Explanation
BACKGROUND: The Housing Division has operated programs that are funded by both local and federal funding sources, in the form of grants and loans that provide critical and emergency home repairs such as roof replacements, water heater replacement, foundation stabilization, and many more repairs/improvements that ensure that residents are not faced with homelessness or additional financial hardship since 1986. In 1988, the City of Columbus made a CDBG funded home repair loan to Cora Towns for her home at 720 South Champion Avenue for $27,000.00. Ms. Towns has passed away and ownership of the home has passed to her heirs in 2023 by order of the Franklin County Probate Court. The family, through their attorney, has requested that the mortgage be forgiven.
Recognizing that there is a limited useful life of the home improvement and value for the City’s investment as well as the importance of ensuring that the City’s programs do not perpetuate inequitable outcomes or limit wealth building opportunities, the Department of Development implemented a loan forgiveness policy which was authorized via Ordinance 0939-2023 for its homeownership services. All federally funded loans that will be considered for forgiveness have met the required affordability periods based on the federal funding source.
This Legislation is to seek the approval of the forgiveness of the loan since it does not fall under the most recent implementation of the loan forgiveness policy due to the fact that the property has transferred to the heirs and therefore does not meet the criteria within the current policy. The same intent of the forgiveness policy applies here as it is still assisting with wealth building by the homeowner and family. There are no CDBG compliance issues with the forgiveness of this loan.
Columbus City Code Sections 335.01 and 335.012 guide the loan forgiveness policy, which allows the Director to authorize the forgiveness of individual loans up to $2,500, the City Attorney to forgive individual loans up to $20,000 and loans over $20,000 requires the approval by City Council.
FISCAL IMPACT: The loan is 10 (+) years old, and is eligible to be evaluated for forgiveness within the federal guidelines and could have been evaluated under the current policy if it was done so prior to the passing of Ms. Towns. This current request for forgiveness is approximately $27,000.00.
Title
To authorize the Director of Development with the approval by Columbus City Council to approve the forgiveness of the loan to Cora Towns who has since passed away and had prior to her passing would have met the eligibility requirements of the program, the current request for forgiveness is approximately $27,000.00, which will remove the burden of heirs and help support housing stability and promote wealth building which is the intent of the program. ($27,000.00)
Body
WHEREAS, the Department of Development Housing Division has operated programs focused on stabilizing low-income homeowners since at least 1986. These programs provide critical and emergency home repairs that include but are not limited to roof replacements, water heater replacement, foundation stabilization, home modifications, connection to city water and sewer services. These services are a critical tool to ensure that residents are not faced with homelessness or additional financial hardship; and
WHEREAS, historically, the programs have been funded by both local and federal funding sources, in the form of both grants and loans. Recognizing that there is a limited useful life of the home improvement and value for the City’s investment as well as the importance of ensuring that the City’s programs do not perpetuate inequitable outcomes or limit wealth building opportunities the Department of Development implemented a loan forgiveness policy for its homeownership repair services programs; and
WHEREAS, this legislation would forgive approximately $27,000.00 of principal on this loans; and
WHEREAS, the loan forgiveness policy was established and approved per Ordinance 0939-2023, however Ms. Towns passed away before requesting the forgiveness of the loan and since the property has passed to her heirs it has made the forgiveness ineligible under the current policy listed above; and
WHEREAS, the policy is guided by Sections 335.01 and 335.012 of the Columbus City Code and authorizes the Director to forgive eligible loans up to $2,500, the City Attorney to forgive eligible loans up to $20,000 and eligible loans over $20,000 require City Council approval; and
WHEREAS, in the spirit of the program and the fact that the City promotes wealth building opportunities for homeowners and their families it is in the City’s best interest to allow this loan to be forgiven for this purpose; and
WHEREAS, it is necessary to authorize the Director of Development with the approval of Columbus City Council to approve the forgiveness of the loan which will remove the burden of the homeowner’s family to which the property has been passed and which will further support housing stability and wealth building; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. Pursuant to Ordinance 0939-2023 passed by City Council on April 3, 2023, which is associated with the Housing Division Homeowner Services programs on loans closed on behalf of the City of Columbus and based on the guidance of Columbus City Code Sections 335.01 and 335.012, eligible individual loans over $20,000.00 require City Council approval in order to be forgiven. It is in the spirit of the original intent of the program that this policy is also applied to the loan made to Ms. Towns.
SECTION 2. That Columbus City Council finds it in the best interest of the City to authorize the approval of the Director of Development to forgive the loan that was made to Cora Towns per the attachment to this ordinance, which will result in the total forgiveness of $27,000.00.
SECTION 3. That this ordinance shall take effect and be in force from and after the earliest period allowed by law.