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HomeMy WebLinkAboutAffordable Housing Board - Minutes - 09/02/2004CITY OF FORT COLLINS AFFORDABLE HOUSING BOARD MEETING MINUTES 281 N. College Ave. Fort Collins, Colorado September 2, 2004 4-6p.m. Kay Rios, Chair Isabel Garity, Vice Chair Ken Waido, Staff Liaison, 970-221-6753 Marty Tharp, City Council Liaison, 970-484-5711 Board Members Present: Kay Rios, Isabel Garity, Jon Fairchild, Jane Phalen, Denise Rogers, Joe Rowan, Peter Tippett and Sunshine Workman Staff Present: Maurice Head, Ken Waido, Heidi Phelps, Julie Smith Council Members Present: None Guests: Cathy Miller, CARE Housing Chair Kay Rios called the meeting to order with a quorum present at 4 p.m. Open Public Discussion None. New Business Minutes The minutes of August 5, 2004, were corrected as follows: One page 4, under item Amendment 34, the third sentence now reads: According to Mr. Rowan, the intent of the amendment is to roll back award limits to property owners who sue builders for faulty construction.... Under Subcommittee Efforts, Kay Rios also thanked Jon Fairchild for his efforts on the letter to City Council on the Right -of -First -Refusal Ordinance for mobile home parks. The minutes were unanimously accepted as corrected on a motion by Joe Rowan seconded by Isabel Garity. Development Fee Comparison The Board reviewed a comparison of fees for a residential 2000 sq. ft. new construction in 15 different Northern Colorado communities, provided by Felix Lee of the City's Building department. The general feeling was that this particular set of data did not answer the underlying question or whether or not Fort Collins' overall fees for development are significantly higher than Fort Collins Affordable Housing Board September 2, 2004 Minutes Page 2 of 5 those in surrounding communities, making it more difficult to build affordable housing in the City. Staff pointed out that each project incurs a unique set of fees, and a great deal more research would be required to determine the valuation of the land in each community, set asides required for parks, contracts with water providers, level of existing services and other factors. The comparison did not include the cost of land. However, Ken Waido reported that Michelle Jacobs of the Homebuilders Association estimated at the recent Sensible Housing Summit that $100,000 is the minimum needed to start a residential construction project in Fort Collins: $22,000 in fees, $80,000 for land. After discussing specific items in the comparison, the Board asked Mr. Waido to ask Mr. Lee for clarification on calculation of the use tax and the differences in construction valuation among the different locations. Both Jon Fairchild and Joe Rowan felt a $10,000 difference was strikingly high to be accounted for by simply different building code requirements. Mr. Waido will also ask what the City's administration fee covers, and will forward to Board members a copy of the ordinance that previously allowed abatement of sales and use taxes to builders of affordable housing. Maurice Head reported that this ordinance was allowed to sunset a few years ago; Kay Rios would like to look at the possibility of reviving it. Mr. Waido may invite Mr. Lee to attend a Board meeting in the near future to answer members' questions in person. Downpvment Assistance Program Joe Rowan reported on his meeting with Advance Planning staff to discuss different ways to recycle the funds available through this federally funded program more quickly, to offer assistance to more homebuyers. This would also make more money available for projects funded through the Competitive Process. To keep the loan from affecting the applicant's debt ratio, downpayment assistance loans are due -on -sale, paid whenever the property is sold, transferred out of the applicant's name or turned into a rental; the maturity date is 90 years. There is never a requirement for monthly payments. Owners may refinance the first mortgage to a better rate at any time without repayment, but not borrow cash against the home's equity. Prior to 2001, downpayment assistance loans could be forgiven, but now must be repaid as outlined above. Since the program began in 1994, of the 734 loans made, 8 properties have been foreclosed; 129 have been released; 272 are currently open and 325 have been repaid. Fifty-one loans associated with the Parkway Townhomes and Via Lopez projects will be released by the end of the year. Mr. Rowan contended that the 90-year maturity date does not set up a reasonable expectation of repayment. He suggested a repayment term of not Fort Collins Affordable Housing Board September 2, 2004 Minutes Page 3 of 5 more than 30 years, adding that 10-15 years might be more appropriate. He argued that 15 years should be a sufficient amount of time for a homeowner to build up enough economic status to afford to repay the loan. Kay Rios argued that if someone in need of downpayment assistance is still living in the same home after 15 years, he or she has most likely not moved up the economic scale and to ask for a $9500 payment would be unreasonable. Mr. Rowan pointed out that it may not be reasonable to assume that the City will be receiving the same level of federal funding for the Downpayment Assistance Program in the future, so the question is how to stretch the existing resources to help as many potential homebuyers as possible. Ken Waido mentioned that nearly half of the loans made in 2001 have already been repaid, so the discussion could be moot. Mr. Rowan cautioned that between 2001 and 2003 interest rates dropped, so there was no way to know if those figures reflect refinancing activity, with the downpayment assistance loan rolled into the new mortgage. He would like to set the right expectation that the loan must be repaid and create incentives to pay the loans back so that recycled money can be used before new funds would have to be allocated. Jane Phalen asked what was the point of the loans, and would such a change discourage or enhance the program? She thought that knowing a lump -sum payment of $9500 would be due, whether you sold the house or not, would be scary for some potential borrowers. Julie Smith agreed that the question is whether the loans represent a social program or a financial program; Ms. Rio felt it is important to balance those two objectives. She asked Mr. Rowan about limitations on funding for the program in the future. He said it was hard to predict, since federal agencies are finding ways to use 100 percent financing of first mortgages to substitute for downpayment assistance. He pointed out that homeownership is a community and economic development objective, given the financial multiplier effect of owning a home and the financial status it conveys, while rental assistance was more of a social program, given the universal need for safe and decent housing. Denise Rogers said it comes down to choosing what's most important: continuing to help the original applicant or helping new applicants. If the loan is not repaid in 15 years, who will be turned down for lack of funds? Jon Fairchild and Jane Phelan both asked whether requiring sooner repayment would help make new money available, and whether we would be able to make more loans if we knew the money already lent would be coming back sooner. Mr. Waido said it will, but that the amount available to lend is variable, as the Downpayment Assistance Program is just one applicant in the Competitive Process pool. Julie Smith confirmed that the program has Fort Collins Affordable Housing Board September 2, 2004 Minutes Page 4 of 5 already spent all the money available this year, and will have to wait for additional funding through the Fall Competitive Process. Kay Rios asked about the 5 percent service fee mentioned in the staff memo. Mr. Waido explained that it is intended only to reduce the amount of loss to the City, not to cover the City's expenses administering the loans. Those expenses are covered by CDBG grants. Some ideas suggested would be developing a sliding payment schedule according to how long the home has been owned and requiring payment of 50 percent in 15 years and the balance due on sale. However, Ms. Rios would like the Board to clarify its intent and philosophy of the program. Mr. Waido agreed, saying while he would like to see the money come back, he would not want it to be at the expense of the people being served. Mr. Fairchild saw the problem as having no requirement to pay it back now, since 90 years sounds like the same thing as never. Heidi Phelps clarified that under Colorado law there has to be a term attached to any loan, so the 90-year term is more of a legality than a reality. Jon Fairchild and Joe Rowan will work together to develop alternatives for this program. Ms. Phelan asked for staff's opinion on the objective and philosophy behind changing the assistance from a grant to a loan to be included in their report. Ms. Phelps explained that the City can't get into loan servicing or collecting monthly payments on the loan primarily because of lack of staff. Mr. Waido added that the cost of the City's administrative time connected with the program far exceeds the 5 percent service fee charged, and is covered by the general fund and/or federal grants. Ms. Smith pointed out that making the downpayment assistance loan an amortized loan with monthly payments would count against an applicant's credit score and could make the difference in qualifying for a mortgage in the first place. Old Business City Budget/Affordable Housing Fund No report. Update/Reports on Subcommittee Efforts None. Liaison Reports Peter Tippett distributed copies of the Board of Realtors newsletter covering the Sensible Housing Summit on June 3 and explaining the Larimer County Individual Development Accounts to help low-income working families accumulate savings toward purchasing a home. The IDA program allows participants to deposit a minimum amount into a savings account on a Fort Collins Affordable Housing Board September 2, 2004 Minutes Page 5 of 5 regular basis and have that dollar amount matched - up to 5-to-1 - by public and private sources over three years. The Larimer County program is managed by Funding Partners and United Way. Rental Licensing and Registration Heidi Phelps reported about 250-300 people attended a public meeting on the issue on August 30. Staff has captured all comments made in small groups and will make them available on the City's website. She said the major issues involved consistency and fairness; challenges to enforcement; affordability; defining the problem; and who is responsible. Ken Waido reported that the issue will be discussed at the Oct. 12 City Council study session; he will see that it is on the Board agenda for October. Open Board Discussion Joe Rowan distributed a copy of an analysis of the proposed Construction Liability amendment to the Colorado Constitution to appear on the Nov. 2 ballot. Ken Waido announced the City Clerk's office is taking applications for Boards and Commissions, and there are two openings on the CDBG commission. Joe Rowan and Isabel Garity have applied for reappointment to the Affordable Housing Board when their terms expire at the end of the year. Distribution of Affordable Housing Competitive Process Applications Ken Waido distributed informational packets on the five affordable housing applicants for funding through the 2004 Fall Competitive process. There will be a special meeting of the Board on Sept. 16 at 4 p.m. to discuss and rank the applicants for recommendation to the CDBG Commission. This meeting will be chaired by Denise Rogers, who will also make the Board presentation to CDBG on Sept. 23 at 5:30 p.m. Staff will provide additional information to the Board on the Sleepy Willow project, which is in transition, for consideration. Meeting adjourned at 5:25 p.m. Respectfully submitted by Kate Jeracki September 20, 2004