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HomeMy Public PortalAboutResolution 95-3462 Low and Very Low Income Housing Rehabilitation Program1 1 RESOLUTION NO. 95 -3462 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMPLE CITY SUPERSEDING RESOLUTION NO. 95 -3459 AND AUTHORIZING THE CITY MANAGER TO APPROVE APPLICATIONS AND EXPEND APPROPRIATE FUNDS FOR 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, October 3, 1995 and October 17, 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 solicit input from representatives of the banking and real estate industries, who shall serve without compensation, as he may deem necessary and appropriate for the purpose of reviewing housing rehabilitation applications. SECTION 3. The City Manager is authorized to: (a) administer the housing rehabilitation program in accordance with the attached Policies and Procedures document; (b) review and approve all housing rehabilitation applications; and (c) expend funds to carry out and implement the City's housing rehabilitation program. The City Manager shall inform the City Council of each decision relative to a housing rehabilitation application at least five (5) days prior to the signing of any work contract and/or loan/grant documents. 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 17TH DAY OF OCTOBER, 1995. ATTEST: 4612i ../r/24.4.-i2) MAYOR PRO TEM Resolution No. 95 -3462 Page 2 I hereby certify that the foregoing Resolution, Resolution No. 95 -3462 was adopted by the City Council of the City of Temple City at a regular meeting held on 17th day of October, 1995 by the following vote: AYES: Councilman - Budds, Gillanders, Souder, Wilson NOES: Councilman -None ABSENT: Councilman- Breazeal 1 1 1 1 1 1 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 1 Resolution No. 95 -3462 Resolution No. CRA 95 -589 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 2 Resolution No. 95 -3462 Resolution No. CRA 95 -589 1 1 1 1 1 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 3 Resolution No. 95 -3462 Resolution No. CRA 95 -589 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 4 Resolution No. 95 -3462 Resolution No. CRA 95-589 1 1 1 1 1 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 5 Resolution No. 95 -3462 Resolution No. CRA 95 -589 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. County 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, the City Manager /Agency Executive Director may solicit input from representatives of the banking and /or real estate industries, who shall serve without compensation, as it is deemed necessary and appropriate for the purpose of reviewing and evaluating the housing rehabilitation application. If the project is approved by the City Manager /Agency Executive Director, 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. 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. 6 Resolution No. 95 -3462 Resolution No. CRA 95 -589 1 1 1 1 1 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. 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. 7 Resolution No. 95 -3462 Resolution No. CRA 95 -589 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. 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. 8 Resolution No. 95 -3462 Resolution No. CRA 95 -589 1 1 1 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. III POLICIES RELATIVE TO SPECIAL CIRCUMSTANCES City staff 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: 9 Resolution No. 95 -3462 Resolution No. CRA 95 -589 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 existing deferred 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 City Manager /Agency Executive Director per the procedure set forth in Sect.II.12 of this Policies and Procedures Manual. 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 17, 1995) 10 Resolution No. 95 -3462 Resolution No. CRA 95 -589 1 1