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Addendum to the FY 2023-24 RFP for Affordable Homeownership Opportunities <br />February 20, 2024 <br />Page 2 <br />Bedrooms <br />HOME Maximum Subsidy <br />0 Bedrooms <br />$173,011 <br />1 Bedroom <br />$198,331 <br />2 Bedrooms <br />$241,176 <br />3 Bedrooms <br />$312,005 <br />4+ Bedrooms <br />$342,482 <br />The difference between the total development cost of a home and the maximum <br />purchase price affordable to households earning 80% Area Median Income (AMI) <br />exceeds at least $500,000 per unit for a newly constructed home in Santa Ana. <br />However, the funds provided through the RFP have maximum per -unit subsidy <br />limits as shown above, which leaves a financial gap of more than $200,000 to <br />$300,000 per home. No other identifiable public or private funds are available to <br />fill this gap. <br />• Buyer qualification/equity considerations/etc.: There are numerous challenges <br />related to selecting and qualifying buyers for affordable homeownership <br />opportunities. Buyers need to be able to qualify to purchase the home based on <br />AMI, and at the same time, they need to qualify for a first mortgage necessary to <br />close escrow. <br />• Interest rate environment: The current high interest rate environment creates a <br />situation in which the maximum affordable sales prices are very low, since a <br />large portion of the maximum payment goes toward interest. It is likely that this <br />situation will continue for the foreseeable future. <br />Developers worked diligently to formulate proposals to respond to the RFP, but the <br />complexities of affordable homeownership finance were too difficult to overcome. <br />Meanwhile, staff assisted potential respondents and answered all questions in a <br />complete and timely manner. In addition, a comprehensive marketing strategy ensured <br />widespread awareness of the RFP. This included publication on the City's official <br />website, a public notice in the OC Register, and targeted emails to affordable housing <br />membership associations such as the Kennedy Commission, 2-1-1 Orange County, and <br />the Southern California Association of Nonprofit Housing. Additionally, a letter was <br />emailed to developers and nonprofit organizations who had previously expressed <br />interest and were part of the Community Development Agency's RFP Database. <br />Addendum to the RFP <br />Pursuant to Section III of the City's Affordable Housing Funds Policies and Procedures, <br />the Community Development Agency, upon City Council approval, may issue a Request <br />for Proposals (RFP) from available funds. The RFP must be open and provide sufficient <br />time for applicants to identify an eligible site and complete and submit a proposal. This <br />Addendum follows this prescribed process and although the initial response to the RFP <br />fell below expectations, staff remains committed to the objective of providing affordable <br />