Grand Forks City Hall administrators, Mayor Brandon Bochenski foremost among them, are pushing to subsidize first-time home buyers who earn too much to receive federal aid.
The “home buyer opportunity program” would offer $10,000 to people who make more than 80% of the area’s average median income, according to a draft summary of the plan presented to Grand Forks City Council members. The exact income limit is still in flux, but the draft plan indicates it would be between 80 and 120% of the average median income. At 100% of the area’s “AMI,” the program would mean $10,000 for a single person making as much as $61,900 annually to spend on a down payment, closing costs, or improvements such as new appliances for their first home, assuming they bought it for $300,000 or less.
“This is a program that I had sort of campaigned on,” Bochenski, a professional developer, said.
He believes home ownership rates are “really low” in Grand Forks, and federal estimates seemingly back that up: the U.S. Census Bureau estimated that, from 2014-2018, 43.4% of Grand Forks residents owned the home in which they lived, which is considerably lower than the 63.8% figure for the country as a whole.
”I think that’s led to some poverty issues, some lower wage issues,” Bochenski said, “and it’s something that I think we want to start to combat.”
Under the draft proposal, if a buyer opts for help with a down payment, the money from the city would be something akin to a small, second mortgage. If the buyer opts to use the money to fix up a house, the city would pay it directly to whichever companies the new homeowner used for the renovations.
The program would complement one run by the Grand Forks Community Land Trust, which is changing its focus from selling rehabbed property to residents at a discount to subsidizing down payments or closing costs on their home purchases with money from the U.S. Department of Housing and Urban Development.
The trust’s plan, which is largely funded and dictated by HUD policy, would not subsidize first-time home purchases for people earning more than 80% of Grand Forks’ average median income, which means it wouldn’t be an option for a single first-time home buyer making more than $49,500 or a family of four making more than $70,700. That income limit also means the program wouldn’t subsidize the purchase of an existing home beyond $221,000 or a new one beyond $242,000.
Emily Contreras, the trust’s executive director, said staff there have been looking for a way to help people who make slightly more than the trust’s income limit.
“Somebody who makes $55,000 a year, trying to buy a home in the Grand Forks market, it’s really tough,” Contreras said.
The program Bochenski and other city staff are proposing would help secure federal funding for the trust’s program, but allocating city money to it directly would theoretically help more, Contreras told city leaders on Monday.
Council member Katie Dachtler wondered if the city could do exactly that: put more money toward the trust itself and other organizations that subsidize Grand Forks homeowners’ expenses, such as Red River Valley Community Action, which helps low- and moderate-income residents pay for home renovations.
“It’s not necessarily what I want, it’s just a question of could that happen so more money was going toward low-income housing or low-income families looking to put roots down here in Grand Forks?” Dachtler asked. “Is that something that we, as a city, could partner with a program that already exists to fund that more and maybe even give them the money and the opportunity to expand where those funds could go towards?”
Council member Danny Weigel, who said he spoke with Bochenski about the proposed city program over lunch, suggested including subsidies for blighted properties or having home buyers ultimately repay the city via special assessments.
“Overall I think it’s a great idea,” Weigel said of the mayor’s proposal. “It helps people that may struggle to get into their first home with that down payment assistance. I think we’re on the right track.”
Other council members were more skeptical. Bret Weber, who represents Grand Forks’ core and northerly end, worried about the unintended consequences that had followed similar subsidy programs.
“One thing that’s plagued us in the past when we try to make housing more affordable, is we run into unintended consequences that result in windfalls for developers or bankers,” Weber said. “I’m not really seeing how that would happen in this case, but it’s something I would want to keep an eye out for.”
And Council President Dana Sande wondered if younger generations, members of which have a reputation for being perpetual renters, would even take advantage of the city program. He also said he was generally wary of using public money to subsidize home buyers' down payments.
“I’m looking at the household size and the income limits and trying to rationalize in my head how we can justify using taxpayers’ dollars to help a family of four at the 100% median income of $88,400,” Sande said. “Those people pay about $15,000 a year in federal and state taxes, which leaves $70,000 of expendable income to go to housing. I don’t understand why those people can’t -- if they can’t scratch together $8,000 this year for a down payment, they should be able to in a couple years.”
He suggested that the city work to further refine the subsidy proposal, but Bochenski did not seem keen on that idea.
“We certainly could have more consultants, committees, task forces, blue ribbon commissions, or we can actually do something and try it and see how it works,” the mayor said to Sande. “It’s a pilot program, so we’ll be able to get a lot of that data from the program itself.”