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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��� (,�`'' �``''�,� � C , �y C I�� `� �y ��o 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 °� ''p� � .,. o � �o U � ,s�n� � A��� 9t 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 Pt��IC ���C�� SENIOR CITIZEN PROGRAM 222,689 100,000 CROSSING GUARDS PROGRAM 257,000 60,000 NATATORIUM EXTENDED HRS. 177,252 60,000 �� � ' �' �� � � � , � 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 C�' , � �� ; �., � � 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