Recommendation: The Finance Committee recommends (3-0) adoption of the following resolutions:

Transcription

1 ./r Yl'CHI((1 City Council Agenda Report Meeting Date: September, 01 TO: City Council FROM: Marie Demers, Housing Manager -0 RE: Authorization of Conveyance of City-Owned Property and a City HOME Loan to Habitat for Humanity to Build Six Self-Help Homes at E. 0th and C Streets REPORT IN BRIEF In 00 and 00, the Chico Redevelopment Agency purchased two properties located at E. 0'h and C Streets for the purpose of affordable housing; the properties are recognized by the State Department of Finance as "Housing Assets of the City of Chico". It is proposed that the City convey the properties to Habitat for Humanity of Butte County (Habitat) and provide loans of Federal HOME and Affordable Housing funds to build six self-help homes for low-income home buyers. The homes will be built in the same style as Habitat's adjacent 1th and 1h Street projects. Habitat's home buyers will contribute "sweat equity" toward their homes by participating in the building process. Habitat partners with local organizations and businesses that contribute volunteer labor and materials to build homes. Recommendation: The Finance Committee recommends (-0) adoption of the following resolutions: RESOLUTION OF THE CITY OF CHICO AUTHORIZING AN AFFORDABLE HOUSING FUND LOAN AGREEMENT BETWEEN THE CITY OF CHICO AND HABITAT FOR HUMANITY OF BUTTE COUNTY AGREEING TO THE DISPOSITION OF CITY PROPERTY AT AND EAST 0TH STREET FOR THE DEVELOPMENT OF LOW INCOME AFFORDABLE HOMES RESOLUTION OF THE CITY OF CHICO AUTHORIZING EXECUTION OF A HOME LOAN TO HABITAT FOR HUMANITY OF BUTTE COUNTY FOR THE DEVELOPMENT OF A LOW INCOME AFFORDABLE HOUSING PROJECT LOCATED AT AND EAST 0TH STREET FISCAL IMPACT An allocation of $1,1 in Federal HOME funds was approved forthis project in the 01-1 HUD Annual Action Plan and in the adopted City Budget in June 01. An additional $,0 in HOME funds will be reallocated from Project #-Homeownership Project, for a total of $0,000 in HOME funds. The $0,000 Affordable Housing Fund loan is the appraised lot value of the City-owned properties to be conveyed to Habitat, and does not involve cash disbursements. There is no fiscal impact to the General Fund. BACKGROUND The property at E. 0m Street (APN: ) was purchased by the Chico Redevelopment Agency from the County of Butte in 00 with Low-and Moderate Income Housing Funds. The parcel is approximately. acres in size and has four underlying lots, each are -,0 square feet. At the time of the purchase, the property had not yet been annexed into the City and it was anticipated the property would be transferred to Habitat for development of low-income housing. The acre property at E. 0th Street (APN: ), which included an abandoned house, was purchased by the Chico Redevelopment Agency in 00 with Low-and Moderate Income Housing Funds. The City subsequently demolished the house. There are two -,0 square foot underlying lots on this parcel. See Attachment A. On January 1, 0, the City Council adopted a resolution electing that the City of Chico become the Successor Housing Agency to the Chico Redevelopment Agency once the dissolution of the agency became effective February 1, 0, pursuant to State AB. Housing assets transferred to the City of Chico include the properties on E. 0th Street that were acquired by the Chico Redevelopment Agency with Low and Moderate Income Housing

2 RE: Authorization City Property Conveyance and HOME Loan Meeting Date: September, 01 Page Funds. Section 1(c) of AB authorizes the Successor Housing Agency to perform activities applicable to Community Redevelopment Law (Health & Safety Code, Section 000 et. al.), with regard to its assets, including conveyance of land for the development of affordable housing on propemy purchased with Low and Moderate Income Housing Funds (Health & Safety Code, Section.(e)). With Community Development Block Grant (CDBG) funds, the City recently constructed a new alley with storm drain and sewer improvements along the northern edge of the parcels, which provides access to these two parcels and those previously developed by Habitat along 1th Street. The parcels are zoned R-1(Single Family Residential) with the SD- (Chapman/Mulberry Special Design) Overlay. As the two parcels had six underlying lots between them, staff recorded Certificates of Compliance for each of the underlying lots, so that each parcel may be individually developed. Habitat and the City have partnered to develop 1 homes for low-income households in the city of Chico since 1. Most recently completed are the two homes on E. th Street. Habitat is dedicated to eliminating substandard housing and providing simple, decent affordable housing for all people. Homebuyers contribute "sweat equity" toward their homes, participating in the building process throughout the course of construction. Habitat does substantial fundraising, receives grants from various organizations and businesses and generates revenue from repayment of borrower mortgages and sales from its retail store (the ReStore) DISCUSSION Proiect Description: The proposed project is the construction of six -1,0 square foot, -bedroom, single-family homes affordable to families with incomes between 0-0% area median income. The houses will mirror those constructed on 1th and 1th Streets which include Universal Design elements. Universal Design allows for use by all people including those with mobility challenges and anticipates potential resident needs in the future. Habitat intends to build two homes per year over the next three years. The final homes are projected to be complete in 01. It is proposed that the City enter into a deferred loan agreement with Habitat and concurrently convey the properties at and E. 0th Street, for the appraised value of $0,000. In exchange, Habitat will agree to construct six homes on the properties and sell them to low-income home buyers. The loan will be secured by a deed of trust and an affordability covenant will be recorded on the properties. The property disposition must comply with Health & Safety Code Section 0- requiring a publicly noticed hearing prior to City authorization. Financing: The financing structure consists of City Affordable Housing Fund (AHF) and HOME fund loans to Habitat which will then be assumed by each of the home buyers. This is a similar loan structure used for other "sweat equity" affordable homeownership projects including recent Habitat and CHIP subdivisions. The City will convey the two parcels to Habitat, and concurrently, enter into a deferred loan agreement with Habitat for the $0,000 appraised value of the properties. When construction is completed, each homebuyer will assume a loan in the amount of $,000. The City will also enter into a $0,000 City HOME deferred loan with Habitat, which will be assumed by each home buyer at $0,000 each. These HOME funds are subject to the 0 Final HOME Rule and its implementing regulations. Below is a summary of the estimated project budget: Sources Per Unit Total City Property/AHF Loan City HOME Loan Private Grants Habitat Fundraising/ Loan Total $,000 $0,000 $,00 $, $, $0,000 $0,000 $1,000 $,0 $1,1,0 Uses Per Unit Total Property Acquisition Permits/Fees/Utilities/Design/Escrow $,000 $,00 $0,000 $1,00

3 RE- Authorization City Property Conveyance and HOME Loan Meeting Date: September, 01 Page Construction Administration/Overhead $1, $0,00 $, $1,0 $,000 $1,1,0 Per Habitat's procedures, a qualified buyer is identified prior to construction start so that they may participate in the construction of the house. Once the construction is complete, the home is transferred to the home buyer and covenants are recorded on the property requiring that the property remain affordable for specified periods of time. The term of the affordability covenant will be years for the Affordable Housing Fund loan, and 0 years for the City HOME loan. Habitat provides a first mortgage with payments amortized over a 0-0 year term with no interest. If a borrower wishes to sell the property during the term of the Habitat loan, the home must be sold to another lowincome borrower; this conforms to the City HOME re-sale provisions in effect during the first 1 years (HOME affordability period) of the HOME loan. The City deferred payment loans will require repayment with % interest if the home is re-sold to a buyer that does not qualify as a low income household during the period after the maturity of the Habitat mortgage prior to the end of the respective loan term. Once the respective term expires, the loans become grants. Below is a summary of the estimated individual home financing. Financing Source Estimated Amount Buyer Downpayment Habitat Mortgage City AHF/LMIHF (land value) City HOME Various Grants Total $1,000 $0,000 $,000 $0,000 $0, $, ENVIRONMENTAL REVIEW The project is Categorically Exempted from the California Environmental Quality Act (CEQA) per 1 of the CEQA Guidelines as an In-Fill Development. City staff has conducted an Environmental Assessment per the National Environmental Policy Act (NEPA) and has made the determination that the project has a Finding of No Significant Impact (FONSI) per CFR Section.0(g)(1). A Notice of Intent and Request for Release of Grant Funds will be submitted to HUD and no funds will be disbursed until HUD issues an Authority to Use Grant Funds. PUBLIC CONTACT A FONSI and Notice of Intent and Request to Release Grant Funds has been published in the Chico Enterprise Record and distributed to the Mechoopda Tribe of Chico Rancheria. A public hearing notice was published in the Chjco Enterprise Record on August and,01. The Finance Committee considered this item at their August, 01 meeting. Prepared by: 1 -KUL' 1» Marie Demers, Housing Manager Approved by: 1\«Inl Mark Orme, City Manager Reviewed by: /'v*n-(.)0 Mark Wolfe, Community Dlvelopment Director

4 RE: Meeting Date: Page DISTRIBUTION: City Clerk () Nicole Bateman, Habitat for Humanity, ATTACHMENTS: Attachment A-Location Map Attachment -Property Disposition and Loan Agreement Resolution Attachment C-HOME Loan Agreement Resolution FILE: MSP Subdivisions-Habitat for Humanity-0th Street-0 HOME / LMIHF

5 E 1TH ST l\\ DOROTHY JOHNSON COMMUNITY CENTER Iii n 0 t-0/ E 1TH ST..s:'Ro JECTSITE*t 1**t E 0TH ST -1 > 0 Z E Z El K -x -- rri C rn Z -1 RHODES Ci SIERRA NEVADA BREWERY 0 00 p Feet Project Site and E 0th Street APNs , /1'C j

6 RESOLUTION NO. (Uncodified) RESOLUTION OF THE CITY OF CHICO AUTHORIZING AN AFFORDABLE HOUSING FUND LOAN AGREEMENT BETWEEN THE CITY OF CH[CO AND HABITAT FOR HUMANITY OF BUTTE COUNTY AGREEING TO THE DISPOSITION OF CITY PROPERTY LOCATED AT AND EAST 0TH STREET FOR THE DEVELOPMENT OF LOW INCOME AFFORDABLE HOMES WHEREAS, on April 1,00 and on June 1,00, the Chico Redevelopment Agency acquired the parcels at East 0th Street, APN: and East0th Street, APN: (the "Properties"), further described in Exhibit "A", with Low and Moderate Income Housing Funds for the purpose o f building affordable housing; and WHEREAS, on January 1,0, the City ofchico (the "City") elected to retain the housing functions of the Chico Redevelopment Agency, thereby becoming the Housing Successor, in accordance with Health & Safety Code Section 1; and 1 WHEREAS, the City, acting in the role ofhousing Successor, retains the housing assets of 1 the former Chico Redevelopment Agency, including property purchased with Low and Moderate 1 Income Housing Funds, and administers those assets in accordance with Health & Safety Code et. al., as required by Health & Safety Code Section 1(c); and 1 WHEREAS, the City desires to support the development of homes affordable to low-income 1 households, furthering goals of the Housing Element adopted June 1, 01; and 0 WHEREAS, Habitat for Humanity ofbutte County ("Habitat") has requested conveyance 1 ofcity-owned property in order to build six self-help homes (the "Project") that are affordable to lower-income households with incomes not more than 0% of area median income ("Home Buyers"). NOW THEREFORE, BE IT RESOLVED, by the City of Chico: as follows: 1. Convevance of the Property from the City to Habitat. The City hereby authorizes the - conveyance o fthe Property from the City to Habitat, contingent on the concurrent execution by Habitat of a Loan Agreement, Affordability Covenant and Deed of Trust, as described Page 1 of ATTACHMENT. _

7 below. The City Manager shall be and is hereby authorized to execute Grant Deeds to Habitat for the Property.. Loan from the Citv to Habitat. The City hereby approves a loan of Affordable Housing Funds to Habitat in the amount of Two Hundred Seventy Thousand Dollars ($0,000), which is the current value of the Property purchased with Low and Moderate Income Housing Funds, for the development ofthe Project (the "Loan Agreement"). The loan shall be subject to the following terms and conditions: a. The term of the Loan Agreement shali be forty-five () years from the date of execution. The interest rate shall be two percent (%) per annum. The Home Buyers will assume the loan for the individual lot value of Forty-Five Thousand Dollars ($,000) at the time Home Buyers purchase the homes, and will enter into a separate deferred payment loan agreement with the City. The loan agreement between the City and each Home Buyer will have a forty-five year term and an interest rate oftwo percent (%) per annum. Once the loans are assumed by each Home Buyer, any interest accrued on the Habitat loan shall be forgiven. b. Habitat shall complete and sell the six homes in the Project to Home Buyers by September 0,00. c. In the event that Habitat does not proceed with the Project or does not cure default within the time proscribed in the Loan Agreement, Habitat shall reconvey the 0 Property to the City. 1 d. The loan shall be made by the City to Habitat in accordance with the terms and conditions of the Loan Agreement between the City and Habitat. Such agreement shall set forth the terms and conditions under which the Property provided for herein will be used by Habitat, shall contain such provisions as may be required to ensure that the City's loan is being made in compliance with the California Health and Safety Code, and shall be in a form and content satisfactory to the City Attorney. ----i. Upon concurrence with the terms and conditions of such Loan Agreement by Habitat, the City Manager shall be and is hereby authorized to execute such Loan S:\0_HOME_HUD\Habitat Projects\0th Street',Resolutions\Property Conveyance Reso.wpd Page of

8 Agreement on behalf ofthe City. As a condition of the Loan Agreement, Habitat shall execute an affordability covenant governing the use of the Project as affordable to Home Buyers (the "Covenant"), which shall be recorded. Such Covenant shall require, for a period of forty-five () years from the date of the issuance of the final certificate of occupancy for the Project, that all homes within the Project be sold at affordable housing costs to Home Buyers in accordance with Health & Safety Code Section 00.. The Covenant shall require each Project Home Buyer enter into a new Covenant for a period o f forty-five () years. In the event the Home Buyer sells a house to a household that is not a Lower Income Household during the term of the Covenant, the Home Buyer that had assumed the Covenant shall repay to the City the amount of the loan attributed to the house within the Project, plus outstanding interest at two percent (%) per annum. Ifthe house continues to be occupied by a Home Buyer through the end of the loan term, the loan, including all accrued interest, shall be forgiven. The Covenant shall contain such other provisions as the City Manager shall determine are necessary to comply with the Affordable Housing Provisions ofthe Community Redevelopment Law, shall otherwise be in a form and content satisfactory to the City Attorney. Upon execution of the Covenant by Habitat, the City Manager shall be and is hereby authorized to execute such Covenant on behalfofthe City. g. As a further condition of the Loan Agreement provided for herein, Habitat shall execute a Deed oftrust in favor ofthe City which shall be recorded and which shall secure the obligations to repay the loan in the event it is determined that there has been a breach of Habitat's duties and obligations under the Covenant or Loan Agreement. The Deed of Trust shall contain such other provisions as may be required to insure that the City's loan is made in compliance with the Affordable Housing Provisions ofthe Community Redevelopment Law, shall be in a form and content satisfactory to the City Attorney. S:\0_HOME_HUD\Habilit Projects\0th StreetResolutions\Property Conveyance Reso.wpd Page of

9 h. Each Home Buyer that purchases a house in the Project shall execute a Deed of Trust in favor of the City which shali be recorded and which shall secure the obligations to repay the loan in the event it is determined that there has been a breach ofthe Covenant. The Deed oftrust shall contain such other provisions as may be required to insure that the City's loan is made in compliance with the Affordable Housing Provisions of the Community Redevelopment Law, shall be in a fonn and content satisfactory to the City Attorney.. The City authorizes the Covenant and Deed oftrust to be subordinate to deeds oftrust and related security agreements in favor of institutional lenders providing construction and permanent financing.. An environmental review was completed and per the State California Environmental Quality Act (CEQA) Guidelines Section 1-Infill development, the project was found to be Categorically Exempt. Because federal HOME funds will be used to finance the project, City staff has conducted an environmental review and prepared an Environmental Assessment. Per the National Environmental Policy Act (NEPA), a Finding of No Significant Impact pursuant to CFR Section.0(g)(1). THE FOREGOING RESOLUTION was adopted by the City of Chico at its meeting held on by the following vote: 1 AYES: 0 NOES: 1 ABSENT: ABSTAIN: DISQUALIFIED: ATTEST: Deborah R. Presson, City Clerk C ) M YA Vilcent C. Swing, City Attorney* *Approved pursuant to The Charter of the City of Chico 0(E) S:\0_HOME_HUD\Habitat Projects\0th StreetResolutions\Property Conveyance Reso.wpd Page of

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11 RESOLUTION NO. RESOLUTION OF THE CITY OF CHICO AUTHORIZING EXECUTION OF A HOME LOAN TO HABITAT FOR HUMANITY OF BUTTE COUNTY FOR THE DEVELOPMENT OF A LOW INCOME AFFORDABLE HOUSING PROJECT LOCATED AT AND EAST 0TH STREET WHEREAS, Habitat for Humanity of Butte County (the "Borrower") is proposing to develop six homes affordable to low-income households (the "Project"), to be located on the properties known as East 0 Street, APN: and East 0th Street, APN: (the "Properties"); and WHEREAS, the Project will be affordable to households earning less than eighty percent (0%) ofthe Area Median Income ("Low Income Households"); and WHEREAS, the City receives Federal HOME funding ("HOME") from the U. S. Department of Housing and Urban Development for the purpose of creating affordable housing; and WHEREAS, the Project will further the purposes of, and will be consistent with, the policies of the HOME Program; and WHEREAS, the Borrower and City will enter into a Written Agreement per the HOME Rules; and WHEREAS, the Borrower and the City will enter into an agreement regarding a loan of HOME funds in the amount ofthree Hundred Sixty Thousand Dollars ($0,000) from the City to the Borrower (the "Loan Agreement") that establishes the specific terms and conditions for the disbursement ofthe loan funds as well as the Borrower's performance requirements. NOW THEREFORE, BE IT RESOLVED by the City of Chico, as follows: 1. The City finds that the development of the Project on the Property is consistent with the goals of the City to provide affordable housing, as documented in the City's adopted- Consolidated.Plan The City hereby approves a loan to the Borrower in the amount of Three Hundred Sixty Thousand Dollars ($0,000) in HOME funds for development of the Project (the "Loan Funds'D. Disbursement of City Loan Funds shall be contingent on execution of the Loan S:\0_HOME-HUD\Habitat Projects\0th Street\Resolutions,HOME Loan Rese.wpc TTACHMENT C Page 1 of

12 1 1 Agreement, Affordability Covenant (the "Covenant'D and Deed of Trust for the Project.. The Borrower and the City shall enter into a Loan Agreement governing the use ofloan Funds subject to the following terms and conditions: a. Disbursement of the Loan Funds shall be pursuant to the following terms: 1) the Loan Funds shall be used by Borrower only for the purposes which are set forth in Exhibit "A" attached hereto; and ) disbursements o f Loan Funds shall be made no more often than monthly, upon submittal of a payment request form and Supporting invoices. b. The Borrower shall obtain unconditional Certificates of Occupancy for all houses in the Project, from the City of Chico Building Division, by September 0,00. d. In the event that the Borrower does not proceed with the Project or does not cure default within the time proscribed in the Loan Agreement, the Borrower shall give to the City all architectural and engineering documents, environmental studies 1 and other documents prepared with the Loan Funds. 1 e. The term ofthe Loan Agreement shall be thirty (0) years from the date ofthe 1 issuance of the final certificate of occupancy for the Project, and the annual 1 interest rate shall be two percent (/). 1 f The Loan shall be made by the City in accordance with the terms and conditions 1 of a Loan Agreement which sets forth the terms and conditions under which the 0 funds provided for herein will be disbursed to and used by, contains such 1 provisions as may b required to ensure that the City's loan is being made in compliance with all federal HOME Program Regulations ( CFR, Part ), shall be in a form and content satisfactory to the City Attorney. Upon concurrence with the terms and conditions ofsuch Loan Agreement by the Borrower, the City Manager shall be and is hereby authorized to execute such Loan Agreement on _. behalfofthe City il- --- g. As consideration for the Loan, the Borrower shall enter into a Covenant governing the use of the Project. Such Covenant shall require, for a period of S.\0_HOME-HUDViabitat Projects\0th Street\Resolutions\HOME Loan Reso.wpd Page of

13 _ thirty (0) years from the date of the issuance ofthe final certificate of occupancy for the Project, that each home within the Project be sold at affordable housing costs to a Low Income Household (the "Home Buyer"). At such time as each house is sold to a Home Buyer, the Borrower will require each Home Buyer to assume the Borrower' s obligations under this agreement and the City will consent to that assumption. That assumption shall be evidenced by each Home Buyer's execution of a new Covenant and Deed of Trust as described below, both of which shall be recorded against the property purchased by that Home Buyer. The Borrower's Covenant shall be released by the City after all homes within the Project have been soid to Home Buyers. h. Each Home Buyer shall enter into a new Covenant governing use ofthe Project. Such Covenant shall require, for a period ofthirty (0) years from the date ofthe Home Buyer's purchase o f a home within the Project, that the home within the Project be sold at affordable housing costs to Low Income Households. In the event an income eligible home owner sells a house within the Project to a household that is not a Low Income Household during the term of the Covenant, the income-eligible home owner that had assumed the Covenant shall repay to the City the principal amount of the Loan Funds attributed to the house within the Project, plus outstanding interest at % per annum, The Covenant shall contain such other provisions as the City Manager shall determine are necessary to comply with federal HOME Program Regulations ( CFR, Part ), shall otherwise be in a form and content satisfactory to the City Attorney. i. As a further condition of the Loan Funds provided for herein, the Borrower shall execute a Deed of Trust in favor ofthe City which shall be recorded and which shall secure the obligations to repay the Loan in the event it is determined that. there has been a breach of Borrower's_duties_and_obligations_under-the_Coy.enant_. or Loan Agreement. The Deed oftrust shall contain such other provisions as may be required to insure that the City's Loan is made in compliance with federal S:\0_HOME_HUD\Habitat Projects\(th Sleet\Resolutions\HOME Loan Reso.wpd Page of

14 HOME Program Regulations ( CFR, Part ), shall otherwise be in a form and content satisfactory to the City Attorney. The Borrower's Deed of Trust shall be reconveyed by the City after all homes within the Project have been sold to Home Buyers. Any accrued interest shall be forgiven once the Project homes are sold to Home Buyers. j. Each Home Buyer shall execute a Deed oftrust in favor of the City which shall be recorded and which shall secure the obligations to repay the Loan in the event it is determined that there has been a breach ofthe Covenant. The Deed of Trust shall contain such other provisions as may be required to insure that the City's Loan is made in compliance with federal HOME Program Regulations ( CFR, Part ), shall otherwise be in a form and content satisfactory to the City Attorney.. The City authorizes the Covenant and Deed oftrust to be subordinate to deeds oftrust and related security agreements in favor of institutional lenders providing property acquisition, construction and permanent financing.. An environmental review was completed and per the State California Environmental Quality Act (CEQA) Guidelines Section 1-Infill development, the project was found to be Categorically Exempt. Because federal HOME funds will be used to finance the project, City staff has conducted an environmental review and prepared an Environmental Assessment. Per the National Environmental Policy Act (NEPA) a Finding of No Significant Impact pursuant to CFR Section.0(g)(1). A Notice of Intent and Request for Release ofgrant Funds will be submitted to HUD and no funds will be disbursed until HUD issues an Authority to Use Grant Funds. THE FOREGOING RESOLUTION was adopted by the City_ofChic_o_atits_meeting_held on by the following vote: S:-HOME_HUDUiabitat Projects\0th Street\Resolutions\HOME Loan Reso wpd Page of i

15 AYES: NOES: i ABSENT: ABSTAIN: DISQUALIFIED: ATTEST: APPRO A OF Deborah R. Presson, City Clerk 1 Ent C.'Ewing, City Attorney* *Approved pursuant to The Charter of the City of Chico 0(IE) S:\0 HOME HUD\Habitat Prqject\0th Street\Resolutions\HOME Loan Reso.wpd Page of

16 EXHIBIT "A" PERMITTED HOME LOAN EXPENSES Architecture and Engineering Developer Administrative Costs Environmental Assessment Geotechnical Engineering Home Construction Legal Local Permits and Fees Site Improvements Utilities Fees I