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Ulster County seeks approval to use Housing Action Fund as revolving loan source for ADU financing
Summary
The Legislature approved a resolution to allow the county to use Housing Action Fund monies to create a revolving loan product to support accessory dwelling unit (ADU) construction. Staff said the program would pair a housing organization with a financial institution and close the gap between existing ADU grants and actual construction costs.
The Ulster County Legislature voted to approve Resolution 137, authorizing the use of Housing Action Fund monies to establish an accessory dwelling unit (ADU) revolving loan fund administered by partners the county will procure through an RFP.
Senior Planner Kai (Senior Planner, Department of Planning) told the committee the county previously launched an ADU grant program administered with a local partner (Repco) and that grants are capped at $112,000 per unit. Kai said that gap remains for lower-income homeowners because grant amounts do not always cover construction costs. "There's a gap, especially for lower income folks of what the cost is for units," Kai said.
Under the proposed revolving loan model, the county would solicit proposals for an administrative partner (a housing organization to manage affordability requirements) and a financial institution to underwrite and service loans. The financial institution would make a single loan payment arrangement with the borrower; county funds would be used to cover the portion of the loan the lender cannot or will not assume. Kai described the plan as a "but for" loan structure: the bank lends to the degree it can and public funds make up a gap to achieve affordability.
The program would be open to property owners (not ADU renters) at any AMI level; in exchange for the favorable loan product, the borrower would be required to keep the ADU rents affordable per the program terms. The resolution notes the Housing Action Fund was originally conceived for grants rather than loan capital, and staff sought legislative approval before using the fund as revolving loan capital.
During discussion, staff said the program model is used elsewhere (examples cited: Vermont and some California communities) and that the state has signaled interest in similar programs. Legislators asked logistical questions about underwriting, how repayments are handled, and whether the county or the lending partner would set underwriting requirements; staff said the financial institution would perform underwriting and the county would structure gap financing and affordability terms.
The Legislature approved the resolution by voice vote. The transcript records a motion and second but individual mover and seconder names were not specified; the record shows a voice "Aye." Several technical details remain to be finalized, including the exact interest rate and specific administrator and lender to be selected through an RFP.
Why it matters: The revolving loan fund is aimed at expanding ADU creation by closing financing gaps that prevent homeowners—particularly lower-income households—from building ADUs that can provide affordable housing or family housing options while preserving public investment in long-term affordability.
What comes next: Staff will issue an RFP for an administrative housing organization and a financial institution to design and run the loan product and will return to the Legislature with contract awards and program design details.
