interest due
each month, the mortgage balance
will grow rather than decrease.
124
Amortizing Loan: An amortized
loan is a type of loan with
scheduled, periodic payments
that are applied to both the loan’s
principal amount and the interest
accrued. An amortized loan
payment first pays off the relevant
interest expense for the period,
after which the remainder of the
payment is put toward reducing the
principal amount.
125
Annual Income: Annual income
is a factor in a mortgage loan
application and generally refers to
a borrower’s total earned, pre-
tax income over a year. Annual
income may include income from
full-time or part-time work, self-
employment, tips, commissions,
overtime, bonuses or other sources.

A lender will use information about
a borrower’s annual income and a
borrower’s existing monthly debts
to determine if borrowers can
repay the loan. Whether a lender
will rely upon a specific income
source or amount when considering
a borrower for a loan will often
depend upon whether a borrower
can reasonably expect the income
to continue.
126
Appraisal: An independent
assessment of the value of a
property. The appraisal gives a
borrower useful information about
the property, and describes what
makes it valuable. It may also show
how the property compares in
value to other properties in the
neighborhood.
127
Appraisal Fee: The cost of a home
appraisal of a house a borrower
plans to buy or already owns. In
most cases, the selection of the
appraiser and any associated costs
is up to the lender.
128
Appreciation: The increased
value of a property determined by
subtracting the purchase price from
the sales price at the time of resale
or the fair market value upon other
events triggering repayment.
129
Appreciation Share: The share of
the appreciated home value split
between a SAL originator and the
homebuyer.
130
Area Median Income (AMI):

The Area Median Income (AMI)
describes the midpoint of an area’s
income distribution, where 50% of
households earn above the median
figure while 50% earn less than the
median. The Department of Housing
and Urban Development (HUD)
defines “area” as a Metropolitan
Statistical Area (MSA).
131
Back-End Ratio: A ratio that
indicates what portion of a person’s
monthly income goes toward
paying debts. Total monthly
debt includes expenses, such as
mortgage pa
yments (principal,
interest, taxes, and insurance),
credit card payments, child support,
and other loan payments. Back-
End Ratio = (Total monthly debt
expense / Gross monthly income) x
100.
132

86 Balloon Payment: A balloon
payment is a larger-than-usual
one-time payment at the end of
the loan term. A mortgage with a
balloon payment may charge lower
payments in the years before the
balloon payment comes due, but
a large amount at the end of the
loan.
133
Borrower Share of Appreciation:
(or Wealth Accumulation) The
portion of the increase in the value
of the home that would be retained
by the borrower after repaying the
Fund’s share of appreciation at the
particular date of calculation.

CalHFA: The California Housing
Finance Agency is an independent
state agency within the California
Department of Housing and
Community Development that
provides low-rate housing
financing.
134
California Comeback Plan: An
outline of major strategic state
investments, including $3 billion
towards affordable housing
development.
135
Cash-Out Refinance: A mortgage
refinance option that allows
homeowners to convert their equity
into cash, increasing borrower
liquidity and taking out a new
mortgage at a higher value than the
previous balance.
136
Capitalization: A property
appraisal method that determines
property value by dividing annual
net operating income by a
capitalization rate.
137
133 “Balloon Mortgage Loans. ” Fannie Mae, 2022. https:/ /mfguide.fanniemae.com/node/8406 134 California Housing Finance Agency. https:/ /www.calhfa.ca.gov/ 135 “California Roars Back: Governor Newsom Presents $100 Billion California Comeback Plan.” Office of Governor Gavin Newsom, 2021. https:/ /www.gov.ca.gov/2021/05/14/california-roars-back-governor-newsom-presents-100-billion-california-comeback-plan/ 136 Lush, Minnie.California Real Estate Finance, 9th Edition. 2016. 137 Ibid.
138 Ibid.
139 “FHA Single Family Housing Polic y Handbook: Glossary.” Federal Housing Administration, 2016. https:/ /www.hud.gov/sites/documents/40001GAHSGH.PDF 140 Cornell Legal Information Institute. https:/ /www.law.cornell.edu/ 141 “Mortgage Ke y Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 142 “Mortgage Loans.” Fannie Mae, 2022. https:/ /mfguide.fanniemae.com/node/10711 143 Lush, Minnie.California Real Estate Finance, 9th Edition. 2016. 144 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 145 Lush, Minnie.California Real Estate Finance, 9th Edition. 2016. 146 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ Closing Costs: All of the costs paid
at closing. This includes origination
charges, appraisal fees, credit report
costs, title insurance fees, and any
other fees required by the lender
or paid as part of a real estate
mortgage transaction.
138
Combined Loan-to-Value (CLTV):

The first mortgage principal at
origination plus the outstanding
principal balance of all subordinate
mortgage(s) divided by the
Adjusted Value.
139
Conforming Loan: A mortgage that
is below the conforming loan limit
established by the Federal Housing
Finance Agency (FHFA) and abides
by other restrictions of Fannie
Mae (Federal National Mortgage
Association) and Freddie Mac
(Federal Home Loan Corporation).

These agencies reduce the risk to
creditors, driving down interest
rates for home loans.
140
Conventional Loan: Any mortgage
loan that is not insured or
guaranteed by the government
(such as under Federal Housing
Administration, Department of
Veterans Affairs, or Department of
Agriculture loan programs).
141
Conventional Financing: In real
estate, mortgage financing that
is not insured or guaranteed by a
government agency such as HUD,
FHA, VA, or the Rural Housing
Service.
142
Cost Approach: A real estate
valuation method that estimates
the price a buyer should pay for a
piece of property is equal to the
cost to build an equivalent building.

In the cost approach, the property’s
value is equal to the cost of land,
plus total costs of construction,
less depreciation. It yields the most
accurate market value for when
a property is new than through
alternative methods.
143
Credit Score (or FICO Score):

A credit score predicts how
likely a borrower is to pay back
a loan on time. Companies use a
mathematical formula—called a
scoring model—to create a credit
score from the information in a
borrower’s credit report. There
are different scoring models, so a
borrower does not have just one
credit score. A score depends on a
borrower’s credit history, the type
of loan product, and even the day
when it was calculated.
144
Community Land Trust (CLT):

A non-profit organization that
holds land and acts as a long-term
steward of retaining housing that is
affordable in the communities they
represent.
145
Debt-to-Income Ratio: All borrower
monthly debt payments divided by
their gross monthly income. This
number is one way lenders measure
a borrower’s ability to manage
the monthly payments to repay
borrowed funds.
146

87 Deed-Restricted: a provision in
a real property conveyance that
limits the grantee’s use of the
property. The beneficiaries of a
restrictive covenant obtain rights
from such covenants, and this may
be the parties who agreed to the
restrictive covenant or adjunct
property owners who benefit from
the restrictive covenant.
147
Default: The failure to make
payments on a mortgage, triggering
the remaining loan balance to be
due in full.
148
Delinquent: Late on mortgage
payments. A loan can become
delinquent when a borrower misses
a payment or does not make a full
payment by the due date. After
a loan becomes delinquent for a
certain period of time, a lender or
servicer may begin the foreclosure
process. The amount of time can
vary by state.
149
Denial Rate: The share of home
mortgage applications denied a
loan.
150
Depreciation: A sum representing
presumed loss in the value of
a building or other real estate
improvement, resulting from
physical wear and economic
obsolescence.
151
Down Payment: The difference
between the sale price of a property
and the sum of outstanding loan
principal at property acquisition. A
borrower puts a percentage of the
home’s value down and borrows
the rest through a mortgage loan.

Generally, the larger the down
payment a borrower makes, the
lower the interest rate received and
the more likely a borrower is to be
approved for a loan.
152
147 Cornell Legal Information Institute. https:/ /www.law.cornell.edu/ 148 Lush, Minnie. California Real Estate Finance, 9th Edition. 2016. 149 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 150 “Mortgage Glossary.” Mortgage Bankers Association, 2022. http:/ /mbabluegrass.org/mortgage-glossary/ 151 “Mortgage Loans. ” Fannie Mae. 2022. https:/ /mfguide.fanniemae.com/node/10711 152 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 153 Ibid.
154 “Effective Annual Interest Rate.” Investopedia. https:/ /www.investopedia.com/terms/e/effectiveinterest.asp#:~:text=What%20Is%20an%20Effective%20 Annual,card%2C%20or%20any%20other%20debt.
155 Lush, Minnie. California Real Estate Finance, 9th Edition. 2016. 156 Cornell Legal Information Institute. https:/ /www.law.cornell.edu/ 157 “Mortgage Loans.” Fannie Mae, 2022. https:/ /mfguide.fanniemae.com/node/10711 158 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 159 Landed. https:/ /www.landed.com/
160 Cornell Legal Information Institute. https:/ /www.law.cornell.edu/ 161 “Mortgage Ke y Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 162 “Mortgage Loans.” Fannie Mae, 2022. https:/ /mfguide.fanniemae.com/node/10711 Down Payment Assistance: A
down payment grant or program
typically refers to assistance
provided by an organization such
as a government or non-profit
agency, to a homebuyer to assist
them with the down payment for
a home purchase. The funds may
be provided as an outright grant
or may require repayment, such as
when the home is sold.
153
Effective Interest Rate (EIR): An
EIR reflects the real percentage rate
owed in interest on a loan when the
effects of compounding are taken
into account. The more frequent the
compounding periods, the higher
the rate.
154
Eligible Borrower: A borrower
meeting the financial requirements
to qualify for a mortgage at the
property of their choice.
155
Environmental Justice: The
fair treatment and meaningful
involvement of all people regardless
of race, color, national origin,
or income, with respect to the
development, implementation, and
enforcement of environmental laws,
regulations, and policies.
156
Equity: Ownership interest in a
property. This is the difference
between the home’s market value
and the outstanding balance of the
mortgage loan (as well as any other
liens on the property).
157
Escrow: An escrow account is
set up by a mortgage lender
to pay certain property-related
expenses, like property taxes
and homeowner’s insurance. A
portion of a borrower’s monthly
payment goes into the account.

If a mortgage doesn’t have an
escrow account, a borrower pays
the property-related expenses
directly.
158
Essential Professional: Essential
professions in the report specifically
referred to healthcare professions,
municipal employees, education
professions that are qualified for
a private shared appreciation
program, Landed.
159
Fair Market Value (FMV): The
value of property as determined
by the marketplace (or objective
purchasers) rather than as
determined by a subjective
individual. This is what an informed
and unpressured buyer would pay
to an informed, unpressured seller.
160
Freddie Mac (FHLMC): Also
known as the Federal Home
Loan Mortgage Corporation, a
Government-Sponsor Enterprise
which provides a secondary
market for savings banks and other
institutions.
161
Federal Housing Administration
(FHA): A division of the U.S.

Department of Housing and Urban
Development (HUD) that insures
residential mortgage loans issued
by approved lenders against
loss through foreclosure. FHA
loans have lower down payment
and financing requirements and
are popular among first-time
homebuyers.
162

88 Fannie Mae (FNMA): The Federal
National Mortgage Association
(Fannie Mae) purchases and
guarantees mortgages from lending
institutions in an effort to increase
affordable lending. Fannie Mae is not
a federal agency. It is a government-
sponsored enterprise under the
conservatorship of the Federal
Housing Finance Agency (FHFA).
163
Financial Counseling: A course to
help households develop financial
literacy skills and establish strong
financial habits.
164
Finder’s Fee: A fee paid by a lender
or broker for referring a borrower to
a certain lending institution or real
estate office.
165
First Mortgage: Also known as the
primary loan or senior loan; the
first recorded loan. As the primary
loan that pays for a property, it
has priority over all other liens or
claims on a property in the event of
default.
166
Fixed Rate Loans: A type of home
loan for which the interest rate is
set when a borrower takes out the
loan and will not change during the
term of the loan.
167
Forbearance: A loss mitigation
measure when the servicer allows
a borrower temporarily to pay
their mortgage at a lower rate or
temporarily to stop paying their
mortgage altogether. A servicer
may grant a borrower forbearance
if, for example, a borrower has
suffered a recent job loss, disaster,
illness or injury that increased
health care costs.
168
163 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 164 “Mortgage Glossary.” Mortgage Bankers Association, 2022. http:/ /mbabluegrass.org/mortgage-glossary/ 165 “Mortgage Loans.” Fannie Mae, 2022. https:/ /mfguide.fanniemae.com/node/10711 166 Ibid.
167 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 168 Ibid.
169 Ibid.
170 “Mortgage Glossary.” Mortgage Bankers Association, 2022. http:/ /mbabluegrass.org/mortgage-glossary/ 171 “Mortgage Ke y Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 172 “Mortgage Glossary.” Mortgage Bankers Association, 2022. http:/ /mbabluegrass.org/mortgage-glossary/ 173 “FHA Single Family Housing Polic y Handbook: Glossary.” Federal Housing Administration, 2016. https:/ /www.hud.gov/sites/documents/40001GAHSGH.PDF 174 Cornell Legal Information Institute. https:/ /www.law.cornell.edu/ 175 Ibid.
176 U.S. Department of Housing and Urban Development. https:/ /www.hud.gov/ Foreclosure: When the lender
or servicer takes back property
after the homeowner fails to make
mortgage payments. In some
states, the lender must go to
court to foreclose on a borrower’s
property (judicial foreclosure), but
other states do not require a court
process (non-judicial foreclosure).

Generally, borrowers must be
notified if the lender or servicer
begins foreclosure proceedings.
169
Forgivable Loan: A loan that allows
borrowers to partially or completely
forgive the balance upon meeting
tenure or equity requirements.
170
Fund Sustainability: The ability of
the Fund to continue making new
loans without relying on increasing
new contributions from the State.

Freddie Mac (FHLMC): The Federal
Home Loan Mortgage Corporation
(Freddie Mac) is a private
corporation founded by Congress.

Its mission is to promote stability
and affordability in the housing
market by purchasing mortgages
from banks and other loan makers.

The corporation is currently under
conservatorship, under the direction
of the Federal Housing Finance
Agency (FHFA).
171
Front-End Ratio: A ratio
representing the borrower’s
mortgage payment divided by
gross monthly income.
172
Government-Backed Loan: A
government mortgage is a federal,
state, or municipal governmental
agency, a Federal Reserve Bank,
a Federal Home Loan Bank, the
Federal Home Loan Mortgage
Corporation (FHLMC, or Freddie
Mac), or the Federal National
Mortgage Association (FNMA, or
Fannie Mae).
173
Government-Sponsored Enterprise
(GSE): A corporate entity created
by a law of the United States that—
(i) has a federal charter authorized
by law; (ii) is privately owned, as
evidenced by capital stock owned
by private entities or individuals;
(iii) is under the direction of a board
of directors, a majority of which is
elected by private owners.
174
Gross Income: The broad total of all
income sources for the taxable year
which above-the-line deductions
are subtracted from to get a
person’s adjusted gross income.

Gross income includes essentially
all income such as from wages,
dividends, alimony, capital gains,
and pensions. Many deductible
items such as charitable giving
must still be included in gross
income. Deductions are applied
after calculating gross income.
175
Homebuyer Education: A course
to help prospective homebuyers
or new homeowners understand
the path to homeownership and
responsibilities as a homeowner.
176
Housing Expense Ratio: A
calculation of how much of a
borrower’s monthly gross income
is going toward their monthly
mortgage payment, including
principal, interest, taxes and
mortgage insurance. Ideally, a
borrower’s housing expense ratio
should be less than 28%.

89 HUD: The Department of
Housing and Urban Development
(HUD) is a federal agency that
administers national programs
aimed at reducing homelessness,
providing housing that is safe and
affordable to all persons, improving
opportunities to access affordable
homeownership, and granting
subsidize to lower-and moderate-
income families to give them equal
opportunities in the rental and
purchase housing markets.
177
HMDA: Abbreviated term for the
Home Mortgage Disclosure Act,
enacted in 1975 to provide home
mortgage data to the public to help
determine if financial institutions are
serving the housing needs of their
communities, to help public officials
distribute public investments
and to identify possible lending
discrimination.
178
Income Approach: A type of real
estate appraisal method that allows
investors to estimate the value of
a property based on the income
the property generates. It’s used
by taking the net operating income
(NOI) of the rent collected and
dividing it by the capitalization rate.
(Investopedia)
Inflation: The rate of change in
the price of goods and services
resulting from a change in the
supply of money and/or cost of
resources.
179
177 “Mortgage Loans. ” Fannie Mae. 2022. https:/ /mfguide.fanniemae.com/node/10711 178 “Download HMDA Data.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/data-research/hmda/historic-data/ 179 “Mortgage Glossary .” Mortgage Bankers Association, 2022. http:/ /mbabluegrass.org/mortgage-glossary/ 180 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 181 “Mortgage Loans. ” Fannie Mae. 2022. https:/ /mfguide.fanniemae.com/node/10711 182 Cornell Legal Information Institute. https:/ /www.law.cornell.edu/ 183 “Mortgage Loans. ” Fannie Mae. 2022. https:/ /mfguide.fanniemae.com/node/10711 184 “Limited equity cooper atives.” 2021. Local Housing Solutions. https:/ /localhousingsolutions.org/housing-policy-library/limited-equity-cooperatives/#:~:text=A%20 limited%20equity%20cooperative%20(LEC,and%20over%20the%20long%20term. 185 “Mortgage Glossary .” Mortgage Bankers Association, 2022. http:/ /mbabluegrass.org/mortgage-glossary/ 186 Cornell Legal Information Institute. https:/ /www.law.cornell.edu/ 187 Ibid.
188 Investopedia. https:/ /www.investopedia.com/
189 Ibid.
190 Ibid.
191 Ibid.
192 “Mortgage Ke y Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ Interest Rate: An interest rate
on a mortgage loan is the cost
a borrower will pay each year to
borrow the money, expressed as a
percentage rate. It does not reflect
fees or any other charges borrowers
may have to pay for the loan. For
example, if the mortgage loan is for
$100,000 at an interest rate of 4
percent, that consumer has agreed
to pay $4,000 each year he or she
borrows or owes that full amount.
180
Junior Mortgage: A mortgage
that is subordinate to a first or
prior (senior) mortgage. A junior
mortgage often refers to a second
mortgage, but it could also be a
third or fourth mortgage. In the
case of a foreclosure, the senior
(first) mortgage will be paid down
first. (Investopedia)
Lender: An organization or
person that lends money with the
expectation that it will be repaid,
generally with interest.
181
Leverage: The use of borrowed
money or debt to purchase assets
or undertake an investment creating
the relationship between an owner’s
equity and total debt on a property.

The higher the leverage, the higher
the debt in relation to the value of
the property.
182
Lien: A legal hold or claim of a
creditor on the property of another
as security for a debt. Liens are
always against property, usually real
property.
183
Limited Equity Cooperative (LEC):

A homeownership model in which
a resident purchases a share in a
collection of units opposed to an
individual unit. LECs often restrict
the future sale value of a property
to maintain housing affordability.
184
Liquidity: The measure of readily
available assets that can be
converted into cash.
185
Loan Assumption: The lender’s
approval of a new borrower who
takes over an existing loan.
186
Loan Closing: The time agreed
upon by the borrower and lender
when the execution of the loan
documents by the borrower
occurs.
187
Loan Commitment: An agreement
by a commercial bank or other
financial institution to lend a
business or individual a specified
sum of money.
188
Loan Exit: (or Exit) The termination
of a loan agreement often through
sale of the asset, refinance, transfer,
or default.
189
Loan Origination: The multi-step
process that every individual must
go through to obtain a mortgage
or home loan. The term also
applies to other types of amortized
personal loans. Origination is often
a lengthy process and is overseen
by the Federal Deposit Insurance
Corporation (FDIC).
190
Loan Origination Fee: A charge,
usually 1% of the loan, that is
intended to compensate the
lender for the work involved in the
process.
191
Loan Servicer: A loan servicer
typically processes loan payments,
responds to borrower inquiries,
keeps track of principal and
interest paid and manages escrow
accounts. The loan servicer may
initiate foreclosure under certain
circumstances. A servicer may or
may not be the same company that
originated a loan.
192

90 Loan Servicing: Supervising and
administering a loan after it has
been made. This process involves
collecting payments, conducting
property inspections, foreclosing
on defaulted loans, and all other
processes after escrow.
193
Loan-to-Value Ratio: The loan-
to-value (LTV) ratio is a measure
comparing the outstanding
mortgage amount with the
appraised value of the property.

The higher the down payment,
the lower the LTV ratio. Mortgage
lenders may use the LTV in deciding
whether to lend to a borrower and
to determine if they will require
private mortgage insurance.
194
Loss Mitigation: The steps
mortgage servicers take to work
with a mortgage borrower in order
to avoid foreclosure. Loss mitigation
refers to a servicer’s responsibility
to reduce or “mitigate” the loss to
the investor that can come from a
foreclosure. Certain loss-mitigation
options may help borrowers stay
in their homes. Other options may
help borrowers leave their homes
without going through foreclosure.

Loss mitigation options may
include deed-in-lieu of foreclosure,
forbearance, repayment plan, short
sale or a loan modification.
195
Low-Income Household: Persons
and families whose gross income
is greater than 50% up to 80% of
area median income, adjusted for
household size appropriate for the
unit.
196
193 Ibid.
194 Ibid.
195 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 196 “Income Limits.” California Department of Housing and Community Development. https:/ /www.hcd.ca.gov/income-limits 197 Cornell Legal Information Institute. https:/ /www.law.cornell.edu/ 198 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 199 “Income Limits.” California Department of Housing and Community Development. https:/ /www.hcd.ca.gov/income-limits 200 “Mortgage Loans.” Fannie Mae. 2022. https:/ /mfguide.fanniemae.com/node/10711 201 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 202 “Mortgage Glossary.” Mortgage Bankers Association, 2022. http:/ /mbabluegrass.org/mortgage-glossary/ 203 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 204 “FHA Single Family Housing Polic y Handbook: Glossary.” Federal Housing Administration, 2016. https:/ /www.hud.gov/sites/documents/40001GAHSGH.PDF 205 Ibid.
206 “Mortgage Loans.” Fannie Mae. 2022. https:/ /mfguide.fanniemae.com/node/10711 Market Price: An estimate of
what a property would sell for in
a competitive market based on
the features and benefits of that
property (the value), the overall
real estate market, supply and
demand and what other similar
properties have sold for in the same
condition.
197
Maturity Date: The date that an
investor’s investment is to be paid
back in full in accordance with its
agreement.
198
Moderate Income Household:

Persons and families whose gross
income is greater than 80% and
does not exceed 120% of area
median income, adjusted for
household size appropriate for the
unit.
199
Monthly Mortgage Payments:

Monthly mortgage obligations
including principal and interest and
possibly taxes and insurance.
200
Mortgage: An agreement between
a borrower and a lender that allows
a homebuyer to borrow money to
purchase or refinance a home and
gives the lender the right to seize
the property if the borrower fails to
repay the money borrowed.
201
Mortgage Credit Availability
Index (MCAI): A barometer on the
availability or supply of mortgage
credit at a point in time, using
criteria from institutional investors
who purchase loans through the
broker and/or correspondent
channels. The MCAI is calculated
using several factors related to
borrower eligibility (credit score,
loan type, loan-to-value ratio, etc.)
using data made available by ICE
Mortgage Technology.
202
Mortgage Insurance (MI):

Protections for lenders in the event
a borrower falls behind on their
payments. Mortgage insurance is
typically required if a borrower’s
down payment is less than 20
percent of the property value.

Mortgage insurance is typically
required on FHA and USDA loans.

However, with a conventional loan
and down payment less than 20
percent, a borrower will most likely
have private mortgage insurance
(PMI).
203
Mortgage Insurance Premium
(MIP): The annual premium on an
FHA-required mortgage insurance
policy required over the life of
the loan and equal to ~0.45-1.05%
of the loan amount. MIPs protect
FHA against higher-risk borrowers
who are more likely to default on
loans.
204
Upfront Mortgage Insurance
Premium (UPMIP): The upfront
fee on an FHA-required mortgage
insurance policy equal to 1.75% of
the loan amount.
205
Mortgage Modification: A change
made to the terms of a loan
because the borrower is unable
to meet the payments under the
original terms. The modification
is a type of loss mitigation. A
modification can reduce monthly
payments to an amount affordable
to the borrower. Modifications may
involve extending the repayment
term, reducing the interest rate,
and/or forbearing or reducing the
principal balance.

Mortgage-Backed Securities:

Investment securities representing
an interest in a pool of
mortgages.
206

91 Mortgage Servicer: The company
that sends borrowers their
mortgage statements and handles
the day-to-day tasks of managing
mortgages.
207
Nominal Interest Rate: Also known
as the note rate. The interest rate
before taking inflation into account
that appears on the mortgage
note.
208
Non-recurring Closing Costs:

Costs that are one-time charges
paid at the close of escrow. One-
time costs include the appraisal
fee, title insurance, origination
fees, underwriting fee, notary fee,
recording fee, and transfer taxes,
among other items.
209
Operating Costs: The recurring
owner’s expenses to maintain a
property in good condition, such as
utilities, repairs and replacement of
furnishings.
210
Origination Fee: What the lender
charges the borrower for making
the mortgage loan. The origination
fee may include processing the
application, underwriting and
funding the loan, and other
administrative services. Origination
fees generally can only increase
under certain circumstances.
211
Outstanding Principal Amount: The
amount of principal due under a
loan after taking into account prior
payments of principal.

PITI: An abbreviation for principal,
interest, taxes and insurance,
commonly used when referring to
the monthly loan obligation.
212
Points: Amount paid by the
borrower or the seller, with each
point equal to one percent of the
loan.
213
207 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 208 “Mortgage Glossary.” Mortgage Bankers Association, 2022. http:/ /mbabluegrass.org/mortgage-glossary/ 209 “Mortgage Loans.” Fannie Mae. 2022. https:/ /mfguide.fanniemae.com/node/10711 210 Cornell Legal Information Institute. https:/ /www.law.cornell.edu/ 211 “Mortgage Ke y Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 212 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 213 “Mortgage Loans.” Fannie Mae. 2022. https:/ /mfguide.fanniemae.com/node/10711 214 Ibid.
215 Ibid.
216 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 217 Investopedia. https:/ /www.investopedia.com/
218 “FHA Single Family Housing Polic y Handbook: Glossary.” Federal Housing Administration, 2016. https:/ /www.hud.gov/sites/documents/40001GAHSGH.PDF 219 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 220 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 221 Ibid.
222 Lush, Minnie. California Real Estate Finance, 9th Edition. 2016. 223 “Mortgage Glossary.” Mortgage Bankers Association, 2022. http:/ /mbabluegrass.org/mortgage-glossary/ Pre-approval: Pre-approval is a
bigger step than pre-qualification,
but it is a better commitment
from the lender. This involves
borrowers completing a mortgage
application and providing the lender
with income documentation and
personal records. If the borrower
qualifies, the lender can provide
the amount of financing, potential
interest rate, estimated monthly
payment (before taxes and
insurance because the property is
unspecified.
214
Pre-qualification: With pre-
qualification the lender provides
the borrower’s qualifying mortgage
amount (and the process is usually
quick and free) but does not
actually qualify a borrower for a
mortgage until pre-approval.
215
Prepayment Penalty: A fee that
lenders may charge if a borrower
pays off all or part of their
mortgage early. A prepayment
penalty is agreed upon at closing
and not all mortgages have a
prepayment penalty.
216
Primary Mortgage Market: The
market where borrowers can
directly obtain a mortgage loan
from a primary lender. Banks,
mortgage brokers, mortgage
bankers and credit unions are all
primary lenders and are part of the
primary mortgage market.
217
Principal Residence: A dwelling
where the borrower maintains or
will maintain their permanent place
of abode, and which the borrower
typically occupies or will occupy for
the majority of the calendar year. A
person may have only one principal
residence at any one time.
218
Principal: The amount of a
mortgage loan that a borrower
has to pay back. When a payment
is made towards a borrower’s
principal, the borrower owes less,
and will pay less interest based
upon a lower loan size.
219
Private Mortgage Insurance (PMI):

A type of mortgage insurance
that benefits the lender. Borrowers
may be required to pay for PMI if
their down payment is less than
20% of the property value on
a conventional loan. Borrowers
may be able to cancel PMI upon
accumulating 22% equity in their
home.
220
Property Taxes: Taxes charged
by local jurisdictions, typically at
the county level, based upon the
value of the property being taxed.

Often, property taxes are collected
within the homeowner’s monthly
mortgage payment, and then paid
to the relevant jurisdiction one or
more times each year. This is called
an escrow account. If the loan
does not have an escrow account,
then the homeowner will pay the
property taxes directly.
221
Purchase Price: A borrower’s
cost of purchasing the property
excluding usual and reasonable
settlement or financing costs.
222
Rate Lock: A lender’s written
guarantee that allows the borrower
to lock in the interest rate on a
mortgage for a specified time
period at the prevailing market
interest rate.
223

92 Real Property: (or Property) A
parcel of land and everything that is
permanently attached to the land.

The owner of real property has all
of the rights of ownership, including
the right to possess, sell, lease and
enjoy the land.
224
Recycling: Using the proceeds
from sales of some properties in a
portfolio to finance loans to new
borrowers.
225
Recurring Closing Costs: Repeating
expenses paid by the borrower
at close of escrow such as tax
reserves, hazard insurance, and
prepaid interest.
226
Refinance: When a new loan is
taken out to pay off and replace
an old loan. Common reasons to
refinance are to lower the monthly
interest rate, lower the mortgage
payment, or to borrow additional
money. Upon refinance, borrowers
typically pay closing costs and
fees. If borrowers refinance and
get a lower monthly payment there
should be an understanding of what
portion of the reduction is from a
lower interest rate and because the
loan term is longer.
227
Regulation Z: Federal rule
prohibiting compensation to
a loan originator based on a
mortgage transaction’s terms or
conditions (except the amount of
credit extended) and prohibiting
a mortgage originator steering a
consumer to a loan that provides
greater compensation.

Replacement Cost: Amount
required to replace improvements
of comparable quality at today’s
prices.
228
Second Mortgage: A second
mortgage or junior lien is a loan
taken out using the house as
collateral while another loan is
secured by the house.
229
224 Cornell Legal Information Institute. https:/ /www.law.cornell.edu/ 225 Ibid.
226 “FHA Single Family Housing Polic y Handbook: Glossary.” Federal Housing Administration, 2016. https:/ /www.hud.gov/sites/documents/40001GAHSGH.PDF 227 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 228 Lush, Minnie. California Real Estate Finance, 9th Edition. 2016. 229 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 230 “Secondary Mortgage Market.” Investopedia. https:/ /www.investopedia.com/terms/s/secondary_mortgage_market.asp 231 “Securitization.”Investopedia. https:/ /www.investopedia.com/terms/s/securitization.asp 232 “Mortgage Loans.” Fannie Mae. 2022. https:/ /mfguide.fanniemae.com/node/10711 233 Ibid.
234 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 235 “Mortgage Loans.” Fannie Mae. 2022. https:/ /mfguide.fanniemae.com/node/10711 236 “Underwriting Standards. ” Investopedia. https:/ /www.investopedia.com/terms/u/underwriting-standards.asp Secondary Mortgage Market: The
purchasing and selling of existing
mortgages secured by deeds of
trust promoting a constant flow of
funds allowing lenders to continue
to provide new loans to ready
borrowers.
230
Securitization: The procedure
through which an issuer designs a
marketable financial instrument by
merging or pooling various financial
assets into one group. The issuer
then sells this group of repackaged
assets to investors.
231
Shared Equity: An arrangement
under which a borrower receives a
portion but not all of the increased
value of the home, whether
through terms of the loan or other
restriction on the property.

Shortage: The deficit compared to
what would be required, such as
in housing construction related to
demand or to be able to provide an
equivalent loan to a new borrower.

Significant Student Debt:

Outstanding debt on a prospective
homebuyer’s student loans such
that the aggregate monthly
payments exceed an amount
specified in the rules for the CA
Dream for All Fund, such as $100
per month.

Silent Second Mortgage: A second
mortgage loan with no monthly
payments that is due upon sale of
the property or maturity together
with accrued interest (if any) at
a fixed interest rate. The second
mortgage is called “silent” because
the borrower does not disclose its
existence to the original mortgage
lender.

Single-Family Home: A property
with one dwelling unit, whether
detached or attached, including a
condominium or townhome.

Surplus: The amount beyond
what is required, such as to meet
statewide requirements or to be
able to provide an equivalent loan
to a new borrower.

Term: The term of the mortgage
loan is how long a borrower has
to repay the loan. For most types
of homes, mortgage terms are
typically 15, 20 or 30 years.
232
Title Insurance: Insurance
written by a legal reserve
title company and lenders
against losses due to title
defects.
233
Truth in Lending Act (TILA): Title I
of the Consumer Credit Protection
Act protects borrowers against
inaccurate and unfair credit billing
and credit card practices. It requires
lenders to provide loan cost
information so that borrowers can
comparison shop for certain types
of loans.
234
Underwriting: In mortgage
banking, the analysis of the risk
involved in making a mortgage
loan to determine whether the
risk is acceptable to the lender.

Underwriting involves the evaluation
of the property as outlined in
the appraisal report and of the
borrower’s ability and willingness to
repay the loan.
235
Underwriting Requirement: Rules
and requirements of a lender,
secondary market institution (such
as Fannie Mae and Freddie Mac) or
mortgage insurer for determining if
a loan is credit-worthy, such as as
maximum loan-to-value or loan-to-
price ratio, debt to income ratio,
etc.
236

93 Upfront Cost: One-time expenses in
connection with the purchase of or
loan on a property. These out-of-
pocket costs, which include a down
payment and various closing costs,
occur before a home buyer can take
title on a piece of property.
237
Upfront Mortgage Insurance
Premium (UPMIP): A one-time
payment equal to 1.75% of the base
loan amount due when closing on a
home that is financed with an FHA
home loan. Given the lower down-
payment requirements for an FHA
loan, UFMIP helps protect lenders if
a borrower is unable to repay their
mortgage.
238
237 “Upfront Cost.” Investopedia. https:/ /www.investopedia.com/terms/u/upfront-pricing.asp#:~:text=What%20Is%20Upfront%20Pricing%3F,the%20onset%20of%20the%20 relationship.
238 “FHA Single Family Housing Polic y Handbook: Glossary.” Federal Housing Administration, 2016. https:/ /www.hud.gov/sites/documents/40001GAHSGH.PDF 239 “Mortgage Key Terms.” Consumer Financial Protection Bureau. https:/ /www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/ 240 Ibid.

USDA Loan: The Rural Housing
Service, part of the U.S. Department
of Agriculture (USDA) offers
mortgage programs with no down
payment and generally favorable
interest rates to rural homebuyers
who meet the USDA’s income
eligibility requirements.
239
VA Loan: A loan program offered by
the Department of Veterans Affairs
(VA) to help servicemembers,
veterans, and eligible surviving
spouses buy homes. The VA does
not make the loans but sets the
rules for who may qualify and the
mortgage terms. The VA guarantees
a portion of the loan to reduce the
risk of loss to the lender. The loans
generally are only available for a
primary residence.
240

94 APPENDIX B
Case Studies
Case study research on public and private shared appreciation models operating both within the state and beyond provided invaluable context in the design of the fund. Research focused on identifying the general parameters of a shared appreciation program, including underwriting standards, terms of appreciation sharing, investment timeline, maximum investment amount, and property eligibility criteria.

On top of desktop research, interviews with relevant public agencies, program administrators, and private firms further supplemented our research.

Private Programs
Hometap Unison Landed The Point
(Various locations, U.S.)
Funding Type Unknown Institutional
investors, including
pension funds
and university
endowments
Chan Zuckerberg
Initiative, others
Endowments,
pension funds,
insurers, REITs,
and investment
managers
Fees 3% 2.5% 1.25% of home purchase
price if not using a
Landed partner agent
3%-5%
Maximum
Investment
Between 5% and
30% of home value
(up to $600k)
Up to 17.5% of home
value (up to $500k)
Up to 15% of home value
(up to $120k)
$25k to $500k
Underwriting
Standards/
Borrower Eligibility
Criteria
• 600+ credit score
• Max. 75% LTV
• 620+ credit score
• Max. 80% LTV
• 620+ credit score
• Max. 95% LTV
• “Essential
Professionals”
(educators, healthcare
professionals,
government
employees)
• 500+ credit score
• Max. 80% LTV
Property Eligibility
Criteria
Single-family homes
and condos. Must be
primary residence.

Single-family
homes, condos, and
townhomes. Must be
primary residence.

Single-family homes,
condos, townhomes,
and duplexes. Must be
primary residence.

Single-family
homes, condos,
townhomes,
missing middle (1-4
units) structures.

Minimum $155k
home value.

Investment Term 10 years 30 years 30 years 30 years
Shared
Appreciation Terms
Structured on a
case-by-case basis
depending on
property value and
initial investment
amount but may
range between 13.9
– 16.7% of home
value at the time of
repayment.

Appreciation split:
4:1
Appreciation split: 2.5:1 Principal
investment +
~15% – 40% of
appreciation
Program Webpage
https:/ /www.
hometap.com/
https:/ /www.unison.
com/
https:/ /www.landed.com/ https:/ /point.com/

95 Public Programs
Homeownership
Opportunities
Program
Help to Buy:

Equity Loan
Down payment
Loan Assistance
Program
(General)
AC Boost Empower
Homebuyers
Downpayment
Assistance
Program
(Pasadena, CA) (England) (San Francisco,
CA)
(Alameda
County, CA)
(Santa Clara
County, CA)
(Seattle, WA)
Funding
Type
Public:

Local funds
(redevelopment
or inclusionary)
Public: Homes
England
Public: local
funds
Public: $580
million general
obligation bond
Public: Initially
funded in
2016 through
affordable
housing bond
Public: initially
funded from
federal HOME
$, later by
affordable
housing tax
levy, linked with
funds from
Washington
State Housing
Finance
Commission
Shared
appreciation
feature was
used from 2004
– 2017 (funding
3 to 4 loans
annually before
terminated)
Maximum
Investment
Unknown Varies by region.
program will fund
up to 20% of
the home value
(increases to
40% in London)
$375k-$500k $210K for
households <=
100%AMI

$160K for
households
>100% AMI
Up to 17% down
payment; Home
price up to $1.1
million
Up to $45,000
from Seattle,
and $60,000
total
Maximum
purchase price
of 95% of
area median
(due to HOME
requirements)
Underwriting
Standards/
Borrower
Eligibility
Criteria
• First time
homebuyer
• Income eligible
households
(income ranges
determined by
household size)
• First time
homebuyer
• Min. 5% down
payment
contribution
• 75% mortgage
maximum LTV
• First-time
homebuyer
• Annual income
up to 175% AMI
• Min. 3% down
payment
contribution
• Min. LTV 50%
• 30%-40% front
end debt ratio
• Max. $300k
liquid assets
before closing
• First-time
homebuyer
• Annual income
up to 120% AMI
• Min. 0-3%
down payment
contribution t
o
a max. of 50%
• Min. LTV 50%
• Min. 25% front
end debt ratio
• Max. $300k
liquid assets
before closing
• First-time
homebuyer
• Annual income
up to 120% AMI
• Min. 3% down
payment
contribution
• 70%-87% LTV
• 28%-38% front
end debt ratio
• >=620 credit
score
• First-time
homebuyer
• Annual income
up to 80% AMI
• Minimum cash
contribution of
greater of 1%
or $2,500
Property
Eligibility
Criteria
Unknown New construction
by approved
homebuilders
• Single family
homes
• Condominiums
• Townhomes
• Single family
homes
• Condominiums
• Townhomes
• Single family
homes
• Condominiums
• Townhomes
• Single family
homes
• Condominiums
• Townhomes
Investment
Term
30-45 years 15 years Upon sale or
transfer (had
originally been
limited to 30
years)
30 years 30 years 30 years

Homeownership
Opportunities
Program
Help to Buy:

Equity Loan
Down payment
Loan Assistance
Program
(General)
AC Boost Empower
Homebuyers
Downpayment
Assistance
Program
Appreciation
Sharing/
Repayment
Terms
Appreciation
split 1:1 (Pro-rata)
Interest free
for the first 5
years; then 1.75%
interest annually
with an increase
of CPI plus 2%;
Pro-rata at time
of sale plus
interest on the
balance of the
equity state.

Appreciation
split 1:1 (Pro-rata)
Unknown Appreciation
split 1:1 (Pro-rata)
Borrower owed
both:
• 3% simple
interest, plus
• pro rata
appreciation
(forgiven 1/9
per year over
9 years),
With
combination
not to exceed
equivalent of 6%
simple interest
Program
Webpage
https:/ /www.
pasahop.com/
https:/ /www.gov.
uk/help-to-buy-
equity-loan
https:/ /sfmohcd.
org/dalp
https:/ /www.
acboost.org/
https:/ /
housingtrustsv.
org/programs/
homebuyer-
assistance/
empower-
homebuyers-scc/
https:/ /www.
wshfc.org/
buyers/Seattle.
htm

STAKEHOLDERS INTERVIEWED
*A special thanks goes to the following individuals that agreed to be interviewed for the purpose of this report.

ORGANIZATION INTERVIEWEES
Landed Alex Lofton, Ian Magruder, Annee Kim and Jack Woodruff Noah Rahul Parulekar
City of San Francisco Aneka Harrell, Cissy Yin, and Tammie Little The Point Eoin Matthews
Mortgage Bank Association Susan Milazzo and Pete Mills
City of Pasadena Jim Wong and William Huang
Heritage Housing Partners Charles Loveman
Chan Zuckerberg Initiative Ruby Bolaria Shifrin
Silicon Valley Housing Trust Noni Ramos, Julie Mahowald, and Fathia Macauley Help to Buy: Equity Program SImon Walley
96

97 APPENDIX C
Program Guidelines
Below is a summary of how a CA Dream for All program can provide Shared Appreciation Second Loans.

This overview is provided to suggest how detailed program features could be designed.

ILLUSTRATIVE PROGRAM GOALS & TERMS
Program Purpose
The purpose of the program is to make
homeownership more accessible and affordable
to income-qualified first-time homebuyers in
California and promote diversity—and to do so
in such a way that the State can continue to
sustainably assist future generations of first-time
buyers despite rising home prices.

Investment: Shared appreciation second
mortgage loans are intended to enable the State
to invest in affordable homeownership in a way
that can help future eligible buyers.

Experience: The shared appreciation approach
outlined here reflects and is meant to work
with the long-standing requirements of both
Fannie Mae and Freddie Mac for publicly funded
shared appreciation second mortgages. Shared
appreciation second mortgages for first-time
homebuyers have been used successfully by San
Francisco for almost four decades, and more
recently by both Alameda County and Santa
Clara County.

How a State Shared Appreciation Program Can
Work: These suggested terms are meant as a
starting point for decisions on detailed program
specifics. They indicate how a shared appreciation
program can be used to address homeownership
needs, meet secondary market requirements, and
can be financially structured.

Shared Appreciation Second Loan Terms
Overview: The program would provide a shared
appreciation second loan (SASL) with no monthly
payments, paired with a Fannie Mae/Freddie Mac
first mortgage.

The SASL would mature and be due when the
property is sold or transferred, there is a cash out
refinancing, or program requirements are violated.

Upon repayment, the program receives the
original principal amount of the SASL plus a share
of the property’s price appreciation in order to be
able to provide SASLs to subsequent first-time
homebuyers.

Basic Terms
§ Appreciation Share: The program’s share of
appreciation could initially be the program’s
percentage of the original purchase price
(pro rata appreciation). This approach is the
simplest to market, explain and administer.
§ After several years of experience with this
basic model, the program could consider
increasing the percentage on new SASLs,
but not to exceed 1.5 times the program’s
percentage of the original purchase price.

The purpose of considering such higher
shares would be to enable the State to
assist more buyers over time.
§ A single multiple should be applicable to
all SASLs being offered.
§ In no case would the program’s share of
appreciation ever exceed 45% of the total
appreciation.
§ Repayment Events: Repayment will be due
upon sale, transfer or cash-out refinancing, or
upon violation of program requirements as
determined by the program administrator.
§ Prepayment: The homebuyer may prepay
the loan at any time based on a fair market
appraisal by the program without penalty.
§ Loan Amount: The amount of the SASL
would be subject to limits established by the
administrator. The loan amount for a borrower
would not exceed the lesser of:

98 § The program’s maximum specified
percentage of the purchase price. This
maximum percentage would generally not
exceed 17%, but could be increased up to
[27%] for borrowers below 100% AMI. We
would recommend that these percentages
could be increased up to an additional
[3%] for borrowers with significant student
loan debt.
§ The amount needed together with the
borrower’s minimum down payment and a
Fannie/Freddie first mortgage based on a
“front-end ratio” of [30%].
§ The maximum specified percentage times
the median purchase price of homes in the
region.
§ Borrower Minimum Down Payment: The
homebuyer must meet Fannie Mae/Freddie
Mac requirements for cash down payment
and closing costs. The borrower can use
local down payment assistance, gifts or other
sources permitted by Fannie Mae/Freddie
Mac (but not the SASL or other state funds)
to meet Fannie Mae/Freddie Mac minimum
requirements.
§ Borrower Protections:
§ Repayment of the principal amount of the
SASL is subordinate to the outstanding
first mortgage and to the borrower’s
original cash down payment.
§ There is never any deficiency judgment
against the borrower.
§ If the program’s share of appreciation is
set higher than pro rata, in order to meet
Fannie Mae requirement the borrower
would receive all of the following before
the program receives any share in the
appreciation: recovery of the borrower’s
original down payment, amortization of
the first mortgage, and the appreciated
value resulting from capital improvements
that increased livable square footage by at
least 10%.
§ There are no program restrictions on
property resale.

Key Considerations
Purpose of SASL Amount: The SASL in
combination with the borrower’s minimum down
payment is intended to allow households to utilize
a conforming Fannie/Freddie first mortgage
without private mortgage insurance.

Significant Student Loan Debt. Increasing the
maximum SASL loan percentage for borrowers
with significant student loan debt payments (e.g.,
more than $100 per month) can help offset the
negative impact of this debt on the borrower’s
maximum first mortgage amount.

Purchase Price Cap: The program does not
include a purchase price cap on properties being
acquired. However, the program’s loan amount
restrictions constrain the amount of the SASL.

Repayment: The financing for the program
recognizes that many borrowers will only repay
the SASL when the home is sold. The program
allows non-cash out refinancing to enable
borrowers to take advantage of lower-rate first
mortgages. The program administrator would also
provide access to ongoing mortgage counseling
and quarterly updates on estimated potential
repayment to ensure that homebuyers are fully
aware of the benefits of repaying their SAL.

Program Descriptions and Homebuyer
Counseling: Since many borrowers are unfamiliar
with SALs, it is essential that all program materials
and documents be extremely clear as to the
nature of the borrower’s repayment obligation. In
addition, the program would provide and pay for
both pre-purchase and post-purchase counseling
for buyers.

99 ELIGIBLE BORROWERS & PURCHASES
Borrower Eligibility Requirements
To qualify for a shared appreciation loan, the
prospective homebuyer would need to meet all of
the following criteria:
§ Residency: The homebuyer has been a
resident of the State of California for at least
one year.
§ First-Time Homebuyer: No member of the
homebuyer’s household has had an ownership
interest in a residential property for three prior
years (the program will make exceptions for
a legally separated head of household who
was displaced from a jointly-owned property
through the separation process).
§ Principal Residence: The homebuyer is
purchasing the property for use as their
principal residence.
§ Income Limit: The program administrator
would set and update the maximum income
limits for the program. This could initially be
150% of the median income for each high-
cost Region of the state as determined by
FHFA and 120% for other Regions. Income
could be based on the first mortgage lender’s
underwriting income and in accordance with
a standard existing methodology (such as
CalHFA’s income methodology for regions of
the State).
§ Higher Loan Amounts for Lower-Income
Borrowers. As described under “Loan
Amount,” the program administrator may set a
higher maximum specified percentage of the
purchase price for borrowers in lower-income
tiers such as those below 100% AMI in order to
meet program objectives (target populations,
regional/geographic considerations, etc).
§ Homebuyer Education Course: All
homebuyers must participate in and complete
a certified homebuyer education program.

Key Considerations
Adjustable Income Limit: The program
administrator would have the ability to adjust
income limits to meet program targets.

Not Limiting Borrower Assets as Condition
for Eligibility: The program would not require
borrowers to meet asset limits. Household assets
are administratively difficult to assess, and
an asset test would both narrow the range of
potential homebuyers and serve as a disincentive
to saving for low- and moderate-income
households.

Priority Homebuyers
Prioritization: The program is designed to allow the
program administrator to target support to priority
households. These can include such categories as
households that are first generation homebuyers,
those who have been long-term tenants in
historically low-income communities, and those
who have high student debt. The program can
prioritize households either through the reservation
process (described in the reservation process
below) and through product terms.

To illustrate how this can work:
§ Long-Term Residents of Low-Income
Communities who have resided for at least
five of the last ten years in low-income
census tracts could be eligible for a priority
set-aside in reservations to help buy in their
community or elsewhere as they wish. This
provides a way for the program to increase
opportunities for households who have
lived in areas that have historically faced
discrimination (such as red-lined areas).
§ First Generation Homebuyers, whose parents
have not owned a home, could be eligible for
a priority set-aside in reservations.
§ Homebuyers with Significant Student Debt
that reduces the amount of the first mortgage
for which the borrower can qualify for (e.g.,
with monthly student debt payments greater
than $100) could obtain a larger SASL.

100
Key Considerations
Future Priorities: While priorities could shift over time, administering and marketing the program benefits from program parameters that remain stable from one year to the next.

Property Eligibility Requirements
To qualify for the program, the property must be
a pre-existing or newly constructed one- to four-
unit residential property or condominium (under
Fannie/Freddie guidelines, borrower cash down
payment requirements are higher for purchasing a
two to four unit property).

Key Considerations
Housing Unit Limit: Allowing the purchase of buildings up to four units would accommodate AB1550 and incentivize the construction, financing and purchase of small infill homes that increase residential density.

First Mortgage Requirements
Homebuyers must obtain a first mortgage loan
that meets the following criteria:
§ Loan Type: The first mortgage must be a
fixed rate, fully amortizing 30-year mortgage,
that conforms with Government-Sponsored
Enterprise (GSE) requirements and is
includable in GSE mortgage-backed securities
that can be sold TBA.
§ Loan to Value: The first mortgage may not
exceed 80% of property value.
§ Participating Lenders: The first mortgage
lender must be a qualified lender under
CalHFA requirements.

The program can be designed so that both the
first mortgage and the SASL are sold to the
administering agency and are serviced jointly.

Key Considerations
Program Approval from GSEs: The program will need to be approved by GSEs based on precedents for similar approvals. This is a key step to navigate before finalizing detailed features.

STATEWIDE PROGRAM
Program
The program is designed to be operated across
and assist first-time buyers in all regions of the
state. The number of borrowers assisted would be
approximately the same percentage of mortgage
purchase transactions in each region of the state
(such as 2%); this will help assure that program
lending does not itself inflame housing prices.

To reflect and operate effectively in the wide
range of housing markets in the state:
§ Income limits would be set as a higher
percentage of AMI in high-cost areas of the
state.
§ By limiting the loan amount to the maximum
specified percentage of the median purchase
price of homes in each region, the program
would reflect the differences in housing prices
in regions across the state.

Key Considerations
These features help assure that the program can be useful for borrowers in each region of the state while having a single standard operating system.

101

REVOLVING INVESTMENT FUND
Program Funding
Overall Design: The program has been structured
to be an ongoing sustainable program that would
make loans over many years, given the long-term
housing affordability pressures in California. It is
designed to make loans throughout economic
cycles, rather than making all loans at the peak of
the market.

Annual Scale: The scale of the program needs to
be limited not only because of limitations on State
resources but so that it does not itself drive up
the prices of homes in California.

For purposes of estimating needed funding
sources, it is assumed that the program could
provide approximately $1 billion of SASL’s in the
first full year after a ramp-up period. This amount
could help approximately 7,500 households if
the average SASL is $130,000. This accounts for
a small share of the state’s 300,000 mortgage
originations per year, but a larger share of the
100,000 mortgages currently originated for
households that earn less than 120% of AMI. It
is approximately the same number of buyers
that CalHFA currently assists, but would provide
significantly deeper assistance for borrowers who
need it, including in the state’s higher cost areas.

Over Ten Years: The program is designed so that
the average loan amount can increase by about

4.5% per year, and the annual total amount of
SASLs would grow accordingly. Over a 10 year
period, this would provide over $10 billion of SASL’s,
helping first-time buyers who need such assistance
purchase approximately $50 billion of homes.

Sources of Money: After extensive analysis, the
simplest and effective way to fund a program
of this annual scale is from taxpayer funds.

These can come from annual state budget
appropriations and/or from voter-authorized GO
bond issues.

Investment Fund. The State would establish a
separate, independent CA Dream for All Fund
(such as that used for tobacco securitization).

This investment fund would receive annual budget
appropriations and/or proceeds of State GO
bonds authorized by the voters.

These monies would be deposited as received into:
§ A loan account to purchase SALs, and
§ An administrative/servicing reserve account to
pay all administrative, origination, marketing
and outreach, counseling and servicing costs
with respect to such SALs.

Repayments of principal and of appreciation
on all SALs would be redeposited in the Fund,
and amounts not needed to replenish the
administrative/servicing reserve fund would be
dedicated to making new SALs each year.

It may be up to ten or fifteen years before the
program produces a significant reliable stream
of repayments to make additional new loans.

As a result, it is appropriate to plan for annual
state appropriations for 10 years (that could be
continued thereafter).

This revolving investment fund is thus a dedicated
endowment for assisting future first-time
homebuyers in California, and would be held in
trust by the State for this purpose.

Key Considerations
Legislation now or in the future could also
authorize the potential use of revenue bonds by
the administering agency as a way to supplement
taxpayer monies—if this proves able to increase
the total future number of borrowers served with
no higher present value expenditure of taxpayer
monies. Discussions with a range of major
investment banks and other sources suggest that
the marketability of such revenue bonds would
require over-collateralization (such as by funding
SASLs 60% from revenue bonds and 40% from
taxpayer monies), and an ongoing assured source
of annual interest payments (through a state
appropriation pledge, the typical way the state
finances lease appropriation bonds). Such revenue
bonds—while reducing the taxpayer funds
needed directly for making SASLs—would require
taxpayer monies for annual interest payments.

Detailed modeling does not indicate that inclusion
of revenue bonds would significantly increase
the number of borrowers assisted with the same
present value of taxpayer monies. Given the
complexity and scale of issuance involved, such
an additional approach is not recommended at
this time. Such revenue bonds, if any, would be
secured by the CA Dream for All Fund.

102
Administrative Costs
Annual state appropriations would provide funds
to be deposited in the administrative/servicing
reserve account in order to pay for program
administration, start-up, homeowner counseling
and servicing. An estimated $100 million would
need to be deposited annually on an ongoing
basis.

ADMINISTRATIVE PROCESS
Program
Administering Agency: A statewide program
administrator would be selected to develop a
detailed operating plan for the program, including
a detailed program manual and procedures guide
for use of Fund resources, a start-up plan, and
proposed system and parties for marketing/
outreach, origination of SASLs, homeowner
counseling, and servicing of SASLs.

The detailed operating plan would indicate how
the overall program would establish priorities and
a reservation system to help achieve program
objectives; as well a quarterly reporting system
on program demographics, operations, SASL
performance and use of Fund resources.

Key Considerations
Ongoing Oversight: The program administrator
will play a key role in day-to-day oversight of loan
reservations to help assure statewide distribution
of the program and meeting program targets, so
that the program does not end up concentrated
in a few markets where it may be easiest to make
such loans..

Marketing, Outreach and Homeowner Counseling
Central Importance: Marketing, outreach and clear
explanation of shared appreciation mortgages to
potential borrowers, lenders and real estate agents
is crucial to the success of the program.

State taxpayer funds will provide important
funding for such marketing and outreach efforts,
including by non-profit groups and housing
counselors, who can help prepare potential
homebuyers.

Homebuyer education, including a special section
on how the shared appreciation mortgage works,
will be mandatory for all borrowers. Monies are
budgeted for pre-purchase counseling and post-
purchase counseling.

Reservation System
Purpose: The reservation system would need to
do three things:
§ Enable eligible buyers to reserve SASLs in
conjunction with related first mortgages so
that buyers can move quickly in a highly
competitive housing market to purchase a
home.
§ Make it easy and convenient for lenders to
reserve and originate SASLs in conjunction
with related first mortgages, with assurance
that qualified loans are timely purchased by or
on behalf of the program administrator.
§ Assure that the Program meets overall
priorities and targeting objectives.

One way to accomplish these goals is to have
a reservation system that provides set-asides
by region of the state, as well as by priority
categories, such as first generation homebuyers
and long-term residents of low-income areas.

103
Servicing
In addition to collecting loan repayments, the
servicer engaged by the program administrator
will provide ongoing information to borrowers
about their shared equity mortgage, including
estimated amount to be repaid, and how and
when it may be in their interest to pay it off
sooner if possible.

The program will be designed to work
together with other programs for affordable
homeownership, including:
§ Below Market Units: The program can be, but
is not required to be, used for the purchase
of below-market units, such as those created
through inclusionary zoning or Community
Land Trusts.
§ Local Down Payment Assistance Programs:

The program can be used with local down
payment assistance programs
§ Local Shared Appreciation Programs: For
counties with their own shared appreciation
programs (such as Alameda, San Francisco
and Santa Clara), the program would pay
for up to half of the amount of any county
shared appreciation loan that meets program
requirements, subject to other loan amount
requirements.

104
Regions of Analysis
Evaluating existing conditions at the regional level helps establish a baseline understanding of geographic variations in income, housing tenure, and housing market activity. Differing regional circumstances can inform how a shared appreciation program might be tailored to respond to unique regional circumstances. The analysis and program framework in this report divide the state into 11 regional markets which consist of aggregations of counties. These regions align with those in California Forward’s “California Dream Index”.

Figure 53: Regions Considered in Analysis
Redwood Coast
Sierra
Nevada
Bay Area
Shasta/
Cascades
Central Valley
Central Coast
Los Angeles
Orange
Inland Empire
San Diego-Imperial
Sierra Nevada
Sacramento
Source: HR&A Advisors
§ Bay Area
§ Central Coast
§ Central Valley
§ Inland Empire
§ Los Angeles
§ Orange County
§ Redwood Coast
§ Sacramento
§ San Diego-Imperial
§ Shasta/Cascades
§ Sierra Nevada

APPENDIX D

105
Financial Analysis
We conducted a comparative analysis of
the household and fund level impacts from
various financing options as well as home price
appreciation rates. The median price of existing
single-family homes in California has increased
more than 225% over the last 20 years, from
$241,800 in 2000 to $786,000 in 2021, which
implies a historic compound annual growth rate
(CAGR) at 5.8% over the course of the past two
decades. Most of the growth occurred in the last
10 years, while the historic CAGR from 2000 to
2010 was only at 2.37%.
241 To be conservative,
we utilize the following home price appreciation
assumptions for three scenarios.
§ Base Scenario: Annual home price
appreciation at 3.0%
§ Upside Scenario: Annual home price
appreciation at 6.0%
§ Downside Scenario: Annual home price
appreciation at 0.0%
We also looked at the financial tradeoffs for
a borrower and the program or fund as the
financing structure changes. We analyzed the
following structures:

1. Shared Appreciation: This structure
represents the recommended terms for a CA
Dream for All loan with a 17% down payment
and a 1:1, or pro rata, appreciation split
between the homebuyer and the fund.

2. Fixed Rate: The second mortgage with
deferred payment carries an annual simple
interest rate payment obligation of 3.00%
and offers a 17% down payment.
242 There is
currently no program with this level of down
payment support.

3. FHA: This structure reflects the current costs
to homebuyers with limited down payment
savings, where they are required to make
monthly insurance premium payments as well
as an upfront mortgage insurance premium.

4. Conventional: This structure reflects what is
currently available to homebuyers who can
make a 20% down payment which eliminates
the need for either a second mortgage
or monthly mortgage insurance premium
payments.

The analysis shows that a SAL has the following
tradeoffs compared to other financing options:
241 California Association of Realtors
242 CalHFA’s MyHome Assistance Program is a silent second fixed rate program, currently charging 3% simple interest, while the loan size is much smaller, up to 3.5% of the purchase price or appraised value.
§ Fixed Rate: There is no difference in the level
of income served by either a fixed interest or a
SAL because both allow the borrower to avoid
mortgage insurance premium and significantly
lower monthly payments. Under our baseline
growth assumption, homebuyers and the state
would receive approximately the same returns,
because the assumed interest rate on the loan
is equal to our growth rate assumptions. In
our upside scenario, homebuyers have a lower
rate of return, but the fund would make a
sufficient return to be able to support the next
homebuyer at the higher prevailing median
price. In our downside scenario, the homebuyer
has a higher return because they have no
interest payment liability while the fund would
have sufficient funds to lend on to the next
buyer because house prices would be similar.
§ FHA: Without the support of any public down
payment assistance programs, homebuyers
who resort to FHA loans with a minimum
down payment of 3.5% carry much higher
monthly mortgage payments due to a larger
first mortgage loan size and the required FHA
mortgage insurance premium. This requires
borrowers to have a higher level of income
to get income qualified for the mortgage
and sustain a healthy debt-to-income ratio.

Due to its high leverage, the homebuyer’s
initial down payment realizes higher return
in all scenarios, but at the expense of higher
monthly payments. Shared appreciation allows
borrowers to put down the same amount of
down payment with a much lower monthly
mortgage payment.
§ Conventional: Homebuyers who put down a
20% down payment without any public down
payment assistance program, incur the same
monthly mortgage payment as those with
shared appreciation since they are no longer
required to pay any mortgage insurance
premium. There is no difference in the level of
income required but a significant difference
in the required upfront down payment. Due
to its low leverage, the homebuyer’s initial
down payment realizes the lowest return in
all scenarios despite the benefits of lower
monthly payments. Shared appreciation
provides the down payment funding gap and
enables borrowers with limited savings to
access median priced homes and achieve a
much higher return.

106
Figure 54: Household Level Loan Calculation Base Scenario California Dream for All – Household Level Loan Calculation

BASE SCENARIO

KEY ASSUMPTIONS
Property Purchase Price 1 $786,275
Annual Price Appreciation 3.00%
Cost of Sales 9.00%
California Median Household Income 2 $77,358
Down Payment Required for Next Borrower 17.00%
MORTGAGE ASSUMPTIONS3
Amortization 360 months
Conforming Loan Base Rate 4.42%
Annual Private Mortgage Insurance (PMI) 0.58%
FHA Loan Base Rate 4.40%
Upfront Mortgage Insurance Premium (UFMIP) 1.75%
Annual Mortgage Insurance Premium (MIP) 0.85%
HOUSEHOLD OPTIONS 1 2 3 4
Shared
Appreciation
17% Fixed-Rate
Second
17% FHA Conventional
Multiple 1 Simple Interest 3.00% Down Payment 3.50% Down Payment 20.00% Homebuyer Down Payment $23,588 3.00% $23,588 3.00% $27,520 3.50% $157,255 20.00% 1st Mortgage Amount $629,020 80.00% $629,020 80.00% $758,755 96.50% $629,020 80.00% 2nd Mortgage Amount $133,667 17.00% $133,667 17.00% $0 0.00% $0 0.00% Upfront Mortgage Insurance Premium $13,278
Total Purchase Price $786,275 100.00% $786,275 100.00% $799,553 100.00% $786,275 100.00% 1st Mortgage Monthly Payment $3,157 $3,157 $3,800 $3,157 Mortgage Insurance Premium $0 $0 $537 $0
Total 1st Mortgage Monthly Payment $3,157 $3,157 $4,337 $3,157 Debt-to-Income Ratio 43% 43% 43% 43%
Required Household Income $88,111 $88,111 $121,033 $88,111 Percent of California Median Household
Income %
114% 114% 156% 114%
EXIT (YEAR 10) - Homebuyer Impact
Projected Property Sales Price $1,025,911 $1,025,911 $1,025,911 $1,025,911 Repayment to First Mortgage ($502,487) ($502,487) ($605,734) ($502,487) Repayment to Second Mortgage
Principal ($133,667) ($133,667)
Shared Appreciation / Fixed Interest ($40,738) ($40,100) Total Second Mortgage Due ($174,405) ($173,767)
Cost of Sales ($92,332) ($92,332) ($92,332) ($92,332)
Borrower Net Equity $256,687 $257,325 $327,845 $431,092 Borrower Equity Multiple 10.9 x 10.9 x 11.9 x 2.7 x
Borrower Rate of Return (RoR) 27.00% 27.00% 28.10% 10.60% EXIT (YEAR 10) - Fund Impact (Second Mortgage)
Effective Annual Interest Rate

2.70% 2.66% N/A N/A
Funds Recycled $174,405 $173,767 N/A N/A
Down Payment Required for Next Borrower ($174,405) ($174,405) N/A N/A Surplus/Shortfall $0 $638 N/A N/A
Source

1. Median priced exis ting single-family home in California in 2021 according to data available to the California Association of Realtors

2. U.S. Census Bureau, Median Household Income in California for 2020, retrieved from FRED, Federal Reserve Bank of St. Louis; https:/ /fred.stlouisfed. org/series/MEHOINUSCAA646N, June 6, 2022.

3. Genworth Mortgage Insurance, Ginnie Mae, and Urban Institute. FHA rate from MBA Weekly Applications Survey. Conforming rate from Freddie Mac Primary Mortgage Market Survey. Note: Rates as of March 24, 2022.

FICO 760+

107
FICO 760+
Figure 55: Household Level Loan Calculation Upside Scenario California Dream for All – Household Level Loan Calculation

UPSIDE SCENARIO

KEY ASSUMPTIONS
Property Purchase Price 1 $786,275
Annual Price Appreciation 6.00%
Cost of Sales 9.00%
California Median Household Income 2 $77,358
Down Payment Required for Next Borrower 17.00%
MORTGAGE ASSUMPTIONS3
Amortization 360 months
Conforming Loan Base Rate 4.42%
Annual Private Mortgage Insurance (PMI) 0.58%
FHA Loan Base Rate 4.40%
Upfront Mortgage Insurance Premium (UFMIP) 1.75%
Annual Mortgage Insurance Premium (MIP) 0.85%
HOUSEHOLD OPTIONS 1 2 3 4
Shared
Appreciation
17% Fixed-Rate
Second
17% FHA Conventional
Multiple 1 Simple Interest 3.00% Down Payment 3.50% Down Payment 20.00% Homebuyer Down Payment $23,588 3.00% $23,588 3.00% $27,520 3.50% $157,255 20.00% 1st Mortgage Amount $629,020 80.00% $629,020 80.00% $758,755 96.50% $629,020 80.00% 2nd Mortgage Amount $133,667 17.00% $133,667 17.00% $0 0.00% $0 0.00% Upfront Mortgage Insurance Premium $13,278
Total Purchase Price $786,275 100.00% $786,275 100.00% $799,553 100.00% $786,275 100.00% 1st Mortgage Monthly Payment $3,157 $3,157 $3,800 $3,157 Mortgage Insurance Premium $0 $0 $537 $0
Total 1st Mortgage Monthly Payment $3,157 $3,157 $4,337 $3,157 Debt-to-Income Ratio 43% 43% 43% 43%
Required Household Income $88,111 $88,111 $121,033 $88,111 Percent of California Median Household
Income %
114% 114% 156% 114%
EXIT (YEAR 10) - Homebuyer Impact
Projected Property Sales Price $1,328,395 $1,328,395 $1,328,395 $1,328,395 Repayment to First Mortgage ($502,487) ($502,487) ($605,734) ($502,487) Repayment to Second Mortgage
Principal ($133,667) ($133,667)
Shared Appreciation / Fixed Interest ($92,160) ($40,100) Total Second Mortgage Due ($225,827) ($173,767)
Cost of Sales ($119,556) ($119,556) ($119,556) ($119,556) Borrower Net Equity $480,525 $532,586 $603,106 $706,353 Borrower Equity Multiple 20.4 x 22.6 x 21.9 x 4.5 x
Borrower Rate of Return (RoR) 35.20% 36.60% 36.20% 16.20% EXIT (YEAR 10) - Fund Impact (Second Mortgage)
Effective Annual Interest Rate

5.38% 2.66% N/A N/A
Funds Recycled $225,827 $173,767 N/A N/A
Down Payment Required for Next Borrower ($225,827) ($225,827) N/A N/A Surplus/Shortfall $0 $52,060 N/A N/A
Source

1. Median priced exis ting single-family home in California in 2021 according to data available to the California Association of Realtors

2. U.S. Census Bureau, Median Household Income in California for 2020, retrieved from FRED, Federal Reserve Bank of St. Louis; https:/ /fred.stlouisfed. org/series/MEHOINUSCAA646N, June 6, 2022.

3. Genworth Mortgage Insurance, Ginnie Mae, and Urban Institute. FHA rate from MBA Weekly Applications Survey. Conforming rate from Freddie Mac Primary Mortgage Market Survey. Note: Rates as of March 24, 2022.

108
FICO 760+
Figure 56: Household Level Loan Calculation Downside Scenario California Dream for All – Household Level Loan Calculation

DOWNSIDE SCENARIO

KEY ASSUMPTIONS
Property Purchase Price 1 $786,275
Annual Price Appreciation 0.00%
Cost of Sales 9.00%
California Median Household Income 2 $77,358
Down Payment Required for Next Borrower 17.00%
MORTGAGE ASSUMPTIONS3
Amortization 360 months
Conforming Loan Base Rate 4.42%
Annual Private Mortgage Insurance (PMI) 0.58%
FHA Loan Base Rate 4.40%
Upfront Mortgage Insurance Premium (UFMIP) 1.75%
Annual Mortgage Insurance Premium (MIP) 0.85%
HOUSEHOLD OPTIONS 1 2 3 4
Shared
Appreciation
17% Fixed-Rate
Second
17% FHA Conventional
Multiple 1 Simple Interest 3.00% Down Payment 3.50% Down Payment 20.00% Homebuyer Down Payment $23,588 3.00% $23,588 3.00% $27,520 3.50% $157,255 20.00% 1st Mortgage Amount $629,020 80.00% $629,020 80.00% $758,755 96.50% $629,020 80.00% 2nd Mortgage Amount $133,667 17.00% $133,667 17.00% $0 0.00% $0 0.00% Upfront Mortgage Insurance Premium $13,278
Total Purchase Price $786,275 100.00% $786,275 100.00% $799,553 100.00% $786,275 100.00% 1st Mortgage Monthly Payment $3,157 $3,157 $3,800 $3,157 Mortgage Insurance Premium $0 $0 $537 $0
Total 1st Mortgage Monthly Payment $3,157 $3,157 $4,337 $3,157 Debt-to-Income Ratio 43% 43% 43% 43%
Required Household Income $88,111 $88,111 $121,033 $88,111 Percent of California Median Household
Income %
114% 114% 156% 114%
EXIT (YEAR 10) - Homebuyer Impact
Projected Property Sales Price $786,275 $786,275 $786,275 $786,275 Repayment to First Mortgage ($502,487) ($502,487) ($605,734) ($502,487) Repayment to Second Mortgage
Principal ($133,667) ($133,667)
Shared Appreciation / Fixed Interest $0 ($40,100)
Total Second Mortgage Due ($133,667) ($173,767) $0 $0
Cost of Sales ($70,765) ($70,765) ($70,765) ($70,765)
Borrower Net Equity $79,357 $39,257 $109,777 $213,023
Borrower Equity Multiple 3.4 x 1.7 x 4.0 x 1.4 x
Borrower Rate of Return (RoR) 12.90% 5.20% 14.80% 3.10% EXIT (YEAR 10) - Fund Impact (Second Mortgage)
Effective Annual Interest Rate

0.00% 2.66% N/A N/A
Funds Recycled $133,667 $173,767 N/A N/A
Down Payment Required for Next Borrower ($133,667) ($133,667) N/A N/A Surplus/Shortfall $0 ($40,100) N/A N/A
Source

1. Median priced exis ting single-family home in California in 2021 according to data available to the California Association of Realtors

2. U.S. Census Bureau, Median Household Income in California for 2020, retrieved from FRED, Federal Reserve Bank of St. Louis; https:/ /fred.stlouisfed. org/series/MEHOINUSCAA646N, June 6, 2022.

3. Genworth Mortgage Insurance, Ginnie Mae, and Urban Institute. FHA rate from MBA Weekly Applications Survey. Conforming rate from Freddie Mac Primary Mortgage Market Survey. Note: Rates as of March 24, 2022.

109

APPENDIX E
Analysis of Alternative Funding Options
Option 4. Blended Taxpayer Funds and Private Capital
Purpose of approach. The aim is to supplement
taxpayer funds with private capital to finance
SALs.

How it would work. The state agency that would
oversee and administer the CA Dream for All
Fund would seek to sell participation interests in
the pools of SALs it is making. In the first several
years, all loans would be funded by taxpayer
monies. As a portfolio and track record is
established, the state agency would structure and
sell senior tranches to investors. The net proceeds
received, together with a reduced amount of new
taxpayer monies, would help fund new loans.

Security for private investors. Private investors
would receive the first return from all loan
repayments, including appreciation up to a
specified minimum rate of return; additional
repayments would be split between the CA
Dream for All Fund and investors. If useful in
attracting private investors, taxpayer monies
could also fund a specific loss reserve fund to
cover losses of principal on the loans.

Monies for new loans. Under this leveraged
approach:

In years 1 through 3, new taxpayer monies would
be provided for $1 billion of SALs each year.

In years 4 through 12, the amount needed from
new taxpayer monies would be reduced and used
together with private capital to make loans.

After year 12, no more new taxpayer monies
would be appropriated for loans. All future loans
would be funded from a combination of residual
repayments retained by the CA Dream for All
Fund and new private equity capital.

Origination, servicing and administrative costs. As
with the revolving fund approach in Option 1, the
State would appropriate $100 million per year.

Precedent. We are not aware of any precedent
for this approach.

Taxpayer investment. The total taxpayer
investment would be designed to be similar to
that for Option 1.

Ability to raise adequate capital, feasibility and
legal concerns. There are little grounds, today, to
think that this option can reliably raise significant
amounts of capital for the program. There also
appear to be fundamental structural issues in
seeking to use these two sources together in
funding common pools of loans. Finally, there are
significant potential risks to the State or state
agency in soliciting private equity capital from
multiple investors.

Ability to meet programmatic needs. Utilizing
private equity capital would significantly limit
who can be helped in terms of areas of the state,
lower-income borrowers and those needing larger
amounts of assistance. Such larger amounts of
assistance run exactly counter to investors’ need
for early repayment of SALs.

The program would need to receive well more than
pro rata appreciation in order to provide expected
rates of return to the private investors, and it would
thus significantly limit household wealth.

The program would have to set and enforce a
fixed 30-year maturity on SALs.

The concern is therefore that a program designed
to raise private investor funds would still rely
heavily on taxpayer monies but would not meet
key program needs.

Compatibility with Fannie Mae and Freddie Mac
first mortgages. The Freddie Mac Affordable
Seconds checklist attached to Section 4204
of the Freddie Mac guide specifically prohibits
sharing of appreciation with for-profit entities,
and discussion by CSG Advisors with Freddie
Mac staff indicates they would not approve such
a program. It is unclear if Fannie Mae would
approve such a program.

Ongoing way to help future first-time
borrowers. The high rate of return required by
private investors, and their early time horizon,
would significantly reduce the amount of loan
repayments that can be used to make new
loans. As a simple example, if the rate of home
appreciation is 4.5% (similar to the statewide
average for the last 40 years) and investors

110
require a 9% return on their investment, that
would dramatically reduce the amount of
appreciation available to help subsequent buyers.

Sustainable investment for the State. The
amount of taxpayer funding would be designed
to be sustainable, but the investors’ expected rate
of return would reduce the ability of the State to
help future borrowers.

No future financial risk to the State. There
would be no financial impact on the State from
any defaults or losses on any SALs. If there are
any losses, they reduce the total amount of
repayments that can be used to make loans to
future buyers.

Leverage taxpayer monies with non-taxpayer
monies to expand the number of borrowers
ultimately served. The total number of borrowers
ultimately served is likely to be less than that
of Option 1, given the rate of return needed for
private investors.

111
Option 5. Private Fund with Significant State Investment Purpose of approach. Taxpayer monies would
pay a portion of the purchase price of those
loans originated by a private fund which meet
CA Dream for All program requirements. The
aim is to make it possible for the private fund to
provide deeper assistance (e.g., a larger SAL) than
it otherwise would if it were operating solely with
private capital.

How it would work. The State would enter into
a leveraging agreement with a private fund that
originates SALs and is raising private capital.

State would fund a portion of the loan amount
for loans that meet CA Dream for All program
requirements.

Consider a fintech company that has a program
for California essential professionals, many of
whom might meet CA Dream for All program’s
income limits, but need deeper assistance than
the amount that private capital can profitably lend
(say 10% of the home purchase price, in return for
25% of the appreciation). Such borrowers might
receive additional resources (say another 7%)
from taxpayer funds on which they only pay pro
rata appreciation.

Security for private investors. Private investors
would receive the first return from all loan
repayments, including appreciation up to a
specified minimum rate of return. Additional
repayments would be allocated between the
fund manager, the private investors and the State
(which would reinvest monies it receives in a
subsequent tranche of new loans).

Monies for new loans. Loans would be originated
by the private fund. The State would provide
funds for a specified portion of those loans that
meet CA Dream for All program requirements,
up to a maximum annual amount of taxpayer
funding.

Origination, servicing and administrative costs.

These are incurred by and paid by the sponsoring
entity.

Precedent. We are not aware of any precedent
for this approach.

Taxpayer investment. The total taxpayer
investment is likely to be much smaller than in
Option 1, simply because the number of loans
would likely be quite small, given the difficulties in
raising private capital.

Ability to raise adequate capital, feasibility
and legal concerns. There are little grounds,
today, to think that this option can reliably raise
significant amounts of private capital. There also
appear to be fundamental structural issues in
seeking to use these two sources together in
funding common pools of loans. Finally, while the
purpose of the State investment is to help lower-
income and other borrowers who need a larger
SAL than would be funded by private capital, the
use of State funds to make a larger loan would
significantly lengthen the expected prepayment.

Therefore, it is unlikely that State and private
funds could be used together.

Ability to meet programmatic needs. Private
equity capital would significantly limit who can be
helped, in terms of areas of the state and those
needing deeper assistance. Borrowers would pay
for more than pro rata appreciation given the
private capital utilized. The program would have to
set and enforce a fixed 30-year maturity on SALs.

Compatibility with Fannie Mae and Freddie Mac
first mortgages. Freddie Mac would not approve
such a program, as it specifically prohibits
sharing of appreciation with for-profit entities. If
the sponsoring entity has a waiver from Fannie
Mae rules, it could use that for loans made with
taxpayer monies as well as private capital.

Ongoing way to help future first-time buyers.

Return on the State’s investment would be highly
limited and would unlikely be relied on for making
new loans. Rather, the State would need to
continue to use General Fund monies to purchase
its participations in subsequent pools of loans.

Sustainable investment for the State. The
amount of taxpayer funding would be designed to
be sustainable, but there would be limited return
on the State’s investment or its ability to help
subsequent borrowers.

No future financial risk to the State. There
would be no financial impact on the State from
any defaults or losses on any SALs. If there are
any losses, they reduce the total amount of
repayments that can be used to make loans to
future buyers.

Leverage taxpayer monies with non-taxpayer
monies to expand the number of borrowers
ultimately served. Total number of borrowers
ultimately served is likely to be less than that
of Option 1, given the rate of return needed for
private investors.

112
Option 6. Private Funds with Limited, Indirect State Investment 243 “Servicing Mortgages Credit. ” New York State Department of Taxation and Finance. https:/ /www.tax.ny.gov/bus/ct/service_mortgage_credit.htm Purpose of approach. Taxpayer monies, without
funding any SALs, would be used to support
private shared appreciation lending, so that such
lending could help the borrowers that the CA
Dream for All program is intended to assist.

How it would work. The State would incentivize
private SALs for those borrowers who meet
CA Dream for All program income and first-
time buyer requirements. It would enter into an
agreement with the private shared appreciation
entity (fintech, investment bank, hedge fund etc.)
under which it provides specified benefits with
respect to the amount of loans that meet CA
Dream for All program requirements (“eligible
loans”). In addition to borrower eligibility, the
agreement would specify that the loan’s share of
appreciation not exceed a certain ratio (such as

2.5 times its share of the purchase price).

These benefits could include:
§ Payment/reimbursement of a portion of loan
origination, administration or servicing costs
(most easily paid as a single up-front payment
with respect to the eligible loans made in a
given month or quarter);
§ A loan loss reserve fund that would cover the
first (say 5%) loss on any eligible loan; or
§ Tax benefits such as relief to investors from
state capital gains tax on the percentage of its
investment that was made for eligible loans.

Private shared appreciation entities would raise all
monies for all SALs. They would make and service
eligible loans in the same way and under the same
standards by which it makes other SALs.

Precedent. We are not aware of any precedent
for this overall approach. With respect to taxation,
New York State provides a business income
tax credit to servicers of first-time homebuyer
mortgages made by the state housing finance
agency.
243 There are many examples of loan loss
reserve funds established by local and state
governments for second mortgage housing
rehabilitation loans.

Taxpayer investment. The total taxpayer
investment is limited to the benefits provided
under such agreements.

Ability to raise adequate capital. The total
amount of private capital raised for shared
appreciation lending has been very limited. This
ability is unlikely to be significantly affected by
State incentives for a subset of such loans.

Ability to meet programmatic needs. Reliance on
private equity capital significantly limits who can
be helped, in terms of areas of the state, lower-
income borrowers and those needing deeper
assistance. Borrowers would pay 2.5 times pro
rata appreciation, affecting their ability to build
household wealth. There would be a fixed 30-year
maturity on loans, and, as at present with private
shared appreciation lending, concerted servicing
efforts to encourage early repayment of loans.

Compatibility with Fannie Mae and Freddie Mac
first mortgages. Private shared appreciation loans
cannot be used with Freddie Mac first mortgages.

If the sponsoring entity has a waiver from Fannie
Mae rules, it could use that for eligible loans as
well as its broader portfolio of SALs in general.

Ongoing way to help future first-time buyers.

Under this approach, the State provides benefits
for each year’s new eligible loans. The State does
not receive any repayments for its benefits, and
there is no need for revolving any funds. Loan
repayments are used to pay private investors.

Sustainable investment for the State. The
amount of taxpayer funding would be designed to
be sustainable, taking into account both out-of-
pocket costs and tax benefits.

No future financial risk to the State. There would
be no financial impact on the General Fund from
any defaults or losses on any SALs. If the State
were to provide a first loss reserve on eligible
loans, actual losses would diminish that reserve.

They reduce the total amount of repayments that
can be used to make loans to future buyers.

Leverage taxpayer monies with non-taxpayer
monies to expand the number of borrowers
ultimately served. The total number of eligible
borrowers is likely to be modest compared to a
State revolving fund (Option 1). Many of those
might be ones who would have received the same
SAL with or without the State incentives.

113

APPENDIX F
Detailed Financial Comparison of Shared Appreciation vs. Fixed Interest Second Loans
Borrower’s Repayment Obligation.

Before modeling the cumulative effects on the
CA Dream for All program as a whole based
on these two different lending approaches, it is
important to understand the key differences for
the borrower between shared appreciation and a
fixed interest rate.

With shared appreciation, the borrower repays
the original principal amount of the CA Dream
for All loan (say $130,000 on a $650,000 home
purchase) plus a pro rata share of the gain. If the
home is resold in 10 years with no increase in
value after sales costs, then a shared appreciation
borrower repays only the $130,000 principal of
the CA Dream for All loan, since there has been
no gain.

With a fixed interest rate loan, the borrower has
to pay the same amount of accrued interest at
the loan rate regardless of what happens to the
value of the home. The interest that accrues each
year is “hard,” meaning that it is due regardless
of what happens to the value of the home. If
the home resells for $650,000 with no increase
in value, the borrower has to repay both the
$130,000 principal plus the $39,000 of interest
accrued over 10 years, and would thus owe a total
of $169,000. Since the home did not increase in
value, the borrower’s household wealth would be
reduced by $39,000, which is double the amount
of the typical 3% down payment for the purchase
of the home.

If home prices rise dramatically, on the other
hand, a borrower with a fixed interest loan still
only pays back the same $39,000 in interest
while receiving all the appreciation on the home.

A borrower with a SAL owes the same share
of appreciation on the home, whether that
appreciation was small or large.

Comparing Impacts at the Individual
Loan Level.

Figure 57 shows how this works under various
home price rise situations for borrowers who
receive either shared appreciation or fixed interest
rate loans and resell their home at the end of 10
years.

What stands out from this simple set of examples
is that a fixed interest rate loan creates two types
of risks not present with shared appreciation.

Risk to borrower. If a home does not increase
in value, the borrower still owes the accrued
interest on a fixed rate loan. As proposed for a
CA Dream for All SAL, even the recovery of the
principal of the loan (e.g., the $130,000) would
be subordinate to the borrower recovering their
original down payment. This provides significantly
more risk protection to the borrower than with a
fixed rate loan.

Risk to helping future borrowers. With a SAL,
whatever happens to the rate at which homes
go up in value, the CA Dream for All Fund has
sufficient monies to help a similar new buyer
purchase an equivalent home. With a fixed rate
loan, if home prices rise more than the fixed rate,
the CA Dream for All Fund does not have enough
monies to help the next borrower.

Nature of these risks. These two risks are inherent
to CA Dream for All Fund investing in fixed rate
loans. If appreciation turns out to be less than the
fixed rate, the low- or moderate-income borrower
loses money, compared to shared appreciation. If
appreciation turns out to be more than the fixed
rate, the CA Dream for All Fund does not have
enough to help the next buyer purchase a similar
home. As shown in figure 58, these potential
problems cannot be solved by setting a high fixed
interest rate.

114
Figure 57: Impact of Individual Average CA Dream for All Loan of $130,000 0% home price rise 3% home price rise 4.5% home price rise 6% home price rise Fixed
interest
Shared
Apprec’n
Fixed
interest
Shared
Apprec’n
Fixed
interest
Shared
Apprec’n
Fixed
interest
Shared
Apprec’n
Original price 650,000 650,000 650,000 650,000 650,000 650,000 650,000 650,000 Resale price 650,000 650,000 874,000 874,000 1,009,000 1,009,000 1,164,000 1,164,000 Total gain 0 0 224,000 224,000 359,000 359,000 514,000 514,000 Repay to CA Dream for All
Principal 130,000 130,000 130,000 130,000 130,000 130,000 130,000 130,000 Int / Apprec’n 39,000 0 39,000 44,800 39,000 71,800 39,000 102,800 Total due 169,000 130,000 169,000 174,800 169,000 201,800 169,000 232,800 Impact on borrower’s
household wealth -39,000 0 185,000 179,200 320,000 287,200 475,000 411,000 Multiple of borrower’s down
payment -2x 0x 9.5x 9.2x 16.4x 14.7x 24.3x 21.1x
Amount needed for CA Dream
for All to help next borrower
buy equivalent home
130,000 130,000 174,800 174,800 201,800 201,800 232,800 232,800 Surplus or shortfall to fund
next loan 39,000 All funds
required -5,800 All funds
required -32,800 All funds
required -63,800 All funds
required
Figure 58: Impact of Individual Loan Fixed interest at 3% and at 5% vs. Shared Appreciation 0% home price rise 6.0% home price rise
Fixed interest
at 3%
Fixed interest
at 5%
Shared
Apprec’n
Fixed interest
at 3%
Fixed interest
at 5%
Shared
Apprec’n
Original price 650,000 650,000 650,000 650,000 650,000 650,000 Resale price 650,000 650,000 650,000 1,164,00 1,164,000 1,164,000 Total gain 0 0 0 514,000 514,000 514,000
Repay to CA Dream for All
Principal 130,000 130,000 130,000 130,000 130,000 130,000 Int / Apprec’n 39,000 65,000 0 39,000 65,000 102,800
Total due 169,000 195,000 130,000 169,000 195,000 232,800 Impact on borrower’s
household wealth -39,000 -65,000 0 475,000 449,000 411,000 Multiple of borrower’s
downpayment of $19,500 -2.0x -3.3x 0x 24.3x 23.0x 21.1x Funds repaid to CA Dream for
All 169,000 195,000 130,000 169,000 195,000 195,000
Amount needed for CA Dream
for All to help next borrower
buy equivalent home
130,000 130,000 130,000 232,800 232,800 232,800
Surplus or shortfall to fund
next loan + 39,000 +65,000 All funds
required -63,800 -37,800 All funds
required
If the rate is set at 5%, then:
§ If home prices are flat, the borrower owes far
more accrued interest and risks losing four
times their original down payment.
§ If home prices increase at 6% per year, the CA
Dream for All Fund is still short in helping the
next borrower.

In essence, an accruing fixed rate second loan
creates a greater upside and a greater downside
for the borrower, and makes it much more difficult
for the State’s investment in the CA Dream for
All program to keep pace with inflation. This is
especially visible when home prices increase as
they have by about 40% in the last two years. A
shared appreciation investment would increase
in value to help future buyers; a fixed rate
investment—whether at 3% or 5%—would not,
meaning the CA Dream for All program could help
fewer and fewer buyers with each passing year.

115
Overall Impact of Fixed Interest vs.

Shared Appreciation on CA Dream
for All’s Ability to Help Borrowers
Having seen how fixed interest compares with
shared appreciation on the same initial $130,000
investment by the CA Dream for All Fund, we can
now look at the cumulative impact on the Fund
itself and its ability to assist borrowers.

Time horizon. For helping borrowers overall, the
differences between the fixed interest rate and
shared appreciation approaches emerge over
time.

The differences occur, not when loans are initially
made, but as they are repaid with different
amounts due back to the CA Dream for All Fund,
and the CA Dream for All Fund then uses those
repayments to help subsequent buyers. In the first
year, the two approaches by definition help an
identical number of borrowers; it is the different
payoff amounts over time that show what
happens to the total number of borrowers helped
and to their household wealth.

Figure 59 shows, in the expected case, the
impacts of loans made through year 40 (30 years
after the 10 years of state funding of initial loans)
to see what happens to the CA Dream for All
program’s ability to help borrowers as loans are
repaid.

Figure 59: Overall Impact of Shared Appreciation and Fixed Interest Over 40 Years: Expected Case Shared Appreciation Fixed Simple Interest at 3%
Taxpayer Funding
For loans $10.0 billion $10.0 billion
For administration, origination, counseling and servicing costs for 40 years

4.1 4.1
Total taxpayer funding over 40 years 14.1 14.1
Present value at 3.0% 10.8 10.8
CA Dream for All Loan Originations
Borrowers assisted over 40 years 157,200 124,800
$ price of homes purchased $238 billion $163 billion
Loans to borrowers $47.6 billion $32.6 billion
Present value at 3.0% 25.3 19.2
Borrower Share of Home Appreciation Through Year 40
Borrower share of appreciation through year 40 $133.8 billion $120.6 billion Present value at 3.0% 64.2 60.8
$ price of homes purchased $238 billion $163 billion
Loans to borrowers $47.6 billion $32.6 billion
Present value at 3.0% 25.3 19.2
Borrower share of home appreciation thru year 40 $133.8 billion $120.6 billion Present value at 3.0% 64.2 60.8
Overall Impact
Residual value of program receipts after year 40 to help subsequent borrowers $35.8 billion $7.6 billion
Present value at 3.0% $7.5 $1.7
Net cost to State for 40 years of program $10.8 - $7.5 = $10.8 - 1.7 = Present value at 3.0% $3.3 bill. $9.1 bill.

Net cost to State for investing with borrowers
Borrower share of appreciation / net cost to State
Each present value at 3.0%
$64.2 / 3.3 billion =

19.5 x
$60.8 / 9.1 billion =

6.7 x

116
Borrowers assisted through year 40. In the
expected case, shared appreciation helps
considerably more borrowers and provides greater
assistance than fixed rate seconds. SALs would
help 157,200 borrowers compared to 124,800 with
fixed interest loans, and would help them buy $238
billion of homes compared to $163 billion.

In the more conservative case (Figure 61 below),
the shared appreciation approach helps more
borrowers and provides greater assistance than
fixed rate seconds, but the difference is less
marked. SALs would help 144,000 borrowers
compared to 134,000 with fixed interest loans and
help them buy $157 billion of homes compared to
$141 billion. These smaller differentials reflect the
fact that, in the more conservative case, the fixed
interest rate is much closer to the appreciation rate.

One perhaps surprising finding is that the higher
the appreciation, the fewer the borrowers
a fixed interest program can help. A fixed
interest program would help 134,000 in the
more conservative case and 125,000 in the
expected case. This is because the fixed interest
the Fund receives back is the same in the more
conservative and expected cases, but the cost of
buying a subsequent home in the expected case
is much greater. A shared appreciation program,
by contrast, is able to help more borrowers in the
expected case than in the more conservative case.

Borrower appreciation through year 40.

The direct impact on household wealth generated
through a given time horizon, such as 40 years,
consists of (a) the household wealth of borrowers
who will have paid off their loans by that date (e.g.,
their gain after paying the program its fixed interest
or share of appreciation) and (b) the accreted
wealth of borrowers who have outstanding loans
on that date (e.g., what their homes are projected
to be worth on that date less the accrued fixed
interest or what CA Dream for All Fund’s share of
appreciation would be as of that date).

In the expected case, shared appreciation gener-
ates significantly greater total household wealth
during this time period than fixed interest—$134
billion versus $121 billion, or about 11% more. This
reflects the much greater number of borrowers
that a shared appreciation program helps.

In the more conservative case (where home
appreciation is very similar to the fixed interest
rate), there is no difference in total household
wealth through the 40 year date.

Figure 60: Overall Impact of Shared Appreciation and Fixed Interest Over 40 Years: More Conservative Case Shared Appreciation Fixed Simple Interest at 3%
Taxpayer Funding
For loans $10.0 billion $10.0 billion
For administration, origination, counseling and servicing costs for 40 years

4.1 4.1
Total taxpayer funding over 40 years 14.1 14.1
Present value at 3.0% 10.8 10.8
CA Dream for All Loan Originations
Borrowers assisted over 40 years 144,000 133,900
$ price of homes purchased $157 billion $141 billion
Loans to borrowers $31.4 billion $28.2 billion
Present value at 3.0% 18.1 16.9
Borrower Share of Home Appreciation Through Year 40
Borrower share of appreciation thru year 40 $61.8 billion $61.8 billion Present value at 3.0% 31.2 31.6
Overall Impact
Residual value of program receipts after year 40 to help subsequent borrowers
$13.0 billion $7.5 billion
Present value at 3.0% $2.7 $1.6
Net cost to State for 40 years of program $10.8 – $2.7 billion = $10.8 – 1.6 billion = Present value at 3.0% $8.1 billion $9.2 billion
Net cost to State for investing with borrowers
Borrower Share of Appreciation / Net cost to State 31.2 / 81 billion = 31.6 / 9.2 billion = Each present value at 3.0% 3.9 x 3.4 x

117
Beyond the borrower appreciation generated
through this time horizon, there is a major
difference in the ability of CA Dream for All Fund
to continue helping borrowers
Resources to help additional borrowers. A
shared appreciation program creates far more
accrued public resources to help subsequent
buyers generate household wealth. The amount of
accrued interest or shared appreciation accrued
by the Fund at the end of 40 years is a cost to
current borrowers—but it is also a resource for
helping future first-time buyers.

In the expected case, a shared appreciation
program will generate five times more resources
from repayments after year 40 to help future
buyers than a fixed interest program ($35.8 billion
versus $7.6 billion). In the more conservative case,
shared appreciation will accrue two times more
resources than a fixed interest program.

Why is this important? Whether the State charges
fixed interest or shared appreciation, investing
alongside borrowers generates a much larger
amount of household wealth than the amount
of state dollars invested. On a present value
basis, the $10 billion initially invested in program
loans generates about six times that amount of
borrower household wealth over 40 years in the
expected case or about three times that amount
of borrower household wealth in the more
conservative case.

Therefore, the amount due back to the Fund
from loans that are outstanding in year 40 is very
significant: those monies helps the State assist
many more subsequent borrowers generate
household wealth thereafter.

In a shared appreciation approach, the amount of
this residual is five times greater than in the fixed
interest approach. In the conservative case, the
shared appreciation residual is two times greater
than with fixed interest.

This residual impact can be viewed in two
different ways:

Efficiency of State investment in generating
household wealth. One way is to picture the Fund
not making new loans after year 40, but rather
paying back to the State what the Fund receives
from outstanding loans. The net effect can be
considered on a present value basis, as shown in
Figure 57 of the body of the report.

Fund continuing to make new loans.

Alternatively, one can picture the program
continuing after 40 years and making new loans,
and compare the household wealth generated
under shared appreciation versus fixed interest.

The following charts show the effect on borrower
appreciation of the Fund continuing to make
loans through year 60. In the expected case, the
cumulative impact on borrower appreciation is
far greater with shared appreciation. In the more
conservative case, there is little difference.

118
Figure 61: Borrower Share of Home Price Appreciation Expected Case CONFIDENTIAL DRAFT WORK PRODUCT, DELIBERATIVE DOCUMENT – NOT FOR PUBLIC DISTRIBUTION Borrower Share of Home Price Appreciation
(net of second mortgage shared appreciation or simple interest obligation)

EXPECTED CASE

119
Figure 62: Borrower Share of Home Price Appreciation Conservative Case CONFIDENTIAL DRAFT WORK PRODUCT, DELIBERATIVE DOCUMENT – NOT FOR PUBLIC DISTRIBUTION Borrower Share of Home Price Appreciation
(net of second mortgage shared appreciation or simple interest obligation)

MORE CONSERVATIVE CASE

120
CONTACT: 916-491-0022 | [email protected] | cafwd.org | @MoveCAFWD

Measure A1 Oversight Committee Presentation
Measure A1 Down Payment Assistance Loan Program
March 24, 2022

Original Program Framework
• Assist First Time Home Buyers to purchase homes in Alameda County • Serve households earning ≤120% AMI (with ability to go up to 150% AMI) • Include design features that:
• encourage Alameda County residents to purchase homes near work or transit that takes them to work.
• benefit former Alameda County residents that have been displaced. • benefit educators and first responders so they may live in the communities in which they work.
• Loan to be structured as a shared appreciation, silent second mortgage.

The Alameda County Board of Supervisors adopted a policy framework in 2018 which drove the Program Design. The program was designed to:

Equity-Centered Policies
Included in the original program design:
3 • Tiered levels of assistance based on household income and market-based need • Multilingual outreach and interpretation services
• Shared appreciation loan to balance wealth-building for individuals with long- term program sustainability
• Robust race data collection throughout the process.

Measure A1 Funding at Work
Closed Loans: $11.41 million (86 homebuyers)
Funds Reserved: $7.43 million (38 applicants)
Funds Remaining: $26.16 million*

41.9%
in 36
months
*Expect remaining funds to be spent within the next three to four years Measure A1 – Down Payment Assistance Loan Program
AC Boost – $50 million of the total $580 million in Measure A1 Program launched March 2019;
Outcome Data as of March 2022

Funding Cycle 2 Update
Significant policy changes were approved by the Board of Supervisors in April 2021
• Increased loan amounts – up to $160k or $210k
• Reduction in required cash to close
• 1.5% Seasoned Funds no longer required
• Layering with other subordinate loan programs allowed, if approved in advance by the County
• Front-end ratio minimum of 25% waived for Section 8
homeownership voucher recipients

Funding Cycle 2 Update
The 2nd Pre-Application Period opened from July 15th-August 30th, 2021. 6,081 Pre-applications received (2,294 during funding cycle #1) 1,000 attendees joined the virtual public lottery held on September 17th, 2021 306 applicants have attended the 5 application workshops we have held to date. 86 full applications have been submitted for underwriting. 36 applicants have been approved for a Reservation of Funds to date 8 applicants are currently in contract to purchase a home. 2 Loans have closed

Policy Changes in Funding Cycle #2

Funding Cycle 1 Analysis
Analysis performed with a goal of increasing the success rates for BIPOC households in Funding Cycle 2.
• Reviewed race data collected at key milestone of the initial Pre-Application. o The data suggested that marketing and outreach strategies were highly effective in reaching Black, Asian and Multi-Racial households, with room for improvement for reaching Latinx, American Indian and Pacific Islander households.
o The data showed significant attrition for Black and Latinx households between attending a workshop and submitting a Full Application.
• Administered Survey to households who attended a workshop but did not submit a Full Application.
• Updated research into the racial wealth gap, disparities in homeownership rates by race, and potential policy solutions.
• Updated analysis of countywide home values, home supply, and necessary loan sizing to ensure AC Boost buyers have access to higher-opportunity neighborhoods.

Changes to Policy

1. Reduction in the amount of cash savings households need to contribute in order to participate in the program.
• The maximum combined loan-to-value (“CLTV”) increased from 97% to 100% to reduce the Buyer’s cash-to-close requirements. The required down payment can now range from 0-3% based on need.
• Seasoned funds are no longer required.
• The Buyer’s contribution is required to cover closing costs which can come from gift funds, grants, lender credits and/or seller credits. ü So far, 6 households have purchased homes with 0% down payment.

Changes to Policy

2. Increase in the total down payment assistance available to help low- and moderate-income buyers find success.
• Maximum AC Boost loan amount increased from $100K to $160K for households earning less than 120%
• Maximum AC Boost loan amount increased $150K to $210K for households earning less than 100%
• AC Boost is now allowed to layer with other subordinate down payment assistance programs
ü So far, 9 households have purchased homes with the higher loan amounts. ü The program can now be layered with the WISH and NeighborhoodLIFT down payment assistance loan programs and any grant programs.

Changes to Policy

3. Modification to income ratio requirements to ensure AC Boost can help Section 8 homeownership voucher holders find success in Alameda County.
• Waive AC Boost’s 25% front-end ratio requirement for buyers who are Section 8 homeownership voucher recipients.
ü In an effort to increase Section 8 voucher participation, Hello Housing has engaged with the Participating Lender List to identify lenders that are able to provide loans to Section 8 homeownership voucher
ü Hello Housing is reaching out to Homebuying Counseling agencies to ensure any Section 8 Applicants can receive support with additional lender requirements.

Changes to Process in
Funding Cycle 2

1. Increase marketing & outreach to Latinx, American Indian and Pacific Islander buyers.

Hello Housing engaged in targeted outreach to get the word out about the Pre- Application period for Funding Cycle #2 to more Latinx, American Indian and Pacific Islander households.
ü Public health, community service, and faith-based organizations that primarily serve these communities
ü Presented at an event hosted by the National Association of Hispanic Real Estate Professionals ü Program Interview with KSTS Telemundo 48 Bay Area and KDTV Univision 14 in Spanish for their viewers.

2. Provide applicants with more time and more support to complete their application. ü Application period was increased from 3 weeks to 4 weeks. ü Applicants receive a link to set up one-on-one appointments to speak with program staff directly after the application workshops.

Changes to Process in
Funding Cycle 2

3. Provide more support to applicants when choosing a Participating Lender. ü Applicants now receive a Lender Outreach Guide and Checklist after the application workshop.
ü Hello Housing identified Participating Lenders who offer loans to ITIN holders and listed this information on the AC Boost website.
ü Are collecting information from lenders about their available grant programs ü Identifying lenders with Section 8 homeowner voucher experience and loan underwriting ability. This information will be listed on the website once complete.

4. Update the marketing and outreach plan to reflect the impact of COVID on outreach practices.
ü Hello Housing engaged in a robust social media marketing strategy, which had a sizable impact on the number of pre-applications received (6,081 as compared to 2,294 in the first Funding Cycle).

Changes to Process in
Funding Cycle 2

5. Continue, post-pandemic, to offer workshops by Zoom to accommodate the schedules of a diverse applicant pool and to minimize childcare-related barriers. ü All application workshops are now held on Zoom. If applicants can’t attend, they are allowed to reschedule to the following workshop date.

6. Provide approved buyers with additional time to get into a contract for a home. ü Reservation of Funds period was increased from 90 days to 120 days.

Changes to Process in
Funding Cycle 2

7. Increase awareness about program requirements such as potential buyer down payment, closing costs, debt-to-income ratio, lender pre-approval, supporting documents required, etc. sooner in the process.
ü Hosted 2 Community Roundtable meetings via Zoom during the Pre-Application period, where any interested community members could join to learn about buying a home and how to apply.
ü Links to informational resources were added to the Pre-Application submission auto- responses and the lottery position notification emails, including:
• Consumer Financial Bureau’s Home Loan Toolkit
• 1-page infographic on the AC Boost application process (in 5 languages) • List of application required supporting documents
• List of homebuyer counseling agencies
• Participating Lender List

Changes to Process in
Funding Cycle 2

8. Increase transparency/accessibility of information about the program online. ü Posted the current status of lottery positions that have been invited to apply to-date, which is available from the home page - www.acboost.org/lottery-position-status. ü Recording of the lottery was posted to the home page of program website - www.acboost.org.

Affirmative Marketing Strategies
Key marketing strategies included:
• Outreach to organizations and public agencies with close ties to communities that include underrepresented homebuyers.
• Partnering with Alameda County to push information through their social media channels which included NextDoor, Twitter, and Facebook. • Working with diverse realtors, lenders and housing counseling agencies that serve underrepresented homebuyers.
• Working with “connector” individuals and presenting at meetings to encourage meeting participants to become champions of the program.
• Media advertising based on audience demographics in multiple languages (English, Spanish, Chinese, Vietnamese and Tagalog).

AC Boost Outcomes
to Date

AC Boost by the Numbers
86 homes purchased as of March 2022
Key Statistics Average Median
AC Boost Loan Amounts $132,704 $150,000
Household Size 2.5 2
Percent of Area Median Income 98.12% 97.14%
Based on Median Household Size of 2 $97,626
BOS-adopted program objective was to serve
120% AMI and below which is $120,550 for
household size of 2 in 2021.

Home Purchase Prices to Date
Purchase Prices Condo Single-Family
Lowest (BMR) $290,029 $475,000
Lowest (Market Rate) $332,000 $410,500
Median $457,500 $552,500
Highest $750,000 $860,000
Program launched March 2019;
Data as of March 2022

Locations of Purchased Homes*
* No purchases yet in Albany, Berkeley, Piedmont, and Pleasanton. 36 14
9 5 5 4 3 3 2 2 1 1 1
0 5
10 15
20 25
30 35
40 Oakland Hayward San Leandro San Lorenzo Livermore Alameda Castro Valley Fremont Emeryville Union City Newark Dublin Sunol

Household Composition of
Successful Purchasers
86 Households 86 Households
47%
53%
School-Aged Children at Home
No School-Aged Children at Home
Educator
30%
First
Responder
3%
Displaced from
County
1%
Other
66%

Household Composition of
Successful Purchasers
86 Households86 Households
41%
50%
9%
100% - 120% AMI 80% - 100% AMI <80% AMI
14%
82%
4%
White Non-White Chose Not to Respond

Race composition of Pre-Applicants
compared to Alameda County 2021 Data
Race
Funding Cycle 1:

Submitted Pre-
Application*
Funding Cycle 2:

Submitted Pre-
Application*
Funding Cycle 1:

Submitted Pre-
Application*
Funding Cycle 2:

Submitted Pre-
Application*
Compared to
Alameda County
General
Population
Raw Numbers By Total %Total Households 2294 6081
Asian 1365 3483 22.13% 23.54% 32.3%
Black or African American 1750 4302 28.38% 29.08% 11.0% White 643 1268 10.43% 8.57% 30.6%
Multi-Racial 849 2172 13.77% 14.68% 5.4%
Latinx 1064 2577 17.25% 17.42% 22.3%
American Indian 29 66 0.47% 0.45% 1.1%
Pacific Islander 69 176 1.12% 1.19% 0.9%
Middle Eastern or North African 86 275 1.39% 1.86% N/A
Other Race N/A 7 N/A 0.05% N/A
Chose Not to Respond 312 469 5.06% 3.17% N/A
*Race data reported at the individual level. This includes 6,167 household members for Funding Cycle 1 and 14,795 household members for Funding Cycle 2.

Funding Cycle 2 Next Steps
• Application Workshop #6 to be held on 3/30
• Additional monthly application workshops
• Approximately $12 million in loan funds anticipated to be disbursed • Sign up for our Stay Connected newsletter to receive updates - www.hellohousing.org/stay_connected

Buyer Testimonials

Hello Housing’s AC Boost Team
Sarah Shimmin
Senior Program
Manager
Florence Szeto
Loan Closing
Specialist
Paxcelli Flores
Special Projects
Manager
Jennifer Duffy
President
Karen
Khomsonerasinh
Loan Underwriting and
Compliance Specialist
If you have any questions or suggestions, please email our team at [email protected] or call (510) 500-8840.

Frequently Asked Questions

Black Wealth Builders Fund
A component fund of the Richmond Community Foundation (RCF Connects), established by Arlington Community Church.

What is the Black Wealth Builders Fund?
The Black Wealth Builders Fund is a Donor Fund established at RCF Connects by Arlington Community Church (UCC), to support homeownership opportunities for Black/African American first-time home buyers.

How does the fund support homeownership?
Home ownership is one way to build wealth and preserve it for future generations. A major barrier to home ownership is the lack of funds required for a down payment or closing costs. The fund will provide a no-interest loan of up to $15,000.00 for closing costs, down payment assistance, or other financial needs to ensure the close of escrow on a buyer’s first home.

Where can I purchase my home?
The Black Wealth Builders Fund will provide funds for first time home buyers purchasing homes in Alameda and Contra Costa Counties

How can I apply for the funds?
The first step is to register for the first-time home buyer program with one of our partner agencies:
• Neighborhood Housing Services: (510) 237-6459 x 1601

Once you complete the program and have an accepted offer on your first home, our partner agency will submit an application to RCF Connects on your behalf to close any gaps you might have in your financing package.

Do I have to pay back the funds I receive?
Yes, you will have to repay the funds, but only when you sell or refinance your home in the future. At that time, the loan will be repaid in full (remember, no interest is charged) so that we can recycle the funds and provide this opportunity to the next group of first-time home buyers.

How can I get more information?
Contact one of our partner agencies or call RCF Connects at 510-234-1200.

CONSENT CALENDAR
November 3, 2022
To: Honorable Mayor and Members of the City Council
From: Councilmember Terry Taplin, Councilmember Susan Wengraf Subject: Budget Referral: No Right on Red Signs

RECOMMENDATION
That the City Council refers to the City Manager the implementation of “No Right on Red” signs to all intersections with traffic lights. Refer the necessary appropriations of $135,000 to the 2022 November Annual Appropriations Ordinance.

FISCAL IMPACTS
An estimated $250 per sign at a total of 135 intersections with four signs per intersection.

CURRENT SITUATION AND ITS EFFECTS
In living memory, the fundamental character of transportation planning and urban design of the United States has been the prioritization of the ease of travel of personal automobiles. From the way we design our roads to the rules we set for them, cars are given priority in the public right of way at the express detriment to pedestrians and cyclists. One such example is the de facto right given to cars to turn “Right on Red” at signalized intersections. This allows cars to drive through pedestrian crosswalks to make their turn in the same signal phase when pedestrians are directed to cross the street. On a daily basis, most drivers will yield to pedestrians before making their right turn and no harm occurs. This rule, however, puts pedestrians at immense risk nonetheless.

Right on Red was illegal in many parts of the country up until the gas crisis of the 1970’s, when the rule was adopted in part to reduce car idling at intersections and promote fuel efficiency.1 The repercussions for pedestrians and cyclists occurred almost immediately. In the 1980’s, allowing Right on Red was found to cause an increase in pedestrian crashes by 60% and an increase in bicycle crashes by 100%.2 This is a stark jump in injuries, especially when compared to the supposed benefits, which came out to between 1 and 4.6 seconds of saved driving time in a 1981 study.3 Many cities have 1 https://www.energy.gov/articles/right-turn-red
2 https://usa.streetsblog.org/2018/05/15/its-time-for-cities-to-rethink-right-turns-on-red/ 3 https://www.energy.gov/articles/right-turn-red

begun the process of limiting Right on Red in the name of their Vision Zero goals. This has taken the form of restricting the turn at specific intersections, such as in Seattle and Washington D.C., as well as an outright ban in New York City.

Berkeley had 133 signalized intersections as of the 2020 Pedestrian Plan, with two more added since.4 Berkeley can join these cities in taking a new approach to achieving its Vision Zero goals by eliminating the ability of cars to turn right on red at all signalized intersections.

Beyond the construction of new pedestrian and cyclist infrastructure and the slowing down of car traffic, policies like eliminating Right on Red are smart and easy ways to begin the process of deprioritizing car use in Berkeley and placing lives about driver convenience.

BACKGROUND
Section 14.16.20 of the Berkeley Municipal Code states as follows:

A. The City Traffic Engineer is authorized to determine those intersections at which it shall be unlawful for the operator of any vehicle to make a right, left, or U-turn, and shall 4https://www.cityofberkeley.info/uploadedFiles/Public_Works/Level_3_- _Transportation/2020%20Pedestrian%20Plan%20Chapter%202%20adopted.pdf

place appropriate signs at such intersections. The making of such turns may be prohibited between certain hours of any day and permitted at other hours in which event the same shall be plainly indicated on the signs.

B. Whenever authorized signs are erected indicating that no right or left or U-turn is permitted, it is unlawful for the operator of any vehicle to disobey the directions of any such sign. (Ord. 3262-NS § 4.1, 1952)

ALTERNATIVES CONSIDERED
The City Council could approach Right on Red injuries by way of an explicit ban on such turns. However, given that Section 21453(b) of the California Vehicle Code allows such turns “except when a sign is in place prohibiting a turn”5, the City is likely preempted from implementing a ban of its own. Considering this, a policy of placing signs prohibiting turns at lighted intersections is proposed in this item.

ENVIRONMENTAL IMPACTS
Establishing a network of safe streets for pedestrians and bicycles incentivizes nonautomobile travel, reducing greenhouse gas emissions. The City estimates that transportation-related emissions accounts for approximately 60% of our community’s total annual greenhouse gas emissions.6 By encouraging alternatives to car transportation by making pedestrian and cyclist infrastructure safer and more accessible, this policy stands to lower the emissions from our community’s dominant source of carbon emissions.

CONTACT
Terry Taplin, Councilmember, District 2, (510) 981-7120 5 https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=VEH&sectionNum=21453. 6https://www.cityofberkeley.info/Clerk/City_Council/2018/12_Dec/Documents/2018-12- 06_WS_Item_01_Climate_Action_Plan_Update_pdf.aspx

2180 Milvia Street, Berkeley, Floor 5, CA 94704 ● Tel: (510) 981-7130 ● E-Mail: [email protected] 1 CONSENT CALENDAR
November 3, 2022
To: Honorable Mayor and Members of the City Council
From: Councilmember Ben Bartlett, Mayor Jesse Arreguin, Councilmember Sophie Hahn
Subject: Budget Referral: Commitment to La Peña Cultural Center

RECOMMENDATION
Refer to the AAO#1 Budget Process $150,000 to support the recovery and renovations of La Peña Cultural Center, a cultural hub and historic community building space within the city of Berkeley.

BACKGROUND/CURRENT SITUATION
La Peña Cultural Center (La Peña) is a nonprofit 501(c)3 organization located in South Berkeley that has served as a multicultural hub for diasporic communities since 1975. La Peña uplifts underrepresented artists and art forms, promotes arts education, and supports community-led social justice movements. The word “Peña” refers to community gatherings centered around music, food, drink, and culture that foster dialogue around current issues. La Peña employs over 40 people, including teaching artists, sound engineers, light technicians and other event staff, administrative staff, interns, and contractors. Through this array of employment opportunities, La Peña focuses on creating job pipelines for its community, which includes many Berkeley residents of color. Through its tenant restaurant program, La Peña provides further job opportunities for small business entrepreneurs and restaurant workers. For the past 8 years, La Peña has leased its restaurant space to Los Cilantros, a family-owned restaurant spearheaded by Chef/Owner Dilsa Lugo, a West Berkeley resident for over a decade.

La Peña has reopened and revitalized its programming after closing during the COVID-19 pandemic. La Peña used the time it was closed to buckle down, dig deep, and improve its internal infrastructure to create a more resilient organization that can weather future storms. Due to this work, La Peña is in a period of recovery and growth; however, it has hit a roadblock in its reopening journey and is asking for the city’s support.

La Peña owns its 7,000-square-foot building, with four primary areas: the restaurant space, lounge, community room, and main theater. The building is quite old and in need of multi-phase repairs. La Peña successfully fundraised to update its roof in 2019. Since then, it has been fundraising for the next phase of critical repairs to bring its kitchen up to code. This phase also supports seismic retrofitting in the restaurant area to ensure the safety of the staff and patrons. If La Peña cannot break ground on this project this year, the negative economic impacts on La Peña, its employees, its tenant restaurant, its artists, and the community it serves will be disastrous. Not only would the inability to make repairs cause permanent layoffs of the Los Cilantros staff, but it would also force La Peña to substantially cut its programming. Such

2180 Milvia Street, Berkeley, Floor 5, CA 94704 ● Tel: (510) 981-7130 ● E-Mail: [email protected] 2 decreases in programming would greatly lower the number of economic opportunities La Peña offers the hundreds of artists of color that teach and perform there.

Over the past year and a half, La Peña has organized a reputable project team consisting of an architect, a general contractor, and a project manager. La Peña has worked with the project team to build out its scope of work and budget to renovate the space. La Peña’s comprehensive budget for this project consists of professional fees, the general contractor’s scope of work, equipment costs, permit fees, soft costs and a 10% contingency. The total cost is broken down by category below for reference:

La Peña Renovation - Cost Breakdown by Category
Category Cost
General Contractor’s Bid $435,000
Equipment Costs $100,000
Soft Costs $36,500
Contingency $63,500
Total $635,000
La Peña has fundraised twice to keep up with the rising costs of supplies and labor due to COVID-19 and inflation. Thus far, La Peña has raised $435,000 towards its necessary renovations and secured the permits to break ground this year. La Peña’s most recent bid came in this month at over 45% higher than the estimated amount just months ago, bringing the project cost to $635,000. La Peña is working with a highly recommended general contractor in the area, Cookline, which specializes in building and renovating restaurants. Because La Peña is a nonprofit with limited resources, Cookline has compared the bids from multiple subcontractors and asked for discount rates or donated time when possible. Additionally, La Peña’s project manager, Bright Street, has reviewed and approved all bids, confirming that the rising costs align with the cost increases experienced throughout the construction industry. This $635,000 bid is thus La Peña’s best offer and covers only the necessary work.

Having already raised $435,000, La Peña has exhausted its fundraising sources for this project from its network of funders and donors, and is thus asking the City of Berkeley to contribute the remaining $150,000. With the City’s aid, La Peña can begin the necessary repairs and thrive again in this post-pandemic environment.

2180 Milvia Street, Berkeley, Floor 5, CA 94704 ● Tel: (510) 981-7130 ● E-Mail: [email protected] 3 RATIONALE FOR RECOMMENDATION
La Peña’s restaurant space is a critical revenue stream for the organization’s financial security.

These renovations will ensure that La Peña can continue to fulfill its mission: operating a thriving restaurant space that employs Berkeley community members, primarily people of color and immigrants. La Peña is a family business that serves as a pipeline for young people to gain experience in the hospitality industry and grow their careers. Over the years, La Peña’s restaurant partners have worked in tandem with La Peña’s diverse multicultural programming to support the community and unite people in art, activism, and movement building. La Peña is a historic multicultural hub rooted in the Latinx diaspora and serves as a bridge-building and advocacy center. La Peña relies on its restaurant space to create a table where people can gather and break bread while attending events, dancing, enjoying live music, or learning at a lecture series.

In conclusion, these renovations must happen as soon as possible if La Peña is to operate at its full capacity and preserve a vital portion of its income. These renovations are necessary to maintain safety, comply with health codes, and ensure efficiency. They are not merely for beautification. These upgrades must be undergone to keep the restaurant operating and keep La Peña afloat. La Peña serves underrepresented communities in the Bay Area. By supporting this project, the City of Berkeley would be directly supporting those communities.

FINANCIAL IMPLICATIONS
$150,000 from revenue allocations through the AAO#1 process.

ENVIRONMENTAL SUSTAINABILITY
Not applicable

CONTACT PERSON
Councilmember Ben Bartlett [email protected] James Chang [email protected]
Kyle Tang [email protected]

2180 Milvia Street, Berkeley, Floor 5, CA 94704 ● Tel: (510) 981-7130 ● E-Mail: [email protected] 1 CONSENT CALENDAR
November 3, 2022
To: Honorable Mayor and Members of the City Council
From: Councilmember Ben Bartlett and Mayor Jesse Arreguín (Authors), Councilmember Kate Harrison (Co-Sponsor, Councilmember Sophie Hahn (Co- Sponsor)
Subject: Budget Referral: Commitment to the Completion of Affordable Housing at 1638 Stuart Street

RECOMMENDATION
Refer to the AAO#1 Budget Process $50,000 to support the Completion of Affordable Housing at 1638 Stuart Street so it can complete exterior renovations and continue to provide eight units of permanently affordable housing for households earning less than 80% of area median income.

BACKGROUND/CURRENT SITUATION
In 2022, the 1638 Stuart Street Apartments project restored eight long-vacant apartments. The McGee Avenue Baptist Church (McGee) and the Bay Area Community Land Trust (BACLT) partnered to lead the project. McGee has served the South Berkeley community by providing religious services and community services at this location since the 1930s. BACLT has been preserving affordable housing in Berkeley since 2005.

The project restored one studio apartment and seven one-bedroom apartments, one of which is an ADA-compliant, wheelchair-accessible unit. BACLT marketed the apartments in June and July 2022 and leased up all units by September 1, 2022. The property currently serves eight adults and two children, with household incomes ranging from 30-80% of the area median income (AMI).

The recent lease-up of this project attracted attention and celebration from across the region, including news coverage by KQED, KCBS, Berkeleyside, The Daily Cal, and the Berkeley Times.

KQED’s article “‘Yes, in God's Backyard’: Berkeley Church Spearheads New Approach to Affordable Housing” highlighted a new resident, Ms. Betty Gray, whose two-year-long struggle to find affordable, accessible housing in Berkeley has also been covered by Berkeleyside. Ms.

Gray said, “for people to go out of their way to be kind to help you … it's new, and it makes you feel wanted and not hopeless.” “[Ms. Gray] said she feels a sense of community with her neighbors.

The proximity of the church has allowed her to benefit from church services, like food and plant drives.”1
However, due to unexpected physical rehabilitation challenges, unexpected delays due to the COVID-19 pandemic, and unplanned cost inflation, the project went over time and exceeded the budget by nearly $100,000. BACLT has raised private donations to cover a portion of the financial gap and is requesting $50,000 from the City’s excess revenue allocations to cover the remaining gap to complete the project’s exterior components. These components include exterior landscaping, 1 Anaïs-Ophelia Lino, ‘Yes, in God’s Backyard’: Berkeley Church Spearheads New Approach to Affordable Housing, KQED (Sep. 15, 2022), https://www.kqed.org/news/11925690/yes-in-gods-backyard-berkeley-church- pioneers-new-approach-to-affordable-housing.

2180 Milvia Street, Berkeley, Floor 5, CA 94704 ● Tel: (510) 981-7130 ● E-Mail: [email protected] 2 walkways, and a driveway. The driveway includes a parking pad for the apartment’s shared electric vehicle–donated by the Berkeley Rotary Club–which will provide transportation access to lower- income households which otherwise could not afford it.

RATIONALE FOR RECOMMENDATION
The cost to preserve these eight units was $3,324,000 (about $415,500 per unit), which is about 40% of the cost of building new affordable units. Recent data from the CA Department of Housing and Community Development show that the average cost of building an affordable housing unit in the Bay Area is over $1,000,000 per unit. The Stuart Street project received $2,054,000 from the City's Small Sites Program (62% of total project costs). BACLT is requesting $50,000 to ensure it can cover the final costs of exterior concrete and landscaping. The original City investment was approximately $257,000 subsidy per unit. An additional $50,000 ($6,250 per unit) would bring the total City investment to $263,000 per unit. All eight units are permanently affordable for households earning less than 80% AMI.

The City’s additional funding commitment would enable the project to be completed as envisioned, with plans to convert it into a permanently affordable housing cooperative in which lower-income residents will have stability and pride. Additionally, this project will serve as a regional model for other community partnerships between faith-based organizations and affordable housing developers.

FINANCIAL IMPLICATIONS
$50,000 from excess revenue allocations through the AAO#1 process. The City of Berkeley stands to benefit from the completion of eight permanently affordable housing units at 1638 Stuart Street.

ENVIRONMENTAL SUSTAINABILITY
Not applicable

CONTACT PERSON
Councilmember Ben Bartlett [email protected] James Chang [email protected]
Kyle Tang [email protected]

Kate Harrison
Vice Mayor, District 4
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-7140 ● TDD: (510) 981-6903 ● Fax: (510) 644-1174 E-Mail: [email protected]

CONSENT CALENDAR
November 3, 2022
To: Honorable Mayor and Members of the City Council
From: Vice Mayor Harrison, Councilmember Hahn, and Mayor Arreguin Subject: Resolution and Referral Supporting Local Implementation of SB 379: Online Instant Solar Permitting Process For Residential Solar And Solar-Plus- Storage Energy Systems

RECOMMENDATION

1. Adopt resolution supporting local implementation of SB 379 requiring cities to adopt online instant solar permitting process for residential solar and solar-plus-storage energy systems; and

2. Refer to the City Manager and Planning Department, consistent with SB 379 and climate goals, to explore and move swiftly to apply for applicable grants and implement automated solar permitting platforms to reduce permit review time for solar energy and battery storage systems.

CURRENT SITUATION, EFFECTS, AND RATIONALE FOR RECOMMENDATION Consistent with prior state law, the City of Berkeley approves administratively within one day applications to install solar energy systems through the issuance of low-cost building permits or similar non-discretionary permits for small residential rooftop solar energy systems. However, the new SB 379 law requires permits to be approved instantly by next year using an online and automated permitting platform that verifies code compliance and issues permits in real time. Non-competitive state grant monies are now available to help Berkeley with the transition, and it is in the public interest to apply for these grants and swiftly comply with the new law consistent with the City’s ambitious climate goals.

BACKGROUND
Berkeley is committed as part of its Climate Action Plan and related policies to reduce greenhouse emissions, including through deploying renewable electric technology locally. Local clean and reliable energy is key to a more resilient electric grid in the face of increasing power shutoffs and electricity shortages. Berkeley’s electric load is expected to increase significantly as a result of vehicle and building electrification policies and trends.

California State Senate Bill (SB) No. 379, signed into law on September 16, 2022, requires most cities and counties in California to implement an online, automated permitting platform that verifies code compliance and issues permits in real time for a

Resolution and Referral Supporting Local Implementation of SB 379: Online Instant Solar Permitting Process For Residential Solar And Solar-Plus-Storage Energy Systems

CONSENT CALENDAR
November 3, 2022
solar energy system that is no larger than 38.4 kilowatts alternating current nameplate rating and an energy storage system paired with a solar energy system that is no larger than 38.4 kilowatts alternating current nameplate rating.

The goal of the law is to decrease approval times for residential solar and solar-plus- storage systems, cut permitting costs for local governments and homeowners, and help California meet its greenhouse gas emission reduction goals.

The law prescribes a compliance schedule for satisfying these requirements, with cities with populations greater than 50,000 required to satisfy the requirements by September 30, 2023. The law also requires cities to report to the California Energy Commission (CEC) when it is in compliance with specified requirements, and to self-certify their compliance with the law’s provisions when applying for certain funds from the CEC.

In 2020, the National Renewable Energy Laboratory (NREL), a federal research center sponsored by the U.S. Department of Energy, released free software called SolarAPP+ that cities and counties can adopt to process permits for residential solar energy systems. In addition, the CEC is operating a program as part of the Senate Bill 129 (Skinner, Budget Act of 2021) budget to deploy $20 million in non-competitive grants to help cities and counties adopt and integrate online automated permitting systems such as SolarAPP+ into existing Berkeley permitting systems like Accela, thereby streamlining compliance and recordkeeping. Funding is intended to help local governments in California recover the cost of establishing an eligible automated, online solar permitting platform. In most cases, most of the funding will be used to reimburse staff or consultant time associated with implementing the software.

Berkeley is eligible for a maximum funding award of $80,000 based on its population size. The application deadline is May 1, 2023.

Jurisdictions such as Pleasant Hill, San Ramon, Sonoma County, Stockton, and Benicia have successfully deployed SolarAPP+ and San Jose, Los Angeles, Alameda County and Vacaville have adopted similar automated permitting software and reduced permit review time.

It is in the public interest to move swiftly to apply for applicable grants and implement automated solar permitting platforms to reduce permit review time for solar energy and battery storage systems consistent with SB 379. This item includes a resolution in support of this objective and a referral to staff to apply for non-competitive grants as appropriate.

FISCAL IMPACTS OF RECOMMENDATION
Staff time will be needed to complete the referral, but costs may be offset by non- competitive CEC grants.

Resolution and Referral Supporting Local Implementation of SB 379: Online Instant Solar Permitting Process For Residential Solar And Solar-Plus-Storage Energy Systems

CONSENT CALENDAR
November 3, 2022

ENVIRONMENTAL SUSTAINABILITY
Supporting expeditious permitting of local renewable energy is key to achieving the City’s greenhouse gas reduction goals.

CONTACT PERSON
Vice Mayor Kate Harrison, (510) 981-7140

RESOLUTION NO. ##,###-N.S.

SUPPORTING LOCAL IMPLEMENTATION OF SENATE BILL NO. 379, ONLINE

INSTANT SOLAR PERMITTING PROCESS FOR RESIDENTIAL SOLAR

AND SOLAR-PLUS-STORAGE ENERGY SYSTEMS
WHEREAS, Berkeley is committed as part of its Climate Action Plan and related policies to reduce greenhouse emissions, including through deploying renewable electric technology locally; and
WHEREAS, local clean and reliable energy is key to a more resilient electric grid in the face of increasing electric shutoffs and electricity shortages; and WHEREAS, Berkeley’s electric load is expected to increase significantly as a result of vehicle and building electrification policies and trends; and WHEREAS, state law requires cities to approve administratively applications to install solar energy systems through the issuance of low-cost building permits or similar non- discretionary permit and develop a streamlined permitting process for the installation of small residential rooftop solar energy system; and
WHEREAS, California State Senate Bill (SB) No. 379, signed into law on September 16, 2022, requires most cities and counties in California to implement an online, automated permitting platform that verifies code compliance and issues permits in real time for a solar energy system, as defined, that is no larger than 38.4 kilowatts alternating current nameplate rating and an energy storage system, as defined, paired with a solar energy system that is no larger than 38.4 kilowatts alternating current nameplate rating; and
WHEREAS, the law prescribes a compliance schedule for satisfying these requirements, with cities with populations greater than 50,000 required to satisfy the requirements by September 30, 2023; and
WHEREAS, the law requires cities to report to the California Energy Commission (CEC) when it is in compliance with specified requirements, and to self-certify their compliance with the law’s provisions when applying for specified funds from the CEC, as specified; and
WHEREAS, In 2020, the National Renewable Energy Laboratory (NREL), a federal research center sponsored by the U.S. Department of Energy, released free software called SolarAPP+ that cities and counties can adopt to process permits for residential solar energy systems; and
WHEREAS, the CEC is operating a program to deploy $20 million in non-competitive grants to help cities and counties adopt and integrate online automated permitting systems such as SolarAPP+ into existing Berkeley permitting systems like Accela,

thereby streamlining compliance and recordkeeping; and
WHEREAS, jurisdictions such as Pleasant Hill, San Ramon, Sonoma County, Stockton, and Benicia have successfully deployed SolarAPP+ and San Jose, Los Angeles, Alameda County and Vacaville have adopted similar automated permitting software and reduced permit review time; and
NOW, THEREFORE BE IT RESOLVED by the Council of the City of Berkeley that it hereby refers to the City Manager and Planning Department to move swiftly to apply for applicable grants and implement automated solar permitting platforms to reduce permit review time for solar energy and battery storage systems consistent with SB 379.

Housing Advisory Commission
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-7000 ● TDD: (510) 981-6903 ● Fax: (510) 981-7099 E-mail: [email protected] Website: http://www.CityofBerkeley.info/Manager

ACTION CALENDAR
November 3, 2022
(Continued from October 11, 2022)
To: Honorable Mayor and Members of the City Council
From: Housing Advisory Commission
Submitted by: Libby Lee-Egan, Chairperson, Housing Advisory Commission Subject: Harriet Tubman Terrace Tenant Support

RECOMMENDATION
Recommend City Council take the following actions:
• Review the video created by tenants about conditions at Harriet Tubman Terrace that was shown at the July 7, 2022 Housing Advisory Commission meeting;
• Direct the City Manager to investigate health and safety violations and other grievances identified by tenants at Harriet Tubman Terrace; and • City Council request Harriet Tubman Terrace provide tenants with a dedicated tenant advocate to assist with relocation and other needs.

FISCAL IMPACTS OF RECOMMENDATION
Staff time to research, investigate, report and enforce with ongoing follow up, making sure that tenants experience continued safety, protections, reparations and compliance from the contractors, vendors, management and all responsible parties.

CURRENT SITUATION AND ITS EFFECTS
At the Housing Advisory Commission (HAC) meeting on July 7, 2022 the Commission heard and took 2 actions on an item regarding an ongoing situation at Harriet Tubman Terrace (HTT) affecting the low income seniors and disabled tenants residing there. At the meeting the Commission heard testimony and watched video evidence that showed appalling treatment and neglect of HTT’s tenants by staff and subcontractors. Residents and community members created a video of the conditions at HTT that was presented at the July 7, 2022 HAC meeting. The video is available at the following link: bit.ly/HTT- Renewal. A Dropbox account is not required to view the video (if prompted).

Harriet Tubman Terrace Tenant Support ACTION CALENDAR
November 3, 2022
At the July 7, 2022 meeting, the HAC took the following actions:

Action: M/S/C (Potter/Mendonca) to send a letter to the City Council requesting the following:
• City Council review the video created by tenants about conditions at Harriet Tubman Terrace that was shown at the July 7, 2022 Housing Advisory Commission meeting;
• City Council directs the City Manager to investigate health and safety violations and other grievances identified by tenants at Harriet Tubman Terrace;
• City Council request Harriet Tubman Terrace provide tenants with a dedicated tenant advocate to assist with relocation and other needs; and • Council request Harriet Tubman Terrace owners/management and tenants report back to the Housing Advisory Commission in September to report progress with addressing the grievances identified by tenants.

Vote: Ayes: Lee-Egan, Mendonca, Potter, Rodriguez, and Sanidad, and Noes: None.

Abstain: None. Absent: Calavita (excused), Fain (excused), Johnson (unexcused), and Simon-Weisberg (unexcused).

Action: M/S/C (Mendonca/Potter) to recommend City Council take the following actions:
• Review the video created by tenants about conditions at Harriet Tubman Terrace that was shown at the July 7, 2022 Housing Advisory Commission meeting;
• Direct the City Manager to investigate health and safety violations and other grievances identified by tenants at Harriet Tubman Terrace; and • City Council request Harriet Tubman Terrace provide tenants with a dedicated tenant advocate to assist with relocation and other needs.

Vote: Ayes: Lee-Egan, Mendonca, Potter, Rodriguez, and Sanidad, and Noes: None.

Abstain: None. Absent: Calavita (excused), Fain (excused), Johnson (unexcused), and Simon-Weisberg (unexcused).

BACKGROUND
Staff and contractors associated with Harriet Tubman Terrace (HTT) have been relocating residents and remodeling individual units since September 2021. The residents at HTT are low income, elderly, and many are disabled. The construction work requires residents to move out of their unit with their possessions, move to another unit in the building while their original unit is under construction. Once construction is complete they are then ideally moved back into their original move-in ready unit.

Relocation professionals have been hired to complete this work but accounts from residents have revealed that almost every step of this process has been handled poorly, which has caused undue stress on these elderly residents, many of whom are also disabled.

Harriet Tubman Terrace Tenant Support ACTION CALENDAR
November 3, 2022

ENVIRONMENTAL SUSTAINABILITY AND CLIMATE IMPACTS
There are no identifiable environmental effects or opportunities associated with the subject of this report.

RATIONALE FOR RECOMMENDATION
The residents of Harriet Tubman Terrace represent multiple constituencies who need protection: all are low income and elderly but many are also disabled and people of color. People in these groups can become disenfranchised and exploited by those with more power. The hope is that the investigation recommended in this report will correct and repair all violations and act as a force that will put an end to these types of abuses in our community and a disgrace to our humanity and our society's legal structures.

ALTERNATIVE ACTIONS CONSIDERED
Commission discussion included other avenues HTT’s tenants have to address these issues. Supplemental communication from HTT management referred to a grievance process but tenants’ testimony implied multiple barriers for disenfranchised residents to use that effectively.

CITY MANAGER
The City Manager takes no position on the content and recommendations of the Commission’s Report.

Staff recognize the importance of ensuring the residents of Harriet Tubman Terrace are well-supported and maintain a high-quality of living. Staff also appreciate the Commission’s work to understand and take action regarding the tenant concerns identified in an effort to improve the living conditions for vulnerable seniors. The following information is intended to provide additional context for Council’s consideration of this matter.

Harriett Tubman Terrace is an affordable development subject to requirements from the U.S. Department of Housing and Urban Development and California’s tax exempt bond program. However, it is not funded by the City through the Housing Trust Fund or other affordable housing funding and regulatory program. This means that the property is not in the Department of Health, Housing, and Community Services’ Housing and Community Services Division (HHCS/HCS) monitoring portfolio and HHCS has no oversight authority.

Following notification to the HAC of the building’s condition, HHCS/HCS immediately contacted the City’s Building Services’ Housing Code Enforcement Program, and the property ownership, Foundation Housing, to receive an update. Building Services reported that Foundation Housing complied with all of the designated City inspections and permits for the scope of rehabilitation work taking place at the property.

Harriet Tubman Terrace Tenant Support ACTION CALENDAR
November 3, 2022
The Housing Code Enforcement program also indicated they conducted inspections on 17 units and the common area at this property since 2019 (Foundation Housing acquired the property in 2021 from a housing investment group that purchased the property in 2019). At the time of writing this report, there are two open cases and the remainder are closed, meaning Housing Code Enforcement found the property to be in compliance with code requirements and /or building permits related to the complaints filed. The latest request for service was received on March 2022 for Unit 401. No housing violations were observed during the inspection and the case was closed.

The two open cases are for Units 503 and 603 (both opened on July 2020) and have been assigned to a Housing Inspector. For both units, the Housing Inspector has directed the owner to correct an inoperable exhaust fan and the required building permit has been issued.

HHCS/HCS coordinated Foundation Housing representatives attendance at the July 7, 2022 to provide the HAC, Harriet Tubman Terrace residents, and public with direct updates on their work and the responses to tenant claims. Following the July meeting, Foundation Housing representatives (based in Washington, DC) flew out to visit the site and meet directly with tenants, advocates, and HAC commissioners. At the time of writing this report in August 2022, Foundation Housing representatives indicated they will attend the September 1, 2022 HAC meeting to provide additional updates on their rehabilitation work and efforts to support residents. A statement from Foundation Housing is included as Attachment 3.

All investigations into health and safety violations fall under the purview of the City’s Planning and Building Services Department. Council may endorse the HAC’s recommendation for HTT to provide tenants with an advocate but this is not an action HHCS/HCS has the authority to implement or enforce. Staff are encouraged by the actions taken by property ownership to correct the tenant complaints. Tenants may also seek out mediation and other services from the Rent Board if they feel their rights are not honored or treatment is discriminatory. At the time of writing this report in August 2022, HHCS/HCS is coordinating with HHCS/Aging Services to conduct outreach to HTT residents to connect them with City services and opportunities for support.

CONTACT PERSON
Mike Uberti, Secretary, Health, Housing and Community Services, (510) 981-5114 Attachments:
1: HAC Supplemental Communication 2022.07.07.pdf
2: HAC Letter to council July 2022.pdf
3: Statement from Foundation Housing

Date: July 6, 2022
To: Housing Advisory Commission
Submitted By: Cassandra Palanza, Foundation Housing on Behalf of Harriet Tubman Renewal LP (the “Owner”) of Harriet Tubman Apartments (the “Property”) To Whom It May Concern:

We submit this for the Housing Advisory Commission (“HAC”) to h ave in its record in response to the recommendations m ade by Ms. Mendonca of Distric t 8. We welcome open communication with any organization but ask the specifics are provided in order for us to respond appropriately. Many of the responses below are being done based on speculation of specific things we have resolved in the last few months with acknowledgement of some unresolved matters since much of the memo supplied, only intimates at things with no spe cificity. We hope that resources that can be spent on serving our residents are not mired in “investigations”, that we strongly believe will be unfounded based on the amount of time doing our own inv estigation and research in response to any previously raised issues. We recognize that sometimes, resident populations go to their local officials whom they have a relationship with and they trust. We encourage that. All we ask is that information is immediately reported to us so we may address it with as specific as possible details to ensure full resolution. Management cannot respond in generalities. We strongly feel we have a team in place tha t is responding to a myriad of circumstances at the Property and working with the residents is and will remain to be one of our top priorities. Our hope is over the next several weeks with additional resources being added, the residents will begin to feel more at ease with all the improvements and management of the Property.

Regarding many of the allegations, first and foremost, we take allegations of violating health and safety seriously. Any tenant that lives at Harriet Tubman that feels their life is in danger should report such danger to the police. Any tenant that experiences a grievance or is displeased with something, may submit a gri evance in accordance with the P roperties grievance policy attached hereto for reference. Any intimation that our residen ts are having crimes committed against them, specifically elder abuse, by anyone in Management or Ownership is categorically false and if a perceived crime is believed to be committed it should be reported immediately for a full investigation. Allegations of elder abuse are not taken li ghtly and deemed a serious matter.

Attachment 1

Residents should feel safe in reporting anything they are displeased with and if they feel strongly about these allegations then they should be written up and prov ided to a trusted person who can work with Ownership on any allegations. Again, to date, we have no reported cases of elder abuse that are being investigated by any channel of authority over su ch matter and our hope is with continued communication the relationship between management and the residents will continue to improve, which we feel has in the last several weeks.

Violations that may exist are fro m the Planning and Development Department (the “PDD”). As violations are recei ved, they are addressed. There are currently two open violations that we are aware of. We have confirmed that these matters are being repaired during the construction work and completion will be submitted to the PDD. All tenants are encouraged to report all matters to management. In order for things to be add ressed timely, management should be the first point of contact. Absent substantive violations to which we can respond, which we are happy to do so, we are not aware of the allegations alleged by Ms. Mendonca in the first paragraph of her memo.

Additionally, we are in receipt of a video produced and submitt ed to HAC regarding the ongoing construction work at Harriet Tubman Apartments. The scope of work for the accessibility units meet the federal standard for accessibility and have been signed off on by local and state officials through our application process for Bonds and LIHTC’s. We are happy to provide the City Inspection Log wherein these units were inspected ,passed, and deemed suitable for occupancy. If a resident has a mobility impairment or need for something outside the scope of their apartment or an accessible designed apartment, they should subm it a Section 504 reasonable accommodation (“RA”) request to management for management to ca rry out. Reasonable accommodations can be made at any time and if a resident cannot fill out the paperwork or does not want to, management will assi st them. Please be aware, sinc e this video was submitted to Management and some of the residents intimate in the video that t h e y m a y o r m a y n o t n e e d accommodation, Management will reach out to them to see if we can assist in any RA request they may need. This is not a retalia tory action but required by mana gement when a resident asserts a need for an accommodation.

Attachment 1

Rodent, roaches and filth should absolutely be reported to mana gement immediately. We have pest control services that can mitigate these issues. Pest control is the second Friday of the month and as needed or requested by management. We are going to schedule a 100% walk with pest control and some residents h ave requested frequent pest co ntrol in their units. We will continue to monitor the pest situation and if additional servic es are warranted we will provide them. If residents follow the grievance policy on reporting things for habitability matters and they are not resolved to the resident’s satisfaction, the regulators of our property will ensure oversight so that matters are responded to. We cannot stress enough the importance of reporting all things to management first. They are our first line of defense for fixing and maintaining habitability. In addition to the Grievance Policy, if residents feel they are no t being heard, at the end of this response is a communications tree for residents to work with wh ich includes all of the contact information of management up to an owner’s representative throu ghout the duration of construction. This does not circumvent the Grievance Policy but rather provides additional points of contact for residents to try and expedite their requests. It should be noted, while Owner is committed to rectifying all issues, if residents do not go to m anagement first, then there could be continued delay of resolving their concerns.

To date, we have received inquiries from CAHI regarding asbestos abatement and security matters. Below is our official response to CAHI regarding asbestos concern:

“With respect to your inquiry – asbestos testing was completed prior to the work commencing. During the rehab work that is ongoing, whenever the scope of work being performed includes di sturbing asbestos containing ma terials the work is only performed after the resident has been temporarily relocated to another unit. While the asbestos abatement work is being performed, the unit is closed and sealed off – please see attached photos. In situatio ns in which the asbestos containing materials or suspected asbestos containing materials (“ACMs”) being disturbed are classified as “friable” ACMs, the units have air clearance testing completed by a licensed 3 rd party environmental services provider prior to the containment being removed and the unit re occupied. All ACM abatement work is being performed by contractor licensed to do this work Attachment 1

in CA. The abatement contractor posted all of the required notices with the state, local jurisdiction and residents prior to the abatement work at the property.

Attached for your reference is the notice that was posted prior to the asbestos work beginning (please note that in this word document the date is set to automatically update to the current date on the day the document is opened).”

Attachment 1

With respect to security in the building, Owner does not provide a security company. The building is controlled by controlled fob access and there are p lans to improve the camera system within the building. Simultaneously with the issuance of this response, we are working on response to CAHI regarding security.

We empathize with the disrupti on that construction can cause. It can be very taxing for residents and we understand that, truly we do. We have, for the duration of construction, funded a relocation coordinator and moving company. Residents should fee l that, while an inconvenience, they are only temporarily relocating to another apartment for t he duration of their in-unit work.

We did this plan because this property in particular has many residents with extreme quantities of contents in their apartments and it would have been challenging for our construction team to work in the units with all the belongings in there. We have consiste ntly evaluated our relocation plan and if it makes sense to adjus t it, we do. We have evaluated in recent weeks and recognize there were some hiccups and construction delays. Our accessible units, which were the most complicated to construct, were renovated first and we incurred numerous delays that we should not have going forward. Additionally, there were cosmetic issues that were not satisfactorily completed (ie. Toilet paper holder, mirror, blinds, etc) prior to returning a residen t to their unit. We acknowledge and apologize for this. We have high standards for our community and strive to meet them every day.

While I thought we were moving on from some of the displeasure we recognize some of the residents may still be upset or unhappy and we will work to fos ter that trust with more communication to them and in person meetings over the following weeks to discuss.

While we cannot address every item in the video in a written response to the Commission, at this time, we can highlight a few items that we know residen ts were upset with and work on a list of responses if the Commission would like additional matte rs answered. The electrical chord noted in the video is a cosmetic issue and not a safety issue. We are working with our construction team on a solution that limits the visibility of any chord. There is no electrical or fire hazard with respect to the chord mentioned in the video. We will communicat e to residents that a solution to the chord in the kitchen light is still being figured out to pr ovide for the best cosmetic 5oluteon this week via an FAQ that we are putting together for our residents. Management also maintains a binder of all notices sent to residents during construction and we are happy to show anyone all of the notices communicated to residents.

Attachment 1

Blinds and screens – everyone will return to their unit with blinds. Due to shipping delays, a resident may return to their unit with their existing blinds. We have been working to have all materials stored and available at each unit being constructed but may have to return to install the blinds. Screens have been ordered and arrived damaged and are being reproduced. Again, we know this is frustrating and going fo rward, while not ideal, no resi dent will return to their unit without blinds installed. While many of these are inconvenient and hass les residents should not have to deal with, we have put processes in place with management and relocation actively communicating with our residents. We are walking units prior to each resident moving back and creating a pre- inspection report to address any concerns prior to a resident m oving back as well as managing expectations. Our relocation coor dinator and management agent h ave been empowered to push back and not accept units if they are not acceptable as well as work with our contractor to determine if there are items residents are not happy with are in the scop e or routine maintenance items that should be added to the scope of work.

Additionally, we have weekly meetings with the following positi ons relevant to Harriet Tubman where we discuss all things construction and relocation:

Foundation Housing: Asset Manager, Director of Asset Management, Project Manager (Cassandra Palanza)
Development Partner: Pennant Housing Group (2-3 individuals) Precision Construction: Superintendent, General C ontractor, Project Manager FPI Management: Community Director, Portfolio Manager, Senior Director and Relocation Coordinator
Our hope is the amount of staff co mmitted to the completion of this project and its future preservation is not lost in a residents pursuit of “justice” fo r their concerns. Below is the contact information of personnel here to serve and respond to our residents through the duration of construction. The below team will reach out to the residents in the video supplied and confirm that all of their issues highlighted in the video are resolved. Cosmetic issue or things that a reasonable person who saw them should think to fix them (under the bathroo m holes, backboard of the sink) will be addressed.

LaTonya Glover, Property Management, FPI Management
[email protected], 510-843-0134

Attachment 1

Brandon Heezen, Portfolio Manager, FPI Management
[email protected]

Brandi Hutchinson, Senior Director, FPI Management
[email protected]

Tamara Couto, Relocation Specialist, Advanced Relocation Services [email protected] / 559-903-3800

Jordan Bobb, Asset Manager, Foundation Housing
[email protected]

Cassandra Palanza, Project Manager and Landlords Representative, Foundation Housing [email protected] /

Lastly, we are beginning to implement some things to try and as sist our residents further with communication and supportive services during the rehab and after conclusion of the rehab.

We have approved a TV monitor for updates and important informa t io n fo r re s id e n ts . W e a re putting our resident services under review to see how many addi tional hours of resident services we can add to the property to give our residents additional support. We are ordering computers for a computer center for the residents to utilize. We are trying t o see if we can add the layout to our scope but the approval to order these computers was granted and we look forward to giving residents access to these as soon as possible. In addition to moving assistance during the rehab, we are offering appointments with a ssistance for residents to go t hrough their things and eliminate/donate unwanted items. See attached flyer. This service is completely voluntary but we recognize that there are many of our residents who lack the cap ability or physical strength to resolve the building amount of contents in their homes. To date, we have had three residents utilize the services and will look to establish this as an annual or se mi-annual event. Rounding out all of the things we continue to work on, Management is sending out a survey to residents asking for feedback. It is voluntary and vital that we hear from everyone. Despite some of the challenges we also have many residents who are pleased with the progress this community is making and as we move forward we feel it is important to share all the informati on so that those stake holders involved can make informed decisions.

Attachment 1

We recognize that in elderly populations, packing, moving, moving, unpacking is stressful.

We are working to find additional resources for additional packing assistance and unpacking. No resident is asked to move anything except for their things they consider extremely valuable (jewelry, passport, documents and any other valuables that they do not want touched). If a resident feels they are not getting the assistance they need, then they should immediately notify the relocation coordinator. If the responsiveness is not there then Management should be notified followed by the Owners Representative.

To date we have completed 22 units. As of July 6, we have 5 tenants who have been temporarily relocated
to other units. These residents are scheduled to return to their homes Friday, July 8, subject to management inspection and approval.

Thank you for your time. We look forward to completing this pro ject and the residents being able to enjoy their improved community in a peaceful manner.

Attachment 1

FPI Managem
ent, Inc.

G:\Word\Grievance Procedure (HUD, Tax Credit with Section 8) November 2017
Management Relations
Grievance Procedures
Our goal at this apartment community is to provide outstanding customer service, responsive management and build good resident/management relations.

On occasion a dispute or problem may arise between a resident(s) and management. If there is a dispute, a discussion is encouraged on a one-to-one basis. If discussion does not provide a resolution, a resident may use the Grievance Procedure outlined in an effort to provide resolution.

The Grievance Procedure is designed to ensure that there is a fair and equitable process for addressing resident concerns and to ensure fair treatment of residents in the event that an action or inaction by a management representative adversely affects the resident of this apartment community.

Individuals, who feel they have been treated unfairly, may submit a grievance to management.

Management will respond to valid requests involving concerns about conditions or quality of life at the apartment community. An informal review of issues and concerns will be conducted.

In order to clearly understand the issues, management will request a written statement of the issue for all parties to review . Management may need to obtain written statements from witness or other outside parties to fully review the concerns. An informal meeting will then be scheduled to review the concerns in an attempt to resolve the conflict . If this process does not resolve the matter, the resident may seek resolution through the process outlined below.

Example of Complaint Process
Step 1. Resident notifies
Community Director/Manager to
discuss complaint, provides
complaint in writing (Form
available),
(Reasonable
Accommodations may be made
for persons with disabilities) and
discusses possible solutions.

Step 2. Community Director/Manager
discusses matter with resident and
replies in writing to complaint within
10 working days. If dispute is not
resolved, proceed to the next step.

Step 3. Resident appeals to Portfolio
Manager in writing within 5 working
days of the receipt of the written
response. (Reasonable
Accommodations may be made for
persons with disabilities). Portfolio
Manager will contact parties within
10 working days of receiving appeal.

If dispute is not resolved, proceed to
the next step.

Step 4. Portfolio Manager will
discuss grievance with resident
and within 10 working days,
provides decision and written
statement on the grievance and
take any necessary action. If
dispute is not resolved, proceed
to the next step.

Step 5. Resident appeals to the
Contract Administrator within 10 days.

Contract Administrator responds to
the Resident. If dispute is not
resolved, proceed to the next step.

Step 6. Resident appeals to the
HUD office within 10 days. HUD
responds to the Resident
Contact Information
Step One, Two, Three
Community Director/Manager:

Step Four
Management Agent:

FPI Management, Inc.

Regional Portfolio Manager
800 Iron Point Road
Folsom, CA 95630
Step Five
Contract Administrator:

Step Six
HUD
I hereby acknowledge that I have received a copy of the Grievance Procedure and understand the process described above. I also understand that a Complaint Form is available in the Rental Office and Community Bulletin Board.
____________________________
____________________________ _________________
Resident Name Resident Signature Date
____________________________
_____________________________ _________________
Resident Name Resident Signature Date
____________________________ __________________
___
Management Representative Date
Step One & Two Step Three & Four
Attachment 1

Libby Lee-Egan (Chairperson) & Mari Mendonca (Vice Chairperson) Berkeley Housing Advisory Commission
July 15, 2022
Mayor Arreguín and Berkeley City Councilmembers,
We write to you today to express deep concern and inspire urgent action on an issue affecting some of Berkeley’s most vulnerable residents. At the Housing Advisory Commission (HAC) meeting on July 7, 2022 we heard and took action on an item regarding an ongoing situation at Harriet Tubman Terrace (HTT) affecting the low income seniors and disabled tenants residing there. For reference, see item #5 on the agenda and supplemental communication here. At the meeting the Commission heard testimony and watched video evidence that showed appalling treatment and neglect of HTT’s tenants by staff and subcontractors.

Most of the grievances were related to relocation to/from and construction in individual units.

Commissioners and members of the public expressed distress at what these seniors were being subjected to, including:
● Inadequate relocation services. The video shows the home of a disabled tenant whose possessions were not unpacked from their boxes and equipment necessary to help him move about his home was not installed.
● Shoddy construction and poorly-planned improvements ill-suited to each home’s resident. The video shows a tenant whose newly-remodeled bathroom has a hole in the wall where a toilet paper holder should be and a bathtub that is not usable for her as someone who has had a hip replacement.
● Overall lack of trust between staff and tenants. It was clear from testimony and video that tenants do not feel comfortable submitting complaints or requests. There are many reasons for this discomfort, including fear of retaliation. This is the primary reason for our 3rd recommendation below for a tenant advocate to assist the HTT residents.

Members of the HAC also received supplemental communication and heard public comment from HTT’s project manager/landlord representative which insufficiently addressed some of these concerns.

During the meeting on July 7, the Commission voted unanimously to send this letter, requesting the mayor and City Councilmembers take action:

1. Review the video created by tenants about conditions at Harriet Tubman Terrace that was shown at the July 7, 2022 Housing Advisory Commission meeting;

2. Direct the City Manager to investigate health and safety violations and other grievances identified by tenants at Harriet Tubman Terrace;
Attachment 2

3. Request Harriet Tubman Terrace provide tenants with a dedicated tenant advocate to assist with relocation and other needs; and

4. Request Harriet Tubman Terrace owners/management and tenants report back to the Housing Advisory Commission at our regular meeting in September to report progress with addressing the grievances identified by tenants.

At the same meeting, the Commission also unanimously approved a motion to put together an official recommendation on this matter. This report is under development right now and is forthcoming. Staff advised that this could take time for this to get on the council's calendar and because these Berkeley residents need help now, the HAC opted to send this letter before the report is finished.

If you have any follow up questions or require any additional information, please do not hesitate to reach out to the submitter of the item and Vice Chair Mari Mendonca ([email protected]) and Chair Libby Lee-Egan ([email protected]).

Sincerely,
Libby Lee-Egan Mari Mendonca
Housing Advisory Commission Chairperson Housing Advisory Commission Vice Chairperson Links:

Agenda: bit.ly/HAC7722-Agenda
Supplemental Communication: bit.ly/HAC7722-SuppComm
Video: bit.ly/HTT-Renewal
Attachment 2

The following update from Foundation Housing was provided by to HHCS staff via email on August 24, 2022.

The Landlor
d [Foundation Housing] continues with the renovations in accordance with local, state and federal guidelines and does not have open code violations as it pertains to any of the renovations.

Landlord, i
n response to tenant input has addressed, in landlords opinion, most items.

Where landlord and tenant(s) differ we continue to work through those matters on an individual basis with each tenant. Landlord has added services including but not limited to more than doubling the resident services contract that will begin in September, changed the cleaning contract of the building and had the building deep cleaned twice with daily cleaning occurring in all common areas and public spaces, done a 100% unit pest inspection and begun regular pest control of units identified with housekeeping issues, offered residents 2 hours of cleaning of their apartments by a cleaning company at landlords expense, offered decluttering and unloading of residents items they do not want or want to dispose of (at landlords expense), paused relocation with the exception of deemed necessity in August, hired a new relocation coordinator (AutoTemps) set to resume tenant relocation in September and continued to focus on the completion of the much needed renovations of the building.

An open ite
m that we acknowledge and realize is not resolved is the matter pertaining to the stoves in the one bedrooms and resolution is still pending on that item. Construction continues to experience supply chain issues and we continue to accommodate as necessary to make sure units are delivered completed with little to no disruption upon returning home. The screens to the windows arrived in early August and began installation on all newly installed windows. Approximately 40% of the apartment homes are completed. Landlord and management will be available on the next Housing Advisory Council call [September 1, 2022] to take questions and give additional updates on the status of things at Harriet Tubman Apartments.

Attachment 3

Office of the City Manager
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-7000 ● TDD: (510) 981-6903 ● Fax: (510) 981-7099 E-Mail: [email protected] Website: http://www.CityofBerkeley.info/Manager

ACTION CALENDAR
November 3, 2022
To: Honorable Mayor and Members of the City Council
From: Dee Williams-Ridley, City Manager
Submitted by: Jennifer Louis, Interim Chief of Police
Liam Garland, Director of Public Works
LaTanya Bellow, Deputy City Manager
Subject: Resolution Accepting the Annual Surveillance Technology Reports for Automatic License Plate Readers, GPS Trackers, Body Worn Cameras, Unmanned Aerial Vehicles (UAV’s) and the Street Level Imagery Project Pursuant to Chapter 2.99 of the Berkeley Municipal Code

RECOMMENDATION
Adopt a Resolution Accepting the Surveillance Technology Report for Automatic License Plate Readers, GPS Trackers, Body Worn Cameras, Unmanned Aerial Vehicles (UAV’s) and the Street Level Imagery Project Pursuant to Chapter 2.99 of the Berkeley Municipal Code.

FISCAL IMPACTS OF RECOMMENDATION
There are no fiscal impacts associated with adopting the attached resolution.

CURRENT SITUATION AND ITS EFFECTS
On March 27, 2018, the City Council adopted Ordinance 7,592-N.S., adding Chapter 2.99 to the Berkeley Municipal Code, which is also known as the Surveillance Technology Use and Community Safety Ordinance (“Ordinance”). The purpose of the Ordinance is to provide transparency surrounding the use of surveillance technology, as defined by Section 2.99.020 in the Ordinance, and to ensure that decisions surrounding the acquisition and use of surveillance technology consider the impacts that such technology may have on civil rights and civil liberties. Further, the Ordinance requires that the City evaluate all costs associated with the acquisition of surveillance technology and regularly report on their use.

The Ordinance imposes various reporting requirements on the City Manager and staff.

The purpose of this staff report and attached resolution is to satisfy the annual reporting requirement as outlined in Section 2.99.070.

One of the reporting categories of the surveillance technology use is whether complaints have been received by the community about the various technologies. To

Resolution Accepting the Surveillance Technology Report ACTION CALENDAR November 3, 2022
date Berkeley Police Department Internal Affairs Bureau (IAB) has not received any external personnel complaints surrounding these technologies. External complaints from community members can be made in writing, via email, in person or via telephone.

Complaints can be received with direct communication to Internal Affairs from the complainant and/or be received by any member of the Department and then forwarded through the chain of command. If a community member initiates a complaint against a subject employee and during the investigation it is determined the subject employee violated policy regarding the misuse of technology, an additional complaint is initiated by the Chief of Police.

Community members also have the right to initiate complaints against employees of BPD by reporting directly to the Police Accountability Board (PAB). The Director of Police Accountability notifies the Chief of Police when an investigation into a complaint is initiated by the PAB, which would prompt a parallel IAB investigation.

Attached to this staff report are Surveillance Technology Reports for Automatic License Plater Readers, GPS Trackers, Body Worn Cameras, and the Street Level Imagery Project. Additionally, this year the Berkeley Police Department had three exigent uses pursuant to BMC 2.99.040 in which the City Manager authorized the Police Department to temporarily use an Unmanned Aerial Vehicle, commonly referred to as a drone, for critical incidents. These incidents were reported by the City Manager to Council pursuant to 2.99.040(2) and are included in this annual report pursuant to BMC 2.99.040(3). At this time the Berkeley Police Department does not intend to acquire this technology but is actively consulting with the City Attorney’s Office regarding developing a Use Policy.

BACKGROUND
On March 27, 2018, the City Council adopted Ordinance 7,592-N.S., adding Chapter 2.99 to the Berkeley Municipal Code, which is also known as the Surveillance Technology Use and Community Safety Ordinance. Section 2.99.070 of the Ordinance requires that the City Manager must submit to the City Council a Surveillance Technology Report as defined by Section 2.99.020(2) of the Ordinance at the first regular City Council meeting in November.

For each of the four technologies, the Surveillance Technology Reports were prepared to satisfy the specific, section-by-section requirements of the Ordinance, and are attached to this report. Also attached is the Surveillance Technology Report for the temporary uses of an Unmanned Aerial Vehicle commonly referred to as a drone pursuant to BMC

2.99.040.

The Surveillance Technology Use Policy for ALPR technology was unanimously adopted at Council on September 13th, 2022 under Resolution 70,524_N.S..

Resolution Accepting the Surveillance Technology Report ACTION CALENDAR November 3, 2022

ENVIRONMENTAL SUSTAINABILITY AND CLIMATE IMPACTS
There are no identifiable environmental effects or opportunities associated with the content of this report.

RATIONALE FOR RECOMMENDATION
City Council is being requested to adopt the attached resolution for the City to be in compliance with the Ordinance.

ALTERNATIVE ACTIONS CONSIDERED
City Council could decide not to adopt the resolution.

CONTACT PERSON
Jennifer Louis, Interim Chief of Police, (510) 981-5700 LaTanya Bellow, Deputy City Manager, (510) 981-7012

ATTACHMENTS

1. Resolution

2. Body Worn Cameras
a) Surveillance Technology Report: Body Worn Cameras
b) Retention Schedule

3. Global Positioning System (GPS) Tracking Devices
Surveillance Technology Report

4. Automated License Plate Readers
Surveillance Technology Report

5. Street Level Imagery Project
Surveillance Technology Report

6. Unmanned Aerial Vehicle (UAV’s)
Surveillance Technology Report

RESOLUTION NO. XX,XXX-N.S.

ACCEPTING THE SURVEILLANCE TECHNOLOGY REPORT FOR AUTOMATIC

LICENSE PLATE READERS, GPS TRACKERS, BODY WORN CAMERAS, UNMANNED AERIAL VEHICLES (UAV’S) AND THE STREET LEVEL IMAGERY

PROJECT
WHEREAS, on March 27, 2018, the City Council adopted Ordinance 7,592-N.S., which is known as the Surveillance Technology Use and Community Safety Ordinance (“Ordinance”); and
WHEREAS, Section 2.99.070 of the Ordinance requires that the City Manager must submit to the City Council a Surveillance Technology Report as defined by Section

2.99.020(2) of the Ordinance at the first regular City Council meeting in November; and WHEREAS, the Surveillance Technology Reports satisfy the requirements of the Ordinance.

NOW THEREFORE, BE IT RESOLVED by the Council of the City of Berkeley that the Council hereby accepts the Surveillance Technology Reports for Automatic License Plate Readers, GPS Trackers, Body Worn Cameras, Unmanned Aerial Vehicles (UAV’s) and the Street Level Imagery Project.

Ordinance No. 7,592-N.S. Page 1 of 8
ORDINANCE NO. 7,592–N.S.

ADDING CHAPTER

2.99 TO THE BERKELEY MUNICIPAL CODE, ACQUISITION

AND USE OF SURVEILLANCE TECHNOLOGY
BE IT ORDAINED by the Council of the City of Berkeley as follows:

Section 1. Title
This ordinance shall
be known as the Surveillance Technology Use and Community Safety Ordinance.

Section 2. That Chapter 2.99 is hereby added to the Berkeley Municipal Code to read as follows:

Chapter 2.99
Acquisition and Use
of Surveillance Technology

2.99.010 Purposes

2.99.020 Definitions

2.99.030 City Council Approval Requirement

2.99.040
Temporary Acquisition and Use of Surveillance Equipment

2.99.050 Compliance for Existing Surveillance Technology

2.99.060
Determination by City Council that Benefits Outweigh
Costs
and Concerns

2.99.070 Oversight Following City Council Approval

2.99.080 Public
Access to Surveillance Technology Contracts

2.99.090 Enforcement

2.99.100 Whistleblower Protections

2.99.110 Severability

2.99.010 Purposes
A. Through the enactment of this Chapter, the City seeks to establish a thoughtful process regarding the procurement and use of Surveillance Technology that carefully balances the City’s interest in protecting public safety with its interest in protecting the privacy and civil rights of its community members.

B. Transparency is essential when the City is considering procurement and use of Surveillance Technology.

C. Although such technology may be beneficial to public order and safety, it has the potential to put both privacy and civil liberties at risk.

D. Decisions relating to Surveillance Technology should occur with strong consideration of the impact such technologies may have on civil rights and civil liberties, as with all rights guaranteed by the California and United States Constitutions.

E. Surveillance Technology may involve immediate, as well as ongoing, financial costs.

Before the City acquires any Surveillance Technology, it must evaluate all costs associated with the procurement, installation, use and maintenance of the technology.

02

Ordinance No. 7,592-N.S. Page 2 of 8
F. Decisions regarding whether and how Surveillance Technologies should be funded, acquired, or used should be governed by the City Council as the elected representatives of the City.

G. In addition to applicable local, state, and federal law, legally enforceable safeguards, including robust transparency, oversight, and accountability measures, are important in the protection of civil rights and civil liberties.

H. Data reporting measures will enable the City Council and public to confirm that mandated civil rights and civil liberties safeguards have been strictly observed.

2.99.020 Definitions
The following definitions apply
to this Chapter:

1. “Surveillance Technology” means an electronic device, system utilizing an electronic device, or similar technological tool used, designed, or primarily intended to collect audio, electronic, visual, location, thermal, olfactory, biometric, or similar information specifically associated with, or capable of being associated with, any individual or group.

Examples of covered Surveillance Technology include, but are not limited to: cell site simulators (Stingrays); automatic license plate readers; body worn cameras; gunshot detectors (ShotSpotter); facial recognition software; thermal imaging systems, except as allowed under Section 2(d); social media analytics software; gait analysis software; and video cameras that record audio or video and can remotely transmit or can be remotely accessed.
“Surveillance Technology” does not
include the following devices or hardware, unless
they have been equipped with, or are modified to become or include, a Surveillance Technology as defined in Section 2 (above):
a. Routine office hardware, such as televisions, computers, and printers, that is in widespread public use and will not be used for any surveillance functions; b. Handheld Parking Citation Devices, that do not automatically read license plates; c. Manually-operated, portable digital cameras, audio recorders, and video recorders that are not to be used remotely and whose functionality is limited to manually capturing, viewing, editing and downloading video and/or audio recordings, but not including body worn cameras;
d. Devices that cannot record or transmit audio or video or be remotely accessed, such as image stabilizing binoculars or night vision goggles or thermal imaging cameras used for fire operations, search and rescue operations and missing person searches, and equipment used in active searches for wanted suspects;
e. annually-operated technological devices that are not designed and will not be used to surreptitiously collect surveillance data, such as two-way radios, email systems and city-issued cell phones;
f. Municipal agency databases;
g. Medical equipment used to diagnose, treat, or prevent disease or injury, including electrocardiogram machines;
h. Cybersecurity capabilities, technologies and systems used by the City of Berkeley Department of Information Technology to predict, monitor for, prevent, and protect

Ordinance No. 7,592-N.S. Page 3 of 8
technology infrastructure and systems owned and operated by the City of Berkeley from potential cybersecurity events and cyber-forensic based investigations and prosecutions of illegal computer based activity;
i. Stationary security cameras affixed to City property or facilities.

2. “Surveillance Technology Report” means an annual written report by the City Manager covering all of the City of Berkeley’s Surveillance Technologies that includes all of the following information with regard to each type of Surveillance Technology:
a. Description: A description of all non-privileged and non-confidential information about use of the Surveillance Technology, including but not limited to the quantity of data gathered and sharing of data, if any, with outside entities. If sharing has occurred, the report shall include general, non-privileged and non- confidential information about recipient entities, including the names of the entities and purposes for such sharing; b. Geographic Deployment: Where applicable, non-privileged and non- confidential information about where the surveillance technology was deployed geographically; c. Complaints: A summary of each complaint, if any, received by the City about the Surveillance Technology;
d. Audits and Violations: The results of
any non-privileged internal audits, any
information about violations or potential violations of the Surveillance Use Policy, and any actions taken in response;
e. Data Breaches: Non-privileged and non-confidential information about any data breaches or other unauthorized access to the data collected by the surveillance technology, including information about the scope of the breach and the actions taken in response;
f. Effectiveness: Information that
helps the community assess whether the Surveillance
Technology has been effective in achieving its identified outcomes; g. Costs: Total annual
costs for the Surveillance Technology, including personnel and other ongoing costs.

3. “Surveillance Acquisition Report” means a publicly-released written report produced prior to acquisition or to proposed permanent use after use in Exigent Circumstances pursuant to Section 2.99.040 (2), of a type of Surveillance Technology that includes the following:
a. Description: Information describing the Surveillance Technology and how it works, including product descriptions from manufacturers;
b. Purpose: Information on the proposed purposes(s) for the Surveillance Technology;
c. Location: The general location(s) it may be deployed and reasons for deployment;
d. Impact: An assessment identifying potential impacts on civil liberties and civil rights including but not limited to potential disparate or adverse impacts on any communities or groups;
e. Mitigation: Information regarding technical and procedural measures that can be implemented to appropriately safeguard the public from any impacts identified in

Ordinance No. 7,592-N.S. Page 4 of 8
subsection (d);
f. Data Types and Sources: A list of the sources of data proposed to be collected, analyzed, or processed by the Surveillance Technology, including “open source” data;
g. Data Security: Information about the steps that can be taken to ensure adequate security measures to safeguard the data collected or generated from unauthorized access or disclosure;
h. Fiscal Cost: The fiscal costs for the Surveillance Technology, including initial purchase, personnel and other ongoing costs, including to the extent practicable costs associated with compliance with this and other reporting and oversight requirements, as well as any current or potential sources of funding; i. Third Party Dependence and Access: Whether use or maintenance of the technology will require data gathered by the technology to be handled or stored by a third-party vendor on an ongoing basis, and whether a third-party may have access to such data or may have the right to sell or otherwise share the data in aggregated, disaggregated, raw or any other formats;
j. Alternatives: A summary and general assessment of potentially viable alternative methods (whether involving the use of a new technology or not), if any, considered before deciding to propose acquiring the Surveillance Technology. , ; and, k. Experience of Other Entities: To the extent such information is available, a summary of the experience of comparable government entities with the proposed technology, including any unanticipated financial or community costs and benefits, experienced by such other entities.

4. "Surveillance Use Policy" means a publicly-released and legally-enforceable policy for use of each type of the Surveillance Technology that shall reflect the Surveillance Acquisition Report produced for that Surveillance Technology and that at a minimum specifies the following:
a. Purpose: The specific purpose(s) that the Surveillance Technology is intended to advance;
b. Authorized Use: The uses that are authorized, the rules and processes required prior to such use, and the uses that are prohibited;
c. Data Collection: Information collection that is allowed and prohibited. Where applicable, list any data sources the technology will rely upon, including “open source” data;
d. Data Access: A general description of the title and position of the employees and entities authorized to access or use the collected information, and the rules and processes required prior to access or use of the information, and a description of any and all of the vendor’s rights to access and use, sell or otherwise share information for any purpose;
e. Data Protection: A general description of the safeguards that protect information from unauthorized access, including encryption and access control mechanisms, and safeguards that exist to protect data at the vendor level; f. Civil Liberties and Rights Protection: A general description of the safeguards that protect against the use of the Surveillance Technology and any data resulting from

Ordinance No. 7,592-N.S. Page 5 of 8
its use in a way that violates or infringes on civil rights and liberties, including but not limited to
potential disparate or adverse impacts on any communities or groups; g. Data Retention: The time period, if any, for which information collected by the surveillance technology will be routinely retained, the reason such retention period is appropriate to further the purpose(s), the process by which the information is regularly deleted after that period lapses, and the specific conditions that must be met to retain information beyond such period;
h. Public Access: How collected information may be accessed or used by members of the public;
i. Third Party Data Sharing: If and how other City or non-City Entities can access or use the information, including any required justification or legal standard necessary to do so and any obligations imposed on the recipient of the information; j. Training: Training required
for any employee authorized to use the
Surveillance Technology or to access information collected; k. Auditing and Oversight:

Mechanisms to ensure that the Surveillance Use Policy is followed, technical measures to monitor for misuse, and the legally enforceable sanctions for intentional violations of the policy; and
l. Maintenance: The mechanisms
and procedures to ensure maintenance of the
security and integrity of the Surveillance Technology and collected information.

5. “Exigent Circumstances” means the City Manager’s good faith belief that an emergency involving imminent danger of death or serious physical injury to any person, or imminent danger of significant property damage, requires use of the Surveillance Technology or the information it provides.

2.99.030 City Council
Approval Requirement

1. The City Manager must obtain City Council approval, except in Exigent Circumstances, by placing an item on the Action Calendar at a duly noticed meeting of the City Council prior to any of the following:
a. Seeking, soliciting, or accepting grant funds for the purchase of, or in-kind or other donations of, Surveillance Technology;
b. Acquiring new Surveillance Technology, including but not limited to procuring such technology without the exchange of monies or consideration; c. Using new Surveillance Technology, or using Surveillance Technology previously approved by the City Council for a purpose, or in a manner not previously approved by the City Council; or
d. Entering into an agreement with a non-City entity to acquire, share or otherwise use Surveillance Technology or the information it provides, or expanding a vendor’s permission to share or otherwise use Surveillance Technology or the information it provides.

2. The City Manager must present a Surveillance Use Policy for each Surveillance Technology to the Police Review Commission, prior to adoption by the City Council. The Police Review Commission shall also be provided with the corresponding Surveillance Acquisition Report that had been presented to council for that Surveillance Technology.

Ordinance No. 7,592-N.S. Page 6 of 8
No later than 30 days after receiving a Surveillance Use Policy for review, the Police Review Commission must
vote to recommend approval of the policy, object to the proposal, recommend modifications, or take no action. Neither opposition to approval of such a policy, nor failure by the Police Review Commission to act shall prohibit the City Manager from proceeding with its own review and potential adoption.

3. The City Manager must submit for review a Surveillance Acquisition Report and obtain City Council
approval of a Surveillance Use Policy prior to engaging in any of the activities described in subsection (1) (a)-(d).

2.99.040 Temporary Acquisition and Use of Surveillance Equipment Notwithstanding the provisions of this Chapter, the City Manager may borrow, acquire and/or temporarily use Surveillance Technology in Exigent Circumstances without following the requirements in Sections 2.99.030 and 2.99.040. However, if the City Manager borrows, acquires or temporarily uses Surveillance Technology in Exigent Circumstances he or she must take all of the following actions:

1. Provide written notice of that acquisition or use to the City Council within 30 days following the commencement of such Exigent Circumstance, unless such information is confidential or privileged;

2. If it is anticipated that the use will continue beyond the Exigent Circumstance, submit a proposed Surveillance Acquisition Report and Surveillance Use Policy, as applicable, to the City Council within 90 days following the borrowing, acquisition or temporary use, and receive approval, as applicable, from the City Council pursuant to Sections

2.99.030 and 2.99.040; and

3. Include the Surveillance Technology in the City Manager’s next annual Surveillance Technology Report.

2.99.050 Compliance for Existing Surveillance Technology The City Manager shall submit to the Action Calendar for the first City Council meeting in November of 2018, a Surveillance Acquisition Report and a proposed Surveillance Use Policy for each Surveillance Technology possessed or used prior to the effective date of this ordinance.

2.99.060 Determination by City
Council that Benefits Outweigh Costs and
Concerns
The City Council shall only approve any action described in Section 2.99.030, 2.99.040, or Section 2.99.050
of this Chapter after making a determination that the benefits to the community of the Surveillance Technology, used according to its Surveillance Use Policy, outweigh the costs; that the proposal will appropriately safeguard civil liberties and civil rights to the maximum extent possible while serving its intended purposes; and that, in the City Council’s judgment, no feasible alternative with similar utility and a lesser impact on civil rights or civil liberties could be implemented.

2.99.070 Oversight Following City
Council Approval
The City Manager must submit to the Council Action Calendar a written Surveillance

Ordinance No. 7,592-N.S. Page 7 of 8
Technology Report, covering all of the City’s Surveillance Technologies, annually at the first regular Council meeting in November. After review of the Surveillance Technology Report, Council may make modifications to Surveillance Use Policies.

2.99.080 Public Access to Surveillance Technology Contracts To the extent permitted by law, the City shall continue to make available to the public all of its
surveillance-related contracts, including related non-disclosure agreements, if any.

2.99.090 Enforcement
This Chapter does not
confer any rights upon any person or entity other than the City Council to cancel or suspend a contract for a Surveillance Technology. The Chapter does not provide a private right of action upon any person or entity to seek injunctive relief against the City or any employee unless that person or entity has first provided written notice to the City Manager by serving the City Clerk, regarding the specific alleged violations of this Chapter. If a specific alleged violation is not remedied within 90 days of that written notice, a person or entity may seek injunctive relief in a court of competent jurisdiction. If the alleged violation is substantiated and subsequently cured, a notice shall be posted in a conspicuous manner on the City’s website that describes, to the extent permissible by law, the corrective measures taken to address the violation. If it is shown that the violation is the result of arbitrary or capricious action by the City or an employee or agent thereof in his or her official capacity, the prevailing complainant in an action for relief may collect from the City reasonable attorney’s fees in an amount not to exceed $15,000 if he or she is personally obligated to pay such fees.

2.99.100 Whistleblower Protections
All provisions
of Berkeley’s Protection of Whistleblowers Workplace Policy, as promulgated by the City Manager on November 2, 2016 and including any updates or replacements thereto, shall apply.

2.99.110 Severability
If any word, phrase, sentence, part, section, subsection, or other portion of this Chapter, or any application
thereof to any person or circumstance is declared void, unconstitutional, or invalid for any reason, then such word, phrase, sentence, part, section, subsection, or other portion, or the prescribed application thereof, shall be severable, and the remaining provisions of this Chapter, and all applications thereof, not having been declared void, unconstitutional or invalid, shall remain in full force and effect.

The City Council hereby declares that it would have passed this title, and each section, subsection, sentence, clause and phrase of this Chapter, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases is declared invalid or unconstitutional.

Section 3. Copies of this Ordinance shall be posted for two days prior to adoption in the display case located
near the walkway in front of Council Chambers, 2134 Martin Luther King Jr. Way. Within 15 days of adoption, copies of this Ordinance shall be filed at each branch of the Berkeley Public Library and the title shall be published in a newspaper of general circulation.

Ordinance No. 7,592-N.S. Page 8 of 8
At a regular meeting of the Council of the City of Berkeley held on March 13, 2018, this Ordinance was
passed to print and ordered published by posting by the following vote:

Ayes: Bartlett, Davila, Droste, Hahn, Harrison, Maio, Wengraf, Worthington and Arreguin.

Noes: None.

Absent: None.

ATTACHMENT 2

Surveillance Technology Report: Body Worn Cameras
October 1, 2021 – Sept. 30, 2022
Description A description of all non-privileged and non-confidential information about use of the Surveillance Technology, including but not limited to the quantity of data gathered and sharing of data, if any, with outside entities. If sharing has occurred, the report shall include general, non-privileged and non-confidential information about recipient entities, including the names of the entities and purposes for such sharing.

Body Worn Cameras are used to capture video recordings of contacts between department personnel and the public, to provide an objective record of these events.

These recording are used in support of criminal prosecutions, to limit civil liability, increase transparency and enhance professionalism and accountability in the delivery of police services to the community. Body Worn Camera (BWC) files are shared with the Alameda County District Attorney’s office in support of prosecution for crime, and may be shared with other law enforcement agencies to support criminal investigations.

Policy regarding activation of the Body Worn Camera BPD Policy 425.7 Members shall activate the BWC as required by this policy in (a)-(f) below, and may activate the BWC at any time the member believes it would be appropriate or valuable to record an incident within the limits of privacy described herein.

The BWC shall be activated in any of the following situations:
(a) All in-person enforcement and investigative contacts including pedestrian stops and field interview (FI) situations.
(b) Traffic stops including, but not limited to, traffic violations, stranded motorist assistance and all crime interdiction stops.
(c) Self-initiated field contacts in which a member would normally notify the Communications Center.
(d) Any search activity, including the service of search or arrest warrants; probation, parole, or consent searches where the member is seeking evidence of an offense, or conducting a safety sweep or community caretaking sweep of the premises. Once a location has been secured and the member is not interacting with detainees or arrestees, the member may mute their BWC when conducting a search for evidence.
(e) Any other contact that the member determines has become adversarial after the initial contact in a situation where the member would not otherwise activate BWC recording.
(f) Transporting any detained or arrested person and where a member facilitates entry into or out of a vehicle, or any time the member expects to have physical contact with that person.

What data is captured by this technology:

BWC use is limited to enforcement and investigative activities involving members of the public. The BWC recordings will capture video and audio evidence for use in criminal investigations, administrative reviews, training, civil litigation, and other proceedings

ATTACHMENT 2

protected by confidentiality laws and department policy. Improper use or release of BWC recordings may compromise ongoing criminal and administrative investigations or violate the privacy rights of those recorded and is prohibited.

How the data is stored:

BWC videos are stored on a secure server. All BWC data will be uploaded and stored on Axon Cloud Services, Evidence.com. Axon complies with the EU-U.S. Privacy Shield Framework and the Swiss-U.S. Privacy Shield Framework as set forth by the U.S.

Department of Commerce regarding the collection, use, and retention of personal information transferred from the European Union and Switzerland to the United States (collectively, “Privacy Shield”). Axon has certified to the U.S. Department of Commerce that it adheres to the Privacy Shield Principles.

Retention period of data:

See attached retention schedule.

Summary of Body Worn Camera Videos Uploaded Oct. 1, 2021 to Sept. 30, 2022:

Total Number of Videos 64,688
Total Hours of Videos 17,520
Total GB of BWC Videos 30,420
Summary of Digital Evidence Uploaded, Oct. 1, 2021 to Sept. 30, 2022:

Type File Count
Audio 8,425
Document 1,804
Image 496,694
Other 2,807
Video* 79,303
Total 138,716
* Includes all uploaded BWC videos and all other videos booked into the evidence management system. Other videos include iPhone videos uploaded, security camera video, copies of BWC videos (for redaction, etc.), and any other videos.

Geographic
Deployment
Where applicable, non-privileged and non-confidential information about where the surveillance technology was deployed geographically.

Body Worn Cameras are worn by all BPD uniformed officers city-wide at all times; BWC’s are not deployed based on geographic considerations.

Complaints A summary of each complaint, if any, received by the City about the Surveillance Technology.

There have been no complaints about the deployment and use of Body Worn Cameras.

ATTACHMENT 2

Audits and
Violations
The results of any non-privileged internal audits, any information about violations or potential violations of the Surveillance Use Policy, and any actions taken in response.

File meta-data are routinely reviewed by our BWC manager, to ensure required metadata fields are completed. There have been no complaints with regards to violations of the Surveillance Use Policy.

Data Breaches Non-privileged and non-confidential information about any data breaches or other unauthorized access to the data collected by the surveillance technology, including information about the scope of the breach and the actions taken in response.

There have been no known data breaches or other unauthorized access to BWC data.

Effectiveness Information that helps the community assess whether the Surveillance Technology has been effective in achieving its identified outcomes.

Body Worn Cameras have proven effective in supporting criminal prosecutions, as video footage is available for all criminal prosecutions. Body Worn Cameras have been effective for training purposes, as footage can be reviewed in incident de-briefs. Body Worn Cameras have been extremely effective in support of Internal Affairs investigations and Use of Force Review.

Costs Total annual costs for the Surveillance Technology, including personnel and other ongoing costs.

The annual cost for the Body Worn Cameras, including cameras, replacement cameras, software, and Axon’s secure digital evidence management system is $222,442 per year over a five-year, $1,112,213 contract. There is one full-time employee assigned to the BWC program, an Applications Programmer Analyst II, at a cost of $168,940 per year, including benefits.

ATTACHMENT 3

Surveillance Technology Report: Global Positioning System Tracking Devices October 1, 2021 – Sept. 30, 2022
Description A description of all non-privileged and non-confidential information about use of the Surveillance Technology, including but not limited to the quantity of data gathered and sharing of data, if any, with outside entities. If sharing has occurred, the report shall include general, non-privileged and non-confidential information about recipient entities, including the names of the entities and purposes for such sharing.

Global Positioning System Trackers are used to track the movements of vehicles, bicycles, other items, and/or individuals.

What data is captured by this technology:

A GPS Tracker data record consists of date, time, latitude, longitude, map address, and tracker identification label. The data does not contain any images, names of subjects, vehicle information or other identifying information on individuals.

How the data is stored:

The data from the GPS tracker is encrypted by the vendor. The data is only accessible through a secure website to BPD personnel who have been granted security access.

Retention period of data:

Tracker data received from the vendor shall be kept in accordance with applicable laws, BPD policies that do not conflict with applicable law or court order, and/or as specified in a search warrant.

The Global Positioning System “Electronic Stake Out” (ESO) devices were not deployed during this reporting period. This program was suspended in mid-March 2020 due to the COVID-19 pandemic. In June of 2022, we renewed our service with the company and paid for new updated equipment with the intent of restarting the program. The program was not reimplemented during the dates specific to this report.

GPS “Slap-N-Track” (SNT) devices were used in three separate investigations during this reporting period:
(1) An investigation into individuals for their involvement in shootings that occurred in Berkeley. The case resulted in the arrest of two individuals involved in the shootings and the recovery of 2 rifles and 4 handguns. (2) An investigation into individuals involved in a shooting that occurred in Berkeley. The case resulted in 2 individuals being arrested for their involvement in the shooting and the recovery of gun parts, ammunition and various drugs. (3) An investigation into an armed robbery and shooting that occurred in Berkeley. The case resulted in the recovery of 1 shotgun, 2 handguns and drugs.

The suspect currently has an outstanding warrant for his arrest.

Data may be shared with the District Attorney’s Office for use as evidence to aid in prosecution, in accordance with laws governing evidence; other law enforcement

ATTACHMENT 3

personnel as a part of an active criminal investigation; and other third parties, pursuant to a court order.

Geographic
Deployment
Where applicable, non-privileged and non-confidential information about where the surveillance technology was deployed geographically.

GPS SNT devices are deployed with judicial pre-approval, based on suspect location, rather than geographical consideration.

Complaints A summary of each complaint, if any, received by the City about the Surveillance Technology.

There were no complaints made regarding GPS Trackers.

Audits and
Violations
The results of any non-privileged internal audits, any information about violations or potential violations of the Surveillance Use Policy, and any actions taken in response.

There were no audits and no known violations relating to GPS Trackers.

Data
Breaches
Non-privileged and non-confidential information about any data breaches or other unauthorized access to the data collected by the surveillance technology, including information about the scope of the breach and the actions taken in response.

There were no known data breaches relating to GPS Trackers.

Effectiveness Information that helps the community assess whether the Surveillance Technology has been effective in achieving its identified outcomes.

The GPS ESO trackers were not used during this time period. The program was suspended in mid-March 2020 due to the COVID-19 pandemic. Our subscription was renewed and we upgraded our equipment. We have not used them during this reporting period.

GPS SNT trackers are effective in that they provide invaluable information on suspect vehicle location during the investigation of complex cases where suspects may be moving around the Bay Area and beyond.

GPS Trackers greatly reduce costs associated with surveillance operations. A bike may be left for days. Surveillance operations generally involve four or more officers for the entire duration of an operation. A moving surveillance is extremely resource-intensive, requiring multiple officers in multiple vehicles for extended periods of time. Using both types of GPS trackers eliminates the need for officers’ immediate presence until officers are ready to apprehend the suspect(s).

Costs Total annual costs for the Surveillance Technology, including personnel and other ongoing costs.

The annual cost for the GPS “Slap-N-Track” (SNT) data service is $1,800.

The annual cost for the GPS “Electronic Stake Out” (ESO) devices this year was $2,353.85.

This was to upgrade our devices and for three years of tracking service for the devices.

There are staff time costs associated with preparing and placing SNT trackers. The investigator must prepare a search warrant and obtain a judge’s approval, and a small number of officers must place the tracker on the suspect’s car. The total number of hours

ATTACHMENT 3

is a fraction of the time it would take to do a full surveillance operation involving numerous officers.

There are staff time costs associated with preparing ESO trackers and placing ESO tracker-equipped bikes for bait bike operations. These are on the order of two-four hours per operation. The total number of hours is extremely small, given the large number of operations, and resulting arrests.

ATTACHMENT 4

Surveillance Technology Report: Automated License Plate Readers October 1, 2021 – Sept. 30, 2022
Description A description of all non-privileged and non-confidential information about use of the Surveillance Technology, including but not limited to the quantity of data gathered and sharing of data, if any, with outside entities. If sharing has occurred, the report shall include general, non-privileged and non-confidential information about recipient entities, including the names of the entities and purposes for such sharing.

Automated License Plate Readers (ALPRs) are used by Parking Enforcement Bureau vehicles for time zone parking and scofflaw enforcement. The City’s Transportation Division uses anonymized information for purposes of supporting the City’s Go Berkeley parking management program. ALPR use replaced the practice of physically “chalking” tires, which is no longer allowed by the courts.

What data is captured by this technology:

ALPR technology functions by automatically capturing an image of a vehicle's license plate, transforming that image into alphanumeric characters using optical character recognition software, and storing that information, along with relevant metadata (e.g. geo-location and temporal information, as well as data about the ALPR).

How the data is stored:

The data is stored on a secure server by the vendor.

Retention period of data:

During this reporting period collected images and metadata of hits were stored no more than 365 days. Metadata of reads were not stored more than 30 days. Current use policy adopted September 13, 2022 sets new retention periods that are now in effect.

Summary of ALPR Time Zone Enforcement Data
Read Data (only retained for 30 days per prior policy)
There was a total of 3,117,058 reads
From 10/1/2021 to 9/30/2022
Hit Data
There were 76,650 “Hits”
34,976 “Enforced Hits” resulted in citation issuance.
1,134 “Not Enforced” valid, enforceable hits resulted in no citation issued, based on PEO discretion.
40,540 Hits were not acted upon for a variety to reasons including but not limited to:
1) Customer comes out to move a vehicle. PEO’s are directed not to issue that citation.
2) Officer gets to the dashboard and sees a permit not visible from a previous location.

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3) Officer does a vehicle evaluation and confirms that the vehicle moved from the hit location (e.g. across the street within GPS range). 4) Stolen car.
5) Similar Plates.
6) 600-700 GIG cars- 100 revel scooters.
7) Officers mistakenly leave their LPR “on” collecting time zone enforcement data, but leave the area being enforced to drive to another location on another assignment, such as a traffic post at a collision scene. These hits are not enforced.

Genetec is the vendor for the ALPR Time Zone enforcement system. A “read” indicates the ALPR system successfully read a license plate. The information that is generated when a plate is viewed by the ALPR camera is the license plate number, state and geographical (GPS) location it was viewed. A “hit” indicates the ALPR system detected a possible violation, which prompts the Parking Enforcement Officer to further assess the vehicle. At “hit” is when the “read” information is recognized as a license plate that matches, or does not match an entry in a list such as permit list or the stolen vehicle “hot list”. In many cases, hits are “rejected” or “not enforced”, meaning no enforcement action is taken, because the Parking Enforcement Officer determines the vehicle has an appropriate placard or permit, or there is other information or assignment which precludes citation.

Summary of ALPR Booting Scofflaw Enforcement Data
0 vehicles booted from 10/1/21-9/30/22
The Berkeley Police Department no longer maintains the ALPR Booting Scofflaw Enforcement Program. The contract to provide this service became cost prohibitive and the city opted not to renew the contract with the vendor. The city returned to having each PEO working a beat again become responsible for recognizing when a license plate has accumulated five or more unpaid parking tickets.

Summary of ALPR Law Enforcement Investigative Inquiry Data 0 vehicle inquiries from 10/1/21-9/30/22
All BPD ALPR data may only be shared with other law enforcement or prosecutorial agencies for official law enforcement purposes, or as otherwise permitted by department policy and law. All ALPR data is subject to the provisions of BPD Policy 415 - Immigration Law, and therefore may not be shared with federal immigration enforcement officials.

Geographic
Deployment
Where applicable, non-privileged and non-confidential information about where the surveillance technology was deployed geographically.

Only Parking Enforcement Vehicles are equipped with ALPRs. ALPRs are deployed based on areas where there are parking time restrictions. ALPRs are not deployed based on geographic considerations not related to parking and scofflaw enforcement.

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Complaints A summary of each complaint, if any, received by the City about the Surveillance Technology.

There have been no complaints about the deployment and use of Automated License Plate Readers.

Audits and
Violations
The results of any non-privileged internal audits, any information about violations or potential violations of the Surveillance Use Policy, and any actions taken in response.

There have been no complaints of violations of the ALPR Surveillance Use Policy.

Data
Breaches
Non-privileged and non-confidential information about any data breaches or other unauthorized access to the data collected by the surveillance technology, including information about the scope of the breach and the actions taken in response.

There have been no known data breaches or other unauthorized access to Automated License Plate Reader data.

Effectiveness Information that helps the community assess whether the Surveillance Technology has been effective in achieving its identified outcomes.

ALPRs have proven effective in parking enforcement for time zone enforcement.

ALPRs have proven effective in supporting enforcement upon vehicles which have five or more unpaid citations. The ALPR’s ability to read and check license plates while being driven greatly increases efficiency, allowing an operator to cover larger areas more quickly without having to stop except to confirm a hit.

Costs Total annual costs for the Surveillance Technology, including personnel and other ongoing costs.

The annual system maintenance cost for Genetec is $51,720. This cost is borne by the Transportation Division, which covers warranties, support, and cellular connection costs.

Genetec ALPR units are installed on 22 Parking Enforcement vehicles. Parking Enforcement personnel perform a variety of parking enforcement activities, and are not limited solely to time zone enforcement. Therefore, personnel costs specifically attributable to time zone enforcement are not tracked.

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Surveillance Technology Report: Street Level Imagery Project October 1, 2021 – Sept. 30, 2022
Description
A description of all non-privileged and non-confidential information about the use of the Surveillance Technology, including but not limited to the quantity of data gathered and sharing of data, if any, with outside entities. If sharing has occurred, the report will include general, non-privileged and non-confidential information about recipient entities, including the names of the entities and purposes for such sharing.

Street level imagery is utilized exclusively by authorized City staff for infrastructure asset management and planning activities. The street level imagery of City infrastructure assets in the Public Right of Way that is provided to the City will not consist of information that is capable of being associated with any individual or group.

Geographic
Deployment
Where applicable, non-privileged and non-confidential information about where the surveillance technology was deployed geographically.

Street level imagery was collected by driving through the entire community over a three week period. It is accessible to the City through a proprietary third-party application, Street SmartTM.

Complaints
A summary of each complaint, if any, received by the City about the Surveillance Technology.

There have been no complaints about the use of Street Smart TM.

Audits and
Violations
The results of any non-privileged internal audits, any information about violations or potential violations of the Surveillance Use Policy, and any actions taken in response.

There have been no complaints with regards to violations of the Surveillance Use Policy.

Data
Breaches
Non-privileged and non-confidential information about any data breaches or other unauthorized access to the data collected by the surveillance technology, including information about the scope of the breach and the actions taken in response.

There have been no known data breaches or other unauthorized access to Cyclomedia Street Level Imagery data.

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Effectiveness
Information that helps the community assess whether the Surveillance Technology has been effective in achieving its identified outcomes.

Staff considered hiring contractors to use GPS in the field to create and update the infrastructure asset GIS data. This method is costly and time consuming.

Cyclomedia’s unique and patented processing techniques allow positionally- accurate GIS data to be collected in a cost-effective way and over a shorter period of time than a “boots on the ground” GPS field survey.

The Imagery extracted the following Citywide Infrastructure assets to create accurate and current Geographic Information Systems (GIS) data inventories:
• Bus pads / stops • Pavement marking • Maintenance Access Holes • Storm drains • Pavement Striping • Signs • Curb paint color • Street trees • Parking meters • Traffic lights • Pedestrian Signal
The street level imagery captured was also being used to:

Created a street sign GIS layer with condition assessment to support compliance with the Manual on Uniform Traffic Control Devices Code and provide an accurate inventory of City signs. The existing sign inventory is contained in a spreadsheet that does not have accurate location data.

Created a curb color layer with condition assessment to indicate where there are red, yellow, blue, white and green colors. This is critical to support Public Safety.

Created pavement striping and paint symbol layers to support Transportation Planning and Vision Zero.

Benefits Projected:

The data from the street level imagery is being integrated into the City’s work order and asset management system for planning activities and to document repair and maintenance.

Planners can use the street level imagery provided to the City to take measurements remotely, such as sidewalk width and public right of way impacts at proposed development locations.

City staff can use the street level imagery to plan the location of road markings for pedestrian crossings, bike lanes or other striping.

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City staff can remotely take accurate measurements of infrastructure assets to adequately plan for repair and replacement.

City staff can use street level imagery to enhance community engagement. The street level imagery can be used to identify and depict the impact of development such as an intersection restriping plan in order to article before and after conditions.

Costs
Total annual costs for the Surveillance Technology, including personnel and other ongoing costs.

The total cost of the system is $232,611 and is itemized below.

Year
No. Description Cost Notes
1 Licenses $48,000 Resolution No: 69,482-N.S. 30JUN20
1 Professional Services
for asset extraction $139,401 Resolution No: 69,482-N.S. 30JUN20 2 Licenses and Support –
One-Time $41,100 Resolution No: 70,487-N.S. 26JUL22
3 License and Support –
Ongoing Annual Costs $4,110 Resolution No: 70,487-N.S. 26JUL22