The Santa Barbara Finance Committee unanimously passed a motion Tuesday afternoon recommending that the City Council approve a loan forgiveness request from Transition House valued at $763,242.20 in loans and interest.
Transition House — which has been assisting homeless and low-income families in the Santa Barbara community since 1984, and serves about 150 homeless families and 50 families at risk of homelessness each year — purchased and opened its shelter at 434 E. Ortega St. with the help of two loans from the City of Santa Barbara in 1992 and 1993.
The first loan in 1992 was in the amount of $245,000, and the second loan in 1993 was for $460,000.
“The funding was provided as residual receipts loans, and payments are only made when the project has positive net cash flow,” the staff report for the item said. “Transition House conducts continual fundraising campaigns and receives charitable donations in order to maintain the shelter and operations. But because Transition House does not charge rent or fees to the clients, the agency has no permanent source of revenue and, thus, no positive net cash flow.”
According to the staff report, 90% of assisted families are from within the city of Santa Barbara, and about 70% of homeless families seeking assistance at Transition House’s emergency shelter succeed in transitioning into permanent housing.
The Finance Committee, which consists of Councilman Eric Friedman and Councilwomen Alejandra Gutierrez and Meagan Harmon, acknowledged the “vital” public service that Transition House provides to the community.
In exchange for the loan forgiveness, Transition House is restarting the 90-year covenant period, which guarantees that the property will be used solely for transitional housing and other services for low-income households.
The current covenant period is set to expire in 2063, but this would extend the term to 2113, adding 50 years of use of the shelter for homeless families.
Because the Finance Committee’s action for this item is a recommendation to the City Council, the loan forgiveness request now will go to the full seven-person council for consideration.