HomeMy WebLinkAboutRoad to Home Request for Big Box Funding
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Anna Rosenberry, Finance Director
Chris Kukulski, City Manager
SUBJECT: HRDC Road to Home Request for $200,000 from the City of
Bozeman’s Big Box Affordable Housing dollars to provide down
payment assistance loans.
MEETING DATE: October 5, 2009
AGENDA SECTION: Action Item
RECOMMENDATION: Approve HRDC Road to Home Request for $200,000 from
the City of Bozeman’s Big Box Affordable Housing dollars to provide down payment
assistance loans.
BACKGROUND: To date, the City has provided $400,000 in down-payment
assistance dollars to the HRDC’s Road to Home program, assisting qualified low and
moderate income households to purchase their first home. (The City has also provided
support of administrative costs through our Workforce Housing mills, including $40,000
in FY10.)
The program provides up to $20,000 in down payment assistance through a second
mortgage, which is repaid when the household sells, refinances, or otherwise pays off
their first mortgage. As loans are repaid, funds are re-loaned to eligible households.
At this time, the Road to Home requests $200,000 to continue this program. They have
included a report on how the dollars have been used in the past, and an application form
that addresses the criteria the Commission established for award of these funds.
FISCAL EFFECTS: If approved, the funds would be taken from the Affordable
Housing dollars in the City’s Development Impacts (Big Box) Fund. Uncommitted
dollars in the fund currently total $285,594. A report of the use and uncommitted
balance in the fund is attached. Approving this project would leave an uncommitted
balance of $85,594 for Affordable Housing purposes in the fund.
ALTERNATIVES: As suggested by the Commission.
Attachments: HRDC Application, Annual Report & Contact Information
Development Impacts Fund Report, June 30, 2009
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Annual Report to the City of Bozeman
The Road to Home
Down Payment Assistance Fund
October 5, 2009
City funds received for Down Payment Assistance fund (FY04-FY08)
FY04 $100,000
FY05 $100,000
FY08 $200,000
TOTAL $400,000
Down-payment assistance funds are loaned to qualifying households as deferred second
mortgages through a revolving loan fund. Since FY04, the program has made $424,549 in
second mortgage loans to 28 households. Funds are repaid with the sale, refinance, or other
payment in full of the first mortgage on the property. In addition to the principal amount of the
loan collected, RTH collects a share of the property’s appreciation in lieu of interest. To date,
RTH has received $39,468 in repayments ($35,000 principal, $4,468 appreciation share).
Sources (through 09/09):
City Big Box Allocation $400,000
Repayments $ 39,468
TOTAL $439,468
Uses (through 09/09):
Outstanding loans $389,549
Loan administration $ 39,947
Remaining loan funds (09/09) $ 5,985
Remaining admin funds (09/09) $ 3,987
TOTAL $439,468
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Application for Big Box Funds
HRDC IX, Inc. The Road to Home
Project Description:
The Road to Home requests $200,000 in Big-Box housing funds to provide down-
payment assistance loans to low and moderate income first time homebuyers purchasing
in the city limits. Loans are provided as second mortgages to qualified households; loans
are repaid, with appreciation share, when the household satisfies the first mortgage
through sale, refinance or other payment. When loan funds are received, the funds are re-
loaned to qualifying households. To date, the program has assisted 28 households to
purchase their first homes. In addition to down-payment funds from the city, the program
also utilizes funding from the Department of Commerce HOME program (used in
Gallatin, Park and Meagher counties), the Montana Board of Housing and local banks.
The loan fund is administered by the Road to Home staff, which is coordinated by Tracy
Menuez, Community Development Associate. Ms. Menuez has managed the loan
program since 2003.
Project Budget (down-payment assistance program only):
Sources:
MDOC HOME program $300,000
City of Bozeman $200,000
TOTAL $500,000
Uses:
Down-payment assistance $462,000
Program administration $ 38,000
TOTAL $500,000
Project timeline:
This project is ongoing, beginning in 2003. Funds are loaned when received and when
qualified households apply. We anticipate that the funds from the city would be spent
over a period of 18-24 months, depending on demand.
Rating factor responses:
1) Use of funds. The funds will provide down-payment assistance loans for first-
time homeownership through second mortgages that are recaptured (with
appreciation share).
2) Leveraging of funds. The MDOC HOME program makes an annual allocation of
funds to qualified entities under the Single Family Pilot Program. As a qualified
entity, the HRDC can access up to $447,752 in the period from July 1, 2009 to
June 30, 2010. However, these funds are provided on a first-come, first-serve
basis between other qualified entities in our region. As the largest and most
productive entity in our division, we estimate we will utilize approximately
$300,000 in funds from MDOC. In addition to down-payment assistance funds
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leveraged, the loan program has leveraged over $7 million in affordable
mortgages through our set-aside program with the Montana Board of Housing.
3) Demonstration of Need: The City of Bozeman has repeatedly noted first time
homeownership as a need for city residents, and as a result helped to establish this
loan fund.
4) Progress Measurement and Reporting: The Road to Home will continue
making annual reports to the City on our use of City funds.
5) Past performance: The Road to Home has been administering down-payment
assistance funds for the City and Gallatin County since 2003, under the
coordination of Tracy Menuez, Community Development Associate. Sources of
funding utilized on the past 2 years include: The City of Bozeman, MDOC
HOME program, and MDOC CDBG program (contacts are attached).
6) Benefit to Low and Moderate income persons: Funds are available to
households earning less than 100% of the Area median income for their family
size (please see chart below).
Family Size and Maximum income
Area 1 2 3 4 5 6 7
City of Bozeman 44,900 51,300 57,700 64,100 69,300 74,400 79,500
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Contact Information for Funding Sources
Montana Department of Commerce:
HOME Program
Leslie Edgecomb, Program Director
301 South Park Avenue Room 240
Helena, MT 59601
406.841.2820
CDBG Program
Gus Byrom, Program Director
301 South Park Avenue
Helena, MT 59601
406.841.2777
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The Development Impacts (Big Box)
Fund accounts for the dollars the City
receives to mitigate impacts related to
large-scale retail developments.
In 2002 Home Depot paid $500,000
for impacts related to their project.
$100,000 was submitted directly to
Farmhouse Partners for affordable
housing. $400,000 was deposited with
the City. The fund has also received
$450,000 from Wal-Mart and $500,000
from Lowes. We don’t anticipate re-
ceiving dollars from other develop-
ments in the near future. Development
Impact dollars will total $1,450,000
(with $100,000 going directly to Farm-
house Partners). $121,000 has been
earned in interest since 2002.
To date, $701,000 has been spent and
$458,000 is committed to projects un-
derway. This leaves approximately
$311,000 uncommitted at the end of
FY09.
In August 2007, the Commission es-
tablished specific grant criteria for Af-
fordable Housing requests. There were
no Affordable Housing related com-
mitments or awards in FY09. The un-
committed balance for housing projects
is $285,600.
In August 2008, the Commission took
action to commit most of the Eco-
nomic Development dollars to specific
projects. A number of projects were
funded. The balance of Big Box
money that remains uncommitted for
Economic Development is $25,600.
Affordable Housing Revenues:
Home Depot FY03 $250,000
Wal-Mart FY04 $225,000
Lowes FY07-FY09 $250,000
Interest Earnings to date $ 60,594
Total Revenues: $785,594
Affordable Housing Commitments:
Farmhouse Partners - submitted directly: FY03 $100,000
The Road Home Project: FY04 $100,000
The Road Home Project: FY05 $100,000
The Road Home Project FY08 $200,000
Total Commitments: $500,000
Uncommitted Dollars: $285,594
Development Impacts Fund
(Big Box Fund)
ISSUED: JUNE 30, 2009 CITY FINANCE DEPARTMENT, ANNA ROSENBERRY, DIRECTOR
Revenue & Commitments
Narrative of the Big Box Fund
Economic Development Revenues:
Home Depot FY03 $250,000
Wal-Mart FY04 $225,000
Lowes FY07-FY09 $250,000
Interest Earnings to date $ 60,594
Total Revenues: $785,594
Economic Development Commitments:
GVIBA FY03 $ 25,000
N 7th Design Plan: FY05-FY08 $ 68,000
Gallatin Ice Foundation Arena: FY07 $300,000
Economic Development Plan FY09 $ 25,000
Rocky Mtn. RC&D Loan Fund FY09 $ 60,000
Downtown Neighborhood Plan FY09 $ 50,000
North 7th TIF Improvements FY09 $232,000
Total Commitments: $760,000
Uncommitted Dollars: $ 25,594
Affordable Housing Economic Development
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PAGE 2 DEVELOPMENT IMPACTS FUND
Affordable Housing—Projects
Farmhouse Partners: In 2001, Home Depot contributed $100,000 directly to an existing Farmhouse Part-
ner’s Affordable Housing project. The money allowed Farmhouse to re-pay an outstanding $50,000 loan from the
Community Affordable House Advisory Board, saving the project interest costs. The other $50,000 was used to subsi-
dize the rents for four to eight units, allowing them to be rented to tenants earning as-low-as 40% of Area Median In-
come, a market that the program was normally unable to reach without assistance.
The Road Home: In November 2003, the City gave $100,000 to affordable housing down-payment assistance
via HRDC’s “The Road Home” program. The City dollars were part of a local match for a $500,000 CDBG grant that
provided services to persons/families earning 60%-80% of Area Median Income. In January 2005, HRDC was granted
an additional $100,000, and in September 2007, another $200,000. “The Road Home” provides education, counseling
and assistance with loan packages, as well as down-payment assistance dollars.
Economic Development—Projects
GVIBA: In FY2003, the City awarded $25,000 of Economic Development dollars to the Gallatin Valley Independ-
ent Business Alliance (GVIBA). Its mission is “to promote locally owned independent businesses in order to preserve
the Gallatin Valley’s unique character.” GVIBA is know for its “Buy Local, You Bet” campaign. City dollars were allo-
cated to their website www.gviba.org, brochures, a membership directory, and print, television & radio ads.
N 7th Design & Connectivity Plan: In June 2005, the Commission funded the Design and Connectivity
Plan for North Seventh Avenue. The actual cost of the plan was $68,000. At the time the Plan was funded, it was in-
tended that the document provide the design framework for further improvements to the area in conjunction with an
anticipated TIF district for N. 7th Avenue and for the development of CTEP projects along the corridor.
Gallatin Ice Foundation Arena: In October 2006, the Commission approved the Foundation’s request for
a total of $300,000: $125,000 to improve the existing Haynes Ice Pavilion at the Fairgrounds, and $175,000 for the fu-
ture construction of an additional Ice Arena adjacent to Haynes. The money is disbursed once it is matched dollar-for-
dollar by local pledges raised by the Foundation, with the $125,000 for the existing pavilion paid in 2007. The project
anticipates providing increased commercial opportunities city-wide, and be a magnet for increased development and
investment in the general vicinity of the Fairgrounds.
Economic Development Plan: In August 2008, the Commission approved Prospera Business Network’s
request to fund a comprehensive Economic Development Plan for inclusion in the City’s growth policy. An award of
$25,000 was made, funding a 50% of the project costs. Prospera Business Network matched the city’s share.
Downtown Neighborhood Plan: In August 2008, the Commission approved the Dowtown Business Part-
nership’s request to fund the creation of a neighborhood plan for the Downtown area (now called the Downtown
Bozeman Improvement Plan). An award of $50,000 was made, with the Partnership contributing matching dollars.
Rocky Mountain RC&D Loan Fund: In August 2008, the Commission approved the Rocky Mountain
RC&D’s request to fund the creation of the Big Sky Energy Revolving Loan Fund. The purpose of the fund is to pro-
vide a flexible financing tool for investment in energy projects. Funds target projects that result in significant energy
efficiency, conservation and green energy development. The City contributed $60,000 for creation of the fund.
N 7th TIF Infrastructure: In August 2008, the Commission approved the Tax Increment Financing Dis-
trict’s (TIF) request for dollars to dedicate to infrastructure improvements in the N 7th area, as described in the N 7th
Design & Connectivity Plan that was previously funded. An award of $232,000 was made to the TIF district, to be
combined with other TIF dollars for infrastructure improvements.
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