Fiscal Note
No significant net fiscal impact is anticipated. The Resolution will effectively allow Operation Fresh Start to defer repayment of loans and reprogram payments of up to $125,000 in income derived from property sales with the commitment secured by other mortgages that have sufficient equity.
Title
Amending Resolution 18935 which authorized Operation Fresh Start (OFS) to repay program income funds with assignments of mortgages on alternate properties. This resolution will correct an error in Resolution 18935 to allow OFS to retain cash from certain property closings and it will allow OFS to draw funds from their revolving loan fund for capital costs associated with certain closings that occurred earlier in 2010.
Body
In 1990 the City established a dedicated revolving loan fund made up of repayments on previous CDBG loans. This fund is used by OFS in developing affordable housing through their youth training and employment program which provides educational and job training opportunities to at risk youth in Madison. The revolving loan funds are used for capital expenses during the acquisition and construction/rehab. portions of a project and are then repaid for use in the same type of activity on other properties. The funds are repaid from the proceeds of the sale of the property to a moderate income family.
In July 2010, the Common Council approved Resolution 18935 which authorized the City to accept assignments of liens on alternate properties as repayment of a limited amount of the funds drawn from the revolving loan fund. The intent of the original resolution was to allow OFS to keep cash from the closings on certain properties to help them bridge a temporary cash shortage. However, language in the resolution restricted the activity to only those situations where “the sale price of the property will not allow full repayment of the CDBG program income loan” and did not meet the intent of providing cash to OFS.
The current resolution...
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