House queries Stimulus office about status of “1602” loans
The Federal loan program to build houses for low income families called the “1602” was the subject of a hearing in the House of Representatives yesterday morning.
Head of the Stimulus Office, Pat Galea’i was accompanied by several staff members to testify on the status of the American Recovery and Reinvestment Act (ARRA) funds. Among the many subjects discussed was the 1602 loan program which is overseen by the Development Bank.
“The 1602 loan is for anyone, but the housing units which were funded from this loan can only be rented out to low income families”, was the explanation given by Pat Galea’i. He was responding to questions by Ituau Rep Taotasi Archie Soliai who asked about the eligibility of those who received loans from the 1602 program.
Galea’i said the Federal government wants people who know how to run businesses for the success of the housing. He explained, “The 1602 is for low income rentals, however those who own the units do not have to be low income, anyone is eligible, Usually business people do it and there are private owners only if they qualified or meet the requirements of the 1602 loan.”
Taotasi also inquired about families who have received funding from the 1602 loan, whose projects are not complete.
“Where do they get assistance for funding to complete the units that are already underway?” he asked.
Galea’i explained that many projects, which are incomplete, are stalled because the funding from the federal government is finished, however, under the agreement by law, the owner must also contribute to building the units.
“The law is that the grant is up to 85% for the project costs but at least 15% must come from you (who own the housing).”
He explained that in the US only 55% comes from federal funds and 45% comes from the individual or the business.
“It seems like everyone, is depending on the Feds to provide 100% funding” Galea’i added.
Rep Larry Sanitoa inquired as to what happens to the incomplete projects and if there are timelines. He added that there are a lot of projects seen in the community that are not even close to completion.
Galea’i said it’s clear in the law that once non-compliance has been detected or assessed, the Development Bank will give that individual 30 days to remedy it, and if by the 30th day, it is not remedied then they (Development Bank) have to inform the US Treasury that the non compliance has not been corrected.
“Then once they notify the US Treasury — which has 90 days to come to the territory to determine if there is a non-compliance — and if Treasury agrees with the Development Bank, then the law says the money must be paid back”, said Galea’i.
The Stimulus Office Assistant Grant Coordinator Tuilaepa Ta’afili Te’o told lawmakers that currently $30,778, 000 has been allocated for the 1602 loan, and all the funds for this program have been released.
“In regards to housing” said Galea’i, “there are a lot of incomplete housing units which were funded through this program. However there are more than 40 housing units which have been completed and the owners are seeking tenants to occupy the new units.”
Tuilaepa explained that only low income families can rent these houses.
“As of now, our office is still carrying out inspections of the new housing to check on the status, to see if the funding provided has been used properly,” he said.
Rep. Puletu Dick Koko asked that — since these units are only for low income families to occupy — how much is the monthly rent that is required by the 1602 program?
Tuilaepa said the answer has to come from the Development Bank, who has the responsibility to come up with the minimum rental amount for each unit, because they oversee this program.
He said there are slight problems with the new housing, and “our inspection tells us there are delays in the completion of this housing, because of the constructors.”
“Many housing units — about 50% to 70 % — are incomplete and we are still visiting the sites to make sure these housings are complete… Another problem is that the location of these units are too far from the main road”, said Tuilaepa.
The hearing with the Government Operations Committee was chaired by Rep. Faimealelei Anthony Allen.
Today, there is a scheduled hearing by the same committee on the same issue, the 1602 low income housing program, to get answers from the Development Bank of American Samoa (DBAS) president Lolo M. Moliga.
In looking through a 2010 training manual on the program, called the Low Income Housing Tax Credit program, Samoa News found that the low income housing built with the 1602 funds, after a period of time can be turned by the developers/ owners back to commercial or market value rentals, meaning they no longer have to be for only ‘low income’ earners.
Samoa News asked around and found that the given period of time seems to be 15 years for the territory.
Another aspect of the program is the underlying purpose of the program. It is “to incentivize and leverage private-sector investment capital for the creation of rental housing units in each state affordable to households earning 60% or less of Area Median Income (AMI), thereby supplementing federal appropriations devoted to the production of public housing and rental housing assistance programs administered by the U.S. Department of Housing and Urban Development (HUD).”
There are two aspects of the program that are apparent from the above underlying purpose:
The 1602 low income housing program is not a loan program — the money is not paid back to HUD, as long as the developer stays compliant with all aspects of the program; and,
Knowing what the Area Median Income (AMI) is very important to finding out what households are eligible to rent the low income housing — a figure that is little known, locally. The AMI would also define what is ‘affordable’ (in rent) to local low income households.
Samoa News has been told by one of the developers that the figure being used for the AMI is ‘$26,000 or less’, but we have been unable to independently confirm this figure.
THE NEW COMMENTS PROCESS
To make comments, you will need to register. You can register under your real name or use a 'screen' name. This way, people will be able to follow comments and make comments back and forth to each other. If you choose to use a 'screen name' no one will know your true identity. In either case, no email addresses will be available to anyone. It is an automated process. If you have questions, email: email@example.com
You currently are not logged in, please LOGIN to post comments.