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7.3.A. - Page 1 <br /> REPORT <br /> To the Honorable Mayor and City Council <br /> From the City Manager <br /> July 27, 2015 <br /> SUBJECT <br /> Fire Safety First Program -- Loan Forgiveness Program with Rent Stabilization <br /> RECOMMENDATION <br /> Adopt Resolution Authorizing Fire Safety First Program Loan Forgiveness Program with <br /> Rent Stabilization. <br /> BACKGROUND <br /> Recently, the City Council adopted an ordinance requiring older residential buildings <br /> with four units or more to install Automatic Sprinkler Systems. (Introduction — May 18, <br /> 2015; Adoption June 8, 2015). Compliance is voluntary for the first five years and <br /> mandatory thereafter. This proposed resolution — the Fire Safety First Program -- is a <br /> companion piece to the ordinance. The Program provides an economic incentive for <br /> owners to retrofit these at -risk residential buildings during the five year voluntary <br /> compliance period in exchange for an agreement to slow rent increases presently <br /> challenging our community. <br /> ANALYSIS <br /> During the City Council's May 18, 2015 meeting, staff presented the "City of Redwood <br /> City Fire Safety First Pilot Program" (the "Program "), which then included two <br /> components: (1) a low interest loan program that allowed for an owner of a pre -July 1, <br /> 1989 multi -unit residential building with four units or more to apply to have the City <br /> offset the costs of retrofitting a building with a low interest loan; and (2) a Rent <br /> Stabilization Loan Program whereby, alternatively, the borrower's loan payments could <br /> be deferred and ultimately forgiven in exchange for entering into the rent stabilization <br /> program. <br /> The City Council was favorably disposed toward such an incentive program but directed <br /> staff to return with a proposal that focused on rent stabilization in the context of the <br /> program. In order to maximize the community benefits of a rent stabilization program, <br /> staff recommends the following revisions to the previously proposed program: <br /> • Offer the previously styled "Rent Stabilization Loan Program" only. Given a <br /> choice between a low interest loan and a loan forgiveness program with <br /> conditions that limit rent increases, applicants may be more inclined to elect the <br /> low interest loan. Therefore, eliminating the low interest loan option will ensure <br /> OAK #4832 - 4527 -1077 v2 <br /> Page 1 of 4 <br />