1. First Time Homebuyers ProgramINTER -CITY MEMORANDUM
DATE: September 14, 1998
TO: Glen Neier, Interim City Manager
Mayor Boharski and City Council
FROM: Susan Moyer, Housing Manager
Planning, Economic and Community Development
SUBJECT: Proposed Policy Changes to the First Time Home Buyer Program
Under the guidelines of Montana Board of Housing and the various federal grant programs, the
City was able to design the First Time Home Buyer Program as local needs appeared to dictate.
Staff would like approval to make some policy changes to the program which should help in
bringing the program to a quicker close.
1. The definition of family to qualify for this program is: a couple, a single parent with
custody of a child or children, or a couple with children. There are six duplex (twelve
units) still available at Teton Terrace which are designed to accommodate individuals
with disabilities. Staff is recommending that single individuals with disabilities be
allowed the opportunity of home ownership. Should the individual employ a care
provider, the care provider will not be counted into the family size or income therefrom.
2. That the total cost of the land on units purchased by individuals whose incomes are at or
below 55% of median income, be covered by the zero interest, deferred mortgage which
is never paid back until the unit is sold or ownership is transferred. At that time the
program income generated from the recapture of subsidy is provided to the Glacier
Affordable Housing Foundation to recycle back into our community to help another
lower income individual or family achieve home ownership.
Consideration be given to targeting the ten tri-plex units (which are a story and a -half) to
single individuals; and, if after strong marketing, the duplex units cannot be allocated to
individuals or families with disabilities, then single individuals could also qualify.
4. At the time the program was designed, it was acknowledged that a realtor's commission
would place an added burden on the sale price of a home/townhouse to the lower income
applicant. The City has the ability through the use of income generated from previous
grants to offset this burden on behalf of the low income buyer. The City previously asked
for community effort and support from the various banks and title companies involved in
this project. We could further that community effort by making a proposal to the Board
a
of Realtors for their assistance in marketing these units for a reduced commission fee:
The City would pay, on behalf of the buyer, a sliding scale commission for each
referral staff and the banks are able to qualify for home ownership. Because the
grants have different income categories to target, it is felt it would be fair to offer:
• 5% commission for individuals or families whose incomes are in the 50%
and below median income range;
• 4% commission for individuals or families whose incomes are in the 60%
to 51 % median income range; and
• 3% commission for individuals or families whose incomes are in the 80%
to 61 % median income range.
The funds used to pay commissions would be drawn from Program Income
derived from previous CDBG grant activities.
In addition to the referral service, the realtor(s) would be asked to prepare the
buy/sell contingent upon the applicant qualifying for the funding and attending the
mandatory Home Ownership Course. That way, the realtor would be ensured of
receiving the commission at the time of closing.
Finally, until the Teton Terrace project is farther along, the City has a model of both the
duplex and trip-plex units for individuals to view. It is extremely difficult for most
applicants to conceptualize what the townhouse project consists of and what the layout of
the units really are like. By having a model in the center unit of the tri-plex under
construction and creating another one as soon as we have a buyer for one side of the
duplex units, the project would be able to do the irrigation system and landscaping of the
center core area. The single family homes are much easier to interest buyers in now that
they can drive down and see several homes with landscaping and all the amenities.
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