CLEARLAKE — The City of Clearlake is exploring ways to develop a First-Time Home Buyer Program. Direction was given to city staff to proceed with developing program guidelines during the city council”s Sept. 13 meeting.
The city”s Redevelopment Agency has an obligation to improve and increase the supply of low- to moderate-income housing. The city has been making a substantial investment for the very-low to lower-income residents with HOME and CDBG grants.
“The Redevelopment Agency has the ability to provide assistance to moderate-income families. We believe we should use the 20-percent Housing Set-aside money to target the moderate-income families,” City Administrator Dale Neiman stated in his report to the council. “We have a very high percentage of very-low and lower-income residents compared to the statewide average. If we targeted the moderate-income families over time we would move closer to the statewide average.”
Targeting moderate-income families has a number of benefits, which were outlined for the council by Neiman.
“It is difficult for police officers, starting teachers and people in other similar jobs to obtain financing to buy a home. Louise Nan (Konocti Unified School District (KUSD) superintendent) made this comment to me,” Neiman said. “It would be positive for the city to increase the number of people in these positions to live in Clearlake.”
Neiman reported that the school district is developing a Career Tech program. The program will be designed in part to provide training for occupations in the construction industry. “It is possible we can work with the program and it will benefit both the district and the city,” Neiman explained. “We can enter into an agreement to have the Career Tech program build the homes for the First Time Home Buyer Program and pay them for their work. We would then sell the homes to qualified buyers.”
Neiman further reported that Housing Rehab loans are currently being used to replace old mobile homes with new ones. “We can build stick built homes and then sell them to people who qualify for the Housing Rehab Program,” he explained. “We would buy the property with the mobile home and remove it and build a stick built house. This would be beneficial because mobile homes depreciate in value while stick built homes increase in value.”
According to Neiman if the city provides the financing, one to three homes could be built per year without the need for additional staff.
Neiman continued, “If we provided the financing we would pay the full construction cost and enter into a loan with a buyer. The buyer would pay what they could afford and we would own an undivided interest in the property based on what was not financed by the buyer.”
Neiman provided an example for the council. “Let”s assume the property has a value of $100,000 and the property owner could only afford to finance $80,000. We would own an undivided 20-percent interest and the buyer would own an undivided 80 percent. The buyer could buy out our 20-percent interest in the future if they wanted to or we would collect it when the property is sold,” he explained. “With this approach our investment is totally protected. We would make the money the bank is making and we would turn around and invest that into the program.”
The final detail Neiman provided concerned the establishment of a procedure by which the city would have the ability to foreclose on properties that are not maintained property adequately in effort to protect the city”s interest in the properties its sells.
Contact Denise Rockenstein at drockenstein@clearlakeobserver.com.
