HomeMy WebLinkAbout10/16/1995 Work Session
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MINUTES OF THE WORK SESSION MEETING OF
THE SPRINGFIELD CITY COUNCIL.HELD
MONDAY, OCTOBER 16,1995
The City of Springfield Council met in Work Session in the Jesse Maine Room, 225 Fifth Street,
Springfield, Oregon, on Monday, October 16, 1995, at 6:08 p.m., with Mayor Morrisette
presiding.
ATTENDANCE
Present were Mayor Morrisette, Councilors Beyer, Dahlquist, Maine and Shaver. Councilor
Burge was absent (excused). Also present were City Manager Michael Kelly, City Attorney Joe
Leahy, Administrative Aide Julie Wilson and members of the staff.
1. HOME Funding Recommendations for FY 1995-96.
Housing Program Specialist Kevin Ko presented the staff report on this issue. The HOME
Review Committee met on October 3, 1995 to review six proposals for HOME Program
funding assistance. Four proposals are being recommended by the Committee for funding.
The Committee drafted recommendations consistent with HOME Program guidelines and
area housing needs. The HOME Program recommendations are being presented at the
Council work session on October 16, 1995, followed by Consent Calendar adoption during
the regular session.
The primary purpose of the HOME Program is to develop viable communities by providing
decent, safe and affordable housing for persons of low and very low-income. The amount
available for this year's request for proposal (RFP) process is $402,885, which includes a
carry-over 0[$141,975 from previous years. The Springfield HOME Review Committee has
completed its review and is recommending four proposals totaling $391,995 for Council's
approval. The remaining $10,890 will be allocated during the next RFP cycle. In contrast to
previous years' allocations, the committee is recommending that allocations for this year be
provided as grants, instead of amortized loans. In order to offset to dramatic increases in the
cost of housing in this community, granting of funds was recommended as the most effective
method of reducing the debt burden on the projects, thereby allowing the full benefit of the
HOME funds to be passed through to low and very low-income families. The Committee's
recommendations strive to meet both the immediate and long-term needs of Springfield, and
to maximize the benefit of the HOME funds invested in the community.
In addition to Mr. Ko, Mr. Terry McDonald and Ms. Anne Williams of St. Vincent de Paul
and Mr. John VanLandingham of Lane County Legal Aid and HOME Review Committee
member were present to answer questions from Council regarding the projects. They
provided additional information regarding the funding recommendations.
Mr. Ko answered questions regarding the NEDCO Program. He also reviewed the proposed
draft Springfield Home Ownership Program Policies document.
Councilor Maine asked about past Council policy regarding loan versus grant funding. Mr.
Ko discussed grants, loans and CDC funding. \
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City Council Work Session
October 16, 1995
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Mr. Ron Middleton, Springfield CDC President, answered questions from Council and
discussed financing alternatives, the Springfield Home Rehabilitation Program, home equity
loans and educational processes regarding available housing assistance programs.
Mr. Tom Johnson, consultant for Springfield CDC, answered questions from Council and
discussed grant versus loan funding.
Mayor Morrisette stated that HOME funding mayor may not be available in the future. The
Council asked how the City would protect its interest in a project if the funds are granted
without repayment. City Manager Mike Kelly responded that the contracts with the agencies
include language allowing the City to take title to a project if it fails to meet program
requirements.
Councilor Maine stated that she could support grant funding if it was used as seed money to
ensure the success of a project. If this was not the intent, she would support providing loans
instead.
2. Springfield Home Ownership Program (SHOP) Policy Amendments.
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Housing Program Specialist Kevin Ko presented the staff report on this issue. The current
SHOP policies need updating in order for the program to be better utilized. Program benefits
have been minimized by the effect that recent changes in the local housing market have had
on the home buying ability of low-income Springfield residents. The SHOP policies must
also be revised to conform to HOME Program requirements, which is now the only eligible
funding source for home buyer assistance programs. Staff has drafted amendments to the
current SHOP policies which reflect the current needs of the program, and which bring SHOP
into conformance with HOME Program regulations.
The purpose of SHOP is to encourage home ownership by assisting low and very low income
Springfield residents with the first time purchase of a home. The current policy caps the
benefit to a home buyer at $2,000. The recent and dramatic increase in local home prices has
made this amount of subsidy ineffective in assisting a low income family with a home
purchase. In January 1993, the average sale price of a home in Springfield was $77,484
(according to the Multiple Listing Service). Four homes listed at that time were selling for
under $60,000. A search of the September 1, 1995 issue of Multiple Listing Service
identified only 5 Springfield properties which were priced below $60,000. The average sale
price of a home in Springfield currently is $90~000.
The current policy requires that the SHOP subsidy not exceed $2,000 per unit, to be paired
with a matching contribution by the purchaser. With $4,000 available for down payment and
closing costs, a family can purchase a home with a maximum sale price of$57,100. A home
of this price is difficult to find in today's market. The proposed amendments to the policies
would in crease the SHOP subsidy to the purchaser to $4,000, and would also require a
minimum investment by the purchaser of $1,500. With a total of $5,500 available for down
payment and closing costs, a family can purchase a home with a sale price of up to $78,500.
Multiple Listing Service has 32 homes listed at or below this price in the September, 1995,
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City Council Work Session
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issue. Increasing the SHOP subsidy would provide the assistance necessary to make this
program effective in today's housing market.
SHOP has been Junded through the CDBG Program in the past, but beginning October 1,
1995, it is no longer an eligible CDBG activity. In anticipation of this change, the City has
set aside'$40,000 from its 1994 HOME allocation to continue SHOP. Staff is requesting an
additional $25,000 of 1995 HOME funds for this program. A SHOP budget of $65,000 will
provide home buyer assistance to more than 20 low-income Springfield families. Ten
families used the SHOP in fiscal year 1994. Staff anticipates that utilization of the program
would increase if the cap was increased. The proposed revisions have been reviewed and
approved by HUD.
Council raised the issue of residency requirements. Mr. Kevin Ko explained that he was not
aware of any federal regulations regarding residency requirements. City Attorney Joe Leahy
commented that there may be other legal restrictions to imposing lengthened residency
requirements. He will research this issue. Council further discussed the residency
requirement and supported a change from six months to one year residency, depending on the
legal interpretation.
Councilor Shaver discussed the $4,000 maximum amount of assistance provided by the
program and recommended that it be increased to $5,000 to make the program more realistic
and more successful.
The Council requested a report back in six months to see if the program is working and
sooner if the $4,000 maximum amount of assistance is not high enough to have effective
utilization of the program.
ADJOURNMENT
The meeting was adjourned at 7:53 p.m.
Minutes Recorder - Julie Wilson
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Mayor
Attest:
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Eileen Stein
City Recorder