HomeMy WebLinkAboutR31- Economic Development I ECONOMIICYDEVELOPMENT IOAGENCY ORIGINAL
FROM: Emil A.Marzullo SUBJECT: Homebuyer Assistance Program ("HAP")
Interim Executive Director Fourth Quarter (April 1, 2010 through June 30,
2010) and Annual Report (July 1, 2009 through
June 30,2010)
DATE: August 20,2010
Synopsis of Previous Commission/Council/Committee Action(s):
On August 19, 2010, Redevelopment Committee Members Johnson, Marquez and Brinker unanimously voted to recommend
that the Community Development Commission consider this action for approval.
--------------------------------
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Recommended Motion(s):
(Community Development Commission)
MOTION: That the Community Development Commission of the City of San Bernardino receive and file the Quarterly
Update 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
ProjectArea(s): All Ward(s): All
Supporting Data Attached: 10 Staff Report 0 Resolution(s)0 Agreement(s)/Contract(s)O Map(s) 0 Letters)
FUNDING REQUIREMENTS: Amount: $ -0- Source: N/A
Budget Authority: N/A
Signature: Fiscal Review:
Emil A.Marzullo, n ' cutive Director Lo /at ' - ery,In m hief Financial Officer
---m-i----io--------------No-t------------------------------ ---
Commission/Council Notes:
P 1Ag�D Co=ivuon\ W10 7-1011.9P IN Qumtc @Moral Rry SkE COMMISSION MEETING AGENDA
Meeting Date: 09//0072010
Agenda Item Number: P-3 1
� ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
HOMEBUYER ASSISTANCE PROGRAM ("HAP")
FOURTH QUARTER(APRIL 1,2010 THROUGH JUNE 30,2010)AND ANNUAL REPORT
(JULY 1,2009 THROUGH JUNE 30,2010)
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, 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 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 of this major
housing correction and the economic dislocation it has caused. Agency Staff estimates this correction
in the housing market will continue for at least the next three years.
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 the borrowers as they qualify for their first mortgage.
Annual Training for any new lender wishing to participate is scheduled for September 2010. Thus far,
11 potential new lenders have expressed interest.
P:\Ag .scommn CO� 201Ww 40 Ue Q,,,na&nod Rq d COMMISSION MEETING AGENDA
Meeting Date: 09/07/2010 n
Agenda Item Number: 3
Economic Development Agency Staff Report
IMP Quarterly Report
Page 2
Assisting prospective buyers is Neighborhood Housing Services of the Inland Empire ("NHSIE") who
markets the HAP Program during its homebuyer education courses, as well as community resource
fairs throughout the Inland Empire. During the most recent quarter (April 1 through June 30), NHSIE
participated in the following events:
Date Event Estimated
Attendance
April 1,2010 Walk With CASA—Outreach by Court Appointed Special Advocates I50
(CASA in partnership with 15 other local non rofit agencies.
April 25,2010 Homebuyer Auction-A community auction event at the Riverside 1,000
Convention Center eared at assisting first time homebu er's.
April 29,2010 CAPS Resource Fair—Event held at the Jessie Turner Community Center in 150
Rancho Cucamon a in partnership with Community Action Partners(CAPS).
May 5,2010 Cinco de Mayo Celebration-The Riverside Hispanic Chamber of 200
Commerce Annual Celebration
Ma 20,2010 Financial Education Forum—Rialto Church Group 15
May 25,2010 Financial Fitness Forum-United Way 15
In addition to the above community events,NHSIE is currently working with Riverside Wells Fargo to
host an event for the community within the San Bernardino area. Moreover, between April 1, 2010
and June 30, 2010, NHSIE educated 178 potential homebuyers, 39 of those were existing residents of
San Bernardino for a total of 1,424 hours in homebuyer education this quarter. For Fiscal Year 09/10,
NHSIE has provided outreach to over 2,000 individuals. In addition to NHSIE, the Agency relies on
the marketing efforts of its certified lenders with the top three performers being: 1) Pacific Financial;
2) Paramount Residential Mortgage Group (formerly First Mutual Mortgage); and, 3) SMD
Mortgage/Mountain West. These three companies contributed to the closing of 35 of the 38 loans
during this year.
During the fourth quarter covering the period April 1, 2010 through June 30, 2010, the Agency
expended $256,398 in low-to-moderate income housing funds for its HAP Program. The total private
investment which included borrower cash investment and first mortgage loans was $1,780,016. This is
equivalent to a private investment of approximately $7 for every $1 invested by the Agency. A total of
9 first-time homebuyers utilized the HAP assistance to purchase homes throughout the City. Of the 9
homes purchased by first time home buyers, 2 were bank owned properties representing 22% of all
homes acquired utilizing Agency assistance during the reporting period.
HAP PROGRAM TOTALS
Reporting Period Number of HAP HAP Amount Private Sales Price
Hot Investment
Fourth Quarter 1 9 $256,398 $1,780,016 $1,970,990
P IAgeM To=Mv Co=iwon�30IMM7.10H 4N Quartet&Amoral Rry SR.a COMMISSION MEETING AGENDA
Meeting Date: 09/07/2010
Agenda Item Number: P.3 I
Economic Development Agency Staff Report
HAP Quarterly Report
Page 3
The following table provides statistical information for the 9 homes acquired during this most recent
quarter. Based on the household size, the household income is at 101%of area median income for San
Bernardino County and is significantly higher than the City's median income of 65.4% adjusted for
family size.
HAP PROGRAM AVERAGES-Quarter Ending June 30,2010
Number of House Household FMecdian e HAP
Reporting Period Homes Size Income e Amount Sales Price
Fourth Quarter 9 3 $59,181 $58,500 1 $28,489 $218,999
•100%of Area Median Income based on Family Size of3
The following two tables identify the Project Areas and Wards, for the fiscal year through June 30,
2010, where HAP activity has occurred. This information is also reflected in the attached maps
(Attachment "A" and Attachment"B").
HAP PROGRAM LOCATIONS BY PROJECT AREA-Year Ending June 30,2010
Project Area # of Units HAP Amount % of Total
State College 5 $153,145 12%
Central City East 1 $16,000 1%
Outside Project Area 32 $1,112,048 87%
Total 38 $1,281,193 100%
HAP PROGRAM LOCATIONS BY WARD
Wards #of Units HAP Amount % of Total
1 2 $25,000 2%
4 2 $51,100 4%
5 16 $600,545 47%
6 3 $60,400 5%
7 15 $544,148 42%
Total 38 $1,281,193 100%
Program Statistics
For the fiscal year covering July 1, 2009 through June 30, 2010, the Agency expended $1,281,193 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 money
was $6,804,806. Of the 38 homes purchased by first-time homebuyers, 20 were bank-owned units or
52% of the total. This is consistent with the Agency's dual policy goal, of creating more homeowners
in the City and encouraging the rehabilitation and resale of foreclosed homes to owner-occupants, as it
has assisted a total of 38 new households to obtain a home in FY 2009-2010.
r:us•m.acomm or co�i.no��cuc lo�owsn�-�a xnv am Qu.nvs Aowd aryon sado COMMISSION MEETING AGENDA
Meeting Date: 09/07/2010
Agenda Item Number: A_- 1
Economic Development Agency Staff Report
HAP Quarterly Report
Page 4
FY2009/2010 HAP PROGRAM TOTALS
Number of HAP HAP Amount Private Sales Price
Homes Investment
38 1 $1,281,193 $6,804,806 $7,863,840
FY2009/2010 HAP PROGRAM AVERAGES
Number of % of Area
HAP House Size Household Median HAP Amount Sales Price
Homes Income Income
38 3 $57,639 98.5% $33,716* $212,536
The$25,000 HAP limit took effect in the second half of the fiscal year.
According to the California Association of Realtors (CAR), the median price of an existing, single-
family detached home in the City during June 2010 was $105,750, a 46.9% increase from the revised
$72,000 median home price for June 2009. The County median price of an existing, single-family
detached home for June 2010 was $159,000,a 13.6%increase from June 2009 levels of$140,000.
For the Fiscal Year the average household size participating in the HAP Program was a family of
approximately 3 and the average household income during the same period was $57,639. This
represents a household income of 101% of AMI when adjusted for family size and is significantly
higher than the City's overall median income of$38,282 (2008, City-Data.Com). CAR also indicates
that statewide, San Bernardino was one of the cities with the greatest median home price increases in
June 2010 compared with the same period a year ago. The cities with the greatest increases were:
National City (59%); Newport Beach (52 0/6); Richmond (52 0/6); San Bernardino (47%); San Pablo
(38%); Fairfield (37%); Walnut(34%); Colton(32%); Imperial Beach(31 0/6); and Poway(30%).
Based on the current depressed market conditions, the Agency has administratively reduced the
amount of down payment assistance back to the original program amount of 10%. This reduction in
assistance has not slowed down the amount of participants utilizing the HAP Program due in part to
the affordability of housing. According to John Husing's Quarterly Housing Affordability Index
(HAI), the Inland Empire's housing affordability rate for the first quarter 2010 was at 64%. The HAI
is computed by taking the median price of existing homes sold, family income, and the prevailing
mortgage interest rate, assuming 20% down payment to find the median monthly payment (PITI-
Principal, Interest, Taxes, and Insurance). Once the median monthly payment is determined, it is
assumed that the monthly payment can be no more than 30% of a household's income. Thus, the
monthly payment is divided by .3 to come up with the minimum income needed to qualify for a loan.
The affordability rate, coupled with historically low interest rates, is making this a very affordable time
for many first-time buyers.
R\AgeMutCOmmn Co issionl 2010\09-07-10 HAPNhQ a&A RepoliSR.Erc COMMISSION MEETING AGENDA
Meeting Date: 09/072010
Agenda Item Number: 9;1
Economic Development Agency Staff Report
HAP Quarterly Report
Page 5
Program Highlights
Quarter and Yearly Summaries Quarter Ending Fiscal Year
June 30,2010 2009/2010
Program Funds Expended $256,398 $1,281,193
Homes Purchased 9 38
Bank Owned Homes 2 20
Percentage of Bank Owned Homes 22% 52%
Average Subsidy Per Home' $28,489 $33,715
Household Income (Program) $59,181 $57,639
Percentage or AMI (Program) 101% 98.5%
Household Income (City) - $38,282
Percentage of AMI (City) 65.4%
Home Prices June 2009 June 2010
Median Price of SFR(City) $72,000 $105,750
Percentage of Increase 46.9%
Median Price of SFR(County) $14,000 $159,000
Percentage of Increase 13.6%
*Percentage ofDowa Payment Changed In Febmaryfrom 20%to lo%
ENVIRONMENTAL IMPACT:
This item does not meet the definition of a "project" under Section 15378 of the California
Environmental Quality Act("CEQA").
FISCAL IMPACT:
There is no impact to the City's General Fund. The Agency's approved FY 2009-2010 Budget called
for an allocation of$3,490,000 in housing set-aside funds to support HAP activities. As of June 30,
2010, there was $2,208,807 remaining for HAP activities. These funds will be reprogrammed into the
FY2010-11 budget to address down payment assistance activities.
Account Budgeted Amount: $ 0- Balance as of: August 23, 2010
Balance after approval of this item: N/A
RECOMMENDATION:
That the Community Development Commission adopt the Motion.
Emil A. Marzu o,rhTerim Executive Director
P:NSativWC DevComm wn\CDC]01g 7-10 CNQuu a pawl aa aSRdw COMMISSION MEETING AGENDA
Meeting Date: 09/07/2010
Agenda Item Number. r;1
ATTACHMENT "A"
City of San Bernardino' -' Homebuyer Assistance Sites
April • •
* Homebuyer Assistance Sites Project D-CENTRALCIT!-WEST H-SOUTH VALLE
Annexation 3067 A-CENTRAL CITY-MEADOWBROOK DD-CENTRALCITY-FAST J-UPTOWN
® See Footnote 1 B_CENTRALCITY-NORTH ESTATE COLLEGE K-MT VERNON
A
Count reas
y BB-CENTRAL CITY-SOUTH O F-NORTHWEST F-1 L<OTH STREET
r I City Limits _ C-SOUTHEAST ® G-TRI-CITY
—T — 18
it----L Footnote 1:
e j - Annexation 3067 is Parts)have been challenged in
the pending Huke versus LAFCO City case,which
I was fled in court on February 25,2010.
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Ward Number HAP Amount I
C!
1 1 $16,000.00
4 1 $24,600,00 Project Number HAP Amount
5 5 $152,100.00 Central City East 1 $16,000.00
7 2 $63,698.00 me Outside Project Area 8
$240,398.00
Total 9 $256,398.00 = Total 9 $256,398.00
ATTACHMENT "B"
City of Bernardino Homebuyer Assistance Sites
July 1 , 009 through
Homebuyer Assistance Sites Project E—] D-CENTRAL CITY-wEST O H-SOUTH VALLE
Annexation 3067 A-CENTRALCITY-MEADOWBROOK DD-CENTRAL CITY-EAST J-UPTOWN
® See Footnote 1 B-CENTRAL CITY-NORTH E-STATE COLLEGE K-MT VERNON
i ) County Areas BB-CENTRAL CITY-SOUTH F-NORTHWEST L-40TH STREET
City imits
y C-SOUTHEAST GTRI-CITY
18
-i, Footnote 1:
n e J Annexation 3067 is Parts)have been challenged in
the pending Huke versus LAFCO City case,which
0 was filed in court on February 25,2010.
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Ward Number HAP Amount oo"o E DR--o
LUGONIA AVE
1 2 $25,000.00
$51,10000 \�R Project Number HAPAmount
5 16
$600,545.00 3r
6 3 $64400.00 - Central City East 1 $16,000.00
State College 5 $153,145.00
7 '$5 '148'00 Outside Project Area 32 $1,112,OAS.00
Total 3$ $1,281,M93.00 m Total 38 $1 031193.00
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