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Home My WebLink AboutR31-Economic Development Agency ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ORIGINAL FROM: Maggie Pacheco Interim Executive Director SUBJECT: Implementation of a Homebuyer Assistance Program - California State University San Bernardino DATE: November 9, 2005 ----------------------------------------------------------------------------------------._-------------------._-----------------------------._---------------------------------------------------------------------------- Synopsis of Previous Commission/CounciVCommittee Action(s): On November 8, 2005, Redevelopment Committee Chairperson, Estrada forwarded this item to the Community Development Commission without a recommendation due to a lack of a quorum. --------------------------------._---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Recommended Motion(s): (Communitv Development Commission) MOTION: That the Community Development Commission approve the Implementation of the Homebuyer Assistance Program for California State University San Bernardino .-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Contact Person(s): Project Area(s): Maggie Pacheco City Wide Phone: (909) 663-1044 1-7 Ward(s): Supporting Data Attached: 0 Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Letters 1,000,000 FUNDING REQUIREMENTS: Amount: $ Annually Source: LowlMod Funds / Budget Authority: See Fiscal Impact SIGNATURE: .~ .;J " ,/:lL-L~a).c"=-=/"o"l",-, /;; Barbara Lindseth, Director Admin. Services .-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Commission/Council Notes: ----------------------------------------------------~--------------------------------------------------------------------------------------------------------------------------------------------------- P:\Agendas\Comm Dev Commission\CDC 2005\05-11-21 CSUSB-Homebuyer Assistance Program SR. doc COMMISSION MEETING AGENDA Meeting Date: 11/21/2005 Agenda Item Number: 1<3/ ECONOMIC DEVELOPMENT AGENCY STAFF REPORT IMPLEMENTATION OF A HOMEBUYER ASSISTANCE PROGRAM- CALIFORNIA STATE UNIVERSITY SAN BERNARDINO Backl!round/Current Issue: On October 3, 2005, City and Agency staff met with Dr. Karnig and other faculty members from California State University San Bernardino (CSUSB) to discuss developing a program specifically geared to assist entry-level professors with a purchase of a home in the City with assistance from both the Agency and CSUSB. With the median price of a home in the Riverside/San Bernardino County averaging $350,0001, an entry-level faculty member will experience difficulty in purchasing a home. In CSUSB's efforts to recruit educators, the majority coming from outside of California, the high price of housing is a major obstacle in CSUSB's recruitment in highly educated professionals to its University and its relocation process. CSUSB is currently recruiting educators to fill 40 positions at the University. The positions will be entry-level at the following beginning salaries: POSITION Assistant Professor Associate Professor Full Professor BEGINNING SALARY $53,000 $66,000 $82,500 Consequently, the homebuyer assistance program outlined below was jointly developed by Agency and CSUSB Staff. PROGRAM OUTLINE: · Educator must be income qualified and meet the income limits as per State Law. The annual income of a familylhousehold cannot exceed 120% of area median income as shown below. Family Size *Maximum Annual Family Size *Maximum Annual Income Income 1 $46,750 5 $72,150 2 $53,450 6 $77,500 3 $60,100 7 $82,850 4 $66,800 8 $88,200 · Program will be open to all new educators and faculty currently employed at CSUSB who do not own a home, or who are renting, and purchase a home in the City. I California Association of Realtors, September 2005 .~I!!~~~.!':1.~.()!!!!!.~__<I!.~_~~.~J~E!.!()..<In':1.~<I-'_!.~~!~J~':1.~!__<1~i~~!~~_!()E.!<I.~J!Y.~!~~'_____mm..._.m._..________mmm...m______________.._m..m_________________mm______ P:\A.gendas\Comm Dev Commission\CDC 2005\05-11-21 CSUSB-Homebuyer Assistance Program SR. doc COMMISSION MEETING AGENDA Meeting Date: 11/21/2005 Agenda Item Number: R.3) Economic Development Agency Staff Report Homebuyer Assistance Program - CSUSB Page 2 · Homebuyer must contribute $1,000 out-of-pocket towards down payment, plus closing costs and must attend an approved 16-hour Homebuyer Education Program. · The loan amount by the Agency to the homebuyer will be up to 20% of the purchase price of the home, but not to exceed $70,000, accruing 3% interest a year. (3.5% of the 20% loan assistance can be applied towards closing costs. The home buyer will more than likely pay average closing costs of about $7,000 depending on the loan amount). (Funds will be reserved for an eligible homebuyer for up to 2 years). · The maximum purchase price is based on the Affordable Housing Cost (AHC), as set forth in Health & Safety Code Section 50052.5(b)(4), and the educator's ability to pay. For example: A family of four with a gross income of $66,800 may not expend more than $1,948.33 a month for total housing expenses, including principle & interest, insurance, property taxes and utilities (translates to a maximum purchase price of approximately $350,000, assuming a down payment of $70,000). · The loan assistance, plus interest, will be forgiven after ten (10) years with a ten percent (10%) forgiveness credit factor given for each year the educator remains in the home. [Should an educator not be retained by CSUSB during the 10-year loan term, and must sell the home in year 5, the educator would receive a 50% credit deduction from the original down payment and interest. Educators who are not retained by CSUSB, but remain in the home for the duration of the loan term will not be required to repay the loan before the 10-year term.] · During the ten (10) year loan term, conditions that will cause loan to become due and payable to the Agency (except for the forgiveness credit factor provisions above) are: (1) When home is sold to an non-eligible successor-in-interest; (2) When home is refinanced to take cash out or consolidate debt; and (3) When home ceases to be educator's primary residence. The Loan can be assumed by an income-qualified successor-in-interest who meets program criteria. The Covenant also requires property to remain affordable and maintained, in addition to above three conditions. Because of the length of time it may take to recruit faculty/educators to CSUSB, Dr. Kamig has requested that the Agency reserve at least $2 million for 2 years for the proposed homebuyer program. CSUSB, through the State Public Employees Retirement System (PERS), will have access to primary mortgage loan products that offer interest rates at .025% below market rate. Moreover, the University will seek private endowment funding which can be employed to further subsidize faculty housing. In closing, the proposed program will give CSUSB a valuable tool to use in its efforts to recruit quality faculty to its University. As CSUSB continues to promote educational, social, economic, and cultural advancement in the region, this tool will be important in assisting CSUSB realize its vision of becoming one of the leading comprehensive universities in the nation. --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- P:\Agendas\Comm Dev Commission\CDC 2005\05-11-21 CSUSB-Homebuyer Assistance Program SR.doc COMMISSION MEETING AGENDA Meeting Date: 11/21/2005 Agenda Item Number: 12.5) Economic Development Agency Staff Report Homebuyer Assistance Program - CSUSB Page 3 ENVIRONMENTAL IMP ACT: None. FISCAL IMPACT: The Agency will set aside $1,000,000 in Low/Moderate Housing Funds annually for two (2) years commencing in budget year 2005/2006. Funds are subject to availability and program success. RECOMMENDATION: That the Community Development Commission adopt the Motion. rn( ~~ Maggie Pacheco, Interim Executive Director -------------------.-------------------------------------------------------------------------------------------------------------------.----------------------------------------------------------------------- P:\Agendas\Comm Dev Commission\CDC 2005\05-11-21 CSUSB-Homebuyer Assistance Program SR,doc COMMISSION MEETING AGENDA Meeting Date: 11/21/2005 Agenda Item Number: Jib.L