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HomeMy WebLinkAboutAGENDA REPORT 2016 0203 CCSA REG ITEM 10EITEM 10.E. CITY OF MOORPARK, CALIFORNIA City Councii Meeting :~~toN: r1-a~;i.~o,(, (I. MOORPARK CITY COUNCIL i ~~ ::i_i~ AGENDA REPORT BY: ___________ ~~~-~~-- TO: Honorable City Council FROM: Jessica Sandifer, Senior Management Analy DATE: January 27, 2016 (CC Meeting of 02/03/16) SUBJECT: Consider Purchase of First Time Home Buyer Units from K. Hovnanian at 6575, 6566, 6530 & 6518 Rangewood Court; Authorize the City Manager to Resell the Subject Properties; and Resolution Amending Fiscal Year 2015/16 Budget to Fund Transactions BACKGROUND The City's First Time Home Buyer program provides attached and detached residential units to very-low and low-income home buyers who meet the requirements of the City's program. The units are sold at an affordable housing cost as defined in California Health and Safety Code Section 50052.5 et seq. The Developers that provide the affordable housing units enter into negotiated Affordable Housing Agreements (Agreement) with the City that set out the parameters for provision and sale of the units to qualified buyers. K. Hovnanian Homes assumed the Affordable Housing Agreement that the City executed with William Lyon Homes when they purchased Tract's 5187 and 5405. Among many things, the Agreement requires that both parties diligently pursue the sale of the affordable units and provides that if there are no buyers identified within 45-days from the date the units receive a certificate of occupancy (COO), the City will purchase the units. K. Hovnanian's affordable units received their COO's on December 8, 2015. DISCUSSION Staff has held many workshops since September to identify eligible First Time Home Buyers for the affordable units and has been able to provide buyers for 13 of the 17 units. The four remaining units are moderate income units. It has been difficult identifying buyers for these units due to the fact that the income qualification level for the moderate income units (up to $107, 150 for a family of four) is at a level where, with appropriate savings and good credit, a buyer could purchase an unrestricted unit on the open market. Additionally, when moderate income buyers have been identified, some of them did not make quite enough money to obtain a mortgage loan due to additional debts and being unable to meet the lenders required debt ratios or they don't have 100 Honorable City Council February 3, 2016 Page 2 enough money to close the loan. Staff is recommending purchasing the remaining properties from K. Hovnanian and continuing to identify buyers for the units. Staff is holding additional workshops on February 9-10 and is hopeful eligible buyers can be identified. If a buyer is identified prior to the City closing escrow on the units, the City's purchase agreement and escrow will be assigned to the identified buyer and the City would not directly purchase the units. Staff is requesting approval to purchase the four remaining units with the caveat that we could be purchasing four or less units. The City Council Policies Resolution, Policy 3.5 relevant to the City's First Time Home Buyer Program, does not clearly define the City Manager's authority to purchase and resell the affordable housing units. Staff is requesting approval for the City Manager to sign purchase agreements and appurtenant documentation for the purchase and subsequent re-sale of the units to eligible buyers. Staff estimates that an additional $30,000 could be required for closing costs related to the resale of the units to eligible . buyers. If the purchase of the units goes through, the City should be prepared to maintain the landscape and utilities for these properties. Working utilities are required when properties are appraised for sale by a mortgage lender. Staff estimates an additional $20,000 for maintenance and utilities for the four units through the end of the fiscal year. If the City's next workshops do not produce eligible buyers, staff will be analyzing alternative options for resale or rental of the units, while maintaining them as affordable, and return to the City Council with a recommendation. FISCAL IMPACT The City will purchase the units at the affordable sales price of $375,000 per unit or $1,500,000. At the time of acquisition, the developer will be paying for the closing costs with a $6,500 closing cost credit required by the Agreement. The City will than recover the purchase price of the unit when it is resold to an eligible buyer. An additional $50,000 is required for property maintenance ($20,000) and closing costs related to the resale transactions ($30,000). There is no General Fund impact. Staff is requesting an aggregate budget amendment of $1,550,000 from the City Affordable Housing Fund (2201). The purchase of these units represents 41 % of the available $3. 7 million fund balance in the City Affordable Housing Fund (2201 ). 101 Honorable City Council February 3, 2016 Page 3 STAFF RECOMMENDATION (ROLL CALL VOTE) 1. Authorize purchase of properties at 6575, 6566, 6530 and 6518 Rangewood Court and authorize the City Manager to sign all documents relevant to the purchase transaction and subsequent resale transactions for the properties; and 2. Authorize City Clerk to accept Grant Deeds for the properties; and 3. Adopt Resolution No. 2016-___ , amending the Fiscal Year 2015-16 budget to purchase the properties. Attachment 1. Resolution No. 2016--- 102 ATTACHMENT 1 RESOLUTION NO. 2016--- A RESOLUTION OF CITY COUNCIL OF THE CITY OF MOORPARK, CALIFORNIA, AMENDING THE FISCAL YEAR 2015/2016 BUDGET BY APPROPRIATING $1,550,000.00 FROM THE CITY AFFORDABLE HOUSING FUND (2201) FOR PURCHASE OF FIRST TIME HOME BUYER UNITS AT 6575, 6566, 6530 & 6518 RANGEWOOD COURT WHEREAS, on November 8, 2006, the City of Moorpark and William Lyon Homes (W Lyon) executed the Affordable Housing Purchase and Sale Agreement for tracts 5187 and 5405 (Properties), which requires the sale of seventeen (17) dwelling units to very low, low and moderate income buyers. The agreement provides that the City shall be responsible at its sole discretion for marketing; selecting and qualifying eligible buyers; and overseeing the escrow processes to sell the affordable units. It stipulates that if no qualified buyer has been identified at the time the W Lyon receives its final inspection approval, the City agrees to purchase the units at the affordable sales price based on a household size of four (4) persons per Section 50052.5(b) of the California Health and Safety Code and the City shall have sole responsibility for approving any subsequent sale of the units; and WHEREAS, on January 9, 2008, W Lyon transferred the Tracts to ORA Ashford 94, LLC; ORA Marquis 89, LLC; and ORA Brighton 17, LLC. Subsequently, on September 19, 2014, K Hovnanian Companies of Southern California (K Hovnanian Homes) acquired the unbuilt portions of the Properties; and WHEREAS, on June 17, 2015, the City of Moorpark adopted the Operating and Capital Improvement Projects budget for Fiscal Year (FY) 2015/16, which includes $338,716 appropriations in the City Affordable Housing Fund (2201) for operations; and WHEREAS on December 8, 2015, K Hovnanian Homes received the final inspection approval for the affordable housing units and the City successfully closed escrow on thirteen (13) of the seventeen (17) affordable units; and WHEREAS, a staff report has been presented to the City Council recommending the purchase of the remaining four (4) affordable housing units located at 6575, 6566, 6530, and 6518 Rangewood Court, Moorpark, CA 93021, for the First Time Home Buyer program from K. Hovnanian Homes at the affordable sales price of $375,000 per unit pursuant to the agreement; and WHEREAS, City Council authorized the City Manager to resale the affordable housing units located at 6575, 6566, 6530, and 6518 Rangewood Court, Moorpark, CA 93021 according to the provisions of the Affordable Housing Purchase and Sale Agreement and Policy 3.5 First-Time Home Buyer Affordable Housing Program per Resolution No. 2015-3378; and - 103 Resolution No. 2016 - Page2 WHEREAS, an aggregate budget amendment of $1,550,000 is requested from the City Affordable Housing Fund (2201) -$1,500,000 for the purchase price, $30,000 for closing costs related to the resale of the four affordable housing units, and $20,000 for property maintenance; and WHEREAS, Exhibit "A", attached hereto and made a part hereof, describes said budget amendment and the resultant impact to the budget line items. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOORPARK DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. The City Manager is authorized to purchase the remaining affordable housing units located at 6575, 6566, 6530, and 6518 Rangewood Court, Moorpark, CA 93021 at the affordable sales price of $375,000 per unit; to resale the aforementioned affordable housing units to eligible buyers; and to sign all documents relevant to the purchase and subsequent resale transactions. SECTION 2. An aggregate budget amendment of $1,550,000 from the City Affordable Housing Fund (2201 ), as more particularly described in Exhibit "A", attached hereto, is hereby approved. SECTION 3. The City Clerk shall certify to the adoption of this resolution and shall cause a certified resolution to be filed in the book of original resolutions. PASSED AND ADOPTED this 3rd day of February, 2016. Janice S. Parvin, Mayor ATIEST: Maureen Benson, City Clerk Exhibit A -Budget Amendment 104 EXHIBIT A BUDGET AMENDMENT FOR City Affordable Housing Fund for purchase of 6575, 6566, 6530 & 6518 Rangewood Court 2015/16 FUND ALLOCATION FROM: Fund Account Number Amount City Affordable Housinq Fund 2201-5500 $ 1,550,000.00 $ - Total $ 1,550,000.00 DISTRIBUTION OF APPROPRIATION TO EXPENSE ACCOUNTS: Account Number Current Budget Revision Amended Budget 2201.2430.5025.9102 $ 109,000.00 $ 30,000.00 $ 139,000.00 2201.2430.5025.9252 $ 20,000.00 $ 20,000.00 2201.2430.5025.9610 $ 220,000.00 $ 1,500,000.00 $ 1, 720,000.00 $ - $ - Total $ 329,000.00 $ 1,550,000.00 $ 1,879,000.00 Approved as to Form: ..fJzt 105