Housing Funds App to FHLBMEMORANDUM
March 11,2003
TO:The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Application for Homeownership Assistance Funds
Housing and Community Development Department Director David Harris recommends
the City sponsor 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 and Dupaco 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.
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 $3000, 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 Affordable Housing Program funds for costs of
necessary rehabilitation. Up to $4000 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 and Community Development Department Director
CITY OF DUBUQUE, IOWA
MEMORANDUM
11 March 03
To: Mike Van Milligen, City Manager
From: David Harris, Housing 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 1998 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 and Dupaco 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 tinancial counselors. A
high degree of cooperation was also obtained from area appraisers and realtors. By all
measures, the program was a highly successful partnership, enabling many families to
realize their dream of homeownership who otherwise could not have qualified.
Discussion
We are again proposing an application for the April 2003 FHLB funding cycle. All area
lending institutions have been 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 $3000, for downpayments and closing costs.
Buyers will be required to contribute three percent of the purchase pdce. 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 $4000 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 July.
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 neighborhoods
eligible for purchase.
As with all the Housing Department's lending activities, this program wilt 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 serving 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. 87-03
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 of
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 lower-income families to purchase homes.
Section 2. This resolution shall take effect immediately.
Passed, approved and adopted this 17thday of March, 2003.
Terrance M. Duggan, Mayor
Attest: Jeanne Schneider, City Clerk