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HomeMy WebLinkAbout09/20/2005, C2 - AUTHORIZATION OF APPLICATION TO THE CALIFORNIA STATE DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMEN council acEnaa uEpoizt `w.N=9. CITY OF SAN LUIS 0 B I S P 0 FROM: John Mandeville,Community Development Direc Prepared By: Doug Davidson,Housing Programs Manager SUBJECT: AUTHORIZATION OF APPLICATION TO THE CALIFORNIA STATE DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT (HCD) FOR FUNDING UNDER THE CALHOME PROGRAM(PROPOSITION 46) CAO RECOMMENDATION Adopt a resolution authorizing staff to complete and submit an application to HCD for CalHome Program funds in the amount of $500,000 to be used for first-time home buyers mortgage assistance. DISCUSSION On August 10, 2005, HCD issued a Notice of Funding Availability (NOFA) for approximately$25 Million of CalHome program funds. These funds are made available as a result of Proposition 46, the Housing and Emergency Shelter Act of 2002; a $2.1 Billion bond measure approved by California voters in 2002.. The maximum funding amount for any one jurisdiction is $500,000. The grant application deadline is October 12, 2005 with funds to be awarded sometime in early 2006. A similar application for CalHome funds last year was not successful. While CalHome grants remain very competitive,the City has been awarded two grants for homebuyer assistance in the last year: 2005 federal HOME funds ($231,000) and the BEGIN Program ($300,000) targeted to the Tumbling Waters project. These two grants improve the City's grant holdings and experience and could make the difference for CalHome funding this year. CalHome funds would be used as low interest, deferred payment (or "silent") second trust deed loans to qualified low-income households for purchase of their first home.- The funds can be used for "gap" financing, down payment assistance, and closing costs and are designed for first-time homebuyers; with incomes at 80% or less of the County median. It is anticipated that about five loans could be made with this grant. The large "gap" between what a low-income family can afford and the price of a home in San Luis Obispo limits the effectiveness of this type of program. Some might question if the program is worth the time and effort if only about five loans could be funded. Staff believes that it is worthwhile for several reasons: Authorization to Apply for CalHome Grant Funds Page 2 1. For the five families receiving funds it.would be a life-changing event not possible without assistance. 2. Five more families could become homeowners than if the State funds were not pursued. 3. It continues the strong efforts of the City to obtain Proposition 46 funds while they are still available. 4. CalHome funds would combine with the City's federal HOME funds to establish the foundation for a City mortgage assistance program. 5. The Housing Element contains several policies and programs to provide assistance to first- time home buyers.. Foremost among them: a. "Assist with the issuance of bonds, tax credit financing, loan underwriting, or other financial tools to help develop or preserve affordable units through various programs, including, but not limited to: (1) below-market financing and (2) subsidized mortgages for very-low, low, and moderate income persons and first-time home buyers; and (3) self-help or"sweat equity"homeowner housing." (Program 2.3.9) b. "Actively seek new revenue sources, including State, Federal, and private/nonprofit sources, and financing mechanisms to assist affordable housing development and first- time home buyer assistance programs." (Program 6.3.13) Proposition 46 funds are one piece of the affordable housing puzzle. In conjunction with Housing Element incentives, Federal CDBG/HOME funds, and the City's Affordable Housing Fund they can make a difference. Staff time will be spent primarily on putting together the application, and if successful; managing. the program. The participating lenders will be setting up the qualified homebuyers with their conventional first mortgage. The Housing Authority has offered to process and service the CalHome loans. The City's application is enhanced by having the Housing Authority as a partner. FISCAL IMPACT Proposition 46 funds will have an overall beneficial fiscal impact. No impact on the General Fund will result, as CalHome funds are grants with no local matching requirements. ALTERNATIVE The Council could decide not to pursue this State loan program. This is not the recommended approach. One of the highest priorities for the Housing Programs Manager is to "aggressively pursue State housing grants and loans." The opportunity for this piece of the Proposition 46 funds would be lost entirely by not making.the application. Attachment Attachment 1 —Resolution Mprop4&CCC.dHomeAuthor2Rpt Attachment 1 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL.OF THE CITY OF SAN LUIS OBISPO AUTHORING SUBMITTAL OF AN APPLICATION TO THE CALIFORNIA STATE DEPARTMENT OF HOUSING.AND COMMUNITY DEVELOPMENT (HCD)FOR FUNDING UNDER THE CALHOME PROGRAM (PROPOSITION 46); THE EXECUTION OF A STANDARD AGREEMENT IF SELECTED FOR SUCH FUNDING AND ANY AMENDMENTS THERETO; AND ANY RELATED DOCUMENTS NECESSARY TO PARTICIPATE IN THE CALHOME PROGRAM WHEREAS, the City of San Luis Obispo, a political subdivision of the state of California, wishes to apply for and receive an allocation of funds through the CalHome Program; and WHEREAS, HCD has issued a Notice of Funding Availability (NOFA) for the CalHome program established by Chapter 84, Statutes of 2000 (SB 1656 Alarcon), and codified in Chapter 6 (commencing with Section 59650) of Part 2 of Division 31 of the Health and Safety Code (the "statute"); and WHEREAS;pursuant.to the statute,HCD is authorized to approve funding allocation using monies made available by the State Legislature to the CalHome program, subject to the terms and conditions of the statute and the CalHome Program Regulations adopted by HCD on August 15, .2003; and WHEREAS, the City of San Luis Obispo wishes to submit an application to obtain from HCD an allocation of Cal Home funds in the amount of$500,000;and WHEREAS,the City's Housing Element contains policies and programs to actively pursue State grants available through Proposition 46. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of San Luis Obispo hereby: 1. Authorizes the filing of an application to HCD to participate in the CalHome Program in response to the NOFA issued on August 10, 2005; and . 2. Directs that the application will request a funding allocation of Cal Home funds in the amount of $500,000 to provide mortgage assistance to low-income first-time home buyers in the City of San Luis Obispo. 3. Agrees that if the application is approved, use the CalHome funds for eligible activities in the manner presented in the application as approved by HCD and in accordance with program regulations cited above. The City may also execute any and all other instruments necessary or required by HCD for participation in the CalHome Program. Attachment 1 7* Resolution No.. Page 2 4. Authorizes the City Administrative Officer to execute in the name of the City of San Luis Obispo, the application, the Standard Agreement, and all other documents required by HCD for participation in the CalHome Program,and any amendments thereto. Onmotionof ------ ---- seconded by and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was passed adopted this 20th day of September 2005. David F. Romero,. Mayor ATTEST: A udrey Hooper, City Clerk APPROVED AS TO FORM: Jo t Lowell, City Attorney dd/ftop46/C0UHorfi.eAuthor2Reso