07/24/2001 RA RPT 13 - Laserfiche WebLink

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, CITY OF RIVERSIDE COUNCIL/AGENCY MEMORANDUM Honorable Mayor & City Council and Redevelopment Agency Date: Item No.: July 24, 2001 13 Subject: Request Approval of Agreements with the State of California and the Riverside Housing Development Corporation for the Implementation of the CalHome First Time Homebuyer Mortgage Assistance Program Background On November 7, 2000 the California Department of Housing and Community Development ("HCD") released a Notice of Funds Available ("NOFA") for a new program called CalHome. Under the CalHome NOFA, $34 million was available to local public agencies and non-profits throughout the Sta1e of California for First Time Homebuyer Mortgage Assistance programs, Owner-Occupied Rehabilitation programs, and Homeownership Project Developmen1 Loans. The maximum grant for which a public agency could apply was $500,000. On February 6, 200 I the City Council approved the submittal of a CalHome grant application for $500,000 to support a First Time Homebuyer Mortgage Assistance program. On April 13,2001 the City received a letter from HCD (Attachment A) confirming that Riverside's application was successful and that $500,000 in CalHome funds had been reserved for Riverside's First Time Homebuyer Mortgage Assistance Program. Current Issue On June 27, 2001 the City received 5 original agreements from HCD for the operation ofthe CalHome program (Attachment B), specifYing the City's obligations under the CalHome grant. These agreements must be signed by the City Manager and returned to HCD for execution (the City will receive an original document back from the State after execution). The CalHome program cannot begin until this document is executed. A brief description of the CalHome program follows: o Fully deferred loans of up to $20,000 will be made to first time homebuyers at 80% of County Median income or below who are buying a home in the target area (Designated Census Tracts in Eastside and Downtown, see Target Area Map Attachment C). Loans are due upon sale or transfer of the property, any refinancing of the home, or upon expiration of the loan term (30 years). Loan principle may not be forgiven. The City will charge 3% simple interest, which will be forgiven if the homeowner lives in the house for 20 years or more. o In its application, the City proposed to partner with the Riverside Housing Development Corporation (RHDC) to implement the CalHome program. Specifically, "RHDC will market the program, accept and review the applications, underwrite the loans, and ensure participants completion of the homebuyer's education class. The Redevelopment Agency of the City of Riverside will be the beneficiary on the loans, and will administer the grant funding, execute any necessary agreements, service the loans, and manage the reuse account." An Agreement be1ween the Redevelopment Agency of the City of Riverside and RHDC (Attachment D) details RHDC's responsibilities and compensation for administration ofthe CalHome grant. In order to begin the CalHome program, several actions must be taken by the City and Agency. o Under the CalHome program guidelines it appeared that the City could use 5% of the grant ($25,000) for administrative expenses, plus $300 per household for actual expenses incurred in the homebuyer education program and $250 per loan for loan servicing. In initial negotiations with RHDC $25,0.00 was deSignated to go 10ward RHDC's administrative costs, and the City would receive the $250 loan servlcmg fee. Staff 13-1