HomeMy WebLinkAbout2006-04-25 - AGENDA REPORTS - FIRSTHOME PGM (2)CONSENT CALENDAR
DATE:
SUBJECT:
Agenda Item:_57
CITY OF SANTA CLARITA
AGENDA REPORT
City Manager Approval:
Item to be presented by:
April 25, 2006
ADJUSTMENT TO PROGRAM GUIDELINES FOR FIRSTHOME,
THE CITY'S FIRST-TIME HOMEBUYER PROGRAM
Community Development
RECOMMENDED ACTION
City Council approve the adjusted FirstHOME Program Guidelines; limit the deferred -payment
second mortgage to a maximum of 50% of the sale price of the home; and adopt the maximum
assistance per household limits for purchase price and number of bedrooms as established by the
State of California.
BACKGROUND
In 2002 the City applied for and received a State grant of $600,000 for the FirstHOME Program
which offers deferred -payment low-interest second mortgage loans to low-income first-time
homebuyers. In addition, the City allocates just over $200,000 in program income from repaid
earthquake repair loans to the FirstHOME Program, bringing the total available to slightly over
$800,000.
Two FirstHOME loans were made in 2003-2004, two loans were made in 2004-2005, and there
have not been any loans made in 2005-2006. However, since the last loan was made in 2004,
home prices in Santa Clarita have risen dramatically, thus creating a significant eligibility
participation issue. Other cities in the State with increased property values are faced with the
same situation as well.
The State FirstHOME grant funds cannot be used for anything other than FirstHOME loans or
residential rehabilitation loans, and there has been no demand for residential rehabilitation loans.
Should the FirstHOME program continue to be unworkable due to current loan limitations, and
eligibility participation issues, the City would have to return the $600,000 grant to the State. The
APPROVED
deadline for expending all of the $600,000 grant is August, 2007.
The low income guidelines required by the State severely limit the size of the first mortgage
available to an otherwise eligible first-time homebuyer. In addition, the State's limitations on the
maximum number of occupants per bedroom coupled with the high cost of housing cause the
FristHOME Program to be unsuccessful. Consequently, even when the current maximum
FirstHOME second mortgage is combined with the homebuyers first mortgage and the required
2% of sale price contribution, it does not produce enough resources to purchase a condominium
in Santa Clarita.
State income guidelines for the FirstHOME Program are based on 80% of the median household
income in the Los Angeles, Long Beach, Santa Ana Metropolitan Statistical Area. Income
maximums are adjusted each year. Below are the current 2006 income maximums.
1 Person 2 Persons 3 Persons 4 Persons 5 Persons 6 Persons 7 Persons
$38,800 $44,350 $49,900 $55,450 $59,900 $64,300 $68,750
Staff is recommending an increase in the maximum FirstHOME loan amount to an amount not to
exceed 50% of the sale price, subject to the State maximums below:
Maximum Purchase Price:
Condominium - $369,550
Single Family Home - $555,750
Maximum Assistance per Household:
1 Bedroom - $127,286
2 Bedroom - $154,781
3 Bedroom - $200,232
4 Bedroom - $219,794
ALTERNATIVE ACTIONS
1. Council not approve changes to the FirstHOME program guidelines
2. Other action as directed
FISCAL IMPACT
FirstHOME does not impact the General Fund. If the grant is not used for its intended purpose, it
must be returned to the State.