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Report regarding a resolution approving a Purchase and Sale Agreement and Affordable Housing Agreement between the City of South San Francisco and Habitat for Humanity for the sale of the City-owned property at 109 Longford Drive (APN 010-071-050) for $750,000. (Deanna Talavera, Management Analyst)
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RECOMMENDATION
Recommendation
Staff recommends that the City Council approve the sale of 109 Longford Drive (APN 010-071-050), a City-owned property, to Habitat for Humanity for $750,000 and authorize the City Manager to execute the Purchase and Sale and Affordable Housing Agreements.
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BACKGROUND/DISCUSSION
The single-family home (3 bedrooms/1 bath) at 109 Longford Drive was purchased by the City in 1998 for $207,000 for the purpose of removing a blighted unit. The City rehabilitated the property in 2009 using a wide array of green building techniques, such as solar panels, tank-less water heaters, and recyclable insulation. Since then it has been used as a model “green” home to educate contractors, students, and homeowners. While this home has served as an educational tool for the City, the home’s technology is no longer cutting-edge and is now obsolete as a model green home. The property has remained vacant.
The property was purchased with funds from the City’s General Fund and rehabilitated using funds from the City’s Housing Trust Fund. In 2014, the City Council adopted a Housing Investment Plan (HIP), which outlines what the City plans to do with the housing assets of the former South San Francisco Redevelopment Agency. The HIP specifies selling 109 Longford Drive at market rate. It is valued at roughly $965,000.
Disposition Process
As part of the disposition process, the City first had to declare the property as surplus and comply with requirements under the California Surplus Land Act. The disposal process under the Surplus Land Act requires the City to notify certain entities, including school districts and housing agencies (Preferred Buyers) and wait at least 60 days for a Preferred Buyer to notify the City of an interest to negotiate a purchase of the property. During this period, the City received one letter of interest from Habitat for Humanity. Once notified by Habitat for Humanity of its interest to negotiate, the City began negotiating the terms of the sale.
Offer Letter
Habitat for Humanity California is a statewide coalition of independent Habitat affiliates that serve communities across California. Habitat affiliates build homes and advocate for affordable housing with specific focus on homeownership opportunities for families with limited incomes. Habitat proposes to purchase 109 Longford Drive, make any necessary repairs, and sell the home to a qualified low-income family. Habitat will provide a qualified buyer with a zero-down, zero interest loan and place a deed restriction on the property, ensuring long-term affordability. Attachment 1 includes the detailed terms of Habitat for Humanity’s offer.
The Habitat for Humanity negotiated offer price of $750,000 is less than the estimated market value of the home. However, the offer provides the City with a unique opportunity to create affordable homeownership housing while also being fully reimbursed its initial investment. The offer details include a live/work preference and deed restricting the unit to households earning 80% of the Area Median Income. The addition of 109 Longford Drive to the City’s inclusionary housing portfolio meets the Council’s objective of creating and preserving affordable housing in South San Francisco.
Prior Council Direction
Staff brought forward Habitat for Humanity’s offer letter to City Council in closed session on July 21, 2020. At that time, the City Council directed staff to negotiate a purchase and sale agreement and bring it forward for City Council consideration at the conclusion of the negotiations period required by the Surplus Land Act. The negotiations period ended on September 3, 2020.
FISCAL IMPACT
The City used $207,000 of General Fund monies to purchase the property at 109 Longford Drive. Additional funds from the City’s Housing Trust Fund were used for extensive rehabilitation of the property. Proceeds from the sale of 109 Longford Drive will offset the costs related to the purchase and rehabilitation. Proceeds from the sale, including funds in excess of the acquisition and rehabilitation costs, will be allocated among the General Fund, the City’s Housing Trust Fund, and any other funding sources identified.
CONCLUSION
In conclusion, staff recommends that the City Council approve the sale of 109 Longford Drive (APN 010-071-050), a City-owned property, to Habitat for Humanity for $750,000 and authorize the City Manager to execute the Purchase and Sale and Affordable Housing Agreements.
Attachments:
1. Habitat for Humanity Offer Letter