Title
Resolution to Amend City Administrator Authority to Sign Lien Discharges, Sign Subordinations, and Forgive Liens for Affordable Housing Single Family Owner Housing Programs
Memorandum
The City of Ann Arbor has provided homeowner down payment assistance and homeowner rehabilitation to low-income households for over 50 years. The City currently has several hundred active liens on properties. The source of funding has been federal CDBG, NSP and HOME funds.
The typical loan term is a 30-year, 0% interest, deferred payment loan that is forgiven after 30 years. If the owner sells or transfers the property prior to the 30-year term, then the loan is repaid to the City out of any proceeds from the sale. However, over time there have been different repayment requirements included in these liens, including some that have no forgiveness at all, after any period of time.
In 2011, on the heels of significant housing market shifts and foreclosures, the City Council granted authority to the City Administrator to waive repayment of liens when the proceeds were not available from the sale of the property (Resolution R-11-439). The following resolution seeks to extend this authority more broadly, to provide the City Administrator the authority to waive repayment of any lien that was enacted to benefit low-income property owners at a point 30 years or more after the lien’s signature date. This will provide the opportunity for a previously qualified low-income household to fully benefit from any increased value on the property upon sale.
The Washtenaw County Office of Community and Economic Development (OCED) is requesting that Council give authority to the City Administrator, or designee, to sign lien discharges, lien subordinations and to forgive a lien of any amount for housing units that previously received acquisition, down payment or rehabilitation assistance from the City.
Lien discharges and subordinations are routine administrative activities for OCED. By granting the City Administrator, or designee, this authority, it will facilitate a faster transaction for buyers, sellers, and lenders.
OCED recommends approval of this authorization to the City Administrator, or their designee, to sign lien discharges, lien subordinations and to forgive any amount from a sale for housing units that received acquisition, down payment or rehabilitation assistance from the City 30 or more years prior.
Staff
Prepared by: Tara Cohen, OCED Housing and Infrastructure Manager
Brett Lenart, Planning Manager
Reviewed by: Derek Delacourt, Community Services Area Administrator
Approved by: Milton Dohoney Jr., City Administrator
Body
Whereas, The City provides funding for affordable housing projects through federal funding sources in order to add affordable housing units to the community or to preserve existing affordable housing units for low-income households;
Whereas, The City has liens on hundreds of housing properties with a typical term of 30 years as a 0% interest, deferred payment loan that is forgiven after 30 years;
Whereas, Some past liens provide no forgiveness after any period of time which has a negative impact on qualified low-income households;
Whereas, Council must approve the forgiving of part or all of a loan that is not repaid; and
Whereas, This resolution expands the authority previously granted to the City Administrator in Resolution R-11-439;
RESOLVED, That City Council authorizes the City Administrator, or designee, at their discretion, to approve and sign lien discharges, lien subordinations and to forgive any loan amount after a 30 year or more period of time for single family housing units that received acquisition, down payment, or rehabilitation assistance from the City;
RESOLVED, That the Mayor and City Clerk be hereby authorized and directed to sign any documents consistent with this resolution, subject to approval as to substance by the City Administrator and approval as to form by the City Attorney; and
RESOLVED, That the City Administrator, or designee, be authorized to take necessary administrative actions and to execute any documents necessary to implement this resolution.