2003 Consolidated Plan for Housing & Community Development
HOME Program Policies

Method of Distribution

The Federal Fiscal Year 2003, Home Investment Partnerships Program (HOME) allocation to the City of Burlington is expected to be $567,523. The Community and Economic Development Office (CEDO) is the City department responsible for developing the Consolidated Plan and the department responsible for administering HOME funds.

In FFY2003, HOME funds will be utilized for the following programs: 

1. Acquisition and Rehabilitation Program, to be used for acquisition and rehabilitation of owner-occupied and rental properties to make them affordable to low income households or to preserve them as affordable units, convert them to cooperative properties, or for the acquisition and improvement of mobile home parks;
2. New Construction Program, to be used for the production of owner-occupied cooperative properties, conventital properties, single-room occupancy units, group homes or housing for households/individuals with documented special needs. Units created under this program must be affordable to low income households; 
3. Rehabilitation of Existing Owner-Occupied Manufactured Homes Program, rehabilitation of existing manufactured housing stock is an eligible activity. Income eligible owners of manufactured housing units qualify for HOME funds to pay for rehabilitation, including the creation or repair of a permanent foundation, rehabilitation of the unit, and relocation costs associated with moving a unit; and 
4. Refinancing Existing Debt, multi-family projects developed by locally based housing organizations that receive HOME funds for rehabilitation may utilize HOME funds to refinance existing debt if there is significant rehabilitation of the property proposed in addition to the refinancing.

All rehabilitation activities undertaken through the HOME program must minimally meet both Section 8 Housing Quality Standards (HQS) and the City's Minimum Housing Standards defined in Chapter 18 of the Code of Ordinances. All HOME-funded activities will also comply with all applicable Federal requirements, including but not limited to, environmental reviews, historic preservation, accessibility, labor standards, non-discrimination and fair housing, equal employment opportunity, contracting and procurement practices, and relocation requirements.

Community Housing Development Organizations (CHDOs)

A minimum of fifteen percent (15%), or $85,130 of the FFY2003 HOME allocation, will be reserved for Community Housing Development Organizations (CHDOs) as defined in 24 CFR 92.2.

Up to $25,000 of the City's total HOME allocation, will be reserved for organizational capacity funding for CHDOs to implement HOME-funded projects.

Administrative Costs

The City intends to use up to 10% of the HOME allocation for administrative and planning costs.

Program Guidelines

Eligible Applicants

Eligibility to apply for HOME funds will be restricted to to households with incomes no greater than 80% of area median income, nonprofit housing or social service organizations, Low Income Housing Tax Credit limited partnerships or limited equity housing cooperatives. At least 15% will be distributed to Community Housing Development Organizations, as defined by HUD. Applications will be accepted on a rolling basis and acted upon by CEDO staff based upon project readiness.

Threshold Criteria for Eligible Applicants

The following criteria must exist in any application from a nonprofit housing development organization to be considered for a commitment of HOME funds (these criteria do not pertain to individual homeowners or home buyers): 

1. Perpetual affordability secured by a housing subsidy covenant, ground lease with appreciation restrictions, or other mechanism, including the designated enforcing entities, acceptable to the Community and Economic Development Office; and 

2. Project must include at least one of the following Consolidated Plan priorities for affordable housing: 
a. Serve household(s) at low or very low income, with preference for projects targeted at <50% area median income; or
b. Serve households with special needs; or
c. Preserve and rehabilitate existing housing units (acquisition may also be included);
d. Preserve a mobile home park; or
e. New construction as mentioned previously.

Additional Analysis

The applicant should provide justification for HOME funding or analysis will be done by CEDO on the following: 

1. Need for project, including projected or existing residents and local market need and demand. 

2. Affordability 

• At a minimum, is the project "affordable" as defined in the HUD regulations? 
• Breakdown of "target" populations by the four income groups: lowest, very low, low and moderate with percentage of annual income to be paid toward housing cost by occupant - are cash flow projections reasonable and do they maintain affordability? 
• If mixed income, is distribution among populations reasonable according to local need and market? 
• Is perpetual affordability mechanism reasonable based on CEDO experience?

3. Project Costs and Design 

• Are projected costs reasonable based on CEDO experience? Soft costs will be evaluated based on needs of particular projects in relation to other projects similar in size and population served. 
• Can projects be completed within 24 months of commitment of HOME funds? 

Program Guidelines for Homebuyer Assistance 

The Burlington HOME Program provides loans for eligible homebuyers to assist with downpayment and closing costs. These loans are secured by subordinate mortgages. When properties assisted with HOME funds for this purpose are sold or transferred, the full amount of the loan plus any accrued interest shall be due and payable to the HOME Program. The HOME Program shall use these funds according to the HUD rules governing HOME program income. When a property owner assisted with HOME funds for this purpose refinances their principal mortgage, the City shall consider executing a subordination agreement upon receiving a written request with sufficient documentation on current fair market value and proposed refinancing amount. When considering such requests to subordinate its HOME mortgage, the City shall require that the loan-to-value ratio be no greater than 100%.

Efficient Use of Federal Resources 

Consistent with 24 CFR Section 92.250(b), projects using other federal assistance in addition to HOME funds will require an analysis of whether the amount of HOME funds invested is reasonable to achieve affordable housing. This analysis will confirm that the project can be sustained from rent levels affordable to the targeted population while maintaining adequate levels of maintenance or repair and fully funding reserves required by lenders or grantors. This analysis will be done by CEDO for each application. 

Commitments of HOME Funds 

The distribution of HOME units must, at a minimum, achieve the allocations by income group required by HUD for rental (all funds to <80% of median; at least 90% of funds to <60% of median; for projects with five (5) or more HOME units at least 20% of units to <50% of median) and homeownership units (all funds to <80% of median for principal residence first-time buyers or existing owners). Commitments of HOME funds will not exceed any per unit cap set by CEDO. Based on the Program Guidelines, HOME funds may be committed to a project as a whole provided that per unit allocations are not required to meet HUD requirements. Terms will be determined consistent with HUD requirements and will reflect the ability of the project to maintain affordability and to serve the lowest income population based on market demand. While most HOME funds will be secured by mortgage deeds, grants may be appropriate under certain circumstances. For units serving households at or below 30% of area median income without federal assistance for operations or that provide an operating subsidy with nonfederal resources, a maximum contribution of HOME funds per <30% unit is acceptable. 

CHDO Plan 

The City of Burlington has an extensive track record in working with Community Housing Development Organizations (CHDOs) and other nonprofit organizations, with additional support from the Vermont Housing and Conservation Board and the Vermont Housing Finance Agency. A minimum of fifteen percent (15%) of the statewide HOME allocation, or $85,130 will be reserved for CHDO projects defined in 24 CFR 92.2. The City may use a portion of this reservation for eligible predevelopment costs. In addition, the City will reserve up to $25,000 for operating costs for CHDOs that implement HOME-funded projects. 

Refinancing Guidelines for HOME Projects

Multi-family projects developed by locally based housing organizations that receive HOME funds for rehabilitation may utilize HOME funds to refinance existing debt, consistent with 24 CFR 92.206(b)(2), if they meet the following guidelines: 

1. Refinancing is necessary to permit or to continue affordability under 24 CFR 92.252; 
2. Rehabilitation is the primary eligible activity. A minimum of $7,500 of rehabilitation per unit is required; 
3. The grantee must demonstrate management capacity and practices that ensure that the long term needs of the project can be met and the targeted population can be served over an extended affordability period; 
4. The grantee must demonstrate that the new investment is being made to maintain current affordable units, to create greater affordability in current affordable units; or to create additional affordable units; 
5. Refinancing will be limited to projects that have previously received an investment of public funds; 
6. The minimum HOME affordability period shall be 15 years and all HOME assisted projects developed by locally based housing organizations are required to be perpetually affordable; 
7. HOME funds may be used for refinancing anywhere in the City of Burlington; 
8. HOME funds cannot be used to refinance multifamily loans made or insured by any Federal program, including CDBG.

Page last updated August 19, 2003