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s o � ANALYSIS Since plan adoption, staff has coordinated with local financial institutions, builders, contractors, non-profit organizations, and applicants to implement the local housing assistance program. In working with the program, the various participants have identified issues that should be addressed in the. plan revision process. These issues are: 1. Minor Revisions Minor revisions to the plan are necessary to clarify the intent of the plan and better describe the various assistance strategies. Revisions are also necessary to update the income, rent, allocation, and estimated SHIP fund expenditures tables to correspond with new fiscal year information as well as with actual trends identified in the'last 4 months by the county. These revisions have been made in the proposed revised plan and can be identified by and underlines. 2. Recapture Provision When the County's Local Housing Assistance Plan *was adopted in April, 1993, State requirements mandated that Local Housing Assistance Programs have recapture provisions identical to those specified in Section 143(m) of the Internal Revenue Code of 1986. Since then, however, the state has revised its requirement. The current state rule requires that Local Housing Assistance programs incorporate a recapture provision, but the rule allows each participating local government to structure its own recapture provision. Accordingly, staff has developed a simplified recapture provision (described on page 44 of the plan). As revised, the county's recapture provision provides that 50% of any profit realized by the sale of an assisted unit will be recaptured by the program if the assisted unit is sold within the first year after loan closing or assumption. That percentage will be reduced by 5 percentage points each year and will be eliminated after 10 years. 3. Interest Rate According to staff research, most local governments throughout the state charge a low interest rate with no compounding, and some charge no interest for SHIP loans. Currently, the County's Local Housing Assistance Plan reflects a 3% interest rate compounded annually. Staff and the Affordable Housing Advisory Committee propose to eliminate the compounding provision for SHIP loans. Both staff and the committee also recommend that no interest be charged to very low income persons. 4. Affordability Timeframe Throughout the state, local governments have various timeframes for maintaining housing affordability. The county's intention is to maintain housing unit affordability as long as possible to expand the county's affordable housing stock. For -that reason, the County's 25 NOW . 12 PACE : 49