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<br />Second Mortgages <br /> <br />The Affordable Housing Agreement allows the City to provide second mortgages for the <br />affordable units. Based on staff's experience with the 56 Bernal affordable homes and other <br />affordable ownership projects, City second mortgages provide an important tool allowing <br />households in this income range to qualify for market financing. As an example, for the Bernal <br />property, a total of 34 of the 56 homeowners received second mortgages for an average amount <br />of$19,400 per household. Mortgages have a term of20 years with payments and interest waived <br />during the first five years. Loan interest rate is equal to 75% of the interest rate of the 1st Trust <br />Deed. Homeowners are required to execute a City Deed of Trust and a Promissory note. <br /> <br />At this time, staff is not recommending second mortgages for this property. However, staff <br />anticipates it will make a recommendation to provide them in the future. The recommendation <br />is not being made at this time because staff is waiting until the property is under construction in <br />order to have more accurate information on the sales price of the homes and interest rates, all of <br />which will impact the need for and amount of the loans. In addition, staff anticipates the <br />Council reviewing the Lower Income Housing Fund prior to this time, during which the Council <br />may discuss second mortgages in general. <br /> <br />Housing Commission Recommendation <br /> <br />The Housing Commission approved the draft Affordable Housing Agreements and <br />recommended the Planning Commission and City Council consider higher unit density as a <br />means of addressing increased affordability, Staff's response to the recommendation is <br />addressed earlier in this report. <br /> <br />FISCAL IMPACT <br /> <br />There is no financial impact as a result of this action; however, the Council will review staff <br />recommendations for consultant services to sell the units and to offer second mortgages after the <br />start of project construction, <br /> <br />Respectfully Submitted, <br /> <br />ANi <br />\ <br /> <br />,..' '-:/ <br />;;J~~/~ <br /> <br />Steven Bocian <br />Assistant City Manager <br /> <br />Nelson Fialho <br />City Manager <br /> <br />Attachments: <br />Attachment A - Affordable Housing Agreement Matrix Summary <br />Attachment B - Affordable Housing Agreement <br />Attachment C - Housing Commission Minutes from October 20, 2006 <br /> <br />SR 06:078 <br />