#8 Discussion and Direction Section 8 Homeowne
NEIGHBORHOOD SERVICES MEMORANDUM
June 9, 2010
TO: Community Development Authority
FROM: Jennifer Petruzzello, Neighborhood Services Director
SUBJECT: Item #8 – Discussion and Direction regarding Section 8 Homeownership
Program.
Summary:
I have been asked by CDA members to prepare a brief memo for the CDA to facilitate
discussion and seek direction regarding the consideration of a Section 8 Homeownership
Program. This memo is intended to provide a very brief summary of a Section 8
Homeownership Program, policies that would need to be developed, and steps that are
recommended to consider the implementation of such a program for the City of Janesville.
Consideration of a Section 8 Homeownership Program is listed as one of the goals and
objectives in the 5 year Annual Plan, if funding and resources allow. At this time, I believe
that we do not have the staff resources to thoroughly explore and effectively implement
such a program. It would be my hope that resources would be available to begin
researching such a program in late 2011 or 2012.
Background:
Community Development Authorities administering Housing Choice Voucher Programs
may elect to offer a Section 8 Homeownership Program which provides vouchers to assist
first-time homeowners with their monthly home ownership expenses in lieu of a rental
subsidy.
The federal government (HUD) establishes certain minimum qualifications and program
requirements, and the local CDA must establish specific policies and procedures. At a
minimum the federal government requires: applicants to meet the eligibility criteria for the
Housing Choice Voucher Program, applicants be eligible to end their leases and move
under Administrative Policies, be a first time homebuyer, meet minimum income
requirements, meet minimum employment requirements, have not defaulted on a prior
mortgage, complete homeownership counseling, complete a third party home inspection,
complete and pass a Housing Quality Standard Inspection, and obtain conventional
financing.
The CDA would be responsible for creating the program policies and procedures. These
policies would include:
Section 8 staff would be responsible for communicating the program to participants,
identifying receptive lenders and educating them regarding the program, determining and
verifying eligibility, providing credit counseling (or coordinating this service), providing
home ownership training (or coordinating this service), inspecting property, reviewing sale
contracts, reviewing loan documents, issuing a “voucher equivalent”. Generally, Section 8
staff would collaborate with lenders to develop financing models that accurately reflect the
family’s increased borrowing capacity and partner with agencies and organizations that
provide loans or grant funds to qualified families and working with the organization and
participants to achieve the home purchase.
Approach to Considering and Evaluating Program Feasibility:
A thorough analysis of the feasibility of a Section 8 Homeownership Program would
include: assessing potential demand, local housing market conditions, the lending climate,
the capacity of Section 8 staff to undertake a home-ownership program. This includes an
analysis of management capacity including the planning, policy development, and meeting
program reporting requirements.
As Section 8 Homeownership Programs are relatively new (10 years), contacting other
participating agencies to gather information about the policies they have put into place, as
well as their success stories and lessons learned is believed to add valuable information to
an analysis of this program.
Recommendation:
Last December, the Janesville CDA identified the following goals and objectives for the
Section 8 Rent Assistance Program for the 2010-2014 time period:
1. Expand the supply of assisted housing by applying for additional rental vouchers (if
they become available).
2. Improve voucher management as measured by the self assessment process
(increase SEMAP score, currently 87%).
3. Improve quality of assisted units (increase the first time pass rate of annual housing
quality standard inspection, currently 59% fail the first inspection).
4. Improve quality of assisted units (provide rehabilitation and lead hazard reduction
loans/grants to assisted units).
5. Improve quality of assisted units (provide landlord training).
6. Increase participation in Family Self Sufficiency Program (currently have 6
participants).
7. Ensure equal opportunity and affirmatively further fair housing.
8. Explore and implement a Section 8 Homeownership Program (if funding and
resources allow).
Currently Section 8 staff is fully engaged in administering the Section 8 Rent Assistance
Program. Changes in federal regulations, policy changes implemented as a result of the
funding shortfall, and efforts to address goals 2-7 this year have been the primary focus of
staff’s efforts in 2010.
It is my recommendation that the CDA postpone a recommendation regarding the Section
8 Homeownership Program at this time. I would recommend that the CDA continue to
identify exploring the feasibility of such a program as one of their goals for the 2010-2014
time period. I further recommend that that CDA consider this each year when reviewing
annual program goals.