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HomeMy WebLinkAboutMINUTES - 12171991 - 1.145 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA TO: Board of Commissioners DATE: December 17, 1991 FROM: Perfecto Villarreal , Executive Director cc: SUBJECT: GUIDELINES FOR RENTAL REHABILITATION PROGRAM FOR PRIVATELY OWNED PROPERTY I. RECOMMENDED ACTION: Approve the attached Guideline/Rental Rehabilitation Program for Privately Owned Properties, revised and dated September 1991, providing county-wide deferred payment loans. II. FINANCIAL IMPACT: Funding for this program is from grants received by Contra Costa County under the U.S. Housing and Urban Development's Rental Rehabilitation Program and Community Development Block Grant Program. III. REASONS FOR RECOMMENDATION/BACKGROUND: In June, 1991 the Advisory Housing Commission approved changes in the Rental Rehabilitation Program Guidelines to provide deferred payment loans for improvement of rental properties for low income renters. A later review by the County Community Development Department recommended the new guidelines be modified to allow loans to be made county wide. This change has been made in the attached guidelines and is presented here for your review. At its regular meeting on November 25, 1991, the Advisory Housing Commission approved the acceptance of the revised Rental Rehabilitation Guidelines. IV. CONSEQUENCES OF NEGATIVE ACTION: Should the Board of Commissioners elect not to approve the revised Rental Rehabilitation Guidelines, deferred payment loans may not be available to improve rental properties for low income renters. CONTINUED ON ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF EXECUTIVE DIRECTOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S) ACTION OF BOARD ONUM 17 1991 APPROVED AS RECOMMENDED 1< OTHER VOTE OF COMMISSIONERS _X_ UNANIMOUS (ABSENT ) I HEREBY CERTIFY THAT THIS A TRUE AND AYES: NOES: CORRECT COPY OF AN ACTION TAKEN AND ABSENT: ABSTAIN: ENTERED ON THE MINUTES OF THE BOARD OF COMMISSIONERS ON THE DATE SHOWN. CC: ATTESTED DEC 17 1991 Phil Batchelor, Clerk of the Board of Commissioners M382/7-83 BY , DEPUTY T' Guidelines Rental Rehabilitation Program For Privately Owned Properties I. Program Goals: The Housing Authority of the County of Contra Costa (Housing Authority) operates a rental rehabilitation program (Program) designed to achieve four central goals: A. Upgrade substandard privately owned rental housing. B. Provide additional lower income rental housing opportunities. C. Contribute to the revitalization of declining areas and help stabilize neighborhoods moving toward decline. D. Prevent displacement of lower income families. Il. Geographical Areas of the Program: A. General Area: All areas of the County of Contra Costa except the cities of Concord, Antioch, Walnut Creek, Pittsburg and Richmond and Target Areas shown below. B. Target Areas: Portions of the following communities have been designated as Target Areas in which the Program may provide financial assistance. Target areas were selected because the rents for standard units are generally affordable to lower income families and the character of the neighborhood indicates that the rents are not likely to increase more than the rate for rent increases that can reasonably be anticipated in the market area for the next five years. The Target Areas are: North Richmond San Pablo Rodeo Crockett Martinez West Pittsburg Oakley Brentwood Please see Attachment A for the specific geographic borders. III. Proiect Selection: A. Eligibility for Assistance: 1. The property must be primarily residential use property. 2. At least 70%of the dwelling units must be occupied by lower income families (as defined by 24 CFR 813.102) at the time of application. A vacant unit may be considered a lower income unit. 3. Units assisted may not be occupied by the owner. wPcuiDEez Guidelines, Rental Rehabilitation Program,September 1991 2 4. There must be at least a $3,000 average cost of rehabilitation work per dwelling unit within the project (e.g. a two dwelling unit project where there is $2000 of eligible work in one unit and $4,000 of eligible work in the other unit would qualify because the average per unit cost meets or exceeds the minimum of$3,000). 5. A project must require rehabilitation, measured by whether or not the project meets the rehabilitation standards as defined herein. B. Project Selection Criteria: The following selection criteria has been established to set priorities for selecting applications from eligible applications received when, due to the demand for program funds, all eligible projects cannot be funded. The criteria are listed in the order of highest priority. 1. The number of bedrooms per unit: a. The percentage of the total number of 3 or more bedroom units in the project (the higher the percentage, the higher the rating. I b. The percentage of the total number of 2 bedroom units in the project (the higher the percentage, the higher the rating). 2. The percentage of total units in the project occupied at the time of application by: a. Very low income families (at or below 50% of the County median income adjusted for family size). b. Low income families (at or below 80% of the County median income adjusted for family size). 3. The amount of per unit rehabilitation cost required for the project to meet the Rehabilitation Standard defined herein (the higher the amount, the higher the priority). IV. Financial Assistance in Target Areas: A. Source of Funding: The source of the funding of the financial assistance provided under this program shall be from grants received by Contra Costa County under the U.S. Department of Housing and Urban Development's Rental Rehabilitation Program, and Community Development Block Grant Program. B. Type of Financial Assistance: Financial assistance provided by the program to eligible projects/property owners shall be in the form of a Deferred Payment Low Interest Loan as described below. 1. Interest Rate: 3% simple interest, fixed. AMWIM92 Guidelines, Rental Rehabilitation Program, September 1991 3' 2. Payments and Term of the Loan: There shall be no monthly payments for the term of the loan. The entire principal and accrued interest shall be due in full at the earliest of the following events: a. The sale or transfer of the property b. Ten (10) years from the date of the note (this period may be extended an additional five years at the option of the Housing Authority if it is determined that the project continues to meet the rental housing needs of lower-income families). 3. Maximum Loan Amount: The loan shall not exceed the lesser of the following two values. a. 50% of the eligible rehabilitation costs. b. The following per dwelling unit schedule. (1) $5,000 per 0 bedroom dwelling unit. (2) $6,500 per 1 bedroom dwelling unit. (3) $7,500 per 2 bedroom dwelling unit. (4) $8,500 per 3 bedroom or more dwelling unit. These amounts may be increased subject to approval of a high cost waiver by the U.S. Department of Housing & Urban Development. However, the amount of the matching funds must also be increased to equal or exceed the amount of the loan (see "Matching Funds" below). 4. Matching Funds: In Target Areas, evidence that at least 50% of the eligible rehabilitation costs will be funded through other sources (owner cash, conventional financing, personal loan, etc.) must be provided. In the event the source of the matching funding is a loan that will result in a security instrument being recorded against the property, the total encumbrance on the property after the rehabilitation loan is made shall not exceed 90% of after rehabilitation value. Upon the recommendation of the Rehabilitation Technical Officer and the approval of the Director of Development, available Community Development Block Grant funds may be used to fulfill this matching funds requirement, in whole or in part if all other sources of matching funds have been exhausted. V. Financial Assistance in General Areas: A. Source of Funding. Funding for these loans is provided by grants received by the County of Contra Costa from the U.S. Department of Housing and Urban Development through the Community Development Block Grant Program. 1. Type of Financial Assistance: Deferred Payment Loans with no interest will be granted to eligible borrowers and projects. Rent Limitations to create affordable RRPGUIDE.92 Guidelines, Rental Rehabilitation Program, September 1991 4 rents for "Low Income" households is required as a part of the Regulatory Agreement for these loans. See Property Tenancy Eligibility Requirements below. 2. Interest Rate: No interest is charged on these loans. 3. Payments and Term: No monthly payments are required. The entire loan principal balance is due and payable at the earliest of: a. Sale or transfer of the property. b. Ten years from the date of the Promissory Note. This period may be extended at the option of the Housing Authority if it is determined that the project continues to meet the needs of low income households. 4. Maximum Loan Amount: The loan shall not exceed the lesser of the following: a. The eligible rehabilitation costs. i b. The following schedule: $17,500 per 0 bedroom (studio) dwelling unit $20,000 per 1 bedroom dwelling unit $22,500 per 2 bedroom dwelling unit $25,000 per 3+ bedroom dwelling unit This loan limit may be increased subject to the recommendation of the Housing Technical Officer and approval by the Director of Development. C. 90% of"As-Is Appraisal Value" plus 80% of estimated rehabilitation costs less all other loans secured by the property. Appraisal values shall be made by an approved fee appraiser or by Housing.Authority staff. d. 90% of"After Rehabilitation Appraisal' less all other secured loans as determined by an approved fee appraiser or by Housing Authority staff. VI. Conditions Applicable to All Loans A. Security: all loans shall be secured by a Deed of Trust recorded against the subject property. B. Pre-payment: Partial payment of principal and interest is prohibited. If borrower wishes to pay off the note prior to its due date, all amounts shall become due in full, principal plus accrued interest, if any. Full repayment shall release borrower from any and all obligations under the promissory note. There shall be no pre-payment penalty charge. C. Other Underwriting Eligibility Criteria: 1. The borrower must have fee simple title to the property. RPPGUIDE-92 Guidelines, Rental Rehabilitation Program, September 1991 5 2. The borrower must have a satisfactory credit history and the project must be able to generate adequate income to cover all expenses and provide owner returns on equity.The Housing Authority reserves the right to obtain and review information regarding the general credit worthiness of the project including information required to perform a cash flow analysis of the project and verifying the income and assets of the borrower. D. Assumability, These loans are not assumable. E. Equity and Appraisal: An after rehabilitation equity of 10% or more shall be required in the property. The after rehabilitation value shall be calculated as follows: 1. "As-Is Appraised Value" plus 80 % of the estimated rehabilitation cost. "As-Is Appraised Value" shall be determined by an approved fee appraiser or Housing Authority staff at the option of the Housing Authority. 2. An "After Rehabilitation Appraisal" by an approved fee appraiser. VII. Reeulatory Agreement and Promissory Note: In order to assure that program goals are met and that Federal program requirements are complied with, the Housing Authority requires that all loan recipients under this program enter into a Regulatory Agreement (see Attachments B.and C) with the Housing Authority. This Agreement may be changed from time to time by staff to insure compliance with changes in HUD regulations and to assist in meeting program goals. A Regulatory Agreement shall be executed together with a Promissory Note (See Attachment D) and Deed of Trust. Breach of this Regulatory Agreement shall be cause for making demand in full on the note. VIII. Rehabilitation Standards: The following rehabilitation standards are established as one factor in determining the eligibility of a given project under the Program. In order to meet the requirement the project must, at the time of application, require rehabilitation, measured by whether the project before the assisted rehabilitation does not meet the rehabilitation standards as herein referred to. A. Section 8 Housing Quality Standards for Existing Housing contained at 24 CFTC 882.109. B. Uniform Housing Code. IX. Rehabilitation Expense Eligibility A. Eligible Expense Categories: The following categories of expense shall be considered eligible for funding under the program. 1. All work identified as not meeting the Rehabilitation Standards. I Fi MUIDEM Guidelines, Rental Rehabilitation Program, September 1991 6 2. Costs necessary to make essential repairs or improvements related to the Rehabilitation Standards. 3. Repair or replace major housing systems-in danger of failure . 4. Improvements necessary to permit the use by handicapped persons. 5. The abatement of lead based paint hazards. 6. Energy-related repairs or improvements. 7. Architectural, engineering or related professional services required in the preparation of rehabilitation plans and drawings or writeups. 8. Costs for processing and settling the financing for a project, such as lender origination fees, credit reports, fees for title evidence, fees for recordation and Filing of legal documents, building permits, attorneys' fees, private appraisal fees and fees for an independent rehabilitation cost estimate. 9. Relocation payments made to tenants who are displaced by the rehabilitation activitiert. 10. Costs for the owner to provide required information services to tenants. B. Ineligible Expense Categories: The following categories of expense shall be considered inelieible for funding under the program. 1. Acquisition of property. 2. - Refinancing of existing debt. 3. New construction. X. Tenant Assistance Policy It is the policy of the Housing Authority to accept only projects into the program where all families in residence may eontinue to be housed within the project complex following rehabilitation. It is expected that most families may continue to reside in their residence with minimal inconvenience while the work is being done. If the rehabilitation requires that a family be relocated temporarily so that the work may be performed, that family shall be offered a suitable unit within the project complex. The owner shall be required to,assist the family in moving to the new unit and/or to pay for reasonable out of pocket moving expenses, including utility charges. If a suitable temporary relocation unit is not available within the project complex, the owner shall be required to locate a suitable unit that is available for rent on a temporary basis, to pay for reasonable out of pocket moving expenses to and return to the project complex upon completion of the rehabilitation work, and to pay for any additional rent and utility expense incurred by the family for the duration of the relocation period in compliance with federal law. Resident families may receive rental assistance through the Section 8 Certificate/voucher Program, administered by the Housing Authority, under the Section 8 Program, a portion.of the F4*'oLnoEM Guidelines, Rental Rehabilitation Program, September 1991 7 rent is paid directly to the owner by the Housing Authority. Upon the owner entering into a loan agreement with the Housing Authority, resident families will be notified where to apply for assistance under the Section 8 Program. It is extremely important that the family report to the office to which they are directed in order to insure that their eligibility be determined and that any assistance to which they are entitled may be awarded. Following the determination of eligibility for the Section 8 Program, families will be notified about the time and place for their briefing. At the briefing, families will be informed about the program, the amount of assistance they are eligible for, and may ask staff about any other features of the program. Due to the lack of public funds for relocation of tenants, projects which require the permanent displacement of existing tenants for whatever reason, including overcrowding, will not be approved unless adequate resources are available from the borrower. It is the policy of the Housing Authority not to discriminate in providing information, counseling, referrals or other relocation services to persons affected by rental rehabilitation activities. SFPautOE02 Guidelines, Rental Rehabilitation Program, September 1991