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City Will Help Some Families Buy First Homes


GLENDALE — In a model program designed to better utilize redevelopment tax dollars, the Glendale Housing Authority on Tuesday allocated $500,000 to help about 20 moderate-income families purchase their first homes.

The city plans to offer interest-free "silent second mortgages"--so-called because no payments would be required--to fill the gap between a buyer's down payment and a conventional mortgage on the purchase of a single-family house or condominium.

The program is designed to encourage renters who work or live in the city to purchase their first home.

Targeted are wage earners with a maximum yearly income of $57,950 for a family of four or $46,350 for a family of two.

"This is like a dream come true," said Mayor Larry Zarian, the senior member who was on the council when the concept was first discussed at a retreat four years ago.

Council members said then that the city should work toward self-sufficiency in helping people achieve home ownership, rather than just providing rental assistance in the form of federal, state and local subsidies.

"We are one of the leaders in the country in moving toward self-sufficiency," City Manager David H. Ramsay told the council Tuesday.

Officials have long been concerned that rental subsidies are dwindling and may soon disappear.

At least 15% of the funds for the program are to be used to help city emergency workers--many of whom live in faraway communities such as Simi Valley and the Santa Clarita Valley--move close to work, where they would be more accessible in the event of a major earthquake or other disaster, said Madalyn Blake, director of community development and housing.

Because of the relatively high cost of housing in Glendale, about two-thirds of the city's police, fire and other emergency employees live outside the city.

Under state law, the city is required to spend 20% of its property tax revenues from a redevelopment zone on low- and moderate-income housing. That money typically has been used to build senior citizen rental units. But the latest program is specifically aimed at home buyers and is the first such plan in Los Angeles County to assist in the purchase of a single-family home, city officials said.

Funds were allocated earlier this year to help buyers purchase condominiums, but that was at a specific site--423-427 W. Doran St.--where a 16-unit development is to be built.

The new plan would allow qualified buyers to select a home or condominium, approximately in the $180,000 price range, anywhere in the city, Blake said. Based on 1990 Census figures, 10% to 15% of housing fits the price range.

The city would provide a second trust deed for up to 20% of the purchase price of a home--a maximum of $25,000 for a condominium, or $35,000 for a single-family home.

An additional $15,000 could be borrowed to make repairs to an older house to bring it up to city code standards. Officials said they want to encourage the purchase of older, lower-cost homes by individuals rather than by developers who tear them down and build higher-cost housing.

No payments would be required for the 30-year term of the city's loan until the house is sold, at which time the loan would have to be repaid.

If a house is sold within the first five years, any increased value in the property would be paid to the city, according to tentative terms approved by the authority. After the first five years, equity would be proportionately shared by the city and the homeowner, officials said.

The initial loan funds and any profits could then be used to invest in purchases by other first-time buyers, Blake said. While officials have proposed that buyers make at least a 7% down payment, several council members and community leaders on Tuesday urged that a greater commitment be required on the part of the buyer. Details have not been finalized.

The proposal already has generated strong interest among real estate brokers and lenders eager to utilize the city's resources in the wake of a sluggish housing market.

Although the program is not expected to be implemented for several months, Blake said the city is compiling a list of potential qualified buyers. She said the depressed housing market offers first-time buyers and the city a "window of opportunity" to take advantage of home prices that are at their lowest in years.

In their action Tuesday, the authority also agreed to contract with a nonprofit professional organization--the Development Fund--to negotiate terms of mortgages to be made available in the program from one or two financial institutions.

The Development Fund, formed in 1963, is associated with a state-wide consortium of 56 California banks and has been working for the last two years to help redevelopment agencies better utilize their housing funds, said Susan Phinney, program director.

Glendale would be one of the first cities, and the first in the county, to participate in a model demonstration program developed by the fund, officials said.

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