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HomeMy WebLinkAbout14563 RESOLUTION NO. 14563 A RESOLUTION ESTABLISHING THE VOLUNTARY DEMOLITION PROGRAM AND RELATED ADMINISTRATIVE PROCEDURES TO ASSIST PROPERTY OWNERS LOCATED IN DESIGNATED LOW-TO- MODERATE INCOME AREAS FOR THE REMOVAL OF BLIGHTED STRUCTURES WHEREAS, on occasion slum and blight can occur within the City, and WHEREAS, the effect of slum and blight can reduce property values and lead to increased crime, and WHEREAS, the City requires a program to assist property owners to mitigate the effects of slum and blight; NOW, THERFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The Voluntary Demolition Program of the City of Pueblo, a copy of which is attached hereto and incorporated herein as if set out in full, (herein “Program”) is hereby approved, and the Department of Housing and Citizen Services (herein “Department”) shall be responsible for the administration of the Program, in accordance with the terms and provisions of this Resolution and the policies and procedures of the Program. SECTION 2. The City, on an annual basis by appropriate legislative enactment may, but without obligation to do so, make available to the Department funds for the purpose of implementing and executing the terms and provisions of the Program. The Department may also apply for other available monies for demolition and grant programs and shall incorporate such grants or loans into the Program to further the objectives of the Program. SECTION 3. The funds are available in Project Account CD1913 within Fund 250, and those funds will be dedicated to the Program. SECTION 4. The officers and staff of the City are authorized to perform any and all acts consistent with this Resolution to implement the policies and procedures described herein. SECTION 5. This Resolution shall become effective immediately upon passage and approval. INTRODUCED February 22, 2021 BY: Ed Brown MEMBER OF CITY COUNCIL APPROVED: PRESIDENT OF CITY COUNCIL ATTESTED BY: CITY CLERK City Clerk’s Office Item # M-4 Background Paper for Proposed RESOLUTION COUNCIL MEETING DATE: February 22, 2021 TO: President Lawrence W. Atencio and Members of City Council CC: Nicholas A. Gradisar, Mayor VIA: Brenda Armijo, City Clerk FROM: Bryan Gallagher, Director of Housing and Citizen Services SUBJECT: A RESOLUTION ESTABLISHING THE VOLUNTARY DEMOLITION PROGRAM AND RELATED ADMINISTRATIVE PROCEDURES TO ASSIST PROPERTY OWNERS LOCATED IN DESIGNATED LOW-TO-MODERATE INCOME AREAS FOR THE REMOVAL OF BLIGHTED STRUCTURES SUMMARY: This Resolution approves the City of Pueblo’s Voluntary Demolition Program (“Program”) to assist property owners in Low-to-Moderate Income Areas, as designated by HUD, in the removal of blighted structures. PREVIOUS COUNCIL ACTION: There has been no previous Council action on this issue. A Council Work Session presentation was given on January 19, 2021. BACKGROUND: The intent of the Program is to assist Code Enforcement and property owners in removing blighted structures. To be eligible for Community Development Block Grant (“CDBG”) funding, the Program must operate within designated low-to-moderate income neighborhoods or areas producing an area benefit for the low-income community. Property owners wishing to participate do not need to be low income. Under the Program, owner-occupied properties and investor- owned properties are eligible. In either case, Code Enforcement must have cited the property as substandard. Eligible projects may receive up to $50,000 in loan funds to complete the project. Only feasible projects will be undertaken. A project is considered feasible if Program funds, in combination with all other resources supplied by the owner, meet or exceed construction estimates. FINANCIAL IMPLICATIONS: The Program is to be funded using Community Development Block Grant funds provided by HUD and are available in the 250 Fund. BOARD/COMMISSION RECOMMENDATION: Not applicable to this Resolution. STAKEHOLDER PROCESS: Not applicable to this Resolution. ALTERNATIVES: Not applicable to this Resolution. RECOMMENDATION: Approval of the Resolution. Attachments: City of Pueblo’s Voluntary Demolition Program Policies and Procedures VOLUNTARY DEMOLITION PROGRAM GUIDELINES CITY OF PUEBLO INTRODUCTION The City, on an annual basis by appropriate legislative enactment may, but without obligation to do so, make available to the Department of H pose of implementing and executing the terms and provisions of the Voluntary Demolition Program of the City of Pueblo (herein "Program"). The Department may make available by referral from the various agencies responsible for enforcing housing codes within the City of Pueblo, an application for the Program to cure code violations or alleviate blight through demolition of dwellings and accessory structures. 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. B. U.S. Department of Housing and Urban Development (HUD) The Federal agency providing funds and programs for community development and affordable housing. C. Low-and-Moderate Income (LMI) 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 low-income limits established by HUD will apply. D. Low-and-Moderate Area (LMA) The term given to a Census Block Group whose makeup consists of greater than 51% LMI persons based on low- and moderate-income summary data (LMISD) from the U.S. Census American Community Survey. E. 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. F. Elderly Household An elderly household is any household in which all members are at least 62 years of age, or where all persons listed on title are at least 62 years of age and live with one or more live-in aides, or where Voluntary Demolition Program Guidelines 1 all persons listed on title are at least 62 years of age and live with one or more dependent children who are 17 years of age or younger. G. Condemned Structure/Code Violation Structure deemed uninhabitable by the City of Pueblo, Code Enforcement Division or the Pueblo Department of Health and Environment. The property is in substandard condition with respect to the requirements of the International Property Maintenance Code, as adopted, but may possess structurally integrity. H. Substandard Condition and not suitable for rehabilitation Dwellings units which are in such poor condition as to be neither structurally nor financially suitable for rehabilitation. Units will show exterior signs of deterioration, dilapidation, or abandonment. The deficiencies covered by this category range from rotted windowsills, missing roof shingles, and broken gutters to cracked foundations and sagging exterior walls or 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. I. Dangerous Building Structure deemed uninhabitable and structurally unsound by the City of Pueblo Fire Department or Pueblo Regional Building Department. J. Designated project area Census Block Groups with an LMA designation as updated by HUD. K. Owner-Occupied Residences Single-family residences, including manufactured homes and accessory structures, located on real property occupied by the owner thereof. Owner-occupied residences have no leased facilities in or on the property. L. Non-Occupied Housing Dwelling units that are not owner-occupied nor leased and have been vacant for six months as verified by utility usage and/or non-occupied accessory structures located on the subject property. M. Accessory Structures Structures located on the subject property additional to and detached from the primary residence. Such structures include a secondary residence, detached garage, storage building, shed, lean-to, and other constructed objects. Lean-to structures, by nature, may be attached to the primary structure. N. Funding Source A source of funding with the intent or regulatory requirements to allow for the execution of the intended activity, and that has regulations to allow the activity to be completed within the regulatory requirements of this program. Voluntary Demolition Program Guidelines 2 SECTION 2 - ELIGIBILITY REQUIREMENTS A. General A voluntary demolition loan may be made only with respect to residential property located in designated low- and moderate-income census tract areas (LMA) within the City of Pueblo. The structure(s) must have a current code violation which the owner and DHCS have determined financially unfeasible to repair or rehabilitate. Deferred loans under $25,000 are available to low- and moderate-income owner-occupants wishing to remove blighted accessory structures from their property. Additionally, property owners of vacant and blighted property located in LMA within the City of Pueblo may access the program to address current code violations by removing a dwelling and/or accessory structure. Projects in excess of $25,000 are subject to full payback amortized over fifteen (15) years. The Program is not a clearance program, and dwelling units feasible for rehabilitation do not qualify for the Program. Dwelling units which cannot be brought up to minimum local code standards within the funding limits, combined resources, will not be approved for the program. In the event damage caused to the Property is covered or partially covered by homeowners or other liability insurance, the insurance proceeds shall be used prior to accessing Program funds and the amount of the insurance proceeds shall be deducted from the total cost of the project. The responsibility for administration of the Voluntary Demolition Program has been delegated to the DHCS. DHCS staff decisions regarding eligibility are final unless an appeal is filed pursuant to Section 15. B. Loan Requirements Applicable to Owner-Occupant Applicants 1. To be eligible for a voluntary demolition loan to remove an accessory structure located on the single-family dwelling unit as its primary residence. The applicant must have owned and occupied the dwelling unit as his/her primary place of residence for a minimum of twenty-four (24) months prior to making an application to the Program, and must continue to occupy the dwelling thereafter. An eligible family unit must be certified as low- or moderate-income in accordance with the most current HUD Section 8 income limits for the Pueblo-MSA area in order to be eligible for assistance. 2. All persons on title must reside in the home as their primary residence. 3. All lien holders must approve of the demolition project in writing, releasing the City from liability prior to the applicant applying to the Program. 4. Special consideration shall be made for elderly households that have elected to add an immediate family member to the title that does not reside in the home. The elderly members of the household (applicant) must have solely held title to the property for a period of at least five (5) years prior to adding an additional non-resident member to the title. If the special conditions for elderly households apply, the income of the non-resident party on title will be excluded from the household income determination. Voluntary Demolition Program Guidelines 3 5. To qualify for the Program, the applicant may have no more than $10,000 total in cash, checking, savings, and stocks. Additionally, the applicant may have no more than $100,000 total in long term investments or assets, such as annuities, retirement accounts, bonds, certificate of deposits, and real property, other than the appl limits above, the applicant will be required to apply the excess value to the cost of demolition prior to accessing Program funds. C. Loan Requirements Applicable to Non-Occupied Housing Applicants 1. To be eligible for a voluntary demolition loan, the applicant must be the property owner of a vacant and blighted structure or accessory structure located within a designated LMA census tract. The applicant must prove that there are no outstanding leases on the subject structure, that the structure contains no legal or illegal residents, and show vacancy of the structure for the last six (6) months by documenting water, gas, and electrical utility non-usage. For accessory structures, a visual observation by DHCS staff and a signed statement of vacancy by the owner will be required. 2. All lien holders must approve of the demolition project in writing, releasing the City from liability prior to the applicant applying to the Program. 3. Demolition of accessory structures: all legal tenants must approve of the demolition project in writing, releasing the City from liability prior to the applicant applying to the Program. 4. To qualify for the Program, the applicant must provide affordable rental housing or intend to redevelop the property for affordable housing within twelve (12) months of project completion. Failure to complete redevelopment within twenty-four (24) months of executing the Voluntary Demolition Loan Agreement shall constitute a breach of contract and the applicant will be subject to repayment penalties. If the Applicant chooses to provide affordable rental housing, the applicant shall do so in accordance with 24 CFR 570, providing for Section 8 Housing Quality Standards, Fair Market Rent, and low- to moderate-income (LMI) tenant selection. Landlord shall remain in compliance with the Fair Housing Act and shall not discriminate on the bases of race, religion, origin, nationality, age, sex, sexual orientation, or familial status. Voluntary Demolition Program Guidelines 4 SECTION 3 - ASSURANCE THAT THE DEMOLITION PROJECT WILL BE COMPLETED A. General In some instances, the abatement and demolition cost may exceed the amount of the voluntary demolition loan. In such cases, the demolition loan will not be made unless the applicant can provide whatever additional amount is needed to assure completion of the work. B. Supplemental Loans on Residential Property The applicant for a voluntary demolition loan 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 redevelopment or demolition. The loan shall be in an amount, which, when added to the voluntary demolition loan and any other funds the applicant furnishes, will be sufficient for completing the required project scope of work. When the applicant is furnishing evidence that actual funds are available, evidence furnished to the City shall consist of verification and documentation showing that the applicant has funds in the required amount for deposit in the loan account. SECTION 4 - COST ALLOWABLE IN A VOLUNTARY DEMOLITION LOAN A. Allowable Costs A voluntary demolition loan may be made only to cover the costs necessary to remove blight and correct the building code violation(s) through abatement, demolition, and removal. Allowable expenses include the material, labor, and equipment necessary to complete the following: environmental inspection, assessment, testing, and clearance, permit fees, utility disconnections, abatement and mitigation, demolition, debris removal, trucking, and disposal fees. All work performed shall bring the property into compliance with local code standards. B. Costs Not Allowable Except as otherwise provided in this Section 4, voluntary demolition loans and projects shall not cover the costs of or provide for: 1. Construction materials not associated with the blight removal, fixtures, equipment, fencing, site improvements, or landscaping. 2.Acquisition of land. 3.Payment of back taxes, delinquency, or fines. 4.Any other purposes than those expressly allowed in Section A above. 5.Funds for the normal costs of operations, such as utilities and insurance. C. Work Write-Up Voluntary Demolition Program Guidelines 5 The DHCS shall prepare a work write-up to document the project scope of work to be financed with a voluntary demolition loan. SECTION 5 - LIMITATION ON PROJECT AMOUNT The amount of a voluntary demolition loan that an applicant may receive shall be subject to available appropriation and limited to the actual and approved cost of abatement, demolition, environmental assessments, environmental testing, permits, and dump fees necessary to cure the violation or to remove blight. The total amount of the loan, including all eligible costs, shall not exceed $50,000. A. Owner-Occupied Voluntary Demolition Loan under $25,000: 1. Deferred loan, due upon death, sale, or transfer; remainder forgiven after term upon DHCS approval. 2. Interest Rate: 0%. 3. Loan term: 15 Years. 4. For qualified borrowers with the ability to make loan payments, a modified payment During the term of the loan, interest shall not accrue on the voluntary demolition funds unless a default occurs. In the case of default, the balance of the loan shall become immediately due and payable in full. 5. If at any time after the assistance is provided, the dwelling unit is sold or transferred in any manner, the remaining balance of the loan will become immediately due and payable. B. Non-Occupied Voluntary Demolition Loan under $25,000: 1. Deferred loan, due upon death, sale, or transfer; remainder forgiven after term upon DHCS approval. 2. Interest Rate: 0%. 3. Loan term: 15 Years. 4. Subordination only allowed within the first twenty-four (24) months and subject to Section 7.B. 5.For qualified borrowers with the ability to make loan payments, a modified payment During the term of the loan, interest shall not accrue on the voluntary demolition funds unless a default occurs. In the case of default, the balance of the loan shall become immediately due and payable in full. 6. If at any time after the assistance is provided, the dwelling unit is sold or transferred in any manner, the remaining balance of the loan will become immediately due and payable. Voluntary Demolition Program Guidelines 6 C. Voluntary Demolition Loan equal to or exceeding $25,000: 1. Full amortized loan, due upon death, sale, or transfer; remainder not forgiven. 2. Interest Rate: 0%. 3. Loan term: 15 Years. 4. Non-Occupied Housing Demolition Projects: subordination only allowed within the first twenty-four (24) months and subject to Section 7.B. 5. During the term of the loan, interest shall not accrue on the voluntary demolition funds unless a default occurs. In the case of default, the balance of the loan shall become immediately due and payable in full. 6. If at any time after the assistance is provided, the dwelling unit is sold or transferred in any manner, the remaining balance of the loan will become immediately due and payable. SECTION 7 - NOTE AND DEED OF TRUST A. Note and Deed of Trust All voluntary demolition loans shall be evidenced by a promissory note, which shall be executed Borrower shall be required to repay 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 fifteen years (15) and shall be evidenced by the Promissory Note 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 borrower's 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 fifteen (15) years from the date of said note: a. Transfer of title of the dwelling unit, including transfer upon death of the owner/borrower, except upon death where title passes to the spouse or adult child Voluntary Demolition Program Guidelines 7 of such owner/borrower who lives in the residence and who is also an eligible and qualified applicant under the Program and a request is made to DHCS to approve such spouse or adult child as 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 rights of such surviving spouse or adult child hereunder; or b. Owner-Occupied applicants who cease for any reason to occupy the residence as applicant's sole and only residence. This applies only to borrowers who receive a deferred loan; or c. Non-Occupied Housing applicants who fail to provide affordable rental housing in accordance with the regulations found at 24 CFR 570 for the term of the note or who fail to redevelop the property for affordable housing within twenty-four (24) months of executing the promissory note; or d. Default in repayment of the loan or any other term 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 DHCS. 7. DHCS shall determine and recertify the family occupancy after the first year, and at two-year intervals thereafter, from the date of execution of the Promissory Note, of each owner-occupied applicant who has received deferred loan assistance under the Program. Borrower-owners should cooperate in such recertifications and turn in all documents required therefore. This does not apply to full pay back loans, but only to borrowers that elected a deferred loan.Failure of an owner-borrower to furnish requested documents shall cause the entire balance of funds loaned to such owner- borrower to immediately become due and payable. B. Subordination Policy The City of Pueblo will consider subordinating its Promissory Note and Deed of Trust to a position no lower than third position in the following circumstances: 1. If the owner-occupied 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-occupied borrower is borrowing money to make additional improvements to the dwelling unit as required to remedy an active code violation. Documentation must be provided to identify the type and cost of the improvements to be made and to ensure that the borrowed money will be used to make additional improvements. 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 Assessor. Voluntary Demolition Program Guidelines 8 3. Non-Occupied Housing applicants may request that the City subordinate to a primary lender within twenty-four (24) months of executing the Promissory Note. The City will only subordinate for the purpose of acquiring development funds for the creation of housing or improvement of existing affordable housing on the subject property. C. All loans shall be secured by a lien on the property evidenced by a mortgage or Deed of Trust. The Deed of Trust will contain such provisions as the City determines necessary for the provision for monthly escrow payments by the borrower to the City in the amount necessary to pay when due: 1. Property taxes and special assessments, if any; and 2. Fire and extended insurance 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 PROPERTY The Program assists property owners through the provision of no interest demolition loans. In order to qualify for assistance, subject properties must be located in LMA Census Tracts as defined by HUD, and must meet the conditions set forth in Section 2. The order in which applicants receive assistance is on a first-come, first-serve basis. Applications will only be accepted when funding is available. The City of Pueblo will review all applications and determine eligibility based on the following: A.Property Location To be eligible, a property must be: 1. Located in an LMA qualified Census Tract/Block Group. 2. In conformance/compliance with all current zoning ordinances, or an agreement must be reached as to when and how conformance and compliance will be achieved. Such agreements shall be accepted in the sole discretion of the Director. 3. No third party or debtor liens, other than first or second mortgages, may be attached to the property. 4. All taxes must be paid with no outstanding tax certificates of purchase. SECTION 9 - APPLICANT'S INCOME FOR AMORTIZED LOAN A. nds and Amounts Comprising Applicant's Income. In the preparation of all reports and analysis required by this paragraph, the following definitions 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 DHCS to determine the applicant's monthly income and demolition loan payment. The following is a listing of the elements comprising income for purposes of a demolition loan: Voluntary Demolition Program Guidelines 9 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 or her 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 sum of the family incomes of all applicants. An applicant's income is established on an annual basis, at the time of applying for a demolition loan, and includes: a. The applicant's earnings; b. Spouse's earnings, and earnings of all other members of the family who share the household; c. Other income regularly received by the applicant or his family from any source; and d. Net income from real estate, other than the project property, 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 demolition loan on a residential property: (1) Income of Person. For purposes of establishing the amount of the applicant's income that is relevant to the 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 this Program. (2) The following exclusion app connection with a demolition loan. Title II of the Social Security Act, 42 U.S.C., 401 et seq., permits, if certain conditions are met (see below), the payment of monthly benefits for educational purposes to the children of an individual entitled to disability or old age insurance benefits (Social Security Educational Benefits). The income attributed to these benefits should ordinarily be excluded from income in determining eligibility for a demolition loan. 4. Conditions for Payment of Benefits. A child of an individual is 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. Voluntary Demolition Program Guidelines 10 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 the Social Security Benefits must be included in the applicant's income. B.Non-Occupied Underwriting Standard for Amortized Loan 1. Applications for rental developments will be underwritten with a minimum Debt Coverage Ratio (DCR) of 1.10, including debt service on the demolition loan. 2. Applications for affordable housing development, for sale to low- and moderate-income homebuyers, shall have no more than a 43% debt-to-income ratio. The first mortgage must be a fully amortized, fixed-rate mortgage. (No adjustable-rate interest, interest only, or negative amortization loans are acceptable). All first mortgages must be in compliance with the FDIC Statement on Subprime lending at http://www.fdic.gov/regulations/laws/rules/5000-5160.html The subject property shall be the prospectivnce and the primary an 80% area median income as determined annually by HUD. 3. Annual household income is defined in 24 CFR 5.609 and is referred to as "Part 5 annual income." The Part 5 definition of annual income is the gross amount of income of all adult household members that is anticipated to be received during the coming 12-month period, and income earned from assets (In general, an asset is cash or a non-cash item that can be converted to cash. It is the income earned from the asset - not the value of the asset - that is counted). A. Fair Housing Requirements 1. Public Law 88-352 refers to Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.), which provides that no person in the United States shall, on the grounds 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 financial assistance. 2.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. B. Non-discrimination in Program Benefit 1. Section 109 of Title I of the Housing and Community Development Act of 1973 requires that no person in the United States shall on the grounds of race, color, national origin, disability, or sex be excluded from participation in, be denied the benefits of, or be subjected to discrimination under Voluntary Demolition Program Guidelines 11 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 government, 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. b. Providing any facilities, services, financial aid, or other benefits, which are different, or are provided in a different form, from that provided to others under the program or activity. c. Subjecting an individual to segregated or separate treatment in any facility, 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 from 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 opportunity 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, sex, or sexual orientation 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, sex, or sexual orientation. 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 from, denying them the benefits of, or subjecting them to discrimination on the ground of race, color, national origin, handicap status, sex, or sexual orientation; 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 Housing and Community Development 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. C.Relocation, Displacement, and Acquisition. 1. The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) Voluntary Demolition Program Guidelines 12 (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.Relocation assistance may be afforded the occupants if it is determined that during the project the living conditions would be unsafe or unsanitary. D. Lead-Based Paint. The Program shall comply with EPA regulations regarding repair, restoration, and painting of surfaces containing or presumed to contain lead-based paint. The applicant agrees to hire only certified/trained contractors 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". 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. 2. Each occupant of housing to be assisted under this program that was constructed prior to 1979 is to be notified of the hazards of lead-based paint poisoning. 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. For activities funded under this program, the following will be implemented concerning lead- based paint: a. Properties built prior to 1979 shall be presumed to contain lead-based paint unless the owner elects to have a LBP Inspection conducted. b. Prior to final inspection and approval of the project, a clearance examination shall be conducted. This examination will be in accordance Evaluation and Control of Lead-Based Paint Hazards in Housing and will document the status of the corrective measures completed through the project. E.Use of Debarred, Suspended, or Ineligible Contractors or Subrecipients. Voluntary Demolition Program Guidelines 13 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 subrecipient during any period of debarment, suspension, or replacement in ineligibility status under the provisions of 24 CFR Part 24 of the regulations. F. Conflict of Interest. 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 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 demolition 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 demolition 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 demolition work for which the loan will be approved. K.Completion of Work. An applicant agrees, by signing a loan application, to assure that the demolition work shall be carried out promptly and efficiently, through written contract awarded with the prior approval 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, demolition work, and all contracts, materials, equipment, payrolls, and conditions of employment pertaining to the work. M.Records. An applicant agrees, by signing a loan application, to keep such records as may be required by the City with respect to the demolition work. N. Incorporation. The provisions of subsections I thru M shall be incorporated and included in all loan documents. PROCEDURES Voluntary Demolition Program Guidelines 14 A.Applicant Screening for Full Amortized Loan. 1. The following matters related to the individual or household applying for Owner-Occupied assistance will be verified in writing: a. All sources of income for all people residing in the dwelling unit, including without limitation 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; and (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 of work financed in whole or in part with the proceeds of the demolition loan. b. All liabilities, including total amount of indebtedness and monthly payment amounts of all indebtedness, including without limitation the following: (1) Any mortgages or liens or delinquent taxes against the subject dwelling unit; (2) Any consumer debt that has an outstanding principal balance, including the amount of monthly payment for each; and (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 one or more of the occupants of the dwelling unit to be demolished. b. That property taxes are current with the local municipality. The assessed value of the property is also to be determined. B. Underwriting Standards of Owner-Occupied Assistance. 1. Standard underwriting ratios are to be used to qualify a prospective borrower for assistance under this program. If the applicant requests to make periodic payments in accordance with a loan schedule set up to repay the indebtedness over a fifteen-year period, the Department will determine if the applicant has the capacity to pay an amortized loan at 0% interest, by using the most current HUD Section 8 Income Guidelines as follows: a. Repayment Schedule. Applicants eligible for loan funds up to a maximum of $25,000 at zero percent interest may elect a repayment loan schedule in lieu of a deferred loan. To determine the monthly amount a borrower can afford to pay back, me (GMFI) will be multiplied by the Voluntary Demolition Program Guidelines 15 maximum allowable debt ratio of 50%. The payment calculation will be done by taking the product of the two, less any existing principal and interest on outstanding mortgages, property taxes, insurance, predetermined utility allowance, and other debt commitments longer than 12 months. The remain monthly amount available for a loan payment. If the minimum monthly payment available, the deferred loan will be made available in lieu of an amortized loan. 2. Allowable monthly debt and debt-to-income required for an amortized loan. Total monthly debt must not exceed fifty percent (50%) of gross monthly income. This allowable debt shall include: a. Housing expenses, to include: all principal and interest payments, including the prospective demolition loan payment, mortgage insurance payments, real estate taxes, hazard and flood insurance premiums, and utilities. b. Utilities, to include natural gas or propane service, electrical service, water and sewer service, and all associated taxes and fees applicable to each service provider. A twelve- month average for each utility less any LEAP assistance shall be in the calculation on the c. 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 and Section 8 are considered eligible under this program. 2. Accessory structures that are blighted or not feasible to repair are eligible structures. Only those dwelling units which are considered vacant and blighted in accordance with the local Codes are eligible units. Information will be retained to be able to identify the before and after condition of the property. All voluntary demolition loan applications received by the Department of Housing and Citizen Services will be reviewed on a case-by-case basis, to evaluate needs affecting safety, health, and urgency. SECTION 12 - FUNDING OF INDIVIDUAL VOLUNTARY DEMOLITION 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. The Maximum Loan Amount shall be in accordance with Section 5. The amount of a loan shall be limited as follows: 1. The actual and approved cost for the demolition necessary to cure an issued violation and make the property conform to the Property Rehabilitation Standards for safe, decent, and sanitary housing. Voluntary Demolition Program Guidelines 16 2. Minimum loan amount: $1,000. 3. Maximum loan amount shall not exceed: $50,000.00. B. Loan. The City will disburse a loan by drawing a check, payable to the contractor with a written authorization to pay from the borrower, in the amount of the work completed based on the s voluntary demolition account. C. Deposit of Loan. After an demolition loan has been approved, an up and a budget amount established in the demolition account. D. Voluntary Demolition 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 demolition loan or from a recognized lending institution, those supplemental funds shall be deposited in the demolition account at the same time the loan is deposited. E. Management of Voluntary Demolition Escrow Account. The City shall maintain a single demolition account as the depository for all demolition 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 demolition account funds. 1. Separate Account for Each Borrower. The City shall establish and maintain a separate account within the program for each borrower who has received a demolition loan. All receipts and disbursements made for or respect to each borrower shall be recorded in the account. 2. Disbursements from the Program. Disbursements from the separate borrower account within the demolition account shall be by check authorized by the borrower and made payable to the contractor for the following purposes, as may be appropriate: a. Making progress and final payments for demolition work. Progress payments, if any, are limited to actual value of the work satisfactorily completed; b. Paying for the Bonding Cost, if required; and 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 authorized by the borrower and made payable to the contractor. The City shall secure the endorsement of the borrower on checks that are made jointly to the borrower and the payee. The City Voluntary Demolition Program Guidelines 17 shall transmit the endorsed check to the payee. b. A check to return to the borrower any unutilized non-City funds in the demolition 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. 4. 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 VOLUNTARY DEMOLITION LOAN A. DHCS has the responsibility of determining the demolition work necessary to bring a property into conformance with the Property Rehabilitation Standards and for providing assistance in the demolition of the property. In carrying out these responsibilities, the DHCS shall: 1. Inspect the property; 2. Make a preliminary work write-up and cost estimate on the work to be done; 3. Consult with and advise the owner on the work to be done; and 4. Prepare a final work write-up and cost estimate as the basis for a voluntary demolition loan and for contracting for the work. B. Property Inspection. DHCS shall inspect the property and prepare an inspection report that identifies each deficiency with respect to the Property Rehabilitation Standards and other deficiencies that may be corrected through demolition loan funds. An inspection report prepared in this manner will later serve the DHCS 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 DHCS based on a property inspection report that itemizes all demolition 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 DEMOLITION WORK A. Work for demolition financed through a loan shall be undertaken only through a written contract between the contractor and the owner/borrower. The DHCS shall assist each applicant in arranging for and obtaining an acceptable demolition contract by receiving sealed bids on behalf of the owner/borrower from qualified contractors who agree to have 10% of the contract inage will be paid to the contractor upon satisfactory completion of all corrective work. All work will have at a minimum a one-year after completion guarantee on all materials and workmanship. Voluntary Demolition Program Guidelines 18 B. The demolition 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 demolition 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 demolition 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. DHCS will assist the borrower/owner, but the City shall not be responsible SECTION 15 - GRIEVANCE PROCEDURES Any applicant for a voluntary demolition loan aggrieved by a decision of the staff of the DHCS 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 DHCS (other than the person who made the initial decision). Such request for reconsideration shall be filed in writing in the office of DHCS 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 said twenty (20) calendar days. If the applicant is not satisfied with the decision based on such reconsideration, the applicant, within ten (10) days after receipt of notice of the decision on reconsideration, may appeal the decision in writing to the Mayor 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 Mayor or his or her designee shall conduct a hearing on such appeal within thirty (30) days after receipt of the written notice of appeal. The decision of the Mayor or his or her designee shall be binding upon the applicant and DHCS. Failure of the applicant to timely file a request for reconsideration and/or an appeal to the Mayor shall be deemed a waiver of any right 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 Voluntary Demolition Program set forth herein are subject to modification and amendments by DHCS and the Mayor. Voluntary Demolition Program Guidelines 19