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<br />10 <br />3. Equity Sharing <br />With this approach, the share or percentage of future equity to the seller <br />attributable to the appreciation in the market value of the property is established at <br />the time the subsidy is provided to the homebuyer. Typically, the equity is shared <br />"50/50". Thus, at the time of sale during the period of affordability, 50% is paid <br />to the County and SO% to the seller. However, any rate may be established by the <br />County given the relationship between property value and income escalations in <br />the community. Any payments received by the County under this scenario could <br />be used for future first-time homebuyers. Typically, this approach is used in <br />mazkets where property values rise at a faster rate than incomes. <br />It is important to note that often times one of the Fair Market approaches described above aze <br />combined with the right of first refusal to create one type of "hybrid" model. Many other hybrid <br />models are also possible given the preference of the unit of local government operating afirst- <br />time homebuyer program. <br />Concluding Comments <br />In designing an effective .long-term affordability strategy, the following issues must be <br />considered: <br />- The primary goals of the program are 1) increasing the supply of permanently <br />affordable housing over an extended period of time and 2) increasing the number of <br />.homeowners in the community and potentially out of the "poverty cycle" must be <br />balanced; <br />- Affordability strategies normally limit the benefits of homeownership particularly <br />wealth building; and <br />- Implementation. of the strategies addressed in this report must be explained fully to <br />potential program .participants prior to receiving financial assistance with a home <br />purchase. <br />Sources: First-Time Homebuyers and the HOME Program, U.S. Department of Housing and <br />Urban Development, 1993. <br />The Community Land Trust Legal Manual, Institute for Community Economics, <br />1991. <br />Resale Formula Analysis, Community Land Trust in Orange County, 1999. <br />