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Land bank, Arbor and HCR discuss Section 3 and feasibility for homebuyer development program
Summary
Staff and Arbor representatives reported that HCR’s Section 3 hiring and residency goals (including a 25% hours minimum and a 5% within‑1‑mile residency target) present compliance challenges in rural areas; Arbor will pursue further guidance and the option agreement will be updated with deep restriction language.
Land bank staff and representatives of Arbor discussed compliance questions on a homebuyer development program application after a meeting with Marjorie from HCR. The group flagged HCR’s Section 3 goals — including a target that 25% of total project hours be filled by Section 3 workers and an additional requirement that 5% of those workers live within one mile of the project site — as difficult to meet in the local, rural workforce.
Staff said HCR’s initial guidance was to make “best efforts” to comply with Section 3 goals in lieu of a clear rural exemption. As a result, Arbor and the land bank plan a follow-up call with the fair and equitable housing office to seek clarification on how to document compliance and what accommodations, if any, are available for rural projects.
Staff also reported timing for the HCR funding round: staff said the current round is being closed with an Oct. 31 date and is expected to reopen in January. Arbor staff reported that, based on their pro forma, a feasible sale price to cover taxes, insurance and rehab costs would be about $140,000 per unit — higher than the land bank and Arbor had hoped — and that Arbor will complete a pro forma, secure a line of credit if needed, and decide whether to sign an option agreement. One staff member said, “We don’t want to buy properties if the land bank could rehab them if the numbers don’t work,” noting the land bank itself would not be funding Arbor’s rehabilitation costs but would be involved in disposition or sale of properties.
Why it matters
HCR program conditions and Section 3 hiring goals affect eligibility and compliance for state funding. If the workforce and residency goals cannot be met or clearly documented, projects that rely on HCR funds may face restrictions or require alternative documentation of “best efforts,” potentially affecting the viability of planned homebuyer units and price targets.
What’s next
Arbor staff and land bank leadership will meet with the fair and equitable housing office to clarify Section 3 compliance for rural projects, update option-agreement restriction language as needed, finalize the pro forma and line-of-credit arrangements, and decide on signing options before the funding window closes. Staff said Arbor will continue to assess numbers before committing to purchases or rehabilitation.
