COMMUNITY HOUSING TRUST OF MONTEREY COUNTY
and MONTEREY COUNTY WORKFORCE HOUSING, INC.

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INFORMATION ABOUT THE COMMUNITY HOUSING TRUST/WORKFORCE HOUSING

In 2001, the Fort Ord Reuse Authority (FORA) Board of Directors determined that affordable workforce housing was a key component in successful reuse of the former Fort Ord and was also essential to the economic and social well being of the Monterey Bay region.

In 2002, a series of public meetings were held to gather information and comment about the need for affordable workforce housing, the types of housing needed, and ways in which the community might address housing needs in the region which has high land costs and a variety of potential resource and other real and perceived constraints.  From those meetings, and continuing into late 2004, a broad-based community “working group” met to suggest policies and planning that could result in increased housing availability for persons in very low, low, moderate and workforce housing ranges.  FORA provided financial assistance for the effort between 2001 - 2004.

The Working Group surveyed over 400 private industry employers, as well as local agencies and jurisdictions, to find out what employers believed were the most critical issues affecting current and future economic and social well-being within the region.   “Housing affordability” was identified as a major concern by 88% of respondents.

Using survey results and data from AMBAG and other agencies, the Working Group developed an initial “Plan”, including a recommendation to establish a county-wide, independent, private, nonprofit, financial housing trust.  Funding for the trust and its functions was suggested to be obtained from a variety of sectors (public, private, foundation, individuals, and industry sectors).  As a result, in November 2004 a smaller group was “spun off” to seek IRS and state approval as a housing-related financial resources trust.  The program recommended for the trust(s) was two-fold: a) to provide home ownership opportunities through direct financial assistance for individuals (loans for down payments and closing costs); and, b) to provide low-interest pre-development loans for builders willing to construct affordable workforce housing.

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The Community Housing Trust of Monterey County, Inc (CHTMC), a 501 (c) (3) organization, and Monterey County Workforce Housing, Inc (MCWH), a 501 (c) (4) organization, were formed and received tax-exempt approvals from IRS and the State of California in 2005.   Both organizations are county-wide, independent, private, not-for-profit, financial housing “trusts”.

The purpose of the two organizations is to help address the need for county-wide affordable workforce housing, and to assist in relieving the burdens of local government as related to provision of affordable workforce housing (and the relationship of such housing in creating and maintaining a sustainable local economy).

The organizations are currently focused on funding to implement program components that provide direct loan assistance for individuals and pre-development construction loans for private and non-profit affordable housing builders.

The trusts are structured to serve persons with income levels of very low, low and moderate (0 - 120% of an area’s median income) and “workforce” level incomes (121 - 180% of median income).

Programs and funding resources for income levels of 0 - 120% are established and recognized by federal, state, county, and local jurisdictions, and funding is typically allocated through established “General Fund” and “Redevelopment Fund” resources.  Not as well recognized and provided for are mechanisms to address “workforce” housing needs for persons with income levels from 121 - 180% of median income.

91% of our local Monterey County area’s workforce (0 - 180% of median income) cannot afford to purchase a median-priced home (currently valued at $665,000 — actual prices vary dependent upon location within the various cities and parts of the county) .

Median home prices have increased by 96% since 2000 whereas median income during that period has increased by 24%. 

In the past year, the CHTMC and MCWH organizations have acquired approximately $260,000 in funding from the cities of Seaside and Monterey, from Monterey County, from private sector businesses, from a foundation, and from individuals.

The California Association of Realtors, in cooperation with the Monterey County Association of Realtors, recently contributed $100,000 from the CAR Housing Affordability Fund to the trusts for direct loans to qualified individual home buyers.  The first of those loans will occur within the next three months.

CHTMC and MCWH are also engaged in discussions/negotiations with several public agencies to establish employee housing assistance programs, and with several housing contractors/developers whose projects will provide workforce housing opportunities.  These projects are expected to come “on line” during the next 2 years.

The trusts are also part of an effort to obtain recognition that in many counties within California there is considerable disparity between set median income levels and the actual cost of housing in that area.  This disparity places an even greater burden on jurisdictions and employers to attract and retain workers in those areas — including within Monterey County’s cities and unincorporated areas.

For example, the ratio of housing pricing to income levels in Monterey County is greater than that found in the San Jose area.  This means that persons working in Monterey County (including people such as city/county workers, teachers, police/fire personnel, and mid-manager levels) would be able to qualify for housing assistance if they lived in San Jose.  The reason is because the median income level (0 - 120%) in San Jose is higher than in Monterey County, even though housing prices may be less than or similar to housing prices here.  As a result, workforce income level persons (121 - 180%) living here in Monterey County make too much money to qualify for assistance under existing “subsidized” housing programs (such as HUD-financed and identified “low to moderate” housing projects), but don’t make enough money to successfully obtain housing loans for market-rate housing. 

Having opportunities for home ownership and affordable workforce housing in our region affects and can benefit everyone.  Ultimate success of the CHTMC and MCWH organizations depends on involvement, engagement, and financial support from all segments of the community — employers, local jurisdictions, organizations, state and federal resources, public and private foundations, and individuals.

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COMMUNITY HOUSING TRUST OF MONTEREY COUNTY
and MONTEREY COUNTY WORKFORCE HOUSING, INC.
DOWNPAYMENT ASSISTANCE PROGRAM
DESCRIPTION/ GUIDELINES
March 2, 2008

Overview of Program:
The Downpayment Assistance Program is a program of the Community Housing Trust of Monterey County Inc. The purpose of this program is to provide direct financial assistance to prospective homebuyers in Monterey County to enable them to purchase a home in the County. The specific terms of the financing provided and program requirements are outlined below.

1) Who can qualify?

• A buyer must be a First Time Homebuyer (FTHB), which is defined as not having owned a home in the last 3 years. Because owning a mobile home is considered owning personal property and not real estate, mobile homeowners are still considered first time homebuyers.

• The only exception to the FTHB requirement is for an employee who is relocating to the County due to new job.

• A buyer who owns real estate for investment is not considered a First Time Homebuyer.

• The total household income cannot exceed 120% of the County median income, as published annually by the Department of Housing and Urban Development (HUD).

• The incomes and assets of all adult members of the household are included for purposes of determining program eligibility.

• The homebuyer must work in Monterey County.
   

2) Loan Terms

Term:
30 year term

Interest Rate:
3%, as may be adjusted for new loans at the discretion of the Board of Directors; interest waived for the first three years. Maximum Loan Amount: Loans limited to a maximum of 20% of the purchase price up to a maximum of $50,000, based on the income qualifications of the homebuyer.

Security:
Promissory Note is secured by a Second Deed of Trust, up to 100% LTV
Subordination The Trust will not subordinate its Note to any source other than the first
mortgage lender or a government funded downpayment assistance program. This
provision may be modified at the discretion of the Board of Directors based on the
qualifications and financing needs of a homebuyer.

Repayment:
The Note is to be repaid as follows:
Years 1-3: no payments on principal, 0% interest.
Years 4-30: Loan payments on the downpayment assistance loan begin on a schedule to amortize the loan over 27 years to correspond to the primary loan.
In the event the property is sold or refinanced, the Trust’s Note will be due in full.
In the event Buyer defaults on their first mortgage, the Trust’s Note will be due in full

Minimum Downpayment:
Buyers will not be required to make a minimum downpayment.

3) Buyer Qualification – Underwriting Standards

1. Buyer’s housing cost ratio (PITI) cannot exceed 50% of their gross household income.

2. Buyers must be credit-worthy. In order to qualify for the California Housing Finance Agency’s first mortgage and downpayment assistance programs Buyers must have a credit score of 640.

3. Asset Test – Buyer is permitted to retain in cash twice the estimated closing cost amount. Interest from investments count as income.

4. Buyer must complete a homebuyer education class from a provider
   approved by the Community Housing Trust of Monterey County Inc.

120% Area Median Income by Household Size       
Monterey County Income Limits for 2008
MAXIMUM INCOME GUIDELINES

Source: US Dept. of HUD