Truckee’s Local First-time Homebuyers Down-Payment Assistance Program

Great news for the town of Truckee! A first-time homebuyers’ assistance program was recently passed. This will help buyers with the downpayment of their home and allow many new buyers to take this exciting step forward! Below are the details of this new assistance program.

Abstract: The Town of Truckee, in partnership with its Redevelopment Agency, has established a first-time homebuyer’s down-payment assistance program (a.k.a. “silent second”) to increase for-purchase housing opportunities. The program is geared towards working folks in three income classifications that are prevalent locally: “low-income”, “moderate-income”, and “above-moderate income”. Program participants are required to either live or work within the Town’s boundaries. This down-payment assistance program targets the existing housing stock, with most all forms of residential dwellings eligible to participate (i.e., single-family detached homes, duplexes, tri-and-four plex units, condominiums, and even manufactured homes – so long as the unit has a permanent foundation). There are very few “strings” attached to participation in this program, which is why many anticipate that this housing affordability expansion effort will actually be embraced by the community, receiving great attention and extensive use. The primary conditions for inclusion involve meeting the income parameters, having not owned real property within the previous 36 months, the geographic connection to the Town through current residence or job, and that the unit to be purchased is utilized as participant’s primary residence for the duration of the conditions of the loan. 

The loan terms involve a 30-year deferred payment structure, with 2% to 3% interest, which is recorded against the real property at the same time, but in second position, when the first loan/primary mortgage is recorded. The program makes use of existing housing inventory, which should serve to enhance our industry’s sales activity. Perhaps of greatest importance to a functional framework, this program is free-market based. Units are purchased at market-rate pricing, and can then be resold to whoever is interested in the property, again without any ornorus restrictions upon the asking or selling price. The Town is to be made whole (i.e., the loan repaid), but the property itself is never saddled with the “affordable-only” or “low-income restricted” housing label. The deed restrictions essentially attach to and run with the loan-holder, not the property’s title. This is a major step forward towards an effective and fully functional home ownership program. 

The timeline for program implementation is as follows: 18 Dec. 2009 is the date slated to officially launch the program; January 2010 multiple workshops will be held to inform the public of this down payment assistance opportunity, and an industry professional’s workshop is also planned specifically for and geared to the real estate industry; 05 Feb. 2010 is the closing date for the Town to receive the first round of applications; with the remainder of February being dedicated to participant selection and initial contact. The Town’s website will be posting information, announcements, and forms as they become available.

Program particulars: Established on 19 November 2009 by Town Council Resolution # 2009-57, the Town of Truckee First-Time Homebuyer Down Payment Assistance Program became a reality. Intended to serve the “low”, “moderate”, and “above-moderate” income segments of the Truckee community, this program provides valuable down payment assistance to those who possess the desire, and meet the lending requirements, to purchase a home of their own. Perhaps the most common question regarding such a program is how the income levels are established, defined, and what this abstract formula converts to in real dollars locally. 

To break this system down into manageable chunks of information, let us begin with a few definitions. Each rung on the income ladder is based on “AMI”, “Area Median Income” for that region. The area used in the service of setting the income averages are the county boundaries. In this instance, the entire County of Nevada is the dataset. Yes, there are differences in income and expense profiles from community-to-community within a county, but for the purposes of establishing the Median Income no such sub-area breakouts are allowed. This is the standardized statistical methodology used by State and Federal Governmental entities, such as Housing and Community Development in California (HCD), or the department of Housing and Urban Development (HUD) in Washington, D.C.. The income numbers are adjusted annually. Turning next to income categories, the pertinent classifications for Truckee’s program are as follows: “low-income” = up to 80% of AMI; “moderate-income” = up to 120% of AMI; and “above-moderate income” = 121% to 160% of AMI. “Income” is broadly defined as gross amount of income of all adult household members anticipated to be received during the coming 12-month period. A household can be a single adult living alone, or any number of permutations of adults living together, with or without children. The point here is that income level must take into account the contributions of all working adults in residence. As such, household-level income establishes eligibility. The formula does recognize and adjust for the fact that larger families require more resources (income) for their existence. Therefore, a family of six could have a combined household income far in excess of a single adult living alone, yet both could be set on the same income strata (e.g., “low-income”…). 

For the Town of Truckee, Nevada County’s Area Median Income figures provide the basis for determining program eligibility. Using 2009 AMI numbers, the actual gross income amounts reflective of the categories for program participation are reported in the table directly below.

Number of Persons in Household
Category	1	2	3	4	5
“low”- up to 80% AMI	$38,700	$44,250	$49,750	$55,300	$59,700
“moderate” 80%-120% AMI	$58,050	$66,300	$74,600	$82,900	$89,500
“above-mod” 121% -160% AMI	‘$77,360	$88,480	$99,520	$110,560	$119,440

                                         These numbers reflect annual gross family/household income. 

Using the current AMI parameters, in combination with Town program requirements, the price-point for housing purchase would fall within three distinct “max-out” sales pricing. Reflected below:

Maximum Purchase Price of Housing Unit
Low Income Category (up to 80% AMI)	$265,000
Moderate Income Category (Above 80% to 120% AMI)	$355,000
Above-Moderate Income Category (Above 120% to 160% AMI)	$445,000

Number of persons per household would move this price-point up or down as family size increased or decreased. The above table is, I believe, reflective of the purchasing power of a family of four at each income category. 

Converting this information into a sense of how much financial aid is potentially available to assist in the down payment and/or closing costs is discussed in the “Draft Program Guidelines”. It states, in pertinent part, that, “…the maximum combined assistance allowable from all sources is $100,000.” (p. 9)

In the few thousand words contained within the text of this informational outreach, I can only begin to scratch the surface of the program’s components. The interested reader is urged to refer to the original source documents for a more comprehensive discussion of the Town of Truckee’s First-Time Homebuyer’s Down Payment Assistance Program. The program specifics are worthy of review, but are well beyond the scope of this “brief” information update. The true experts in this arena are the folks who put together this program, and will be administering its resources distribution. Specifically, Mr. David Griffith, Redevelopment and Housing Coordinator for the Town of Truckee, has a wealth of information on the program particulars. If you contact him, please offer our thanks for his leadership in spearheading this much-needed program. 

Reference materials: Posted to the TSBOR/TSMLS website, within the PDF library, the LGR Committee has created a new category entitled, “Truckee First-Time Homebuyer Program”. Presently, the Town staff report to the Council on this subject has been uploaded. Additionally, the draft Down Payment Assistance Program Guidelines are posted as well. You will also find a copy of the Redevelopment Agency’s staff report to the Council regarding funding levels and sources listed in this newly generated category. Additional documents will be added as they become available.