Opportunity: There are *thousands* of privately owned vacant lots in Miami-Dade's distressed neighborhoods - Why not acquire ownership and build houses on them? FACT: a capable developer experienced in low income neighborhoods usually has no trouble obtaining construction loans which he or she can then use to quickly build affordable houses PROVIDED THAT the following are available: reasonably priced "ready to build" parcels, subsidized purchase loans for the homebuyers.

• Fact:  A capable developer experienced with working in low income neighborhoods has no trouble obtaining construction loans PROVIDED THAT the following two items are available:

• readily available and reasonably priced building lots

• subsidized purchase loans for the homebuyers

• Barriers:

• Even in distressed neighborhoods land is becoming increasingly expensive.

• Government sponsored 2nd mortgage loan programs  (such as Surtax and SHIP) place a cap on the size of the purchase prices that can qualify. For this reason higher land cost can't always be absorbed into the development cost of a house and then passed on to the customer in the form a higher sales price.

• In other words, overly high land prices may make an otherwise desirable acquisition economically unfeasible

• Solution - Surtax line of credit to pay for part of land acquisition cost.

• Miami-Dade County should provide pre-qualified infill developers with a line of credit of Surtax funds. The financing would be used to pay for a portion of the acquisition costs of vacant building lots in distressed neighborhoods.

• Private Sector Match: the Surtax funds for particular acquisitions would be matched with bank financing procured by the developer. Other potential sources of private sector financing might include: a Section 108 loan to an intermediary; a FannieMae loan to an intermediary; a "program related investment" from a foundation; or, an equity pool (built on a possible use of the New Market's Tax Credit program).

• The amount of Surtax funds made available would be limited to only what was needed to achieve the economically feasibility of the acquisition in question.

• The Surtax loans would be forgiven upon sale of the completed house to the low income family (provided, of course, that all County affordability and other criteria had been satisfied).

• The Key;  The line of credit would have to be readily accessible once a purchase contract for a parcel had been executed (most contracts require closing within 30 days)

• Developers that hope to acquire lots on an ongoing basis could get bogged down having deal with separate closings on multiple construction loans. Typically bank loans are collateralized with specific parcels that are already owned by the developer. There needs to be a way to avoid separate construction loan closings for developers who will be acquiring lots on an ongoing basis..

• There is a need for a revolving line of construction credit for developers who are engaged in an ongoing program of acquisition of additional parcels

• Developers need assurance that Surtax/SHIP financing will be available for new projects that they are about to undertake.

• There is a need to speed the processing time for Surtax/SHIP loans closings

• perhaps combine the SHIP/Surtax second mortgage underwriting with the underwriting that is always done by the private sector first Mortgage lenders.

• Increase amount of funding available for Surtax/SHIP loans.  Here are some ideas:
  

• Sell more closed SHIP/Surtax loans on a secondary markets (such as the Neighborhood Reinvestment Corporation)
  

• experiment with 40 year mortgages, interest only loans, reverse mortgages, etc.

• Provide downpayment assistance to low income buyers

• Homebuyers need both pre-closing and post closing assistance.

• Expand funding for proven homebuyer education programs such as those run by Haven Development Corporation, Miami-Dade NHS, and the LISC sponsored homebuyer education partnership.
  

• The approval process needs to be streamlined and accelerated for scattered site development of single family infill housing.  Suggestions include: "One-Stop Shopping" (all services surrounding the permitting process should be obtained from one designated department); set mandatory deadlines for smaller projects, assignment of facilitators, fast tracking smaller infill projects; pre-application meetings; adhere to minimum standards (reviewers should not be able to required small infill developers to build above and beyond the stated minimum code standards); self help inspections (allow inspections by certified architects rather than county staff)