HomeMy WebLinkAboutAgenda Statement 1982/03/09 Item 7COUNCIL AGENDA STATEMENT
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Meeting Date 3/9/82
TITLE: Resolution /D 78y Authorizing CHIP Deferred Loan for Very
Low-Income Families
TTED BY: Community Development Director Date: Yes No X )
Th City Community Housing Improvement Program (CHIP) assists Chula Vista
ho eowners in three neighborhood strategy areas to rehabilitate their
pr perties with a range of financial assistance, including low-interest
to ns, deferred payment loans, and grants. Seniors over 62 and permanently
di abled heads of households with incomes under 80% of the area median income
ar eligible for deferred loans. The exclusion of non-elderly,
no -handicapped families from eligibility for deferred loans has resulted in
pr gram benefit deriving principally to seniors. The U. S. Department of
Ho sing and Urban Development has advised us that our CHIP program could more
ad quately satisfy our goals for assisting low-income families, and they have
en ouraged us to remedy that situation. Therefore, it is my
RE OMMENDATION: That Council adopt the resolution authorizing deferred
to ns for very low-income families.
BO RDS/COMMISSIONS RECOMMENDATION: The CHIP Loan Committee recommended on
Fe ruary 25, 1982, that the City Council authorize such deferred loans for
ve y low-income family homeowners.
D15CUSSION:
Th City's Housing Assistance Plan, annually submitted to HUD, indicates the
ne d for housing assistance to low-income family homeowners, and we have
of icially set goals to redress that need. We addressed those goals by
de igning a CHIP program which provides reduced interest rate loans for
pr perty improvement to family homeowners in our Neighborhood Strategy Areas.
In practice, we have found that it is difficult to make an installment loan
t a family in the very low-income category, even when interest rates are
r uced to 5%. Such families simply cannot accommodate any significant
m nthly debt service.
On the other hand, we have had
1 w-income seniors and handicapped
h meowner is usually on a fixed
significant increase in income. As
s rvice, loans are given to them at
t ansfer of title on their property.
i order to secure repayment of
r payment, funds are recycled as
p operties.
much activity with deferred loans for
heads of households. This category of
income with little expectation of a
they are unable to support a monthly debt
0% interest and payment is deferred until
The City obtains a lien on the property
the deferred loan. At the point of
program income to improve additional
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would like to similarly assist very low-income families so that they can
hieve standard housing and so that significant improvements to the
ighborhood strategy areas can be accomplished by correction of deteriorated
ructures. I propose two differences from the deferred loans available to
w income seniors and handicapped heads of households. First, such family
ans would be made only to families at or below 50% of the median income for
e area, to assure that we assist only the most needy with our limited
ogram funds. The following are the proposed income limits for these very
w income families.
No. of Annual No. of Annual
Persons Income Persons Income
1 $ 8,400 5 $12,750
2 $ 9,600 6 $13,500
3 $10,800 7 $14,250
4 $12,000 8 or more $15,000
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~cond, I would recommend biannual recertification of income to take into
:count the potential for increases in family income. At biannual
certification, if the family were discovered to have income in excess of
ie program limits for this loan type, then the CHIP Loan Committee would
ive the discretion to convert that loan to an installment loan at the
•ogram percentage rate prevailing for that income category. Thus we could
iitiate repayment from those families whose financial circumstances had
roroved.
ch an addition to our CHIP program should allow us to achieve our stated
using assistance goals, to make a stronger positive impact on our
ighborhood Strategy Areas, and to appropriately distribute and recapture
ogram funds.
FISCAL IMPACT:
C IP loans are a combination of Community Development Block Grant funds and
1 veraged bank funds. The proposed loan category should have no significant
i pact on the ratio of property rehabilitation per program dollar. Total
e penditures for the program would remain the same, as all appropriated funds
a e totally expended annually.
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