HomeMy Public PortalAboutA 2011-04-13 - CDBG AGENDA
COMMUNITY DEVELOPMENT BLOCK GRANT
ADVISORY BOARD COMMISSION
WEDNESDAY, APRIL 13, 2011
6:00 P.M.
PUBLIC HEARING
LYNWOOD CITY HALL COUNCIL CHAMBERS
11330 BULLIS ROAD, LYNWOOD, CA 90262
Kim Battle, Chairperson Antonio Munguia, Vice Chairperson
Iris Pygatt, Commissioner Patricia Carr, Commissioner � vey �a� S �� 4 �
Evelia Hernandez, Commissioner
OPENING CEREMONIES R E C E I V E D
A�R 0 6 2011
A. CALL TO ORDER
CITY OF LYPVWOOD
B. FLAG SALUTE CITY CLERKS OFFICE
C. ROLL CALL M A��� (,�`'' �``''�,� �
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D. CERTIFICATION OF AGENDA POSTING
E. PUBLIC ORALS: (ITEMS ON AGENDA ONLY)
F. NEW BUSINESS
- PUBLIC HEARING - Draft Fiscal Year 2011 Consolidated Annual Action Plan
G. STAFF ORALS
H. BOARD ORALS
J. ADJOURNMENT
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LYNWOOD REDEVELOPMENT AGENCY
1 1330 BULLIS ROAD LYNWOOD CALIFORNIA 90262-3845 310.603.0220 www.lynwood.ca.us
MEMORANDUM
DATE: April 6, 2011
TO: Community Development Block Grant Commission
FROM: Sarah M. Withers, Director of Redevelopment
BY: Annette Potts eput D ct�or�of Administrative Services
SUBJECT: CDBG FUNDS HOUSING REHABILITATION PROGRAM PROPOSAL
Attached is a proposal for the implementation of a CDBG funded Housing Rehabilitation
Program. This program will be funded from the Community Development Block Grant
(CDBG) program's unencumbered balance resulting from CDBG activities that did not
spend their entire allocation and/or CDBG activities that were cancelled. These funds
were not available during the planning process of the FY 2011-12 Consolidated Annual
Action Plan preparation meetings, however can still be added to the draft Consolidated
Plan for Council consideration and approval at their May 3, 2011 City Council meeting.
The CDBG funded Rehabilitation Program will emulate the City's HOME Rehabilitation
program. HUD regulations and requirements are the same for both programs and any
resident that qualifies for one program will qualify for both. The maximum amount of
assistance per resident will be $35,000 for Deferred Payment Loans and $10,000 per
grant, whether it is from CDBG or HOME program funds, or a combination of both.
The HOME program currently plans to assist 15 homeowners for fiscal year 2011-12,
although there are over 50 homeowners on the waiting list. By providing CDBG funds
for the Housing Rehabilitation Program, the City should be able to assist another 15
homeowners.
CDBG ADMINISTRATION 320,000 320,000
FAIR HOUSING FOUNDATION 18,000 18,000
SECTION 108 REPAYMENT 631,891 631,891
Ct�N�A�i�if�"� �1rtSER��kT'lON
CDBG HOUSING REHABILITATION 500,000 500,000
CODE ENFORCEMENT 475,000 400,000
FY2011 ALLEY IMPROVEMENT 110,000 110,000
JOSEPHINE STREET IMPROV. 130,000 130,000
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SENIOR CITIZEN PROGRAM 222,689 100,000
CROSSING GUARDS PROGRAM 257,000 60,000
NATATORIUM EXTENDED HRS. 177,252 60,000
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HOME ADMINISTRATION 67,000 67,000
CHDO ACTIVITIES 100,669 100,669
HOME HOUSING REHABILITATION 503,458 503,458
The Department of Housing and Urban Development (HUD) has not yet released
funding amounts for fiscal year 2011-12 CDBG and HOME programs. Although staff is
aware that the Government plans to reduce all CDBG and HOME program funds by at
least 8%, which will result in adjustments in the numbers above.
As discussed in prior CDBG Commission meetings, and based on your funding
priorities, the Josephine Street Improvement project will be the 1 project deleted, if
funds are not available. Also Lynwood can apply a maximum of 20% of their allocation
for Administration and a maximum of 15% for public service activities. In addition, the
HOME program can only use 10%: for Administration and 15% for CHDO activities.
Thank you for your consideration.
Attachments: CDBG Housing Rehabilitation Proposal
Housing Rehabilitation Program Guidelines
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CITY OF LYNWOOD
HOUSING REHABILITATION PROGRAM
PROGRAM GUIDELINES
Prepared by:
CDBG Divisian
312011
I. PROGRAM DESCRIPTION
The purpose of the City of Lynwood Housing Rehabilitation Program (HRP) is to assist low- and
moderate-income owners of single-family detached dwellings with the preservation of decent safe
and sanitary housing. The HRP corrects hazardous structural conditions, makes improvements
considered necessary to eliminate blight, promotes the construction of healthy, sustainable and
resource-efficient housing, improves disabled access, and corrects building, health and safety
code violations.
Program funds may be used to complete housing rehabilitation projects only, inclusive of project-
related soft costs such as hazardous materials testing fees, document recordation fees, escrow
fees and project-related hard costs such as construction contracts.
II. SOURCE OF FUNDS
HRP projects may be funded with the City's annual allocation of Community Development Block
Grant (CDBG) funds and/or the HOME Investment Partnership Funds (HOME). The City of
Lynwood receives CDBG and HOME program funds from the U.S. Department of Housing and
Urban Development (HUD) because it is a Participating Jurisdiction. Funds for the HRP are
approved by the City Council each fiscal year as part of the City's Annual HUD Action Plan
process and during the annual budgeting of City funds.
III. PROGRAM LOANS
To fulfill the HRP's purpose, zero-interest (0%) deferred loans will be made available to eligible
households whose incomes do not exceed the 80% of Area Median Income adjusted for
household size as promulgated by HUD. Program loans may not be less than $5,000 and may
not exceed $35,000. When combined with the grant, an applicant will be eligible for up to
$45,000. Program funds may not be used for refinancing purposes. The rates and terms
applicable to Program loans are described further in Section V-F of these Program Guidelines.
There is a limit of one (1) Program loan and (1) grant per eligible owner. Program loans shall be
underwritten by program staff and approved by the Project Review Committee (LRC), which
consists of the Program Director and/or appointed designee.
For real property, program loans will be evidenced by a promissory note and secured by a deed
of trust. Program loans may not be in a junior position beyond a third trust deed. The
combination of all secured indebtedness (including the Program loan) may not exceed 90% of the
assisted property's estimated post rehabilitation value, as determined by appraisal.
All loan funding is limited and subject to the availability of program funds.
IV. PROGRAM GRANTS
Program Grants are available to assist eligible households meeting the 80% of AMI criteria. The
maximum one-time grant amount is $10,000 and program applications for subsequent grants will
not be accepted.
Applicants may use up to $5,000 of the grant funds to address emergency repairs. The
remaining grant funds will be available to the applicant at such time that the applicant is
processed under the regular process. Emergencies are conditions that require housing
rehabilitation work necessary to remediate hazardous code-related issues. To be eligible for an
emergency grant, the required repair must pose an immediate threat to the structural integrity of
the residence or the health and/or safety of the property's occupants.
Housing Rehabilitation Program 1 Program Guidelines
March 2011
Residential Rehabi(itation Proqram
All grant funding is limited and subject to the availability of program funds.
V. ELIGIBILITY CRITERIA
A. Eliqible Applicants
Eligible applicants are owners of single-family detached residential properties located
within the Lynwood corporate city limits. Eligible applicant properties must be owner-
occupied dwelling units.
Program loans may only be made to owner-occupants with acceptable credit history and
clear title to an eligible property in need of rehabilitation. As a prerequisite to eligibility,
an applicant must be willing to correct all current code violations.
City Council Members, all Community Development Department employees and any
employee, official or agent of the City who exercises any policy or program decision-
making function in connection with the Program are ineligible for assistance under the
Program. This policy will be in effect until the individual's disassociation with the City of
Lynwood in such a capacity.
B. Eliaible Household Income
Owner-occupant household income may not exceed 80% of the Los Angeles County
Area Median Income adjusted for household size as promulgated by the U.S. Department
of Housing and Urban Development.
The determination of annual household income shall be made in accordance with the
HUD Technical Guide for Determining Income and Allowances for the HOME Program,
Third Edition. The City has elected to use the "IRS Form 1040 Adjusted Gross Income
Method" as detailed in the Technical Guide for both the CDBG and HOME programs.
Determination of income eligibility shall be made based on Title 24 Code of Federal
Regulations —in conformance with the Technical Guide for Determining Income
Allowances for the HOME program (See Attachment A). In accordance with U.S.
Department of Housing and Urban Development (HUD) regulations, an applicant's
annual household gross income may not exceed 80% of the area median income
adjusted for household size, based on the income limits promulgated annually by HUD
(See Attachment B).
C. Eliqible Improvements
Program loans and grants may be expended for structural repairs, roofs, insulation,
rodent and pest extermination, cabinets, counters, plumbing, electrical work,
windows/window frames, door/door frames, flooring, painting (interior and exterior),
heating and cooling, or access improvements for the disabled. Site work involving the
foundation, drainage improvements or any health and safety concerns or code violations
may also be eligible. Current code violations shall take precedence over all other repairs,
including general property improvements. Construction of room additions or the initial
construction or repair of luxury items (i.e., bar-b-ques, saunas, hot tubs, patio covers,
etc.) is not eligible.
Construction materials used for this Program shall conform to the specifications designed
by Staff under its Rehabilitation Standards. The Participant shall not be allowed to
upgrade approved work scope items beyond designated standard grade materials.
Housing Rehabilitation Program 2 Program Guidelines
March 2011
Residential Rehabilitation Proqram
D. Eliqible Costs
Program loan and grant proceeds will be used to cover rehabilitation costs, credit and title
reports, recordation costs, escrow fees, document recordation, hazardous materials
testing costs, and other project-related administrative costs.
E. Relocation
Relocation is not contemplated as a part of this rehabilitation activity, however if an
unanticipated event occurs which requires temporary relocation, such relocation shall be
performed in compliance with the provisions of the Uniform Relocation Assistance and
Real Property Acquisitions Policies Act of 1970 and Section 104(d) and may be paid for
using program funds.
F. Rates and Terms
Deferred loans will not accrue interest and do not require monthly payments. They are
immediately payable inclusive of the unpaid principal balance, and any other amounts
due under this Note upon the earlier of:
1. The sale, conveyance, transfer, lease, rental, hypothecation of the Security, or any
part thereof, or any interest therein, or divestment of title or any interest therein in any
manner or way, whether voluntarily or involuntarily, without the prior written consent
of the City being first had and obtained; or
2. Failure to adhere to the provisions of the Participation Agreement; or
3. Failure to perform any obligation under the Deed of Trust securing this Note, or any
other Deed of Trust encumbering the Security.
Participant may pre-pay the City Loan at any time without penalty. All payments received
on account of the Note shall be first applied to accrued interest, if any, and the remainder
shall be applied to the reduction of the principal balance.
The City Loan is not assumable except under the limited circumstances listed below.
The following allowable assumptions shall not be construed as a transfer under the
provisions of this Policy:
1. The transfer of the Property to the surviving joint tenant by devise, descent or
operation of the law, on the death of a joint tenant;
2. A transfer of the Property where the spouse becomes an owner of the property;
3. A transfer of the Property resulting from a dec�ee of dissolution of marriage, legal
separation or from an incidental property settlement agreement by which the spouse
becomes an owner of the Property;
4. A transfer to an intervivos trust in which the Borrower is and remains the beneficiary
and occupant of the property.
VI. IMPLEMENTATION
A. Administration
The Community Development Department Staff shall administer the Program. As used
herein, the term "Staff' may include either employees or consultants of the Department
under the direction of the Program Director.
Housing Rehabilitation Program 3 Program Guidelines
March 2011
Residential Rehabilitation Propram
The administration of the Program including, without limitation, application evaluation
procedures, rehabilitation assessments, cost estimation, bid solicitation, contractor
selection, construction management, inspection, disbursement of Program funds and
processing of the Notice of Completion will be managed in accordance with this Policy.
The Program Director shall be responsible to ensure that HRP Implementation
Guidelines are maintained and updated periodically to ensure compliance with all U.S.
Department of Housing and Urban Development policies and regulations. The
Implementation Guidelines shall conform to this approved Policy.
B. Application
Applications for participation in the Program may be obtained from and returned to the
City of Lynwood Community Development Department. Applications will be accepted on
a first-come first- served basis from eligible applicants consistent with funding availability.
The application must be completed in its entirety and submitted together with the
following documentation:
1. Application Form;
2. Copy of applicant(s) valid government-issued photo identification;
3. Verification of all Household Income, which must include, but is not limited to the
Applicant's most recent signed Federal Income Tax Return, three (3) most recent pay
stubs, three (3) most recent bank statements, and statements or other acceptable
documentation of all other income sources and asset accounts;
4. Proof of ownership of the eligible property such as a copy of the Deed of Trust, or
Grant Deed;
5. Proof of occupancy at the residence by providing a copy of a utility bill (however not a
water or trash bill);
6. A prioritized and itemized list of the construction work requested to be done;
7. Acknowledgement form for Receipt of lead based paint brochure;
8. Copy of the latest property tax bill; and
9. Copy of the homeowner's insurance policy.
Only when the program application is complete, Staff has confirmed income eligibility and
the owner-occupant status, shall the Applicant be placed on a list of eligible projects in
order. Therefore, those applicants who submit all requested documents with the
Application in the shortest time frame will have the highest priority for assista�ce under
the Program. For the purpose of determining actual funding, completion of all program
requirements must be achieved, inclusive of the timely procurement of bids, and
execution of all related program documentation.
Application approval is subject to funding availability. Staff's eligibility determination is
not a commitment of funds. Funds shall only be committed upon the approval by the
LRC, full execution of the Participation Agreement, signing of the promissory note, and
the recordation of the Deed of Trust.
D. Pre-qualification Evaluation and LRC Review
1. Pre-qualification and Propertv Evaluation — Each application filed will be dated and
processed in the order received. Staff will review applications for completeness and
verify property eligibility. Incomplete applications will be returned to the applicant.
Housing Rehabilitation Program 4 Program Guidelines
March 2011
Residential Rehabilitation Propram
Staff shall notify all ineligible applicants of their status by written correspondence.
Prior to consideration by the LRC, Staff shall schedule an appointment with each pre-
qualified applicant at the subject property to review the work requested and to inspect
the premises. Based on this on-site review, Staff shall prepare a Current Conditions
Assessment Report that will establish the type and level of rehabilitation required.
Subsequent to the inspection, a complete work description shall be prepared with an
internal cost estimate. An estimated post-construction valuation must be obtained
through a process acceptable to HUD such as appraisal.
2. Maximum Post — Rehabilitation Value: As a condition of CDBG funding, the
maximum estimated post-rehabilitation value of the property may not exceed 95% of
the median sales price as determined in accordance with 24 CFR 92.254(a)(2)(iii).
Program staff shall utilize the HUD-sanctioned methodology to determine the
maximum value that yields the highest maximum post-rehabilitation value at the
beginning of each program year.
3. Maximum Per-Unit Subsidv Limits: As a condition of HOME funding, the maximum
per-unit subsidy to affordable housing may not exceed the limits determined and
promulgated by HUD in accordance with 24 CFR 92.250. The maximum program
loan and grant limits has been designed to minimize per-unit subsidy considerations.
4. LRC Review — The LRC shall consist of the Program Director and assigned
designee. LRC will consider complete application packages for approval based on
the Program underwriter's recommendations. In order to proceed, all LRC members
must approve all Program loans.
5. Owner Approval and Work Scoqe Chanqes — The owner shall review and provide an
approval signature on the Work Description and Bid Proposal Form prior to the
preparation of bid packages by the City.
D. BiddinQ and Contractor Selection Procedures
The applicant shall solicit bids (in accordance with Implementation Guidelines) from
contractors for completion of the rehabilitation work. Owners shall solicit bids from
general B-Licensed contractors for Work Descriptions involving more than one specialty.
Bid solicitations can be made of licensed specialty contractors if the Work Description
involves a single specialty (i.e. roofing, electrical, plumbing, etc.). Once the owner has
received three (3) or more bids from qualified contractors, the owner shall submit three
(3) or more bids to the City for review. The bid evaluation shall result in the contract
award to the lowest responsible, responsive bidder. Prior to contract award, Staff will
confirm contractor eligibility by:
1. Checking the contractor's license status with the Contractors State License Board
(www.cslb.ca.qov);
2. Checking the contractor's Federal debarment status with the Excluded Parties Listing
System (www.epls.qov);
3. Obtaining a copy of the contractor's current City of Lynwood Business License; and
4. Obtaining additionally insured General Liability ($1 million general aggregate
coverage) and Workers Compensation (statutory coverage) insurance certificates.
Housing Rehabilitation Program 5 Program Guidelines
March 2011
Residential Rehabilitation Propram
E. Loan Documents
When bid proposals are complete, loan approval as been obtained from the LRC and the
bid is ready to be awarded to the lowest responsive and responsible bidder, Staff shali
present the applicant with a Participation Agreement and loan documents, which includes
the:
1. Promissory Note;
2. Deed of Trust;
3. Good Faith Estimate of Settlement Charges;
4. Itemization of Amount Financed;
5. Right of Rescission; and
6. Request for Notice under Section 2924b of the Civil Code (i.e. Notice to City if senior
loans foreclose or upon sale).
The City shall not be committed to fund any loan-funded project prior to the City's
execution of the Participation Agreement and recordation of the program Deed of Trust.
Similarly, the City shall not be committed to fund any grant-funded project prior to the
City's execution of the Participation Agreement only. Staff shall provide fully executed
duplicates of the originals of the Agreement and any loan documents to the Applicant.
F. Pre Construction Meetinq Contractor Aqreement Notice to Proceed and Construction
Phase
Following the recordation of �oan documents, Staff will convene a pre-construction
meeting with the owner and selected contractor to review the Contractor Agreement,
Work Description and Bid Proposal Form, and to answer site-specific questions. Three
(3) calendar days following the execution of the Contractor Agreement, Staff will issue the
Notice to Proceed. Subsequent to obtaining the required permits, the contractor will carry
out the required work. Generally, work shall commence no later than ten (10) days from
the date of the Proceed Notice and work must be completed no more than 30-60 days
after the start date (or as agreed upon by the owner and contractor). Property owners
and Staff shall authorize the release of program funds in accordance with the
Participation Agreement between the property owner(s) and the City, as well as the
Contract Agreement between the property owner(s) and the construction contractor as
further detailed in the Implementation Guidelines.
G. Proiect Closeout
Individual rehabilitation projects will be financially closed subsequent to Staff approval of
the work performed and the property owner's execution of a Notice of Completion. To
prevent persons or businesses associated with the project from filing a lien against the
property after the City has released all project funds, the City shall withhold ten percent
(10%) of the construction contract from the prime contractor until such liens may no
longer be filed, which, in accordance with California Civil Code Section 3116 is 30
calendar days following the recordation of the Notice of Completion with the County
Recorder's Office. To allow for the receipt of mailed notification of any recorded liens, the
City shall withhold the ten percent (10%) retention until 35 calendar days following the
recordation of the Notice of Completion.
Housing Rehabilitation Program 6 Program Guidelines
March 2011
Residential Rehabilitation Propram
H. Aaaroval of Program Leqal Documents
All Program legal documents shall be approved as to form by the City's legal counsel
prior to their use.
I. Authoritv to Administer
The preparation and use of all required Program Implementation Guidelines, manuals,
forms, documents and agreements shall be administered by the Director of
Redevelopment, or his/her designee, in accordance with this Policy. The Program
Director has the authority to waive eligibility requirements and loan limits at his/her
discretion to address critical home improvement needs, provided that the requirement is
not statutory. The Program Director may also approve the subordination of the City's
Program loan lien in the event that a borrower refinances a prior-recorded loan to
improve their mortgage terms.
J. Proqram Guidelines Chanqes And Modifications
Minor changes to these Program Guidelines involving administrative procedures or
accommodations to adapt to regulatory changes may be performed with the approval of
the Program Director. All other changes require the approval of the Lynwood City
Council.
Housing Rehabilitation Program 7 Program Guidelines
March 2011