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SR-6-K (66) CouncIl Meetmg November 28. 1995 Santa Momca. Cahfoffim 6K RM H&R JM PM JG share el1grpt srf NOV 2 8 1995 TO Mayor and CIty CouncIl FROM CIty Staff SUBJECT ModIfIcation of Shared AppreCIatIOn Loan Program GUldelmes INTRODUCTIOK ThIS report transrmts mformatlon and recommendanons regardmg a proposed modlflcanon of the Shared ApprecIatIOn Loan Program GUldelmes funded by the Tenant OwnershIp RIghts Charter Amendment (TORCA) The report recommends that the Clt}' CounCIl (1) approve the mOdIfication to the Program GUldelmes to ITIlprove the program's operatIon and aSSIst addItIOnal households to purchase theIr homes, and (2) allocate 25 % of the funds currently avaIlable for loans to apphcants ehglble under the eXIstmg loan program gmdelmes and who resIde m urnts undergomg a TORCA conversIon BACKGROlJ'XD The Tenant OwnershIp R1ghts Charter Amendment (TORCA) was adopted at a speCIal muruclpal elecnon June 5. 1984. and amended on November 6, 1984. June 7, 1988, November 6. 1990, and June 2. 1992 The TORCA reqUIres that the CIty llllplernent an ownershIp aSSIstance program for low and moderate lUcorne households purchasmg theu umts eIther as condornmmffi, commumty apartments. stock cooperatlves. cooperatIve aSSOClatlOns. or hmlted eqUlty stock cooperatIves under TORCA ProposItlon K. adopted June 1992, reqmred that the Clly 1ll1plernent a program whereby the CIty would receive a share of the appreCIated value of the umt at resale, and that the loan program funds be equally allocated between low Income households and 1 6K NOV 2 8 1995 moderate lUcorne households Under TORCA. low mcome households are defined as households whose mcomes do not exceed 80% of medIan gross mcome for Los Angeles County. adjusted for famIly SIZe Moderate lUcorne households are defined as households whose lUcomes do not exceed 120% of med1an gross mcorne for Los Angeles County, adjusted for famIly SIze The Cuy CouncIl adopted Program GUldelmes for operatJon of the program on September 14, 1993, and as authorIZed by Councd, the CIty entered mto an agreement wnh FITst Federal Bank: under whIch the bank processes and underwntes loan applIcatJons for the program InformatIon regardrng me program was maIled to all tenants of TORCA propertIes that had completed or were close to completmg the TORCA process m December. 1993, and FITst Federal Bank began acceptrng loan applIcatIOns To date, the bank has processed and the elly has approved and funded eIght loans. totalmg S440,740. under the program As of September 30. 1995. $2,708.762 IS avaIlable for loans under thIS program Based on tins expenence and dISCUSSIOns regardmg the program's loan terms and reqUIrements WIth many mterested persons. staff has adopted several modIficatJons to the program's AdmmlStratJve GUldelmes ill order to llllprove the program's operatIon and to aSSIst addmonal households to purchase theIr homes In conjunctIon WIth First Federal Bank. the CIty has maIled mformatIon regardmg the program to tenants of TORCA bUIldmgs on several occaSIOns However. there stIll appears to be a need to modIfy the terms and reqll1rements of the program to encourage broader partICIpatIOn 2 DISCGSSION Staff analysts mdIcated that the Program Gmddmes should be amended In order to Increase the number of low and moderate mcome households that are served through thIS program Staff beheves that the number of persons who have been served to date through the program has been hmlted by several factors. mcludmg the lmmatlon on the ehglbIhty to parttclpatIllg tenants whIch caused "mIsmatches" between umt pnces and affordabIhty for such tenants and "mIsmatches" between urnt SIZes and tenant needs for such Uillts Addmonally. III some cases, there was a lack of clear economIC benefit to tenants of purchasmg theIr umt rather than contmumg to rent the umt Staff proposes to modIfy the borrower elIgIbIlIty reqUIrements as contamed m the reVIsed Program GUidelInes (attached) Currently. the Program GUIdelInes proVIde (ill part) that applIcants must have reSIded III a UllIt III a bmldmg undergomg Tenant PartlcIpatmg ConversIOns at the date of the approval by the Planmng CommISSIon of the Tenant ParllClpatmg ConverSIOn apphcauon. or by the City CouncIl If the applIcatlOn IS appealed. m order to be elIgIble for a Shared AppreCIatIOn Loan These tenants are defmed as "partlClpatmg tenants- under TORCA The proposed modIficatlOll to the Program GUldelmes would allow low and moderate mcome households resldmg III a umt III a buddmg whIch has undergone a Tenant PartiCIpatIng ConverSIOn to be ehgIble for a Shared AppreCIatIOn Loan WIthOut regard to thelT length of occupancy of the urnt (m addItIon to partICIpatmg tenants who are now elIgIble under the program) ImmedIate relauves of the seller of the umt would be excluded from eligIbIlIty Staff belIeves that the reVISIOns wIll increase demand for the program by provldmg a larger pool of potentralloan applIcants and allowmg applIcants more chOIce III the umt they may purchase 3 under the program Although the Charter allows program funds to be used to assIst any tenant lIvmg m the Ullit at the tnne of the loan applIcatIOn, staff recommended limItmg elIgIbIlIty m thIS manner when the GUIdehnes were first adopted because of uncertamty regardmg the demand for the funds Based on the program's operatmg expenence to date, however. staff feels that thIS 11lmtatIOn IS no longer warranted Other eXIstmg ehgIblhty reqUIrements would remaIn unchanged In dISCUSSIons between staff and mterested partIes regardmg the program's operatIons, there has been general support for such broader elIgIbIlIty reqmrements Several owners of TORCA bmldmgs and converters who parucIpated m a publIc meetmg sponsored by the CIty to receIve feedback on the operatIon of the program requested that the CIty consIder opemng elIgIbIlity to persons whom eIther reSIded mother TORCA bUIldmgs or elsewhere m the CIty, WIthout regard to reSIdency wIthm the umt WhICh IS proposed for purchase WillIe staff bebeves that the Charter Amendment reqmres actual reSIdency m the umt. It does not speCIfy a partIcular length of reSIdency Therefore. the proposed change would proVIde fleXIbIlIty to the extent pernllssIble under TORCA It IS expected that thIS broader elIgIbIlIty provlSlon WIll Increase the demand for program funds The TORCA process can take from 18 to 36 months to complete and tenants cannot access the Loan Program WIthout the final TORCA subdIVIsIOn III place In order to assure that program funds remarn avaIlable to households who reSIde m uruts undergomg a TORCA converSIOn, staff recommends that 25 % of the funds currently aVallable be allocated for such households These funds would be set aSIde ill equal amounts for use by low and moderate Income households Staff 4 beheves tins would help assure that tenants III bmldmgs currently undergomg converSIOn, have access to funds once these converSIOns are completed The balance of the total program funds would be made avaIlable to households who qualIfy under thIS revIsed elIgIbIlIty reqUIrement. regardless of theIr length of occupancy The Housmg ComrmSSIOn revIewed. dIscussed. and voted to recommend the proposed changes to the TORCA Loan Program at therr August 17 and September 21 meetmgs ADj\UNISTRA TION Staff wIll work WIth First Federal Bank, whIch IS processmg loan applIcatIons under thIS program, to publIcIze the program's expanded ehgIblhty provlSlons to mterested persons In conJunctton With FIrst Federal Bank. mformanon regardmg changes to the program gmdelmes wIll be maIled to current tenants, owners. and converters Staff WIll contmue to morutor program loan actIVIty FINANCIAL/BUDGET ARY IMP ACT It IS antICIpated that tlus modIficatlOll wIll allow for greater UtllIzatIOn of exIStmg loan program funds 1'\0 other fmancml or budgetary ImpaCts are expected RECOMl\fENDATIO"XS It IS recommended that the CIty CouncIl (1) Approve the modIfICatIOn to the Program GUIdelmes for the condommmm component of the Tenant OwnershIp RIghts Chaner Amendment Shared AppreCIatIOn Loan Program presented III thIS report 5 (2) Authonze the City Manager to establIsh a set aSIde of 25 % of the funds currently avaIlable under the program ($677,190) from aVaIlable TORCA converSIOn tax revenue for borrowers who reSIded m theIr UDlt at the tIme of Plarunng ComrmssIOn approval of a Tenant Parnclpanng ConversIOn, Of CIty CouncIl approval where appl1cable Prepared by Jeff Mathieu, Resource Management DIrector Johanna GUllICk, SeDlOf Admlillstratlve Analyst Attachment TORCA GUidelInes st3ffrpt\ehgrpt stf 6 TORCA SHARED APPRECIATION LOAN PROGRAM GUIDELINES The TORCA Shared ApprecIatIon loan Program was established by the Tenant Ownership Rights Charter Amendment (TORCA) and amended by ProPOSition K adopted In 1992, In order to assist low and moderate Income households purchasmg theIr Units as condominiums under TORCA Under the program, the City may make Shared Appreciation I:.oansloatis to persons liVing In apartments which are being converted to condominiums who could not otherwise afford to purchase their Units The amount of the loan avaIlable from the CIty Will depend on y'':;ui~Qij$eho'd mcome and the size and price of the Unit No payments need to-be paid on the City loan until Y0urthe unit IS sold or otherwise transferred, or there IS a default on the loan Upon sale or transfer, the owner repays the loan and Will share any Increase In the value of the property With the City, In proportion to the amount of the City's Investment Shared Ap~reciation Loan Program Shared AppreciatIon Loans are Intended to make homeownershlphom~own~$hip pOSSible for buyers who (1) have adequate Incomes to support a mortgage, but do not have the funds available to pay the necessary dO'v.mpaymentdown paytpemt or clOSing costs, or (2) have Incomes which are too low to qualify for the mortgage they would need for the umt bemg purchased The maxImum loan amount WIll be based upon the applIcant's borrOWing capacity, assets available for downpa'fmentdownpayment, and the Unit size The loan amount shall be no more than IS necessary to enable a Borrower (1) obtammg maximum affordable private fmanclng, and (2) utiliZing personal assets, to purchase the ASSisted Unit In no case shall loans exceed 60% of the purchase pnce The follOWing maximum amounts per Unit size also apply StudiO or effiCIency $50,000 One Bedroom Umt $60,000 Two Bedroom or larger Umt $75,000 1 October 6, 1995 --- The minimum loan IS $5,000 All loans will be available only to eligible borrowers whose borrowing capacity IS determined to be Insufficient to purchase their units on their own All loans will be secured by a Deed of Trust recorded against the Assisted Unit The City'S Deed of Trust may be subordInated to a pnvate lender's FIrst Deed of Trust and CIty approved seller fmanclng Eligibility Requirements Borrowers Low and Mud~.atz :iiC;:;i1iZ H;:;i..is~Ii;:;:dsmoderate Income households who are currently residing In a i..iiiit iii ::'i..ii:diiigS uiidz.Quiiigbuildingwhrchhasundergonf!' Tenant Participating r"'__. .---.--- I,nr"'\ -~ ~L.._ ..J_~_ _.& ~L.._ ___~_.._I ..... ~..._ nl_~_.__ 1""___.__.__ ......VII" '-', ~IVII~ \ I 1 ....../ en 1I.e ....cue v' 1I1.... CttJtJl """QI ..,y ~llo;;; 1 ICt' Illlll~ UVIIIIIII>:>~I""'I --' ~...- ,----~ n_....._.__~.__ l""onverSJon ^ ~~I.-_~._~ __ ..... ....._ r"'.~. r"'_. .~_.I .t: ___1.__...__ ._ VJ ~II"" . v, Ja. Ii-I alll\..o'tJCI W j~ ...... I"'\ppll....CU.VI I, Vj V Y 1I,.... ......Ill uv....' '...... .. ~tJl-'''wClLJV' I ,,;I appealed(TpG) Borrowers may not currently own another residence Members of the City Council, persons employed by the City's Resource Management Division, City Manager's Office, CIty Council, or famIly members of such persons are not eligible to partiCipate In the program ~~_H'_"_ I _n. __..J ~._..J___.._ 1_____ 1_.._1_ ___ "'_..__"'_I..J _.__ _~_ _,,~___~I..__ IVIOAIII I....U II L..V1lV eu IU IVIUU\,;r1 ClLOV II U....UIII't:P U;;;;:V..t;;FI~ t..n:=-L . IVU~'I;;IIUJU ..:1'1L.v QL C \",l".Il L'l;;il H.'1 a~ f;:;::C....iS. LJ_. ._~..._1..... C"._~ ~~_,.._.._ ^ __. ._1 1_____ I 'VUoi:JI~II\JIU vlL."iJ IVIClAU I LUIII ru IIIUo.l LII\.l'Vlllv I _... .~____ ~ ._..J___~_ 1_ ____ L..VVV II Ii \..IV I I 1'1;:. IVIVUC:I (:IL~ .. n.....vll.-v ... 1l'.,""7 r\l::n Il'A., ':Il::n , \VG.I lV'tJV 'fo""""'T"--..........v 2 31,900 48,4CC 3 ? t= nil.., t::A At::n """'v,vvv ......"""'T,-r"""v .A -:In nnn an t::nn "T 1J~lvVV VV,VUV r "':I -Inn aE= -:It::n v "'v,IVV VV,4J-.JV 6 -<'3,38::> 70,200 7 49,500 ""7 t= nnn 'v,vvv 8 52,650 ""7t"\ ol:n r..;r,u......v u--- ~....~ ACqi..ii3itiCiii (iiidudiiig d;:;Wiijjo}/iiic;;t oSSistCiiiccThe-inirnedlate r~tative~of1ne seller of lheunit, inclVding the spouserchildrenipafent~, grandparents, broth~r.~ister, father In-taw, mother-in-law, son-ItT-"law,daughter -in-law r aunt.uQcte.,niece, l1e,phew, sister';' jn~raw, andbrother-in../aw, arenotelrgibleJo participate in th~ prog{arrt 2 October 6, 1995 Maximum low and moderatejncome leVels per hou$ehpl~sizef6r 1995~r~:~ foHows: H()us~hdJd Size> 'Maximllm~nuaJ Ihcome low income Mod~ratelncon;le (8G%) 020%) 1 $28.150 $43.1g0 2 ~Z, 150 49,250 3 36i200 55,40Q> 4 40,200 61;550 5 43,400 66,450 6 46,650 71,400 7 49~850 76,300 8 53,050 81~250 .J Uses: Acq(jisilion (ilJpluding down paymentassistahcealJqehgibleclo~i~g coS,tSJbf th~ Borrower's unitinbu i1dingshO(;tergoing a Tenant Participafing~ Conversloll'>fb condominium ownership. Eligible clOSing costs Include tYPical escrow and title Insurance fees and reasonable flnancmg fees for private loans Costs of necessary repairs to the property, If any, may not be paid from loan proceeds All repairs reqUired under the TORCA approval or by lender must be completed prior to close of escrow unless otherwIse allowed under the Charter Amendment loan Terms Term The term of a Shared AppreCiation Loan wIll be a maXimum of tvventy years, but no longer than the term of all other flnancmg, Includmg seller finanCing and pnvate institutional lender finanCing Upon request by the Borrower, the City may, at rts sole dIscretion, provide one ten year extension of the term of the loan to borrowers whose Incomes do not exceed 120% percent of the medIan Income one year prior to the date the loan matures DownpaymentDoWn payment The Borrower must make a dO'v'mpaymentdownp~yment equal to at least five percent (5%) of the ASSisted Umt's purchase pnce In addltlon, the Borrower must pay clOSing costs-,wl1ere thefBorrowerhas fulidsavailablerforthis PlJrpbs~.{Where such funds are not available,eliglble closmg costs may be included intheantoul1tofthe City!oan) Repayment The principal amount of the City's loan IS due and payable on the earlier of 3 October 6, 1995 twenty years, or upon resale or other transfer In addition, the Borrower must pay to the City, as contIngent Interest, a share of the appreciation of the umt equal to the amount of the City loan dIvided by the Onglnal Purchase Pnce, multiplied by the Appreciation of the unit Transfers to a Borrower's spouse, transfer of title In conjunction with divorce, and transfers of title by a Borrower's death to a surviving JOint tenant shall not be requIre repayment so long as the Borrower's successor assumes the loan and all loan terms The pnnclpal amount of the City's loan shall be due and payable even In the event that there IS no apprecIation rn the Unit, or the appreciation IS negatIve Restrictio ns: 1 The Borrower shall occupy the Assisted Unit as their pnmary residence A Unit shall not be rented, or used pnmarlly for commercial purposes 2 The Borrower shall not pledge the Assisted Unit as security without the pnor wntten consent of the City 4 Units shall be resold at no less than 95% of fair market value The Borrower shall provide an appraIsal at time of resale to document fair market value, If so reqUired by the City 5 The Borrower may make any Improvements to the Assisted Umt they wish However, only the value of documented, permanent capItal real estate or fIxture Improvements to the property for which the Borrower received pnor City approval under thIS program shall be deducted from the Resale Price of the Assisted Umt for the purpose of calculating appreciation The value of capital Improvements shall be determined by the City 6 Loans are not assumable, except in cases of transfer to a spouse or domestic partner, transfer to a spouse or former spouse In conjunction wIth a divorce, or transfer of title by a Borrower's death to a survIVing JOint tenant 7 In order to deter speculation, In the event that the umt IS sold wlthm three years of the date of purchase, Borrower WIll be reqUired to pay an additional portion of the umt's appreciation ThIS amount shall be equal to 10% of the apprecIation In the event that the unit IS sold Within three years, 20% of the appreciation In the event the unit IS sold Within two years, and 30% of the appreciatIon In the event that the Unit IS sold Within one year of purchase ThIS amount shall be In addition 1Q the contmgent mterest due on the loan However, In no circumstance shall the total amount due to the CIty as contingent Interest and under thIS proVIsion exceed 100% of the apprecIation of the unit The Director of the Resource Management Department shall develop cntena under 4 October 6, 1995 whIch the CIty may waive thIs provIsIon due to hardship Underwriting Guidelines Borrowers shall demonstrate that they do not have suffICient assets avaIlable to purchase the unIt wIthout CIty financIal assIstance A Borrower shall be determined to be unable to acquire the umt wIthout CIty fInancIal assistance If 1 the monthly cost for payment of principal, mterest, taxes, homeowner aSSOCiation fees and msurance of the combIned loans being obtamed by the Borrower from a private financIal institutIon and/or the seller would exceed twenty-eIght (28%) of the household's gross monthly Income, and 2- the household's assets do not exceed the total of the follOWing - (a) the amount necessary to pay the estimated c10smg costs and downpaymentdownpayment for the unrt to be purchased, (b) the amount necessary to pay SIX (6) months of the monthly housing costs (pnnclpal, Interest, taxes, Insurance and homeowner aSsocIation fees) associated wIth the unIt to be purchased, and (c) -five thousand dollars ($5,000) These underwritIng guidelines may be adjusted to conform wIth the underwntlng standards utIlized by the private InstitutIonal lender whIch IS provldmg fInancing to a Borrower under thiS Program Assets For the purposes of the Program, "assetsasset" means the value of a household's savmgs and any equIty In stocks, bonds, real property, or other forms of capital Investment "AssetsAsset" does not Include Items reasonably necessary for the personal use of the . household, such as personal effects, furnIture, appliances, automobIles, and real or personal property used In a bUSiness or undertaking whIch IS the primary source of lIvelihood for the household Assets also does not Include the value of life Insurance, penSIons, IRA accounts, or other retIrement funds (although Income received from such sources may be consIdered as Income) Loan to vall,.le ratio The total amount of all loans secured by the ASSisted Unit, includIng the City's loan, shall not exceed 95% of the appraIsed value of the ASSisted UnIt An appraIsal of the 5 October 6, 1995 Assisted Unit shall be provided by the Borrower and shall be subject to City approval Wherever feasible, the City shall utilize appraisals prepared by or for private lendmg Instltutlons provldmg financing for the Assisted Unit Creditworthiness The City may, In ItS sole discretion, decline an application for a loan where staff havehas reasonably determined that the Borrower's mcome, employment history. or creditworthiness is not sufficient to ensure repayment of all proposed loans being sought for the Assisted Unit Semor Fmanclng The City reserves the right to review and approve or disapprove the terms of all senior financing If the TORCA loan IS to be subordinate to a vanable payment or adjustable rate loan, the Borrower must submit a schedule showmg the maXimum possible Increase In debt servIce per year and the proposed means for meetmg the debt service requirements Vanable payment or adjustable rate loans shall not be allowed unless the Borrower's abIlity to meet such payments can be demonstrated to the satIsfaction of the City Vanable payment loans With negatIve amortization shall not be allowed Price Test The pnce of an AssIsted Unit must be comparable to or below the price of similar units In the same bUilding The Borrower must take advantage of seller discounts whenever feasible Seller Financing The City shall reView seller financing proposals on an IndiVidual basIs The City reserves the right to reject a loan application If staff reasonably determmes that the terms of the seller financing would adversely to the CIty's mterests RefinanCing of Senior Financing If the Borrower desires to refinance the primary debt, or borrow any additional funds after the Initial purchase of the ASSisted Unit, the City shall review and approve the terms and conditions of the proposed loan and the proposed use of the proceeds The City reserves the right to prohibit such refinanCing -If -staff reasonably determine that It Will adversely affect the City'S Interests In no case shall the Borrower be allowed to Increase the amount of total debt on the Assisted Unit Prepayment of the City Loan Borrowers may prepay the City loan at any time However, upon prepayment the Borrower must pay to the City the prinCipal and contmgent Interest, as well as any applicable mterest due under the anti-speculatIOn proVIsion of these GUidelines Definitions Appraiser- A . holder of a valid . Real Estate Appraiser Certificate ftomthestate<of California. 6 October 6, 1995 Appreciation -tfteThe Resale Price minus closing costs, real estate commiSSions, and any other normal and customary costs Incurred by the Borrower In selling the Assisted Unit, minus .......~ ^_._.-~I n..__...._~_ n~.__ _~ ......- .._.... __..J _____1 __..J _.._...____. _I_~.__ ___..._ ",lly ""-'11~lIlal' UI\,.r'lc;;I~~ I .Iv~ VI Lllv UIIIl QIIU tlUllllQI CUIU vU~LVllla.y ""'IV~III:::::J lIvV.;:I".;;;JI Incurred b'f the Original Purchase Price of the unit and normal andco$:lomaryctosing costs incurred by the Borrower in purchasing of the unit, minus the value of any capital Improvements for which the Borrower received pnor City approval under this Program Assisted Unit A unIt for which the City provides a City Loan Borrower That person or persons who have title to and occupy the Assisted Umt and enters Into a Shared AppreciatIon Loan With the City City Loan A loan made pursuant to the TORCA Charter Amendment and these gUIdelines, Including any amendments made thereto Ehalble Borrower Low and ~1..:J'::'::;iCit.::; :ii\:.:Jiii'::; :-:G'-i5.::;h<:i:':::; i'::;5idiiig iii Ci '-iiiit iii b;.;;:diiig und6~--'-- T____.. n_~.~.__...__ f"'__.,_~_.~__ tTnf"'_\ _... ......._ ..J_.~ ~~...I.._ ~____.._I 1.... ......_ I ~VII'l::l ''''''01 II I 01 ll....'tJoIII ,~ \,,#VII V"" ~I'-'II~ \ I I """"1 "'. u ,<;;; \.IC'll'W VI 1I1'W 01-'1-" V yQI U Y L1'''' rlsiiiiilig Cuiii~i3:;iujj vf t~6 ia;io.iit rCirtiC:p~t~~g C~;--;'v.6i~ivii At:ip:lcatiCiii, v~ ~,. t~:; C~tJ' f"'~. .__.1 .~ ~__I.__....~_ ._ _____I_..J Dvii<:i;;';\:i5 iiiCiY iii)tmoderate income hqqsenpt(js who \,,#'-'UII...." II "'tJtJll...."'L1UII ,~ OtJtJ'WCl''WU are currently vv'iil Ciiivthei" i'::;5ideiiceresi:ding in a building which has lli1dergone Tenant PartiCipating Conversion (TPC). Membersofthe City CouncilipersonsemplQyed by the City's Resource Management Division. City Manag~r's OfficE(Clty Council, or family members of such persons are not eligible toparticipateifl:the program MembersThe Immediate relatives of the City Cv'-iii\:il, i=i'::;i5.:Jii5 '::;iiiplc.y.::;d bY3ell~r.of the City's Resource Management Dl'ilslonunlt;. including the spouse,chHdren, City ~..~ar.Ci~'::;i'5 Off;c.::;, City r'~. '--"parents. grandparents< brother M .r~_.... ~~_I-._- -~ -. .-.... ~~--~-~""ister. father-in VVUI ,.....u i - .-: :. ._.. , VI 1c;l.IIIUY 111~IIILI'It;;;;1 ~ VI .::I.....""'.. p~1 ~VIII;JI~ .~:~. _ __~ law, mother-in-law, son:lo-:-ll:Iw. daugl1ter-in~Jaw, aunt, uncle, nje:9~;nephew, siSter-ind~w. andbrother.:..in-Iaw, are not eligible to particIpate In the program - Low I ncome Household Persons and famIlies whose Income does not exceed eighty percent (80%) of the median gross Income for Los Angeles County, adjusted for family SiZe, as determined by the Secretary of HOUSing and Urban Development and under Section 8(f)(3) of the United State HOUSing act of 1937, as amended, or If programs under Section 8(f)(3) are terminated, eIghty percent (80%) of the median gross Income determined under the method used by the Secretary pnor to such termination Moderate Income Household Persons and families whose Income does not exceed one hundred twenty percent (120%) of the median gross Income for Los Angeles County, adjusted for family Size, as determined by the Secretary of HOUSing and Urban Development and under Section 8(f)(3) of the Umted State HOUSing act of 1937, as amended, or If programs under Section 8(f)(3) are terminated, one hundred twenty percent (120%) of the median gross Income determined under the method used by the Secretary pnor to such termination 7 October 6, 1995 Onglnal Purchase Price The amount paid by the Borrower to purchase the unit, not mcludmg fees such as title fees, escrow fees, loan onglnatlon fees and other closmg costs Prog ram The Shared Appreciation Loan Program adopted by the City pursuant to the TORCA Charter Amendment Re$<;1le Price The amount for which the Assisted Unit IS sold by the Borrower In the case of a matured loan or a loan prepayment (where there has been no transfer or sale), the Resale Pnce shall be equal to the appraised value of the property To determine the fair market value of the Property for thiS purpose, the City and the Borrower shall endeavor to agree upon an Appraiser If the parties are unable to agree Within ten (10) days the Lender shall have an appraisal made by an Appral3erappraiser of ItS chOice to estabhsh the fair market value The Borrower may also, at Borrower's expense, have an appraisal made by an Apprai3crappraiser of the Borrower's choice to establish the market value If agreement cannot be reached, the average of the two appraisals shall be deemed to be the market value Tenant Partlcloatma Conversion Any conversIOn to tenant ownership Implemented under Section 2000 et seq of the Santa MOnica City Charter Umt Housing unit being converted through the TORCA process which IS currently occupied by applicant and Intended for purchase as a condominium Application Submittal and Review Procedures Application Submittal and Review Process 1 Eligible Borrowers may pick up an Information packet at any lime before or dunng the processing of their bUlldmg's Tenant Participating Conversion application Housmg DIVISion staff or a deSignated lender(s) Will be available at deSignated times to answer questions about the TORCA Shared Appreciation Loan Program and application procedures Staff or the deSignated lender Will also explain how Borrower eligibility and maximum potential private loan amounts are estimated However, City staff do not provide legal or finanCial counselmg and applicants are encouraged to seek their own adVisors regarding their deCISion to buy 2 Applicants may submIt applications for assistance only jf their building has received final map approval from the City 3 A complete application wlJllnclude - Completed application form - Copy of Purchase Agreement - EVIdence of the bUlldmg's TPC approval -- Venflcatlon of Income (most recent W2 form or acceptable 8 October 6, 1995 verification from an employer) - - Two prevIous years' federal and state Income tax returns - - A copy of the completed application to the pnvate lender (required after step 6 below) 4 Applications for City loans shall be submitted to private lenders designated by the City, who will review the application and package the loan request for approval by the City The lender shall request that the City provide the lender With verification of the status of the Tenant Partlclpatmg Conversion application CIty staff Will proVide written venficatlon of the status after consultation With the Planmng and ZOning DiVision and the Department of Real Estate 5 Completed applications Will be submitted by the designated lender(s) to the City and will be conSidered on a first come - first served basIs, however, City loan funds Will be allocated between low mcome Borrowers and moderate Income Borrowers as required by the City Charter ;.. In additicm,a total of tvfflIlty-five percehtof the TOf{CA funds.Willbe sef:;asideJor households who residedirl'~.unitin a building undergoing COil version at the li~of Planning CommissIon approval (or City CouncilapprovalWhere applicable)~ Halfef these funds, (or125% of the total fundsavaHabte)shalJ be seta~jde.for loWhicome households meeting thiS criterion, and half of these, funds (or 14.5% ofthe total funds avallabte) shall beset aside for moderate Income hOll$eholds rneetingtbis criterion. In the eventthat adequ~te fund.s are notavaifaJ:'}teto fund afFl9~n application~;. priority shall be giverito_~ousel1olds who residedjD.:a::bulrdingunderSdmg conversion at the time of PlanningCornmisslonapprova~ (or Gity~pproYalWhere applitable}oHhe application for.TenantParticipating Conver$ro[1~ 6 If the Borrower IS eligible to receive a TORCA loan, a notification letter WIll be prepared by the Housing DIVISion staff and reviewed and Signed by the Director of the Resource Management Department The letter shall state the maximum Program assistance amount reserved for the Borrower, and a list of additional conditions, documents and steps that must be completed by the Borrower In order to close the loan 7 Upon fulfillment of all conditions, the lender deSignated by the City shall prepare loan documents for execution 8 The Director of the Resource Management Department shall authonze release of the TORCA loan funds mto the escrow account established for the loan clOSing With Instructions for disbursement 9 October 6, 1995 9 All Borrowers shall be requIred to provide the City wIth title Insurance In a form and substance acceptable to the CIty and shall name the CIty as addItionally Insured on hazard Insurance policies, which shall be In amounts acceptable to the City Further Information Further mformatlon regardmg the City of Santa Monica's TORCA Shared Appreciation Loan Program can be obtamed by callmg the Housing and RectElyelopment DIVIsIon of the Resource Management Department at (310) 458-8702 8 2 D40ctober 6~1995 10 October 6, 1995 EXAMPLE OF SHARED APrRECATIONAPPRJ:CIATrO~ MORTGAGE Assumptions Family Income $30 I 000 Family Size 4 persons Property 2 bedrooms Price $150,000 Calculation of Affordable Mortgage Family's monthly Income $2,500 Affordable hOUSing cost 700 Affordable payment 500 MaXimum mortgage, based on an 80;'0 Interest rate and a 30 year amortization $68,100 Sources of Funds for Purchase Down paymentDown ~paymen,t $7,500 Conventional loan (1st Trust Deed) 68,100 City Shared AppreCiation Loan (2nd Trust Deed) 74.400 TOTAL FUNDS $150,000 City Share of Appreciation Resale Price $200 ,000 MinUS EligIble Selling Costs 15,000 Minus Approved Capital Improvements 0 MinUS. Ongmal Purchase Price 150.000 Equals. T atal AppreciatIon $35,000 TORCA Loan Amount $74,400 TORCA Loan/Ongmal Purchase Price 496% "CONTINGENT INTEREST" due to City $17,360 11 October 6, 1995 Principal of TORCA Loan due to City $74.400 TOTAL AMOUNT DUE TO CITY ON SALE $91,760 NET APPRECfA TIONTO BORROWER ON SAtE $17Ji40 . - - -.. ....-. ~ . ~ . . 12 October 6, 1995 COMPARISON OF HOUSING COSTS UNDER TORCA SHAREDAPPRE~IATION L.OANP~OGRANI Example: 2 Bedroom Unit costing $150,000 Without Shared With Shared ApprecationAppreciatj Appreciation on Mortgage Mortgage DO'vVnpaymentDown (20%) $30,000 7,500{5%)$7~500 payment Bank Loan 120,000 68,100 CIty Loan 0 74,400 Monthly Payment* $880 $500 * Assumes a thirty year loan at 8% interest 13 October 6, 1995 TORCA SHARED APPRECIATION LOAN PROGRAM GUIDELINES The TORCA Shared Appreciation Loan Program was established by the Tenant Ownership Rights Charter Amendment (TORCA) and amended by Proposition K adopted In 1992, In order to assist low and moderate Income households purchasrng their unrts as condominiums under TORCA Under the program, the City may make Shared Appreciation loans to persons living In apartments which are being converted to condominiums who could not otherwise afford to purchase their unrts The amount of the loan avaIlable from the City WIll depend on household Income and the size and price of the Unit No payments need be paId on the City loan until the umt IS sold or otherwise transferred, or there IS a default on the loan Upon sale or transfer, the owner repays the loan and Will share any Increase In the value of the property with the City, In proportion to the amount of the City's Investment Shared Appreciation Loan Program Shared Appreciation Loans are rntended to make home ownership possible for buyers who (1) have adequate Incomes to support a mortgage, but do not have the funds available to pay the necessary down payment or clOSing costs, or (2) have Incomes which are too low to qualify for the mortgage they would need for the Unit being purchased The maximum loan amount Will be based upon the applicant's borrowmg capacIty, assets avaIlable for down payment, and the unit sIze The loan amount shall be no more than IS necessary to enable a Borrower (1) obtaining maximum affordable private flnancmg, and (2) utilizing personal assets, to purchase the ASSisted Umt In no case shall loans exceed 60% of the purchase pnce The follOWing maximum amounts per unit size also apply Studio or effiCiency $50,000 One Bedroom Unit $60,000 Two Bedroom or larger Umt $75,000 1 October 6, 1995 The minimum loan IS $5,000 All loans will be available only to eligIble borrowers whose borrowing capacity IS determined to be Insufficient to purchase their units on their own All loans will be secured by a Deed of Trust recorded against the Assisted Umt The City'S Deed of Trust may be subordinated to a pnvate lender's First Deed of Trust and City approved seller financing Eliaibilitv Reauirements - - - Borrowers Low and moderate Income households who are currently resIding In a bUilding which has undergone Tenant Participating Conversion (TPC) Borrowers may not currently own another reSidence Members of the City CounCil, persons employed by the CIty's Resource Management DIVISion, City Manager's Office, CIty CounCil, or family members of such persons are not eligIble to participate In the program The ImmedIate relatives of the seller of the umt, Including the spouse, chIldren, parents, grandparents, brother, Sister, father In-law, mother-In-law, son-In-law, daughter-In- law, aunt, uncle, ntece, nephew, sister-In-law, and brother-In-law, are not eligible to participate In the program MaxImum low and moderate Income levels per household size for 1995 are as follows Household Size Maximum Annual Income Low Income Moderate 1 ncome (80%) (120%) 1 $28,150 $43,100 2 32,150 49,250 3 36,200 55,400 4 40,200 61,550 5 43,400 66,450 6 46,650 71,400 7 49,850 76,300 8 53,050 81,250 Uses AcqUisition (Including down payment assistance and eligible closing costs) of the Borrower's Unit In bUildIngs undergOing a Tenant Participating Conversion to condomlnlum ownership Eligible clOSing costs Include tYPical escrow and title 2 October 6, 1995 Insurance fees and reasonable financing fees for pnvate loans Costs of necessary repairs to the property, If any, may not be paId from loan proceeds All repaIrs reqUired under the TORCA approval or by lender must be completed prior to close of escrow unless otherwise allowed under the Charter Amendment Loan Terms Term The term of a Shared Appreciation Loan will be a maximum of twenty years, but no longer than the term of all other finanCing, Includmg seller finanCing and pnvate Institutional lender finanCing Upon request by the Borrower, the City may, at Its sole discretion, provide one ten year extension of the term of the loan to borrowers whose Incomes do not exceed 120% percent of the medIan Income one year prror to the date the loan matures Down payment The Borrower must make a down payment equal to at least five percent (5%) of the ASSisted Unit's purchase pnce In addItIOn, the Borrower must pay c10smg costs, where the Borrower has funds available for thiS purpose (Where such funds are not available, eligible clOSing costs may be Included In the amount of the City loan) Repayment The prrnclpal amount of the CIty's loan IS due and payable on the earlier of twenty years, or upon resale or other transfer In addition, the Borrower must pay to the City. as contingent Interest, a share of the appreciation of the umt equal to the amount of the City loan divided by the Ongmal Purchase Pnce, multiplied by the Appreciation of the Unit Transfers to a Borrower's spouse, transfer of title In conjunction With divorce, and transfers of title by a Borrower's death to a survlvmg JOint tenant shall not be require repayment so long as the Borrower's successor assumes the loan and all loan terms The prinCipal amount of the City's loan shall be due and payable even In the event that there IS no appreciation In the umt, or the appreciation IS negative Restrictions: 1 The Borrower shall occupy the ASSisted Unit as their pnmary residence A unit shall not be rented, or used primarily for commercial purposes 2 The Borrower shall not pledge the ASSisted Umt as secunty WIthout the pnor written consent of the CIty 4 Umts shall be resold at no less than 95% of fair market value The Borrower shall provide an appraisal at time of resale to document fair market value, If so reqUired by the City 5 The Borrower may make any Improvements to the ASSisted Unit they Wish However, only the value of documented, permanent capItal real estate or fIxture 3 October 6, 1995 Improvements to the property for which the Borrower received pnor City approval under this program shall be deducted from the Resale Price of the Assisted Unit for the purpose of calculating appreciation The value of capital Improvements shall be determined by the City 6 Loans are not assumable, except In cases of transfer to a spouse or domestic partner, transfer to a spouse or former spouse m conjunction With a divorce, or transfer of title by a Borrower's death to a surviving jOint tenant 7 In order to deter speculation, In the event that the Unit IS sold WithIn three years of the date of purchase. Borrower wIll be reqUIred to pay an additional portion of the Unit's apprecIation ThIS amount shall be equal to 10% of the appreCIation In the event that the umt IS sold wlthm three years, 20% of the appreCiatIon In the event the Unit IS sold wlthm two years, and 30% of the appreCiation In the event that the unrt IS sold Within one year of purchase ThiS amount shall be In ad(;iltlon :tQ the conttngent Interest due on the loan However, In no circumstance shall the total amount due to the City as contingent Interest and under thiS proVIsion exceed 100% of the appreCiation of the umt The Director of the Resource Management Department shall develop cntena under which the City may waIve thiS proVIsion due to hardshIp Underwritina Guidelines Borrowers shall demonstrate that they do not have suffICIent assets avaIlable to purchase the umt Without CIty financial assistance A Borrower shall be determIned to be unable to acqUire the Unit Without CIty financial assIstance If 1 the monthly cost for payment of pnnclpal, mterest, taxes, homeowner aSSOciatIon fees and Insurance of the combined loans being obtained by the Borrower from a private financial institutIOn and/or the seller would exceed twenty-eight (28%) of the household's gross monthly Income, and 2 the household's assets do not exceed the total of the following (a) the amount necessary to pay the estimated clOSIng costs and down payment for the Unit to be purchased, (b) the amount necessary to pay SIX (6) months of the monthly hOUSing costs (pnnclpal, mterest, taxes, Insurance and homeowner assocIation fees) associated With the unit to be purchased, and (c) five thousand dollars ($5,000) 4 October 6. 1995 These underwntlng gUidelines may be adjusted to conform with the underwntlng standards utilized by the pnvate Institutional lender which IS proViding financing to a Borrower under this Program Assets For the purposes of the Program, "asset" means the value of a household's savings and any equity In stocks, bonds, real property, or other forms of capital Investment "Asset" does not Include Items reasonably necessary for the personal use of the household, such as personal effects, furniture, appliances, automobiles, and real or personal property used In a busmess or undertaking which IS the pnmary source of livelihood for the household Assets also does not include the value of life Insurance, penSions, IRA accounts, or other retirement funds (although Income received from such sources may be conSidered as Income) Loan :tQ value ratro The total amount of all loans secured by the ASSisted Umt, Including the City's loan, shall not exceed 95% of the appraised value of the ASSisted Umt An appraisal of the ASSisted Unrt shall be prOVided by the Borrower and shall be subject to CIty approval Wherever feaSible, the City shall utilize appraisals prepared by or for pnvate lendmg institutions proViding finanCIng for the ASSisted Umt Credltworthmess The CIty may, In Its sole dIscretIon, decline an applIcatIon for a loan where staff has reasonably determined that the Borrower's Income, employment hiStOry, or credltworthmess IS not suffiCient to ensure repayment of all proposed loans being sought for the ASSisted Unit Senior FinanCing The City reserves the right to review and approve or disapprove the terms of all senror finanCing If the TORCA loan IS to be subordinate to a variable payment or adjustable rate loan, the Borrower must submIt a schedule shOWing the maxImum pOSSIble Increase In debt service per year and the proposed means for meetrng the debt service requirements Variable payment or adjustable rate loans shall not be allowed unless the Borrower's ability to meet such payments can be demonstrated to the satIsfaction of the City Variable payment loans With negative amortization shall not be allowed Price Test The price of an ASSIsted Unit must be comparable to or below the price of SimIlar unrts In the same bUilding The Borrower must take advantage of seller discounts whenever feaSible Seller FinanCing The City shall review seller finanCing proposals on an IndiVIdual baSIS The City reserves the right to reject a loan application If staff reasonably determines that the terms of the seller finanCing would adversely to the City's Interests RefinanCing of Senior FinanCing If the Borrower deSIres to refinance the primary debt, or borrow any additional funds after the Inrtlal purchase of the ASSisted Unit, the CIty shall review and approve the terms and conditions of the proposed loan and the proposed use 5 October 6, 1995 of the proceeds The City reserves the right to prohibIt such refinancing If staff reasonably determine that It will adversely affect the City's mterests In no case shalf the Borrower be allowed to Increase the amount of total debt on the ASSisted Unit Prepayment of the City Loan Borrowers may prepay the City loan at any time However, upon prepayment the Borrower must pay to the City the pnnclpal and contingent Interest, as well as any applicable Interest due under the anti-speculation proVIsion of these GUidelines Definitions Aooralser A holder of a valid Real Estate Appraiser Certificate from the state of California AppreCiation The Resale Pnce minus clOSing costs, real estate commiSSions, and any other normal and customary costs Incurred by the Borrower In selling the ASSisted Unrt, minus the Onglnal Purchase Pnce of the Unit and normal and customary clOSing costs Incurred by the Borrower In purchasing of the Unit, mmus the value of any capital Improvements for which the Borrower receIved pnor City approval under thiS Program ASSisted Unit A Unit for which the CIty provides a City Loan Borrower That person or persons who have title to and occupy the ASSisted Unit and enters mto a Shared AppreCiation Loan With the City City Loan A loan made pursuant to the TORCA Charter Amendment and these gUIdelines, including any amendments made thereto Eligible Borrower Low and moderate Income households who are currently reSiding In a bUilding which has undergone Tenant Participating Conversion (TPC) Members of the City CounCIl, persons employed by the City's Resource Management DIVISIon, City Manager's Office, City CounCil, or family members of such persons are not eligible to participate In the program The Immediate relatives of the seller of the Unit, Including the spouse, chJldren. parents, grandparents, brother, Sister, father-In-Jaw, mother-In-law, son- In-law, daughter-m-law, aunt. uncle, niece, nephew, sister-in-law, and brother-In-law, are not eligible to participate In the program Low Income Household Persons and families whose Income does not exceed eighty percent (80%) of the median gross Income for Los Angeles County, adjusted for family SIze, as determIned by the Secretary of Housmg and Urban Development and under Section 8(f)(3) of the Umted State HOUSing act of 1937, as amended, or If programs under Section 8(f)(3) are terminated, eighty percent (80%) of the median gross income determmed under the method used by the Secretary prior to such termmatlon 6 October 6, 1995 Moderate Income Household Persons and families whose Income does not exceed one hundred twenty percent (120%) of the medIan gross Income for Los Angeles County, adjusted for family Size, as determined by the Secretary of Housing and Urban Development and under SectIon 8(1)(3) of the UnIted State Housmg act of 1937, as amended, or If programs under Section 8(f)(3) are terminated, one hundred twenty percent (120%) of the median gross Income determmed under the method used by the Secretary pnor to such termmatlon Onglnal Purchase Pnce The amount paid by the Borrower to purchase the unrt, not Including fees such as title fees, escrow fees, loan onglnatlon fees and other closing costs Program The Shared Appreciation Loan Program adopted by the CIty pursuant to the TORCA Charter Amendment Resale Price The amount for which the Assisted Unrt IS sold by the Borrower In the case of a matured loan or a loan prepayment (where there has been no transfer or sale), the Resale Pnce shall be equal to the appraised value of the property To determine the fair market value of the Property for thiS purpose, the City and the Borrower shall endeavor to agree upon an Appraiser If the parties are unable to agree within ten (10) days the Lender shall have an appraisal made by an appraiser of Its chOice to establish the faIr market value The Borrower may also, at Borrower's expense, have an appraisal made by an appraiser of the Borrower's chOice to establish the market value If agreement cannot be reached, the average of the two appraisals shall be deemed to be the market value Tenant PartlclOatlna Converslon Any conversIon to tenant ownershIp Implemented under Section 2000 et seq of the Santa Momca City Charter Unit Housing umt being converted through the TORCA process which IS currently occupied by applIcant and mtended for purchase as a condommlum Application Submittal and Review Procedures ApplicatIon SubmIttal and RevIew Process 1 ElIgible Borrowers may pIck up an InformatIon packet at any time before or dUring the processmg of their bUlldmg's Tenant Participating Conversion application Housing DIVISion staff or a designated lender(s) Will be available at desIgnated times to answer questions about the TORCA Shared Appreciation Loan Program and application procedures Staff or the designated lender Will also explain how Borrower eligibility and maximum potential private loan amounts are estimated However, CIty staff do not prOVide legal or finanCial counseling and applicants are encouraged to seek their own adVisors regardmg their deCISIon to buy 2 Applicants may submit applications for assistance only If their bUilding has 7 October 6. 1995 receIved fmal map approval from the CIty 3 A complete appllcatron will Include - Completed appllcatron form - Copy of Purchase Agreement - EVidence of the buildlng's TPC approval - Verification of Income (most recent W2 form or acceptable venficatlon from an employer) - Two prevIous years' federal and state Income tax returns - A copy of the completed application to the private lender (reqUired after step 6 below) 4 Applications for City loans shall be submitted to private lenders deSignated by the City, who Will review the application and package the loan request for approval by the City The lender shall request that the City proVide the lender With venflcatlon of the status of the Tenant Participating Conversion application City staff Will proVIde wntten verification of the status after consultation With the Planning and Zomng DIVISIon and the Department of Real Estate 5 Completed applications Will be submitted by the deSignated lender(s) to the City and Will be conSidered on a first come - first served baSIS, however, City loan funds Will be allocated between low Income Borrowers and moderate mcome Borrowers as required by the City Charter In additIon, a total of twenty-five percent of the TORCA funds Will be set aSide for households who reSided In a umt In a bUlldmg undergOing conversIon at the time of Plannrng CommIssIon approval (or CIty CouncIl approval where applIcable) Half of these funds, (or 125% of the total funds available) shall be set aSide for low Income households meeting thiS criterion, and half of these funds (or 125% of the total funds available) shall be set aSide for moderate Income households meetmg thIS cnterlon In the event that adequate funds are not available to fund all loan applications, priority shall be given to households who reSided m a bUilding undergOing conversIon at the time of Plannmg CommiSSion approval (or City approval where applicable) of the application for Tenant Participating Conversion 6 If the Borrower IS eligible to receive a TORCA loan, a notification letter Will be prepared by the HOUSing DIVISion staff and reViewed and Signed by the Director of the Resource Management Department The letter shall state the maximum Program assIstance amount reserved for the Borrower, and a list of additional conditions, documents and steps that must be completed by the Borrower In order to close the loan 8 October 6. 1995 7 Upon fulfillment of all conditions, the lender designated by the City shall prepare loan documents for execution 8 The Director of the Resource Management Department shall authorize release of the TORCA loan funds Into the escrow account established for the loan clOSing With instructions for disbursement 9 All Borrowers shall be required to provIde the City With title Insurance In a form and substance acceptable to the City and shall name the City as additIonally Insured on hazard Insurance policIes, which shaH be In amounts acceptable to the City Further Information Further Information regarding the City of Santa Monica's TORCA Shared Appreciation Loan Program can be obtained by calling the HOUSing and Redevelopment DIVISion of the Resource Management Department at (310) 458-8702 July 13, 1995 9 October 6. 1995 EXAMPLE OF SHARED APPRECIATION MORTGAGE Assumptions F am Ily Income $30,000 Family Size 4 persons Property 2 bedrooms Price $150,000 Calculation of Affordable Mortgage Family's monthly Income $2,500 Affordable housing cost 700 Affordable payment 500 Maximum mortgage, based on an 8% Interest rate and a 30 year amortIzation $68,100 Sources of Funds for Purchase Down payment $7,500 Conventional loan (1 st Trust Deed) 68,100 City Shared Appreciation Loan (2nd Trust Deed) 74.400 TOTAL FUNDS $150,000 City Share of Appreciation Resale Price $200,000 Minus' Eligible Selling Costs 15,000 Mmus Approved Capital Improvements 0 Minus Ongmal Purchase Pnce 150.000 Equals Total Appreciation $35,000 TORCA Loan Amount $74,400 TORCA Loan/Onginal Purchase Price 49 6010 "CONTINGENT INTEREST' due to City $17,360 Principal of TORCA Loan due to City $74.400 TOTAL AMOUNT DUE TO CITY ON SALE $91,760 10 October 6, 1995 NET APPRECIATION TO BORROWER ON SALE $17,640 11 October e, 1995 COMPARISON OF HOUSING COSTS UNDER TORCA SHARED APPRECIATION LOAN PROGRAM Example: 2 Bedroom Unit costing $150,000 Without Shared With Shared Appreciation ApprecIation Mortgage Mortgage Down payment (20%) $30,000 (5%) $7,500 Bank Loan 120,000 68,100 City Loan 0 74,400 Monthly Payment* $880 $500 *Assumes a thirty year loan at 8% Interest 12 October 6, 1995