HomeMy WebLinkAboutAgenda - 06-23-2005-8aORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: June 23, 2005
Action Agenda
Item No. ~j'G _
SUBJECT: FY 2005 CDBG Program -IDA Program
DEPARTMENT: Housing/Comm, Development PUBLIC HEARING: (Y/N) Yes
ATTACHMENT(S):
Resolution
Application Summary
INFORMATION CONTACT:
Tara L. Fikes, ext, 2490
TELEPHONE NUMBERS:
Hillsborough 732-8181
Chapel Hill 968-4501
Durham 688-7331
Mebane 336-227-2031
PURPOSE: To 1) receive comments from the public regarding the development of a FY 2005
Community Development Block Grant (CDBG) Application for funds for an Individual
Development Account (IDA) Program; and 2) Approve a resolution authorizing the submission
of the formal application document on or about .July 15, 2005 and authorize and Chair to sign
the application document on behalf of the Board,
BACKGROUND: The N.C. Department of Commerce announced the availability of
approximately $70,000 in Small Cities Community Development Block Grant Program (CDBG)
funds for the purpose of fianding an Individual Development Account (IDA) Program in Orange
County for first-time hamebuyers with incomes below 80% of the area median income,
Specifically, the 80% income limits are as follows: One-person household - $39,950; two-person
household - $45,650; three-person household - $51,350; and afour-person household -
$57,050.
IDAs are dedicated savings accounts, similar in structure to Individual Retirement Accounts
(IRAs), that can only be used far purchasing a first home, They are managed by community
organizations and accounts are held at local financial institutions, Contributions for lower
income participants are matched using both private and public sources. For example, if a
participant saves $1,000 toward the down payment on a home, their savings are matched with
$1,000 in CDBG funding and $1,000 in local funding equating to a 2:1 match of local savings.
Additionally, all participants receive homebuyer education and counseling, economic literacy
training to include credit counseling, budgeting, and money management,
The Women's Center, a 501(c)(3) organization located in Chapel Hill, administered the County's
first IDA Program funded by CDBG funds from 2002 - 2004, The Center is very Interested in
continuing to administer this program with future CDBG funds.
The application specifically requests $50,000 in CDBG funds, Of this amount, a total of
$20,000 will be used to match participants' savings, $20,000 will be available for housing
z
services including education and outreach activities, and $10,000 will be available far
administrative expenses. The Women's Center plans to support 20 participants in the IDA
Program with each participant required to save $1000 during the course of the program - 24
months. Savings must be used for downpayment assistance and/or closing costs for afirst-time
homebuyer only.
A second public hearing is required after the grant application is prepared in order to receive
additional comments prior to submission. This public hearing has been advertised in the local
newspaper. Comments received will be incorporated into the application document prior to
submission.
FINANCIAL IMPACT: This grant provides the opportunity to apply for $50,000 in CDBG
funding for housing purposes. There is a $35,000 match requirement that the County must
provide in local funds - $20,000 will match participant savings; $10,000 will match the
administrative funding; and $5,000 will assist in the provision of housing services, The Orange
County HOME Consortium has allocated $20,000 in FY 2005 HOME funds to meet the match
requirement. County staff is proposing to provide the remaining $15,000 in match funding to
the program from available CDBG program income. The Women's Center will provide the
additional $5,000 match requirement.
RECOMMENDATION(S): The Manager recommends that the Board receive comments from
the public as additional information and approve a resolution authorizing the submission of the
formal application document on or about July 15, 2005, and authorize Chair to sign the
application document on behalf of the Board,
RESOLUTION AUTFIORIZING AN APPLICATION FOR COMMUNITY
DEVELOPMENT BLOCK GRANT FUNDS
WHEREAS, the N.C. Department ofCommerce -Division of Community
Assistance announced the availability of approximately $300,000 in Small Cities
Community Development Block Grant (CDBG) Program funds for the purpose of
establishing Individual Development Account (IDA) Programs to first-time homebuyers
with incomes below 80% of the area median income; and
WHEREAS, an application for funding must be sent to the Division of
Community Assistance in order to receive the funds; and
WHEREAS, Individual Development Accounts are dedicated savings accounts to
be used for homeownership only; and
WHEREAS, the Women's Center has operated the IDA Program in the County
Program and has expressed an interest in administering this program utilizing CDBG
funds; and
WHEREAS, the grant funds will be used to match participant savings by a 1:1
ratio for a total of twenty (20) families and to provide housing services including
education and outreach services;
NOW, THEREFORE BE IT RESOLVED by the Orange County Board of
Conunissioners, that an application for FY 2005 Community Development Block Grant
funds for the hndividual Development Account Program under the North Carolina Small
Cities CDBG Prograni is hereby authorized, The arnount of the request will be $50,000.
The application will be submitted on or about July 15, 2005.
FURTHER, the Orange County Board of Commissioners authorizes the Chair of
the Board to sign the application document on the County's behalf
This the 23rd day of June 2005.
4
Application Summary
FY2005 Community Development Block Grant Program
Individual Development Account (IDA) Program
Background
Individual Development Accounts are dedicated savings accounts, similar in
structure to Individual Retirement Accounts (IRAs) that can only be used for purchasing
a first home in Orange County. They are managed by community organizations and
accounts are held at local financial institutions. Contributions far lower income
participants are matched using both private and public sources. Additionally, all
participants receive economic literacy training that shows them how to clean up their
credit, set up a budgeting and savings schedule, and teaches them the basics of money
management.
The N.C. Department of Commerce and the Division of Community Assistance
has set aside approximately $300,000 of Small Cities Community Development Block
Grant Funds for use in establishing IDAs. These funds will be awarded to applicants
supporting homeownership IDA programs.
Proqram Administrator
The Women's Center (TWC) successfully administered the County's FY 2001 IDA
program assisting 11 families in buying their first homes. TWC is very interested in
continuing to administer this program as a continuation of the prior years' program. The
organizations will carry out the key components of the program including outreach and
marketing, credit counseling, economic literacy training, financial counseling, account
monitoring and post-purchase counseling.
TWC will be working with several partners in the administration of this IDA program and
has the support of these partners:
Orange County
Habitat for Humanity of Orange County, NC, Inc.
EmPOWERment, Inc.
Orange Community Housing & Land Trust
SunTrust Bank
Brief Proqram Description
Twenty accounts will be set up for this IDA program. This is an appropriate number of
accounts considering the amount of funding available and staff time necessary to
administer the program.
Participants will be required to save a full $1000 during the course of the IDA program.
Savings account will be opened with a minimum $.50 initial deposit and participants will
5
save a minimum of $50 per month that must come from earned income. The minimum
savings period will be six (6) months and the maximum/ideal savings period will be
twenty-four (24) months. In addition, participants will be counseled throughout the
program and especially after the purchase of their home that continued savings are
essential to deal with normal home and lawn maintenance and also far emergencies.
In the event of an emergency, participants may make only one (1) emergency
withdrawal and are required to inform the administrator of their intent to do so.
Savings contracts will be signed at the IDA Orientation. Participants will be required to
save for at least the minimum period of time (six months) and may be required by the
administrator to save more than the program minimum of $50 per month if planning on
purchasing their home sooner than the maximum eighteen month time period. For
example, a participant planning on purchasing a home within twelve months may be
required to save a minimum of $75 - $85 per month to ensure that they will meet their
savings goal.
A participant may be disqualified from the IDA program if the participant:
• Has an income that exceeds 80% of the median income
• Provides the program with false information
• Misses more than two (2) deposits in the course of the program
• Saves for fewer than six (6) months
• Saves less than $1000 in eighteen (18) months
• Deposits savings that do not come from qualified earned income
• Does not participate in financial counseling or home ownership workshops
• Makes more than one (1) withdrawal from IDA savings account
Program Schedule
Begin program implementation October 2005
Complete program by September 30, 2007
6
IDA Program Projected Budget 2005-2007
IDA Savings Match
Amount # of families Total
CDBG Match $1,000 x 20 = $20,000
Orange Coun Match $1,000 x 20 = $20,000
Total IDA Match $2,000 x 20 = $40,000
CDBG -Administrative Budget
Total Administrative $10,000
CDBG -Housing Services Budget
Service # of
Sessions Cost/
Participant # of
Participants
Total
Partici ant Recruitment $40lhour 75 hours $3,000
Desi n & U date Curriculum $40lhour x 35 hours $1,400
Orientation 1 x $45 x 20 = $900
Personal Finance Workbooks x $15 x 20 = $300
Homebu er's Worksho s 6 x $45 x 20 = $5,400
Homebu er's Workbooks x $10 x 20 = $200
Individual Housin Counselin 1 x $45 x 20 = $900
Mone Wise Curriculum Materials $5 x 20 = $100
Housin Counselor Certification $10 x 20 = $200
Credit Counselor Certification $10 x 20 = $200
Individual Financial Counselin 6 x $45 x 20 = $5,400
Travel N/A N/A N/A = $200
Total Housin Services = $20,000
In-Kind Administrative & Housing Services Funding Match
Source Service Amount Type of Match
Orange Coun Government Administrative Ex ense -Sala $10,000 Cash
Oran e Coun Government Housin Services $5,000 Cash
The Women's Center Housing Services $5,000 Cash
Total Fundin Matches $20,000
Total Budget -IDA Program
Source Amount
CDBG Savin s Match $20,000
CDBG Administrative Ex ense $10,000
CDBG Education Expense $20,000
Orange Coun Savings Match $20,000
Orange Coun Administrative Match $10,000
Oran e Coun Housing Services Match $5,000
Women's Center Housin Services Match $5,000
TOTAL $90,000