Housing Grants Programs

Community Development Block Grant (CDBG)

STATE OF CALIFORNIA GRANT PROGRAMS

BEGIN Program – Proposition 46

City awards $300,000 in State funding for down payment assistance at the Tumbling Waters project (see “New Housing Developments” link for project description).

The BEGIN Program is a homeownership program designed to make grants to jurisdictions that provide incentives or reduce or remove regulatory barriers for housing developments. The grants are used for down payment assistance in the form of a loan to qualifying first-time homebuyers of low- and moderate-income. In exchange for regulatory concessions made at the local level, the BEGIN Program provides up to $30,000 per dwelling unit in down payment assistance in the form of a soft (silent) second mortgage to low- and moderate-income households. In Tumbling Waters, 10 units (not including the two required inclusionary units) will receive $30,000 each in down payment assistance for a total grant award of $300,000. BEGIN funds are a grant from the State and a loan from the City to the homebuyer.

BEGIN grants, capped at $30,000 per unit, are often, if not always these days in California, supplemented by additional funds to help fill the gap between what a moderate-income household can afford and the market price of a home (an affordable by design home at that). The City is matching the BEGIN grant with a $30,000 loan per unit for additional mortgage assistance. The developer will also contribute 1/3 the amount that the City obligates to the program. In this manner, the mortgage is brought down $70,000 per unit ($30,000 State, $30,000 City, and $10,000 Developer). To complete the housing program, additional assistance is proposed to “buydown” the interest rate. The City’s contribution to the interest rate buydown will not exceed $10,000 per unit (average) with the same 1:3 dollar ratio from the developer.

CITY OF SAN LUIS OBISPO PROGRAMS

Affordable Housing Fund (AHF)

City awards over $1 Million in 2005 to two affordable housing projects: $600,000 to the Housing Authority to assist in site acquisition for a Cooperative Housing project on Humbert Street and $400,000 to the Tumbling Waters project for down payment assistance.

Established in 1999, the AHF implements the Inclusionary Housing Program and is funded by the payment of in-lieu affordable housing fees. The current balance in the Affordable Housing Fund is $1,846,065. Revenues are shown in detail below, as of May 1, 2006:


Affordable Housing Fund Balance

City of San Luis Obispo, Finance Department

The City Council relies on the following criteria in reviewing requests for AHF funding:

Eligibility. Use of the Affordable Housing Fund will increase or improve affordable housing inventory and promote General Plan policies regarding housing and related community goals.

Need. There exists a substantial or overarching need for the type of housing to be assisted.

Suitability. The project to be assisted is appropriate for its location, both in terms of land use and design.

Timing. The project would better serve the City’s needs if it were built immediately as opposed to later.

Financial Effectiveness. But for the requested assistance, the project would not be economically feasible; or AHF funding “leverages” significant additional funding from other sources.

Readiness. The project has all necessary City approvals and is ready to proceed.

In summer 2006, the City Council will consider a request from People Self-Help Housing for AHF funds to assist in the construction of a 28-unit project on South Higuera for low- and very-low income households (see New Housing Developments for project desription).

For more information on the City's Grant Programs, please contact Peter Brown at 781-7523.