O-2014-3506 amend FY 2013-2014 Budget

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REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: June 10, 2013 Requested By: Tim Tietiens Department: Planning Report: X Resolution: Ordinance: _ Exhibits: 1. Marketing Report Appropriation Source of Funds: General Fund Account Number: 0016146 515 9050 Amount Budgeted: N/A Amount Requested: $30,000 Budgeted Item: _YES ANO SUMMARY & RECOMMENDATION In 2012, City Council authorized the Planning Department to apply for the latest round of HOME funding from Harris County Community Services Department (HCCS) to build six new homes via the Northside Neighborhood IV Program of La Porte. This represents part of an overall revitalization strategy that includes replacement and infill housing to facilitate the goal of an improved housing stock. The grant award was received and is now being implemented in two phases of three homes each. The phase one construction contract, currently underway, was awarded to Bayway Homes in June 2012 and the homes are approximately 75% complete. At the same meeting, Main Properties was awarded the contract for listing, marketing and prequalification of eligible buyers. As of the preparation of this summary, significant work has been done to attain qualified buyers, as shown in the attached exhibit. The task of finding eligible buyers for these homes is much more difficult than on the open market due to the maximum income requirements, credit scoring minimums and the mortgage qualifications necessary for a moderate income family to obtain a loan for a $105,0004115,000 home. During the last HOME program, completed in 2011, the City encountered similar difficulty in finding qualified buyers. Even with the incentive package which included a $14,500 HCCS funded down -payment per unit for eligible homebuyers, the difficulty persisted. In response to that problem, HCCS was able to apply an additional $10,000 per unit from a separate funding source to widen the narrow window of eligible buyers. In addition, the City obtained the services of Main Properties at that time to list, market and prequalify the buyers. Those two actions together, yielded immediate program results. In the current program, HCCS still funds the $14,500 down -payment, however, the additional $10,000 is no longer available from HCCS. It was anticipated that the improving economic conditions might have negated the need for additional funding, but given the status of buyer activity, staff was asked to allocate up to $10,000 per unit to enhance the pool of qualified applicants. ($30,000 in this phase via budget adjustment, and $30,000 in the next phase, if necessary, via departmental request in the upcoming operating budget) It is important to recall that HCCS implemented a significant programmatic change with this grant; requiring that the homes be sold within 90 days of completion for occupancy. If this is not accomplished within the time frame referenced, the city may be required to operate them subsequently as affordable rental housing. It is the opinion of staff and Main Properties that the additional funds would avoid that consequence. It