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HomeMy WebLinkAboutMINUTES - 03312015 - C.147RECOMMENDATION(S): APPROVE revisions to Contra Costa County Neighborhood Preservation Program Policy (NPP) and Guidelines effective March 31, 2015. FISCAL IMPACT: No General Fund impact. NPP is funded by the Community Development Block Grant program. (CFDA# 14.218) BACKGROUND: The Neighborhood Preservation Program (NPP) provides low interest rehabilitation loans and grants to low-income homeowners. NPP is administered by the Department of Conservation and Development and is funded by federal Community Development Block Grant funds. Program policies were originally adopted in 1984 and have been updated periodically since that time. The policies were last updated in 2011. The policies establish guidelines for administering the rehabilitation program. The proposed changes and the rationale for the changes follow: 1. Increase the emergency grant amount from $10,000 to $15,000 for single family homes. The purpose of the emergency grant is to provide enough funds to remedy serious health and safety items. The current grant limit of $10,000 has not been raised in over 15 years and is no longer sufficient to cover common emergency repairs such as roof repairs and accessibility improvements. APPROVE OTHER RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Action of Board On: 03/31/2015 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF SUPERVISORS AYE:Candace Andersen, District II Supervisor Mary N. Piepho, District III Supervisor Karen Mitchoff, District IV Supervisor ABSENT:John Gioia, District I Supervisor Federal D. Glover, District V Supervisor Contact: Kara Douglas 925-674-7880 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: March 31, 2015 David Twa, County Administrator and Clerk of the Board of Supervisors By: June McHuen, Deputy cc: C.147 To:Board of Supervisors From:John Kopchik, Director, Conservation & Development Department Date:March 31, 2015 Contra Costa County Subject:Modifications to the Neighborhood Preservation Program BACKGROUND: (CONT'D) 2. Change the interest rate from three percent on amortizing loans and zero percent on deferred loans to one percent on all loans. NPP provides both amortizing and deferred loans depending on household income and ability to make monthly loan payments. Loans are evaluated at the end of the 15 year term and may either be converted to an amortized loan, or deferred for an additional 15 years. Currently, there is a three percent interest rate on amortizing loans and no interest on deferred loans. Interest rates should be consistent throughout the program. When a loan is repaid, a one percent interest rate will provide a small return to ther County to help cover loan administration costs. The rate is well below market rate and should not be an undue burden to the borrower. 3. Increase the loan limit from $50,000 to $70,000, and allow loans up to $85,000 with written approval from the Department of Conservation and Development Director, or designee. The combination of aging homes and increases in construction costs have resulted in the need for a higher loan limit. Over the past two years, there have been 11 requests (or 61 percent of requested loans) for loans that exceed the current $50,000 loan cap. 4. Limit the loan amount which can be used for general improvements to the lesser of 20 percent of the loan or $20,000.. The current cap for general improvements (repairs that are not to correct code violations or to improve the health, safety, or accessibility of the home) is 20 percent of the loan amount. As loan limits increase, so does the amount allowed for general improvements. While it is appropriate to allow some non-critical upgrades to a home, the amount should be limited in order to preserve resources and assist additional homeowners. 5. Increase the asset limit from $30,000 to $100,000 for households with a senior or disabled head of household, and from $15,000 to $50,000 for all other households. The asset limit was established to prevent provision of loans to households who have adequate resources to repair their homes. It is also important that households have resources to cover emergencies such as medical care or job loss. Therefore, households should be allowed to retain assets adequate for such circumstances and also qualify for NPP assistance. Staff believes the current limit is not sufficient. Additional revisions include energy efficient upgrades as allowed improvements, stating that the County Deed of Trust must be in first or second lien position, and not allowing the County loan to be subordinate to a reverse mortgage. CONSEQUENCE OF NEGATIVE ACTION: If not approved, the existing Neighborhood Rehabilitation Program guidelines would not be revised to reflect current needs and construction costs. CHILDREN'S IMPACT STATEMENT: NPP supports outcome #5 in the Children’s Report Card: “Communities are Safe and Provide a High Quality of Life for Children and Families”. ATTACHMENTS NPP Revised Guidelines 1 CONTRA COSTA COUNTY Department of Conservation and Development Neighborhood Preservation Program Revised Policies and Guidelines (Adopted by the Board of Supervisors on _______, 2015) I. INTRODUCTION A. This document sets forth policies for the Neighborhood Preservation Program (NPP) owner-occupied residential rehabilitation low-interest loan and grant program, as authorized by the Community Development Block Grant (CDBG) program (24 CFR Part 570). B. NPP is available throughout the CDBG Urban County, which is all of Contra Costa County, except for the cities of Antioch, Concord, Pittsburg, Richmond, and Walnut Creek. C. NPP has established several housing rehabilitation target areas. The target areas are consistent with the CDBG Consolidated Plan Low Income Areas. The program will be marketed to the target areas; however, all eligible households may apply. The current target areas are listed in Appendix A. II. OBJECTIVES AND PRIORITIES A. Primary Objective The primary objective of the Neighborhood Preservation Program (NPP) is to assist in the maintenance of viable communities by providing decent housing and a suitable living environment in the community, principally for persons of low and moderate income1, consistent with provisions of the CDBG program. B. 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 codes. 3. Stabilize and enhance older neighborhoods to enco urage future investment from the private sector and from other public funds and programs. 4. Develop economically integrated communities to allow low and moderate- income residents to enjoy the benefits of economic revitalization. 5. Improve the energy efficiency of homes built prior to 199 5. 1 See Appendix B for current income limits by household size. Appendix B will be updated to reflect current annual income limits as they become available. 2 To attain these objectives, the County has developed a financial assistance program consisting of low-interest loans and grants. The loans and grants must be used to rehabilitate owner-occupied homes. Eligibility for loans is based on household income, ability to service an additional monthly housing payment, and home equity. 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. Grants are limited to emergency repair work and provided to households who do not meet the minimum loan eligibility requirements in Section V. As a condition of receiving a loan or grant, 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 or grant commitment from NPP, the homeowner enters into a contract with an independent contractor to complete the rehabilitation project. The County is not a party to these contracts. C. Priorities for Award of Loans and Grants It is the intent of this program that each applicant household first be evaluated for eligibility under for a low-interest loan, and then for a grant. The program intends to maximize the use of loans in order to establish a revolving fund for future program years. The origination of a combination low-interest loan/grant is permissive under these policies. Applications will be evaluated and processed as received, based on the eligibility criteria and requirements stated in the following sections 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 o rder in which their complete application materials are compiled for eligibility determination. III. GENERAL PROPERTY REQUIREMENTS AND APPLICANT ELIGIBLITY A. General Property Requirements Owner-occupied single family structures, duplexes and mobile homes will be eligible for rehabilitation loan or grant assistance, if the property 1. is in need of repair to eliminate hazardous conditions a nd/or other code violations, 2. has no conditions that can not be mitigated pursuant to the National Environment Policy Act (24 CFR part 58) and Section 202(a) of the Flood Disaster Protection Act of 1973, 3. in the case of the second unit in a duplex that is a rental property, conforms with State and federal non-discrimination regulations. 3 B. Applicant Eligibility An eligible applicant is one who 1. is an owner-occupant of a single-family home, duplex2, or mobile home in need of the repairs listed in Section IV.B, 2. has owned and occupied the property for a minimum of six months prior to applying for NPP assistance, 3. is a member of a household with a low (up to 50% area median income) or moderate income (between 51 and 80% AMI)3, 4. has assets that, for an elderly (age 62 or over) and/or disabled household, does not exceed $100,000, and for a non-elderly household, has assets which do not exceed $50,000. Assets include bank accounts, stocks, bonds, investments, and real estate holdings, but do not include the principal residence or defined retirement accounts for non -senior household. Approved defined retirement account s must not be accessible without penalty, and 5. in the case of the second unit in a duplex that is a rental property, applicant agrees that, upon receipt of a loan from the County: a. rents and other charges shall not be increased beyond the greater of actual increases in property taxes and assessments, or the percentage increase in the Bay Area cost of living index issued by the U.S. Department of Commerce; or b. the second unit in the duplex to be rehabilitated may be rented to families utilizing the federal Section 8 Housing Choice Voucher Program. IV. ELIGIBLE IMPROVEMENTS Work and items of repair eligible under the program are to be completed as availabl e 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 repairs and improvements as necessary, including the following: 1. exterior painting; 2. physical modifications designed to improve the mobility of handicapped or elderly persons; 2 For the purposes of NPP, duplex is defined as one structure with two living units or two single -family structures on one parcel. 3 Income levels are defined as a percentage of the area median income (AMI) for the Oakland Primary Metropolitan Statistical Area as adjusted for household size and defined by the U.S. Department of Housing and Urban Development (HUD). 4 3. improvements to conform to code standards applicable to existing residential structure to ensure safe, decent, and sanitary housing ; 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 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; 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 and/or improvements if funds are available and when the amount spent does not exceed 40 percent of the loan amount up to a maximum of $20,000. General repairs or improvements are not allowed under the grant program described in Section V, below. V. REHABILITATION LOAN AMOUNTS, TERM, AND SECURITY A. Loan Amounts 1. The maximum amount for a rehabilitation loan shall not exceed $70,000 for a single family dwelling. The maximum rehabilitation loan amount may be exceeded up to $85,000 on a case by case basis to correct extremely serious health and safety issues, and make accessibility improvements, as recommended by the NPP Principal Building Inspector, and approved by the Director of the Department of Conservation and Development, or designee. 2. The loan maximums specified above are subject to the following allowances and limitations: a. General property repairs or improvements as allowed under Section IV.G cannot exceed 40 percent of the loan amount up to a maximum $20,000. b. The rehabilitation loan plus existing indebtedness agains t the property shall not exceed 90 percent of the appraised after- improvement value of the property at the time the loan is approved. c. The County loan must be first or second lien position. d. The County loan may not be subordinate to a reverse mortgage. B. Low-Interest Loans a. Low-Interest Loans are subject to one percent simple interest rate. b. If the homeowner can afford a monthly payment that will not cause total housing costs (principal, interest, taxes, and insurance) to exceed 35 percent of their monthly income, the Low Interest Loan will be amortized over the term with monthly payments due to the County. 5 c. If the homeowner cannot afford monthly payments, the Low -Interest Loans will be deferred for the term of the loan. C. Security Requirements Loans must be secured by a Deed of Trust, which secures the Promissory Note. D. Loan Terms 1. Loans may be pre-paid in part or in whole at any time and without any penalty. 2. The term is 15 years. A loan recipient may request an extension of an additional 15 years if they are low or moderate income. The loan may be deferred for another term, or converted to an amortizing loan. 3. Loans are due and payable with interest upon sale or transfer of the property or if the home should cease to be owner occupied . Transfers that do not require repayment of the loan include the following: a. transfer to an existing spouse or domestic partner who is also an obligor under the note, b. transfer to a spouse or domestic partner where the spouse or domestic partner becomes the co-owner of the Property, c. transfer between spouses as part of a marriage dissolution proceeding, d. transfer to an existing spouse, domestic partner, or child of borrower by devise or inheritance following the death of borrower, or e. transfer by borrower into an inter vivos trust in which borrower is the beneficiary VI. HOUSING REHABILITATION and LEAD-BASED PAINT HAZARD CONTROL GRANTS A. Introduction Rehabilitation grants will be provided only to low and moderate income households who do not qualify for a loan due to insufficient equity in their home and owners of mobile homes. Repairs funded by grants are limited to correcting items that pose urgent health and safety threats . Grants may not be used for general repairs or improvements. Grants up to $5,000 for lead-based paint hazard control will be made to low and moderate income households who are living in a home built prior to 1978 and receiving a loan or grant through NPP. 6 B. Eligible Repairs 1. Work and items of repair eligible under the rehabilitation grant 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 repairs and improvements to correct extreme structural deficiencies, which may include: i. exterior painting ii. physical modifications designed to improve the mobility of handicapped or elderly persons iii. improvements to conform to code standards applicable to existing residential structure to ensure safe, decent, and sanitary housing; and d. To correct any incipient deficiencies which would make it impossible for a structure to be brought to and readily maintained at code standards. e. To improve energy efficiency of the dwelling through additional insulation, new windows and exterior do ors, and other similar improvements. 2. Lead-based paint grants may only be used for costs associated with lead - based testing and remediation. C. Grant Amounts 1. The maximum rehabilitation grant amount is $10,000 for a mobile home or $15,000 for a single-family dwelling. 2. The maximum rehabilitation grant amount may be exceeded on a case by case basis to correct serious health and safety issues as determined by the Director of the Department of Conservation and Development, or designee. 3. The maximum lead-based paint grant amount is $5,000. 4. An applicant may receive both a rehabilitation grant and a lead -based paint grant. VII. ADMINISTRATION Implementation and administration of the NPP is the responsibility of the Contra Costa County Department of Conservation and Development. 7 VIII. APPEALS Any persons, firm, partnership, or corporation aggrieved by a decision pursuant to the policies of the NPP shall be afforded an opportunity for review of that decision by the Director of the Department of Conserva tion and Development, or designee. Upon review of the case a final decision will be rendered by the Director, subject to appeal to the Board of Supervisors, under the appeal procedures in Title 1, Chapter 14-4 in the County Ordinance Code. 8 APPENDIX A Target Areas Cities – El Cerrito Martinez Pinole San Pablo Unincorporated County – Bay Point Bayview-Montalvin Manor Bethel Island Byron Crockett East Richmond Heights El Sobrante Knightsen Mountain View North Richmond Pacheco Port Costa Rodeo Rollingwood Tara Hills Vine Hill 9 APPENDIX B 2014 Income Limits Extremely Low (30%AMI) Low (50% AMI) Moderate (80% AMI) 1 Person $19,350 $32,200 $47,350 2 Person 22,100 36,800 54,100 3 Person 24,850 41,400 60,850 4 Person 27,600 46,000 67,600 5 Person 29,850 49,700 73,050 6 Person 32,050 53,400 78,450 7 Person 36,030 57,050 83,850 8 Person 40,090 60,750 89,250