11/08/1978 Meeting - Laserfiche WebLink

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~ sale of the house and how the City might avoid continued subsidation of the loans on the first sale. e Mr. Kupper reviewed a memo distributed to Council which outlined a method to address concerns of Council. Those included: The second lien would bear an interest rate of 6 percent, which is the amount the CDC has to pay on borrowed rehabilitation funds; an interest rate of 6 percent on the $10,500 extra value created by the rehabilitation which, hopefully, would prevent speculative buying. Also included was a suggestion that the City have the first right of refusal at the price of $58,500 for three years. Mr. Obie said the suggestions certainly addressed his concerns, and he felt it would not inhibit the goals of the NIP in trying to establish and owner/occupied house for a low/medium-income family. Mr. Lieuallen said it was important to note that this program is not intended to solve the broad range of community problems. It is a situa- tion that came from not wanting to tear down a particular house in the neighborhood, not a solution to the housing problem in Eugene. Mr. Delay requested discussion on the implications of the 6-percent interest rate on the $10,500 value created by the rehabilation. He noted this was not money out of the City's pocket and wondered if this were really necessary. Paul Osborn, HCC, said during last week's discussion Council had indicated there should be some interest rate attached to that money, or the City should somehow share in the increased value of a future sale. He felt the City's participation in this increased value was not a workable solution. Thus, it was determined that attaching an e interest rate would be the best solution. He noted the 6-percent interest rate is less than the current appreciation rate. Mr. Obie said he would be concerned in not attaching an interest rate. He said it would be difficult to justify the City's involvement in a give-away program for one person. He said this was City money which could be reused for other purposes if the house were put on the market and sold at $58,500. He felt the 6-percent interest rate attached was a compromise between zero interest rate and today's higher interest rates. Mr. Bradley wondered if any thought had been given to a 6-percent rate for two to three years, with a variable interest rate thereafter. He said three years from now the prevailing interest rate may be down from what it is today. Mr. Osborn said it would be easy to build in a variable interest rate on the downside, but would be more difficult on the upside. . . Mr. Lieuallen moved, seconded by Mr. Delay, to approve the staff's formula for resale of the house as outlined in the memo, ,dated November 1, and the additional conditions, dated November 8. Motion carried unanimously. Mr. Obie understood there was one other house in the area which the City is rehabilitating and plans to sell. He suggested the City sell the house before it gets involved and finds itself in a similar situation. Mr. Osborn said the City is currently in an arrangement with Lane County. e 11/8/78--6 ,~