02.22.23 HAB Presentation - MIDPAMiddle Income Down Payment Assistance Pilot Program
February 22, 2023
Housing and Human Services
Council Priorities 2022-2023
Inclusionary Housing (in progress)
Consider an ordinance to revise existing inclusionary housing code to
focus specifically on increasing middle-income units.
Middle Income Housing
Launch middle-income down payment assistance pilot.
Review the details of this
unique pilot program
Feedback on potential ways
to move the pilot towards
implementation
Briefly review the history and
background of the Middle Income
DPA pilot program.
History and Background
Review the unique elements of the
initial pilot and the proposed
changes.
Impacts of Proposed Changes
Identify ways to move the pilot
program forward.
Moving Forward?
Housing and Human Services
Middle Income DPA Pilot Program
Purpose
Evolution of Middle Income DPA Pilot Program
2016
Middle
Income
Housing
Strategy
established
2017
Development of pilot concept: A
Shared Equity
Model for
Middle-Income
Affordable
Housing Home
Ownership in
Boulder
July 2019
Council
provided
direction on
mechanics
of potential
pilot
November
2019
Ballot
initiative to
fund pilot
approved
by voters
2020
Pilot put on
hold due to
COVID
2022
Restarted work on pilot (consultant analysis, local lender
analysis, etc.)
Back to the Basics: Definitions
Affordable (“Attainable”) Housing
Households pay no more than 28 -30% of income on housing
Permanently Affordable Housing
Deed restriction for affordability in perpetuity
Area Median Income (AMI)
Determined by HUD for the Boulder MSA
Half of households make less than 100% AMI and half make more
2022 AMI = $125,400 for a household of 3
Back to the Basics: Unique Structure
Down Payment Assistance to a Middle-Income Household
Permanent Deed Restriction on Home Purchased
Middle Income Down Payment Assistance Pilot Program
New Pilot Program Parameters
Down Payment Assistance Parameters
•Households earning up to 120% Area Median Income
•Maximum DPA assistance: up to $200,000
•Repayment due at 15 years, or when home is sold
•0% interest DPA loan for first homebuyer
•City to cover interest payments: $40,000 -$112,000
Deed Restriction Parameters
•Homeowner also agrees to make the home permanently affordable through deed restriction that limits appreciation
•Appreciation rate for homes in pilot (current appreciation methodology plus 2%)
•No income qualification requirement for second and all subsequent homebuyers
Questions for Council
1. Should we pursue this pilot program considering these program changes?
2. What is an appropriate rate of appreciation for the homes in the Middle Income DPA pilot?
3. Are there additional parameters, terms, or conditions in this pilot program that should be considered?
One Pilot Program: Three Impacted Entities
First Homebuyer
Subsequent Homebuyers
City of Boulder
Up to $200,000 in interest
free borrowing
Increased purchasing power
for 120% AMI Households
Wealth generation
Number of 2-Bedroom
Homes for Sale at or
under $675,000*
13What is in it for the 1st
homebuyer? Number of 2-Bedroom
Homes for Sale at or
under $475,000*
8
$564,000
$723,000
$924,000
Estimated Net Equity at Different
Appreciation Rates, 15 Years After Purchase3.20%4.20%5.20%
*As found on Redfin on 2/14/2023.
Subsequent Homebuyers: Appreciation Matters
Permanently Affordable Home Ownership Program: 2.2%appreciation
Middle Income DPA Pilot Program
Market Rate: 7.5% appreciation
Appreciation
Options
Option 1 (3.2%)Option 2 (4.2%)Option 3 (5.2%)Market Rate
(7.5%)
AMI Level at 15
Years
146%164%185%271%
AMI Level at 30
Years
157%209%279%538%
Questions for Council
1. Should we pursue this pilot program considering these program changes?
2. What is an appropriate rate of appreciation for the homes in the Middle Income DPA pilot?
3. Are there additional parameters, terms, or conditions in this pilot program that should be considered?
City of Boulder Homeownership Programs
City of Boulder Program Cost to City Impacts on Affordability
Permanently Affordable
Homeownership Program
$100,000 (2 Bedroom)
$215,000 (3 Bedroom)
$252,000 (4 Bedroom)
Permanently deed restricted
for households at/under 120%
AMI.
Middle Income DPA Pilot
Program
Up to $40,000 to $112,000
(dependent on interest rates)
1st Homebuyer: income limited
at 120% AMI AND
Deed restricted to limit
appreciation not income.
House to Homeownership
(H2O) DPA Program
Evergreen funding source. No
cost to the city.
No deed restriction.
Middle-Income Market Alternatives
Permanently Affordable Home Ownership Program
Middle Income DPA
(4.2%)
House to Homeownership (H20) DPA Market Rate Homes
120%164%213%271%
120%209%458%538%
Area Median Income Affordability in 2037 (15 Years)
Area Median Income Affordability in 2052 (30 Years)
Next Steps
Now Moving to Implementation
Short-Term Evaluate Participation
Long-Term Measuring Success
Questions for Council
1. Should we pursue this pilot program considering these program changes?
2. What is an appropriate rate of appreciation for the homes in the Middle Income DPA pilot?
3. Are there additional parameters, terms, or conditions in this pilot program that should be considered?