By Glenn Rolfe

GEORGETOWN — A double-winged pilot program to promote affordable housing for lower-income households in Sussex County is positioning for takeoff.

The Housing Trust Fund initiative, tabled in 2020 due to the COVID-19 pandemic, is back on the agenda, with a half-million dollars in funding allocated by Sussex County Council in the fiscal year 2022 budget.

In an update July 27 before council, Brandy Nauman, the county’s director of community development/housing, said plans are to use $400,000 for the fund’s Development Loan Program and $100,000 for direct homebuyer assistance.

Ms. Nauman said the development loans are “basically where qualifying nonprofit affordable-housing providers and developers apply to the county to assist with the creation of affordable housing and various ventures related to affordable housing. This could be (initiatives for) homelessness, tax credit properties, preservation, rehabilitation — as long as they meet specific criteria that we would set up in the application process.”

The Housing Trust Fund would “fill the gap” between the cost of producing market-rate housing and producing below-market-rate housing for lower-income households, especially for those earning 50% of area median income. The trust fund could also be used to leverage other funding, offering greater flexibility with fewer regulations than federal or state resources have, Ms. Nauman said.

The maximum award for a Housing Trust Fund application would be $100,000 per project, or $10,000 per unit.

“That is the development side, more for your nonprofit organizations. I foresee Habitat (for Humanity) applying and the Milford Housing (Development Corp.) or a homeless service provider,” Ms. Nauman said.

Funds would be available once a year, similar to the Human Service Grant Program the county currently offers, she added.

With a total of $100,000, the homebuyer-assistance arm of the fund would have $10,000 maximum available per household. These monies could assist homebuyers with such things as down payments and closing costs.

“It’s technically a loan, but the buyer doesn’t make any payments, and (there’s) no interest accrued,” Ms. Nauman said. “Basically, it is a prorated forgivable lien, a mortgage. It is secured as a mortgage. It is filed with the recorder of deeds as a second mortgage for the purchase of the property. For every year that they stay in the home, a portion gets forgiven.”

Repayment would occur in the event the home is sold before the 10-year lien ends. “So as long as they stay there for 10 years, they never pay anything. Let’s say they decided to sell in five years. Then, they would owe us half of that $10,000 — so they would pay (the county) $5,000 out of the proceeds of the sale,” Ms. Nauman explained.

This program is modeled off a similar project about a decade ago.

“We got some stimulus money called the Neighborhood Stabilization Program, and we have all of those documents. Basically, we are going to use all of that as a template. We kind of already have a system in place. Especially with the market like it is right now, we want to be able to give that little boost for folks that don’t necessarily have all of that cash,” said Ms. Nauman.

During the presentation, Councilman Mark Schaeffer asked, “Have you given any thought to lenders’ objections to utilizing that money for down payment, closing costs?”

Ms. Nauman replied, “With the other program that we ran with this, we typically had to work with each lender individually to have them approve the documents in advance and sign off. We probably have five to seven lenders that were approved and comfortable that a lot of folks worked with down here. So we would kind of do the same thing.”

These housing initiatives stem from 2019, when the county contracted with the LSA planning firm for a housing needs market analysis, economic feasibility analysis and Housing Opportunities and Market Evaluation.

Strategic recommendations from the HOME study included:

• To modify the zoning code to promote housing affordability in growth areas identified in the county’s comprehensive plan.
• To establish a local Housing Trust Fund.
• To preserve the existing supply of affordable housing.

Along with forming a Housing Trust Fund, the zoning code strategy may soon be addressed.

“That is coming. We have been actively working on that, as well. I would look to seeing that in the next month or so, hopefully,” Ms. Nauman said. “It was a much heavier lift … than the trust fund, so we decided to get going, and we went with trust fund first.”

The expectation is to roll these initiatives out in January.

“That is the hope. And the point of this, too, is to have it leverage with other finance opportunities,” Ms. Nauman said. “So January may be the best time for them to apply.”

With County Council’s assistance, an advisory board would be created to oversee funding approvals and evaluate applications “to make sure they reflect program goals and objectives,” she added.

“We hope that this would assist local nonprofits with predevelopment costs, like engineering or design fees or capital costs, like site-improvement surveys or studies — larger things that are upfront costs,” Ms. Nauman said.

It was recommended that the following members be included on the advisory board: the county’s finance director, its director of community development/housing and its economic-development director, as well as an affordable-housing advocate and a representative from a financial institution.

“We’re recommending about five people. It’s just our effort to be transparent. Affordable housing is such a hot topic,” Ms. Nauman said. “This is a way to make sure that folks understand what the process is and we’re truly trying to assist the community.”

Before coming back before council for approval of her plans, Ms. Nauman plans to meet with a stakeholder focus group to gauge reaction and “get some feedback as far (as) if this proposal makes sense to them. Is it going to serve the purpose that we hope it does? Will it fill the gap that we know there is?”