HomeMy WebLinkAboutMINUTES - 08211984 - 1.54 ToBOARD OF PERVISORS
PROM: Anthony A. Dehaesus Contra
Director of.Planning Costa
DATE: August 13, 1984 County
SUBJECT: Modification to County Housing Rehabilitation Loan Program Income Limits
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATON:
Approve modifications to the Housing Rehabilitation Program Policies (income limits) as
recommended by the Director of Planning (attached) .
BACKGROUND:
The County Housing Rehabilitation Loan Program has historically established its
maximum qualifying income at 100% of median SMSA income. The Program was targeted
to predominantly low & moderate income (less than 80% of median income) communities.
As noted by U.S. Department of Housing and Urban Developement (HUD) representatives
in a recent monitoring of the County program, recent changes in HUD regulations
governing Community Development Block Grant funded programs now require that 80 %
of median income adjusted for family size be used for direct benefit activities, such as
the housing rehabilitation program.
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CONTIN.VeDON ATTACHMENT: X YES SIGNATOR
R OMMENDATION OF COUNTY ADMINISTRATOR ECOMMEN ATION F BOARD COMMITTEE
APPROVE OTHER /
SIGNATURE(S)
ACTION OF BOARD ON APPROVED AS RECOMMENDED OTHER
VOTE OF SUPERVISORS
XUNANIMOUS (ABSENT �— ) 1 HEREBY CERTIFY THAT THIS IS A TRUE
AYES: NOES: AND CORRECT COPY OF AN ACTION TAKEN
ABSENT:. ABSTAIN: AND ENTERED ON THE MINUTES OF THE BOARD
OF SUPERVISORS ON THE DATE SHOWN.
Originial Planning
CC: Bu i 1 d i ng Inspection ATTESTED
CAO J.R. OLSS COUNTY CLERK
AND EX OFFICIO CLERK OF THbB®OA��
a
M3e2/7-e3 mq BY . DEPUTY �
CONTRA COSTA COUNTY
Community Development Neighborhood Preservation Program
Housing Rehabilitation Program Policies
(Adopted by the Board of Supervisors on )
I. INTRODUCTION
The following sets forth policies for residential rehabilitation financial assistance in the
form of low-interest loans, and zero-interest loans, as authorized by Section 105, Title I of
the Housing and Community Development Act of 1974 as amended. The program is
available throughout the Urban County, however several Housing Rehabilitation Target
Areas have been established in the County for purposes of implementing a marketing plan
for this program and its components. Agreements with financial institutions are in effect to
implement and service the loan components of this program.
II. OBJECTIVES
Primary Objective
The primary objective of the Neighborhood Preservation Program, and in particular the
housing rehabilitation component, is to assist in the development of viable communities by
providing decent housing and a suitable living environment in the community - principally
for persons of low and moderate income - consistent with provisions of Federal assistance
provided in the Housing and Community Development Acts of 1974 as amended.
Specific Objectives
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1. The elimination of slums, blight, and the prevention of blighting influences causing the
deterioration of property and neighborhoods.
2. The elimination of conditions which are detrimental to health, safety and public
welfare, by rehabilitation, demolition, or removal.
3. The stabilization and enhancement of older neighbhorhoods in order to encourage future
investment from the private sector, and other public funds and programs.
4. The development of economically integrated communities, particularly as it relates to
the enjoyment of the benefits of the revitalization process by low and moderate income
residents.
5. The review of residential structures of owners participating in the voluntary Housing
Code Enforcement Program for need of rehabilitation.
In order to attain these objectives, a voluntary code enforcement program has been
combined with a financial assistance program consisting of two components: 1) low interest
loans, and 2) zero-interest loans. The criteria for each program are geared to the
household's income and ability to service an additional monthly housing payment. The intent
is to reach the maximum number of households while ensuring a maximum return of the
money for the purpose of making future assistance available to other households. The
guidelines for each program component are outlined below.
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I11. HOUSING REHABILITATION LOAN ELEMENT
A. Introduction
The Loan Element of this PrograrT is designed to provide financial assistance for the
housing stock of moderate income households who can afford a moderate increase in
monthly housing payments but cannot be served by private financial institutions under
existing programs.
B. Eligibility Requirements
This section sets forth the eligibility criteria and requirements for receiving a
Rehabilitation Loan. These criteria assess both the structure and the applicant from
the standpoint of need and eligibility.
1. General Requirements
Owner-occupied single family structures and duplexes will be eligible for
rehabilitation loan assistance, if the property (1) is in need of repair to eliminate
hazardous conditions and/or other code violations and (2) is owned by a household
which has a qualifying income as defined in the following sections and which has
been in permanent legal possession of the property owner for at least six months
prior to applying for financial assistance.
2. Eligible Costs
Work and items of repair eligible under this program are to be completed as
available funds allow, in the following order of priority:
' a
a. To make repairs and improvements necessary to the structure to correct
health and safety hazards;
b. To make other necessary repairs and improvements, including exterior painting
and physical modifications designed to improve the mobility of handicapped or
elderly persons, in order to conform to code standards applicable to existing
residential structures to ensure safe, decent, and sanitary housing; to enhance
the appearance of the structure and of the neighborhood exterior painting will
be included as an item of repair unless determined unnecessary;
c. To correct any incipient deficiencies which would make it impossible for a
structure to be brought to and readily maintained at code standards;
d. To replace built-in cooking appliances when required for safety reasons;
e. To provide for or enlarge a room or finish an attic or basement in order to
alleviate a condition of overcrowding, as specified in Chapter 5 of the Uniform
Housing code;
lSee Appendix A for current table of income by household size which meet these criteria.
2For the financial purposes of this program, duplex is defined as one structure with two living
units or two single family structures on one parcel.
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f. To remove unrepairable secondary buildings, structures, and other blighting
influences located on the property; which may include the repair or replace-
ment of dilapidated fencing;
g. To make other general property repairs if funds are available and when the
amount spent does not exceed 40% of the loan amount.
3. Eligibility of the Applicant
In addition to being the owner of a single family unit or the owner-occupant of a
duplex, in need of the above repairs, to qualify for a rehabilitation loan the
applicant must:
a. Be a moderate. income household with an adjusted gross income less than 80%
of the median income for the County as established by HUD for the San
Francisco-Oakland Standard Metropolitan Statistical Area (SMSA); and
b. Have assets which, for elderly households, (age 62 and over) do not exceed
$20,000, and for non-elderly households, have assets which do not exceed
$10,000. Assets would include bank accounts, stocks, bonds, investments, and
real estate holdings but not including the principal residence.
c. Be designated as not eligible for a conventional home improvements loan; and
d. Have a credit record evidencing willingness and ability to meet and service the
debt incurred; and
e. In the case of the second unit in a duplex which is a rental property, conform
with Federal non-discrimination regulations and agree that, upon receipt of a
loan from the County: 1)rents and other charges shall not be increased beyond
the total cost of the loan, actual increases in taxes, and the percentage
increase in the Bay Area cost of living index issued by the U.S. Department of
Commerce; or 2) the units to be rehabilitated will be rented to low and
moderate income families utilizing the Federal Section 8 Existing Unit Rental
Subsidy Program.
C. Priorities for Award of Loans
Applications will be evaluated and processed as received, based on the eligibility.
criteria and requirements stated in Section b of these guidelines. The evaluation will
consist of an initial determination of the eligibility of the applicant followed by a
determination of the needed repairs of the structure. Financial assistance will be
awarded to applicants in the order in which their application materials are completed
for eligibility determination.
3Income will be based on the applicant's income for the 12 months prior to its application for
financial assistance and reflect increases or decreases anticipated during the next 12
months. Adjusted gross income is defined as a household's annual gross income less:
1) Uncompensated or uncovered medical expenses which exceed 3% of gross
income; and 2) $300 for each dependent person in the household other than the
spouse.
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D. Loan Amounts, Term and Security
For purposes of this program, Rehabilitation Loans are defined as loans requiring
monthly payments of both principal and interest based on the amount of money
borrowed. No prepayment penalties will be charged.
1. Loan Amounts
a. The maximum amount for a Rehabilitation Loan shall not exceed $20,000 for a
single-family dwelling with an additional $3,000 allowed for the second unit in
a duplex.
b. The loan maximun specified in (a) above may be exceeded subject to the
following limitations:
1) General property improvements as allowed under Section III B (2) (g)
cannot exceed 40% of the loan maximum specified in Section III (D (1) (a).
2) The amount by which the maximum loan amount specified in Section III (D
(1)(a) above may be exceeded to the lesser of
a) $5,000; or
b) an amount derived by subtracting $12,000 (60% of the maximum loan
amount specified in Section III D (1)(a) above from the costs of
completing required code improvements (as specified in Section III B
(2)(a-f) above). For purposes of the above calculation costs not
allocable directly to improvements (profit,overhead, etc.) shall be
included on a pro-ratia basis in a ratio reflecting the code general
property improvement ratio.
c) The Rehabilitation Loan plus existing indebtedness against the
property shall not exceed 90% of the appraised after-improvement
value of the property at the time the loan is approved.
2. Interest Rate
The interest rate will be below the existing market rate, varying from 3 to 10
percent, based on the household's ability to pay as defined in D.3 below.
3. Loan Term and Security Requirements
The term of the Rehabilitatin Loan shall not exceed 15 years tailored together with
the interest rate to the borrower's needs with the goal being that total debt
including the loan commitment does not exceed 50% of the Household's income.
The intent is to charge the highest interest rate while adjusting the term of the
loan in order to maximize the amount of work to be completed within the
Household's ability to pay. The Rehabilitation Loan is due and payable upon sale or
transfer of the property and must be secured by a Deed of Trust, which secures the
Promissory Note.
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IV. HOUSING REHABILITATION ZERO-INTEREST LOAN ELEMENT
A. Introduction
The zero-interest loan element of this Program is designed to IVovide financial
assistance for the housing stock of households with very low income. who otherwise
cannot afford any increased monthly housing costs.
B. Eligibility Requirements
This section sets forth the eligibility criteria and requirements for receiving
zero-interest loan. These criteria assess both the structure and the applicant from the
standpoint of need and eligibility.
1. General Requirements
Owner-occupied single family structures and duplexes5 will be eligible for
rehabilitation financial assistance, if the property: 1) is in .heed of repair to
eliminate hazardous conditions and/or other code violations; and 2) is owned by a
household which has a qualifying income as defined in the following sections and
which has been in permanent legal possession of the property for at least six
months prior to applying for financial assistance.
2. Eli ible Costs
Work and items of repair eligible under this program are to be completed as
available funds allow, in the following order of priority:
a. To make repairs and improvements necessary to the structure to correct
.<, health and safety hazards; %
b. To make other necessary repairs and improvements, including exterior painting
and modifications design to improve the mobility of handicapped or elderly
persons, in order to conform to code standards applicable to existing resi-
dential structures to ensure safe, decent, and sanitary housing; to enhance the
appearance of the structure and of the neighborhood exterior painting will be
included as an item of repair unless determined unnecessary;
c. To correct any incipient deficiencies which would make it impossible for a
structure to be brought to readily, and maintained at code standards;
d. To replace built-in cooking appliances when required for safety reasons;
e. To provide for or enlarge a room or finish an attic or basement in order to
alleviate a condition of overcrowding as specificed in Chapter 4 of the
Uniform Housing Code.
f. To remove unrepairable second buildings, structures, and other blighting
influences located on the property, which may include repair or replacement
of dilapidated fencing;
g. To make other general repairs if funds are available and when the amount
spent does not exceed 40% of the loan amount.
4See Appendix A for current table of income by household size which meet these criteria.
5For the financial purposes of this program, duplex is defned as one structure with two living
units or two single family structures on one parcel.
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3. Eligibility of the Applicant
In addition to being the owner-occupant of a single family unit or duplex in need
for the above repairs, to qualify for a zero-interest loan the applicant must:
a. Meet tV definition of a very low income household with an adjusted gross
income of 50% or less of the median income for the County, and have assets
which, for elderly households, (age 62 and over) do not exceed $20,000, and for
non-elderly households, have assets which do not exceed $10,000. Assets
would include bank accounts, stocks, bonds, investments, and real estate
holdings but not including the principal residence; and
b. Have not have been the recipient of a prior zero-interest loan for the property
in question within the past five years; and
C. In the case of the second unit in a duplex which is a rental property, conform
with Federal non-discrimination regulations and agree that, upon receipt of a
Loan or Grant from the County: 1) rents and other charges shall not be
increased beyond actual increases in taxes, and the percentage increase in the
Bay Area cost of living index issued by the U.S. Department of Commerce; or
2) the units to be rehabilitated will be rented to low and moderate income
families utilizing the Federal Section 8 Existing Unit Rental Subsidy Program.
C. Priorities for Award of Zero-Interest Loans
Applications will be evaluated and processed as received, based on the eligibility
requirements stated in Section B of these guidelines. The evaluation will consist of an
initial determination of the eligibility of the applicant followed by a determination of
the needed repairs of the structure. Financial assistance will be awarded to applicants
in the order in which their application materials are completed for eligibility deter-
mination. The determination of whether a zero-interest loan will be awarded shall be
based on the following criteria:
1. Zero-interest loans will be awarded to those households which:
a. Can utilize up to $20,000 for necessary repairs without exceeding the 90%
total debt limit; or
b. Need a zero-interest loan in order not to bring existing indebtedness plus this
financial assistance above 90% of the appraised after-improvement value of
the property.
D. Amounts, Terms, and Security for Zero-Interest Loans
1. Amounts
a. The maximum amount for a zero-interest loan shall not exceed $20,000 for a
single-family dwelling, with an additional $3,000 allowed for the second unit in
a duplex.
6lncome will be based on the applicant's income for the 12 months prior to its applicant for
financial assistance and reflect increases and decreases anticipated during the next 12
months. Adjusted gross income is defined as a household's annual gross income less:
1) Uncompensated or uncovered medical expense which exceed 3% of gross income;
2) $300 for each minor person in the household other than the spouse. 0 0
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b. A loan of up to 125% of the maximum specified in (a) above may be originated
subject to the following:
1) General property improvements as allowed under Section IV B (2)(7)
cannot exceed 40% of the loan maximum specified in Section IV D (1)(a).
2) The maximum amount by which the maximum loan amount specified in
Section IV D (1) (a) above may be exceeded is the lessor of:
a) $5,000
b) an amount derived by subtracting $12,000 (60% of the maximum loan
amount specified in Section IV D (a)(a) above) from the cost of
completing required code improvements (as specified in Section IV B
(2)(a-f) above). For purposes of the above . calculation costs not
allocable directly to improvements (profits, overhead, etc.) shall be
included on a pro-rata basis in a ratio reflecting the code/general
property improvement ratio.
c. The existing indebtedness against the property plus the amount of the
zero-interest loan, shall not exceed 90% of the appraised after-improvement
value of the property at the time the financial assistance is approved.
2. Term and Security Requirements
The zero-inteeest loan is due and payable after five years or upon sale or transfer
of the property, but may be repaid in full or in part at any time prior to such date.
As the end of five years, if the applicant household still resides in the same house
and can demonstrate its continued inability to repay the zero-interest loan, the
loan term may be extended for an additional five year term. If, however, at the
end of five years the applicant has sufficient income to be eligible for the interest
bearing loan component of the program, the zero-interest loan will be converted to
an interest bearing loan under the then existing guidelines and policies of such
program. All zero interest loans will be secured by a Deed of Trust, which serves
the Promissory Note. Upon transfer of the property in the case of inheritance, the
finanical capabilities of the heir will be considered prior to requiring repayment.
V. APPLICABILITY OF EACH PROGRAM ELEMENT
It is the intent of this program that each household, as applicant, be evaluated for eligibility
under the loan element first and the zero-interest loan element second to ensure that the
use of loans is maximized in order to establish a revolving fund, for future program years,
which realizes immediate returns of funds. For example, if the household can support
payments on a low-interest loan given its income and credit history, then it would not be
eligible for a zero-interest loan. The origination of a combination interest bearing
loan/zero interest deferred loan is permissive under these policies. In all cases, if the
household qualified for a conventional market rate loan, it would not be eligible for either of
these program elements.
VI. ADMINISTRATION
Agreements with financial institutions exist for implementation and servicing of the
financial aspects of the program elements. Implementation of the Housing Rehabilitation
Program is the responsibility of the County Building Inspection Department in close -
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coordination with the County Community Development Program administered by the County
Planning Department. For those elements of the program not contracted to a financial
institution, a Review Panel, composed of three persons knowledgeable in the housing finance
field and two citizen representatives has been established to make final decisions concerning
the awarding of financial aide. This panel will be provided with staff services by the
Building Inspection Department and other County staff as necessary. The Review Panel will
periodically review the procedures and criteria utilized by the participant financial
institutions.
VII. GENERAL PROCEDURES
The County Building Inspection Department will operate and administer a voluntary
residential code enforcement program accompanied withfinancial assistance. The.operation
and administration of the Housing Rehabilitation Program will be guided by the policies
promulgated herein. Such operaton and administration shall include the following:
1. Application intake and processing.
2. Determination of financial eligibility.
3. Inspection of the structure.
4. Preparation of a list of repair items.
5. Securing contractural services to undertake the repair work,7 including:
a) preparing bid packages
b) noticing the availaility of bid packages
c) reviewing bids received
d) selecting the contractor with the approval of the homeowger.
6. Preparation of financial documents for submittal to financial institution with whom
County has an agreement.
7. Preparation and execution of a contract document.
8. Inspecting the work of the rehabilitation contractor with respect to applicable codes,
the terms of the contract, and for conformance with accepted standards of quality in
completion of the rehabilitation work.
9. In conjunction with the homeowner, accept the work and authorize payments to the
contractor.
VIII. APPEALS
Any persons, firm, partnership, or corporation aggrieved by a decision pursuant to the
policies and procedures of the Neighborhood Preservation Program shall be afforded an
opportunity for review of that decision by a staff committee composed of representatives
from the Building Inspection Department, the Planning Department, and the County
Administrator's Office. Upon review of the case a final decision will be rendered by the
staff committee, subject to appeal to-the Board of Supervisors, under the regular appeal
procedures provided for in the County Ordinance Code.
7A the option of the homeowner the procedure for securing bids for rehabilitation work may
be modified to allow the homeowner to negotiate a contract with an eligible contractor of
the homeowner's choice. The County Building Inspection Department will review the
negotiated contract amount to assure that the market rate for such services has not been
exceeded.
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APPENDIX A
INCOME LIMITS BY HOUSEHOLD SIZE
FOR REHABILITATION FINANCIAL ASSISTANCE
ADJUSTED
ANNUAL GROSS INCOME
Persons Very Low
Per Income Moderate Income
Household Household Households
1 $ 11,200 $ 17,900
2 12,800 20,500
3 14,400 23,050
4 16,000 25,600
5 17,300 27,200
6 18,550 28,800
7 19,850 30,400
8+ 21, 100 321000
"Very Low Income" Households are defined as having an adjusted gross income of not more
than 50% of the SMSA median income, as adjusted for household size. "Median Income"
Households, for purposes of the Housing. Rehabilitation Assistance Program, are defined as'
having an adjusted gross income of not more than the median income in the SMSA, as
adjusted for household size. This table incorporates the most recently HUD published
income limits for the Community Development Block Grant program in the San Francisco
SMSA. HUD adjusts these figures from time to time and the County program will use the
most current available figures.
JK/mblc
8/6/84
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