Consideration and Approval of the Contract: First Amendment to the Professional Services Contract for the Flagstaff Police Department Employer Assisted Housing Program (FPD-EAH), Contract No. 2015-60 between City of Flagstaff and Housing Solutions of Northern Arizona, Inc. (HSNA).

The Flagstaff Police Department Employer Assisted Housing Program (FPD-EAH) was approved by City Council on July 14, 2015 and was created as a pilot program. To date, the program has successfully opened the doors of homeownership to nine (9) first-time Flagstaff homebuyers within Flagstaff Police Department.

Due to the success of the program and an increased budget allocation, the Housing Section in collaboration with City Management and Human Resources has created a citywide Employer Assistance Housing program. This new City of Flagstaff Employer Assisted Housing Program (COF-EAP) will continue to encompass the Police Department employees but will now also be available to all eligible City of Flagstaff employees. 
 
The goals of the COF-EAH Program is to add a housing based incentive by matching funds  up to $10,000 per household for down payment and/or closing costs when purchasing a home in Flagstaff. The program will assist with recruitment and retention of City of Flagstaff staff. 

HSNA was selected as the most qualified respondent through a Request for Statement of Qualifications process and Council approved the contract being amended on July 14, 2015. Currently, the Employer Assisted Housing Program requirements are outlined in the contract for services with HSNA.  This contract amendment will expand the program eligibility and make other related changes. 

 

If the First Amendment is approved, the Employer Assisted Housing Program will budget separately for Police Department and non-Police Department employees. The FY 2018 budget includes $95,370 for the Flagstaff Police Department employer assisted housing funding (account number 021-05-106-0366-4-4290). In FY 2018 budget, City Council authorized the use of $100,000 for the new citywide program (account number 021-05-106-0366-4-4290). 
  
The budget for COF-EAH includes both the program and administration. It is estimated at least 8 households will benefit from the citywide budget and an additional 8 households will benefit from the police department budget. Administrative fees to HSNA are $1,250 per matching loan, paid at the point of closing.

Affordable Housing Goal
2.) Pursue financing strategies for affordable housing to create additional rental and ownership housing opportunities.
Regional Plan: Goal NH.3. Make available a variety of housing types at different price points, to provide housing opportunity for all economic sectors. Policy NH.3.3. Increase the availability of affordable housing for very low-income persons, through innovative and effective funding mechanisms.
3.) Establish an employer assisted housing program.

Personnel Goal
1.) Expand the Housing Assistance Program for all City Staff.

 The FPD-EAH was approved by Council on July 14, 2015.

1. Approve the contract amendments as recommended and authorize the City Manager to execute the necessary documents.
2. Do not approve the contract amendments for the City of Flagstaff Employer Assisted Housing Program. Continue the use of funds for the Flagstaff Police Department Employer Assisted Housing Program and publish a Request for Statement of Qualifications allowing other entities to submit proposals for the City of Flagstaff Employer Assisted Housing Program.
3. Hire staff to operate the program internally, with an increased administrative cost.
4. Do not implement the program.

The intent of the FPD-EAH program was initially to provide an employee benefit to eligible Police Department employees, helping them to open the door to homeownership and serving as an employee retention and attraction tool. To date, 9 households have benefited from this program.  The expanded program will allow employees outside of the Police Department to participate.
 
Many employees make too much money to qualify for existing Federally funded down payment and closing cost assistance programs but not enough money to save for homeownership.  The COF-EAH program is designed to provide all eligible households with the opportunity for homeownership by matching funds up to $10,000 toward the down payment on a home.

The following is a list of the offered amendments, along with technical and conforming changes to contract servicing.
 
Scope of Work Amendments

1. Eligible buyers must meet employment guidelines, have worked for the City of Flagstaff in a non-temporary position for a minimum of 12 consecutive months, have the most recent performance evaluation demonstrate work performance meeting or exceeding expectations, and not be on a performance work plan.
2. The maximum amount of financial assistance is increased from $7,000 to $10,000 per household and the prorated forgiveness time period is extended from 7 years to 10 years.   

Technical and Conforming Changes to Servicing

1. The Department of Housing and Urban Development's federal definition of a first-time homebuyer was included for clarification.
2. Current agreement requires debt-to- income ratio does not exceed 45% of gross monthly income. Amendment permits exceptions to this requirement on a case-by-case basis, as recommended by the HSNA Homebuyer Assistance Program Committee, and based on compensating factors.
3. Other clerical corrections.

The administration of the COF-EAH program will provide homebuyer education, counseling and financial assistance in order to increase homeownership opportunities to eligible personnel. Additionally, the program will serve as a recruitment and retention tool for the City of Flagstaff.

A Request for Statements of Qualifications for the FPD-EAH was issued on February 19, 2015 and Council approved the contract with HSNA on July 14, 2015.

To date, 9 Flagstaff Police Department employee households have become first-time Flagstaff homebuyers. One employee resigned from the Flagstaff Police Department and repaid the loan in full. With the success of the FPD-EAH pilot program and additional funding, the Housing Section, in partnership with Human Resources and the City Manger's office, has created an expanded program available to all eligible City of Flagstaff employees. With Council's approval of the First Amendment to Contract 2015-60, a minimum of 18 households will have the opportunity to become first-time Flagstaff homeowners.