Homeownership Assist FundsMEMORANDUM
TO:The Honorable Mayor and City Council Members
FROM:Michael C. Van Milligen, City Manager
SUBJECT:Application for Homeownership Assistance Funds
August 26, 2002
Housing and Community Development Director David Harris recommends sponsorship
of an application for $250,000 to the Federal Home Loan Bank (FHLB) for Affordable
Housing Program funds to assist income-qualifying families to purchase a home.
In 1998 and again in 2000, the Housing Services Department sponsored applications to
the Federal Home Loan Bank for a first-time buyer down payment assistance program.
These applications were approved in the total amount of $580 000. Our partner lending
institutions included Dubuque Bank and Trust, American Trust and Savings Bank,
Firstar Bank, Mercantile Bank, Premier Bank, Dupaco Credit Union, DuTrac Credit
Union and East Dubuque Savings Bank.
In total, 63 loans were made to buyers earning less than 60% of area median income.
Matching funds committed by the lenders and buyers totaled more than $ 3.5 million.
All participating families were required to complete a series of homebuyer workshops
and financial counseling sessions, sponsored by the Dubuque County Extension Office.
Because demand for these classes exceeded Extension's staff capacity, each of the
lenders contributed funds to extend the part-time hours of the financial counselors. A
high degree of cooperation was also obtained from area appraisers and realtors. By all
measures, the program has been a highly successful partnership, enabling many
families to realize their dream of homeownership who otherwise could not have
qualified.
The application proposal will again target all lower-income households, with assistance
to 25 buyers, all earning less than 50% of area median income. Five-year forgivable
loans will be offered in the amount of $5,000, for down payments and closing costs.
Buyers will be required to contribute three percent of the purchase price. Participating
lenders will provide first mortgages for the balance of financing. In addition, the
program design includes AHP funds for costs of necessary rehabilitation. Up to $5,000
per home will be made available for rehab, as part of the forgivable loan package.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
____________________
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
David Harris, Housing & Community Development Department Director
26 August 02
CITY OF DUBUQUE, IOWA
MEMORANDUM
To: Mike Van Milligen, City Manager
From: David Harris, Housing Services and Community Development Department
Re: Application for Homeownership Assistance Funds
Introduction
The purpose of this memorandum is to request the Mayor's execution of the attached resolution,
approving sponsorship of an application to the Federal Home Loan Bank (FHLB) for Affordable
Housing Program funds to assist income-qualifying families to purchase a home.
Background
In l998 and again in 2000, the Housing Services Department sponsored applications to the
Federal Home Loan Bank for a first-time buyer downpayment assistance program. These
applications were approved in the total amount of $580 000. Our partner lending institutions
included Dubuque Bank and Trust, American Trust and Savings Bank, Firstar Bank, Mercantile
Bank, Premier Bank, Dupaco Credit Union, DuTrec Credit Union and East Dubuque Savings
Bank.
In total, 63 loans were made to buyers earning less than 60% of area median income. Matching
funds committed by the lenders and buyers totaled more than $ 3.5 million. All participating
families were required to complete a series of homebuyer workshops and financial counseling
sessions, sponsored by the Dubuque County Extension Off'me. Because demand for these
classes exceeded Extension's staff capacity, each of the lenders contributed funds to extend the
part-time hours of the financial counselors. A high degree of cooperation was also obtained
from area appraisers and realtors. By all measures, the program has been a highly successful
parthership, enabling many families to realize their dream of homeownership who otherwise
could not have qualified.
Discussion
We are again proposing an application for the October 2002 FHLB funding cycle. All area
lending institutions have bean contacted and each has agreed to participate. This year US
Bank has joined as a partner. Dupaco Credit Union has volunteered to serve as lead lender.
The application will request $250 000.
The application proposal will again target all lower-income households, with assistance to 25
buyers, all earning less than 50% of area median income. Five-year forgivable loans will be
offered in the amount of $5000, for downpayments and closing costs. Buyers will be required to
contribute threa percent of the purchase price. Participating lenders will provide first mortgages
for the balance of financing.
In addition, the program design includes AHP funds for costs of necessary rehabilitation. Up to
$5000 per home will be made available for rehab, as part of the forgivable loan package. All
participating families will again be required to attend the homebuyer workshops, sponsored by
the County Extension office. The Housing Department will inspect all homes, specify necessary
repairs, authorize payments and monitor rehabilitation activities. All AHP funds will be required
to be expended within a twelve-month timeframe. It is expected that announcement of the
award will be made by December.
As part of the application package, member Federal Home Loan Bank members are
encouraged to enlist the sponsorship of local area governments. The Housing Department has
convened the discussion among the lenders and has proposed that City sponsorship again be
incorporated within the project proposal. The sponsorship must be endorsed by the City
Council.
Recommendation
It is recommended that the Council endorse the attached resolution. This program of
homeownership assistance will complement existing programs currently sponsored by the City,
including the First Time Homebuyer Program, funded with CDBG revenues, operating City-wide
for households earning up to 80% of area median income.
The Affordable Housing Program grant - named PATH: Pathways Affordable to Homeownership
- will complement these activities by emphasizing assistance to lower-income (below 50%
mortgage revenue bond income limits) households, incorporating rehabilitation assistance and
making properties throughout the targeted neighberhoeds eligible for purchase.
As with all the Housing Department's lending activities, this program will serve to enhance the
existing partnerships the City enjoys with Dubuque's lending institutions. The participating
banks will gain credit for federal Community Reinvestment Act (CRA) activities in support of
income-qualifying households. And the City will continue to promote its objectives of providing
assistance to families seeking their dream of homeownership, while sewing to revitalize the
downtown neighborhoods.
Action Step
The action requested of the City Council is to approve the Mayor's execution of the attached
resolution, in sponsorship of an application for Affordable Housing Program funds to the Des
Moines Federal Home Loan Bank.
RESOLUTION NO. 454 -02
A RESOLUTION AUTHORIZING SPONSORSHIP OF AN APPLICATION
TO THE FEDERAL HOME LOAN BANK OF DES MOINES FOR AFFORDABLE
HOUSING PROGRAM FUNDS.
Whereas, the Federal Home Loan Bank has published notice to
availability of funds under the Affordable Housing Program; and
whereas, local member FHLB lending institutions have agreed to submit
an application for these funds, for a program of homeownership assistance to
lower-income households; and
Whereas, the City's Consolidated Plan promotes the objectives of
homeownership assistance and stabilization of target neighborhoods; and
Whereas, provision of homeownership opportunities to the City's working
families is a necessary complement to on-going economic development efforts.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF DUBUQUE, IOWA.
Section 1. The Mayor is hereby authorized to execute this resolution in
sponsorship of an application to the Federal Home Loan Bank for Affordable
Housing Program funds, to assist Iow- and moderate-income families to
purchase homes.
Section 2. This resolution shall take effect immediately.
Passed, approved and adopted this 3rd September
______________________
Terrance M. Duggan,mayor
Attest:
________________________
Jeanne Schneider, City Clerk