San Marcos City Councilmembers, left, used a federal grant to buy a home on Capistrano Drive, right, for $4,200 more than the asking price.
By SEAN BATURA
Two 1,300-square-foot homes may soon be on the market in San Marcos with the city as seller and the state as lender. In one case, the city went into competition with a private buyer.
An overwhelming city council vote last week favored using a federal stimulus grant to buy the foreclosed properties.
San Marcos City Councilmember Ryan Thomason cast the lone vote against purchasing one of the homes. Thomason said that when he found out the city was offering $4,200 more than the seller’s asking price, he made inquiries and was horrified to discover why: the city had entered a bidding war.
“We cut someone’s legs off from under them as a municipality,” Thomason said. “Am I correct on this?”
City of San Marcos Development Services Director Chuck Swallow said staff viewed the purchase as an opportunity to prevent blight in neighborhoods and offer affordable housing to new families.
After saying Thomason’s evaluation of the situation “may be a bit simplistic,” Councilmember Kim Porterfield referred to the city’s bidding competitor as “the people that the city stole this house from,” repeating Thomason’s earlier use of the word “stole,” albeit in a different tone. After Porterfield finished her question, San Marcos Mayor Susan Narvaiz interjected a warning to her colleagues to “think about how you’re posing your questions” because of concerns about press coverage.
“Everything you say is going to be written up as if that is actually what is occurring here, and that is not what is happening here,” Narvaiz said. “So I just — please keep that in mind.”
Narvaiz, on behalf of councilmembers, advised staff to refrain from competing with other buyers in future acquisitions.
Armed with $450,000 in grant money, councilmembers plan to acquire a third property later and re-sell all three to low-income buyers, who would qualify for 30-year, zero-interest loans and mortgage buy-downs of as much as $30,000.
Councilmember Fred Terry echoed Thomason’s concern about public-private competition, but expressed confidence in the ability of Janis Hendrix, the city’s community initiatives administrator, to conduct due diligence and find the appropriate buyers.
“As I am a realtor … I don’t appreciate having another competitor in the marketplace, but I do like the idea of what this program is,” Terry said.
Terry and Thomason are in the real estate business.
Before accepting the stimulus grant, the city agreed to offer homes to buyers who are at 50 percent of the city’s median income level. Hendrix said the maximum income level of a single person qualifying for the homes is $25,650, and an individual’s debt-to-income ratio cannot exceed 45 percent, including long-term debts. Hendrix said not every family that applies for the housing program may be eligible.
The house the city won in the bidding war, at 221 Capistrano Drive, is reportedly in “like new” condition, is four years old, has three bedrooms, two full baths, a two-car garage, a utility room, and is 1,302 square feet. A stove and refrigerator are not included, though energy efficient models will be supplied by the city with stimulus grant money.
The second house under consideration, which councilmembers voted unanimously to buy, is located at 1700 Ramona Circle, was constructed in 1994. It is appraised at $135,380, has three bedrooms, two full bathrooms, a two-car garage, a utility area, and is 1,380 square feet. City staff said the foundation under the master bedroom/bath of the Ramona Circle has settled.
The city will analyze the foundation and withdraw its offer without loss of earnest money, depending on the estimated cost of repairs. City councilmembers offered to pay $110,000, plus customary closing costs for the Ramona Circle home. Any costs for rehabilitation of the homes is covered by the grant and will be added to the sale prices offered by the city. Hendrix said she expects the city to offer the Ramona Circle home for $105,000 or less.
Hendrix said the same stimulus grant used for home purchases provides $50,000 for house demolition. City Manager Rick Menchaca said eight demolitions have been budgeted and the city “may be able to do 12 more” pursuant to the Keep San Marcos Beautiful program. Menchaca credited Hendrix for San Marcos being among the top two cities in Texas for using the stimulus grant.Email | Print