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City staff backs HUD middle-income housing financing guidelines
Summary
Staff recommended adopting local guidelines for a new HUD middle-income program that provides extended loans in return for developers renting 50% of units at or below 120% AMI for 10 years; River's Edge is an early applicant and staff will present formal guidelines in coming weeks.
City staff presented proposed local guidelines to implement a new HUD middle-income housing financing program and recommended the council move forward with adopting guidance to process applications.
"This is the middle income housing program guidelines," Jeremy said, describing the HUD program as a financing tool for market-rate rental projects. Under the program, a project receiving HUD loan funds must agree that 50% of units will be rented at or below 120% of area median income and maintain that restriction for 10 years; the restriction is nonrenewable after the 10-year compliance period.
Jeremy gave a concrete example for a two-person household: 120% AMI would equal $115,680 and the illustrative rent cap discussed in staff materials was $2,892 per month for that household size. He explained developers would compile rent rolls for annual review and the city’s role is to certify compliance each year and issue a confirmation letter.
Council members asked whether the program applies retroactively and about market saturation. Jeremy said the policy is prospective and applies only to new applicants seeking HUD financing for construction; he added vacancy and saturation forecasts are continually monitored and that the program is most likely to attract developers needing additional financing to make projects feasible. Jeremy also said the River's Edge developer brought the program to the city's attention and has applied as an early example.
Staff recommended returning formal guidelines to council in a few weeks for adoption and said administrative burden on the city would be limited to annual certification of developer-submitted documentation.
Next steps: staff will bring formal guideline language and an application process to the council for approval.
