SR-112696-6I~I
JPM:RDT-mh NOV 2 61996
Council Meeting: November 26, 1996 Santa Monica, Cafifom~a
To: Mayor and City Council
From: City Staff
Subject. Recx~mmendat~on to adopt a City Council Resolution requesting the Los
Angeles Department of Airports include facilities to accommodate
business jet a~nxaft Los Angeles International Airport (LAX) Mas#er Plan.
Introduction
This staff report recommends that the City Council adopt the attached resolution which
requests that the Los Angeles Department of Airports include Fixed Base Operator
(FBO) facilities to acoommodate corporate and business jet aircraft during the
development of the LAX Master Plan The lack of FBO sernces will cause het operators
to search out other airports (such as Santa Manna Airport) En the vicinity of LAX to the
detriment of the neighbors living in the vican~ty of the Airport
Background
About 20 months ago, the Los Angeles Department of Airports (LADOA) embarked on a
Federally funded, three-phase Airport Master Plan study to provide a blueprint for
future airport growth and development to accommodate an estimated doubling of
passenger growth by the year 2015 Such protected growth will have an adverse
impact on air and surface transportation ~n the Los Angeles Basin especially impacting
those communities within three to five miles of LAX
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Nov 2 s ~~
Prepared by Jeff Mathieu, Director Resource Management Dept
Bob Moncr~ef, Housing Manager
Johanna GuR~ck, Housing Coordinator
Tad Read, Senior AdminEStrative Analyst
F `.HOliSI\Ci'•SlL~RE'stij'PFILES'.aD19IV'~1R5"I"F'ND1 ti~~D 4
Staff recommends that each of the Trust Fund Guidelines be amended as follows
Interest Rate The +nterest rate shall be set at the rate establ+shed by the Federal
Home Laan Mortgage Corporation far the average convent+onal commitment of a
#+xed rate, thirty-year {30) mortgage, compounded annually, except that when the
City loan is second to a first trust deed loan made under the U S Department of
Housing and Urban Development (HUD) Section 202 or Sect+on 811 Programs, the
interest rate shall not exceed the h+ghest permissible rate on the applicable HUD
Section 202 or Section 811 Program mortgages, under authanty of Chapter 24 of
the Code of Federal Regulations (CFR), Subpart 885 410(g)
FINANCIALIBUDGETARY IMPACT
There +s no budgetary or financ+al impact of the proposed amendment
RECOMMENDATIONS
It +s recommended that the City Gounc+l approve amendments to all four City Trust Fund
guidef+nes to requ+re that the rnterest rate on C+ty loans to protects rece+~mg mortgage
loans under the HUD Section 202 or Section 811 Programs not exceed the h+ghest
permissible interest rate under these federal loan programs, otherwise known as the
federal default rate
Under current program gurdelrr?es, the interest rate for Crty Trust Fund loans rs to be set
at the rate established by the Federal Home Loan Mortgage Corporation ("Freddie Mac")
for the average conventional commitment of a fixed rate, thirty-year (30) mortgage,
compounded annually The City currently utilizes the Freddie Mac interest rate because
it is a nationally recognized index for mortgage loans and an industry standard The
Freddie Mac interest rate is adjusted weekly As of October 31, 1996, the 30-year fixed
interest rate on a Federal Home Loan Mortgage Corporation mortgage was 7 89 percent
This staff report recommends that the City continue to use this interest rate for all projects
not involving HUD Section 811 and 202 loans
However, for projects to which a permanent City loan is second to a permanent mortgage
loan funded under the HUD Section 202 or 811 programs, HUD requires that the interest
rate on the City loan not exceed the highest permissible interest rate under the Section 202
and 811 !Darr programs, otheruvrse known as the federal default rate The Sectrorr 202
Program is a mortgage loan program for low income rental housing for seniors, and the
Section 811 Program is a mortgage loan program for low income rental housing for
disabled persons The authority for requiring that the interest rate on the City loan not
exceed the federal default rate as set forth in Chapter 24 of the Code of Federal
Regulations (CFR), Subpart 885 410(8) The federal default rate is updated only once
each year For the Fiscal Year beginning October 1, 1996, the federal rate is 7 25 percent
Thus, it is conceivable that the Freddie Mac rate could increase or decrease over the
course of a year while the federal default rate remained unchanged
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