To:   HONORABLE MAYOR                             From:   Leslye Corsiglia

                        AND CITY COUNCIL                                              

 

   Subject:   THP REVISIONS                                       Date:   December 11, 2003

 

REASON FOR SUPPLEMENTAL

 

This supplemental report provides additional information for consideration and includes an additional recommendation for City Council approval.

 

RECOMMENDATION

 

Adoption of a resolution modifying the Teacher Homebuyer Program as follows:

 

  1. Decreasing the maximum loan amount from $40,000 to $25,000 for teacher households that earn between 90% and 120% of Area Median Income (AMI).

 

  1. Continuing the $40,000 current maximum loan for teacher households earning less than 90% of the AMI.

 

  1. Establishing a maximum home purchase price of 95% of the median home price for the San José Metropolitan Area.

 

  1. Making the proposed changes applicable to home purchase contracts executed after January 31, 2004.

 

  1. Authorizing the Director of Housing to negotiate and execute all necessary documents evidencing the program changes on behalf of the City.

 

BACKGROUND

 

At the December 16, 2003, City Council meeting, the City Council will consider a number of modifications to the Teacher Homebuyer Program (THP).

 

ANALYSIS

 

The supplemental memo is intended to make clear that the current maximum loan amount of $40,000 is still available to teacher households earning less than 90% AMI (see recommendation #2 above). 

 

The purpose of the proposed reduction in the maximum loan amount to teacher households earning above 90% of median income is to achieve cost savings by “stretching” the current funds to assist more teachers. Based on the Department’s analysis of teacher loans closed since January 1, 2003 to date, the proposed change could result in a savings of approximately $495,000.   An additional 12 to 20 teachers could purchase a home in San José with the current annual funding allocation for the program.

 

The proposed purchase price limit benchmark of 95% of area median purchase price will allow the Housing Department to leverage traditional HOME funds and the “American Dream” HOME set-aside recently approved by the U.S. Congress for home purchase assistance. 

 

PUBLIC OUTREACH

 

Not applicable.

 

COORDINATION

 

The preparation of this supplemental report has been coordinated with the City Attorney’s Office.

 

CEQA

 

Not a project.

 

 

LESLYE CORSIGLIA

Director of Housing