HomeMy Public PortalAboutResolution 95-3459 Low and Very Low Income Housing Rehabilitation ProgramRESOLUTION NO. 95 -3459
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMPLE
CITY APPROVING CRITERIA FOR ADMINISTERING THE LOW AND
VERY LOW INCOME HOUSING REHABILITATION PROGRAM
WHEREAS, the City of Temple City (City) is engaged in a housing rehabilitation program using
Community Development Block Grant (CDBG) funds and other funds; and
WHEREAS, the City wishes to adopt criteria for administering the programs which are set forth
in the staff reports and attachments thereto, dated July 18, 1995 and October 3, 1995.
THE CITY COUNCIL OF THE CITY OF TEMPLE CITY DOES HEREBY RESOLVE:
SECTION 1. The City Council hereby approves the criteria for programs to be administered
using the CDBG funds as set forth in the report to City Council and the Policies and Procedures document
attached hereto.
SECTION 2. The City Manager is authorized to create a five member loan and grant review
committee ( "Review Committee ") composed of the Community Development Director, the Financial
Services Director, a building inspector from Los Angeles County or other Los Angeles County building
official, a community volunteer from the banking industry, and a community volunteer from the real estate
industry. Except for the City officials designated above, committee members shall be selected by the City
Manager and shall serve without compensation.
SECTION 3. The City Manager is authorized to:
a. authorize expenditures for housing rehabilitation applications for up to $10,000 in loans
and/or grants provided that such applications have been reviewed and approved by not less than three
members of the Review Committee but without the necessity of a noticed meeting; and
b. authorize expenditures for housing rehabilitation applications for over $10,000 in loans
and/or grants provided that such applications have been reviewed and approved by not less than three
members of the Review Committee after a noticed meeting of the Review Committee; and
c. otherwise carry out the criteria set forth in the staff report and the Policies and
Procedures document for the City's housing rehabilitation program.
SECTION 4. The City Clerk shall certify to passage and adoption of this resolution and enter
it into the book of original resolutions.
PASSED, APPROVED AND ADOPTED ON 3RD DAY OF OCTOBER, 1995.
AfI'EST:
/ /itt
ity Clerk
N-dlooload,
MAYOR
Resolution No. 95 -3459
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I hereby certify that the foregoing Resolution, Resolution No. 95 -3459 was adopted by the City
Council of the City of Temple City at a regular meeting held on 3rd day of October, 1995 by the following
vote:
AYES: Councilman - Budds, Souder, Wilson, Breazeal
NOES: Councilman -None
ABSENT: Councilman- Gillanders
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POLICIES AND PROCEDURES
LOANS AND GRANTS
I HOUSING REHABILITATION PROGRAM: PURPOSE, INTENT, PARAMETERS
AND GUIDELINES
1. INTRODUCTION
This Housing Rehabilitation Loan and Grant Program has been
authorized by City Council and Community Redevelopment Agency
action of July 18, 1995 in order to provide decent, safe and
sanitary living conditions to residents of Temple City.
Funding sources for these programs originates from monies
generated by the 20% Set Aside requirements of Community
Redevelopment Law Section 33000 et seq. and from funds
received through the Community Development Block Grant Program
through the Los Angeles County Community Development
Commission, under authority of the Housing and Community
Development Act of 1974.
Programs may be added, deleted or revised depending upon local
requirements and subject to the approval of the City Council
and /or the Community Redevelopment Agency.
2. GRANT PROGRAM FOR SENIOR CITIZENS AND DISABLED HOUSEHOLDS
Grants up to $10,000.00 shall be made available to very low
income households who own or are purchasing and who occupy the
residence to be rehabilitated. Very low income is defined by
the Department of Housing and Urban Development as 50% or less
of the median income for the area.
The grant program is designed to correct health and safety
hazards correct code violations and cure deferred maintenance.
Examples of typical rehabilitation work funded by the grant
include the following:
o Roof replacement
o Plumbing and electrical repairs and upgrades to meet
current codes
o Structural repair including seismic retrofit
O Painting and restucco
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o Yard clean -up /tree trimming
o Correction of code violations
o Modify the residence for handicapped accessibility.
The grant is not repaid, except in the circumstance of the
homeowner selling the property or a change in title occurring
within 5 years after execution of a "Contract and Agreement"
which sets forth the following conditions of the grant:
o No title change occurs within the 5 year period.
o The owner continues to occupy the property as his /her
principal residence for the 5 year period.
o Death of the owner(s) will require repayment if the
surviving spouse does not retain the property as his /her
principal residence.
o The homeowner /grant recipient agrees to maintain the
property in a clean, debris -free condition, in full
compliance with all applicable City Codes.
The homeowner /grant recipient must agree to allow a yearly
inspection of the property in order to determine that the
above conditions of the grant "Contract and Agreement" are
being maintained.
By City Council /Community Redevelopment Agency action, a Grant
may be combined with a Deferred loan, however, the total
assistance provided shall not exceed $20,000.00.
3. DEFERRED LOAN PROGRAM FOR SENIOR CITIZENS AND DISABLED
HOUSEHOLDS
The deferred loans are offered to senior citizens over 62
years of age and permanently disabled heads of households.
The deferred loans have a maximum principal amount of
$20,000.00 and accrue interest at the rate of 3% simple
interest annually. The loans accrue interest for twenty (20)
years and are due and payable upon sale or transfer of title.
The loans are offered to owner /occupied households whose
annual gross income does not exceed 80% of the median income
for the area as published by H.U.D.
As part of its underwriting criteria for Deferred loans, it
shall be a policy of the Housing Rehabilitation Program that
the total encumbrances on the property to be rehabilitated
including the new 3% Deferred loan shall not exceed 90% of the
value of the property. Staff will obtain an appraisal of the
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property if a question arises as to the above loan -to -value
ratio for the property being rehabilitated.
Generally, the Deferred loan is intended to be used on a
priority basis to provide for the correction of identified
health and safety violations including violations of building
and zoning codes; re- establishing the property in a good and
maintainable condition with necessary facilities in good
working order commensurate with the type and quality of the
property under consideration and comparable with the type and
quality of the surrounding neighborhood. Loans may also be
used to correct incipient health and safety hazards such as
replacing a furnace which due to age or general condition may
become inoperative or hazardous.
By City Council /Community Redevelopment Agency action a
Deferred loan may be combined with a grant, however, the total
assistance shall not exceed $20,000.00.
4. EXAMPLES OF REHABILITATION WORK ELIGIBLE UNDER THE GRANT AND
3% DEFERRED LOAN PROGRAM
o Roof Replacement, repair and replacement of dryrot and
termite damage
o Rodent and termite extermination
o Repair or replacement of heating /cooling, plumbing and
electrical systems /components.
o Structural repairs to include seismic retrofit
o Bedroom additions to relieve overcrowding
o Alterations /modifications to make dwelling handicapped
accessible
o Repair or replacement of driveways, concrete walks, patio
slabs and patio covers.
o Repair or replacement of damaged or deteriorated walls,
doors, windows, screens, hardware, cabinets, countertops
bathroom /kitchen fixtures or appliances
o Restucco and repainting
o Yard cleanup and tree trimming
o Floor covering
o Correction of all code violations
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5. INELIGIBLE REHABILITATION WORK
Proposed rehabilitation work will be ineligible if it is
inconsistent with the general intent of the eligible work
discussed in the preceding section.
As a matter of policy, staff will make determinations as to
the need to replace cabinets, countertops, appliances, kitchen
and bathroom fixtures, windows, doors, driveways etc. Under
normal circumstances any or all of the above mentioned items
may qualify for replacement if repair is not practical. When
repair can extend the life of the particular item in question
beyond a period of 5 years, then the cost to repair the item
will be figured into the cost of the loan.
If the item(s) is beyond repair, replacement with equal value
units will be provided. Cabinets, appliances, fixtures,
windows etc. may not be changed out because of a change in the
homeowner's decor.
No rehabilitation work shall be funded which would not
otherwise be permitted by the Zoning Code or Uniform Building
Code.
II LOAN AND GRANT PROCEDURES
1. Interested homeowner contacts City requesting information on
the Housing Rehabilitation loans and grants. If the homeowner
appears eligible, a Preliminary application is mailed out.
2. Preliminary application is received by Housing Officer and the
receipt is recorded in" Applications Status" records book.
3. If applicant appears eligible, a file is assembled consisting
of the following forms:
o Fair Lending Statement
o Preliminary application
o Uniform Residential Loan Application (FNMA 1003)
o Confidential Information Authorization Statement
o Employment Verification Request
o Request for Verification of Deposit
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o Enrollment Statement
o Lead Paint Warning pamphlet
o Statement of Information for Title search information
o Mortgage Verification Request
o Homeowners Insurance Questionnaire
o Basic Property Identification form (for deferred loans)
4. Initial interview is scheduled in the City Hall. Staff
explains the program and disperses necessary forms to process
application (per step #3). The homeowner is instructed to
complete the forms and call for an appointment to review them
for completeness. Proof of age (driver's license or birth
certificate, etc.) is obtained at this time.
5. All necessary verifications are distributed at this time.
o Verification of Deposit
o Verification of Mortgage
o Credit report (for loans)
o Employment Verification
o Proof of any other income is obtained at this time
o Last two years Federal Income tax returns are obtained if
the homeowners were required to file with the IRS.
o Property appraisal - if determined necessary by staff
6. Homeowner contacts Housing Officer to return all completed
loan package forms for review by Housing Officer. An
appointment is scheduled.
7. Homeowner returns completed loan package and a review for
completeness is made by the Housing Officer. An appointment
for a home inspection is made at this time.
8. Prior to home inspection, a check of all previously issued and
finalled building permits is made. If a structure is observed
during the inspection for which a permit does not exist, the
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homeowner will need to obtain the required permits and bring
the structure up to code if required.
9. Housing Officer inspects the property and views the proposed
repairs requested by the homeowner. If additional
health /safety repairs are necessary, they are noted and the
homeowner is informed. Photographs of the structure(s) and
surrounding property are made at this time.
10. Staff prepares a "cost estimate" for the proposed
repairs /rehabilitation. Staff at this time also prepares the
"Basic Property Identification Form" for L.A. Couny funded
Deferred loans.
11. Staff reviews the cost estimate with the homeowner and a final
"Work Write -Up" is prepared detailing the entire scope of the
proposed rehabilitation.
12. When project is ready for approval, a "Loan /Grant Review
Committee" is convened consisting of 1) Director of Community
Development, 2) Director of Financial Services, 3) L.A. County
Building Inspector or Building Official, 4) Temple City
volunteer from the real estate industry, and 5) Temple City
volunteer from the banking /lending industry. Loans or grants
over $10,000.00 require a meeting of no less than 3 of 5
committee members. Loans or grants under $10,000.00 require
a review and "sign off" on a "Housing Rehabilitation
Loan /Grant Project Review" form from no less than 3 of the 5
committee members. Loans and grants less than $10,000.00 can
be reviewed by committee members individually without
convening the entire committee.
The City Manager /Agency Executive Director may approve a loan
and /or grant application only upon the favorable
recommendation of the loan /grant committee.
If the project is approved, the following steps take place.
13. A Preliminary Title Report is ordered at this time if the loan
amount will exceed $10,000.00.
14. The Housing Officer reviews the final "Work Write -Up" with the
homeowner who signs and dates the document in preparation for
the bid process.
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15. The homeowner will have the option of selecting one of three
(3) options for completing the proposed rehabilitation.
Note: all contractors selected must be of good reputation,
financially sound, licensed by the state of California and
carry a minimum $500,000.00 general liability insurance as
well as worker compensation insurance. All contractors will
be checked for current status with the State Contractors
Board.
OPTION #1
If the proposed rehabilitation requires 3 or less
construction specialties, the homeowner may obtain bids to
perform this work from subcontractors who specialize in this
work. The homeowner may use the City provided list to obtain
bids or may obtain bids from other licensed contractors. The
bid amounts must be within the City's cost estimate. If a
homeowner selects this option, he /she must provide a rider to
their homeowner's insurance which covers all workers for
general liability. The rider shall also indemnify and hold
harmless the City, it's agents and employees.
OPTION #2
Applicant designates the City to obtain bids from eligible
general contractors using an approved list of contractors,
NOTE: the applicant is informed that the City does not
recommend contractors but offers this option as a service to
homeowners in order to obtain qualified contractors to perform
the rehabilitation work. Bids are mailed out on a rotational
basis. Five (5) bids will be mailed out in order to receive
a minimum of 3 bids. A homeowner may include the name of any
licensed and insured general contractor of their acquaintance
in this bid process.
If Option #2 is selected, the homeowner meets with the Housing
Officer when all the bids are received and a contractor is
selected. Normally the lowest responsible bidder is selected
to perform the work. If a homeowner prefers a contractor who
is not the low bidder and that contractor is within 10% of the
staff cost estimate for the proposed work, then that
contractor may be awarded the bid, or if the contractor
desired by the homeowner to do the work is not within 10% of
the agency cost estimate, he /she will be allowed to adjust
their bid to match that of the lowest responsible bidder and
be allowed to perform the work at that price.
OPTION #3 •
If the applicant demonstrates the ability and expertise to
complete all or part of the proposed rehabilitation work in a
professional and timely manner, the City may allow the owner
to perform the work. In this circumstance, loan funds will
pay the cost of the material and soft costs (building permits)
but no loan funds will pay for the owner's labor.
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16. After selection of a contractor(s) has been completed, the
homeowner signs the construction contract(s) and an
appointment to sign loan documents is scheduled. NOTE: The
construction contract is not fully executed until signed off
by the appropriate City staff person.
17. A Policy of Title Insurance is ordered at this time if the
loan amount exceeds $10,000.00.
18. GRANT DOCUMENTS
Typically, the homeowner signs all necessary Grant documents
at the Temple City, City Hall. A "Contract and Agreement" is
executed.
19. LOAN CLOSING AND DOCUMENTS
Typically, the homeowner signs all necessary loan documents at
the Temple City, City Hall. The following documents are
required:
o Deed of Trust with Assignment of Rents
o Promissory Note
o Contract and Agreement
o Truth in lending Statement
o Notice of Right of Recision
20. After waiting the necessary 3 days (Right of Recision), the
Contract and Agreement and Deed of Trust are forwarded to the
Los Angeles County Recorders Office. A Certificate of
Acceptance is forwarded with the Deed of Trust.
At this time the Construction Contract is signed by City staff
and the contract is fully executed.
21. CONSTRUCTION BEGINS
"Notice to Proceed" is sent to the contractor to begin work.
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22. Periodic site inspections are made to check job progress.
23. Upon satisfactory completion of a portion of the contracted
work, the contractor submits a "Bill for Services" to the
Housing Officer. The Housing Officer will then schedule an
inspection to verify the work has been completed. If the work
has been completed per the contract, the homeowner signs an
authorization to release progress payment to the contractor.
24. CHANGE ORDERS
If it is necessary to add or delete an item from the original
"Work Write -up" or to modify the work specifications, a
"Change Order Authorization" is completed by the Housing
Officer and signed by the homeowner and contractor.
25. PROJECT COMPLETION
When the contractor completes the work, a bill for services
per the above procedure is submitted. The final payment will
usually include the remaining balance less 10% of the total
contract amount. This amount is withheld an additional 35
days to protect the homeowner against the filing of any
mechanics liens.
26. Prior to the disbursing of the final progress payment to the
contractor, the Housing Officer will check to make sure that
all of the building permits have been finalled by the Building
and Safety Department. A full labor and material lien release
will be obtained from the contractor and all warranties for
material, appliances and fixtures will be obtained.
27. A "Notice of Completion" is completed and signed by the
homeowner at the final inspection. This document is then
mailed to the Los Angeles County Recorder's Office as soon as
possible for recordation.
28. The final 10% of the contract amount is released 35 days after
the recording date of the "Notice of Completion" if no liens
have been recorded against the property by the contractor.
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III POLICIES RELATIVE TO SPECIAL CIRCUMSTANCES
City staff, the designated loan /grant review committee and the
City Manager /Agency Executive Director will make
interpretations and clarifications as may be necessary to
address special circumstances and conditions relative to
administration of the Housing Rehabilitation Program. If
policy direction is deemed necessary, the City Council and /or
Community Redevelopment Agency will be asked to provide
appropriate guidance.
Following are policies relative to certain special
circumstances:
Existing Non - Conforming Use.
The Home Improvement Program will not fund any repairs,
improvements or upgrades which would not otherwise be
permitted by the Zoning Code or the Uniform Building Code.
Any non - conforming use which would not be allowed to be
improved, upgraded or rehabilitated shall not be improved
under the auspices of this program.
Refinancing.
A home improvement loan or grant shall not be used to re-
finance an existing debt on the property except as described
below.
Emergency Situations.
All applications will be processed on a first -come, first -
served basis except in the case of a homeowner with a
condition which poses an immediate threat to the household's
health or safety. These households will receive an immediate
priority and will be serviced first.
Subordination.
A homeowner with an existing deferred loan may apply to the
Community Development Department to subordinate the
existingdeferred loan. The loan may be subordinated to a new
loan if all debts on the property do not exceed 75% of the
appraised value of property. All requests to subordinate a
Deferred loan shall be reviewed and approved by the Loan /Grant
Review Committee per the procedure set forth in Sect.II.12 of
this Policies and Proceedures Manual.
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Second Time Assistance.
A homeowner who has been previously assisted through the Home
Improvement Program may be assisted again after a 10 year
period has elapsed. If the previous assistance was through a
loan and an existing balance remains, the new loan may
include sufficient funds to re- finance the outstanding balance
of the previous City loan.
(Approved and adopted by City Council and CRA on October 3, 1995)
MANU \12407
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INCOME LIMITS
Grants shall be available only to very low income households,
with incomes of 50% or less of the median County income.
As of September, 1995, the very low income limits are shown
below:
1 person H.H.
$17,950.00
5 person H.H.
$27,700.00
2 person H.H.
$20,500.00
6 person H.H.
$29,700.00
3 person H.H.
$23,100.00
7 PERSON H.H.
$31,800.00
4 person H.H.
$25,650.00
8 person H.H.
$33,850.00
Deferred Loans are available only to low income households
with incomes of 80% or less of the median County income.
As of September, 1995, the low income limits are shown
below:
1 person H.H.
2 person H.H. 3 person H.H.
$28,150.00 $32,150.00 $36,200.00
5 person H.H.
$43,400.00
6 person H.H. 7 person H.H.
$46,650.00 $49,850.00
These limits are adjusted periodically.
4 person H.H.
$40,200.00
8 person H.H.
$53,050.00
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