Loading...
HomeMy WebLinkAboutR05-Economic Development Agency o o 0" o 0 DBVBLOPIIBIIT DBPARTIIBIIT OF TBB CITY OF SAIl 'AownntllO BODEST FOR Cm.uSSIOII/COUIICIL ACTIOII From: KENNETH J. HENDERSON Executive Director DAllSITIOllAL HOUSING PROGllAll Subject: Date: October 30, 1991 SvnoDsis of Previous CnmMt88ionlCoun~il/CnmMittee Action(s): On October 16, 1991, an overview of the concept of Transitional Housing was presented to the Housing Committee. Staff was directed to continue research on this issue and to present more information at the October 29, 1991 Housing Committee meeting. On October 29, 1991, the Committee recommended approval to the Community Development Commission of the concept of a Transitional Housing Program. Recommended IIotion(s): (r._in Develo_ent C..-ission) IIOTIOII: That the Community Development Commission approve in concept the Transitional Housing Program as set forth in the attached staff report and exhibits and authorize staff to prepare a detailed implementation strategy. ~ Admirll.:erator ~11 ~. BBIID 011 Bzecutive Direct r Contact Person{s): Ken Henderson/Doris Daniels Phone: 5081 Project Area{s): CitYWide Ward{s): 1 - 7 Supporting Data Attached: Staff Renort: Exhibit FUNDING REQUIREMENTS: Amount: * Source: Budget Authority: Commission/Council lIotes: KJH:DAD:lab:0155q CCMlISSIOII IlEBTING AGENDA lIeeting Date: 11/04/1991 Agenda Item lI1mber: 5" o o o o o DEVELOPME.T DEPARTME.T OF TIlE CITY OF SAlt BEII1URDlBO STAn' REPORT Tr~aitinn.l Bousina ,roRram ConeeDt Ba""'-ro1D1d An overview of the eoneept of a Transitional Housing Program was presented to the Housing Committee on Oetober 16, 1991. It was reeommended that the City beeome involved in the County-wide Homeless Transitional Housing Strategy by developing a City pilot program whieh would (i) transition City of San Bernardino residents from emergeney shelter into permanent housing, and; (ii) serve as a model to eneourage other eities to provide transitional housing. Staff was direeted to eontinue researeh on this issue and to present more information at the Oetober 29, 1991 Housing Committee meeting. On October 29, 1991, staff returned to the Housing Committee with additional researeh and presented three options for Obtaining transitional housing and three options for finaneing transitional housing. At this time, the Housing Committee aceepted the Transitional Housing Program Coneept and direeted staff to prepare a detailed implementation strategy setting forth the manner in whieh transitional housing would be obtained as well as the manner in whieh the housing would be financed. Exhibits I and II present recommended housing and finaneing options. Exhibit III presents an overview of program eomponents. The utilization of said options will not have a negative finaneial impact upon the City beeause only one dollar will be required to obtain United States Department of Housing and Urban Development (BUD) vaeant housing per year. This eash outlay would hold the property up to three (3) years as a lease with option to purehase. Should the purehase option not be utilized after three years, the housing units should revert baCk to HUD. Additionally, the City will not be responsible for the rehabilitation of aequired housing as the Building Industry Assoeiation will conduct the rehabilitation of eaeh housing unit. In this program, the City (working as a Private Mortgage Insurer (PMI)) will not be required to produce any initial outlay of funds because the guarantee would only become effeetive should the housing unit go into foreclosure. In the event a foreclosure is imminent, the property could be quitelaimed to the City and the City could satisfy the delinquent indebtedness and offer said property to another low ineome, prospective home buyer. The Transitional Housing Program would inelude a eomponent which would provide financial counseling to future homebuyers to help prevent foreelosures from occuring. KJH:DAD:lab:0155q COIIMISSIO. MEETIBG AGEImA Meeting Date: 11/04/1991 Agenda Item Bumber: 5 o o o. - 4 iii o o DEVELOPMElIT DEPAK:I:1unr SrAn' REPORT Transitional Kouailla Progra Concept October 30, 1991 Page lfullber -2- ------------------------------------------------------------------------------- RecOllllleDdation It is now recommended that the Community Development Commission approve the concept of transitional housing for the City to become involved at the local level by developing a pilot program which will (i) transition City of San Bernardino residents from emergency shelter into permanent housing, and; (ii) serve as a model which will encourage other cities to become involved in the Countywide Transitional Housing Strategy. Based upon the foregoing, staff recommends approval of the form motion. fLl ~11 ". IIElOl OR, beeutive Director Development Depar ent ------------------------------------------------------------------------------- KJH:DAD:lab:0155q COtIIISSIOR IlBETIRG AGERDA lIeetilla Date: 11/04/1991 Agenda Item Number: ~ o o o o o CIn OF SAIl R1nI..uJnnro IIDDBL TlWlSITIOIUL BOUSIIIG PROGRAM The following option for obtaining transitional housing was investigated: A) BUD Sinale Familv Leasina and Discount-Sales Proaram. Under the BUD one dollar ($1.00) per year lease and discount sales program, local government agencies and nonprofit providers may lease eligible forclosed properties for one dollar ($1.00) annually for up to five (5) years (Federal Register 24 eFR Parts 291, 577 and 578). At the end of this period, local government agencies or nonprofit providers must purchase the property or same reverts back to BUD. Those preferring to purchase properties are eligible for a ten-percent (10%) discount off normal or bid price. Recent changes in BUD regulations make this program a very feasible one. For example: 1. Local government agencies and/or nonprofit providers Who decide to purchase property may do so with a ten-percent (10%) percent discount of the lesser of its value at the initiation of the lease or at the time of purchase. (This will provide a distinct advantage to the City in that rehabilition efforts by the Building Industry Association (BIA) and the homeless tenant will appreciate the value of the home while the cost of purchase will remain at the value of the house at initiation of the lease.) 2. Local government agencies and/or nonprofits may now charge occupants rent at a rate appropriate to the financial means of the occupant not to exceed thirty-percent (30%) of gross income, but not more than the lessee's cost of operating the property. 3. Field offices are now permitted to lease as well as close a sale under the program directly with the governmental or nonprofit entity rather than with the Public Housing Authority. 4. Local government agencies and nonprofit service providers may purchase any acquired property at a maximum ten-percent (10%) discount regardless of how long the property has been in inventory or whether the property is currently listed for sale. 5) Local government agencies and non-profit service providers which are preapproved are awarded a ten (10) day consideration period before properties are offered to the general public. BXIIIBIT "I" o o o. o o CIn OF SAIl _AIlnnro IIlDEL DABSITIOlW. BOUSIIG PROGRAM Pfftilfteina t'rilftaitional BousiDa. The following option for financing transitional housing was investigated: A) The Development Department would act as a Property Mortgage Insurance (PMI) issuer by entering into an agreement with a financial institution whereby the Department would ensure or guarantee a percentage of the loan. The intent of this guarantee would be to reduce the front end requirement of the low income buyer. For example, if the total loan were worth $80,000, the Department would guarantee twenty-five percent (25%) of that amount or $20,000. Financing in this manner would not necessitate the expenditure of Department funds unless the house went into foreclosure. This type of financing would allow the Department to leverage money without having to spend it up front. The agreement with the financial institution would spell out affordability covenants to be attached to the property for up to ten (10) years should the house be required to be resold in the case of foreclosure or resale. The end result for the buyer would be a reduction of the monthly mortgage payment and the improvement of the buyers' ability to qualify. The advantage is that the Department would be financing housing which has been discounted as much as twenty-five percent (25%) before sale. The BUD Lease/Option program provides a ten-percent (10%) discount on current deflated market value and a fifteen-percent (15%) sweat equity discount could be realized through rehabilitation efforts of the tenant and BIA volunteers. It should be noted that the purchase price is established on the value of the house prior to rehabilitation. It is recommended that this mechanism be utilized because this type of financing would allow the Department to leverage money without having to spend it up front. In addition, it should be noted that the Department would be financing housing which has been discounted as much as twenty-five percent (25%) before sale. BXIIIBIT "II" o o o IRITIAL PIWVISIOB OF HOUSIBG JRmIBG LBASIBG PDIOD IlEHABILI'l'ATIOB MAIIIDBABCB - o ~ - - o CITY OF SAIl R'R1IWnnlBO mDm. DOSITIOIW. BOUSIBG ROGJWI Synopsis of Areas of Responsibility HOUSIBG COIIPOImlTS Housh.., ........ UrblUl Develoument (HUD) - Development Department serves as appliclUlt for BUD single family houses at one-dollar ($1.00) per year with option to purchase after three (3) years. AuarhB~t Owners Association - Provides apartments for singles lUld seniors. ParticiplUlts pay 30% of income as rent. Difference between rent paid and rent required used as a tax deductible contribution. BaildinR Industrv of A.~rica - Contributes volunteer labor lUld materials for rehabilitation of lease/option houses. Some materials may be obtained locally from building supply firms. Realtors - Those who specialize in mlIIlagement and maintenance will provide during model program. PURCHASE FIKABCIBG IIDtI - Fund 10lUl program on competitive basis. FOLLOWING LEASE PERIOD Will qualify for Community Reinvestment Act credits. PRIVATE SECTOR PUBLIC SECTOR VOLmr.rEBR SECTOR Develoument Deuartment - Provides a loan commitment program similar to Private Mortgage Insurance. PROGRAII COIIPOImlTS Unions ........ Churches - Recruits of Volunteers who become "Ombudsmen" or "Big Brothers/Sisters" for Mentoring Program. Private Bon-Profits - Screens applicants and provides centralized access point for volunteers. CnMMnftity Services Deuartment (County) - Provides training of volunteer "Ombudsmen." DPSS. Public Health. Mental Health (C01Dltv) - Participates in volunteer training and provides variety of services, as needed. Church Outreach Pr02P..R - Provides food, clothing, furniture, counseling BJJIIBIT "III"