Title
Resolution to Allocate $245,000.00 in Neighborhood Stabilization Funds to Community Housing Alternatives for Homebuyer Acquisition of Affordable Housing ($245,000.00 NSP)
Memorandum
Attached for your review and approval is a resolution to allocate $245,000.00 in NSP funds to Community Housing Alternatives (CHA) to assist low-mod income homebuyers to acquire and rehabilitate affordable housing and to approve the Housing Affordability Agreement. CHA will work with homebuyers, who will receive up to $50,000.00 per household to purchase and rehabilitate the home, and the homebuyer will leverage the City's NSP funds with cash and a private mortgage.
CHA will work with pre-qualified homebuyers to acquire houses in NSP eligible census tracts and oversee rehabilitation work, if needed. The City will place a mortgage on the house at the time the homebuyer purchases the home, in second lien position behind a private lender's mortgage, if applicable. The per house allocation of $50,000.00 may include up to $15,000.00 in down payment and closing cost assistance for the homebuyer, depending on the total development costs and the homebuyer's financial situation. CHA will receive a standard developer fee from the City as a fee for service for administering the program that will not be included in the buyer's loan.
The City's loan will be a 0% interest 20-year lien with an equity-sharing recapture formula at the time of sale or transfer of the property. If the homeowner lives in the home for 20 years, the lien will be forgiven and discharged. If the homeowner sells or transfers the home before 20 years have expired, the amount the homeowner repays is based on a formula that takes into account the percent of the City's initial investment, the change in appraised value, and the proceeds available.
Recapture Formula Scenarios:
Initial Appraised After Rehab Value (IARV) $90,000
Initial Purchase Price (IPP) $75,000
City NSP investment ($15K DPA & $20K Reha...
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