TO: Mayor and Members of City Council
THRU: Kelly Strickland, Assistant City Manager
FROM: Christopher Cauley, Director of Economic and Community Development
Jeffrey Morin, Housing Program Manager
DATE: September 2, 2025
RE:Title
Update on Affordability Period Requirements for the Homebuying HERO ProgramTitle
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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 receive updated information on the changes to affordability period requirements under the Home Investment Partnerships Program. The revised federal thresholds mean some homebuyers will now face shorter required affordability periods than before, depending on the assistance they receive. This change gives the City greater flexibility to support homebuyers in today’s higher-cost market without extending the required affordability period.
Background:
The federal government recently updated regulations under 24 CFR Part 92.254, which governs affordability requirements for HOME-assisted homeownership. While the required affordability periods of 5, 10, and 15 years remain unchanged, the dollar thresholds that determine when those periods apply have been increased. Under the previous rule, assistance levels above $15,000 triggered a 10-year affordability period and assistance above $40,000 triggered a 15-year period. The new rule raises those thresholds so that assistance up to $25,000 now requires only a 5-year period, assistance between $25,000 and $50,000 requires 10 years, and only assistance above $50,000 continues to require the full 15 years.
Although the City does not rely exclusively on HOME funds, the Homebuying HERO Program is modeled on HOME regulations regardless of funding source. As a result, these changes give the City the ability to adjust its program design and, in some cases, reduce the required affordability period for homebuyers who receive assistance within the updated thresholds.
Issues/Analysis:
The City’s Economic and Community Development Department currently applies affordability requirements that are stricter than the new federal minimums, which means the City remains fully compliant with the updated rule. Because the Homebuying HERO Program is structured around HOME regulations regardless of funding source, these changes create an opportunity to adjust the program to better reflect current federal standards.
Aligning the HERO Program with the new thresholds would provide two key benefits. First, some homebuyers could face shorter affordability periods, up to five years less, while still ensuring long-term affordability where higher levels of assistance are provided. Second, a reduction in affordability requirements for certain households would ease the City’s long-term monitoring responsibilities, lowering the administrative burden on staff. Taken together, these adjustments would make the program more attractive to homebuyers, more responsive to current housing costs, and more efficient for the City to administer.
Budget Impact:
The City receives an annual allocation of HOME funds that can be shifted among programs based on demand. Current balances are approximately: City Employee HERO, originally funded at $450,000, with $220,000 remaining; State-funded program, initially $500,000 of a $1 million total, with a working budget of $404,000 after staff costs and $187,000 remaining.
If Council aligns the Homebuying HERO Program with the updated federal thresholds, the direct budget effect is minimal. The City may only recapture when a sale occurs during the affordability period. Because the new thresholds shorten that period for some buyers, the City will have fewer opportunities for recapture. This may modestly reduce program income over time, though the impact is expected to be limited.
Options:
Council may elect one or more of the options below:
• Receive the updated information and provide consensus to adjust the Homebuying HERO Program affordability periods.
• Receive the updated information and provide consensus to retain the current Homebuying HERO Program affordability periods.
• Direct staff to take another action as determined by Council.
Recommended Action::Recommended Action
Staff recommends that Council receive updated information and provide consensus to adjust the Homebuying HERO Program affordability periods.
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Attachments:
Presentation on Affordability Period Requirements for the Homebuying HERO Program