11/18/1981 Meeting - Laserfiche WebLink

Home Browse Search

Mr. Gleason stated that he would like the council to consider having new liquor license outlets dealt with administratively. Ms. Miller agreed that that is what the council would like. Mr. Gleason stated that a reso 1 ut ion wou ld be e required and then this item would be placed on a future agenda for the council's consideration. IV. REHABILITATION LOAN AGREEMENT (memo, chart distributed) Mr. Gleason introduced Bob Thomas, HCC. Mr. Thomas stated that this is the fourth in a series of leveraged loan agree- ments. With Section 312 gone from the Community Development Program of HUD, more rehabilitation rests on the City making such loan agreements with the banks, leveraged with CD funds. These are for loan pools which are repaid from homeowner loan payments. Loans are secured by Community Development funds which are deposited as a reserve and by payments and collateral documents from loans to property owners. The loans are made only in Community Development-eligible neighborhoods and the Bethel Triangle will now be added to the list of those eligible neighborhoods. There will now be a limit of $15,000 which is lower than the previous maximum limit of $17,400. There is a Federal requirement that at least 20 percent of the funds be spent in designated areas, but that is no problem since all of Eugene's funds are spent in designated areas. Staff is asking the council to approve interest rates of up to 14 percent on the loan agreements. Staff will continue to negotiate for lower rates. Council approval will prevent staff from having to come back, which would cause a delay possibly causing higher interest rates. Staff would recommend that the resolution title be changed to: "A resolution authorizing the City to use Community Development e Block Grant Funds to enter into a rehabilitation loan agreement for $300,000 to $600,000 with local lenders." Staff will begin negotiations immediately for an amount more than the $300,000 which is currently being offered by the bank. Another agreement can probably be secured later in the year. Staff would like approval to continue negotiations for the interest rate not to exceed 14 percent for rehabilitation loan funds up to $600,000. This would be fixed rate interest. Banks have discussed variable interest rates. Staff does not feel there is adequate staffing to deal with variable interest rates until at least July. Ms. Wooten asked if it is a disadvantage to use fixed interest rates since interest rates may come down. She also asked how soon the second agreement would be negotiated. Mr. Thomas responded that there are plans for a mechanism for the City to handle variable loan interest rates. These are small loans and staff can negotiate again in March. However, loans from this agreement will have to be repaid at 14 percent. By March, staff wi 11 have committed all of these funds and can then negotiate the second loan agreement. Ms. Schue asked how this works for the homeowner. Mr. Thomas responded that they are doing a survey to see what kind of subsidies the City will need to market these loans. They are proposing splitting interest rates differently from in the past and basing them on the ability to pay. Current interest rates to owners are 3 percent, 6 percent, and 9 percent. The recommend at ion is to change these to 5 percent, 8 percent, 11 percent, and 14 percent, based upon the ability to pay. - MINUTES--Eugene City Council November 18, 1981 Page 7