Additional Incentives Offered For Affordable Housing Units

Additional Incentives Offered For Affordable Housing Units
City officials in Milpitas, California have unanimously voted to adopt a resolution that would authorize the city manager to execute amendments to affordable housing agreements at a recently completed 683-unit condo complex.

The restrictions on the complex, Terra Serena, are being lifted due to the bad economy. The goal of lifting these restrictions is to provide a lower sales price in efforts to attract more buyers. As of now, Milpitas requires 15 percent of all residential units in the redevelopment project area to be off price. Very low income households offset by 6 percent and 9 percent for low to moderate income households.

Dedicated units of affordable housing are required as part of mandated regional "fair share" housing goals. A total of 85 moderate-income units were to be provided in the condominiums. In addition, a $50,000 loan was provided to each of the buyers as down payment assistance.

Despite the buying incentives, the current housing market with its stricter lending requirements has made it more difficult to find qualified buyers for the affordable units than was expected. Due to the price reduction of the selected units in combination with the current housing market, the minimum sales prices for a typical unit is not much lower than that of the selected affordable housing units. The narrow price difference in combination with a 45-year resale restriction for the affordable housing units has simply encouraged buyers to purchase the typical units. As of now, only 13 of the 85 units have been sold.

As an incentive to attract buyers, additional advertising as well as these amendments in the affordable housing agreements are underway. In addition, the city is providing an additional $20,000 to go toward closing costs if the unit is financed through their preferred lender.