HomeMy WebLinkAboutR32-Economic Development
CITY OF SAN BERNARDINO
ECONOMIC DEVELOPMENT AGENCY
ORIGINAL
FROM: Emil A. Marzullo
Interim Executive Director
SUBJECT:
Review and Consent of tbe Agency's Integrated
Housing Strategy
DATE:
October 15,2008
-------------------------~------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SvnoDsis of Previous Commission/Council/Committee Action(s):
On October 9, 2008, Redevelopment Committee Members Estrada, Johnson and Baxter unanimously voted to recommend that
tbe Community Development Commission consider this action for approval.
____________________________________________________ ___________________ _______________________ ________________________n______________________n_ _________________________________________________________
Recommended Motion(s):
(Community Develooment Commission)
MOTION: Tbat the Community Development Commission of the City of San Bernardino approve the Redevelopment
Agency of the City of San Bernardino's ("Agency") Integrated Housing Strategy
_n_____~_______________ ____~____________________n_ ____________________ --------------------------- --------~-------------------- ---------------------------- ---~---------------------- --------------------------
Ward(s):
(909) 663-1044
All
Project Area(s):
Carey K. Jenkins
Citywide
Phone:
Contact Person(s):
Supporting Data Attached:
o Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Letter(s)
o Integrated Housing Strategy
FUNDING REQUIREMENTS:
Amount: $
-0-
Source:
20% Set-Aside, HOME Funds and Federal
Neighborhood Stabilization Program Funds
Budget Authority:
FY2008-2009
Signature: IX ~ 0 ~ ) Fiscal Review:
Emil A. Marzullo, Interim Executi ire~ctor
!:~c ~GL'" =Lr/~;f
Barbara Lindseth, Administrative Services Director
________________________________________________n___~_________________n___________________________________________-------------------------------------~----------------------------------------------------
Commission/Council Notes:
__________~_________________________________________________.___________________d_.__________________________....____________________._.____________________________~_-----------------------
P:\AgendaslComm Dev Commission\CDC 2008110_20_08 Integrated Housing Strategy SR.doc
COMMISSION MEETING AGENDA
Meeting Date: 10120/2008
Agenda Item Number: P-32..
16- 2O-D8
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
_________________~__________________n ___________________u_______________________________________------------------------------------------- -------------------- ------------------------------------------
REVIEW AND CONSENT OF THE AGENCY'S INTEGRATED HOUSING STRATEGY
BACKGROUND:
For the past several months, Agency Staff has been developing an integrated strategy (the "Strategy") to
meet the City of San Bernardino's ("City") current and future housing needs. This Strategy and the need
for one has been discussed numerous times over the past several years. The preparation of the Strategy
has involved assessing the Agency's existing housing projects and programs, identifying the availability
of Agency funds for housing related activities and meeting with the Mayor and Councilmembers to
determine specific community needs as well as obtain initial feedback on proposed Strategy content.
Several of the Strategy components are presently identified in the FY2008-2009 EDA Budget. These
components include (i) single-family beautification grant and rehabilitation loan programs administered
by Neighborhood Housing Services of the Inland Empire ("NHSIE"), (ii) the citywide housing down
payment assistance program, (iii) single-family home revitalization funds, and (iv) the annual notice of
funding availability.
It is the intent ofthis report to further detail the Agency's overall Strategy and to gain policy confirmation
from the Community Development Commission of the City of San Bernardino (the "Commission").
As a part of the recent discussions with the Mayor and Councilmembers, Agency Staff emphasized key
elements of the Strategy in order to gain a consensus on general goals and objectives. These included the
following elements:
. Create a more objective and consistent system for awarding funds for housing projects.
. Encourage the development community to invest in San Bernardino.
. Become more efficient and creative with the use of scarce housing resources.
. Become more effective with the use of housing resources for greater community sustainability.
As the recent economic environment dictates, the City has suffered from an extremely high home
foreclosure rate relative to other communities within California. This is indicative of recent data collected
that identifies the number of residential properties that have been foreclosed upon in the last year through
August 2008. During this time, a total of 1,578 residential properties have gone through the foreclosure
process. Please see the attached chart (Exhibit "A") that identifies these foreclosures by Ward.
As another indicator of the scope of the depressed housing market, home prices within the City have
fallen anywhere from 32% to as much as 61% during the one year period through April 2008. Please see
the attached list (Exhibit "B") that identifies the rate of annual price decline by zip code.
As a result of the recent Neighborhood Stabilization Program ("NSP"), legislation that was approved by
Congress and signed into law by the President in August 2008, the City was awarded $8.4 million in an
attempt to address the current foreclosure crisis. The City's allocation was significant relative to other
sL~il_~__~i:z_~_~jllr~s_~i~_t!~~_s_<l~~~_~_e_~<l~~iIl()_'~__fo_~_e_<:!()_s_lIl'\:!<l!\:}_~__U_:_8_~~,__s_~c_()Ec~__()~lr_!o...~!O'~~!~~__!~_<l~_l\:~_
P:\Agendas\Comm Dev CommissionlCDC 2008\10-20-08 Integrated Housing Strategy SRdoc COMMISSION MEETING AGENDA
Meeting Date: 10120/2008
Agenda Item Nnmber:
Economic Development Agency Staff Report
Agency's Integrated Housing Strategy
Page 2
all California cities with a foreclosure rate of 12.3%. As a reference point, the statewide foreclosure rate
is 6.7%. Please see the attached list (Exhibit "C") identifying the amount of funds awarded within
California under the NSP.
Administered by the U.S. Department of Housing and Urban Development ("HUD"), the NSP is designed
to provide emergency assistance to state and local governments to acquire and redevelop foreclosed
properties that might otherwise become sources of abandonment and blight within their communities.
The NSP provides grants to every state and certain local communities to purchase foreclosed or
abandoned homes and to rehabilitate, resell or redevelop these homes in order to stabilize neighborhoods
and stem the decline of house values of neighboring homes.
The commencement of the City's NSP is forthcoming and will be submitted to the Commission for
consideration after Agency Staff has formulated a specific strategy that is in conformance with HUD
regulatory and programmatic requirements. Several NSP orientation meetings sponsored by HUD will be
held in the coming days.
With the present economic uncertainty as a backdrop, the Agency's Strategy will look to encompass
several aspects of the City's housing resources with a clear and overriding policy emphasis on attempting
to mitigate the negative effects caused by our current foreclosure crisis.
CURRENT ISSUE:
The basis of the Agency's Strategy includes four functional components consisting of the following
items:
1. Annual Notice of Funding Availability.
2. Single-Family Homeownership and Neighborhood Revitalization.
3. Strategic Site Specific Development; and
4. Grant and Loan Procurement.
It is the intent of the Strategy to utilize and/or enhance existing programs and, where necessary, identify
new activities to address unmet needs. Many of the existing programs that have been identified in the
Agency's Strategy can be found in the Single-Family Homeownership and Neighborhood Revitalization
component. These would include:
. Homeowner beautification grant and rehabilitation loan programs administered under a contractual
agreement with NHSIE.
. Comprehensive homebuyer education also administered by NHSIE.
. Agency administered Homebuyer Assistance Program ("HAP") that provides down payment
assistance funds to first-time homebuyers acquiring homes in the City.
P\Agendas\Comm Dev Commission\CDC 2008\10-20-08 Integrated Housing Strategy SRdoc
COMMISSION MEETING AGENDA
Meeting Date: 10/20/2008
Agenda Item Number:
Economic Development Agency Staff Report
Agency's Integrated Housing Strategy
Page 3
In addition to upgrading and modifying existing programs, the Agency also looks to identify and utilize
new programs and resources to enhance its overall Strategy. These would include:
. The introduction of a court appointed receivership program to identify and rehabilitate residential
properties that have a history of health and safety code violations.
. The issuance of an annual Notice of Funding Availability targeted to the development community
on an open and competitive basis for Agency identified projects that address specific housing
needs.
. Strategic site specific development opportunities that seek to address the following issues: i) those
larger, more complicated sites that have become a blighting influence on the immediate area and
pose a serious health and safety risk, and ii) those sites that offer a unique opportunity to create a
catalytic project that would help to further additional private investment.
. Acquisition and rehabilitation of previously foreclosed residential properties as outlined in the
recent federally sponsored NSP.
. The active procurement of grant and loan opportunities that can be immediately inserted into
existing programs and projects in order to extend the Agency's delivery of housing production.
Details relating to each of these activities can be found in the attached document (Exhibit "D") entitled
"2008 Integrated Housing Strategy."
As it relates to strategic site specific development opportunities, the Agency is actively involved in one
that fits the category of addressing a larger scale, complicated site that has become a blighting influence
on the surrounding community. Known as the 5th Street and Meridian Avenue Project ("Meridian
Project"), it was approved by the Commission on September 15, 2008. The first phase of the project
seeks to acquire the 18 residential complexes along 5th Street immediately east of Meridian Avenue. The
project is a priority for the Agency as a result of the blighting effects the current apartment complexes are
having on the immediate area which is generally comprised of single-family residences. Given the high
number of bank owned properties and the overall state of housing prices, the Agency has a unique
opportunity to acquire these properties at drastically reduced prices in order to obtain site control for
future development. After the properties are acquired, the Agency will issue a request for proposals to the
development community in an attempt to seek the best redevelopment solution on an open and
competitive basis.
With regard to other projects, the Agency has undertaken housing rehabilitation and acquisition strategies
in several areas of the City in the past and has always strictly adhered to the applicable State laws
regarding the property rights of both owners and residents. Each property acquisition by the Agency has
properly implemented the relocation laws and the procedures required under both the California
Community Redevelopment Law and other provisions of California law requiring payment of fair market
value based upon an appraisal when the Agency is initiating the acquisition. The Agency has prepared
and adopted a relocation plan for each of these property acquisitions and tenant relocation programs.
_____________~_____________________________________________________u___________________________ _________________________ _________________________________________________________----- ---------------------
P\Agendas\Comm Dev Commission\CDC 2008\10-20-08 Integrated Housing Strategy SR,doc
COMMISSION MEETING AGENDA
Meeting Date: 10/20/2008
Agenda Item Number:
Economic Development Agency Staff Report
Agency's Integrated Housing Strategy
Page 4
The attached Integrated Housing Strategy does not, in any manner, diminish the commitment of the
Agency regarding property acquisitions and the rehabilitation of residential dwelling units and the
inevitable relocation of residents that usually occurs. In regards to activities related to the Meridian
Project, the recently approved Agency contract with CPSI, Inc., will allow the Agency to determine in
advance the anticipated level of expenditure of Agency funds and the estimated relocation costs for each
proposed property acquisition and rehabilitation project.
The Agency has always encouraged cooperation with existing property owners in target areas who seek to
obtain some form of Agency financial assistance to rehabilitate dwelling units and thus stabilize
neighborhoods. Investor property owners have always sought Agency assistance and the Agency remains
willing to assist those investor property owners of multi-family dwelling units to undertake substantial
rehabilitation of their units, rather than mere cosmetic repairs, to thereby enhance the neighborhood
property values and to extend the useful life of the investor owned properties. Whether or not the Agency
elects to assist any investor owned property is dependent upon the degree of commitment that each such
property owner is willing to undertake in providing affordability covenants, property maintenance
covenants and other commitments regarding property management and the extent of the rehabilitation
activities. The Agency has recognized from past experiences that owners of many rental residential
properties lack the financial resources and managerial expertise to adequately safeguard their investments
in certain neighborhoods as was most recently evident in the Arden Guthrie area of the City.
ENVIRONMENTAL IMP ACT:
None.
FISCAL IMPACT:
As specific projects under the overall Strategy are introduced for consideration, Agency Staff will seek
individual budget authority as necessary. For the purposes of considering the Strategy as it is currently
presented, there is no fiscal impact to the Agency.
RECOMMENDATION:
That the Community Development Commission adopt the Motion.
~
Emil A. Marzullo, Ioten
P\Agendas\Comm Dev CommissionlCDC 2008\10-20-08 Integrated Housing Strategy SR.doc
COMMISSION MEETING AGENDA
Meeting Date: 10/20/2008
Agenda Item Number:
EXHIBIT "A"
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City of San Bernardino
Properties foreclosed upon from August 1, 2007 to August 1, 2008
EXHIBIT "B"
CITY OF SAN BERNARDINO
RATE OF ANNUAL PRICE DECLINE BY ZIP CODE
HOUSING VALUES APRIL 2007 TO APRIL 2008
92404: (41.0%)
92405: (41.0%)
92407: (33.0%)
92408: (32.0%)
92410: (61.0%)
92411: (41.0%)
(Source: The Nunez Team May, 2008)
EXHIBIT "C"
NSP Grant
State Grantee Name Amount
CA CALIFORNIA STATE PROGRAM $145,071,506
CA RIVERSIDE COUNTY $48,567,786
CA LOS ANGELES $32,860,870
CA SAN BERNARDINO COUNTY $22,758,188
CA SACRAMENTO COUNTY $18,605,460
CA LOS ANGELES COUNTY $16,847,672
CA SACRAMENTO $13,264,829
CA STOCKTON $12,146,038
CA MORENO VALLEY $11,390,116
CA KERN COUNTY $11,211,385
CA FRESNO $10,969,169
CA STANISLAUS COUNTY $9,744,482
CA SAN DIEGO $9,442,370
CA SAN JOAQUIN COUNTY $9,030,385
CA BAKERSFIELD $8,982,836
* CA SAN BERNARDINO $8.408,558 <.
CA OAKLAND $8,250,668
CA MODESTO $8,109,274
CA PALMDALE $7,434,301
CA FRESNO COUNTY $7,037,465
CA LANCASTER $6,983,533
CA RIVERSIDE $6,581,916
CA CONTRA COSTA COUNTY $6,019,051
CA FONTANA $5,953,309
CA SANTA ANA $5,795,151
CA SAN JOSE $5,628,283
CA RIAL TO $5,461,574
CA VICTORVILLE $5,311,363
CA SAN DIEGO COUNTY $5,144,152
CA LONG BEACH $5,070,310
CA HESPERIA $4,590,719
CA ANTIOCH $4,049,228
CA CORONA $3,602,842
CA POMONA $3,530,825
CA RICHMOND $3,346,105
CA ORANGE COUNTY $3,285,926
CA COMPTON $3,242,817
CA APPLE VALLEY $3,064,836
CA HEMET $2,888,473
CA CHULA VISTA $2,830,072
CA ONTARIO $2,738,309
CA VALLEJO $2,657,861
CA ANAHEIM $2,653,455
CA ELK GROVE $2,389,651
CA VISALlA $2,388,331
CA RANCHO CUCAMONGA $2,133,397
CA ALAMEDA COUNTY $2,126,927
EXHIBIT "D"
Redevelopment Agency
of the City of San Bernardino
2008
Integrated Housing Strategy
San Bernar l'no
8M
Prepared by the
Housing and Community Development Division
City of San Bernardino Economic Development Agency
October 20, 2008
Backl!:round:
For several years, the City of San Bernardino's ("City") has sought to develop an integrated strategy
(the "Strategy") to meet its current and future housing needs. In response to this need staff of the
Economic Development Agency (the "Agency") has prepared a Strategy that involves assessing the
Agency's existing housing projects and programs, identifying the availability of Agency funds for
housing related activities and meeting with the Mayor and Councilmembers to determine specific
community needs as well as obtain initial feedback on proposed Strategy content.
During these discussions Agency Staff emphasized key elements of the Strategy in order to gain a
consensus on general goals and objectives. These included the following elements:
. Create a more objective and consistent system for awarding funds for housing projects.
· Encourage the development community to invest in San Bernardino.
. Become more efficient and creative with the use of scarce housing resources.
. Become more effective with the use of housing resources for greater community sustainability.
Current Issues
As the recent economic environment dictates, the City has suffered from an extremely high home
foreclosure rate relative to other communities within California. This is indicative of recent data
collected that identifies the number of residential properties that have been foreclosed upon in the last
year through August 2008. During this time, a total of 1,578 residential properties have gone through
the foreclosure process. As another indicator of the scope of the depressed housing market, home
prices within the City have fallen anywhere from 32% to as much as 61 % during the one year period
through April 2008.
With the present economic uncertainty as a backdrop, the Agency's Strategy will look to encompass
several aspects of the City's housing resources with a clear and overriding policy emphasis on
attempting to mitigate the negative effects caused by our current foreclosure crisis.
Stratel!:V Components:
The basis of the Agency's Strategy includes four functional components consisting of the following
items:
· Annual Notice of Funding Availability.
· Single-Family Homeownership and Neighborhood Revitalization.
· Strategic Site Specific Development; and
. Grant and Loan Procurement.
1. Annual Notice of Funding Availability: The annual notice of funding availability ("NOF A") is
being established to address a number of key affordable housing objectives. One, it allows for a
systematic allocation of funds on a regular basis. It will also serve to foster an environment where
similar projects can be reviewed on the same merits, at the same time. Additionally, it will serve to
address the City's overall housing production goals as stated in its Housing Element and the Agency's
Housing Implementation Plan in addition to providing a means for the City to implement specific
housing policy goals and objectives (for example, higher quality affordable housing stock and better
2
P:\Agendas\Comm Dev CommissionlCDC 2008\10.20_08 Integrated Housing Strategy SRdoc
on-site management). Finally, it creates development opportunities within the City and generates
interest from a greater number of potential respondents.
FY2008-2009 will mark the Agency's first opportunity to provide a regular allocation of funds to
address the general housing goals stated above. With this in mind, the Agency has identified up to $6
million to be allocated toward two specific project types:
I. New construction of senior housing between 80 and 120 units; and
2. Acquisition and rehabilitation of existing multi-family rental housing in excess of 40 units.
The Agency will seek to emphasize these two types of projects in the current year NOF A as they
represent the most pressing affordable housing need within the City. In the case of new construction of
senior housing, it will add to the City's list of successful senior projects in order to meet the housing
needs of this growing community. In the case of the acquisition and rehabilitation of existing multi-
family housing, especially those with a history of public service calls and those that are a blighting
influence on the surrounding community, the investment will help to immediately stabilize certain
areas of the City adversely affected by poorly maintained and operated residential housing complexes.
Over time, it is assumed the policy emphasis on project type will change. As an example, there is
presently a strong demand for quality senior housing and solutions for existing problematic
multifamily developments. As the market changes and overall policy emphasis shifts, the need for
different housing opportunities may arise. However, it is the intent of the Agency to allocate resources
on a regular and competitive basis to meet the City's critical affordable housing needs, now and into
the future.
2. Single-Family Homeownership and Neighborhood Revitalization: Single-family homeownership
and neighborhood revitalization is another key component of the Agency's overall Strategy. Presently,
the Agency has a number of successful programs designed to enhance residential neighborhoods and
promote home ownership. Examples of these include the homeowner beautification grant and
rehabilitation loan programs currently administered under a contractual agreement with NHSIE. Based
on residency and income eligibility criteria, homeowners can access a grant for the beautification of
the exterior of their property or receive a low-interest deferred payment loan for repairs and overall
rehabilitation.
Another fundamental program targeting homeownership is the Agency's comprehensive homebuyer
education training. Under this program would-be home owners are introduced to the responsibilities of
home ownership and financing options and are made aware of the traps associated with predatory
lending practices. During these sessions attendees are also introduced to the housing options available
in San Bernardino and are made aware of the down payment assistance provided by the Agency.
The homebuyer education program serves to meet several very important long-term goals of the
Agency. First, it entices responsible would-be homebuyers to live in the City. The program also
creates a more sophisticated and informed homebuyer. Finally, with a more stable homebuyer who
understands the responsibilities of home ownership and who is provided with a conservatively
underwritten loan that is within their existing budget, the City should begin to see healthier and more
sustainable communities in the future.
Another successful program the Agency uses to enhance homeownership is the Homebuyer Assistance
Program ("HAP"). Under this program down payment assistance funds are provided to first-time
3
PlAgendaslComm Dev Commission\CDC 2008\lO-20-08Integraled Housing Strategy SRdoc
homebuyers acquiring homes in the City. During the most recent 2007-2008 fiscal year, the Agency
provided 67 HAP loans to first-time homebuyers. In FY2008-2009, the Agency is on target to
originate an additional 85 loans. It is anticipated that this program will be integrated with other
Agency funds to help finance the re-sale of previously foreclosed and rehabilitated properties to
moderate income homebuyers. Prior to being awarded a HAP loan, applicants are first required to take
the Agency's homebuyer education program.
In addition to upgrading and modif'ying existing programs, the Agency looks to identif'y and utilize
new programs and resources to help enhance homeownership and revitalize neighborhoods. An
example of this would include the introduction of a receivership program. Under this proposed
program, after the City's Code Enforcement team has documented a series of violations with a
particular property and the owner refuses to comply after being given reasonable notice and
opportunity, the City would make a request to have a receiver appointed to make the necessary repairs.
This process takes approximately 60 days to obtain a hearing in front of a judge. After the judge has
made a ruling in favor of the City's motion, a receiver is appointed to assume all responsibility for the
property. At this point, the City is completely removed as a responsible party and would have no
financial obligations with respect to the particular property.
In all cases the receiver is fully bonded and certified to coordinate any repairs, maintain the property
during the holding period and work with the property owner in an attempt to retain their ownership
status. In many instances the receiver can create a solution where the property is repaired, the owner
retains possession of the property after the receivership period and financing is provided to cover the
repair cost that benefits all parties. While it is the intent of the receiver to have the owner retain their
ownership interest in the property after the receivership period, in some cases where either health and
safety issues do not permit, or there are complicating financial circumstances, or the owner is
unwilling to work out a mutually beneficial solution, the receiver has the authority to sell the property
to recoup all costs of repairs, repay any existing liens on the property and any other expenses incurred
as a result of the receivership process.
Under the statutory rules established for receiverships that are identified in Section 17980.7 of the
California Health and Safety Code the court appointed receiver is required to ensure that all liens
against the property are paid in the following order: all federal, state and county taxes are paid-in-full
first, any contractor hired by the receiver to repair the property is paid second; the court appointed
receiver is paid third; all costs expended by the City are paid fourth; and any mortgage or other liens
are paid fifth. The end result is a property that is completely rehabilitated and no longer a health and
safety code nuisance to the City.
The benefits of using the receivership strategy are numerous:
1. The process already fits into the City's code enforcement activities. The receivership is an
extension of what the City is presently coordinating.
2. Other than staffing the code enforcement activities the City has very little, if any, additional
costs to incur.
3. Once appointed, the receiver has the authority to raise funds to conduct all necessary deferred
maintenance repairs and rehabilitation of the property. In doing so, this addresses the City's
concern of beautifying existing blighted housing stock without having to worry about how to
fund the repairs.
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P:\AgendasIComm Dev Commission\CDC 2008\10-20-08 Integrated Housing Strategy SRdoc
4. City staff is not tied to the daily requirements of managing the process. This is the sole
responsibility of the court appointed receiver.
5. At the end of the receivership process, any City fees assessed on the property are paid.
The final component to the Agency's strategy for promoting homeownership and revitalizing
communities includes integrating the federally sponsored Neighborhood Stabilization Program
("NSP") into existing projects and programs to help address the City's current foreclosure crisis.
As a result of the recent NSP legislation that was approved by Congress and signed into law by the
President in August 2008, the City was awarded $8.4 million in an attempt to address the current
foreclosure crisis. The City's allocation was significant relative to other similar sized jurisdictions as
San Bernardino's foreclosure rate is 11.8%, second only to Stockton that led all California cities with a
foreclosure rate of 12.3%. As a reference point, the statewide foreclosure rate is 6.7%.
Administered by the U.S. Department of Housing and Urban Development ("HUD"), the NSP is
designed to provide emergency assistance to state and local governments to acquire and redevelop
foreclosed properties that might otherwise become sources of abandonment and blight within their
communities. The NSP provides grants to every state and certain local communities to purchase
foreclosed or abandoned homes and to rehabilitate, resell or redevelop these homes in order to stabilize
neighborhoods and stem the decline of house values of neighboring homes.
A preliminary plan is being formulated that encompasses the acquisition, rehabilitation and resale of
specific single-family homes. Proposed target areas within the City are being defined that include
parameters such as the number of foreclosures, the amount of owner occupied residences relative to
non-owner occupied residences and the overall increase in crime, presumably traceable to the increase
in the foreclosure rate.
As it relates to specific acquisition and rehabilitation activities, the Agency is exploring the possibility
of acquiring foreclosures with the use of a nonprofit organization established to own and ultimately
dispose of these properties. The Agency would then contract with a pool of for-profit and non-profit
builder/developers that would rehabilitate the properties and market them to homebuyers whose
incomes do not exceed 120% of area median, adjusted for family size. As needed, the Agency's HAP
loan funds would be available to these buyers for down payment assistance.
As stated in the NSP guidelines, 75% of the funds must be available to homebuyers at the 120% of
area median income threshold. This would equal approximately $6.3 million of the total grant award
and is consistent with the same parameters used with the Agency's existing HAP down payment
assistance program. The remaining 25% of program funds, which is approximately $2.1 million, must
be set aside to assist those persons and/or families whose incomes do not exceed 50% of the area
median. In this instance it may not be feasible to attempt to promote homeownership for this segment
of the community due to the significant subsidy it would require from the Agency. As a result, it is
proposed these funds be directed to the Agency's NOF A activities in order to provide additional
resources to acquire and rehabilitate larger multi-family structures to rid them of their blighting
influence and bring them under professional management.
3. Strategic Site Specific Development: Another category within the Agency's Strategy includes
opportunities to acquire specific sites of strategic importance for future development. Generally, these
sites fall under two primary categories; those that have become a blighting influence on the immediate
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area and pose a serious health and safety risk, while the other type offers a unique opportunity to create
a catalytic project that would help to further additional private investment.
A current project example within the first category includes the 5th Street and Meridian A venue Project
("Meridian Project") that was approved by the Commission on September 15,2008. The first phase of
the project seeks to acquire the 18 residential complexes along 5th Street immediately east of Meridian
A venue. The project is a priority for the Agency as a result of the blighting effects the current
apartment complexes are having on the immediate area which is generally comprised of single-family
residences. Given the high number of bank owned properties and the overall state of housing prices,
the Agency has a unique opportunity to acquire these properties at drastically reduced prices in order to
obtain site control for future development. After the properties are acquired, the Agency would issue a
request for proposals to the development community in an attempt to seek the best redevelopment
solution on an open and competitive basis.
4. Grant and Loan Procurement: Rounding out the Agency's Strategy includes ways to target other
grant and loan opportunities that can be immediately inserted into existing programs and projects in
order to extend the Agency's delivery of housing production. By applying for specific grant and loan
opportunities that integrate smoothly into existing Agency activities, the speed of new development
will increase without additional cost to the Agency.
As a case-in-point, in June 2008, the Agency applied for $900,000 in California Department of
Housing and Community Development CalHOME funds which would be used in conjunction with the
Agency's existing HAP program. Under this scenario, the Agency would offer down payment
assistance of up to $60,000 to first-time homebuyers purchasing a home within the boundaries of the
City. The program would provide a silent second trust deed at 3% simple annual interest with no
payments required. After 10 years, 50% of the program loan would be forgiven and each year
thereafter, 1/35 of the loan would be forgiven. After 45 years, the entire loan would be forgiven. If the
homebuyer ceases to occupy the home as their primary residence, sell, refinance to cash out equity, or
convert the property to a rental unit, the loan would become due and payable.
On October 14, 2008, the Agency was notified that it was awarded the full grant amount of $900,000.
With this award, the Agency will be able to provide down payment assistance for up to 18 additional
households it would otherwise not be able to help with the amount of existing HAP resources.
Along with applying for grant applications, the Agency is also actively seeking loan opportunities to
extend existing resources for projects and programs that Agency Staff is initiating. For example,
Agency Staff is currently negotiating a $5 million line of credit with Fannie Mae. Should the credit
line be awarded, these funds would be augmented with budgeted funds for activities such as the NOF A
Program and the Meridian Project. With the NOF A, a portion of these funds could be added to
existing resources to create additional development opportunities. The result of this would be an even
greater effect on the development of new housing for lower income seniors and/or the lessening of
blighted multi-family housing structures that are a public nuisance.
Credit line funds would also be used to help acquire properties within the Meridian Project at a faster
pace than would otherwise be allowed given the existing resources. Should the Agency be awarded
these funds, initial acquisition of the residential properties could be completed in just one year instead
of having to extend over two years because of budget constraints. The Agency is actively negotiating
with Fannie Mae for an award of these funds and should have an answer by November 2008.
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