AgdaPkt 2000-06-12 - Laserfiche WebLink

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{AS way to prevent a targeted employee from changing employers (e.g. if a loan was made to a qualified teacher and two years later they moved to a different school district). So, the Committee considered providing strong disincentives to paying off the second loan during the first five years, and also strong incentives to keep the second in place as long as possible. Targeted Household Recommendation: That if they sell during the first five years they will owe 1.5 x the' subsidy as % of price' with a cap of 60% of the total equity. Examples: A $250,000 house would qualify for a $100,000 subsidy or 40% of the price. If they sold in year 3 they would owe the principal and 60% (1.5 x 40% = 60%) of the equity. A $300,000 house would qualify for a subsidy of $100,000 or 33% of the price. If they sold in year 3 they would owe the principal of $100,000 plus 49.5% (33% x 1.5 = 49.5%) of the equity. A $450,000 house would still only qualify for a subsidy of $100,000, or 22.22% of the purchase price. If they sold in year 3 they would owe principal plus 33.33% (1.5 X 22.22 = 33.33%) of the equity. Targeted Household Recommendation: That starting in year six (6) the equity share drops according to the following schedule, but in no event below the equity 'floor' defined in Attachment 1: Year Rate 6 1.4 7 1.3 8 1.2 9 1.1 10 1.0 11 0.9 12 0.8 13 0.7 15 0.67 16 0.67 The Committee recommended that the equity share for Targeted Households never drop to zero but that the Agency always receive a portion of the equity. Attachment 2 illustrates the decline in the equity participation percentages over time. Attachment 3 graphs this same data. Targeted Household Recommendation: That in year six (6) and following, for every year the household remains employed with the City or school district, the Agency forgive 10% of the principal on the second. If the target household stays with the same employer for 15 years, the entire second loan is forgiven. In conjunction 5 '~----"~-"T' ..