CITY OF COMMERCESTAFF REPORTCITY OF COMMERCESTAFF REPORT
CITY OF COMMERCE
STAFF REPORT
CITY OF COMMERCE
STAFF REPORT
TO: Honorable City Council
FROM: City Manager
SUBJECT: Consideration of a City Council Resolution Approving Modifications to the City’s First Time Homebuyer 2.0 Program Guidelines Meeting Date: April 25, 2023
RECOMMENDATION:
Adopt a Resolution approving the proposed modifications to the existing First-Time Homebuyer (“FTHB”) 2.0 Program Guidelines to add expanded language to permit qualified participants the opportunity to purchase their first home within the City of Commerce boundaries, rather than only within the new Rosewood Village housing development due to unforeseen delays with the next phase of that project.
BACKGROUND:
On December 7, 2021, the City Council approved the implementation of the City’s First Time Homebuyer 2.0 Program to provide income-qualified Commerce residents secondary financing of up to $150,000 to assist with down payment and closing costs related to the purchase of a new home within the “Rosewood Village” housing development located in the City of Commerce, adjacent to City Hall.
The FTHB 2.0 Program was designed solely for the purchase of an eligible property located within the Rosewood Village development, in conjunction with the City Ventures project. As part of that project, the developer agreed to reserve up to three (3) housing units per phase of the three-phase development, for a total of nine (9) housing units. Consistent with the number of units reserved, the City secured up to $150,000 for up to nine (9) qualified participants each, who completed the Program application and deemed eligible to move forward in the lottery process.
ANALYSIS:
As part of the FTHB 2.0 implementation, 14 applicants successfully completed and met the Program eligibility requirements, allowing them to participate in the FTHB 2.0 Program lottery on June 21, 2022. The first three names drawn were issued an award letter allowing them to select an available unit in Phase One of the Rosewood Village housing development while lottery winners 4 through 14 were placed on a waitlist in the order they were drawn.
During the mortgage loan approval process, Staff was notified that at least one participant did not qualify for a home loan, some participants were non responsive, while others backed out because they were not financially ready to purchase a home within the price range of Rosewood Village, which ranged from $624,990 to $664,990 in Phase I of the development. As participants failed to move forward in the process, Staff continued to go down the waitlist until we reached three households who successfully completed the loan approval process and are now proud homeowners in Phase I of the Rosewood Village.
For the past few months, staff has analyzed the framework and parameters of FTHB 2.0 to determine if it can be enhanced to ensure the desired goal of placing Commerce residents in their first home can be achieved. In its analysis, staff is finding that the last couple of years have presented some unforeseen challenges caused by the 2020 Pandemic. Most notably, the rising cost of building materials that has led to the increase of home prices which was not initially contemplated when staff obtained direction to design the FTHB 2.0 guidelines. Additionally, there has been a delay in the development of Phase II of the Rosewood Village due to unforeseen environmental regulations that have evolved since the project was approved. This may add years to the completion of Phase II of the development.
Because of the above, staff recommends that the Program Guidelines be expanded to allow the next 3 (as determined by the original drawing) of the remaining 11 qualified FTHB 2.0 participants the opportunity to purchase a home located within the City of Commerce boundaries, rather than limiting them to only units in the Rosewood Village development. Once Phase II of the Rosewood Village development is completed, the final three qualified participants may select from one of the designated housing units within that phase. This would mean that the final phase of the Rosewood Village project may not have three FTHB units unless the City identifies a distinct funding source or opts to allocate another source of funding. It is staff’s assessment that this adjustment will expand the participants’ options, to include a collection of more affordable housing opportunities when considering the potential purchase of a home in Commerce at a price that is financially suitable for an eligible participant.
ALTERNATIVES:
Approve staff recommendation;
Deny Staff recommendation; or
Provide Staff with further or modified direction.
FISCAL IMPACT:
If the City Council approves the aforementioned recommendation, it is anticipated that funding will be achieved via the proceeds generated from the sale of land to City Ventures. Therefore, a direct fiscal impact to the City’s General Fund Budget shall be minimal.
RELATIONSHIP TO STRATEGIC GOALS:
The issue before the Council is applicable to the following Council’s strategic goal: Guiding Principle 3: Support a long-range planning vision through the City’s General Plan, zoning ordinance, and related land use planning documents that incorporate community and stakeholder input and provide a compass for strategic economic growth, infrastructure investments and city fiscal planning” as identified in the 2016 Strategic Plan.
Respectfully submitted by: Edgar P. Cisneros, City Manager Recommended by: Viviana M. Esparza, Acting Director Economic Development and Planning Reviewed by: Vilko Domic, Assistant City Manager
Approved as to form, Noel Tapia, City Attorney
ATTACHMENTS:
Resolution
Revised FTHB 2.0 Guidelines