Title
Supplemental Contract: Unseen Heroes for Creative Community Development First-Time Homebuyer Program
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FileID
File ID: 2024-01244
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Location
Location: Zip Codes 95817, 95820, 95824, 95828; Districts 5; 6
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Recommendation
Recommendation: Pass a Motion authorizing the Interim City Manager or designee to execute the attached supplemental contract to Nonprofessional Services Agreement No. 2023-0153 with Unseen Heroes for Creative Community Development dba CLTRE to extend the agreement until March 31, 2026, and modify the scope of services regarding down payment financial assistance.
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Contact
Contact: Leslie Fritzsche, Community Investment Manager, (916) 808-5450, lfritzsche@cityofsacramento.org; Ya-yin Isle, City Housing Manager, (916) 808-1869, yisle@cityofsacramento.org; Axel Magallanes, Housing Analyst, (916) 808-1844, amagallanes@cityofsacramento.org; City Manager’s Office of Innovation and Economic Development
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Presenter
Presenter: None
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Attachments
Attachments:
1-Description/Analysis
2-Agreement Supplement #4
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Description/Analysis
IssueDetail
Issue Detail: On April 13th, 2021, City Council approved the Community Benefits Partnership Agreement (CPBA), between the City, the Regents of the University of California, and Wexford Development LLC outlining employment, workforce training, housing, youth engagement, and transportation commitments by all parties surrounding the new development of the Aggie Square project along Stockton Boulevard. One key component of the CBPA provision included the commitment of $5 million from the City to fund a range of programs and activities to counter potential resident displacement and support housing stability in the neighborhoods surrounding Aggie Square, including the funding for the CLTRE First-Time Homebuyer Program.
To determine the programs needed to address potential displacement and housing stability, the City completed a survey in the spring of 2022 to understand the community needs around this topic and has been utilizing the results of that survey to contract with partners to implement programs and assist qualifying residents with anti-displacement housing needs. The survey collected results from 367 individuals within the identified community zip codes surrounding Stockton Boulevard and UC Davis employees in the AFSCME Local 3299 employee union. The survey showed there was greatest demand for Home Repair (76%) and Homeless Prevention (73%) programs, with First-time Homebuyer programs (FTHB) third at 67%. The City then issued a Request for Proposals (RFP) seeking community organizations to administer these programs.
In February 2023, Council approved implementation of four pilot programs to be administered by the organizations selected from the RFP process. Unseen Heroes for Creative Community Development dba CLTRE (CLTRE) was selected to administer the First-Time Homebuyer Program and the City entered into a contract with CLTRE in February 2023. The program graduated a cohort of 24 participants through the 12-week homebuyer education course and 4 participants have purchased homes through the program to date. The remainder of the cohort continues to work towards homeownership and more participants anticipate purchasing homes this spring. The current scope of services states that CLTRE is to offer up to $15,000 in downpayment assistance to program participants as a silent second loan, meaning that payments are deferred until the home is sold. The assistance is completely forgiven if program participants stay in their purchased homes for a 10-year period.
CLTRE has requested and City staff is recommending a supplemental contract that instead structures the assistance as a grant rather than a loan because the current structure is creating challenges with the participant’s ability to secure a home loan. If the supplemental contract is approved, participants would receive their assistance as a grant with the stipulation that they must stay in their purchased home for a 7-year period for the assistance to be completely forgiven. CLTRE will ensure that a lien is recorded on the participant’s home to ensure that these requirements are fulfilled, and in the event any funding is repaid, it will flow back to CLTRE for future use by first-time homebuyers in CLTRE’s program who meet the original eligibility requirements. Participants who sell their home before the 7-year expiration will be required to pay back their grant amount as follows:
1 Year - $15,000
2 Years - $12,500
3 Years - $10,000
4 Years - $7,500
5 Years - $5,000
6 Years - $1,750
7 Years - $750
This change will alter the program by removing the shared equity component but will continue to serve the intention of this program by supporting first-time homeownership for low-income residents, allowing them to build equity and increase generational wealth. Staff is also recommending that CLTRE’s contract be extended until March 31, 2026, to allow more time for participants to prepare for homeownership and secure additional State homebuyer assistance.
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PolicyConsiderations
Policy Considerations: The supplemental contract recommended as part of this staff report remains in alignment with the City’s commitments surrounding Stockton Boulevard to provide housing anti-displacement and stabilization programming. Changes to CLTRE’s contract seek to make this assistance more readily available for first-time homebuyers who are unable to qualify for conventional home loans. Additionally, this programming aligns with programs included within the City’s updated Housing Element of the General Plan.
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EconomicImpacts
Economic Impacts: The $511,500 previously allocated for this program will help to provide inclusive economic development by providing financial assistance to low-income residents near the Aggie Square development that would otherwise be unable to afford homeownership.
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EnvironmentalConsiderations
Environmental Considerations: The actions specified in this report do not constitute a “project” under the California Environmental Quality Act (CEQA) because they involve the creation of government funding mechanisms or other government fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. (CEQA Guidelines section 15378(b)(4)). Any individual program that results in any CEQA-qualifying projects would be reviewed separately.
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Sustainability
Sustainability: Not applicable.
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Commission/Committee Action
Commission/Committee Action: Not applicable.
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RationaleforRecommendation
Rationale for Recommendation: /CLTRE has proved successful in the launch of the First-Time Homebuyer program, graduating a class of 24 first-time homebuyers and coaching 4 households through their first home purchase while assisting participants with credit repair, homebuyer education, and financial coaching in partnership with the City’s Financial Empowerment Center. Staff recommends execution of the attached supplemental contract with CLTRE to ensure the downpayment assistance is accessible with no undue burden for participants. This change is designed to allow participants to tap into a wider array of loan products than what was available under the City’s original loan model for the downpayment assistance.
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FinancialConsiderations
Financial Considerations: In February 2023, the City launched the First-time Homebuyer program to be implemented by CLTRE for an initial not to exceed amount of $500,000. In August 2023, the original contract was increased by $11,500 for the development of overall branding for all the Stockton Boulevard Housing Stabilization Programs and a new not to exceed amount of $511,500. The supplemental contract proposed in this staff report does not include any additional funding, only changes to the program design, related scope of services, and time of performance.
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LocalBusinessEnterprise
Local Business Enterprise (LBE): CLTRE is a local business.
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