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HomeMy WebLinkAbout09/07/2010, C2 - RESOLUTION APPROVING A GRANT APPLICATION FOR FIRST-TIME HOMEBUYER DOWN PAYMENT ASSISTANCE PROGRAM council j, acenda nepont ImmNux 2 C I T Y OF SAN L U IS O B 1 S F 0 FROM: Katie Lichtig, City Manager Prepared By: Michael Codron, Acting Assistant City Manager SUBJECT: RESOLUTION APPROVING A GRANT APPLICATION FOR FIRST- TIME HOMEBUYER DOWN PAYMENT ASSISTANCE PROGRAM RECOMMENDATION Repeal Resolution No. 10173 (20 10 Series) and adopt a new resolution authorizing the grant application for the Cal Home First-Time Homebuyer Program (FTHB). DISCUSSION Background On May 18, 2010, the City Council considered and adopted Resolution No. 10173 (2010 Series) authorizing an application to the State Department of Housing and Community Development (HCD) for First-time Homebuyer(CalHome/FTHB) program funds in the amount of$213,450. During the review of the application and approved resolution, HCD noticed inconsistencies regarding the program's name referenced in Resolution No. 10173 (2010 Series). The resolution references in part the BEGIN program instead of CalHome / FTHB. The agency therefore.asked for a corrected resolution stating the proper program title. HCD has indicated that the application was accepted and will be processed once the inconsistencies in the current resolution have been corrected. FISCAL IMPACTS The CalHome program is a grant program that does not require a local funding match. Staff has determined that these programs can be administered using existing staff resources and, therefore, the programs are not expected to impact the City's General Fund. To the extent that these funds reduce demand for direct assistance from the City's Affordable Housing Fund, the grants have a positive short-term fiscal impact on the City's Affordable Housing Fund. ATTACHMENTS 1. Council Agenda Report—May 18, 2010 2. Resolution No. 10173 (20 10 Series) 3. New Resolution authorizing FTHB application ZIA- MACHMENI I Council j AGenaa nepont e CITY OF SAN LUIS O B I S P O FROM: John Mandeville, Community Development Direct Prepared By: Michael Codron,Housing Programs Manager SUBJECT: AUTHORIZE GRANT APPLICATIONS FOR CALHOME BEGIN AND FIRST- TIME HOMEBUYER DOWN PAYMENT ASSISTANCE PROGRAMS. RECOMMENDATION Adopt two resolutions authorizing the proposed grant applications, and authorizing the City Manager to execute grant related documents,as follows: 1) Authorize the Community Development Department to apply to the California State Department of Housing and Community Development (HCD) for $631,000 of BEGIN program fimds for down payment assistance to ten qualified moderate- income homebuyers in the Housing Authority's Moylan Terrace project; and 2) Authorize the Community Development Department to apply to HCD for$213,450 of First-Time Homebuyer (FTHB) program funding, to provide down payment assistance to qualified low income homebuyers within the City of San Luis Obispo. DISCUSSION Situation On April 19, 2010, HCD released a series of Notices of Funding Availability(NOFAs) for their grant programs. The NOFAs include $40 million in new funds for the BEGIN program, and$50 million in funds for other CalHome programs, including the FTHB component. Both programs provide down payment assistance to first-time homebuyers. The BEGIN program targets specific projects, whereas FTHB provides funds that can be used by eligible buyers for any housing project in the City. The BEGIN program awards jurisdictions for actions that remove regulatory barriers to development of affordable housing. The Moylan Terrace project will qualify for a grant because the project received several entitlements, including rezoning, that make affordable housing feasible on the project site. In addition, the City provided financial assistance to HASLO for property acquisition, which will add to the overall score of the application. BEGIN funds target moderate income first-time homebuyers. FTHB program funds target low income first-time homebuyers. These funds are awarded to jurisdictions and can be used by qualified first-time homebuyers to purchase any owner-occupied housing in the City. In practice, housing prices in the City are too high for these funds to bridge the affordability gap between the low-income affordable price and the market price. As a result, 2 ATTACHMENT 1 CalHome Grant Aonlication Authorization Page 2 these funds are intended to be used to provide down payment assistance for buyers of designated low-income housing units within the Moylan Terrace project. Applications Consistent With Grant Management Policy The City of San Luis Obispo has adopted a grant management policy to insure that new grant programs are consistent with City goals and that there are sufficient resources to administer funds awarded through new grant programs (Attachment 1). In this case, the proposed grant-funded programs would not create a substantial new workload because staff is currently administering a BEGIN grant made to the Laurel Creek project, which is near completion. FTHB funding is intended to apply to homes in the City's Long-Term Affordability Program, which already necessitates substantial City staff involvement. The City's affordable housing programs are administered by the Housing Programs Manager; who is already involved in each affordable housing property transaction to certify that buyers meet all eligibility criteria. Although grant administration for BEGIN and FTHB would add to the workload,the grant funds would represent an exceptional public benefit by making affordable housing available to a much larger pool of potential homeowners. The proposed grants would also improve the City's ability to support affordable housing in the future because when the down payment assistance is repaid by the homeowner, the funds go into the City's Affordable Housing Fund to be used for other local housing programs or projects that are allowed under the CalHome guidelines. Funding Amounts Requested 1.BEGIN Program Staff is recommending a grant application in the amount of $631,000, which would provide sufficient down payment assistance to fund the purchase of 10 units by moderate income, first- time homebuyers. These ten units would include 5 two-bedroom units and 5 three-bedroom units. Each two-bedroom unit would include$59,425 of down payment assistance. Each three-bedroom unit would include $66,775. The table below illustrates how the BEGIN fiords would be used to make ten market-rate units in the project affordable to moderate-income homebuyers. Unit Size Moderate Expected Per Unit Number Total Affordable Price Market Price Subsidy of Units Assistance Required Assisted 2-bedroom $267,575 $327,000 $59,425 5 5297,125 3-bedroom $309,225 $376,000 $66,775 5 $333,875 Total 10 $631,000 Loans made through the BEGIN program are second, 30-year, mortgages. They earn interest for the City at 3% simple, and must be paid back when the unit is sold or at the end of the loan term. The BEGIN program is a grant program and loan proceeds are available to the City for reuse in . other CalHome eligible projects. Additional program guidelines are attached to this report (Attachment 2). cz- 3 ATTACHMENT 9 CalAome Grant Application Authorization Page 3 2. FTHB Program Staff is recommending a grant application in the amount of$213,450, which will provide down payment assistance for seven low-income units in the Moylan Terrace project, including 3 one- bedroom units, 2 two-bedroom units and 2 three-bedroom units. These funds are not intended to increase the total number of affordable units in the Moylan Terrace project, rather, they are expected to increase the pool of potential buyers for the low income units already designated in the project. FTHB down payment assistance would be used to provide up to a 20% down payment for qualified homebuyers,as illustrated in the following table. Unit Size Low Income Purchase 20%Down Number of Total Price Payment Units Assistance Assisted 1-bedroom $135,900 $27,180 3 $81,450 2-bedroom $153,000 $30,600 2 $61,200 3-bedroom $176,775 1 $35,355 12 1 $70,710 Total 17 J $213,360 Loans made through the FM program are also second, 30-year, mortgages. They earn interest for the City at 3% simple, and must be paid back when the unit is sold or at the end of the loan term. The FM program is a grant program and loan proceeds are available to the City for reuse in other CalHome eligible projects. Grant funding must be expended within 36 months of the award. The units types and grant amounts listed above are intended to match units available in the first phases of the development project. Additional FTHB program guidelines are attached to this report(Attachment 3). City Manager and Assistant City Manager to Execute Program Related Documents The attached resolutions provide the City Manager with the necessary authority to execute program related documents, including a standard agreement and any amendments thereto. The Assistant City Manager is also specifically authorized to execute BEGIN program related documents to facilitate program implementation. FISCAL IMPACTS The BEGIN and FTHB programs are grant programs that do not require a local funding match. Staff has determined that these programs can be administered using existing staff resources and, therefore, the programs are not expected to impact the general fund. To the extent that these funds reduce demand for direct assistance from the City's Affordable Housing Fund, the grants have a positive short-term fiscal impact on the Affordable Housing Fund. When the loans are repaid, they will provide a direct benefit to the Affordable Housing Fund by increasing the balance of funds available to support affordable housing projects that are consistent with CalHome program guidelines. ATTACHMENT CalHome Grant Application Authorization Page 4 ALTERNATIVES 1. The Council may modify the proposed grant application amounts. This alternative is not recommended because the identified funding amounts are chosen to comply with program guidelines, based on the number of units expected to be absorbed during a 36-month period after a grant award is made. 2. The Council may continue consideration of the recommended grant applications if more information is needed. Direction should be provided to staff to return to the Council with the information necessary to make a decision about the proposed grant applications. ATTACHMENTS 1. City of San Luis Obispo Grant Management.Policy 2. BEGIN Program Guidelines 3. Fl7HB Program Guidelines 4. Resolution authorizing BEGIN application 5. Resolution authorizing FTHB application G.SCD•PLA"CODRO"ousing\BEGN\HASLD\HASLA(BEGIN CAR).DOC c�-S ATTACHMENT2 RESOLUTION NO. 10173 (2010 Series) A RESOLUTION OF THE CITY OF SAN LUIS OBISPO AUTHORIZING AN APPLICATION IN THE AMOUNT OF$2139450 TO THE STATE DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT FOR FIRST TIME HOMEBUYER PROGRAM FUNDS. WHEREAS, the City of San Luis Obispo, a charter city and political subdivision of the State of California, wishes to apply for and receive an allocation of funds through the CalHome Program; and WHEREAS, the California Department of Housing and Community Development (hereinafter referred to as "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 Sections 50650) of Part 2 of Division 31 of the Health and Safety Code (the "statute"). Pursuant to the statute, HCD is authorized to approve funding allocation utilizing monies made available by the State legislature to the CalHome program, subject to the terms and conditions of the BEGIN Program Guidelines adopted as amended by HCD in April, 2004; and WHEREAS, the City of San Luis Obispo wishes to submit an application to obtain from HCD an allocation of BEGIN Program funds in the amount of$213,450;and WHEREAS, at the time of application, the City of San Luis Obispo has a Housing Element that is certified by HCD. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. Application. The City of San Luis Obispo shall submit to HCD an application to participate in the BEGIN Program in response to the NOFA issued on April 19, 2010, which will request a funding allocation for the First Time Homebuyer Program in the amount of$213,450, which may be used (but is not limited to) units designated for low income households in the Moylan Terrace project, as outlined in the following table: Unit Size Low Income Purchase 20%Down Number of Total Price Payment Units Assistance Assisted l-bedroom $135,900 $27,180 3 $81,450 2-bedroom $153,000 $30,600 2 $61,200 3-bedroom $176,775 1 $35,355 1 2 1 $70,710 Total 1 7 1 $213,360 SECTION 2. Elipible.Activities. If the application for funding is approved, the City of San Luis Obispo hereby agrees to 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. It also may execute any and all other instruments necessary or required by HCD for participation in the CalHome Program. R 10173 `D J ATTACHMENT 2 Resolution No. 10173 (2010 Series) Page 2 SECTION 3. Authorization. The City of San Luis Obispo authorizes the City Manager or the Assistant City Manager 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. Upon motion of Vice Mayor Carter, seconded by Council Member Ashbaugh, and on the following vote: AYES: Council Members Ashbaugh, Marx and Settle,Vice Mayor Carter and Mayor Romero NOES: None ABSENT: None The foregoing resolution was adopted this 18th day of May 2010. Mayor David F.Romero ATTEST: e�L Elaina Cano City Clerk APPROVED AS TO FORM: r Christine Dietrick City Attorney MACHMEIT3 RESOLUTION NO. XXX (2010 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO AUTHORIZING AN APPLICATION IN THE AMOUNT OF $2139450 TO THE STATE DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT FOR FIRST TIME HOMEBUYER PROGRAM FUNDS. WHEREAS, the City of San Luis Obispo, a charter city and political subdivision of the State of Califomia, wishes to apply for and receive an allocation of funds through the CalHome Program; and WHEREAS, the California Department of Housing and Community Development (hereinafter referred to as "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 Sections 50650) of Part 2 of Division 31 of the Health and Safety Code (the "statute"). Pursuant to the statute, HCD is authorized to approve funding allocation utilizing monies made available by the State legislature to the CalHome program. WHEREAS, the City of San Luis Obispo wishes to submit an application to obtain from HCD an allocation of CalHome Program funds in the-amount of$213,450; and WHEREAS, at the time of application, the City of San Luis Obispo has a Housing Element that is certified by HCD. WHEREAS, the City Council of the City of San Luis Obispo first authorized the CalHome application on May 18th, 2010, but was asked by HCD to reauthorize the application because of incorrect references in the previously approved Council Resolution No. 10173 (2010 Series); and NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. Application. The City of San Luis Obispo shall submit to HCD an application to participate in the CalHome Program in response to the NOFA issued on April 19, 2010, which will request a funding allocation for the First Time Homebuyer Program in the amount of$213,450, which may be used (but is not limited to) units designated for low income households in the Moylan Terrace project, as outlined in the following table: Unit Size Low Income Purchase 20% Down Number of Total Price Payment Units Assistance Assisted 1-bedroom $135,900 $27,180 3 $81,450 2-bedroom $153,000 $30,600 2 $61,200 3-bedroom $176,775 $35,355 2 $70,710 $213,360 _ . *. 7 Total R oZ 15 O ATTACHMENT 3 Resolution No. (2010 Series) Page 2 SECTION 2. Eligible Activities. If the application for funding is approved, the City of San Luis Obispo hereby agrees to 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. It also may execute any and all other instruments necessary or required by HCD for participation in the CalHome Program. SECTION 3. Authorization. The City of San Luis Obispo authorizes the City Manager or the Assistant City Manager 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. Upon motion of , seconded by , and on the following vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this 7th day of September, 2010: Mayor David F. Romero ATTEST: Elaina Cano, City Clerk AP EDA TO FO Ir Christine Dietrick, City Attorney cam- �