HomeMy WebLinkAbout2013/08/06 Item 06' -~r~~. _ CITY COUNCIL
~. ~~- _ ~.<~. AGENDA STATEMENT
Zv.. .~. ::._ .: .
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__ s., ~~ CITY OF
CHULA VISTA
AUGUST 6. X013
Item~i
ITEM TITLE: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA (1) APPROVING ANT UPDATE TO
COUNCIL POLICY 453-02 RELATED TO THE
DEVELOPI\gNT OF AFFORDABLE FOR-SALE HOUSING
FOR LOAT AND MODERATE-INCOME BUYERS; (2)
AUTHORIZING THE Dfl2ECTOR OF DEVELOPMENT
SERVICES OR HIS DESIGNEE TO IMPLEA4ENT THE
POLICY; .SND (3) FURTHER AUTHORIZING THE
DIRECTOR OF DEVELOPMENT SERVICES OR HIS
DESIGNEE TO EXECUTE AND AA4END. CONSISTENT
WITH THE AFOREMENTIONED POLICY. ANY AND ALL
DOCUMENTS SUBJECT TO THE POLICY
SUBMITTED BY: DIRECTOR OF DEV OPNIENT SERVICE
REVIEWED BY: CITY >\4AN'AG
4hTHS VOTE: IBS ~ \`O
SU~211ARY
The Citv of Chula Vista's Affordable For-Sale Housing Policy 453-02 yeas original]}~
adopted on December 9; 2003 and last updated September 13, 2005. Given recent changes
in the real estate market and the elimination of Califomia Redevelopment; a comprehensive
update is needed to Council Policy 453-02 to allow greater flexibility to the beneficiaries of
the Citv's For-Sale Housing Program and to encourage long term homeo~mership
(Attachment I: Updated Council Policy 453-02).
E\~'IROIVI~IENTAL REVIEW
The Director of Development Sen~ices has reviewed the proposed activity for compliance
with the Califomia Environmental Quality Act (CEQA) and has determined that the
activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines
because the proposed activit}° consists of a governmental administrative action that will not
result in direct or indirect phti~sical changes in the environment. Therefore, pursuant to
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August 5, 2013 Item No. ~
Page 2 of 5
Section 15061(b)(3) of the State CEQA Guidelines the activity is not subject to CEQA.
Thus, no environmental review is necessary.
RECOMMENDATION
Council adopt the resolution.
BOARDS/COMMISSION RECOMMENDATION
On July 24, 2013, the Housing Advisory Commission voted to recommend revisions to
Council Policy 453-02 (Development of Affordable For-Sale Housing).
DISCUSSION
The Affordable For-Sale Housing City Council Policy 453-02 (the "Policy") was adopted
in 2003 to provide procedures and guidelines for Developers .proposing to construct
affordable for-sale housing opportunities within the City. The policy outlines mechanisms
to ensure affordability of the sales price, sharing of sale proceeds to continue to promote
affordable homeo~~~nership programs, loan qualification, and selection of qualified buyers.
To date, 32 units within Sedona at Rolling Hills Ranch and 67 units at Mar Brisa at San
Miguel Ranch have been developed utilizing this Policy.
Since the last amendment to the Policy in 2005, there have been drastic changes in the
housing market such as steep decline in U.S. home values. With the elimination of State
Redevelopment and the associated governing laws, the Shared Equity loan terms and
restriction on the properties can reflect our current First Time Homebuyer Program and
industry standards rather than State Redevelopment law. Given the changes, revisions to
the Policy are needed to ensure its continuing effectiveness for existing and future first time
homeov<ners.
Staff is proposing revisions that will allow greater flexibility to those beneficiaries of the
City's For-Sale Housing Program and to encourage long term homeownership. Such
revisions include restructuring of the equity share between the City and homeowner, a
reduction in the length of term of the Silent Second loan, underwriting criteria and
procedures for a short sales and cases of hardship. 'In addition clean up revisions are
proposed to provide flexibility which include the applicability of the policy to moderate
for-sale products and elimination of examples and language that may change over time and
become obsolete. The proposed revisions are consistent with mortgage industry standards
and are in line with program policies, at the federal and state level, that have been adopted
for those experiencing a hardship and facing foreclosure, such as Keep Your Home
California and the Home Affordable Refinance Program (HARP).
Recommended Substantive Revisions to the Policy
Loan Ternz and Equity Share
The Policy requires the repayment of the Silent Second loan principal upon sale, transfer,
refinance, rental or change of title on the property. Staff proposes reducing the shared
equity term from the current Policy of 45 years, required under previous State
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Aueust 5. 2013 Item No. ~
Paee 3 of ~
Redevelopment law; to li veazs to coincide ~~2th more typical homeowrership trends and
the Citq`s First Time Homebuyer Program. Proposed Table 1 of the Council Policy is
revised to reflect equity share percentages bet.veen the City and the Homeo~smer based on
the revised maximum length of the time (1~ veazs) the Homeov<mer has occupied the
propern~. Should a homeo~~ner sell within one veaz; the City retains 100% of the equity in
the propem~. minus the homeowners expenses. The City's share of equity declines each
veaz until yeaz 1 ~.
Underx-ritirag Criteria
Staff has proposed updates to unden~ziting criteria to be consistent with the City's First
Time Homebuyer Program and current industn~ unden~Titing standards to ensure qualified
applicants are being selected for the program that will be able to sustain homeownership.
Lansuase is included to limit the use of funds eifred to the buyer.
Short Sale and Hardship
At the time of the adoption and the subsequent amendment to the Policy, home prices
reached unprecedented double digit increases and the Policy did not reflect any potential
decline in market conditions. t4%ith the siartificant dog+mturn in the housing market in
recent yeazs; where home mortgages are significantly higher than market value, many
homeowtters aze choosing to short sell or allow the properh~ to enter into a default status.
Given the existing policy term of 4~ yeazs and upside dosvrt mortgages; homeos~~ners aze
provided with little incentive to maintai^ homeownership at the existing terms or to
refmance. Staff has proposed new language to recognize short sales and financial
hazdships. Prior to a short sale, homeo~timers will be required to seek homeownership
counseling.
City Silent Second Loan Restructuring
The Development Sen ices Director will have the ability to'reyiew existing loan documents
and approve loan principal reductions in a downtumed economy for homeowrters in good
standins and seekine refmancins to more favorable terms. The proposed language «~11
allow for coordination with Federal; and State foreclosure prevention programs. such as
Keep Your Home California and the Home Affordable Refinance Program (HARP).
.Applicability to Existing Balm%ced Communities (7nclusionarv Housing') Projects
Since 2003; two developments have utilized the Policy; Sedona in Rolling Hills Ranch and
Mar Brisa in San A4iguel Ranch. Both projects provided affordable units through the City's
Balanced Communities Policy. The City is currently working with Fannie Mae; «%ells
Fazgo; and other parties involved in the fast mortgages of these properties to address
concerns regazding loan modifications and refinances. The update of the Policy will
provide the Development Services Director the ability to review the City's Silent Second
loan documents and appropriately apply the Policy as necessar}~ to allow these homeo~~ners
an oppomtnih~ to seek more favorable financing terms and maintain homeos~mership.
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August 5; 20] 3 Item No. (~
Page 4 of ~
Moderate become Buyers
The original Policy did not have provisions for moderate-income buyers. The proposed
Policy would apply the underwriting criteria and terms as low-income buyers and coincide
with the approved pricing guidelines as set forth in the Inclusionary Guidelines.
Recommended Clean Up Revisions to the Policy
Puy pose
The Housing Element of the Genera] Plan is updated every seven years. Therefore, goals
and policies of the Housing Element aze subject to change as housing needs may change
over time. The revisions include the strikeout of the specific goals of the 1999-2020
Housing Element and replacement with language that states a general goal of providing for
varied housing opportunities for the diverse needs of the community.
Examples
The existing Policy provides specific examples (reference struck out Tables 1-3 in
Attachment 1) for loan assumptions, calculation of sales prices, and the Silent Second
loans. Additionally, County of San Diego Income Limits for 2005 and Housing Pricing
based on these income limits serve as Attachments to the Policy. The examples and the
Attachments are based on point in time information and subject to change over time and
based on market conditions. Therefore, the examples and Attachments to the Policy are .
being deleted.
CONCLUSION
The Policy revisions promote long term affordability and encourage Chula Vista's workine
families to take advantage of opportunities for quality housing consistent with City housing
goals. Without such changes, staff anticipates it will be difficult to find future buyers of
for-sale products under this Policy due to excessive restrictions of the current language and
additional defaults may occur with the existing complexes implemented under the Policy.
DECISION MAKER CONFLICT
R'hile the Policy update is not site specific and consequently, the 500-foot rule found in
California Code of Regulations section 18704.2(a)(1) is not applicable to this decision, the
revisions may allow the Development Services Director to make modifications to existing
loan documents for the Sedona and Mazbrisa projects, if requested and in compliance with
the proposed revisions. Staff has reviewed the property holdings of the City Council and
has found no property holdings within 500 feet of the boundaries of the properties which is
the subject to this action.
Staff is not independently aware, nor has staff been informed by any City Councilmember,
of any other fact that may constitute a basis for a decision maker conflict of interest in this
matter.
CURRENT YEAR FISCAL IMPACT
There is no ongoing fiscal impact.
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Aueust ~_. 2013 Item No. 6
Pase ~ of ~
ONGOING FISCAL IAZPACT
There is no ongoing fiscal impact. The City of Chula -Vista's Inclusionap• Program
proceeds NZll continue to assist additional first time homebu~~ers.
ATTACIir1ENT
1. Updated Council Policy 453-02
Prepared b}~: Jose Dorado. Project Coordinator
Stacey Kura, Senior Project Coordinator
Development Sen-ices Department, Housing Dn~ision
6-5
ATTACHMENT 1 -Undated Council Policy 453-02
COUNCIL POLICI'
CITI' OF CHULA ~7STA
SUBJECT: DEVELOPIvIENTOFAFFORDABLE POLICY EFFECTIVE
FOR SALE HOUSING FOR LON_ NUMBER DATE PAGE
AND D10DERATE- INCOME q53-02 12-09-03 1 of 7
BUYERS
ADOPTED BS': Resolution No. 2003-492 DATED: 12-09-03
TENDED Bl': Resolution No. 2005-314. 9-li-OS and 20 G- . 7-1 G13
PURPOSE
The Housing Element of the City's General Plan (1O°°~o-^^^2013-20201 establishes goals
and policies for the City to address a number of important housing related issues. the-One
of the focus areas pFimary-gea~is to ensure the cit~~ooorts varied housing opportunities
Hs-tke-Ettyf
d' arse needs of residents including the establishment of g_ermanent affordable housing
opoortunities for low- and moderate- income households.
This Policy establishes the procedures and guidelines for the development of affordable
for sale housing for first-time low- and moderate- income buyers defined as households
~^^,^~ -~, ~ ~^ ''^'~^^~' ~ '^~';o ~..al whom gashave.not had ownership
interest in any property within three years from the date of application and are earning
no more than 80% and
120% resoectivel~of the Area Median Income( AMI"l. The A~MediaH-Fr~eerae-EAMI~,
based upon household size, is determined annually by the U.S. Department of Housing
and Urban Development '"",^,~';. This policy wiN-outlines the development
guidelines, program requirements including underwriting criteria and the buyer selection
criteria that shall pertain to a~ for-sale development per posed to have affordable units
within the Cit~and not otherwise regulated by other funding sources inclusive of the
City's Balanced Communities f'Inclusionary'') Policy.
6-6
COU\'CIL POLICI'
CITI' OF CHULA \7STA
SUBJECT: DEVELOP6~~T' OF AFFORDABLE POLICY EFFECTT\~E
FOR SALE HOUSING FOR LO\\'- i\UA7BER DATE PAGE
A\rD D90DER.4TE- I~'COME
453
02
12
09
03
€?
}
F
BUYERS - -
- -
-
-e
ADOPTED Bl': Resolution No. 2003-492 DATED: 12-09-03
IADIE\DED BY: Resolution \o. 2003-314, 9-13-OS and 2013- . i-16-Li
The Inclusionary-policy rer,uires residential development projects consisting of 50 units or more
to restrict a minimum of ten percent f10°/1 of the units for occupancy by and affordable to low-
and moderate- income households vrith a minimum of 5°~ of the units for low-income
residents. Any Developer wishing to satisfy their affordable housing obligation through the
development of affordable for-sale housing within the City must adhere to the policies
contained herein and the Balanced Communities Policy Guidelines. ^• ^,~~.~-t#~ 2:tt!e^:eai
DEVELOPMENT GUIDELINES
The purpose of this polity is to provide affordable homeownership opportunities for low-
income households and to ensure that upon sale of the 'affordable" unit the City receives
adequate funds to continue to promote affordable homeownership programs throughout
the City.
To that end, the two primary components of this development process include the
establishment of a loan, through a Second Trust Deed, between the Homebuyer and the
City and an equity share system based upon the Homebuyer's length of occupancy. The
City and Developer shall ~-'^'^ ^''~'^ `^"`" implemeniat-ten-et the development
mechanisms as outlined below.
The City's Second Loan will ensure that the unit shall be affordable to the ''^,o.".;~..,•^'^^'^^
buyer while maintaining the market value of the property. The Silent Second Loan shall be
defined as a loan that does not require any payments until sale, transfer, refinance, rental
or change in title of the property.
City Loan Calculation
The calculation of the City's second loan amount shall be based upon the establishment of
the 'Affordable Sales Price' and "Market Rate Price" of each type of unit, based upon
number of bedrooms per unit The Citys Second Loan amount is calculated based upon
the difference between the Market Rate Price (MRP) and the Affordable Sales Price (ASP).
Silent Second Loan Amount=MRP-ASP
6-~
COliNCIL POLICY
CITY OF CHULA VISTA
SUBJECT: DEVELOPMENT OF AFFORDABLE POLICY EFFECTIVE
FOR SALE HOUSING FOR LOW- NUMBER UATE PAGE
.AND \10DERATE- INCOME
12
09
03
o~
BUYERS ~ 45x02 -
- ~
ADOPTED B1': Resolution No. 2003-492 DATED: 12-09-03
AbIENDED BY: Resolution No. 2005-314, 9-13-OS and 2013- .7-1(-I
The Affordable Sales Price shall be calculated based upon a number of factors, including but
not limited to. -number of bedrooms per unit at 1.5 persons per bedroom, homeowner's
association dues, utilityallowance orooertv tax Mello Roos fCFDs) and any other additional
costs of construction that are passed onto the buyer. This calculation is then incorporated into
the formula that determines what the City's second loan amount will be.
Assum~tlons utilized to calculate the Affordable Sales Price will be subject to the normal
costs and fees as associated with the purchase of the particular property based upon the
real estate market and negotiations between the City and Developer at the time of the
development DfODOSdI The criteria included that will remain constant are the erp centagg
of down~ayment required term of the loan and the maximum housing to income ratios
Other factors may be applied and are subject to change based upon the individual
development costs.
The Market Rate Price will be determined and mutually agreed upon by the City and
Developer based upon current real estate comparables and market analysis at the time of
development proposal. The Market Rate Price may be subject to change upon the
approval of the City during the development/construction period.
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COUNCIL POLICY
CIT]' OF CHULA ]7STA
SLBJECT: DEVELOPDgNT OF AFFORDABLE POLIC]' EFFECTIVE
FOR SALE HOUSING FOR LOttl- NUMBER DATE PAGE
A\D ~1ODER-4TE- INCOi`g
453
02
12
09
03
1
€
~
BUYERS - -
- -s
-
-
ADOPTED B]': Resolution No. 2003-492 DATED: 12-09-03
IADfENDED BY: Resolution No. 2005-314, 9-li-OS and 20 L3- , i-16-13
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COUNCIL POLICY
CITI' OF CHULA VISTA
SUBJECT: DEVELOPb-IENT OF AFFORDABLE IPOLICY EFFECTR'E
FOR SALE HOUSING FOR LOW- NUMBER DATE PAGE
AND t`90DERATE- INCOME 03
2
09 7
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BUYERS 453-02 1
-
- -
-e
~
ADOPTED BY: Resolution No. 2003-492 DATED: 12-09-03
AMENDED BY: Resolution No. 2005-314, 9-li-OS and 2013- . 7-16-13
~escriptien kow Low-Ineenie ~
Income Income
X539 6992 799
Equals-A4arr' c,°~ $230,073 62-59,983
TabFe-3
Max Aff Mar et Va ue o Home
Bedrooms purchase Sewnd Trust Deed Amount
Per Unit pdce
2 $ 195,303 $ 79,697 $ 104,697 $ 129,697 $ 154 697 $ 179,697
3 $ 230,073 S 44 927 $ 69 927 $ 94 927 $ 119 927 $ 144 927
4 S 259,983 $ 15,017 S 40,017 $ 65,017 $ 90,017 $ 115,017
Equih~Share
Table 4-1 illustrates the equity share percentages between the City and Homeowner based
upon the length of time that the Homeowner has occupied the property. The applicable equity
share if anv plus principal shall be due upon sale, transfer, refinance, rental or change of title
on the property. Should a Homeowner sell, transfer, rent or reconvey the property before one
year has passed from the date of the close of escrow, the City shall retain 100% of the equity in
the property, minus approved Homebuyer expenditures, including amount of initial
downpayment and approved costs of sale.
Table 41
For-Sale Low- and Moderate- Income Homebuyer Equity Share
Occupancy Period
( months) CiTy Equity Share Homeowner Equity Share
0-121-3 0%79~°,S 100/ 3R% ~
13.240-?9 5%604 95%a9e6
6-10
e
COUNCIL POLIC]'
CIT]' OF CHULA ]'ISTA
SUBJECT: DEVELOPDg\T OF AFFORDABLE POLIC]' EFFECTFI'E
FOR SALE HOUSi~'G FOR LOW- ~U11BER DATE PAGE
A\'D a1ODERATE- INCOD~
453
02
12
09
03
f?
FF
BU]'ERS - -
- -
a
ADOPTEDB]': Resolution No. 2003-492 DATED: 12-09-03
~.4,alE\DED Bl': Resolution No. 2005-314, 9-U-0> and 2013- 7-16-li
25-3615 I 10°/~ I 0°L/Q50'=
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61-722Fr38 I 50°~ I SO%88'.
73-8431-35 I 55%i8=: I 45°
85-963=i I 60 :°' I 40
97-108 I ~ I ~ I
109-120 I 70% I 30%
121-132 I 3~qs I
133-144 ~ I ~ Q
145-156 I 85% ( 15% I
157-168 I 90% 10~°
16 -180 I 98q° I ~
Thereafter I 100% 0~°
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6-1 1
COUNCIL POLICY
CITY OF CHULA VISTA
SUBJECT: DEVELOPMENT OF AFFORDABLE POLICY EFFECTIVE
FOR SALE HOUSING FOR LO\\'- NUn1BER DATE PAGE
4ND ~90DERATE- INCOME
BUYERS 453-02 12-09-03 -}-I-ef~
ADOPTED BY: Resolution No. 2003-492 DATED: 12-09-03
rU1IENDED BV: Resolution No. 2005-314. 9-13-OS and 2013- . 7-16-13
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EXAMPLE TABLE
Cu«ent Sales Price (4 yars later) $ 500,000
1st LOan-Homeowner $ (787,303)
2nd Loan-City $ (79,679)
Homeowner's Investment-Homeowner $ 45 859
Equily $ 787,159
Times E uit Share Percents a 70.0%
Equity Share (City) S 137,011.30
TOTAL DUE TO CITY $ 210,090
TOTAL DUE TO HOMEOWNER $ 289,310
Rennvmenr Requirements and Conditions
Sale, transfer, refnance with cash-out or for purposes of debt consolidation or renting of the
property requires both repayment of the Silent Second Loan PLUS repayment of a portion of
the equity based upon the length of occupancy at the time of such action.
The City will subordinate its second loan if the Homeowner wishes to obtain a straight rate and
term refinance (no cash out or debt consolidation). Neither the City's second loan or the equity
share will be due. The City will evaluate the Homeowner's Ratios to determine if the borrower
can reoav a oortion of the silent second or if the new loan remains affordable for borrowers
who refinance into a less loan term
Should the Homeowner wish to add an individual to the Title of the property or include the
property in a Trust they must obtain City approval prior to such action. Either action may result
in the loan and/or equity share becoming due and payable within 90 days of the action and
shall beat the discretion of the City.
6-12
COUNCIL POLICY
CITY OF CHIiLA VISTA
SUBJECT: DE\-FLOP\~*[ OF AFFORDABLE
FOR SALE HOUSING FOR LOW- POLICY
NUMBER EFFECTIVE
DATE
PAGE
AND ~10DERATE- INCOAg
453
02
12
03
09
a
I
~?
BUI'ERS - -
- -
-e
ADOPTED Bl': Resolution No. 2003-492 DATED: 12-09-03
IA,SIENDED BY: Resolution No. 2005-314, 9-13-05 and 20 G- . i-16-li
Shorn Sale and Hardship
Upon loan re~aymeni request. if the combined first and second mortpapes are
below current market value of a unit the City will repuire homeowners to seek
homeownership counseling prior to the approval of a short sale of the property. In
addition. these request will be reviewed on a case by case basis.
City Silent Second Loan Restructuring
The Director of Development Services may authorize a reduction in the Cit~/s Silent
Second Loan Amount principal (after sale) for buyers whom are in good standing
fora minimum of 6 months (on their mortga~ce payments. and HOA fees).
undergoing a refinance. and where initial Market Rate Price has declined by more
than 40%to current value under current underwriting and industry standards.
PROGRAM REQUIREMENTS
The City and the Developer will ensure the development meets all of the following
requirements:
Should subsidized financing, offsets, or incentives be proposed and obtained, the
development requirements of that program or granting Agency must also be met.
All "affordable" units will be sold to buyers meeting both the income-based and
cost-based measures of affordability. The income-based measure is the annual
income at 80% and 120°~ of ,°.~^, "".~-~,~ri,^ 'a^^^ IAMI; based upon household
size. The cost-based measure may not exceed 40% of 80% of AMI for all loans
except FHA which has a cap of 36oy rti^.,.t...,. ^,, nnnc ~.,^.,..,,, c^ .,,..~.,,
°.
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6-13
COUNCIL POLICY
CITI' OF CHULA VISTA
SUBJECT: DEVELOPMENT OF AFFORDABLE POLICY EFFECTR'E
FOR SALE HOUSING FOR LOW- NUMBER PATE PAGE
AND A4ODERATE- INCOb4E
BUYERS 453-02 12-09-03 a-1-e€~
ADOPTED BI': Resolution No. 2003-492 DATED: 12-09-03
ADIENDED BI': Resolution No.2005-314, 9-13-OS and 20li- 7-1G-I3
iThe units will be priced as affordable to buyers at the 70% and 110% of AMI level,
but the maximum income level for quali in households will still be at 80% of AMI
for low- income and 120% for moderate- income Pricing will be set using a front
end ratio of 30°/ for low income buyers and 36% for moderate income buyers
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y .,
4. Prospective homebuyers must be pre-qualified by the designated Lender, as
determined by the Developer, in order to purchase an affordable unit, although the
homebuyer may obtain his/her permanent fnancing from any licensed mortgage
broker or lender of their choosing. Homebuyer shall notify City staff in writing of
intent to use "outside' lender at least 30 days before expected escrow
closing, as determined by the developer.
5. Homeowner is required to attend a qualified "Homebuyer Education
Program" and provide evidence to the City of their attendance before the
close of escrow.
6. The Borrower must sign a release authorizing the City to receive a copy of
the buyer's 1003 (Mortgage Loan Application), Good Faith Estimate and
Underwriting Transmittal Summary (1008) or similar form from Lender,
which shall be forwarded to City as part of the application review process.
Undernriting Requirements
The City shall require that each homebuyer meet the following underwriting
standards in order to be eligible for purchase of an Affordable Unit, regardless of
Lender's standard or available underwriting criteria:
1. Minimum contribution by buyer of three percent (3%) of the Purchase Price;
6-14
COIIi\CIL POLIC]'
CIT]' OF CHliLA ]'ISTA
SUBJECT: DEVELOPt]~\-I OF AFFORDABLE POLICY EFFECTI]'E
FOR SALE HOUSI,\'G FOR LO\V_ ~'Ui\1BER DATE PAGE
.A~'D MODERATE- I\COr1E
4Si
02
12
09-03
~+
€~
BUYERS - - -ee
ADOPTED Bl': Resolution No. 200392 DATED: 12-09-03
Ail1E\DED B]': Resolution No. 2005-314, 9-li-OS and 2013- - i-I6-G
2. Maximum liquid assets after downpayment and closing cost contribution
not to exceed S2S,000 (not including retirement accounts i.e. IRA's, 401(k),
etc);
3. Non-occupant co-borrowers are not allowed;
4. Maximum total housing ratio of 36% for FHA loans and 40% for all other
loans;
S. Maximum debt-to-income ratios of 41% for FHA loans and 46% for all other
loans;
aad
~6- Minimum front-end ratio of 30% for income qualification ourooses
~- ---- Formattetl: Irdent left: 0.5', No bullets or
numbering, Tab stops: Not a. 0.5'
7. No refinancing for the purposes of cash-out or debt consolidation shall be
allowed a~ nd-
r3S Gift funds shall not exceed 10% of the affordable sales price.
Lender Requirements
The Developer is responsible for providing an informational packet to the Homebuyer
detailing the responsibilities of all of the involved parties, including the Lender, City,
Developer and Homebuyer. The Lender is required to adhere to the criteria in determining
the Homebuyer's eligibility for an affordable for-sale unit. Appropriate documentation {as
eeNi+aed-aLieve-a~"-Z)-must be forwarded to the City by the Lender. After review and
verification that the Homebuyer is qualified, the City will send an Approval Letter to the
Lender confirming the Homebuyer's eligibility.
BUYER SELECTION CRITERIA
The Developer shall use the following criteria in order to determine priority for purchase of
an affordable for-sale housing unit. Marketin of units shall be in comoliance with --.--~ Formatted: Font CG Omega
g. - - - ..._..... -
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COUNCIL POLICI'
CITY OF CHULA ~7STA
SUBJECT: DEVELOPMENT OF AFFORDABLE POLICY EFFECTIVE
FOR 5.4LE HOUSING FOR LOVd_ NUMBER DATE PAGE
AND MODERATE- INCOME
BUYERS 45-02 12-09-03 I l~f 'I
ADOPTED BY: Resolution No. 2003-492 DATED: 12-09-03
AbIENDED BT: Resolution No. 2005-314, 9-li-OS and 2013- . 7-16-13
federal and state fair housing law. A point system has been established so that
applicants with a higher number of points will receive preference for units. _
5_points .Households which are displaced from their primary residence as a result of
any of the following: (i) expiration of affordable housing covenants
applicable to such residence; (ii) an action of City or Agency; (iii) closure of a
mobilehome or trailer park community in which the household's residence
was located; or (iv) a condominium conversion involving the household's
residence. One member in the households must have resided in such
housing as the primary place of residence for at least one year prior to such
action or event.
ins Households with at least one member who is working within the City of
Chula Vista, as that person's principal place of full-time employment, at the
time of application.
3 points Households currently residing within the boundaries of the City of Chula
Vista, ai the time of application.
2~ooints Households with at least one member who is a Public Safety employee
(fireman/woman and policeman/woman) or Credentialed Teacher. The
individual must be working in Such position as his/her full-time profession
at the time of application.
1 pin All other applicants who do not meet any of the above criteria.
In the situation where there are applicants with an equal number of points but not enough
units available, secondary determining factors may be considered, including number of
verifiable household members or individuals with special needs or disabilities.
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COU\ CIL POLICY
CITY OF CHUL.4 VISTA
SLBJECT: DEVELOP~'IEi~IT OF AFFORDABLE POLICI' EFFECTIVE
FOR SALE HOUSING FOR LOW- NUMBER DATE PAGE
~
AND \1ODERATE-
INCOT7E'.
453-02 12-09-03 4~"
BUYERS
ADOPTED Bl': Resolurion No. 2003-092 DATED: 12-09-03
I A,~IENDED Bl': Resolurion No.2005-314, 9-li-OS and 2013- . 7-16-I 3
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COUNCIL RESOLUTION NO. 20li-
RESOLUTION OF THE CITY COUNCIL OP THE CITY- OF
CHULA VISTA (1) APPROVING AN UPDATE TO COUNCIL
POLICY 453-02 RELATED TO THE DEVELOPMENT OF
AFFORDABLE FOR-SALE HOUSING FOR LOW-INCOME
BUYERS; (2) AUTHORIZING THE DIRECTOR OF
DEVELOPMENT .SERVICES OR HIS DESIGNEE TO
IMPLEMENT THE POLICY; AND (3) FURTHER
AUTHORIZING THE DIRECTOR OF DEVELOPMENT
SERVICES OR HIS DESIGNEE TO EXECUTE AND AMEND,
CONSISTENT WITH THE AFOREMENTIONED POLICY_-
ANY AND ALL DOCUMENTS SUBJECT TO THE POLICY
WHEREAS, the City of Chula Vista adopted an Affordable For-Sale Housing Policy
453-02 ("Policy') on December 9, 2003 and updated such Policy on September 13; 200; and
WHEREAS, the goal of such Policy was to provide affordable homeownership
opportunities for low- income households and to ensure that upon sale of the "affordable' unit
the City receives adequate funds to continue to promote affordable homeownership programs
throughout the City; and
WHEREAS, on September 25, 2012 the City adopted the Balanced Cornrnunities
`7nclusionary" Housing Policy Guidelines ("Inclusionary Guidelines"); and
WHEREAS, staff has determined that a comprehensive update of Policy 453-02 is
necessary in order to continue meeting the original goals of the Policy and adequately
supplement the Inclusionary Guidelines; and
WHEREAS, such update includes the addition of criteria for moderate-income for-sale
products; changes to the reduction in the length of the shared equity term from 45 to 15 years,
updates in underwriting criteria to meet current industry standards and coincide with the Citys
First-Time Homebuyer Program, _and guidance in instances of hardship for short sales and
projects that previously utilized the Policy; and
WHEREAS, since 2003 hvo complexes have utilized Policy 453-02 and due to changing
market conditions should be evaluated under the updated Policy; and
WHEREAS, documents and agreements under former Policy 453-02 may be modifed to
reflect the new terms of the proposed updates to Policy 453-02.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula
Vista, that it:
1:\Attorneq\FINAL RESOS AND ORDINANCES\2013\08 06 13\RESO-DSD-For Sale Housing Policy.doc
7/30/2013 229 PD9
6-~$
Resolution No.
Paee 2
(l) Approves the update to Policy 4~3-02 related to the development of affordable for-
sale housine for low- and moderate- income buyers.
(2) Authorizes the Director of Development Services or his designee to implement Policy
4~3-OZ, as updated.
(S) Further authorizes the Duector of Development Services or his designee to execute
and amend; consistent with the aforementioned Policy 4~3-02. an_v and all documents
subject to the Policy.
Presented by
Approved as to form by
Glen ~ Gooeins
City Attorney
Kelley G. Broughton
Development Services Director
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i/30!?013 2:29 PM
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