HomeMy WebLinkAbout2017-02-22 e-packet@6:31Wednesday, February 22, 2017
6:31 PM
City of South San Francisco
P.O. Box 711 (City Hall, 400 Grand Avenue)
South San Francisco, CA
Municipal Services Building, Council Chambers
33 Arroyo Drive, South San Francisco, CA
Special City Council
Special Meeting Agenda
February 22, 2017Special City Council Special Meeting Agenda
NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of
California, the City Council of the City of South San Francisco will hold a Special Meeting on
Wednesday, February 22, 2017, at 6:31 p.m., in the City Council Chambers, Municipal Services
Building, 33 Arroyo Drive, South San Francisco, California.
Purpose of the meeting:
Call to Order.
Roll Call.
Agenda Review.
STUDY SESSION
Study session regarding Down Payment Assistance Program for City Employees.
(Richard Lee, Director of Finance)
1.
Adjournment.
Page 2 City of South San Francisco Printed on 3/16/2017
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:17-207 Agenda Date:2/22/2017
Version:1 Item #:1.
Study session regarding Down Payment Assistance Program for City Employees.(Richard Lee,Director of
Finance)
RECOMMENDATION
It is recommended that the City Council review the information in this staff report and provide staff
with direction regarding the proposed Down Payment Assistance Program outlined below.There are no
actions for consideration at this time.
BACKGROUND/DISCUSSION
Staff requests that the City Council consider implementation of a Down Payment Assistance Program
(Program)for City employees.The Program would be in furtherance of the City’s primary strategic goals to:1)
Attract,train,support and retain a high performance team;and 2)Build and maintain a sustainable city by
providing a full range of employment and housing options.
The City has successfully implemented similar housing assistance programs in the past,most recently with the
First Time Homebuyer Program,which was approved by the City Council via Resolution in 2002 (Resolution #
71-2002).The First Time Homebuyer Program was funded by the former South San Francisco Redevelopment
Agency (RDA)as well as Community Development Block Grant funds.The First Time Homebuyer Program
ended in 2012 due to dissolution of the RDA.However during the tenure of the First Time Homebuyer
Program,it provided assistance to 95 residents and employees of businesses located in South San Francisco
(including South San Francisco Unified School District and City of South San Francisco)to purchase a home
within South San Francisco.
In the current home loan market,as part of the underwriting process,prospective borrowers must provide
documented evidence that they will have sufficient liquid assets after purchase of the property to cover 12
months of principal,interest,property tax,homeowner’s insurance (PITI),and when applicable,mortgage
insurance premium and homeowner’s association dues.In 2016,the average sales price for a single family
home in South San Francisco was $901,000.Assuming the borrower provides a 20 percent down payment,they
would need to provide evidence of $51,800 in liquid assets to meet the PITI requirements,a requirement that
may dissuade or prevent prospective home buyers from securing a home loan.This is in addition to any
required down-payment, typically 20% of the purchase price.
Given the prohibitive level of assets required for the loan qualification process,staff recommends that the City
Council consider implementing a Down Payment Assistance Program with the following parameters:
·Eligibility:Open to full-time regular employees of the City of South San Francisco.Verification of
employment status would be conducted by the Human Resources Department.
·Loan Amount:Maximum of 15 percent of property purchase price,up to $100,000.Interest rate would
be linked to the interest rate with the Local Agency Investment Fund,currently earning 0.75 percent.
Loans will be amortized over a 30-year term.Payments during the first five years would be interest only
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File #:17-207 Agenda Date:2/22/2017
Version:1 Item #:1.
Loans will be amortized over a 30-year term.Payments during the first five years would be interest only
payments,with principal payments and interest payments beginning in the sixth year.The loan would
be secured by a second deed on the property,otherwise known as a “silent second”loan.Similar to the
First Time Homebuyer Program,the loan would be serviced by a third party administrator.Program
participants must be approved by a first lender prior to obtaining a loan reservation from the City’s
Down Payment Assistance Program.
·Geographic Restrictions:Property must be located within the boundaries of the City of South San
Francisco.
·Funding Source: Infrastructure Reserves.
·Shared appreciation:If the employee sells or refinances the property,the City receives a pro rata share
of the original loan to value ratio.For example,if the City loans an employee $100,000 to purchase a
property for $900,000,the original loan to value ratio is 11.11 percent.If the employee sells the
property for $1.2 million, the City’s shared appreciation, to be repaid, would be $133,333.
Based on a recent survey of City employees,42 expressed interest in the Down Payment Assistance Program.
Of those expressing interest,21 would apply for funding in 2017-2018,ten would apply for funding in 2018-
2019, six would apply for funding in 2019-2020, and five would apply in a future fiscal year beyond 2020.
FUNDING
Assuming all loans are paid back,the Program would have a net zero financial effect on the City long term,
given the interest rate link to LAIF,while providing a low interest rate incentive for employees.Assuming
Council concurrence,staff will include in the proposed FY 2017-2018 budget seed money for this program
sufficient to meet any immediate demand.As more funds are needed,if any,staff will return to Council for
appropriations.
CONCLUSION
The proposed Down Payment Assistance Program aligns with the City’s strategic plan,and serves to retain a
high performance team in South San Francisco.
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