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<br />'1A'4 <br /> <br />The attached memorandum from Peter Kelly of Clover Capital (fmancial advisors to Archstone) attempts <br />to describe what they are giving for what they are getting with the tax exempt bond issue. <br /> <br />Under Interest Costs, the fmance director indicates that the 1.75% spread between the taxable and tax <br />exempt interest rates is generally accurate. <br /> <br />Under lease revenue, the current median income for San Mateo County is $74,900. 80% of this is $59,920. <br />If the residents pay no more than 30% of their income, this translates to a maximum monthly rent of <br />$1,498. <br /> <br />I take their word for the 'average' rent in the market-rate units being $2,300. A call to the project indicates <br />starting rents of$2,090 for one-bedrooms and $2,775 for two-bedrooms. We know that Irvine is getting <br />two-bedroom rents over $3,000 for their new units on Bair Island Road. At $2,300, Archstone is losing <br />$802 per month per unit, or $288,720 over a year for the entire 30 units. <br /> <br />The difference between their estimated interest savings and this rent 'loss' is $120,280 per year. At the <br />time of writing, they are offering the 30 affordable units until 2006 if the bonds have to mature in 2008. If <br />they can extend the bond maturity to 2010, they have offered to extend the affordable units until 2007, an <br />extra year. The following chart compares these two offers. The 2006 option assumes the 30 units <br />remaining affordable until 2006 and Archstone making the entire interest savings between taxable and tax <br />exempt rates in just the last two years. The 2007 option assumes Archstone gets approval to extend the <br />bond maturity to 2010 and provides the City with an extra year of afford ability, to 2007. Again, at the time <br />of writing there is no confirmation that Archstone has gotten bond counsel approval to extend the bond <br />maturity to 2010. <br /> <br />Comparison of 2006 and 2007 Affordability <br /> 2006 2007 <br />Years Affordability Affordability <br />2000 120,280 120,280 <br />2001 120,280 120,280 <br />2002 120,280 120,280 <br />2003 120,280 120,280 <br />2004 120,280 120,280 <br />2005 120,280 120,280 <br />2006 120,280 120,280 <br />2007 409,000 120,280 <br />2008 409,000 409,000 <br />2009 0 409,000 <br />2010 0 409,000 <br />Total 1,659,960 2,189,240 <br />