Marin
Independent Journal Friday, January 31,
1986
Innovations
at Novato's Skylark project
By
Clark Blasdell and Dwayne Hunn
JUST
UP THE
ROAD from the
Marin Independent Journal, 15 more families soon will be moving in at the
Skylark housing project, another development by Novato Ecumenical Housing.
This Ignacio project will
set a state record when 19 of its 37 homes are sold at below-market rates to first-time
Marin homebuyers who. earn less than 80 percent of the county’s median income
of $27,500.
There are several
innovations connected with this project. Itemizing them gives us an idea of how
difficult it is to build affordable housing in Marin.
With a balance sheet of
zero, Novato Ecumenical Housing received a $350,000 California Housing and
Community Development loan — one of their largest single commitments. Couple
with Community Development Block Grant funds and in-lieu fees from developers,
NEH now had enough funds to purchase the site on Alameda del Prado near the
Skylark Motel.
The city of Novato’s Housing
Opportunity Program encourages affordable housing development by allowing
certain sites to be built at the top of the density range, thereby reducing a
developer’s per unit cost. One of these sites, was found.
By using the $350,000 predevelopment loan, NEH was required to make half of the development affordable to low-income households — those with earnings from $19,250 to $27,500. After eight lending institutions rejected NEH’s construction-loan application because of the project’s financial complexity, Citicorp granted a $2.35 million loan in February 1985.
NEH’s contribution was to
come from $973,984 in grants it obtained from nine different funding sources.
Also part of the funding
package was $2.754 million of first-time homebuyers’ mortgage money through the
$22 million Marin County Tax Exempt Bond Pro gram, issued at a fixed 30-year
rate of 10.5 percent.
To obtain this money, points
(prepaid interest) had to be paid to the bond broker. These fees were paid by
another block grant allocation.
Through the process, NEIl
was determined to build the best project possible. We began by choosing
California's 1981 Affordable Housing Design winner, Mike Moyer, as project
architect. He integrated all-redwood siding, solar domestic hot water beating,
all-gas appliances, extremely high-efficiency gas furnaces, thermo-paned
windows and edible landscaping into the one and two-bedroom designs. PG&E
later awarded Skylark its Energy Conservation Award.
To make we homes affordable and to ensure that pride of ownership
would be maintained, NEH created second trust deeds (mortgages) with deferred
principle and interest, along with a shared-appreciation program for the
below-market-rate buyers.
As an example, suppose such
a buyer purchases a unit at $100,000, but can only finance $60,000 (down
payment plus first mortgage). The remaining $40,000 in value is carried by NEH
as a “sleeping” second mortgage requiring no payments until the unit is sold.
At that time, the first and
second mortgage are repaid and the appreciation beyond that is split between
the original buyer and NEH. This split, in essence, is NEH’s deferred interest.
For market-rate buyers, NEH
provides interest-rate buydowns. For example, suppose a first-time homebuyer
purchases a unit at the 10.5 percent interest rate. NEH may do a 2-to-1
buydown, which means it pays part of the interest for each of the first two
years.
This means that in year one,
the interest is 8.5.5 percent, in year two it is 9.5 percent and for the remaining 28 years it’s 10.5 percent. This often helps the
buyer qualify by reducing initial monthly payments.
To cost-effectively carry
out the design and ensure hometown accountability, a Novato builders’
consortium of respected builders was formed-- Grippe, Parode and Timmer.
As NEH enters its second
full month of marketing, prices start at $88,000 with uniquely designed
two-bedroom units available at $105,000. Spacious two-bedroom townhouse design
s are priced at $114,950. A few below-market-rate units may also still be
available.
Interested people should
contact Home and Land Realty (454-9900) to take a look at the spectacular and
affordable record-setting project that NEH and the community of Novato are
proud to have created for Marin.
More than half the units at Novato’s Skylark housing
will be sold at below market rates
Blasdell
Hunn
Clark Blasdell is executive director of Novato Ecumenical Housing.
Dwayne Hunn is assistant director and Skylark’s project manager.