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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 02/02/2021 - RESOLUTION 2021-014 AUTHORIZING AND APPROVING THE Agenda Item 10 Item # 10 Page 1 AGENDA ITEM SUMMARY February 2, 2021 City Council STAFF Sue Beck-Ferkiss, Social Policy and Housing Programs Manager Ingrid Decker, Legal SUBJECT Resolution 2021-014 Authorizing and Approving the City’s Participation in the Metro Mortgage Assistance Plus Program, and Authorizing the Execution of a Delegation and Participation Agreement with the City and County of Denver in Connection Therewith. EXECUTIVE SUMMARY The purpose of this item is to consider a Resolution allowing resid ents of Fort Collins to participate in a down payment assistance program administered by the City and County of Denver, by approving an agreement between the City of Fort Collins and Denver delegating to Denver the authority to operate the program within Fort Collins. This program expands the range of down payment assistance available in the City to households earning up to $150K (most current programs administered by City partners only go up to 80% AMI) at no cost to the City. This responds to the Council priority of Affordable and Achievable Housing. STAFF RECOMMENDATION Staff recommends adoption of the Resolution. BACKGROUND / DISCUSSION For many years, the City offered a down payment assistance program to first -time home buyers. For generations of homeowners with sufficient income to qualify for a mortgage but not enough income to save for a down payment and/or closing costs, this support was enough to propel them into home ownership and stabilize their housing costs, often leading to intergenerational wealth building. This is still true for some residents. However, with price escalation of both rental and for -sale housing far out-pacing income growth, home ownership has become out of reach for many residents even with down payment assistance. Because of the change in economic circumstances and because many private and public sources of down payment assistance are now available to City residents, the City currently refers residents to outside programs in lieu of offering its own. The metro DPA program, administered by the City of Denver, is offering to allow City residents to participate in its down payment assistance program which would broaden the range of down payment assistance programs available to City residents because: • This program serves incomes up to $150,000 whereas some available programs limit income to 80% area median income (i.e.: $75,250 for a family of 4). • This program offers a 3-year forgivable second loan for various levels of down payment assistance, typically between 4-6% of purchase price. • There is no first-time buyer requirement - meaning even people who have previously owned a home can qualify. • There is no maximum purchase price, although the program is available for home purchase only - not refinancing. • It can serve people with minimum credit scores of 640. Agenda Item 10 Item # 10 Page 2 Most down payment assistance, including the City’s former program of Home Buyer Assistance, is in the form of a second mortgage. A second mortgage is a lien placed on the property. The City’s former program, and most of the programs available currently do not require payment on the loan unless the mortgage is refinanced, or the home sold. At that time, the assistance must be repaid in full. To support successful home ownership and reduce the chance of foreclosure, typical programs, including metro DPA, require buyers to: • Complete homebuyer education from an approved agency; • Qualify for a mortgage based on household income; and • Use the property as the buyer’s principal place of residence. Denver has been offering this down payment assistance program since 2013. The metro DPA program offers a 30-year, fixed rate mortgage and down payment and closing cost assistance. Because the City and County of Denver is a Housing Finance Authority, it can provide borrowers with a 30-year, fixed rate mortgage at competitive rates through participating lenders and assistance in the form of a 3 -year 0% interest forgivable second mortgage by using capital markets to fund the first mortgage and accompanying assistance. Like the City’s prior program, no monthly payments are required on the down payment assistance. However, in this program, for every month that the first mortgage payment is received, 1/36 th of the loan is forgiven. If the buyer lives in the home for 3 years and makes payments on their first mortgage for 36 months, the buyer will not need to pay back any portion of the assistance. A borrower will not make payments during the first 3 years unless the mortgage is paid off or the borrower ceases to live in the property as thei r principal residence in the first 3 years. So, if the buyer decides to refinance, sell, or no longer live in the property within the first 3 years of ownership, they will owe a portion of the assistance received. For example, if a borrower received $10,00 0 in assistance and refinanced their mortgage after 28 months, the borrower will owe $2,223 when they refinance and $7,777 will be forgiven. Borrowers receive funds at closing through a participating lender and the lenders are reimbursed when the loans are sold to a prearranged servicer. Currently the servicers are Lakeview Loan Servicing LLC and US Bank. Using multiple servicers increases program efficiency, borrower flexibility and rate competitiveness. Hundreds of local lenders, including some in northern Colorado are approved to participate. The metro DPA program had received calls of interest from residents and lenders in Fort Collins hoping to use this program to assist with the purchase of homes in the City. To allow City residents to participate i n the program, the City must approve a Resolution and execute a Delegation and Participation Agreement, a draft of which is attached to the Resolution as Exhibit A. Denver pays set-up and on-going operational costs for the program. The program has expanded to include over 35 Colorado cities and 8 Colorado counties including Larimer County. This means it is already available to people living in unincorporated Larimer County. Adoption of this Resolution makes this program available to those within Fort Collin s city limits. CITY FINANCIAL IMPACTS This program does not cost the City anything and does not affect the City's credit rating. BOARD / COMMISSION RECOMMENDATION Participation in this program was recommended by City Council's Ad Hoc Housing Committee and the Affordable Housing Board. (Attachments 1 and 2) PUBLIC OUTREACH This program was considered by Council's Housing Ad Hoc Committee at its December meeting and the Affordable Housing Board at its January Meeting. These meetings were open to the pub lic. Also, through the outreach for the Housing Strategic Plan, a key element of feedback is the importance of housing stability Agenda Item 10 Item # 10 Page 3 (which aligns with the Plan’s draft vision that “everyone has healthy, stable housing they can afford”). Expanding down payment assistance options reduces barriers for home ownership, which supports housing stability. A letter of support was received and is attached. (Attachment 3) ATTACHMENTS 1. Ad Hoc Housing Committee Minutes (draft) (PDF) 2. Affordable Housing Board Minutes (draft) (PDF) 3. Constituent Letter of Support (PDF) 1 AD HOC HOUSING COMMITTEE December 10, 2020 5:00pm-7:00pm Zoom Meeting Members: Mayor Pro Tem Stephens, Councilmember Cunniff, Councilmember Gorgol Attendees: Staff Members: Lindsay Ex, Caryn Champine, Meaghan Overton, Clay Frickey, Sue Beck-Ferkiss, Dean Klingner, Carrie Daggett, Jackie Kozak Thiel, Darin Atteberry, David Lenz, Ingrid Decker, Justin Moore, Marcy Yoder, Victoria Shaw, JC Ward, Rita Knoll Community Members: Shelby Sommer, Bob Pawlikowski, Jenn “JR” Rieskamp, Kathy O’Neil, Lindsay Mason, Jennifer Bray, Kyle Kumjian, Kevin Jones, Ehret Nottingham, Grace Curtis, Caley Valdez, Isaiah Dennings, Ava McCall, Christian Dykson, Sam Whitaker, Katrina Vander Horst, Jakob Beckish, Sorbarikor Inene, Joelle, Emely Cruz Arrazola, Jasper Sloss, Lexi Orgill, Liam Bureau, Sophia Shepp, Hannah Taylor, Noah Schindler, Kyle Hill. No last name listed: Lisa, Jesse S., Joseph, Chelsea A. Call to Order: 7:06 Approval of November Minutes and Agenda Review: • Councilmember Cunniff moved to approve November minutes, Councilmember Stephens seconded. Roll call for vote: Unanimous 3-0-0. • Agenda Review Discussion Item: Review Anti-displacement and Housing Stability • Prepared to see evictions rise sharply in 2021 • Eviction prevention strategies o Legal defense funds o Financial literacy programs o Gentrification mapping • Committee discussion o Legal defense fund ▪ Would need staff person to support these efforts ▪ Would contract with Colorado Legal Services ▪ Currently providing some of these resources through CARES funding, 2021 would be extension ▪ Possibility that we’ll receive additional CARES dollars, and may not have to use general fund ▪ Appreciate the “Ask a Lawyer” program, help understanding eviction process ▪ $125k is not a huge sum for the benefits offered ATTACHMENT 1 2 o Mapping via GIS should not require additional staffing resources (supported due to low entry required) ▪ May be existing information already out there that could help with this – i.e. data from equity indicators project o Financial literacy programs ▪ If through Community Development Block Grant (CDBG) Committee, those committee members would decide on use of funds – could provide with a matrix of priorities • Suggestion to consider this as mini-grant program rather than through CDBG Committee ▪ Interest in exploring partnerships ▪ Focused on housing, but could look at broader financial literacy if there’s interest there ▪ What is the biggest need/where’s the biggest gap in our community? o Support from all 3 committee members for legal defense fund – would likely serve 50-80 residents each month between various classes and sessions o Support for gentrification mapping, staff will meet with GIS and start that work o Want to identify needs and gap more clearly related to financial literacy Discussion Item: Explore Funding and Financing Strategies • Median value of City contribution is about $39k per unit • Need to deliver 228 units/year (from affordable housing plan) would require $8.8 million at $39k subsidy per unit • No single line item will meet housing goals • Portfolio approach will be most stable • Potential scale for direct opportunities o Expand existing, pursue linkage fees, and explore new bond and tax opportunities • Indirect and influence opportunities o Include private activity bonds, maximizing state and federal program, and expanding partnerships • Committee discussion o Interest in tax would require broader discussion – other items (Transit, e.g.) are also looking at possibility of taxes o Unsure it’s the right time for a tax, but could open community dialogue about this ▪ Agreement that new sales tax in next 1-2 years would be difficult o Need to fix gap in funding ▪ Interested in fee or tax related to demolition o Committee supports partnership with Metro DPA program (potential quicker win) o Already discussing community land trust options o Previous linkage fee conversation may need to be revisited – especially in relation to luxury developments o Incentivizing developers who are building what we’re looking for ▪ Fees for 1,200 sq ft homes vs. 3,000 sq ft homes – are we prioritizing homes with smaller footprints/multi-dwelling? AFFORDABLE HOUSING BOARD REGULAR MEETING January 7, 2021, 4:00-6:00pm Remote/Online via Zoom due to COVID-19 1/7 /202 1 – MINUTES Page 1 1. CALL TO ORDER: 4:01 2. ROLL CALL • Board Members Present: Jen Bray, John Singleton, Bob Pawlikowski, Tatiana Zentner, Diane Cohn, Daphne Bear, Kristin Fritz • Board Members Absent: None • Staff Members Present: Meaghan Overton, Lindsay Ex, Sue Beck-Ferkiss, Brittany Depew • Presenters: Andrew Johnston, Diana Minardi, David Slivken 3. AGENDA REVIEW – Welcomed new member John Singleton and did introductions 4. CITIZEN PARTICIPATION – NONE 5. APPROVAL OF MINUTES Daphne moved to approve December minutes. Diane seconded. Approved 7-0. 6. NEW BUSINESS A. Poudre River Library District—David Slivken B. Metro Down Payment Assistance (DPA) Program—Andrew Johnston, City of Denver Fort Collins is interested in bringing the Denver DPA Program into our city, which is administered by Denver’s Department of Housing Stability. No cost to the City of Fort Collins. Ultimately will be seeking resolution from City Council to enter agreement with Denver to administer this program in Fort Collins. This program began in 2013 and rebranded in 2018. Offer 3%-6% of loan amount as DPA, home purchases only, no maximum purchase price. No first-time homebuyer requirement, maximum qualifying income is $150,000 (150% of Denver area median income), minimum 640 FICO credit score, homebuyer education required through HUD approved agencies. Discussion: • Would the income limit be the same in Fort Collins or would it be adjusted? o Income limit would be the same as Denver – consistent across metroDPA’s entire service area. • Current program in Fort Collins caps at 80% AMI and is only for first-time homebuyers (with some exceptions). • CHFA also has a program that is statewide, qualifying income limit is $126k currently. • More than 100 lenders already involved in the program. ATTACHMENT 2 AFFORDABLE HOUSING BOARD REGULAR MEETING 1 /7/20 2 1 – MINUTES Page 2 • Sponsored by the City and County of Denver, and has no federal, state, or local funding. Self-sufficient funding source through good financial relationships with partners. • Lender funds at the time of closing. Tatiana moved to recommend that City Council move forward with metroDPA program. Bob seconded. Passed 7-0-0. (SEE FULL MINUTES FOR REST OF MEETING) January 20, 2021 Wade Troxell, Mayor City of Fort Collins 300 LaPorte Avenue Fort Collins, CO 80521 RE: SUPPORT – metroDPA Program: Jurisdiction Approval Dear Mayor Troxell, On behalf of Spire Financial, where success is driven by our commitment to one another and our desire to pursue excellence personally and professionally, I would like to offer this letter of support for the metroDPA Program expanding into the City of Fort Collins community. This program helps foster housing affordability by offering down payment assistance to borrowers. This program requires no investment from the City of Fort Collins. Approving metroDPA would let me help qualified borrowers in the community become homeowners. As a businessperson, offering a program like metroDPA helps me expand my business, stay competitive and support local residents. In today’s high-priced market, the demand from potential homebuyers for an assistance program that increases affordability is evident. In the last two months alone, over 30 Coloradans were able to purchase a home because of metroDPA. I have personally helped dozens of families achieve their homeownership dreams with this program in other Colorado communities since its inception. Approving the program’s expansion into the City of Fort Collins would mean your constituents could also benefit. The municipality approval docs are listed on www.metrodpa.org, towards the bottom of the home page. If you have any questions or wish to discuss this further, please contact Andrew Johnston at (303) 335-6338 or via email at Andrew.Johnston@denvregov.org Sincerely, Jessica Howard | NMLS 1400044 Mortgage Advisor jhoward@spirefinancial.com | www.jhoward.spirefinancial.com ATTACHMENT 3 cc: Susan Gutowsky, Dist. 1 Julie Pignataro, Dist. 2 Ken Summers, Dist. 3 Russ Cunniff, Dist. 5 Emily Gorgol, Dist. 6 -1- RESOLUTION 2021-014 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING AND APPROVING THE CITY’S PARTICIPATION IN THE METRO MORTGAGE ASSISTANCE PLUS PROGRAM, AND AUTHORIZING THE EXECUTION OF A DELEGATION AND PARTICIPATION AGREEMENT WITH THE CITY AND COUNTY OF DENVER IN CONNECTION THEREWITH WHEREAS, the City and County of Denver (“Denver”) is authorized pursuant to its Home Rule Charter to promote the financing of mortgage loans for persons or families that earn 150% or less of the area median income for Denver and to purchase homes intended for use as the sole place of residence by the owners or intended occupants thereof; and WHEREAS, Denver sponsors the Metro Mortgage Assistance Plus Program to provide competitive mortgage loans, which will be coupled with down payment and closing cost assistance in connection with financing mortgage loans, for persons or families that earn 150% or less of the area median income for Denver to purchase homes intended for use as the sole place of residence by the owners or intended occupants thereof (the “Program”); and WHEREAS, Denver has invited the City to participate in the Program, and this resolution would authorize Denver to operate the Program within the City’s jurisdiction; and WHEREAS, the City previously offered its own Home Buyers Assistance program, but no longer does so and now refers residents to other assistance programs serving the community; and WHEREAS, the Program serves a wide range of incomes (currently up to $150,000), serves some people with lower credit scores, and provides a forgivable three-year loan; and WHEREAS, by participating in the Program the City would expand the available housing finance options for Fort Collins residents; and WHEREAS, there would be no cost to the City to participate in the Program, and it will not affect the City’s credit rating; and WHEREAS, to authorize Denver to operate the Program within Fort Collins, the City and Denver would execute a Delegation and Participation Agreement in substantially the form attached hereto as Exhibit “A” and incorporated herein by reference (the “Agreement “); and WHEREAS, the Agreement allows the City to terminate its participation in the Program at any time on thirty days’ notice without affecting existing loans; and WHEREAS, pursuant to Colorado Revised Statutes Section 29-1-203, governments may cooperate or contract with one another to provide any function or service lawfully authorized to each of the cooperating or contracting units of government; and -2- WHEREAS, the City Council has determined that it is in the best interests of the City that the City authorize Denver to operate the Program in Fort Collins for the benefit of City residents. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. Section 2. That the City Council hereby authorizes and approves the City’s participation in the Program in connection with the financing of mortgage loans for persons or families that earn 150% or less of the area median income for Denver as described herein, and delegates to Denver the City’s authority to operate the Program on behalf of the City. Section 3. That the Mayor is hereby authorized to enter into the Agreement in substantially the form attached as Exhibit “A,” together with such additional terms and conditions as the City Manager, in consultation with the City Attorney, determines to be necessary and appropriate to protect the interests of the City or to effectuate the purposes of this Resolution, and the City Manager is hereby authorized to execute other Program documents, and to take such other actions as may be necessary or convenient to carry out and give effect to the City’s participation in the Program, consistent with this Resolution. Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 2nd day of February, A.D. 2021. __________________________________ Mayor ATTEST: _____________________________ City Clerk 4842-3532-0186.3 DELEGATION AND PARTICIPATION AGREEMENT This DELEGATION AND PARTICIPATION AGREEMENT, dated as of February 3, 2021 (this “Delegation and Participation Agreement”), is by and between the CITY OF FORT COLLINS, a legally and regularly created, established, organized and existing home rule charter city and political subdivision under the Constitution and statutes of the State of Colorado (“Fort Collins”) and the CITY AND COUNTY OF DENVER, COLORADO, a legally and regularly created, established, organized and existing home rule charter city and political subdivision under the Constitution and statutes of the State of Colorado (“Denver”), each a “Party”. R E C I T A L S: WHEREAS, the State of Colorado (the “State”) Constitution Article XIV, Section 18(2)(a) provides that nothing in the Constitution shall prohibit any of the State’s political subdivisions from cooperating with one another to provide any service lawfully authorized to each of the cooperating units; and WHEREAS, Denver is authorized pursuant to its Home Rule Charter to promote the financing of mortgage loans for persons or families that earn 150% or less of the area median income for Denver and to purchase homes intended for use as the sole place of residence by the owners or intended occupants thereof and to promote the health, welfare, safety, convenience and prosperity of the people of Denver; and WHEREAS, Denver sponsors the Metro Mortgage Assistance Plus Program to provide competitive mortgage loans which will be coupled with down payment and closing cost assistance in connection with financing mortgage loans for persons or families that earn 150% or less of the area median income for Denver to purchase homes intended for use as the sole place of residence by the owners or intended occupants thereof (the “Program”); and WHEREAS, Fort Collins previously offered its own Home Buyers Assistance Program but no longer does so and now refers residents to other assistance programs serving the Fort Collins community; and WHEREAS, Denver has invited Fort Collins to participate in the Program in order to expand the available housing finance options for Fort Collins residents; and WHEREAS, Fort Collins has the full legal authority to participate in the Program pursuant to the general powers granted to it in Title 29, Article 1, Section 203 of the Colorado Revised Statutes, as amended; Title 31, Article 15, Colorado Revised Statutes, as amended; and the Resolution 2021-014 adopted on February 2, 2021 by the Fort Collins City Council authorizing Fort Collins’s participation in the Program pursuant to this Delegation and Participation Agreement (collectively the “Act”); and WHEREAS, Fort Collins desires to delegate to Denver the authority of Fort Collins to take action and exercise power under the Act on behalf of Fort Collins with respect to the Program within Fort Collins’s boundaries; EXHIBIT A 4842-3532-0186.3 NOW THEREFORE, in consideration of the mutual covenants and undertakings set forth herein, Fort Collins and Denver hereby agree as follows: Section 1. Fort Collins hereby delegates to Denver the authority of Fort Collins to take action and exercise power under the Act on behalf of Fort Collins with respect to the Program within Fort Collins’s boundaries. Section 2. Denver hereby accepts the delegation of authority from Fort Collins pursuant to Section 1 hereof and agrees to abide by each of the terms and conditions of this Delegation and Participation Agreement in connection with the use of such delegation. Denver agrees to make the Program available to Fort Collins for the origination of home mortgages within Fort Collins’s boundaries. Section 3. In the event that the Program is discontinued by Denver, this Delegation and Participation Agreement, and all duties, obligations and rights of Denver and Fort Collins hereunder, shall terminate. If the Program is terminated, Fort Collins agrees to release Denver from any claims for costs or any other liabilities incurred by Fort Collins with respect to the adoption and approval of this Delegation and Participation Agreement or any other Fort Collins actions related thereto. Section 4. Fort Collins’s participation in the Program pursuant to this Delegation and Participation Agreement shall be at no cost to Fort Collins and shall not be construed as creating or constituting a general obligation or multiple fiscal year direct or indirect i ndebtedness or other financial obligation whatsoever of Fort Collins nor a mandatory payment obligation of Fort Collins in any fiscal year during which this Delegation and Participation Agreement shall be in effect. Fort Collins does not assume any responsibility or liability for any financial obligations of Denver or of participants in the Program, and Denver agrees to release Fort Collins from any claims for costs or any other liabilities incurred by Denver with respect to the adoption and approval of this Delegation and Participation Agreement or any other Denver actions related thereto. Section 5. Either Fort Collins or Denver may terminate this Delegation and Participation Agreement by providing at least thirty (30) days’ prior written notice of such effective date of termination to the other Party of such termination. Notice of termination may be sent to the following, via electronic mail or U.S. First Class U.S Mail, postage prepaid, addressed as follows: If to Fort Collins: City of Fort Collins Social Sustainability Department P.O. Box 580 Fort Collins, CO 80522-0580 Attn: Sue Beck-Ferkiss sbeckferkiss@fcgov.com If to Denver: City and County of Denver Department of Housing Stability 201 West Colfax Avenue, 6th Floor 4842-3532-0186.3 Denver, Colorado 80202 Attn: Andrew Johnston, Catalytic Projects Andrew.Johnston@denvergov.org Notwithstanding the foregoing, any termination of this Delegation and Participation shall only prevent Denver from initiating any new loans under the Program within the boundaries of Fort Collins and shall not affect the legality or effectiveness of any loans previously-initiated or -closed under the Program with the boundaries of Fort Collins prior to the effective date of termination. IN WITNESS WHEREOF, Fort Collins and Denver have caused this Delegation and Participation Agreement to be executed and be effective as of February 3, 2021. CITY OF FORT COLLINS [SEAL] By Wade Troxell, Mayor ATTEST: City Clerk Name ______________________________ APPROVED AS TO FORM: __________________________________ Assistant City Attorney Name _____________________________ 4842-3532-0186.3 CITY AND COUNTY OF DENVER, COLORADO By Britta E. Fisher Executive Director and Chief Housing Officer Department of Housing Stability [Signature Page to Delegation and Participation Agreement]