04 - Laserfiche WebLink

While HOUSE, Inc. did not apply for funding in last year's funding round, with a housing market that is increasingly favorable to buyers, the agency has been actively searching for a new residential property to add to its portfolio. In August 2008, the Housing Commission reviewed a request from HOUSE, Inc. for $450,000 in HOME funds to assist in the purchase of ayet-to-be-identified single family residential property in Pleasanton with as estimated sales price in excess of $550,000. While the Commission was generally supportive of this usage, it requested additional information and provided general direction to HOUSE, Inc. to continue to search for a property in Pleasanton that ~- better leverages City funds. Concurrent with the Commission's direction, staff was informed that one of the original 56 affordable homes on the Bernal property was available for sale. The subject home is a duet model with three bedrooms, two baths, with a small yard and a sales price of $242,000. Because the City's restrictive covenants on the property allows the City to designate an eligible purchaser, staff pursued this option as a means of realizing loan/cost savings to both the City and HOUSE, Inc. In response, staff and HOUSE Inc. toured the property and determined that it would meet its needs and significantly reduce the total amount of the City loan. In addition, it creates an opportunity for HOUSE, Inc. to provide a larger equity share in the property, as requested by the Housing Commission. As a result, this matter was again placed on the Commission agenda and after some additional research, at its meeting of November 20, the Commission recommended approval of the acquisition, HOME loan and the financing plan as identified below: Summary of Property Acquisition Financing Plan $242,000 Sales price for home (actually $241,985; rounded) - 50,000' Down payment by HOUSE, Inc. (private funds) $192,000 + 3,000 Approximate closing costs /other real estate costs $195,000 Proposed loan by City of Pleasanton (HOME funds; deferred) In adddion to the above, House Inc. anticipates making approximately $10,000 in repairs and updates to the property. The City HOME loan would be made with terms including no interest payments and no repayment of principal would be due as long as HOUSE, Inc. owns the property. However, when sold, the City would receive payment in full plus a 79.34% share in equity earnings on the property. (The 79.34% share represents the City's contribution to the initial purchase.) As the Council recalls, the Bernal below-market homes are subject to a formula that determines a home's "maximum sales price." This formula stipulates that the sales price of a home is adjusted to an amount equal to the adjustments in the AMI. As a result, if the AMI increases by 20% by the time HOUSE, Inc. makes the home available for sale, the equity will be $48,400 ($242,000 X 20°/a) of which the City will receive $38,400 ($48,400 x 79.34%). Page 3 of 6