Chapter 2.38 — CITY MANAGER--REHABILITATION LOANS

Sections: 2.38.010 Purpose.

2.38.020 Definitions. 2.38.030 Scope. 2.38.040 City Manager’s authority to act--Duty to report to City Council.

The City Council finds as follows:

A. The City has a vital interest in ensuring the repayment of City rehabilitation loans because monies from loan repayments are expended for housing programs which address the needs of Berkeley citizens for decent, safe, sanitary and affordable housing.

B. City policies governing default of City loans should, to the maximum extent feasible, avoid the displacement of low income persons from their homes while protecting the City’s interest in repayment of its loans.

C. The enactment of separate ordinances to authorize the City Manager to take specific actions in each instance of loan default would cause undue delay and thereby impair the City Manager’s ability to protect the City’s financial interests.

D. In enacting this chapter the City Council is acting pursuant to general laws of the state of California which provide remedies to creditors with security interests in real property. The council seeks to ensure that the City of Berkeley can avail itself, in a timely manner, of remedies available to all other secured creditors. (Ord. 5619-NS § 1, 1984)

A. "Advancement" means monies paid by the City to a senior creditor to cure any default by the borrower of a rehabilitation loan to that creditor, including amounts in excess of ten thousand dollars.

B. "Foreclosure" means proceedings to sell real property which secures repayment of a debt.

C. "Rehabilitation loan" means any loan extended by the City of Berkeley used to rehabilitate housing, the repayment of which is secured by a deed of trust or other security instrument on real property.

D. "Senior creditor" means any other creditor who is entitled by law to be repaid, prior to the City, out of the proceeds of a sale of property which is security for a rehabilitation loan. (Ord. 5619-NS § 2, 1984)

This chapter shall apply to all rehabilitation loans. (Ord. 5619-NS § 3, 1984)

A. Whenever a borrower of a rehabilitation loan is in default on a debt to a senior creditor and the repayment of a rehabilitation loan is in jeopardy, the City Manager is hereby authorized to take all actions necessary to protect the City’s financial interests including but not limited to making advancements to senior creditors, foreclosure, bidding for and acquiring the secured property and expending sums in excess of ten thousand dollars.

B. Whenever a borrower of a rehabilitation loan is in default on that debt to the City, the City Manager is hereby authorized to proceed with foreclosure if all resolution measures short of foreclosure have failed, and, the City’s interests in the repayment of rehabilitation loans outweigh the City’s interests in preventing the displacement of low income homeowners. The City Manager is also authorized to take all other actions to protect the City’s financial interests including, but not limited to, acquiring secured property and expending amounts in excess of ten thousand dollars.

C. In exercising the authority conferred by this section, the City Manager shall act in accordance with guidelines adopted by the City Council by resolution.

D. The City Manager is authorized to rent property acquired pursuant to this chapter on a month to month basis pending its ultimate disposition by the council.

E. A report from the City Manager setting forth the basis of any actions taken pursuant to this chapter, the amounts expended, and the sources of funds used shall be transmitted to the council within ten days after taking such actions. (Ord. 5619-NS § 4, 1984)