Calistoga has a 'silent second' program that was funded by a developer for 20 homes in one subdivision. The agreements are typical and allow for subordination. A homeowner has requested subordination to a revolving line of credit to put the city's note in third position (they wish to take some cash out of their equity). The new combined loan to value ratio will be 72.5%. The City has no subordination policies in place to deal with this request (this is a four year program and the question has not come up before). As usual in a small town, there is pressure to allow this to happen, but a concern with precedent. The staff is interested in what other Cities have done with subordinations and what adopted or administrative policies are out there. Your opinions would also be very helpful. The City Manager would like to take this issue to the City Council next week, so a quick response would be appreciated. Thanks in advance David Spilman Interim Finance Director City of Calistoga
