1983-0816_BANK OF AMERICA_J3a_Agenda Report0
AGENDA ITEM
TO: Stephen B. Julian, City Manager
FROM: Thomas G. Merrell, Director
Community Planning and Development
0
August 16, 1983
SUBJECT: Bank of America Agreement - Home Improvement Program
(Los Rios Area)
SIT[7ATION
As part of the implementation of the Los Rios Precise Plan,
the City established the Los Rios Home Improvement Program.
The program includes low-interest loans and fix -up grants to
rehabilitate and restore dwellings in the Los Rios area.
Until a few months ago, Security Pacific National Bank and
the City had an agreement to administer an interest subsidy
loan program for residents. To provide low-interest loans,
the City, through HCDBG monies, would buy down the interest
from 15 1/2°s to 38 or 6%. In times of high interest rates,
this would quickly deplete the monies at hand.
Since the expiration of the Security agreement, staff has
investigated other low-interest loan programs. The result
of this research is to recommend that the City enter into an
agreement with the Bank of America for their revolving fund
loan program. That agreement is included as Attachment 1.
A simple explanation of the program follows below. The City,
in either committed or drawn down funds, has $113,808 of HCDBG
funds earmarked for housing rehabilitation. Of this amount,
$50,000 will be placed in an interest-bearing account at the
Bank of America (the remainder will be used for the structural
rehabilitation of Little Hollywood units). As loans are
approved, the amount for collateralization is placed in a
non-interest-bearing account. This amount is reduced as
payment is received. To cite an example, if $6,000 is the
principal amount to be presented at 4% rate to the property
owner, the agreement calls for 90% collateralization. Thus,
$5,400 would be placed in the non-interest-bearing account.
This amount would be reduced as payments are made on the
loan, with a shift of the funds to the interest-bearing
account.
The most significant factors in staff's recommendation to sign
the Bank of America agreement are its visibility and interaction
with the public. Unlike the Security Pacific program where a
FOR CIT' COUNCII. AGENOA
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Agenda Item -2- August 16, 1983
centralized bank in Downey processes all paperwork, the Bank
of America local branch services the community. The local
Bank of America branch is directly across the street from Los
Rios, and the loan officers at the branch handle all of the
public contact and paperwork.
COMMISSION/BOARD REVIEW RECOMMENDATION
On August 17, the Los Rios Review Committee was presented the
Bank of America agreement and endorsed a recommendation to the
City Council to approve the agreement.
FINANCIAL CONSIDERATIONS
Commensurate with our contract with orange County Housing and
Community Development, the City has agreed to absorb all
administrative costs associated with the HCDBG program. Thus,
Planning staff time will be drawn from Account No. 01-4310.
All costs will be charged to the Redevelopment Agency.
ALTERNATE ACTIONS
1. Approve the agreement.
2. Approve the agreement with modifications.
3. Refer the agreement to staff for further review.
RECOMMENDATION
By motion, approve the agreement with the Bank of America to
provide low-interest loans to the Los Rios community, and
authorize the Mayor to sign the agreement.
Respectfully submitted,
Thomas G. Merrell, Director
Community Planning and Development
TGM:MPP:jtb
Attachment