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Home My WebLink AboutR23-Economic Development Agency CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY FROM: Emil A. Marzullo Interim Executive Director SUBJECT: Homebuyer Assistauce Program Report for the Quarter eudiug March 31, 2011 DATE: June 10,2011 Svnopsis of Previous Commission/CounciVCommiltee Action(s): On June 9, 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 Development Commission) MOTION: That the Community Development Commission of the City of San Bernardino receive and file the Quarterly Report of the Homebuyer Assistance Program activities for the Quarter ending March 31, 2011 for the Redevelopment Agency of the City of San Bernardino Contact Person(s): Carey K. Jenkins Phone: (909) 663-1044 Project Area(s): ALL Ward(s): ALL Supporting Data Attached: It! Staff Report 0 Resolution(s) DAgreement(s)/Contract(s) It! Map(s) 0 Letter(s) FUNDING REQUIREMENTS: Amount: $ -0- Source: NIA Signature: Emil A. Marzull , Budget Authority: . Chief Financial Officer xecutive Director Commission/Council Notes: P:\AgendasIComrn Dev Comrnission\CDC 2011\07-05-11 HAP Quarter Ending March 3 I, 2011 Report SR.doc COMMISSION MEETING AGENDA Meeting Date: 07/05/2011 Agenda Item Number: 12:2...'3 ECONOMIC DEVELOPMENT AGENCY STAFF REPORT ------~---------------------------------------------------~---------------------------------------------------~---------------------------------- HOMEBUYER ASSISTANCE PROGRAM REPORT FOR THE QUARTER ENDING MARCH 31, 2011 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, 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 of30% 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 of this maj or 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. This Program 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 March 31, 2011, the Agency expended $37,500 in low and moderate income housing funds ("low-mod funds") for its Homebuyer Assistance Program. The total private lender funding for these purchases was $410,992. This is equivalent to a private investment of just over $9 for every $1 invested by the Agency and a total of 4 eligible homebuyers utilizing HAP P:\Agendas\Comm Dev Commission\CDC 2011\07-05-]] HAP Quarter Ending March 3 I, 2011 Report SR. doc COMMISSION MEETING AGENDA Meeting Date: 07/05/2011 Agenda Item Nnmber: p..t..3 Economic Development Agency Staff Report Homebuyer Assistance Program Report Quarter Ending March 31, 2011 Page 2 assistance to purchase homes throughout the City. Based on data collected by Agency staff, the average, household utilizing the HAP Program has the following characteristics: Household Size Household Income Sales Price HAP Assistance 2 $43,851 $110,000 $9,375 The following table identifies the Council Wards where HAP activity has occurred: Ward # of Units HAP Amount % of Total I 0 $0 0% 2 I $11,000 29% 3 0 $0 0% 4 I $12,000 32% 5 0 $0 0% 6 I $8,000 21% 7 I $6,500 17% Total 4 $37,500 100% The above chart reflects a dispersion of loans through four wards. Of the 4 HAP loans made, 3 or 75% 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 a broader and more sustained neighborhood revitalization is achieved. The first quarter of 20 II experienced a significant decline in the number of HAP loans originated as compared to the last two quarters of 2010. Much of the decline is attributable to the lack of quality inventory and expiration of the first time homebuyer tax credit. 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:\Agendas\Comm Dev Commission\CDC 20] 1\07-05-11 HAP Quarter Ending March 3 I, 2011 Report SRdoc COMMISSION MEETING AGENDA Meeting Date: 07/05/2011 Agenda Item Number: ja-13 Economic Development Agency Staff Report Homebuyer Assistance Program Report Quarter Ending March 31, 2011 Page 3 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. 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 IMPACT: 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. ~ Emil A. Marzu 0, nteri~ Executive Director P:\Agendas\Comm Dev Commission\CDC 2011\07-05-11 HAP Quarter Ending March 31, 2011 Report SR.doc COMMISSION MEETING AGENDA Meeting Date: 07/05/2011 Agenda Item Number: 1t'23 City of . Bernardino Homebuyer Assistance Sites January 1 1 2011 through Homebuyer Assistance Sites BB-CENTRAL CITY-SOUTH E-STATE COLLEGE J-UPTOWN Project C-SOUTHEAST I� F-NORTHWEST 0 K-MT VERNON A-CENTRAL CITY-MEADOWBROOK D-CENTRAL CITY-WEST G-TRI-CITY L-40TH STREET B-CENTRAL CITY-NORTH 0 DD-CENTRAL CITY-EAST H-SOUTH VALLE ---:L, l TpN� p N\EV�� t, _ O,y 1<,o NORTHPAR BLV o r � Coun y _ w Are 4 TH 3RD AVE TH IT PO O OGDEN ST O Q 36TH ARKDAL Q H Coun w Zte tirc_ F x 34TH R Y D -o., p 30TH ST= o� y A�FD a �Fq�, v rn aTH DAr� Are LL z Q W PUM • 1ST t^ 1 W N County w PACIFIC ST `3T w t — �. Ho A Q l J BASELINE RD a ELIN ST TOTfi � - r L' z BASELINE S 5T T �\ county �rr_� - a _ FOO BLVD 6 , .. 3 4 3RD Si TH _ � -- -- Prima- — J . — — -- .Q RIALTO AVE ¢ , LTO E N w MERRILL AVE t�, a �__.�____ to Q CD N O�QJ r3 MIL .zFF � I ,' �" Q z — 4ENTRAL AVE ? Q O > 'JET Q; 00 O �O? .j ,/Rt } SAN BERNARDINO VE 0 v Oj�R DR ° p� c. LUGONIA AVE Ward Number HAP Amount "'LINE REDLANDS BLVD Q �•_ 2 1 X $11,000.00 4 1 $12,000.00 Project Number HAP Amount 6 1 $8,000.00 = I V DA 2 $17,500.101C 7 1 $6,500.00 `s vo Outside Project Area 2 n $20,000.00 Total 4 $37,500.00 �.� Total 4 $37,500.00 ate D g g - atey. •"S /I NAD 1983 StatePlane California V FIPS 0405 Feet " I les Data Rights: Street,Parcel and City Limit data owned O �.5 tits 1 tru t t h„fhor' .,n,„rcam„aP--i,