IURA Neighborhood Investment Committee

Ithaca Urban Renewal Agency 108 East Green Street Ithaca, New York 14850 (607) 274-655 Minutes IURA Neighborhood Investment Committee February 14, 2014 I. Call to Order The meeting was called to order at 8:30 AM with members Tracy Farrell, Chair; Karl Graham and Teresa Halpert present. Staff member Nels Bohn was present. II. Public comment None. III. Review of Minutes – January 10, 2014 Halpert moved, seconded by Graham, approval of the January 10, 2014 minutes. Carried Unanimously. IV. New Business 1. 2014 Designation of Ithaca Neighborhood Housing Services (INHS) as a Community Housing Development Organization (CHDO) and a Community Based Development Organization (CBDO) Graham moved, seconded by Halpert: HUD Entitlement Grant Program – 2014 Designation of INHS as a CHDO & CBDO Whereas, the Ithaca Urban Renewal Agency (IURA) has been designated by the City of Ithaca as the Lead Agency to develop, administer and implement the HUD Entitlement grant program, including funds received through the Home Investment Partnerships (HOME) program, and Whereas, grant recipients under the HOME program are termed Participating Jurisdictions (PJs), and Whereas, PJs must reserve not less than 15% of their HOME allocation for investment in housing to be developed, sponsored, or owned by Community Housing Development Organizations (CHDOs), and Whereas, each PJ must identify annually CHDOs that are capable of carrying out projects to address priority housing needs identified in the Consolidated Plan, and IURA NIC minutes, 2/14/14 Page 1 of 7 Whereas, a CHDO is a specific type of community‐based nonprofit organization as defined in 24 CFR §92.2, and Whereas, a CHDO automatically qualifies as a Community Based Development Organization (CBDO) per 24 CFR §570.204(c)(1)(iii), and Whereas, a PJ may use HOME funds to provide special assistance to CHDOs, including: • Project pre‐development loans; • Operating assistance; • Use of HOME project proceeds; • Capacity‐building assistance; and Whereas, on January 31, 2014, Ithaca Neighborhood Housing Services, Inc. (INHS) submitted materials documenting their qualification and requested renewal of their designation as a CHDO and CBDO by the IURA, and Whereas, at their February 14, 2014 meeting, the Neighborhood Investment Committee of the Ithaca Urban Renewal Agency compared submitted materials against CHDO & CBDO criteria and recommends the following; now, therefore be it Resolved, that the IURA, acting in its capacity as the Lead Agency for the Participating Jurisdiction of the City of Ithaca, hereby renews its designation of Ithaca Neighborhood Housing Services, Inc. as a CHDO and CBDO for the 2014 Action Plan. Carried Unanimously 2. Amend Funding Contract with INHS for the Mini‐Repair Program to Reduce the Number of Annual Beneficiaries from 60 to 50 Households Members discussed the request and noted that INHS still performs 110 repair projects per year, but the unduplicated number of beneficiaries has declined. Members asked staff to query INHS about their marketing and outreach efforts for the program and whether eligible homeowners are crowded out by participants who receive multiple repairs per year. Halpert moved, seconded by Graham: HUD Entitlement Program, Amend Outcome Measurement for INHS Mini‐Repair Program Whereas, on January 27, 2014, Ithaca Neighborhood Housing Services (INHS) requested amending the 2011, 2012 and 2013 Mini‐Repair program funding agreements to decrease the number of annual beneficiaries from 60 to 50 homeowners, and Whereas, the Mini‐Repair program makes small and emergency repairs to low‐ and moderate‐ income homeowners, and IURA NIC minutes, 2/14/14 Page 2 of 7 Whereas, INHS annual funding applications project the program will conduct 110 repairs on an annual basis, and Whereas, the CDBG grantee is required to report unduplicated beneficiaries for the mini‐repair program and cannot report individual repairs in the HUD Integrated Disbursement and Information System (IDIS) system, and Whereas, INHS measures outcome of the Mini‐Repair program by number of repairs and the IURA measures outcomes based on unduplicated number of beneficiaries, and Whereas, in funding agreement negotiations, INHS has projected that 110 annual repairs will assist 60 homeowners, but in recent years the program has benefited 50 unduplicated homeowners because many homeowners receive assistance more than once per year, and Whereas, executed funding agreements for the Mini‐Repair program require 60 beneficiaries, and Whereas, INHS has submitted documentation verifying that they complete at least 110 mini‐ repairs annually, and Whereas, the IURA Neighborhood Investment Committee reviewed this matter at their February 14, 2014 meeting and recommended the following; now, therefore, be it Resolved, that the IURA hereby amends the 2011, 2012 and 2013 funding agreements with INHS for the Mini‐Repair program to reduce the number of unduplicated beneficiaries from 60 to 50 low‐ and moderate‐income homeowners, and be it further Resolved, that the Mini‐Repair project in the 2011, 2012 and 2013 Action Plans is hereby amended as necessary to identify project outcome as 110 repairs benefiting at least 50 low ‐ and moderate‐income homeowners. Carried Unanimously 3. Development of 2014‐2018 Consolidated Plan, Draft Goals and Objectives Bohn reported that HUD requires grantees to fill in a template to complete the 5‐year Consolidated Plan, which must be submitted this year. The template requires the following steps to set priority needs and goals: 1. Determine community needs 2. Set priorities among needs 3. Determine resources available 4. Set overarching goals for strategic use of HUD funds Each funded activity will be expected to tie back to (A) a priority need identified in the Consolidated Plan, and (B) meet a general goal contained in the Consolidated Plan. IURA NIC minutes, 2/14/14 Page 3 of 7 Members reviewed community needs and arrived at the following recommended general goal statements for the Consolidated Plan: 1. Improve and expand affordable housing options 2. Expand economic & employment opportunities 3. Strengthen neighborhoods 4. Increase access to resources leading to physical and economic mobility 5. Meet essential needs for food, shelter and safety. The recommended priority needs are listed on the attached Priority Community Development Needs Assessment worksheet. V. Old/Other Business 1. 2013 HOME Final Rule Amendments, HOME Homebuyer Policies Graham moved, seconded by Halpert: HUD Entitlement Program – HOME Homebuyer Program Policies Whereas, §92.254(f) of the 2013 HOME final rule requires the grantee to adopt written policies for: 1. Underwriting standards for homeownership assistance; 2. Responsible lending; 3. Refinancing loans to which HOME loans are subordinated; and Whereas, pursuant to an executed agreement dated 2/14/13, the City of Ithaca authorizes the IURA to act as lead agency to plan, administer, implement and monitor HUD Entitlement grant funds awarded to the City of Ithaca, and Whereas, draft homebuyer policies have been developed in consultation with Ithaca Neighborhood Housing Services, Inc., who has operated a homebuyer education and lending program for over 20 years, and Whereas, the IURA Neighborhood Investment Committee reviewed and discussed draft homebuyer policies at its January 10, 2014 and February 14, 2014 meetings, and recommend the following; now, therefore be it Resolved, that IURA, acting in its capacity of lead agency on behalf of the City hereby adopts HOME Homebuyer Program Policies, dated 1/31/14. Carried Unanimously * * * * * HOME Homebuyer Program Policies Ithaca Urban Renewal Agency 1/31/14 IURA NIC minutes, 2/14/14 Page 4 of 7 §92.254(f) of the 2013 HOME final rule requires the participating jurisdiction to adopt written policies for: 4. Underwriting standards for homeownership assistance that evaluate housing debt and overall debt of the family, the appropriateness of the amount of assistance, monthly expenses of the family, assets available to acquire the housing, and financial resources to sustain homeownership; 5. Responsible lending, and 6. Refinancing loans to which HOME loans are subordinated to ensure that the terms of the new loan are reasonable. HOME Homebuyer Program Objectives HOME funds allocated for homebuyer assistance are intended to create an ongoing resource to assist low‐ and moderate‐income homebuyers overcome obstacles to achieve and sustain homeownership in the City of Ithaca. A low‐ and moderate‐income homebuyer is defined as a household earning 80% or less of the area median income adjusted for household size. HOME financial assistance provides subordinate mortgage loans to assist with purchase and closing costs. HOME funds are intended to leverage conventional mortgage loans, homebuyer equity and other funding sources. Homeownership provides housing stability, independence, and an opportunity for homebuyers to build assets that may be used to invest in education, weather a financial crisis or pass on to succeeding generations. Providing homebuyer assistance benefits the entire city by increasing the number of financial stakeholders in the long‐term viability of their neighborhood and community and allowing people to live close to their workplace and access goods and services with less dependence on automobile ownership. The following program policies apply to HOME funds awarded for homebuyer assistance: Underwriting Standards for Homeownership Assistance Homebuyer assistance loan underwriting shall minimally consider the following factors: • Eligibility of homebuyer; • Eligibility of home to be purchased; • Borrower’s credit history; • Housing debt to household income; • Total debt to household income; • Amount of assistance requested; • Assets available to acquire housing; • Sources of income needed to sustain homeownership; Eligible homebuyers must: • Have household incomes at or below 80% of the area median income, adjusted for household size; and • Complete a pre‐purchase homebuyer education program sponsored by Ithaca Neighborhood Housing Services, Inc. or other education program for first‐time homebuyers approved by the IURA that meets the National Industry Standards for Homeownership Education and Counseling or those of comparable quality as established by other organizations. Eligible homes must: • Be located within the City of Ithaca; • Be a one‐ to four‐family residence, condominium unit, limited equity cooperative unit, or homes on leased land owned by land trusts. Homes with an accessory dwelling unit are eligible; • Be occupied as the homebuyer’s principal residence; and • Not exceed 95% of the median value of comparable homes in the City of Ithaca. • Be decent, safe (including meeting lead‐based paint requirements at 24 CFR 35), sanitary and in good repair as determined by physical inspection and meet the standards for legal occupancy by the City of IURA NIC minutes, 2/14/14 Page 5 of 7  Ithaca. In the event of health and safety deficiencies, such deficiencies must be budgeted in with the purchase price and corrected within six months of purchase; and Credit Report – A credit history report shall be required for each loan application, though underwriting shall not rely solely on credit scores to determine credit worthiness as flexibility shall be retained to examine extenuating circumstances. The report must cover at least two years of credit history and cannot be more than 90 days old. A credit score may also be obtained and evaluated. The applicant must explain all derogatory remarks in the credit report. A credit score of less than 600 generally indicates heightened credit risk. Debt to Income Ratios – The following maximum debt to income ratios are hereby established for homeownership loans: • 37% housing debt to income; and • 42% total debt to income. Maximum debt to income ratios should consider characteristics of the home to be purchased that may reduce operating expenses. For instance, EnergyStar certified homes use 15%‐30% less energy than home built to the current energy code. Similarly, homes with alternative energy facilities installed at the property may reduce energy expenses. Maximum Amount of Assistance – The maximum amount of assistance shall be limited to the minimum amount of assistance needed to close the gap for borrower to qualify for sufficient private financing to purchase a home, up to a maximum of $40,000 per assisted household, unless specifically waived by the IURA. Homebuyer Contribution – Homebuyers must provide a minimum of $2,500 toward the down payment and closing costs of the home purchase, unless a reduced homebuyer contribution is approved by the IURA based on extenuating circumstances. A homebuyer’s contribution of volunteer time through a nonprofit‐sponsored sweat equity housing program may be accepted in lieu of a minimum cash contribution. Assets – If an income‐qualified applicant possesses liquid assets available for home purchase equal to 40% or more of the purchase price plus closing costs, then underwriting shall consider all relevant circumstances to determine if HOME loan assistance is necessary and appropriate to achieve sustainable homeownership on a case‐by‐case basis. Loan Terms – The interest rate, term, repayment and amortization shall be established to achieve long‐term homebuyer affordability consistent with creating an ongoing resource to assist future homebuyers. All approved loans shall conform to the PJs applicable resale/recapture provisions. Responsible Lending To ensure that HOME‐assisted homebuyers obtain mortgage loans that they have the ability to repay: • All HOME Homebuyer loans shall be structured to assure long‐term affordability by the homebuyer if household income remains stable. • HOME homebuyer loan underwriting shall consider the amounts and terms of all debt, including revolving, student loans, liens and mortgage debt, when considering homebuyer qualifications, purchase affordability and homebuyer’s ability to repay such debt and sustain homeownership. Nondiscrimination and Equal Opportunity – No loan applicant shall be discouraged from or denied the ability to apply for credit because of race, color, religion, national origin, sexual preference, sex, marital status, physical limitations or age. The approval or denial of an application for credit shall be based solely upon the underwriting standards without regard to race, color, religion, national origin, sexual preference, sex, marital status, physical limitations or age. Resubordination of HOME Debt in Event of Refinancing of Private Debt IURA NIC minutes, 2/14/14 Page 6 of 7 HOME debt must not be subordinated to new debt unless: • New debt results in a reduction in monthly loan payments, or • New debt is used to enhance the condition of the home and overall debt remains affordable to sustain homeownership. VI. Motion to Adjourn The meeting was adjourned by consensus at 10:15 AM. ― END ― Minutes prepared by N. Bohn IURA NIC minutes, 2/14/14 Page 7 of 7