loan now grant
William Scott, of the Montclair NAACP and Housing Commission, lobbied that a loan to assist first-time home buyers of affordable housing be instead be a grant.
FILE PHOTO

By Tina Pappas
for Montclair Local

Future home buyers who now purchase affordable housing units administered through the township will not have to pay back a loan offered to help with down payments.

The loan, now a grant, allows a purchaser who lacked sufficient funds for a down payment to borrow up to two percent, a maximum of $2,500, toward costs related to a first-time purchase of an affordable housing unit.

Council members unanimously passed an ordinance amending the Montclair Affordable Housing code converting the loan to a grant on July 24.

William Scott, chair of the Montclair NAACP Housing Committee and co-chair of the Montclair Housing Commission, said the loan process required purchasers to take out a second mortgage resulting in an immediate lien on the house. The grant process is simpler, as well, he said.

“It really supports the first-time home buyer, that will make a real difference,” Scott said. “It will help them with closing fees, and other related costs.”

The assistant program is for qualifying purchasers of deed-restricted affordable housing units only and is distributed by developers who take part in the program, said Municipal Planner Janice Talley. HOMECorp of Montclair is one of several non-profit organizations that acquire and develop both rental and ownership housing specifically for low, moderate and middle income residents. They also provide financial education programs and services, Talley said.

Housing Commission Co-chair Megan York said changing the loan to a grant will better assist buyers of affordable homes in Montclair.    

“The loan program was underutilized by home buyers because the loan terms were making it hard for applicants to qualify for their mortgage. A grant will not require a lien on the home,” she said “We anticipate that it will result in a lot more awards, and help low-and moderate-income buyers achieve home ownership.”

Developers are required to create one affordable housing unit for each five units they build. The grant funding stems from the township’s affordable housing trust fund. Builders, if allowed by the town and in the case of smaller developments, may opt to pay cash-in-lieu of building. The ordinance sets the amount of $150,000 for each unit. Those funds can be used by the town to create more affordable housing or as a mechanism for home-buyers who qualify to purchase a qualifying home.

The trust fund also helps Montclair, non-profit organizations and for-profit developers with financial assistance to develop affordable housing.

“This funding does not come from taxpayers’ dollars,” Scott said. “We made major changes to the affordable housing ordinance and the fund was increased to offer up to $2,500.”

Scott said the ordinance change was a step in the right direction and feels positive overall about the significant changes over the past year. He said progress is being made based on the amount of development of affordable housing units available for township residents.

With Montclair’s median income at $102,349, households making under $71,000 can apply for moderate income housing. Households making under $44,000 fall under lower income housing. The state concedes generally that no more than 30 percent of income should go toward housing. According to the U.S. Census more than 39 percent of Montclair residents pay more than 30 percent of their income for housing. The median rent is currently at $1,422.

For-sale affordable housing in Montclair includes units at The Siena, Bay Street Commons and 192-194 Bloomfield Ave. Piazza & Associates, Inc. has been retained by the township to coordinate many of the affordable housing opportunities on its behalf.

In May, the council passed two ordinances regulating affordable housing with the goal of keeping a 20 percent affordable housing quota for new Montclair development, creating flexibility of where affordable housing would be constructed and invoking a local preference for those who live or work in Montclair. The two codes reflect the now defunct Council on Affordable Housing (COAH), which aim to bring the town in line with current state regulations.

“It’s very good progress,” Scott said. “Will it solve all our problems? No, but at least we’re in a position now towards getting more affordable housing in the township.”