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HomeMy WebLinkAboutIR 2906 y INFORMAL REPORT TO CI _ ,OUNCIL MEMBERS ' No. 2906 �,,P•ER�Q �,ejllx� E40RT To the Mayor and Members of the City Council May 12, 1977 v Subject: PAYMENT EXEMPTION PLAN (PEP) 'ei3 On March 20, 1977 Mr. Y. C. Shamblee appeared before the City Council to oppose the approval of the Payment Exemption Plan which had been approved by the Community Development Council on March 14, 1977. Additional information was requested by the City Council at that meeting. The Payment Exemption Plan (PEP) was developed to provide a means to deter abuse of the Home Rehabilitation Grant Program which is contained in the Community Development Block Grant application approved by the City Council and presently administered through the Community Development Council. The Grant Program makes CDBG rehabilitation funds available to. qualified low income home owners/occupants whose housing costs exceed 25 percent of their adjusted gross income. Inadequacies in the present ad- ministration of the program are realized when a grantee rehabilitates the home, then either sells the home or continues living in the home after an increase in income above program qualification limits. Under PEP the grantee, while receiving a loan to complete the repairs, would not be required to make monthly payments as 16ng as eligibility requirements were maintained. However, if the grantee's income in- creased above the PEP income qualification limits at any point during the life of the mortgage, the repayment of the grant to the City would begin on a monthly basis with credit given for the time elapsed from the original grant date to the time the financial status was upgraded. If the property were to change ownership, the new owner would also be required to meet eligibility requirements in order to receive payment exemption. If the new owner was ineligible, then the PEP lien would be settled at the time of sale, or the balance would be assumed and monthly payments made to the City. In the event of the recipient's death before termination of the grant period, the heirs, if qualified, would continue to receive the exemption. If the heirs are not qualified they would be required to pay the remaining grant payments. At the January 17, 1977 meeting of the Community Development Council, Mr. Shamblee expressed his concern that people in their twenties and thirties, who could be expected to increase thier income, were receiving home rehabilitation grants. The staff was asked to investigate possible alternatives to alleviate this potential problem. The staff informed the Community Development Council that the Housing Committee would study a Payment Exemption Plan being used in San Antonio, Texas. The CDC Housing Committee, of which Mr. Shamblee is chairman, met on January 18, 1977 and the plan was discussed but no action was taken. The PEP proposal was brought before the CDC Executive Committee meeting and the Housing Committee was instructed to consider the plan at its next meeting so that it could be presented to the CDC. At the next Housing Committee meeting on February 15, 1977, Mr. Shamblee suggested that the plan be sent to the Executive Committee and the CDC without recommendation. The Executive Committee then referred the plan to the CDC for consid- eration at the next scheduled meeting by placing the matter on the agenda, the only action which is required by the Executive Committee. M ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS -� INFORMAL REPORT TO CIT) �,OUNCIL MEMBERS No. 2906 — Page 2 Ip T(A UDIXO To the Mayor and Members of the City Council May 12, 1977 Subject: PAYMENT EXEMPTION PLAN (PEP) e» On March 14, 1977 the PEP proposal was presented to the Community Development Council. At that meeting Mr. Shamblee expressed his opposition to the program on the grounds that the Grant Program had been administered from the beginning of the CDBG program with no repayment stipulations and to impose new rules for maintaining qualifications would be unfair to future grantees. Five other citizens spoke including: Dr. A.I. Harris, Ms. Sopera Hicks, Mrs. Lawrence Alaman, Rev. Briscoe, and one citizen who dial n,-.)t identify, herself. Questions and explanations were offered by the Staff and CDC and when the objections became identical for each speaker, Chairman Byron Searcy limited the time left for citizen input. The sum of the objections to the PEP was t.h.it .tizens receiving grants did not wish to impose hardships on their heirs; grantees did not wish to be subject to annual financial reviews and to change the program now would be unfair since it was administered differently in the past. In the discussion on PEP by staff and members of the CDC the following points were explained: 1. Participation in the Grant Program would be on a voluntary basis; 2: The pian was not retroactive nor did it affect the Emergency Grant program; 3. A lien on the property would on.iy be held by the City until all monthly Grant payments were either exempted or made; l . 7hc property {;.i,l.d only be taken by the Public Housing Authority if the graclte.e Or heirs became able to repay and chose not to do so; 5 1'h PEP was not intended to impose a hardship, but to assure that grants t;,�re given only for the benefit of th^se in need.3nd if heirs of a PEP Grantee met the same qualifications , they too would be exempted from payments; . FJ -, recommendations involving PEP Grant approval, adjustment of exemption Status and annual grlantee re-views would be made by the CDC Loans and Grants C.�nnu;_tr_ee in coordination with the H & CD staff, A request was made at the March 14 CDC meeting by Councilman Bradshaw that a meeting be held with community representatives ro answer questions they asked at the CDC m;-eting. The City staff met with the r:prk-sentatives on May 6, and thoroughly explained the proposed program. In summary, an examination of the grant situation came about through a request by the CDC Rou-,ing Committee and its -hairman, Mr. Shamblee. After careful consideration the CDC approved the attached Payment Exemption Plan proposal agreement as a method :_f giving rehabilitation grants only to those in need -- as long as they are'in need. However, PEP provides the safeguard that if income or situations change to the point that the grantee no longer requires grant assistance, the remaining monthly payments will not be exempted, but must be paid. Respectfully submitted, R. N. Line OFFICIALRLCORD City Manager CIjY S.,.CRLTARY FT. WORTH, TEX. ISSUED BY THE CITY MANAGER -- — FORT WORTH, TEXAS