Application for Local Housing Assitance Program Funds
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516
RESOLUTION NO 516-00
A RESOLUTION AUTHORIZING AN APPLICATION TO THE IOWA
DEPARTMENT OF ECONOMIC DEVELOPMENT FOR LOCAL
HOUSING ASSISTANCE PROGRAM FUNDS
Whereas, the Iowa Department of Economic Development has published
notice of availability of funds under the Local Housing Assistance Program (LHAP); and
Whereas, the Department of Economic Development is encouraging municipalities
to promote housing assistance programs which address unmet needs and complement
planned programs of economic development; and
Whereas, the Consolidated Plan for the City of Dubuque includes the objectives
of promoting homeownership opportunities for low- and moderate-income households,
elimination of slum and blight and public and private investment in revitalization of
downtown neighborhoods; and
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Whereas, the Housing Trust Fund Committee and Housing Commission have
reviewed the proposed application for construction of affordable new condominium homes
for low-income households.
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 support of
an application to the Iowa Department of Economic Development for Local Housing
Assistance Program funds.
Section 2. This resolution shall take effect immediately.
Passed, approved and adopted this 6 th day of November, 2000.
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John M. Markham, Mayor Pro-Tern
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eanne Schneider, City Clerk
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CITY OF DUBUQUE, IOWA
MEMORANDUM
November 2, 2000
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Application for Local Housing Assistance Program (LHAP) Funds
Housing Services Manager David Harris is recommending that the City apply for $100,000 in
Iowa Department of Economic Development Local Housing Assistance Program funds for a pilot
program promoting low-income home ownership.
Two derelict houses in the 600 block of West Eighth Street have been vacant for a number of
years. As it has proven infeasible to renovate them, the owner has proposed their demolition and
replacement with five newly-constructed, attached condominium or townhouse-type homes.
These will be sold to first-time buyer, low-income households, with the intent of demonstrating
the market for this type of housing for downtown area service wage working families.
If successful, a similar approach could be used in conversion of existing (through renovation
rather than demolition), older rental housing, now under-utilized, for owner-occupied uses; or for
construction at in-fill sites throughout downtown neighborhoods.
I concur with the recommendation and respectfully request Mayor and City Council approval.
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Michael c. Van Milligen
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Attachment
cc: Barry Lindahl, Corporation Counsel
Tim Moerman, Assistant City Manager
David Harris, Housing Services Manager
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CITY OF DUBUQUE, IOWA
MEMORANDUM
31 October 00
To: Mike Van Milligen, City Manager
From: Da~~arris, Housing Services Department
Re: Application for Local Housing Assistance Program (LHAP ) funds
Introduction
The purpose ofthis memorandum is to request the City Council's authorization to apply to the
Iowa Department of Economic Development (IDED) for Local Housing Assistance Program
funds for a pilot program promoting low-income homeownership.
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Background
In June of this year, the City Council approved a "pre-application," from Housing Services to the
Department of Economic Development, for two programs of assistance to low- and moderate-
income homebuyers. One was to fund a downpayment assistance program for buyers earning up
to 100% of area median income - a renewal of funding for our "Moderate Income Homebuyer
Program." This request was not approved for submission of a final application.
The second pre-application was for a demonstration project to include elimination of blighted
housing on West Eighth Street and construction of five condominium homes to be sold to
households earning no more than 60% of area median income. IDED has invited the Housing
Department to submit a final application, in the amount of $1 00 000, to fund this project.
Discussion
Two derelict houses in the 600 block of West Eighth Street have been vacant for a number of
years. As it has proven infeasible to renovate them, the owner has proposed their demolition and
replacement with five newly-constructed, attached condominium or townhouse-type homes.
These will be sold to first-time buyer, low-income households, with the intent of demonstrating
the market for this type of housing for downtown area service wage working families.
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The homes will be approximately 1000 square feet in area, built on slab, with two bedrooms, full
kitchens, individua1laundry facilities, rear covered patios with attached storage buildings and on-
site parking. The developer, Toby Kress, projects a $75000 per unit sale price. Using the LHAP
funds as subsidy, this price will be written down to $55 000 per condo, with resale covenants
included to restrict seller gain over a 20-year term. In this manner, low-income affordability will
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remain a project feature for that length oftime. The City-sponsored LRAP grant, at $20 000 per
unit, will be provided as a 20-year forgivable loan. Buyers will be able to utilize this subsidy to
cover downpayment requirements and avoid payment of private mortgage insurance. The City's
forgivable loan will be written as subordinate to private lender financing and be assumable by
subsequent income-qualifying buyers.
Income limits will remain in effect for the 20-year term. Currently, for a family of three persons,
the 60% income limitation is $24 480 annually.
The Housing Department will additionally participate by providing a long-term, deferred-payment
loan to demolish the existing structures and purchase a small adjacent parcel needed for adequate
lot size. Block Grant funds in the amount of $30 000 will be utilized for this purpose. A
preliminary commitment from an area lender, for $200 000 in construction financing, has been
obtained. Section 106 historic review has been completed by the CED Department, concluding
that the structures have no historic significance. Site zoning is adequate for the intended use. As
the rear yard set-back will be too close to the lot line, a variance will be requested. No other
obstacles to project development have been identified at this time.
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Recommendation
It is recommended that the Council approve the application for Local Housing Assistance
Program funds for this project. This venture will serve to demonstrate the market for lower-
income homeownership using a condominium model. If successful, this approach could be
duplicated in conversion of existing, older rental housing now under-utilized, for owner-occupied
uses; or for construction at in-fill sites throughout downtown neighborhoods. As well, this
project will achieve multiple objectives of slum clearance, reinvestment in an older downtown
neighborhood and area stabilization through increased owner-occupancies.
Action Step
The action requested of the City Council is to approve the application, to the Iowa Department of
Economic Development, for $100000 in LRAP Program funds for the West Eighth Street
project. The resolution authorizing this application is attached.
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remain a project feature for that length of time. The City-sponsored LHAP grant, at $20 000 per
unit, will be provided as a 20-year forgivable loan. Buyers will be able to utilize this subsidy to
cover downpayment requirements and avoid payment of private mortgage insurance. The City's
forgivable loan will be written as subordinate to private lender financing and be assumable by
subsequent income-quali:fYing buyers.
Income limits will remain in effect for the 20-year term. Currently, for a family of three persons,
the 60% income limitation is $24 480 annually.
The Housing Department will additionally participate by providing a long-term, deferred-payment
loan to demolish the existing structures and purchase a small adjacent parcel needed for adequate
lot size. Block Grant funds in the amount of$30 000 will be utilized for this purpose. A
preliminary commitment from an area lender, for $200 000 in construction financing, has been
obtained. Section 106 historic review has been completed by the CED Department, concluding
that the structures have no historic significance. Site zoning is adequate for the intended use. As
the rear yard set-back will be too close to the lot line, a variance will be requested. No other
obstacles to project development have been identified at this time.
Recommendation
It is recommended that the Council approve the application for Local Housing Assistance
Program funds for this project. This venture will serve to demonstrate the market for lower-
income homeownership using a condominium model. If successful, this approach could be
duplicated in conversion of existing, older rental housing now under-utilized, for owner-occupied
uses; or for construction at in-fill sites throughout downtown neighborhoods. As well, this
project will achieve multiple objectives of slum clearance, reinvestment in an older downtown
neighborhood and area stabilization through increased owner-occupancies.
Action Step
The action requested of the City Council is to approve the application, to the Iowa Department of
Economic Development, for $100000 in LHAP Program funds for the West Eighth Street
project. The resolution authorizing this application is attached.