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HomeMy WebLinkAbout68461 1 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. -1- 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: -3- (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, SI 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 -5- 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 Sol 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 -7- 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 El