HomeMy WebLinkAboutAGENDA REPORT 2002 1106 CC REG ITEM 08CI'T'EM �• �.
MOORPARK CITY COUNCIL
AGENDA REPORT
To: Honorable City Council
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From: Nancy Burns, Senior Management Analyst
Date: October 29, 2002 (CC Meeting of November 6, 2002)
Subject: CONSIDER RE- ALLOCATING PROCEEDS FROM SALE OF 6479 -B
PENN STREET (COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS)
BACKGROUND
At its October 2, 2002, Regular Meeting, the Moorpark City
Council approved Resolution No. 2002 -2011, authorizing the sale
of 6479 -B Penn Street. The unit has been sold, and escrow is
expected to close November 8, 2002. Public notice of this
matter has been published, as required by Community Development
Block Grant (CDBG) regulations.
DISCUSSION
Funds from the proceeds of this sale may be re- allocated to any
eligible Community Development Block Grant (CDBG) project. If
the Council wishes to utilize the proceeds for Affordable
Housing, the funds may be designated for that purpose, with a
specific project to be identified at a later date.
If CDBG funds are used for property acquisition or for a loan to
enable a developer to purchase land, and affordable dwelling
units are constructed on the property, the CDBG funds could be
rolled over into deferred payment mortgages ( "Silent Second
Mortgages "). These Silent Second Mortgages, in favor of the
City, would thereby provide partial funding for the down
payments needed for the affordable units. The funds would
eventually be returned to the City, per resale restrictions
developed by the City.
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Honorable City Council
Date 10/31/02
Page 2
It is possible that prevailing wages might be required for a
project with this type of assistance. However, staff believes
that recently enacted legislation (SB 972) may provide an
exemption for this type of assistance, providing that all
assistance is structured as a loan and not a grant. If Council
desires to provide CDBG funds as assistance for Affordable
Housing, this form of assistance would help the largest number
of low income buyers. Staff recommends that the assistance per
buyer be limited to twenty thousand dollars ($20,000) per
household. Additional funds from other sources (developer
contribution or public funds such as Housing Setaside) could be
utilized to supplement CDBG. All public funding needs to be
structured as a loan to qualify for the exemption referenced
above.
It is unclear at this time whether the sale of 6479 -B Penn
Street will add approximately two hundred seventeen thousand
dollars ($217,000) or two hundred fifty thousand dollars
($250,000) to the City's CDBG allocation of funds. The
difference of thirty -three thousand dollars ($33,000) represents
the gain on the sale of the property, over the purchase price
and costs of the purchase transaction, plus the closing costs
for the sale transaction. The City is awaiting a determination
by HUD as to the disposition of the $33,000 in question
(Attachment "A ").
As shown on Attachment "B", the City's unexpended funds
currently total approximately $447,140. HUD regulations limit
the unexpended funds in the City's line of credit to one and one
half (1 %) times the annual allocation, which is approximately
two hundred thousand dollars ($200,000) . This means that the
City should carry no more than three hundred thousand dollars
($300,000) in its unexpended line of credit. When escrow closes
on the subject property, the City's CDBG allocation will be
increased by either $217,000 or $250,000, for a total line of
credit of either six hundred sixty -four thousand one hundred
forty dollars ($664,140) or six hundred ninety -seven thousand
one hundred forty dollars ($697,140).
Council action on the re- allocation of $250,000 is requested at
this time. This will avoid the need to bring this item before
the Council again, in the event that a funding decision is made
Honorable City Council
Date 10/31/02
Page 3
for $217,000 and the City receives a favorable decision from HUD
for the remaining $33,000 in question.
STAFF RECOMMENDATION
1. Continue this item to the City Council meeting of November
20, 2002; and
2. Refer the matter to the Budget and Finance Committee for
consideration prior to the Council meeting of November
20, 2002.
Attachment "A ": 6479 -B Penn Street Transaction Costs
Attachment "B ": Unexpended Community Development Block Grant
(CDBG) Funds
Honorable City Council
Date 10/31/02
Page 4
Attachment "A"
6479 -B Penn Street
Transaction Costs
Item
Purchase Transaction
Sale Transaction
Sales Price
$217,000
$250,000
Closing Costs
$1,745
(Estimated) $16,402
Net Gain
(Estimated) $14,853
Honorable City Council
Date 10/31/02
Page 5
Attachment "B"
Unexpended Community Development Block Grant (CDBG) Funds
October 29, 2002
Project /Program
Funds Available
Affordable Housing
$49,710
Street Lights (Downtown Residential)
$146,876
Public Park
$143,400
Boys & Girls Club Re- Roofing Project
$20,000
Code Enforcement
$20,999
RAIN
$5,000
Catholic Charities
$8,535
Senior Nutrition
$10,000
Senior Center Operations
$12,000
Senior Survivalmobile
$1,000
Administration
$29,620
Total
$447,140