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Home My WebLink About10/16/1995 Work Session . . . t' 'I, ., .- 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. \ r City Council Work Session October 16, 1995 Page 2 . 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. . 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, . . . . y I City Council Work Session October 16, 1995 Page 3 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 ~~ Mayor Attest: ~~ Eileen Stein City Recorder