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Minutes 12-08-08 MINUTES OF THE BOYNTON BEACH AFFORDABLE HOUSING ADVISORY BOARD MEETING, HELD ON MONDAY, DECEMBER 8,2008, AT 6:30 P.M. IN COMMISSION CHAMBERS, BOYNTON BEACH, FLORIDA PRESENT: Frances Francis, Chair Brent Clayton Angela Girtman (arrived at 7:25 p.rn.) Shirley Jaskiewicz Margaret Johnson Lamont Robinson Jeffery Wooster Octavia Sherrod, Community Development Improvement Manager ABSENT: Sherry Johnson Robert Taylor Woodrow Hay Jeanne Heavilin, Vice Chair I. Call to Order Chair Francis called the meeting to order at 6:42 p.m. II. Roll Call The Recording Secretary called the roll. A quorum was present. III. Approval of Agenda Motion Ms. Jaskiewicz moved to approve the agenda as presented. Mr. Wooster seconded the motion that unanimously passed. IV. Approval of Minutes from November 10, 2008 Motion Ms. Johnson moved to approve the minutes. Ms. Jaskiewicz seconded the motion that unanimously passed. 1 Meeting Minutes Affordable Housing Advisory Committee Boynton Beach, Florida December 8, 2008 V. Land Trust Presentation by Lydia Beltran - Florida Housing Coalition Octavia Sherrod, Community Development Improvement Manager, explained the Board had expressed an interest in Community Land Trusts. Lydia Beltran, a Technical Advisor from the Florida Housing Coalition was present. Ms. Sherrod explained Ms. Beltran has approximately 15 years in housing, with experience ranging from project coordination for non-profits, program management for major entitlement cities and community planning and development within the U.S. Department of Housing and Urban Development. Her specific experience entailed technical assistance and addressing strategies associated with an affordable housing development. Ms. Sherrod further presented Ms. Beltran's educational credentials. Ms. Beltran thanked the Board for the opportunity to speak and explained she would make a presentation and distribute a handout of how funds were broken down and how equity would be distributed. Community Land Trusts were established to provide separation of the building from the land and it provides for the transference of the title of the home to a homeowner, without selling the land. It would not include a fee of interest in the land, only the sale price of the value of the improvements to the land. The ground lease would have a resale provision to ensure the property would be affordable in perpetuity and the non-profit would have rights to it through a 99-year ground lease. Specifics of the Community Land Trust encompassed following: . The homeowner not being permitted to sell the home at the open market price . The home must also be sold to another income eligible buyer . The first right of refusal would remain with the Community Land Trust. The resale provisions of Community Land Trusts could be specific or general. Resale standards encompassed the contribution at closing, the principal payments over time and the appreciation. It was important to set the maximum allowable resale price. This was accomplished through an appraisal based formula using a certain percentage increase in the market value. The new owner has to qualify in a particular income category and although a family member could "inherit" the home, if they were not income eligible, the Land Trust would exercise its right of refusal and the dwelling would revert to the Land Trust. The perimeters of the program varied depending on the local subsidies involved. SHIP funds used three income categories based on the median income. Other factors could come into play such as policies in the local government; however, those would be considered when setting up the Community Land Trust structure under the resale formula. 2 Meeting Minutes Affordable Housing Advisory Committee Boynton Beach, Florida December 8, 2008 Property Taxes are a critical piece of homeownership and, at times, could be retained in an escrow account by the Land Trust or non-profit owner. Taxes could be added as part of the ground lease, because there is a small fee that is a homeowner/SHIP association fee used to maintaining the ground lease for the property for all the homeowners. The fee and the taxes could be put in escrow, or the homeowner could pay the taxes on their portion of the land. The property would be homesteaded so taxes would be limited other than what is allowable. When there is a resale on the home, the property taxes would change from one owner to the next. The value of the taxes was, at one time, very reasonable and there is a policy movement to control the taxes and keep them at the same level they were when the first homeowner had possession. In this manner, when the property was resold, the new taxes would be the same. There was a real concern about that aspect, because it would negatively impact the affordability of the structure. Another component of the Land Trusts was the pre and post education requirements. The transaction was not a traditional transaction and individuals would enter into the acquisition thinking they would own the home and realize the full profit from its sale. It is critical that the non-profit and local government make sure the homebuyer receives all the disclosed information and there be standardized, specific disclosures and a memorandum of understanding signed. This would ensure the buyer understands the actual structure of the Land Trust. The information should be contained in the marketing materials indicating that the land trust is unique and detail the investment by the homebuyer. There should be annual updates for each homeowner outlining each factor of the Land Trust. Discussion followed that the Land Trust in Delray Beach guaranteed some equity appreciation even in a down market. The way most Land Trusts are structured was the equity appreciation was shared with 25% to the homeowner and 75% to the local government, which is then recycled and used for maintenance. Land Trusts provide homeownership opportunities and provided for long term security and building of assets, although it was a smaller portion and not an equal share of the assets. The Trust provides an alternative to renting, because the land is out of the equation. For local governments considering affordable housing opportunities, this offers a home ownership option for its residents and the pros and cons of a land trust should be carefully weighed. Land usually comes from a redevelopment agency or surplus land the City or County has that they cannot market or move. Land Trusts are often a joint venture. There are other costs which should be considered when establishing a Trust. One component is the operation of the ground lease, maintenance and when the home is sold the cost to rehab the home. In some instances there is so much pride in the home 3 Meeting Minutes Affordable Housing Advisory Committee Boynton Beach, Florida December 8, 2008 that when the homeowner leaves there is little rehabilitation needed, as opposed to others which may require a great deal of rehabilitation. Those costs need to be considered. Ms. Beltran distributed an example of a Land Trust Appraisal Methodology based on the median income for the City of Boynton Beach and reviewed each category. The median income in Boynton Beach was $66K for a family of four. The target market used 60%. In one example the initial income is $39,600, the market price of a home was $180K and the value of improvements was $144K. The value of the land was $36K and the down payment was $28,800. The family who earned the $39,600 would need $38K in subsidy and to qualify for a first mortgage difference of $102K. They would qualify for a loan with 6.75% interest, for a mortgage of $102K with their monthly payment being $664 including principal and interest with the payoff in120 months. She provided other examples using different rates, depicting different appreciation resale distribution options. Ms. Beltran explained based on the income range of the individual, the type of resources the homeowner can bring to the table are limited. The figures were based on a 10-year mortgage or the amount of the mortgage financed. It could be more than 10 years depending on the amount of subsidy needed. Ms. Beltran explained in this type of a structure it is ascertained how much of a subsidy the applicant qualified for and the land trust fills the gap for the subsidy, not the other way around. The land trust concept was good, but many people did not understand it and were not pleased to learn they would not own the land. The SHIP program had a shared equity formula. Ms. Beltran explained with most SHIP and other government programs, the subsidies provided were sizable and it was in the best interest of the local government to have the ability to recapture some of the original investment in those homes. Shared equity would benefit both parties and some of the funds would be recycled back to the local governments for other affordable housing programs. This year there was a shortfall of SHIP and other affordable housing funding sources. The most important part of structuring the Land Trust was to ensure the operational and staff costs associated with the non-profit overseeing the project would be collected. There was discussion regarding the price of land and when would be the best time to create a Land Trust. Also discussed was if the current market and land prices have impacted Land Trusts as far as increases and decreases in the price of lots. Ms. Beltran explained there was a better opportunity for Land Trusts to invest in homes and lots in a buyer's market. She acknowledged the value of the property has changed dramatically. If the non-profit has the finances to secure properties, they would have more equity in the property when the market changes as the ownership for the 99 years would provide a higher equity rate to be shared at a later time. The crunch facing the Land Trusts had to do with the credit crisis, the loss of jobs, and individuals not able to qualify for mortgage financing. She explained the current environment provided a prime 4 Meeting Minutes Affordable Housing Advisory Committee Boynton Beach, Florida December 8, 2008 opportunity for local governments to consider Land Trusts because much has been learned from them across the country. Community Land Trusts should contemplate having resources available for maintenance, staff time, management and oversight of the actual property. Ms. Beltran commented, now that Land Trusts have been in existence a while, it would be easier to ascertain what those figures were and she agreed to provide them to the Board The Delray Beach Community Land Trust had a full time staff of five individuals. The Trust; however, had not experienced the maintenance component because they were still building homes. Ms. Beltran was asked once the project sold out, would the Trust continue looking for lots or just maintain the dwellings they had. She responded it would just be maintenance. She announced the Delray Beach Community Land Trust was just approved for a Pre-Development Loan Program. She works with Delray Beach on local infill land parcels and they have a model to follow. The Pre-Development Loan Program would help set up homebuyer counseling. One phase was completed in Delray Beach and a second phase was being started. There was one other Community Land Trusts in Palm Beach County. Brenda Cornelius, Housing Administrator, asked if the Delray Community Land Trust had any resold homes. Ms. Beltran responded they did not. It was also questioned when the homes are resold, whether the monies used to repair the home were part of the 25% homeowner, 75% equity split, or if the homeowner would be billed for the repair and the cost be deducted from what the homeowner share at the time of resale. She noted many individuals cannot afford to maintain homes, so the non-profit must be able to carry the purchase of the land and all the maintenance. There was discussion about the property appraiser appraising the land separate from the dwelling. Ms. Beltran explained that issue was being addressed, but had not been formalized. Additionally, how the taxes were structured for the Delray Beach Community Land Trust was questioned. The homeowner would not pay all the taxes because they did not own the land, and it could put a burden on the homeowner, possibly making their payments higher. The insurance and taxes could be escrowed, but what portion of taxes to be paid was the bigger question. The property appraiser was exploring exempting the land taxes and taxing the home, based on a sale price. Ms. Beltran noted the tax bill would go to either the homeowner or to the Land Trust and how it was handled would vary depending on each county's property appraiser. Those were the types of issues that needed to be considered when structuring a Community Land Trust. Members agreed they could not envision anyone making renovations when they did not own the land. Ms. Jaskiewicz would like review the program 10 or 20 years down the road and see how the maintenance was kept up and the statistics on it. Ms. Beltran explained it was important for the homeowner to be notified annually of various items including equity accrued. 5 Meeting Minutes Affordable Housing Advisory Committee Boynton Beach, Florida December 8,2008 The program was between a rental and home-ownership program and could be considered a stepping stone to full home ownership. The potential homebuyers do not have the type of annual income for a market rate home, but it did not mean they could not achieve that in three-to-five years. The Land Trust post education would keep homeowners on track as far as their future investments, but would also provide an opportunity for homeowners to stabilize themselves to improve their credit and improve their goal of home ownership. Credit counseling agencies could partner with Land Trusts to assist homeowners move into more traditional homes. The tide of the market would dictate the structure of what could be established in the present day. Ms. Beltran agreed it would be beneficial to see where Land Trusts would be in the future and to-date. She advised there were National Community Land Trust Conferences and operating demands had been a key topic in the past. Chair Francis explained when the Committee first convened, they were interested in the Land Trusts, but felt it benefitted the Trust. She inquired if the pre-screenings and qualifications were the same as for other subsidies. Ms. Beltran explained the subsidy has restrictions tied to it. Unless an individual received a subsidy that had no federal or state requirements, such as a general fund, then the restrictions would not be needed unless a policy was set forth by the local government. The Florida Housing Coalition, and the 1000 Friends of Florida could provide technical assistance and formulate an assessment whether a Land Trust fit the local government and their housing needs, and then set it up. The set-up would exclude legal advice. Ms. Beltran would provide a list of Community Land Trusts in existence and provide additional information on taxes and operating costs. She would also follow-up on the policy regarding appraisals and taxes for Community Land Trusts under consideration in the State, and any counties that have instituted it VI. 2008 Incentive Review and Recommendations Report Ms. Sherrod explained the incentives had been reviewed and discussed. Input was sought regarding changes or questions by the members. She complimented the Board on their involvement. She explained she checked with the Building Department about the application process for contractors and they have considered coding the application to identify the project was an affordable housing project. The turn around time for a Building Permit to be issued was about 18 days. Expedited service had a turn around time of about 10 days. It was suggested contractors notify the Community Improvement Department and they would address it on the application to ensure the project is fast tracked. There was a question about projects constructed with a portion of the units set aside for affordable housing and whether the entire project would be expedited. It was noted this pertained mainly for single-family projects. 6 Meeting Minutes Affordable Housing Advisory Committee Boynton Beach, Florida December 8, 2008 There was also a question about accessory buildings and kitchens. Ms. Sherrod was advised the Code was vague and there had to be a method for cooking. The appliance; however, could be a microwave and a stove connected to a 220V line was not necessarily required. Ms. Sherrod needed direction on what items they would bring to the City Commission. The draft document was based on the Commission's acceptance of the report. They may have questions or receive input at the December 16th City Commission meeting. One correction to the report would be Ms. Beltran made the Community Land Trust presentation and not Stan Fitterman. Ms. Sherrod announced, for the record, the meeting was publically noticed in the Palm Beach Post; however, no one from the public was present. Ms. Sherrod advised unless there were additional comments, this portion of the Board's mandate was complete. Ms. Sherrod discussed the future of the Board. Based on the input given by the Board, staff would begin preparing the City's Local Housing Assistance Program for submission to the Florida Housing Coalition, due on May 2, 2009. This would be based on new statistics to be received in January or February regarding the median income. She suggested the Board meet every other month and she would bring a draft in February for review and discussion. Ms. Sherrod explained in the past, the sale price of the home to be purchased was based on information from the State. The State's information would include data from the entire Metropolitan Statistical Area. She would also bring information compiled by the Planning Department regarding sale prices. The maximum price of a home eligible to be purchased via a subsidy was $280K. That figure was no longer the current market price and the amount should be lowered. The SHIP program allocated very-low and low income applicants up to $75K in subsidy, and moderate income applicants were receiving $50K in subsidy. The City was no longer receiving the same amount of SHIP funds it had in the past. They were advised by the State to expect a minimum of 20% less, which would be approximately $100K. They had to reduce the level of subsidy given. The State requirement mandates the plan cannot exceed 30% of the allocation for moderate income individuals, earning 81% to 120% of the median income. There is no funding left for them, nor were there funds for low-income individuals. The only funds available were for very-low income individuals and they had to spend 30% of the allocation there. City staff could meet that plan requirement by undertaking rehabilitation projects. Chair Francis inquired if the majority of those individuals were not bankable, whether those applicants were receiving down payment assistance and being put in homes. Ms. Cornelius responded they would close on applicants whose funds were encumbered. 7 Meeting Minutes Affordable Housing Advisory Committee Boynton Beach, Florida December 8, 2008 She advised the SHIP funds received in 2008 were spent or encumbered, as were funds from prior years. The State also advised staff not to encumber anticipated amounts, because it was not certain how much they would receive or when they would receive it. She reiterated staff could meet that portion of the requirement through rehabilitation. The members agreed to reconvene in February. Ms. Sherrod thanked the Board for their input. She introduced Brent Clayton who was not present for prior meetings and advised she would have materials prepared for the next meeting. Should questions arise regarding the report, she would contact the members. VII. Q & A from Committee Ms. Girtman inquired about the Incentives and Recommendations put forward by the Board. She questioned the reduction in parking and setback requirements, and also about density for affordable housing. She inquired what the communities, homes and streets would look like. She also explained parking was a concern and reduced parking may be detrimental. Ms. Sherrod explained the Board decided not to reduce parking. The consensus of the Board regarding density was discussed. Ms. Sherrod explained the provision pertained to Planned Unit Developments, condominiums or zero lot-line developments. It did not apply City-wide. Ms. Girtman was concerned about overcrowding and what the development would look like. Ms. Sherrod explained on the City level, there were incentives for developers to provide affordable housing by offering increased densities for multi-family projects. The Community Redevelopment Agency had developed the provision for multi-family units. There was no change in the zoning or the lot sizes. The only difference was newly platted lots would be allowed to have lots with 60-foot fronts. There are minimum square foot requirements for lots, and the only lots that could be used were lots platted prior to a certain year. In older communities there were many existing lots with 50-foot fronts. The idea was, if they were not developed, they would remain vacant and become dumping grounds. The density provision also stipulated that the portion set aside for affordable housing in multi-family projects cannot be different than any other unit in the project, and the units could not be located in one building. They would be incorporated throughout the project. Ms. Sherrod explained the report would be on the December 16, 2008 City Commission Consent Agenda. She requested some of the members attend the meeting and wished all a wonderful holiday. Mr. Wooster apologized to the Board for missing the last meeting. VIII. Public Comments 8 Meeting Minutes Affordable Housing Advisory Committee Boynton Beach, Florida December 8, 2008 None. IX. Adjournment There being no further business to discuss, the meeting properly adjourned at 7:54 p.m. /tCLl /., .' !. 'lfr ('I, J , ! 'i' c q 1...(:..' l.V Y .I,. ,~ 1\...l:i\..J ,..- Catherine Cherry Recording Secretary 121508 9