ARLINGTON COUNTY PROPOSED ACTIVITY #1

Arlington Housing Corporation ($300,000)

Background

The Arlington Housing Corporation, a nonprofit charitable corporation, was established in 1975 to expand and to preserve housing opportunities for low and moderate income Arlington residents. In the 14 months of its existance it has made 29 grants to low income homeowners to upgrade their properties to minimum safety standards. In addition, the corporation sponsored a contractors workshop and attempted to purchase a 22 unit garden apartment for substantial rehabilitation and rental under the Section 8 program. The corporation is a broadly based community organization whose proposals and activities represent a high level of professional expertise, effort and commitment.

Description and Objectives of Proposed CD3 Activities

Though each of the following activities is distinct, if AHC is to make a significant impact, funding is required to implement the full program. Though they are listed in priority order, they should be rated as a program.

a) Home Improvement Activities ($175,000)

Purpose

1) Home Improvement Program ($125,000)

The purpose of the Arlington Housing Corporation Home Improvement Program is to provide low-interest loans and subsidies to low and moderate-income Arlington residents who need to fix up their homes. Attendant to this major purpose are two others namely, to encourage and enable eligible low and moderate-income residents to make needed repairs on their dwellings; and, in doing so, to preserve the housing stock in Arlington County which is available for low and moderate-income people.

Description of Assistance

The Home Improvement Program tries to operate with as much flexibility as possible, so as to leverage its limited funds and to maximize their benefit to the largest possible number of low-income and moderate-income recipients. It does this by:

1. providing interest rate subsidies on conventional loans made by conventional lenders to recipients whose income is not large enough to repay a loan made at conventional interest rates.

2. providing direct loans to loan applicants who meet the eligibility criteria set forth by the Arlington Housing Corporation, but who are not able to receive a loan from a conventional lending source.

3. providing to eligible loan applicants, direct loans whose principal repayment and/or interest charges are deferred to the date of the next transfer or lease of the property upon which the loan is made, whether during the life or after the demise of the borrower/property owner.

4. providing loan guarantees to lenders making rehabilitation loans to eligible applicants, when such loan guarantees are necessary for the loan applicants to obtain the loans.

Proposed Activity #1 - page 2

5.

providing to eligible applicants direct grants which will meet an

urgent or immediate repair or rehabilitation need, and which because
of the very low income of the recipient, is not considered to be repay-
able.

A.

B.

C.

D.

Dwellings in census tracts where other CD activities are being under-
taken will receive priority.

Owner-occupied dwellings located in Arlington County, in either standard
condition or substandard condition, shall receive priority over renter-
occupied dwellings.

Properties located in areas of Arlington County scheduled for major
redevelopment in the immediate or short-range future shall be excluded
from consideration for participation in the Home Improvement Program,
except where the unique circumstances of the situation call for con-
sideration.

Properties upon which rehabilitation loans are made under this program
must be insured by a hazard insurance policy in an amount sufficient to
cover the amount of the rehabilitation loan in addition to the property's
present encumbrances, and the lender of the rehabilitation loan shall be
listed as a loss payee in such hazard insurance policy.

2. Eligible Improvements

The types of improvements to receive priority in this Home Improvement Program
shall be those which are needed for the health and safety of the owner or
resident, and those which are necessary to preserve and to extend the life of
the property. The types of improvements which this program shall address are
those of a basic nature designed to provide a decent, safe and sanitary
housing accommodation for the occupant.

Public Notification and Application

The Arlington Housing Corporation Home Improvement Program will be widely publicized and advertised, with emphasis in those census tracts where other CD funding is being spent. Relationship to Funding Criteria

This program will provide direct benefits only to low income households. In most instances, this assistance is necessary for the retention of the unit in Arlington's low and moderate income housing stock.

2) Family Loan Program Segment of HIP Activities ($50,000)

Purpose

The purpose of AHC's Family Loan Program segment of the HIP is to increase the availability of suitable, safe and healthful housing for families through the reduction of payments on conventional home improvement loans and the provision of loan guarantees to low and moderate income families who own older houses in Arlington. Two secondary purposes of this program are to encourage private lenders to take an active role in preserving Arlington's existing houses and to encourage homeowners to make improvements to their houses.

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page 3

Types of Assistance

The Home Improvement Program will operate with as much flexibility as possible, so as to leverage its limited funds and maximize their benefit to the largest possible number of low-income and moderate-income recipients:

1. By providing interest payment subsidies on conventional loans made by conventional lenders to recipients whose income is not large enough to repay a loan made at conventional interest payment. By reducing the interest rate on a conventional loan, AHC reduces the initial payments on the loan when interest is the bulk of the payment and tapers out its assistance at the end of the term of the loan when the payments are primarily composed of principal. This relieves the immediate burden on families who anticipate an increase in income over the years.

2.

By providing loan guarantees to lenders making rehabilitation loans to eligible applicants, when such loan guarantees are necessary for the loan applicants to obtain loans.

Both of the above-mentioned processes involve an ongoing program known as the Rehabilitation Loan Program through which seven participating banks in Arlington have agreed to make home improvement loans at 8% to eligible applicants. This program has not worked largely because of the applicants' failure to demonstrate to the bank's satisfaction their ability to repay the loan. Both facets of the Family Loan Program should increase the number of people who will be able to meet the lending institutions' requirements for loan eligibility.

Eligibility Requirements

In addition to AHC's eligibility requirements, the borrowers, properties, and improvements must satisfy any requirements of the individual lending institutions.

Public Notification and Application

The Arlington Housing Corporation Home Improvement Program will be widely publicized and advertised, with emphasis on those census tracts where there are other CD activities. Anticipated Benefits

1. This program will help to preserve and extend the life of the housing inventory in Arlington County by making the existing housing more livable because it is better maintained.

2.

3.

4.

This program will better balance the financing gap between older houses and
those that are newly constructed. At present, it is difficult for families
to take on the larger down-payment generally required for the purchase of older
houses and any concurrent major repairs or improvements that need to be made.

This program should contribute to a more balanced population in Arlington.
By helping to make the existing housing stock expandable and repairable with-
out unreasonable financial strain, AHC hopes that this program will aid in
creating a community that is more stable and better able to utilize and con-
tribute to the County's public schools and other capital investments.

AHC believes that, by working with private lenders in this program, private
lenders will be encouraged to relax some of their guidelines for loans in
mortgaging of older homes and neighborhoods in Arlington.