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HomeMy WebLinkAboutAGENDA REPORT 1994 0427 CC ADJ ITEM 11CAGENDA C I T Y O F Z"L e R E P O R T M O O R P A R R TO: The Honorable City Council FROM: Jaime Aguilera, Director of Community DevelopmenfZ/-' Deborah S. Traffenstedt, Senior Planner DATE: April 13, 1994 (CC Meeting of 4- 20 -94) SUBJECT: CONSIDER REVISIONS TO THE CITY'S FIRST TIME HOME BUYER PROGRAM FOR TRACT 3963 Background In 1990, the City developed a First Time Home Buyer Program in conjunction with Griffin Homes and Simi Valley Bank. In exchange for development allocations, Griffin Homes paid the City $50,000 for five homes in Tract 3963, and that money was subsequently used to buy down the interest rate on the first mortgage for those five homes. In addition, Griffin Homes transferred $30,000 in equity to the City for each of the five homes, and that equity share allowed the City to provide a second mortgage of $30,000 to each of the buyers of the five homes. The City also agreed to act as the mortgage guarantor in lieu of having Simi Valley Bank require private mortgage insurance. In December 1993, the City purchased one of the five homes in Tract 3963 for which the City had a second mortgage of $30,000. That purchase was made, because Simi Valley Bank had notified the City that foreclosure was imminent for the first mortgage. Since through foreclosure Simi Valley Bank could have sold the property at a loss, and required the City to fulfill its mortgage guarantee obligations, the decision was made to purchase the home. Staff subsequently made improvements to the property, developed new First Time Home Buyer Program criteria, and advertised a First Home Buyer Program for the one available house. A lottery was held on March 2, 1994, to prioritize applications. No qualified buyer has been found to date. One problem has been the income restriction of 120 percent of the Ventura County median income (i.e., moderate income). The price of the home makes it very difficult for a moderate income household of one to three persons to qualify based on debt ratio restrictions. We are continuing to work with one applicant; however, Simi Valley Bank has notified the City that they cannot fund a loan based on. the Bank's eligibility criteria. The Honorable City Council April 13, 1994 Page 2 Discussion Staff intends to re- advertize a First Time Home Buyer Program, with equal priority given to residents and persons employed in the City that have never owned a residential unit of property, and that have a gross income that does not exceed 150 percent of the Ventura County median income (adjusted for family size). The advertised sales price is proposed to be $190,000, and a second mortgage of $10,000 and the first mortgage guarantee will again be offered. A resale restriction agreement would provide that the City receive a percentage share of any increase in equity when the home is sold to a subsequent buyer. If after the second advertisement of the Program, no qualified buyer is found, staff is requesting that the City Council authorize the City Manager to sell the home for the highest price that can be obtained to any buyer that has an income that does not exceed 150 percent of the Ventura County median income (i.e., not restricted to a first time home buyer, resident, or person employed in the City). Staff's main interest at this time is to sell the home as quickly as possible. The monthly utility, maintenance, and insurance costs for the home total approximately $200; and the total cost to the City as of March 31 was approximately $188,300 (includes purchase price of home). The most recent appraised value of the home was $200,000. Recommendation Authorize re- advertisement of the Tract 3963 First Time Home Buyer Program, based on the revised sales price and Program criteria proposed by staff; and if no qualified first time home buyer is found, authorize the City Manager to sell the home for the highest price that can be obtained, but not less than $190,000, to any buyer with a qualifying income of 150 percent of the County median income, and with no resale restrictions or equity provisions.