Item 13 Staff Report Accept Informational Report on Loss of Below Market Price (BMP) Unit at 122 Henning CourtCOUNCIL AGENDA
DATE: 8-1-94
ITEM NO. / 3
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
DATE: July 27, 1994
TO: MAYOR AND TOWN COUNCIL
FROM: TOWN MANAGER
SUBJECT: ACCEPT INFORMATIONAL REPORT ON LOSS OF BELOW MARKET PRICE (BMP) UNIT
AT 122 HENNING COURT
RECOMMENDATION:
Informational Report.
BACKGROUND:
The BMP Program, established by Zoning Ordinance Sections 3.90.100 - 3.90.135, assists low and moderate
income Los Gatos citizens purchase homes. Through this program homes are sold at prices below market
value. This ordinance helps meet State -mandated housing goals.
One twenty-two Henning Court is one of six BMP units in the Courtside condominium complex. The seller
notified the Town on December 27, 1993, of her intent to sell the unit. The Town has six months to exercise
its first right of refusal, which includes either purchasing the unit or finding a buyer. The Town always
chooses to find a buyer. The Town contracts with Community Housing Developers (CHD) to market and
facilitate the sale of BMP units.
The qualified buyer for the unit obtained a first mortgage for eighty percent ($116,800) of the purchase price
($146,000) and indicated she had funds to cover a five percent downpayment and closing costs. She
requested a second mortgage from the Town to complete the financing. At its June 13, 1994 meeting,
Council approved a $21,900 loan from the BMP fund to cover the fifteen percent balance.
The buyer was unable to provide the full downpayment and closing costs. She needed approximately $7,500
extra to meet the obligation. The seller was willing to provide a loan to close the financing gap. The seller
and buyer were unable to reach an agreement on loan terms and the sale failed to take place.
CONCLUSION:
Town and Community Housing Developers staff worked diligently to facilitate the BMP sale before the first
right of refusal expiration on June 27, 1994. Since the sale failed to occur before June 27, the unit has
converted to a market rate unit and has been lost from the BMP Program.
PREPARED BY: Regina A. Fal
Community es Director
RAF:dr
CSD01:A: CNCLRPTS\BMPUNIT.122
Distribution: See Page 2 for Distribution List.
7/27/94 9:21 am
File #
Reviewed by:
Attorney CI c Finance Treasurer
COUNCIL ACTION/ACTION DIRECTED TO:
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: ACCEPT INFORMATIONAL REPORT ON LOSS OF BELOW MARKET PRICE (BMP) UNIT AT 122
HENNING COURT
July 27, 1994
ENVIRONMENTAL ASSESSMENT:
This is not a project as defined under CEQA, and no further action is required.
FISCAL IMPACT:
No loan from the BMP Fund will be made.
DISTRIBUTION:
Below Market Price Advisory Committee:
Lee Bowman, Planning Director
David W. Knapp, Town Manager
Regina A. Falkner, Community Services Director
August 1, 1994
Los Gatos, California
ROOFING MATERIALS/INSTALLATIONS/URGENCY ORDINANCE 1987 (32A.28)
The Town Clerk read the Title of the Urgency Ordinance.
Motion by Mrs. Benjamin, seconded by Mrs. Lubeck, to waive the reading of the Urgency
Ordinance. Carried unanimously.
Motion by Mrs. Benjamin, seconded by Mrs. Lubeck, that Council adopt Urgency Ordinance
1987 entitled, ORDINANCE OF THE TOWN OF LOS GATOS AFFIRMING FINDINGS OF
LOCAL NECESSITY TO REGULATE ROOFING MATERIALS AND INSTALLATIONS, noting
that the findings are in the Ordinance. Carried unanimously.
ROOFING MATERIALS/INSTALLATIONS/ORDINANCE INTRODUCTION (32B.28)
The Town Clerk read the Title of the Draft Ordinance.
Motion by Mrs. Benjamin, seconded by Mrs. Lubeck, to waive the reading of the Draft
Ordinance. Carried unanimously.
Motion by Mrs. Benjamin, seconded by Mrs. Lubeck, that Council introduce Draft Ordinance
entitled, ORDINANCE OF THE TOWN OF LOS GATOS AFFIRMING FINDINGS OF LOCAL
NECESSITY TO REGULATE ROOFING MATERIALS AND INSTALLATIONS, noting that the
findings are in the Ordinance. Carried unanimously.
9421 PROJECT/BI-ANNUAL STREET RESURFACING/RESOLUTION 1994-126 (33.35)
Motion by Mrs. Benjamin, seconded by Mrs. Lubeck, that Council adopt Resolution 1994-126
entitled, RESOLUTION OF THE TOWN OF LOS GATOS REJECTING BIDS RECEIVED ON
PROJECT 9421 WITHOUT PREJUDICE, AMENDING PLANS AND SPECIFICATIONS OF
PROJECT 9421, AND AUTHORIZING READVERTISEMENT OF' PROJECT FOR BID, and
set August 22, 1994 for the next Council meeting to facilitate timely completion of this project.
Carried unanimously.
HENNING COURT 122/BELOW MARKET PRICE UNIT/BMP (13.19)
Council consensus to accept and file informational report concerning loss of below market price
unit at 122 Henning Court. Carried unanimously.
TOWN COUNCIL MEETING SCHEDULE/1994-95 (34.10)
Motion by Mrs. Benjamin, seconded by Mrs. Lubeck, that Council approve the revised Town
Council Meeting Schedule to include the August 22, 1994 meeting at 5:00 p.m. Carried
unanimously.
ADJOURNMENT
Motion by Mrs. Benjamin, seconded by Mr. Blanton, that this evening's meeting be adjourned
at 11:16 p.m. to reconvene August 22, 1994 at 5:00 p.m. pursuant to Council action this evening.
Carried unanimously.
TC: D6: M M080194
ATTEST:
Marian V. Cosgrove, Town Clerk
9
/0
September 6, 1994
Los Gatos, California
CONSOLIDATED STORM DRAINS/PROJECTS 9309, 9312, 9315, 9316
COMPLETION NOTICE/RESOLUTION 1994-130 (18.35)
Motion by Mrs. Benjamin, seconded by Mr. O'Laughlin, that Council adopt Resolution 1994-
130 entitled, RESOLUTION OF THE TOWN OF LOS GATOS ACCEPTING WORK OF
PFISTER EXCAVATING, INC. ON PROJECT 9309, 9312,9315, AND 9316 - CONSOLIDATED
STORM DRAINS AND AUTHORIZING THE TOWN MANAGER TO EXECUTE
CERTIFICATE OF ACCEPTANCE AND NOTICE OF COMPLETION FOR RECORDING BY
TOWN CLERK. Carried unanimously.
9321 PROJECT/ENERGY CONSERVATION MODIFICATIONS/RESOLUTION 1994-131 (19.35)
Motion by Mrs. Benjamin, seconded by Mr. O'Laughlin, that Council adopt Resolution 1994-
131 entitled, RESOLUTION OF THE TOWN OF LOS GATOS APPROVING PLANS AND
SPECIFICATIONS AND AUTHORIZING THE ADVERTISEMENT FOR PROJECT 9321 -
ENERGY CONSERVATION MODIFICATIONS. Carried unanimously.
WOOD ROAD #1/ANNEXATION/RESOLUTION 1994-132 (20.04)
Motion by Mrs. Benjamin, seconded by Mr. O'Laughlin, that Council adopt Resolution 1994-
132 entitled, RESOLUTION OF THE TOWN OF LOS GATOS ORDERING THE
ANNEXATION OF CERTAIN UNINHABITED TERRITORY DESIGNATED AS WOOD ROAD
#1 TO THE TOWN OF LOS GATOS. Carried unanimously.
ROOFING MATERIALS/INSTALLATION/ORDINANCE 1988 (21.46)
Motion by Mrs. Benjamin, seconded by Mr. O'Laughlin, that Council adopt Ordinance 1988
entitled, ORDINANCE OF THE TOWN OF LOS GATOS AFFIRMING FINDINGS OF LOCAL
NECESSITY TO REGULATE ROOFING MATERIALS AND INSTALLATIONS. Carried
unanimously.
VERBAL COMMUNICATIONS
Below Market Price Housing:
Jamie Willmes, 342 Deerwood Crt., Mountain View, spoke of problems selling her BMP unit.
Gregg Ann Herrern, 535 Lasser St., Real Estate Agent for Abigail Co., Los Altos, expressed her
concerns in the management of sales within the BMP program.
Entertainment Ordinance:
Charles Sauers, 1884 Foxworthy, San Jose, requested Council's consideration of the Drummer's
Group to play at The Crow coffee house. Lee Bowman, Planning Director, stated that this
subject is on the Planning Commission agenda for September 14, 1994.
HEARINGS
VEHICLE REPAIR/RESIDENTIAL LOTS/ORDINANCE CONSIDERATION (22.47)
Mayor Attaway stated that this was the time and place duly noted for public hearing to consider
introducing ordinance amending Section 29.10.020 and adding Section 29.40.038 of the Town
Code to add definition of categories of vehicle repair and add restrictions concerning the repair
of vehicles on residential lots. This matter will not have a significant impact on the environment
and is therefore exempt from the requirements of the California Environmental Quality Act.
Zoning Ordinance Amendment A-94-3. Applicant: Town of Los Gatos.
IC: D6: MM090694
4
PRr L Comm un/c.A;Ions
Se pT 61'4 -rov‘)✓t
«eerrn9
TOWN OF LOS GATOS -- TOWN MEETING
WHY AM I HERE: I am here to get something off of my chest and
to express my concerns on how the town administers their Below
Market Priced Housing Program. Nobody should have to go
through what I experienced and am continuing to experience. I
apologize for reading from my notes but since I am still very
emotional from this -- I thought it best.
HISTORY: Five years ago I became a member of your
community by purchasing a Below Market Priced Townhome. In
October of 1993 I decided to sell my property. I expressed in my
October letter to the town that I had some concerns about the
process of selling. These concerns stemmed from a conversation I
had with my neighbors who purchased into the program the prior
year. I was assured at that time that measures had been
implemented into the program to deal with my concerns. These
concerns had to do with the amount of time it took to secure a
buyer and the lack of service from Community Housing
Developers, the company the town hires to administer the sale.
THE PROCESS: The first task on the sale of my house was to
price it. The pricing is something the town controls and is based on
the lower of a formula tied to the median salary range or the fair
market value (so I was told). I was very surprised to hear that my
unit had only appraised at $146K, which I was told was the Fair
Market Value. I later learned that Community Housing had asked
the buyers appraiser to adjust all comps by as much as $62K.
The next step in the process was to have an open
house and start the applicant screening (at this point 2 months
have already gone by). I believe we went through seven approved
applicants and 5 more months. The only updates I received in this
process were when I called Community Housing. This was even
after I asked them for weekly updates and had to speak to their
management about this.
J A r}l) E LL, S
3y2_ Deee_vTood cT.
rYLTN. VIEW r EA . c `f6L10
(c1IS' "!tA1-322.'-i (Luc) 77.-tiSc7 1Nbele
FAIL 1 of3
On May 17th I received a call from Community
Housing that they had good news. I was told it was a done deal,
they had a buyer that looked real good and if by chance she did
not work out the town would purchase the unit because they did
not want to loose it from their BMP Program (there is a clause in
the deed restrictions that the town must sell a unit within six
months).
Although the town is not required to buy the unit I
was told they would. With this news I adjusted my original plans
to not shop for a new home until my place had sold. Since I was
guaranteed a sale I started looking. I found a place that I almost
lost. I had to struggle to hold on to it and it cost me extra $1,500 to
do so.
On June 27th, the day of escrow signing the now X-
buyer backed out of the deal. I was told (after moving my
belongings over the weekend) that she had expressed some
reservations the week before. We then spent four days trying to
figure out what was going on. The X-buyer was going to sign then
she wouldn't, she would -- she wouldn't. No one seemed to be in
control. I spent the week sick to my stomach (literally throwing -
up) and had to take time off from work. We will probably never
really know what went on but the X-buyer indicated that she did
not have enough down -payment (and never did) and that she was
confused and did not feel like she was receiving the proper
guidance. The Realtor handling the sale of the place I was trying to
purchase along with the escrow officer tried to help the X-buyer
understand the process since no one had explained it to her. I then
offered her a cash loan to help with the amount of down payment
she indicated she was short and offered to give her my
washer/dryer and refrigerator. She walked away from the deal.
PA6c' 2 15f3
When it was clear that the X-buyer was out of the
picture I asked the town to switch to their plan of purchasing the
home. I was told that the town had no intention of buying the unit.
They also indicated that they could not believe that I was told that
they would purchase the unit. This information was not only told
to me it was told to my Realtor and the Realtor handling the sale of
the house I wanted to buy. Also, at this time the town manager
indicated that I should drop the price. I am still laughing at that
suggestion since I put my home on the open market for $20K more
and had a buyer within three days after it listed.
I think it is important to say at this point that this
poorly managed process had an impact on more than just my life.
Based on the purchase of the house I wanted to buy the sellers put
an offer on a home they wanted and the wife quit her job. They
did not get the home and the wife could not get her job back.
Realtors, escrow officers and bank officers took time away from
work and families to try to make this process work.
CONCLUSION: I have spent the last couple of months trying
to UN -do a situation that the town put me in. I have received no
help and now I hear from Community Housing that the town
thinks that the X-buyers deposit sitting in escrow is due to them.
The idea of the town thinking that something is owed to them is a
bit crazy. If anything, I would expect the town to assist me in
collecting the money that is due to me for liquidation damages due
to breach of contract.
RECOMMENDATION: Although I can agree with the idea of a
town program that allows for affordable housing -- I can now say
that owning this home was not worth it. The amount of time and
energy I have spent and continue to spend on this is ridiculous. I
am glad that my unit is one less unit for the town to control. 90% of
my frustrations would not have existed if the town would hire
qualified Realtors to manage the process. Community Housing
Developers may be good at their normal line of business but they
are not informed nor qualified to sell property.
Plahe 3 of 3
GOOD 4V E, CITY COUNCIL & �,-
I AM ALSO HERE TO TK YOU ABOUT YOUR BELOW
MARKET RATE PROGRAM
I AM A LICENSED REAL ESTATE AGENT, WITH THE ABIGAIL
COMPANY IN LOS ALTOS CA. AND A SINGLE PARENT OF 3
v\:-/ \,cs.a\cs
Mom" tom- JA,
THE REASON FOR MY REQUEST TO SPEAK IS TO TELL YOU
FROM AN AGENTS POINT OF VIEW -WHAT HAPPENED -THIS IS
ONLY BECAUSE I DON'T WANT TO SEE IT HAPPEN AGAIN -
THE QUESTION I PROPOSED TO YOU IS; WHO SUFFERED LOSSES'
'WHO IS RESPONSIBLE ?
RECEIVED AN OFFER FROM JAI ME WILLMES, BUYER" B" TO
PURCHASE MY SELLERS, SELLER "C" UNIT ON JUNE 1,1994.
I CALLED RAY TOBAR AT THE COMMUNITY HOUSING
DEVELOPEMENT AND WAS TOLD THAT YES , BUYER "B "UNIT
WAS SOLD AND NO PROBLEM AND THAT IF ANYTHING HAPPEN
THE CITY OF LOS GATOS WOULD PURCHASE THE UNIT.
�o
MY CLIENT SELLER "C" WENT AHEAD AND AGREED UPON A
PRICE, AND TERMS, WITH SOME MINOR MODIFICATIONS FOR A
30 DAY CLOSE OF ESCROW ( MY CLIENT WAS SELLING AT A
LOSS).
BUYER Vit SELLER "C"/MY CLIENT THEN PROCEEDED WITH A
PURCHASE OF THEIR OWN. ONCE ALL CONTINGENCIES WERE
REMOVED FROM BUYER/SELLER "B" R NAl(.-
R CONTINGENCIES, BASED ON BUYER 'A' AND
BUYER/SELLER B . ALL PAPERS, LOANS
AND DEPOSITS WERE SIGNED AND PLACED IN ESCROW ON "B"
AND "C", IN THE MEAN TIME I WAS TOLD BY RAY -NO PROBLEM
ON BUYER"A" LOAN IS APPROVED, SHE JUST HADN'T SIGNED
THEM YET.
WHEN A COUPLE DAYS WENT BY AND BUYER "A" HAD NOT
SIGNED TITLE AND LOAN DOCUMENTS, AND I KEPT ASKING
WHY, RAY DIDN'T KNOW, I ASKED COULD HE GO AND SPEAK TO
BUYER" A" HE DIDN'T ANSWER INN THE MEANTIME BUYER/
SELLER"B" AGENT AE7A BABY AND TOW-BABYlefAS
a
MN IN THE HOSP I TAL,BUYER/SELLER "C", WIFE -
QUIT HER JOB TO STAY AT HOME WITH 4 SMALL CHILDREN-'edoNS''9
I FELT I HAD NO CHOICE BUT TO TAKE
MATTERS INTO MY OWN HANDS, I ASKED FOR BUYER"A",
ADDRESS, RAY WOULDN'T GIVE IT TO ME, NOR RESOLVE THE
PROBLEM, AT THIS POINT BUYER "A" WASN'T RETURNING
NUMEROUS (I WAS TOLD) PHONE CALLS TO RAY OR TO
BUYER/SELLER "B", OR TO THE TITLE
COMPANY SO I LEARNED OF HER
ADDRESS AND HER PLACE OF EMPLOYMENT, I WENT TO HER
EMPLOYER ON JUNE 30, 1994 WE WERE TO HAVE CLOSED
ESCROW, ON BUYER/SELLER"B" ON JUNE 29,1994.
SHE WASN'T AT WORK, S0 I WENT TO HER HOME, AT HER HOME
DIDN'T KNOW WHAT I WOULD FIND. WHEN I APPROACHED
BUYER"A", WHY I WAS THEIR, SHE INVITED ME INSIDE AND
STARTED TO CRY, SHE EXCLAIMED THAT SHE DIDN'T KNOW
WHAT HER PAYMENT WAS OR WHAT HER DOWNPAYMENT
WAS.
I PROCEEDED BY CALLING HER LENDER WHO WAS OUT, TO TRY
AND FIND OUT, AS WELL AS GET COPIES OF HER CLOSING
PAPERS S0 THAT I COULD TELL HER WHAT HER FEES WERE
AND HER LOAN AMOUNT. THAT EVENING I MET WITH
BUYER"A" AGAIN TO DISCUSS COSTS, SHE CLAIMED SHE
DIDN'T HAVE ENOUGH MONEY (ALTHOUGH SAID SHE DID TO
BUYER/SELLER "B" THE WEEK BEFORE. THE DAUGHTER WAS
HOME THAT EVENING AND THANKED ME, OVER AND OVER FOR
BEING THERE, SHE FELT HER MOM (BUYER "A") WAS LEFT
ALONE AND DIDN'T KNOW WHAT SHE WAS DOI NG.i I LEFT THAT
EVENING, SHE WAS GOING TO TAKE THE DAUGHTER TO A
FRIENDS HOUSE, ANENAS GOING TO FAX ME HER TAX
RETURNS IN THE MORNING TO SEE IF SHE COULD GET ANY TAX
BENEFITS BY COMPLETING THE PURCHASE WHICH WOULD
GI VE HER MORE MONEY, Maignikk I WOULD SHARE THEM WITH
AN ACCOUNTANT (FREE OF CHARGE). THE NEXT DAY I
RECEIVED BUYER "A" RETURNS, 7ND MET WITH AN
ACCOUNTANT, BUT WHEN I TRIED TO SHARE WITH BUYER"A"
WHAT I HAD LEARNED FROM THE ACCOUNTANT BUYER "A"
WOULDN'T RETURN MY CA . SO I THEN WENT TO SEE BUYER
"A" AT WORK\A " " WAS FINISHING HER LUNCH, HER
CLOSING PAPERS IN FRONT OF HER. SHE SAID
HER ATTORNEY WAS REVIEWING THEM BUT SHE WOULD SIGN
PAPERS THAT AFTERNOON, I CALLED THE TITLE CO. TO SET
APPOINTMENT FOR 4:30, I WOULD MEET BUYER "A", AT HER
HOME TO GO WITH HER, S0 SHE WASN'T ALONE, SHE DIDN'T
SHOW AT 4:30,5:30,OR 6:30, I KEPT CALLING THE TITLE
AGENT WHO SAID THAT SHE WOULD STAY UNTIL 5:30, BUT
KEPT STAYING LATER, BUT FINALLY I CALLED IT QUITS. IT
WAS THE WEEKEND ..MY FAMILY WAS WAITING ONE MORE
EVENING FOR ME, FOR DINNER,ETC. AND AFTER SPENDING
UNTOLD HOURS TRY TO FIX SOMETHING I CLEARLY Wasn't
RESPONSIBLE FOR, I THEN CALLED BUYER/SELLER "B", HER
AGENT, AND MY BUYER/SELLER "C". ,
(DURING THE PROCESS WE FELT SO CONFIDENT THAT RAY
KNEW WHAT HE WAS DOING THAT BUYER/SELLER "C"
ALLOWED BUYER/SELLER "B" EARLY OCCUPANCY OF THEIR
HOME, SINCE THEY HAD ALREADY MADE THEIR MOVE UP
NORTH, SACRAMENTO AREA PENDING THE SALE OF THEIR
UNIT.
WE NOW KNOW THAT BUYER/SELLER"B" SOLD HER HOME ON
THE OPEN MARKET, AND SOLD QUICKLY, DUE TO TIME AND
COMMITMENT BY HER AGENT"B".
MY FIRST QUESTION WHO SUSTAIN LOSSES?,
BUYER"A" MAYBE A 2,000.00 DEPOSIT?
BUYER/SFI I MTh" ALIv1051 LOSS'ED HER PURLHAbh, LU5b to
HER LOAN, LOSS'ED TIME AT WORK, UNACCOUNTABLE
STRESS???HER FURNITURE IN SOMEONE ELSE'S HOME.
BUYER/SELLER"C"-LOSS'ED HOME THEY WERE PURCHASING,
LOAN, QUIT JOB TO EARLY, JUNE 30,1994, STRESS,
FINANCIAL LOSS, DUE TO DELAYED CLOSING
AGENT "B"-WORK HOURS LOSS'ED
AGENT"C"-WORK HOURS LOSS'ED, PHONE CALLS, GAS, AND
:-_ TONS OF UNDUE STRESS...
THE CITY-LOSS'ED A UNIT WHO KNOWS WHEN THEY CAN
REPLACE?
COMMUNITY HOUSING DEVELOPMENT-LOSS'ED HOME THAT
THEY CAtSELL? UNTOLD HOURS.. -DO
TITLE COMPANY-LOSS'ED EXCESSIVE HOURS.
LENDERS-LOSS'ED TIME, N
THEIR WERE 32 PEOPLE IMMEDIATELY AFFECTED BY THIS
TRANSACTION -NOT COUNTING THE CITY.
WHO IS RESPONSIBLE, WILL YOU DO THIS AGAIN, AT WHAT
PRICE-
LEAVE YOU WITH THIS THOUGHT -EVERYONE SHOULD HAVE
A HOUSE , WETHER A CASTLE OR A COTTAGE, WETHER BLACK
OR WHITE, MAYBE RICH OR POOR, MAYBE IT'S NEW OR ITS
OLD, AS AGENT WE MAKE A HOUSE, BECOME SOMEONE'S HOME,
THEY SHOULDN'T HAVE TO GO IT ALONE.. PLEASE, PLEASE
LOOK INTO WHO IS RESPONSIBLE, FOR COMPLETING THE MOST
IMPORTANT PURCHASE OF SOMEONE LIFE.
THANK YOU FOR YOUR TIME