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Update to the Homebuyer Down Payment Assistance Loan Program March 6, 2018 Page 3 The third proposed revision to the program is to create a loan forgiveness incentive for returning Santa Ana high school students. Prospective homebuyers who graduated from a high school located in Santa Ana and have a 4 -year college degree will be eligible for a loan forgiveness up to $40,000. Under this loan forgiveness incentive, $10,000 will be forgiven every five (5) years over a twenty (20) year period up to a maximum of $40,000. The fourth proposed revision to the program is to require participants to live and/or work in Santa Ana, with an exception for U.S. military veterans. Consistent with the live and/or work requirements of the Housing Choice Voucher Administrative Plan, borrower(s) must be a resident of Santa Ana and/or work in Santa Ana at least 32 hours per week for at least the last 6 months. Participants must be first-time homebuyers in that they have not had ownership interest in, or have not held title to a principal residence during the three years preceding the purchase of the property. The homebuyer must attend an in-person homeownership training from a HUD - approved counseling agency. Additional eligibility requirements for the program are listed in the revised program guidelines (Exhibit 1). Following approval by the City's Loan Committee, the City will enter into a loan agreement with the approved homebuyer(s) using either the CDBG or Inclusionary Housing funds as determined by the committee (Exhibit 2). CDBG funds in the amount of $200,000 were approved as part of the FY 17-18 Annual Action Plan submitted to the U.S. Department of Housing and Urban Development for homebuyer down payment assistance, and City Council appropriated the funds as part of the annual FY 17-18 budget adoption. Staff recommends an initial $400,000 in Inclusionary Housing funds and $200,000 in existing CDBG funds be used for this program. The program will continue to be monitored and recommendations for increases in the allocation of funds for this program will be made in the future as part of the annual action plan and budget adoption if the program is successful. With these proposed revisions, homebuyers will once again be able to qualify for the Homebuyer Down Payment Assistance Loan Program and become Santa Ana homeowners. STRATEGIC PLAN ALIGNMENT Approval of this item allows the City to meet Goal #5 — Community Health, Livability, Engagement & Sustainability, Objective #3 (Facilitate diverse housing opportunities and support efforts to preserve and improve the livability of Santa Ana neighborhoods) and Objective #4 (Support neighborhood vitality and livability). FISCAL IMPACT Funds are budgeted and available for anticipated expenditure as follows: Program Account No. FY Amount Inclusionary Housing Fund 41718820-69152 2017-18 $ 80,000 2018-19 $320,000 CDBG 13518782-69152 2017-18 $ 80,000 2018-19 $120,000 Totals $600,000 25C-3