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Home My WebLink About29A - HOMEBUYER DOWN PAYMENT ASSISTANCE LOAN PROGRAMREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: NOVEMBER 18, 2013 TITLE: 2013 -2014 ANNUAL ACTION PLAN SECOND SUBSTANTIAL AMENDMENT FOR HOMEBUYER DOWN PAYMENT ASSISTANCE LOAN PROGRAM �f Cl MANAGEg RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ❑ As Recommended ❑ As Amended ❑ Ordinance on 15' Reading ❑ Ordinance on 2ntl Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER Approve a second substantial amendment to the 2013 -14 Annual Action Plan approving a new program activity using Community Development Block Grant funds and HOME Investment Partnerships Program funds, and authorizing its submittal to the U.S. Department of Housing and Urban Development. 2. Adopt the Homebuyer Down Payment Assistance Loan Program and allocate $280,000 of HOME Investment Partnerships Program funds and $120,000 of Community Development Block Grant (CDBG) funds for program funding. FINANCE, ECONOMIC DEVELOPMENT AND TECHNOLOGY COMMITTEE REVIEW The Finance, Economic Development and Technology Committee reviewed this matter at its meeting on October 14, 2013 and recommended that City Council proceed with said actions by a vote of 3:0. COMMUNITY REDEVELOPMENT AND HOUSING COMMISSION RECOMMENDATION At its regular meeting on November 5, 2013, by a vote of 6:0 (Sandoval absent) the Community Redevelopment and Housing Commission approved the recommended actions. DISCUSSION In May 2013, the City submitted to the U.S. Department of Housing and Urban Development (HUD) an Annual Action Plan. The Annual Action Plan is the document whereby the City formally applies to HUD for the annual federal grant allocations for CDBG, Home Investment Partnerships Program (HOME), Emergency Solutions Grant (ESG), and Housing Opportunities for Persons with AIDS (HOPWA), and describes how those grant funds will be utilized. 29A -1 Substantial Amendment — Homebuyer Down Payment Assistance Loan Program November 18, 2013 Page 2 The proposed Substantial Amendment (Exhibit 1) amends the Plan to include a new activity, Homebuyer Down Payment Assistance Loan Program and allocates $280,000 of HOME funds and $120,000 of CDBG funds. Public notice for this substantial amendment was published in the Orange County Register, La Opinion and Nguoi Viet News on October 18, 2013. Consistent with the City's goal of promoting neighborhood stability and homeownership for low - income households, the Homebuyer Down Payment Assistance Loan Program (Exhibit 2) encourages long -term homeownership within the city. This program will allow households with incomes up to 80 percent of the area median to participate. Maximum loan amounts will be $40,000. Loan amounts will be based on underwriting front -end ratios of not less than 28 percent. The loans will have a zero percent interest rate and payment will be deferred for 45 years or until property is sold. Participants must be first time homebuyers in that they have not had ownership interest in, or have not held title to a principal residence during the three years preceding the purchase of the property. The homebuyer must attend a home - ownership training from a HUD - approved counseling agency. FISCAL IMPACT Upon approval of the amendment and adoption of the new program activity, funds will be reallocated from the Single Family Rehab activities ($280,000 from HOME and $120,000 from CDBG) to the HOME and CDBG Housing Loans and Grants accounts (nos. 13018780 -69152 and 13518782 - 69152). Interim Exe Community NF /SLB /kg Exhibit: Agency APPROVED AS TO FUNDS AND ACCOUNTS: Francisco Gutierrez Executive Director Finance & Management Services Agency 1. 2013 -2014 Annual Action Plan Substantial Amendment 2. Homebuyer Down Payment Assistance Loan Program Description 29A -2 2010 /11- 2014 /15 CITY OF SANTA ANA CONSOLIDATEDPLAN I SUBSTANTIAL AMENDMENT TO THE 2013/14 ACTION PLAN EXHIBIT 1 SUBSTANTIAL AMENDMENT TO THE FISCAL YEAR 2013 -2014 ACTION PLAN INTRODUCTION This document is a Substantial Amendment to the City of Santa Ana's Fiscal Year 2013 -14 Annual Action Plan, which was submitted to the U.S. Department of Housing and Urban Development (HUD) on May 15, 2013. Title 24 Section 91.505 of the Code of Federal Regulations stipulates that participating jurisdictions shall amend their approved plans whenever they make one of the following decisions: 1. To make a change in its allocation priorities or a change in the method of distribution of funds; 2. To carry out an activity, using funds from any program covered by the consolidated plan (including program income) not previously described in the action plan; or 3. To change the purpose, scope, location, or beneficiaries of an activity. The Regulation further requires that jurisdictions identify in their citizen participation plans the criteria they will use for determining' what constitutes a substantial amendment. Consistent with these requirements, the Citizen Participation Plan adopted by the City of Santa Ana as a component of its 2010/11- 2014/15 Consolidated Five Year Plan identifies three criteria that will require a substantial amendment: 1. Changes in the use of CDBG funds from one eligible activity to another; 2. An activity is undertaken that was not previously included in the Consolidated Plan or subsequent action plans; 3. More than 30 percent of the most recent annual federal grant allocation is reallocated to other eligible program activities within the fiscal year. The proposed amendment meets one of these three criteria, and therefore requires a substantial amendment. 10/18/2013 29A -3 SUBSTANTIAL AMENDMENT TO THE 2013 -2014 ANNUAL ACTION PLAN Substantial Amendment to the 1 2010/11. 2014/15 CITY OF SANTA ANA CONSOLIDATED PLAN 2013/14 ACTION PLAN INTRODUCTION The City is amending the 2013 -14 Action Plan to include the following activity: Activity Name: Homebuyer Down Payment Assistance Loan Program Activity Description: Consistent with the City's goal to promote neighborhood stability and homeowner for low- income households, the City proposes to use HOME and CDBG funds for down payment assistance. Approximately $280,000 of HOME funds and $120,000 of CDBG funds will be used be used to provide deferred down payment assistance loans to qualified lower income households, up to 80% of the area median income. Estimated Cost: $400,000 CITIZEN PARTICIPATION In accordance with 24 CFR 91.105(c)(3) for local governments, the substantial amendment Public Notice for the use of CDBG and HOME funds was released for citizen review and comments on October 18, 2013. During the 30 -day public comment period from October 18,2013 through November 16, 2013 the Public Notice for the Draft Substantial Amendment was made available during regular business hours between 8:00 a.m. and 5:00 p.m., Monday through Thursday in the offices of the Housing Department, 20 Civic Center Plaza, 3rd Floor, Community Development Agency, 20 Civic Center Plaza, 6th Floor, Office of the Clerk of the Council, 20 Civic Center Plaza, Room 809, the Main Public Library, 26 Civic Center Plaza, Santa Ana, California and on the city's website. The Community Redevelopment and Housing Commission of the City of Santa Ana held a public hearing on November 5, 2013, at 6:00 p.m., at the City Council Chambers, 22 Civic Center Plaza, Santa Ana, California 92701. The City Council of Santa Ana will hear and vote on this Substantial Amendment to the 2013 -14 Action Plan on November 18, 2013. A copy of the public hearing notice is presented in Exhibit 2. A summary of citizen comments received during the public comment period and responses to these citizen comments are presented in Exhibit 2. SUMMARY OF CITIZEN PARTICIPATION PROCESS A copy of the public hearing notice is presented in Attachment 2. A summary of citizen comments received at the public hearing and the remainder of the public comment period, and responses to these citizen comments are also included in Attachment 2. SUBSTANTIAL AMENDMENT TO THE 2013 -2014 ANNUAL ACTION PLAN 29A -4 10/18/2014 10/18/2013 2010 /11- 2014 /15 CITY OF SANTA ANA CONSOLIDATEDPLAN I SUBSTANTIAL AMENDMENT TO THE 2013/14 ACTION PLAN EXHIBIT 2 PROOF OF PUBLICATION 30 -DAY COMMENT PERIOD & PUBLIC HEARING & SUMMARY OF PUBLIC COMMENTS 3 29A -5 SUBSTANTIAL AMENDMENT TO THE 2013 -2014 ANNUAL ACTION PLAN Substantial Amendment to the 1 2010/11- 2014/15 CITY OF SANTA ANA CONSOLIDATED PLAN 2013/14 ACTION PLAN SUMMARY OF PUBLIC COMMENTS SUMMARY OF PUBLIC COMMENTS RECEIVED DURING 30 -DAY COMMENT PERIOD AND STAFF RESPONSE Pending 11/05/2013 REDEVELOPMENT & HOUSING COMMISSION PUBLIC HEARING: Pending SUBSTANTIAL AMENDMENT TO THE 2013 -2014 ANNUAL ACTION PLAN 29A -6 10/18/2014 2010 /11- 2014 /15 CITY OF SANTA ANA CONSOLIDATEDPLAN I SUBSTANTIAL AMENDMENT TO THE 2013/14 ACTION PLAN EXHIBIT 3 PROPOSED ACTIVITIES 10/18/2013 5 SUBSTANTIAL AMENDMENT TO THE 2013-2014 ANNUAL ACTION PLAN 29A -7 Substantial Amendment to the 1 2010/11- 2014/15 CITY OF SANTA ANA CONSOLIDATED PLAN 2013/14 ACTION PLAN CPVP Version 2.0 Grantee Name: Santa Ana, CA Project Name: Homebu er Down Payment Assistance Loan Pro ram Description: IDIS Project #: UOG Code: CA63342 SANTA ANA HOME and CDBG funds for down payment assistance loans to qualified home buyers. Home buyers loans will be deferred and for qualified lower income households. Location: ° >•;° a Priority�Naed'Catego' Citywide Owner Occupied Housing -. Select one: Explanation: Expected Completion Date: Activity will help the City improve access to owner- occupied housing that Is affordable to lower income households. 6/30/2012 Objective Category * Decent Housing O Suitable Living Environment O Economic Opportunity 77 Specific047ectives , Outcome Categories 1 Improve access to affordable owner housing W ❑ Availability/Accessibility ❑O Affordability 2 _ ❑ Sustainability 3. 7 SO Housing Units Proposed 10 Accompl. Type: m +• — e Underway Complete W m Accompl. Type: W Accompl. Type: 0) a a .3 E CL u Accompl. Type: V Accompl. Type: u a Proposed Outcome Performance Measure Actual Outcome First -time homebuyers receiving 10 eligible homebuyers received down - down- payment assistance payment assistance 13 Direct Homeownership Assistance 570.201(n) - Matrix Codes -. o Matrix Codes I w Matrix Codes Matrix Codes I � Matrix Codes '. � I i i A d Y E m m 0 a SUBSTANTIAL AMENDMENT TO THE 2013 -2014 ANNUAL ACTION PLAN 29A -8 10/18/2014 Exhibit 2 CITY OF SANTA ANA COMMUNITY DEVELOPMENT AGENCY HOUSING AND NEIGHBORHOOD DEVELOPMENT DEVISION HOMEBUYER DOWN PAYMENT ASSISTANCE LOAN PROGRAM The Community Development Agency of the City of Santa Ana seeks to promote neighborhood stability and home ownership of low - income people. To achieve this goal, the Agency has designed the Downpayment Assistance Loan Program (Program) to encourage long -term homeownership. The Program will be funded by HOME Investment Partnerships Program (HOME) and Community Development Block Grant Program (CDBG). Elieibility Requirements The borrowers must be a first time homebuyer (a person with no ownership interest in, or who has not held `title' to a principal residence during the three -year period preceding the purchase of the property). Total annual income of the household, meaning all persons residing in the home as their principal place of residence, cannot exceed 80 percent of the Orange County area median income as determined by HUD, adjusted annually. The following table identifies the Orange County limits effective ,December 11, 2012. Household Size Maximum Income Household Size Maximum Income 1 person $ 51,250 5 persons $ 79,100 2 persons $ 58,600 6 persons $ 84,950 3 persons $ 65,900 7 persons $ 90,800 4 persons $ 73,200 S persons $ 96,650 To ensure successful homeownership, borrowers will be required to complete a minimum of eight (8) hours of homeownership training offered by a counseling center approved by the U.S. Department of Housing and Urban ,Development (HUD). A list of HUD - approved counseling centers in Orange County is included below as Attachment A. Borrowers will also be required to contribute a minimum of three percent (3 %) of the purchase price towards down payment. The minimum contribution cannot be from gift funds. The maximum purchase price must not exceed 95% of the area median purchase price, as determined by the HUD on an annual basis. As of August 23, 2013, the maximum purchase prices are as follows: Existing Home and/or Condominium $ 394,000 New Home and /or Condo $ 443,000 The maximum loan will be based on underwriting front -end ratios of not less than 28 %. The allowable ratios will be 28% / 40 %. 29A -9 Borrowers must not be a current homeowner, have a positive credit history, and must obtain a fixed - interest rate loan. Cosigners and variable rate loans are not allowed. Gross household income of all adults who will make the home their principal residence will be used for underwriting purposes. Borrowers must agree to maintain the home as their principal residence for the term of affordability, which is 45 years. Purchase of the property must result in fee simple title of the property, a 99 -year leasehold interest in the property, or ownership of a condominium. Condominium complexes must be FHA approved. Purchase of manufactured homes will not be allowed under this program unless the lot where the home is to be permanently fixed will be owned by the borrower. All properties built before 1978 are required to have a Visual Lead Based Paint Inspection and must pass the inspection before loan approval. Inspections will be made to ensure that there are no code related issues, including the common areas in condominium complexes. Eligible applicants will be accepted on a first come first serve basis as funds are available. Applications packages will be available on the City of Santa Ana's website and at the Housing Division (3`d Floor), Santa Ana City Hall. Use of Loan Proceeds Downpayment Assistance loan proceeds may only be used to help meet downpayment requirements associated with the purchase of an eligible home by an eligible buyer. Maximum loan amounts will be $40,000. Interest Rates and Repayment Loan proceeds are not subject to forgiveness, but are offered as a deferred loan with a zero percent (0 %) rate. Repayment of the City loan will be required when any of the following events take place: At the end of the term of affordability, when the property is sold, or when the property is no longer the borrower's principal residence. 29A -10 Attachment A HOUSING COUNSELING AGENCIES The following organizations have been approved by the U.S. Department of Housing and Urban Development (HUD) as providers of homebuyer education in Orange County. The City of Santa Ana First Time Homebuyer Loan Program requires that prospective homebuyers complete a pre - purchase counseling program from one of these agencies prior to applying for a loan to purchase a home. Completion of a post - purchase counseling program after purchase of the home is also required. Working with these agencies is important because they are knowledgeable about a variety of programs to assist first time homebuyers. The information contained in this list is based on HUD's website (www.hud.gov /) effective September 19, 2013. Please contact the providers for current information or updates. Agency Address Contact Information Languages Provided Consumer Credit 2450 E. Lincoln Phone: (714) 547 -2227 ASL Counseling Service of (Inside EDD Email: cccsockccsoc.org English Orange County Building), Anaheim Spanish Vietnamese Consumer Credit 695 Madison Way Phone: (714) 547 -2227 ASL Counseling Service of (Inside Brea Email: ecesoc@ccesoe.org English Orange County Community Center), Spanish Brea Vietnamese Consumer Credit 18430 Brookhurst St., Phone: (714) 547 -2227 ASL Counseling Service of Suite 202C, Fountain Email: cccsoc(n cecsoc.org English Orange County Valley Spanish Vietnamese Consumer Credit 23046 Avenida de In Phone: (714) 547 -2227 ASL Counseling Service of Carlota, Suite 600, Email: eccsoc&cccsoc.org English Orange County Laguna Hills Spanish Vietnamese Neighborhood Housing 128 E. Karelia Ave, Phone: (714) 408 -9321 English Services of Orange Suite 200, Orange Email: heleno&nwoc.org Spanish County Vietnamese Consumer Credit 1920 Old Tustin Ave, Phone: (714) 547 -2227 ASL Counseling Service of Santa Ana Email: cccsoc@cccsoc.org English Orange County Spanish Vietnamese Legal Aid Society of 2101 North Tustin Phone: (714) 571 -5200 English Orange County Ave, Santa Ana Email: ppinto@legal- aid.com Korean Spanish Vietnamese Orange County Fair 201 South Broadway, Phone: (714) 569 -0823 English Housing Council, Inc Santa Ana Email: bmagana@fairhousin og e org Vietnamese Spanish 29A -11 29A -12