Homeownership Assist Washington Neighborhood
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MEMORANDUM
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November 15, 2005
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TO:
The Honorable Mayor and City Council Members
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FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Homeownership Assistance in the Washington Neighborhood
Presently, the City administers a "continuum" of financial assistance, depending on
family income, to households purchasing their first homes and to homeowners seeking
financing for renovations. For the Washington Neighborhood, we additionally offer
targeted programs of assistance.
Housing and Community Development Department Director David Harris recommends
City Council approval to expand the use of already budgeted General Funds for the
Washington Homeownership CIP to include a $10,000 rehab loan written for 10 years at
3% interest for families using the downpayment loans to purchase homes in the
neighborhood. This proposal does not request additional funds in the CIP allocation,
but the program revision would allow use of funds for rehabilitation assistance, as well
as down payments.
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
Cindy Steinhauser, Assistant City Manager
David Harris, Housing and Community Development Department Director
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MEMORANDUM
7 November 05
To: Michael Van Milligen, City Manager
From: David ~~iS, Housing and Community Development Department
Re: Homeownership assistance in the Washington Neighborhood
Presently, we administer a "continuum" of financial assistance, depending on family
income, to households purchasing their first homes and to homeowners seeking
financing for renovations. For the Washington Neighborhood, we additionally offer
targeted programs of assistance. These include the following:
Home purchase/down payment loans:
For 1st time homebuyers earning < 50% of area median income (AMI):
$5000 5-year forgivable
Source: IFA Housing Trust Fund
FY06 available: $1630001
$2500 5-year forgivable / $2500 due-on-sale
Source: CDBG
FY06 available: $75 0002
For 1st time homebuyers earning 50-80% AMI:
$5000 10-year, 0%; first 3 years deferred payment
Source: CDBG
FY06 available: $75 0002
For homebuyers earning 80-100% AMI; 1st time buyer not required:
$5000 10-year, 3%; first 3 years deferred payment
Source: General Fund
FY06 available: $100 000
Homeowner rehab loans:
For <50% AMI households:
$10 000 due-on-sale
Source: IFA Housing Trust Fund
FY06 available: $163000'
$25 000; $5000 5-year forgivable / $20 000 3D-year, 0%
Source: CDBG
FY06 available: $760 0003
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For 50-80% AMI households:
$25 000; $5000 due-on-sale I $20 000 20-year, 0%
Source: CDBG
FY06 available: $760 0003
80-100% AMI households:
no program available
We have checked with the Neighborhood Finance Corporation in Des Moines. (NFC's
inner-city programs have successfully promoted increased homeownership and
property investment.) NFC targeted-area loans have no income qualifications; funding
is provided by the City of Des Moines and Polk County, at $1 million, each, annually.
For downpayment assistance, NFC offers $2000 grants to all buyers. For home
purchase mortgages, terms are 6.125% for 30 years; or 5.625% for 15 years.
For rehab loans, the terms are 6.625%, 10 years. Additionally, a "rehab subsidy" is
offered, up to $10 000, written as a 5-year forgivable loan.
Recommendation
We have proposed to expand use of our General Funds for the Washington
Homeownership CIP to include for rehab loans to families using our downpayment
loans to purchase homes in the neighborhood. Recommended is a $10 000 rehab loan,
written for 10 years at 3%.
This proposal does not request additional funds in the 5-year CIP allocation; it is a
program revision, to allow use of the funds for rehabilitation assistance as well as
down payments. The rationale for the request is the need to provide additional
incentives to moderate-income families to purchase homes in the area.
1 Total of $163 000 available for both <50% AMI purchase and rehab programs
2 Total of $75 000 available for home purchase programs for both <50% and 50-80% AMI households
3 Total of $760 000 available for rahab programs for both <50% and 50-60% AMI households
2