HomeMy WebLinkAbout6239RESOLUTION NO. 6239
A RESOLUTION ESTABLISHING PROCEDURES FOR THE ADMINISTRATION
OF THE CITY'S REHABILITATION LOAN PROGRAM BY THE DEPARTMENT
OF HOUSING AND COMMUNITY DEVELOPMENT TO ASSIST LOW -AND
MODERATE INCOME OWNERS OF SINGLE FAMILY RESIDENCES IN THE
REHABILITATION OF SUBSTANDARD HOUSING
WHEREAS, there is a shortage in the City of Pueblo of safe,
decent and sanitary housing which is within 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 confer a
general benefit upon the City of Pueblo at large; and
WHEREAS, it is desireable and there exists a demonstrated need to
make funds available to low -and moderate - income families to assist in the
rehabilitation of substandard housing; and
WHEREAS, the funds made available for the purpose of implementing
and executing the terms and provisions of this Resolution principally
serve public rather than private purposes. NOW, THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, COLORADO, that:
Section 1.
A. 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 Community Development (herein "Department ")
funds for the purpose of implementing and executing the terms and
provisions of the Housing Rehabilitation Program of the City (herein
-1-
called the "Program "). Department may make application for other available
moneys for housing rehabilitation loan and grant programs and shall
incorporate such grants or loans into the Program to further the
objectives of the Program in meeting the housing and financial
capabilities of low -and moderate - income families.
B. The Department shall be responsible for the execution of the
Program, in accordance with the terms and provisions of this Resolution.
C. The owner of a single familiy residence located within the
City of Pueblo who occupies same as his sole and only place of residence
shall be eligible to make application for housing rehabilitation
assistance under the Progam if he meets all of the following criteria:
1) Said residence is substandard as defined under the Housing
Code of the City of Pueblo.
2) Applicant meets 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).
3) The residence is not subject to more than one encumbrance or
lien.
4) Any other requirements imposed by the terms of any grant
award to the City.
D. Application for assistance shall be submitted to
Department upon forms made available and prepared by the
Department.
E. Upon receipt of an application from a qualified applicant
meeting the requirements of paragraph "C" above, Department shall,
provided unobligated program funds are available,
1) Prepare a detailed list and explanation of all actions
and work required to eliminate or repair the conditions
of the residence which make it substandard.
2) Prepare an estimate of the cost of such repairs.
3) Obtain sufficient documentation that the applicant has
a good and marketable title to said residence.
4) Determine the value of the applicant's equity in said
residence.
-2-
5) Obtain credit information and ascertain relevant social and
economic information concerning the applicant and other
persons residing in the residence including but not limited
to, family composition, family income, place of employment
of all members of the family, approximate date of purchase
of the residence, and existing indebtedness secured by
said residence.
6) Prepare a preliminary analysis of applicant's ability
to repay any funds made available to applicant under the
Program.
F. In the preparation of all reports and analysis required by
this Paragraph (F) and Paragraph C & E above, 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 program" shall apply and
be followed by the Department to determine the applicant's monthly
affordable housing rehabilitation payment. In all rehabilitation loan
applications the Department of Housing and Community Development will
review each application on a case by case basis, to evaluate needs
affecting safety, health and urgency.
1) Income Formula
as Total Gross Family Income: Total gross family income
means income from all sources of the head of household and
spouse and each additional member of the family and others
residing in the household who are at least 18 years of age.
It is to include income anticipated to be received during
the twelve months following receipt of housing rehabilitation
assistance but excluding the income of full time students
other than head of household or spouse.
b. Allowances toward Total Gross Family Income: For
purposes of determining adjusted annual income the following
allowances are deducted from Total Gross Family Income:
b -1. For all families a $480 deduction from gross income for
each dependent, a deduction for actual child care expenses
and handicap assistance expenses.
-3-
b -2. In addition to allowances b -1, an additional
allowance for the head of household or spouse if their
age is 62 or over, handicapped or disabled, two additional
allowances of: 1) $400 per household; and 2) unreimbursed
reasonable medical expenses.
C. Adjusted Family Income: Defined as Total Gross
Family Income minus eligible allowances.
G. In determining if the applicant will be given a partial grant or
interest loan at 0 -7% interest rate, the most current HUD Section 8 Income
Guidelines will be used as follows:
1) Repayment Schedule - Catagory A Applicants These applicants
are eligible for rehabilitation funds at a maximum of $10,000
and Gross Family Income has been determined to be 49% or less
of the median income guidelines. To determine monthly loan
payback, the monthly adjusted family income will be multiplied
by the housing debt ratio of 30X less principal and
interest of the first mortgage, taxes, insurance and a
predetermined utility allowance (if allowed). The remainder
will equal the "net" monthly affordable loan payback
payment. If this amount is negative, the applicant will pay
a minimum of $25 a month toward the rehabilitation costs with the
balance becoming a deferred loan (See Example #1).
EXAMPLE #1: Gross Annual Income: $12,192 Rehab Cost: $10,000
Less Dependants @ $480 ea. 1,920 1 Loan Payback: 4,500
Adjusted Family Income $10,272 Deferred Loan $ 5,500
Divide by 12 equals
Net Monthly Income: $ 856
Times 30% equals 256
Less 1st Mortgage: 271
$( 15)
Less Utility Allowance: 105
Total: $ 170)
Loan Payback Amount $ 25 x 180 months $4,500
2) Repayment Schedule - Catagory B Applicants applicants
Gross Family Income has been determined to be less than 80% of
the median income guidelines or Catagory A applicants'
eligible for rehabilitation loans of $10,000 - $17,000 at sliding
0 -7% interest rates. To determine the maximum loan an applicant
would be eligible for, Adjusted Family Income will be multiplied
by the housing debt ratio of 30% less principal and interest of
the first mortgage, taxes, insurance and a predetermined utility
allowance (if allowed). If the remaining "net" monthly
affordable loan payback amount is insufficient to borrow the
total rehabilitation loan amount needed, the adjusted family
income will be multiplied using a TOTAL DEBT ratio of 40 %. If
the total debt to income exceeds 40%, the recipient will only
qualify for the lesser loan using 30% housing debt ratio (See
Example #2).
-4-
EXAMPLE #2: Gross Annual Income
Less Dependants @$480 ea.
Divided by 12 equal
Gross Monthly Income:
Times 30% equal
Less 1st Mortgage
Less Utility Allowance
Loan Payback Amount
Gross Monthly Income:
Times 40% equal
Less 1st Mortgage
Less Additional Debt
Less Utility Allowance
Loan Payback Amount
$12,500 t Rehab Costs $17,000
480 t Int. @1X Per Annum 1,313
$12,020 t Total Repayment
1,002 t @ $102 per /mo.: $18,313
301
115
$ 186
105
$ 81 x 180 $13,534
$ 1,002
401
115
$ 286
75
$ 211
105
106 x 180 - $17,711
H. Utility Expense shall be the average estimated costs for
water, gas, electricity and sewer. This figure is not to exceed the current
average costs in the area as certified at least once a year by the Board of
Water Works, Public Service Company, Centel Corporation and the City of
Pueblo. Utility allowances will be allowed only to families not receiving
a utility subsidy.
I. Taxes: Amount shall be the annual real estate tax based
upon the prior year's tax statement for ad valorem tax as shown in the
records of the Pueblo County Treasurer.
J. Applicant shall be required to repay all or part of the
funds made available under this program according to the.formula set
forth in paragraphs F & G hereof. Funds advanced and required to be repaid
shall be repaid over a period of fifteen years and shall be evidenced by a
Promissory Note secured by a Deed of Trust on said residence, provided
however that the total amount of all funds advanced shall become
-5-
immediately due and payable upon the occurrence of either of the following
events within fifteen ( 15) years from the date of said note:
1. Transfer of title to the residence, including transfer
upon death of the applicant, unless upon death title shall pass
to the spouse or adult child of such applicant who lives in the
residence and who also is a qualified applicant under the
Program and request is made upon the Department to approve such
spouse or adult child as a qualified applicant within 120 days
after the death of the applicant (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,
2. Applicant cease for any reason to occupy the residence
as applicant's sole and only residence.
Department shall redetermine and recertify the family composition and
total net family income after the first year, and at two year intervals
thereafter from the date of execution of the repayment note of
each applicant who has received a grant of assistance hereunder. At any
time, upon request of applicant or the Department, but not more frequently
than once yearly, an income review may be done provided the applicant's
gross annual income increases or decreases by more than 12% per year from
the gross income level at the time the most recent repayment determination
was made. The Department shall prepare and the applicant shall execute a
modified repayment schedule for the remaining balance of funds advanced
based upon the formula set forth in Paragraphs F & G hereof. Failure of an
applicant to execute a modified repayment schedule shall cause the entire
balance of funds advanced on behalf of such applicant to immediately
become due and payable.
K. All funds repaid by applicants shall be separately accounted
for and used only for similar loans or grants of housing and.
rehabilitation assistance under this Resolution or subsequent Resolution
which may be adopted by the City Council providing for similar programs.
-6-
L. Department shall only approve an application for a
Rehabilitation Loan under the Program upon satisfactory evidence of the
following:
1. Applicant has marketable title to the residence and
sufficient equity therein to justify a loan or grant of
assistance. Equity shall be determined by subtracting the
balance owed on the First Deed of Trust from the fair market
value of the residence determined before rehabilitation plus
one -half of the approved loan amount. In emergency situations
where the Director deems it appropriate, equity may be determined
by subtracting the balance on the First Deed of Trust from the
fair market value of the residence, determined before
rehabilitation, plus 40% of the approved loan amount.
2. Applicant has entered into a written contract on forms to
be approved by the City Attorney with a person or entity
qualified to perform and complete the work determined necessary
to rehabilitate the residence.
3. That said residence after rehabilitation and repairs will
comply with all applicable building and housing codes.
4. Applicant has not previously received regular housing
rehabilitation assistance under the Program.
5. Applicants' payments for taxes and first deed of trust are
current.
M. All persons and entities entering into contracts with
applicants to make repairs and rehabilitations of any substandard
residence shall be an equal opportunity employer and shall comply with all
federal, state and city codes, statutes and ordinances.
N. Department shall authorize payment for all repairs and
rehabilitation construction.
0. The Housing Rehabilitation Committee, established by
Section 8- 8 -8(4) of the 1971 Code of Ordinances, shall meet on an "as
needed" basis, at the request of the Director, to act upon:
1. Unusual or special cases;
2. Complaints and appeals;
3. Guidance on new programs; and
4. Other matters relating to the Program.
-7-
Section 2.
Resolution No. 5972 adopted February 23, 1987, relating to the
Program is hereby repealed effective upon passage of this Resolution;
provided, however, that assistance provided under said prior Resolution
shall be and remain subject to the provisions of said prior Resolution.
Section 3.
This Resolution shall become effective immediately upon final
passage and approval.
INTRODUCED JULY 25 ,1988
BY: DOUGLAS RING
COUNCILMAN
APPROVED:
s
�PRESIDENT OF THE COUNCIL
ATTEST:
BY: r;
CITY CLERK
-8-