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Staff reports Lennar meeting compliance on Ridgeland workforce-housing sales; staff outlines monthly review process
Summary
City staff told council that Lennar is complying with the Ridgeland agreement that governs net sales price calculations for workforce housing, outlining a monthly review process that uses settlement statements and a custom template to quantify mortgage-interest credits.
City staff briefed the Kerrville City Council on Feb. 11 about monitoring and compliance for the Ridgeland subdivision sales agreement with Lennar, and described the monthly process staff uses to confirm net sales prices for workforce-housing units.
Staff member Julie (identified in the workshop as Miss Barrons) explained the city's interpretation of "net sales price" under the Ridgeland agreement and described how staff and Lennar use settlement statements and a shared compliance template to calculate incentives and mortgage-interest credits. "The agreement defines net sales price as any incentive or closing assistance that developer pays on behalf of the homeowner," Julie said, describing seller credits, closing mortgage-interest credits and similar items as included in that definition.
Monthly review process: Staff said Lennar provides a monthly report that includes base price, incentives and how the report arrives at the net sales price. Staff reviewed settlement statements (HUD-1 and equivalent forms) and ALTA statements and built a template that replicates the ALTA calculation so the city can validate Lennar's figures. Julie said the city receives these reports no later than the middle of each month and often by the 7th or 8th, and that Lennar now provides Excel spreadsheets with the calculations.
Mortgage-interest credit: Staff explained that mortgage-interest credits vary per loan and are computed as a present-value reduction in payments; staff said the calculation is done as of the reporting date rather than as a lifetime projection. "It's just today. And so, yes. And that varies...because it can vary so much based on each homeowner and what the buyer is choosing," Julie said.
Compliance findings and sales statistics: Through December, staff reported 80 units sold with an average net sales price of $254,000. Staff said eight properties exceeded the net-sales-price threshold but that Lennar corrected seven of those before the city reviewed them and the city caught and corrected one. Julie summarized the compliance position: "Lennar is living up to the agreement and the contract that they made with the city for homes in a certain price range that are workforce housing." Councilmembers asked for copies of nonconfidential reports and for the compliance materials staff can share.
Forms and clarification: Staff noted the agreement specifies a HUD-1 but that many lenders now use ALTA forms; staff suggested the agreement language may need to be clarified to accept HUD-1 "and equivalent" forms going forward.
No formal action was taken at the workshop. Staff said they will continue monthly reviews and provide materials to council as appropriate.
