HomeMy WebLinkAboutAGENDA REPORT 2007 0801 CC REG ITEM 09Iq,0r,0
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MOORPARK CITY COUNCILBY.
AGENDA REPORT
To: Honorable City Council
From: Nancy Burns, Senior Management Analyst � I
Date: July 26, 2007 (CC Mtg. of August 1, 2007) 1
Subject: Consider Opening Round 3 of the City's First Time Home Buyer
Program
BACKGROUND
A lottery was conducted at a Special Meeting of the City Council July 19, 2006, for
Round 2 of the City's First Time Home Buyer Program. This lottery determined the
order in which eligible applicants were processed for the units available at that time.
Buyers were approved for the 2 affordable units in the Shea Homes Canterbury Lane
project. No additional units have been completed since that time. The lottery list
from last year expires July 31, 2007, and no affordable units are expected to be
completed by that time.
DISCUSSION
Following some delays due, in part, to a general slowing in construction, Pardee's
Waverly Place is moving forward now, and a total of 25 units affordable to Low
Income households (80% of median income) are anticipated in this project. This
development will offer twelve 3 bedroom /2 bath units at 1,050 square feet, and
thirteen 4- bedroom /2 bath units at 1,425 square feet.
Staff recommends conducting a new lottery to identify buyers for this project. The
lottery list created will be valid for 2 years. During this time period, the lottery list will
be used for any Low Income resales that become available, and any other
City /Redevelopment Agency affordable housing units. It is believed that the City will
continue to conduct lotteries in the future, so that a list of pre - qualified applicants will
always be available for possible resale opportunities.
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Honorable City Council
Meeting of 8/1/07
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Although attendance at one of the informational workshops is mandatory for lottery
participants, all income levels, including Very Low Income and Moderate Income
individuals and households are welcome to attend the workshops to learn about the
application process, eligibility requirements, deed restrictions, resale requirements,
etc.
The list generated by the lottery will be administered in lottery number (numerical)
order. Following conditional loan approval, each applicant will be assigned an
affordable unit (new condominium or resale) based on family size.
Section 50052.5 of the California Health and Safety Code defines affordable housing
cost for purchases based on a family size "appropriate for the unit". Sub - section "c"
of this Section of the Code provides that "family size appropriate to the unit' is as
follows:
What the above means is that Affordable Housing Cost for a 3- bedroom dwelling, for
instance, is based on median income for a household of 4 persons, no matter what
size household actually purchases the unit. Affordable Housing Cost includes
principal, interest, property taxes, insurance, HOA dues (if applicable), utilities and
maintenance costs.
The following example explains how this affects a smaller household:
The current Affordable Sales Price for Pardee's (Low Income) Waverly Place 3
bedroom unit is $166,000. A 2- person household at the low end of the Low Income
category would have a housing cost -to- income ratio of 44 %. A 2- person household
at the high end of the Low Income category would have a housing cost -to- income
ratio of 28 %, which is an acceptable housing ratio. Whether or not either applicant
would be approved to purchase the unit would also depend on the amount of funds
remaining after providing the required minimum down payment, and the additional
debt carried by the applicant.
Affordable Sales Prices, based on current income limits and interest rates, are shown
on the following page. These are only estimates. Sales aren't expected to occur until
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Assumed Household Size
1
person
Studio unit
2
persons
1 bedroom
3
persons
2 bedrooms
4
persons
3 bedrooms
5
persons
4 bedrooms
What the above means is that Affordable Housing Cost for a 3- bedroom dwelling, for
instance, is based on median income for a household of 4 persons, no matter what
size household actually purchases the unit. Affordable Housing Cost includes
principal, interest, property taxes, insurance, HOA dues (if applicable), utilities and
maintenance costs.
The following example explains how this affects a smaller household:
The current Affordable Sales Price for Pardee's (Low Income) Waverly Place 3
bedroom unit is $166,000. A 2- person household at the low end of the Low Income
category would have a housing cost -to- income ratio of 44 %. A 2- person household
at the high end of the Low Income category would have a housing cost -to- income
ratio of 28 %, which is an acceptable housing ratio. Whether or not either applicant
would be approved to purchase the unit would also depend on the amount of funds
remaining after providing the required minimum down payment, and the additional
debt carried by the applicant.
Affordable Sales Prices, based on current income limits and interest rates, are shown
on the following page. These are only estimates. Sales aren't expected to occur until
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Honorable City Council
Meeting of 8/1/07
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2008 and the Affordable Sales Prices will be adjusted based on then applicable
income limits.
AFFORDABLE SALES PRICES
2007 Income Limits
Pardee Homes "Waverly Place" (condominiums
Low Income 3 bedrooms $79,500 1/12 of 30% of $166,000
(assumed (Household of 4) 70% of $79,500
household of 4)
Low Income 4 bedrooms $85,900 1/12 of 30% of $180,000
(assumed (Household of 5) 70% of $85,900
household of 5)
Staff has proposed modifications to Policy 27 - First Time Home Buyer Affordable
Housing Program and is requesting said modifications be approved at this time by
Minute Order. Staff will bring the proposed modifications to the City Council for
discussion and final approval on September 19, 2007. A redline version of Policy 27
is attached as Exhibit A.
STAFF RECOMMENDATION
Authorize staff to proceed with plans for Round 3 of the City's First Time Home Buyer
Program, with provisions as stated in this report and applicable to the Pardee
Waverly Place development, resale units or other City /Redevelopment Agency
Affordable Housing units; advertise the program; schedule a lottery for October 17,
2007; and approve provisions stated herein to become modifications to Policy 27.
Exhibit A
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EXHIBIT A
SECTION 27. POLICY 27 — FIRST -TIME HOME BUYER AFFORDABLE HOUSING
PROGRAM
Periodically, the City and /or the Moorpark Redevelopment Agency will make available
for sale one or more attached or detached dwelling units to very low, low, or moderate
income persons /households as further defined below as part of its First -Time Home
Buyer Affordable Housing Program (Program). This policy sets forth the primary criteria
for eligibility for participation in said Program and determining priority for participant
selection. This policy also sets forth the primary criteria and parameters for retaining
the affordable units as affordable for the longest feasible period, but in no event less
than forty -five (45) years; equity sharing requirement upon resale; and establishes the
requirement that upon resale the affordable dwelling unit is sold to a City /Agency
approved buyer in the same income category as the original buyer at the time of the
initial sale.
Other criteria to determine participant eligibility and to ensure compliance with this
policy, including but not limited to purchase agreement documents, shall be established
by the City Manager prior to the advertisement of the availability of one or more
affordable dwelling units as part of the Program.
Home Buyer Qualification Guidelines
• Low Income (less than 80 percent of Ventura County median income
based on household size); Very Low Income (less than 50 percent of
Ventura County median income based on household size); and when
applicable Moderate income (less than 120 percent of Ventura County
median income based on household size)
• First time home buyers (no previous home or mobilehome ownership)
• First priority for City of Moorpark residents who have lived in the City of
Moorpark for no less than one year prior to Program application deadline
(Category 1)
• Second priority to people who have worked within the City of Moorpark for
no less than one year prior to Program application deadline (Category 2)
• Third priority all others (Category 3)
• Five percent (5 %) minimum down payment, based on sales price (No
more than two percent (2 %) of affordable sales price may be a qualified
gift with remainder from borrower's own funds; under certain
circumstances, down payment assistance loan, not to exceed one percent
(1 %) of affordable sales price, with four percent (4 %) from borrower's own
funds.]
• Non - occupant co- borrowers are not allowed
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2. Selection Process
• Advertisement of program and orientation meetings on City Home Page,
City government channel, and distribution of a press release and other
means as determined by the City Manager
• Mandatory attendance of all interested buyers at an orientation meeting.
• Pre - screening applications offered at orientation meetings
• Neighborhood Housing Services of America (NHSA) or other City -
approved underwriting guidelines to be used, subject to additional City
requirements
• City- approved Home Buyer Education required prior to purchase, and
City- approved post - purchase home owner workshops (foreclosure
intervention, predatory lending, etc.) required after close of escrow
• A public lottery drawing shall be conducted for residential developments
with affordable units. Applicants may participate in the lottery process for
more than one development. Each lottery will consist of three "mini -
lotteries" for the three priority categories listed in Section 1 of this policy.
Categories will be exhausted before moving to the next category
(Category 1 first, followed by Category 2, followed by Category 3).
• The income category for an applicant will be determined when the
application is reviewed, prior to the lottery. If an applicant's personal,
financial or other circumstances change and it is later determined they are
no longer eligible in that income category, then they shall no longer be
eligible for any units that might be available during the applicable lottery
drawing period.
3. First -Time Home Buyer Affordable Housing Program Participant Exclusion
List
• Moorpark City Council, Moorpark Planning Commission, Moorpark Parks
and Recreation Commission, and Moorpark Arts Commission.
• Mayor and City Council appointees including but not limited to Air Pollution
Control District Advisory Committee, Area Housing Authority, Senior
Center Advisory Committee, Area Agency on Aging, Citizens
Transportation Advisory Committee, and Teen Council.
• All City employees in non - competitive service (management positions).
• Financial institutions participating as lenders for the Home Buyer Program.
• Developers and Developer's General Contractor(s) for specific projects
they developed or constructed that contain 1 or more affordable units.
• City contractors involved with City /Moorpark Redevelopment Agency First -
Time Home Buyer Affordable Housing Program and affiliates of these City
contractors, as determined by the City Manager on a case -by -case basis,
which may include title and escrow companies, contractors,
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subcontractors, subsidiaries, partnerships, and affiliates of these City
contractors.
Family members are excluded for all of the above - listed participant
exclusions. "Family members" is defined as follows: mother, father,
grandfather, grandmother, aunt, uncle, cousin, sister, brother, son,
daughter, step -son, step- daughter, son -in -law, daughter -in -law, nephew,
niece, grandchild, mother -in -law, father -in -law, brother -in -law, sister -in-
law, spouse as defined as a partner in marriage (California Civil Code
Section 4100), and domestic partner as defined by California Family Code
Section 297 and including the requirement for the filing of a Declaration of
Domestic Partnership with the Secretary of State.
4. Housing Pricing and Selection of Units:
• Initial Sale Price: Units will be priced based on Affordable Housing Cost
for the family size appropriate to the unit (Section 50052.5(b -c and h),
regardless of size of actual household:
o 3 bedroom unit priced for a household of 4
o 4 bedroom unit priced for a household of 5
• Resale Price — Resale price for affordable units will be based on
Affordable Housing Cost at time of resale. Affordable Sales Price is not
based on market price at initial sale, or at resale. (City will provide this
information to homeowners in this Program on an ongoing basis.)
• Applicants will be assigned a unit in their income category based on
household size, following conditional loan approval. Household size will
be determined at the time of receipt of application. At its discretion, the
City may assign a unit with more bedrooms than the applicant would
otherwise be eligible for, if it is the last unit that is available during the
applicable period of the Priority List.
5. City Staff Authority
The City Manager is authorized to execute all affordable housing project deferred
loan agreement and repayment documents for all affordable housing projects for
which the City will own an equity share. The City Clerk is authorized to accept
interest in real estate secured by any Deed of Trust associated with this program.
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