As a result of recent legislation, the California Department of Housing and Community Development has received $74 million to aid in the recovery of the Bay Area Earthquake. Funding is authorized under Chapter 6X, Statutes of 1989, of the Health and Safety Code. A portion of the allocation, $5.5 million, is now available under the Natural Disaster Emergency Shelter Program (NDESP). The NDESP funding is being provided to local public entities and nonprofit organizations for the purpose of assisting persons who have been rendered homeless as a result of the October 17, 1989 earthquake.

PROGRAM DESCRIPTION

Eligible Sponsor Agencies: Local public entities or nonprofit corporations that are currently providing emergency shelter are eligible to apply to HCD to receive grants through NDESP.

Eligible Projects: Proposals which will provide shelter to persons who are rendered homeless as a result of the October 17, 1989 earthquake will be considered for grant funding.

Eligible Use of Funds: Funds may be used for expansion of existing shelters; conversion of existing space to shelter use; shelter acquisition by purchase or lease; purchase of shelter equipment, including mobilehomes, necessary to expand the number of people served; rental vouchers; operational expenses necessary to operate shelters; and grant administration expenses.

Security Deposit Grant/Guarantee Component: In addition to the previous list of eligible activities, $500,000 of the $5.5 million appropriation has been allocated to the Security Deposit Grant/Guarantee (SDG) component of NDESP. These funds are to be used to assist earthquake victims to relocate into rental housing. The purpose of this component is to provide contractual guarantees for the payment of residential rental security deposits. Earthquake victims will apply to contracted sponsor agencies which will prepare, upon agreement with the owner of the rental property, a three-party contract which serves as a substitute for the rental security deposit and allows the security to be paid over a

specified number of months.

Restrictions in the Use of Funds: The rehabilitation of an existing shelter is not an eligible expense. The statute requires that NDESP funds not be used to "supplant other state and local programs providing social services, health care, and housing assistance." This includes assistance from the Federal Emergency Management Administration (FEMA).

Application Process: Because of the emergency need for these funds, applications are being accepted as of November 20, 1989. Applications will continue to be accepted until all funds have been awarded. Funds will be awarded on a "first-come" basis; however, the following criteria will be used in the evaluation of applications to ensure that funding is properly distributed throughout the disaster area and that projects address the needs of those areas:

1.

2

3.

4.

5.

Need for emergency shelter as determined by the number of irreparable residential units and the disaster generated increase in emergency shelter demand in each of the affected counties;

The cost effectiveness of the application as measured by the projected number of persons served per grant dollar;

Relationship of project objective to identified need;

Capacity of applicant to complete the project in an expeditious manner and administer the terms of the NDESP contract; and

Anticipated period until shelter services can be provided.

Technical Assistance: The Department will provide technical assistance to interested nonprofits and local entities throughout the disaster area. Temporary offices for three day working sessions will be set up at various locations. The offices will be staffed by Department personnel who will provide assistance in reviewing potential projects, explaining program requirements and completing applications. The schedule for work sessions, the name and direct phone number of the assigned NDESP Contract Manager for each county, and an application may be received by calling the Emergency Shelter Program at (916) 445-0845.

As a result of recent legislation, the California Department of Housing and Community Development has received $74 million to aid in the recovery of the Bay Area Earthquake. Funding is authorized under Chapter 6X, Statutes of 1989, of the Health and Safety Code. A portion of the allocation, $2 million, is now available under the Natural Disaster Predevelopment Loan Program. The Natural Disaster Predevelopment Loan Program consists of two revolving funds. The Rural Predevelopment Fund contains $1 million and the Urban Predevelopment Fund contains $1 million. Loans are made for one to three years and repayments are "revolved" back into the fund. The amount of funds available for loan varies from month to month.

PROGRAM DESCRIPTION

Eligible Sponsor Agencies: Eligible applicants include those public agencies and nonprofit corporations located in the three cities of Isleton, Benicia and Tracey, and ten counties of Alameda, Contra Costa, Marin, Monterey, San Benito, San Francisco, San Mateo, Santa Clara, Santa Cruz and Solano.

Eligible Use of Funds: Loans may be made to public agencies and nonprofit corporations, including cooperatives, for a variety of predevelopment expenses incurred in securing longterm financing for the production or rehabilitation of subsidized housing in urban areas or rural areas for low-income households. Specifically, loan proceeds may be used to purchase land or land options; pay advance fees for architectural, engineering, consultant, and legal services; permits, bonding and application fees; site preparation expenses (including water and sewer development) and other similar expenses. Loans may not be used for administration expenses or construction financing.

Loans may be made to eligible borrowers for land purchase to land bank sites for future development of low-income housing. Loans may also be made to such agencies and corporations which meet certain standards of experience to establish "revolving funds" for

Restrictions in the Use of Funds: The aggregate amount to be loaned for purposes other than that for option or purchase of real property or site development shall not exceed $75,000. No more than 20% of the total monies appropriated to the fund may be committed to any single borrower at any time.

Rates and Terms: Loans are made for a term of one to three years and bear interest at a rate of 7% per annum. The Department may reduce or eliminate this interest rate if the Loan Committee makes a finding that charging the interest would prevent a significant number of persons of very low income from owning or occupying new or rehabilitated assisted housing. Borrowers must provide adequate security for loan funds advanced by the Department.

Application Process: Those seeking loans must submit a HCD application form. Loan applications can be obtained from and returned to the Natural Disaster Predevelopment Loan Programs, Department of Housing and Community Development, P.O. Box 952054, Sacramento, CA 94252-2054.

Completed loan applications will be considered by a Loan Committee composed of Department officials and public members. Applications must be received at least 20 working days prior to a Loan Committee meeting to be considered at that meeting. Regular meetings are held on the fourth Friday of every month.

Administrative Regulations: The programs are governed by Subchapter 1 (Sections 7000 7016) of Chapter 7, Title 25 of the California Code of Regulations. Copies of the regulations are available free of charge from the Department.

FOR FURTHER INFORMATION, CONTACT:

Carol J. Smith, Unit Chief

Ray A. Bulford

Lorraine French

Kim Boarden

1800 Third Street, 390-1B3

Sacramento, CA 95814 (916) 445-0877

FSPDLP

STATEMENT OF DR. PETER L. HARD

GEOPHYSICIST, U.S. GEOLOGICAL SURVEY, DEPARTMENT OF THE INTERIOR

BEFORE THE

AD HOC PANEL ON HOUSING ASSISTANCE IN EARTHQUAKE DISASTER AREAS

OF THE

SUBCOMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT

OF THE

COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS

U. S. HOUSE OF REPRESENTATIVES

APRIL 12, 1990

On October 17, 1989, the Loma Prieta earthquake shook the San Francisco Bay area. In 15 seconds, 62 people were killed, and more than six billion dollars worth of property was destroyed as homes, businesses, bridges, and highways collapsed. This earthquake was the costliest natural disaster in the United States since the great San Francisco earthquake of 1906. Reports by the national news media led many to believe that central California had been devastated. Yet as the reports came in, it became clear that despite the large losses, only a very small part of the Bay area was affected significantDamage and life loss were concentrated in a

ly

far less than 1 percent.

few small areas: the Santa Cruz Mountains where the earthquake occurred, the towns of Santa Cruz, Watsonville, and Los Gatos, and 65 miles to the north in downtown San Francisco and Oakland. These were some of the same areas damaged heavily in 1906. Yet more than two million people living in between these