TC Res. No. 2007-42 APPROVING THE TOWN OF AVONTOWN OF AVON
RESOLUTION NO. 0742
Series of 2007 ,
A RESOLUTION APPROVING THE TOWN OF AVON
DOWNPAYMENT ASSISTANCE PROGRAM
WHEREAS, the Town of Avon Down Payment Assistance program is established to
attract and retain Town employees and to encourage home ownership in or near the Town; and
WHEREAS, the program will provide a second mortgage loan to certain employees
in order to purchase new and existing single family homes; duplexes, condominiums or town
homes in a way'that reduces the costs associated with a first mortgage, provided those employees
reside in the home as their primary residence.
NOW, THEREFORE, BE IT RESOLVED by the Town Council of the'Town of
Avon:
1. The Town of Avon Down Payment Assistance ("DPA") program is approved.
2. The Town Manager is authorized to establish guidelines for the DPA program
and to make loans to qualified employees of the Town consistent with those guidelines and the
funds appropriated by the Town Council for implementation of the program.
PASSED AND ADOPTED the 27th day of November, 2007.
ATTEST:
Ronald C.
Wo fe, Mayor
7EA
:
Patt3~,Mcgenny, Town
EXHIBIT TO RESOLUTION
DOWN-PAYMENT ASSISTANCE PROGRAM
The Town of Avon Down-Payment Assistance (DPA) program is established to attract
and retain Town employees, and to encourage home ownership in or within a 7-mile
radius of the Town.
The program provides a second mortgage loan to an employee in order to purchase new
and existing single family homes, duplexes, condominiums or townhomes in a way that
reduces the costs associated with a first mortgage. Employees must reside in the home as
their primary residence.
A DPA mortgage may be taken as either a conventional fixed rate second mortgage or a
shared. appreciation second mortgage, as described below. DPA is available for up to
20% of the purchase price based on an employees other, financial means with the amount
at the discretion of the Town Manager. If an employee has other assets that are available
for down-payment, the DPA may be reduced.
The DPA program is subject to available funds and may be suspended at any time by the
Town Manager. Funding for all DPA mortgages must be approved by the Town
Manager.
Currently this program is only available to department heads and commissioned police
officers.
Conventional Fixed Rate Second Mortgage
• Department head employees and commissioned police officers who meet the
qualifications"of this policy may elect a Conventional Fixed Rate Second. Mortgage.
• Maximum amount available is 20% of the home purchase price, excluding closing
costs.
• 'Financing for the first three years is at 0% with no principal payments required.
Upon the. third anniversary of closing, the second mortgage will bear interest at a rate
equal to the prime rate of the Town's depository bank at the time of closing and will
be amortized over a period not to exceed 15 years.
• The second mortgage payments will be deducted from the employee's paycheck on a
bi-monthly basis.
• Employees may repay the outstanding principal amount due at any time without
penalty.
• Repayment of the outstanding principal amount due is required in full immediately
upon the sale or transfer of the home, if the first mortgage is refinanced, if the home
is no longer occupied by the employee, or within 9 months after the employee leaves
the employment of the Town.
Shared Appreciation Second Mortgage
• Department head employees who meet the qualifications of this policy may elect a
Shared Appreciation Second Mortgage.
• The maximum amount available is 20% of the home purchase price, excluding
closing costs.
• Financing is at 0% and no payments are required.
• Repayment of the principal balance of the mortgage plus the net appreciation on the
home is required when the home is sold or transferred, if the first mortgage is
refinanced, if the home is no longer occupied by the employee, within 9 months after
the employee leaves the employment of the Town, or, if not paid sooner, will be
subject to amortization commencing 30 years after the date of closing.
• Net appreciation is defined as the sales price of the home; less real estate
commissions and the original cost of the home. The net appreciation of the home will
include any increase in the value of the home, including increases due to capital
improvements to the home, additions, remodels, etc..
• The portion of the net appreciation to be shared with the Town shall be based upon
the original amount of DPA as a ratio of the original purchase price ofthe home.
• An employee who elects. the Shared Appreciation Second Mortgage may, at any time,
elect to convert to a conventional fixed rate second mortgage. An appraisal of the
home provided for, by the employee and acceptable by the Town shall be required to
determine the net appreciation up to the conversion date. The original DPA plus the
net appreciation as of that date shall then be amortized based on a repayment term not
to exceed the lesser of 15 years after the date of the conversion or 18 years after the
original DPA and interest shall accrue at the then-current prime rate of the Town's
depository bank.
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