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Home My WebLink AboutResolution 2012-72 - Neighborhood Stabalization Program Amend TermsCITY OF PALM DESERT STAFF REPORT REQUEST: ADOPT CITY COUNCIL RESOLUTION N . 01_2-T -72 _ AUTHORIZING A REQUEST TO THE CALIFORNIA DEPARTMENOF HOUSING AND COMMUNITY DEVELOPMENT TO AMEND THE TERMS OF THE ENHANCED FIRST TIME HOMEBUYER ASSISTANCE COMPONENT OF THE CALIFORNIA NEIGHBORHOOD STABILIZATION PROGRAM (NSP) SUBMITTED BY: Veronica Tapia, Accountant II DATE: November 15, 2012 CONTENTS: Resolution No2012-72 Recommendation That the City Council: 2012-72 1) Waive further reading and adopt Resolution No. _-_, a resolution of the City Council of the City of Palm Desert authorizing a request to amend terms of the Enhanced First Time Homebuyers Assistance ("EFTHB") Component of the California Neighborhood Stabilization Program ("NSP"); and 2) Authorize the City Manager to execute documents necessary to complete the amendment. Executive Summa Approval of staff's recommendation will allow staff to amend its proposed Enhanced First Time Home Buyer component of the NSP Program to provide purchase price assistance to eligible first time homebuyers in the form of a silent second lien with varying assistance levels based on the income level of the qualified homebuyer, up to a maximum of $75,000. The program currently allows up to $75,000 in assistance per purchaser; however there is a 20% of purchase price cap that does not allow enough subsidy to ensure an affordable housing cost to qualified homebuyers. Background On May 21, 2009, the City Council/Agency Board approved a joint agreement for NSP funding, which was necessary to meet the $1 million threshold to apply with the County of Riverside, City of Coachella, and City of Palm Springs to secure funding available to each area. The basic intent of the NSP is to mitigate the impacts of increasing foreclosures and falling home prices by purchasing foreclosed and abandoned homes and other residential properties at a discounted value, rehabilitating or redeveloping these properties if necessary, and reselling the properties to qualified homebuyers. With the funding received, the City was able to acquire two properties in designated areas that were suffering from the foreclosure cycle. On April 8, 2010 City Council approved the acquisition of the home located at 77115 Florida Avenue at a cost of $153,450. On June 10, Staff Report 2012-72 Resolution No. _-_ Neighborhood Stabilization Program Amendment Page 2 of 2 November 15, 2012 2010 City Council again approved the acquisition of the home located at 74131 El Cortez Way at a cost of $141,570. The homes have been rehabilitated and marketed for sale to qualified homebuyers. On May 26, 2012 staff was authorized to negotiate the sale of these homes to qualified homebuyers, which included silent second loans not to exceed $75,000. However, in order to accommodate the sale of the properties, staff has discovered that the 20% limitation previously set, does not allow enough subsidy to ensure an affordable housing cost to qualified homebuyers. As a result, staff recommends the following change: Activity: NSP3 Enhanced First Time Home Buyer ("EFTHB") Program The EFTHB Program is to provide purchase price assistance to eligible first time home buyers in the form of a silent second lien as follows: Up to thirty percent (30%) of the selling price for moderate income first time homebuyers with a household income which does not exceed 120% of the area median income ("AMI"); Up to forty percent (40%) of the selling price for low income first time homebuyers with a household income which does not exceed 80% of the AMI; and finally, up to fifty percent (50%) of the selling price for very low income first time homebuyers with household income which does not exceed 50% of the AMI. All assistance loans will be capped for a maximum amount of seventy five thousand dollars ($75,000), with an affordable restriction for a time period not to exceed fifteen (15) years. The purchase price assistance provided to eligible first time home buyers will be funded from the net proceeds of the sale. Staff recommends approval of the attached resolution authorizing the request to amend the terms of the Enhanced First Time Homebuyer Assistance (EFTHB) component of the Neighborhood Stabilization Program (NSP). The amendment would modify the proposed EFTHB Program to provide purchase price assistance to eligible first time home buyers in the form of a silent second lien from its original 20% assistance cap to 30%, 40%, or 50% depending on the income level of the qualified buyer, up to $75,000 per home. Fiscal Analysis The purchase price assistance will be funded from net proceeds of the sale of the homes. These homes were acquired with funding provided by the NSP program, therefore there is no impact to the General Fund. Submi By: Vero 7' Tapia, Account nt II 019'ul S. Gibson, Director of Finance Department Head: M. Moore, Diyector of Housing CITY COUNClL�" _ _ON APPROVED DEN" RECEIVED OTHER Approval: AYES;/ NOES: ABSErM ABSTAIN: AIMP- J17hM. Wo muth, City Manager VERIFIED BY: Original on File with G:\rdaXVeronicaTapia\NSP Program\Contract Amendment\SR-NSP Request for Amendment to EFTHB 11-15-12.doc Office RESOLUTION NO. -- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AUTHORIZING A REQUEST TO THE CALIFORNIA DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT TO AMEND THE TERMS OF THE ENHANCED FIRST TIME HOMEBUYER ASSISTANCE COMPONENT OF THE CALIFORNIA NEIGHBORHOOD STABILIZATION PROGRAM (NSP) The City Council of the City of Palm Desert, California (hereinafter referred to as the "City Council") does resolve as follows: WHEREAS, the County of Riverside ("County") and the City of Palm Desert ("City") executed a Cooperation Agreement for the use of Neighborhood Stabilization Program Funds ("Cooperation Agreement"), dated 22 December 2009, whereby the City elected to participate with the County in a joint effort to apply for, receive and use Neighborhood Stabilization Program ("NSP" or the "Program") funds from the State of California to assist and undertake essential neighborhood stabilization and housing assistance activities pursuant to the Housing and Economic Recovery Act of 2008 ("HERA"), and the subsequent program regulations promulgated by the United States Department of Housing and Urban Development ("HUD"); and WHEREAS, the California Department of Housing and Community Development ("HCD") administers NSP funds for the State of California; and WHEREAS, the City, in cooperation with the Palm Desert Redevelopment Agency, established a 2009-10 NSP Action Plan (the "Plan") for the participation of very low, low and moderate income residents in the Program within the City, approved by the City Council on May 26, 2009; and WHEREAS, the County and the City desire to seek authorization from HCD to amend the terms of the Enhanced First Time Homebuyer Assistance component of California NSP consistent with HUD and HCD regulations and rules. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM DESERT DOES HEREBY FIND, DETERMINE, RESOLVE AND ORDER AS FOLLOWS: Section 1. The City Council has reviewed and hereby approves and consents to the County and the City seeking authorization from HCD to amend the terms of the Enhanced First Time Homebuyer Assistance component of the California NSP consistent with HUD and HCD regulations and rules, for the following activities: Proposed amended terms Activity: NSP3 Enhanced First Time Home Buyer ("EFTHB") Program The EFTHB Program is to provide purchase price assistance to eligible first time home buyers in the form of a silent second lien as follows: Up to thirty percent (30%) of the selling price for moderate income first time homebuyers with a household income which does not exceed 120% of the area median income ("AMI"); Up to forty percent (40%) of RESOLUTION NO. the selling price for low income first time homebuyers with a household income which does not exceed 80% of the AMI; and finally, up to fifty percent (50%) of the selling price for very low income first time homebuyers with household income which does not exceed 50% of the AMI. All assistance loans will be capped for a maximum amount of seventy five thousand dollars ($75,000), with an affordable restriction for a time period not to exceed fifteen (15) years. The purchase price assistance provided to eligible first time home buyers will be funded from the net proceeds of the sale. Section 2. In the event that additional NSP funding becomes available at a later date, the City is authorized to apply for, and/or accept such additional NSP funding, up to the amount eligible under any revised or reissued notice of funding availability. Any additional NSP funding will be used in accordance with funding requirements established by HUD and/or HCD. Section 3. The City Council hereby authorizes and directs the City Manager, with concurrence with City Attorney, to take such further actions and execute such other agreements as may be necessary or appropriate in administering the actions authorized by this Resolution. Section 4. The City Council hereby authorizes, the City Manager to sign Program amendment and other reporting forms that are required by the Program. PASSED, APPROVED AND ADOPTED this 15th day of November, 2012 by the following vote to wit: AYES: NOES: ABSENT: ROBERT A. SPEIGEL, Mayor ATTEST: RACHELLE D. KLASSEN, City Clerk City of Palm Desert, California G:\rda\VeronlcaTapiakNSP Program\Contract Amendment\NSP Resolution Amending EFTHB 11-15-12.doc