PLHAccmtg10-24-22(klk)
CITY OF SIMI VALLEY
MEMORANDUM
October 24, 2022
TO: City Council
FROM: Department of Environmental Services
SUBJECT: A PUBLIC HEARING TO ADOPT A RESOLUTION AMENDING THE
PERMANENT LOCAL HOUSING ALLOCATION (PLHA) FIVE-YEAR PLAN
AND AUTHORIZING THE CITY MANAGER TO EXECUTE ASSOCIATED
DOCUMENTS, ADOPTION OF A RESOLUTION ESTA BLISHING A
HOMEBUYER ASSISTANCE PROGRAM, AND APPROV AL OF A
SUPPLEMENTAL BUDGET R EQUEST TO ESTABLISH BUDGET
AUTHORITY
STAFF RECOMMENDATION
It is recommended that the City Council:
1. Adopt a resolution amending the PLHA five- year plan and authoriz ing the City Manager to execute associated documents;
2. Adopt a resolution establishing a Homebuyer Assistance Program; and
3. Approve a Supplemental Budget Request to establish budget authority.
BACKGROUND AND OVERVIEW
The State of California’s Senate Bill 2 (SB2) passed in 2017 , is part of a housing package aimed at addressing the state’s housing shortage and high housing costs.
Specifically, SB2 established a permanent funding source intended to increase the affordable housing stock in California. Permanent Local Housing Allocation (PLHA) entitlements are specifically funded through the Building Homes and Jobs Act of SB2, which established a $75 recording fee on real estate documents.
Revenues are expected to fluctuate annually based on the real estate market’s activity.
PLHA provides financial assistance to local governments to help implement plans to facilitate housing affordability , particularly for lower -income households , assisting persons experiencing or at risk of homelessness, and increase assistance to affordable owner-occupied workforce housing. PLHA funds may be used for any combination of the 10 eligible activities as outlined in the PLHA five - year plan must be spent no later than 4 years and 10 months after the date of appropriation or returned to the State. In 2020, the City Counci l approved use of
AGENDA ITEM NO.
5A
the PLHA funds for a rental assistance program however due to duplicate programs, it was never launched . Staff has outlined a proposed amendment for the use of PLHA funds and is seeking authorization from the City Council to proceed.
FINDINGS AND ALTERNATIVES
Previously Adopted Five-Year Plan and Selected Activity In June 2020, the City Council adopted R esolution No. 2020 -37 approving a five -year PLHA p lan (Plan) and authorized the application for grant funds dedicated to the development and preservation of affordable rental housing and the creation of home ownership opportunities for extremely low to moderate income households. The Plan provided a list of ten eligible activities, of which the selected activity was to provide assistance to households at 30% of Area Median Income (AMI) and at r isk of homelessness pursuant to federal and state definitions (Attachment 1; page 27). In June 2021, the Department of Housing and Community Development (HCD) approved the City’s Plan and executed the standard agreement for the first year of funds, in the amount of $290,357. However, due to more accessible and flexible rental assistance and grant programs that were implemented by the State of California, the County of Ventura, and the City during the COVID-19 pandemic that distributed over $16.5 million to assist Simi Valley residents, rental assistance under the Plan was determined not to be a viable option in discussion with service providers once all the parameters were understood.
Following the release of the most recent Notice of Funding Availability (NOFA), City staff contacted HCD to inquire about expanded uses for these funds within the previously selected activity. It was inquired if homeless prevention activities (i.e. motel vouchers), to address each community’s specific needs and available resources, would be permissible.
HCD confirmed that the funding cannot be used for motel vouchers. The City continues to support and work closely with our local non- profits who provide rapid rehousing and supportive/case management services. Unfortunately, work to support rapid rehousing needs is currently challenging for service providers due to the i nsufficient number of available affordable housing units.
Amended Five-Year Plan and Revised Activity Selection
Given the Plan’s limited scope of assistance available under the prior selected rental assistance activity and the wide availability of other programs, City staff reassessed the options available and prepared a Plan amendment to reallocate funds to provide down payment assistance for first time home buyers. The Plan Amendment is attached as Exhibit A to proposed Res
olution No. 2022-56 (page 9). The draft Homebuyer
Assistance Program policies and procedures manual is attached as E xhibit A to proposed Resolution No. 2022-5 7 (page 17).
The selected activity provides the greatest immediate benefit to the community , and the proposed Homebuyer Assistance Program has been designed to provide ongoing funding PLHAccmtg10-24-22(klk)
2 PLHAccmtg10-24-22(klk)
to assist residents in achieving homeownership and preventing homelessness . Other eligible activities , detailed within the Plan , require paired financing, developable land, duplicate existing programs, and/or may result in the creation of housing opportunities outside of the City, and if not completed in a timely manner, may result in the loss of PLHA funds.
A
dditionally, as demonstrated with continually rising rents, the only way for households to have consistent housing costs is through ownership opportunities in which they control any changes in their housing costs other than property taxes and HOA dues.
Furthermore, recent studies are increasingly focusing on gaps in homeownership and that it is one of the ways to build stable wealth, most notably Little Hoover Commission – California Housing: Building a More Affordable Future and Joint Center for Housing Studies of Harvard University – The State of the Nation’s Housing 2022. With record-high real estate prices and rising interest rates, households are in need of assistance to make homeownership a reality.
Proposed Homebuyer Assistance Program Highlights
The proposed Program supports homeownership opportunities in the following ways:
• Serves income levels up to 150% Area Median Income (AMI) with preference provided to households up to 60% AMI (See Attachment 2; page 51 for household size and qualifying income levels);
• Allows households to select housing from the open market to best meet their needs in terms of size, location, and amenities;
• Allows households who face hous ing instability due to changes in household composition, economic downturns, relocation needs, or downsizing to receive assistance without requiring them to meet the definition of a first-t ime homebuyer; • Incentivizes households to hold homes for more than ten years, creating str onger community connection and investment in neighborhoods;
• Establishes equity share based on the tenure of ownership and City contribution to allow households to im prove their overall financial position and ex it the affordable housing market, which allows future s upport for additional households; • Allows for cash-o ut refinancing for hom e improvement credits for c apital improvements upon sale to encourage and support investment in the maintenance of the City’s housing stock;
• Allows households to maintain housing cost ratios between 25% and 35% to provide long-term affordability; and
• Provides up to 20% down payment assistance bas ed on a max debt-t o-income ratio of 45% and a max housing cost ratio of 35%, which accommodates for fluctuations in real estate values and cost of financing. 3 PLHAccmtg10-24-22(klk)
The City’s anticipated allocation over the Plan’s five-year period (2019-2023) is estimated to total $1,742,142, which will assist approximately 15 households in purchasing homes.
If each household holds the property for a minimum of 10 years , the Program could increase its financial value by approximately 41% assuming an average annual rate of return of 3.5%, which is consistent with real estate appreciat ion trends over a 10- year period. Funds recaptured by the City will help to offset inflation and maintain a consistent number of households being served. All earned equity due to the City will be used to assist future homebuyers.
Grant Submission Requirements
The funding for each Plan year is determined by the prior calendar year’s real estate transactions by county. The City must allocate funds by percentage to e ligible activities and may allocate a maximum of five (5%) percent of the annual grant amount to offset the City’s administrative costs.
All Plan amendments and applications for the Plan Year (PY) 2020 and PY 2021 must be authorized and submitted to HCD by November 30, 2022; otherwise, the draw of PY 2019 funds and additional PY allocations will not be available until an amended Plan and annual applications are submitted during the next NOFA cycle, in Fall 2023.
The P
LHA program guidelines require that the public have the opportunity to review and comment on the proposed updated Five- Year Plan. City staff published a notice on October 11, 2022, 13 days in advance of the public hearing, inviting the public to review and comment on the proposed updated Plan amendment and the proposed Program .
The Plan amendment and the proposed Program were available for public review on the City’s website beginning on October 20, 2022. As of the writing of this report, no comments have been received.
T
he City Council can make future changes for the use of funds, if necessary, to allocate resources based on program outcomes and associated City Council future policies. Staff will provide progress of the activities each year in the City’s Annual Snapshot of Housing and Program Activities. The Plan can be reviewed and amended in future years as necessary to best meet the needs of the community.
Staff Recommendation
Sta
ff recommends that the City Council adopt Resolution No. 2022-56 approving the amended Plan and authorizing the City Manager to execute all associated documents , including annual streamlined applications for the implementation of the Plan ; adopt Resolution No. 2022-57 establishing the Homebuyer Assistance Progr am; and approve the Supplemental Budget Request, providing budget authority in Fund 208 for the receipt of the PY 2019 revenues and expenditures (including City’s administrative costs) for the implementation of the Program as detailed in the table below:
4 PLHAccmtg10-24-22(klk)
Table 1 – Supplemental Budget Request
F
or the subsequent years of the Program, budget authority will be set during the annual budget adoption and City staff will submit an annual application for PY allocations for the approved plan activity, during future NOFA cycles.
T
he following alternatives are available to the City Council:
1. A
dopt Resolution No. 2022-56 amending the PLHA five-year plan and authorizing the City Manager to execute associated documents;
2. Adopt Resolution No. 2022-57 establishing a Homebuyer Assistance Program;
3. Approve a Supplemental Budget Request to establish budget authority to implement the Program.
4. Provide alternate direction.
S
taff recommends Alternative Nos. 1, 2, and 3.
SUGGESTED CITY COUNCIL MOTION
I mo
ve to adopt Resolution No. 2022- 56 and Resolution No. 2022- 57 and approve a Supplemental Budget Request, in the amount of $290,357 in Fund 208 (PLHA Fund) to establish budget authority to implement the Homebuyer Assistance Program.
SUMMARY
T
he State’s SB2 provides funding for the Permanent Local Housing Allocation ( PLHA), which is an annual allocation intended to provide financial assistance to local governments to help implement plans to facilitate housing affordability, particularly for low-income to moderate- income households. It is recommended that the City Council adopt a resolution amending the PLHA five-year plan and authorizing the City Manager to execute associated documents, adopt a resolution establishing a Homebuyer Assistance Program, and approve a Supplemental Budget Request to establish budget authority to implement the Program.
____________________________
Stratis Perros
Environmental Services Director
Account Amount
2089306-36002 $290,357
2089306-44120 $275,840
2089306-46100 $14,517
5 PLHAccmtg10-24-22(klk)
Prepared by: Mara Malch, Deputy Environmental Services Director INDEX Page
P
ublic Hearing Procedure .............................................................................................. 7 Resolution No. 2022-56 (Plan Amendment) .................................................................... 9 Exhibit A – Permanent Local Housing Allocation Plan Document and Application .. 12 Resolution No. 2022-57 (Proposed Program) ............................................................... 17 Exhibit A – Homebuyers Assistance Program Policies and Procedures .................. 19 Attachment 1 – Resolution No. 2020-37 ........................................................................ 46 Attachment 2 - State Income Limits for 2022 ................................................................ 51 6 PLHAccmtg10-24-22(klk)
PUBL IC HEARING PROCEDURE
HE
ARING DATE: October 24, 2022
1. MA
YOR: This is the time and place set for a public hearing to consider adoption of a resolution amending the Permanent Local
Housing Allocation (PLHA) Five-Year Plan and authorizing the City Manager to execute associated documents,
adoption of a resolution establishing a Homebuyer
Assistance Program, and approval of a Supplemental
Budget Request to establish budget authority.
May
I have a reading of the resolutions?
2. CLE
RK: (Reads resolution and/or ordinance)
3. MA
YOR: May we have an oral report on this matter by staff?
4. STA
FF: (Report)
5. ANY
COUNCIL
MEMBER : (Questions of staff and staff response)
6. MA
YOR: Please read any public comments on this matter that have been received.
7. AUDI
ENCE: (Comments)
8. MA
YOR: The hearing is closed. Are there any comments or questions from members of the City Council? (Note: If the City
Council has any further questions of staff or the applicant at this time, the Public Hearing may need to be re-opened.)
9. ANY
COUNCIL
MEMBER : (Comments)
10. MA
YOR: The Chair will now entertain a motion.
11. ANY
COUNCIL
MEMBER :
1) Adopt, modify, or not adopt Resolution No. 2022-56 & 2022-57 (requires a second and a vote; requires reading of
resolution). Suggested motion: I move to adopt the
resolution, amending the Permanent Local Housing
Allocation (PLHA) Five-Year Plan and authorizing the
City Manager to execute associated documents, adoption
of a resolution establishing a Homebuyer Assistance
Program, and approval of a Supplemental Budget
Request to establish budget authority.
7 PLHAccmtg10-24-22(klk)
* Any action to refer the matter back to staff or to continue the matter requires a second and a vote.
12. ANY COUNCIL
MEMBER : Second
13. MAYOR: (Call for vote)
14. MAYOR
: Proceed to the next item.
8 PHLAccmtg10-24-22(sy)
RESOLUTION NO. 2022-56
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SIMI VALLEY AMDENDING THE PERMANENT LOCAL
HOUSING ALLOCATION (PLHA) FIVE -YEAR PLAN AND
AUTHORIZING CITY MANAGER TO EXECUTE
ASSOCIATED DOCUMENTS
WHEREAS, the Department is authorized to provide up to $33 5 million under the SB2 Permanent Local Housing Allocation Program Formula Component from the Building Homes and Jobs Trust Fund for assistance to Cities and Counties (as described in Health and Safety Code section 50470 et seq. (Chapter 364, Statutes of 2017 (SB 2)); and
WHEREAS, the State of California (the “State”), Department of Housing and Community Development (“Department”) issued a Notice of Funding Availability (“NOFA”) dated August 17, 2022 under the Permanent Local Housing Allocation (PLHA) Program; and
WHEREAS, the City of Simi Valley (“Applicant”) is an eligible Local government who has applied for the program to administer one or more eligible activities, or a Local or Regional Housing Trust Fund to whom an eligible Local government delegated its PLHA formula allocation; and
WHEREAS, the Department may approve funding allocations for PLHA Program, subject to the terms and conditions of the Guidelines, NOFA, Program requirements, the Standard Agreement and other contracts between the Department and PLHA grant recipients.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SIMI VALLEY DOES HEREBY RESOLVE AS FOLLOWS:
SECTION 1
. If Applicant receives a grant of PLHA funds from the
Department pursuant to the above referenced PLHA NOFA, it represents and certifies that it will use all such funds in a manner consistent and in compliance with all applicable state and federal statutes, rules, regulations, and laws, including without limitation all rules and laws regarding the PLHA Program, as well as any and all contracts Applicant may have with the Department.
SECTION 2. Applicant is hereby authorized and directed to receive a PLHA grant, in an amount not to exceed the five- year estimate of the PLHA formula allocations, as stated in Appendix C of the current NOFA of $1,742,142 in accordance with all applicable rules and laws.
9 PHLAccmtg10-24-22(sy)
SECTION 3. Applicant hereby agrees to use the PLHA funds for eligible activities as approved by the Department and in accordance with all Program requirements, Guidelines, other rules and laws, as well as in a manner consistent and in compliance with the Standard Agreement and other contracts between the Applicant and the Department.
SECTION 4. Pursuant to Section 302(c)(4) of the Guidelines, Applicant’s PLHA Plan for the 2019- 2023 Allocations is attached to this resolution (Exhibit A), and Applicant hereby adopts this PLHA Plan and certifies compliance with all public notice, public comment, and public hearing requirements in accordance with the Guidelines.
SECTION 5.
Applicant certifies that it may subgrant some or all of its PLHA funds to another entity or entities. Pursuant to Guidelines Section 302(c)(3), “entity” means a housing developer or program operator, but does not mean an administering Local government to whom a Local government may delegate its PLHA allocation.
SECTION 6.
Applicant certifies that its selection process of these subgrantees will be accessible to the public and avoided or shall avoid any conflicts of interest.
SECTION 7.
Pursuant to Applicant’s certification in this resolution, the PLHA funds will be expended only for eligible Activities and consistent with all program requirements.
SECTION 8.
Applicant certifies that, if funds are used for the acquisition, construction or rehabilitation of for -sale housing projects or units within for -sale housing projects, the grantee shall record a deed restriction against the property that will ensure compliance with one of the requirements stated in Guidelines Section 302(c)(6)(A),(B) and (C).
SECTION 9.
Applicant certifies that, if funds are used for the development of an Affordable Rental Housing Development, the Local government shall make PLHA assistance in the form of a low-interest, deferred loan to the Sponsor of the Project, and such loan shall be evidenced through a Promissory Note secured by a Deed of Trust and a Regulatory Agreement shall restrict occupancy and rents in accordance with a Local government-approved underwriting of the Project for a term of at least 55 years.
SECTION 10.
Applicant shall be subject to the terms and conditions as specified in the Standard Agreement, the PLHA Program Guidelines and any other applicable SB 2 Guidelines published by the Department.
10 RES. NO. 2022-56
PHLAccmtg10-24-22(sy)
SECTION 11. The City Manager and/or his/her designee is authorized to execute the PLHA Program Application, the PLHA Standard Agreement and any subsequent amendments or modifications thereto, as well as any other documents which are related to the Program or the PLHA grant awarded to Applicant, as the Department may deem appropriate.
PASSED
and ADOPTED this 24th day of October 2022.
A
ttest:
Lucy Blanco, City Clerk Keith L. Mashburn, Mayor of the City of Simi Valley, California
A
pproved as to Form: Approved as to Content:
David L. Caceres, City Attorney Brian Paul Gabler, City Manager S tratis Perros
Environmental Services Director
11 RES. NO. 2022-56
2022 PLHA NOFA Formula Allocation Amount: $496,647 Allowable Local Admin (5%): $24,832.00 Which NOFA year(s) are you applying for with this application? 2021 & 2022 Did Applicant receive an award from the 2020 and/or 2021 Formula Allocation NOFA? Title: Deputy ES Director
State: CA
Eligible Applicant Type: Entitlement
Local Government Recipient of PLHA Formula Allocation: Simi Valley 2021 PLHA NOFA Formula Allocation Amount: Allowable Local Admin (5%): $22,565.00$451,305 Zip Code:
Instructions: If the Local Government Recipient of the PLHA Formula Allocation delegated its PLHA formula allocation to another Local Government in its 2020 application, the Applicant (for which information is required below) continues to be the administering Local Government, which received the award. The PLHA award will be made to the Applicant (upon meeting threshold requirements) and the Applicant is responsible for meeting all program requirements throughout the term of the Standard Agreement.
Eligible Applicants §300
93063
Auth Rep Name:
[email protected]
§300(a) and (b) Eligible Applicants for the Entitlement and Non-Entitlement formula component described in Section §100(b)(1) and (2) are limited to the metropolitan cities and urban counties allocated a grant for the federal fiscal year 2017 pursuant to the federal CDBG formula specified in 42 USC, Section §5306 and Non-entitlement local governments.
Applicant: City of Simi Valley
Brian P. Gabler
City:
Yes
§302(c)(5) Applicant certifies that the Plan has not reallocated more than 10 percent of funds among Activities from the approved 5-year Plan included in the PLHA program Standard Agreement, Exhibit E. No
Yes§302(c)(8) If a program income reuse plan was not submitted with the 2020 application, has Applicant attached a program income reuse plan describing how repaid loans and/or accrued interest will be reused for eligible activities specified in Section 301? File Name: Application and Plan Adoption
Local Government Formula Allocation Rev. 2/17/22
This streamlined application form is limited to Applicants who applied for and received an award from the 2020 and/or 2021 Formula Allocation NOFA.
Yes
If a reallocation of more than 10 percent of funds was made, Applicant has attached an amended Plan that has been discussed and approved at a publicly-noticed meeting of the governing body.
CA Zip: 93063 VenturaState:
§302(c)(2) Applicant certifies that submission of the application was authorized by the governing board of the Applicant.
Threshold Requirements
Title:
93063
§302(b) Applicant and Delegating Local Government have submitted the current or prior year's Annual Progress Report to the Department of Housing and Community Development pursuant to Government Code Section 65400. Yes CA
County:
Contact Email:
City Manager
2929 Tapo Canyon Road
805-583-6758
Simi Valley
[email protected] Rep. Email: Phone:
§300(e) Applicant does not have uncommitted PLHA funds greater than permitted by Section 300(e). Yes §503(b) Applicant has submitted the PLHA Annual Report by July 31, 2021 (if applying before July 31, 2022), or has submitted the PLHA Annual Report due by July 31, 2022 (if applying on or after July 31, 2022). Yes
Date
Certifications
Authorized Representative Printed Name Title
On behalf of the entity identified below, I certify that: The information, statements and attachments included in this application are, to the best of my knowledge and belief, true and correct and I possess the legal authority to submit this application on behalf of the entity identified in the signature block.
Signature
File Name: Reuse Plan Program Income Reuse Plan describing how repaid loans or accrued interest will be used for eligible activities in Section 301.
Narrative uploaded
to HCD?
Address:
Has applicant received their 2021 NOFA funds? No Based on the requirements in guideline section 300(e), how much has the applicant committed? $0
§302(c)(4)(D) Evidence that the Plan was authorized and adopted by resolution by the Local Uploaded to HCD? Contact Phone:
Simi ValleyCity:
2929 Tapo Canyon Road
Yes
Zip Code:
805-583-6701
State:
§302(a) Housing Element compliance: Applicant and Delegating Local Government's if applicable Housing Element was adopted by the Local Government’s governing body by the application submittal date and subsequently determined to be in substantial compliance with state Housing Element Law pursuant to Government Code Section 65585.
Simi Valley
No
Contact Name:
City:Address:
2929 Tapo Canyon RoadAddress:
Mara Malch
EXHIBIT A
12 RES. NO. 2022-56
§301(a)(10) Fiscal incentives made by a county to a city within the county to incentivize approval of one or more affordable housing Projects, or matching funds invested by a county in an affordable housing development Project in a city within the county, provided that the city has made an equal or greater investment in the Project. The county fiscal incentives shall be in the form of a grant or low-interest loan to an affordable housing Project. Matching funds investments by both the county and the city also shall be a grant or low-interest deferred loan to the affordable housing Project. §301(a)(9) Homeownership opportunities, including, but not limited to, down payment assistance. §301(a)(8) Efforts to acquire and rehabilitate foreclosed or vacant homes and apartments.
Included?§301(a) Eligible activities are limited to the following:
Eligible Activities, §301
§301(a)(3) Matching portions of funds placed into Local or Regional Housing Trust Funds.
PLHA Formula 5-year Plan - Amendment Rev. 5/7/21
§301(a)(2) The predevelopment, development, acquisition, rehabilitation, and preservation of affordable rental and ownership housing, including Accessory Dwelling Units (ADUs), that meets the needs of a growing workforce earning up to 120 percent of AMI, or 150 percent of AMI in high-cost areas. ADUs shall be available for occupancy for a term of no less than 30 days.
§301(a)(1) The predevelopment, development, acquisition, rehabilitation, and preservation of multifamily, residential live-work, rental housing that is affordable to Extremely low-,Very low-, Low-, or Moderate-income households, including necessary operating subsidies. §301(a)(7) Accessibility modifications in Lower-income Owner-occupied housing. §301(a)(6) Assisting persons who are experiencing or At-risk of homelessness, including, but not limited to, providing rapid re-housing, rental assistance, supportive/case management services that allow people to obtain and retain housing, operating and capital costs for navigation centers and emergency shelters, and the new construction, rehabilitation, and preservation of permanent and transitional housing. §301(a)(5) Capitalized Reserves for services connected to the preservation and creation of new permanent supportive housing. §301(a)(4) Matching portions of funds available through the Low- and Moder ate-Income Housing Asset Fund pursuant to subdivision (d) of HSC Section 34176.
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
13 RES. NO. 2022-56
§301(a)(9) Homeownership opportunities, including, but not limited to, down payment assistance. §301(a)(8) Efforts to acquire and rehabilitate foreclosed or vacant homes and apartments. §301(a)(5) Capitalized Reserves for Services connected to the preservation and creation of new permanent supportive housing. §301(a)(4) Matching portions of funds available through the Low- and Moderate-Income Housing Asset Fund pursuant to subdivision (d) of HSC Section 34176. §301(a)(7) Accessibility modifications in Lower-income Owner-occupied housing. §301(a)(3) Matching portions of funds placed into Local or Regional Housing Trust Funds. §301(a)(2) The predevelopment, development, acquisition, rehabilitation, and preservation of Affordable rental and ownership housing, including Accessory Dwelling Units (ADUs), that meets the needs of a growing workforce earning up to 120 percent of AMI, or 150 percent of AMI in high-cost areas. ADUs shall be available for occupancy for a term of no less than 30 days. §302(c)(4)(C) Provide a description of how the Plan is consistent with the programs set forth in the Local Government’s Housing Element.
The Plan is consistent with the City's Housing Element goals and objectives to address housing needs of all City residents. The Plan's selected activity will alleviate the cost burden of ownership households and provide greater opportunities to achieve housing affordability/stability. The Plan implements the Housing Element Policies: HE 4.10 Housing for all Household Sizes - provides down payment assistance to households without disposable income for a down payment due to ongoing expenses associated with larger households and/or assistance for single incomes with minimal savings opportunities; HE 4.2 Housing for Low-Income Seniors - makes relocation and/or ownership more affordable in an effort to be closer to support networks while preserving liquidatable assets for future needs; HE 5.1 Fair Housing - provides assistance to households of disadvantaged socioeconomic status and affordable home ownership; HE 5.2 Eliminate Housing Discrimination - through equitable lending and removing down payment as a barrier to obtaining private loans; HE 2.3 Preserve Existing Affordable Housing Stock - allows properties to be affordable to a broader socioeconomic base and reinvests equity share for future homeownership opportunities for income qualified households; HE 2.2 Housing Maintenance - allows for housing stock to turn over to enthusiastic homeowners with options to draw from equity for home repairs/maintenance as long as affordability standards can be maintained. §301(a)(1) The predevelopment, development, acquisition, rehabilitation, and preservation of multifamily, residential live-work, rental housing that is affordable to extremely low-,very low-, low-, or moderate-income households, including necessary Operating subsidies. §302(c)(4) Plan Rev. 5/7/21
§302(c)(4)(A) Describe the manner in which allocated funds will be used for eligible activities.
The allocated funds are to be used for downpayment assistance with an equity share recapture upon sale with affordabilty restrictions for the duration of the loan. §302(c)(4)(B) Provide a description of the way the Local government will prioritize investments that increase the supply of housing for households with incomes at or below 60 percent of Area Median Income (AMI).
While the Plan provides for up to 150 percent AMI, households with 60 percent or below will be prioritized based on date of applications received. The up to 150 percent AMI will allow maximum flexilbity to accommodate changes in the real estate market and have the greatest reach to increase housing affordablility among new homeowners.
Activities Detail (Activities Detail (Must Make a Selection on Formula Allocation Application worksheet under Eligible Activities, §301)) §301(a)(6) Assisting persons who are experiencing or At risk of homelessness, including, but not limited to, providing rapid rehousing, rental assistance, supportive/case management services that allow people to obtain and retain housing, operating and capital costs for navigation centers and emergency shelters, and the new construction, rehabilitation, and preservation of permanent and transitional housing.
14 RES. NO. 2022-56
§302(c)(4)(E)(ii) Projected
N
umber of Households Served 3 3 3 3 3 15
§302(c)(4)(E)(ii) Area Median
I
ncome Level Served 150% 150% 150% 150% 150% TOTAL
§302(c)(4)(E)(ii) Unmet share
of
the RHNA at AMI Level
Note: complete for year 2019
&
2020 only
0 0 0
Type of Homeowner Assistance
Down
Payment
Assistance
Down
Payment
Assistance
Down
Payment
Assistance
Down
Payment
Assistance
Down
Payment
Assistance
§302(c)(4)(E)(i) Percentage of
Funds Allocated for the
P
roposed Activity
100.00% 100.00% 100.00% 100.00% 100.00%
§302(c)(4)(E)(i) Provide a detailed and complete description of how allocated funds will be used for the proposed Activity. Percentage of Funds Allocated for Affordable Owner- occupied Workforce Housing (AOWH)
The allocated funds will provide for up to 20% downpayment assistance to income qualified households. The program will serve up to 150% AMI, with priority given to 60% AMI and below when applications received at the same time and funding is limited. The program will also allow for cashout refinancing to ensure home maintenance is achievable for owners in the long-term. Affordability and occupancy deed restrictions will be in place for the life of the loan and equity sharing recapture upon sale will be used to fund future loans.
Complete the table below for each proposed Activity to be funded with 2019-2023 PLHA allocations. If a single Activity will be assisting households at more than one level of Area Median Income, please list the Activity as many times as needed to capture all of the AMI levels that will be assisted, but only show the percentage of annual funding allocated to the Activity one time (to avoid double counting).
Funding Allocation Year
2019 2020 2021 2022 2023
15 RES. NO. 2022-56
Pending City Council approval of the program manual and filling staff vacanies, staff will need to update promissory note, deed restrictions, and program marketing information prior to initaiting outreach and accepting applications. It is anticipated that the program will be fully launched by June 2023 to allow for all 2019 funds to be committed by the April 2024 deadline. §301(a)(10) Fiscal incentives made by a county to a city within the county to incentivize approval of one or more affordable housing Projects, or matching funds invested by a county in an affordabl e hous
ing development Project in a city within the county, provided that the city has made an equal or greater investment in the Project. The county fiscal incentives shall be in the form of a grant or low- interest loan to an affordable housing Project. Matching funds investments by both the county and the city also shall be a grant or low-interest deferred loan to the affordable housing Project. §302(c)(4)(E)(iii) A description of major steps/actions and a proposed schedule for the implementation and completion of the Activity. §302(c)(4)(E)(iv) Period of
Affordability for the Proposed
A
ctivity
30 years 30 years 30 years 30 years 30 years
16 RES. NO. 2022-56
PHLAccmtg10-24-22(sy)
R
ESOLUTION NO. 2022-57
A
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SIMI VALLEY ESTABLISHING A HOMEBUYER
ASSISTANCE PROGRAM POLICIES AND PROCEDURES
MANUAL AND AUTHORIZING FUTURE AMENDMENTS TO
MAINTAIN COMPLIANCE WITH FUNDING
REQUIREMENTS
W
HEREAS, the State of California, Department of Housing and Community Development is authorized to provide up to $1,742,142 under the SB2 Permanent Local Housing Allocation (PLHA) Program Formula Component from the Building Homes and Jobs Trust Fund for assistance to Cities and Counties (as described in Health and Safety Code section 50470 et seq. [ Chapter 364, Statutes of 2017 (SB 2) ]) to the City of Simi Valley for the 2019 – 2023 plan cycle; and
W
HEREAS, the City of Simi Valley (City) has adopted a PLHA Plan to allocate funding to down payment assistance as the eligible activity and the City has prepared a Homebuyers Assistance Program (Program) to implement that activity within the parameters of the PLHA rules and regulations; and
W
HEREAS, housing affordability and stability within the region remains one of the most challenging in the nation and PLHA funds can assist households with up to 150% Area Median Income with down payments to make homeownership achievable; and
W
HEREAS, the Program furthers the goals and policies of the City and its Housing Element to provide housing affordability and stability to its residents through the resources within its authority and purview.
NO
W, THEREFORE, THE CITY COUNCIL OF THE CITY OF SIMI VALLEY DOES HEREBY RESOLVE AS FOLLOWS:
SEC
TION 1. The Homebuyer Assistance Program Policies and Procedure Manual, as detailed in Exhibit A, is hereby approved.
S
ECTION 2. The City Manager, or his /her designee, is authorized to implement the Program on behalf of the City, and to take all further actions and execute all documents necessary and appropriate to carry out the Program.
S
ECTION 3. The City Manager, or his/her designee, is authorized to make any modifications to the Program Policies and Procedures Manual required to maintain compliance with the requirements of the PLHA Program and adjustments to dollar thresholds consistent with regional housing costs to provide maximum impact of the Program.
17 PHLAccmtg10-24-22(sy)
SECTION 4. The City Clerk shall certify to the adoption of this resolution and shall cause a certified resolution to be filed in the Office of the City Clerk.
PASSED
and ADOPTED this 24th day of October 2022.
At
test:
Lucy Blanco, City Clerk Keith L. Mashburn, Mayor of the City of Simi Valley, California
Ap
proved as to Form: Approved as to Content:
David L. Caceres, City Attorney Brian Paul Gabler, City Manager St ratis Perros
Environmental Services Director
18 RES. NO. 2022-57
EXHIBIT A
HO
MEBUYER ASSISTANCE PROGRAM
Po
licies and Procedures Manual
Pr
epared by
Dep
artment of Environmental Services
Pr
esented for City Council Approval on October 24, 2022
19 RES. NO. 2022-57
2 CI
TY OF SIMI VALLEY
HO
MEBUYER ASSISTANCE PROGRAM
TA
BLE OF CONTENTS
Contents
I. INTRODUCTION AND PROGRAM GOALS ........................................................... 4 II. POLICIES ................................................................................................................ 4 A. Program Scope ..................................................................................................... 4 B. Eligibility Standards .............................................................................................. 5
1. Participant .......................................................................................................... 6 a. Homebuyer ...................................................................................................... 6 b. Household Income Limits ................................................................................ 6 c. Down Payment ................................................................................................ 7 d. Maximum Housing Expense ............................................................................ 7 e. Debt-to-Income Ratio ...................................................................................... 7 f. Employment and Credit History ....................................................................... 7 g. Co-borrowers .................................................................................................. 7 h. Homebuyer Seminar ....................................................................................... 8
2. Program Financing and Loans ........................................................................... 8 a. Program Financing .......................................................................................... 8 b. City’s Second Trust Deed Loan ....................................................................... 8 c. Restrictive Covenants ..................................................................................... 9 d. Determination of Program Equity Share .......................................................... 9 e. Repayment of Program Loan Within Five Years ........................................... 10 f. Repayment of Program Loan Within Six Years through Ten Years .............. 10 g. Repayment of Program Loan After Ten Years .............................................. 10 h. Subordination and Refinancing ..................................................................... 10 i. Loan Assumption .......................................................................................... 11 j. Title Insurance ............................................................................................... 12 k. Property Insurance ........................................................................................ 12
3. Primary Loan and Other Loans ........................................................................ 12 a. Loan Type ..................................................................................................... 12 20 RES. NO. 2022-57
3 b. Other Deed of Trust Loans ............................................................................ 12 c. Loan Status ................................................................................................... 12 d. Request for Notice ........................................................................................ 13
4. Property ........................................................................................................... 13 a. Type and Location of Property ...................................................................... 13 b. Appraised Property Value ............................................................................. 13 c. Principal Residence ...................................................................................... 13 d. Inspection / Lead Based Paint Disclosure ..................................................... 13 e. No Tenant Displacement ............................................................................... 14 f. Documents Related to Purchase ................................................................... 14 g. No Eminent Domain ...................................................................................... 15 h. Voluntary Transaction / No Relocation / Withdrawal from Purchase and Sale Agreement ..................................................................................................... 15 III. PROCESS / APPLICANT SELECTION................................................................. 15 IV. ROLES OF GOVERNMENT AND PRIVATE AGENCIES ..................................... 17 A. City Council ........................................................................................................ 17 B. Loan Review Committee .................................................................................... 18 C. Environmental Services Director and City Manager ........................................... 18 D. Housing Section of the Department of Environmental Services ......................... 18 E. Department of Housing and Community Development ....................................... 18 F. Primary Lender ................................................................................................... 18 V. GENERAL PROVISIONS ...................................................................................... 18 A. Provisions for Change in Program ...................................................................... 18 B. Confidentiality of Records ................................................................................... 19 C. Re-use of Program Funds .................................................................................. 19 D. Affirmative Marketing /Non-discrimination .......................................................... 19 E. Conflict of Interest Disclosure ............................................................................. 19 F. Reimbursement of Administrative and Activity Delivery Cost ............................. 19 Exhibit 1 - Disclosure to Seller with Voluntary, Arm’s Length Purchase Offer ............... 20 Exhibit 2 - HOMEBUYER ASSISTANCE PROGRAM APPROVAL PROCESS ............ 22 Exhibit 3 - PLHA REUSE POLICY ................................................................................ 27 21 RES. NO. 2022-57
I. INTRODUCTION AND PROGRAM GOALS
The City of Simi Valley (City) acknowledges that there is a need to assist in creating housing stability for the community through support to low, median, and moderate income households . The 2020- 2024 Regional Consolidated Plan and the Housing Element of the General Plan discuss the Cit y’s commitment to creating housing stability and affordability through various programs and incentives. The main goal of the Homebuyer Assistance Program (Program) is to create housing affordability and stability through homeownership opportunities that would otherwise be out of reach for the participating households. The Program may be used in conjunction with other buyer incentive programs, such as the Mortgage Credit Certificate, and the California Housing Finance Authority program, provided Program guidelines are met.
The Program is primarily funded by the S tate’s Permanent Local Housing Allocation (PLHA) program, as administered by the California Department of Housing and Community Development (HCD). The City’s Local Housing Fund may be used to augment annual PLHA funds , as needed, to successfully fund loans in the amount needed to fulfill down payment needs and/or maximize assistance in any given fiscal year as budgeted. Additional funding sources may be paired with the Program if goals and policies can be met within the parameters of the funding.
The Program will utilize available and budgeted funding to provide down payment assistance in the form of no-interest, equity share City loans to qualified low, median, and moderate income households pursuant to each source’s respective regulations, inclusive of PLHA.
The Policies and Procedures Manual (Manual ) provides guidelines for the City ’s administration of the Program and shall not be deemed to create a mandatory duty under any Government Code, nor shall any provision hereto be deemed to benefit any specific party, other than the intended beneficiaries, nor shall any special relationship arise by virtue of the implementation or non-implementation of the policies herein.
II. POLICIES
A. Program Scope
The City will assist qualifying low, median, and moderate income households (up to 150% Area Median Income) in the purchase of a home with down payment assistance. The City’s assistance, along with a primary loan from a conventional lender, including forgivable junior loans from a federally certified Community Development Financial Institution (CDFI) or a certified nonprofit agency , will provide financing for up to 100% of the property purchase price. A primary lender (bank, savings and loan, or mortgage banker) provides the amortized fixed-rate, first trust deed, loan for the benefit of eligible borrowers and the City will provide a second trust deed loan. The second trust deed loan will be a shared equity loan up to 20% of the purchase price and will not require any monthly payments. Any forgivable junior loans shall subordinate to the second trust deed loan from the 22 RES. NO. 2022-57
5 City. The Program will be guided by the Eligibility Standards established in the following sections.
A
first and second trust deed offered by a primary lender to finance the purchase of a property in conjunction with the City’s loan, will only be considered when: 1) the combined amount of the first and second trust deed loans will be equal to purchase price less applicant’s and Program’s down payment assistance; 2) the loan package will be generated through a single lender; 3) the proposed first and second trust deed will offer a fixed rate and be fully amortized; and 4) the two amortized loans would decrease the homebuyer’s interest rate and payment. If the above conditions are met, the City’s down payment assistance loan may be placed in third lien position.
B. Elig
ibility Standards
In
order to determine a participant’s eligibility for the Program , all prospective applicants will be required to submit an application along with documentation that verifies compliance with the specific requirements of the Program. Buyers must provide a copy of the latest two federal income tax returns and W -2 forms, pay stubs for all members of the household who will reside in the home from the most recent two months , checking account statements for the last six months, most current income producing assets (such as savings accounts of over $5,000, 401(k) or IRA retirement plans, stocks, bonds, etc.), and other incom e supporting documents as required. Self-employed individuals will need to submit profit and loss statements for the prior year, as well as , a projected profit and loss for the next twelve months. B uyers will be required to provide written certification of all assets, including retirement accounts, gross household income, and their qualification as homebuyers under the Program. Additionally, any participant who owned a home in the past three years needs to provide documentation of the proceeds from the sale of the home and current availability of personal funds to assist with the purchase, and demonstrate financial need for further assistance beyond the equity from that prior sale. If the equity received from that sale equals or exceeds the assistance requested from the City, the homebuyer will need to contribute 10% of the prior home’s equity proceeds to the down payment.
Th
e applicant’s eligibility for assistance and the amount of assistance will be determined upon review and verification of the applicant’s income, expenses, and assets and funding required to purchase the property, as well as, demonstration that their debt -to-income and housing cost ratios comply with Program requirements.
Elig
ible applications will be submitted for review to the City’s Loan Review Committee, per Section IV.B. (Loan Review Committee) below.
Th
e following eligibility standards shall be used to evaluate the qualifications of all homebuyer loan applications under this Program.
23 RES. NO. 2022-57
6 1. Participant
a. Homebuyer
To qualify for the Program, eligible borrowers, including co-borrowers must reside in the home and meet the definition of a homebuyer.
A homebuyer is defined as a borrower who does not currently have an ownership interest in any principal residence or does not reside in the home owned by a spouse.
If a homebuyer has owned a home within the past three years, documentation will be required to show the equity gained upon the sale of that home and demonstration of financial need beyond what is available from that sale, to assist with a down payment.
The Program will be available to a homebuyer purchasing a detached or attached single-family home, condominium or a town-home, which is affixed on a permanent foundation and located within the boundaries of the City of Simi Valley. Mobile homes are not eligible for the Program. Current owners of mobile homes are not eligible as homebuyers.
b. Household Income Limits
Homebuyers’ household current and projected income for all household members 18 years and older for the subsequent twelve-month period must not exceed the Ventura County Income Limits for 150% of Area Median Income, adjusted by household size, as prescribed annually by H CD and determined not less than 90 days from the receipt of assistance under this Program. HCD publishes annual tables of official federal and State income limits on its website (currently
https://www.hcd.ca.gov/grants-and-
funding/income-limits) for determining these maximums for a vari ety of housing programs. Should another funding source be otherwise compatible with the Program and have differing income limits, the governing limits shall be used for determining eligibility. Household income is determined in accordance with 24 CFR 813 and CFR 24 Part 92.203, includes, but is not limited to: wages, salaries, tips and commissions; income from self-employment; income from interests, dividends, net rental income or income from estates or trusts; Social Security or railroad retirement; Supplemental Security Income or any public assistance; any retirement or other pensions; and any other source of income received regularly, including Veteran’s payments, unemployment compensation, and or alimony. Third party income verification will be required prior to the approval of the loan application. Applicants will be required to sign a form authorizing the release of income information (i.e., employment, pension and annuities, assets on deposits), which will be used to determine the eligibility status.
24 RES. NO. 2022-57
7 c. Do
wn Payment
Hom
ebuyers are able to provide an additional down payment toward the purchase of a qualified property (Section II.B.4.b ) from their own personal assets and/or gift of funds with proper documentation to achieve more affordable debt-to-income and housing cost ratios; however, purchase price will be limited to 95% median home price. When the property’s appraised value is above 95% median home price the provisions of Section II.B.4.b (Appraised Property Value), will apply. Homebuyers will also be required to follow the down payment guidelines of the primary lender. The additional down payment may not bring the housing cost ratio below 25%. d. Ma
ximum Housing Expense
Th
e assistance provided by the Program is intended to reduce the financed amount, to allow for a housing cost of 35% or below of the household’s gross monthly income. Gross monthly income shall be based on the information submitted as required in Section II.B.1.b. (Household Income Limits). Housing costs include principal, interest, property taxes, insurance, and homeowner association dues.
e. Deb
t-to-Income Ratio
Th
e applicant’s debt-to-income ratio shall not exceed 45%; however, should industry standards shift, a revised ratio may be approved by the City Manager. The debt-to-income ratio will be based on the applicant’s monthly housing and long-term installment expenses (of ten months or more) as a percent of the gross monthly income.
f. Em
ployment and Credit History
Al
l applicants whose income is used for qualifying purposes must provide documentation of two years of employment history, typically within the same industry sector, without any major periods of unemployment. Applicants must not have a bankruptcy discharge date within two years of submitting an application. Applicants with a bankruptcy discharge date between two and four years must provide a letter of explanation regarding the cause of bankruptcy and demonstrate a record of payment consistency with all post-bankruptcy installment debt. Applicants with a credit score of less than 620 will not be eligible for the Program.
g. Co-borr
owers
A co-bor
rower may be required by the primary lender in order to qualify for a loan for an otherwise eligible family. The income of the co-borrower, used for this purpose, w ill not be considered when determining eligibility for the 25 RES. NO. 2022-57
8 loan, provided the co-borrower does not reside on the property and signs a certification to that effect. Both the applicant and co- borrower may be required to be on the property's title. A co -borrower will be required to co-sign the City loan.
h. Ho
mebuyer Seminar
Appl
icants are required to attend a seminar/workshop designed to provide information about becoming a homebuyer. Applicants must attend such a seminar and submit evidence of attendance prior to receiving a loan from the City, preferably before making an offer to purchase a property. The City will provide seminars/workshops on a regular basis through the services of a consultant. In addition, the City will also provide information on where such seminars may be held. Applicants may attend any seminar of their choice but should verify with City staff, prior to attending, that the workshop meets the City’s requirements. Proof of attendance is required and will need to be submitted to the City.
2. Pr
ogram Financing and Loans
a. Pr
ogram Financing
Th
e Program will utilize available funding to help structure mortgage financing. It provides down payment assistance to qualified buyers up to 150% of Area Median Income for Ventura County . Acceptable financing structures could include, but are not limited to, the following examples:
Two-T
iered Structure
First Position: Primary loan (conventional)
Second Position: City loan
Th
ree-Tiered Structure
First Position: Primary loan (conventional)
Second Position: City loan
Third Position: Forgivable loan/grant (such as WISH or DCAP) Pur
suant to Section II .A (Program Scope), the City may consider a four- tiered structure, where the first and second trust deeds are offered by one primary lender to finance the purchase of a property in conjunction with the City loan. The first and second trust deeds would need to provide greater affordability together than a first trust deed would on its own (i .e. the combined principle and interest payment would be lower due to the lower interest rate on the second trust deed). Four -tiered financing will be considered to achieve overall greater affordability.
b. Cit
y’s Second Trust Deed Loan
26 RES. NO. 2022-57
9 The City will provide a no-interest bearing, equity sharing, second trust deed loan, in an amount not to exceed 20% of the home purchase price to eligible homebuyers. The amount of the second mortgage will be based on the applicant’s funding assistance need, their ability to obtain a primary loan based on gross monthly income, debt-to-income, and housing cost ratios.
Th
e second trust deed loans funded by the City will be equity sharing loans with no interest and no monthly payments. Loan repayment will occur upon the earliest of: (a) 30- years from the date of original purchase; (b) sale or transfer; (c) use of the property by other than the buyer's principal residence; or (d) when the primary loan is fully repaid. c. Rest
rictive Covenants
Res
trictive Covenants provide rights to the City in regulating the sale, transfer, and refinance of the subject property purchased wit h assistance from the Program for a period of thirty (30) years from date of first sale of the affordable housing unit, including an option to purchase the property upon default. The Restrictive Covenants recorded against the property will ensure adherence to Program regulations for a 30-year term. d. De
termination of Program Equity Share
Th
e City’s Equity Share will be equal to the net equity of the property at the time of sale, multiplied by the ratio of the Program assistance to the original purchase price.
In the event of a refinance, where the homeowner intends to pay off the City’s second trust deed loan and equity share, the City’s equity share will be equal to the net equity at the time of sale, multiplied by the ratio of the Program assistance to the original purchase price. The fair market value of the property will be established by a neutral appraiser of the City’s or the buyer’s choice. Disagreement between the two appraisal amounts will be resolved by taking the average value of the two appraisals.
The property's net equity will be determined by deducting the outstanding encumbrances and verified costs of capital improvements from the resale price prior to calculating the equity share. A total of up to a maximum of $60,000 effective in calendar year 2022 and adjusted annually with the January CPI for the Los Angeles -Long Beach-Anaheim for all item s, may be deducted at the time of resale for capital improvement.
Capital improvements shall mean substantial structural or permanent fixed improvements made since acquisition of the property, which cannot be removed without substantial damage to , or loss of value of , said improvements. To be considered eligible, capital improvements must meet IRS definitions at time of property transfer. The owner must provide written documentation, such as invoices and cancelled checks to substantiate the 27 RES. NO. 2022-57
10 costs of such improvements. Capital improvements will be depreciated at a rate of seven percent (7%) per year beginning in the calendar year following the date of completion of the improvement.
e. Repayment of Program Loan Within Five Years
Resale of property purchased under this Program within five (5) full years of initial purchase (close of escrow) will require the homeowner to pay to the City (i) the ratio established as the City’s Equity Share Payment, and (ii) an additional 10% of net equity.
f. Repayment of Program Loan Within Six Years through Ten Years
Resale of property purchased under this Program after five (5) years, from year six (6) through year ten (10) of the initial purchase (close of escrow) , will require the homeowner to pay to the City (i) the ratio established as the City’s Equity Share Payment, and (ii) an additional 5% of net equity shall be paid to the City.
g. Repayment of Program Loan After Ten Years
If the property purchased under this Program is sold, or if the homeowner elects to repay the City loan and equity share payment after ten (10) full years of initial purchase, the City will require the homeowner to pay to the City the ratio established as the City’s equity share payment, as of the date of full repayment based on comparable sales data.
h. Subordination and Refinancing
Refinancing will only be allowable with a two- tier structure with the Program’s second deed of trust subordinated to any first trust deed loan permitted under this Program as discussed in Section II.B.3.a (Loan Type).
This subordination is only to any first trust deed loan (subject to the standards contained herein) made by , or held by, an institutional lender or Initial Purchase Price: $500,000
City Loan @ 20%: $100,000
Homeowner's Obligation @ 80%: $400,000
Annual Equity Assumption @ 3.5%:
YR 5 YR 10 YR 30
Resale Price $593,843 $705,299 $1,403,397
Primary Loan $333,333 $266,667 $0
City Loan $100,000 $100,000 $100,000
Capital Improvement Credit $10,000 $20,000 $60,000
Total Equity $150,510 $318,633 $1,243,397
Homeowner's Equity Share + Capital Improvements $115,357 $258,975 $1,054,717 City's Equity Share $45,153 $79,658 $248,679
SAMPLE EQUITY SHARE CALCULATIONS
28 RES. NO. 2022-57
11 investor in connection with any refinancing of the loan secured by such senior deed of trust, provided the purpose of the refinancing is to reduce the interest rate of the loan, to reduce the term of the loan, and/or to reimburse or pay off the documented and verified cost of completed capital improvements on the property within the limitations described below.
Cash-out request will be considered for participants that have completed five full years of ownership and provides evidence that the household occupied the property purchased through the Program as their principal residence. Cash-out at the time of refinancing will not be permitted except when refinancing is for emergency purposes and the denial of which would result in financial hardship, or to reimburse or pay off the documented and verified cost of completed capital improvements on the property, provided the amount of the cash-out shall (1) not to exceed the total principal amount that have paid down the primary loan or increased market value, and (2) in no event shall the new loan exceed a loan- to-value ratio of 80%, including the City loan principal and estimated equity share. Possible emergencies may include medical expenses, or a court order due to dissolution of marriage or legal separation. Requests for subordination due to refinancing must be submitted in writing by completing an application and submitting it along with other required documentation. All requests for subordination (with the exception of rate- and-term reduction refinance only) will be reviewed by the City’s Loan Review Committee who will render a recommendation to the Environmental Services Director and City Manager.
For cases regarding rate-and-term reduction only, the Housing Section will render a recommendation to the Environmental Services Director ’s approval, and a notice to the City Manager’s attention.
i. Loan Assumption
The Program loans are not assumable and no successor in interest to the owner(s) will be permitted to assume the loan, except under the following circumstances: Transfer of property title that results from the death of a n owner who received down payment assistance from the Program and the transfer is to the surviving spouse; a transfer by an owner who received Program assistance to his or her spouse when the spouse becomes , by such transfer, a co-owner of the property; or when the transfer results from a decree of dissolution of marriage or legal separation or from a property settlement agreement incidental to such a decree.
However, transfer of property title from an owner who received down payment assistance from the Program to an heir shall not be deemed as an eligible transfer. The heir would need to apply to the Program and be subject to eligibility standards and availability of funding.
Where the property is transferred under the eligible circumstances, as necessary, a new loan will be made to that buyer in accordance with the provisions of this Program.
29 RES. NO. 2022-57
12 j. Tit
le Insurance
Pr
ior to the close of escrow, the City shall be provided with an American Land Title Association (ALTA) policy of title insurance naming the City as insured in the amount of the City loan(s).
k. Pr
operty Insurance
Haz
ard insurance policies shall be maintained during the City loan term, with the City named as additional insured. In addition, if the property is located within a Flood Zone area as identified in the latest Flood Insurance Rate Maps, as amended from time to time, available at the City’s Department of Environmental Services, flood insurance administered under the Federal Flood Insurance program shall be maintained until the City loan is repaid. Failure to provide and maintain the required insurance will result in default and the Program loan will immediately become due and payable.
Repayment of the loan shall be as described above in Subsections (e) and (f).
3. Pr
imary Loan and Other Loans
a. Loan T
ype
The
primary loan must be a fully amortized loan provided by a bank, savings and loan, mortgage banker or other institutional lender. Primary loan must be conventional with a fixed term. No negative amortization financing , interest-only loans with balloon payment options, or stated income primary loans will be allowed.
b. Ot
her Deed of Trust Loans
Appl
icants may obtain other non-primary loans at the time of initial purchase on the property provided they are subordinate to the Program ’s trust deed loan and the total of all outstanding liens (all loans), does not exceed the value of the property. The Program does not allow for subsequent liens to be taken out after the initial purchase as they will affect the equity share payment.
c. Loan S
tatus
Buy
ers will be required to provide authorization, with their application, to permit the City to receive information at any time regarding the status of the primary loan, including monthly payments on the first trus t deed loan recorded against the property.
30 RES. NO. 2022-57
13 d. Request for Notice
Escr
ow shall be required to record a Request for Notice of Default in favor of the City loan.
4. Pr
operty
a. Ty
pe and Location of Property
Th
e Program will be available to eligible households purchasing a detached or attached single- family home, condominium or a town- home, which is affixed on a permanent foundation and located within the boundaries of the City of Simi Valley. Mobile homes are not eligible for the Program. Current owners of mobile homes are not eligible as homebuyers.
b. Ap
praised Property Value
Ho
mebuyers may not purchase a home above the appraised property value. When a buyer is able to provide some form of down payment in addition to Program assistance, the assistance will be capped at the gap between the buyer’s down payment and 20% of the purchase price, if the purchase price is above 95% median home price.
c. Pr
incipal Residence
Th
e homebuyer shall occupy the property as a principal residence throughout the term of the City’s assistance. A principal residence is one that is occupied by one or all of the owner(s) for a minimum of ten (10) months of the year. If the qualifying homebuyer ceases to use the property as a principal residence, all loans provided by the City shall immediately become due and payable. Repayment of the loan shall be as described in Section II B.2.e (Repayment of Program Loan Within Five Years), Section II.B.2.f (Repayment of Program Loan Within Six Years through Ten Years), and Section II .B.2.g (Repayment of Program Loan After Ten Years), as applicable.
d. Ins
pection / Lead Based Paint Disclosure
Th
e property must be inspected by a certified professional home inspector.
The buyer can retain an inspection service from the National Association of Certified Home Inspectors (NACHI), the California Real Estate Inspection Association (CREIA) or the American Society of Home Inspectors (ASHI).
Each association has a referral service, which provides a list of member inspection services for the area and is provided to the applicant by the City in the application materials for the Program. A home inspection report must be provided to the City, certifying that the property is not in violation of any City or development standards or regulations at the time of purchase. The 31 RES. NO. 2022-57
14 seller will be responsible for correcting any deficiencies identified during the inspection, at seller’s expense, prior to the close of escrow.
If
the property being purchased was constructed prior to 1978, the buyer must be supplied with a lead based paint risk brochure titled “Protect Your Family From Lead In Your Home.” In addition, the prospective buyer will be required to sign an affidavit certifying receipt of the brochure, which will be placed in their file. The purchase and sale agreement must also contain lead based paint notification. Properties built prior to 1978 may require separate testing for lead based paint if painted surfaces show peeling or other signs of deterioration. The inspector will visually assess the property for “deteriorated paint,” which is any exterior or interior paint or other coating that is peeling, chipping, chalking, cracking, or otherwise damaged or separated from subst rate. If the inspection renders a positive finding of deteriorating paint, a lead based paint test must be conducted by a State or federally certified lead hazard inspector. Seller must agree to remove or mitigate, at seller's expense, the lead based paint found in accordance with Federal regulations, and obtain the necessary clearance of the unit. e. No Te
nant Displacement
Any
home to be purchased under this Program must be owner-occupied or vacant for a minimum of four months prior to the time an offer t o purchase is made on the residence, to ensure that the property acquisition will not result in tenant displacement. The seller must certify that the property is owner-occupied or vacant for at least four months prior to the execution of the Purchase and Sale Agreement. Seller must also agree that no tenant will be permitted to occupy the property before the sale is completed and escrow is closed. Pursuant to HUD regulations, an owner -occupied residence is not considered displaced if the existing owner agrees to the purchase price at fair market value. An exception is to be made if the occupying tenant is the buyer.
f. Do
cuments Related to Purchase
Af
ter receiving preliminary approval for a loan from this Program (based upon Program eligibility and full financial review and pending primary loan pre-qualification) and entering into a Purchase and Sale Agreement and applying for a primary loan, the buyer must submit to the City copies of the following documents no later than thirty (30) days from opening of escrow:
• Pur
chase and Sale Agreement;
• Disclosure Statement;
• Certified Escrow Instructions;
• Primary Loan Application (typed and signed);
• Good Faith Estimate of Closing Costs;
32 RES. NO. 2022-57
15 • Estimated Settlement Statement; and
• Truth in Lending Disclosure.
Th
e City will work with the primary lender to review the Disclosure Statement, Primary Loan Application, Good Faith Estimate of Closing Costs, Estimated Settlement Statement, and Truth in Lending Disclosure, and provide input as to any additional Program requirements.
Th
e City will also require a copy of the appraisal on the property prepared by the primary lender, or verification from the lender concerning the property's value as shown in the appraisal. The City reserves the right to conduct an independent appraisal.
Upon c
lose of escrow, the City shall be provided a copy of the Final Settlement Statement.
g. No E
minent Domain
Pr
ior to or at the time of execution of the Purchase and Sale Agreement, Seller must be provided with a complete and executed “Disclosure to Seller with Voluntary, Arm’s Length Purchase Offer,” Exhibit 1, indicating that the City will not use its power of eminent domain to acquire the property. h. Vol
untary Transaction / No Relocation / Withdrawal from Purchase and Sale Agreement
At
the time of execution of the Purchase and Sale Agreement, Seller must be provided with a complete and executed “Disclosure to Seller with Voluntary, Arm’s Length Purchase Offer,” Exhibit 1, stating that the sale is a voluntary, arm’s length transaction, and the seller is not eligible for relocation payments or other relocation benefits. In cases where there is an executed Purchase and Sale Agreement, the seller must be provided the opportunity to withdraw from the Agreement once he/she becomes aware of the requirements of the Program.
III. PRO
CESS / APPLICANT SELECTION
Th
e Program approval process is detailed in the attached “Homebuyer Assistance Program Approval Process” (Exhibit 2).
Th
e applicant must submit a complete application to the City, including all required income and asset verification documents (including income producing assets such as savings accounts of over $5,000, 401(k) or IRA retirement plans, stocks, bonds, etc.), certifications and authorizations, together with a credit report fee, for review and preliminary approval before entering into a purchase contract or applying for funding from a primary lender, together with authorization and accompanying fee for a credit report for each buyer. The City will evaluate all applications to determ ine Program 33 RES. NO. 2022-57
16 eligibility and level of City assistance needed in accordance with Program guidelines.
No application will be considered until all required documentation is submitted for review. The applicant will be asked to provide a completed application form along with the latest Federal income tax return and W-2 forms, the two latest pay stubs and six latest bank statements for all checking accounts, most current income producing assets (such as savings accounts of over $5,000, 401(k) or IRA retirement plans, stocks, bonds, etc.), and any other required documentation including authorization for the City to obtain third party income verification from employers, financial institutions, and if applicable, governmental agencies identified in Section II .B.1.b (Household Income Limits) above, and which may be needed in order to determine household income. Personal certification is the least preferred method for income verification, but may be used if no other sources are available. In the event several compl ete applications are received at the same time, they will be processed for a determination of preliminary eligibility on a first come, first served basis. For instances in which two or more applications are received in the same calendar week, applicants with incomes at or below 60% AMI will be given review priority. However, special consideration will be given to applicants who have identified an eligible property.
Upon
review of the application based on the procedures and determination of qualifications, Housing staff will be able to provide preliminary approval and inform the applicant(s) the proposed amount of the assistance from the City, where applicable.
Applicants who do not submit full and complete applications may experience delays in the review of their applications. Additionally, an applicant’s application is not considered received until it is deemed complete by City staff. This means an applicant who submits a complete application after an incomplete application may take priority for receiving a loan. However, the applicant must receive final loan approval from a primary lender, and subsequently, final approval from the City in order to receive any loan funds from the City.
The
Housing Section will use the procedures listed below to determine the amount of assistance to be provided under the Program.
• Det
ermine whether the applicant qualifies as a homebuyer pursuant to Section II.B.1.a.
• Det
ermine the applicant’s household gross monthly income as described in Section II.B.1.b after third party income verification is received. • Determine the applicant’s eligible down payment assistance as described in Section II.B.1.c.
• Determine the applicant’s maximum housing expense based on information received from the applicant and the guidelines provided in Section II.B.1.d. • Determine applicant’s debt -to-income ratio based on the guidelines provided in Section II.B.1.e.
• Determine the maximum primary loan amount that the household may qualify for based on going interest rates and other rating factors. Thes e 34 RES. NO. 2022-57
17 factors include, but are not limited to, housing debt ratio and debt-to-income ratios, as identified in Sections II.B.1 .d and II.B.1.e, calculated housing expense, prevailing market interest rates for a 30-year fully amortized loan, homeowners’ association dues, and other relevant factors, including minimum FICO scores of 620.
• Determine the loan amount of the second trust deed loans for which the applicant qualifies. This loan amount may not exceed limits described in Section II.B.2.b and must only be used as gap financing between the City’s estimated maximum primary loan amount and the purchase price of the target home.
• Determine the maximum price of the house the applicant may purchase.
Section II.B.4.b states that homebuyers may not purchase a home above the appraised property value. When a buyer is able to provide some form of down payment in addition to Program assistance, the assistance will be capped at the gap between the buyer’s down payment and 20% of the purchase price, if the purchase price is above 95% median home price (Section II.B.4.b).
• Th
e maximum assistance provided by the City Program cannot be used to reduce housing costs to less than 25% of the buyer’s gross monthly income as described in Section II.B.1.d.
Th
e City’s process for prequalifying and approving a homebuyer applicant is described in detail in the attached Approval Process (Exhibit 2) which shall be made available to all applicants, realtors, lenders, escrow and title officers participating in the Program.
Once the applicant has been prequalified for the Program, the applicant may purchase the property of their choice, provided it is located within the in corporated limits of the City, and otherwise conforms to all Program regulations.
IV. R
OLES OF GOVERNMENT AND PRIVATE AGENCIES
Th
e following is a summary description of the principal agencies involved in the Program:
A. Ci
ty Council
Th
e City Council has the sole responsibility and authority to make all policy decisions concerning the expenditure of funds and to authorize the submittal of applications for funding assistance to support the Program. The City Council has authorized the City Manager or his/her designee to make changes necessary to effectuate the implementation of the Program. The City Manager, or his /her designee, is authorized to implement the Program on behalf of the City, to take all further actions and execute all documents, which are necessary and appropriate to carry out the Program on behalf of the City. Any substantive changes to the Program will be brought forward for City Council approval. 35 RES. NO. 2022-57
18 B. Loan Review Committee
Th
e City’s Loan Review Committee has the responsibility of reviewing applications submitted by prospective homebuyers who meet the Program’s Eligibility Standards and have qualified and received approval for a primary loan, making a recommendation regarding the disposition of each application that has received preliminary determination of eligibility for a Program loan.
C. En
vironmental Services Director and City Manager
Th
e recommendation of the Loan Review Committee will be reviewed by the Environmental Services Director and City Manager for final determination.
D. Hous
ing Section of the Department of Environmental Services Th
e Housing Section has responsibility for receiving and reviewing applications and qualifying applicants to ensure that Program guidelines outlined in this Manual are met. The Housing Section is also responsible for maintaining records on the loans provided through the Program.
E. De
partment of Housing and Community Development
HCD prov
ides PLHA funds for the City to use to assist homebuyers directly. HCD monitors the City’s use of Program funds for compliance with funding requirements and issues guidelines for operation of state-funded programs.
F. Pr
imary Lender
Th
e primary lender (bank, savings and loan, mortgage banker) originating first trust deed loans will have sole discretion in qualifying the applicant for a loan, as well as any remedies regarding default of the loan including initiating the foreclosure process, and instituting any foreclosure prevention repayment or loan modification payment plan or forbearance agreement. Applicants receiving loans from the City-funded loans may only obtain a primary loan through institutional primary lenders, such as banks, savings and loan, mortgage bankers, or authorized not-for-profit agencies.
V. GEN
ERAL PROVISIONS
A. Pr
ovisions for Change in Program
It
shall be the policy of the City to periodically assess the effectiveness of the Program in meeting its goal. As actual experience dictates the need, modifications may be required regarding, but not limited to, eligibility standards and the amounts and terms of the Program loans. In addition, the City may modify the Program in order to take advantage of other types of funding from Federal and State sources that would benefit the residents of Simi Valley.
36 RES. NO. 2022-57
19 B. Confidentiality of Records
Unl
ess authorized by written release by the borrower, all personal financial information and materials provided to the City shall be held by the City as privileged and confidential information, not as a public record subject to applicable State and/or local laws and/or regulations.
C. Re -use
of Program Funds
Any
and all funds repaid to the City may be made available for re-use for additional affordable housing programs, including down payment assistance for homebuyers pursuant to the requirements of the original funding source. For PLHA funds, the Reuse Policy is set forth in Exhibit 3.
D. Af
firmative Marketing /Non-discrimination
Th
e City’s Homebuyer Assistance Program will not discriminate against anyone based on a protected class including but not limited to race, religion, marital status, familial status, sex/gender, national origin, ancestry, age, or disability. The Program will follow Affirmative Marketing procedures and requirements established by HUD under rule 24 CFR Section 92.351 and be consistent with Fair Housing practices.
E. Co
nflict of Interest Disclosure
Al
l persons administering the Homebuyer Assistance Program will be required to sign an annual Statement of Economic Interest Form (California Form 700, Fair Political Practices Commission) that will be filed in the office of the City Clerk. This form requires all persons to identify the office, agency or court that they are serving, disclose any interests in property, loans, business positions, travel payments, and to sign under penalty of perjury under the laws of the state of California that the information provided is true.
F. Re
imbursement of Administrative and Activity Delivery Cost Adm
inistrative Costs are expenditures made by the City to carry out general administrative functions that satisfy the conditions of the funding. These costs may include such costs associated with updating program manuals to conform to the funding regulations, general management and oversight, and salaries for personnel who administer the Program.
37 RES. NO. 2022-57
20 Exhibit 1 - Disclosure to Seller with Voluntary, Arm’s Length Purchase Offer [Da
te]
Dis
closure to Seller with Voluntary, Arm’s Length Purchase Offer [S
eller’s Name and Address]
Dear
___________:
Thi
s is to inform you that __________________ would like to purchase the property located at ____________________________, if a satisfactory agreement can be reached. The buyer, ___________________, is prepared to pay $__________ for clear title to the property under the conditions described in the attached proposed contract of sale. The City of Simi Valley will be providing down payment assistance of approximately $________.
Bec
ause taxpayer funds may be used in the purchase, however, we are required to disclose to you the following information:
1. Th
e sale is voluntary. If you do not wish to sell, the City of Simi Valley will not acquire your property. The City does not have the power to acquire your property by condemnation (i.e. eminent domain) and will not use the power of eminent domain to acquire the property.
2. We
estimate the fair market value of the property to be $_____________ based on ____ _______________________________________________________.
3. Si
nce the purchase would be a voluntary, arm’s length transaction, you would not be eligible for relocation payments or other relocation under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 197 0 (URA), or any other law or regulation. Also, as indicated in the contract of sale, this offer is made on the condition that no tenant will be permitted to occupy the property before the sale is completed.
Ag
ain, please understand that if you do not wish to sell your property, the City of Simi Valley will take no further action. If you are willing to sell the property under the conditions described in the contract of sale, please sign the acknowledgement below on the enclosed copy of this letter and return it to us.
38 RES. NO. 2022-57
21 If you have any questions about this matter, please contact _______________________ in the Neighborhood Services Division of the Environmental Services Department. The telephone number is (805) 583-______.
Si
ncerely,
______
______________, Management Analyst
Environmental Services Department
Sel
ler Acknowledgment
_____________________________________________________
Or Seller acknowledgement may be attached as a separate page.
Enc
losures
cc: D
eputy Environmental Services Director
39 RES. NO. 2022-57
22 Exhibit 2 - HOMEBUYER ASSISTANCE PROGRAM APPROVAL PROCESS
CITY OF SIMI VALLEY
HOMEBUYER ASSISTANCE PROGRAM APPROVAL PROCESS
If
you are purchasing a home under the City's Homebuyer Assistance Program (Program), please follow the steps described below. Adherence to these procedures will help address Program requirements and expedite funding approval. We urge you to carefully review and follow these steps and provide a copy to your real estate agent as well as your lender. A copy of the completed application with all required worksheets, certifications and attachments, will be provided to you upon request.
Pl
ease contact the City's Housing Section [ NAME at (805) 583- ] if you have any questions.
STEPS TO BE TAKEN PRIOR TO MAKING AN OFFER ON A PROPERTY
APPLICANT PRE-QUALIFICATION OF ELIGIBILITY
• Sub
mit a completed application to the Department of Environmental Services , either returning the application in person or delivery by mail to 2929 Tapo Canyon Road, Simi Valley, California 93063. The application will include worksheets designed to assist you in determining your household’s gross income and assets.
You must provide written certification and evidence of income and assets.
Program eligibility is limited to income-qualified households. • Com
plete and submit a Homebuyer Certification.
• Com
plete and submit a Credit Report Authorization and Release. • Rev
iew of applications will be on a first -come, first-served basis. A preliminary determination of applicant’s eligibility for Program assistance and anticipated amount and source of down payment/closing costs. A credit report will be obtained at this time. A preliminary Uniform Residential Loan Application (Form 1003) can be submitted to demonstrate homebuyer’s ability to secure a primary loan. The financial information submitted with the application must show sufficient assets to provide for down payment (if applicable) and closing costs. 40 RES. NO. 2022-57
23 • The information provided with the application and supporting information will be used to determine the amount of financial assistance you are eligible to receive from the City provided all Program requirements are met.
All applicants will be notified in writing as to the City's preliminary determination of applicants' eligibility. Preliminary determination of eligibility does not constitute approval under the Program. Final loan approval will be made upon review by and recommendation of the City's Loan Review Committee, Environmental Services Director, and the City Manager. The applicant’s preliminary determination of eligibility will be made based on income (third party verification required), existing debt, calculation of anticipated housing expense (including anticipated mortgage payments, utility allowance, homeowners’ association dues, and utility allowance), as well as housing cost and debt -to-income ratios not exceeding the limits established by the Program guidelines. • The Program requires that applicants attend a homebuyer seminar/workshop as approved by the City. The applicants must each attend such a seminar and submit evidence of attendance prior to receiving Program loan approval.
Applicants are strongly encouraged to attend the seminar prior to making an offer to purchase a property.
STEPS TO BE TAKEN PRIOR TO OPENING ESCROW
• Any residence purchased with Program assistance must be owner - occupied, or vacant for a minimum of four months prior to the time an offer to purchase is made on the residence to ensure that the acquisition of the residence will not result in tenant displacement. The seller must certify that the property is owner-occupied or vacant for at least four months prior to the time the Purchase and Sale Agreement is executed. Seller must also agree that no tenant will be permitted to occupy the property before the sale is completed and escrow is closed. Pursuant to HUD regulations, an owner -occupied residence is not considered displaced if the existing owner agrees to the purchase price at fair market value. An exception is to be made if the occupying tenant is the buyer. • The City must be provided a recent Market Analysis of the property conducted by the listing real estate broker prior to the execution of a Sales Contract/Purchase Agreement. The City will compare this Market Analysis to its assessment to determine the estimated value of the property. • The value of the property must not exceed its appraised property value. When a buyer is able to provide some form of down payment in addition to Program assistance, the assistance will be capped at the gap between the buyer’s down payment and 20% of the purchase price, if the purchase price is above 95% median home price.
41 RES. NO. 2022-57
24 • Prior to the execution of the Sales Contract, the seller must be provided a complete “Disclosure to Seller with Voluntary Arm’s Length Purchase Offer,” provided by the City, stating the fair market value of the property; that the sale is a voluntary, arm’s length transaction; that the seller is not eligible for relocation payments; and that the City will not exercise its power of eminent domain to acquire the property.
• If the property being purchased was built prior to 1978, the Sales Contract/Purchase Agreement must also contain a lead- based paint notification and must indicate that the City will receive a copy of the buyer’s acknowledgement of receipt of the lead- based paint brochure entitled “Protect Your Family From Lead In Your Home.”
• The seller must provide to the City a written Property Certification stating that:
(a) the property was owner -occupied or vacant for at least four months immediately prior to the time the Sales Contract/Purchase Agreement was executed; and (b) that the seller will not allow any tenant to occupy the property before the sale is completed.
• A copy of the Sales Contract/Purchase Agreement signed by the buyer(s) and seller(s) must be provided to the City.
STEPS TO BE TAKEN AFTER OPENING ESCROW
• The applicant must provide the City with the name of the escrow company. • The City will provide the buyer with a Truth in Lending Disclosure. • The property must be inspected by a certified professional home inspector to ensure that it meets local code standards. A copy of the inspection report must be provided to the City. The applicant can retain an inspection service ei ther from the National Association of Certified Home Inspectors (NACHI), the California Real Estate Inspections Association (CREIA) or the American Society of Home Inspections (ASHI). Each association has a referral service and an 800 number for providing a list of member inspection services for the area CREIA’s number is (800) 388-8443; ASHI’s number is (800) 743-2744; NACHI provides a user-friendly website, www.nachi.org
, which provides a list of NACHI inspectors
upon data entry of city or zip code).
• If the property being purchased was built prior to 1978 and if deteriorating paint is found, a lead- based paint test will be required. Any abatement of the lead- based paint is required to be completed by the seller prior to close of escrow.
Any required abatement repair expenses will be the responsibility of the seller(s). • The buyer must complete and submit a Loan Review Authorization and Release. • The buyer must complete and submit a signed and dated Borrower Occupancy Certification certifying that the property being purchased will be occupied as applicant’s principal residence.
42 RES. NO. 2022-57
25 • If a co-borrower is necessary, the applicant must return to the City a signed and dated Co-Borrower Certification of Non-Occupancy stating that the co-borrower will not be residing in the property nor contributing financially to the household. • The primary loan on Program-assisted units shall be a fully amortized, fixed-rate loan provided by an institutional lender or an interest -only loan provided by Cal HFA.
No Adjustable Rate Mortgage (ARM) , negative amortization financing , or interest-only loans with balloon payment options will be allowed. • Copies of the following documents must be submitted to the City immediately upon receipt:
o Disclosure Statement;
o Certified Escrow Instructions;
o Primary Loan Application (typed and signed);
o Property Appraisal;
o Good Faith Estimate of Closing Costs;
o Estimated Settlement Statement;
o Truth in Lending Disclosure; and
o Preliminary Title Report.
• The City will work with the primary lender in reviewing the above listed documents to ensure adherence with Program guidelines. The primary lender will evaluate and qualify the applicant’s primary loan. The City will be solely responsible for qualifying applicants for a loan under the Program. • Upon receipt of all required documents, staff will make an evaluation of the maximum loan amount consistent with the Program's affordability requirements. • The application will be submitted to the City's Loan Rev iew Committee, Environmental Services Director, and City Manager for review and approval. • Upon Loan Review Committee approval, City staff will prepare the Certificate of Acceptance of Deed, Restrictive Covenants, Notice of Affordability Restrictions on Transfer of Property, Deed of Trust, and Promissory Note. • The applicant must provide an American Land Title Association (ALTA) policy of title insurance naming the City of Simi Valley as insured in the amount of the City funded loan.
• City will instruct escr ow to file a Request for Notice of Default on behalf of the City.
43 RES. NO. 2022-57
26 • The applicant shall obtain, maintain and provide evidence of valid hazard insurance policy coverage during the City’s loan term naming the City as additional insured. In addition, if the property is located within a Flood Zone area, flood insurance shall be maintained until the City loan is repaid. Failure to maintain the insurance will constitute default of the loan. • The primary lender and/or escrow officer must forward to the City an executed copy of the First Trust Deed Note (and Second Trust Deed Note, if applicable) and the initial certificate(s) of insurance coverage.
• Upon close of escrow, the City shall be provided a copy of the Final Settlement Statement.
44 RES. NO. 2022-57
27 Exhibit 3 - PLHA REUSE POLICY
PLHA REUSE POLICY
Purpose
To maintain compliance with the PLHA program guidelines as set forth by SB2 Permanent Local Housing Allocation Program Formula Component from the Building Homes and Jobs Trust Fund for assistance to Cities and Counties (as described in Health and Safety Code section 50470 et seq. (Chapter 364, Statutes of 2017 (SB 2)).
Tracking of Program Income and Recapture
All repayments of loan principal, loan interest, equity share payments, and accrued interest of cash balance shall be deposited to the City’s SB2 PLHA Fund (208) to be separately maintained as the PLHA Reuse Account. This is a separate account from all other active grant accounts. The Reuse Account is governed by this Reuse Policy as it applies to the income sources detailed above.
Program Income shall be classified separately from new PLHA allocations to allow for reporting and use of each pursuant to program guidelines. Outstanding loan balances funded all or in part will be tracked using the City’s Enterprise Resource Planning (ERP) system’s project manual to allow for financial forecasting and separation of source of program income (principal loan repayment versus equity share).
Eligible Uses for Program Income
Pursuant to program guidelines, 5% of program income may be used for administrative costs associated with the use and long -term monitoring needs associated with the use of funds. The remaining program income shall be used for program activities permissible at the time of commitment and expenditure. Pr ogram income is not bound to follow the adopted PLHA plan, which only governs the use and budgeting of new allocations.
45 RES. NO. 2022-57
SB2FLHAccmtg6-29-20(klk)
RESOLUTION NO. 2020-37
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SIMI VALLEY TO AUTHORIZE THE CITY MANAGER TO
APPLY FOR AND EXECUTE THE GRANT AGREEMENT
AND O
THER ASSOCIATED DOCUMENTS TO RECEIVE
SENATE BILL 2 (SB2) PERMANENT LOCAL HOUSING
AL
LOCATION (PLHA) GRANT FUNDS , AND APPROVAL
OF
A SUPPLEMENTAL BUDGET REQUEST
WHER
EAS, the State of California, Department of Housing and Community Development (HCD) is authorized to provide up to $195 million under the SB2 Permanent Local Housing Allocation Program Formula Component from the Building Homes and Jobs Trust Fund for assistance to Cities and Counties (as described in Health and Safety Code section 50470 et seq. (Chapter 364, Statutes of 2017 (SB 2)); and
WHER
EAS, the State of California, Department of Housing and Community Development (“Department”) issued a Notice of Funding Availability (“NOFA”) dated February 26, 2020 under the Permanent Local Housing Allocation (PLHA) Program; and
WHER
EAS, the City of Simi Valley (“Applicant”) is an eligible Local government applying for the program to administer one or more eligible activities; and WHER
EAS, the Department may approve funding allocations for PLHA Program, subject to the terms and conditions of the Guidelines, NOFA, Program requirements, the Standard Agreement and other contracts between the Department and PLHA grant recipients; and
WHE
REAS, the City of Simi Valley intends to contract for services through a competitive procurement consistent with State and Local laws to meet program goals and requirements; and
WHE
REAS, Exhibit A details the planned PLHA activities for the next five - years with all funding allocated to assisting persons at risk or currently experiencing homelessness and by adoption of this resolution the Plan is approved by the City Council; and
NOW,
THEREFORE, THE CITY COUNCIL OF THE CITY OF SIMI
VALLEY DOES HEREBY RESOLVE AS FOLLOWS:
SECT
ION 1. The City Manager is hereby authorized to submit the Plan approved as attached hereto (Exhibit A), apply for and execute the grant agreement and other associated documents, and make any adjustments and/or amendments to documents in order to receive SB2 PLHA grant funds.
DocuSign Envelope ID: 0A8DDCBD-EB8C-4F26-9237-47F9686230C4 46 RES. NO. 2020-37
SB2FLHAccmtg6-29-20(klk)
SECTI
ON 2 . If Applicant receives a grant of PLHA funds from the Department pursuant to the above referenced PLHA NOFA, it represents and certifies that it will use all such funds in a manner consistent and in compliance with all applicable state and federal statutes, rules, regulations, and laws, including without limitation all rules and laws regarding the PLHA Program, as well as any and all contracts Applicant may have with the Department.
SECTI
ON 3. Applicant is hereby authorized and directed to receive a PLHA grant, in an amount not to exceed the five- year estimate of the PLHA formula allocations, as stated in Appendix C of the current NOFA of $1,742,142 in accordance with all applicable rules and laws.
SECTI
ON 4. Applicant hereby agrees to use the PLHA funds for eligible activities as approved by the Department and in accordance with all Program requirements, Guidelines, other rules and laws, as well as in a manner consistent and in compliance with the Standard Agreement and other contracts between the Applicant and the Department.
SECTI
ON 5. The City Clerk shall certify to the adoption of this resolution and shall cause a certified resolution to be filed in the Office of the City Clerk.
PASSED and
ADOPTED this 29th day of June 2020.
Attes
t:
Lucy Blanco, City Clerk Keith L. Mashburn, Mayor of the City of Simi Valley, California
Appro
ved as to Form: Approved as to Content:
Lonnie J. Eldridge, City Attorney Brian Paul Gabler, City Manager Strat is Perros
Environmental Services Director
2 DocuSign Envelope ID: 0A8DDCBD-EB8C-4F26-9237-47F9686230C4 47 RE
S. NO. 2020-37
CERTIFICATION
I,
City Clerk of the City of Simi Valley, California, do hereby certify that the foregoing is a full, true, and correct copy of Resolution No. 2020-37 which was regularly introduced and adopted by the City Council of the City of Simi Valley, California, at a special meeting thereof held on the 29 th day of June 2020, by the following vote of the City Council:
AYES: C
ouncil Member s Lister, Luevanos, Cavanaugh, and Mayor
Mashburn
NAY
S: None
ABSENT: Mayor Pro Tem Judge
ABST
AINED: None
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Simi Valley, California, dated ___________________.
Lucy Blanco
City Clerk
3 DocuSign Envelope ID: 0A8DDCBD-EB8C-4F26-9237-47F9686230C4 July 21, 2020
48 RES. NO. 2020-37
EXHIBIT A
SB2FLHAccmtg6-29-20(klk)
Permanent Local Housing Allocation Plan
§302(c)(4)(A) Describe the manner in which allocated funds will be used for eligible activities.
The City of Simi Valley plans to use all of its PLHA funds for Activity 6 pursuant to Section 301(a)(6) by assisting persons who are experiencing or at risk of homelessness to obtain and retain housing with 5% of the funds allocated to administrative costs.
§302(c)(4)(B) Provide a description of the way the Local government will prioritize investments that increase the supply of housing for households with incomes at or below 60 percent of Area Median Income (AMI).
Persons at risk of homelessness or who are currently homeless are required to have extremely-low income at or below 30% AMI. Therefore by assisting this population with obtaining and retaining housing, it will subsequently prioritize the supply of housing for household well below the 60% AMI threshold. §302(c)(4)(C) Provide a description of how the Plan is consistent with the programs set forth in the Local Government’s Housing Element.
The City's current Housing Element includes financial resources available for affordable housing activities including rental assistance and public services benefiting lower-income households and those with special needs.
§302(c)(4)(E)(i) Provide a description of how allocated funds will be used for the proposed Activity.
The City of Simi Valley plans to use the PLHA funds to assist homeless and at risk of homelessness with rapid rehousing assistance based on Housing First principles and rental assistance in accordance with Section 8 standards and requirements for rent and utility payments. Housing may include apartment rental, monthly room rental, mobile home rental space, single room occupancy, doubled-up share rental, or other permanent housing situations that meet the State’s legal requirements for habitability and as confirmed by an inspection. Funds may also be used for security deposit assistance and landlord incentives such as those allowed by California Emergency Solutions & Housing Program. Homeless activities and stabilization services such as field outreach, housing search and placement, transportation and employment assistance, and supportive case management services that allow people to obtain and retain housing.
§302(c)(4)(E)(iii) A description of major steps/actions and a proposed schedule for the implementation and completion of the Activity.
Once the plan is accepted by the State and the grant award is executed, the City will award a contract to a qualified service provider as selected through a competitive Request for Proposal (RFP) process. The RFP is anticipated to be released in August 2020 with an anticipated award in October or November 2020. The contract will cover the full term of the five-year plan.
4 DocuSign Envelope ID: 0A8DDCBD-EB8C-4F26-9237-47F9686230C4 49 RES. NO. 2020-37
SB2FLHAccmtg6-29-20(klk)
Funding
Al
location Year 2019 2020 2021 2022 2023
Type of Activity
for Persons
Experiencing or
At Risk of
Homelessness
Permanent Permanent Permanent Permanent Permanent
§302(c)(4)(E)(i)
Percentage of
Funds Allocated
for the
Proposed
Activity
100% 100% 100% 100% 100%
§302(c)(4)(E)(ii)
Area Median
Income Level
Served
30% 30% 30% 30% 30%
§302(c)(4)(E)(ii)
Unmet share of
the RHNA at
AMI Level
144 TBD TBD TBD TBD
§302(c)(4)(E)(ii)
Projected
Number of
Households
Served
45 45 45 45 45
§302(c)(4)(E)(iv)
Period of
Affordability for
the Proposed
Activity (55
years required
for rental
housing
projects)
N/A N/A N/A N/A N/A
5 DocuSign Envelope ID: 0A8DDCBD-EB8C-4F26-9237-47F9686230C4 50 1 2 3 4 5 6 7 8
Acutely Low - 15% 12,100$ 13,850$ 15,550$ 17,300$ 18,700$ 20,050$ 21,450$ 22,850$ Extremely Low - 30% 26,350$ 30,100$ 33,850$ 37,600$ 40,650$ 43,650$ 46,650$ 49,650$ Very Low Income - 50% 43,900$ 50,200$ 56,450$ 62,700$ 67,750$ 72,750$ 77,750$ 82,800$ Low Income - 80% 70,250$ 80,300$ 90,350$ 100,350 $ 108,400$ 116,450$ 124,450$ 132,500$ Median Income - 100% 80,800$ 92,300$ 103,850$ 115,400 $ 124,650$ 133,850$ 143,100$ 152,350$ Moderate Income - 120% 96,950$ 110,800 $ 124,650$ 138,500 $ 149,600$ 160,650$ 171,750$ 182,800$ Moderate Income - 150% (High Cost Region) 121,150$ 138,500 $ 155,800$ 173,100 $ 186,950$ 200,800$ 214,650$ 228,500$ Number of Persons in Household:
Ventura County
Area Median Income:
$115,400
State Income Limits for 2022 - Issued by HCD on May 13, 2022 ATTACHMENT 2
51