HomeMy WebLinkAbout05/18/2010, C 9 - AUTHORIZE GRANT APPLICATIONS FOR CALHOME BEGIN AND FIRST-TIME HOMEBUYER DOWN PAYMENT ASSISTANCE PRO council °°°°��,�-�,�,
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CITY OF SAN LUIS OBISPO
FROM: John Mandeville, Community DevelopmentDirec�
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 funds 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,
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CalHome Grant Application 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 funds 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
Re uired Assisted
2-bedroom. $267,575 $327,000 $59,425 5 $297,125
3-bedroom $309,225 $376,000 $66,775 5 5333,875
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). /2 p,ma,
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CalHome 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 $35,355 2 $70,710
Total 7 $213,360
Loans made through the FTHB 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 FTHB 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-tern 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.
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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 afters 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. FTHB Program Guidelines
4. Resolution authorizing BEGIN application
5. Resolution authorizing FTHB application
G:SCD-PLAN\MCODRON\Housing\BEGIMHASLO\HASLO(BEGIN CAR).DOC
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Section 740
Attachment 1
POLICYGRANT-MANAGEMENT
OVERVIEW
With state-takeaways and continued decreases in key General Fund revenues, grant revenues
have become an even more important part of the City's overall resource picture, especially in
funding capital improvements. Although grant programs themselves are being reduced and
becoming more competitive, actively seeking out grant revenues that assist in achieving
identified City goals and objectives should nonetheless play a key role in the City's overall
financial health strategies.
The purpose of this policy is to set forth an overall framework for guiding the City's use and
management of grant resources.
GOALS
1. Set forth the importance of grant programs in accomplishing City goals and objectives.
2. Establish general concepts and framework for seeking and managing grant programs.
3. Identify roles and responsibilities in managing grant programs.
4. Establish criteria for evaluating the benefits and costs of grant programs.
5. Set forth the City's policy in complying with Single Audit Act requirements.
GENERAL CONCEPTS AND FRAMEWORK
1. The City will aggressively pursue grant funding from federal, state and other sources,
consistent with identified City goals and objectives.
2. Aside from entitlement grants, the City should focus its efforts on securing grants for capital
improvements. This approach will allow the City to compete for projects we might not
otherwise be able to afford while maintaining financial independence should future grant
sources diminish. Grants for operating purposes may be considered on a case-by-case basis
after careful consideration of the benefits of the program and the ongoing impacts on the City
if grant funding is no longer available.
3. Until the City's financial situation significantly improves, we should avoid grants that fund
"pilot" operating programs or short-term staffing enhancements to existing programs.
Taking on these programs could ultimately aggravate the City's fiscal position should the
desire for the program remain once the grant funding is no longer available.
4. The City will only seek grants`wh6n sufficient staff resources are available to effectively
administer the program in compliance with grant requirements and successfully perform the
grant workscope.
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740-1
Grant Management Policy
Attachment 1
5. Indirect costs of administering grant programs will be recovered to the maximum extent
feasible.
6. Operating departments have the primary responsibility for seeking out grant opportunities,
for preparing effective grant applications and for successfully managing grant programs after
they have been awarded.
7. Operating departments should develop a simple system that tracks grant funding availability
in their functional areas. Using this system, all capital improvement plan budget requests
will evaluate and document the ability of grants to assist in funding the project.
ROLES AND RESPONSIBILITIES
City Council
1. Approves grant management policies.
2. Approves all grant applications in excess of $5,000 and delegates receipt and contract
execution to the City Manager if delegation is allowed by the grantor agency.
City Manager
1. Receives grants and executes related contract documents when delegated to do so by the
Council.
2. Develops,recommends and maintains grant management policies.
Operating Departments
1. Develop systems for maintaining ongoing information regarding grant availability within
their functional areas of responsibility.
2. Evaluate benefits and costs of specific grant programs on a case-by-case basis:
a. Purpose of the grant program and its consistency with identified City goals and
objectives.
b. Additional staffing, office space, facilities, supplies or equipment that will be required if
the grant is awarded.
c. Ongoing impacts of the grant program after it is completed.
d. Responsibilities of other departments and impacts on them in preparing the grant
application or performing workscope if the grant is approved.
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740-2
Grant Management Policy Attachme 1
e. Amount of indirect costs to be recovered from the grant,
f. Total program costs, including portion funded through grant revenues and any required
City contribution.
g. Source of funding for any required City share.
h. Compliance and audit requirements, paying special attention to those areas where_ the
grantor's administrative procedures are different than the City's.
3. Prepare grant applications.
a. Work with the grantor agency in identifying special program requirements and
developing strategies for preparing a successful grant application.
b. Complete grant application documents.
c. Coordinate with affected departments as necessary.
d. For grants in excess of$5,000, prepare a Council agenda report requesting authorization
to seek grant funding. This report should describe the grant program's conformance with
this policy, including the results of the cost/benefit analysis.
e. For grants of $5,000 or less, submit the grant application, subject to the following
conditions:
• It will not add regular staffing.
• Any matching funds or in-kind contributions are already available within existing
resources, and no additional appropriation of unreserved, undesignated fund balance
or working capital is required.
• At the conclusion of the grant, there will no ongoing commitments or obligations to
continue the program.
• The purpose of the grant program is clearly consistent with current City plans,
policies and goals.
4. Administer grant programs if awarded.
a. For grants in excess of$5,000, prepare a City Manager Report (or Council agenda report
if required by the grantor agency) accepting grant award, including grant summary form
(see attached), budget amendment request and any other required City forms or
documents;and coordinate execution of grant documents by the City Manager and return
executed documents to grantor agency.
b. For grants of$5,000 or less, execute and return grant documents to grantor agency.
c. Notify affected departments of grant award.
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740-3
i 1
Grant Management Policy Attach l. 1
d. Maintain financial and other records in accordance with grant requirements.
e. Complete and submit required reports, including requests for funds.
f. Monitor grant expenditures and receipt of revenues.
g. Coordinate on-site management reviews by the grantor agency during the grant term.
h. Ensure compliance with grant requirements,paying special attention to those areas where
the grantor's administrative procedures are different than the City's.
i. Perform the grant workscope.
5. Complete grant closeout.
a. Complete the grant workscope.
b. Notify affected departments that the project is completed and schedule a "close-out"
meeting if necessary to resolve any final procedural issues.
c. Ensure final receipt of grant revenues.
d. Prepare and submit any required grant close-out documents.
e. Review grant file for completeness.
f. Retain all necessary program and financial records for the period of time required by
grantor agency.
g. Coordinate any on-site management reviews or audits after the grant is completed.
h. Resolve any audit findings.
i. Ensure that the City's policy regarding single audit act requirements is implemented as
discussed below.
Department of Finance& Information Technology
1. Provides technical assistance to operating departments in preparing grant applications,
submitting reports and maintaining records.
2. Coordinates preparation and distribution of single audit reports.
Other Departments
Provide assistance to the managing department as identified during the grant application and
award process.
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740-4
Attachment 2
Article 2. Program Requirements
Section 103. Applicant Eligibility Requirements
Eligible applicants for a BEGIN Program award include all cities and counties
within the State of California. An applicant can only apply to assist a BEGIN
Program project within its jurisdictional boundaries.
Section 104. Eligible Households
To be eligible to receive the benefits of BEGIN Program funding, an individual
household shall:
(a) Be a low-income or moderate-income household, when considering the
gross income of all household residents eighteen (18) years old or older.
(b) Include as borrowers on the BEGIN Program promissory note all persons
who will be on title to the property; and
(c) Be a first-time homebuyer and intend to occupy the home as a principal
place of residence for the first five (5) years.
BEGIN Program Guidelines 10 of 43 Amended 4/9/08 9�/
� Attachment 2
Section 105. Eligible and Ineligible Uses of Funds
BEGIN Program funds shall be used only for the following costs:
(a) Mortgage assistance for permanent financing of:
(1) A new homeownership dwelling unit ready for occupancy, or;
(2) A unit constructed using the self-help method. In the case of self-
help housing mortgage assistance, the BEGIN Program permanent
financing may be disbursed at time of lot purchase where the self-
help housing is being financed under the U. S. Department of
Agriculture, Rural Housing Service 502 program;
(b) Non-recurring loan closing costs;
(c) Any use not expressly listed as eligible is an ineligible use of BEGIN
Program funds.
Section 106. Regulatory Relief
The following regulatory concessions and development incentives represent
BEGIN Program eligible regulatory relief. If an applicant proposes to implement
an alternative measure or action, it must be approved by the Department in order
to receive points in any of the following categories. No regulatory relief points
can be awarded for any project located on a site that has been downzoned or
which was approved at a significantly lower density than allowed under existing
zoning prior to application. The BEGIN Program application must sufficiently
document the actions taken and ensure regulatory barrier removal was provided
to the development project. Documentation of the approval of the regulatory
action must be from the city or county, and contain a copy of the signed original
action by the final decision-making body (i.e., planning commission, board or
council). No points will be given for applications documenting regulatory relief
with staff level reports, correspondence or from minutes of council meetings or
other documentation that did not specifically approve the regulatory relief action
and include a direct connection to the project. This approval must be obtained
from the government agency, and be included in the application to demonstrate
the regulatory relief action has been formally approved at or before the time of
application. Examples of sufficient documentation include signed resolutions,
enabling legislation, amended and adopted codes, and development
agreements. Further, the application must include specific documentation of the
cost savings resulting from the regulatory relief in terms of development costs.
Applications must describe the requirement and costs before and after the
regulatory relief action and the dollar value of the difference in terms of
development costs. See Appendix 1 for sample regulatory relief matrix.
BEGIN Program Guidelines 11 of 43 Amended 4/9/08
Attachment 2
(1) Modification of Zoning, Density and Development Standards
Modification of Zoning, Density and Development Standards: The
application must demonstrate densities significantly above otherwise
allowable maximum densities or modify reduce or remove development
standards to increase the project's financial feasibility. The following are
examples of eligible zoning, density and development standard
modifications:
(a) An attached development with densities at least 20 percent higher
than under the zoning prior to the regulatory action and with a
minimum density of:
(1) 10 units per acre for rural areas
(2) 20 units per acre for surburban areas
(3) 30 units per acre for metropolitan areas.
See Appendix 2 for a table detailing these minimum densities by
jurisdiction.
(b) A single-family detached development must be approved
significantly above otherwise allowable densities and have a
minimum density of 10 units per acre.
(c) The project has removed, reduced or modified development
standards such as setbacks, square footage requirements,
minimum lot sizes, lot coverages, floor area ratios or height limits to
permit housing development in excess of the maximum allowable
density.
(d) Significantly reduced site improvements such as street widths or
reduce right-of way or easement dedication requirements for the
project from a prior standard.
(e) Lot consolidation: Significantly assisted project with lot
consolidation and/or assembly, including scattered sites.
(2) Reduction in Permit Processing and Procedures
To be eligible for points in this category, the application must demonstrate
cost savings in terms of development costs by measuring the difference
between the permit procedure or time before and after the regulatory relief
action. The following are examples of eligible regulatory relief:
BEGIN Program Guidelines 12 of 43 Amended 4/9/08
Attachment 2
(a) The project is located within an area for which a specific plan was
approved pursuant to Government Code Section 65450 et. seq.,
with subsequent ministerial approval or benefited from a tiered
environmental review with minimal subsequent environmental
review.
(b) Significant reduction in permit processing times, due to, for
example, elimination of separate or sequential project reviews.
Application must demonstrate cost savings to the development due
to review process reduction vs. standard processing times.
Applications will only be credited by demonstrating significant cost
reduction in permit processing time over the baseline standard
processing time.
(c) Ministerial approval of required entitlements.
(d) Streamlined design review, including:
(1) Staff level design review only for example, not requiring full
design committee review or other layers of review processes
were removed and development design approval was
expedited as a result.
(2) Local governments provide off-the-shelf prototype design
packages, for ministerial approval. The application must
demonstrate the significant cost savings or regulatory relief
provided to the development by this relief.
(3) Reduction of Parking Standards
Regulatory relief for parking standards should clearly demonstrate the
difference between the former and reduced standards and the cost
savings in terms of development costs. The following are examples of
eligible regulatory relief:
(a) Crediting on-street parking or shared residential/commercial
parking, toward minimum residential parking requirements.
(b) Carports (unenclosed garages) are permitted to satisfy at least a
portion of an enclosed garage parking requirement.
(c) Parking requirements, inclusive of visitor parking and parking for
persons with disabilities do not exceed:
BEGIN Program Guidelines 13 of 43 Amended 4/9/08 X9%2
Attachment 2
(1) Zero to One Bedrooms: One on-site parking space
(2) Two to Three Bedrooms: Two on-site parking spaces
(3) Four or More Bedrooms: Two and one-half parking spaces.
(4) Land Donation and Other Development Incentives
The local government provides incentives to directly and significantly
reduce development costs, such as land donation and environmental
remediation.
(5) Mitigation of Fees and Exactions
Fees were significantly reduced, deferred or waived for the project. Fee
reduction or waivers should be quantified in the application including a
comparison of the fees typically collected for comparable projects and
those required of the BEGIN Program project.
(6) Jurisdiction-wide Regulatory Relief Bonus Points
Projects which benefit from eligible regulatory relief that was implemented
through the revision of zoning standards or regulations as opposed to
relief provided through a variance process will be eligible for bonus points.
To be eligible,jurisdiction-wide regulatory relief actions must have been
taken after January 1, 2003. Applications must include copies of
documents demonstrating the action has been taken including resolutions
and revised zoning text or regulations.
Section 107. Local Program Administration
The Recipient shall implement the local program and be responsible for the
following activities:
(a) Marketing the local program;
(b) Determination of a household's income-eligibility pursuant to the income
requirements of these Guidelines;
(c) Compliance with the following requirements:
(1) Section 108 loan servicing requirements;
(2) Section 109 reuse account requirements;
(3) Section 110 BEGIN Program Downpayment Assistance Program
Guideline requirements;
BEGIN Program Guidelines 14 of 43 Amended 4/9/08
C?-Z3
�^ Attachment 2
(4) Section 111 BEGIN Program Downpayment Assistance Loan
Requirements;
(5) Section 112 Local Loan Administration Requirements.
(d) Disbursing funds on behalf of borrowers at the time of property acquisition;
(e) Maintaining complete and accurate records of all BEGIN Program loan
disbursements and repayments to ensure adherence to proper accounting
procedures for the BEGIN Program loans, which may be verified by the
Department and may be subject to a fiscal and programmatic audit;
(f) Complying with reporting requirements pursuant to Section 122; and
(g) Complying with all other locality requirements as set forth in these
Guidelines and all applicable federal and state regulations.
Section 108. Loan Servicing Requirements
(a) Recipients shall develop and employ a loan servicing plan acceptable to
the Department that shall be submitted to the Department for review and
approval.
(b) If loan servicing will be performed under a contract with a third party,.that
third party must be in the business of performing loan servicing; and
(c) Recipients shall be required to enter into a long-term monitoring
agreement with the Department allowing Department monitoring of loan
servicing for compliance with the Guidelines.
Section 109. Reuse Account
(a) BEGIN Program Recipients shall develop and employ a reuse account
plan acceptable to the Department that shall be submitted to the
Department for review and approval.
(1) All repayments of BEGIN Program loan principal and any BEGIN
Program loan interest shall be deposited into a separately
maintained reuse account governed by the reuse account plan
approved by the Department.
(2) Any interest earned on deposited BEGIN Program reuse funds
must accrue to the BEGIN Program identified funds and be reused
for first-time homebuyer downpayment assistance, home
rehabilitation, home buyer counseling, home acquisition and
rehabilitation, or self-help mortgage assistance for persons and
families of low- or moderate-income.
BEGIN Program Guidelines 15 of 43 Amended 4/9/08 e9'��
Attachment 2
(A) Borrower shall obtain the maximum first lien mortgage loan
with a term and interest rate from a mortgage lender
consistent with affordable housing costs as defined in each
program's Guidelines;
(B) Mortgage loans shall not include provisions for negative
amortization, principal increases, balloon payments or
deferred interest;
(6) Financing subordinate to the BEGIN Program loan:
(A) Fees and/or charges for subordinate financing shall be
consistent with industry standards;
(B) There must not be a balloon payment due before the
maturity date of the BEGIN Program loan;
(C) All subordinate financing provided shall defer principal and
interest payments for the term of the BEGIN Program loan;
(b) Cash out of escrow to borrowers is limited to the amount deposited into
escrow by the borrowers and not needed for any lender-required minimum
downpayment.
(c) Recipients must obtain title insurance that includes the amount of the
BEGIN Program loan at close of escrow.
(1) Fire insurance (and flood insurance where applicable) requirements
are as follows:
(2) Recipient must require borrowers to maintain insurance on the
property in an amount at least equal to the replacement value of the
improvements; and
(3) Recipient must be named as additional loss payee on the policy.
Section 111. BEGIN Downpayment Assistance Loan Requirements
(a) The maximum amount of the BEGIN Program Downpayment Assistance
loan shall not exceed 20 percent of the sale price of the BEGIN Program
assisted unit. The amount of the BEGIN Program loan will be determined
by the Recipient on a case-by-case basis using the method as described
in the Recipient's BEGIN Program Guidelines.
BEGIN Program Guidelines 17 of 43 Amended 4/9/08 9/s
h, "Attachment 2
(b) BEGIN Program loans shall be secured by the property or leasehold
interest, as applicable.
(c) The lien securing repayment of the BEGIN Program loan shall be
recorded in no lower than second position.
(d) the combined indebtedness (all loans) secured by the BEGIN Program
assisted unit shall not exceed one hundred (100) percent of the sales
price plus a maximum of up to five (5) percent of the sales price to cover
actual closing costs.
(e) Homebuyer BEGIN Program loans shall have the following terms and
conditions:
(1) Principal and interest payments shall be deferred for the term of the
BEGIN Program loan;
(2) Loans shall be repayable when the property ceases to be
continuously occupied by the home buyer in the first five years after
the date of recordation of the deed of trust securing the BEGIN
Program loan;
(3) Loans shall be repayable upon the BEGIN Program loan maturity
date;
(4) If at the loan maturity date, it is determined by the recipient that
repayment of the BEGIN Program loan causes a hardship to the
borrower,the recipient has two other options. They are:
(A) Amending the note and Deed of Trust to defer repayment of
the amount due at loan maturity, that is the original principal
and the accrued interest, for up to an additional 30 years (at
0 percent additional interest), this may be offered one time,
or;
(B) Converting the debt at loan maturity, that is the original
principal balance and any accrued interest, to an amortized
loan, repayable in 15 years at 0 percentadditional interest.
(5) Loans are assumable by another income-qualifying homebuyer
after five years from the recordation of the deed of trust securing
the BEGIN Program loan.
(6) The following transfers of interest shall not require the repayment of
the BEGIN Program loan:
(A) Transfer to a surviving joint tenant by devise, descent, or
operation of law on the death of a joint tenant;
BEGIN Program Guidelines 18 of 43 Amended 4/9/08 �9,��
Attachment 2
(b) Funds in the reuse account shall only be used by the Recipient for first-
time homebuyer downpayment assistance, home rehabilitation, home
buyer counseling, home acquisition and rehabilitation, or self-help
mortgage assistance for persons and families of low or moderate income.
(c) A portion of the funds deposited in the reuse account may be used to pay
for the delivery of BEGIN Program eligible activities funded from the reuse
account. The amount available to the Recipient to pay for activity delivery
is dependent upon the activity funded, and is calculated as a percentage
of the loan made to the low- or moderate-income household, or on a per-
unit basis, i.e.;
(1) 10 percent for mortgage assistance;
(2) 15 percent for owner-occupied rehabilitation, and home acquisition
with rehabilitation;
(3) $350 for homebuyer education for each closed mortgage
assistance loan where homebuyer education was provided;
(4) Up to $20,000 per unit for technical assistance on a self-help
housing development project.
(d) Recipients shall be required to enter into a long-term monitoring
agreement with the Department allowing Department monitoring of reuse
accounts for compliance with these Guidelines.
Article 3. Mortgage Assistance Loan Requirements
Section 110. BEGIN Downpayment Assistance Program Guidelines
Requirements
(a) BEGIN Program Recipients shall develop and employ Mortgage
Assistance Program Underwriting Guidelines that have been submitted to
and approved by the Department as addressing the following underwriting
topics:
(1) Method for determining the sales price of BEGIN Program assisted
units as affordable to BEGIN Program eligible households;
(2) Method for establishing the amount of the BEGIN Program
Downpayment Assistance loan;
(3) Establish front- and back-end ratios used to qualify the borrower;
(4) What criteria will be used to determine the credit worthiness of the
borrower;
(5) Requirements for the first mortgage:
BEGIN Program Guidelines 16 of 43 Amended 4/9/08 Cj_��
Attachment 2
(B) A transfer, in which the transferee is a person who occupies or
will occupy the property, which is:.
(i) A transfer where the spouse becomes an owner of the
property;
(ii) A transfer resulting from a decree of dissolution of
marriage, legal separation agreement, or from an
incidental property settlement agreement by which the
spouse becomes an owner of the property; or
(iii) A transfer into an inter vivos trust which the borrower is
and remains the beneficiary and occupant of the
property.
(7) The term for first-time homebuyer mortgage assistance BEGIN
Program loans shall be thirty (30) years with the following
exception: when United States Department of Agriculture, Rural
Housing Service (USDA-RHS) 502 mortgage loans are in first lien
position, the term shall be the term of the 502 mortgage (30 to 38
years); and
(8) A borrower may pay the BEGIN Program loan amount, in part or in
whole, at any time without penalty.
(f) All BEGIN Program assistance to individual households shall be made in
the form of a loan. Recipients may make BEGIN Program loans bearing
simple interest of one (1 percent)to three (3 percent) percent per annum.
(g) In any loan transaction where the BEGIN Program loan is the only
subsidy, the borrower cannot be restricted from selling the home at its fair
market value at any time.
Section 112. Local Loan Administration Requirements
The recipient of BEGIN Program funds to operate a local mortgage assistance
program shall be responsible for the following activities:
(a) Providing information and assistance to first-time homebuyers on
obtaining maximum amount of first mortgage financing pursuant to the
underwriting requirements in Section 111; and
(b) Originating, underwriting, packaging and closing BEGIN Program loans in
accordance with program requirements.
BEGIN Program Guidelines 19 of 43 Amended 4/9/08 Cli L}_�-
Lbp �grinipat ma only rlajo
t3
portion of the net appreciation. That maximum portion of the t
appreciation which may be claimed by the recipient is equal the
percentage of the value of the residence financed by the ome
Program loan. That is, if the loan equals twenty percent ( /o) of the
initial value of the residence, a maximum of twenty perce 20%) of the
appreciation may be charged by recipient.
(f) In any loan transaction where the CalHome Program to the only subsidy, the
borrower cannot be restricted from selling the home a s fair market value at any
time.
NOTE: Authority cited: Sections 50406(n) and 50650.2, alth and Safety Code. Reference:
50650.3(b) and 50650.7, Health and Safety Code.
Section 7727. Homeowner/Homebuyer Loan-t alue Limits.
(a) The loan-to-value ratio for mortgage assistance CalHome Program loan, when
combined with all oth ndebtedness to be secured by the property, shall not
exceed one hundre 0)percent of the sales price plus a maximum of up to five
(5)percent of ales price to cover actual closing costs.
(b) The to o-value ratio for an owner-occupied rehabilitation CalHome Program
to hen combined with all other indebtedness secured by the property, shall
exceed one hundred-five (105) percent of the after-rehabilitation value
estimated pursuant to Section 7735(b)(1).
N Authority cited: Sections 50406(n) and 50650.2, Health and Safety Code. Reference:
Article 4. Mortgage Assistance Programs.
Section 7728. Eligibility Requirements.
In addition to the requirements of Section 7717, to be eligible to apply for CalHome funding for
a mortgage assistance program, the applicant shall have successfully administered a homebuyer
program for a minimum of two years within the four years immediately preceding the
application.
NOTE: Authority cited: Sections 50406(n) and 50650.2, Health and Safety Code. Reference:
50650.4, Health and Safety Code.
Section 7729. Eligible Costs.
CalHome funds in support of a mortgage assistance program shall be used only for the following
costs:
Approved Regulations— 04104 Page 17 of 40
(a) Mortgage akocance for permanent financing of: ") Attachment
3
(1) a dwelling unit ready for occupancy; or
(2) a unit acquired by a loan such as a HUD FHA 203(k) loan. This includes
self-help housing mortgage assistance, except that CalHome permanent
financing may be disbursed at time of lot purchase where the self-help
housing is being financed under the U. S. Department of Agriculture,
Rural Housing Service 502 program;
(b) Homebuyer education, which will be reimbursed in the form of a grant from the
Department to the Recipient in an amount not to exceed the maximum published
in the current NOFA.
(c) Non-recurring loan closing costs.
(d) A CalHome loan-processing activity delivery fee not to exceed the maximum
amount published in the current NOFA will be reimbursed in the form of a grant
from the Department to the Recipient.
NOTE: Authority cited: Sections 50406(n) and 50650.2, Health and Safety Code. Reference:
50650.3(b), Health and Safety Code.
Section 7730. Local Program Administration Responsibilities.
The recipient of CalHome funds to operate a local mortgage assistance program shall be
responsible for the following activities:
(a) providing information and assistance to first-time homebuyers on obtaining
maximum amount of first mortgage financing pursuant to the underwriting
requirements in Section 7731;
(b) reviewing CalHome required appraisals for property eligibility under value limits
established pursuant to Section 7731(b)(3). The appraised value shall not exceed
these limits;
(c) in the case of acquisition of existing housing, the Recipient shall be responsible
for inspection of properties to be purchased or a review of Uniform Residential
Appraisal Reports, including the Valuation Conditions, to ensure that they
conform to the requirements of State Housing Law (California Health and Safety
Code, Section 17910 et seq.);
(d) ensuring completion by each assisted household of a homebuyer education class
that meets the requirements of Section 7722; and
(e) originating, underwriting, packaging and closing. CalHome Program loans in
accordance with program requirements.
Approved Regulations— 04104 Page 18 of 40 eq-0,20
Attachment 3
NOTE: Authority cited: Sections 50406(n) and 50650.2, Health and Safety Code. Reference:
50650.3(b) and 50650.7, Health and Safety Code.
Section 7731. Mortgage Assistance Underwriting Requirements.
(a) CalHome Recipients shall develop and employ Mortgage Assistance Program
Underwriting Guidelines that have been submitted to and approved by the
Department as addressing the following underwriting topics:
(1) establish front and back-end ratios used to qualify the borrower;
(2) what criteria will be used to determine the credit worthiness of the
borrower;
(3) requirements for the first mortgage:
(A) Borrower shall obtain the maximum first lien mortgage loan with a
tenn and interest rate from a mortgage lender consistent with
affordable housing costs as defined in each program's guidelines.
(B) Mortgage loans shall not include provisions for negative amortization,
principal increases,balloon payments or deferred interest
(4) financing subordinate to the CalHome Program loan:
(A) fees and/or charges for subordinate financing shall be reasonable loan
origination fees for first mortgage financing as determined by the
Department to be consistent with industry standards;
(B) there must not be a balloon payment due before the maturity date of the
CalHome Program loan;
(C) all subordinate financing provided shall defer principal and interest
payments for the term of the CalHome Program loan;
(b) Prior to close of escrow, the Recipient shall ensure that an appraisal has been
obtained which meets the following requirements:
(1) the appraisal shall be prepared by a State-licensed,residential property
appraiser;
(2) the appraisal shall use the sales of comparable properties approach to
determine value; and
Approved Regulations— 04104 Page 19 of 40 e�a
11 Attacht 3
(3) max�3num appraised home values at time ofpu,.nase or upon cApe e o
of acquisition/rehabilitation work shall not exceed the appraised value
limit established by the Department and published in the NOFA.
(c) Cash out of escrow to borrowers are limited to the amount deposited into escrow
by the borrowers and not needed for any lender-required minimum down-
payment.
(d) Recipients must obtain title insurance in the amount of the CalHome Program
loan at close of escrow.
(e) Fire insurance (and flood insurance where applicable)requirements are as
follows:
(1) Recipient must require borrowers to maintain insurance on the property in
an amount at least equal to the replacement value of the improvements;
and
(2) Recipient must be named as additional loss payee on the policy.
NOTE: Authority cited: Sections 50406(n) and 50650.2, Health and Safety Code. Reference:
50650.3(b) and 50650.7,Health and Safety Code.
Section 7732. Eligibility Requirements.
In addition to the requirements of Section 7717, to be eligible to apply for C e assistance
for an owner-occupied rehabilitation program, the applicant shall have su sfully administered
a local owner-occupied rehabilitation program for a minimum of tw ars within the four years
immediately preceding the application.
NOTE: Authority cited: Sections 50406(n) and 50 , Health and Safety Code. Reference:
50650.4 and 50650.7, Health and Safety Code.
Section 7733. Eligible Costs.
Ca1HHome funds in suppo an owner-occupied rehabilitation program shall be used only for
the following costs:
(a). st of rehabilitation of the property, as defined in Section 7716(11).
). Cost of building permits and other related government fees.
(c). Cost of an appraisal, architectural, engineering, and other consultant services that
Approved Regulations— 04104 Page 20 of 40 �.as
Attachment 4
RESOLUTION NO. (2010 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
AUTHORIZING AN APPLICATION IN THE AMOUNT OF$6319000 TO THE STATE
DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT FOR BEGIN
PROGRAM FUNDS TO PROVIDE DOWN PAYMENT ASSISTANCE TO FIRST TIME
HOMEBUYERS IN HASL09S MOYLAN TERRACE PROJECT.
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 BEGIN
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
BEGIN Program established by Chapter 14.5, Sections 50860 through 50866 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 BEGIN program, subject to the terms and conditions of the BEGIN Program Guidelines
adopted as amended by HCD on May,21, 2007; and
WHEREAS, the City of San Luis Obispo wishes to submit an application to obtain from
HCD an allocation not BEGIN Program funds in the amount of$631,000; 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 down payment assistance to first-time
homebuyers, consistent with BEGIN Program Guidelines, for ten units in the Moylan Terrace
Project, including five two-bedroom units and five three-bedroom units, for a total of$631,000,
as follows:
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 $297,125
3-bedroom $309,225 $376,000 $66,775 5 $333,875
Total 10 $631,000
SECTION 2. Eligible Activities. If the application for funding is approved, the City of
San Luis Obispo hereby agrees to use the BEGIN Program funds for eligible activities in the
manner presented in the application as approved by HCD and in accordance with program
R s 9-a3
ATTACHMENT
Resolution No. (2010 Series)
Page 2
Guidelines as cited above. It also may execute any and all other instruments necessary or required
by HCD for participation in the BEGIN 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 BEGIN program, and any amendments thereto.
Upon motion of seconded by
and on the following vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this 18th day of May, 2010.
Mayor David F. Romero
ATTEST:
Elaina Cano, City Clerk
APPROVED AS TO FORM:
stine Dietrick, City Attorney
9-C�y
7 Attachment 5
RESOLUTION NO. (2010 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
AUTHORIZING AN APPLICATION IN THE AMOUNT OF$213,450 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 not 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
1-bedroom $135,900 $27,180 3 $81,450
2-bedroom $153,00.0 $30,600 2 $611200
3-bedroom $176,775 1 $35,355 2 $70,710
Total 7 $213,360
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
R
C -as
t7TACHMENT 5
Resolution No. (2010 Series)
Page 2
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 18th day of May, 2010.
Mayor David F. Romero
ATTEST:
Elaina Cano, City Clerk
APPROVED AS TO FORM:
GVs'tine Dietrick, Ci FAttorney