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CITY O F SAN LUIS O B I S P O
FROM: Doug Davidson, Acting Community Development Director
Prepared By: Tyler Corey, Housing Programs Manager
SUBJECT: AUTHORIZE A GRANT APPLICATION FOR THE CALHOME BEGIN
DOWN PAYMENT ASSISTANCE PROGRAM.
RECOMMENDATION
Adopt a resolution authorizing the Community Development Department to apply to the
California State Department of Housing and Community Development (HCD) for $973,409 of
BEGIN program funds for down payment assistance to 28 qualified low and moderate income
homebuyers in the Housing Authority of San Luis Obispo's (HASLO) Moylan Terrace project.
DISCUSSION
Background
On July 8, 2011, HCD released a series of Notices of Funding Availability(NOFAs) for its grant
programs. The NOFAs included $17 million in new funds for the BEGIN program. This
program provides down payment assistance to low and moderate income first-time homebuyers
in new project specific housing developments. The BEGIN program awards jurisdictions for
actions that remove regulatory barriers to development of affordable housing. The City was
successful in securing $300,000 in BEGIN funds in 2007 for down payment assistance to ten
units in the Laurel Creek development on Orcutt Road.
HASLO's Moylan Terrace project includes development of a 4.68-acre site with 80 townhome
units located on. Humbert Street. This project should qualify for a grant for the following
reasons: 1) At the time of application, the City has a General Plan Housing Element that is
certified by HCD; 2) The project received several entitlements, including a General Plan
amendment and rezoning, that make affordable housing feasible on the site; 3) The project site is
considered "infill" development; 4) The proposed unit allocation provides for 50% low income;
and 5) The City provided $600,000 in financial assistance from the Affordable Housing Fund
(AHF) to HASLO for property acquisition. All of these reasons add to the overall score of the
application and increase the chances of grant award.
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
program would not create a substantial new workload because staff is currently administering a
BEGIN grant made to the Laurel Creek project.
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
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CalHome BEGIN Grant Application Authorization
meet all eligibility criteria. Although grant administration for the BEGIN program 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 grant 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 Amount Requested
Staff is recommending a grant application for the BEGIN program in the amount of$973,409,
which would provide low and moderate income first-time homebuyers down payment assistance
to fund the purchase of 28 units (35% of the total units proposed in project). The income groups
for the 28 units include 14 low, 6 moderate and 8 at market rate. The market rate units are
eligible for BEGIN funds because the projected down payment subsidy will lower the purchase
price of the units to the moderate income price category.
The 10% down payment assistance provided to the low and moderate income units would allow
potential homebuyers to purchase the units at a lower cost than the maximum sales price
established by the City's Affordable Housing Standards, thereby attracting a larger pool of
potential buyers within those income groups. The 20% down payment assistance provided to the
market rate units would allow those units to be affordable to moderate income households. The
table below illustrates how the BEGIN funds would be used to make 28 low, moderate and
market-rate units in the project more affordable to low and moderate-income homebuyers.
Income Purchase Down BEGIN Total
Unit Size Group Price Payment Assisted Assistance
1-BR Low $139,200 $13,920 8 $111,360
2-BR Low $156,600 $15,660 4 $625640
3-BR Low $180,975 $18,098 2 $36,195
2-BR Moderate $274,050 $27,405 3 $82,215
3-BR Moderate $316,663 $31,666 3 $94,999
2-BR Market $335,000 $67,000 3 $201,000
3-BR Market $385,000 $77,000 5 $385,000
Total 28 $9737409
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).
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CalHome BEGIN Grant Application Authorization
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 program is a grant program that does not require a local funding match. Staff has
determined that this program can be administered using existing staff resources and, therefore,
the program is not expected to impact the City's General Fund. To the extent that these funds
reduce demand for direct assistance from the City's AHF, the grants have a positive short-term
fiscal impact on the AHF. When the loans are repaid, they will provide a direct benefit to the
AHF by increasing the balance of funds available to support affordable housing projects that are
consistent with CalHome program guidelines.
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. Select BEGIN Program Guidelines
3. Resolution authorizing BEGIN application
T:\Community Development\CARs\Ivtoylan Terrace BEGIN.DOC
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lkttachment 1
Section 701
GRANT MANAGEMENT POLICY
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 when 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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Attachment 1
Grant Management Policy
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 and delegates receipt and contract execution to the City
Manager if delegation is allowed by the grantor agency.
City Manager
I. 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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Attachment 1
Grant Management Policy
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.
3. Prepare grant applications.
a. Work with the grantor agency in identifying special program requirements and
developing strategies for preparing a successf il,grant application.
b. Complete grant application documents.
c. Coordinate with affected departments as necessary.
d. 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.
4. Administer grant programs if awarded.
a. 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.
b. Coordinate execution of grant documents by the City Manager and return executed
documents to grantor agency.
c. Notify affected departments of grant award.
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. Perform the grant workscope.
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Attachment 1
Grant Management Policy
5. Complete grant close-out.
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.
SINGLE AUDIT ACT REQUIREMENTS
Background
The City is subject to the financial and compliance requirements of the Single Audit Act of 1984,.
which is applicable to all local and state governments receiving federal financial assistance
exceeding $100,000 for a fiscal year. The purpose of the Act is to:
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Attachment 1
Grant Management Policy
1. Improve the financial management and accountability of state and local governments
with respect to federal financial assistance programs.
2. Establish uniform requirements for audits of federal grants.
3. Promote efficient and effective use of audit resources.
4. Assure that federal departments and agencies rely upon and use audit work performed
during a single audit rather than performing the audit work themselves.
Under this Act, federal grants are included under an inclusive single audit program that is
incorporated into the City's annual audit and financial report preparation process. During the
audit, tests are made to determine the adequacy of the internal control structure, including that
portion related to federal financial assistance programs, as well as to determine that the City has
complied with applicable laws and regulations.
City's Policy Regarding the Single Audit Approach
For federal grants included in the scope of the City's single audit approach, it is the City's policy
that all financial and compliance issues have been met through the single audit, and follow-up
audits to determine these issues are not necessary unless specifically related to findings or
recommendations included in the single audit report. As noted above, the purpose of the Act is
to establish uniform audit requirements, promote efficient use of audit resources, and assure that
federal agencies rely upon audit work already completed; its purpose is not to audit local
agencies twice. Accordingly, the City will strongly resist any efforts by federal agencies to
duplicate audit work already performed in complying with Act requirements. As such, whenever
federal grantor agencies request final audits, the managing department should notify the
Department of Finance in order to ensure a consistent response to these types of requests.
ATTACHMENT
Grant Summary Form
Approved by the Council on August 16, 1994(Resolution No. 8322)
Updated April 6,2009
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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.
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 when 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 considered an ineligible use of
BEGIN Program funds.
BEGIN Program Guidelines 10 of 43 Amended 4/21/09
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° ° Attachment 2
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 a sample regulatory relief matrix.
(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.
BEGIN Program Guidelines 11 of 43 Amended 4/21/09
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(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:
(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
BEGIN Program Guidelines 12 of 43 Amended 4/21/09
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Attachment 2
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:
(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.
BEGIN Program Guidelines 13 of 43 Amended 4/21/09
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Attachment 2
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;
(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
BEGIN Program Guidelines 14 of 43 Amended 4/21/09
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Attachment 2
(c) Recipients shall be required to enter into a long-term monitoring
agreement with the Department allowing the Department to monitor the
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.
(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.
BEGIN Program Guidelines 15 of 43 Amended 4/21/09
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Article 3. Mortgage Assistance Loan Requirements
Section 110. BEGIN Down payment Assistance Program Guidelines
Requirements
(a) BEGIN Program Recipients shall develop and employ Program 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:
(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.
BEGIN Program Guidelines 16 of 43 Amended 4/21/09
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Attachment 2
(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.
(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 homebuyer 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:
BEGIN Program Guidelines 17 of 43 Amended 4/21/09
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Attachment 2
(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 year (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 percent additional 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;
(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 U. S. Department of Agriculture, Rural Housing
Service 502 program 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.
BEGIN Program Guidelines 18 of 43 Amended 4/21/09
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Attachment 2
(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 to three (1 - 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.
Article 4. Project Requirements
Section 113. Developer Experience
The developer of a proposed BEGIN Program project shall demonstrate the
experience and capacity necessary to guarantee the successful completion of
the BEGIN Program project. In order to demonstrate this, the developer shall
have successfully developed a minimum of two affordable housing projects.
Section 114. Eligible Projects
(a) BEGIN projects shall be a newly constructed homeownership
development project whose units are designated as BEGIN Program units
and are sold to BEGIN Program eligible households with BEGIN Program
mortgage assistance.
(b) The types of BEGIN Program eligible homeownership units include:
(1) Single-family detached units;
(2) Attached homeownership units;
(3) Units in co-housing developments;
(4) Newly erected manufactured housing on a permanent foundation;
(5) Ownership of housing on long-term leasehold land that enables the
lessee to make improvements on and encumber the property and
has a term sufficient to secure the BEGIN Program loan such as;
(A) Planned Unit Developments;
(B) Community Land Trusts;
BEGIN Program Guidelines 19 of 43 Amended 4/21/09
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RESOLUTION NO. XXXX-11
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF SAN LUIS OBISPO AUTHORIZING AN APPLICATION IN THE
AMOUNT OF $9739409 TO THE STATE DEPARTMENT OF HOUSING AND
COMMUNITY DEVELOPMENT FOR BEGIN PROGRAM FUNDS TO PROVIDE
DOWN PAYMENT ASSISTANCE TO FIRST TIME HOMEBUYERS IN HASLO'S
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 April, 21, 2009; 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$973,409; and
WHEREAS, at the time of application, the City of San Luis Obispo has a General Plan
Housing Element that is certified by HCD.
BE IT RESOLVED, by the City 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 July 8,
2011, which will request a funding allocation for down payment assistance to first-time
homebuyers, consistent with BEGIN Program Guidelines, for 28 units in the Moylan Terrace
Project, including 14 low income, 6 moderate income and 8 at market rate, for a total of
$973,409, as follows:
Income Purchase - Down BEGIN Total
Unit Size Group Price Payment Assisted Assistance
1-BR Low $139,200 $13,920 8 $111,360
2-BR Low $156,600 $15,660 4 $62,640
3-BR Low $180,975 $18,098 2 $36,195
2-BR EModerate $274,050 $27,405 3 $82,215
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Resolution No. (2011 Series)
Attachment 3
Page 2
3-BR Moderate $316,663 $31,666 3 $94,999
2-BR Market $335,000 $67,000 3 $201,000
3-BR Market $385,000 $77,000 5 $385,000
Total 28 $9739409
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 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 passed and adopted this 19`h day of July, 2011.
Mayor Jan Marx
ATTEST:
Elaina Cano
City Clerk
APPROVED AS TO FORM:
Ahristine Dietrick
City Attorney
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