Longmont staff outline expanded down-payment assistance program after $750,000 state award

Longmont housing staff presented proposed modifications to the city's down-payment assistance (DPA) portfolio during a study-session presentation, explaining how a recent $750,000 Prop 123 state award and a prior $250,000 local pilot would expand loan availability.

The proposed portfolio combines three funding buckets: existing Boulder County HOME funds ($72,000), the city's $250,000 pilot allocation and the $750,000 Prop 123 award, which staff said yields “over a million dollars in down payment assistance funds available to be used very soon,” according to Katie Silvis, homeownership program specialist. Staff described the program as a revolving loan fund intended to be repaid and reused for future borrowers.

Why it matters: Staff said the larger fund and a higher income cap under the Prop 123 award (up to 120% of area median income) will let the city assist more working households in Longmont that do not qualify for deeper-subsidy programs. City leaders raised questions about repayment options and program caps during the study session; council provided feedback but did not vote to adopt the guidelines.

Key details presented by staff: - Loan structure: recommended 30-year fixed-rate second mortgages. Staff proposed a standard 2% interest rate and a 0% deferred rate (no monthly payments) for borrowers at or below 60% AMI. - Loan size: staff recommended assistance up to 10% of the sales price with a $40,000 per-loan maximum (staff proposal; council discussed possible modest increases such as $45,000–$50,000). - Repayment options: a menu including (a) regular monthly payments, (b) fully deferred loans for <=60% AMI, (c) annual escrow collection if the primary lender agrees, and (d) a partial-deferment model that defers principal for 10 years with accrual of the proposed 2% interest (staff noted the advisory board had recommended a revolving-loan approach). Councilmembers suggested adding an interest-only option during the deferment period as an alternative; staff said that could be incorporated as a menu choice. - Eligibility and limits: Boulder County DPA rules serve areas outside the City of Boulder and cap assistance at lower AMI levels (80% AMI for the county program); the Prop 123 funding allows up to 120% AMI. Staff recommended aligning a $50,000 liquid-asset limit (excluding tax-advantaged retirement and college accounts) across program buckets with waivers considered case-by-case. - Environmental rules: federal HOME-funded Boulder County DPA requires exclusion of properties within 3,000 feet of trains, 1,000 feet of major roadways or within the 500-year floodplain; staff proposed that local DPA and Prop 123-funded loans allow homes in a floodplain provided the borrower maintains homeowners and flood insurance.

Council reaction and next steps: Council members praised staff and the Housing and Human Services Advisory Board's work, asked for additional modeling of interest-only options and asked staff to consider whether a higher per-loan cap would help deploy the Prop 123 funds within the state’s two-year award window. Staff said the state award and the city’s local match were both more likely to yield future funding if the city demonstrates the ability to deploy the award. No formal vote or ordinance was adopted at the study session; staff said the item would return on a regular meeting agenda for formal direction and potential adoption.

Votes at a glance: The only formal recorded vote during the session was on adjournment. The motion to adjourn passed 5–0 with two members noted absent; no other motions or ordinances were voted on during the study session.

Staff and officials quoted in this report are identified by their roles and comments from the study session transcript.