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Home My Public Portal About049-2011 - Adoption of NSP Real Estate DisposiCOMMON COUNCIL CITY OF RICHMOND, INDIANA ORDINANCE NO. 49-2011 A SPECIAL ORDINANCE TO APPROVE AND ADOPT THE NEIGHBORHOOD STABILIZATION PROGRAM (NSP) REAL ESTATE DISPOSITION PROCEDURES FOR REAL ESTATE LOCATED IN NSP AREA (VAILE NEIGHBORHOOD) RICHMOND, INDIANA WHEREAS, The Neighborhood Stabilization Program ("NSP") was enacted by the United States Legislature as part of the Housing Economic Recovery Act of 2008 (Pub. L. 110-289, approved July 30, 2008, hereinafter "HERA") to deal with the housing foreclosure crisis facing many localities throughout the country; and WHEREAS, The City of Richmond is the recipient of a Three Million Dollar ($3,000,000) Neighborhood Stabilization Program (NSP-1) Grant from the Indiana Housing and Community Development Authority as well as a Two Million Dollar ($2,000,000) Neighborhood Stabilization Program (NSP-3) Grant, also from the Indiana Housing and Community Development Authority (IHCDA); and WHEREAS, Pursuant to HERA, the IHCDA and the Department of Housing and Urban Development (HUD) have established NSP Guidelines for the acquisition, rehabilitation, construction, and disposition of properties to be followed by grant recipients; and WHEREAS, The City of Richmond has acquired or will acquire certain properties located in the geographic area known as the Neighborhood Stabilization Program area, and more commonly known as the Vaile neighborhood, and has proceeded or will proceed with the demolition and/or rehabilitation of existing structures and new builds on vacant lots pursuant to NSP grant guidelines; and WHEREAS, Under the NSP grant guidelines, the properties acquired by the City were required to be foreclosed, abandoned, or vacant residential properties (which included certain residential properties in mortgage or tax default status that met the NSP definition of "foreclosed") at a one (1%) percent discount from their current market appraised value; and WHEREAS, NSP Guidelines ("Guidelines"), in accordance with the Housing Economic Recovery Act of 2008 (Pub. L. 110-289, approved July 30, 2008, hereinafter "HERA"), set forth the requirements and procedures for the sale of any homes that have been or will be redeveloped by the City with NSP-1 and NSP-3 funds; and WHEREAS, The City of Richmond should follow the disposition methods required by the NSP Guidelines when commencing with the sale and disposition of the NSP properties, provided, however, that any disposition procedures that are required by Indiana Code 36-1-11 et seq. will be followed to the extent that they do not directly conflict with the NSP Guidelines; and WHEREAS, Pursuant to Indiana Code 36-1-11-3 any property being disposed of by the City with an appraised value of Fifty Thousand Dollars ($50,000.00) or more must be approved by the fiscal body prior to the sale; and WHEREAS, It is in the best interests of the City of Richmond that the Common Council of the City of Richmond formally approve the sale of all NSP properties in the Vaile Neighborhood and authorize the Board of Public Works and Safety and City administrative staff to conduct the proper procedural actions necessary to effectuate the NSP sales in accordance with Indiana Code and with NSP Guidelines in order to provide eligible households an opportunity to purchase reduced -priced homes in the NSP area. NOW, THEREFORE, BE IT ORDAINED BY THE COMMON COUNCIL OF THE CITY OF RICHMOND, INDIANA, that pursuant to Indiana Code 36-1-11-3(c)(1) the Common Council approves the sale of all Vaile Neighborhood properties that have been or will be built, rehabilitated, or redeveloped, using NSP-1 and/or NSP-3 funds and any public hearings required by Indiana Code 36-1-11-3(b)(2) in connection with the disposal of the properties shall be conducted by the Board of Public Works and Safety as designated by the Mayor. NOW, THEREFORE, BE IT ALSO FURTHER ORDAINED BY THE COMMON COUNCIL OF THE CITY OF RICHMOND, INDIANA, that the Mayor, the Director of the Department of Metropolitan Development, the Director of the Department of Finance, the Deputy Director of the Department of Finance, the Community Development Specialist, the President of the Board of Public Works and Safety, the City Attorney, and/or the Assistant City Attorney, are hereby authorized to execute any property transfer documents in accordance with the administration and implementation of the NSP Program. NOW, THEREFORE, BE IT ALSO ORDAINED BY THE COMMON COUNCIL OF THE CITY OF RICHMOND, INDIANA, that, for the purpose of the Neighborhood Stabilization Program, the Vaile Neighborhood properties that have been or will be acquired by the City and built, rehabilitated, or redeveloped through the NSP Program using NSP-1 and/or NSP-3 funds will be sold in accordance with Indiana Code to the extent the Indiana Code does not conflict with the NSP Guidelines promulgated in accordance with Housing Economic Recovery Act of 2008 (Pub. L. 110-289, approved July 30, 2008) and the Common Council of the City of Richmond hereby approves and adopts the following NSP Real Estate Disposition Procedures: Procedures for Sale of Homes Redeveloped through the Neighborhood Stabilization Program 1. In 2008, the Neighborhood Stabilization Program ("NSP") was enacted by the United States Legislature as part of the Housing Economic Recovery Act of 2008 (Pub. L. 110- 289, approved July 30, 2008) to deal with the housing foreclosure crisis facing many localities throughout the country. Consequently, the City of Richmond, Indiana ("City") was awarded NSP-1 and NSP-3 funds to redevelop foreclosed properties in the City. These Guidelines ("Guidelines") set forth the requirements and procedures for implementing the City's Resale Program ("Program") for homes that will be built or redeveloped with NSP-1 and NSP-3 funds. The NSP Guidelines impose certain requirements on all local government agencies and other NSP participants that will apply to the Program and may be updated from time to time as determined by the Indiana Housing and Community Development Authority (IHCDA) and the Department of Housing and Urban Development (HUD). 2. NSP-1 and NSP-3 funds may only be used by the City on eligible projects that assist low, moderate, and middle -income households whose incomes do not exceed one hundred twenty percent (120%) of Wayne County Area Median Income ("Eligible Household"). g. The properties shall be sold only to a low-income, moderate -income, or middle -income family that will use the property as their principal residence. The term "low-income family" shall mean a family whose gross annual income does not exceed fifty percent (5o%) of the median family income for the geographic area as published annually by HUD. "Moderate - income family" shall mean a family whose gross annual income does not exceed eighty percent (8o%) of the median family income for the geographic area published annually by HUD. "Middle -income family" shall mean a family whose gross annual income does not exceed one hundred twenty percent (120%) of the median family income for the geographic area published annually by HUD. The geographic area of Wayne County as published in the 2010 Low -Income Housing Community Development program is set forth as follows: 2010 LOW-INCOME HOUSING COMMUNITY DEVELOPMENT PROGRAM WAYNE COUNTY INCOME LIMITS: AMI ONE TWO THREE FOUR FIVE SIX SEVEN EIGHT LEVEL PRSN PRSN PRSN PRSN PERSN PRSN PRSN PERSN 30% $11,650 $13,300 $14,950 $16,600 $17,950 $19,300 $20,600 $21,950 40% $15,520 $17,720 $19,920 $22,120 $23,920 $25,680 $27,440 $29,200 50% $19,400 $22,150 $24,900 $27,650 $29,900 $32,100 $34,300 $36,500 60% $23,280 $26,580 $29,880 $33,180 $35,880 $38,520 $41,160 $43,800 80% $31,000 $35,400 $39,850 $44,250 $47,800 $51,350 $54,900 $58,450 120% $46,560 $53,160 $59,760 $66,360 $71,760 $77,040 $82,320 $87,600 Only current geographic area Income Limit schedules for Wayne County will be used, as periodically updated by HUD and published on the HUD website. It is required by the NSP Guidelines that the purchasing family pay no more than twenty-nine percent (29%) of its gross family income towards the principal, interest, taxes, and insurance for the property on a monthly basis. 4. The City must provide at least 25% of grant funds to households whose income is at or below 50% of Wayne County Area Median Income ("AMI"). (Please see 2010 income limits as set forth above or as periodically updated by HUD.) 5. Prior to obtaining a mortgage loan all Eligible Households will also be required to attend a HUD -certified, 8-hour minimum pre -acquisition home ownership class [see page 58334 of Part III of the Department of Housing and Urban Development Notice — FR-5255-N-oi]. 6. All Eligible Households must be able to receive mortgages from a lender who agrees to comply with the bank regulators' guidance for non- traditional mortgages [see page 58334 of Part III of the Department of Housing and Urban Development Notice — FR-5255-N-oi]. 7. Homes that have been or will be rehabilitated and developed using NSP and/or NSP-3 funds have been or will be constructed according to NSP standards as well as the codes adopted by the City of Richmond in order that all code and/or zoning violations shall be cured. 8. All rehabilitation work performed pursuant to the Program must comply with Title X of the 1992 Housing and Community Development Act, 42 U.S.C. Section 4800, et seq. and the implementing regulations set forth at 24 C.F.R. part 35, subparts A, B, J, K, and R, with respect to notification, inspection, assessment, reduction, and clearance of lead based paint. 9. The Department of Metropolitan Development shall publish a notice of public hearing pursuant to Indiana Code (IC) 36-1-11-3 in order that the Board of Public Works and Safety, as designated by the Mayor, may conduct a public hearing prior to the approval of the disposition of the NSP properties. 10. Upon completion of the construction, redevelopment, or rehabilitation of a given parcel of property, the Department of Metropolitan Development shall obtain two appraisals in accordance with Indiana Code 36-1-11-4 in order that the fair market value may be determined. 11. Upon completion of the redevelopment or rehabilitation of a given parcel of property, and subsequent required appraisals, the Department of Metropolitan Development shall publish a notice setting forth the terms and conditions of the sale pursuant to IC 36-1-11-4 in order that the City may accept offers from eligible households pursuant to the NSP Guidelines. 12. Each Home acquired and rehabilitated through the Program must be sold to an Eligible Household at a price that is equal to or less than the cost to acquire and redevelop or rehabilitate such home or property up to a decent, safe, and habitable condition plus transaction (escrow and title) costs and carrying costs, which shall include, but not be limited to taxes, insurance, maintenance, marketing, overhead, and interest [see page 58342 of Part III of the Department of Housing and Urban Development Notice — FR-5255-N-o1]. Due to this "capped sales price" requirement, and notwithstanding IC 36-1-11-4, in the event two (2) or more eligible households wish to bid on a particular property and the capped sales amount has been reached, the City will administer a "drawing" process in order that the bid may be fairly and impartially awarded to eligible household bidders who have been pre -qualified by their respective lenders. The steps of the drawing process will be as follows: a. Prepare initial applications to verify income eligibility — including an application form, application certification form, authorization for consent to release information, description of the use restriction, and a description of the eligibility requirements. b. Conduct informational meeting(s) to explain drawing process, review housing plans, tour properties. C. Household size shall govern for which units a household can compete. i. One bedroom units - use household of 2; ii. Two bedroom units - use household of 3; iii. Three bedroom units - use household of 4. d. Review applications to insure income eligibility. e. If more than one unit will be available for the drawing, then each eligible household will rank their unit preference. f. Eligible households will be assigned an entry number and winners shall be chosen by random selection. g. Each eligible household will be ranked in order of drawing. This ranking will serve as the qualified buyer list. ig. Marketing for the properties and/or drawings will adhere to HUD regulations, 24 C.F.R. 570.6oi Equal Opportunity and Fair Housing and 24 C.F.R. 570.602 Affirmative Marketing. 14. In accordance with the NSP Guidelines and Resale Program, the affordability periods, affordability restrictions, and/or resale and recapture guidelines, will be incorporated into the restrictive covenants of the deeds. Passed and adopted this 15th day of —August_, 2011, by the Common Council of the City of Richmond, Indiana. _S/S Diana Pappin President (Diana Pappin) ATTEST: _S/S Karen Chasteen City Clerk (Karen Chasteen) PRESENTED to the Mayor of the City of Richmond, Indiana, this _161h day of _August__, 2011, at 9:00 a.m. _S/S Karen Chasteen City Clerk (Karen Chasteen) APPROVED by me, Sarah L. Hutton, Mayor of the City of Richmond, Indiana, this _16' day of _Au ust , 2011, at 9:05 a.m. S/S Sarah L. Hutton Mayor (Sarah L. Hutton) ATTEST: _S/S Karen Chasteen City Clerk (Karen Chasteen)