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RESOLUTION NO. 6846
A RESOLUTION ESTABLISHING PROCEDURES FOR THE ADMINISTRATION OF
THE CITY OF PUEBLO'S REHABILITATION LOAN PROGRAM BY THE
DEPARTMENT OF HOUSING AND COMMUNITY SERVICES 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 are public uses and purposes are
governmental and municipal functions, and
WHEREAS, the rehabilitation of substandard housing would confer a general benefit on
the City of Pueblo at large, and
WHEREAS, it is essential and there exists a demonstrated need to make funds available
to low -and moderate - income families for 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 ultimately go to 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,
without obligation to do so, make available to the Department of Housing and Community
Services (herein 'Department ") funds for the purpose of implementing and executing the terms
and provisions of the Housing Rehabilitation Program of the City (herein 'Program "). The
Department shall 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.
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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 family residence located in 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 Program if he meets all of the following criteria:
(1) Said residence repairs are needed to eliminate those minimum listed
conditions described as substandard under the City of Pueblo Uniform
Housing Code and to the extent that such conditions endanger the life,
limb, health, property, and safety conditions of the occupant or
public.
(2) Applicant meets the income and assets 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.
This requirement may be waived if any Program loan subordination is a
requirement of any grant award or would encourage multiple housing
agency cooperation to further the Program objectives.
(4) Any other requirements imposed by the terms of any grant award to the
City.
D. An application for housing assistance shall be submitted to Department on forms
made available and prepared by Department.
E. Upon receipt of an application from a qualified applicant whose residence meets
the conditions of paragraph "C" above, and provided unobligated program funds are available,
the Department shall:
(1) Prepare a detailed list and explanation of all actions and major work
(with emphasis on mechanical systems) needed 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 for persons listed on title but not
living in the dwelling and that the applicant has a good and
marketable title to said residence.
(4) Make an estimate of the value of the applicant's equity in said
residence.
(5) Obtain credit information, pertinent income verifications, property
ownership and ascertain relevant social and economic information
IPA
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
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 all rehabilitation loan applications the Department will review each
application on a case -by -case basis to evaluate needs affecting health and safety. In the
preparation of all reports and analyses required by Paragraph C & E above and Paragraph F, the
following definitions and standards will be followed and where not defined HUD handbook 4350.3
"Occupancy Requirements of Subsidized Multi- Family Housing Program" (Chapter 3 ) may be
considered as providing ordinary accepted meanings:
(1) Income Defined:
(a) Gross Annual Family Income Gross family income means income
from all sources of the head of the 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.
For purposes of
allowances are
deducted from
(b -1) For all families a $480 deduction for each dependent, a deduc-
tion for actual child care expenses and handicap assistance expenses.
(b -2) In addition to allowances in b -1, an additional allowance for
the head of household or spouse if their age is 62 or older,
handicapped or disabled, up to two additional allowances of. (1) $400
per household; and (2) unreimbursed reasonable medical expenses.
(c) Adjusted Annual Family Income Defined as gross annual family
income minus eligible allowances.
G. In determining if the applicant is eligible for a partial grant or low interest
loan at 0% - 7% interest rate, the gross annual family income must be within the limits of
current HUD Section 8 income guidelines based on borrower's family size. The formula to
determine the applicant's monthly amount available for principal and interest loan payback
shall be calculated as follows:
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(1) Category A Applicant/Repayment Schedule These are very -low income
applicants in which the Gross Annual Family Income has been determined
to be 50% or less of the HUD Section 8 income limits based on family
size. Applicants under this category are eligible for rehabilitation
funds at a maximum of $10,000 plus an additional $3,000 if needed for
exterior rehabilitation or other improvements. To determine the total
monthly amount available for principal and interest loan payback, the
gross monthly family income will be multiplied by the housing debt
ratio of 30 %, less principal and interest payable monthly on the first
mortgage, taxes, insurance and a predetermined utility allowance (if
allowed). The remainder will equal the total monthly amount available
for principal and interest payback. If this amount is less than
twenty five dollars, the applicant will pay a minimum repayment of $25
a month on the loan subject to periodic readjustment. If this amount
is greater than twenty five dollars, the applicant will pay that
amount as a monthly repayment. The amount of the rehabilitation costs
in excess of the total repayment amount for the term of the loan shall
then be a deferred loan, unless the applicant's monthly amount
available for principal and interest payback increases as a result of
income or pre - existing mortgage changes in the formula based on
periodic updates of the applicant s ability to repay. (See Example A)
EXAMPLE A: FAMILY OF SIX
Gross Annual Family Income $12,192
Less 4 Dependents @ $480 each 1920
Adjusted Annual Family Income
$10,272
Divided by 12 equals
Gross Monthly Family Income
$ 856
Times 30% equals
$ 256
Less 1st Mortgage Principal, Interest,
Taxes and Insurance
$ 271 per month
Less Utilities
$ 105 per month
Monthly Amount Available for P & I
payback (If negative, minimum $25)
$ 120
Minimum Payment Required $ 25 @ 180 months
(2) Category B Applicant/Repayment Schedule: These are low- income
applicants in which the Gross Annual Family Income has been determined
to be 51% - 80% of the HUD Section 8 income guidelines based on family
size or Category A applicants with ability to pay back larger loan
amounts. Rehabilitation loans cannot exceed $17,000 and are subject
to sliding interest rates. To determine the maximum loan an applicant
can borrow, Gross Monthly Family Income will be multiplied by the
housing debt ratio of NO, less principal and interest of the first
mortgage, taxes, insurance and a predetermined utility allowance (if
allowed). If this amount is less than twenty five dollars, the
applicant will pay a minimum repayment of $25 a month on the loan
subject to periodic readjustment with the total loan amount not to
exceed $10,000. If this amount is greater than twenty five dollars,
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but remains insufficient to borrow a larger rehabilitation loan amount
actually needed, the Gross Monthly Family Income will be multiplied
using a total debt ratio of 40 %. The applicant may then be eligible
to borrow the larger loan at the debt ratio of 40% unless this amount
is less than the monthly payback calculated at the ratio of 30 %. (See
Example B & 131)
EXAMPLE B: FAMILY OF TWO
Gross Annual Family Income
Less Allowances (Elderly)
Divided by 12 equals
Gross Monthly Family Income
Times 30% equals
Less Principal, Interest,
Taxes and Insurance
Less Utilities
Monthly Amount Available for
P & I payback
$12,500
$ � 00
$11,700
$ 975 per month
$ 292
$ 119 per month
$ 105 per month
EXAMPLE B1
Gross Monthly Income
Times 40% equals
Less 1st Mortgage
Less Additional Debt
Less Utility allowance
Monthly Amount Available for
P & I payback
$ 975
$ 390
$ (120
$ (63)
$ 105
$ 102
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 applicable utility companies located in City of Pueblo. Utility
allowances may be allowed only to families not receiving a utility subsidy.
I. Taxes means one twelfth (1/12) of the annual real estate tax based upon the
prior years tax statement for ad valorem taxes as reflected 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 paragraph F and paragraph G hereof.
Funds advanced and required to be repaid shall be paid over a period not to exceed fifteen
years and shall be evidenced by a Promissory Note secured by a Deed of Trust on said
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residence; provided however that the total amount 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:
(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 also is a qualified applicant under
the Program and the Department shall 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 from the Department within said 120 day
period shall conclusively constitute a waiver of all rights of such
surviving spouse or adult child hereunder.) or,
(2) Applicant, without written consent of the City, ceases for any reason
to occupy the residence as applicant's sole and only residence.
(3) Default in repayment of the loan or any other material term of the
promissory note or failure to execute a modified repayment schedule.
Department shall redetermine and recertify the family composition and gross monthly amount
available for principal and interest payback after the first, and at two year intervals
thereafter, from the date of the execution of the promissory note for each applicant who has
received a deferred loan or grant of assistance hereunder. At any time, upon request of
applicant or the Department, but not more frequently than once yearly, an applicant's ability
to repay the loan will be calculated provided the applicant's gross annual family income
increases or decreases at least 12% per year or other changes in the formula have occurred
resulting in an increased amount the applicant can afford to pay back toward principal and
interest. Department shall adopt and the applicant shall execute a modified repayment
schedule for the remaining balance of funds advanced based upon the formula set forth in
Paragraph F and G hereof. Failure of an applicant to execute a modified repayment schedule
adopted by the Department shall cause the entire balance of funds advanced to such applicant
to immediately become due and payable.
K. All funds repaid by applicants shall be used only for similar grants or loans for
housing and rehabilitation assistance under this resolution or subsequent resolution which may
be adopted by the City Council providing for similar programs. To further the objective of the
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Program, the Department may combine such funds with other available monies for housing
rehabilitation in order to meet the housing and financial needs of low- and moderate - income
families and providing further that such assistance are eligible under 24 CFR 570.
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 50% of the approved loan amount. In emergency
situations where the Department deems it appropriate, equity may be
determined by subtracting the balance on the first mortgage from the
fair market value of the residence determined before rehabilitation or
the official records of the Pueblo County Assessor Office, whichever
is greater, plus 60% 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 to rehabilitate the residence.
(3) Applicant must undertake to have repaired those items determined by
the Department on the initial inspection report to be necessary for
the property, to meet the minimum City of Pueblo Uniform Housing Code
standards utilized by the Pueblo Regional Building Department. As a
minimum the residence after repairs shall comply with the HUD minimum
Housing Quality Standards contained in the Code of Federal Regulations
24 CFR 882.109. The initial inspection report required under
Paragraph E (1) may not be considered as a representative or a
warranty by the Department that completion of requirements outlined in
the initial report will render the property in compliance with all
applicable building codes or requirements as determined by the Pueblo
Regional Building Authority inspection.
(4) Applicant has not previously received housing rehabilitation
assistance under the Program.
(5) Applicant payments on taxes on the home 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 applicable federal, state and local laws and regulations.
N. Before payment shall be made for any repairs, rehabilitation or construction,
such payment must be authorized by the Director of Department upon proper inspection of the
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contractor's workmanship and materials based on appropriate work write -up contained as part of
contract documents used in accordance with the written agreement between the homeowner and the
contractor.
O. The Housing Rehabilitation Committee, as 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.
Section 2.
Resolution No. 6239 adopted August 25, 1988, 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.
The Resolution shall become effective immediately upon final passage and approval.
Introduced November 11 9 1991
By: FAY KASTELIC
Councilperson
Approved•
By:
President of the Council
Attest:
By: _A/1� 4 mzx_ A
Cify Clerk
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