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HomeMy WebLinkAbout10410RESOLUTION NO. 10410 A RESOLUTION APPROVING A PILOT PROGRAM FOR NEIGHBORHOOD REVITALIZATION WITHIN TARGETED NEIGHBORHOODS, ALLOWING FOR LAND AND PROPERTY ACQUISITION IN FURTHERANCE OF THE CITY OF PUEBLO'S 2005 -2009 CONSOLIDATED PLAN AND THE ADOPTED NEIGHBORHOOD PLANS, AND AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME WHEREAS, the City recognizes the value of neighborhood revitalization to bring about a needed change in Pueblo neighborhoods; and WHEREAS, a pilot program of neighborhood revitalization sponsored by the City will become an invaluable tool for revitalizing neighborhoods within the City; BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The Neighborhood Revitalization Pilot Program, ( "Pilot "), a copy of which is attached hereto, is hereby approved. The Department of Housing and Citizen Services is hereby authorized and empowered to take all actions required or necessary to implement the Program in accordance with its requirements. INTRODUCED June 13, 2005 BY Michael Occhiato Councilperson APPROVED: PREStDENT 9F CITY C IL ATTESTED BY: CITY CLERIC D 0 ii A60. 7 4 Background Paper for Proposed RESOLUTION AGENDA ITEM # I DATE: June 13, 2005 DEPARTMENT: HOUSING AND CITIZEN SERVICES / ADA RIVERA CLARK TITLE A RESOLUTION APPROVING A PILOT PROGRAM FOR NEIGHBORHOOD REVITALIZATION WITHIN TARGETED NEIGHBORHOODS, ALLOWING FOR LAND AND PROPERTY ACQUISITION IN FURTHERANCE OF THE CITY OF PUEBLO'S 2005 -2009 CONSOLIDATED PLAN AND THE ADOPTED NEIGHBORHOOD PLANS, AND AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME ISSUE The approval of a resolution authorizing and empowering the Department of Housing and Citizen Services to purchase improved and unimproved parcels for inclusion in the Neighborhood Revitalization Pilot Program (hereinafter referred to as the Pilot), as per the guidelines established for the Pilot. RECOMMENDATION Approval of the Resolution BACKGROUND The Department administers the Vacant Lot Recycle Program, approved under Res. 7584. This Program has been very successful, to date it has converted over 90 city owned lots into single - family dwellings. The city's inventory of vacant lots has greatly diminished and we do not foresee a change in the near future. The continuing decline and disinvestments in the older neighborhoods suggests that a different approach to rebuilding neighborhoods is warranted. The targeted communities identified in the Pilot program do have a surplus of vacant lots that are considered a blight on the community. There are also improved parcels of land that have homes in need of major rehabilitation /remodeling, or that have been boarded -up and are also considered a blight on the neighborhood. This Pilot would provide the Department the authority to purchase both improved and unimproved properties for the purposes of eliminating slum /blight conditions in the targeted neighborhoods. The properties will be improved in partnership with for - profit and not - for - profit developers in an effort to leverage funding sources. Improved properties are to be sold to low -to- moderate income homebuyers. The maximum subsidy per unit will not exceed $40,000. The investment will be secured by a deed of trust as required by federal regulations. FINANCIAL IMPACT The City has appropriated funds in prior years for infill and new construction from the HOME federal grants. Funds are available in the 251 Fund. The amount of funds available for the above activities is $529,000. NEIGHBORHOOD REVITALIZATION PILOT PROGRAM The City of Pueblo recognizes the fundamental necessity of partnering in problem - solving in order to achieve much greater success in its neighborhood revitalization efforts. Too frequently, when residents are unhappy with the state of their residential environments, they have generally pursued three options: pack up and move to a more satisfactory environment; change the unsatisfactory condition; or begrudgingly accept these conditions. Changing the unsatisfactory condition is difficult for any individual resident or property owner to accomplish. The continuing decline and disinvestment in older neighborhoods suggests that a different approach to rebuilding neighborhoods is warranted. We also recognize that, to address the needs of our declining neighborhoods, it is appropriate for the City to act as a catalyst to spur private reinvestment. In this role the City will work to bring together resources and assemble partnerships to address the needs of the targeted neighborhoods, especially in the areas of housing and elimination of spot slum/blight. This pilot Neighborhood Revitalization Program (hereinafter referred to as "the Pilot" has been established to begin to develop such an approach to revitalization. Pilot Program Description - The Pilot authorizes the City's Department of Housing and Citizen Services to acquire, hold and develop properties in the targeted neighborhoods. The Department is also authorized to partner with for - profit and not - for - profit developers to deliver the program. The targeted neighborhoods are those neighborhoods with Neighborhood Plans that have been approved by the City Council. The properties acquired must meet the selection criteria for revitalization and be economically feasible for rehabilitation or new construction with subsequent resale to a low -to moderate - income homebuyer. Properties will be identified in several ways: 1) Multiple Listing Service (MLS); 2) identification by the local neighborhood associations; 3) Fire Department Boarded -Up Property list; 4) properties for which the City may apply for title upon tax certificates; 5) properties under current order for repair or demolition under the Code for Abatement of Dangerous Buildings. Under the Pilot, the City will not displace individuals or families or enter into agreements that do so. An appraisal by a qualified appraiser of the City's choosing will be conducted prior to the acquisition of a property. The presence of an appraisal does not require the City of Pueblo to make a purchase offer equal to the appraised value, but at no time shall the offer be less than 50% nor more than 115% of the appraised value. In acquiring any property, the amount of outstanding liens held by the City of Pueblo against the property shall be deducted from the compensation paid to the owner. The initial properties to be developed are as follows: 1- 608 Arroyo 2- 614 Arroyo 3- 1535 Pine St. 4- 1003 Catalpa Pilot Geoeraphic Boundaries The boundaries of the Pilot are the boundaries established in each of the approved neighborhood plans for Bessemer, Hyde Park and the Eastside. Additions or deletions to these boundaries may occur from time to time as new neighborhood plans are developed and approved by the City Council. Responsible Entity - The Department of Housing and Citizen Services of the City of Pueblo (hereinafter referred to as "the Department ") shall be responsible for conducting the Pilot in accordance with the terms and provisions of this authorizing Resolution. Maximum Purchase Price for Improved Land — Each property will be evaluated for reasonableness and feasibility. Purchase price for land and improvements suitable for rehabilitation will not exceed $60,000, except that City Council may subsequently authorize increases or decreases in this cap based upon substantial changes in market. The purchase offer for improved land will not exceed the appraised value by more than 15 %. Maximum Purchase Price for Unimproved Land — Each property will be evaluated for reasonableness and feasibility. The maximum purchase price for vacant land shall not exceed $15,000, except that City Council may subsequently authorize increases or decreases in this cap based upon substantial changes in market. The purchase offer for unimproved land will not exceed the appraised value by more than 15 %. Maximum Investment Per Unit - A feasibility study will be conducted prior to the purchase of each property. Funding for each project will be determined by the "gap" or need demonstrated by the project budget. The gap is the difference between the cost to construct (or rehab) the units and the amount of outside funding available (mortgage loan). The City's portion of expenditures for the construction or rehabilitation of a property cannot exceed the HOME allowable per unit subsidy of $87,000. In the event that any property requires the maximum allowable subsidy a portion of the City assistance will be recouped upon the sale of the property. The Pilot shall also apply a maximum subsidy per property limitation of $40,000. Since properties will carry a second lien from the City, the appraised value must be sufficient to cover the first and second lien. Maximum Subsidy Amount to Homebuyer — While the maximum allowable subsidy under the HUD HOME program is $87,000 per unit, the maximum amount of subsidy provided by the City under the Pilot for each unit will not exceed $40,000. The subsidy may be provided as a grant or a deferred forgivable loan or a combination of each. The loan/grant will be secured by a deed of trust. The repayment terns will vary depending on the amount of subsidy provided and as determined by HOME and CDBG regulations. If assistance is provided by loan, a promissory note will be executed by the borrower. The indebtedness on the deferred forgivable loan will be forgiven 1/20` for each year that the property was the primary residence of homeowner. The assumption of the loan may be allowed as long as the subsequent buyer meets the HUD income guidelines at the time of the purchase and is a first time homebuyer. To insure affordability, this program adheres to the recapture requirements as set forth in 24 CFR 92.253(a)(5). Upon sale or transfer of the subject property by the homeowner, the City will recoup the outstanding balance on the loan. Eligible Homebuyers — The applicant must be a first -time homebuyer whose income does not exceed the HUD established income guidelines for the year in which the loan/grant is made. The applicant must have a verifiable, steady income and a reasonably good credit history. The property must be the buyer's primary residence. The homebuyers will be required to take pre- and post homebuyer education classes from a qualified counseling agency. Upon determination of eligibility for the program, applicants must also demonstrate an ability to pay 1% of the purchase price of the property to contribute towards their down - payment and closing fees. Property Selection Criteria — Selected properties must meet the criteria in the HOME regulations under 24 CFR Part 92. Furthermore, the proposed property will be evaluated under the following community development concepts and feasibility requirements, including but are not limited to: - Rehabilitation of subject property can act as a catalyst for neighborhood revitalization; - Project is economically feasible, meaning that the development costs minus the allowable subsidy amount does not exceed the property's market value in the neighborhood; - Subject property is vacant or an abandoned property, determined to constitute an element of slum or blight by the neighborhood associations; - Property evidences reoccurring code violations; - Evidence of marketability. Pilot Program Time Frame — The Pilot Program will be reviewed for effectiveness, modification, and permanency not later than three years from the date of approval.