HomeMy WebLinkAbout1822 ResolutionSSED by the City Council of the C
, 1988.
Pasco this
day o
yn ells, City Clerk
APWVED TO FO
Greg Ft: ir-tello, City Attorney
41
RESOLUTION NO. 1822
A RESOLUTION amending the Housing Rehabilitation Program Rules.
WHEREAS, the City Council finds the Housing
Rehabilitation Program requires revision to reflect changed
federal requirements, as well as to clarify new or modified local
administrative procedures; NOW, THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PASCO,
WASHINGTON:
That the attached program statement for the Housing
Rehabilitation Program is hereby approved as amended.
Ed Hendler, Mayor
COMMUNITY DEVELOPMENT BLOCK GRANT
PROGRAM STATEMENT
HOUSING REHABILITATION
DEFERRED LOAN PROGRAM
CITY OF PASCO, WASHINGTON
March 1988
IT'S YOUR NEIGHBORHOOD IT'S YOUR CHOICE
TABLE OF CONTENTS
INTRODUCTION 1
PRIORITIZATION OF APPLICATIONS 2
ELIGIBILITY REQUIREMENTS 4
ELIGIBLE IMPROVEMENTS 7
FINANCIAL REQUIREMENTS/LIMITATIONS 8
SYNOPSIS OF LOAN PROCESS 10
SYNOPSIS OF CONTRACT PROCESS 11
INTRODUCTION
The City of Pasco annually receives an amount of federal funds
under the Community Development Block Grant Program. Those funds
are budgeted each year by the City Council to finance a variety
of "community development" programs and activities. One of those
programs is called the Housing Rehabilitation Program. This
program is part of the City's overall effort to assure its
citizens reside in safe, decent and sanitary dwellings.
Under this program, the City will finance all improvements
necessary to correct substandard conditions of a single-family
home occupied by a lower-income family. Federal The City's
rules prohibit the use of these funds for renter-occupied units
as well as any family which exceeds applicable income limits.
Consequently, an application process is used to assure that all
federal and city rules are met.
The program uses what is called a "deferred loan" at 3% annual
percentage rate (APR) to finance the improvements and repay the
funds to the program. It is similar to getting a loan from the
bank, except the homeowner is not required to make monthly or
annual payments. Rather, the homeowner signs a promissory note
and property-lien Deed of Trust which are is filed with the
property records. No payment whatsoever is required until the
property is transferred to another person; at that time, the full
amount of the promissory note including the original amount of
the loan and accrued interest, is due and payable to the City.
Any Each such payment is returned to the City's Block Grant
Program, to provide assistance to other lower-income families.
For information concerning this program, contact the Community
Development Department, City Hall, 412 West Clark Street
(545-3441).
PRIORITIZATION OF APPLICATION
In order to assure rehabilitation funds are directed toward those
households most in need, the first quarter (three-month period)
of each program year will be reserved for the solicitation and
acceptance of applications (this policy does not, however,
prohibit submittal of applications during the balance of the
program year). At the end of the first quarter, those
applications received by the close of business on the last
working day of the quarter will be prioritized in two (2) steps,
as follows:
STEP 1. All applications will be assigned one of the two
following categories:
Category A: A dwelling unit which reflects any
one of the following conditions as these
conditions are defined in Chapter 10. Uniform
Housing Standards:
• Lack of or hazardous plumbing;
• Lack of or hazardous mechanical equipment;
• Lack of or hazardous wiring;
• Structural hazards.
Category B: Any dwelling unit which does not
reflect one of the conditions under Category A will
be assigned Category B.
STEP 2. Once assigned a category under Step 1 (above), each
application will be ranked in accordance with the following
priority array based on the household characteristics.
Priority Category Criteria
1 Very Low Income (VLI) Elderly* Household
2 VLI Non-Elderly Family** W/SHH***
3 VLI Non-Elderly Household
4 Lower Income (LI) Elderly* Household
5 LI Non-Elderly* Family** W/SHH***
6 LI Non-Elderly Household
* "Elderly" means at least one and 50% of the owners are 60 or
more years of age
** "Family" means any household with one or more dependent
children under the age of 18 years.
*** "SHH" (Single Head of Household) means a family with only
one parent/guardian.
Within each priority category, applications will be further
prioritized by date of application. The entire Housing
Rehabilitation allocation for the respective program year, less
reasonably anticipated administrative expenses, will then be
obligated through the bidding process by priority category. If
all of the priority categories are obligated and sufficient funds
remain for additional contracts, those applications received
after the close of the first quarter will be obligated by date of
application only. If the Rehabilitation allocation is not
sufficient to cover all categorized first-quarter applications,
those not funded in that program year will be carried over to the
next program year within the same category of priority.
f
1
ELIGIBILITY REQUIREMENTS
DWELLING CONDITIONS
(1) The structure must have one or more substandard conditions,
as determined by the City in accordance with the adopted
Uniform Housing Code.
The structure to be improved must be a conventional
single-family dwelling.
The property must be owned
occupied by the applicant.
The applicant must have owned
property for at least one
application.
(or being purchased) and
(or been purchasing) the
continuous year prior to
City taxes on the property to be improved must be paid and
current.
INCOME ELIGIBILITY.
The average of the annual household income during the preceding
three years must not exceed the average of the lower applicable
income limits (for the same preceeding three years) for the
household size established for Section 8 Rent Subsidy in the
Pasco area. Household income is defined as the total income
received by all household members residing in the structure as
their usual place of residence, excluding income from dependent
minor children, less deductions from unusual expenses. These
include:
1. Medical expenses which exceed three percent (3%) of the
annual household income and are not covered by insurance.
2. Annual expenditures for child care to enable employment by a
member of the household.
3. Cost of care of a disabled or handicapped family member, to
the extent not covered by insurance.
4. The following sources of income and any other income which
must be reported as taxable income under the Internal
Revenue Code must be considered in determining gross family
income:
(a) Wages and salaries including all compensation for
regular overtime; all other earnings and compensation for
personal services, such as commissions, fees, tips, etc.;
and all income received by military personnel except items
excluded in 5 (e); payment in-kind, such as meals for food,
is not regarded as compensation, and gross income includes
the full amount of earnings before payroll deductions are
made for any purpose;
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(b) Net profits from the operation of a business or
profession;
(c) The full amount received from social security,
pensions, annuities, retirement income, and other similar
types of periodic receipts;
(d) Payments in lieu of earnings, such as unemployment
compensation, other social security benefits, dismissal
wages, benefits in lieu of earnings other than lump-sum
payments under health and accident insurance, and workmen's
compensation other than lump-sum payments;
(e) Periodic and determinable allowances, alimony,
contributions, child support and gifts;
(f) Interest, dividends and net earnings of any kind from
real personal property, including but not limited to capital
gains;
(g) Subsistence allowances or receipts in connection with
education or training; and
(h) All payments made to or on behalf of any person under
the provision of the Economic Opportunity Act, or any other
anti-poverty program.
5. The following items shall not be considered as income:
(a) Casual and irregular gifts;
(b) Earnings of minors under 18 and full-time students
other than the head of household or spouse;
(c) Family assets, or lump-sum additions to family assets,
such as inheritance, insurance payments, including lump-sum
workmen's compensation settlements, and settlements for
personal or property damages (if such sums are substantial,
the eligibility of the families in question will be
considered under the capital asset limitation);
(d) The special pay to a serviceman who is in head of the
family and is away from home and exposed to hostile fire;
(e) Relocation payments made pursuant to Title II of the
Uniform Relocation Assistance and Real Property Acquisition
Policies Act of 1970 (PL-91-646, 84 Stat. 1894);
(f) Pursuant to the Food Stamp Act of 1964, (7 U.S.C. 2015
(c), the value of the coupon allotments for the purchase of
food in excess of the amount actually charged to eligible
household.
(g) Payments received by residents who are participants in
volunteer programs provided for in the Older Americans Act
(PL-93-29) and the Domestic Volunteer Service Act of 1973
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(PL-93-113, and
(h) The amount of educational scholarships or veterans
education benefits paid directly to the student or to the
educational institution to the extent that these benefits
are used in meeting the cost of tuition fees and books.
I
I
HOUSEHOLD INCOME LIMITS
by HOUSEHOLD SIZE
Household
(Rounded to Nearest $50 Increment)
LI Size VLI
Income Limits
1 Person /17159 12,200 17858 19,500
2 Persons 12759 13,900 287488 22,250
3 Persons 147959 15,650 2E7958 25,050
4 Persons 157958 17,400 B7598 27,800
5 Persons 17B59
18,800 27189 29,600
6 Persons 187589 20,200 28789 31,300
7 Persons 197880 21,600 3e 7 3ee 33,050
8 or More Persons el 7 e5e 22,950 917988 34 ,800
ASSET LIMITATION
In addition to the income limitations, a household may not
possess assets in excess of $7,500. Assets include: real estate
(exclusive of equity in primary residence), bonds, saving
accounts, certificates of deposits, stocks, other investments,
notes receivable, antiques, jewelry, boats, motor homes, and
other luxury items of substantial value.
ELIGIBLE IMPROVEMENTS
The purpose of this program is to correct conditions that
constitute code violations and to ensure a safe, decent and
sanitary dwelling, in accordance with the Uniform Housing Code
adopted by the City of Pasco. Financing under this program is
limited to that amount necessary to correct those substandard
conditions identified by the City in the detailed work write-up
provided by the Community Development Department.
FINANCING REQUIREMENTS/LIMITATIONS
MAXIMUM LOAN AMOUNT.
The minimum rehabilitation loan amount shall be $9,500, provided,
however, in no case shall a rehabilitation loan constitute more
than fifty percent (50%) of the current value of the structure
to be rehabilitated. "Current value" will be determined by the
most recent value assigned by the Franklin County Assessor.
ADDITIONAL FINANCING.
Where rehabilitation costs exceed the maximum available under
this program, the Community Development Department, to the extent
practicable will coordinate with other appropriate agencies in an
effort to obtain additional funds for the balance of the
rehabilitation costs identified in the work write-up. When
another agency will finance some of the improvements, those
improvements must be completed prior to qualification of the
structure under this program, or otherwise coordinated with the
work write-up in a manner which will insure proper completion of
all needed improvements.
In those cases which cannot obtain the additional funds necessary
to bring the dwelling into conformance with the Uniform Housing
Standards, the homeowner may provide the additional financing
needed. However, the source and conditions of such funds and
their effect on the security position of the City's deed of trust
shall be considered in deciding whether or not the application
will receive final approval.
In those cases where the homeowner will provide the additional
financing and the same is approved by the City, such financing
must be properly secured prior to execution of a contract for
financing under this program. Such securement may be in the form
of an escrow account or some other secured form which assures
release of the funds in accordance with the rehabilitation
contract established under this program. The City Attorney
will determine whether or not the proposed form of additional
financing is acceptable, on a case-by-case basis.
SECURITY OF DEFERRED LOAN.
Financing provided under this program must be secured in the form
of a Promissory Note (see Exhibit ) and a Deed of Trust (see
Exhibit ) at the time of contract execution. Repayment of
the deferred loan amount is required only in accordance with the
provisions of the Promissory Note.
SUBORDINATION OF PRIOR INTEREST. (Prior to Rehab Loan)
In some cases, an eligible household may be purchasing an
eligible structure under a contract from another person and,
occasionally, the sum of all recorded interests (deeds of trust,
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mortgages, contracts, etc.) in the property leaves insufficient
unobligated equity against which the City's deed of trust can
reliably apply. In such a case as determined by the Community
Development Department, on a case-by case basis, one or more of
the superior interests must be subordinated in favor of the
City's deed of trust; such subordination must be accomplished
prior to or in conjunction with execution of a contract for
assistance under this program. If necessary subordinations
cannot be obtained, financing under this program will not be
available.
SUBORDINATION OF CITY'S INTEREST (Subsequent to Rehab loan)
Subsequent to the completion of a rehabilitation project and the
recording of the Deed of Trust and--Premissery--Nete securing the
City's loan, the owner may find the need to mortgage his/her
equity for other obligations. In such a case, the City normally
will subordinate its interest to that of the mortgagor provided
the following conditions are met:
(1) Ownership of the dwelling remains in the name of the
person(s) named in the City's Deed of Trust and Promissory
Note;
(2) The sum of all superior interests , together with the
value of the City's Deed of Trust and the proposed mortgage,
does not exceed eighty percent (80%) of the value of the
property (as determined by the County Tax Assessor's most
recently assigned value or the appraisal performed by the
mortgagor, whichever is most recent); and
(3) If the mortgagor uses a Deed of Trust, the mortgagor
provides separate written assurance to the city that
mortgagor will assume full liability for he Promissory Note
in the event the mortgagor becomes owner of the property.
SYNOPSIS OF LOAN PROCESS
APPLICATION.
Community Development Department staff will verify all
application information and purchase a "lot book report" from a
title-service company to verify ownership, tax—statute, and
identify all recorded interests in the property. The
applicant-homeowner must assist in the verification of income,
assets, and housing expenses. After the required verifications
are received and reviewed by staff, final grant approval will be
made by the City Manager upon recommendation of the Community
Development Director in accordance with established rules and
procedures. All approved applications will be prioritized in
accordance with the prioritization policies described earlier in
this document. Once an approved application is assigned a
project file number (signifying it will be processed during the
respective program year), the City building rehabilitation
inspector will inspect the dwelling and prepare a detailed work
write-up and cost estimate.
If the cost estimate is within the maximum loan amount ($9,500),
the work write-up will be reviewed in detail with the homeowner
and, if approved by the homeowner, the City will prepare a bid
package and call for bids from qualified contractors. Unless the
homeowner selects a bid which is within five percent (5%) of the
lowest qualified bid, the lowest qualified bid will be selected.
The City reserves the right, however, to reject all bids or to
reject unqualified bidders. If the cost estimate of the work
write-up prepared by the City bung rehabilitation inspector
exceeds the maximum loan amount ($9,500), the application will
not proceed under this program until additional financing has
been identified in accordance with the provisions for such
discussed earlier in this document under "Financial
Requirements/Limitations".
Upon selection of a contractor, the Community Development
Department will prepare the standard contract for the
rehabilitation work involved; the contract is essentially between
the homeowner and the contractor, but the City will sign as a
third party for purposes of contract administration and
payments. At the time of signing the contract, the homeowner
must sign the Promissory Note for the full amount of he contract
and must also sign the Deed of Trust securing the Note. Beth
deeuments—Wete-and-Beed} The Deed of trust will be recorded by
the City. The City will use the services of a leeal title
insurance company for the recording and release requirements
associated with the Nee-and Deed (at city expense).
Any change in the rehabilitation work to be performed under the
contract requires a-ehange-erder an "addendum to specifications"
to reflect the respective increase or decrease in the contract
amount; at the time a--ehange-erder the addendum is executed,
a--new an amended Promissory Note, and-Beed-eE-Trustr-to reflect
the adjusted contract cost, must be signed by the homeowner.
n
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A copy of all loan documents will be provided the homeowner by
the Community Development Department.
SYNOPSIS OF CONTRACT PROCESS
CONTRACT ADMINISTRATION.
The contract form provided by the Community Development
Department will be of a standard form, in order to assure
inclusion of all applicable federal and state rules and
regulations. Although the contract essentially is between the
homeowner and the contractor, the City will sign the contract as
a third party and will act as a liaison between the contractor
and homeowner. Any disputes between the contractor and homeowner
will be mediated by the Community Development Department, and the
Department's decision will be binding on both parties.
PERMITS AND INSPECTIONS
Prior to commencing the rehabilitation work, the contractor will
obtain a building permit from the city building rehabilitation
inspector (no cost to the homeowner). The building
rehabilitation inspector will make necessary and periodic
inspections of the rehabilitation work to assure the work
complies, in all respects, with applicable construction codes,
as well as the contract provisions.
ADDENDUM TO SPECIFICATIONS.
eHAN6E-49RBERS.
Any change in the work required to be performed under the
contract will not be authorized (therefore, not paid for) unless
the change is approved by the contractor, homeowner and city in
the form of a contract ehamge-erder "addendum to specifications"
(form supplied by Community Development Department). A—ehange
erder An addendum must identify the nature and quantity of the
change, as well as the contractor's material, labor and profit
prices for the work to be added or deleted; the Community
Development Department reserves the right to determine whether or
not the change is necessary or appropriate and whether or not the
contractor's price is excessive. Any approved ehange—erder
addendum requires the concomitant execution of-a-mew an amended
Promissory Note amd-Beed-ef-Trust by the homeowner to reflect the
adjusted cost of the rehabilitation contract.
WARRANTIES.
The contractor will be required to provide to the homeowner any
and all warranties available from the manufacturers and suppliers
of any materials or fixtures installed in the dwelling under the
respective contract. This requirement must be fulfilled prior to
final payment to the contractor.
•
FINAL INSPECTION.
When the contractor indicates that all contract work is
completed, the City building rehabilitation inspector will
perform a final inspection of the dwelling. The homeowner will
be strongly encouraged to accompany the inspector in the final
inspection, in order that the homeowner can verify satisfaction
with the work performed by the contractor.
In a case where any of the contractor's work has not been
properly completed, the inspector will require the contractor
to perform that work necessary and appropriate to constitute
compliance with the contract. If any of a contractor's work is
not satisfactory to the homeowner, the inspector will determine
whether or not the quality of workmanship is normally acceptable;
if not, the inspector will require the contractor to correct the
particular item of work so that it meets the inspector's
normally acceptable standard of workmanship quality. The final
determination in any such dispute will rest with the Community
Development Department.
fl--a No contract shall involve work to be performed by the
homeowner. The--inspeeter-shali-determine—whether—er—met—the
hemeowner-I-s--werk--eemplies--with--the--eentraet--preveiens--and
whether--er--met—the--quality---ef--werkmamship—meets--mermelly
emeeptable-standardst-if-met7-the--eity-may-teke-sueh-legai-steps
es-are-deemed-meeessary-te-eerreet-the-umemeeptable-werk7
CERTIFICATE OF COMPLETION/RELEASE.
Upon satisfactory final inspection, the city building
rehabilitation inspector will complete and sign a Certificate of
Completion. Signature of the homeowner on the Certificate of
Completion will constitute the homeowner's final acceptance of
the contract work. If a dispute over acceptance exists and the
homeowner does not sign the Certificate, such lack of signature
shall not prevent timely final payment. The homeowner shall be
notified in writing that final arbitration of disputes rests
solely with the Community Development Department.
FINAL PAYMENT.
Upon satisfactory final inspection and execution of the
Certificate of Completion by the inspector and the homeowner, or
as provided above, the City will obtain the following documents
from the contractor:
(1) Final invoice;
(2) Written guarantee of contract work;
(3) Written release of liens from the contractor and
subcontractors and suppliers listed in the bid or
subsequent addendum to contract.
Upon submittal of all necessary contractor documents, final
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contract payment will be made by the city to the contractor.
POST-COMPLETION INSPECTION.
The Community Development Department will make a follow-up
inspection of the work performed under the contract approximately
thirty (30) days after the Certificate of Completion date.
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