TO: Mayor and Members of City Council
THRU: Kelly Strickland, Assistant City Manager
FROM: Christopher Cauley, MPA, Director of Economic and Community Development
Jeffrey Morin, Housing Program Manager
DATE: April 7, 2025
RE:
Title
Presentation on the Proposed Changes to the Homebuying HERO Program
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:
To further refine the Homebuying HERO program, staff requests that the Council consider the following:
1) Add the one (1) year employment requirement for Public Service HEROes
2) Add the “Meets Expectations” requirement for Public Service HEROes
3) Remove the guaranteed $30,000 for City Employees HERO;
4) Allow Public Service retirees to be eligible for increased funding up to $30,000.
Background:
In May of 2024, the City Council approved the expansion of the City’s down payment assistance program. As part of the expansion, funding for Low-to-moderate income individuals was changed from Community Development Block Grant (CDBG) to the HOME Investment Partnership (HOME). This removed the matching requirement of down payment funds. The expansion also included the eligibility for Public Service employees (Cumberland County Government, Cumberland County Schools, and Cape Fear Valley Medical System) to utilize the program with an increased amount of funding ($30,000). This expansion coincided with the rebranding and relaunch of the Homebuying HERO program on July 1st 2024 to included three (3) separate categorizes and funding amounts; Citizen HERO at up to $20,000, the Public Service HERO at up to $30,000, and the City Employee HERO at $30,000. This expansion has resulted in an increased interest from lenders, realtors, organizations, and homebuyers. ECD staff regularly attends outreach events to better spread the word about the program. Since July of last year, the Homebuying HERO Program has helped nine (9) people become first-time home owners.
Issues/Analysis:
1) The current program policy requires that a City Employee HERO must have been with the city for one (1) year and have received a rating of “Meets Expectations” on their most recent employee evaluation. Until these milestones have been met, a City employee is not eligible for the $30,000 in down payment assistance. This restriction is only applied to the City Employee HERO and not to the Citizen HERO or the Public Service HERO.
2) In July of 2024, the City of Fayetteville Down Payment Assistance program was rebranded to the Homebuying HERO Program. It was also expanded from two tiers (City employee and non-city employee) to three tiers (Citizen, Public Service, and City Employee). The Public Service Employee is limited to those individuals currently employed by Cumberland County Government, Cumberland County Schools, and Cape Fear Valley Health System.
3) On multiple occasions and at outreach events, ECD staff has been asked if retirees of the City and County would qualify for the increased funding of $30,000 or would be considered a Citizen HERO and qualify for $20,000. This is not detailed in our current policy. The option to include retirees seems like a welcomed addition and benefit to those that have served and dedicated so much time to our community.
Budget Impact:
The City has three current funding sources for the Homebuying HERO program, and each one has certain limitations to consider:
Locally Funded (City Employee HERO) - Initially funded with $450,000 as an employer sponsored program to incentivize recruitment, retention, and homeownership. The $30,000 in assistance is treated as taxable income for each of the five years that it is forgiven. Council Policy has capped the household income for this program at 140% of the AMI. This program is governed under the broad authority that the City Council possesses to determine the compensation and benefits for City employees. The $30,000 in assistance is provided irrespective of the household’s income and ability to pay a larger or greater amount with their primary mortgage. This program has just over $250,000 of funding remaining.
Grant Funded (Citizen and Public Service HERO) - Funded with $200,00 of the annual HOME Investment Partnership funds received by the city. This program is limited to households earning below 80% of the AMI. Assistance is provided up to $20,000 for Citizen HEROs and $30,000 for Public Service HEROs based on the homebuyer’s debt-to-income ratio to ensure their primary mortgage is affordable. Some clients have only needed a few thousand in support to close on a home. This program has $170,000 of funding remaining.
State Funded (Citizen and Public Service HERO) - This program is funded by a one-time grant of $1M from the State’s Capital Infrastructure Funding Program as “seed funding” for a Housing Trust Fund. The program is limited to households earning between 80% and 120% of the AMI and is one of a handful of programs that assist workforce income levels in North Carolina. The program is constructed identically to the above, aside from the higher income allowances. This program has just over $675,000 of funding remaining.
Options:
Council may elect one or more of the options below:
• Add the longevity and performance requirements for Public Service HEROes and remove the $30,000 guarantee for City Employee HEROES, also expand the definition of Public Service HEROES to include retirees.
• Approve only portions of items 1, 2, 3, or 4.
• Make no changes to the current program.
• Direct staff to some other option.
Recommended Action:
Staff recommends that Council provide consensus and approve the four recommendations of:
1) Add the one (1) year employment requirement for Public Service HEROES
2) Add the “Meets Expectations” requirement for Public Service HEROES
3) Remove the guaranteed $30,000 for City Employees HERO;
4) Allow public service and city retirees to be considered Public Service HEROES and
eligible for increased funding up to $30,000
With this approval, staff would update all policies and procedures in preparation for public notification on the City website and social media.
Attachments:
Homebuying HERO Proposed Revisions Presentation