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HomeMy WebLinkAbout09898ORDINANCE NO. 9898 AN ORDINANCE ESTABLISHING PROJECT NO. HS2101, BUDGETING AND APPROPRIATING $25,000 FROM THE GENERAL FUND BALANCE TO PROJECT NO. HS2101, AND ADOPTING THE EMERGENCY HOUSING REHABILITATION ASSISTANCE PROGRAM AND ITS ADMINISTRATIVE PROCEDURES TO ASSIST LOW-INCOME HOMEOWNERS IN CORRECTING UNSAFE CONDITIONS WHEREAS, emergent conditions, recent in nature, may cause housing to become substandard and potentially unhabitable within the City of Pueblo and at times the conditions presented may exceed the financial capabilities of low-and moderate-income families; and WHEREAS, the elimination of substandard housing and the providing of decent, safe, and sanitary housing for low-and moderate-income families serves public and municipal purposes; and WHEREAS, the rehabilitation of substandard housing would eliminate blight, improve public health and safety, and confer a general benefit upon the City of Pueblo at large; and WHEREAS, it is desirable and there exists a demonstrated need to make funds available to low-and moderate-income families to assist in the rehabilitation of owner-occupied substandard housing; and WHEREAS, the funds made available for the purpose of implementing and executing the terms and provisions of this Ordinance principally serve public rather than private purposes and will not constitute a commingling of public and private funds; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. Capital Project No. HS2101 is hereby established for the purpose of the Emergency Housing Rehabilitation Assistance Program operational expenses. SECTION 2. Funds in the amount of $25,000.00 are hereby budgeted and appropriated from the General Fund to Capital Project No. HS2101. SECTION 3. The Emergency Housing Rehabilitation Assistance Program of the City of Pueblo (herein “Program”), a copy of which is attached hereto and incorporated herein as if set out in full, 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 Ordinance and the policies and procedures of the Program. SECTION 4. All funds repaid by Program participants shall be separately accounted for and used only for similar loans for emergency housing rehabilitation assistance under this Ordinance and Program, or subsequent Ordinance and Program which may be adopted by the City Council. All funds received as program income, including principal and interest loan repayments, or other sources of private receipts through the Program, shall be deposited with the City’s Finance Department and credited to Capital Project No. HS2101. SECTION 5. The officers and staff of the City are authorized to perform any and all acts consistent with this Ordinance to implement the policies and procedures described herein. SECTION 6. If any section, paragraph, clause, or provision of this Ordinance shall for any reason be held invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause, or provision shall not affect any of the remaining provisions of this Ordinance. SECTION 7. This Ordinance shall become effective on the date of final action by the Mayor and City Council. Action by City Council: Introduced and initial adoption of Ordinance by City Council on March 8, 2021 . Final adoption of Ordinance by City Council on March 22, 2021 . President of City Council Action by the Mayor: ☒ Approved on March 24, 2021 . □ Disapproved on based on the following objections: _ Mayor Action by City Council After Disapproval by the Mayor: □ Council did not act to override the Mayor's veto. □ Ordinance re-adopted on a vote of , on □ Council action on _______ failed to override the Mayor’s veto. President of City Council ATTEST Acting City Clerk City Clerk’s Office Item # R-4 Background Paper for Proposed Ordinance COUNCIL MEETING DATE: March 8, 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, Housing and Citizen Services SUBJECT: AN ORDINANCE ESTABLISHING PROJECT NO. HS2101, BUDGETING AND APPROPRIATING $25,000 FROM THE GENERAL FUND BALANCE TO PROJECT NO. HS2101, AND ADOPTING THE EMERGENCY HOUSING REHABILITATION ASSISTANCE PROGRAM AND ITS ADMINISTRATIVE PROCEDURES TO ASSIST LOW-INCOME HOMEOWNERS IN CORRECTING UNSAFE CONDITIONS SUMMARY: This Ordinance establishes Project No. HS2101 and budgets and appropriates $25,000 from the General Fund to Project No. HS2101 to provide the initial funding for the Emergency Housing Rehabilitation Assistance Program (“Program”). The Ordinance also adopts the Program’s administrative policies and procedures of operation. PREVIOUS COUNCIL ACTION: City Council has taken no previous action on this matter. BACKGROUND: In 2015, City Council adopted the International Property Maintenance Code with language indicating that an emergency housing rehabilitation loan program was available for low-income homeowners who were unable to financially cure a code violation by their own accord. This Ordinance establishes a program in concert with the language previously adopted. Staff presented the Emergency Housing Rehabilitation Assistance Program during Work Session on January 19, 2021. FINANCIAL IMPLICATIONS: This Ordinance budgets and appropriates $25,000 from the General Fund Balance to Project No. HS2101 and establishes the initial program balance. Funds will need to be requested annually to maintain a sufficient operating balance. It is estimated that an annual operating balance of $50,000 is appropriate. The Department will seek to establish the full operating balance through the 2022 Budget process. BOARD/COMMISSION RECOMMENDATION: Not applicable to this Ordinance. STAKEHOLDER PROCESS: Not applicable to this Ordinance. ALTERNATIVES: City Council can choose not to establish an Emergency Housing Program. RECOMMENDATION: Approval of the Ordinance. ATTACHMENTS: Attachment 1: Emergency Housing Rehabilitation Assistance Program Guidelines EMERGENCY HOUSING REHABILITATION ASSISTANCE 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 Housing and Citizen Services (herein DHCS or Department) funds for the purpose of implementing and executing the terms and provisions of the Emergency Housing Rehabilitation Assistance 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 housing emergencies, recent in nature, through rehabilitation or home repair in owner-occupied, single-family housing. SECTION 1 - DEFINITIONS A. Home Investment Partnership Program (HOME) 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 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, 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. 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. E. 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 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. Emergency Housing Rehabilitation Assistance Program 1 F. Property Rehabilitation Standards (PRS) Property Rehabilitation Standards are defined as the Codes adopted by the City of Pueblo and enforced by the Pueblo Regional Building Department, namely the International Residential Code, National Electrical Code, International Plumbing Code, International Mechanical Code, International Property Maintenance Code, and Uniform Abatement of Dangerous Buildings Code (herein These standards are greater than the HUD Section 8 Housing Quality Standards. Standard Condition -- Dwelling units which meet the requirements of the Local Codes as they pertain to existing housing, but not as they pertain to new construction, contain sufficient bedrooms to accommodate the size of the eligible family unit, and do not contain defects which could threaten the health or safety of the occupants. Maintenance is required only to the extent it does not involve structural repairs which are Local Code violations. These eligible family dwelling units are considered safe decent shelter in which repairs, and maintenance can be privately undertaken, and the Section 8 Existing Housing Quality Standards are equaled or exceeded. Substandard Condition and Not Suitable for Rehabilitation -- Dwellings units which are in such poor condition as to be neither 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 and 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. Substandard Condition but Suitable for Rehabilitation -- Dwelling units which do not meet Standard Conditions but are both structurally repairable and financially feasible for rehabilitation shall be considered substandard but suitable for rehabilitation. These units do not include buildings that require only cosmetic work, correction of minor livability problems, or maintenance work. The units show exterior signs of deterioration and require more than routine maintenance. Such units could have rotted windowsills or major electrical, plumbing, or mechanical system failure, but appear fully capable of rehabilitation. The unit can be repaired in accordance with the Section 8 Existing Housing Quality Standards or other Local Codes and the subsequent rehabilitation improves the unit to standard condition. In addition, the cost of rehabilitation must be reasonable, taking into consideration the value of the dwelling unit after rehabilitation, the market value of homes in the area, and other financial feasibility standards including loan-to-value ratio. G. Emergency Repair Necessary and required improvement(s) to a permanent dwelling unit, which will alleviate an immediate and eminent threat to the health and safety of the resident(s) caused by an emergency that is recent in nature (within the last six months), or an improvement required to correct a current code violation issued by the City of Pueblo, Regional Building Department, or the Pueblo Department of Health and Environment. Emergency Repair costs are the total costs of the rehabilitation or repair required to provide safe, decent, and sanitary conditions for a permanent dwelling unit. Emergency Housing Rehabilitation Assistance Program 2 H. Designated Project Area Within Pueblo city limits. I. Owner-Occupied Residence ( No Rentals) Single-family residences, including manufactured homes permanently attached to real property, occupied by the owner thereof. Owner-occupied rental properties are eligible properties and can include a two-unit structure where the owner lives in one of the units and rents the other to a tenant. To be eligible, the rental unit must be a legally permitted unit. The property owner must sign an agreement that states that the property will continue to be the primary residence of the owner. J. 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. SECTION 2 - ELIGIBILITY REQUIREMENTS A. General An Emergency Housing Rehabilitation Assistance loan may be made only with respect to low- and moderate-income owner-occupied dwelling units located in the City of Pueblo. The dwelling units must need rehabilitation to cure a current Local Code violation. This program is not a maintenance program, and dwelling units needing standard maintenance items do not qualify for the program. Dwelling units which cannot be brought up to minimum Local Code standards within the funding limits , or those properties in which the rehabilitation cost exceeds the value of the dwelling after rehabilitation, 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 cost of repair or rehabilitation. The responsibility for administration of the Emergency Housing Rehabilitation Assistance Program has been delegated to the Department. DHCS staff decisions regarding eligibility are final unless an appeal is filed pursuant to Section 15. B. Loan Requirements Applicable to Applicant 1. To be eligible for a Program loan, the applicant must be an eligible family unit who owns and occupies 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 and will continue to do so after rehabilitation. An eligible family unit must be certified as low-to-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. Emergency Housing Rehabilitation Assistance Program 3 2. All persons on title must reside in the home as their primary residence. 3. Special considerations 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. 4. To qualify for the Program, the applicant may have no more than $5,000 in cash, checking, savings, and stocks. Additionally, the applicant may have no more than $100,000 in long term investments or assets such as annuities, retirement accounts, bonds, certificate of deposits, and real property other than the aa cash and assets exceed the limits above, the applicant will be required to apply the excess value to the cost of repairs or rehabilitation prior to accessing Emergency Housing Rehabilitation Assistance Program funds. SECTION 3 - ASSURANCE THAT REHABILITATION WILL BE COMPLETED A. General In some instances, the rehabilitation cost may exceed the amount of the rehabilitation loan. In such cases, the rehabilitation loan will not be made unless the applicant can provide whatever additional amount is needed to assure completion of the work so that the property will meet at least the Property Rehabilitation Standards (PRS). B. Supplemental Loans on Residential Property The application for a Program 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 the rehabilitation work. The loan shall be in an amount, which, when added to the Emergency Housing Rehabilitation Assistance loan and any other funds the applicant furnishes, will be sufficient for completing the required rehabilitation work. When the applicant is furnishing evidence that actual funds are available, evidence furnished to the City shall consist of verification and documentation showing that the applicant has funds in the required amount for deposit into the rehabilitation account. SECTION 4 - COST ALLOWABLE IN AN EMERGENCY HOUSING REHABILITATION ASSISTANCE LOAN A. General An Emergency Housing Rehabilitation Assistance loan may be made only to cover the costs of rehabilitation necessary to make an owner-occupied, single-family, residential dwelling unit and/or property conform to standards for safe, decent, and sanitary housing as specifically required by the PRS or the violation issued, and other costs as provided in this section. Because the rehabilitation work will be financed, in whole or in part, by a Program loan, the dwelling unit must at a minimum Emergency Housing Rehabilitation Assistance Program 4 cure the violation and conform to PRS. Emergency Housing Rehabilitation Assistance loan funds shall be used only to achieve economical and practical compliance with PRS. All work performed to bring a structure into compliance with the PRS will be accomplished in accordance with local code standard specifications for residential rehabilitation. B. Allowable Costs Costs allowable under this Program include those used to meet the requirements of PRS, correct hazardous conditions, correct recent violations, and building permits and related fees. Generally, these are costs to make an owner-occupied home conform to the PRS or to alleviate the hazardous conditions created by an emergency. 1. Requirements of PRS: When necessary to meet a specific PRS requirement, an Emergency Housing Rehabilitation Assistance loan may be used for: a. Repairs necessary to restore the habitability of the structure. b. The rehabilitation of plumbing, electrical, mechanical, and sewer systems, or repairs to ensure the integrity of the building. Other basic elements of the dwelling unit, including: the furnace, hot water heater, electrical and plumbing fixtures, kitchen stove, and refrigerator. Other appliances are not eligible. c. The construction, expansion, and finishing of space necessary to accommodate those facilities included in subsections (a) and (b) above. 2. Kitchen Equipment: a loan may provide for the repair, or purchase and installation, of a kitchen stove and refrigerator. Purchase and installation are acceptable if there is no such equipment in the dwelling unit, or if existing equipment is unsafe or unsanitary because of its basic physical condition. 3. Utilities: Utilities shall be independent for each dwelling unit without dependence on other structures. Dwelling units not connected to utilities may be connected as part of the rehabilitation if DHCS staff deems it economically feasible. 4. Incipient Violations: Loan funds may be used to correct incipient as well as actual violations of PRS. An incipient violation exists if, at the time of inspection, it is determined that the physical condition of an element in the dwelling unit may deteriorate into an actual violation within two (2) years. 5. Building Permits & Related Fees: Loan funds may be used to cover the cost of building permits and related fees required to complete the necessary rehabilitation work. 6. Hazardous Conditions: Where required by PRS, a loan may provide for the correction of hazardous conditions, such as handicap accessibility, correction of certain Local Code violations which if left uncorrected could endanger the homeowner, and emergencies needing immediate attention such as gas leaks or badly deteriorated electrical wiring. 7. General Property Improvements: General property improvements (GPI) may be in the rehabilitation cost when the cost of the GPI combined with the PRS does not exceed the maximum amount of the loan and the costs are otherwise eligible. Emergency Housing Rehabilitation Assistance Program 5 C. Costs Not Allowable. Except as otherwise provided in this Section 4, rehabilitation loans and projects shall not cover the costs of or provide for: 1. Materials, fixtures, equipment, or landscaping of a type or quality which exceeds that customarily used in the locality for properties of the same general type as the property to be rehabilitated. 2. Appliances not required or eligible by PRS. 3. Acquisition of land. 4. Payment of back taxes, delinquency, or fines. 5. Loans for the rehabilitation of any structure other than a permanent single-family, homeowner occupied, dwelling unit are not permitted. 6. Any other purposes than those expressly allowed in Paragraph B above. 7. Purchase of furniture or fixtures that are movable and are not permanently affixed to the property are considered ineligible. 8. Funds for the normal costs of operations, such as utilities and insurance. D. Work Write-Up The DHCS shall prepare a work write-up to document the rehabilitation work to be financed with Program loan. SECTION 5 - LIMITATION ON PROJECT AMOUNT The amount of a Program loan that an applicant may receive shall be limited to the actual and approved cost of the repairs and improvements necessary to cure the violation or to make the property conform to the Property Rehabilitation Standards for safe, decent, and sanitary housing and any general property improvements that can be included without exceeding the maximum amount of the loan. The total amount of the loan, including the cost of rehabilitation, general property improvements, and all other costs may not exceed $25,000.00. SECTION 6 RATE & TERM OF LOAN A. Emergency Housing Rehabilitation Assistance Loan Type: 1. Deferred loan, due upon death, sale, or transfer; remainder forgiven after term upon DHCS approval. 2. Interest shall not accrue on Emergency Housing Rehabilitation Assistance Loans. Emergency Housing Rehabilitation Assistance Program 6 3. Loan term: 15 Years. 4. For qualified borrowers with the ability to make loan payments, a modified payment schedule may be made at the a During the term of the loan, interest shall not accrue on the Emergency Housing Rehabilitation Assistance funds unless a default occurs. In the case of default, the balance of the loan shall immediately become 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. SECTION 7 - NOTE AND DEED OF TRUST A. Note and Deed of Trust All Program loans shall be evidenced by a Promissory Note, which shall be executed by the dwelling unit in a form prescribed by the City of Pueblo. 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 (15) years and shall be evidenced by the Promissory Note secured by a Deed of Trust on the dwelling unit. The Promissory Note shall have the following characteristics: 1. The principal amount shall be the amount of the loan. 2. The interest rate shall be established. 3. The note shall provide for late charges. 4. The term of the 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 the 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 any of the following events within fifteen (15) years from the date of said note: a. Transfer of title of the dwelling unit residence, including transfer upon death of the owner-borrower, unless upon death title passes to the spouse or adult child 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. b. Applicant ceases for any reason to occupy the residence as applicant's sole and only residence. Emergency Housing Rehabilitation Assistance Program 7 c. 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 applicant who has received any form of assistance under the Program. Borrower-Owner shall cooperate in such recertification and turn in all documents required, therefore. This does not apply to full pay back loans, but only to borrowers that receive a deferred loan. Failure of an owner-borrower to furnish requested documents shall cause the entire balance of funds advanced on behalf of such owner-borrower to immediately become due and payable. B. Subordination Policy The City of Pueblo will consider subordinating its Promissory Note and Deed of Trust to a position no lower than third in the following circumstances: 1. If the owner-borrower is refinancing the original mortgage in order to obtain a lower interest rate and/or overall mortgage cost. To be eligible for subordination, a refinancing cannot result in any cash out to the owner-borrower. 2. If the owner-borrower is borrowing money to make additional 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 the Cdo not exceed 125% of the as determined by the Pueblo County Assessor. C. erest All rehabilitation loans shall be secured by a lien on the dwelling unit to be rehabilitated evidenced by a mortgage or Deed of Trust. The Deed of Trust will contain such provisions as the City determines necessary for the protection of the a 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 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 homeowners through the provision of no interest rehabilitation loans. In order to qualify for assistance, homeowners must be considered low or moderate income as defined by the U.S. Department of Housing and Urban Development (HUD), and must meet the conditions set Emergency Housing Rehabilitation Assistance Program 8 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 the City of Pueblo. 2. The current assessed property value cannot exceed 95% of the Median Home Value for Pueblo, Colorado. HUD annually sets the 95% Median Home Value as required under the HOME Program. 3. 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 at the discretion of the Director. 4. No third party or debtor liens other than first or second mortgages may be attached to the property. 5. All taxes must be paid with no outstanding tax certificates of purchase. B. Income Limits: Loans are available only to low-and-moderate income, single-family, homeowner residents of the City of Pueblo for properties located within the city limits of the City of Pueblo. Applicant must meet the income guidelines and limits for a lower income household under 24 CFR Part 570, and Section 8, of the United States Housing Act of 1937 (or if such program is terminated, under such program in effect immediately before such termination). SECTION 9 - APPLICANT'S INCOME A. Sources of Funds and Amounts Comprising Applicant's Income. In the preparation of all reports and analysis required by this paragraph, the following definition and standards as defined under Section 8 of the United States Housing Act of 1937, and more fully defined in HUD Handbook 4350.3 (Chapter 3) "Occupancy Requirements of Subsidized Multi-family Housing Programs" shall apply and be followed by the DHCS to determine the applicant's monthly income and affordable housing rehabilitation payment. The following is a listing of the elements comprising income for purposes of a rehabilitation loan: 1. Gross Family Income: The total income, from all sources whatsoever of each member of an eligible family unit. 2. Applicant who is a Person. Income of an applicant who is a "person" includes the income of the applicant and his family. The applicant's family includes the applicant and any other person or persons related by blood, marriage, or operation of law, who share the same dwelling unit. Emergency Housing Rehabilitation Assistance Program 9 3. 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 and at the time of application for a rehabilitation 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/her family from any source; and d. Net income from real estate, other than the property to be rehabilitated, and any other net business income. 4. Exclusions and Adjustments to Applicant's Income. a. The following exclusions apply to an applicant's income in connection with a rehabilitation loan on a residential property: (1) Income of Person. For purposes of establishing the 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 applies only to an applicant or family's income in connection with a rehabilitation loan. Title II of the Social Security Act, 42 U.S.C., 401 et seq., permits, if certain conditions are met (see below), the payment of monthly benefits for educational purposes to the children of an individual entitled to disability or old age insurance benefits. The income attributed to these benefits should ordinarily be excluded from income in determining eligibility for a rehabilitation loan. 5. 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. 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. Emergency Housing Rehabilitation Assistance Program 10 SECTION 10 FEDERAL REQUIRMENTS 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. 3601 et seq.), 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 Part I of the Housing and Community Development Act 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 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, subrecipient, 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 in, or in any matter of process related to receipt of any service or benefit under the program or activity. d. Restricting an individual in any way in access to, or in the enjoyment of, any advantage or privilege enjoyed by others in connection with facilities, services, financial aid, or other benefits under the program or activity. e. Treating an individual differently 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 in satisfying any admission, enrollment, eligibility, membership, or other activity. f. Denying an individual an opportunity to participate in a program or activity as an employee. Emergency Housing Rehabilitation Assistance Program 11 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) (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 rehabilitation of the home 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 and 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; Emergency Housing Rehabilitation Assistance Program 12 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 rehabilitation 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 an LBP Inspection conducted. b. Prior to final inspection and approval of the rehabilitation project, a clearance examination shall be conducted. This examination will be in accordance with Guidelines for the 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 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 placement 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 rehabilitation loan. G. Cancellation of Loan An applicant agrees, by signing a loan application, to return the loan proceeds with no rights, interest, or claim in the proceeds, if the loan is cancelled before the rehabilitation work is started. H. Use of Loan Proceeds An applicant agrees, by signing a loan application, to use the loan proceeds only to pay for costs of services and materials necessary to carry out the rehabilitation work for which the loan will be approved. Emergency Housing Rehabilitation Assistance Program 13 I. Completion of Work An applicant agrees, by signing a loan application, to assure that the rehabilitation work shall be carried out promptly and efficiently, through written contract awarded with the prior concurrence of the City. J. Inspection An applicant agrees, by signing a loan application, to allow inspection by the City or its designee of the property rehabilitation work and all contracts, materials, equipment, payrolls, and conditions of employment pertaining to the work. K. Records An applicant agrees, by signing a loan application, to keep such records as may be required by the City with respect to the rehabilitation work. L. Incorporation The provisions of subsections D thru K shall be incorporated and included in all loan documents. SECTION 11 EMERGENCY HOUSING REHABILITATION ASSISTANCE PROGRAM ADMINISTRATIVE PROCEDURES A. Applicant Screening 1. The following matters related to the individual or household applying for assistance will be verified in writing: a. All sources of income for all people residing in the dwelling unit, including without limitations the following: (1) The earnings or retirement income of the prospective borrower and his/her spouse and any other adult who will sign the promissory note or who resides in the dwelling unit; 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 or work financed in whole or in part with the proceeds of the rehabilitation loan. b. All liabilities, including total amount of indebtedness and monthly payment amounts of all indebtedness, including without limitations the following: (1) Any mortgages or liens or delinquent taxes against the dwelling unit property that is to be rehabilitated; Emergency Housing Rehabilitation Assistance Program 14 (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 rehabilitated. b. That property taxes are current with the local municipality. The assessed value of the property is also to be determined. B. Underwriting Standards 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 (15) 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 who elect a repayment loan schedule in lieu of a deferred loan must be at 80% or less of the HUD area median income for Pueblo, set annually. To determine the monthly amount a borrower can afford to pay back, the FI) will be multiplied by the 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 monthly amount available for a loan payment. If the minimum monthly payment 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, including: all principal and interest payments, including the prospective rehabilitation 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 housing expenses. Emergency Housing Rehabilitation Assistance Program 15 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. Only those dwelling units which are considered substandard in accordance with the Local Codes prior to rehabilitation and which are feasible to bring up to the Property Rehabilitation Standards after rehabilitation are eligible units. Information will be retained to be able to identify the before- rehabilitation condition and the after-rehabilitation condition of each unit. All rehabilitation 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 EMERGENCY HOUSING REHABILITATION ASSISTANCE 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. B. Loan Amount 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 rehabilitation or repairs necessary to cure an issued violation and/or make the property conform to PRS for safe, decent, and sanitary housing. 2. Minimum loan amount: $1,000.00. 3. Maximum loan amount shall not exceed: $25,000.00. C. Loan Disbursements Upon receipt of written authorization by the owner-borrower, the City will disburse a loan by drawing a check, payable to the contractor, in the amount of the progress work completed based Emergency Housing Rehabilitation Assistance account. Any unutilized Program loan funds shall be returned to the City upon completion of the rehabilitation project, and the principal due under the loan shall be reduced by such returned amount. D. Deposit of Loan After a Program loan has been approved, an account under the name shall be setup and a budget amount established in the rehabilitation account. Emergency Housing Rehabilitation Assistance Program 16 E. Emergency Housing Rehabilitation Assistance 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 Program loan or from a recognized lending institution, those supplemental funds shall be deposited in the emergency housing rehabilitation assistance account at the same time the loan is deposited. F. Management of Emergency Housing Rehabilitation Assistance Escrow Account The City shall maintain a single Program account as the depository for all Program 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 Program account funds. 1. Separate Account for Each Borrower. The City shall establish and maintain a separate account within the Program account for each borrower who has received a Program loan. All receipts and disbursements made for or with respect to each borrower shall be recorded in the account. 2. Disbursements from the Emergency Housing Rehabilitation Assistance Account. Disbursements from the separate borrower account within the rehabilitation account shall be by check made payable jointly to the borrower and the payee for the following purposes, as may be appropriate: a. Making progress and final payments for rehabilitation work. Progress payments, if any, are limited to actual value of the work satisfactorily completed; b. Paying for the insurance binder, if required; and c. Close out of the separate borrower account by appropriately disbursing any utilized funds remaining in the account. 3. Disbursements by the City from the Separate Borrower Account. a. The City, upon receipt of appropriate invoices, shall draw a check for the payment of completed and approved work and services. Each check shall be made payable to the appropriate payee upon receipt of written authorization to disburse funds from the borrower. The City shall transmit the check to the payee. b. A check to return to the borrower any unutilized non-city funds in the Program 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 authorization to release funds, the City shall transmit the check(s) to the 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. Emergency Housing Rehabilitation Assistance Program 17 SECTION 13 - DETERMINING WORK TO BE DONE WITH EMERGENCY HOUSING REHABILITATION ASSISTANCE LOAN A. DHCS has the responsibility of determining the rehabilitation work necessary to bring a property into conformance with Property Rehabilitation Standards and for providing assistance in the rehabilitation of the property. In carrying out these responsibilities, 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 an Emergency Housing Rehabilitation Assistance 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 PRS and other deficiencies that may be corrected through rehabilitation 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 the rehabilitation work to be done on the property, and includes an estimate of the cost of each item. The cost estimate shall be reasonable and shall reflect actual costs prevailing in the City for comparable work. SECTION 14 - CONTRACTING FOR REHABILITATION WORK A. Construction work for rehabilitation financed through a loan shall be undertaken only through a written contract between the contractor and the owner-borrower. The DHCS shall assist each applicant in arranging for and obtaining an acceptable construction contract by receiving sealed bids on behalf of the owner-borrower from qualified contractors who agree to -ainage 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. B. The construction contract will consist of a single document signed by the contractor and accepted by the owner-borrower. It shall contain a bid and a proposal by the contractor and the general conditions, as well as the specifications for the work to be performed. C. Issuance of a Proceed Order. The general conditions of the construction contract will state that the owner will issue a proceed order within a stated number of days from the date of acceptance of the contractor's bid and proposal and shall require the start of construction within ten (10) days or less from the date of the order's signing. Emergency Housing Rehabilitation Assistance Program 18 D. Owner-Borrower Responsibilities. The owner-borrower will be responsible for supervising the contractor work. DHCS will assist the borrower-owner but the City shall not performance. SECTION 15 - GRIEVANCE PROCEDURES Any applicant for a Program 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 said twenty (20) calendar days after receipt of the written request for reconsideration and the decision based on such reconsideration shall be given in writing to the applicant within twenty (20) calendar days. 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/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/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 Emergency Housing Rehabilitation Assistance Program set forth herein are subject to modification and amendments at times by the Mayor or the DHCS. Emergency Housing Rehabilitation Assistance Program 19