The Housing Program provides low interest loans for rehabilitation of single- family and multi-family ownership homes, mobilehomes, and rental properties housing low-income households. The substantial rehabilitation loans cover both code and general improvements to the structure. This may include updating all major component systems; i.e., electrical, plumbing, roofing, heating and exterior finishes. The intent of the program is to insure that the residents are living in safe and sanitary homes. All code and incipient code violations are corrected and all deferred maintenance items are included in the repairs. To qualify for the program, a four-person family’s household income cannot exceed $74,250 (80% of median income). Interest rates range from 3% to 5% depending on the household income and the ability to repay. Loans to very low-income households (50% of median income) are deferred payment. To qualify for the loans to rental property the unit(s) must be continuously rented to a low-income household and rents cannot exceed the existing HUD Section 8 rents for Santa Clara County.

Each year the Housing Program manages approximately 30 to 40 projects of various sizes with a current year total loan budget of over $600,000. The funds are all from the HUD CDBG grant. The Housing Program has been in effect since the start of the CDBG program in the 1970’s. As a result, repayment on these loans has been averaging $450,000 a year. These funds are recycled back to the community for new loans. In addition to providing the loans to fund the construction, the Housing Program assists the homeowner in determining the scope of work, writing the specifications for the work, locating contractors, inspecting, monitoring and assisting in the negotiations with contractors during the course of construction. The City issues all progress payments directly to the contractor.

The Housing and Community Revitalization Sub-Element Policy 2.3B.3a states:

Staff has completed a review of the operations for implementation of the program. It was determined that an exception process to approve high cost loans would be of substantial benefit to the program. This type of process allows staff the flexibility to consider the funding of rehabilitation projects that may exceed the current loan limits.

Staff recommends that Council approve an exception to established loan limits that would include the review and approval of higher cost projects. Specifically, staff recommends that the Director of Community Development be authorized to approve rehabilitation loans up to 30% higher than the loan limits established by City Council in cases where he judges such a rehabilitation loan to be the most cost effective way to provide standard affordable housing,
provided that the following criteria are met:

• The loan-to-value ratio is at 80% or less.
• The property will comply with all related applicable City codes affecting residential rehabilitation.
• The loan will not negatively effect the City’s ability to meet the production standards (number of completed projects per year) of the rehabilitation program.