STAFF REPORT
City of Lancaster
CC 8
3/26/2024
JC
Date: March 26, 2024
To: Mayor Parris and City Council Members
From: Larissa De La Cruz, Director - Community Development Christopher Aune, Housing Manager - Housing and Economic Development Subject: Additional First Time Homebuyer Program Grant Funding Recommendations:
1. Authorize the appropriation of additional future HOME funding to the First Time Homebuyer Program, up to a maximum cumulative amount of $3,000,000.00.
2. Authorize the City Manager or his designee to negotiate and execute individual loan agreements of up to $150,000.00 each with qualified homebuyers under the parameters of the First Time Homebuyer Program, up to a maximum cumulative amount of $3,000,000.00 with the concurrence of the City Attorney.
Fiscal Impact:
None. Sourced from the City’s allocation of U.S. Department of Housing and Urban Development (HUD) HOME Investment Partnership Program (HOME) funding. These funds are designed for exclusive use in affordable housing activities.
Background:
On December 13, 2022, the City Council approved the First Time Homebuyer (FTHB) Program.
The total HOME grant amount was approved for $1,657,393.00 In September 2023, the City received an additional $543,458.00 in HOME grant funding for a total amount of $2,200,851.00.
Currently, the FTHB Program has funded seven eligible, qualified families at a total amount of $1,035,000.00. The remaining $1,166,000.00 will be expended by the end of this summer and provide homeownership opportunities to an additional eight hard working families.
The City will continue to receive annual HOME grant funding. Taking into consideration next year’s (2024-2025) HOME grant allocation, staff is requesting Council authorize the City Manager or his designee to negotiate and execute individual loan agreements of up to $150,000.00 each with qualified homebuyers under the parameters of the FTHB Program, up to a maximum cumulative amount of $3,000,000.00.
The FTHB Program assists families and individuals who wish to purchase a home but are unable to secure a sufficient down payment to qualify for an affordable loan. A Program loan provides down payment assistance in the form of a silent second mortgage to eligible first-time homebuyers within the Lancaster City limits.
This FTHB loan is a non-interest-bearing loan, with repayment deferred until the sale, transfer, lease, or encumbrance of all or any interest in the Property without the City’s prior written consent, upon a declaration of default of the Affordable Housing Restriction, or the triggering of an acceleration clause of the promissory note. FTHB Program loans will incorporate forgiveness terms on all promissory notes. Loan amounts will be forgiven at a rate of ten percent (10%) per completed year, starting with year six (6). This forgiveness schedule results in a 100 percent grant at the end of year 15.
In order to be eligible for funding, applicants’ household income must fall below 80% of the County median income, which is published each year. The current limits are listed below:
Low-Income (80% of Area Median) *
Household Size Income Limit
1 $70,650
2 $80,750
3 $90,850
4 $100,900
5 $109,000
6 $117,050
7 $125,150
8 $133,200
Based on 2023 Median Income for Los Angeles County. (Effective June 15, 2023) CA/js