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TO: Mayor John Laesch
FROM: Chris Ragona, Director of Community Services
DATE: August 13, 2026
SUBJECT:
A Resolution authorizing Approval of Development Agreement HOME-2025-01 between the City of Aurora and Habitat for Humanity of Northern Fox Valley to provide HOME Investment Partnerships (HOME) funding to develop the subdivsion commonly known as Habitat Green Freedom Subdivision, located at 1921 Jericho Road for the purpose of providing affordable housing for nine (9) properties in the amount of $1,285,000 in Home Investment Partnerships Program (HOME) funding.
PURPOSE:
Staff requests authorization to provide HOME Investment Partnerships Program funding in the amount of $1,285,000 to Habitat for Humanity of Northern Fox Valley (HFHNFV) to build nine (9) high-efficiency, net-zero single-family homes with the current common address of located at 1921 Jericho Road, Aurora, IL 60506 (Garden Road subdivision). The proposed HOME project's Development Agreement is attached as Exhibit A. A site plan is attached as Exhibit A. Photos and renderings for the proposed housing development are attached as Exhibit B.
BACKGROUND:
Habitat for Humanity of Northern Fox Valley (HFHNFV) is requesting $1,285,000 in HOME funds to construct the final nine homeownership units-six 3-bedroom and three 4-bedroom homes-completing a 17-lot subdivision in Aurora with a total project cost estimate of $3,633,727. Homes will be sold to households earning at or below 80% Area Median Income (e.g. in 2026, a 4-member household income could not exceed $97,200).
HFHNFV selects partner families through a transparent, objective process based on four core criteria: demonstrated housing need, income eligibility, the ability to repay an affordable mortgage, and a willingness to partner through "sweat equity" volunteer hours. To evaluate a family's financial readiness, Habitat reviews employment history, credit history, and overall payment capability. Homes are sold at fair market value and financed with no-interest loans, keeping monthly payments affordable so families can build long-term equity, stability, and independence.
For the Green Freedom Subdivision (or any other housing development), Habitat cannot require current Aurora residency as an eligibility requirement. As a licensed mortgage lender receiving government funds, Habitat is subject to federal fair lending regulations, including the Fair Housing Act and the Equal Credit Opportunity Act. These laws prevent lenders from establishing geographic restrictions that could limit access to credit or result in a discriminatory impact on protected classes. Consequently, setting an Aurora-only requirement would raise significant fair lending concerns. Neither race nor religion plays a role in family selection; instead, Habitat relies strictly on objective, mission-driven standards to ensure fair, equal, and legally compliant access to affordable housing for all qualified applicants.
As a lender, HFHNFV makes homeownership accessible to lower-income families by offering fair market value homes with 0% interest loans and no private mortgage insurance (PMI). To preserve long-term affordability, recorded land use restrictions determine future resales during the twenty-year Affordability Period. If a family decides to sell their home, the City holds the exclusive option to purchase it and caps the resale price to the original cost plus a fair return on investment, ensuring the seller receives a fair return (fixed percentage of appreciation and value) while keeping the home affordable for the next buyer. Essentially, the homeowner would keep the return, with the rest of value remaining with the home. This will be disclosed in the project's Land Use Regulatory Agreement and Homebuyer Agreement. As the City's designated partner, HFHNFV selects and income-qualifies the next low-income homebuyer, ensuring the home remains affordable for future HFHNFV families.
Eligibility for funded activities under this proposed HOME development agreement meet HUD's income requirements and also address the City's 2025-2029 Consolidated Plan's Goals and Objectives. This project aligns directly with the City's affordable housing Consolidated Plan by pairing 100% affordable, net-zero sustainable housing with comprehensive homebuyer support for first-time low to moderate income homebuyers. To ensure long-term stability and reduce operating costs, the homes incorporate energy-efficient systems-such as solar panels with battery storage, EV chargers, HRV systems, and high-performance insulation. Homeowners receive HUD-certified homebuyer education and maintenance workshops before purchasing their home at fair market value via zero-interest financing.
DISCUSSION:
The HOME Investment Partnerships Program (HOME) provides formula grants to states and localities that communities use, often in partnership with local nonprofit groups to fund a wide range of activities including building, buying, and/or rehabilitating affordable housing for rent or homeownership or providing direct rental assistance to low-income households. HOME is the largest federal block grant to state and local governments designed exclusively to create affordable housing for low-income households. HOME funds are awarded annually as formula grants to participating jurisdictions including Aurora and surrounding counties. The program’s flexibility allows states and local governments to use HOME funds for grants, direct loans, loan guarantees, and other activities.
On February 24, 2026, City Council approved the funding set-aside allocation for this project under R26-051, with the understanding that the Developer Agreement would be brought forward at a future date. As planned, the Developer Agreement has been prepared and is presented for Council approval.
The HOME Project's overall budget is estimated at $3,633,727 of which $1,285,000 in HOME funds has been proposed. The remainder of funding has been secured by the developer through a combination of developer equity as well as corporate and private support, including Nicor Gas. Below is the breakdown of the project's proposed HOME funds:
HUD HOME Program Year Funding Source:
2019 Direct Project Activity: $76,564.35
2020 Direct Project Activity: $110,561.55
2021 Direct Project Activity: $11,917.63
2022 Direct Project Activity: $525,956.47
2023 Direct Project Activity: $350,953.80
2024 Direct Project Activity: $209,046.20
Estimated Allocation / Reallocation Total: $1,285,000
Terms of HOME Funding - The City will provide FVHFH with a $1,285,000 HOME-funded forgivable loan to build nine single-family units, secured by a Development Agreement, Mortgage, Promissory Note, and Land Use Restriction Agreement (LURA). If FVHFH complies with all program terms and HOME regulations throughout a 20-year affordability period, the loan requires no annual payments and will be fully forgiven upon completion of the term.
To maintain administrative consistency and uniform rules, a fixed-percentage fair-return formula under 24 CFR 92.254(a)(5), will be applied to all nine properties to cap maximum resale prices while ensuring homeowners receive their allowed return regardless of appraisal variations or purchase-price limits. Long-term affordability is maintained via the recorded LURA, with the City holding purchase options and updating purchase-price limits per HUD guidelines. FVHFH's approved 0% first and soft second mortgages function as real debt, allowing Habitat to act as a reseller. After 20 years, all restrictions expire, making the homes standard single-family properties where owners can receive their full investment upon sale.
A budget amendment will be submitted to account 213-1330-801.44-23 to fund this project.
IMPACT STATEMENT:
This action will have a positive impact on the City's community development efforts to preserve and provide safe, decent, and sanitary affordable housing.
RECOMMENDATIONS:
Staff recommends approval of the proposed Resolution authorizing Approval of Development Agreement HOME-2025-01 between the City of Aurora and Habitat for Humanity of Northern Fox Valley to provide HOME Investment Partnerships (HOME) funding to develop the subdivision commonly known as Habitat Green Freedom Subdivision, located at 1921 Jericho Road for the purpose of providing affordable housing for nine (9) properties in the amount of $1,285,000 in Home Investment Partnerships Program (HOME) funding. Staff also requests authorization for the City's Mayor, Chief Community Services Officer, Director of Community Services, or their designees to execute any contracts as well as any other documents associated with this Development Agreement.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution authorizing approval of Development Agreement HOME-2025-01 between the City of Aurora and Habitat for Humanity of Northern Fox Valley to provide HOME Investment Partnerships (HOME) funding to develop the subdivision commonly known as Habitat Green Freedom Subdivision, located at 1921 Jericho Road for the purpose of providing affordable housing for nine (9) properties in the amount of $1,285,000 in Home Investment Partnerships Program (HOME) funding.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, WHEREAS, housing activities through funding by the U.S. Department of Housing and Urban Development; and
WHEREAS, the City of Aurora has a Consolidated Plan and Annual Action Plan which
have been adopted by the City Council and which have defined priorities for CDBG and HOME funding; and
WHEREAS, HOME funding will be available in the 2026 City Budget HOME program account 213-1330-801.44-23 via budget amendment.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: finds as facts all of the preamble recitals of this Resolution and hereby approves Development Agreement HOME-2025-01 between the City of Aurora and Habitat for Humanity of Northern Fox Valley to provide HOME Investment Partnerships (HOME) funding to develop the subdivsion commonly known as Habitat Green Freedom Subdivision, located at 1921 Jericho Road for the purpose of providing affordable housing for nine (9) properties in the amount of $1,285,000 in Home Investment Partnerships Program (HOME) funding; and authorizes the City's Mayor, Chief Community Services Officer, Director of Community Services, or their designees to execute any agreements, contracts and other documents associated with these approvals, including but not limited to HUD's program administration requirements.