SR-407-004-01 (6)
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Santa Monica, California, March 20, 1978
TO:
Mayor and City Council
IDIt
MAR 2 8 1978
FROM'
City Staff
SUBJECT
Request for Policy Decisions
Housing RehabilItation Program
Introduction
This report transmits the City Housing Commission's proposed poliCY changes to
the Housing Rehabilitation Program, and recommends that the City Council approve
the requested changes
Discussion
1. Change In DefinitIon of Lower Income
As of January, 1978, the Department of Housing and Urban Development (HUD)
revised its schedule defining lower income families in the Los Angeles metropolitan
area. It IS this schedule which Must be followed in determIning income eligibIlity
for the Housing Rehab.l itatron Program.
City pol ICY to date indicates that 85 percent of the loans be made to this lower
Income category. City pol icy further stipulates that not More than l5 percent of
the loans be made to famll ies whose income exceeds the "loltJ incomell figure by
10 percent. Thus, six percent loans are available to "lower income" farlilles,
and seven percent loans are available to families with 51 ightly higher income.
(OR
MAR 2 8 1978
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TO
Mayor and City Council
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March 20, 1978
The old and new schedules are represented below.
Old Schedule Ne\'J Schedule
Family Of 6% 7% 6% 7%
1 S 8,700 $ 9,600 $ 9,705 510,725
2 9,900 10,900 11 , 1 50 12,265
3 11 ,200 1 2 , 3 00 12,550 13,805
4 12,400 13 , 600 13,900 15,290
5 1 3 ,200 14,500 14,800 16,280
6 14,000 15,400 15,650 1],215
7 14,800 16,300 16,550 18,205
8 1 5 ,600 17,200 17,400 19, 140
2. HUD Guidel rnes Concerning RatiO of
Loans to 'ILovJer I ncome" Homeowne rs
HUD regulations require that "more than 50 percent'l of the rehabilitation loans
be made to families whose total income fall within the 1I1ower Incomell category
(80 percent of the County median family income). Thus, 49 percent of the loans
may be made to fami1 ies with higher incomes, with no upper I imit established by
the federal government.
City policy provides that 85 percent of the loans be made to "lo~'Jer income"
fami lies and 15 percent to fami I les ~'>Jith incomes up to 10 percent above the "1ov"er
inCOf'Je11 fj gures.
Program experience to date Indicates that the federal government's defjnition of
low income is not real istlC In a community such as Santa Monica, particularly in
relationship to homeowners struggl ing to maintain their households. It is
not realistic to maintain the City's guidelines for program participation at a
level more restrictive than that required by HUD
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TO: Mayor and City Council
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March 20. 1978
In order to provide a greater range of participation, it is proposed that HUD
guidelines be util,zed in determInIng the ratio of loans available to 11lolt/er
income'l household and household of some\oJhat higher Income
3, Upper limit of Income Eligibjlity
Present pol ICY on income eligibility indicates that famil ies meeting the HUD
"1ower Income'l schedule. \1hich is 80 percent of the County fTledian family income.
are eligible for a SIX percent rehab loan
Famil ies whose incomes are up to
10 percent above that figure are el igible for a seven percent loan
In order to more realistically account for the economic environment Indigenous to
the housIng market In Santa Monica. It IS proposed that the upper limit of income
eligIbility be raised to reflect the median family income figures for the County.
Such a schedule would reflect the following figures as of January, 1978.
Family Of 6% loan T% loa n
I $ 9,750 $12.200
2 11 .150 13 , 900
3 12,550 15.700
4 13.900 17,400
5 14.800 18,800
6 15.650 20,200
7 16,550 21,600
8 17.400 23,000
All Income eligibility criterIa vJOuld comply \oJith HUD target area policy,
4. No Interest Deferred Loans
Those homeowners whose financial situation does not allow them to repay even a
modest loan amount per month are eligible for a deferred loan. Eligible homeowners
have consistently balked at the idea of placing a lien against their property,
particularly one accruing annual interest
The Housing Commission recommends that
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TO
Mayor and City Council
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March 20, 1978
City Council consider offering such deferred loans at no interest in order to
assIst these more needy individuals.
Recommendations
The Housing Commission recommends the following policy changes to the Housing
RehabiJitation Program.
1. Change in Definition of Lower Income
The diSCUSSion here is for informational purposes and requires no Council.
action.
2. Recommendation to Adopt HUD Guidel ines Concerning
Ratio of Loans to "Lower Income'! Homem'iners
That 51 percent of the HOUSing Rehabilitation Loans be made to famil ies
whose total incomes comply "lith the "IO\oJer incQlTlefl schedule established
by HUn from time-to-time, and 49 percent of the Housing Rehabilitation
Loans be made to families whose total incomes are at a higher level as
established by City policy.
3. Recommendation to Raise the Upper Limit of Income Eligibil ity
That maximum income eligibility for Housing Rehabilitation Loans be
based on County median Income statistiCS determined by Hun from
tlme-to-tlme
The loan schedule under Item 3, page 3, reflects such
figures as of January, 1978. All income eligIbility Criteria ltJould
comply with HUD target area policy
4. Recommendation to Provide No Interest Deferred Loans
That deferred loans be available With no Interest charge.
Prepared by
Ca ro I Delay
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