HomeMy WebLinkAboutED RA Purchase BMR UnitCITY OF
SAN RAFAEL
AGENDA ITEM NO.: 3
MEETING DATE: May 4, 2009
San Rafael Redevelopment Agency Agenda Report
Department: Redevelopment
Prepared by: l/1'UU�f/l�% (/cCP/v AUC_— Initials: J
Nancy Mackle, EconorrAc Development Director /Ken Nordhoff, Executive Director
SUBJECT: A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF
SAN RAFAEL ACCEPTING THE PURCHASE OPTION FROM MAR1N HOUSING,
AUTHORIZING THE PURCHASE OF A BELOW MARKET RATE UNIT FOR $244,000
AND AUTHORIZING ADDITIONAL FUNDING OF UP TO $31,000 TO REDUCE THE
RESALE PRICE OF THE UNIT AND FUND COSTS ASSOCIATED WITH THE RESALE
(APN 155-376-24)
RECOMMENDATION: Staff recommends that the Agency Board adopt the attached resolution
accepting the purchase option from Marin Housing for $244,000 for the purchase and resale of a
Below Market Rate unit and authorize additional funding of up to $31,000 to reduce the price of
the unit and fund the costs associated with the resale.
BACKGROUND: The City has contracted 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. The
majority of BMR unit resales occur between a willing seller and another low or moderate income
family that has been qualified by Marin Housing. In these situations Marin Housing does not
provide funds for the unit acquisition. Occasionally, Marin Housing is in the position of
exercising the resale option due to the inability to identify another qualified buyer within the
allotted time period. The Memorandum of Understanding with Marin Housing requires the local
jurisdiction, in this case San Rafael, to provide the funding for the unit acquisition.
FOR AGENCY SECRETARY ONLY
File No.:
Agency Meeting:
Disposition:
Page 2
The Capri units were initially sold in 2006. The initial sales were difficult because of the hidden
location and because the units looked similar to apartments. The one bedroom BMR units priced
for moderate income buyers initially cost $ 229,700 and were difficult to sell because of the unit
size and price. The one bedroom units priced for lower income buyers initially cost $ 146,900 and
were easily sold.
The resale price formula for this one bedroom moderate income unit results in a sales price of
$244,000, reflecting the increase in the Consumer Price Index. 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 a qualified buyer within the allotted time
period. Therefore, Marin Housing is requesting that the San Rafael Redevelopment Agency
purchase the unit to keep it in the program.
Marin Housing will continue to search for a qualified buyer and is recommending that the resale
price to be initially set at $220,000, a reduction of $24,000. Staff is requesting a maximum of
$31,000 in case the unit price needs to be further reduced and also to cover any additional
rehabilitation or closing costs associated with the sale. Upon the sale of the unit, the Agency will
receive between $213,000 and $220, 000, the $244,000 sales price less the ultimate subsidy.
ANALYSIS: There have been several situations where Marin Housing has been required to
purchase a BMR unit instead of selling the unit directly to another qualified buyer. At Baypoint
Lagoons, the Agency loaned Marin Housing funds to acquire a BMR unit after the owner's default.
The unit required substantial rehabilitation prior to resale. The Agency provided a $25,000 subsidy
to fund the rehabilitation in order to keep the sales price in line with other BMR units in the
development. The Agency also provided funding to acquire a unit at the Mission Townhouses. The
unit did not sell within the allotted time period because the price was too expensive for low and
moderate income buyers. The Agency funding reduced the unit price by $ 35,000 to
$ 298,000 and the unit was sold to a qualified buyer. The funding has been provided by the
Agency's Low and Moderate Income Housing Fund. The acquisition funds were returned when the
units were sold.
Exhibit A, prepared by Marin Housing, provides additional information on recommended pricing.
FISCAL IMPACT: The authorization amount shall not exceed $275,000 and would be charged to
the Agency's Low and Moderate Income housing fund. Marin Housing will continue to market the
unit at no additional cost to the Agency, pursuant to the current Memorandum of Understanding
between the City and Mann Housing. There is one other one bedroom unit priced for moderate
income owners at Capri. Staff anticipates similar pricing problems on that unit. Staff will request
Agency Board direction at the time that owner decides to sell.
Page 3
OPTIONS:
Staff recommends the Agency accept the option from Marin Housing and authorize the purchase
and resale of the unit at a not to exceed cost of $275,000. The Agency could take the following
actions:
Not accept the purchase option from Marin Housing. Staff does not recommend this option
because the unit will then be sold on the open market and lost as an affordable housing resource.
• Reject the subsidy request. Staff does not recommend this option because the price of the unit
will be similar to properties without resale restrictions and will be difficult to sell and for the
Agency to recoup its costs.
• ACTION REQUIRED: Authorization of the resale price and approval of subsidy amount.
ATTACHMENTS: A: Affordability Analysis prepared by Marin Housing.
RESOLUTION NO.
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN
RAFAEL ACCEPTING THE PURCHASE OPTION FROM MARIN HOUSING,
AUTHORIZING THE PURCHASE OF A BELOW MARKET RATE UNIT FOR $244,000
AND AUTHORIZING ADDITIONAL FUNDING OF UP TO $31,000 TO REDUCE THE
RESALE PRICE OF THE UNIT AND FUND COSTS ASSOCIATED WITH THE
RESALE (APN 155-376-24)
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 exercised its option to purchase a Below Market Rate
unit at Capri and desires to assign the purchase option to the San Rafael Redevelopment Agency;
and
WHEREAS, the Agency will utilize $244,000 from the Low and Moderate Income
Housing Fund (the "Housing Fund") so that the unit will remain in the City's BMR program; and
WHEREAS, the Housing Fund will be reimbursed once the unit is resold by Marin
Housing to a qualified buyer; and
WHEREAS, it is proposed that the resale price be set initially at $220,000, a subsidy of
$24,000; and
WHEREAS, the Agency authorizes an additional $7,000 to fund potential additional
costs associated with reselling the unit or further reducing the sales price; and
WHEREAS, the $220,000 resale price will benefit low and moderate -income
homebuyers, benefit the Project Area and serve major Redevelopment Plan goals and objectives.
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 acquire the unit and 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 approves the $220,000 resale
price and allocates up to Thirty One Thousand Dollars ($31,000) of Housing Fund monies to
fund the cost of the unit acquisition, rehabilitation and other costs in excess of the resale price.
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 4th day of May, 2009, by the following vote,
to wit:
AYES:
MEMBERS:
NOES:
MEMBERS:
ABSENT:
MEMBERS:
ABSTAIN:
MEMBERS:
ESTHER C. BEIRNE, Agency Secretary
April 28, 2009
Ms Stephanie Lovette,
City of San Rafael
Redevelopment Agency
1313 Fifth Avenue
San Rafael CA 94901
MAR N
HOUSING
Malting Housing More Affordable
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 and to Purchase, Temporarily, 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 February 10,,,
2009, and calculated the resale price, in accordance with the Resale Restriction
Agreement, to be $243,050. Within a month Marin Housing held a lottery draw and
offered the chance to buy to 18 one- and two -person households in the lottery pool.
Since then the home has been offered to all subsequent applicants with further open
houses and has been posted on Craig's List, but to date no one has expressed interest
in the home.
After two months Marin Housing was obliged to exercise its Option to Purchase on April
17, 2009, in order to retain the home in the Below Market Program. In a normal re -sale
the option would now be assigned to a buyer identified through the lottery, and the terms
of the Resale Restriction Agreement require close of escrow by mid-May.
The homes at Capri were always challenging to sell because of their apartment -like size
and character and in the present market there are plenty of 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 could temporarily acquire this unit at Capri by
May 15 to allow Marin Housing to undertake some new marketing initiatives. It is
recommended that the effective price should be reduced by at least $20,000. 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 $20,000 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
EXHIBIT A (TDD) 1-800-735-2929
www.marinhousing.org