No, a real estate agent isn't falling down on the job. The 988-square-foot, two-bedroom condominium on Henning Court near Highway 85 and Winchester Boulevard is one of about 30 owner-occupied homes in the town's Below Market Price housing program. Another 30 or so properties have controlled rent rates.

Initiated in 1980 to address a lack of affordable housing in the area, the program requires that a certain number of below-market-price dwellings be included in new developments.

The condominium on Henning Court will sell for $202,800 to the most qualified buyer. According to an Alain Pinel real estate agent, a comparable home on nearby Palmer Drive is being listed for $619,000 and is expected to sell at that price.

In order to be considered for the home, applicants must make less than a predetermined amount of income. For one person, the cap is $74,300, and for two it is $84,900; the cap increases for up to six people.

Applicants are then awarded points based on several criteria. For example, someone over the age of 62 who has lived in town for at least the two last years receives six points. Another six points are awarded if he or she is handicapped. Additional points are given for those who are salaried town staff members, had to move out of town because of town council action or a mobile home park closure, are single parents or meet a number of other criteria.

The home is offered to the person with the most points. In the event of a tie, a lottery will be held.

Diana Moreno, a property specialist with the Santa Clara County Housing Authority, said she has a list of 250 people who are interested in the Below Market Price program.

To ensure the homes are used for their intended purpose, the housing authority and the town will oversee the property sales.

"The property has to be in the program for 59 years," Moreno said. "When someone wants to sell it, we come up with another qualified buyer."

Councilman Joe Pirzynski was on the council in 2000 when the program's guidelines were revised. He said he has heard nothing but praise for the town's attempts to provide lower-cost residences and that the town is "actively looking" at several properties to add to the program.

"If there's any frustration, it's in not being able to provide the number of units we'd like," Pirzynski said. "We've really always emphasized, in the last five or six years, the idea that we are going to find opportunities wherever they present themselves."

Community Services Director Regina Falkner said the town will add both new rentals and owner-occupied homes to the program soon. The controversial Sobrato development will contain several of those rentals.

Falkner said the program has been successful in ensuring that people of varying income levels can afford to live in Los Gatos. Formulas are used to determine reduced rent and sale prices based on low-income salaries. Even so, "cheap" is not a word often used in a community with median home prices near $1 million.

"The median price of a home in Los Gatos way exceeds what most people of lower income can afford," Falkner said. "There are a lot of people who ... simply don't make enough money to buy even a condominium or a detached unit."

But the Below Market Price housing program does contribute to the town's other efforts to provide affordable housing, such as offering no-interest loans to property owners with low-cost secondary units. In addition, 20 percent of the town's redevelopment agency funds must be used for lower-income dwellings.

Pirzynski said developers may choose to pay a fee if they do not wish to provide lower-cost units or if it is not feasible to do so. But so far, he said, nearly every new development has included such units—something he said the entire community seems to support.

"It's one of those things I think we're really dedicated to," he said. "It allows the fabric of the community to evolve in a natural way and not exclude individuals who could not otherwise afford to move in."

Applications and information for the 110 Henning Court property will be available at an open house on July 15 from 2 to 6 p.m. For additional information, call the town's Below Market Price information line at 408.361.4659.