Explanation
BACKGROUND: This legislation authorizes the amendments of Ordinance No. 0720-2023, passed by Columbus City Council on March 13, 2023 and Ordinance No. 0024-2024, passed by Columbus City Council on January 22, 2024 to increase the maximum amount of assistance to individual homebuyers participating in the Department of Development’s American Dream Downpayment Assistance (ADDI) program using non-federal funds from the lesser of 6% of the home purchase price or $7,500.00 to the lesser of 6% of the home purchase price or $14,999.00.
The maximum amount for the ADDI program was effectively changed on March 1, 2024, but amending Ordinances 0720-2023 and 0024-2024 was inadvertently missed. Approval of all ADDI agreements, currently 95 applications and agreements and 27 lender agreements, executed during this period at the increased assistance amount is also requested.
Fiscal Impact: no funding is needed for this ordinance.
Title
To amend Ordinance No. 0720-2023, passed by Columbus City Council on March 13, 2023 and Ordinance No. 0024-2024, passed by Columbus City Council on January 22, 2024 to increase the maximum amount of assistance to individual homebuyers participating in the Department of Development’s American Dream Downpayment Assistance (ADDI) program; and to approve agreements previously executed, starting March 1, 2024, at the increased assistance amount. ($0.00)
Body
WHEREAS, in March 2024, the Department of Development’s American Dream Downpayment Assistance (ADDI) program increased the maximum amount of assistance to individual homebuyers from the lesser of 6% of the home purchase price or $7,500.00 to the lesser of 6% of the home purchase price or $14,999.00; and
WHEREAS, the need exists to amend Ordinance No. 0720-2023, passed by Columbus City Council on March 13, 2023 and Ordinance No. 0024-2024, passed by Columbus City Council on January 22, 2024; and
WHEREAS, the maximum amount for the ADDI program was effectively changed in March 1, 2024, but amending Ordinances 0720-2023 and 0024-2024 was inadvertently missed; and
WHEREAS, approval of all ADDI agreements executed during this period at the increased assistance amount is also requested; and NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. That the Background of Ordinance No. 0720-2023 is hereby amended to increase the maximum assistance to individual homebuyers participating in the American Dream Downpayment Assistance program, as follows:
This ordinance authorizes the Director of the Department of Development to execute a commitment letter, loan agreement, promissory note, mortgage, and/or restrictive covenant with individual homebuyers who access the Department of Development’s American Dream Downpayment Assistance (ADDI) program using non-federal funds.
The Department of Development provides down payment assistance using federal HOME funds to first time homebuyers whose household income is at or below 80% AMI for the purchase of a home in the City of Columbus. The amount of assistance provided is the lesser of 6% of the purchase price or $7,500.00 $14,999.00 and is provided as a forgivable loan. The household must remain in the home for a period of five years for the loan to be forgiven.
In addition to HOME funds for this program, the Department of Development is expanding the program to use non-federal funds in order allow for applicants up to 120% AMI. The use of non-federal funds also reduces the time it takes to review/approve an application as specific HUD required documents are not needed. These funds would be in the form of a loan and the household must remain in the home for a period of five years in order for the loan to be forgiven.
Ordinance 2768-2022, approved by Columbus City Council on November 7, 2022, authorized the Director of the Department of Development to enter into a non-for-profit service contract with the Tony R. Wells Foundation to act as the fiscal manager of the non-federal ADDI funds and dispense the funds as directed by the City.
This ordinance is a companion piece to Ordinance 2768-2022 in that this ordinance will authorize the director to execute the necessary documents for the non-federally funded ADDI program.
SECTION 2. That the existing Background of Ordinance No 0720-2023 is hereby repealed.
SECTION 3. That the Background of Ordinance No. 0024-2024 is hereby amended to increase the maximum assistance to individual homebuyers participating in the American Dream Downpayment Assistance program, as follows:
This ordinance authorizes the Director of the Department of Development to execute a Lender Participation Agreement with numerous, individual lenders who wish to partner with the Department of Development for the American Dream Downpayment Initiative (ADDI) program.
The Department of Development’s ADDI program provides down payment assistance using federal HOME funds or non-federal funds to first time homebuyers whose household income is at or below 80% or 120% AMI, respectively, for the purchase of a home in the City of Columbus. The amount of assistance provided is the lesser of 6% of the purchase price or $7,500.00 $14,999.00 and is provided as a forgivable loan. The household must remain in the home for a period of five years for the loan to be forgiven.
The department partners with multiple lenders to provide information about the ADDI program to the lenders’ eligible clients, as defined by program guidelines. Only lenders who have executed a Lender Participation Agreement and whose staff have completed city-created training can recommend clients for the ADDI program. The City does not make payment to the Lender for their participation in this program, nor is the lender a subrecipient as defined in 2 CFR 200. A lender’s participation in this program allows the lender to recommend a potential resource of additional funds to eligible clients who may not be able to purchase a new home without additional financial assistance.
The department evaluates its programs and agreement templates on a regular basis. This review may necessitate program or agreement template changes based upon new federal regulations or process improvements because of a change in best practices or lessons learned. As such, changes to the Lender Participation Agreement may need to be made to reflect these changes. In order to prevent a disruption in the program if a change must occur expeditiously - for which a disruption may result in a first time homebuyer not being able to purchase a home - the Director of Development is seeking authority to modify these agreements as needed without seeking further City Council approval. Modifications would reflect changes required by federal regulations or changes to the department’s program, which is described in the agreement. Since the lender is not being compensated, no funding will be added to these agreements through a modification.
Emergency action is requested to allow for the immediate execution of Lender Participation Agreements in order to provide eligible home buyers access to financial assistance as soon as possible. A delay in execution of these agreements may result in eligible participants not having access to these funds at the time of closing, resulting in higher mortgage interest rates or even the loss of the ability to purchase the home.
SECTION 4. That the existing Background of Ordinance No 0024-2024 is hereby repealed.
SECTION 5. That Section 1 of Ordinance No. 0720-2023 is hereby amended as follows:
SECTION 1. That the Director of the Department of Development is authorized to execute a commitment letter, loan agreement, promissory note, mortgage, and/or restrictive covenant with individual homebuyers who access the American Dream Downpayment Assistance (ADDI) program using non-federal funds, in an amount not to exceed the lesser of 6% of the home purchase price or $14,999.00.
SECTION 6. That existing Section 1 of Ordinance No. 0720-2023 is hereby repealed.
SECTION 7. That Section 1 of Ordinance No. 0024-2024 is hereby amended as follows:
SECTION 1. That the Director of the Department of Development is authorized to execute Lender Participation Agreements with numerous, individual lenders who wish to partner with the Department of Development for the American Dream Downpayment Initiative (ADDI) program, in an amount not to exceed the lesser of 6% of the home purchase price or $14,999.00, and is authorized to modify the Agreements without seeking further City Council approval in order to align with evolving federal guidance and regulations and to align with changes to the Department's program.
SECTION 8. That existing Section 1 of Ordinance No. 0024-2024 is hereby repealed.
SECTION 9. That all non-federally funded ADDI homebuyer applications and agreements and lender agreements, entered into by the Department of Development since the passage of Ordinance No. 0720-2023, starting March 1, 2024, at the higher assistance level of the lesser of 6% of the house purchase price or $14,999.00, are hereby approved and ratified.
SECTION 10. That this ordinance shall take effect and be in force from and after the earliest period allowed by law.