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6.E. - Page 13 of 16 Attachment 1 7.A. - Page 7 income residents, many of whom have lived in the apartment complex for years. This strategy has two key positive aspects: 1) it preserves existing "naturally affordable" apartment complexes, many of which in the region have been recently bought, rehabilitated and been subject to substantial rent increases that existing residents cannot afford, and 2) it typically creates deed restricted affordable units at a much lower cost than the production of new units. This type of activity preserves "naturally affordable" rental housing and converts it to permanent affordable housing and prevents displacement. This is both a short and midterm housing solution. A tradeoff with this approach is that, compared to new construction, older units may not be accessible for persons with disabilities, may have few or no amenities and may have higher repair and maintenance costs. Land acquisition for the construction of affordable housing is usually completed by the City providing funds to nonprofit mission -driven housing organizations. The nonprofit developer uses the City funds along with other financing to purchase and build the units, which are deed restricted by the City for up to 55 years. This is a longer term housing solution as these types of activities take several years to complete, however the new units are fully accessible, come with modern amenities, are energy efficient and in close proximity to public transit and other community amenities. Funding Guideline Recommendations for Use of Affordable Housing Funds After considering community input and the tradeoffs involved in various approaches, staff recommends allocating Affordable Housing Fund proceeds for five primary affordable housing activities: 1. Acquisition of existing multifamily housing for conversion to deed restricted affordable housing 2. New construction of affordable housing including site acquisition for development of affordable housing 3. Acquisition and rehabilitation of existing multifamily housing for conversion to deed restricted affordable housing 4. Rehabilitation of existing deed -restricted affordable housing 5. Refinance of existing deed -restricted affordable housing to preserve affordability. The City receives multiple inquiries and requests for funds to support affordable housing acquisition, acquisition and rehabilitation, refinance of affordable housing, new construction and site acquisition. Generally the requests for funds exceed the amount the City has available and the allocation guidelines provide the City with criteria for recommending funds to projects based on how closely they meet the City funding priorities. Exceptions to the guidelines may be considered by the City on a case by case basis to ensure the City has the flexibility to invest funds in affordable housing when 122