RDA funding for first time homebuyers leads to Council discussion

February 02, 2007
Santa Paula City Council

The Redevelopment Agency’s program for first time homebuyers was questioned at the January 16 meeting.

By Peggy KellySanta Paula TimesThe Redevelopment Agency’s program for first time homebuyers was questioned at the January 16 meeting. Councilman Bob Gonzales asked how the funds - $55,000 - are awarded, “a grant versus a gift,” how the availability of the funds is advertised, and “if two or more people who apply for the same amount of money - how is it divided,” and related issues.Assistant to the City Manager Elisabeth Amador gave a summary of the program and its activity to date. The program provides a forgivable loan where the homebuyer enters into a second deed of trust with the city. “It has a 10-year term, and every year” the loan is forgiven by 10 percent.If the homebuyer sells, rents or transfers the property, the standing balance must be repaid to the city plus a percentage of the equity gained. “It’s all in the agreement they sign,” said Amador.If there is more than one applicant, their documents are date stamped and reviewed and, if deemed complete, they are required to show proof of income, their credit is reviewed and they must attend a workshop on home ownership. Applicants must not have owned property during the three years prior to the application.“They must come in with 3 percent of their own funds,” said Amador. Competition for the funds could only occur if staff, at “that exact same moment over the counter,” received multiple applicants. Amador added that city residents or those employed in Santa Paula receive priority.Since the program was launched in 2005 it has been advertised through various sources, including a public meeting for interested applicants. Although a number were interested in the program, “Most were not able to get approval from lenders” due to their low income bracket... we went about a year without much success.”
Last year the city did a mass mailing in utility bills advertising the first time homebuyers and the rehabilitation programs, which proved successful. Amador said that the city also held a public meeting for lenders and real estate agents to “let them know we were looking for qualified applicants,” launching almost daily contact with the city about the program.Condominium developments have stimulated further interest by applicants in the program, and “We’d probably have another five or six if we could do full loans.”City Attorney Karl Berger reminded the Council that funding for the housing programs is “not city money, this is Redevelopment Agency money” targeted for such use.“I’m curious... how many applicants have been received over the last year and how many qualified,” asked Councilman Ralph Fernandez.Up to 40 people have taken some or full part in the program, and to date “we’ve only had six applicants” who received a total of $328,000 approved by the Council acting as RDA directors.“I assume the rest did not qualify,” said Fernandez, but Amador said a few decided they did not want to participate due to the restrictions imposed by the program.Gonzales asked if program funds could ever be at risk, and City Manager Wally Bobkiewicz noted that the city had faced some risk for future funding by past inaction in expending funds targeted for such programs.

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