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HomeMy WebLinkAbout04. Habitat Dinwiddie AGENDA MEMO DATE: July 13, 2010 TO: Mayor and Members of the City Council FROM: Office of the City Manager Brian Saeki, Director of Community Development SUBJECT: PROPOSED ACQUISITION OF 7036 DINWIDDIE STREET BY HABITAT FOR HUMANITY OF GREATER LOS ANGELES RECOMMENDATION It is recommended that the City Council approve a commitment of $182,000 in HOME funds, to Habitat For Humanity, for the acquisition of 7036 Dinwiddie Street – Unit 12; and authorize staff to prepare the necessary documents to initiate the transaction. BACKGROUND The City of Downey (City) is recipient of the federal Home Investment Partnership Grant (HOME). This grant requires that the City set-aside not less than 15% of the HOME grant for non-profit housing developers. The non-profit developer, also referred to as a Community Development Housing Organization (CHDO), must use these funds to produce affordable housing units. The City’s set-aside fund for CHDO’s, has produced 19 housing units since 1994. On July 11, 2008 the City Council approved an Agreement with Habitat for Humanity of Greater Los Angeles (H4H), which reserved $211,000 in HOME funds for affordable housing activities. This Agreement specified that H4H would undertake activities involving the acquisition and rehabilitation of properties, including bank-owned properties. Under the current Agreement, H4H has produced one housing unit. DISCUSSION: Habitat for Humanity is requesting a commitment of HOME funds to purchase the subject property. Habitat proposes to rehabilitate this unit and then sell it to a HOME- income-eligible family. The unit is a three-bedroom townhouse and is located in a City designated Neighborhood Preservation Area. The property is a foreclosure property, currently owned by Wells Fargo Bank. The Bank has made the property available to Habitat for Humanity under the First-Look Program. This is a Wells Fargo Bank Program which offers foreclosed property first to non-profit housing developers before offering for sale to the private sector. The subject property is available from Wells Fargo bank for $273,000, and Habitat for Humanity is requesting $182,000 to complete the purchase of this property. H4H will finance the balance of the transaction through Wells Fargo Bank. After the acquisition CITY OF DOWNEY, CALIFORNIA is completed, H4H will utilize volunteers to repair and upgrade the property and will sell the unit to an eligible household. The home would be sold at a price to cover all development costs, estimated at $289,600. The HOME funds will remain in the project as a mortgage in the form of a silent second deed of trust. The proposed use and source of funding for this project are as follows: Acquisition and Project Funding: $ 273,000 Property Purchase Price $ 6,000 Acquisition Transaction Fees $ 10,600 Repairs and improvements $ 289,600 Total Proposed Project Financing Sources: $ 107,600 Wells Fargo Bank $ 182,000 Downey HOME funds 289,600 Total of Sources $ Staff is supportive of the proposed project. The proposed project is an eligible use of the HOME funds, and the project is located in a City-approved Neighborhood Preservation Area. The project would also add another unit to the inventory of City-assisted affordable housing units. If City Council approves programming the HOME funds for this project, staff will draft the necessary documents and agreements for the project and will bring back these documents for City Council approval during a future meeting. FISCAL IMPACT: While there is no immediate fiscal impact by approval of this item, the HOME fund will be expending $182,000 once the implementing documents are approved.