TITLE
1) Recommendation to respectfully request The Long Beach Housing Development Company to consider the following:
a. To allow the funds already allocated for homeowners assistance to include low income applicants.
b. To change the requirements of Long Beach residents only to preferred Long Beach residents. The owner would demonstrate good faith best efforts to attract Long Beach residents.
2) All City resources, with zero net general fund cost, should be utilized to attract new home ownership opportunities in Long Beach which would include but not limited to:
Email Blasts Port Newsletters
Neighborhood Newsletters Heart of the City Program Segment
Community Meetings Weed and Seed Outreach
Section 8 Housing Materials Workforce Development Outreach
Utility Bills and Public Mailers Community Health Worker Outreach
Printed Materials at City Facilities City Website
On Hold Messages City Council Meeting "Crawlers"
Electronic Message Boards Printed Materials at City Facilities
DISCUSSION
Olive Court property requires bold action to bring this development to a successful conclusion. The new ownership has taken aggressive steps to make this project a winwin for the existing homeowners, the City of Long Beach, and new purchasers.
At the request of the LBHDC the new developer has improved the unit finish, enhanced project security, reinitiated full-time sales activity, conducted a marketing campaign, joined the Chamber of Commerce and conducted extensive community outreach. All the while promoting the city's Second Mortgage Assistance Program (SMAP). The developer has spent over $638,000 on making it possible to sell the remaining properties.
Over $252,000 has been spent on upgrading the floor, bath and security of the property. This was done to make the property more attractive to purchase. Over $150,000 has been spent on marketing and promotion.
The Long Beach Development Company has approved a SMAP program for this property up to $2,350.000. The current SMAP requirement for this new developer is restrictive to only include moderate income and Long Beach resident only. To date no moderate income purchaser has been found. However, the developer has identified over four low income potential purchasers that would be ready to go should the eligibility be changed.
In a memorandum dated August 19, 2009 the Housing Development memo states that, " ... (the) staff feels the least complicated option is to provide assistance only to moderate income homebuyers ... "
From inception, Olive Court has been a very complicated project. Under the initial SMAP, and due to a multitude of factors, the sales were very slow which in part led to the first developer's bankruptcy. The original developer who went bankrupt had both low and moderate income qualifier, with no residency requirement. The first developer who went bankrupt never sold any units at market rate. The new developer has sold four (4) units at market rate. We would like to build the same flexibility that was present when this project first became available. The request for flexibility is only directed at this specific project. Of the four units sold the money that was available for moderate income can and should be used for low income purchasers.
Although the new developer made four sales at market value in the past four months, none of the purchasers used the City's assistance program. It is our opinion that unless the Long Beach Housing Development Company changes the program back to what it was before, the new developer will not be successful.
The status quo will leave the developer no options but to auction off the units, which will create a free fall in the home price of Olive Court.
If all of the remaining properties are auctioned off this will wipe out whatever is left in the home equity, not just for the 28 existing owners', but the City's as well (all 28 condos sold have more than $180,000 second loan each on them).
In the interest of all parties, it is abundantly clear that modifications to the Olive Court SMAP must be made in order to meet the mission of the City of Long Beach and the Long Beach Housing Development Company. These modifications include removing the residency requirements and opening up assistance to lower income purchasers. Should these restrictions be removed the new developer has the confidence that as many as ten or more new sales would occur within a few months bringing Olive Court that much closer to a successful conclusion.
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
DEE ANDREWS |
APPROVED: |
COUNCILMEMBER, SIXTH DISTRICT |
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PATRICK H. WEST |
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CITY MANAGER |