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Home My WebLink AboutED RA BMR Homeownership Program FundingCITY OF SAN RAFAEL AGENDA ITEM NO.: 4 MEETING DATE: October 19, 2009 San Rafael Redevelopment Agency Agenda Rort Department: Redevelopment 7 Prepared by: )4A4x� hA4--,r� Initials: Lk— Nancy Mackle, Economic Development Director Ken Nordhoff, Executive Director SUBJECT: Resolution Approving Funding in the Amount of $80,000 for an Agreement between the City of San Rafael and Marin Housing for the Administration of the City's Below Market Rate Homeownership Program RECOMMENDATION: Staff recommends that the Agency adopt the attached resolution approving funding in the amount of $80,000 for an Agreement between the City and Marin Housing for the administration of the Below Market Rate Homeownership Program. BACKGROUND: The Housing Authority of the County of Marin ("Marin Housing") has been administering the City's Below Market Rate Ownership ("BMR") program since its inception in 1986. In 2007, Marin Housing and the participating jurisdictions formalized the existing arrangement through a Memorandum of Understanding. The program costs are allocated between the participating jurisdictions. San Rafael has 37% of the BMR inventory and pays 37% of the costs, the County. of Marin has 29% of the units, Corte Madera has 10%, Larkspur, Tiburon and Mill Valley have 8% each, and San Anselm has 1% of the units. Each jurisdiction pays for legal costs of associated enforcement actions in its own jurisdiction. Marin Housing staff provides sales and resale services for all of the units in the program. Work includes conducting the lottery, verifying that the applicants meet the income and program requirements, assisting with financing, recording resale restrictions, ongoing contacts with the owners and monitoring of the units. Over the years, the Agency has provided one time financial contributions to Marin Housing for the program and has funded the costs associated with purchasing and rehabilitating San Rafael BMR units that had to be purchased due to violation of program rules or financial hardship. The Agency funds are returned when the units are resold. San Rafael's contribution is paid by the Agency's affordable housing fund. The Agency is required to spend a minimum of 20% of its tax increment revenue on low and moderate income housing. Redevelopment agencies can expend housing funds outside of the Redevelopment Project Area pursuant to findings by the City Council. FOR AGENCY SECRETARY ONLY File No.: Agency Meeting: Disposition: ANALYSIS: In the past nine months Marin Housing staff has been able to complete six resale transactions with qualified buyers and thirteen refinancing transactions, despite the most challenging real estate market in recent memory. Marin Housing was not able to find a qualified buyer for one unit in the Capri development, so the Agency purchased the unit in order to keep it in the program. Staff anticipates this unit will be resold to a qualified buyer within six months. In the past year and a half, the financial community has had difficulty separating legitimate affordable housing programs from abusive schemes and many lenders stopped all lending to first time, affordable housing buyers. Marin Housing has been aggressively pursuing opportunities to assure that low and moderate income households will be able to obtain ownership housing. Marin Housing has been able to secure additional Federal Mortgage Credit Certificates, continue the American Dream Down Payment Initiative and the City's homebuyer assistance program, and receive program approval from FHA. Marin Housing has also been working to increase the number of eligible people in the lottery by contracting for homebuyer education programs, waiving the application fee for buyers who complete a homebuyer education program and by creating partnerships with local non profit groups. In addition, Marin Housing and Agency staff spent considerable time negotiating the BMR agreement for 33 San Pablo; the standard BMR agreement had to be completely reworked due to changes in the real estate market and additional requirements from real estate lenders. Staff anticipates that continued job losses in the economy will result in additional problems in the BMR program due to people not being able to pay their mortgage or homeowners association dues. These situations require legal assistance and funding to enforce Marin Housing's rights under the unit Resale Restriction. Marin Housing has monitored all of the units for the past two years, and will continue to monitor the units at the rate of at least one-third of the units per year. The Agency funds will be used to fund an agreement between the City and Marin Housing to continue to administer and enforce the BMR program for the 2009-2010 Fiscal Year. The City Council will be considering a resolution authorizing the City Manager to enter into the agreement, in a form to be approved by the City Attorney. FISCAL IMPACT: The cost for the program administration is $70,000. Staff anticipates an additional $10,000 for legal costs due to enforcement actions. The full $80,000 expenditure is reflected in the Agency's budget in the affordable housing fund. OPTIONS: • Adopt the resolution authorizing the expenditure of Agency affordable housing funds to fund an agreement with Marin Housing for administration of the City's BMR program. • Reject the expenditure. Staff does not recommend this action, as there is not currently another vendor that will provide the same services. ACTION REQUIRED: Adopt the attached resolution. ATTACHMENTS: A: Resolution SAN RAFAEL REDEVELOPMENT AGENCY RESOLUTION NO. 2009 - MOVED BY: MEMBER SECONDED BY: MEMBER RESOLUTION APPROVING FUNDING IN THE AMOUNT OF $80,000 FOR AN AGREEMENT BETWEEN THE CITY OF SAN RAFAEL AND MARIN HOUSING FOR THE ADMINISTRATION OF THE CITY'S BELOW MARKET RATE HOMEOWNERSHIP PROGRAM WHEREAS, the San Rafael Redevelopment Agency (the "Agency") has set objectives for affordable housing in accordance with the Amended and Restated Redevelopment Plan (the "Agency Plan") for the Central San Rafael Redevelopment Project Area; and WHEREAS, in order to serve the objectives of the Agency Plan, the Agency desires to assist low and moderate income persons to achieve homeownership; and WHEREAS, the Agency has established a Low and Moderate Income Housing Fund (the "Fund") pursuant to Health and Safety Code Section 33334.3; and WHEREAS, San Rafael Municipal Code Section 14.16.030 requires the majority of new housing developments in the City to provide housing affordable to low and moderate income households on site and for those units to remain affordable over time; and WHEREAS, there are presently 116 affordable ownership units in the City of San Rafael with long tern resale restrictions; and WHEREAS, the Housing Authority of the County of Marin ("Marin Housing") has administered the Below Market Rate Home Ownership Program for the City of San Rafael, the County of Marin and the majority of cities in the County for many years; and WHEREAS, Marin Housing and the City of San Rafael wish to enter into a formal contract fox Marin Housing to administer the City's Below Market Rate Home Ownership Program ("Program") far an annual cost of $70,000, and the City of San Rafael does not have sufficient funds to fund this contract; and WHEREAS, the Program meets the Agency's goals of providing housing opportunities to low and moderate -income persons; all of the units have affordability restrictions of a minimum of forty-five years meeting the requirement of Health and Safety Code Section 33334.3. NOW, THEREFORE, IT IS HEREBY RESOLVED that the Agency Board hereby approves an expenditure of not to exceed Seventy Thousand Dollars ($70,000) from the Fund for an agreement between the City of San Rafael and Marin Housing to administer the City's Below Market Rate Home Ownership Program during Fiscal Year 2009-2010 and an additional $10,000 for enforcement activities in connection with the Program. I, ESTHER C. BEIRNE, Agency Secretary of the San Rafael Redevelopment Agency, hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a meeting of the members of said Agency held on the 19`h day of October, 2009 by the following vote, to wit: AYES: MEMBERS: NOES: MEMBERS: ABSENT: MEMBERS: ESTHER C. BEIRNE , Agency Secretary