Agenda Item 8 Reviewed: AGENDA REPORT City Manager A" X— P Finance Director N/ A MEETING DATE: MARCH 7, 2018 TO: JEFFREY C. PARKER, HOUSING AUTHORITY EXECUTIVE DIRECTOR FROM: TUSTIN HOUSING AUTHORITY SUBJECT: AUTHORIZATION TO CURE HOMEOWNER DEFAULT AND SELL CITY OF TUSTIN- OWNED AFFORDABLE HOME AT 370 FLYERS LANE AT MARKET RATE SUMMARY The Tustin Housing Authority (" Housing Authority") is seeking authorization to cure homeowner default and sell the City of Tustin - owned affordable home at 370 Flyers Lane at market rate. RECOMMENDATION It is recommended the Tustin Housing Authority Commission: 1) Authorize the Housing Authority to Cure the Homeowner Default and Sell the City of Tustin - Owned low income affordable home at 370 Flyers Lane, located in the Tustin Field I development, at a market rate price; and 2) Authorize the Housing Authority Executive Director, or his designee, to negotiate a sales price at the market rate; and 3) Direct the Housing Authority Executive Director to schedule a Closed Session Meeting when a prospective purchaser is identified in order to receive Commission approval for the negotiated sale. FISCAL IMPACT The Tustin Housing Authority will utilize Low and Moderate Income Housing Asset Funds (" LMIHAF") to pay off the first lien against 370 Flyers Lane and will recover these funds through the sale of this unit at market rate. The proceeds will be deposited back into the LMIHAF. 164
Transcript
Agenda Item 8
Reviewed:
AGENDA REPORT City Manager A"X—PFinance Director N/ A
MEETING DATE: MARCH 7, 2018
TO: JEFFREY C. PARKER, HOUSING AUTHORITY EXECUTIVE DIRECTOR
FROM: TUSTIN HOUSING AUTHORITY
SUBJECT: AUTHORIZATION TO CURE HOMEOWNER DEFAULT AND
SELL CITY OF TUSTIN- OWNED AFFORDABLE HOME AT 370
FLYERS LANE AT MARKET RATE
SUMMARY
The Tustin Housing Authority (" Housing Authority") is seeking authorization to curehomeowner default and sell the City of Tustin -owned affordable home at 370 FlyersLane at market rate.
RECOMMENDATION
It is recommended the Tustin Housing Authority Commission:
1) Authorize the Housing Authority to Cure the Homeowner Default and Sell the City ofTustin -Owned low income affordable home at 370 Flyers Lane, located in the Tustin
Field I development, at a market rate price; and
2) Authorize the Housing Authority Executive Director, or his designee, to negotiate asales price at the market rate; and
3) Direct the Housing Authority Executive Director to schedule a Closed SessionMeeting when a prospective purchaser is identified in order to receive Commissionapproval for the negotiated sale.
FISCAL IMPACT
The Tustin Housing Authority will utilize Low and Moderate Income Housing AssetFunds (" LMIHAF") to pay off the first lien against 370 Flyers Lane and will recover thesefunds through the sale of this unit at market rate. The proceeds will be deposited back
into the LMIHAF.
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COORELATION TO THE STRATEGIC PLAN
The sale of 370 Flyers Lane as a market rate unit supports Goal C. sustaining long- term financial strength and enhancing capacity to provide a sustainable level of Cityservices.
BACKGROUND
A Notice of Default was recorded on October 18, 2017, for 370 Flyers Lane, a low
income unit in the City's Affordable Housing Program. The Notice was recorded as a
result of the homeowner being in violation of the affordable housing documentsexecuted between the homeowner and the City. On January 16, 2018, the TustinHousing Authority Commission (" Commission") authorized the Housing Authority to curethe homeowner's default. On February 14, 2018, the City successfully purchased thesecond at the Trustee' s Sale.
Now that the City has cured the default on the second lien, it is necessary to completethe City's purchase by paying off the first lien against the property. The payoff amount
will be less than $ 150,000. Without taking these actions, the City will lose its investmentin the affordable unit.
Upon completing the purchase of the unit, the Housing Authority is proposing to convertthe affordable unit to a market rate unit and sell the unit as such. The City Attorney'sOffice and Special Counsel to the Housing Authority have confirmed the Commissionhas the authority under Health and Safety Code (" HSC") Section 33334.3( f)(B) to sell
the units in excess of the otherwise permitted affordable price as long as the funds aredeposited into the LMIHAF and spent in accordance with HSC Section 34176. 1.
Under HSC Section 34176. 1, the first priority of the LMIHAF is to monitor and preservethe long-term affordability of units subject to affordability covenants, of which there willbe 279 affordable ownership units in Tustin after the recommended action removes thisunit from the Authority' s inventory. Since there is no other funding source tosupplement the LMIHAF, the proceeds from the market rate sale of this unit willincrease the current LMIHAF balance of approximately $ 2, 700,000 and insure
continued funding for these activities. As a result, staff is recommending theCommission approve the market rate sale of this unit for the purpose of increasing theLMIHAF and insuring there are operational funds for an additional one to two yearsbefore funds are exhausted.
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When a prospective purchaser is identified for the unit, a Closed Session meeting willbe scheduled to discuss and receive approval for the negotiated sales price. Staff is
available for any questions the Commission may have.
ohn Buchanan Jerry Craigor of Economic Development Deputy Dire for mic Development
