Item 17 - Approve and Launch the New “My First Home” Program

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Approve and Launch the New “My First Home” Program November 2, 2021 Page 2 2 1 9 6 The “My First Home” program will be a limited-time program based upon funding availability. This means that as soon as the $1.2 million in Inclusionary Housing Funds are exhausted, staff will revert the program guidelines back to its original form using Community Development Block Grant funds. The core working part of this one-time program is an increase in down payment assistance available per household. Specifically, staff is increasing the maximum down payment assistance loan amount available for low-income buyers up to $120,000. The maximum down payment assistance loan amount for moderate-income buyers will also be increased to $80,000. By increasing the loan amounts, together with record low mortgage interest rates, more low-income families will qualify to purchase a home. The vision behind the allocation of $1.2 million is to assist at least ten low-income families purchase their first home (e.g. $120,000 x 10 families), or a combination thereof between low- to moderate-income families. The updates to the Down Payment Assistance Program Guidelines and template Loan Agreement are attached as Exhibit 1 and 2 in redline format. The effectiveness of this one-time program will be evaluated if the City is successful to assist at least ten low- to moderate-income families purchase their first home. Staff may adjust the allocation of funds per household depending on the results of the program. Regarding the eligibility of the $1.2 million in funding for this one-time program, pursuant to Section 41-1909 (a)(3) of the Housing Opportunity Ordinance, permissible uses of the Inclusionary Housing Fund include pre-home ownership co-investment. The Ordinance states that the Inclusionary Housing Fund may be used for the benefit of owner-occupied housing. Following approval by City Council, staff will launch the program and begin marketing the program together with NeighborWorks of Orange County. The “My First Home” Program will be available until all of the funds are expended. Program Administration and Contingency As part of the FY 2021-2022 City Budget, a portion of the City’s Inclusionary Housing Funds are already allocated for down payment assistance but it is anticipated that this one–time program will require additional staff time, administration and marketing efforts. Staff estimates needing $19,809 for these additional efforts, as well as a contingency of $1,981 for any unanticipated costs. The Inclusionary Housing Administrative Funds needed were already budgeted in the FY 2021-2022 City Budget as part of the costs required to administer the Housing Opportunity Ordinance: Project Item Total “My First Home” Program $1,200,000 Inclusionary Housing Administrative Funds $ 19,809 Contingency $ 1,981 Total Delivery Cost for Project $1,221,790