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Home My WebLink AboutR45-Economic Development Agency CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY FROM: Emil A. Marzullo Interim Executive Director SUBJECT: Homebuyer Assistance Program Report for the quarter ending December 31,2010 DATE: June 1,2011 _________________________________________________________________u___________________________________________--------------. SVDODSis oCPrevious Commission/Council/Committee Action(s): On May 5, 2011, Redevelopment Committee Members Johnson, Marquez and Brinker unanimously voted to recommend that the Community Development Commission consider this action for approval. Recommended Motion(s): (Communitv Deve.comen! Commission) MOTION: That the Community Development Commission of the City of San Bernardino receive and file the Quarterly Report of the Homebnyer Assistance Progrann activities for the period ending December 31, 2010 for the Redevelopment Agency of the City of San Bernardino -------------------------------------------~------------------------------------------------------------------------- Contact Person(s): Carey Jenkins Phone: (909) 663-1044 Project Area(s): ALL Ward(s): ALL Supporting Data Attached: Ii'l Staff Report 0 Resolution(s) DAgreement(s)/Contract(s) Ii'l Map(s) 0 Letter(s) FUNDING REQUIREMENTS: Amount: $ -0- Source: N/A Signature: EmilA. Fiscal Review: N/A Budget Authority: Executive Director rim Chief Financial Officer -- C~mmissi~~-c;.u~~ii Notes: ------------------------------------ ------------ ----------- ----------------------- ------------------------------------------------------------------------------- Pc\Agendas\Comm De... Commission\CDC 2011\06-20-11 HAP Quarter Ending Report SR.doc COMMISSION MEETING AGENDA Meeting Date: 06/20/2011 Agenda Item Number: J'Z-Lf~ ECONOMIC DEVELOPMENT AGENCY STAFF REPORT --------------------------------------------------------------------~------------------------------ HOMEBUYER ASSISTANCE PROGRAM REPORT FOR THE QUARTER ENDING DECEMBER 31, 2010 BACKGROUND: On October 17, 1994, the Community Development Commission of the City of San Bernardino ("Commission") approved the Mortgage Assistance Program ("MAP") which made available a limited number of deferred payment second mortgages, in amounts up to 10% of the purchase price for single- family detached homes as assistance towards down payments for income qualified homebuyers. On October 5, 1998, the Commission authorized the modification of the MAP to allow the Executive Director of the Redevelopment Agency of the City of San Bernardino ("Agency"), under extenuating circumstances, the authority to approve up to 20% in mortgage assistance. Certain operational definitions were also clarified. The general public had the perception that this program was to provide first mortgages rather than down payment assistance. Therefore, the name was changed to the Homebuyer Assistance Program ("HAP"), which it is presently known. In 2007, the average median sales price of a single-family residence in the City of San Bernardino ("City") was $375,000. The increase in home sale prices made it extremely difficult for low- to moderate-income buyers to purchase a home at an affordable housing cost as required by State law. Therefore, on June 4, 2007, the Commission authorized down payment assistance for an amount up to a maximum of 30% of the purchase price to fill the gap on a case-by-case basis. Soon after this approved increase, the San Bernardino housing market experienced an extensive correction. In many neighborhoods, housing prices plummeted by as much as 60% of their value. At its core, the significant drop in property values was fueled by low-interest rates, subprime loans and the rampant speculation this caused in the housing market. In essence, there was too much money chasing too few deals causing otherwise suspect financings to be done. It could be argued that no one, not even the federal government, could have stopped this wave of excessive speculation once it started and had reached its height. As a result, the City is currently dealing with the aftermath ofthis major housing correction and the economic dislocation it has caused. Currently, the HAP makes available a limited number of deferred payment (principal and interest) second mortgages, not-to-exceed 10% of the maximum purchase price of $250,000. The HAP is specifically designed to provide qualified families with down payment/closing costs monies necessary to secure financing towards the purchase of single-family detached homes in the City. CURRENT ISSUE: For the reporting period ending December 31,2010, the Agency expended $271,990 in low and moderate income housing funds ("Low-Mod Funds") for its Homebuyer Assistance Program. The total private lender funding for these purchases was $2,474,836. This is equivalent to a private investment of just over $9 for every $1 invested by the Agency and a total of 19 eligible homebuyers utilizing HAP assistance to -----..----------------------------------------------------------------------------------------------- P:\Agendas\Comm Dev CommissionlCDC 2011106-20-11 HAP Quarter Ending Report SR.doc COMMISSION MEETING AGENDA Meeting Date: 0612012011 Agenda item Number: ~ Economic Development Agency Staff Report Homebuyer Assistance Program Report Quarter Ending December31, 2010 Page 2 purchase homes throughout the City. Based on data collected by Agency staff, the average household utilizing the HAP has the following characteristics: 3 Household Income Household AMI $52,051 104% Sales Price HAP Assistance Household Size $147,942 $14,315 The following table identifies the Council Wards where HAP activity has occurred: This information is also reflected in the attached map (Attachment "A"). Wards # of Units HAP Amount % of Total I 0 $0 0% 2 I $8,900 3% 3 I $14,000 5% 4 3 $47,290 17% 5 5 $89,550 34% 6 0 $0 0% 7 9 $112,250 41% Total 19 $271,990 100% The above chart reflects a concentration of HAP loans in Wards 5 and 7. Combined, these Wards account for 75% of loans made by the Agency. Of the 19 HAP loans made, 6 or just over 32% were secured by homes participating in the Neighborhood Stabilization Program ("NSP"). The layering of Federal and Local resources continues to be a focus of the Agency to ensure broader and more sustained neighborhood revitalization is achieved. As a result of the housing market crash and subsequent recession, the value of homes in the City has steadily declined since 2007. In 2007, the area median home sales price was $375,000. According to real estate data source Zillow.com, San Bernardino's current area median home sales price is $119,400. [This would indicate that very little, if any, price appreciation has occurred since the beginning of the fiscal year (FY2010-2011).] As a result of the lagging sales price and proliferation of FHA insured mortgage financing which requires a small down payment, overall home buyer demand for HAP has decreased. While there has been a reduction in the loan amount and number of requests for assistance, the Agency still finds demand from certain homebuyers which require the assistance of a deferred silent second loan. To this end, Agency staff is planning a lender training session for new loan officers seeking to participate in the HAP. Presently, the Agency has just over 10 approved lenders who have been trained by Agency staff to determine program eligibility and work with prospective borrowers as they qualify for their first mortgage. The upcoming training will provide an opportunity to expand the marketing efforts of the program to ensure homebuyers are aware of the home purchase opportunities available to them within the City. ---------------------------------------------------------------------------------------------------------------------- P:\AgendasIComm Dev Commission\CDC 2011\06-20.11 HAP Quaner Ending Report SR,doc COMMISSION MEETING AGENDA Meeting Date: 06120/2011 Agenda Item Number: J2L.l5"' Economic Development Agency Staff Report Homebuyer Assistance Program Report Quarter Ending December31, 2010 Page 3 Assisting prospective buyers is the Neighborhood Housing Services of the Inland Empire ("NHSIE") who markets the HAP Program at its home buyer education courses, as well as community resource fairs throughout the Inland Empire. Between July I, 2010 and December 31, 2010, NHSIE educated approximately 140 people, 30 of those were existing renters in San Bernardino. Policv Discussion: Based on current market conditions, the Agency's 10% loan cap should be sufficient to close transactions for the foreseeable future and no adjustments to the loan cap are being recommended at this time. The need for future down payment assistance cap adjustments will be monitored by Agency staff as it continues to review real estate financing trends and home buyer demand to determine the appropriate level of assistance. In managing the Agency's HAP, Agency staff often reviews similar programs in other cities. This is done to gauge whether the Agency's program is competitive with those of other cities and conversely to determine if the Agency is too generous relative to what other jurisdictions are providing. It also serves to provide Agency staff with feedback on how to best market the Agency's program and to better understand the motivations that lead prospective home buyers to purchase in the City. The following is a brief survey of the down payment assistance programs offered by nearby jurisdictions. The survey was conducted on April 15,2011. Hemet Fontana Ontario Rialto Victorville San Bernardino Coun Maximum of$10,000 10% maximum $35,000 6% maximum $10,000 6% maximum $20,000 30% maximum $20,000 10% maximum $40,000 ENVIRONMENTAL IMPACT: This item does not meet the definition of a "project" under Section 15378 of the California Environmental Quality Act (CEQA) and therefore there is no environmental impact. FISCAL IMP ACT: There is no impact to the City's General Fund. The Agency's approved FY2010-2011 Budget calls for an allocation of $2,000,000 in housing set-aside funds to support HAP activities. RECOMMENDATION: That the Community Development Commission adopt the Motion. , , -----------+--------------------------------------------------------------------------------------------------- P:\Agendas\Comm Dev Commission\CDC 2011106-20-11 HAP Quaner Ending Report SRdoc COMMISSION MEETING AGENDA Meeting Date: 0612012011 Agenda Item Number: Y2-L.J~ City of San Bernardino - Homebuyer Assistance Sites July 1 , 2010 through December 31 , 2010 Homebuyer Assistance Sites Project D-CENTRAL CITY-WEST H-SOUTH VALLE -----� County Areas A-CENTRAL CITY-MEADOWBROOK DD-CENTRAL CITY-EAST J-UPTOWN -----� City Limits B-CENTRAL CITY-NORTH E-STATE COLLEGE K-MT VERNON BB-CENTRAL CITY-SOUTH F-NORTHWEST L-40TH STREET C-SOUTHEAST G-TRI-CITY IVDA /J ----- I Q` r 5th Ward �wOglA R NORTHPAR BLV 4th Ward w.uurW4 _. ! 2� w o (4 > J r COu y Are 40TH 3RD AVE M / TH 9 S P RKDAL 0 E X00 . OGDEN ST 0 ¢ 43 TH;7th War a pR Z F Coun F I- W, _ x TH N � — 0 TH T m H _ Q y — A OC Q �`F v} a N 8TH T 0 W �U W - J Z ' UMALO a r (L r arc' o conmy w CIFICiST , ASELI S . 9 o Area > —_- W SH 1 -•l- _ Q 1--- BASELINE RD 6th rd I z T _'L_�j 9TH�SY_ 4, a 1 1 HST County' 6TH W] 5TH g"C m - Area - L FOOTHILL BLVD 4 T I 3R 4TH Q- I-----�-- 3RD ST RIALTO AVE p - - F-1, f' � N W MERRILL AVE t�, w '.. 'tL__—_�__, -J A Ward —I Q- N R .a ,.-. MIL I UFF 55) Q Z O w W tc, CENTRAL < O SAN BER 4ARDINO#VE D Ward Number MAP Amount I= a. LUGONIA AVE AIRPORT 1SA�QTY _ 2 1 $8,900.00 - _ 120LINE 3 1 $14,000.00 Project Number MAP Amount 4 3 $47,290.00 State College 1 $25,000.00 5 4 $73,050.00 m IVDA 6 $70,350.00 7 10 $128,750.00 y Outside Project Area 12 $176,640.00 Total 19 $271,990.00 n Total 19 $271,990.00 i Coordinate System: NAD 1983 StatePlane California V FIPS 0405 Feet Mlles Data Rights: Street,Parcel and City Limit data owned 0 0.5 1 2 by the County of San Bernardino. File:R\GIS Data\Housing\HAPperRDAAndWards70l2010tol2312010