TO: Mayor and Members of City Council
THRU: Kelly Strickland, Assistant City Manager
FROM: Christopher Cauley, MPA, Director of Economic and Community Development
DATE: May 5, 2025
RE:
Title
Options for 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:
At the April 7, 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 for 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.
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.
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 has identified areas where the policy could be updated to align more closely with best practices, ensure internal consistency, and provide greater uniformity across each Homebuying HERO category. In addition, staff has reviewed the proposals presented at the April 8, 2025, City Council Work Session.
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 $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 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. Provide consensus to accept staff recommendations as outlined in the presentation.
2. Do not provide consensus to accept staff recommendations as outlined in the presentation.
3. Direct staff to some other alternative.
Recommended Action:
Provide consensus to accept staff recommendations as outlined in the presentation.
Attachments:
Homebuying HERO Revision Options Presentation 5.5.25