At a public hearing last week, city planning staff shared an update that adds a new dimension to Bentonville’s housing conversation:

Its homeownership assistance program for low-income households wasn’t able to help a single family buy a home.

Why? Low-income households must be able to qualify for a loan independently of the assistance, which would have provided up to 50% of a down payment. Given that Bentonville homes were selling for a median price of over $480,000 in December 2024, the income required to qualify for a loan would likely exceed the limits for the program. 

Simply put, those who can afford to buy a home in Bentonville more than likely earn too much to qualify for down payment assistance.

Now, the city is pivoting to use the grant funds for other projects that benefit the same target recipients.

Bentonville’s homeownership assistance program was to be funded through the Community Development Block Grant (CDBG) program, managed by the United States Department of Housing and Urban Development (HUD). The program awards federal funds annually intended to improve the quality of life for low- to moderate-income individuals and families meeting the below income requirements from HUD:

The city of Bentonville re-entered the CDBG program in 2022 after it left the program in 2016. In 2023, the city received $320,831, and in 2024 the city received $310,326 in funding.

In its five-year consolidated plan submitted to HUD — the outline of where funding will go — the city had planned for its largest allocation of funds to go to the homeownership assistance program. Affordable housing was identified in the plan as “one of Bentonville's biggest needs,” with multi-family and single-family housing in “critically short supply” for low- to moderate-income residents.

The homeownership assistance program, with $236,326 allocated for 2024, aimed to help first-time home buyers afford the down payment for a home, once they had independently qualified to purchase that home.

However, as city staff worked to get the program off the ground, they began to have concerns about its feasibility. Median sale prices were increasing — about 16% year-over-year from 2023 to 2024, according to data from Redfin — changing what the housing market looked like compared to when staff first developed CDBG priority goals. 

“Even if the increase had not been so great between 2022 and where we are now in 2025 when we would be getting the program going, we had real concerns about this being a five-year strategic goal of the program, considering the potential for continued increased housing prices within the community,” said Taylor Allen, community & economic development planner with the city of Bentonville.

To prevent people from taking federal funds and then selling the home in a hot market, a forgivable lien would be placed on the home for a duration of up to 10 years, depending on the amount of federal assistance received.

“We weren’t sure that this would really be serving these low-income people to lock them into place with potentially a very high mortgage,” Allen said. 

Shelli Kerr, comprehensive planning manager for the city of Bentonville, told The Bentonville Bulletin that the pivot away from the homeownership assistance program would allow the city to potentially help more people.

“We felt like because of the amount that we would have to give the individual home buyers to really provide some serious assistance, we weren’t going to be able to make the money go as far as we needed to and help as many people, based on the current market,” she said.

At the public hearing last week, Allen outlined the city’s highest priorities as it works to amend the consolidated plan: infrastructure and street improvements, including sidewalk installation and tree planting, in low- to moderate-income residential areas.

“These projects would likely be multi-year projects because of the funding amount that we are given by HUD,” Allen said during the meeting. “Anything that we undertake is going to be strategic, and it's going to make sure that we are doing what we can with the money that we have on an ongoing basis.”

Currently, the city has planned a sidewalk project to install sidewalks along SE C Street from SE 12th Street to SE 14th Street.

Bentonville has few areas that qualify as low- to moderate-income. The other area that would fit the parameters to receive improvements is an area north of SW Regional Boulevard and south of 28th Street, between Greenhouse Road and Featherston Road.

Once the amendments are made to the five-year plan and approved by HUD, allocations of funds, even for previous years, can be redirected into new programs. 

Other priority areas for CDBG funding are set to stay the same, including housing rehabilitation and grants for public service programs. For housing rehabilitation, city staff is currently looking into nonprofits in which to distribute the funds. 

Bentonville decided not to invest in creating a city-run housing rehabilitation program, like cities such as Springdale have done, because there aren’t enough homes owned by low-income individuals within Bentonville anymore, Allen said, as well as due to the limited amount of federal funding they receive. Instead, they provide grants to organizations that provide that assistance. 

In 2023, $25,000 was allocated to housing rehabilitation through Habitat for Humanity Benton County. However, before the funds could be distributed, Habitat for Humanity Benton County merged with Habitat for Humanity of Washington County, requiring the organization to withdraw from Bentonville’s CDBG program. Following their withdrawal, no funding was allocated in 2024, although it will remain a priority for future funding.

Grants for public service programs is another area where Bentonville is able to distribute CDBG funds, although HUD only allows 15% of the funds to be used in this area. 

In 2024, the Boys and Girls Club was awarded $10,000 to provide scholarships for its after-school and summer programming. Northwest Arkansas Continuum of Care was awarded $10,000 for homelessness services and outreach. 

Helen R. Walton Children's Enrichment Center was awarded $15,000 to offset the cost of tuition for qualifying families. The Micah 6:8 Initiative is set to be awarded $9,000 to assist with job training and education efforts for the homeless population of Bentonville once the subrecipient agreement is approved by City Council.

During the public hearing, City Council member Beckie Seba asked Allen if staff had any concern that CDBG funding would change with the new presidential administration. Allen said that although there is always a degree of uncertainty in any new administration coming in, CDBG was not one of the programs that was identified as being at risk.

“But we're going to remain responsive to whatever happens on the federal level, because it impacts us all the way down here,” she said.

The amendment to the Consolidated Plan is posted now, and comments can be submitted to Allen at [email protected] or via phone at (479) 271-3122. The comment period lasts through March 20. It will then go to the City Council for approval before being submitted to HUD.

The public hearing on Feb. 12 also marked the beginning of development for the 2025 Annual Action Plan, with further opportunities for public comment to be held once a proposed plan is drafted.

Nonprofit, community-based development organizations or public service providers that serve residents of Bentonville can apply for CDBG funds on the city’s website. To be considered for funding, applications must be received via email or by delivering the application to the City Hall office no later than March 14 at 4 p.m.