1 Desert Hot Springs Neighborhood Stabilization Program & Neighborhood Renewal Plan January 2009

2 Presentation Overview Neighborhood Stabilization Program (NSP) –Program Requirements Foreclosure Analysis –Field Findings –Opportunities –Building a Better DHS DHS Housing Fund Opportunities –Uses DHS Redevelopment Agency Financing –Housing Set-Aside Opportunities

3 Neighborhood Stabilization Program (NSP)

4 Desert Hot Springs Neighborhood Stabilization Program Requirements & Elements: NSP Funds awarded to the City/County One time emergency funds to address foreclosures Funds must be “obligated” within 18 months Funds must be spent on foreclosed properties and related expenses only Funds can be spent on families up to 120% AMI 25% of funds must be spent to assist families at or below 50% AMI

5 Housing and Economic Recovery Act of 2008 Neighborhood Stabilization Program Foreclosure Recovery Plan Activities Eligible UsesProgram Sources NSP Funds A. Establish financing mechanisms for purchase and redevelopment of foreclosed upon homes and residential properties Foreclosure Recovery Low-Income Homeownership and Rental Program B. Purchase and rehabilitate homes and residential properties that have been abandoned or foreclosed upon in order to sell, rent, or redevelop Foreclosure Recovery Rehabilitation Program C. Establish land banks for homes that have been foreclosed upon Foreclosure Recovery Land Bank Program D. Demolish blighted structuresRegulatory Services Demolition of Blighted Structures E. Redevelop demolished or vacant properties * The Neighborhood Stabilization Program requires that 25% of the funds received must be targeted to households at or below 50% of the area median income.

6 Foreclosure Analysis

7 Desert Hot Springs Foreclosure Study Summary In Project AreaOutside of Project Area Total- City Wide Notice of Default (NOD) Notice of Trustee Sale (NTS) Foreclosure Totals

8 Foreclosure Map

9 Foreclosure Summary Findings

10 Typical Foreclosed Properties

11 Typical Foreclosed Properties

12 Public Housing Opportunities Multi-Family Units / Large Lots

13 Foreclosure Opportunities Code Deficient Properties

14 Housing Constraints Public Infrastructure

15 Housing Constraints Code Enforcement Efforts

16 Home Ownership

17 Home Ownership Analysis

18 Desert Hot Springs Housing Set-Aside Funds

19 Desert Hot Springs Redevelopment Agency Housing Set-Aside Funds Housing funds may provide additional flexibility when compared to NSP criteria Property acquisition Property rehabilitation Down payment assistance Related infrastructure improvements

20 What Does State Law Require? An Agency must use at least 20 percent of its tax increment revenue to increase, improve and preserve the supply of low- to moderate-income housing in the community (the “Housing Fund”; CCRL Section ); Funds can be used for foreclosures and other housing needs in the community Funds may be used in and outside of the project area with the appropriate findings

21 How is Affordable Defined? The CCRL defines three target income groups: Very-Low-Income: Households whose income does not exceed 50% of the county’s median income adjusted for family size; Low-Income: Households whose income is greater than 50% but does not exceed 80% of the county’s median income adjusted for family size; and Moderate-Income: Households whose income is greater than 80% but does not exceed 120% of the county’s median income adjusted for family size.

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23 How May Housing Funds Be Used? The Agency may use its Housing Fund moneys to improve real property or building sites with onsite or offsite improvements (i.e., curbs, gutters, sidewalks, etc.). The Agency may only use Housing Funds to finance offsite improvements if: The improvements are part of the new construction or rehabilitation of affordable housing units for low- or moderate-income persons that are directly benefited by the improvements and are a reasonable and fundamental component of the housing units (i.e., are conditions or prerequisites of development); and The Agency requires that the units remain available at affordable housing cost to, and occupied by low- to moderate-income households (i.e., 45 years for ownership housing and 55 years for rental housing).

24 Housing Funds With NSP Funds Housing Funds could, in whole or part, fund programs listed below which would work well with and enhance the use of NSP funds. –A foreclosed home purchase down payment assistance deferred loan program for income eligible homebuyers. The program should provide financing for up to 20% of the purchase price subject to the home meeting all City housing quality standards (i.e., code and appearance), the buyer meeting a minimum contribution threshold and the home selling for no more than appraised value. The program would require 45-year affordability covenants. –A foreclosed home acquisition and rehabilitation or acquisition, demotion and replacement program. The acquired and renovated (or replaced) units would be sold to income eligible households with 45-year affordability covenants. Eligible home buyers would be eligible for the down payment assistance deferred loan program.

25 Enhanced Housing Programs In conjunction with the special programs that would enhance the use of NSP funds, the Agency could offer additional home improvement programs that could be offered on a City-wide basis such as: A large-scale (up to $20,000) home rehabilitation deferred loan program for income eligible homeowners that emphasizes code corrections and general rehabilitation. It is recommended that this program be limited to homeowners whose household income does not exceed 120% of AMI.

26 Enhanced Housing Programs A medium-scale (up to $10,000) home rehabilitation grant program for income eligible homeowners for exterior “curb appeal” enhancement improvements (i.e., painting, fencing, landscaping, etc.). It is recommended that this program be limited to homeowners whose household income does not exceed 50% of AMI. A small-scale (up to $5,000) home painting grant program for income eligible homeowners for repainting the exterior of their homes in order to correct existing or potential paint-related code deficiencies. It is recommended that this program be limited to homeowners whose household income does not exceed 80% of AMI

27 Resource Allocations Housing Rehabilitation Programs –Grant Programs Homeowner Grant Program: A grant program for emergency and/or minor repairs to owner occupied single family residence. –Loan Programs Homeowner Loan Program: A deferred loan program for repairs to owner occupied single family residence.

28 Senior Citizen Programs Requirements: Owner Occupied, Single Family Residences Homeowner(s) must be over the age of 62 Total Household Income Cannot Exceed 80% Of The Area Median

29 Senior Citizen Programs Emergency Repair Program –Amount Shall Not Exceed $4,000 –Addresses Health, Safety and Welfare Items Plumbing, roof, electrical, heating and HVAC Disabled Accessibility Program –Amount Shall Not Exceed $10,000 –Addresses accessibility needs Ramps, accessible bathrooms, and height adjustments

30 Senior Citizen Programs Landscape Improvement Program –Front Yard Only –Amount not to exceed $6,000 –Priority participation is recommended: Households receiving violations or located within priority neighborhoods Paint Improvement Program –Amount not to exceed $7,000 –Priority participation is recommended: Households receiving violations or located within priority neighborhoods

31 Homeowner Programs Emergency Repair Program –Household Income Shall Not Exceed 120% of Area Median Income –Amount shall not exceed $4,000 –Addresses Health, Safety and Welfare Items Plumbing, roof, electrical, heating and HVAC Home Improvement Program –Household Income shall not exceed 120% of Area Median Income –Amount shall not exceed $20,000 –Addresses Code Items, deterioration of the structure Fencing, painting, electrical, painting, windows, and roofing

32 Homeowner Programs Landscape Improvement Program –Household Income Shall Not Exceed 120% of Area Median Income –Front Yard Only –Amount not to exceed $6,000 –Priority participation is recommended: Households receiving violations or located within priority neighborhoods Paint Improvement Program –Household Income Shall Not Exceed 120% of Area Median Income –Amount not to exceed $7,000 –Priority participation is recommended: Households receiving violations or located within priority neighborhoods

33 Housing Grant Programs: Paint, Fencing, and Landscape

34 Housing Grant Programs: Paint, Fencing, and Landscape

35 Public / Private Partnerships

36 City of Desert Hot Springs Neighborhood Stabilization Program County of Riverside Neighborhood Stabilization Program- State of California Desert Hot Springs Redevelopment Agency HUD & Fannie Mae Non-Profit Housing Groups Local Trades: Plumbing Painting Electrical Landscaping Etc Banks Owning Properties Real Estate Brokers For Profit Housing Developers Building Industry Association Coachella Valley Housing Coalition City of Desert Hot Springs Foreclosure/Housing Reinvestment Partnerships

37 RDA Financial Opportunities

38 Background on Housing Set-Aside Revenues Assessed values in the Merged Project Area declined 2.6% from 2007/08 to 2008/09 ($1.22BB → $1.19BB) In 2008, the Agency issued $35,835,000 of TABs secured by non-housing revenues –“A” rating from S&P; 1.35x ABT The Agency does not have any bonds secured by housing set-aside revenue Projected Housing Set-Aside Revenue for FY 2008/09 = $1.82 million

39 Housing Set-Aside Bond Capacity Assuming 7.5% interest rates, the Agency could issue about $16,120,000 of housing set- aside TABs –$14.33 million of net proceeds –$1.35MM annual debt service payment Assuming Agency only needs $10MM in proceeds, annual debt payment would be about $947,000 (1.92x coverage)

40 Subsidy Required “As-is” Occupants For-Profit Developers Non-Profit Developers No Subsidy Required Land Bank Subsidy Required $5,000,000 Financial rental / Homeownership $500,000 $3,000,000 Program Administration $ 1,000,000 NSP / Housing Funds $10M Neighborhood Stabilization Program and Housing Rehabilitation Plan

41 Conclusions

42 Summary of Findings Typical foreclosures include newest housing stock –Some exceptions do exist Opportunities exist for multi-family housing –Unfinished units and large lots Infrastructure and Code Enforcement efforts are constraints –Carrot and the Stick

43 Summary of Findings Agency Funds Should be allocated to Communitywide Neighborhood Renewal Efforts Use of Public-Private Partnerships is paramount to success –BIA, Housing Coalition, Banks, Brokers, Habitat for Humanity, ETC Priority should be given to DHS businesses and non-profits –Trades (plumbers, painters, landscape, True Value)