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HomeMy WebLinkAbout13608 RESOLUTION NO. 13608 A RESOLUTION AMENDING THE VACANT LOT RECYCLE PROGRAM TO EXPAND THE TYPES OF ACTIVITIES UNDERTAKEN TO BETTER MEET COMMUNITY NEEDS AND TO MEET REQUIREMENTS OF THE NEIGHBORHOOD STABILIZATION PROGRAM 3 GRANT BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The Vacant Lot Recycle Program established pursuant to Resolution No. 7521, and amended by Resolution No. 7584, is hereby reauthorized with modifications, and shall hereafter be conducted in accordance with the policies and priorities established in the amended Program attached hereto. SECTION 2. The name of the Vacant Lot Recycle Program is hereby amended to Vacant Lot Recycle/Land Bank Program to more truly reflect the activities of the Program. SECTION 3. The officers and the staff of the City are directed and authorized to perform any and all acts consistent with the intent of this Resolution which are necessary or appropriate to implement this Resolution. SECTION 4. This Resolution shall become effective immediately upon passage and approval. INTRODUCED: February 13, 2017 BY: Ed Brown City Clerk’s Office Item # M-8 Background Paper for Proposed Resolution CITY COUNCIL MEETING DATE: February 13, 2017 TO: President Steven G. Nawrocki and Members of City Council CC: Sam Azad, City Manager VIA: Gina Dutcher, City Clerk FROM: Ada Clark, Director of Housing and Citizen Services SUBJECT: A RESOLUTION AMENDING THE VACANT LOT RECYCLE PROGRAM TO EXPAND THE TYPES OF ACTIVITIES UNDERTAKEN TO BETTER MEET COMMUNITY NEEDS AND TO MEET REQUIREMENTS OF THE NEIGHBORHOOD STABILIZATION PROGRAM 3 GRANT SUMMARY: This Resolution amends the existing Vacant Lot Recycle Program to meet grant requirements and expands the types of activities that can be undertaken by the Program. The name is also changed from the Vacant Lot Recycle Program to the Vacant Lot/Land Banking Program. PREVIOUS COUNCIL ACTION: On December 12, 1994, the City Council approved Resolution No. 7521. This Resolution established the Vacant Lot Recycle Program (“Program”). In March of 1995, the Program was amended and reauthorized through Resolotui9n No. 7584. BACKGROUND: The 1994 Program was originally created to meet the affordable housing needs within the city of Pueblo. The Program took in vacant lots owned by the City that were feasible for re- development, and declared to be surplus to the City’s needs, to increase the supply of housing. The vacant lots were made available to low and moderate-income households for the development of single-family owner-occupied housing. In 1995, the Program was amended to allow for the conveyance of vacant lots to licensed homebuilders and non-profits. Once completed these properties had to be sold to low and moderate income households. In 2010, the City received an allocation of CDBG funds under the American Recovery and Reinvestment Act (ARRA), for the purchase of foreclosed and abandoned properties. Under the grant, the City purchased several properties that were a blight on the community. Several of these properties were demolished with the intention of redeveloping at some future appropriated time. The grant allows for properties to be land banked. The new amendments to the Program allow the Department of Housing and Citizen Services (DHCS) to comply with the land banking requirements of the grant. In 2015, when the City changed the way it collected on code enforcement liens, the DHCS saw a spike in the number of individuals wishing to donate their vacant parcels to the City. The DHCS accepted the donation of one parcel for future development, and researched the viability of several other potential property donations. In addition, the Blight Stakeholder’s Group discussed several additional processes that have been included in this Amendment. The primary activities that are authorized under the new Program, include, acquisition of vacant, abandoned and foreclosed properties, acquisition of tax foreclosed properties, ownership of escheated properties and receipt of donated properties by the private sector. FINANCIAL IMPLICATIONS: Properties retained in the Program will require maintenance and upkeep until the time of property disposition. At present, properties within the Program are maintained, and the charges accrue to the federal grant that the property was acquired with. The Program sets out the requirement that prior to the acceptance of properties a funding source must be identified and secured. BOARD/COMMISSION RECOMMENDATION: None. STAKEHOLDER PROCESS: Blight Stakeholder Group. ALTERNATIVES: The City Council might wish to amend this Resolution by eliminating those portions that are not required by the federal/state grant funding source. RECOMMENDATION: Approve the Resolution. ATTACHMENTS: Vacant Lot Recycle/Land Bank Program Policies VACANT LOT RECYCLE/LAND BANK PROGRAM Goals of the City of Pueblo Vacant Lot Recycle/Land Bank Program The overall goals of the Department of Housing and Citizen Services (DHCS) Vacant Lot Recycle/Land Bank Program ("Program") are to remove blight, stabilize neighborhoods, promote redevelopment, and increase the supply of affordable and workforce housing units. These goals are intended to: 1- Create a permanent inventory of affordable housing options for the community and its residents; 2- Return properties to the tax rolls and to productive use; 3- Provide low and no-cost land to homebuyers, homebuilders, for-profit and not-for-profit developers; and 4- Improve neighborhoods by removing blighted and abandoned properties. The Program calls for the following financial incentives: • No cost or low cost, improved or unimproved parcels owned by the City; • Sidewalk and street infrastructure improvements, as eligible; • Down-payment and closing cost assistance to homebuyers, as eligible; • Shared Equity second mortgage financing, as eligible. These guidelines are intended to support and further the goals, objectives and policies established in the 2015-2019 Consolidated Plan, the Neighborhood Stabilization Program, and the Pueblo Regional Comprehensive Plan, Addendum 2014. 1 Activities The Program is both an inventory and a program. It is important that staff and financial resources be adequately supplied to support the program. Cost could include not only acquisition, but also legal expenses,maintenance,demolition,and disposition expenses. The specific activities that can be undertaken include: • Acquisition of vacant, abandoned and foreclosed properties; • Acquisition of tax foreclosed properties; • The Program can purchase tax certificates that were not purchased during the annual tax certificate auction; • Ownership of escheated properties; and • Receipt of donated properties from the private/public sector. Priorities • Parcels will be conveyed to both for-profit and not-for-profit affordable housing developers. • Parcels will be conveyed to individuals wishing to build a home. Income limits, if any, will be set by funding sources. • Parcels in community redevelopment areas will be prioritized for affordable housing if appropriate and for the elimination of blighted conditions. Policies Governing the Acquisition of Properties In determining which (if any) properties shall be acquired* by the Program, the following considerations shall be made(please note that this list includes all possible acquisition types, only some of which will be eligible under the Neighborhood Stabilization Program (NSP)): • Acquisition of properties that support the mission of the Program. • Proposals and requests by governmental, nonprofit and for-profit entities that identify specific properties for ultimate acquisition and redevelopment, which: a) act as catalysts for further development; b) are part of a comprehensive development plan; or c) reduce blight in the community. Acquisition will be prioritized where the Program participation is necessary to complete the redevelopment. • Proposals and requests by governmental, nonprofit and for-profit entities that identify specific properties for ultimate use and redevelopment, including but not limited to infrastructure, public space and parking projects. In the case of municipal involvement, inter-governmental agreements (if required for development or maintenance) must be in place prior to acquisition. 2 • Properties that are available for immediate occupancy without need for substantial rehabilitation, and will generate operating resources for the functions of the Program. • Properties located in reinvestment areas that would support strategic neighborhood stabilization and revitalization plans. • Properties that meet the criteria for demolition, and such demolition will support blight elimination and neighborhood revitalization plans. This activity is contingent upon funding being available for the Program to facilitate demolition. • Properties that would form a part of a land assemblage development plan by either the Program or partnering entities. • Vacant, non-conforming, or undevelopable properties that could be placed into the Side Lot Disposition Program or support a planned development. • Properties that will generate operating support for the functions of the Program. • Properties that will result in a planned development that benefits the community, and are supported by the local government. • All properties must be absent of any financial liabilities. The Program must be aware of any environmental conditions. If any adverse conditions are determined,a remediation plan must be in place. • Properties that are environmentally contaminated where funds have been secured for the clean-up and reuse of the property. • Properties near schools, senior centers, or high visibility areas that may pose safety issues to the community. • Bank-foreclosed properties which are located in a neighborhood that is an area of focus, or with the purpose of preventing the further decline of a neighborhood. • Properties that would allow for the creation or expansion of green or community space. • Properties for which title issues are preventing the property from being developed to its highest and best use. *Acquisition is defined by the following methods: tax foreclosure; mortgage foreclosure; donation;purchase. In determining the nature and extent of the properties to be acquired, the Program shall also consider underlying values of the subject properties, the financial resources available for acquisitions and/or ongoing management, the operational capacity of the Program, and the projected length of time for transfer of such properties to the ultimate transferees. Properties acquired using financial assistance from NSP will include only eligible homes and residential properties that have been foreclosed or abandoned, as per the definitions published by HUD for the NSP program and in conformance with Exhibit 2 of the Administrative Policy Manual/Acquisition. 3 Policies Governing the Disposition of Properties (Land Transfer) In determining the requirements for property disposition by the Program, the following considerations shall be made: • The transferee must not own any real property that: a) has any un-remediated citation or violation of the state and local codes and ordinances;b)is tax delinquent;c)was transferred to a local government because of tax foreclosure proceedings. • All tax incentives and financing necessary to complete the development must be committed as prescribed in the development agreement, prior to actual disposition. • Parcels of property may be transferred for consideration in an amount less than the actual costs incurred in acquisition, demolition, maintenance and administrative fees of the lot/building. If grant funds (i.e. NSP, HOME, CDBG, Brownfields, environmental remediation, philanthropy, etc.) are used to support any of the aforementioned activities, the grant provisions will prevail. • Options to purchase real estate may be available for a specified percentage of the purchase price with a negotiated time frame to be determined by the Program. This fee will be credited to the parcel price at closing. If closing does not occur, the fee is forfeited. All option agreements are subject to all policies and procedures of the Program pertaining to property transfers. • All development projects should require a development agreement, and be started and completed within the negotiated time-frame. Where rehabilitation of a property by the transferee is a condition of the transfer, the requirement for such rehabilitation shall be in accordance with rehabilitation standards as established by the local codes. Adequate completion of such rehabilitation shall be a condition to the release of any restrictions or liens securing such performance. • A precise narrative description of future use of the property is required.The future use must be in-line with local development plans. The development agreement shall apply to stated use. • If code or ordinance violations exist with respect to the property at the time of the transfer, the development or transfer agreements shall specify a maximum period of time for elimination or correction of such violations, with an approximate period of time being established in relation to the nature of the violation. • The proposed use must be consistent with current zoning requirements, if not,a waiver for non-conforming use will be required prior to transfer. • Transactions shall be structured in a manner that permits the Program to enforce Neighborhood Stabilization Program compliance requirements, recorded covenants or conditions upon title pertaining to development and use of the property. Such restrictions may be enforced, in certain cases, through reliance on subordinate financing held by the Program. • The transferee must agree to pay future property taxes from the time of transfer. 4 • The subject property must not have been used by the transferee or a family member of the transferee as his or her personal residence at any time preceding the submission of application. • Where part or all the consideration for the transfer is the prospective affordability of the housing units, affordability requirements may be set forth in the transfer agreement and enforceable through recorded covenants, conditions, or limitations upon title. • An NSP-assisted property may not be held in a Program for more than 10 years without obligating the property for a specific,eligible redevelopment of that property in accordance with NSP requirements. The following additional policies shall apply to properties to be transferred to individual transferees as part of a homeownership program. • The owner-occupant must complete renovations and move into the structure within a time frame negotiated by the Program. • Properties purchased through grant funds may have additional programmatic and financial requirements, such as, affordability periods, household income limits, and others. Priorities Concerning the Disposition of Properties The disposition of properties shall be based upon a combination of two different factors. The first factor involves the intended or planned use of the property. The second factor considers the nature and identity of the transferee of the property. Within each factor is a ranking of priorities. The disposition of any given parcel will be based upon an assessment of the most efficient and effective way to maximize the aggregate policies and priorities. Staff shall, at all times, retain flexibility in evaluating the appropriate balancing of the priorities for development or use of the property and the considerations for the conveyance of those properties. Priorities for Use of Property (Examples in no particular order of priority) • Affordable housing: single-family for sale or multi-family rental • Market rate: single and multi-family rental housing development • Mixed use development • Side lots • Neighborhood revitalization • Consistent with existing redevelopment plans • Long term "banking" of properties for future strategic uses • Land assemblage for public use • Community gardens • Development of public green space (parks and gardens) 5 • Public infrastructure • Parking • Return of the property to productive taxpaying status • Land assemblage economic development projects • Retail and commercial development • Industrial and manufacturing • Demolition • Purpose of environmental clean-up • Historic preservation Priorities as to the Nature of the Transferee (Examples in no particular order of priority) • Qualified nonprofit corporations that will hold title to the property on a long-term basis (primarily rental properties) or hold title to the property for purposes of subsequent redevelopment and re-conveyance to private third parties for homeownership. • Individuals who own and occupy residential property. • Developers for commercial or mixed-use projects. • Businesses that will own and occupy commercial property. • Businesses who own commercial property for purposes of the Side Lot Disposition program. • Qualified real estate developers. • Entities that are a partnership, limited liability corporation, or joint venture comprised of private nonprofit corporations and a private for-profit entity. • Individuals who own and occupy residential property for purposes of the Side Lot Disposition Program. • Nonprofit or tax-exempt institutions such as academic, social service and religious institutions. • Qualified landlords, residential builders, or real estate investors without histories of local code violations, fair housing complaints, or such judgments against them for at least the previous five (5) years. Individuals and entities that were the prior owners of the property at the time of the tax foreclosure which transferred titled to the Treasurer, shall be ineligible to be the transferee of said property from the Program. 6 Factors in Determining Consideration Due Upon Transfers The following factors shall constitute general guidelines of the considerations to be received by the Program for the transfer of properties. In each and every transfer of real property,the Program shall require good and valuable consideration in an amount determined by the Program in its sole discretion. The Program will consider both the fair market value of the property and the property costs in its determination of consideration for each property. "Property Costs" shall mean the aggregate costs and expenses of the Program attributable to the specific property in question, including costs of acquisition, maintenance, repair, demolition, marketing of the property and indirect costs of the operations of the Program allocable to the property. • The consideration to be provided by the transferee to the Program may take the form of cash, performance of contractual obligations, imposition of restrictive covenants, or other obligations and responsibilities of the transferee, or any combination thereof. • All property that is transferred shall be based upon restrictions applied by transferors of property or sources of funding that make the property available. Applicable considerations shall be paid in full at the time of the transfer. Transfers to entities or individuals for development • Transfers of property shall require consideration not less than the cost of transferring the closing costs of property. • Consideration shall be established at a level between the Property Costs and fair market value of the property, except in cases of grant funding, including NSP-assisted properties. To the extent that the consideration exceeds the Property Costs, such amount shall be reflected by a combination of contractual obligations to develop, maintain, or preserve the property for specified development purposes. Such amount may be secured by subordinate financing in which amortization of the obligation occurs by virtue of annual performance of the required conditions. • The dominant priority in determining the amount of and method of payment of the consideration may be to facilitate development that aligns with the priorities on use and concerns neighborhood and community development. Transfers using the Side Lot Disposition Program • The pricing policies applicable to the Side Lot Disposition Program shall be as set forth in the policies and procedures applicable to the Side Lot Disposition Program, and will depend on the source of funds that have been used to pay Project Costs. 7 Transfer of Rehabilitated Properties These policies apply to the disposition by the Program of improved real property which is rehabilitated by or on behalf of the Program prior to its disposition to a transferee. Rehabilitation and Marketing • The Program shall undertake rehabilitation of properties prior to the transfer to third parties.The nature and extent of any such rehabilitation shall be determined by the Program in its sole discretion. • NSP-assisted properties will be rehabilitated in accordance with the rehabilitation standards for the program by the NSP-grantee. • A real estate agent, or realtor, shall be selected in accordance with procurement policies to assist in the marketing of the property. A listing agreement will normally be signed with such agent prior to completion of the rehabilitation. Sale of Rehabilitated Properties • A refundable escrow deposit shall be required for all contracts for the disposition of property rehabilitated by the DHCS. Such deposit shall be in an amount established by DHCS, but shall not be less than $500 or more than $1,000. • A sales contract must comply with all policies and procedures of the Program, or in the case of the Neighborhood Stabilization Program,sales requirements(i.e. sales at no greater than project costs).The sales contract shall not be binding upon the Program until approved by the Director of Housing and Citizen Services("Director"). • Closing shall occur with the assistance of a title company. Program Issued Financing Funds may be available through Community Development Block Grant, HOME or other grants for improvements. Improvements may include sidewalks and other public infrastructure that normally must be included by homebuilders in the cost of new home construction. There may be additional requirements as dictated by funding sources. In addition, HOME funds may be made available to fill the gap between the cost of construction and the market value of the property. Funding will be provided as a direct subsidy to the homebuyer/homebuilder and will be secured by a promissory note and deed of trust, and an affordable housing agreement. HOME funds are subject to household income limits and other requirements. 8 Disposition Procedures • The Program will make available a packet for interested parties that includes the application and policies. The applications will request information on the use of the property, the budget for any development, personal or organizational information (experience, capacity, history, etc.) and timelines. • Application and supporting documents will be received by the DHCS. • The DHCS will process the application and provide a review and initial evaluation of the proposals, as compared to the policies and priorities established by the Program. • The DHCS will communicate all outcomes to applicant. • The DHCS will implement the closing process. In some instances, the DHCS or the transferee may elect to use an attorney and/or title company. Application/Document Requirements The prospective transferee must submit the following documents to the DHCS: • Address of Property being Requested • Rehabilitation/ Improvement Specifications • Time Line for Rehabilitation / Improvement Completion(if applicable) • Project Financing(Pre-Qualification Letter from Lender) • Development and Operating Budget(if applicable) • Driver's License The prospective buyer must submit the following documents to the DHCS if applicable: • Development Team Description, including complete information on the following parties (as applicable): • Developer • Co-developer/Partner • Owner • General Contractor • Consultants • Architect • Project Manager(during construction) • Lead Construction Lender • Marketing Agent • Project Management(post-construction) • All rental transactions must attach a budget and a 15 year pro-forma statement • Most recent audited financial statement • Evidence of compliance with all applicable Program policies 9 Approvals of Land Transfers Transfers Allowed with Staff Approval Only • The Director may approve all transfers in the Side Lot Disposition Program. • The Director may approve all single parcel land transfers (single-family) for residential use. • All other transfers shall be approved by the City Council. • The Director may further delegate, by written policy, such approval authority. Occupied Foreclosed Property Procedure • The Program will not acquire or accept transfer of properties that are legally or illegally occupied. Development Procedure The Program will procure all development services (real estate, appraisal, title, construction services, etc.)through a Request for Proposals(RFP), in compliance with the City's Purchasing guidelines or the funding source requirements. Development Agreements To ensure that development on transferred property is completed and is consistent with the application, the DHCS will require that each property transfer is subject to a development agreement. Each development agreement will consist of the following components: • Project Description • Development Schedule • Financing Structure • Enforcement Mechanism • Neighborhood Stabilization Program Requirements and Compliance (if applicable) • Funding Source requirements and compliance (if applicable) Each development agreement will be drafted by the City and signed by both the City and the transferee at the time of transfer, and approved by the City Council (if applicable). Development agreements may be accompanied by a note and deed to secure compliance. 10 Side Lot Disposition Program The transfer of any given parcel of property in the Side Lot Disposition Program is subject to override by higher priorities as established by the Program. Individual parcels of property in the Program will be transferred to individuals in accordance with the policies outlined below. Side Lot Disposition Policies Parcels of property eligible for inclusion in the Side Lot Disposition Program shall meet the following minimum criteria: • The property shall be vacant unimproved real property. • The property shall be physically contiguous to adjacent occupied (owner) residential property with not less than a 100%common boundary line on one side(left or right). • Initial priority shall be given to the disposition of properties of insufficient size to permit independent development. • No more than one lot may be transferred per contiguous lot. • Intended use for lot is disclosed. • (NSP Only) The transfer shall include a deed restriction requiring the use of the property to be consistent with the stated use and Neighborhood Stabilization Program requirements. Transferees • All transferees must hold title on the contiguous property. Priority is given to transferees who personally occupy the contiguous property. • The transferee must not own any real property (including both the contiguous lot and all other property within the city) that is subject to any un-remediated citation or violation of state or local codes and ordinances. • The transferee must not own any real property (including both the contiguous lot and all other property in the city)that is tax delinquent. • The transferee must not have been the prior owner of any real property that was transferred to the Treasurer because of tax foreclosure proceedings. Pricing • Parcels of property may be transferred for nominal consideration, or consideration as allowed/determined by the funding source for acquisition and Project Costs.Title insurance is not included as part of the Project Costs. 11 Additional Requirements • In the event that multiple adjacent property owners(with the same percentage of common boundary line) desire to acquire the same side lot, the lot shall either be transferred to the highest bidder for the property,or divided and transferred among the interested contiguous property owners. • In the event that a contiguous property needs land for a driveway or other local code compliance issues, that property owner shall have priority. Side Lot Disposition Procedures • The prospective buyer must submit the following documents to the City: • Address of Property being Requested • Project Description - property use must be consistent with current zoning requirements. • Evidence of compliance with all Side Lot Disposition Policies. • Within a reasonable period of receiving a complete request packet, a basic analysis is completed and presented to the Director or such other persons as designated by the Director for approval. • Once the project has been approved, the closing documents for property transfer to complete the transaction with the buyer/transferee will be compiled. Acceptance of Donated Property Donated Property Policies • Properties with adverse environmental conditions will not be accepted without a satisfactory approved and funded plan for remediation approved by the City of Pueblo. • Properties with immediate maintenance requirements will not be accepted without a funding source secured for such maintenance. • The Program will not determine the value of the donated property for the purpose of tax benefits, but will provide a letter describing the property donated. • The Program will only accept donated properties located within a neighborhood of focus. Donated Property Procedures The Program will complete a comprehensive analysis of the property to be donated which will: • Determine if property is located within a neighborhood of focus. • Determine the fair market value of the property. • Determine if there are any environmental concerns. • Determine if there are any outstanding liens. 12 • Determine the initial maintenance cost(boarding, demolition, mowing). • Determine any on-going maintenance cost. • Determine the condition of the surrounding neighborhood. Program Staff will present the report to the Director or other City Staff as may be required for approval. Program Policies The Program can receive title to properties from community development corporations, government agencies, and all other entities, and hold title to such properties pending future use by the Program.The receipt by the Program of all conveyances of real property shall always be solely within the discretion of the Program.Nothing in this policy shall be deemed to require the Program to take title to any properties nor to limit the discretion of the Program in negotiating the terms of its acquisition of any property, whether as donated, transferred, or otherwise. All conveyances received must comply with the Program requirements and be in accordance with the procedures set forth below. If the transfer is approved by the Program, the Program shall hold the subject property, and may use or convey the subject property or any interest in the subject property. Following the transfer of any properties to the Program in accordance with this policy,the Program shall have the right, but not the obligation, to maintain, repair, demolish, clean, and grade the subject property and perform any and all other tasks and services with respect to the subject property as the Program may deem necessary and appropriate in its sole discretion. Requirements for Conveyances to the Program in its Programing Capacity • Property that is intended to be conveyed to the Program and to be held by the Program in its Programing capacity shall be clearly designated as such in the proposal for the transfer and in the records of the Program. • The subject property must be located in a Program area of interest. • The subject property must not be occupied by any party or parties, legally or illegally for at least ninety (90) days before transfer to the Program. • The subject property must, as of the date of the transfer to the Program, be free or released of any and all liens for ad valorem taxes, special assessments, and other liens or encumbrances in favor of local, state or federal government entities. • The subject property must, as of the date of the transfer to the Program, be free or released from all outstanding mortgages and security instruments. • If the property that is to be conveyed by the Program has benefitted from Neighborhood Stabilization Program funding, then such property will be required to comply with all program requirements. 13