Homeowner Loan Program Washington NeighborhoodTHE CITY OF
DuB E MEMORANDUM
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February 14, 2007 -
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Homeowner Loan Programs in the Washington Neighborhood ,~ _
Housing and Community Development Department Director David Harris is advising of
pending amendments to current Housing Department loan guidelines in order to
promote homeownership in the Washington Neighborhood.
One of the central concepts of the Washington: Revitalize initiative is to promote
homeownership.
Currently there are separate programs for those that make less than 50% of area
median income, those that make between 50% and 80% of area median income, and
those that make over 80% of median income. The incentive program that is for under
50% of median income provides the greatest incentives.
In the first 18 months, there have been no applications for these programs.
Housing and Community Development Department Director David Harris will be
amending the criteria to provide the same incentive as less than 50% of median income
to all applicants. The incentives would be as follows:
For a purchase incentive, a $5,000 forgivable loan would be provided.
For rehabilitation, a $5,000 forgivable loan would be provided, along with
$10,000 due on sale loan and a $10,000 20-year, 0% interest loan.
It is our hope that at least 13owner-occupied homes would be occupied in the
Washington Neighborhood over the next year.
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G~ ~~
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David Harris, Housing and Community Development Department Director
CITY OF DUBUQUE, IOWA
MEMORANDUM
5 February 07
To: Mic Van Milligen, City Manager
From: Dav d Harris, Housing and Community Development Department
Re: Homeowner. Loan Programs in the Washington Neighborhood
Introduction
The purpose of this memorandum is to advise the City Council of pending
amendments to current Housing Department loan guidelines, in order to promote
homeownership in the Washington Neighbofiood.
Background
One of the central concepts of the Washington: Revitalize! initiative is to
encourage additional owner occupancies in the Washington Neighborhood. As
of June 2005, when we introduced the initiative, Census data indicated that 70°~
of the dwelling units in the neighborhood were rentals.
Currently, we operate three programs to promote homeownership in this area.
The first is for persons earning less than 50°~ of area median income. For a
four-person family, that limit is $29 350.
Using Community Development Block Grant {CDBG) funds, we provide the
following assistance to <50% income households:
For purchase: $5000 as a forgivable loan
For rehab: 5000 as a forgivable loan
10 000 as a due-on-sale loan
10000 as a 0%, 20-year loan
The second program is for persons earning 50-80% area median income. The
four-person household income limit is $46 950.
Again using CDBG funds, this assistance is provided as follows:
For purchase: $10 000 due-on-sale loan
For rehab: 5 000 due-on-sale loan
20 000 as a 0%, 30-year loan
The third program, using General Funds, was introduced in FY 2006. There is
no income limit on eligibility for these funds. Assistance is provided as a $20 000
20-year loan, to be used for combination purchase and rehabilitation. Terms are
10-year deferred payment, 3% interest.
Although this program has been available for the past 18 months, we have had
no applicants.
Discussion
In the interest of promoting more home occupancies in the area by families at all
income levels, proposed are changes in the guidelines for these programs.
All applicants for home purchase and rehabilitation loans would be treated
equally. This means that the current terms for the <50% income households
would be extended to all other applicants. All families, regardless of income,
would receive $5000 forgivable loans, for purchase and for rehab; $10000 as a
due-on-sale loan for additional rehab; and up to another $10 000 as a 0%, 20-
year loan for rehab, as needed.
Families earning less than 80°~ of income would receive CDBG assistance.
Households earning more than 80% would be assisted with General Funds.
It is proposed that these changes be incorporated this fiscal year; and that the
"trial" period be set for one year. After that time, we would evaluate the
effectiveness of this approach.
As mentioned, the General Fund program of homeowner assistance for the
Washington Neighborhood was approved beginning the 2006 Fiscal Year. We
have accrued $200 000 as a balance in that activity. For FY08, it is has been
recommended that an additional $300 000 in General Funds be allocated to this
activity. $100 000 of the funds would be utilized for a demonstration project
townhouse development we are now preparing for Council review and approval.
The balance of General Funds (up to $400 000 if approved in the FY08 budget)
would be utilized for homeownership promotion in the Washington
Neighborhood. If the full lending package - at $5000 for purchase and $25 000
for rehab -would be borrowed by each new homeowner, this would produce 13
homeowner occupancies by families earning more the 80°~ of income.