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HomeMy WebLinkAbout11591RESOLUTION NO. 11591 A RESOLUTION APPROVING THE AMENDED PILOT PROGRAM FOR NEIGHBORHOOD REVITALIZATION WITHIN TARGETED NEIGHBORHOODS, AND ALLOWING FOR LAND AND PROPERTY ACQUISITION IN FURTHERANCE OF THE CITY OF PUEBLO'S 2005 -2009 CONSOLIDATED PLAN 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; and WHEREAS, new funding sources have been identified to carry out the Pilot and the existing Pilot does not allow for the eligible activities under the new funding; BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The amended 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. A77TSTDD SY: CITY CLERK INTRODUCED: April 27, 2009 BY: Judy Weaver } Councilperson APPR D' } �- PRESIDENTaf Cfty Council L) 4 Background Paper for Proposed RESOLUTION AGENDA ITEM # 5 DATE: April 27, 2009 DEPARTMENT: HOUSING AND CITIZEN SERVICES 1 ADA RIVERA CLARK TITLE A RESOLUTION APPROVING THE AMENDED 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 AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME ISSUE The approval of a resolution amending the Neighborhood Revitalization Pilot Program (hereinafter referred to as the "Pilot ") to meet the requirements of the Neighborhood Stabilization Program I funding. Approval of the Resolution BACKGROUND In June 2005, the City Council approved the Pilot. At the time five properties where identified for revitalization. The Department entered into a subrecipient agreement with NeighborWorks of Pueblo to purchase the properties, however no properties were purchased. In 2008 the City was notified that it was eligible for a $2.8 million grant through the Housing and Economic Recovery Act of 2008 (HERA) under the Neighborhood Stabilization Program (NSP 1). The purpose of the NSP is the acquisition and rehabilitation of foreclosed or abandoned properties. The Pilot was developed with CDBG and HOME as the funding sources. The NSP funding has different eligibility requirements. We therefore wish to incorporate the NSP requirements into this existing program. The changes are as follows: 1- Deletion of language referring to new neighborhood plans (page 1, paragraph 3); 2- Deletion of language which allows the City to pay 15% above appraised value for improved and unimproved properties (page 2, paragraphs 5 & 6); 3- Increase purchase price limits from $70,000 to $135,000 (page 2, paragraph 5) ; 4- Deletion of language limiting the maximum investment and subsidy per unit to allow for the NSP guidelines (page 2, paragraphs 7 & 8) 5- Change language under eligible homebuyers to remove the more restrictive language specific to HOME and CDBG (page 2, paragraph 9) The changes will allow the City to undertake the NSP I on a timely basis. FINANCIAL IMPACT The resolution is administrative in nature and has no immediate financial impact. Funding to carry out the activities are appropriated by ordinance as funding becomes available. AMENDED 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; and 6) Foreclosed upon properties. 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 100% 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. Pilot Geographic 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 programs and funding become available. 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. 1 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 $135,000, except that the Director of the Department may subsequently authorize increases or decreases in this cap based upon substantial changes in market. 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 the current market value. 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. Since the 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 The Department will adhere to the maximum allowable subsidy under the funding sources that are available or may become available. 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 terms will vary depending on the amount of subsidy and the applicable requirements of the source of the funds. If assistance is provided by loan, a promissory note will be executed by the borrower. 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. Except for allowed assumption, upon sale or transfer of the subject property by the homeowner, the City will recoup the outstanding balance on the loan Eligible Homebuyers The applicants income must 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 costs. 2 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 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. Amended: April 27, 2009 N