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You could call it a loan or you could call it a grant,
but in the end it's not going to cost Warren's taxpayers
a cent.
When the Pennsylvania Housing Finance Agency (PHFA) came
through with $1.5 million in funding for riverfront owner-occupied
housing in Warren earlier this week, the money was officially
called a loan.
The terminology raised some concerns among people
who thought the funding was supposed to be in the form
of a grant and would not have to be repaid by the city's
taxpayers or future tenants of the owner-occupied housing.
Warren Mayor Mark Phillips, who has fielded some of
the questions, turned to Larry Segal, the funding expert
for "Impact Warren," for an explanation.
The mayor summarized Segal's explanation, saying,
"In the end, it is going to be a grant. It will
not be a liability for taxpayers of the city or the
people who live in the owner-occupied townhouses."
The funding will initially appear to be a no-interest
loan, said Phillips, but the entire loan will be paid
off by PHFA itself after 30 years.
Segal explained to Phillips, "Technically, it
is a loan. The reason for this is that PHFA, statutorily,
can only issue loans, not grants."
But as far as the city and homeowners are concerned,
said Segal, the funding is a grant.
"At the inception of the loan," said Segal,
"PHFA purchases a zero coupon bond for a face value
corresponding to the principal amount ($1.5 million)
with a thirty-year maturity. At the end of the thirty-year
term, the bond is redeemed as repayment of the loan."
There will be "no obligation or liability to the
city, the developers, or the ultimate homeowners,"
said Segal.
The townhouses near Breeze Point Landing will be geared
toward prospective buyers with income levels between
50 and 115 percent of median income. The price of the
housing will range from $55,000 to $85,000.
The PHFA funds will be used to construct two-bedroom,
two-bath units designed to be both modern and efficient.
Every unit will be designed to offer a view of the Allegheny
River.
Under the current timetable, construction is expected
to begin next May and the townhouses could be completed
in December 2004.
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