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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; -4- (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 -5- (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, -8- 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 -1 0- 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 -12- 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. **********************