NC City may offer down payment assistance to its employees
FAYETTEVILLE — Down payment assistance for first-time home buyers may soon be coming to City of Fayetteville employees.
City Council voted unanimously on Monday for officials to consider expanding its existing Good Neighbor Homebuyer Loan Program to include all eligible city employees.
When the program started in 2019, the $20,000 down payment assistance was only available to police officers.
The council also asked officials to increase that amount of assistance to $30,000 to account for rising home prices.
In January, according to the latest data available, the typical selling price of an existing single-family home in Fayetteville was $189,450, according to Swamp Pine Estate Agents.
This is an increase of more than 11% compared to January 2021.
Some zip codes in Fayetteville, such as 28314, 28306 and 28304, has seen increases approaching 20%. ZIP codes 28305 and 28312 — both of which saw an increase of around 30% — have median sales prices for existing single-family homes at $243,000 and $304,504, respectively.
“There has been a serious appreciation of housing costs,” the mayor said Mitch Colvin said at Monday’s city council meeting, arguing for increased aid.
“The houses are competitive…instead of being one or two offers, it’s 10 offers. In order to really put them in the game, they need to put an increased down payment with the way the prices have gone up.
The program is funded by $400,000 from the city’s general fund and a $50,000 donation from the First Horizon Bank.
director of economic and community development of Fayetteville, Chris Cauleysaid in an interview before the reunion that the program encourages positive aspects of the community in two main ways.
“It’s about those community-oriented policing services that are so important to reach out to,” Cauley said.
“And then it’s also about relief – reversing the trend from renting to home ownership. This is one of the challenges of neighborhoods in difficulty. Someone’s grandmother dies, and the grandkids are in another state, so they rent the house until they can’t rent it anymore. This is how many neighborhoods decline over time.
“It’s really in the interest of the city and the community as a whole to help promote positive homeownership and homeownership from a generational wealth perspective, from a community safety perspective. and simply preserving the property tax values in those neighborhoods, keeping those neighborhoods intact.
If the city council approves a submitted plan to expand the program in the coming weeks, eligible city employees can apply for the aid as early as April, Cauley said.
Who is eligible?
If the program is expanded, municipal employees can apply for assistance if they meet certain criteria.
Employees must have worked for the city for at least one year and be rated “meets expectations” in their most recent evaluation.
They must also be a first-time home buyer, which the city considers anyone who purchases the property, will live in the home as their primary residence, and have had no ownership, sole or joint, in any residential property in the during the previous three years. on the date of purchase.
There are also income limits.
Employees and their families must have an annual family income equal to or less than 140% of the region’s median income.
In Fayetteville, it’s $58,000 for a single person, and it’s $65,700, $73,400 and $81,100, respectively, for households of two, three and four people.
Eligible city workers could only buy a home under the program in certain neighborhoods.
As it currently exists, the program is limited to residences in the central Campbellton area and the Murchinson Road corridor.
City Council also voted for officials to consider expanding this to four more neighborhoods – Massey Hill Community, Bonnie Doone, 71st District Community and Deep Creek.
“They all revolve around low-income census areas, areas that in some programs we call hard to develop,” Cauley said.
“If we’re really looking to try to create homeownership and tip the scales in our redevelopment areas, from tenants to homeowners, then this is a really good program to do that.”
How the program works
The down payment assistance will take the form of a loan repayable over five years.
This means that the amount owed, in the event that the municipal employee decides to sell, will decrease by 20% each year over a period of five years.
At the end of the five years, the loan, which is granted at zero percent, will be considered fully repaid.
Since this is an Internal Revenue Service repayable loan, employees will also have to pay taxes on the aid since it would be considered part of their annual compensation.
This taxable income will be spread over the five-year period of the loan.
Homebuyer Education Class
Another part of the program expansion is the addition of a homebuyer education class.
Since the program began in late 2019, Cauley said about half a dozen police officers have inquired about the program, but none have purchased homes through it.
Cauley said the main reason based on the feedback was that agents didn’t feel ready to buy a home.
A homebuyer education class, Cauley said, could solve that problem.
“People just aren’t ready to become first-time homeowners and have been renters basically their entire lives,” he said.
“Their parents could have been renters all their lives, and buying a house is serious business. And it’s also complicated. We wanted to put together an education class for first-time home buyers as part of that. »
Cauley said the city would find a certified housing counselor who would teach potential homeowners how to navigate the process of buying a home, from finding a lender and finding a real estate agent to finding a home. in their price range.
The class would also teach them how to handle the new responsibilities that come with owning a home.
member of the board Antonio Joneswho is also a real estate agent, supports this addition to the program.
“There are a lot of things that go into buying a home, from renting to buying,” Jones said. “The courses would definitely be beneficial as it prepares them for things they may not have originally thought of or had to deal with on the rental side.”
Why not others in the city?
At Monday’s meeting, council member Shakeyla Ingram inquired about adding other professions outside of the city’s payroll to the schedule, particularly teachers and firefighters.
Cauley said in response that significant changes would have to be made to expand the program in this way.
“The legality of that is very different from funding our own employees,” Cauley said. “It essentially becomes the basis of their compensation.”
He also said there are barriers to funding assistance for people who are not low-income.
“We’re very limited in what we can do outside of this moderate housing income,” Cauley said.
“That’s not to say we couldn’t, but it really should be a separate branch of the board for us to work on something like this.”