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THE CITY OF {- f'L'EASANTONa CITY COUNCIL AGENDA REPORT November 18, 2014 Assistant City Manager TITLE: ALLOCATE $235,000 FROM LOWER INCOME HOUSING FUND TO BUY BACK BELOW MARKET RATE HOUSE ON BERNAL PROPERTY AND PREPARE FOR RE-SALE TO QUALIFIED LOW-INCOME FAMILY SUMMARY The City previously facilitated the sale of fifty-six below market duet homes on the Bernal Property and is party to a recorded agreement establishing restrictive covenants and resale restrictions for these homes (Restrictive Covenants). Under the terms of the Restrictive Covenants, the City determines a home's sales price, defines an eligible purchaser and certifies a purchaser's income, which must be at/or below 80% AMI (currently $70,800 for a family of four). The Restrictive Covenants also specify that the City may elect to purchase the home or designate an eligible purchaser and there have been a few occasions in the past where the City has purchased and resold a home. Recently, an owner of one of these homes died and the estate is offering to sell it back to the City. The home is now part of a probate process and the executor has indicated that no heirs intend to use the home, that the estate does not have the resources for the mortgage, property taxes, or other expenses, and therefore, it desires to sell the home as expeditiously as possible. Further, the home in question is rather unique because it has a motorized lift and has been modified to accommodate the previous owner's physical disabilities. To facilitate this process, staff is recommending that the City Council appropriate $235,000 from the Lower Income Housing Fund (LIHF) and authorize the City Manager to execute purchase documents. During the acquisition process staff will work with the Tri-Valley housing Opportunity Center to resell the home to a qualified lower-income purchaser and due to the unique improvements made to this home, staff intends to place a priority on reselling the home to a household that can utilize the modifications made for a physically disabled person/household. RECOMMENDATION Approve an appropriation of $235,000 from the Lower Income Housing Fund (271900) to purchase an affordable home on the Bernal Property and prepare it for re-sale to a qualified low-income household with a priority given to a household that can utilize existing improvements/modifications for physical disability. FINANCIAL STATEMENT Approval of this recommendation would temporarily reduce the LIHF by $235,000. After the home is re-sold, the sale proceeds would be returned to the LIHF.