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HomeMy WebLinkAboutAGENDA REPORT 1990 0606 CC REG ITEM 08HBERNARDO M.PEREZ Mayor SCOTT MONTGOMERY Mayor Pro Tern ELOISE BROWN Councilmember CLINT HARPER, Ph.D. Councilmember PAUL W. LAWRASON, Jr. Councilmember LILLIAN KELLERMAN City Clerk TO: FROM: DATE: SUBJECT: Background MOORPARK � I7EM&A• STEVEN KUENY City Manager CHERYL J.KANE :;OORPARK, CALIFORNIA City Attorney City Cou II MeetFaTRICK RICHARDS, A.I.C.P. of Director of 2 ommunity Development ACTIO NIS DELZEIT City Engineer JOHN V. GILLESPIE Chief of Police CHARD T. HARE City Treasurer M E M O R A N D U M The Honorable City Council Donald P. Reynolds, Jr., Management Analys June 1, 1990 Repayment of Villa Campesina Deferred Loan The Small City Community Development Block Grant (CDBG) part time funding of the acquisition and development of Tract 41471 generally known as Villa Campesina, for 62 new affordable housing units. Of the $600,000 grant, $532,800 was provide to Villa Campesina Corporation, working with Cabrillo Economic Development Corporation, for the purchase of the land and management of the project. Upon sale of the land to the new homeowners, the funds were used as deferred loans which assisted the families in qualifying for additional funding, and allowed low and very low income persons to finance the purchase of the homes. The deferred loan became the second on the deed of trust, to the primary lender, Farmers Home Loan Administration. The City's deferred loans are interest free, and become due and payable to the City after five years. A re- evaluation of the homeowner's income will be conducted after five years, and if the homeowner still qualifies as a low or moderate income person, then the loan can be deferred in five year increments, (after each re- evaluation) , up to 25 years. The homeowners are free to repay the loan at any time without penalty. One of the original homeowners is seeking to consolidate various loans and the new lender requires repayment of the loan to the City. Discussion The Mayor has executed a "Beneficiary Demand" in order to allow a Villa Campesina resident to refinance the second 799 Moorpark Avenue Moorpark, California 93021 (805) 529 -6864 Repayment June 1, 1990 loan on the deed of trust, (which is the deferred loan provided to the beneficiary from the City) . The beneficiary has qualified for a home improvement loan, and will use this new loan to repay the City, and consolidate his personal finances. The houses in Villa Campesina can be resold, or refinanced as long as 10 %, (12 houses), remain available to low and moderate income persons, as stipulated in both the Planned Development and Tract conditions. This is the first application for request to repay the deferred loan by a Villa Campesina resident, and was not executed until these details were clarified. The first loan attached to the deed of trust will remain in place, (from Farmers Home Loan Administration) , and the City will receive $8,848 as payment for the deferred loan, (which is the second attachment to the deed of trust), from Glendale Federal Bank. The Mayor has only executed the "Beneficiary's Demand" which allowed the repayment process to continue. A copy of this document has been provided to the Council under separate cover. The City will execute the "Request for Reconveyance" when the payment has been received and has cleared the City's bank. In order to facilitate the deferred loan repayment procedure, staff is recommending that the Council authorize the City Manager to execute these documents in the future. The City must keep repayments of Small City CDBG in a clearly identifiable place in the City's revenue accounting system, because this revenue is considered by HUD to be "program income" and is still subject to CDBG regulations. The repayments can be invested with other City funds so that the City can compete for the highest interest rate until a new project has been identified. Staff has requested that a formal written directive be provided to the City so we can develop future eligible activities for the use of the Small City CDBG program income. In researching the potential for the use of funds, staff was informed by the State of California Housing and Community Development Department, that because the City's contract expired on December 31, 1988, and because the project is closed (pending final audit), that the State no longer holds jurisdiction over the City in controlling the use of these funds. Therefore, staff has requested guidance from the current City CDBG authority, the County of Ventura. The County will provide written guidance to the City after Repayment of Deferred Loans June 1, 1990 verifying how the City can reuse the Small City CDBG project income. Initially, it is staff's impression from the County, that the funds can be reused for new City affordable housing projects, and possibly for any CDBG eligible activity. Recommendation That the City Council: 1) Authorize the City Manager to execute documents to complete the repayment referenced in the report; 2) Authorize the City Manager to execute all future deferred loan repayment documents.