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Home My WebLink AboutCC 1998-12-08 Discussion Item (2)I'hc Honorable Mayor and DEC 8 1998 iklembers of the City Commission Donald H. Warshaw City Manager City of Miami Police Home Ownership Program Response to City Commission Inquiry The following information is provided in response to an inquiry by the City Commission regarding the City oVMiami Police Home Ownership Program administered by the Housing Division of the Department of Community Development. Resolution No. 97-519, adopted July 24, 1997, authorized the establishment of the City's Police Home Ownership Program as a new initiative to encourage police officers to own homes in the City of Miami. This legislation further allocated $100,000 of Community Development Block Grant (CDBG) Funds to provide to assist police officers participating in the program. The program design (Attachment 1) provides $5,000 of financial assistance to supplement the downpayment and/or closing costs for police officers to purchase a single family home in the City of Miami as their primary residence. To promote the program, staff contacted the City's Chapter of the Fraternal Order of Police Union (F.O.P.) with information on the program and the F.O.P. included this material in its monthly newsletter to its membership. Since the inception of the program, the Department of Community Development's Housing Division has received a number of inquiries from police officers seeking assistance through the homeownership program, the most recent request coming from Officer Jose Sangles in November. However, an inherent flaw in this program has resulted in the inability of the City to assist even one (1) police officer to purchase a home in the City of Miami since the initiation of the program. While the intent and concept of the police homeownership program may be well meaning, the basic problem encountered in trying to implement the program is the restrictiveness of the funding source designated to provide this assistance Federal regulations limit persons eligible to participate in CDBG assisted programs to be from low and moderate income families (Attachment 2). Under the income guidelines established for residents of Miami -Dade County by the U.S. Department of Housing and Urban Development ( HUD), City of Miami police officers interested in the program have not qualified for assistance because their incomes exceed the HUD income limits. l~~,r ~uur inti~rnr:rti~,n. tl~~ fi>Il,,~~in~ f IL l) incunt~ `~ui~iclinc~ ha~c been in ~tf~~t ~in~c January 7, I ~)~)~{: Family Sizc Maximum Income I $2~,~OU 2 $28,550 3 $32,100 4 $3,700 5 $38,550 6 $41,400 7 $44,250 8 $47,100 The current salary of a probationary City of Miami police officer at an entry level already exceeds the HUD income limits for a family of one. Based on these income limitations, it would be a raze situation for a veteran officer or officer with other employed members in the household to qualify for participation in the Police Homeownership Program. Historically, the Administration has supported the Miami Police Homeownership Program and recognizes its potential to be an effective vehicle to establish police presence in the City's neighborhoods and serve as a deterrent to crime, drugs and other illegal activities. However, in order to make this program viable, there is a definite need to identify another source of funds to provide financial assistance which is not subject to the regulatory restrictions of CDBG. Realistically, the Police Home Ownership Program will be of no assistance to Officer Sangles and other interested officers unless an alternative funding source is provided that establishes income limits/ that fit within the income range of the typical City of Miami police officer. ~1 yI~Y ,/ ,(, III"'~~~ DHW B/GCW/DF:df Attachments a r~r~~~~Et~t~~v~r ~ .. • ~ ~ • - -~ - _ t i _ ~ ~ ~ ~ •t ~• ':~ e~ ~~ ~ ~ .~ ~ ~ = . _~. ~ := '~ ~.t `. ~~ .L _ ~~ ~ ~. i ". _. r .-. -. ro ram . City of titi.uni Dcpnrtmcnt of Cummun~n (?evelupmcntMuuring f~hsion ~ ti W 2nJ i~ve. :nJ floor Mutmi. Flun~lu i J i i l f tt)5 ~ ~ tai-2rtAu ~t City of ~~tiami Police Homeownership Program .- I. Introduction: The City of Miami's Police Homeownership Program (PHP) is designed to address two concerns that plague many inner city communities across the country, i. e. Increasing crime and deteriorating housing. The Police Homeownership Loan Program's primary objective is to encourage City of Miami Police Officers to buy homes within the inner city neighborhoods they serve. In an effort to motivate police officers to consider living in these neighborhoods, the City of 11~fiami o~'ers deferred payment loans for downpayment/closing cost assistance in connection with the purchase of a home. The Police Homeownership Program gives many police officers the-vprportunity to own a home much earlier in their careers that aotmal ci~rcurnstanees would not permit. Becoming a member of the neighborhood gives the officers additional incentive to invest their time aad energy in community concerns and a chance to interact on a more personal level with the people who live there. II. Tune of Financing: The City of Mranu will utilize Community Development Block Crrant funds to provide police officers with a 5ve thousand (SS,000) dollar deferred payment loan to assist with the cost of downpayment aad/or closing cost associated with the purchase of as eligible home within the City of 11~iiami III. ~Iiiaible Properties: Any single family dwelling located within the City of Miami. The maximum purchase prict/appraised value of the home being purchased shall not exceed S 115,000 All properties assisted must have good and marketable title. IV. F.li>able Applicants• Police Officers who's total annual family income does not exceed eighty (80'/0) percent of the area's median income. Police Officers must occupy the property as their principal residence. The prospective homebuyer (Officer) must obtain approved for a first mortgage from a licensed mortgage lender. Proposed first mortgage financing arrangements must be found acceptable to the City. The City - of Miami reserues the right to evaluate and deny any mortgage financing terms not found acceptable and/or beneficial to the purchaser. The estimated first and second mortgage payments including escrow, shall not exceed thirty (30°/,) percent of the officers total family gross monthly income. A11 mortgage financing provided to a police officer will be subject to the qualification guidelines as defuud in paragraph VII below. V Income Limitations: The Police Homeownership Program, is designed to benefit both low and moderate income police officers Current (low and moderate) income limits in Dade County are listed below. These limits shall be adjusted automatically whenever the federal government re-determines the median income for Dade County. Family 2 3 4 S 6 7 8 Maximum Income Limits (80%) S24,100 27,500 30,950 34,400 _ , 37,150 39,900 42,650 45,400 VL Downnarmeat/G7winu Cast Assistance: A) Police Officers earning up to eighty (80%) of the area median income who are pta~chasing s home within the City of Miami, would be eligible for. SS,000 def~err+ed paynamt loan to be utilized for downpayment/closing costs. This loan wd1 require ao monthly payments. The loan wt71 be recorded as s juaior mortgage on flee subject property. The loans maturity shall be equal to that of the first mortgage leader or thirty (30) years from the date of closing, whichever is Less. The loan will be due and payable to the City of Miami in the everrt that the purchaser sells, leases or moves from the subject property. The loan wdl carry an interest rate of three (3%) percent. In the eveat that the homebuyer sells or leases the subject property prior to the City's loaa maturity, the City's loan shall be due aad payable inclusive of all principal and interest. VII. Qualification Reauiremenb: In determining the qualiScation of s household/applicant for Police Homeownership Program assistance, the City utilizes the following quali5cation ratios: 1) the housing expense to income ratio and 2) the - total debt to iti2~ome ratio. The housing expense to income ratio, takes into consideration the total monthly expense of the home bring purchased, which includes, principal, interest (on all financing), taxes, insurance and condominium association or homeowners association fees (if any) and dividing the total by the household's gross monthly income. The result cannot exceed thirty (30%) percent. 2 The total debt to income ratio consists of the addition of the coca! housing expenses plus all other monthly expenses such as credit card payments, personal loans, student loans, and auto loans, alimony or child support payments and any other fixed monthly expenses that will take more than twelve (12) months to pay off. The total of these expenses is divided by the household's total gross income. The result can not exceed forty five (45%) percent. VIII. ~rictiona/Additional Coaditions• • Any home assisted with proceeds from the Police Homeownership Program may be sold by its owner. Hov~cever all financing provided to the Police 09icer assisted wi71 become due and payable at the closing of the sale. • Any revdeoces purchased with assistance of the Police Homeownership program must rezmin as the purchasers principal residence for the entire term of the loan. • Appfiations under the Policx Homeownership Program wr71 be considered on a Srst come, first served basis. Submitted applicsttions wdl be processed in the order in which they are recxived. - • The City of 11~ianu will provide Police Homeownd~hip Program assistancx is the farm of unforgivable loans. All loans shall be deferred at a rate d by the City of lbfarni and st a maadmum term of thirty (30) years. • All loans shall be see~ired by a note and mortgage on the property, which shall be recorded either in a second or third lien position. • All properties assisted under the Police Homeownership Program must have good and marketable title. • The City of Miami, will conduct yearly homestead verifications or all properties assisted under the Police Homeownership Program. • All rules and regulations pertaining to the CDBG Program are in full force and effect. All funding will be subject to the availability of funds. 3 ~