HomeMy WebLinkAboutR-1990-D5846 Housing / Block GrantRESOLUTION NO.
,8
A RESOLUTION authorizing an Interfund Loan from 551 -Equipment
Rental Fund to the 124 -Housing Fund, and pro-
viding for repayment.
WHEREAS, 551 -Equipment Rental Fund has sufficient re-
sources available for investment to make the Interfund Loan
authorized by this resolution; and
WHEREAS, funds must be loaned to the 124 -Housing Fund in
order to provide sufficient resources for the programs admin-
istered bl the Office of Housing and Neighborhood Conserva-
tion; and
WHEREAS, the Cit) Council deems it to be in the best
interest of the City to make the Interfund Loan provided for
herein, no%,, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
The amount of $200,000 is hereby transferred and loaned
from the 551 -Equipment Rental Fund; which loan, together with
interest at the rate of 8.5% per annum, is to be repaid from
the 124 -Housing Fund to the 551 -Equipment Rental Fund on or
before October 31, 1991. The Director of Finance and Budget
is hereb% directed to make the necessary transfer to accom-
plIsh the loan authorized by this resolution.
ADOPTED B1 THE CITY COUNCIL this ,2c> day of
Mayor
ATTEST
City Clerk
(res intrfnd.jt)
CITY OF YAKIMA
OFFICE OF HOUSING AND NEIGHBORHOOD CONSERVATION
NOVEMBER, 1990
RENEWAL OF FIVE YEAR FINANCIAL PLAN
Background
For over fifteen years, the Office of Housing and Neighborhood
Conservation has successfully implemented and operated a housing
program. Throughout these years, the program has been supported
primarily by Community Development Block Grant (CDBG) Entitlement
Funds.
Since 1975 and each year thereafter, entitlement amounts received a
steady increase up to 1980 and has been declining each year since.
Without taking inflation into consideration, the present program is at a
funding level comparable to 1976-77. The current discussions in Congress
is a 35% reduction in the Community Development Block Grant Program or
approximately $215,000. In addition to the anticipated cuts, Congress has
passed legislation eliminating the 312 Direct Loan Program, Rental
Rehabilitation Program and the Urban Homesteading, which the Housing
Office currently uses in conjunction with the Block Grant Program.
Although CDBG funding has continued to decline, the need for housing
assistance has not. The continual need for affordable, decent housing is
reflected in our homeless population, low vacancy rates, low tax base, and
the many numbers of families on housing agencies' waiting lists.
Throughout the years, the Office of Housing and Neighborhood Conservation
has weathered this national debate on funding priorities by leveraging
other federal, state and local funding sources and applying for funds from
other like programs. Although the Housing Office has successfully
accomplished both of these methods, it can only apply if there are
sufficient funds available and accessible at the appropriate time. Both
have become a major problem for the operation of the program. As has
been widely publicized, members of Congress are experiencing some
difficulty in deciding what will be funded and at what level. Since the
federal year begins in October, this disagreement periodically freezes the
federal treasury, and our program is forced into a negative cash flow
position. This is poor business, and is a concern of the state auditor. It is
for these reasons that a new financing arrangement is being proposed.
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P_rrposed Financina Plan
This Financial Plan is an extension of the Three to FivE? Year Financial Plan
that was approved by City Council in 1986. The earlier plan set forth
funding strategies to continue the housing program and established a long
term goal to make the housing program self sufficrient without tri
fependency of federal funding. Although this is a difficult task, it can
become a short term reality to have sufficient program funds to achieve
the capital funding of both the single family and elderly prograrns within
six years, if administrative funding can be obtained. ( See Attachment
"A", Income and Obligations, and Attachment "B", the Proposed Financial
Plan Budget.)
I. Proposed Loary%Repayment Plan
a. In 1990, the Housing Division borrows $200,000 from the City
through an interdepartmental loan.
b. The Housing Division would borrow one million dollars from a
local lending institution at 9% for ten years in the following
scheduled installments:
$400,000 in 1991
$400,000 in 1992
$200,000 in 1993
This loan would be issued in the form of a General Obligation
Bond. This would impact the City's Council-matic Bond Debt
Capacity. (Existing Capacity is $7,429,516 as of December 31,
1989.)
Repayment of the one million dollar debt obligation would be
over a ten year term. The primary source of funds for
repayment is the collective program income from Single -
Family, Multi -Family, and Homeownership Program
participants. The City's Housing Office loan portfolio value is
$3 million and exceeds any current outstanding indebtedness as
well as the proposed new debt.
II. Use of Funds
1. In 1991, pay the $200,000 loan, plus interest, back to the
City.
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2. Payoff one homeownership loan each year through 1995.
(See Attachment "C")
3. Assist funding of the existing federal, state and local
housing rehabilitation program's with the remaining
funds.
This proposal uses many assumptions based on the existing program's
history and experience to calculate this Financial Plan. The assumptions
are outlined in the following narrative for each program.
1. Single Family Rehabilitation/Homeownership Loans
These loans are provided to low/moderate income, owner -occupied
applicants for the rehabilitation of homes within the boundaries of
the City of Yakima and homeownership financing opportunities
a. Direct Repayment Loans - These are direct low interest loans
to families who pay a monthly payment to the bank on behalf
of the City's Housing Office. There are presently 69 loans
paying monthly payments. The average payment is $146 with
interest rates ranging from 0-9%, averaging 3.4%. The present
outstanding balance due the City is $1,030,520 as of
September, 1990. The average loan is $18,701, and includes
Homeownership Program participants.
This Financial Plan anticipates continued program direct
repayment loans of $250,000 annually from 1991 thru 1995.
This action will increase the monthly repayment of program
income to $206,552 annually by 1995, or an increase of about
$75,000 over current repayment levels.
b. Deferred Loans - These loans are issued in conjunction with
direct repayment loans, (those described above), or with other
funding resources which include private, state or other local
Housing resource bases. These loans are considered deferred
of monthly repayment, but must be repaid upon title transfer
of the property, or following repayment of the senior
mortgages. There are presently 64 deferred loans held by the
City Housing Office. The average loan value is $15,057 and an
3
overall value of the deferred program is $963,662. History
indicates one or two of these loans are repaid annually. These
loan repayment funds are reinvested into similar projects.
The Financia! Plan anticipates that this type loans will be
issued in conjunction with 312 Direct Loans from the U.S.
Department of Housing and Urban Development or other similar
public or private conveyances, as they become available.
2. Rental Rehabilitation Loans
These loans are provided to investors to rehabilitate rental units.
To make these loans affordable and retain affordable rents, public
and private funding is combined. Since 1985, this program has
issued 64 loans and rehabilitated 189 rental units at a total cost of
$2,699,918 with an average of $14,285 per unit.
These loans are a combination of funding from participating lending
institutions and the City's Housing Office. Typically, the housing
loans reflect primarily, State DCD and CDBG. Following the
satisfaction of the first mortgage private loan, the investor begins
repayment of the public loan at the same monthly payment. The
public housing loans accrue at a 1% annual fee until the repayment
start date.
Of the $2,699,918 loans issued, the public housing programs have
funded $1,592,153 and the balance of $1,107,765 was funded from
private resources. These public housing loans are scheduled to be
paid back to the program at future periodic times. There are
presently 10 loans being repaid in monthly 'payments of $1,315.
This amount increases annually. See Attachment "A"
The Financial Plan anticipates a continued program of issuing loans
of $125,000 in Block Grant annually, in addition to an anticipated
$75,000 from the state to match local lender funds. These new
loans will have a future repayment value not realized for a minimum
of five to ten years.
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3. Elderly/Handicapped Repair
Grants for home health and safety repairs to elderly/handicapped,
low/moderate income homeowners.
This program has no repayment requirement. The funds available for
repairs to the homes are issued as grants. Due to the small
investment and the major deterioration of the homes, no lien is
imposed.
Approximately 20 to 24 homes are repaired annually and program
history reflects 265 applicants assisted.
The $30,000 annual budget combines efforts with other agencies for
additional work to the home when it is available.
The real economic value of this program is assisting in the
independency of the applicant so they can remain in their home and
not be placed in institutional or private care, which is very costly
for both the community and family.
It is anticipated to continue the $30,000 annual funding level of this
program for the five years. This should assist 20-24 families a
year.
4. Rehab/Resale
This program makes funds available for the purchase of weedy lots
and abandoned, dangerous buildings.
This program is budgeted at $25,000 to $50,000 annually and has
purchased 32 separate parcels that have had deterrent qualities
affecting both the appearance and value of neighborhoods.
All parcels purchased are deeded to different entities that have
developed affordable and decent housing for low/moderate income
families.
The average purchase of these Tots has been $8,000 and they now
5
have a current average value and new tax base of a minimum of
$35,000.
This program anticipates a $25,000 level of funding annually for
five years for the purchase of approximately 15 parcels of land.
These acquisitions will compliment the new Rebound Program in the
elimination of abandoned/dangerous buildings within our
neighborhoods.
5. Operating Costs
These are required to fund necessary items to operate the
rehabilitation programs. This would include title search, credit
reports, appraisals, etc., and ensure compliance with federal, state
and local program requirements, also the ability to research and
underwrite loans that provide additional private funding
alternatives.
The Financial Plan anticipates that this component be funded at a
$15,000 level for each of the five years.
This Five Year Financial Plan does not include construction inflation
costs. If these costs increase, the number of projects that could be
completed would be reduced.
6. Administration
The cost of staff and office operation to implement all of Yakirna's
City housing programs. This includes wages, benefits and office
operating costs.
The specialization and expertise of the eight staff members is
necessary to implement the existing programs. This balance of
staff operates programs equal to the sixteen member staff of 1980.
Program enhancements beyond the level proposed by this Plan, or
new federal or state funded programs would require additional staff
to implement.
6
The Financial Plan base year is the 1990 budget. The Five Year
Financial Plan projects increases in administrative and program
operating costs of 5% per year.
SUMMARY
This Financial Plan is adequate to balance program needs and bolster the
future financing opportunities for the local Housing Office. The basic
reason for this whole proposal is to generate cash flow and continue
programs until the climate for state and federal funding turns, and/or the
City's existing housing portfolio's equity is sufficient to be self
perpetuating. The Financial Plan anticipates that self sufficiency of
capital funding for programs can be achieved by the beginning of the next
decade if they continue their current and stable level of funding.
The requested interdepartmental loan from the City of Yakima will be paid
back in one year and produce interest income to the City. The commercial
loan (guaranteed by a limited G.O. Bond) will be secured from a local
lender at a reduced interest rate. It will be secured in two parts (spring
and fall) for 1991 and 1992, with the 1993 loan secured in the fall. These
commercial loans are scheduled in the fashion to save both interest and
repayment costs for the program, making them affordable.
This Financial Plan will provide the on going funding necessary to
maintain existing programs at current levels. Also, the early retirement
of the long term debt obligations of the homeownership loans are an
additional benefit. (See Attachment "C")
If additional Community Development Block Grant Entitlement Funds are
received or other resources are made available, this Plan will reduce
debts incurred earlier or enhance existing programs.
Given the policy assumptions and proposed budget outlined in this
Financial Plan, it will be valid from 1990 thru 1995. Starting in 1996,
other funding options and/or alternatives must be identified or the
existing programs need to be modified, curtailed or eliminated.
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TEN YEAR REVENUE VS OBLIGATIONS
City of Yakima, Office of Housing and Neighborhood Conservation
CITY LOAN
BANK LOAN
1990 1991 1992 1993 1994 1995
$200,000r--��1---�-
$400,000 $400,000 $200,000 -
1 1996
1-----
1�����
1�����
1997
1998 1999 2000
REVENUE
---��1�����
EXISTING SIF LOANS
$132,000
$148,638
$165,276
$181,914 $206,552
1 $223,190
$239,828
$256,466 $273,104 $289,742
EXISTING M/F LOANS
$15,788
$23,192
$39,050
$41,624 $57,603
1 $60,303
$86,712
$131,343 $149,408 $172,380
1
SUBTOTAL
$147,788
$171,830
$204,326
$223,538 $264,155
1 $283,493
$326,540
$387,809 $422,512 $462,122
■������1�����
PA:AMENAIN] Ell
1
1
1�����
HO LOAN/BANKS
$73,047
$69,138
$65,159
$61,110 $57,991
1 $53,792
$49,493
$67,705 $66,928 $63,920
CITY LOAN
$209,327
BANK LOAN
$30,402
$91,206
$121,608
$152,010 $152,010
$152,010
$152,010
$152,010 $152,010 $152,010
SUBTOTAL
$312,776
$160,344
$186,767
$213,120 $210,001
$205,802
$201,503
$219,715 $218,938 $215,930
BALANCE
($164,988)
$11,486
$17,559
$10,418 $54,154
$77,691
$125,037
$168,094 $203,574 $246,192
The deficit amount in 1991
reflects the
repayment of the 1990 City interdepartmental loan.
1
I
I
1
1
ATTACHN
"A"
FIVE YEi JDGET
City of Yakima, Office of Housing t ,Veighborhood Conservation
ATTACHMENT "B"
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
REVENUE
CARRY FORWARD
$50,000
$131,650
$374,774
$408,221
$217,989
$54,129
($104,426)
($234,780)
($342,178)
($435,203)
CDBG
$575,000
$575,000
$575,000
$575,000
$575,000
$575,000
$575,000
$575,000
$575,000
$575,000
STATE DCD
$75,000
$75,000
$75,000
$75,000
$75,000
$75,000
$75,000
$75,000
$75,000
$75,000
EXISTING S/F LOANS
$132,000
$148,638
$165,276
$181,914
$206,552
$223,190
$239,828
$256,466
$273,104
$289,742
NEW S/F LOANS
$16,638
$16,638
$16,638
$16,638
$16,638
$16,638
$16,638
$16,638
$16,638
$16,638
EXISTING M/F LOANS
$15,788
$23,192
$39,050
$41,624
$57,603
; $60,303
$86,712
$131,343
$149,408
$172,380
CITY LOAN
$200,000
BANK LOAN
$400,000
$400,000
$200,000
SUBTOTAL
$200,000
$1,264,426
$1,370,118
$1,445,738
$1,298,397
$1,148,782
$1,004,260
$888,752
$819,667
$746,972
$693,557
OBLIGATIONS
S/F LOANS
$250,000
$250,000
$250,000
$250,000
$250,000
$250,000
$250,000
$250,000
$250,000
$250,000
M/F LOANS
$200,000
$200,000
$200,000
$200,000
$200,000
$200,000
$200,000
$200,000
$200,000
$200,000
ELDERLY
$30,000
$30,000
$30,000
$30,000
$30,000
$30,000
$30,000
$30,000
$30,000
$30,000
REHAB/RESALE
$25,000
$25,000
$25,000
$25,000
$25,000:.
$25,000
$25,000
$25,000
$25,000
$25,000
OPERATING
$15,000
$15,000
$15,000
$15,000
$15,000
$15,000
$15,000
$15,000
$15,000
$15,000
ADMINISTRATION
$300,000
$315,000
$330,750
$347,288
$364,652
$382,884
$402,029
$422,130
$443,237
$465,398
HO LOAN/BANKS
$73,047
$69,138
$65,159
$61,110
$57,991
:` $53,792
$49,493
$67,705
$66,928
$63,920
CITY LOAN
$209,327
BANK LOAN
$30,402
$91,206
$121,608
$152,010
$152,010
$152,010
$152,010
$152,010
$152,010
$152,010
SUBTOTAL
$150,000
$1,132,776
$995,344
$1,037,517
$1,080,408
$1,094,653
$1,108,686
$1,123,532
$1,161,845
$1,182,175
$1,201,328
BALANCE
$50,000
$131,650
$374,774
$408,221
$217,989
$54,129
($104,426)
($234,780)
($342,178)
($435,203)
($507,771)
ATTACHMENT "B"
TEN YR. LOAN PREPAYMENT City of Yakima, Office of Housing and Neighborhood Conservation
PAYOFF
LOAN FROM
AMOUNT
FULL TERM
EARLY PAYOFF
PROGRAM
DATE
INTEREST
INTEREST
SAVINGS
Jan -91
PIONEER NATIONAL BANK
$30,000
$64,625.35
$29,397.83
$35,227.52
Jan -91
YAKIMA VALLEY BANK
$30,000
$64,625.35
$28,779.32
$35,846.03
Jan -93
YAKIMA FEDERAL S & L
$30,000
$64,625.35
$28,110.34
$36,515.01
Jan -94
WASHINGTON MUTUAL
$30,000
$64,625.35
$27,371.06
$37,254.29
Jan -95
BENJAMIN FRANKLIN
$30,000
$64,625.35
$26,562.43
$38,062.92
Jan -96
1ST INTERSTATE
$30,000
$64,625.35
$25,677.93
$38,947.42
Jan -97
FIRST FEDERAL
$30,000
$64,625.35
$24,717.20
$39,908.15
Jan -98
U.S. BANK
$65,000
$140,357.25
$51,388.94
$88,968.31
Jan -99
SECURITY PACIFIC
$75,000
$161,386.61
$56,208.42
$105,178.19
Jan -00
SEATTLE FIRST
$90,000
$194,342.24
$63,923.95
$130,418.29
$586,326.13
ATTACHMt 'C"
