REPORT TO THE CITY COUNCIL February 4, 2021 FROM: JENNIFER K. CLARK, Director Planning and Development Department BY: THOMAS MORGAN, Housing Manager Housing and Community Development Division SUBJECT ..Title Approve a First Amendment to the Neighborhood Stabilization Program Agreement with the Housing Authority of the City of Fresno authorizing the City to subordinate to a senior mortgage lender on the property located at 844 Chance Avenue, Fresno, CA 93702. ..Body RECOMMENDATION Staff recommends the City Council approve the First Amendment (Exhibit "A") to the September 20, 2018, Neighborhood Stabilization Program 3 (NSP) Program Income Agreement with the Housing Authority of the City of Fresno. The Amendment authorizes the City to subordinate its $148,700 loan to a senior mortgage lender. BACKGROUND In September 2018, when the NSP Agreement with the Housing Authority of the City of Fresno (Housing Authority) was presented to Council for approval, it was proposed that the City would hold a first position lien at sale of the house located at 844 Chance Avenue (District 5). However, when an appraisal of the house and property was obtained prior to sale to a low-income homebuyer, the value was estimated at $225,000, which is much higher than anticipated. Sale at the appraised value will require a second mortgage on the property because the NSP Program requires that a low-income homebuyer not have an income of more than 50% of the area median income and that the homebuyer pay a mortgage supported by an income for a household at 50% of area medium income. Since this was a joint construction project between the Housing Authority and Habitat for Humanity Fresno County (Habitat), the Housing Authority has agreed to provide the upfront second mortgage so that the homebuyer could occupy the house at close of escrow. This arrangement was agreed upon with the condition that the City would approve an amendment to the NSP Agreement to subordinate the $148,700 in NSP funds to the project and thus hold a second position lien. The City's subordination and subsequent transaction will provide for a low-income household whose income is 50% of area medium income to obtain a first and second mortgage to buy the house located at 844 Chance Avenue as provided for in the original September 20, 2018, NSP Agreement. ENVIRONMENTAL FINDINGS The First Amendment is not a "project" for the purposes of CEQA, pursuant to CEQA Guidelines Section 15378. LOCAL PREFERENCE Local preference is not applicable because this amendment does not include a bid or award of a construction or services contract. FISCAL IMPACT There is no impact to the Planning and Development Department's 2021 Budget. APPENDICES Exhibit A - First Amendment to the Neighborhood Stabilization Program Agreement