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Home My WebLink AboutED RA BMR Ownership Program; Marin Housing 2009CITY OF SAN RAFAEL 2 AGENDA ITEM NO.: MEETING DATE: October 5, 2009 San Rafael Redevelopment Agency Agenda Report SUBJECT: A Resolution of the Redevelopment Agency of the City of San Rafael approving the execution of a loan to Marin Housing in an Amount Not to Exceed Three Hundred and Seventy Five Thousand Dollars ($375,000) for the purchase of a Below Market Rate Housing Unit (A.P.N.179-471-14) Department: Redevelopment Prepared by: Initials: Nancy Mackie, Econodiic Development Director Ken Nordhoff Executive Director RECOMMENDATION: Staff recommends that the Agency adopt the attached resolution authorizing a loan to Marin Housing in an amount not to exceed $375,000 for the purchase and resale of a Below Market Rate unit and associated legal fees, and authorize the Economic Development Director to affect 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. This can occur when lenders are unable to provide a new buyer with mortgage financing in a timely manner or when the owner is facing a foreclosure action by the bank or homeowner's association. In these situations, San Rafael has utilized the Agency's Low and Moderate Income Housing Fund ("Housing Fund') for acquisition loans to Marin Housing or to purchase the unit directly. hi the past three years the Agency has authorized the purchase of four BMR units; two units were resold to eligible buyers and the owner cured the default on one unit. The Agency currently owns and is marketing one unit in the Capri development. The Agency paid $244,000 for this moderate income unit and the Agency Board approved reducing the sales price to $220,000 to make the unit affordable to low income buyers. The Agency also provided a silent second mortgage in the amount of $15,000 for a BMR unit. "Silent seconds" reduce the initial sales price making the unit more affordable, and are repaid upon sale or refinance of the unit. FOR AGENCY SECRETARY ONLY File No.: Agency Meeting: Disposition: ANALYSIS: This is the second time that the Agency has authorized staff to acquire this unit due to the owners' difficulty in paying the mortgage and/or the homeowners association dues. The owner has previously cleared all liens so the Marin Housing did not have to acquire the unit. Marin Housing staff is in contact with the owner regarding the liens. If the liens are not cleared in a timely manner, Marin Housing will purchase the unit as outlined below. If additional funds are required to refurbish the unit prior to sale, staff will request additional Agency funds. BMR formula repurchase price $358,100 Legal Fees (outside counsel) 6,900 Escrow and closing costs 10,000 Total $375,000 Timing Marin Housing is in the process of working with the property owner and lien holders to ascertain if the default can be cured to allow the property owner to retain the unit. If the property owner does not have sufficient funds, Marin Housing staff estimates the process of acquiring title and clearing the liens will require six months. Marin Housing staff believes the unit can be resold quickly; it is located in a desirable project with no threats of litigation for construction deficiencies. Resale Price and Affordability The resale price can be set at an amount that will enable the Agency to recoup all of its costs. Alternatively the resale price could be set at a lower price and the Agency could subsidize a portion of the costs required to acquire and rehabilitate the unit. Agency staff suggests that the decision on the resale price be made once the actual recovery costs are known. Marin Housing has agreed to consult with the Agency prior to reselling the unit. At that time staff will present an analysis of the resale price alternatives to the Agency Board. FISCAL IMPACT: The loan amount shall not exceed $375,000 and would be charged to the Housing Fund. The funds will be repaid to the Agency's Housing Fund. If this sale is approved and funded, the Agency will have expended $634,000 of housing funds in the past three years and anticipates recovering $578,000, and keeping all of the current units in the program and affordable to low and moderate income households. OPTIONS: • Adopt the resolution authorizing a loan agreement in a form to be approved by the City Attorney and authorizing the Economic Development Director to effect the loan agreement. • Direct staff to alter the loan terms to reflect the desires of the Agency members. • Reject the loan request. Staff does not recommend this option, as the unit could be removed from the affordable ownership housing stock. ACTION REQUIRED: Adopt the attached resolution. MOVED:MEMBER SAN RAFAEL REDEVELOPMENT AGENCY RESOLUTION NO. 2009- SECONDED: MEMBER A RESOLUTION OF THE SAN RAFAEL REDEVELOPMENT AGENCY APPROVING THE EXECUTION OF A LOAN TO MARIN HOUSING IN AN AMOUNT NOT TO EXCEED THREE HUNDRED AND SEVENTY FIVE THOUSAND DOLLARS ($375,000) FOR THE PURCHASE OF A BELOW MARKET RATE HOUSING UNIT (APN 179-471-14) WHEREAS, the City Council (the "City Council") of the City of San Rafael (the "City") has adopted and amended, from time to time, the Redevelopment Plan (the "Redevelopment Plan") for the Central San Rafael Redevelopment Project Area (the "Project Area"); and WHEREAS, the San Rafael Redevelopment Agency (the "Agency") is responsible for administering the Redevelopment Plan to cause redevelopment of the Project Area, including the provision of housing available at affordable housing cost to low and moderate income households; and WHEREAS, The City of San Rafael General Plan Policy H-19 requires a portion of the units in residential projects include units affordable to low and moderate income households; and WHEREAS, the City of San Rafael and Signature Properties initially entered into an Agreement to Provide Below Market Rate Housing and the Marin County Housing Authority ("Marin Housing") agreed to administer the BMR units in the development; and WHEREAS, the Below Market Rate Housing Agreement provides that each contract conveying a Below Market Rate 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 desires to exercise its option to purchase a Below Market Rate unit pursuant to the Resale Restriction, but Marin Housing does not have the funds necessary to exercise the purchase option; and WHEREAS, the Agency desires to provide a loan to Marin Housing (the "Agency Loan") to finance acquisition of such unit by Marin Housing, so that the unit might remain in the City's Below Market Rate Housing program; and WHEREAS, it is proposed that the Agency fund the Agency Loan with Three Hundred and Seventy Five Thousand Dollars ($375,000) from the Agency's Low and Moderate Income Housing Fund (the "Housing Fund'); and WHEREAS, the loan repayment will be deposited into the Agency's Low and Moderate Income Housing Fund; and WHEREAS, the preservation of this affordable housing unit Development will benefit the Project Area and serve major Redevelopment Plan goals and objectives; and WHEREAS, The California Environmental Quality Act (Public Resources Code Sections 21000 et seq.) ("CEQA") imposes no conditions on the Agency's consideration and approval of this Agreement, because the project undertaken pursuant to this Agreement is an acquisition 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 Agency 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 Agency hereby: 1) incorporates by reference the accompanying staff report; and 2) Finds and determines that the above recitals and the information contained in the accompanying staff report are true and correct and serve as the basis, in part, for the findings and actions of the Agency set forth below. BE IT FURTHER RESOLVED that, based oh information and analysis set forth in the above Recitals and contained in the Staff Report accompanying this Resolution, the Agency hereby finds and determines pursuant to Health and Safety Code Section 33334.2(g) that the use of moneys from the Housing Fund to fund the acquisition of the Below Market Rate unit by Marin Housing will be of benefit to the Project Area and the program of redevelopment pursuant to the Redevelopment Plan. BE IT FURTHER RESOLVED that the Agency hereby approves the Agency Loan and allocates Three Hundred and Seventy Five Thousand Dollars ($375,000) of Housing Fund monies to fund the Agency Loan. BE IT FURTHER RESOLVED that the Agency hereby authorizes the Economic Development Director to execute on behalf of the Agency the Loan Agreement, in a form to be approved by the Agency's Attorney, and to take all actions necessary to provide and implement the Agency Loan. BE IT FURTHER RESOLVED that this Resolution shall take immediate effect upon adoption. I, ESTHER BEIRNE, Agency Secretary of the San Rafael Redevelopment Agency, hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a regular meeting of the members of said Agency held on the 5th day of October 2009, by the following vote, to wit: AYES: MEMBERS: NOES: MEMBERS: ABSENT: MEMBERS: ABSTAIN: MEMBERS: ESTHER BEIRNE, Agency Secretary