Grand jury examines fund
for low income home buyers

By Angela Hokanson, Bay City News Service

June 26, 2006

SAN FRANCISCO (BCN) - The 2005-2006 San Francisco civil grand jury today offered several recommendations for improving the efficacy of the Downpayment Assistance Loan Program, or DALP, a fund that helps low and moderate-income residents buy homes for the first time.

The DALP was established as a $15 million fund in 1996 through Prop. A. The city makes interest-free down payment assistance loans to homebuyers from the fund. The loans -- plus a percentage of the home's appreciation -- are re-paid to the fund when the home is sold. In this way, the fund is a kind of "evergreen" account because money comes back in and new loans can be distributed, according to the grand jury report.

The city of San Francisco should sponsor a new ballot measure to increase funding for the DALP, which currently has $3.4 million available for potential borrowers, the grand jury proposed.

The maximum sale price permitted for properties purchased through the loan program should also be increased to bring the price guidelines set in 2004 closer to current real estate prices, the grand jury recommended.

The grand jury report called the price guidelines for homes set in 2004 "unrealistic in the present real estate market.'' For example, the maximum sale price for a studio or one-bedroom property purchased with DALP funds is set at $360,000.

The guidelines for the maximum allowable property prices should be increased by at least 15 percent to allow potential borrowers to take advantage of the DALP funds, the grand jury proposed.

Because of the demand for assistance in buying homes, a waiting list should be established for interested borrowers while DALP funds are temporarily low, the grand jury recommended.

In addition, the grand jury was not able to determine whether the mayor's office of housing has filed an annual report since 2002 with the San Francisco Board of Supervisors on the state of the affordable housing program that was established through Prop. A. Such an annual report was stated as a requirement when the program was established in 1996.

The grand jury recommended that the mayor's office of housing submit the relevant annual reports starting with the 2002-2003 fiscal year.

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