September 15, 2022

Council File: 17-1352

Council Districts: Citywide

Contact Persons: Lasisi Azeez (213) 808-8574

Gloria Torres (213) 808-8930

Honorable Members of the City Council

City of Los Angeles

c/o City Clerk, City Hall

200 N. Spring Street

SUMMARY

In reference to the Mayor and City Council’s instruction (CF No. 17-1352) to report back on the

Community Development Grant award by the First Citizens Bank (who merged with CIT Bank, N.A., in

January 2022), the General Manager of the Los Angeles Housing Department (LAHD) respectfully

requests authority to accept and expend a 2022 Community Development Grant of $300,000 received in

August 2022 from First Citizens Bank for the City’s Low Income Purchase Assistance (LIPA)

Homeownership Program.

LAHD will leverage the First Citizens Bank Grant funds with LAHD’s LIPA Program funds. The LIPA

Program provides purchase assistance to first-time, low-income homebuyers who purchase a home in the

City of Los Angeles. The assistance will come in the form of a deferred-payment “soft second” loan to be

RECOMMENDATIONS

I. That the City Council, subject to the approval of the Mayor:

A. AUTHORIZE the General Manager of LAHD, or designee, to accept and expend the 2022

Community Development Grant of $300,000 awarded to LAHD by First Citizens Bank, for its

LIPA Homeownership Program;

B. AUTHORIZE the City Controller to:

Manager, or designee;

C. AUTHORIZE the General Manager of LAHD, or designee, to submit an application for a 2023

Community Development Grant of $400,000 to First Citizens Bank, for the LIPA Homeownership

Program; and,

D. AUTHORIZE the General Manager of LAHD, or designee, to prepare Controller instructions and

any necessary technical adjustments consistent with Mayor and City Council actions, subject to

the approval of the City Administrative Officer (CAO), and instruct the Controller to implement

the instructions.

BACKGROUND

Prior to the current grant, LAHD has successfully applied for $1,900,000 in grants from First Citizens

Of the combined total grant funds, 93% have been fully expended by LAHD thus far, assisting 120 low-

income families in purchasing their first homes under the LIPA Program. The remainder of the grant funds

are reserved for transactions currently in escrow. In May 2022, LAHD applied for a sixth grant and was

subsequently awarded $300,000 by First Citizens Bank in August 2022, which will bring the grand total

to $2,200,000.

governmental agencies that mainly provide community development services in the bank’s assessment

areas such as Los Angeles. First Citizens Bank defines community development activities as affordable

housing, essential community services, economic development, and activities that revitalize or stabilize

has been approved by their Executive Committee.

Low Income Purchase Assistance (LIPA) Program

In order to stretch LAHD’s homebuyer program funds and assist more low-income families to purchase

homes in the city, LAHD proposes to leverage the 2022 First Citizens Bank Grant funds with the LIPA

Program funds. The LIPA loan maximum is up to $140,000, and assists households with incomes up to

80% of the Area Median Income (AMI). The LIPA loan carries zero interest; however, it has a shared

appreciation component, which is a ratio of the City’s loan amount to the home purchase price. The loan,

along with the shared appreciation amount, is due upon sale of the home, title transfer, first mortgage

repayment, or at the end of 30 years as a balloon payment. Attachment A to this report provides a

description of the LIPA Program features and requirements, and Attachment B provides a summary of the

2023 First Citizens Bank Community Development Grant Application

Upon Council and Mayor approval to apply for the 2023 grant allocation, and if awarded, LAHD

anticipates using the 2023 First Citizens Bank Community Development Grant funds of $400,000 to assist

approximately 27 low-income first-time homebuyer households. LAHD proposes utilizing the First

more low-income homebuyers and apply for a 2023 First Citizens Bank Community Development Grant

of $400,00 for the LIPA Program.

ATTACHMENTS:

LIPA Program Description

The Low Income Purchase Assistance (LIPA) Program helps first-time, low-income homebuyers purchase

homes in the City of Los Angeles by providing loans to cover the down payment, closing costs, and acquisition.

The City’s homeownership program funds are leveraged with private mortgage financing and other assistance

programs to achieve the maximum purchasing power for the homebuyer. The LIPA Program provides purchase

assistance of up to $140,000 for households earning up to 80% Area Median Income (AMI). LIPA loans have a

zero percent interest rate and are due upon sale, title transfer, first mortgage repayment, or in 30 years as a

balloon payment. The loan contains a shared appreciation provision based on a ratio of the loan amount to the

purchase price. Borrowers are required to pay the principal and the percentage share of appreciation upon LIPA

● U.S. Citizens, Lawful Permanent Residents, or other Qualified Aliens

● Household income must be within the program limits

● Minimum 1% down payment from the borrower’s own funds

● Homebuyer must occupy the home as their primary residence

● Homebuyer must complete 8 hours of a homebuyer education and housing counseling provided by an

LIPA Loan Features:

● Loan up to $140,000