Committee approves sending HOME‑loan forgiveness ordinance to full council after debate

The Federal Programs Committee voted by voice to send an ordinance to full council that would authorize the safety‑service director to forgive certain outstanding balances tied to the city's long‑running HOME homeowner‑rehab loan program.

The issue matters because the ordinance affects how the city treats decades‑old HOME loans (federal HOME Investment Partnership program funds), and it carries potential program‑income and budgetary implications: staff described options that include writing off loans on deceased borrowers and forgiving remaining interest on deferred loans to align older loans with the city’s updated program rules.

Matt Kuzner, director of Building, Housing and Planning, told the committee the city has administered HOME homeowner‑rehab loans since the early 1990s. He said the older loans typically consisted of a repayable portion and a deferred portion recorded as liens; the deferred portion became due on sale or transfer. Kuzner said, "All of the interest rates on these loans were typically below prime," and that the "most common monthly payment for a household was $13.86." He described a HUD technical‑assistance process to align the older portfolio with current HOME program practices.

Staff presented three groups of loans in exhibits. Exhibit A lists loans whose original borrowers are deceased and that staff consider unlikely to be collectible; Kuzner said the total potential write‑off for that group would be about $431,000 in principal and accrued interest if council authorized full forgiveness. For Exhibit B staff proposed forgiving remaining interest on a set of deferred loans (Kuzner said that interest forgiveness would total about $80,621) while preserving a collectible principal balance (he cited a figure of about $145,622.94). For Exhibit C staff proposed a similar approach: forgiving remaining interest (approximately $77,801) and preserving a principal balance (about $185,835) to remain collectible on transfer.

Kuzner said HUD has reviewed and "endorsed" the proposed changes and that the city’s new HOME‑rehab loan product already provides up to $75,000 interest‑free, secured by a 10‑year forgivable mortgage; the proposed amendments would make the older portfolio more consistent with that model. He said pursuing collection by litigation or title suits could require substantial legal and administrative work and that some recoveries are probably impractical, particularly where title transfers used quick‑claim deeds and did not involve title companies.

Committee members probed collection options and taxpayer exposure. Councilman Nett asked whether the loans were federal funds and confirmed that repayments would be program income for HOME; he and others suggested targeted outreach to current owners and title companies before forgiving balances. Mayor Bradley and others expressed concern about writing off funds that originally improved homes and thereby increased property values for later owners. Kuzner and counsel said they will continue targeted research and could pursue title companies where transfers used title insurers.

Several residents spoke in opposition to broad forgiveness. Sherry Williamson said she inherited her mother's house and personally paid a $50,000 HOME loan and opposed a blanket write‑off. Rolando Ruiz argued the city had mismanaged the program and urged caution. Other public speakers urged the city to exhaust collection options, to notify owners, or to structure partial forgiveness (for example, forgiving interest but keeping principal collectible).

After discussion the Federal Programs Committee took a motion to forward the ordinance to the full council for consideration. Councilwoman Smrzanski moved to send the item to council; Councilwoman Moon indicated agreement; a voice vote was taken and "ayes have it" was recorded. The committee did not record a roll‑call tally in the meeting transcript.

The ordinance as presented authorizes — but does not require — the safety‑service director to forgive listed balances; staff told committee members they will continue research, pursue recoveries where economically feasible (for example, where title insurance exists), and return to council with further recommendations.

The full council will consider the ordinance in a future meeting; no final council decision was made at this committee session.