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Contra
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TO: BOARD OF SUPERVISORS Costa
tlr- �H County
FROM: CARLOS BALTODANO, DIRECTOR e, M 7
BUILDING INSPECTION DEPARTMENT
DATE: JULY 8, 2003
SUBJECT: COMMUNITY DEVELOPMENT NEIGHBORHOOD PRESERVATION PROGRAM
HOUSING REHABILITATION PROGRAM POLICIES
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS:
ADOPT the updated Community Development Neighborhood Preservation Program's Housing
Rehabilitation Program Policies.
FISCAL IMPACT
None.
BACKG'ROUN'D/REASONS FOR RECOMMENDATIONS
A. The Neighborhood Preservation Program is a home rehabilitation loan program sponsored by the
Building Inspection Department. The rehabilitation program is funded by Community Development Block
Grant funds, which are made available to the County under the Housing and Community Development
Act of 1974, as amended (42 U.S.C. 5301 et seq.)
B. The County Community Development Department receives the funds and authorizes the Building
Inspection Department to administer the portion of the funds allocated to the rehabilitation program
through an agreement between both departments.
C. The policy establishes guidelines for administering the rehabilitation program,which offers low-interest
and zero-interest loans to qualifying low-income and very-low-income homeowners. The Board of
Supervisors adopted the existing policies on July 17, 1984 and had not been reviewed by the County
Counsel since then.
D. The County Counsel has reviewed the policies and recommended revisions to the language of the
policy. The purpose of the revisions was to clarify the wording used to describe the Program's
concepts, objectives and procedures. These recommended revisions were implemented to the
existing policies and approved as to form by the County Counsel. The policies were revised to bring
them in line with current business terminology. There were no changes made to existing Neighborhood
Preservation Program operating procedures and policies.
E. The updated policy is attached.
CONTINUED ON ATTACHMENT: X YES SIGNATURE
ECOMMENDATION OF COUNTY ADMINISTRATOR
_RECOMMENDATION OF BOARD COMMITTEE
"PPROVE .- _OTHER
SIGNATURE(S):
4�
ACTION OF BOAR O Y 8, 2W3 APPROVED AS RECOMMENDED X OTHER
VOTE OF SUPERVISORS 1 HEREBY CERTIFY THAT THIS IS A TRUE
X UNANIMOUS(ABSENT IV ) AND CORRECT COPY OF AN ACTION TAKEN
AYES: NOES: AND ENTERED ON THE MINUTES OF THE
ABSENT: ABSTAIN: BOARD OF SUPERVISORS ON THE DATE
*District III Seat VACANT* SHOWN.
ATTESTED July 8, 2003
JOHN SWEETEN,CLERIC OF
THE BOARD OF SUPERVISORS
AND COUNTY ADMINISTRATOR
r
BY ALI° 't DEPUTY
I
CONTRA COSTA COUNTY
Community Development Neighborhood Preservation Program
Housing Rehabilitation Program Policies
(Adopted by the Board of Supervisors on July 17, 1984)
I. INTRODUCTION
A. This document 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 1 of the Housing
and Community Development Act of 1974, as amended (42 U.S.C. §5301 et seq.).
B. The program is available throughout Contra Costa County, except for the cities of Antioch,
Concord, Pittsburg, Richmond,and Walnut Creek. Contra Costa County is considered an urban
county under 42 U.S.C. §5302.
C. The County has established several Housing Rehabilitation Target Areas. The purpose of these
target areas is to market the program and its components to specific areas in the County whose
residents may benefit from the program. However, all eligible persons may apply. The current
target areas are listed in Appendix A.
D. The County has agreements with financial institutions to implement and service the loan
components of the program.
II. OBJECTIVES
Primary Objective
The primary objective of the Neighborhood Preservation Program, and in particular the housing
rehabilitation components, 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
1. Eliminate slums and blight, and prevent blighting influences that cause the
deterioration of property and neighborhoods.
2. Eliminate conditions that are detrimental to health, safety and public welfare by
rehabilitating housing that does not meet building or housing codes.
3. Stabilize and enhance older neighborhoods to encourage future investment from the private
sector and from other public funds and programs.
4. Development economically integrated communities to allow low-income and very-low-income
residents to enjoy the benefits of economic revitalization.
To attain these objectives,the County has developed a financial assistance program consisting of two
components: low interest loans and zero-interest loans. The leans must be used to rehabilitate
homes. A person's eligibility for the program depends on household income and ability to service an
additional monthly housing payment. The intent of the program is to reach the maximum number of
households,while at the same time ensuring a maximum return on loans to make future assistance
available to other households.
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As a condition of receiving a loan,a homeowner must agree to allow the County to enter the premises
and inspect the premises to determine whether the rehabilitation work complies with building,housing
and safety codes.
Once a homeowner receives a loan, the homeowner enters into a contract with a contractor to
complete the rehabilitation project. The County is not a party to these contracts.
Ill. HOUSING REHABILITATION LOW-INTEREST LOAN ELEMENT
A. Introduction
The Loan Element of this Program is designed to provide financial assistance for the housing stock
of low-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 singe family structures and dupiexes2 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. Ellgible Costs
Work and items of repair eligible under the 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
physical modifications designed to improve the mobility of handicapped or elderly
persons, in order to conform to code standards applicable to existing residential
structure 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;
'See Appendix B for current tables of income by household size that meet these criteria.
2For the financial purpose 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 replacements
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 Ap licant
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 household with an adjusted gross income less than 80%of the median income
for the County as established by HUD for the Oakland Primary Standard
Metropolitan Statistical Area(PMSG, Exhibit C); and
b. Have assets that, for elderly households (age 62 or 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. In the case of the second unit in a duplex that 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 III (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 compiled for eligibility determination.
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$25,000
for a single-family dwelling with an additional$3,000 allowed for the second
unit in a duplex.
b. The loan maximum specified in (a) above may be exceeded subject to the
following limitations:
1) General property improvements as allowed under Section 111 (B) (2) (g)
cannot exceed 20%of the loan maximum specified in Section III (D)(1)(a).
Income 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 uncompensated or uncovered medical expenses that
exceed 3%of gross income.
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2)The maximum amount by which the maximum loan amount specified in
Section IV(D) (1)(a) above may be exceeded is 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
111 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-ratio 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 7 percent, based
on the household's ability to pay as defined in Section 111 (D) (3) below.
3. Loan Term and Security Requirements
The term of the Rehabilitation 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 35%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.
IV. HOUSING REHABILITATION ZERO-INTEREST LOAN ELEMENT
A. Introduction
The zero-interest loan element of this Program is designed to provide financial assistance
for the housing stock of households with very low income4 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 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 for at least six months prior to
applying for financial assistance.
4See Appendix B for current table of income by household size that meets these criteria.
5For the financial purpose of this program,duplex is defined as one structure with two living units or two single-
family structures on one parcel.
4
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. 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 confirm 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 code 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 specified 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 20% of the loan amount.
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 the 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 that,for elderly
households(age 62 or over)do not exceed$20,000,or for non-elderly households
do not exceed $10,000. Assets may include bank accounts, stocks bonds,
investments,and real estate holdings but do not include the principal residence;and
b. Have not 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 that 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.
6income will be based on the applicant's income for the 12 months prior to its application 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 uncompensated or uncovered medical
expenses that exceed 3% of gross income.
C. Priorities for Award of Zero-Interest Loans
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Applications will be evaluated and processed as received, based on the eligibility
requirements stated in Section III (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. The
determination of whether a zero-interest loan will be awarded shall be based on the following
criteria:
1. The County will consider providing zero-interest loans for households with incomes
between 51%and 80%of area median income(moderate income households)in the
following circumstances:
a. Total indebtedness on the property including the amount of the County loan
will not exceed 90%of the after-rehab appraised value of the property,and
b. A zero-interest loan is necessary to prevent the applicant's monthly debt
ratio including the County's loan from exceeding 35%of the applicant's
monthly gross income.
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.
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 20% 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 maybe exceeded is the
least of the following:
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-ratio 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 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-interest 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.
At 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
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term may be extended for an additional five-year term. If, however,at the end of
five years the applicant has sufficient income tobeeligible for the interest bearing
loan component cdthe program,the zero-interest loan will beconverted tuan
interest bearing loan under the then existing guidelines and policies of such
program. All zero interest loans will basecured bvaDeed cdTrust,which serves
the Promissory Note. Upon transfer ndthe property inthe case ofinheritance,the
financial capabilities and occupancy of the heir will be considered prior to requiring
repayment.
V. APPLICABILITY OFEACH PROGRAM ELEMENT
his the intent ofthis program that each household,amapplicant,beevaluated for eligibility undertho
loan element first and the zero-interest |nun element second boensure that the use of loans is
maximized in order to establish a revolving fund,for future program years,which realizes immediate
return offunds. For example, ifthe household can support paymmntmonalow-{nteree(|oangiven
its income and credit history,then it would not be eligible for a zero-interest loan. The origination ofa
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
ofthese program elements.
Vi ADMINISTRATION
Agreements with financial institutions exist for implementation and servicing ufthe financial aspects
of the program elements. Implementation of the Housing Rehabilitation Program is the responsibility
of the County Building Inspection Department. A Review Panel, composed of three persons
knowledgeable inthe housing finance field andtmxo citizen representativeshas 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. The Review Panel will periodically review the
procedures and criteria utilized by the participant financial institutions.
V||. APPEALS
Any persons,firm,partnership, mdion aggrieved by a decision t to the policies 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.
Updated un2/2mapc
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