HomeMy WebLinkAboutA028 - Story County Low and Moderate Income Housing Support Program ApplicationITEM #:27
DATE:07-28-26
DEPT:P&H
SUBJECT:STORY COUNTY LOW AND MODERATE INCOME HOUSING SUPPORT
PROGRAM APPLICATION
COUNCIL ACTION FORM
BACKGROUND:
Story County announced the intent to utilize tax increment financing (TIF) revenue from the
County's Urban Renewal Area to support the construction of new affordable housing within the
County. Local governments are eligible to apply for the funding by August 5. If the funds are
awarded, the local government would be reimbursed for costs for construction when the
County collects TIF revenues annually within its Urban Renewal Area.
Staff believes that applying for these funds would facilitate the City's plan to utilize
federal HOME funds to construct three ownership single-family homes for low and
moderate income households. The requested funds can be counted as the required
25% local match for use of HOME funds.
As part of the City's 2026-27 CDBG/HOME Annual Action Plan, the following project is
proposed under the HOME Program:
New Single-Family Home Construction— $895,732 (not including administration). This
proposed budget would assist in constructing approximately three (3) of the remaining
six (6) affordable lots in the Baker Subdivision. Over the last several years, funds were
budgeted under this activity to build a fund balance to construct single-family housing for
low- and moderate-income first-time homebuyers, as outlined above. Under the HOME
program (unlike CDBG), HUD has a mandate requiring recipients to contribute twenty-
five percent (25%) from non-federal sources for every $1 of HOME funds they spend on
affordable housing. This requirement is designed to mobilize local, state, and private
resources to permanently increase the availability of affordable housing.
In April 2026, the City was notified that Story County would implement a "New Housing
Incentive Fund" and was invited to attend a required meeting about the program if the City
was interested in applying. In May 2026, Story County announced that applications were being
accepted for its "Urban Renewal Area Program under its Story County, Iowa LMI Housing
Support Program. Under this program, Story County has set aside approximately $2 million for
cities to apply for one of the following types of projects:
1
Program Element Criteria
1. New construction of LMI units –
can be for sale or for rent and can be
single-family or multi-family. (Projects
may include LIHTC developments,
tiny homes, or traditional
development.)
• Sales price, rental rates, buyers
and renters must all meet LMI
requirements
• Income restrictions on
beneficiaries
required.
2. Rehab of LMI multi-family units -
can be for sale or rent. (Projects may
include adaptive reuse, conversion of
spaces, and rehab of existing units.)
At time of application, location of
units will need to be known.
• Terms of affordability must be
maintained.
• Sales price, rental rates, buyers
and renters must all meet LMI
requirements
3. Purchase of lots for LMI
construction.
• Sales price and buyer must both
meet LMI requirements
• Income restrictions on
beneficiaries required.
Based on the above program criteria, this funding opportunity would meet the City’s
HOME local match requirements and provide the additional dollars needed to construct
the three homes outlined in the 2026-27 CDBG/HOME Annual Action Plan under the
New Single-Family Home Construction activity.
Staff proposes the following project description and budget.
Item Detail
Project Name LAUNCH Homeownership Project Initiative
Project Output Three (3) Single-Family Homes
Baker Subdivision
Project Timeframe August 2026-December 2027
Project Proposed Budget $1,177,735
HOME Funding $895,735
URAP Funding $230,000 (25% of HOME FUNDS)
Project Outcome
Three newly constructed owner-occupied homes for low- and
moderate-income-qualified households, i.e. household earning
less than 80% of AMI.
The funding from the URAP is not available until July 2027. This funding timeframe is feasible
for the City to begin the process of identifying a builder or use of modular housing this winter
and to begin construction most likely in 2027 utilizing the City's HOME funds.
The City can begin the process while awaiting the County funds since the local match
requirement is not determined until after project completion. If the City is not successful in
securing these matching funds, the project will likely be delayed while alternative matching
dollars are determined and secured.
2
ALTERNATIVES:
1. Authorize staff to prepare a Grant Application for the Story County Urban Renewal Area
Program-LMI Housing Support Program Application to support the construction of three
single-family affordable housing units in the Baker Subdivision consistent with the City's
2026-27 CDBG/HOME Annual Action Plan.
2. Authorize staff to proceed as described in Alternative No. 1, with modifications.
3. Do nothing.
CITY MANAGER'S RECOMMENDED ACTION:
The submittal of an application to apply for funding through Story County's Urban
Renewal Area Program will provide the City with funds to accelerate implementation of
its 2026-27 HOME New Construction Single-Family Affordable Housing Project in the
Baker Subdivision. Additionally, if awarded, the funds would be eligible to be counted
as local match dollars as required by the HOME Program and would allow the City to
continue to address its Affordable Housing goals in completing the Baker Subdivision.
Therefore, it is the recommendation of the City Manager that the City Council adopt Alternative
No. 1.
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