OLENE WALKER HOUSING LOAN FUND - Utah



OLENE WALKER HOUSING LOAN FUND

QUARTERLY BOARD MEETING

Housing and Community Development Division

Salt Lake City, Utah

Minutes

Thursday, April 25, 2019

Members Present Representing

Mike Glenn General Public

Marty Henrie Mortgage Lender

Kip Paul Real Estate Interest

Garret Bangerter Home Builders

David Snow Mortgage Lender

Jennifer Schumann Local Government

Jason Wheeler Housing Advocacy

Cass Butler General Public

Mark Lundgren Manufactured Housing

John Lindsay Rental Housing

Kellly Jorgensen HUD

Staff

Lora Rees HCD - OWHLF

David Fields HCD - OWHLF

Annette Despain HCD - OWHLF

Lori Poll HCD – OWHLF

Shelli Glines HCD – OWHLF

Rebecca Banner HCD

Katherine Smith HCD

Daniel Herbert-Voss HCD

Sanobi Johnson HCD

Visitors

Kaylee Beck HCD – Admin North - Finance

Debbie Kurzban AGO

Brook McCorrick AGO

Sharla Weaver AGO

Marion Willey Utah Non-Profit Housing Corp.

June Hiatt Utah Housing Coalition

Carlos Linares UCNS

Martha Wunderli AAA-Individual Development Accounts

Welcome - The Olene Walker Housing Loan Fund (OWHLF) Quarterly Board Meeting was held at 1385 S. State Street – Conf. Room 157 - Salt Lake City, Utah. The meeting called to order at 9:00 am, by Marty Henrie, Chair.

Mike Glenn – Lora has been here for 14 years, I would like to read something we have here in the card. Then I would entertain a motion to include this in the minutes for the meeting. “Lora, What will we do without you? Your efforts have made our work as a board so much more productive. Thank you so much for all you have done for us. We love and appreciate you and hope that you have a long and joy-filled retirement.” The Olene Walker Housing Loan Fund Board

Motion from Garret Bangerter and second by Mark Lundgren. The motion carried unanimously.

PUBLIC COMMENTS

Marion Willey – Definition of surplus cash loan. Marion mentioned that the HUD attorneys are questioning the language and where is the $1,000 coming from to maintain the loan. Staff is aware of the language and staff is in the process of working to come up with new language.

June Hiatt – A couple of announcements from the Utah Housing Coalition. Our next regional meeting will be May 1, 2019 in Moab, UT. August 27th and 28th is our annual conference, it will be held at the Marriott in Park City.

OTHER BUSINESS

Item 1 - Approval of Minutes –

Quarterly Board Meeting - October 24, 2018

Motion by Jennifer Schumann and second by David Snow to approve the minutes as written. The motion carried unanimously.

Item 3 – Pass through Funds

1. AAA Fair Credit Foundation

In the 2019 General Legislative Session, AAA Fair Credit Foundation’s Utah Individual Development Account Network (UIDAN) received an appropriation of $89,500 that will pass through from the Olene Walker Housing Loan Fund. The funds will be used as follows:

1. $80,550 to match the savings of low income Utahan’s who complete the requirements of the program and purchase an approved asset.

2. $8,950 to support the administration of the program and financial education.

Staff’s recommendation is that the Olene Walker Housing Loan Fund receive the appropriation and pass through the funds to the AAA Fair Credit Foundation to implement the program.

Motion by Cass Butler and second by Mike Glenn to accept staff’s recommendation. The motion carried unanimously

2. Utah Veteran First Time Homebuyers

In the 2019 General Legislative Session, the Utah Department of Veterans’ and Military Affairs received an appropriation of $500,000 to be used for a homebuyer program for veterans and current serving military personnel as defined by the department. The Legislature further intends that the department is authorized to enter into financial and administrative arrange with the Olene Walker Housing Loan Fund and the Housing and Community Development Division to develop and implement the program.

Staff’s recommendation is that the Olene Walker housing Loan Fund receives the appropriation and pass through funds to the Utah Housing Corporation to implement the program.

Motion by Garret Bangerter and second by Jennifer Schumann to accept staff’s recommendation. The motion carried unanimously

NEW BUSINESS

Item 1: New Projects

1. Grand Vista – Cordes Development

Project is the acquisition/rehabilitation of an RD 515 elderly 62+/disabled property currently with 27 1BR units – all affordable – in a single garden-style multi-unit building originally constructed in 1990. Project is located just east of Payson’s main downtown area, with a free shuttle available from the Payson Senior Center, as well as reasonably close to a UTA bus stop (Route 821). Four of the 1BR units will be reconfigured into 2BR units, so there will be 23 1BR and 2 2BR units at completion. Amenities will include a community room, computer room, raised vegetable gardens, and larger individual patios, and 3 additional units (2 currently) will be retrofitted as Type A fully-accessible. Zoning is presently GC-1 General commercial, with multifamily residential a legal nonconforming use. The existing USDA-RD 515 loan will be refinanced over 50 years, with deferred payments for the first 20 years. Developer applied for $391,352 in 9% LIHTC and was awarded the requested amount on December.

Staff’s recommendation is to fund $435,000 as a fully-amortizing loan for 20 years at 1.5% from OWHLF funds as requested. If HTF funds are available for commitment, fund $206,400 as a fully-amortizing loan for 20 years at 0% from HTF funds as requested. Funding contingent on all other sources as listed in application, and rehabilitation to applicable Energy Star 3.0/minimum HERS standards.

Motion by Jason Wheeler and second by Mike Glenn to accept staff’s recommendation with the exception to change the 1.5% to 2.0%. The motion carried unanimously.

2. Willow Veteran First Time

Project is the acquisition/rehabilitation of an RD 515 elderly 55+/disabled property with 21 1BR units – all affordable – in three single story garden-style buildings originally constructed in 1990. All units presently receive RD rental assistance. Project is located close to Grantsville’s main downtown area and adjacent to the Grantsville Senior Center. Amenities are shared with Phase I-III (community center, on-site management, laundry, storage, etc.) which was previously rehabilitated in 2018; two additional units (2 currently) will be retrofitted as Type A fully-accessible. Zoning is presently RM-7 – Multiple Residential District, with multifamily residential a permitted use. The existing USDA-RD 515 loan will be refinanced over 50 years, with deferred payments for the first 20 years. Developer applied for $285,713 in 9% Federal LIHTC and $8,236 in state LIHTC, and was awarded the requested amounts on December 13, 2018 from UHC.

Staff’s recommendations is to fund $385,000 as a fully-amortizing loan for 20 years at 1.5% from OWHLF funds as requested. If HTF funds are available for commitment, fund $206,400 as a fully-amortizing loan for 20 years at 0% from HTF funds as requested. Funding contingent on all other funding sources as listed in application, and rehabilitation to applicable Energy Star 3.0/minimum HERS standards.

Motion by Jennifer Schumann and second by Garret Bangerter to accept staff’s recommendation with the exception to change the 1.5% to 2.0%. The motion carried unanimously.

Item 2 – Existing Projects

1. Housing Authoring of the County of Salt Lake County – Magna House

The home was originally constructed in 1963 as a two-bedroom, one-bath single-level wood frame home with 748 square feet of living space on the main level and a 748 square-foot full basement. The dilapidated home was purchased by the Salt Lake Community Action Program in 1998 or 1999 and was rehabilitated at that time. Brian Dover was an applicant approved for the purchase of this home after a review by the Salt Lake County Loan Committee completed on November 8, 1999.

The purchase price of the home was set at its appraised value as of October 1999 - $95,000. A $60,000 20-year fully-amortizing first mortgage at 5.38% with monthly payments of $418.92 beginning on February 1, 2000 was originated through the Housing Authority of the County of Salt Lake (“HACSL”) with a Trust Deed signed on December 28, 1999 and recorded on February 29, 2000.

A $20,000 20-year deferred second loan at 0% would not require any payment until February 1, 2020; the funds were to be provided to HACSL/SLCAP by the Olene Walker Housing Loan Fund (“OWHLF”).

A $15,000 30-year fully-amortizing loan at 3% was also put in place by HACSL with monthly payments of $63.25 beginning on February 1, 2000. A down payment assistance grant of $2,000 was provided by the Community Development Corporation, which would be forgiven by a specified percentage year until year 11, when it would be forgiven entirely. Mr. Dover provided a $500 earnest money deposit as well. The total purchase price with closing costs and principal reduction per the HUD-1 Final Settlement Statement dated December 28, 1999 was shown as $97,500.

The $20,000 loan was provided directly by the OWHLF and set up as a deferred loan “due and payable in full if property securing this note is sold, or if property is refinanced” per the Trust Deed Note signed on February 10, 2000. Funds used for this loan were Federal HOME funds, and the loan number issued was HMO354.

Mr. Dover passed away on January 1, 2004 due to complications from diabetes, and a Notice of Default was filed at the Salt Lake County Recorder’s Office on April 26, 2004. The default remained uncorrected so the property went into foreclosure and was sold at a Trustee’s Sale on September 1, 2004 at the Third Judicial District [Matheson] Courthouse. The OWHLF purchased the property at the auction in the amount of $68,754.20, with a Trustee’s Deed showing that amount dated September 22, 2004 and recorded on December 20, 2004.

A check for $68,754.20 dated September 24 was paid to HACSL for the amount the property was sold for and the home was placed into OWHLF’s inventory. An appraisal was ordered from Salt Lake Appraising Company and a check for $300 was issued on September 22, 2004. The completed appraisal dated September 9, 2004 showed an estimated value of the home of $94,000.

2004 delinquent property taxes, trash, and water fees of $1,020.10 were paid to Salt Lake County on March 11, 2005. As a state agency and nonprofit, property taxes from 2005 forward were waived, and OWHLF paid $108 for trash collection fees on October 31, 2005. HACSL continued to maintain the property and a total of $681 was paid to HACSL by OWHLF for maintenance and repairs during 2005. For 2006, the trash collection fees plus a late charge penalty totaling $118.87 was paid on January 30, 2007. For 2007 and 2008, trash fees of $132 each year were paid on November 30, 2007 and December 1, 2008. On top of these amounts the original HMO354 loan for $20,000 was still on the property, and as of the end of 2011 it was estimated that the total amount of funds OWHLF had spent on the home was $89,848.53.

In January 2012, HACSL/Kerry Bate put forth a proposal to purchase the property back from OWHLF. At that point it was being used as temporary housing for the Uisaile family from Tonga, who had a permanently disabled son. The son had legal status in the United States, but the parents were still in process of completing their immigration process. Since it is not a purpose of the OWHLF to own and manage properties, this proposal was brought forth at an OWHLF quarterly board meeting on January 26, 2012 for review and approval by the board. An appraisal completed on December 8, 2011 listed the estimated value of the property at $85,000.

OWHLF staff recommended that the HACSL purchase the property with a 5-year deferred loan of $85,000, along with a utility reserve of $18,000 and a repair reserve of $8,000, for a total amount of $111,000, which was approved by the OWHLF Board. At the end of the loan the family’s situation will be reviewed at that time, and if they are able to purchase the home, the OWHLF will be paid back the total funds expended. If the sales price was in excess of the total funds expended, a profit-sharing agreement would be negotiated at that time with HACSL.

OWHLF loan documents for loan #WHE1293 (Trust Deed Note, Trust Deed, Deed Restriction) were signed on June 28, 2012, and recorded at the Salt Lake County Recorder’s Office on June 28 also. The loan was a 5-year deferred loan with 0% interest. HCD Contract #12-2108 was also executed on May 10, 2012. The existing balance of the previous loan (HMO354), which had been transferred to OWHLF inventory at the time of foreclosure, was transferred to HACSL with the new loan (WHE1293) by the Division of Finance in the total agreed-upon amount of $111,000.00. This represents the original $85,000 plus a utility and repair reserve totaling $26,000.00 to be drawn as needed to reimburse HACSL for utilities and repairs to the property.

During the next five years a total of 12 draws were paid by OWHLF to HACSL on the utility and repair reserves totaling $15,463.50. The five-year deferral period was originally scheduled to end on March 26, 2017, but HACSL requested another five-year extension of this contract and loan. At the quarterly OWHLF board meeting held on April 27, 2017, the five-year extension was approved by the OWHLF Board. Contract #12-2108 was amended on May 30, 2017 for the expiration date to be changed to March 31, 2022. A Modification of Trust Deed Note for loan #WHE1293 was also completed on June 6, 2017 extending the loan ending date to March 31, 2022.

As part of the OWHLF Board approval listed in the award letter dated May 1, 2017, HACSL will do one of three things at the end of the extended loan/contract on March 31, 2022:

1. The family residing in the home at that time will purchase the home, and the outstanding OWHLF loan will be paid off with the new loan proceeds; or

2. The HACSL will complete the purchase process from the OWHLF, adding the property to the rental portfolio and closing out this loan and beginning repayment of the loaned OWHLF funds; or

3. The HACSL will sell the house on the open market and the proceeds will be used to pay off the outstanding OWHLF loan.

Since the April 27, 2017 board meeting, HACSL has submitted an additional three draws of funds to OWHLF on the utility and repair reserves totaling $4,517.17. Of the total of $26,000 provided for the utility and repair reserves, as of the end of 2018 a total of $19,980.77 had been spent. Draw #16 was submitted on February 11, 2019 for $7,796.46, but only $6,019.33 remained of the original utility and repair reserves at that time.

In order to pay this draw of funds, additional funding for the utility and repair reserves needs to be authorized by the OWHLF board. According to the Salt Lake County Assessor’s website, as of 2018 the property was valued for tax purposes at $152,300. HACSL is requesting an additional $20,000 for the remaining three-year term of the contract.

Staff’s recommendation is to fund an additional $20,000 towards the utility and repair reserves, and increase the total maximum OWHLF loan from $111,000 to $131,000. Contract #12-2108 will currently end on March 31, 2022, with HACSL to select one of three options at that time:

1) The home will be sold to the current occupants, if qualified, and the OWHLF loan will be repaid in full with the sale proceeds; or

2) HACSL will complete the purchase process from the OWHLF, making the home a part of their rental portfolio, with loan repayment terms to be negotiated at that time; or

3) The home will be sold on the open market and the proceeds will be used to replay the OWHLF loan in full.

Motion by Jennifer Schumann and second by Kip Paul to accept staff’s recommendation. The motion carried unanimously.

The next Olene Walker Housing Loan Fund Quarterly Board Meeting will be held July 18, 2019.

ADJOURN: Meeting adjourned at 10:30 am

Submitted by:

Lora Rees

Olene Walker Housing Loan Fund

Housing and Community Development Division

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