inhp anchor housing partnership

IndianapolisNeighborhoodHousingPartnership

Anchoring Revitalization:A Housing Strategy for Institutions and Neighborhoods

Greenstreet Ltd. | Indianapolis

IndianapolisNeighborhoodHousingPartnership Anchoring Revitalization: A Housing Strategy for Institutions and Neighborhoods

Prepared by Greenstreet Ltd. Revised January 22, 2017 Page | 1

Anchoring Revitalization: A Housing Strategy for Institutions and Neighborhoods Prepared for the Indianapolis Neighborhood Housing Partnership Prepared by Greenstreet Ltd. December 2016 About the Indianapolis Neighborhood Housing Partnership Established in 1988, the Indianapolis Neighborhood Housing Partnership (INHP) is the leading nonprofit homeownership resource in Marion County, Indiana dedicated to neighborhood revitalization and helping working families and individuals become and remain long-term, successful homeowners. INHP is a Community Development Financial Institution (CDFI) and partners with dozens of local, state and federal government agencies, community organizations, civic groups, banks and lending institutions and corporations to achieve its mission. The organization offers U.S. Department of Housing and Urban Development (HUD) certified pre-purchase homeownership advising, homebuyer education, and a variety of affordable mortgage, refinancing and home improvement loan options. As a trusted nonprofit, INHP has empowered thousands of homeowners to sustain their investment in their homes—ultimately helping to strengthen and encourage the growth of vibrant Indianapolis neighborhoods. | www.inhp.org | 317.610.HOME About the Indy Chamber The Indy Chamber serves as a voice of progress and improvement in the region, uniting business and community to maintain strong economy and quality of life. The Chamber’s advocacy efforts, networking events, economic development initiatives, and other member benefits position members, business leaders and the community for success. With membership of nearly 2,500 businesses representing 235,000 employees in the Indianapolis region, the Indy Chamber is leading the effort to strengthen Indy’s business climate, revitalize Indy neighborhoods, and enhance the region’s workforce. | www.indychamber.com | 317 464 2222 About Greenstreet Ltd. Founded in 2004, Greenstreet Ltd. is an Indianapolis-based strategic planning and real estate practice focused on leveraging anchor institutions as catalysts for community redevelopment. With experience in real estate development, brokerage and consulting, Greenstreet works to bridge the planning and development process and create plans and implementation strategies that are both visionary and actionable. | www.greenstreetltd.com



Table of Contents

I. Objective

II. Program Policies and Procedures

III. Determining Employee Eligibility: Who Should Benefit?

IV. Appendices

A. INHP Tools and Resource Summary B. Program Investment Details C. Loan Forgiveness, Loan Repayment, & Loan Conversion Table



Objective

The objective of the Anchor Institution Housing Program is to attract and retain talent, with incentives to encourage individuals and families to live close to where they work, while further stabilizing or revitalizing surrounding neighborhoods. The program was developed by the Indy Chamber, with assistance from INHP, in response to anchor institution support for strategies to specifically address housing and neighborhood revitalization issues. This document addresses policies and procedures in the adoption and implementation of an anchor institution-based housing incentive program. Topics addressed include program funding, employee eligibility, and program management considerations. Program Policies and Procedures For eligible participants, INHP will provide homeownership programs and services including homebuyer education and pre-purchase homeownership advising as well as mortgage placement and origination support. The value of the products and services provided by INHP will, at a minimum, be $5,000 per homeowner for education and advising. INHP will also match anchor funds for down payment assistance and homeowner repair assistance to those in households making less than 120% of Area Median Income (AMI). The Indy Chamber and INHP have selected several anchor institutions to participate in a program that is planned for 2017. Home Purchase Program

1. Eligible Properties – Employees wishing to purchase a new or existing home as a primary residence will have options in detached single-family homes as well as row houses, townhomes and condominiums. Structures consisting of two units are also eligible provided one unit remains owner occupied as the qualifying employee’s primary residence. Additionally, the subject property must be located within the anchor’s defined program area.

2. Verification – The program may require verification of active employment for the applicant with the anchor at the time of purchase with ongoing employment being maintained post-closing for a 5-year period. Additionally, in order to confirm the subject property is eligible for the program, it will be necessary to submit the address or a copy of the BLC real estate listing to the program administrator. A physical review of the proposed property will be conducted at the discretion of the program administrator.

3. Timing Consideration – The applicant will have 60 days from the date of eligibility approval to locate a property for purchase. The applicant will further have 60 days from the date of contract acceptance to close on the purchase of an existing home and 150 days to close on a home not yet constructed (new construction). In the event of a delayed closing, a 30-day extension can be considered and authorized. Applicants whose closing date is delayed beyond the 30-day extension will be evaluated by INHP on a case-by-case basis subject to funding availability.

4. Financing – Mortgage financing will be provided by INHP and Private Sector lenders familiar with the unique nature of an employer-assisted housing program. A mortgage that provides for acquisition along with additional funds for rehabilitation is permitted under the program. INHP will help buyers compare lending options available for financing.



Homeowner Repair Program

1. Eligible Properties – Employees currently owning a home in the program area identified by the anchor institution as their primary residence will be eligible for exterior improvement matching funds. Eligible structures include owner occupied residential properties consisting of one to two units. These can include detached single-family homes as well as row houses and townhomes. Residences where a homeowners’ association, condominium association or other form of cooperative is responsible for the building exterior are not eligible.

2. Verification – In order to verify the employee property is program eligible, it may be necessary to submit a copy of the deed (or other documentation identifying ownership) to the program administrator. Pre-approval of a proposed exterior home improvement project is required. A written scope of work must be submitted.

3. Qualified Improvements – Qualified improvements will be limited to the exterior of the home. These improvements include a wide range of beautification, weatherization and restoration projects. These projects include:

a. Roof replacement b. Masonry restoration c. Door and window repair or replacement d. Exterior restoration e. Exterior painting f. Exterior Lighting g. Gutters and downspouts h. Siding & trim repair i. Street Fronting Site work (including landscaping, fencing, walks, etc.)

All work must be approved by the program administrator. Assistance and guidance will be made available through the program administrator.

4. Zoning and Code Compliance – All approved work must be performed in conformance with local zoning ordinances and applicable building codes. Should the structure be located in or adjacent to a designated historic district, the proposed work must meet applicable city/state historic district requirements.

5. Contractors – All proposed work requires bids from a minimum of two contractors. Work may be performed by

a general contractor, or depending on the scope, one or two specific tradespersons. In the case of multiple trades hired directly by the homeowner, two bids will be required for each trade. Owners may also perform their own work where practical though only the cost of materials will be considered eligible project costs for the matching allowance. Contractor credentials (i.e. licensing, insurance, etc.) may be required by the program administrator for project approval.

Applicable to Both Home Purchase and Homeowner Repair:

1. Property Tax and Insurance – Property tax payments and homeowner’s insurance coverage should be up to date in order to participate in the program. Proof of current homeowner’s insurance coverage and evidence of property taxes being paid current are required.

2. Applying Funds –The program is designed to let the anchors use INHP’s liquidity and expertise in managing down

payment and homeowner repair assistance for households making less than 120% of AMI. For these households, INHP will fund the down payment assistance at closing and home repairs upon successfully passing inspection.



INHP will then bill the anchor institution monthly with the detailed accounting of the funds provided under the program.

For those in households earning more than 120% of AMI, INHP will facilitate the purchase process for the applicant and provide instructions to the anchor to fund the down payment assistance directly at closing. For homeowner repairs, INHP will be available to advise on the scope of work and vendor selection but the recipient will seek payment directly from the anchor.

Matching funds subject to program limitations (see Appendix B) will be made available prior to closing through wire transfer or certified check directly to the title company, closing attorney or other settlement agent for disbursal on behalf of the applicant. Program funds may be allocated towards the acquisition price of the property, any required down payment investment, closing costs, prepaid expenses, and rehabilitation costs (i.e. repair costs, contingency reserve funds, draw administration, inspections, etc.).

3. Home Buyer Obligations – In order to secure the down payment assistance forgivable loan, a contractual agreement

will be entered into between the anchor (or INHP) and the participant. One can participate in the housing purchase program only once.

4. Annual Update – An annual customer compliance check-up will be conducted for each anchor employee participant.

This will serve as certification of employment status (if employment is a condition of the award), ownership, and residency. Each program participant will be required to submit proof of insurance and payment of property taxes at this time in order to remain in compliance with the loan agreement.

5. Schedule of Loan Forgiveness – Loans are forgiven over a five-year period beginning at the day of closing as long as

the participant is in compliance with the terms of the program. Forgiveness of 1/5 of the loan balance will occur on the anniversary of the closing date annually until the entire balance is forgiven. Interest is accrued on the unforgiven portion of the loan at 3% above the U.S. 10-year Treasury Bond Rate (5.559% as of 12/21/2016) and any accrued interest is forgiven on each principal forgiveness date. The loan is considered due immediately in the case of any of the following events:

a. Separation of Employment – If continued employment is a requirement and a participant should separate from the sponsoring anchor institution, the repayment of any unforgiven loan funds will be considered due and the loan will convert to an amortizing note which is secured by a lien on the property unless the anchor elects to waive the collection.

b. Sale of Property – If a participant sells the home for which a loan has been applied, the amount of any unforgiven portion of the outstanding loan is due immediately.

c. Uninhabitable Condition – In the event of damage due to fire, vandalism or act of nature that renders the structure uninhabitable, the homeowner will have 120 days to complete repairs or the structure will be considered abandoned, the outstanding amount of the loan becomes due and the loan will convert to note which is secured by a lien on the property.

d. Limitations – applicants currently owning their primary residence within the program area are not eligible for the purchase program.



Determining Employee Eligibility:

Eligibility Where employment at the sponsoring anchor is a requirement for participation in the program, any employee eligible for employee benefits can participate in this program. Down payment assistance will be made available to eligible employees who live outside the program area and to renters who live inside the program area at the time of application. Eligibility requirements:

1. All applicants meeting eligibility criteria described above will be eligible for assistance from the anchor. Those

applicants with household income under 120% of AMI are eligible for additional program funding from INHP. In addition to funding from the anchor and INHP, applicants with household income below 80% of AMI may also be eligible for other assistance programs through INHP. INHP will work with eligible applicants to access such funding opportunities.

2. INHP’s Home Buyer Education course (available online or in-person) will be required for down payment

assistance recipients receiving INHP funds. Homeowner repair assistance has no education requirements. For participating home buyers not receiving INHP funds, the classes are encouraged and homeownership advising is available.

Application Employees wishing to participate in the program should go to a to-be-developed dedicated landing page or contact Ken Hall at 317-610-4641 or [email protected]. Income Related to Incentive The down payment assistance is structured as a forgivable loan, with interest, to an anchor institution employee. If the term of the forgivable loan is five years, 20% of the principal balance of the loan and all related interest will be forgiven per year. Employees should consult a qualified tax advisor as forgiveness of the assistance (anchor portion only) may



result in taxable income. Because of this possibility, the employer will provide cash each spring to offset the majority of the taxes due for those with household income below 120% AMI. APPENDIX A: INHP Tools and Resource Summary Home Mortgage Loans

• Credit scores as low as 550 may be acceptable for loan qualification • Down payment requirements ranging from 0% to 3% of purchase price • Unique features like no PMI and down payment assistance • Access to mortgages from 15 different lenders • Rehab loan options for fixer uppers

Homeownership Advising

• One-on-one pre-purchase homeownership advising for up to 2 years • Personalized homeownership plans • Help to improve credit, reduce debt and save for down payment

Homebuyer and Financial Education

• Dollars & Sense class to make the most of income and improve budgeting • Understanding Credit class to learn the importance of credit and tips to improve credit score • Homebuyer Education class to help navigate the process to buy a home from start to finish

Homeowner Repair

• Make essential repairs to keep a house safe and habitable like roofs, plumbing, furnace, sewer and more. • 0% interest/.25% APR** • No monthly payments or out-of-pocket expense • Access to licensed contractors and project support through INHP • Maximum loan amount $15,000

Accessibility Modifications

• Make accessibility modifications like doorways, wheelchair ramps, bathrooms and more • 0% interest/.25% APR** • No monthly payments or out-of-pocket expense • Access to licensed contractors and project support through INHP • Maximum loan amount $15,000

Home Improvements

• Make optional and cosmetic improvements like windows, flooring, bathroom and kitchen remodels, exterior siding/painting and more

• Affordable fixed-rate loan • Maximum loan amount $15,000 • Access to licensed contractors and project support through INHP

Energy Efficiency Upgrades

• Reduce energy bills by upgrading furnace, air conditioner, water heater and other Energy Star® rated appliances including a refrigerator, washer, dryer, stove and microwave.

• Affordable fixed-rate loan • Maximum loan amount $8,000



**Loan matures at the end of 30 years or must be repaid upon title transfer. Closing costs rolled into loan (up to $600)

APPENDIX B: Program Investment Details

MidTown Anchor Coalition – Butler University, Indianapolis Museum of Art, Christian Theological Seminary, Crown Hill Cemetery, International School of Indiana Geographic Boundaries Program Area North Census Tract 3220 and part of 3503 South Census Tract 3220 and part of 3503 East Census Tract 3220 and part of 3503 West Census Tract 3220 and part of 3503 Organization Investment INHP

Match # of Units # DPA # Repair Starting

Butler University

$180,000 $180,000 15 First come-first served @ $24,000 per

First come-first served@ $10,000 per

January 2017

Indianapolis Museum of Art



January 2017

Christian Theological Seminary



January 2017

Crown Hill Cemetery ** Not Restricted to Employees of Crown Hill**



January 2017

International School of Indiana



January 2017

*Anchor DPA up to 20% of Purchase Price (40% including INHP Match) and Anchor Home Repair Assistance up to 25% of repair cost (50% including INHP Match)



Appendix C: Loan Forgiveness, Loan Repayment, and Loan Conversion Table Employee Action Within 5-Years of Closing Loan Forgiveness (1) Loan Repayment (2) Loan Conversion (3) Separation of Employment ! Retirement ! Permanent or Long Term Disability ! Reduction in Force ! Death ! Resale of the Subject Property ! Subject Property is Leased or Rented ! Subject Property Becomes Vacant or Abandoned !

(1) The remaining loan balance and any accrual of interest is completely forgiven (2) The remaining loan balance and any accrual of interest becomes immediately due (3) The remaining loan balance and any accrual of interest converts to an amortizing loan with the following terms:

o 10-Year Term for Loan Balances > $15K o 7-Year Term for Loan Balances > $10K up to $15K o 5-Year Term for Loan Balances of $10K or less

Loan Payment example(s): A $15K loan amount financed at 5.50% rate over a 10-year term yields a monthly P&I payment of $162.79. A $12K loan amount financed at 5.50% rate over a 7-year term yields a monthly P&I payment of $172.44. A $10K loan amount financed at 5.50% rate over a 5-year term yields a monthly P&I payment of $191.01.

inhp anchor housing partnership

Government & Nonprofit