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Home My WebLink AboutAgenda - 04-16-2002 - 7c i a 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: April 16, 2002 Action Agenda Item No. 7 : SUBJECT: FY 2002 CDBG Program— IDA Program DEPARTMENT: Housing/Comm. Development PUBLIC HEARING: (YIN) Yes ATTACHMENT(S): INFORMATION CONTACT: Resolution Tara L. Fikes, ext. 2490 Application Summary TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 336-227-2031 PURPOSE: To receive comments from the public regarding 1 the development of a FY 2002 Community Development Block Grant (CDBG) Application for funds for an Individual Development Account (IDA) Program; 2) approve a resolution authorizing the submission of the formal application document on or about April 17, 2002 and authorize and Chair to sign the application document on behalf of the Board; and 3) approve the allocation of$40,000 in match funding from the County's Housing Trust Fund. BACKGROUND: The N.C. Department of Commerce announced the availability of approximately $500,000 in Small Cities Community Development Block Grant Program (CDBG) funds for the purpose of establishing Individual Development Account (IDA) Programs for first- time homebuyers with incomes below 80% of the area median income. Specifically, the 80% income limits are as follows: One-person household - $38,100; two-person household - $43,500; three-person household - $48,950; and a four-person household - $54,400. IDAs are dedicated savings accounts, similar in structure to Individual Retirement Accounts (IRAs), that can only be used for 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 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 Women's Center, a 501(c)(3) organization located in Chapel Hill, presently operates an IDA for TANF and TANF eligible participants and expressed their interest in continuing to administer this program with funding from Community Development Block Grant funds at a public hearing held on March 19. Since that time, staff has been working with developing a sound application for submission to the State in mid-April 2002. a 2 The application specifically requests $40,000 in CDBG funds. A total of$20,000 will be used to match participants' savings. The remaining $20,000 will be used for operating costs with $7,200 used for administrative purposes and $12,800 for training and technical assistance. 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 — 18 months. Savings must be used for downpayment assistance and/or closing costs for a first-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$40,000 in CDBG funding for housing purposes. There is a $1 for$1 match requirement, thus the County must provide $40,000 in local funds as a match. County staff is proposing that the match contribution come from the local Housing Trust fund that has a balance of approximately $328,000. RECOMMENDATION(S): The Manager recommends that the Board 1) receive comments from the public as additional information; 2) approve a resolution authorizing the submission of the formal application document on or about April 17, 2002 and authorize and Chair to sign the application document on behalf of the Board; and 3) approve the allocation of$40,000 in match funding from the County's Housing Trust Fund. i REVISED 3 �- ORANGE COUNTY BOARD OF COMMISSIONERS RESOLUTION AUTHORIZING AN APPLICATION FOR COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS WHEREAS,the N.C. Department of Commerce—Division of Community Assistance announced the availability of approximately$500,000 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 on or before April 30,2002 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 presently operates an IDA Program under the County's TANF Program and has expressed an interest in administering this program utilizing CDBG funds; WHEREAS,the grant funds will be used to match participant savings by a 1:1 ratio for a total of twenty(20) families. NOW,THEREFORE BE IT RESOLVED by the Orange County Board of Commissioners, that an application for FY 2002 Community Development Block Grant funds for the Individual Development Account Program under the North Carolina Small Cities Program is hereby authorized. The amount of the request will be$40,000. The application will be submitted on or about April 30, 2002. 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 16`h day of April 2002. r ' 3 ORANGE COUNTY BOARD OF COMMISSIONERS RESOLUTION AUTHORIZING AN APPLICATION FOR COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS WHEREAS,the N.C. Department of Commerce—Division of Community Assistance announced the availability of approximately$500,000 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 on or before April 30,2002 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 presently operated an IDA Program under the County's TANF Program and have expressed an interest in administering this program utilizing CDBG funds; WHEREAS,the grant funds will be used to match participant savings by a 1:1 ratio for a total of twenty(20)families. NOW,THEREFORE BE IT RESOLVED by the Orange County Board of Commissioners,that an application for FY 2002 Community Development Block Grant funds for the Individual Development Account Program under the North Carolina Small Cities Program is hereby authorized. The amount of the request will be$40,000. The application will be submitted on or about April 30, 2002. 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 16t'day of April 2002. 4 Application Summary FY2002Community Development Block Grant Program Individual Development Accounts 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 for 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 $500,000 of Small Cities Community Development Block Grant Funds for use in establishing IDAs. These funds will be awarded to applicants supporting homeownership IDA programs. Program Administrator The Women's Center (TWC) is currently the only non-profit organization in Orange County administering an IDA program and will have assisted 30 families in buying their first homes through Habitat for Humanity by the end of the program in June 2002. TWC is fully capable of taking on this IDA program, as it would serve as a continuation of the current IDA program. TWC's Consumer Credit Counseling Program would fulfill key roles of outreach, economic literacy training, financial counseling, account monitoring and post-purchase counseling. TWC would 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 Central Carolina Bank Brief Program 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. For a description of the on-going relationship between TWC 5 and the IDA participants please see attached protocols for IDA Accounts Set-up and Management. 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 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 eighteen (18) 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 for 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 September 2002 Complete program by June 30, 2004 6 Program Budget Total CDBG Expenses (Two Year Projections) $32,800 IDA Budget Amount per #of IDA Savings Match family families CDBG Match $1,000 x 20 = $20,000 Oran a County Match' $1000 x 20 = $20,000 Total IDA Match 1 $2,000 1 x 20 = $40,000 'Not Yet Confirmed IDA Program -Administrative Budget MIS IDA license $1,200 Salary of Program Administrator2 $12,000 Total Administrative $13,2001 2$6,000 CDBG and $6,000 Orange County IDA Program - Education and Training Budget #of Cost/ #of Service Sessions Participant Participants Total Orientation 1 x $35 x 20 = $700 Personal Finance Workbooks x $15 x 20 = $300 Homebu er's Workshops 5 x $35 x 20 = $3,500 Homebu er's Workbooks x $10 x 20 = $200 Holiday Budgeting Workshop 1 x $35 x 20 = $700 Tax Refund Workshop 1 x $35 x 20 = $700 Individual Financial Counseling 6 x $40 x 20 = $4,800 Travel N/A N/A N/A = $100 Total Education &Training = $11,000 In-Kind Administrative & Education Funding Match Source Service Amount Type of Match The Women's Center Two Years of CCCS Program's Rent $12,200 In-Kind Orange County Government3 Administrative Expense-Salary $6,000 Cash Total Funding Matches $18,200 3As yet unconfirmed