Fiscal Note
The City’s Deferred Payment Loan (DPL) program has a current available balance of $358,725 in HOME funds, and the CDD Housing Development Reserve fund has an available balance of over $1 million in CDBG funds. This Resolution proposes to exchange up to $360,000 in HOME funds from the DPL program for a commensurate amount of CDBG funds from the Housing Development Reserve.
No additional City funds are being requested by this Resolution, and there is no impact on the local City levy.
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Approving the exchange of HOME funds for CDBG funds between the City’s Deferred Payment Loan program and the CDD Housing Development Reserve Fund in order to better align these two HUD funding sources with appropriate projects and expenditures, in light of recent HUD regulation changes regarding the use of HOME funds.
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The City’s Deferred Payment Loan (DPL) program provides residential rehab loans targeted to Madison homeowners with income levels at or below 80% of the Area Median income. A typical rehab loan is $18,000, and could assist with roof replacements, energy efficiency improvements, electrical repairs and upgrades, plumbing repairs, and general repairs including those related to code compliance. The repayment of these loans is deferred until the time the property is sold, allowing homeowners to make necessary improvements to their property without incurring monthly installment payments. All loan repayments are returned to the program, and in turn, are used to fund additional rehab loans. Currently, the DPL program is funded with a combination of HOME and CDBG funds.
Recently, HUD implemented its new HOME Rule, which incorporated regulatory changes that now make the use of Federal HOME funds far more attractive for investments in larger housing development projects, and less so for programmatic designs that use smaller investments, such as the provision of homebuyer assistance or rehabilitation loans.
The City’s Community Development Division (CDD...
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