HomeMy WebLinkAboutED RA Affordable Housing FundingCITY OF AGENDA ITEM NO.: 5
SAN RAFAEL MEETING DATE: June 15, 2009
SAN RAFAEL REDEVELOPMENT AGENCY REPORT
SUBJECT: A Resolution of the Redevelopment Agency of the City of San Rafael Authorizing
Funding of up to $25,000 to Reduce the Resale Price of an Affordable Housing Unit
(APN 155-376-25)
SUBMITTED BY:- i1,194t Xi—kb
Nancy Mackle, Economic Develo ment Director
DATE: June 9, 2009
APPROVED BY:
*KNor—dho—ff,-C-1ty Manager
RECOMMENDATION: Staff recommends that the Agency Board adopt the attached resolution
accepting authorizing funding of up to $25,000 to reduce the resale price of a Below Market Rate unit.
BACKGROUND: The City contracts with the Marin County Housing Authority ("Marin Housing") to
administer the Below Market Rate ("BMR") program for ownership units. The 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. When Marin Housing receives notice
that an owner is selling their BMR unit, Marin Housing staff works through their waiting list to
identify another qualified buyer. Such identified buyer enters into an agreement with the owner to
purchase the unit. Occasionally, Marin Housing is unable to identify another qualified buyer within the
allotted time period and must purchase the unit to keep it in the BMR program. The Memorandum of
Understanding with Marin Housing requires the local jurisdiction, in this case San Rafael, to provide
the funding for the unit acquisition.
The Capri development contains eleven BMR units; two moderate income one bedroom units ("Capri
#1 and #2"), two moderate income two bedroom units and six one bedroom low income units. The
moderate income one bedroom units initially cost $229,700 and were difficult to sell because of the
unit size, price and lack of covered parking.
The owner of one of these moderate income one bedroom units ("Capri #1") decided to sell. Marin
Housing could not find another qualified buyer within the allotted time period and requested the San
Rafael Redevelopment Agency purchase the unit to keep it in the program. The San Rafael Agency
Board approved the purchase of Capri #1 and a reduction in the sales price of up to $31,000. Marin
Housing has undertaken an extensive marketing campaign for this unit. A price reduction has
produced several income qualified buyers and we believe that the unit will soon be resold. Upon sale,
the Agency will recoup the acquisition funds less the permanent subsidy amount.
FOR CITY CLERK ONLY
File No.:
City Council Meeting:
Disposition:
Page 2
Unfortunately, the owner of the second moderate income, one bedroom unit Capri #2 is also selling
their unit. Marin Housing is recommending the resale price for Capri #2 also be reduced in order to
attract a qualified buyer.
ANALYSIS: The resale prices for Capri #1 and #2 are $244,000, reflecting the increase in the
Consumer Price Index since 2006. The decline in the real estate market has resulted in larger
condominiums, without resale restrictions, being available at similar prices. The price and the unit size
have made it difficult to find qualified buyers within the allotted time period. Therefore, Marin
Housing is requesting that the San Rafael Redevelopment Agency provide a maximum permanent
subsidy of $25,000 for Capri #2. This is similar to the price reduction for Capri 41.
While it is difficult to predict the real estate market, at this time we believe that price reductions will
not be required for the other BMR units in the Capri development. The one bedroom units priced for
lower income buyers initially cost $146,900. We anticipate their reasonable price will make those
units very desirable without a price reduction. There are also two moderate income two bedroom BMR
units at Capri. One of these units was recently sold without a price reduction.
FISCAL IMPACT: The authorization amount shall not exceed $25,000 and would be charged to the
Agency's Low and Moderate Income housing fund. This is a permanent subsidy so the funds will not
be returned when the unit is sold. Permanently reducing the price of the unit will result in the unit
being affordable to lower income households over time and more in line with other units in the BMR
program. We believe this the other BMR units at Capri will sell without additional subsidy, assuming
the real estate market does not deteriorate further. There are two other moderate income units at Capri,
both two bedroom units. Marin Housing staff does not believe that those owners will be selling in the
near future and the two bedroom units have not been difficult to sell.
OPTIONS: Staff recommends the Agency authorize the subsidy request of not to exceed amount of
$25,000. The Agency could take the following actions:
Reject the subsidy request. Staff does not recommend this option because the price of the unit will
be similar to properties without resale restrictions. If another qualified buyer cannot be found
within the allotted time period, the Agency may have to purchase the unit to keep it in the BMR
program.
ACTION REQUIRED: Authorization of the funding for the permanent subsidy and resale price
reduction.
ATTACHMENTS:. A: Letter from Marin Housing
B: Resolution
June 9, 2009
Ms Stephanie Lovette,
City of San Rafael
Redevelopment Agency
1313 Fifth Avenue
San Rafael CA 94901
MAR N
HOUSING
Making Housing More A7ordaWe
4020 Civic Center Drive
San Rafael, CA 94903-4173
Executive Director
Dan Nackerman .
Ref: Below Market Rate Home Ownership Program: Recommendation for the
City to Reduce the Price of a One —Bedroom Condominium at 401 North
Ave (Capri). APN: 155-376-24
Marin Housing received Notice to Sell this condominium from the owner on May 27
2009, and calculated the resale price, in accordance with the Resale Restriction
Agreement, to be $242,450. This unit is almost identical to the next-door unit which the
City acquired on 5/ 28/09, so that the price could be reduced and marketing continued.
After two months Marin Housing will be obliged to exercise its Option to Purchase, in
order to retain the home in the Below Market Program. MHA staff therefore
recommends that the price of.this home, too, could be reduced to facilitate finding a new
buyer within this time period.
The homes at Capri were always challenging to sell because of their apartment -like size
and character and in the present market there are still one-, two-, and three-bedroom
condos available in Novato and San Rafael for less than $250,000, and without resale
restrictions.
In order to preserve this home as part of the affordable stock, Marin Housing
recommends that the City of San Rafael should reduce the effective price by at least
$25,000. This could be achieved by a straight price reduction or by offering a silent
second mortgage loan.
The current price is affordable to a couple at 90% of Area Median Income: $69,700. The
reduction by $25,000 would bring it within reach of a couple at 80% AMI ($61,950) and
at the lower income level there are more support programs available to first-time buyers.
Marin Housing will support the sale with a Mortgage Credit Certificate worth
approximately $200 per month and an American Dream Down payment loan of $10,000,
to eligible applicants.
Housing Authority of .
Peter Ramsay the County of Marin
Home Ownership Programs Specialist
415/491-2525'
(FAX) 415/472-2186
(TDD) 1-800-735-2929
ATTACHMENT A
www.marinhousing.org
SAN RAFAEL REDEVELOPMENT AGENCY
RESOLUTION NO.
MOVED BY:
BY:
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN
RAFAEL AUTHORIZING FUNDING OF UP TO $25,000 TO REDUCE THE RESALE
PRICE OF AN AFFORDABLE HOUSING UNIT (APN 155-376-25)
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 Redevelopment Agency of the City of San Rafael (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 at least 10% of
the units in any residential project of ten units or more include a minimum of 10% of the units
affordable to moderate income households; and
WHEREAS, the City of San Rafael and Mc Innis Housing Partners initially entered into
an Agreement to Provide Below Market Rate Housing ("BMR") and the Marin County Housing
Authority ("Marin Housing") agreed to administer the BMR units in the Capri 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 has received notice that the owners of a one bedroom
moderate income unit at the Capri desire to sell their unit; and
WHEREAS, the Agency desires to utilize $25,000 from the Low and Moderate Income
Housing Fund (the "Housing Fund") to permanently reduce the sales price of the unit so that the
unit will be affordable to lower income households; and
WHEREAS, the $25,000 subsidy will make the unit affordable to lower income
households, benefit low and moderate -income homebuyers, benefit the Project Area and serve
major Redevelopment Plan goals and objectives.
ATTACHMENT B
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 on 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 provide a subsidy in order to reduce the resale price of the
Below Market Rate unit at Capri 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 allocates up to Twenty Five
Thousand Dollars ($25,000) of Housing Fund monies to provide a permanent subsidy for the
unit.
BE IT FURTHER RESOLVED that this Resolution shall take immediate effect upon
adoption.
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 regular
meeting of the members of said Agency held on the 15th day of June, 2009, by the following
vote, to wit:
AYES:
MEMBERS:
NOES:
MEMBERS:
ABSENT:
MEMBERS:
ABSTAIN:
MEMBERS:
ESTHER C. BEIRNE, Agency Secretary
