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HomeMy WebLinkAbout1997-08-27 Housing MINASHLAND HOUSING COMMISSION AUGUST 27, 1997 MINUTES CALL TO ORDER The meeting was called to order by Chairperson Gerry Sea at 4:05 p.m.. Other Commissioners present were Glenn Tiffany, Madeline Hill, Jack Ware, Steve Hauck, Jan Vaughn, Joseph McKeever, and Larry Medinger. There were no absent members. Staff present were Molnar and Yates. RENTAL ASSISTANCE PROGRAM Item 3: Monthly Payment by Borrower If someone borrows the money for rent, they probably do not have the money to start payment back right away. Ware said, though, it could be as many as 50 days until they are required to make a payment just because of the billing cycle. Molnar said he could look into the utility billing cycle. Hauck wondered about the length of time to repay. Molnar was not sure anything specific had been decided and he had given 12 to 18 months as repayment time. Vaughn said a line should be included saying 'final payment due on or before__' Each case can be dealt with on an individual basis. It was decided to have a maximum of 15 months to be paid off on or before Molnar said a five percent processing fee is added to cover the agency's administrative fee. Vaughn said there will not be any net gain for the Housing Commission overall but it will defer part of the cost of running the program. Vaughn has volunteered some time to help offset administering the program. The processing fee is a one time fee. Hill thought there should be interest charged on the loan. Hauck said none of the programs he has looked at have charged interest and he is opposed to the program making money. Ware said this program will lose money so he would like to see five percent interest charged. Hill said if five percent interest were charged, it would keep the money there. Medinger believes the Commission should protect the asset but not make money. McKeever said by charging interest, it makes a statement to the applicant that this loan is not free. He believes a five percent interest rate is appropriate. Vaughn agrees with Hauck's objection to the interest rate. Molnar said the amounts borrowed would be from $500 to $750. Hill said the additional loan fee is just part of the loan just as the interest rate would be. After discussion, the Commission decided on charging a flat $25 processing fee for each loan because no matter what the size of the loan, the administration fee will be the same for each loan. This amount can be reviewed in a year. If there is no agency that will offer a bid on the request for proposal, the Commission can go back to the drawing board. There was additional discussion about including the processing fee with the loan fee. Ware did not favor that idea because that would not help the person who wanted to pay off the loan early. He felt the program should help as many people as possible with as fast a turnaround rate as possible. Hill moved to charge five percent interest per annum. For new applications, once a year the Housing Commission will evaluate the processing fee, the interest rate and the whole program. Medinger seconded the motion all Commissioners approved. Hauck asked if Molnar was working on the guidelines and a short explanation of the program. Vaughn is going to assist him in the effort. Molnar has begun working on it. Hill had some concerns about the agreement. She suggested the check be made payable to both the client and the landlord which will take two signatures to cash. The agreement should specify what will happen when a partial payment is made and how the money wi// be distributed. Hill asked if anyone had checked to see if a person's utilities can legally be cut off if the utility bill is paid but the loan is not paid. Hill did not see a 'remedies' section if there is a disagreement about it. Vaughn asked about indemnification. What are the legal responsibilities if some sort of collection has to be instituted? Hi//believes it should say 'prior to any institution of legal action or court proceedings, the parties agree to mediate' or some sort of binding arbitration clause. Molnar said the City can decide whether or not to add this language. Additionally, Hi//has concerns about what happens in the case of divorce-who is legally responsible? She has questions about the credit report. She suggested that Staff ca//Carlyle Stout, Attorney for Southern Oregon Renter's Association and ask for free advice in putting the application together. Sea said there should be a p/ace in the application where someone can deal with a negative credit report. She knows of women who have negative credit reports but that is not really an indicator of how they are doing. Hi//thought the non-profit agency should get the credit report, not the City. Sea hoped that Molnar would prepare a request for proposal for the ne~ meeting. The Commission decided that the applicant would only pay the processing fee if they are approved for the loan. FIRST TIME HOME BUYER Molnar said the only item on here not addressed is the residency requirement. Springfield has a one- year residency requirement. McKeever noticed there were no resale restrictions or equity/iraits. Ware thought most of those items would be worked out through financing. Sea wondered if some real estate people should look at the agreement. Mo/nar suggested talking with local lenders. Medinger said someone should talk to an underwriter. Ware said this is not a new program in Oregon and there are lots of examples and many banks that are doing a similar program right now. Molnar said the City wi// continue to qualify people under the current affordable housing program. Many of the quirks seem to have been worked out in this program. Hill asked how Molnar envisioned this program working with sleeping second on the deferred Systems Development Charges. Could someone qualify for both programs? Molnar thought the first time home buyer would target a lower income group. Hi//has a philosophical problem with item 3.3 on the promissory note. She had to sign in favor of a local improvement district for $70,000 and she did not have to sign anything saying if she did not pay for the LID that her utilities would be terminated. Why are the poorest of the poor getting threatened while the rest of the people who have obligations with the City not required to sign such an agreement? She does not believe this is right or fair. ASHLAND HOUSING COMMISSION AUGUST 27, 1997 MINUTES 2 Several Commissioners thought Molnar should talk to the lenders and underwriters regarding repayment. If there isn't a clause in the agreement about repayment, Medinger thinks it will be impossible to sell to banks. Hill said Staff should give a draft of the agreement to the major banks giving them 30 days for them to talk to their underwriters and ask for a written opinion from the head office underwriters. Tiffany said there are those who are presently doing this; where are they going? Hi//will help Molnar with a letter to the underwriters. HOUSING ELEMENT Citizen Involvement Process Molnar handed out a schedule of the Citizen Participation Process. ADJOURNMENT The meeting was adjourned at 5:30 P.M. ASHLAND HOUSING COMMISSION AUGUST27, 1997 MINUTES