AgdaPkt 2000-06-12 - Laserfiche WebLink

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lf1b with the equity participation structure, the Committee felt this provided as strong an incentive as possible for the teacher or City Employee to not change jobs. For non-targeted households the Committee's overall objective was to help them buy a house. However, there was no incentive to encourage this group to keep the loan long-term. In fact the program is benefited most by early pay-off of such loans. Accordingly, the Committee recommended that for this group, the equity participation by the Agency be fixed at 1.0 x the subsidy as a % of price in the first five years (as opposed to the 1.5 x provided for target households) but that the equity share increase to 1.5 x in year six (6). Fund Source and Affordability. The Committee was initially interested in providing the program to a broad range of incomes. However, the major sources of funding for this program all had income restrictions. The Community Development Block Grant (CDBG) Program could only serve people up to 80% of the median income. The program managers advised that in this housing market there was no way to devise a program that would enable this population to purchase a home. The Redevelopment Agency Housing Fund was the other major source, and the Committee focused on this because it could serve people up to 120% of median income. Accordingly, the Redevelopment Agency budget that will be proposed to the Board will contain a recommendation for an appropriation of $1,500,000 towards this FTHB Program (approximately 15 loans). All applicants would have to meet the State definition of low and moderate- income (currently $89,900 for a 4-person household). Inventory. The inventory of available units has apparently increased during May 2000. However, during the Committee deliberations, both the program managers and the realtors stressed that because of the overheated residential market, there was little available inventory. Most of the units' for-sale that would be affordable to this population at 120% of median were condominiums. With so many buyers pursuing the few units, the Committee was concemed that if the program put too many new buyers in the market, the program itself could make the price escalation worse. Nevertheless, the Committee felt that the program could be implemented now, so that the City has a vehicle in-place to assist low and moderate-income families to buy when the market cools. Administration The Committee worked closely throughout their work with the two 'experts' - Scott Coe and Walter Zhovreboff. Between them they administer almost all the operating first time homebuyer programs in San Mateo County. Scott Coe indicated he could not take on an additional program, so the Committee asked Walter Zhovreboff of First Home Incorporated to make a proposal for administration of the FTHB. 6