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HomeMy WebLinkAboutSR - Sale of 93 Sngl-Fmly Homes - Falcon Crst Dvlpmnt/Res 06-145/Res 535Resolution No. 06-145 Resolution No. 535 CITY OF PALM DESERT/PALM DESERT REDEVELOPMENT AGENCY JOINT CONSIDERATION STAFF REPORT REQUEST: JOINT CONSIDERATION FOR APPROVAL OF ACTIONS RELATED TO THE SALE OF NINETY-THREE (93) SINGLE-FAMILY HOMES LOCATED IN THE FALCON CREST DEVELOPMENT (TRACT NO. 30795) IN THE CITY OF PALM DESERT SUBMITTED BY: JANET M. MOORE, HOUSING AUTHORITY ADMINISTRATOR DATE: NOVEMBER 16, 2006 CONTENTS: CITY RESOLUTION NO. 06-145 AGENCY RESOLUTION NO. 535 SUMMARY REPORT PURSUANT TO H 8, S CODE SECTION 33433 CITY'S BEGIN LOAN PROGRAM AND GUIDELINES PURCHASE AND SALE DOCUMENTS AFFORDABLE HOUSING RESTRICTION AND LIEN AGREEMENT AGENCY LOAN DOCUMENTS CITY LOAN DOCUMENTS RECOMMENDATION: 1) That the City Council and Agency Board, a) Open the joint public hearing and accept public testimony on the proposed sale of the ninety-three single-family homes located in the Falcon Crest development (Tract No. 30795) in the City of Palm Desert; close the public hearing; and, b) Waive further reading and adopt, City Resolution No. 06- 145 and Agency Resolution No. 535 making findings in accordance with the Summary 33433 Report prepared pursuant to California Health and Safety Code Section 33433 for the sale of property located at the Falcon Crest development. 2) By Minute Motion, that the City Council: a) Approve the City's BEGIN Loan Program and Guidelines, and BEGIN Monitoring Agreement, substantially as to form; and, b) Approve the documents related to the sale of properties at Falcon Crest, the Agency loans and the City loans, including the Purchase and Sale Agreement, Seller's Disclosure, Deeds of Trust, for both the Agency and City loans, Promissory Notes for both the Agency and G tRDAUessica Gonzales\FTHB PROGRAMSTALCON CREST\SALES DOCUMENTS\Staff Report - Falcon Crest Sale of Homes Public Hearing Nov 16 2006 DOC Resolution No. 06-I45 Resolution No. 535 Staff Report Sale of Homes at Falcon Crest Page 2 of 7 November 16, 2006 City's BEGIN loans, the CaIHFA Subordination Agreement and the Affordable Housing Restriction and Lien Agreement ("Lien Agreement"), all substantially as to form and authorize the City Manager to execute the same; and, c) Authorize "City BEGIN Loans" for qualifying Falcon Crest homebuyers with deferred payments from BEGIN Program monies in varying amounts up to $30,000 to assist qualifying buyers with down payment and closing cost assistance and authorize the City Manager to execute same; and, d) Authorize the Finance Director to facilitate the draw of BEGIN program monies for the purpose outlined herein and appropriate said funds accordingly; and, e) Authorize the City Manager to execute any documents necessary to effectuate the actions taken by the City Council herewith. 3) By Minute Motion, that the Agency Board: a) Authorize the establishment of the sales prices of the Falcon Crest homes so that the total of the sales price, mortgage payments and other components of the purchaser's housing cost result in the home being available to a person or family of low or moderate income at an affordable housing cost; b) Approve the documents related to the Agency loans, the City loans and the sale of homes at Falcon Crest including the Purchase and Sales Agreement, Seller's Disclosure, Deeds of Trust for both the City and Agency loans, Promissory Notes for both the City and Agency loans, the Lien Agreement, the CaIHFA subordination agreement, substantially as to form, and authorize the Executive Director to execute the same; c) Authorize Agency loans for qualifying Falcon Crest homebuyers with deferred payments from 20% Set -Aside monies in varying amounts up to $50,000 to assist qualifying buyers with down payment and closing cost assistance and authorize the Executive Director to execute same; d) Authorize the Director of Finance to appropriate funds necessary for the purpose outlined herein; and, e) Authorize the Executive Director to execute any documents necessary to effectuate the actions taken by the Agency Board herewith. G %RDAWessica GonzaiestFTHB PROGRAMSTALCON CREST\SALES DOCUMENTStStaH Report - Falcon Crest Sale of Homes Public Heanng Nov 16 2006 DOC Resolution No. 06-145 Resolution No. 535 Staff Report Sale of Homes at Falcon Crest Page 3 of 7 November 16, 2006 EXECUTIVE SUMMARY: Falcon Crest consists of 93 three and four bedroom single-family homes as part of Tract 30795, which will be sold to persons and families of low or moderate income. Health and Safety Code 33433 generally provides that before any property of the Palm Desert Redevelopment Agency ("Agency") acquired, in whole or in part, directly or indirectly, with tax increment money is sold for development pursuant to the redevelopment plan, the sale must first be approved by the City Council of the City of Palm Desert ("City") by resolution following a public hearing and the resolution musl contain certain findings. Recommendations for these actions are included in Items 1(a) and (b). Additionally, approval of the following actions are necessary for property sales, subsidy loans and program implementation; ❖ Establish guidelines and monitoring requirement for the City's BEGIN Loan Program ("BEGIN Program"); Recommendations for these actions are included in Item 2(a) ❖ Authorize the establishment of sales prices for homes at Falcon Crest; Recommendations for these actions are included in Item 3(a) ❖ Authorize the sale of the homes and the documents related thereto; Recommendations for these actions are included in Items 2(b) and 3(b) ❖ Authorize the issuance of City and Agency of subsidy loans with deferred payments and the documents related thereto; Recommendations for these actions are included in Items 2(b), (c) and 3 (b), (c), (d) ❖ All of which will ensure an affordable housing cost to each homebuyer. For example: A family with a household income of $48,000 purchasing a Plan 1 Falcon Crest home will pay a sales price of $206,000, receive an Agency loan of approximately $32,000 and a City BEGIN loan of $30,000.00. The remaining amount will consist of the buyer's down payment of at least 2% and a first mortgage. BACKGROUND: A fundamental purpose of redevelopment is to increase and improve the supply of very low, low and moderate -income housing. The Agency has already determined that Project Area No. 3 contains conditions of blight that are so prevalent and so substantial that redevelopment of the area is necessary. With this in mind, the Redevelopment G \RDAUessica GonzalesTTHB PROGRAMSTALCON CREST\SALES DOCUMENTS\StaH Report Falcon Crest Sale of Homes Public Heanng Nov 16 2006 DOC Resolution No. 06-145 Resolution No. 535 Staff Report Sale of Homes at Falcon Crest Page 4 of 7 November 16, 2006 Agency acquired property from the City to create a development that has for -sale and for -rent components, multi -family and senior components, the blend of which is expected to encourage social, economic and household composition diversity. On July 14, 2005, the Agency Board approved an Agreement between the Palm Desert Redevelopment Agency and Comdyn PD LLC for fee Developer Services for Agency owned property located in the City of Palm Desert for the development of an affordable housing project that includes ninety-three (93) three and four bedroom single-family for - sale homes known as Falcon Crest and twenty-seven (27) senior one -bedroom rental units known as La Rocca Villas. The Falcon Crest homes, the basis of this report, are well underway and marketing, and sales efforts have begun. In accordance with the Sales Program described below and to make the project attractive and affordable to households of low and moderate income while still being competitive to the surrounding markets, the following components were considered: • Proarams The Falcon Crest Sales Program ("Sales Program") was approved on April 13, 2006, which set the minimum guidelines for Falcon Crest homebuyers and the method for the establishment of the waitlist. On January 30, 2006, the City was approved for a $2,790,000 grant through Department of Housing and Community Development ("HCD") as part of BEGIN Program. As part of the requirements for the funding, guidelines have to be established for the issuance of loans and the procedures by which the loans will be administered. The City of Palm Desert BEGIN Loan Program and Guidelines ("BEGIN Program") are included with this report for approval and have been established in accordance with Health and Safety Code section 50865. The BEGIN Program includes a reuse plan that includes the guidelines for funds coming back to the City as loans are paid back. • Aareement/Documents The Agency proposes to sell each home, and the Agency and City propose to make loans with deferred payments for each home, pursuant to documents, consistent with the BEGIN Program and the Sales Program, including (i) a deposit receipt, purchase contract and joint escrow instructions, (ii) seller's disclosure, (ii) an affordable housing restriction and lien agreement (iii) deeds of trust, and (iv) promissory notes, substantially in the form(s) attached to this report and recorded against the property with the Riverside County Recorder's Office as appropriate. • Sales Price In order to make the homes available to a person or family of low or moderate income at an affordable housing cost, the sales price of each home is tentatively set by floor plan at prices that range from $199,000 to $224,000. G \RDAUessica Gonzaies\FTHB PROGRAMSTALCON CREST\SALES DOCUMENTS\Staff Report -Falcon Crest Sale of Homes Public Nearing Nov 16 2006 DOC Resolution No. 06-145 Resolution No. 535 Staff Report Sale of Homes at Falcon Crest Page 5 of 7 November 16, 2006 The actual amount of each City and Agency subsidy loan will vary for each transaction provided that the combination results in the home being available at an affordable housing cost to the buyer. Based on the foregoing, the consideration for each home will not be less than the fair reuse value of the homes at the use and with the covenants and conditions set forth in the Affordable Housing Restriction and Lien Agreement. Sale prices may be increased annually by the percentage change of Area Median Income (AMI) as provided by HCD for Riverside County. • Primary Loans For the initial purchase of homes in the Falcon Crest development, only CaIHFA approved lenders will be participating. CaIHFA has partnered with the developer, ComDyn PD LLC, to offer reduced interest rates on their CaIHFA first mortgage loans. Additionally, on September 14, 2006, the Agency Board authorized the purchase of a forward commitment through these approved CaIHFA lenders to lock -in an interest rate for a pool of funds, in the event the mortgage interest rates start to increase. No monies for the forward commitment will be expended unless the mortgage interest rates begin to increase. The reserved funds will provide conventional 30-year first mortgages to homebuyers at the locked -in interest rate regardless of the rates in the marketplace. • Buver Subsidies In accordance with the Sales Program, the City and Agency propose to make loans with deferred payments using both 20% Set -Aside funds (the "Agency Loan") and the proceeds of the BEGIN grant (the "City BEGIN Loan") to each homebuyer. The purpose of the loans will be to reduce the purchaser's required down payment and monthly mortgage costs, so that the total of the sales price, mortgage payments and other components of the purchaser's housing cost result in the home being available to the purchaser at an affordable housing cost (as defined in California Health and Safety Code Section 50052.5, as amended from time to time). The BEGIN funds will be maximized for each homebuyer (up to $30,000 per home) taking into account a minimum Agency loan of $5,000. Total combined City and Agency loans will not exceed $80,000 adjusted annually by the percentage change of the AMI. The loans will be recorded against the property but will not become payable until after the superior deed of trust is paid in full. At the City or Agency's sole and absolute discretion interest may be forgiven at any time during the term of the loans or payments of principal and interest may be deferred for a longer period of time after the superior deed of trust is paid in full. Such considerations will be made in accordance with redevelopment law or the program guidelines of the applicable funding source. • Cost vs. Sales Prices The Agency will absorb the initial cost differential, if any, between the cost of the homes (including the cost of land, offsites, onsites, construction and soft costs) and the sales prices of the homes in order to ensure affordability to the homebuyers. G \RDAVessica GonzalesTTHB PROGRAMSTALCON CRESTTSALES DOCUMENTS\StaH Report - Falcon Crest Sale of Homes Public Hearing Nov 16 2006 DOC Resolution No. 06-145 Resolution No. 535 Staff Report Sale of Homes at Falcon Crest Page 6 of 7 November 16, 2006 • Affordability Restriction and Requlatory Term In order to maintain the continued affordability in the development, every buyer will be required to sign an "Affordable Housing Restriction and Lien Agreement". California Redevelopment Law calls for a minimum affordability term of 45 years. The agreement will also include resale price restrictions, occupancy restrictions, and limitations on encumbrances and transfers, among others. • Homeowners Association The homes will be part of a Homeowners Association (HOA) that will maintain the front yard of each home, window awnings and the common areas to ensure ongoing continuity and consistency in the development. The HOA will be autonomous once it is turned over to the residents of Falcon Crest. • Enerav Costs and Photovoltaic Estimated Reduction in Cost The Agency is absorbing the cost of the installation of equipment in order to lower energy costs to the homebuyer. The installation of this photovoltaic system will offset approximately 57% of the average home's energy consumption in Southern California Edison's territory. The average annual cost savings per household is approximately $650. • Buver Profile Based on the buyer profiles processed to date, the typical buyer will be in the low to moderate -income category with household incomes over $40,000. The average household size is four (4) members, which include two (2) children. All households are "First Time Home Buyers" as defined by CaIHOME guidelines and must not exceed 120% of the area median income for households in Riverside County. • Fundina Sources Funds necessary to implement the recommended programs will be reserved from 20% Housing Set -aside Funds and BEGIN Funds on an as needed basis. CONCLUSION: Having taken the above components into consideration, staff recommends that the City Council and Agency Board jointly hold a public hearing on the proposed sale of the 93 single-family homes in the City of Palm Desert located in the Falcon Crest development (Tract No. 30795). Following the conclusion of the public hearing, approve Resolution No. 06- and Resolution No. making findings in accordance with the G \RDAUessica GonzaleskFTHB PROGRAMSTALCON CRESTTSALES DOCUMENTStStaH Report Falcon Crest Sale of Homes Public Hearing Nov 16 2006 DOC Resolution No. 06-145 Resolution No. 535 Staff Report Sale of Homes at Falcon Crest Page 7of7 November 16, 2006 Summary 33433 Report prepared pursuant to Section 33433 of the Health and Safety Code and approve the above actions related to the sale of homes in the Falcon Crest development. Submitted by: Approval: J net . Moore `Dave Yr H goj7evelopment/Housing Authority Administrator Director �T61md BY RDA ON VERIFIED BY Original on file v,W", ,."F'3 Office ent Carlos L. Ortegk Executive Director CITY COUNCIL ACTION: APPROVED ✓ DENIED RECEIVED OTHER MEETI G DAT AYES• NOES: ABSENT: ABSTAM.-Now'',, ,, VERIFIED BY :.11�^,,ll h, Original on File wiYh City Clerk '6 OfLlire G \RDAUessica Gonzaies\FTHB PROGRAMSNFALCON CRESTNSALES DOCUMENTSkStatt Report - Falcon Crest Sale of Homes Public Hearing Nov 16 2006 DOC RESOLUTION NO. 06- 145 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT APPROVING THE SALE OF 93 SINGLE-FAMILY HOMES IN THE FALCON CREST DEVELOPMENT IN THE CITY OF PALM DESERT THE CITY COUNCIL OF THE CITY OF PALM DESERT HEREBY FINDS, DETERMINES, RESOLVES AND ORDERS AS FOLLOWS: Section 1. The Palm Desert Redevelopment Agency (the "Agency") owns property located in Project Area No. 3 of the Agency (the "Project Area"), consisting of Tract No. 30795 in the City of Palm Desert, California, and known as the Falcon Crest development (the "Property"). The Property will be developed with 93 single-family homes (the "Homes"). The Agency proposes to sell the Homes only to persons and families of low or moderate income (as defined in California Health and Safety Code Section 50093, as amended from to time). In accordance with the Agency's Falcon Crest Program, the Agency proposes to make deferred -payment loans (the "Agency Loans") and the City of the Palm Desert (the "City") proposes to make deferred -payment loans (using proceeds of the BEGIN grant from the California Department of Housing and Community Development) (the "City BEGIN Loans")) to each purchaser of a Home for the purpose of reducing the purchaser's required down payment and monthly mortgage costs, so that the total of the sales price, mortgage payments and other components of the purchaser's housing cost result in the Home being available to the purchaser at an affordable housing cost (as defined in California Health and Safety Code Section 50052.5, as amended from time to time). The Agency proposes to sell each Home, and the Agency proposes to make each Agency Loan, pursuant to (i) a deposit, receipt, purchase contract and joint escrow instructions (Affordable Housing) (the "Purchase and Sale Agreement"), (ii) an affordable housing restriction and lien agreement (the "Lien Agreement"), (iii) an Agency deed of trust (the "Agency Deed of Trust"), and (iv) an Agency promissory note (the "Agency Promissory Note"), and the City proposes to make each City BEGIN Loan pursuant to (i) a City BEGIN deed of trust (the "BEGIN Deed of Trust"), and (ii) a City BEGIN promissory note (the "BEGIN Promissory Note") all substantially in the form of such documents on file in the offices of the Agency Secretary and City Clerk of the City. Section 2. The Purchase and Sale Agreement, the Lien Agreement, the Agency Deed of Trust, the BEGIN Deed of Trust, the Agency Promissory Note, and the BEGIN Promissory Note, together with a certain related documents and a summary report prepared pursuant to Health and Safety Code Section 33433 in connection with the sale of the Homes (the "Summary Report"), have been made available for public inspection in the office of the City Clerk and Agency Secretary in the manner required by Health and Safety Code Section 33433. Section 3. Following notice duly given, the Agency and City Council have held a full and fair public hearing on the proposed sale by the Agency of the Homes to persons and families of low or moderate income. Section 4. Based on the evidence presented to the City Council, including the written staff report, oral and written testimony in this matter, and the Summary Report, the City Council hereby finds and determines that (i) the sale of the Homes by the Agency to persons and G AW Jessica Gonzales\FTHB PROGRAMSTALCON CRESTSALES DOCUMENT&Resolution of the Gty of Palm Desert Approving sale of homes Nov 16 2006 DOC Resolution No. 06- 145 families of low or moderate income at an affordable housing cost pursuant to purchase and sale agreements, lien agreements, deeds of trust and promissory notes substantially in the form of the Purchase and Sale Agreement, Lien Agreement, Agency Deed of Trust, BEGIN Deed of Trust, Agency Promissory Note, and BEGIN Promissory Note will assist in the elimination of blight in the Project Area and will provide housing for low and moderate income persons; (ii) the sale of the Homes pursuant to such purchase and sale agreements, lien agreements, deeds of trust and promissory notes is consistent with the Agency's Implementation Plan for the Project Area adopted pursuant to Health and Safety Code Section 33490; and (iii) the consideration for each Home will be not less than the fair reuse value of the Home at the use and with the covenants and conditions authorized by the lien agreement. Section 5. The City Council hereby approves the sale of the Homes at an affordable housing cost to persons and families of low or moderate income pursuant to purchase and sale agreements, lien agreements, deeds of trust, and promissory notes substantially in the form of the Purchase and Sale Agreement, Lien Agreement, Agency Deed of Trust, BEGIN Deed of Trust, Agency Promissory Note, and BEGIN Promissory Note and the Executive Director of the Agency is hereby authorized to determine the sales price and the amount of the Agency Loan for each Home. Section 6. The City Manager, the Mayor, the Mayor Pro Tem, and the City Clerk, and their designees, are hereby authorized and directed, jointly and severally, to execute and deliver any and all necessary documents and instruments and to do all things which they may deem necessary or proper in order to effectuate the purposes of this Resolution and the transactions contemplated hereby; and any such actions previously taken by such officers are hereby ratified, confirmed and approved. PASSED, APPROVED and ADOPTED this 16th day of November 2006 by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: ATTEST: Rachelle D. Klassen, City Clerk Jim Ferguson, Mayor 2 G 1RDAUessica Gonzales\FTHB PROGRAMSTALCON CRESTISALES DOCUMENTS1Resoluuon of the City of Palm Desert Appro�ng sale of homes Nov 16 2006 DOC RESOLUTION NO. 535 A RESOLUTION OF THE PALM DESERT REDEVELOPMENT AGENCY APPROVING THE SALE OF 93 SINGLE-FAMILY HOMES IN THE FALCON CREST DEVELOPMENT IN THE CITY OF PALM DESERT THE PALM DESERT REDEVELOPMENT AGENCY HEREBY FINDS, DETERMINES, RESOLVES AND ORDERS AS FOLLOWS: Section 1. The Palm Desert Redevelopment Agency (the "Agency") owns property located in Project Area No. 3 of the Agency (the "Project Area"), consisting of Tract No. 30795 in the City of Palm Desert, California, and known as the Falcon Crest development (the "Property"). The Property will be developed with 93 single-family homes (the "Homes"). The Agency proposes to sell the Homes only to persons and families of low or moderate income (as defined in California Health and Safety Code Section 50093, as amended from to time). In accordance with the Agency's Falcon Crest Program, the Agency proposes to make deferred -payment loans (the "Agency Loans") and the City of the Palm Desert (the "City") proposes to make deferred -payment loans (using proceeds of the BEGIN grant from the California Department of Housing and Community Development)(the "City BEGIN Loans")) to each purchaser of a Home for the purpose of reducing the purchaser's required down payment and monthly mortgage costs, so that the total of the sales price, mortgage payments and other components of the purchaser's housing cost result in the Home being available to the purchaser at an affordable housing cost (as defined in California Health and Safety Code Section 50052.5, as amended from time to time). The Agency proposes to sell each Home, and the Agency proposes to make each Agency Loan, pursuant to (i) a deposit, receipt, purchase contract and joint escrow instructions (Affordable Housing) (the "Purchase and Sale Agreement"), (ii) an affordable housing restriction and lien agreement (the "Lien Agreement"), (iii) an Agency deed of trust (the "Agency Deed of Trust"), and (iv) an Agency promissory note (the "Agency Promissory Note"), and the City proposes to make each City BEGIN Loan pursuant to (i) a City BEGIN deed of trust (the "BEGIN Deed of Trust"), and (ii) a City Promissory Note (the "BEGIN Promissory Note") all substantially in the form of such documents on file in the offices of the Agency Secretary and City Clerk of the City. Section 2. The Purchase and Sale Agreement, the Lien Agreement, the Agency Deed of Trust, the BEGIN Deed of Trust, the Agency Promissory Note, and the BEGIN Promissory Note, together with certain related documents and a summary report prepared pursuant to Health and Safety Code Section 33433 in connection with the sale of the Homes (the "Summary Report"), have been made available for public inspection in the office of the City Clerk and Agency Secretary in the manner required by Health and Safety Code Section 33433. Section 3. Following notice duly given, the Agency and City Council have held a full and fair public hearing on the proposed sale by the Agency of the Homes to persons and families of low or moderate income. Section 4. Based on the evidence presented to the Agency, including the written staff report, oral and written testimony in this matter, and the Summary Report, the Agency hereby finds and determines that (i) the sale of the Homes to persons and families of low or moderate income at an affordable housing cost pursuant to purchase and sale agreements, lien G \RDAUessica GonzaieskFTHB PROGRAMSTALCON CRESnSALES DOCUMENTSXResolunon of the Palm Desert Redevelopment Agency Approving sale of homes Nov 16 2006 DOC Resolution No. 535 agreements, deeds of trust and promissory notes substantially in the form of the Purchase and Sale Agreement, Lien Agreement, Agency Deed of Trust, BEGIN Deed of Trust, Agency Promissory Note, and BEGIN Promissory Note will assist in the elimination of blight in the Project Area and will provide housing for low and moderate income persons; (ii) the sale of the Homes pursuant to such purchase and sale agreements, lien agreements, deeds of trust and promissory notes is consistent with the Agency's Implementation Plan for the Project Area adopted pursuant to Health and Safety Code Section 33490; and (iii) the consideration for each Home will be not less than the fair reuse value of the Home at the use and with the covenants and conditions authorized by the lien agreement. Section 5. The Agency hereby approves the sale of the Homes at an affordable housing cost to persons and families of low or moderate income pursuant to purchase and sale agreements, lien agreements, deeds of trust and promissory notes substantially in the form of the Purchase and Sale Agreement, Lien Agreement, Agency Deed of Trust, BEGIN Deed of Trust, Agency Promissory Note, and BEGIN Promissory Note and the Executive Director is hereby authorized and directed, for and in the name and on behalf of the Agency, to execute and deliver the purchase and sale agreements and lien agreements in substantially the form of the Purchase and Sale Agreement and Lien Agreement, with such additions thereto or changes or insertions therein as may be approved by the Executive Director (such approval to be conclusively evidenced by such execution and delivery), and the Executive Director is hereby authorized to determine the sales price and the amount of the Agency Loan for each Home. Section 6. The Executive Director, the Chairman, the Vice -Chairman, and the Secretary of the Agency, and their designees, are hereby authorized and directed, jointly and severally, to execute and deliver any and all necessary documents and instruments and to do all things which they may deem necessary or proper in order to effectuate the purposes of this Resolution and the transactions contemplated hereby; and any such actions previously taken by such officers are hereby ratified, confirmed and approved. PASSED, APPROVED and ADOPTED this 16th day of November 2006 by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: Jim Ferguson, Chairman ATTEST: Rachelle D. Klassen, Secretary 2 G \RDAUessica GonzalesTTHB PROGRAMSFALCON CREST\SALES DOCUMENTS\Resoluuon of the Palm Desert Redevelopment Agency Approving sale of homes Nov 16 2006 DOC SUMMARY REPORT FALCON CREST DEVELOPMENT Introduction The Palm Desert Redevelopment Agency (the "Agency") owns property located in Project Area No. 3 of the Agency (the "Project Area"), consisting of Tract No. 30795 in the City of Palm Desert, California, and known as the Falcon Crest development (the "Property"). The Property will be developed with 93 single-family homes (the "Homes"). The Agency proposes to sell the Homes only to persons and families of low or moderate income (as defined in California Health and Safety Code Section 50093, as amended from to time). California Health and Safety Code Section 33433 generally provides that before any property acquired by a redevelopment agency with tax increment money is sold, that transaction must be approved by the city council after a public hearing in accordance with Section 33433. Section 33433 provides that a copy of the proposed purchase and sale agreement, and a summary report which describes and specifies certain information, must be available for public inspection. A. Cost of the Purchase and Sale Agreements and Loans to the Aaencv The Property was acquired by the Agency for $854,165.00. As part of the Agency's investment in the development and construction, approximately an additional $22,786085.00 has been expended including but not limited to clearance costs, lot improvements, the costs of construction of the homes, indirect costs, sales costs, plus an additional $220,000.00 that will be an approximate cost of a forward commitment with CaIHFA. The actual construction costs will be offset by the amounts received as part of the sales proceeds, which include the first mortgage and the City BEGIN Loan. This amount is difficult to quantify due to the individual details of each home sale transaction. In accordance with the Agency's Falcon Crest Program, the Agency proposes to make deferred - payment loans (the "Agency Loans") and the City of Palm Desert (the "City") proposes to make deferred -payment loans (using proceeds of the BEGIN grant from the California Department of Housing and Community Development) (the "City BEGIN Loan") to each purchaser of a Home for the purpose of reducing the purchaser's required down payment and monthly mortgage costs, so that the total of the sales price, mortgage payments and other components of the purchaser's housing cost result in the Home being available to the purchaser at an affordable housing cost (as defined in California Health and Safety Code Section 50052.5, as amended from time to time). The Agency proposes to sell each Home, and the Agency and City propose to make deferred payment loans for each Home, pursuant to (i) a deposit, receipt, purchase contract and joint escrow instructions (Affordable Housing) (the "Purchase and Sale Agreement"), (ii) an affordable housing restriction and lien agreement (the "Lien Agreement"), (iii) deeds of trust (the "Deeds of Trust"), and (iv) promissory notes (the "Promissory Notes"), all substantially in the form of such documents attached hereto and on file in the offices of the Agency Secretary and City Clerk of the City. The sales price for each Home and the amount of the Agency Loan and City Loan will vary for each transaction provided that for each transaction the total of the sales price, mortgage G QDAUessica GonzatesTTHB PROGRAMSTALCON CRESnSALES DOCUMENTS\Summary Report Falcon Crest Nov 16 2006 DOC payments and other components of the purchaser's housing cost result in the Home being available to a person or family of low or moderate income at an affordable housing cost. B. Estimated value of the Interest to be Sold (Based on the highest and best uses permitted under the Redevelopment Plan) The estimated value of the homes if sold without affordable housing restrictions would range from $327,000 to 355,000. C. Estimated Value of the Interest to Be Sold (Based on the Terms of the Purchase and Sale Agreements and Lien Agreements) The sales price of each Home will be less than the fair market value of such Home. The sales price for each Home and the amount of the Agency Loans and City Loans will vary for each transaction provided that each transaction will result in the Home being available to a person or family of low or moderate income at an affordable housing cost. Each Home will be subject to a Lien Agreement which restricts the resale of the Home to a person or family of low or moderate income at an affordable housing cost. The differential between the fair market value of each Home and the sales price is necessary, taking into account the Agency Loans and City Loans, to make the Homes available to persons and families of low or moderate income at an affordable housing cost. Based on the foregoing, the consideration for each Home will be not less than the fair reuse value of the Homes at the use and with the covenants and conditions set forth in the Lien Agreement. D. Explanation of Whv the Sale of the Homes Will Assist in the Elimination of Blight and Provide Housinq for Low or Moderate Income Persons The City Council has previously determined that the Project Area is an area in which the combination of conditions of blight is so prevalent and so substantial that there is a reduction of, or lack of, proper utilization of the area to such an extent that it constitutes a serious physical and economic burden on the community which cannot reasonably be expected to be reversed or alleviated by private enterprise or governmental action, or both, without redevelopment. Among other things, the Project Area contains vacant and underutilized properties, properties which suffer from depreciated or stagnant property values and impaired investments, and deteriorated, aged and obsolete buildings. Such conditions tend to further deterioration and disuse because of the lack of incentive to landowners and their inability to improve, modernize or rehabilitate their property while the condition of the neighboring property remains unchanged. The Legislature has declared that decent housing for all people of the State of California is vital to the State's future peace and prosperity and that a fundamental purpose of redevelopment is to expand the supply of low and moderate income housing and to provide an environment for the social, economic and psychological growth and well-being of all citizens. The sale of the Homes in the Falcon Crest development to persons and families of low or moderate income at an affordable housing cost pursuant to lien agreements which restrict the units for the use and occupancy of persons and families of low or moderate income at an affordable housing cost will assist in eliminating blighting conditions in the Project Area related to the lack of affordable housing and provide much needed affordable housing opportunities, in furtherance of a fundamental purpose of redevelopment, all for the benefit of the health, safety and welfare of the residents and taxpayers of the Project Area and the City. G tRDAVess,ca GonzatesTTRB PROGRAMS\FALCON CRESTTSALES DOCUMENTS\Summary Report Falcon Crest Nov 16 2006 DOC 2