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Home My WebLink AboutED Purchase BMR Housing Unit 2015CITY of Agenda Item No: 3. e Meeting Date: October 5, 2015 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: Economic Development Prepared by: Stephanie Lovette City Manager Approval: Economic Development Manager TOPIC: Allocate funds to purchase an individual below market rate housing unit. The City will be repaid when the unit is resold to another income eligible buyer at a below market price. SUBJECT: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL APPROVING THE ALLOCATION OF AN AMOUNT NOT TO EXCEED TWO HUNDRED AND FIFTY THOUSAND DOLLARS ($250,000) TO FUND A LOAN TO MARIN HOUSING FOR THE PURCHASE OF A BELOW MARKET RATE HOUSING UNIT WITH CITY IN LIEU HOUSING FUNDS (A.P.N. 180-520-07) RECOMMENDATION: Staff recommends that the City Council approve an allocation from the City's affordable housing in lieu fund in an amount not to exceed $250,000 to provide a loan to Marin Housing for the purchase and eventual resale of a Below Market Rate housing unit and authorize the City Manager to effectuate the Loan Agreement. BACKGROUND: The City has contracted with the Marin County Housing Authority ("Marin Housing") to administer the Below Market Rate ("BMR") Housing program for ownership units. The City's BMR Agreement provides that each contract conveying a BMR unit to a buyer include a resale restriction and an option to purchase constituting a right of first refusal to Marin Housing ("Resale Restriction"). In most cases Marin Housing qualifies a buyer to purchase the unit and the unit is transferred directly from the seller to the qualified buyer and Marin Housing does not provide any funding. Occasionally, a BMR unit must be purchased by a public agency to assure the unit remains in the BMR program. In these situations, San Rafael can utilize the City's in lieu affordable housing fund (the "City Affordable Housing Fund") for acquisition loans to Marin Housing or to directly purchase the BMR unit. ANALYSIS: The contract between the BMR owner and Marin Housing requires the owner to occupy the unit. Marin Housing has confirmed this unit is not owner occupied. The owner has acknowledged violating the contract and has agreed to sell the unit to Marin Housing. FOR CITY CLERK ONLY File No.: .212.' Council Meet!% _ 1,01c,12'a/<- Disposition: koLSOz-0 rioAJ 140 SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 The contract between Marin Housing and the owner provides a formula for the resale price. The formula price is $250,000. The transaction structure will be a loan from the City to Marin Housing. Marin Housing will purchase the unit and repay the City once the unit is sold to another income eligible buyer. FISCAL IMPACT: There is no impact to the General Fund. The loan shall not exceed $250,000 and would be charged to the City's Affordable Housing Fund. When the unit is resold, the funds will be repaid to the City's Affordable Housing Fund. In March 2015, the City Council authorized allocating $580,000 from the affordable housing fund for the administration of the affordable ownership housing program and for loans to Marin Housing to be used to repurchase existing ownership units. These loans will be repaid once the unit is sold to another qualified purchaser. The Council authorized the annual Marin Housing contract for 2015-16 in the amount of $80,000 and a $135,000 loan to repurchase a unit in September 2015. With this action, there is $115,000 remaining in the account from the original City Council authorization for this program. There is an additional $1.2 Million of affordable housing funds which the Council has allocated towards development, purchase and rehabilitation of affordable housing units. Should there be additional ownership BMR units that Marin Housing needs to purchase prior to the sale of the two units purchased in 2015, the City Council could direct staff to utilize a portion of the $1.2 Million in affordable housing funds for that purpose. OPTIONS: • Adopt the resolution authorizing a loan agreement in a form to be approved by the City Attorney and authorizing the City Manager to effect the loan agreement. • Reject the loan request. Staff does not recommend this option, as the unit could be removed from the affordable ownership housing stock. RECOMMENDED ACTION: Adopt the resolution. ATTACHMENTS: Resolution RESOLUTION NO. 14020 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL APPROVING THE ALLOCATION OF AN AMOUNT NOT TO EXCEED TWO HUNDRED AND FIFTY THOUSAND DOLLARS ($250,000) TO FUND A LOAN TO MARIN HOUSING FOR THE PURCHASE OF A BELOW MARKET RATE HOUSING UNIT WITH CITY IN LIEU HOUSING FUNDS (A.P.N 180-520-07) WHEREAS, Section 14.16.030 of the Zoning Ordinance of the San Rafael Municipal Code requires that a portion of the units in residential projects include units affordable to low and moderate income households; and WHEREAS, Section 14.16.030 of the Zoning Ordinance of the San Rafael Municipal Code also imposes affordable housing requirements on new nonresidential (commercial, industrial or institutional) development. These funds are placed in a separate housing in lieu fee fund to be used for the acquisition, improvement or construction of housing affordable to very low, low and moderate income households; and WHEREAS, the City has contracted with the Marin County Housing Authority ("Marin Housing") to administer the Below Market Rate ("BMR") Housing program for ownership units. The City's BMR Agreement provides that each contract conveying a BMR unit to a buyer include a resale restriction and an option to purchase constituting a right of first refusal to Marin Housing ("Resale Restriction"); and WHEREAS, Marin Housing and the owner of the property identified as APN 180-520-07 entered into a Resale Restriction"; and WHEREAS, Marin Housing desires to exercise its option to purchase a Below Market Rate unit at APN 180-520-07 pursuant to the Resale Restriction, but Marin Housing does not have the funds necessary to exercise the purchase option; and WHEREAS, the City of San Rafael desires to provide a loan to Marin Housing to finance acquisition of such unit by Marin Housing ("the Loan"), until the unit can be resold to a low or moderate income household, so that the unit might remain in the City's BMR program; and, WHEREAS, it is proposed that the City fund the Loan with Two Hundred and Fifty Thousand Dollars ($250,000) from the City's in lieu affordable housing fund (the "City Affordable Housing Fund"); and WHEREAS, the transaction will serve the goals of the City's housing element by maintaining housing available at affordable cost in the community, thereby decreasing the market pressure on the supply of affordable housing in the community; and WHEREAS, The California Environmental Quality Act (Public Resources Code Sections 21000 et seq.) ("CEQA") imposes no conditions on the City's consideration and approval of this Agreement, because the project undertaken pursuant to this Agreement is the rehabilitation of existing improvements and such projects are exempt from CEQA requirements under the categorical exemption set forth in 14 CCR Section 15301; and WHEREAS, by staff report accompanying this Resolution and incorporated into this Resolution by this reference (the "Staff Report"), the City Council has been provided with additional information upon which the findings and actions set forth in this Resolution are based. NOW, THEREFORE, BE IT RESOLVED that the City Council hereby finds and determines that the above recitals are true and correct and have served as the basis, in part, for the findings and actions of the City Council set forth below. BE IT FURTHER RESOLVED that the City Council hereby approves allocation of Two Hundred and Fifty Thousand Dollars ($250,000) from the City Affordable Housing Fund monies to fund the Loan and authorizes the City Manager to effectuate the Loan Agreement with Marin Housing, in a form approved by the City Attorney. BE IT FURTHER RESOLVED that this Resolution shall take immediate effect upon adoption. I, ESTHER BEIRNE, City Clerk of the City of San Rafael, hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a regular meeting of the City Council held on the 5th day of October 2015, by the following vote, to wit: AYES: COUNCILMEMBERS: Bushey, Colin, Gamblin, McCullough & Mayor Phillips NOES: COUNCILMEMBERS: None ABSENT: COUNCILMEMBERS: None ESTHER BEIRNE, City Clerk ROUTING SLIP / APPROVAL FORM INSTRUCTIONS: Use this cover sheet with each submittal of a staff report before approval by the City Council. Save staff report (including this cover sheet) along with all related attachments in the Team Drive (T:) 4 CITY COUNCIL AGENDA ITEMS 4 AGENDA ITEM APPROVAL PROCESS 4 [DEPT - AGENDA TOPIC] Agenda Item # 3.e- Date .e- Date of Meeting: 10/5/2015 From: Stephanie Lovette Department: Economic Development Date: 9/23/2015 Topic: Allocate funds to purchase an individual below market rate housing unit. The City will be repaid when the unit is resold to another income eligible buyer at a below market price. Subject: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL APPROVING THE ALLOCATION OF AN AMOUNT NOT TO EXCEED TWO HUNDRED AND FIFTY THOUSAND DOLLARS ($250,000) FOR THE PURCHASE OF A BELOW MARKET RATE HOUSING UNIT WITH CITY IN LIEU HOUSING FUNDS (A.P.N. 180-520-07) Type: ® Resolution ❑ Ordinance ❑ Professional Services Agreement ® Other: Staff Report APPROVALS ® Finance Director Remarks: MM- Approved 9/25/15 ® City Attorney Remarks: LG -Approved 9/24/15 with minor changes. ® Author, review and accept City Attorney / Finance changes Remarks: )ZL City Manager