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Home My WebLink AboutMINUTES - 08061991 - IO.2 I.O.-2 TO: BOARD OF SUPERVISORS Contra FROM: INTERNAL OPERATIONS COMMITTEE f Costa Count Jul 22 1991 !`"° DATE: y � f -�P� C UUN REPORT REGARDING A SHARED EQUITY/SHARED APPRECIATION SUBJECT: AFFORDABLE HOUSING PROPOSAL FOR THE OAKLEY REDEVELOPMENT PROJECT AREA SPECIFIC REQUEST(S)OR RECOMMENDATION(S)8 BACKGROUND AND JUSTIFICATION RECOHM]ENDATIONS: 1. Request staff of the Community Development Department to continue their review of the Oakley Redevelopment Proposal with the Oakley Municipal Advisory Council as is outlined in the attached staff report to our Committee. 2. Request staff of the Community Development Department to review the Oakley Redevelopment Proposal for a Shared Equity/Shared Appreciation Affordable Housing Program with the Housing Trust Fund Task Force at the Task Force' s second meeting. 3 . Request staff of the Community Development Department to make a further status report to our Committee on October 14, 1991 on this subject. BACKGROUND: On April 2, 1991 the Board of Supervisors approved a status report from our Committee on this subject. At that time the Deputy Redevelopment Director was asked to do a pro forma analysis of this program for the Oakley Redevelopment Project Area. As is noted in the attached staff report, the redevelopment increment figures are not yet available for the Oakley CONTINUED ON ATTACHMENIPeS Y SIGNATURE: RECOMMENDATION OFrT ATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE 1 SIGNATURES: CHRODER SUNNE WRIGHT MCP& ACTION OF BOARD ON August 6, 1991 APPROVED AS RECOMMENDED OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE X UNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. CC: please See Page 2. ATTESTED August 60 1991 PHIL BATCHELOR,CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR M382 (10/88) BY CL 01,4. 1 M 14 DEPUTY • I .O. -2 Redevelopment Project Area. In addition the Housing Trust Fund Task Force has not yet met. Staff has reviewed the proposal once with the Oakley Municipal Advisory Council (GMAC) . An additional review is scheduled for August 19, 1991. We are asking that staff report this matter back to our Committee following their second review with the GMAC and following the review of the proposal with the Housing Trust Fund Task Force. cc: County Administrator Jim Kennedy, Deputy Redevelopment Director CONTRA COSTA COUNTY REDEVELOPMENT AGENCY DATE: July 16, 1991 TO: Internal Operations Committee Supervisor Robert 1. Schroder Supervis /u/nne . McPeak FROM: Jim Ken d v Depu Direct - development SUBJECT: Sh red ity Program : Staff was requested to: 1 . Prepare a pro-forma analysis for the Oakley Redevelopment Project Area relative to the shared Equity/Shared Appreciation concept proposed by Warren Street Equities; 2. Have the Housing Trust Fund Task Force review the concept; and 3. Brief the Oakley Municipal Advisory Committee (GMAC) on this and other redevelopment issues. A status report follows. I. Pro-Forma Analysis Unfortunately the 1991-9.2 Tax Increment figures are not yet available. Various estimates of the 1991-92 Tax Increment and resultant housing set-aside for Oakley are shown on Table 1 . II. Housing Trust Fund Task Force Review The Housing Trust Fund Task Force will undertake its review once it has been activated. III. Briefing of Oakley Municipal Advisory Committee (OMAC) Staff has provided an overview briefing to OMAC on redevelopment issues. An initial briefing was provided on June 18. A second briefing, with more focus, is scheduled for August 19. This shared equity concept was mentioned in the June overview session with GMAC, and will be one of the subjects reviewed in more detail in August. SRA 170fioehereq.mem TABLE 1 OAKLEY TAX INCREMENT PROJECTIONS ' (7/12/91) GROSS HOUSING MAXIMUM EQUITY SHARE TAX INCREMENT SET-ASIDE BONDABLE DEBT CAPACITY## 1990-91 Actual $214,000 $42,800 1991-92 Proj @ 8.4%# $231,976 $46,395 $421,775 8.8 1991-92 Proj @ 15.53%* $247,234 $49,447 $449,517 9.4 1991-92 Proj @ 38.04%#* $320,220 $64,044 $582,218 12. 1 FOOTNOTES Avg increase in County AV Avg increase in AV in Antioch 4E* Avg increase in AV in Brentwood ��;k Based on MLS Avg SFD Resale Price in Oakley (1990) of $240,000, & 20% Public Equity Share CONTRA COSTA COUNTY REDEVELOPMENT AGENCY DATE: July 16, 1991 TO: Internal Operations Committee Supervisor Robert I. Schroder Supervi u e W. McPeak u Su e rv' , r FROM: Jim Ken d ir Deputy irect edevelopment I Borrowing SUBJECT: Rede e o nt Borrowing for Housing Set-Aside Funds Overview Capitalizing the future stream of redevelopment housing set-aside funds has significant policy consequences. As a general proposition, if tax exempt bonds are issued, the proceeds cannot be used to make loans to developers, home- owners, or non-profits. Staff does not believe the answer lies in simply issuing taxable bonds or to start making grants instead of loans. Staff recommends that a careful analysis of precisely how the housing .set-aside funds are programmatically going to be used, and the tax and legal implications of so doing, be conducted. Staff suggests a two-step process to achieve this: A. Undertake a process of developing equity sharing policies, loan documentation, and lending procedures, and integrating them with conventional mortgage lending process. B. Integrate an analysis of redevelopment housings et-aside borrowing into the Redevelopment Agency's tax exempt borrowing plans for 1991-92; and 11. Band issues Because of significant economies of scale, bond issues secured by redevelopment housing set-aside funds are generally incorporated into larger tax exempt tax allocation bond issues for infrastructure. The County Redevelopment Agency will be undertaking such an issue for its Pleasant Hill BART Station Redevelopment Project Area in 1991-92. Incorporating financing needs of the other Redevelopment Project areas will be assessed. CONTRA COSTA COUNTY COMMUNITY DEVELOPMENT DEPARTMENT DATE: March 22, 1991 TO: Internal Operations Co Operations Supervisor Rob C der i M P, Supervisor nne McPeak FROM: Jinn nedy I Dep ty Director ed elopment tal Staff Report on Shared Equity Proposal SUBJECT: SupL2 One of the prospective sources of equity funds would be proceeds from the sale of bonds secured by redevelopment agency tax increments. The law firm of Jones Hall Hill and White are of the opinion that such a bond issue would be tax exempt and legal. under State Redevelopment Law and federal tax law, under . rl:*: . .:-)r,.s. With respect to federal tax law, the key determination is whether the mortgage subsidy bonds," as defined. If they are "mortgage subsidy bonds," they would be subject to the restrictive first time homebuyer, income limits and purchase price limits of such bonds. The Warren Street Equily proposal was conceived as a program for a higher income group than the typical first time homebuyer under County bond programs. Jones Hall Hill and White is of the opinion that bonds secured by redevelopment agency tax increments would be tax exempt IF the redevelopment agency interest is that of a true equity partner where any return on equity is realized only upon sale of the property. Requiring a homeowner to repay at a date certain, as the Warren Street Equity proposal is designed, would result in the interest of the redevelopment agency being more of a "loan" rather than equity. A loan could be made only pursuant to rules governing mortgage subsidy bonds. hs/ra53:iocomm.mein