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HomeMy WebLinkAbout09867RESOLUTION NO. 9867 A RESOLUTION REPEALING RESOLUTION 6846 AND ADOPTING A RESOLUTION ESTABLISHING ADMINISTRATIVE PROCEDURES FOR THE CITY'S HOMEOWNER HOUSING REHABILITATION LOAN PROGRAM TO ASSIST LOW- AND MODERATE- INCOME OWNERS OF SINGLE FAMILY RESIDENCES IN THE REHABILITATION OF SUBSTANDARD HOUSING WHEREAS, there is a shortage in the City of Pueblo of safe, decent and sanitary housing which is within the financial capabilities of Iow-and moderate-income families; and WHEREAS, the elimination of substandard housing and the providing of decent, safe and sanitary housing for Iow-and moderate-income families serves public and municipal purposes; and WHEREAS, the rehabilitation of substandard housing would confer a general benefit upon the City of Pueblo at large; and WHEREAS, it is desirable and there exists a demonstrated need to make funds available to Iow-and moderate-income families to assist in the rehabilitation of substandard housing; and WHEREAS, the funds made available for the purpose of implementing and executing the terms and provisions of this Resolution principally serve public rather than pdvate purposes. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The City, on an annual basis by appropriate legislative enactment may, but without obligation to do so, make available to the Housing and Citizen Services Department (herein Department") funds for the purpose of implementing and executing the terms and provisions of the Homeowner Housing Rehabilitation Program of the City, a copy of which is attached hereto and incorporated herein as is set out in full. (herein "Program"). Department may make application for other available moneys for housing rehabilitation loan and grant programs and shall incorporate such grant programs and shall incorporate such grants or loans into the Program to further the objectives of the Program in meeting the housing and financial capabilities of Iow-and moderate- income families. The program is hereby approved and the Department shall be responsible for the execution of the Program, in accordance with the terms and provisions of this Resolution and Program. SECTION 2. Resolution No. 6846 adopted November 11, 1991, relating to the Program is hereby repealed effective upon passage of this Resolution; provided, however, that assistance provided under said prior Resolution shall be and remain subject to the provisions of said prior Resolution. SECTION 3. All funds repaid by applicants shall be separately accounted for and used only for similar loans or grants of housing and rehabilitation assistance under this Resolution and Program or subsequent Resolution and Program, which may be adopted by the City Council providing for similar programs. All funds received as program income including principal and interest loan repayments, or other sources of pdvate receipts through the Program, shall be deposited into the Finance Department of the City and credited to Fund No. 250 and 251 for housing rehabilitation. SECTION 4. This Resolution and Program shall become effective immediately upon final passage and approval. INTRODUCED May 27, 2003 BY Al Gurule APPROVED: President of City Council ATTEST: City Clerk HOMEOWNER HOUSING REHABILITATION PROGRAM GUIDELINES CITY OF PUEBLO, COLORADO INTRODUCTION The City of Pueblo, Colorado, has incorporated into its U. S. Department of Housing and Urban Development (HUD) required Consolidated Plan a list of objectives and projected use of funds for the Community Development Block Grant (CDBG) and HOME Entitlement Program Funds. The housing component of the Consolidated Plan describes the objectives for providing housing rehabilitation assistance to low/moderate income, single-family, homeowner residents of the City of Pueblo. CDBG/HOME funds are provided for such purposes by the HUD and are governed by Federal regulations and requirements as issued by HUD and other Federal agencies. The City of Pueblo certifies to HUD that all CDBG/HOME funds will be expended in accordance with the Federal regulations and requirements governing the program, including, but not limited to, the program eligibility requirements at 24 CFR 570.202 and the National Objective requirements at 24 CFR 570.208, and the HOME federal hous'mg regulations at 24 CFR 92. The City of Pueblo acting by and through its Housing and Citizen Services Department ("HCSD") has structured its homeowner housing rehabilitation program to insure that all Federal regulations and requirements will be met. SECTION 1 - DEFINITIONS A. Community Development Block Grant Program (CDBG) The source of funds authorized by Congress and approved by the U.S. Department of Housing and Urban Development for use in this program. B. Home Investment Partnership Program (HOME) The source of funds authorized by Congress and approved by the U.S. Department of Housing and Urban Development for us in this program C. U.S. Department of Housing and Urban Development (HUD) The Federal agency providing funds used in this program. D. Low-and-Moderate Income (LMD Homeowner Housing Rehabilitation Program Guidelines I The term given to individuals and households whose total gross income falls below certain levels established by the Federal government. They are based on HUD estimates of median family income, with adjustments for family size. In this program, the Section 8 lower income limits established by HUD will apply. E. Grantee (recipient) The City of Pueblo is the governmental unit receiving Federal funds, and, therefore, is the grantee. In the ease of the HOME program the Pueblo Consortium is the grantee. F. Eligible Family Unit: One or more persons related either by blood, adoption, marriage, or familial status who are occupying a permanent residential structure dwelling unit at the time of application for a loan. G. Property Rehabilitation Standards (PRS) Property Rehabilitation Stand_a_rds are defined as the Codes adopted by the City of Pueblo and enforced by the Pueblo Regional Building Department, namely, Uniform Building Code, National Electrical Code, Uniform Plumbing Code, Uniform Mechanical Code, Uniform Housing Code, and Uniform Abatement of Dangerous Building Code (herein "Local Codes"). Theses standards are greater than HUD Section 8 Housing Quality Standards. Standard Condition -- Dwelling units that meet the requirements of the Ix)cai Codes as they pertain to existing housing, but not as they pertain to new construction, contain sufficient bedrooms to accommodate the size of the eligible family unit, and do not contain defects which could threaten the health or safety of the occupants. Maintenance is required only to the extent it does not involve .qxactural repairs which are Local Code violations. These eligible family dwelling units are considered safe, decent shelter in which repairs and maintenance can be privately undertaken and the Section 8 Existing Housing Quality Standards are equaled or exceeded. Substandard Condition and not Suitable for Rehabilitation -- Dwellings units which are in such poor condition as to be neither stnlctumlly nor financially suitable for feasible rehabilitation. Units will show exterior signs of deterioration, dilapidation, or abandonment. The deficiencies covered by this category range fiom rotted window sills, missing roof shingles, broken gutters, to cracked foundations and sagging exterior walls, roofs or other health and safety violations as a result of defective major plumbing, electrical or mechanical systems. At a minimum, these units do not meet the Section 8 Existing Housing Quality Standards. Homeowner Housing Rehabilitation Program Guidelines 2 Substaodurd Condition but Suitable for Rehabilitation - Dwelling units which do not meet Standard Conditions, but are both financially and structurally feasible for rehabilitation and does not include units that require only cosmetic work, correction of minor livability problems, or maintenance work. The units show exterior signs of deterioration and require more than routine maintenance. Such units could have rotted windowsills or major electrical, plumbing, or mechanical system failure, but appear fully capable of rehabilitation. The unit can be repaired in accordance with the Section 8 Existing Housing Quality Standards or other Local Codes and the subsequent rehabilitation qualifies the unit as standard by correcting those conditions. In addition, the cost of rehabilitation must be reasonable, taking into consideration, value of the dwelling unit after rehabilitation, the market value of homes in the area, and other financial feasibility standards including loan-to-value ratio. H. Emergency Repair Necessary and required improvement(s) to a permanent dwelling unit residential structure, which will alleviate the immediate and eminent threat to the health and safety of the resident(s) of said structure, caused by an emergency that is recent in nature. Rehabilitation/Repair or Emergency costs are those total cost of the rehabilitation, repair, or emergency to a pemianent dwelling unit. I. ADA Accessibility Program Component of the Homeowner Housing Rehabilitation Program that addresses handicap accessibility in dwelling units occupied by persons with disabilities. J. Designated proiect area All areas of the City with priority given to Neighborhood Improvement Program areas, including targeted areas of CDBG Neighborhood Strategy Areas (NSA). Preference will be given to areas that are located in a Census Tract and Block Group designated as at least 51% low and moderate income by HUD. Additionally, all low and moderate income persons designated by any agency of the Federal Government as disabled, low and moderate income persons over the age of 65, and low and moderate income families who have a dependent who has been declared disabled by any agency of the Federal Government will be eligible to participate in this program regardless of the area of their residence. K. Owner-occupied residences (no rentals). Single-family residences, including manufactured homes permanently attached to real property occupied by the owner thereof. Owner-occupied rental properties are eligible properties and can include a two-unit structure where the owner lives in one of the units and rents the other to a tenant. To be eligible, the rental unit must be a legally pemfitted unit for a period of at least 5 years. The property owner must sign an agreement that states that the property will continue to be the primary residence of the owner. Homeowner Homing Rehabilitation Program Guidelines 3 SECTION 2 - ELIGIBILITY REQUIREMENTS A rehabilitation loan may be made only with respect to low-and moderate-income owner-occupied dwelling units located in the city of Pueblo within targeted neighborhood areas designated by the City of Pueblo. The dwelling units must need rehabilitation to meet the Property Rehabilitation Standards. This program is not a maintenance program, and dwelling units needing standard maintenance items do not qualify for the program. Dwelling units, which cannot be brought to minimum Local Code standards witlxin the fimding limits or those in which the rehabilitation costs exceed the value of the dwelling after rehabilitation, will not be approved for the program. The responsibility for administ~tion of the rehabilitation program has been delegated to the Housing and Citizen Services Department of the City of Pueblo. ("HCSD'). HCSD staff decisions regarding eligibility are final unless an appeal is filed pursuant to Section 15. B. Requirements Applicable to Applicant for a Loan To be eligible for a rehabilitation loan, the applicant must be an eligible family unit who owns and occupies a single-family dwelling unit, or is a purchaser-occupant of such property under a land sales contract. The applicant must have owned and occupies or will purchase and occupy after rehabilitation the dwelling unit as his/her primary place of residence. An eligible family unit must be certified as low-and moderate income in accordance with the most current HUD Section 8 income limits for the Pueblo- MSA area, in order to be eligible for a loan. The applicant must meet the National Objective of benefit to low-and moderate-income person as desex/bed in 24 CFR 570.208(a)(3). 1. Land Sales Contracts: a. The term "land sales contract," regardless of the nomenclature by which it may otherwise be known, refers to any transaction in which the purchaser-occupant obtains fee simple title only if he or she completes a series of installment payments over a tvm, of years. The fom~ of land sales contract may vary considerably. b. Contxact Requirements: In order for a purchaser under a land sales contract to be eligible for a loan, all of the following requirements must be met: 1) The contract shall be a written, legally binding instrument involving a residential property containing no more dwelling units after the work is completed Homeowner Homing Rehabilitation Program Guidelines 4 than it did before the work was undertaken. The contract must be recorded in the records of the Pueblo County Clerk and recorded. 2) The seller of the property must hold fee simple title to the property and, while the contract is in good standing, must be unable to use the property for collateral or to convey the property to any other party unless such use for collateral or conveyance of fee is subject to the land sales contract. 3) Under the contract, the seller and any subsequent holder of title to the property must be obligated, without qualification, to deliver to the purchaser fee simple title flee of liens and encumbrances and a deed to the property upon full payment of the contract price, or some lesser amount. 4) Under the terms of the contract, the purchaser shall have full use, possession, and quiet enjoyment of the property equitable title to the property which cannot be temiinated except through foreclosure proceedings and the right to cure any default within a period of not less than thirty (30) days. 5) The purchaser shall have had possession and use of the property under contract for at least twenty four (24) months prior to the date of application for a loan. C. Requirements Applicable to ADA Accessibility Program. To be eligible for assistance under the ADA Accessibility Program, the applicant must be an individual or family who owns and occupies a singie-family dwelling unit, residential property, or is a purchaser-occupant of such property under a land sales contract. A member of the eligible family unit must be disabled. The applicant must have owned and occupied or will occupy after rehabilitation the property as his/her primary place of residence. Assistance through this Program is intended to provide ADA accessibility rehabilitation for the Pueblo disabled population and applicants may be referred by any local agency or another agency specializing in handicap accessibility. Applicants will complete the same process as applicants under the Homeowner Housing Rehabilitation Program. SECTION 3 - ASSURANCE THAT REHABILITATION WILL BE COMPLETED In some instances, the rehabilitation cost may exceed the amount of the rehabilitation loan. In such eases, the rehabilitation loan will not be made unless the applicant can provide whatever additional amount is needed to assure completion of the work so that the property will meet at Homeowner Housing Rehabilitation Program Guidelines 5 least the Property Rehabilitation Standards (PRS). Since rehabilitation loans are intended to improve the safety of homes in the target areas, if the rehabilitation loan will not be sufficient to pay the rehabilitation cost to meet at least the PRS, the City shall not approve the rehabilitation loan unless the applicant can furnish supplementary funds sufficient to complete the work. B. Supplemental Loans on Residential Property. If the applicant for a rehabilitation loan on a dwelling unit is obtaining a supplemental loan, the rehabilitation loan application shall not be approved until the City has been furnished satisfactory evidence that the applicant has obtained a binding adequate and satisfactory supplemental loan commitment. When the loan will be obtained from a recognized lending institution, evidence furnished to the City shall consist of a signed, bona fide written commitment to make the loan for the purpose of the rehabilitation work. The loan shall be in an mount, which, when added to the rehabilitation loan and any other funds the applicant will furnish will be sufficient for completing the required rehabilitation work. When the applicant is furnishing evidence that actual funds are available, evidence furnished to the City shall consist of verification and documentation by the City that the applicant has funds in the required amount for deposit in the rehabilitation account. SECTION 4 - COST ALLOWABLE IN A REHABILITATION LOAN A rehabilitation loan may be made only to cover the cost of rehabilitation necessary to make an owner-occupied, single-family dwelling unit residential property conform to standards for safe, decent and sanitary housing as specifically required by Property Rehabilitation Standards (PRS), and other costs as provided in this section. Because of the rehabilitation work financed, in whole or in part, by a rehabilitation loan, the dwelling unit must, at a minimum, conform to PRS. Rehabilitation loan funds shall be used only to achieve economical and practical compliance with PRS. All work performed to bring a structure into compliance with the PRS will be accomplished in accordance with Local Code standard specifications for residential rehabilitation. B. Allowable Costs. Costs allowable under this program include those which meet the requirements of PRS, correct hazardous conditions, correct incipient violations, plus building permits and related fees. Generally these are costs to make an owner-occupied home conform to Property Rehabilitation Standards (PRS), or to alleviate the hazardous conditions created by an emergency, and any other costs eligible under the Program, may be considered as allowable under this program or eligible under the CDBG/HOME program for housing rehabilitation. 1. Requirements of PRS: When necessary to meet a specific PRS requirement, a home rehabilitation loan may be used to the extent necessary for: Homeowner Homing Rehabilitation Program Guidelines 6 a. The rehabilitation of plumbing, electrical, or mechanical systems and elements of the of the dwelling unit, including basic equipment such as the furnace, hot water heater, electrical and plumbing fixtures, roof, structure, kitchen stove and refrigerator. Other appliances are not eligible. b. The, construction, expansion and finishing of space necessary to accommodate those facilities included in (a) above. c. The provision of additional or enlarged bedrooms. 2. Kitchen Equipment: Whether or not required by PRS, a loan may provide for the repair or purchase and installation of a kitchen stove and refrigerator. Purchase and installation are acceptable if there is no such equipment in the dwelling unit, or if existing equipment is unsafe or unsanitary because of its basic physical condition. Loan funds may also be used for building in a stove and refrigerator, if necessary to replace existing unsafe or unsanitary built- in equipment. 3. Additional Bedrooms: Detem;inafion of need for additional bedrooms to existing structures should be based on the following criteria with respect to the eligible family unit and existing bedrooms: a. One Bedroom: Adult(s) only. b. Two Bedrooms or Sleeping Rooms: Adult(s) with one child, or with two children of either sex under the age of 12, or with two children of the same sex over 12 years of age. c. Three Bedrooms or Sleeping Rooms: Adults with two children over 12 years of age and of different sex, or with three children of the same sex or mixed; or with four children of mixed sex under 12 years of age, or with four children with two being males and two females over 12 years of age. 4. Utilities: Utilities shall be independent for each dwelling unit without dependence on other structures. Dwelling units not connected to municipal utilities may be connected as part of rehabilitation, if staff deems it economically feasible. 5. Incipient Violations: Loan funds may be used to correct incipient as well as actual violations of PRS. An incipient violation exists if, at the time of inspection, it is thought that the physical condition of an element in the dwelling unit may deteriorate into an actual violation within a year or two. Homeowner Homing Rehabilitation Program Guidelines 7 6. Building Pemfits & Related Fees: Loan funds may be used to cover the cost of building permits and related fees required to complete the necessary rehabilitation work. 7. Federal Flood Insurance: Loan funds may be used to purchase not more than one year of federal flood insurance if the dwelling unit is located within a designated flood plain. However, in order to meet the program objectives for rehabilitating and repairing as many substandard units as possible, this activity is not encouraged. 8. Hazardous Conditions: Whether required by PRS or not, a loan may provide for the correction of hazardous conditions such as handicapped accessibility, correction of certain Local Code violations which if left uncorrected could endanger the homeowner, and emergencies needing immediate attention such as gas leaks or badly deteriorated electrical wiring. 9. Refinancing of Existing Mortgages. The refinancing of existing mortgages on a dwelling unit to be rehabilitated will only be performed when the applicant can show that the combined payments of the mortgage to be refinanced and the rehabilitation loan meets the conditions of 24 CFR 570: 202, or applicable HOME regulations for refinancing and is necessary or appropriate to achieve the City's community development objectives. 10. General Property Improvements. General property improvements (GPI) may be in the rehabilitation cost when the cost of the GPI combined with the PRS does not exceed the maximum amount of the loan and the costs are otherwise eligible. C. Costs Not Allowable. Except as otherwise provided in this Section 4, rehabilitation shall not provide for: 1. Ineligible new construction not permitted under the CDBG regulations. 2. Materials, fixtures, equipment, or landscaping of a type or quality which exceeds that customarily used in the locality for properties of the same general type as the property to be rehabilitated. 3. Appliances not required or eligible by PRS. 4. Acquisition of land with no intended hons'mg development to take place. 5. Payment of back taxes or delinquency unless allowed by the federal program regulations. 6. Loans for the rehabilitation of any structure other than a permanent single-family, homeowner, dwelling unit are not permitted. Homeowner Housing Rehabilitation Program Guidelines 8 7. Any other purposes than those expressly allowed above are not permitted. 8. Purchase of furniture or fixtures that are movable and are not pum~anently affixed to the property are considered ineligible. 9. Funds for the normal costs of operations such as utilities and insurance, are considered ineligible. D. Work Write-Up The HCSD shall prepare a work write-up to document the rehabihtation work to be financed with a rehabilitation loan. SECTION 5 - LIMITATION ON AMOUNT OF LOAN A. The amount of a rehabilitation loan that an applicant may receive shall be limited to the actual and approved cost of the repairs and improvements necessary to make the property confom~ to the Property Rehabilitation Standards for safe, decent, and sanitary housing and any gen,tal property improvements that can be included without exceeding the maximum amount of the loan. The total amount of the loan, including the cost of rehabilitation, cost of refinancing an existing mortgage, general property improvements, and all other costs may not exceed $50,000. SECTION 6 - TERM OF LOAN A. For loans received under this program the following terms will be adhered to: 1. For every year that the applicant occupies the dwelling unit as his sole and only residence 5% of the original loan amount will be deducted from the balance of the loan. During this twenty (20) year period interest shall not accrue unless a default occurs. 2. If at any time during the twenty (20) year period, the dwelling unit is sold or tmmferred in any manner, the reniaining balance of the loan will become immediately due and payable. A new owner may apply for assumption under this program to repay the balance of the original loan based on meeting eligibility requirements for this program. SECTION 7 - NOTE AND DEED OF TRUST A. Note and Deed of Trust All property rehabilitation loans shall be evidenced by a promissory note; which shall be executed by the dwelling unit owner ('~oorrower") in a form prescribed by the City of Pueblo. Borrower Homeowner Housing Rehabilitation Program Guidelines 9 shall be required to repay all or part of the funds made available under this program according to the formula set forth in Section 11 of this document. Funds advanced and required to be repaid shall be paid over a period of twenty years and shall be evidenced by the Promissory Note secured by a Deed of Trust on the dwelling unit. The Promissory Note shall have the following characteristics: 1. The principal amount shall be the amount of the loan. 2. The interest rate shall be established. 3. The note shall provide for late charges. 4. The term of the borrowers obligation to repay shall be established. 5. The note shall provide that all payments under the note shall be credited first to late charges, second to interest due, then to principal 6. The note shall be due and payable upon sale or transfer of the property for any reason, in addition the principal balance of all funds advanced shall become immediately due and payable upon the occurrence of either of the following events within twenty (20) years from the date of said note: a. Transfer of title to the dwelling unit residence, including transfer upon death of the owner-borrower, unless upon death title shall pass to the spouse or adult child of such owner-borrower who lives in the residence and who also is a an eligible and qualified applicant under the Program and request is made to HCSD to approve such spouse or adult child as a an eligible and qualified applicant within 120 days after the death of the owner-borrower (Failure of the surviving spouse or adult child to request and obtain such approval within said 120 day period shall conclusively constitute a waiver of all fights of such surviving spouse or adult child hereunder); or, b. Applicant cease for any reason to occupy the residence as applicant's sole and only residence. c. Default in repayment of the loan or any other material teim of the Promissory Note or Deed of Trust, or failure to execute a modified repayment schedule within ten (10) days after request therefore is given by HCSD. 7. HCSD shall predetemdne and recertify the family composition and total net family income after the first year, and at two-year intervals thereafter from the date of execution of the Promissory Note of each applicant who has received any from of assistance under the Program. Borrower-owner should cooperate in such recertification and mm in all Homeowner Housing Rehabilitation Program Guidelines 10 documents reasonably required therefore. At any time, upon request of owner-borrower or the HCSD, but not more frequently than once yearly, an income review may be done provided the owner-borrower's gross annual income increases or decreases by more than 12% per year from the gross income level at the time the most recent repayment determination was made. HCSD shall prepare and the owner-borrower shall execute a modified repayment schedule for the remaining balance of funds advanced based upon the formula set forth herein. Failure of an owner-borrower to furnish requested documents or to execute a modified repayment schedule shall cause the entire balance of funds advanced on behalf of such owner-borrower to immediately become due and payable. B. SUBORDINATION POLICY The City of Pueblo will consider subo 'rdmating its Promisso~ Note and Deed of Trust to a position no lower than a second in the following circumstances: 1. If the owner-borrower is refinancing the original mortgage in order to obtain a lower interest rate and/or overall mortgage cost. To be eligible for subordination, a refinancing cannot result in any cash out to the owner- borrower. 2. If the owner-borrower is borrowing money to make additional impmwments to the dwelling unit. Documentation must be provided to identify the type and cost of the improvements to be made and the assurance that the borrowed money will be used to make additional improvements. 3. If the owner-borrower is securing a loan that includes funds for additional improvements and for reasons other than home improvement (ex. debt consolidation, medical expenses, etc.), the City will only consider subordination if the Pueblo County assessor's valuation of the property shows that the value of the dwelling unit is greater than the mortgages against the property, and if the homeowner has been in the home for at least five years. On certain occasions where the loan is used in conjunction with other third party non- profit housing loans the City will consider a third position if the value of the liens against the property (including the city's mortgage) do not exceed 110% of the property's value as detcmiined by the Pueblo County Assessor. C. All rehabilitation loans shall be secured by a lien on the dwelling unit to be rehabilitated evidenced by a mortgage or deed of trust ("Deed of Trust") The Deed of Trust will contain such provisions as the City detemfines necessary for the protection of the City's interest, including provision for monthly escrow payments by the borrower to the City in the amount necessary to pay when due: Homeowner Housing Rehabilitation Program Guidelines 11 1. Property taxes and special assessments, if any; and 2. Fire and extended coverage, flood (if applicable) and any other insurance premium required by the City to be paid by the owner-borrower. SECTION 8 - ELIGIBILITY REQUIREMENTS OF APPLICANT The Homeowner Housing Rehabilitation Program assists homeowners through the provision of low interest, or no interest rehabilitation loans. In order to qualify for assistance, homeowners must be considered low or moderate income as defined by the U.S. Department of Housing and Uffoan Development (HUD). The order in which applicants receive assistance is on a first-come, first-serve basis, therefore, persons wishing to receive assistance should contact the HCSD to be placed on the waiting list. The City of Pueblo will review all applications and determine eligibility based on the following: A. Property Location No loans will be made outside the designated project area approved by the City of Pueblo. To be eligible, a property must be: 1. Located in the City of Pueblo. 2. At least 40 years old. Exception is for crnergency repairs (ex. furnace, sewer) or to address issues of handicapped accessibility. 3. Appraised at a value that does not exceed $100,000, a limit subject to change by HUD. 4. In conformance/compliance with all current zoning ordinances, or an agreement must be reached as to when and how confosmance and compliance will be achieved. 5. If located in a 100-year floodplain, an environmental review is completed or approval is granted by the City Engineer and the City's Community Development Department. B. Income Limits: Loans are available only to low-and-moderate income, single-family, homeowner residents of the City of Pueblo for properties located within the City limits of the City of Pueblo. Applicant must meet the income guidelines and limits for a lower income household under 24 CFR Part 570, and Section 8, of the United States Housing Act of 1937 (or if such Homeowner Homing Rehabilitation Program Guidelines 12 program is tem,inated, under such program in effect immediately before such termination) or any other requirements imposed by the terms of any grant award to the City. The loan applicant must meet the National Objective of benefit to low-and-moderate income as described in 24 CFR 570.208(a)(3). To maximize the impact and effectiveness of neighborhood revitalization effort, the City's can concentrate CDBG and other resources in a small number of low and moderate income neighborhoods, called Neighborhood Strategy Areas (NSA). Exception to income Yunits will be made only when aggregation of housing units assisted pursuant to the strategy may be considered to be part of a single structure for proposes of applying the low-and moderate-income national objective criteria, thus providing greater flexibility to carry out housing programs that revitalize a neighborhood (24 CFR 570.208(a)(3) and (d)(5)(ii)). SECTION 9 - APPLICANT'S INCOME A. Sources of Funds and Amounts Comprising Applicant's Income. In the preparation of all reports and analysis required by this paragraph, the following definition and standards as defined under Section 8 of the United States Housing Act of 1937, and more fully defined in HUD Handbook 4350.3 (Chapter 3) "Occupancy Requirements of Subsidized Multi-family Housing Programs" shall apply and be followed by the HCSD to detemfine the applicant's monthly income and affordable housing rehabilitation payment. The following is a listing of the elements comprising income for purposes of a rehabilitation loan: 1. Gross Family Income: The total income, from all sources whatsoever of each member of an eligible family unit. 2. Applicant who is a Person. Income of an applicant who is a "person" includes the income of the applicant and his family. The applicant's family includes the applicant and any other person or persons related by blood, marriage, or operation of law, who share the same dwelling unit. If ownership of the property rests in more than one person, the applicant is each owner who shares the dwelling unit. The applicant's income, therefore, is the stun of the family incomes of all applicants. An applicant's income is established on an annual basis, at the time of applying for a rehabilitation loan, and includes: a. The applicant's earnings. Spouse's earnings, and earnings of all other members of the family who share the household, if the employment of the spouse or other family member is a definite characteristic of family life. c. Other income regularly received by the applicant or his family from any source. Homeowner Homing Rehabilitation Program Guidelines 13 d. Net income from real estate, other than the property to be rehabilitated, and any other net business income. 3. Exclusions and Adjustments to Applicant's Income. a. The following exclusions apply to an applicant's income in connection with a rehabilitation loan on a residential property: (1) Income of Person. For purposes of establishing the mount of the applicant's income that is relevant to the rehabilitation loan, there shall be excluded from the income of a "person" the income of a dependent child or children, as defined by the United States Internal Revenue Service. The applicant's income, adjusted in this manner, shall be related to the income limits prescribed in the Rehabilitation Program. (2) The following exclusion applies only to an applicant or family's income in connection with a rehabilitation loan. Title II of the Social Security Act, 42 U.S.C., 401 et. Seq., permits, if certain conditions are met (sec below), the payment of monthly benefits for educational purposes to the children of an individual entitled to disability or old age insurance benefits. The income attributed to Ihese benefits should ordinarily be excluded from income in detemfining eligibility for a rehabilitation loan. 4. Conditions for Payment of Benefits. A child of an individual entitled to receive Social Security Educational Benefits for education purposes if: a. The child is unmarried at the time an application is filed; and b. At the time the application is filed, the child has not attained the age of 18 or has not attained the age of 22 and is a full-time student. c. Circumstances Where not Applicable. The foregoing decision applies only to the type of Social Security Benefits cited. In addition, there may still be circumstances in which even thc Social Security Benefits must be included in the applicant's income. Homeowner Housing Rehabilitation Program Guidelines 14 SECTION 10 - FEDERAL REQUIRMENTS A. Fair Housing Requirements 1. Section 104(b) of the Housing and Community Development Act of 1974, as amended, provides that any loan under Section 106 of the Act shall be made only if the grantee certifies that the loan will be conducted and administered in conformity with Public Law 88-352 and Public Law 90-284 and the grantee will affirmatively further fair housing. 2. Public Law 88-352 refers to Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et secO, which provides that no person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance. 3. Public Law 90-284 refers to the Fair Housing Act (42 U.S.C. 360120), which states that it is the policy of the United States to provide, within constitutional limitations, for fair housing throughout the United States and prohibits any person from discriminating in the sale or rental of housing, the financing of housing, or the provision of brokerage services, including otherwise making unavailable or denying a dwelling to any person, because of race, color, religion, sex, national origin, disability or familial status. 4. Executive Order 11063, as amended by Executive Order 12259, directs HUD to take all action necessary and appropriate to prevent discrimination because of race, color, religion (creed), sex, disability, or national origin, in the sale, leasing, rental, or other disposition of residential property and related facilities (including land to be developed for residential use), or in the use or occupancy thereof, if such property and related, facilities are, among other things, provided in whole or in part with the aid of loans, advances, grants, or contributions agreed to be made by the Federal Government. B. Non-discrimination in Program Benefit 1. Section 109 of the Act requires that no person in the United States shall on the ground of race, color, national origin, disability, or sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with community development funds made available pursuant to the Act. For purposes of this section, "program activity" is defined as any function conducted by an identifiable administrative unit of the recipient, or by any unit of govemment~ sub recipient, or private contractor receiving community development funds or loans from the recipient. Specific discriminatory actions prohibited include: a. Denying any individual any facilities, services, financial aid, or other benefits provided under the program or activity. Homeowner Housing Rehabilitation Program Guidelines 15 b. Providing any facilities, services, financial aid or other benefits, which are different, or are provided in a different form, fi'om that provided to others under the program or activity. c. Subjecting an individual to segregated or separate ~'eatment in any facility in, or in any matter of process related to receipt of any service or benefit under the program or activity. d. Restricting an individual in any way in access to, or in the enjoyment of, any advantage or privilege enjoyed by others in connection with facilities, services, financial aid or other benefits under the program or activity. e. Treating an individual differently fxom others in determining whether the individual requirement or condition which the individual must meet in order to be provided any facilities, services, or other benefit provided under the program or satisfies any admission, enrollment, eligibility, membership, or other activity. f. Denying an individual an oppommity to participate in a program or activity as an employee. 2. A recipient may not use criteria or methods of administration which have the effect of subjecting persons to discrimination on the basis of race, color, national origin, handicap status, or sex, or have the effect of defeating or substantially impairing accomplishment of the objectives of the program or activity with respect to persons of a particular race, color, national origin, handicap status, or sex. 3. A recipient, in determining the site or location of housing or facilities provided in whole or in part with funds under this part, may not make selections of such site or location which have the effect of excluding persons fxom, denying them the benefits of, or subjecting them to discrimination on the ground of race, color, national origin, handicap status, or sex; or which have the purpose or effect of defeating or substantially impairing the accomplishment of the objectives of the Act and of this section. 4. Section 109 of the Act further provides that any prohibition against discrimination on the basis of age under the Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq) or with respect to an otherwise qualified handicapped person as provided in Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) shall also apply to any program or activity funded in whole or in part with funds made available pursuant to the Act. Homeowner Housing Rehabilitation Program Guidelines 16 C. Environmental Standards 1. Section 104(g) of the Act states that the intent of the policies of the National Environmental Policy Act of 1969 and other provisions of law which further the purposes of such Act be most effectively implemented in connection with the expenditure of funds under the Act. 2. Regulations governing such expenditures are stated in 24 CFR Part 58 and will be complied with in completing this activity. D. National Flood Insurance Program 1. Section 202(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4106) provides that no Federal officer or agency shall approve any financial assistance for acquisition or construction purposes for use in any area that has been identified by the Director of the Federal Emergency Management Agency (FEMA) as an area having special flood hazards unless the community in which such area is situ_a_ted is then participating in the National Flood Insurance Program. 2. Recipient requires the program participant to provide documentation which verifies that flood insurance is in full force and effect for each property for which assistance is received for properties which are detemfined to be in a FEMA designated "A" or "V" zone. E. Relocation, Displacement and Acquisition 1. The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4601), as amended, is applicable to this program. 2. The City has an approved policy of Residential Anti-displacement and Relocation Assistance that will be utilized for any instance of relocation, displacement, and acquisition encountered by this program. 3. It is the policy of this program that no activity will precipitate any displacement or the necessity for relocation whether of a temporary or permanent nature. F. Lead-Based Paint The City of Pueblo complies with federal regulations regarding lead-based paint. The City agrees to hire only certified/trained inspectors, contractors and risk assessors to work with and assess lead-based paint/hazards. Any work that must be completed to address lead-based paint hazards will be considered a "code deficiency" and will be given priority over non-code items. Homeowner Homing Rehabilitation Program Guidelines 17 1. Section 401(b) of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 831 (b)) prohibits the use of lead-based paint in residential structures constructed or rehabilitated with Federal assistance. 2. Each purchaser, tenant, or occupant of housing to be assisted under this program that was coustmcted prior to 1978 is to be notified of the hazards of lead-based paint poisomg. Each participant will be notified: a. that the property may contain lead-based paint; b. of the hazards of lead-based paint; c. of the symptoms and treatment of lead-based poisoning; d. of the precautions to be taken to avoid lead-based paint poisoning (including maintenance and removal techniques for eliminating such hazards); e. of the advisability and availability of blood lead level screening for children under seven years of age; and f. that in the event lead-based paint is found on the property, appropriate abatement procedures may be undertaken. 3. In the rehabilitation program that is funded under this program, the following will be implemented concerning lead-based paint: a. All units coustmcted prior to 1978, which are occupied by families with children less than seven years of age, will be inspected for lead-based paint and defective conditions found included in the work write-up for the rehabilitation work, b. All units constructed prior to 1978 which include a child under seven years of age with an identified elevated blood level (EBL) condition shall be tested by using an X-my fluorescence analyzer (XRF) or other method approved by HUD. Test readings of I mg/cm2 or higher using an XRF shall be considered positive for presence of lead-based paint, c. Evidence must be available prior to final inspection and approval of the rehabilitation that all defective paint and chewable surfaces have been treated for lead-based paint poisoning. Homeowner Housing Rehabilitation Program Guidelines 18 G. Use of Debarred, Suspended, or Ineligible Contractors or Subrecipients Assistance under this Program shall not be used directly or indirectly to employ, award contracts to, or otherwise engage the services of, or fund any contractor or sub recipient during any period of debarment, suspension, or replacement in ineligibility status under the provisions of 24 CFR Part 24 of the regulations. H. Conflict of Interest 1. The requirements of 24 CFR 570.204(c), 24 CFR 85.36 and OMB Circular A-110 apply to all procurement of supplies, equipment, construction, and services by recipients and subrecipients. 2. No member of or Delegate to the Congress of the United States, and no Resident Commissioner shall be permitted to share in any proceeds of the loan, or in any benefit arising from the same. 3. No bonus, commission, or fee shall be paid for the purpose of obtaining the Government's approval of the loan application, or any other approval or concurrence required by the Government or its designee, to complete the rehabilitation work, financed in whole or in part with the rehabilitation loan. 4. No member of the governing body of the City of Pueblo, and no other public official of the City of Pueblo who exercises any functions or responsibilities in connection with the administration of the federally-assisted project or program, and no other officer or employee of the City or consultant who exercises such functions or responsibilities, or any relatives thereof or third parties acting on their behalf, shall be allowed to have any interest, direct or indirect, in the proceeds of any loan, or in any contract entered into by the applicant for the performance or work financed in whole or in part with the proceeds of the rehabilitation loan. I. Cancellation of Loan An applicant agrees, by signing a loan application, to return the loan proceeds with no rights, interest, or claim in the proceeds, if the loan is cancelled before the rehabilitation work is started. J. Use of Loan Proceeds An applicant agrees, by signing a loan application, to use the loan proceeds only to pay for costs of services and materials necessary to carry out the rehabilitation work for which the loan will be approved. Homeowner Homing Rehabilitation Program Guidelines 19 K. Completion of Work An applicant agrees, by signing a loan application, to assure that the rehabilitation work shall be carded out promptly and efficiently, through written contract awarded with the prior concurrence of the City. L. Inspection An applicant agrees, by signing a loan application, to allow inspection by the City or its designee of the property rehabilitation work and all contracts, materials, equipment, payrolls, and conditions of employment pertaining to the work. An applicant agrees, by signing a loan application, to keep such records as may be required by the City with respect to the rehabilitation work. N. Incorporation The provisions of subsections I thru M shall be incorporated and included in all loan documents. SECTION 11 - REHABILITATION PROGRAM ADMINISTRATIVE PROCEDURES A. Applicant Screenine 1. The following matters related to the individual or household applying for assistance will be verified in writing: a. All sources of income for all people residing in the dwelling unit, including without limitations the following: (1) The earnings or retirement income of the prospective borrower and his/her spouse and any other adult who will sign the promissory note or who resides in the dwelling unit. (2) Any other income received, such as alimony, child support, or public assistance that is to be counted for qualification to borrow funds direct or indirect, in the proceeds of the loan, or in any contract entered into by the applicant for the performance or work financed in whole or in part with the proceeds of the rehabilitation loan. b. All liabilities, including total amount of indebtedness and monthly payment amounts of all indebtedness, including without limitations the following: Homeowner Housing Rehabilitation Program Guidelines 20 (1) Any mortgages or liens or delinquent taxes against the dwelling unit property that is to be rehabilitated. (2) Any consumer debt that has an outstanding principal balance, including the amount of monthly payment for each. (3) Any other debt that requires regular monthly payments, such as alimony, child support, or extraordinary medical expenses. 2. The following items related to the dwelling unit will be verified in writing: a. That title to the dwelling unit is in the name of at one or more of the occupants of the dwelling unit to be rehabilitated. b. That property taxes are current with the local municipality. The assessed value of the property is also to be det~mdned. B. Underwriting Standards 1. Standard underwriting ratios are to be used to qualify a prospective borrower for assistance under this program. In determining if the applicant will be given a loan at 0-3% interest rates, the most current HUD Section 8 Income Guidelines will be used as follows: ao Repayment Schedule- Applicants: Applicants eligible for rehabilitation funds up to a maximum of $50,000 and the interest rate based on the applicant's Gross Annual Family Income (GAFI) and family size. Applicants must be determined to be 80% or less of the HUD area median income for Pueblo. To determine the monthly amount a borrower can payback, the borrower's Gross Monthly Family Income (GMF1) will be multiplied by the housing debt ratio of 30% and total debt ratio of 40 %. These products less any existing principal and interest on a first mortgage, property taxes, insurance, predetermined utility allowance (if allowed) and other debt in the case of the 40% debt ratio. The remainder will equal the "net" monthly amount available for a loan payback payment. The monthly payback amount will be the highest remainder of the two formulas. In no case will the borrower not have to make a minimum monthly payment of $50 toward the rehabilitation costs with balance of loan becoming a deferred loan subject to repayment in Section 7 A. 7. Homeowner Homing Rehabilitation Program Guidelines 21 2. Monthly housing expense a. Must not exceed thirty percent (30%) of gross monthly income unless included in (3). b. Housing expenses includes all principal and interest payments, including the prospective rehabilitation loan payment; mortgage insurance payments, real estate taxes, and hazard and flood insurance premiums. 3. Total -debt a. Must not exceed forty percent (40%) of gross monthly income, including housing expenses described above. b. Includes all consumer debt, such as car loans, credit card, accounts, revolving loan accounts, alimony, child support, maintenance payments, or any other monthly installment charges. C. Property Qualifications 1. All dwelling units eligible in Section 2 are considered eligible under this program. 2. Only those dwelling units which are considered substandard in accordance with the Local Codes prior to rehabilitation and which are brought up to Section 8 Existing Housing Quality Standards after rehabilitation are eligible units towards housing assistance loans under the Program. Information will be retained to be able to identify the before-rehabilitation condition and the after-rehabilitation condition of each unit. In all rehabilitation loan applications the Deparhnent of Housing and Citizen Services will review each application on a case-by-case basis, to evaluate needs affecting safety, health, and urgency. SECTION 12 - FUNDING OF INDIVIDUAL REHABILITATION LOANS A. Source of Funds Loan funds, whether or not they are supplemented with funds from other sources, shall be limited to the amount necessary to cover the actual cost of the work to be completed. Maximum Loan Amounts: The amount of a loan shall be limited as follows: 1. The actual and approved cost for the rehabilitation or repairs necessary to make the property conform to PRS for safe, decent, and sanitary housing. 2. Loan amounts for this purpose shall not exceed $50,000.00. Homeowner Housing Rehabilitation Program Guidelines 22 B. The actual and approved cost of the emergency repairs necessary to alleviate the immediate and eminent threat to the health and safety of the occupants of the dwelling unit caused by the existing emergency. 1. Loan amounts for this purpose shall not exceed $12,000.00. 2. A set-aside will be established for addressing emergency repairs with funds from the Program. The City will disburse a rehabilitation loan by drawing a check, payable to the contractor and borrower, in the amount of the progress work completed based on the contract, drawn on the borrower's rehabilitation account. B. Deposit of Loan After a rehabilitation loan has been approved, an account under the borrower's name shall be set- up and a budget amount established in the rehabilitation account. C. Rehabilitation Loan Supplemented by Other Funds If a loan is to be supplemented by funds to be provided by the applicant from a source other than a rehabilitation loan or from a recognized lending institution, those supplemental funds shall be deposited in the rehabilitation account at the same time the loan is deposited. D. Management of Rehabilitation Escrow Account The City shall maintain a single rehabilitation account as the depository for all rehabilitation loans as well as for supplemental funds provided by the applicants. This account shall be separate and distinct from all other accounts maintained by the City and shall be for the purpose of depositing and withdrawing rehabilitation account funds. 1. Separate Account for Each Borrower. The City shall establish and maintain a separate account within the rehabilitation account for each borrower who has received a rehabilitation loan. All receipts and disbursements made for or respect to each borrower shall be recorded in the account. 2. Disbursements from the Rehabilitation Account. Disbursements from the separate borrower account within the rehabilitation account shall be by check made payable jointly to the borrower and the payee for the following purposes, as may be appropriate: Homeowner Housing Rehabilitation Program Guidelines 23 a. Making progress and final payments for rehabilitation work. Progress payments, if any, are limited to actual value of the work satisfactorily completed. b. Paying for insurance binder, if required. c. Close out of the separate borrower account by appropriately disbursing any unutilized funds remaining in the account, 3. Disbursements by the City From The Separate Borrower Account. a. The City, upon receipt of appropriate invoices, shall draw a check for the payment of completed and approved work and services. Each check shall be made payable jointly to the borrower and the appropriate payee. The City shall secure the endorsement of the borrower on checks that are made jointly to the borrower and the payee. The City shall transmit the endorsed check to the payee. b. A check to return to the borrower any unutilized non-city funds in the rehabilitation escrow account shall be made payable to the borrower only. c. Checks shall be delivered only after receipt of lien waivers executed by the payee. Transmittal of Checks. After securing the borrower's endorsement on the check(s), the City shall transmit the check(s) to the joint payee. Checks which include any amounts previously withheld from progress payments shall be accompanied by an explanation and computation of the amount of the check. SECTION 13 - DETERMINING WORK TO BE DONE WITH REHABILITATION LOAN A. HCSD, has the responsibility for determining the rehabilitation work necessary to bring a property into conformance with Property Rehabilitation Standards and for providing assistance in the rehabilitation of the property. In carrying out these responsibilities, the HCSD shall: 1. If required, obtain a survey by a qualified engineer. The survey will indicate the finished floor elevation that will determine the height to which the dwelling unit must be raised to elevate it above the flood plain. The raising of dwelling units will be a required part of the Property Rehabilitation Standords in order to mitigate any future damages by flooding. In addition, the City will require each applicant to maintain flood insurance on the property, if such property is located in a flood hazard area. 2. Inspect the property. 3. Make a preliminary work write-up and cost estimate on the work to be done. Homeowner Housing Rehabilitation Program Guidelines 24 4. Consult with and advise the owner on the work to be done. 5. Prepare a final work write-up and cost estimate as the basis for a rehabilitation loan and for contracting for the rehabilitation work. B. Property Inspection. HCSD shall inspect the property and prepare an inspection report that identifies each deficiency with respect to the PRS and other deficiencies that may be corrected through rehabilitation loan funds. An inspection report prepared in this manner will later serve the HCSD as the basis for preparing a work write-up and cost estimate. C. Work Write-up and Cost Estimate. A work write-up and cost estimate is a statement prepared by the HCSD based on a property inspection report that itemizes all the rehabilitation work to be done on the property, and includes an estimate of the cost of each item. The cost estimate shall be reasonable and shall reflect actual costs prevailing in the City for comparable work. SECTION 14 - CONTRACTING FOR REHABILITATION WORK A. Construction work for rehabilitation financed through a loan shall be undertaken only through a written contract between the contractor and the owner - borrower. The HCSD shall assist each applicant in arranging for and obtaining an acceptable construction contract by receiving sealed bids on behalf of the owner borrower from qualified contractors who will agree to have 10% of the contract amount retained for "punch-list" items. All work will have a one-year after completion guarantee and will be paid to the contractor when all '~punch-list" items meets or exceeds the rehabilitation described and agreed to by the owner-borrower and contractor in the work write-up. B. The construction contract will consist of a single document signed by the contractor and accepted by the owner borrower. It shall contain a bid and a proposal by the contractor and the general conditions, as well as the specifications for the work to be performed. C. Issuance of a Proceed Order. The general conditions of the construction contract will state that the owner will issue a proceed order within a stated number of days from the date of acceptance of the contractor's bid and proposal, and shall require the start of construction within ten (10) days or less from the date of the order's signing. D. Owners-borrower Responsibilities. The owner borrower will be responsible for supervising the contractor work. HCSD will assist the borrower-owner but the City Shall not be responsible for the contractor's performance. Homeowner Housing Rehabilitation Program Guidelines 25 SECTION 15 - GRIF. VANCE PROCEDURES Any applicant for a homeowner homing rehabilitation loan aggrieved by a decision of the staff of the HCSD with respect to eligibility, amount of loan, and/or amount of loan repayment may have the decision reconsidered by another member of the staff of the HCSD (other than the person who made the initial decision). Such request for reconsideration shall be filed in writing in the office of HCSD within thirty (30) days after the date of the initial decision. Such reconsideration shall be concluded within twenty (20) calendar days after receipt of the written request for reconsideration and the decision based on such reconsideration shall be given in writing to the applicant within twenty (20) calendar days after receipt of the request for reconsideration. If the applicant is not satisfied with the decision based on such reconsideration, the applicant, within twenty (20) days after receipt of notice of the decision on reconsideration, may appeal the decision in writing to the City Manager or his designee who shall not have been involved in either the initial decision or the decision on reconsideration. Such written appeal shall specify the grounds therefore. The City Manager or his designee shall conduct a hearing on such appeal within thirty (30) days after receipt of the written notice of appeal. The decision of the City Manager and/or his designee shall be binding upon the applicant and HCSD. Failure of the applicant to timely file a request for reconsideration and/or an appeal to the City Manager shall be deemed a waiver of any fight to reconsideration and/or appeal. All applicants shall be advised of their right to reconsideration and/or appeal. SECTION 16 - EXCEPTIONS The provisions of the City of Pueblo Homeowner Housing Rehabilitation Program set forth herein are subject to modification and amendments at time by the City Council of the City of Pueblo and such authority is hereby reserved to the City Council. Homeowner Housing Rehabilitation Program Guidelines 26