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5 <br />B. Equity Sharing <br />All financial contributions provided by the County will be provided as a deferred <br />second loan secured by a forty (40) year Deed of Trust and Promissory Note, forgivable <br />at the end of 40 years. This Deed of Trust and Promissory Note shall constitute a lien on <br />the Property; subordinate only to private construction financing or permanent first <br />mortgage financing. <br />. The 99 year period of affordability for each individual housing unit will be <br />secured by a declaration of restrictive covenants that will incorporate a right of first <br />refusal that may be exercised by a sponsoring non profit organization and/or Orange <br />County. This declaration of restrictive covenants witl be further secured by a deed of <br />trust. <br />The non-profit organization and/or the County as applicable retains full <br />responsibility for compliance with the affordability requirement for assisted units <br />throughout the term of affordability, unless affordability restrictions are terminated due to <br />the sale of the Property to anon-qualified buyer. <br />If the buyer no longer uses the Property as a principal residence or is unable to <br />continue ownership, then the buyer must sell, transfer, or otherwise dispose of their <br />interest in the Properly only to a qualified. homebuyer, i.e., aloes-income household, one <br />whose combined income does not exceed 80% of the area median household income by <br />family size, as determined by the U.S. Department of Housing and Urban Development at <br />the time of the transfer, to use as their principal residence. <br />However, if the properly is sold during the term of affordability to anon-qualified <br />homebuyer to be used as their principal residence, the net sales proceeds (sales price <br />less: 1) selling cost, 2) the unpaid principal amount of the original first mortgage and <br />3) the unpaid principal amount of the initial County contribution and any other initial <br />government contribution secured by a deferred payment promissory note and deed of <br />trust) or "equity" will be divided 50/50 by the seller of the Property and the County. If <br />the initial County contribution does not have to be repaid because the sale occurs more <br />than forty years after the County contribution is made, then the seller of the Property and <br />the County will divide the entire equity realized from the sale. <br />Any proceeds from the recapture of funds under this provision will be used to <br />facilitate the acquisition, construction, and/or rehabilitation of housing for the <br />purposes of promoting affordable housing. <br />IV. Policy Review <br />This policy will be reviewed by County staff and officials within two (2} years of the <br />original approval date to ensure continued congruency with local affordable housing <br />programs. <br />Effective Date: April 3, 2000 <br />Revised: June 6, 2000 <br />3 Lthapolicy.doc <br />