Salt Lake City officials relied on nearly every cliche they could think of to express their collective relief for progress made in paying a $2.8 million debt belonging to the Salt Lake City Housing Development Corp.

"Looks like the light at the end of the tunnel," City Councilman W.M. "Willie" Stoler said at a council session Thursday."This is good news," said City Council Chairman Tom Godfrey.

"We're extremely optimistic," said city Development Services Director Craig Peterson.

HDC project manager Dan Franks, hired to solve the corporation's debt problem, presented the council with a plan calling for $3.2 million in grant money and property assets to correct the $2.8 million deficit.

The plan may save the city's embattled elderly and low-income housing project from failure while costing the city only money it could pay back in grants from federal sources, Peterson said.

The city's project fell into disarray when a nearly $2 million deficit was discovered in July of 1987, prompting Mayor Palmer DePaulis to declare a spending freeze in the corporation and fire city Housing Authority officials.

The housing corporation is a private corporation separate from the city created to build 330 low- and moderate-income housing units. The city is responsible for the projects because it lent the corporation its triple-A bond rating.

The $3.2 million would come from federal government grants the city already has or is applying for and the liquidation of housing corporation property, Franks said.

The city applied for a $500,000 U.S. Department of Housing and Urban Development grant that Franks proposed be used to buy the Ben Albert Apartments, 130 S. Fifth East.

Another $300,000 in unused federal Community Block Grant Funds and $864,000 in HDC money, for a total of $1,664,000, would also go toward the purchase of the apartments, valued at $1.45 million four years ago, Franks said.

The housing corporation would also sell all of its real estate, excluding The Riverside, a housing complex for the elderly at 610 W. Ninth West that is now making money, giving the corporation another $900,000.

Franks also proposed the city spend $1.5 million from another HUD loan to buy another 70-unit family or elderly apartment complex. The loan would be paid with $300,000 the city receives yearly in CDBG payments over the next six years.

"What we're really trying to do here is get our assets at a level that will debt service our bonds," Franks said.

Additionally, income from the apartment complexes could then go toward paying off the $14.9 million bond. The city does not have to begin bond payments until 1997, said city Finance Director Lance Bateman.

The plan still leaves the corporation $500,000 in debt, which Franks said could be alleviated via another plan.

To bring Franks' plan on line, the city must approve the release of the CDBG funding and the liquidation of HDC properties, which could be done as early as Sept. 6, Franks said.

Additionally, the city must wait for bond holders to approve bond amendments on the $14.9 million loan to build the project. Bond holders are expected to vote on the amendments as early as next week, Franks said.

The plan was welcomed by relieved city council members and cautiously praised by Franks.

"We still have a problem, but it's not close to the size of the problem it once was," Franks told the council. "At this time we're confident that this (deficit) could be managed."

Outside real estate experts also called the plan sound.

Mark Millburn, president of Equimark Properties, said the plan appeared realistic and would benefit from a healthy buyers real estate market in the Salt Lake area.

The two properties sought by the housing corporation could be easily purchased and filled with tenants, Millburn said. "Income from Ben Albert and the unnamed apartment complex should just be primarily net income" to go toward servicing the debt, he said.