Submitted By
Jonathan Burch, Assistant Village Manager/ Neighborhood Services Director
Reviewed By
A.M. Zayyad, Deputy Village Manager
Agenda Item Title
Title
Study Session on Homeownership Programs
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Overview
Overview
Staff will present options for and elements of homeownership programs that will address the racial and ethnic gap in homeownership rates in Oak Park. Staff are seeking direction from the Board on the focus of these programs.
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Recommendation
Recommendation
Staff request that the Board provide direction on the homeownership program elements identified in the presentation. Staff recommends the following elements as program development continues.
• Any program must provide homeownership counseling.
• Whether for shared equity or down payment assistance, a future program should focus on “first generation” homebuyers.
• The Village should prioritize development of a shared equity program.
• Down payment assistance can be valuable for households earning 120% of the area median income and for households looking to purchase a condominium.
Background
The Strategic Vision for Housing sets out two goals related to homeownership.
• Expand the variety of homeownership opportunities
• Respond to racial disparities in homeownership
To address these goals the Strategic Vision recommends the following actions.
• If any homeownership assistance is pursued, design any program to address racial homeownership disparities
o Explore whether Housing Trust Fund changes are needed to support homeownership.
o Explicitly address historical barriers to homeownership that continue to impact Black households.
In keeping with these recommendations, staff has explored three primary veins of homeownership support.
• Homeownership counseling - this is intentional counseling for anyone interested in buying a home to help the understand and prepare for purchasing a home.
• Down payment assistance - this is monetary support given to a household looking to buy that could be used to cover the down payment or closing costs needed to purchase a home.
• Shared equity housing - this is funding to purchase a housing unit and then resell a portion of it to a household at a more affordable price point, maintaining the home as affordable in perpetuity.
Through staff’s research, we have developed the following recommendations related to each of these elements.
• Any program must provide homeownership counseling since there are many non-monetary barriers to homeownership.
• Whether for shared equity or down payment assistance, a future program should focus on “first generation” homebuyers. This designation has been the most direct way that financial homeownership assistance is targeted to addressing racial/ethnic disparities.
• The Village should prioritize development of a shared equity program since this program provides a deeper subsidy and creates permanently affordable units. The tradeoff is that the subsidy amount per unit is significantly higher and that there are few non-profits in the region who operate such programs.
• Down payment assistance can be valuable for households earning up to 120% of the area median income and for households looking to purchase a condominium. The cost per unit for this option would be far lower and there are several programs already serving the area.
Fiscal Impact
Operation of a homeownership program would have a fiscal impact in the long-term, the magnitude of which would vary depending on the program elements and funding used for operations. Shared equity and down payment programs in other communities have been funded by Community Development Block Grant (CDBG), HOME, state affordable housing trust fund, and local monies.
DEI Impact
The homeownership program options discussed specifically focus on how these programs can narrow the racial and ethnic gap in homeownership rates, as well as how they can support homeownership opportunities for households earning less than 100% of the area median income.
Alternatives
Alternative 1 - Provide alternative direction to staff‘s recommendations on homeownership program elements.
• Advantages
o Customizes next steps based on Board direction.
• Disadvantages
o May require additional research by staff prior to coming back with a recommended program.
Previous Board Action
N/A
Citizen Advisory Commission Action
N/A
Anticipated Future Actions/Commitments
Staff will return with a defined program for evaluation by the Board based on the feedback provided.
Intergovernmental Cooperation Opportunities
As program development proceeds based on Board feedback, staff will connect with other units of government in the region who are looking into homeownership programs too, exploring opportunities for collaboration.