Saving Affordable Homes in the City of Novato

This is the second in a series of blog posts from Cornerstone Partnership’s CHIP grantees. They’ll be reflecting on their experiences seeking to implement best practices, build capacity and scale their long-term affordable homeownership programs. This post is an example of the work we’ve been doing to build our story-telling skills. The team at Hello Housing, based in San Francisco, CA, developed this story during a training series from The Goodman Center.


“If you make an announcement to the crowd, you can be charged with a misdemeanor,” says the auctioneer.

Novato House Front PorchMatt Warner, program manager for Hello Stewardship, never thought choosing a career in affordable housing could land him in jail. “Well, I need to let everyone know that if they buy this home, they are subject to the City’s affordability restrictions. So what are my options?”

“You can talk to each bidder individually.”

Matt surveys the room full of hungry bidders, looks at his watch and starts moving through the crowd. “Hi, I’m Matt Warner and I’m here on behalf of the City of Novato. Are you familiar with the restrictions that you’ll be subject to if you buy this home?” casually waving a huge stack of legal documents.

This is Wednesday morning. Late afternoon, the Friday before, Matt had at least two hours of work ahead of him when his phone rang. It was a resident in one of the homeownership developments Hello Housing manages on behalf of the City asking about her neighbor’s home. She’d seen a Foreclosure Notice posted on the door and was curious what was happening. The neighbor shared the auction was scheduled for Wednesday morning. This was the first Matt was hearing of this situation.

Matt thanked the neighbor, took a deep breath, and started making calls.

Novato House Living RoomFirst, he called Hans, the program manager with the City, to see if they’d received any notices. Unsurprisingly, the answer was no. The combination of stale addresses for the defunct redevelopment agency combined with banks not following proper notification procedures means that the City is often given no advance notice of a below market rate (BMR) home at risk of being lost to foreclosure.

Second, Matt called the Trustee to confirm the auction date and to see if there was a published opening bid. “The minimum bid price will be available 24 hours before the auction,” said a pre-recorded message.

Next, he tried to call the owner with no luck. He dispatched Hello Housing’s local realtor partner to go knock on the door. Ideally, there would be a way to stop the auction to buy some time to hatch a plan.

Then, he called the Title Company to place a rush order on a preliminary title report so he could learn whether there were any outstanding liens on the home.

Next, he called the HOA to find out whether the owner had a balance due. The City had adopted a policy that would bring any HOA back dues current if they were to buy a BMR home back at auction.

All of these pieces of information would help Matt prepare an analysis which would need to be presented to City staff by mid-day on Tuesday for the City to have time to cut cashier’s checks by Wednesday morning. Because the owner was unreachable, there was no way to learn whether the home was in need of major rehab, or whether the owner still resided in the home, making them eligible for some relocation assistance. So, the team decided to include conservative numbers in the feasibility analysis.

Since Hello Housing began working with the City ten months prior, this was the fourth home at risk of being lost due to foreclosure. The first home served as the guinea pig for creating a detailed “City Buy-Back” process. By creating a clear road map and a spreadsheet template detailing all the possible costs to buy-back and resell a BMR home, everyone could act swiftly to gather the information and resources needed to preserve the home.

Novato House Living Room“We are ready to begin the auction. Opening bid is set at $90,000” says the auctioneer.

Matt looks around the room. The crowd has thinned out dramatically after he shared the restrictions. “$91,000” says Matt, holding up his paddle. The room is silent. After asking the room several times for other bids, the auctioneer says, “The bid sits with me at $95,000.” Matt quickly realizes that the opening bid was not the price the bank was willing to accept. So, a bidding war ensues between Matt and the auctioneer until Matt bid $131,000. The auctioneer announces that Matt was the winning bid and hands him a pile of paperwork.

Matt calls Hans to let him know they are the new new owners of an old BMR. He then texts the Hello Housing team, “WE GOT IT!”

Thursday morning, the Hello Housing team gathers around the conference table to starts mapping out next steps…

* * *

The City of Novato, like most cities in California, has been left with a skeleton crew of staff charged with managing millions in affordable housing assets. City Council and staff in Novato have taken a proactive approach to preserving the $30 million in taxpayer dollars invested in their BMR developments. For example, the City Council approved the use of General Funds on a short-term basis to buy back BMRs and to hire Hello Housing to professionally manage the BMR program. The team at Hello Housing has been able to help the City act quickly and strategically to buy back homes that would otherwise be lost. With housing prices on the rise once again, preserving these homes is critical to maintaining a diverse, healthy and affordable community where people can live and work. And, with high cost of new development and the loss of public subsidies, the most cost-effective way to offer affordable homeownership for working families is to preserve existing homes rather than build new ones.

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