TO: Mayor and Members of City Council
THRU: Kelly Strickland, Assistant City Manager
FROM: Christopher Cauley, MPA, Director of Economic and Community Development
Jeffrey M. Morin, Housing Program Manager
DATE: May 12, 2025
RE:
Title
Revisions to the Homebuyer HERO Programs
end
COUNCIL DISTRICT(S):
Council District(s)
All
b
Relationship To Strategic Plan:
GOAL IV: The City of Fayetteville will be a highly desirable place to live, work and recreate.
• 4.5: To ensure a place for people to live in great neighborhoods
• 4.6: To reduce poverty and homelessness
Executive Summary:
Council is asked to approve the following changes to the Homebuyer HERO Programs:
• Revise Public Service HERO to include all federal, state, and local government employees and retirees, all public and private healthcare professionals and retirees, and employees and retirees of public and private educational schools and institutions.
• Revise City Employee HERO to provide funding up to $30,000, include City of Fayetteville retirees, and allow for immediate eligibility upon hiring. The requirement of 1 year of employment will remain in effect and be secured with a Deed of Trust and Promissory Note for the full amount of assistance.
• Remove the first-time home buyer requirement from all three programs to allow for move-up buyers, with the condition that the applicant cannot own a home, solely or jointly, at the time of closing.
Background:
In May 2024, City Council approved an expansion of the City’s down payment assistance program. As part of this expansion, funding for low-to-moderate income individuals transitioned from the Community Development Block Grant (CDBG) program to the HOME Investment Partnerships (HOME) program, eliminating the requirement for matching down payment funds. The expansion also extended eligibility to public service employees, including those employed by Cumberland County Government, Cumberland County Schools, and Cape Fear Valley Health System, who became eligible for increased assistance of up to $30,000.
This expansion coincided with the rebranding and relaunch of the Homebuying HERO program on July 1, 2024, establishing three distinct categories with corresponding funding amounts: Citizen HERO, offering up to $20,000; Public Service HERO, offering up to $30,000; and City Employee HERO, also offering up to $30,000.
At the April 7, 2025 and at the May 5, 2025, City Council Work Session, staff presented several proposed changes to the City’s Homebuying HERO program. During the same meeting, City Council reached consensus to direct staff to return in May after further discussion and guidance regarding the Mayor’s agenda item request to expand the program. Staff from the Economic and Community Development Department have reviewed all requests and prepared recommendations for City Council’s consideration and consensus.
The program’s expansion and rebranding have led to increased interest from lenders, realtors, community organizations, and prospective homebuyers. Staff from the Economic and Community Development Department regularly attend outreach events to promote the program and broaden awareness.
Issues/Analysis:
Staff conducted research to ensure that the City of Fayetteville is not imposing front and back-end ratios that are not in keeping with other programs or industry standards. Results of that research show that the City is making allowances for greater use of the program and therefore Staff recommends no changes to the current policy regarding these ratios. Below are the results for council review.
Agency Front Min Front Max Back Max
COF 20% 35% 45%
NCHFA 20% 32% 45%
FHA 31% 43%
VA 41% 41%
USDA 29% 41%
Other 28-32% 36-45%
Budget Impact:
The City currently administers the Homebuying HERO program through three funding sources, each with specific limitations:
The Locally Funded (City Employee HERO) program was initially capitalized with $450,000 to incentivize employee recruitment, retention, and homeownership. Assistance of up to $30,000 is treated as taxable income over five years and is available to households earning up to 140% of the Area Median Income (AMI), regardless of mortgage capacity. Approximately $209,000 in funding remains.
The Grant Funded (Citizen and Public Service HERO) program is supported by $200,000 in annual HOME Investment Partnerships (HOME) funding and serves households earning at or below 80% of AMI. Assistance is provided up to $20,000 for Citizen HEROs and up to $30,000 for Public Service HEROs, based on debt-to-income ratios. Approximately $140,000 in funding remains.
The State Funded (Citizen and Public Service HERO) program is backed by a one-time $1 million grant from the State’s Capital Infrastructure Funding Program to support workforce housing. It mirrors the HOME-funded program but serves households between 80% and 120% of AMI. Approximately $500,000 in funding remains.
Options:
1. Approve the program changes as outlined.
2. Do not approve the program changes as outlined, and provide direction to staff.
Recommended Action:
Staff recommends that Council move to approve the program changes as outlined.
Attachments:
Homebuying HERO Program Guidelines - updated 5.5.25 with redline corrections