Monday, May 6, 2024, at 6:30PM
Town Council opened followed by
Amey Tucker Spencer Trust Fund Meeting at 6:47PM
Town Council Sitting in their Capacity as Trustees
Town Council reconvened at 7:17PM
Video: https://vimeo.com/showcase/9672722
Attachments can be found: https://clerkshq.com/barrington-ri
Prior to the meeting of the Amey Tucker Spencer Meeting, the Members of the Town Council opened their meeting on this evening.
AMEY TUCKER SPENCER MEETING
Present: Vice President Braxton Cloutier, Trustee Kate Berard and Trustee Carl Kustell
Also, Present: Town Manager Phil Hervey, Town Solicitor Mike Ursillo, and Town Clerk Meredith J. DeSisto
Absent: President Annelise Conway and Trustee Robert Humm
Vice President Cloutier called the meeting of the Amey Tucker Spencer Trust Fund to order at 6:47PM.
Motion by Trustee Kustell and seconded by Trustee Berard to approve the minutes as presented from April 1, 2024. The motion passed 3-0-0-0, in favor, Vice President Cloutier, Trustee Berard and Trustee Kustell, no one opposed, no recusals and no abstentions.
TM Comment: The Housing Board has sent the Council a memo requesting a discussion of the downpayment assistance program funded by the Spencer Trust (balance is approximately $370,000).
Housing Board of Trustees Chair Carla DeStefano was present for the discussion in which she discussed her submitted brief dated April 2024 (via Clerkbase https://clerkshq.com/barrington-ri).
She explained that the Housing Board of Trustees was asked to steward the amount of money that was awarded to the Trustees to be put into service for affordable housing development or production. She said that HBT began working on a program initially that would be basically a downpayment and closing costs assistance program. She commented that the Spencer Trust Funds must be spent for the “poor and unfortunate” of Barrington residents. She said that we developed a program that not only would comply with the Spencer Trust requirements, but at the time, were also charged with, including the housing that might be produced as part of the Spencer Trust, be in compliance with the State and each municipality, creating 10% of their housing stock as affordable housing which meets the law. She said and we all know what happened in 2020, just as we were about to roll out the program, the world shut down. Then she said as the world opened up again, she discussed the issues during Covid and the change to the housing market during that time. She commented that the process for qualification for buyers was a little bit cumbersome and took time with a difficult approval process with the use of the funds. She explained that we tried to tweak it within the guidelines of what was allowed over the last couple of years, and we still had no takers.
Chair DeStefano said that we are here tonight to ask for a little more flexibility to be able to modify the way we look at the program and laid them out in the memo. She said that the number one request is providing assistance under the compliance with Spencer Trust, but to eliminate the requirement that it be spent in accordance with a 10% law with multiple reasons. She said that under the law, a house has to be sold to someone spending no more than 30% of their gross income on their home purchase. Which is lower than what the mortgage market allows, it limits the price of the house at 30% of gross income. It's at 38%. It complies with an FHA underwriting requirement. But it allows the price to be at a higher level. under the state law, it has to be at 30%. So that probably is the most critical item on the list. One of the other requirements is under the state law, there is a requirement in order to meet the 10% law, there has to be a 30-year deed restriction at the affordable sale price, at the affordable income level. She said that we believe we can create a more flexible, usable program if we eliminate the compliance with the state law. She said that this is the biggest item on the list.
Discussion ensued regarding whether the proposed program has been vetted through the Solicitor’s office.
Town Solicitor Ursillo stated that this topic is on the Spencer Trust agenda this evening as well as the Town Council agenda that is to follow this meeting this evening.
Chair DeStefano said that there are two different funds, one is a separate fund exempt from the Spencer Trust Fund. She said that the Spencer Trust Fund, which only allows to be allocated to people who live in Barrington, with a whole process to verify, that is not changing. She said that we are not asking for any change to that process. She said that there is the public funds that were allocated at the Financial Town Meeting in 2021. She said that we are asking for some flexibility there, but not outside the Affordable Housing Law, just in some more creative ideas about how to meet the Affordable Housing Law on that program.
Town Solicitor Ursillo said just for clarity, in terms of the Spencer Trust Fund this evening, you are not coming before the Trustees saying we have a specific project, here are the dollars, you are just letting them know, in general.
Chair DeStefano, no not yet. Discussion ensued regarding the topics on both the Spencer agenda and the Council agenda.
Chair DeStefano said that we were asking the Trustees of the Spencer Trust for it no longer be a requirement that those funds be spent to satisfy some amount, some number of units and production of affordable housing under the state's law. She said we are asking just to be able to use it in the spirit and, compliance of the Spencer Trust itself. So that is the major difference. She said that we have read the Spencer Trust and we do believe that it does not say the Spencer Trust funds have to be spent in compliance of the Rhode Island affordable housing law, but we could still use it to help people buy a home, first time homebuyers buy a home.
Trustee Berard asked for clarification, that the money is if they are allocated by the town, and she said she knows this is separate, but it was brought up here, must they fall in line with Rhode Island law relative to affordable housing and meet those definitions if the monies are going to be used for affordable housing?
Town Solicitor Ursillo said, yes, if the monies are going to be used for affordable housing.
Trustee Berard asked, if for affordable housing, does our language must match the definition provided by the state?
Town Solicitor Ursillo said it is affordable as Carla (Chair DeStefano) expressed the 30-year deed limitation etc.
Trustee Berard asked so there is no flexibility when we (sit) as council members?
Town Solicitor Ursillo said, there is flexibility but first of all, in your capacity as Trustees of Spencer Trust, at some point you can make that decision if a proposal specifically comes before Spencer Trust with a project and then you as Trustees will decide. He said that it is his understanding and he will check this, that his understanding is the capital budget that was a line item was approved in 2021 – “The vote created an allocation of $500,000 for the creation and preservation of affordable housing in the community and that those funds be dedicated to the creation and or capture of affordable housing unit using methods proposed by the Housing Board of Trustees and as approved by the Town Council.” He said that it is pretty specific that it is for affordable housing.
Trustee Berard commented that affordable housing has many definitions and said she was curious if it has to fit this motion but does not specifically state in compliance with state law.
Trustee Berard said that she appreciates this to be the truth in every market, but the state regulations don't keep up with the practicality of affordable living whatsoever. She said that she is of the position that the funds are not regulated by that state mandate and she said 30% is not attainable in this town or any actual towns next to this town. She said that she would be in favor of that and complying with FHA is a good idea. Because that matches up to what a lot of first-time homebuyers are looking to utilize anyway, if we can match or get into some downpayment assistance. Secondarily, she said that she is curious about your comments relative to deed restriction, maybe with leases to keep the property affordable but also not in a way that takes all the equity away from the homeowner.
Chair DeStefano said here are some of the ideas, including a revolving fund, and cap it at 100% AMI. She said with program guidelines that we set up initially, we intend to keep some with a deed restriction. She said that it is anti-speculative, it is still a first-time buyer, it is still an entry level home. She said that is what we want to look at and come back and present something like a seven-year deed restriction or a 10-year deed restriction. But we now need the permission from Spencer Trust to leave the state law behind and get creative and be able to use the money, essentially the same way with some flexibility. She said that this is an opportunity to be flexible with non-tax dollars, and to do what the Spencer Trust purportedly is allowed and required to do.
Trustee Berard questioned the Spencer Trust Downpayment Assistance Program.
Chair DeStefano said that is what it started as and would require a change from us. She said that we want to prequalify buyers so we want to change the program a little and ask for some authority about being able to issue pre-qualification letters up to a certain amount of money of the funds. So that was one of the things that Realtors said if they come with a pre-qual letter up to FHA level, we can make that happen. Discussion ensued regarding a cash buyer, houses on the market (inventory).
Chair DeStefano said that over the last two years, we have gotten the number of how many houses really are affordable. Even at 38% of gross income, it is still going to be a lift.
Michaela Carroll, HBT member, said that in the last 24 months, per Zillow, about 400 homes have sold in Barrington and 13 of them would qualify for the program based on purchase price alone. She said it is a 1-, 2-, 3- and four-bedroom houses, 3% of them would qualify under the current price and a very, very limited number would be eligible. There is not a whole lot of homes on the market that would qualify, but if we raised 8% more, there would be homes that may qualify.
Trustee Berard said that you had mentioned purchasing deeper affordability and asked would that example be that you would buy down the purchase price and that the person qualifies when it's one of the options.
Chair DeStefano said that you need a program that's flexible and step two would be to have pre-qualification and be able to get someone to qualify. This is really targeted to someone who is trying to get into homeownership but has to have some buy in with their own cash. She said that you need to think about going from 30 to 38% of their gross income takes up quite a notch, it's almost a 20% 20 to 25% increase in the cost of a house that you would be able to buy. She would like to think by the time we get this rolling, maybe in the next 12 to 18 months, there are some signs that the mortgage rates might come below 6%. So that math when you do a little bit more cash in a little bit higher percentage, you can pay a little bit of a lower mortgage rate, the puzzle comes together, but you still have to have houses on the market.
Trustee Berard commented that Mr. Klepper is in the audience and he is working on other incentives for affordability for seniors with the thought of universal building improvements. She said that her concern with just changing the percentage is that it is still going to have the same hurdles to be completed, the percentage makes a lot of sense but the way to get there is still a really lengthy process. It's a national problem and we need changes.
Chair DeStefano said that HBT has several ideas, including helping seniors age in place with some of these funds. Again, we feel like we are stewards of this money, and we don't really just want to give it away. If we do eliminate some of the deed restriction years, and someone does want to sell their house, we've got a chart, if you stay in your house for 10 years, you pay back less, if you want to move after three years, you're pretty much going to have to pay it all back.
Chair DeStefano said in the third paragraph of the memo, we are requesting permission to explore creative solutions, to allow the Spencer Trust Downpayment Assistance Program and funding allocated at the FTM to better serve the needs of the town. She said that we are not looking for permission to do any of these things but looking for permission to keep exploring. She said that we want to know if the trustees will be on board, then we can talk with the Solicitor's Office.
Vice President Cloutier echoed his colleagues and likes the idea of exploring creative solutions, to know that the fund is not being utilized as well as it could be.
Motion by Vice President Cloutier and seconded by -- that we as the Spencer Board of Trustees, allow the members of the Barrington Housing Board of Trustees permission to explore creative solutions to allow the Spencer Trust Downpayment Assistance Program, and the funding allocated at the FTM to better serve the housing needs of the town.
Trustee Berard was not anticipating that the FTM monies to be included in the motion.
Vice President Cloutier amended his motion.
Amended Motion by Vice President Cloutier and seconded by Trustee Kustell that we as the Spencer Board of Trustees, give the Barrington Housing Board of Trustees permission to explore creative solutions to allow the Spencer Trust Downpayment Assistance Program to better serve the housing needs of the Town. The motion passed 3-0-0-0, in favor, Vice President Cloutier, Trustee Berard and Trustee Kustell, no one opposed, no recusals and no abstentions.
Tom Rimoshytus, 1 Howard Street, asked for clarification that this item does not include agenda #22 on the Town Council agenda regarding Affordable Housing Funding Proposals.
Trustee/President Kustell said that it does not.
Motion by Trustee Kustell and seconded by Trustee Berard to adjourn the meeting at 7:15PM. The motion passed 3-0-0-2, in favor, Vice President Cloutier, Trustee Berard and Trustee Kustell, no one opposed, no recusals and no abstentions.
_______________________________
Meredith J. DeSisto, CMC
Barrington Town Clerk