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HomeMy WebLinkAboutMINUTES - 06232009 - C.55RECOMMENDATION(S): APPROVE the Second Substantial Amendment to the Community Development Block Grant FY 2008/09 Action Plan to incorporate changes related to the Neighborhood Stabilization Program (NSP) funds. FISCAL IMPACT: No General Fund impact. Neighborhood Stabilization Program (NSP) funds are provided to the County on a formula allocation basis through the U.S. Department of Housing and Urban Development (HUD). CATALOG OF FEDERAL DOMESTIC ASSISTANCE (CFDA) NUMBERS Community Development Block Grant (CDBG) Program – 14.218 BACKGROUND: On April 15, 2008, the Contra Costa County Board of Supervisors approved the County’s FY 2008/09 Annual Action Plan of the Five Year (2006 – 2010) Consolidated APPROVE OTHER RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Action of Board On: 06/23/2009 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF SUPERVISORS AYE:John Gioia, District I Supervisor Gayle B. Uilkema, District II Supervisor Mary N. Piepho, District III Supervisor Susan A. Bonilla, District IV Supervisor Federal D. Glover, District V Supervisor Contact: Kara Douglas 335-7223 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: June 23, 2009 David J. Twa, County Administrator and Clerk of the Board of Supervisors By: Celicia Nelson, Deputy cc: C. 55 To:Board of Supervisors From:Catherine Kutsuris, Conservation & Development Director Date:June 23, 2009 Contra Costa County Subject:Neighborhood Stabilization Program, Second Substantial Amendment to the Community Development Block Grant FY 2008/09 Action Plan BACKGROUND: (CONT'D) Plan for Community Development Block Grant (CDBG) funds. On November 18, 2008, the Board of Supervisors approved a Substantial Amendment to the Action Plan to include the Neighborhood Stabilization Program (NSP). The purpose of this second amendment to the Action Plan is to incorporate the following three changes related to NSP: 1. Add special needs housing providers as eligible purchasers of the rehabilitated homes. Activity 1, Revolving Fund for Purchase and Rehabilitation, was originally designed to be a program where rehabilitated homes would be sold to low, moderate, or middle income (LMMI) purchasers. Different groups who work with and/or house people with special needs commented that they would like the opportunity to purchase these homes. This amendment would expand this activity to sell homes to LMMI or agencies that would use the home for housing for people with special needs. 2. Add an analysis of presumed affordability for the target areas as an alternative method of insuring long term affordability of the rehabilitated homes. Activity 1, Revolving Fund for Purchase and Rehabilitation, stated buyers of the rehabilitated homes would enter into either resale restrictions or shared appreciation loans to ensure the long term affordability of those homes. However, the NSP regulations allow a third alternative: Presumed affordability of homes in the affected neighborhoods. Presumed affordability will be used as the affordability mechanisms in all High Priority Areas, except Oakley, when the home is sold at a market price and without NSP downpayment assistance. (An analysis of current and projected home prices in Oakley did not support the presumed affordability approach.) Homes sold below market, or with NSP downpayment assistance, in all High Priority Areas will have a recapture provision equal to the difference of the market value and the sales price. The High Priority Areas are continuing to decline in value. Contra Costa County has significant inventory of vacant homes, many of which are affordable without subsidies or assistance to middle income purchasers. The current market is providing more choice in housing types and locations than has been seen in over ten years. Home sellers with existing resale restrictions are not finding buyers willing to enter into resale restrictions, even in highly desirable neighborhoods. The resale restriction is the only reason given by real estate agents as the negative feature of these homes. Therefore, requiring resale restrictions in the neighborhoods that are facing significant decline due to the foreclosure crisis will effectively prohibit home sales. An analysis of the High Priority areas showed that homes in these neighborhoods are, in relation to the larger Contra Costa market, modest in size, amenities, and price, and are projected to remain so over the life of the affordability period. While geographically disbursed, the High Priority areas are similar in many respects. The homes are on average about 15 years older and 20 percent smaller than typical in the County. Home ownership rates average 54 percent compared to the County average of 69 percent. Part, or all, of each of the High Priority areas are designated redevelopment areas (RDAs). The RDAs use tax increment financing to reinvest in the communities, improve infrastructure, and facilitate residential and commercial investment. To determine affordability over time, the change in median price, median incomes, and affordable purchase prices were estimated based on historic information. This analysis showed that homes in the High Priority areas are likely to stay affordable to middle income (incomes at or below 120% of the area median income) buyers over time. North Richmond is expected to remain affordable to moderate income (80% AMI) over time. 3. Fund activity 5, Demolition and Land Banking, with up to $200,000. During the drafting of the Substantial Amendment, it was assumed that land banking activities would be associated with the purchase of sites with substandard structures that required demolition. However, there are foreclosed sites that could be obtained for very little or no money. The funds budgeted to this activity would be used for demolition, site security and holding costs. Funds for this activity would come from either Activity 1, Revolving Fund for Purchase and Rehabilitation and/or Activity 3, Downpayment/Shared Appreciation Loans.