The URL can be used to link to this page

Home My WebLink About2002-01-15; City Council; 16512; Termination Of Homebuyer Assistance ProgramCITY OF CARLSBAD -AGENDA BILL t~# I(o! 51 3- ATG. 1-1 5-0 9 TITLE: TERMINATION OF THE CARLSBAD HOMEBUYER ASSISTANCE AND MODERATE INCOME LOAN PROGRAMS EPT. HlRED RECOMMENDED ACTION: 5 DEPT. HD. CITY ATTY. CITY MGR. ADOPT City Council Resolution No. 2003 -02 \ , APPROVING the termination of the Carlsbad Homebuyer Assistance and Moderate Income Loan Programs, and authorizing reallocation of the balance funds of $28,450 into the undesignated fund balance of the Housing Trust Fund. ITEM EXPLANATION In 1998, the City of Carlsbad Housing and Redevelopment Department initiated the Carlsbad Homebuyer Assistance Program (CHAP). The program was entirely funded by the developer of the Arroyo La Costa residential community to satisfy the project‘s inclusionary housing requirement. With CHAP, a low- income, first-time homebuyer can receive up to $20,000 in down payment assistance to purchase a home in Carlsbad. Since the inception of CHAP, 85 loans have been issued totaling $1,700,000. This assistance has primarily been used by those households purchasing homes constructed as a result of enforcement of the requirements set forth within the City’s lnclusionary Housing Ordinance. In addition to the $1.7 million in CHAP loans that have been processed to date, a total of $1,350,000 was disbursed from the CHAP fund in the form of a construction loan to Continental Homes for the development of the Serrano Townhome project. From the original funding amount of $3,220,000, $3,061,900 has been expended to date. The amount expended to date includes $1 1,900 paid to Bank of America for loan servicing fees. The current balance of the CHAP fund is $158,100. With recognition that the CHAP fund will be required to pay future loan servicing fees at an estimated cost of $129,650 (with the assumption that all 85 loans are outstanding for their full 15-year term), the remaining balance is reduced to approximately $28,450. Because of the limited funds, the Housing and Redevelopment Department recommends transferring the remaining CHAP funds, minus future loan servicing fees, into the undesignated fund balance of the Housing Trust Fund and terminating the CHAP program. If all the funds reserved for loan servicing fees are not expended, that balance will also be transferred to the undesignated fund balance of the Housing Trust Fund. Although funding could be added to this program to continue it, staff is not recommending that action. Due to the considerable need for the construction of new units, staff believes that the funds are better spent at this time producing needed housing within Carlsbad rather than providing silent second financing. The program may be re- total supply available within the community. established at a later date, if deemed appropriate, after additional housing is constructed to increase the In addition to CHAP, the Housing and Redevelopment Department developed and initiated another homebuyer assistance program to specifically address the needs of moderate-income, first-time homebuyers. This program is known as the Moderate Income Loan Program (MILP) and provides moderate-income, first-time homebuyers up to $5,000 in closing cost assistance. In 1999, the City Council allocated $50,000 from the Housing Trust Fund to assist an estimated total of ten moderate- income homebuyers as a pilot project. To date, no loans have been issued through this program. Again, staff has determined that this program is not the best use of the Housing Trust Funds. Staff believes, at this time, Housing Trust Funds should continue to be focused on new construction. Therefore, the Housing and Redevelopment Department recommends the transfer of the remaining MILP funds into the undesignated fund balance of the Housing Trust Fund and termination of this program as well. Page 2ofAgenda Bill No. ld!s12 FISCAL IMPACT The CHAP and MlLP programs were previously funded by the Housing Trust Fund through prior City Council actions. Therefore, the transfer of funds within the Housing Trust Fund from the CHAP and MlLP funds to the undesignated fund balance will not result in any fiscal impact. Adequate funds ($129,650) will remain within the CHAP fund to cover loan servicing fees for future years. EXHIBITS 1. City Council Resolution No. ma - 0 2 / , terminating the Carlsbad Homebuyer Assistance and the Undesignated Fund Balance of the Housing Trust Fund Moderate Income Loan Programs, and authorizing reallocation of the balance of program funds into 1 c I C 1C 11 12 13 14 15 16 17 la 19 2c 21 22 23 24 25 26 27 28 RESOLUTION NO. 2o02-021 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING THE TERMINATION OF THE CARLSBAD HOMEBUYER ASSISTANCE AND MODERATE INCOME LOAN PROGRAMS, AND AUTHORIZING STAFF TO REALLOCATE THE BALANCE OF PROGRAM FUNDS INTO THE UNDESIGNATED FUND BALANCE OF THE HOUSING TRUST FUND WHEREAS, on December 10, 1996, the City of Carlsbad City Council approved the Carlsbad Homebuyer Assistance Program, which provided down payment assistance to low income, first time homebuyers in the City of Carlsbad; and WHEREAS, 85 five loans have been made and approximately $3 million have been expended from Carlsbad Homebuyer Assistance Program funds; and WHEREAS, there remains approximately $28,450 in funding available to provide new loans under the Carlsbad Homebuyer Assistance Program; and WHEREAS, the City of Carlsbad believes that the remaining balance of program funds are better spent producing needed housing within Carlsbad rather than providing silent second financing at this time; and WHEREAS, on June 15, 1999, the City Council allocated $50,000 to establish the Moderate Income Loan Program to provide down payment assistance and closing cost assistance to moderate income, first time homebuyers in the City of Carlsbad; and WHEREAS, because no loans have been issued through this program, the City of Carlsbad has determined that this program is not the best use of the Housing Trust Funds, and that such funds should be appropriated for new construction of housing units. NOW, THEREFORE, BE IT HEREBY RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. The above recitations are true and correct. 2. The City Council hereby approves the termination of the Carlsbad Homebuyer Assistance and Moderate Income Loan Programs. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3. That the City Council authorizes the Finance Director and/or other appropriate staff to reallocate any remaining program funds not expended for loan servicing fees into the undesignated fund balance of the Housing Trust Fund, should it be determined that the funds set aside for loan servicing fees are no longer needed. PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad, California, held on the 3 day of JANUARY , 2002 by the following vote, to wit: AYES: Council Members Lewis, Kulchin, Finnila, Nygaard, Hall NOES: None ABSTAW: None ABSENT: None CLAUDE A. LEWIS, Mayor ATTEST: