By Mike Gervais
Register Staff

4-17-2008

Inyo County may be abandoning its efforts to offer low-interest loans to local first-time home buyers.
The fate of Inyo’s HOME loan grant program hangs in the balance due to unforeseen financial obligations the county may not be able to afford. Hanging in the balance along with the future of the program is the loan application of a resident hoping to buy her first home this year.

The fiscal setbacks were brought to light during Tuesday’s meeting of the Inyo County Board of Supervisors, which was ultimately unable to make any decisions regarding the fate of the program or the loan recipient as it lacked critical information from the Planning Department and the Inyo Mono Advocates for Community Action (IMACA), the two local agencies that administer the loan grants.

What the board did learn is that if the county is to administer the final loan for the program, it will have to front the money itself.
Inyo County successfully administered four home loans of up to $200,000 since the $1 million program began four years ago.
When the first loans were administered, the federal government would send a check to the state government, which would then cut a check to Inyo County to close escrow on a purchase for a first-time home buyer.
But with this final loan, Inyo County Planning Director Pat Cecil said, the State Department of Housing and Community Development is forcing Inyo County to front the money to close escrow and wait about a month before it is reimbursed by the state.
“The state says it will reimburse the county in 4-6 weeks, but it will probably take closer to 6-8 weeks,” Cecil said.
According to Cecil, he contacted three other California counties that use the HOME grant program, and learned that every one of them have fronted the loans and waited for state reimbursement.
“The first grants didn’t require that of us,” First District Supervisor Linda Arcularius said.
Cecil noted that he did not know why the county was not required to pay upfront during the first four loan transactions.
“It’s a good program” but if the county must initially cover the grants and wait more than a month to get a return on those funds, “it does kind of tie up the county’s budgetary hands,” Cecil explained.
“I don’t see any possible way that we can front this money and wait 6-8 weeks,” said Third District Supervisor Beverly Brown.
The supervisors all agreed that the county would be hard-pressed to come up with the grant amount itself and have to wait up to two months before it was returned.
“I just don’t believe that this small county can suffer a cash flow hit of $200,000,” said Fourth District Supervisor Jim Bilyeu.
“We have a promise out there that we were going to fulfill this grant,” said Second District Supervisor Susan Cash. “We’re in a very precarious situation.”
According to Cecil, there could be only $132,000 remaining in the HOME program budget for loans, so the county wouldn’t have to front a full $200,000 loan.
Cecil said that the county receives a $13,000 fee and IMACA receives a $6.5 percent fee for administering the program.
It is unclear, however, if IMACA receives its administrative fee off the top of the $1 million grant, or if it is cut from each individual loan.
That means that it is unclear exactly how much money is left in the grant program. If IMACA took its fee off the top of the original $1 million, that would leave approximately $132,000 in the HOME budget. If the nonprofit has been taking its 6.5 percent administrative fee from each of the four previous $200,000 loans, the program budget should still have another $200,000 remaining.
While the supervisors are attempting to get the balance of the HOME program budget, one resident is waiting for her loan.
According to Michelle Schaup, her mother was approved for a grant between $160,000 and $200,000, but recently learned that the HOME grant budget can not support such a loan.
Schaup said that her mother was not the last to complete the necessary paperwork for the loan, but will be the last to receive funds, and will not receive enough from the program to close escrow on the property she wants to buy.
The Board of Supervisors directed IMACA Housing and Community Services Director Jeff Buss to bring back accounting for every dollar of every loan that the HOME program has provided thus far. Arcularius told Buss she also wanted to see a time line of completed HOME loan applications, so the board will know when Schaup’s mother was in line for the loans.
If indeed the HOME program budget has less than $200,000, Inyo County Administrative Officer Kevin Carunchio said he would like to see “how they got approved without that money in the bank.”
Buss and Cecil said they were unable to answer most of the board’s questions because they each have employees who are currently attending a HOME loan seminar out of the area.
The board decided to resume the discussion regarding the HOME program at its next meeting on Tuesday, May 6 at 1 p.m.
The board also agreed that it must take up a serious discussion on whether the county wants to attempt another round of HOME loans if it is going to have to pay out of its own budget and wait for reimbursement from the state. That discussion, Arcularius said, will be taken up at a later date.