Title
Approval of a Resolution Authorizing a Grant Application to the Department of Housing and Urban Development to Pursue Funding for Affordable Homeownership
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Move to approve a Resolution authorizing a Grant Application to the Department of Housing and Urban Development to pursue funding for affordable homeownership.
Report
Issue:
Whether to approve a Resolution authorizing a Grant Application to the Department of Housing and Urban Development to pursue funding for affordable homeownership.
Staff Contact:
Jacinda Steltjes, Affordable Housing Program Manager, Community Vitality, 360.753.8482
Presenter(s):
None - Consent Calendar Item.
Background and Analysis:
The U.S. Department of Housing and Urban Development (HUD) has released a Notice of Funding Opportunity (NOFO) for its second round of grant funding under the Pathways to Removing Obstacles to Housing (PRO Housing) grant program. A total of $100 million is available through the NOFO. The PRO Housing program is designed to provide funding to jurisdictions which have taken substantial actions to reduce barriers to affordable housing to further decrease persisting barriers. The City of Olympia and Thurston County, in partnership, intend to apply for PRO Housing funds to reduce barriers to affordable homeownership within City of Olympia city limits and within unincorporated Thurston County, with a focus on the Grand Mound/Rochester area. HUD has identified Grand Mound/Rochester as a high need and high priority geographic area extensively lacking affordable housing options.
Past Efforts to Reduce Barriers to Affordable Housing
Over the past several years, the City of Olympia has conducted several studies and strategic plans to help identify housing issues and approaches to address those issues. Through this work the City has remained resolute in our commitment to reducing barriers to affordable housing. The City adopted a Housing Action Plan identifying 71 actions intended to meet the community’s affordable housing needs. Within three years, we’ve completed 19 of these actions and we are actively making progress on another 20. Olympia has adopted development incentives to encourage production of housing, established a dedicated funding source to assist in the costs to develop housing, and provided funding to ensure residents’ homes are safe and healthy for them to live in.
The Housing and Homeless Response team has launched new programs and expanded existing ones, built relationships with housing developers, and implemented tenant protections. With the expansion of the Office of Community Vitality, the City has expanded the number of staff doing housing related work and have made conscious and purposeful efforts to collaborate across departments with planning, climate, and economic development staff to increase and preserve a range of housing so that all Olympians have access to safe, affordable housing. Our work is not complete though. These efforts have largely focused on rental housing and while the City has made significant strides in this sector, there is still much work to be done around homeownership.
Affordable Homeownership
The PRO Housing grant proposal focuses on affordable homeownership. Homeownership is the primary means for wealth building in the United States. The average homeowner’s net worth is forty times that of a typical renter. Homeownership is a way to increase housing stability, financial stability, and a sense of community belonging. It builds intergenerational wealth that can be leveraged to improve health, education, employment, and to provide generations of children a life more secure than that led by their parents and grandparents. Homeownership creates opportunities. Yet, accessing homeownership is exceptionally difficult for low-income households who are being priced out of the housing market.
Demand for affordable homeownership housing far outweighs the supply. For example, an analysis by Homestead Community Land Trust, found there were 2,157 two-plus bedroom homes listed for sale in Thurston County between March and June 2021. Of those, 71 were affordable to households with incomes between 50 percent and 80 percent of area median income. For perspective, this means that for every 1 affordable home there were up to 131 low-income prospective homebuyers.
Barriers to Affordable Homeownership Housing
The largest barriers to affordable housing for homeownership in Olympia and unincorporated Thurston County are:
1. Reduced organizational capacity among housing developers;
2. Insufficient availability of financing and subsidies to increase the supply of affordable housing; and
3. Insufficient resources necessary to assist low-income households in achieving affordable homeownership
PRO Housing Proposal
The PRO Housing grant proposal outlines the City and Thurston County’s strategy to reduce these barriers. With PRO Housing funds the partners will undertake the following activities:
1. Provide capacity building support to Thurston Housing Land Trust.
2. Establish a Property Acquisition Program in which PRO Housing funds are used to acquire property to support the creation of new and preservation of existing affordable homeownership housing.
3. Establish an Infrastructure Assistance Program specific to Olympia in which PRO Housing funds are applied toward the cost of infrastructure associated with the creation of new affordable homeownership housing.
4. Provide funding to South Puget Sound Habitat for Humanity to support its homebuyer education program
5. Establish a Homebuyer Assistance program in partnership with Washington State Finance Commission in which low-income, first-time homebuyers have access to funds to apply toward the purchase of a home.
This proposal aligns with HUD’s 2022- 2026 Strategic Plan and all four of the strategic goals identified in the Notice of Funding Opportunity. The proposal will support underserved communities, ensure access to and increase the production of affordable housing, promote homeownership, and advance sustainable communities.
Climate Analysis:
In an effort to work with the Thuston County Land Trust, the housing team sees this as an opportunity to preserve low-income housing. The organization would be able to make the needed energy retrofits the homes need, and then sell to a resident, both addressing built environment carbon emission concerns and providing housing stability. All new development would be required to meet the City’s energy code.
Equity Analysis:
In partnership with Thurston County and the Housing Authority of Thurston County, the City of Olympia completed a countywide Assessment of Fair Housing (AFH) in early 2023. The AFH found that people of color, people with disabilities, people who are transgender, and single mothers are more likely to face housing insecurity through risk of displacement, housing cost burden, and gaps in homeownership. These groups are more likely to experience homelessness, eviction, and are more likely to be renters than homeowners.
In Thurston County, the homeownership rate for white, non-Hispanic households is 69 percent, while the homeownership rate for people of color is 58 percent. The homeownership rate is lowest for Black or African American households (45 percent). The Washington State Department of Commerce report Improving Homeownership Rates for Black, Indigenous, and People of Color in Washington finds that 2,866 Black, Indigenous and other People of Color (BIPOC) households would need to become homeowners in Thurston County to equal the rate of white, non-Hispanic homeownership. Only 38 percent of single female-headed households in Thurston County own their homes. Disability advocates provided feedback that family members who care for a household member with disabilities often are forced to leave the workforce to provide support and are at risk of losing housing. Affordable homeownership could help stabilize these caregiving families.
Neighborhood/Community Interests (if known):
Housing is of significant interest to the community. In connection with the Assessment of Fair Housing and 2023- 2027 Consolidated Plan, both produced in 2023, over 600 community members participated in a survey to assess fair housing barriers and priorities in Thurston County. Respondents rated access to homeownership as the second highest priority to address housing disparities.
Financial Impact:
Olympia is the lead agency in the partnership and, if awarded funds, will be the grant recipient. Some PRO Housing funds will remain with the City and some will be passed on to Thurston County as a sub-recipient.
No new programs included in the proposal will require City General Fund contributions. PRO Housing funds will be available for a six-year period of performance from February 2025 through September 2030.
Applicants may request up to $7 million for use over the period of performance. A total of $5.5 million is being requested by Olympia and Thurston County. The grant application proposes funding be distributed as follows:
• Thurston Housing Land Trust Administrative Support- $500,000
• Property Acquisitions Program- $2,000,000
• Infrastructure Assistance Program- $1,000,000
• SPS Habitat for Humanity Homeownership Education- $782,000
• Homebuyer Assistance Program- $1,000,000
• County/City Administration- $218,000
Habitat’s homeownership education program will be matched with approximately $250,000 annually over the six-year period of performance. These funds will be secured by Habitat. PRO Housing funds for an Infrastructure Assistance Program could potentially be matched by approximately $295,000 annually via a utility rate increase of up to 1%. This item will be discussed further at the Sept. 19 Land Use and Environment Committee meeting. A Homebuyer Assistance Program would be leverage with up to $15,000 per homebuyer in down payment assistance provided by the Washington State Housing Finance Commission (WSHFC). Participants in the program would also have access to WSHFC’s House Key program which offers below market interest rates. Some homebuyers may also be eligible for WSHFC’s Covenant Homeownership Program, which provides down payment and closing cost funds to low-income households who have personally experienced or have a family history of experiencing racial discrimination in housing, such as redlining, in Washington state.
Options:
1. Approve the Resolution Authorizing a Grant Application to the Department of Housing and Urban Development to Pursue Funding for Affordable Homeownership as proposed.
2. Approve the Resolution Authorizing a Grant Application to the Department of Housing and Urban Development to Pursue Funding for Affordable Homeownership with amendments.
3. Take no action.
Attachments:
Resolution