Some city
‘soft loans’
are forgiven

Budget chief Tom
responds to charges of
poor loan monitoring

By Gordon Y.K. Pang
Star-Bulletin

City Budget Director Malcolm Tom says nonprofit groups building affordable housing are given "soft loans" from the city that are sometimes deferred or even forgiven.

"If we were concerned about getting the money back, we wouldn't be making these types of loans," Tom said.

He was responding to a charge yesterday by Councilwoman Donna Mercado Kim that some $25 million in outstanding federal housing and community development loans for up to 27 projects is being improperly monitored.

Tom said his figures show the city has made about $13 million in loans over the last five years. None of them are in arrears, he said.

He acknowledged, however, that the federal Community Development Block Grant program allows most nonprofit housing developers to pay very low interest, no interest, get a deferred payment plan or even a complete waiver of payment.

"We make these loans available to help these subrecipients to provide for affordable homes," Tom said. "We know up front they're not going to be making payments to us early in the game. They pay us as they can afford it."

Of the 27 projects identified by Kim, the loan for one will be forgiven in 40 years, assuming it meets certain requirements up to that point, Tom said.

Kim said the budget director is clouding her point that there appears to be confusion over the monitoring of loan money.

A monitoring position has been funded but has not been filled yet, Community Services Director Abelina Shaw said.

During a Council committee meeting yesterday, neither Tom nor Shaw were certain who had ultimate responsibility over the loans.

Shaw said Michael Shiroma, a housing specialist now in her department, is helping out with the program. Shiroma, however, indicated he wasn't given that duty until yesterday.

Tom after the meeting said Shaw's department is "ultimately responsible" for oversight of the loans -- and specifically named Community Development Division chief Gail Kaito.

Kim demanded copies of performance reports that are required by the U.S. Department of Housing and Urban Development.

Tom said he would get back to the Council. He later said the reports don't include money paid back on loans, but focus primarily on how the money has been used.

Kim said there needs to be better oversight over both the performance of community development projects and the status of loans.

Council members, as policymakers, have a difficult time checking on the viability of individual projects without a central point of information, she said.

And while the city administration may perceive the payment of loans a casual matter, money repaid can later be used by others, she said.