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Home My WebLink AboutR33- Economic Development CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY FROM: Emil A.Marzullo SUBJECT: Homebuyer Assistance Program Report for the Interim Executive Director period July 1,2009 through December 31,2009 DATE: March 5,2010 Synopsis of Previous Commission/Council/Committee Action(s): On February 18, 2010, Redevelopment Committee Members Johnson, Baxter and Brinker unanimously voted to recommend that the Community Development Commission consider to receive and file this project. Recommended Motion(s): (Community Development Commission) MOTION: That the Community Development Commission of the City of San Bernardino receive and file the Semi-Annual Report of the Homebuyer Assistance Program activities 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: 0 Staff Report❑ Resolution(s)❑Agreement(s)/Contract(s)❑Map(s)❑Letter(s) FUNDING REQUIREMENTS: Amount: $ -0- Source: N/A /� Budget Authority: N/A Signature: Y` a 9 j Fiscal Review: Emil A.Marzullo,Interim Executive Director Lori ille me ' A i tstrative Services Director Commission/Council Notes: P?ASend TmnDevCnmmiu\CDCWIM03-15-14HAPA virySemi-Anm Rpm Sadm COMMISSION MEETING AGENDA Meeting Date: 03/155/2010 Agenda Item Number: M�73 ECONOMIC DEVELOPMENT AGENCY STAFF REPORT HOMEBUYER ASSISTANCE PROGRAM REPORT FOR THE PERIOD JULY 1,2009 THROUGH DECEMBER 31,2009 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 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 of this major housing correction and the economic dislocation it has caused. CURRENT ISSUE: Presently, the Agency has a total of 14 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. Assisting prospective buyers is the Neighborhood Housing Services of the Inland Empire ("NIISIE") who markets the HAP Program at its homebuyer education courses as well as community resource fairs throughout the Inland Empire. For example, on December 15th, 2009, NHSIE hosted a Lender symposium that brought more than 40 brokers and loan officers together to learn about NHSIE, and the various down payment assistance programs available to first time homebuyers. This included a e\AW Womm�Commisfjonc 201M.MIDt Aa tySml-AOmm a�sa ao< COMMISSION MEETING AGENDA Meeting Date: 03/15/2010 Agenda Item Number: 8233 Economic Development Agency Staff Report HAP Activity Semi-Annual Report Page 2 detailed discussion, about the Agency's activities. Between July 1, 2009 and December 31, 2009 NHSIE educated 229 people, 55 of those were residents of San Bernardino. For the half-year period of July 1, 2009 through December 31, 2009, the Agency expended $996,050 in low and moderate income housing funds ("low-mod funds") for its Homebuyer Assistance Program. The total private investment which includes borrower cash investment and first mortgage loan was $4,635,883. This is equivalent to a private investment of almost $5 for every $1 invested by the Agency and a total of 24 first-time homebuyers utilizing HAP assistance to purchase homes throughout the City. Of the 24 homes purchased by first-time homebuyers, 14 were bank-owned units or 58% of the total. On average,the household utilizing the HAP Program has the following characteristics: HAP PROGRAM AVERAGES Household Size Household Income Household Sales Price HAP Assistance AMI 3 $59,535 1 103% $229,036 $41,502 The following two tables identify the project areas and Council Wards where HAP activity has occurred: This information is also reflected in the attached map (attachment"A"). HAP PROGRAM LOCATIONS BY PROJECT AREA Project Area #of Units HAP Amount %of Total State College 2 $69,000 7% Outside Project Area 22 $927,050 93% Total 24 $996,050 100% HAP PROGRAM LOCATIONS BY Ward Wards # of Units HAP Amount %of Total 1 0 0 0 2 0 0 0 3 0 0 0 4 1 $26,500 3% 5 10 $435,500 44% 6 1 $31,600 3% 7 12 $502,450 50% Total 24 $996,050 1 100% The Agency has seen a steady increase in the amount of borrowers participating in the HAP Program, due in part to the high volume of foreclosures and the affordability of single-family residences. This is especially the case for sales that have occurred in some of the City's neighborhoods deemed by the public to be more desirable and reflected in the large number of properties acquired outside of the Agency's redevelopment project areas. According to the California Association of Realtors, the median price of an existing, single-family detached home in the City of San Bernardino during December 2009 was $85,000, a 19% decrease from the revised $105,000 median for December 2008. PMUg U�=D Co=isse nk 301003-15-10a Ati yS i-M Report SRA COMMISSION MEETING AGENDA Meeting Date: 03//1.55/2010 W Agenda Item Number: 3 Economic Development Agency Staff Report HAP Activity Semi-Annual Report Page 3 The County median price of an existing, single-family detached home for December 2009 was 153 250 a 15%decrease from December 2008 levels of 1 $ $ 80,000. In managing the Agency's HAP Program, 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 San Bernardino. The following is a brief survey of the down payment assistance programs offered by nearby jurisdictions. city % of Down Payment Highland 10% Fontana 10%maximum$35,000 Ontario 15%maximum$30,000 Ccamently on hold) Upland 30%maximum$129,675 Victorville $20,000 maximum San Bernardino County Range between 7%to 9% Based on current market conditions, the Agency has administratively reduced the amount of down payment assistance back to the original program amount of 10%. During the recent transitional period from 20% down to 10%, the Executive Director, under extenuating circumstances, had the authority to approve applications back to 20% in HAP assistance. Extenuating circumstances were considered by the Interim Executive Director on a case-by-case basis and included situations where State inclusionary housing requirements mandate that developers set-aside a certain number of units for purchase by lower income households who often need a greater amount of down payment in order to qualify for a first mortgage. This was the case with the last phase of a recent single-family housing development that had applicants who initially applied and were approved for a 20% down payment subsidy, but actually closed their transactions during the new 10%program cap period. It is anticipated that for the remainder of the fiscal year, the 10% cap will be sufficient to close transactions and that no further discretionary actions will be required of the Interim Executive Director. Furthermore, the need for future down payment assistance cap adjustments will be monitored by Agency staff with recommendations brought before the Commission should the market change and a great or lesser amount of Agency subsidy can be demonstrated. 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. P:1AgmtlulCOmmD Comm onTDC2010103.15-10a AAtyS i-Animal ReportSRd COMMISSION MEETING AGENDA Meeting Date: 03//15/2010 Agenda Item Number: A s 2 2 i Economic Development Agency Staff Report HAP Activity Semi-Annual Report Page 4 FISCAL IMPACT: There is no impact to the City's General Fund. The Agency's approved FY2009-2010 Budget calls for an allocation of$3,490,000 in housing set-aside funds to support HAP activities. Based on this figure there is $2,493,950 that remains budgeted for HAP activities for the rest of the fiscal year ending June 30, 2010. Account Budgeted Amount: $3,490,000. Balance as of: Monday, March 8, 2010. Balance after approval of this item: $2,493,950. RECOMMENDATION: That the Community Development Commission adopt the Motion. /a.� (/ ) Emil A. Marcullo,Interi Executive Director P Uge�omm NV r MIBB1y11 30IM-15-10 HM MivySe -AOmul Re nSkE COMMISSION MEETING AGENDA Meeting Date: 03//15/2010 Agenda Item Number: P—*63 City of . Bernardino Homebuyer Assistance Sites * Homebuyer Assistance Sites DD-CENTRAL CITY-EAST County Areas E-STATE COLLEGE $ p City Limits F-NORTHWEST Project G-TRI-CITY - A-CENTRAL CITY-MEADOWBROOK I.--_.__� H-SOUTH VALLE 1H B-CENTRAL CITY-NORTH J-UPTOWN BB-CENTRAL CITY-SOUTH _] K-MT VERNON C-SOUTHEAST _ L-4 STREET D-CENTRAL CITY-WEST TO N 5th Ward t 4th and to b a fa 3 DA eti' TH N RKDALE ¢ Can ��(O SO ZO 4� } i T � Any R�FR w DA B o Ward e ATE i Q Q W 1 h59f r 2s 5 1 W H - y fA W I T W T O A.u > BO B L BASELINE RD' st 3 Z ELI E S < (0 9 FO THILL BLVD 5TH ST RIALTO AVE 1st Ward ERRILL AVEJ4� = W P s MIL — MILLS z, G40� W CE TRAIL AV m 1 OO o O G Ward Number MAPAmount R `= L0NIAAVE I N 4 1 $26,500.00 y Project Area Number MAP Amount 5 10 $435,500.00 3 m 6 1 $31,600.00 °zQ None 22 $927,050.00 7 12 $502,450.00 A State College 2 $69,000.00 Total 24 $996,050.00 Total 24 $996,050.00 r