Using NSP to Preserve Affordability. March 22, 2011

Transcription

1 Using NSP to Preserve Affordability March 22,

2 Using NSP to Preserve Affordability March 22, a.m. Pacific/ 1 p.m. Eastern

3 Presenters Ron Whitman, Pima County Community Land Trust Staci Horwitz, City of Lakes Community Land Trust, Minneapolis, MN Paul Johnson, The Housing Fund, Nashville, TN Moderated by Rick Jacobus, Director of

4 Webinar Agenda Welcome and Introduction NSP as a Tool to Preserve Affordability Pima County Community Land Trust City of Lakes Community Land Trust The Housing Fund in Nashville, TN Questions

5 Overview A peer network for homeownership programs that seek to preserve long- term affordability and community stability, helping more people buy homes today, maintain those homes and keep them affordable in the future.

6 Requirement for Affordability NSP Overview The Secretary shall, by rule or order, ensure, to the maximum extent practicable and for the longest feasible term, that the sale, rental or redevelopment of abandoned and foreclosed upon homes and residential properties under this section remain affordable to individuals or families. - The Housing and Economic Recovery Act of 2008, section 2301 (f)3b

7 NSP Overview Preserving Affordability Can we take advantage of today s relatively l low prices to create a lasting stock of affordable ownership units?

8 NSP Overview Home Program Affordability Periods Less than $15,000 NSP Investment (Per Unit) Minimum Affordability Period 5 Years $15,000 - $40, Years Over $40,000 New construction or acquisition of newly constructed housing g( (rental only) 15 Years 20 Years

9 NSP Overview Recapture Loans can be: Forgiven over time Repaid in full at sale Repaid with interest t at sale Repaid at sale along with a share of appreciation

10 NSP Overview Resale Resale restrictions are imposed: Through deed restriction or other covenant Through Community Land Trust lease

11 NSP Overview New Resource

12 Model Lease Purchase Program Ron Whitman, Pima County Community Land Trust

13 Program Overview CLT approved in 2008 TA in two phases: o Phase 1: - Feasibility study - Building political will - Developing Community Support o Phase 2: - Developing Implementation strategies - CLT Legal Documents Pima County Community Land Trust

14 Program Overview (cont d) $7.2 M in NSP1 to City of Tucson for the acquisition and rehabilitation Pima County Community Land Trust Board of Directors developed CLT legal documents (appx one year) Business Plan Articles of Incorporation 501C3 Application Conflict of Interest Ground Lease

15 Rent to Own Program 53 Homes in Portfolio o16 are permanent rentals (25% set aside) o37 to be sold by the CLT Rent to Own program prevents homes from sitting vacant Renter criteria: o Minimum credit score of 600 o Between 50 and 65% AMI o Mortgage g ready within 18 months Pima County Community Land Trust Third party management

16 The Sale of NSP 1 Homes A Subrecipient Agreement between the City of Tucson and the PCCLT. Simultaneous closing All proceeds are returned to the City to purchase additional homes. Pima County Community Land Trust

17 PCCLT as the Developer Sale proceeds used by the City of Tucson to purchase additional homes. Upon acquisition by the City, these homes will be transferred to PCCLT PCCLT will earn a Developer fee on these transactions. Pima County Community Land Trust

18 Pima County Community Land Trust Total homes to be sold by the CLT (96) NSP1 NSP2 NSP3 37 homes initial purchase 12 with proceeds 4 homes purchased under round 3 22 homes initial purchase 7 with proceeds 2 homes purchased under round 3 8 homes initial purchase 3 homes with proceed 1 home under round 3

19 Homebuyer Initiated Program (HIP) Staci Horwitz, City of Lakes Community Land Trust, Minneapolis, MN

20 City of Lakes Community Land Trust Program Overview Assists individuals and families at or below 80% AMI Focuses on existing single-family homes Provides affordability and rehabilitation investments Offers buyers opportunity to purchase home of their choosing within the City of Minneapolis

21 City of Lakes Community Land Trust HIP Process Buyer completes CLCLT application process (including mortgage pre-approval) CLCLT: - Determines level of affordability investment (up to $60,000) based on %AMI - Meets with buyer and their realtor to review program specifics

22 HIP Process (cont d) Buyer works with realtor to find home When PA is signed, CLCLT inspects home for: - Deferred maintenance; - Safety and code compliance issues; and - Environmental hazards. CLCLT approves home. Buyer closes. CLCLT completes defined rehab, post-purchase. City of Lakes Community Land Trust

23 NSP Funds Received funds through state housing finance agency originally, then through City City of Lakes Community Land Trust Selected as one of the City s 10 original NSP developer partners Acknowledged as anomaly among City s developer partners - HIP buyer chooses home. - Although foreclosed or vacant, home has to be in livable condition. - Rehab completed post-purchase, owner-occupied.

24 City of Lakes Community Land Trust NSP Benefits Begin with income-eligible homeowner Minimal risk to CLCLT (e.g. property holding costs) Home occupied during rehab Homeowner input on rehab work Assists CLCLT in continuing to implement HIP

25 City of Lakes Community Land Trust NSP Challenges Use of NSP funds for rehabilitation work required: -Modification of some program processes to accommodate NSP-specific requirements -Incorporating some additional rehab components -Increased levels of reporting

26 Other NSP Opportunities City of Lakes Community Land Trust Purchase of homes rehabbed by other NSP developers Project: Reclaim (Contract for Deed) -Partner developer acquires and rehabs homes using NSP funds. -CLT deed restriction signed at time of contract. -CLT Ground Lease signed at time of refinance.

27 Deed Restriction Program Paul Johnson, The Housing Fund, Nashville, TN

28 The Housing Fund Program Overview 4 organizations $30.4 million through NSP 2 to create Housing 4 Nashville s Neighborhoods. GOAL: To acquire foreclosed and vacant properties in the neighborhoods hardest hit by the foreclosure crisis to create affordable housing and stabilize neighborhoods.

29 The Housing Fund

30 The Housing Fund Program Allocation $10,185,064 $2,250,000 Shared Equity Allocation $2,250,000 Financing Mechanism $960,610 Redevelopment $15,264,936 Financing Mechanism Acquisition/Rehab Redevelopment

31 Our House and NSP 30-year deed restriction covenant. Soft-second assumable loan secured by a note and a deed of trust. Appraisal-based formula; 25% of appreciation if they sell the home within 3 years of purchase 50% of appreciation if they sell after owning for 3 years 100% of appreciation if they sell after owning for 30 years The Housing Fund

32 The Housing Fund NSP Benefits Opportunity to develop a shared equity program in Nashville. Aggressive timeline for portfolio growth (while challenging, it will also move us more quickly towards program sustainability). Flexibility to serve a large range of household incomes enables a more diverse portfolio of units (and better neighborhood development).

33 The Housing Fund NSP Challenges 25% set-aside requirement does not work for shared equity homeowners, sale after sale. Capitalizing on an emergency/reserve/repair fund under NSP. Overall development costs for a new construction is still high for the market of shared equity homebuyers. Attracting homebuyers to the city s most disinvested neighborhoods.

34 The Housing Fund Development Cost Estimate # Units/ OUR HOUSE Projected Project Housing Type Investment/unit Sales Price(s) Chestnut Row $1,395, townhomes $30,000-40,000 2 BR $115,000 3 BR $125,000 Fawn Crossing $2,055, single-family $30,000-35,000 $115, ,000 Scattered Site Acq./Rehab $1,400, single-family $20,000-25,000 $60,000-80,000

35 The Housing Fund Multi-family Development Lot Cost $10,890 Infrastructure $16,720 Dev. Fee $5,000 Const. Cost $82,700 TOTAL $115,310 Tax appraisal Land Only Bedrooms 2 Bathrooms 2 Square feet 1308 Purchase Price $121,075 Buyer DP $1,153 OUR House $30,000 1 st Mortgage $89,922 Affordability: Monthly payment $657 Household Income* $22,600 Percent AMI 43% * 2 person HH, 4.5% IR, 35% front end

36 The Housing Fund Scattered Site Acq./Rehab Tax appraisal Bedrooms Bathrooms Square feet $81, Acq. Cost Rehab Cost TOTAL $35,000 $25,000 $60,000 Sales Price OUR House 1st Mortgage g g $61,800 $20,000 $41,800 Affordability: Household Income* Percent AMI before picture $12,000 23% * 2 person HH, no debt, 4.5% IR, 35% front end

37 Questions?

38 Contact t Information Ron Whitman, ron.whitman@tucsonaz.gov Paul Johnson, pjohnson@thehousingfund.org Staci Horwitz, staci@clclt.org Rick Jacobus, rick@rjacobus.com