Item 12 - CDBG Housing Rehabilitation Program Guidelines
AGENDA REPORT SUMMARY
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-TO: Honorable Mayor and Members of the City Council
FROM: James L. Bowersox, City Man~
INITIATED BY: John D. Fitch, Assistant City Manage~">r ~
Warren H. Shafer, Director of Redevelo ~nt Services ~
David Narevsky, Redevelopment Manager!)
Kris Gridley, Redevelopment Coordinator~
DATE: January 3, 1995
SUBJECT: Community Development Block Grant (CDBG) Housing Rehabilitation Program
Guidelines
ABSTRACT
This report presents proposed Program Guidelines for the CDBG Funded Housing
Rehabilitation Program.
ENVIRONMENTAL REVIEW
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The CDBG Housing Rehabilitation Program has been determined to be exempt from CEQA
review requirements.
FISCAL IMPACT
The City Council previously approved an allocation totalling $240,OlO from the City's
20th and 21st Year Block Grants to fund housing rehabilitation loans for low and very
low-income residents. No additional allocation is proposed at this time.
ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE
None.
RECOMMENDATION
It is recommended that the City Council approve the proposed CD8G Rehabilitation
Program Guidelines.
ACTION
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JAN 3 1995 ITEM 12
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~ AGENDA REPORT
CITY OF POW A Y
TO: Honorable Mayor and Members~e City Council
FROM: James L. Bowersox, City Mana
INITIATED BY: John D. Fitch, Assistant City Manage~\ ~ 1
Warren H. Shafer, Director of Redevelo en
Services
David Narevsky, Redevelopment Manager~ ~
Kris Gridley, Redevelopment Coordinator
DATE: January 3, 1995
SUBJECT: Community Development Block Grant Housing Rehabilitation
Program
BACKGROUND
The Redevelopment Agency's existing Affordable Housing Rehabilitation Program
was approved by the Redevelopment Agency in November 1993. The Program is
funded by the Agency's Low- and Moderate-Income Housing Fund. In December
1993, the Agency received a number of comments from the Legal Aid Society
regarding the Program's compliance with Redevelopment Law. The comments were
reviewed by Agency Legal Counsel and it was decided that the Affordable
Housing Rehabilitation Program Guidelines would be amended to specify that all
applications will be screened to ensure that applicants' housing costs are
truly "affordable" per the definition of "affordable" contained in California
Redevelopment Law.
After reviewing a total of 208 applications, Program staff has found that the
affordablity test has the practical effect of disqualifying many of the very
low and low-income applicants. Of the 70 loans which have been funded, six
percent have been granted to very low-income, twenty-five percent to low-
income and sixty-nine percent to moderate-income households. The concept of a
CDBG funded Program was developed to provide an alternative for very low- and
low-income families whose housing costs were too high to qualify for the
Redevelopment Agency funded Program.
On November 28, 1994 the Redevelopment and Housing Advisory Committee reviewed
proposed Program Guidelines for a CDBG funded Housing Rehabilitation Program.
The Committee recommended approval of the Guidelines, with minor
modifications, on a vote of 9-0-1 with one member abstaining.
ACTION:
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Agenda Report
- January 3, 1995
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FINDINGS
PROGRAM GUIDELINES
The Agency's existing Affordable Housing Rehabilitation Program Guidelines
have been reviewed and revised to fit the needs of the new Program, The
proposed revisions are presented in Attachment 1 in a strikee~trêâlîriij
format. The changes can be roughly divided into two categories,fhosii
triggered by the new CDBG funding source and those recommended by Agency
staff, in order to maximize efficiency and direct assistance to applicants who
are most in need.
A. REVISIONS NECESSARY TO REFLECT CDBG FUNDING SOURCE
1. All references to the Redevelopment Agency are changed to the City
as thi s Program wi 11 be federally funded and wi 11 not recei ve
Redevelopment funds.
2. The eligible applicant is redefined as a person/household with an
income that does exceed 80% of area median income as required by
HUD (U.S. Department of Housing and Urban Development).
- 3. Specific requirements pertaining to lead based paint are added as
required to comply with new federal regulations.
B. REVISIONS PROPOSED BY REDEVELOPMENT AGENCY STAFF
1. The maximum loan amount is reduced from $10,000 to $8,000.
2. The provision for approval of a loan exceeding the maximum amount
has been deleted.
3. Landscaping is removed from the list of eligible requirements,
except as needed for erosion control or to correct drainage
problems.
4. Applicants are required to select a licensed general contractor
except when projects will involve less than three trades.
5. A procedure for determining eligibility preference is outlined.
MAXIMUM LOAN AMOUNT - The limitation of the loan amount to $8,000 is proposed
in order to maximize the number of homeowners who can participate in the
program. The amount of CD8G funding available to the City is limited. The
total CDBG grant for the 21st Year was $249,422. Each year there are a number
of projects which compete for available funds. Based on experience with
previous rehabilitation projects, staff believes that a limit of $8,000 will
allow adequate funding to accomplish necessary work and increase the number of
loans which can be funded.
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ELIMINATION OF THE "EXCESS LOAN" PROVISIONS - This change is also intended to
maximize the number of homeowners who can participate in the Program. Should
individual homeowners have a serious need for additional funding they have the
option of combining the City of Poway loan with a County of San Diego
Rehabilitation Loan.
DELETION OF LANDSCAPING AS ELIGIBLE IMPROVEMENT - Under the existing
Rehabilitation Program, a number of homeowners have elected to do front yard
landscaping. This type of improvement has proved to be expensive and may not
be a wise investment of funds should homeowners fail to maintain the planting.
While landscaping can be very effective in upgrading the exterior appearance
of a home, staff believes that the CD8G funding should be reserved for
improvements that are more permanent in nature, and more directly related to
meeting basic housing needs.
REQUIREMENT TO USE A LICENSED GENERAL CONTRACTOR - This issue was the topic of
some debate when the current Program standards were adopted. After
approximately nine months of experience, Program staff has encountered ongoing
difficulty with projects where homeowners have chosen to act as owner/builder
(i.e. - hiring a group of licensed specialty trade contractors rather than one
general contractor).
While the homeowners present a plausible argument that they will be able to
negotiate more work at a lower cost if they act as the owner/builder, in fact
these jobs have generally 1) taken twice as long to complete than projects
managed by a general contractor and 2) expended more than four times the
administrative resources than projects managed by a general contractor. In
several cases these homeowners have approached Program staff, once the job was
underway, to request additional funds due to "unforeseen circumstances."
Failure to estimate cost correctly is a serious problem. When loan funding is
not adequate to finish a job the owner/builder homeowner must come up with the
additional funding out of pocket. General contractors know they must submit a
solid bid and have the experience to recognize and account for the variables
which can effect project costs. The proposed standards will require
applicants to use a general contractor unless their project will involve less
than three trades.
PROCEDURE FOR DETERMINING ELIGIBILITY PREFERENCE
Currently there are 28 eligible applications which have been reviewed and
placed on hold until the CD8G Rehabilitation Program is funded. There are 271
names on the waiting list to receive applications. Many of the individuals on
the waiting list will be eligible for the CDBG Program.
Program staff has suggested that we consider income level, type of improvement
and date received when determining the order in which to process applications.
Given that so few very low-income applicants have qualified for the Housing
Fund Program, it is recommended that very low-income applicants be given first
preference for the CDBG Program. Applications from households needing to
modify their homes to provide access for a disabled family member would share
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Agenda Report
January 3, 1995
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the first priority status with very low-income applicants. In order to
include program income, types of improvement and date received it is proposed
that we define several categories of application which would be processed in
the following order:
1. Applications received prior to January 1995
a. The applications from very low-income households and low
income households in need of disabled access improvements,
in chronological order.
b. Applications from low-income households, in chronological
order.
2. Applications received from the first twenty-five applicants on the
Agency's Waiting List for the Rehabilitation Program.
a. Applications from very low-income or low-income/disabled
households, in chronological order.
b. Applications from low-income households, in chronological
order.
3. Applications received from the next twenty-five applicants
on the Waiting List - - - - - repeat process in B. above.
until applications have been sent to all names on the waiting
1 i st.
PROGRAM ADMINISTRATION
CDBG standards require recipients to use a competitive bidding process when
selecting a contractor for programs which will be funded by CDBG. The
Redevelopment Agency's existing Housing Rehabilitation Program is administered
by Comprehensive Housing Services, Inc. (CHS). At the time the Agency selected
CHS they were the sole provider for the full range of Housing Rehabilitation
Program services which the Agency needed. Recently there have been additional
consulting firms which have entered into this field. Although it would be
logistically very difficult for the Agency to employ more than one consulting
firm for the two Rehabilitation Programs, public notice of the new program and
contract opportunity will be published as required by federal guidelines.
ENVIRONMENTAL REVIEW
The CDBG Housing Rehabilitation Program has been determined to be
categorically exempt (Class 1) from CEQA environmental review requirements, as
the Program will, generally, undertake the restoration of existing single
family residences which are less than 50 years old. The Program will not
involve expansion of the structures or uses. Each individual rehabilitation
project is required to be reviewed by the County of San Diego in order to
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Agenda Report
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ensure that any historical structures and structures in the floodway are
identified and given additional review as required for compliance with NEPA
(National Environmental Protection Act).
FISCAL IMPACT
The City Council has previously approved an allocation of $110,070 for Housing
Rehabilitation from the City's 20th Year CDBG Grant and an allocation of
$130,000 from the 21st year Grant. The 20th Year funding is expected to be
available in February 1995 and the 21st year funding in December or January
1996. The Agency has a total of 28 qualified applicants who are waiting for
the CD8G Rehabilitation Program. Given a maximum loan amount of $8,000 and
allowing 15% for administrative costs, the funding should be adequate for 26
to 30 projects.
RECOMMENDATION
It is recommended that the City Council approve the proposed CDBG
Rehabilitation Program Guidelines as presented in Attachment 1.
Attachment 1 - CDBG Rehabilitation Program Guidelines
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April 25, 1994 (Draft changes dated November 28, 1994)
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PURPOSE OF THE AFFORDABLECQMMQNIT'i jEVI:;LqPMìËN"tl1!~q~~~I;ì.Äf-rt
HOUSING REHABILITATION PROGRAM (Program)
I. BcoauGc of tho California Rodovolopmont Law, tho roway nodovolopmont Agoney
reooivoG fundG which aro Got aGido to help inoreeGe, improve end preserve tho
CoffimunitY'G supply of 'lory low, low and ffioderate income housing available at
affordable housing oost, as defined by Statc Low. ThêQ!tY9f
fi.ii:l$t~IQÞthmqhitYP~yeIÞÞthi.iht.ßI .
th §ênpÎ~gq;T!igQÎtY
C . 4h@i;f~Yê!9pm§rJt9Þ ~9)Yê 9
Ii.. ... t9q~; The poway as
decided that the implementation of on :\ffordablo ousing
Rehabilitation Loan Program is an opportunity to utilize these funds to assist
eligible low and moderate income homeowners in the rehabilitation of their homes.
II. PRIORITIES
The primary purpose of the Program is to assist Vø .Low Moderote
Income households as defined in Ë4QFB&QÞ¡:J$9 i.igi§tgt).gtQ¡~
Health and Safet} Codc Section 50105, 50070.5 and 50003 ("low moderato ¡Rcome
housoholdG") to rehabilitate their dwellings to correct code violations and health
and safetY problems and to a safe and sanitary living environment.
III. PROGRAM DESCRIPTION
A. Single Family Homes and Condominiums - Assistance is available to
owner-occupants of: single family detached homes, manufactured homes
on private lots, single family attached homes and condominiums. The
program offers zero interest loans up to ~~;~per eligible
household. Tho amount of tho Agonoy IOCR ma} not c)(oood 25% of the
appraiGod value of tho d.....olling unit. The total indebtedness on the property,
including the AgeRey CDE3gl;lqÜsih§ReHêÞiliìêtighloan, cannot exceed one
hundred percent (100%) of the åppfai::¡ëpvalue of the dwelling unit.
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B. Mobilehomes - Assistance is available to Mobile Flomo mobilehome
owner /occupants of units located within the City of Poway. The program
offers zero interest loans ()fjjPJÞ$$,ÞQQ. Tho l\gono1' loan may not Q)(oeod
25'K of tho unifo value ao determined by a oomparativo market analyoio and
cannot m(oeed a mClJ<imum lean amount of $10,000. The total indebtedness
on the property, including the A§eAey QPêG!;!Þ4§¡Q9ßøb~m~~t!§Q loan,
cannot exceed one hundred percent (100%) of the ~þþf~[$êÇ value of the
unit.
C. Loan - Deed of Trust - If the owner-occupant remains in the housing unit
for a period of 10 years, the loan will be forgiven ten percent (10%) for each
year of residency. If the owner-occupant remains in the home for less than
10 years the loan will be forgiven, on a pro-rata basis, at a rate of 10% for
each year of residency. A Deed of Trust (or lien agreement for a
mobile home) securing payment shall be recorded on the housing unit.
D. Loan Repayment - Loan repayment is to be made to the Peway
Redevelopment Agoncy QityÞtRpw¡3,yiat such time as the property is
leased, sold or transferred to a new owner (unless the new owner meets
the low to moderate-income household requirement and assumes the
balance of the loan obligation) or the unit or the mobilehome t:ffiit is moved
outside the City limits. The Redevelepmont Agenoy P¡ty will not subordinate
its interest at any time. Only one loan will be permitted per each property.
E. Exaess loan pragram Undor certain warranted oiroumotanoeo, ao
directed by the E)(eeuti':e Director of the Redevelopment I\geney, or hie/her
designee, the $10,000 loan limit per participant could be e)<ooodod. At no
time, however, shall tho loan amount m(oeed 25~(' of tho prepert'¡'s value.
Fer vcr! low and low income reoidents, the additional amount approved
above the $10,000 boGie program limit will be offered in the form of a
deferred lean with a total balanoe due upon Gale or tranofer of the property.
None of the "O)<oeoo" loan balanoo would be forgiven. In no event would a
"oubotantial" rehabilitation be undertal<on through this program without tho
recordation of afferdability covenants (deed restrietiono) againot the
property, purGuant to State Law.
For median and moderate income reoidento, the "e)(oeso" loan would be
offered a Dimple interact rate of three percent (3~(,), fully amortized over a
period not to eHoeed 15 year::;.
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IV. ELIGIBLE APPLICANT
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Assistance from the A§efIey qÞê~119Q§iQ9A$tìêpmti:\P9qRf99ti:\m shall be
available only to persons who:
1. Are the legal age and have capacity to competently enter into financial and
contractual agreements.
2. Reside in and own the property and possess proof of ownership such as
a State of California, HCD Certificate of Title (mobilehomes) or a grant deed
(real property) located in the City of Poway.
3. Have income that does not exceed ~ aO%Iof the area median income
adjusted by family size as determined the u.S. Department of HUD.
~. Have a total monthly houoing oHpenoe which io determined to be
"affordablo" in that it dODO not e)(eeed the limitationo deoeribed in Soetion
50052.5 of AppendÎJ( 31 of the California Health and Safety Code
ë,4) Agree to comply with any and all applicable permit, code and other
regulations of the City.
Property owned by a Trust is eligible for Program participation. All trustees must
sign all the appropriate documentation. The income of all beneficiaries is used to
determine income eligibility. Transfer of an assisted property into a trust would not
automatically trigger any repayment clause.
In the event that a program participant dies and the assisted property is inherited
by an eligible family member (defined as a natural or adopted child who qualifies
as moderate ê low income person), that intends to actually occupy Wñqgççgpl~~
the property wilnip§!Xm9hlo§and aotually doeE) occupy the propertYthei6an
may be transferred to that individual pursuant to the original terms of the loan.
V. DETERMINATION OF ADJUSTED GROSS INCOME
In calculating adjusted gross income, all of the income of the applicant and other
household members 18 years of age or older and not full-time students shall be
considered as follows:
1. The full amount, before any payroll deductions of wages and salaries,
overtime pay, commissions, fees, tips, and bonuses, and other
compensation for personal services;
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2. The net income from an operation of a business or profession, as
calculated by averaging the net income manifested by their Federal income
taxes for the past three years;
3. Interest, dividends, and other net income of any kind from real or personal
property (where the family assets are in excess of $5,000, excluding
property adjusted gross income shall include the greater of the actual
income derived from all assets or percentage of such assets based on the
current passbook savings rate);
4. The full amount of periodic payments received from social security,
annuities, insurance policies, retirement funds, pensions, disability or death
benefits, and other similar types of periodic receipts, including a lump-sum
payment for the delayed start of a periodic payment;
5. Payment in lieu of earnings, such as unemployment, worker's
compensation, severance pay, welfare assistance (NOTE: Such payments
may be excluded by the lending institution providing the first mortgage, for
purposes of underwriting, but shall be included in eligibility determinations
for this program);
6. Periodic and determinable allowances, such as alimony and child support
payment, and regular contributions or gifts received from persons not
residing in the dwelling to the extent that such payments are reasonably
expected to continue;
7. All regular pay, special pay, and allowances of a member of the Armed
Forces (whether or not living in the dwelling) who is the head of the family,
spouse, or other person whose dependents are residing in the unit;
8. Any earned income tax credit to the extent it exceeds income tax liability;
9. Any other income that must be reported for Federal and State income tax
purposes;
10. Gross Self-employed income as reported on Schedule C, IRS 1040, will be
adjusted to reflect deductions for necessary and reasonable business
expense.
VI. ELIGIBLE IMPROVEMENTS
Program funds are available for improvements that are physically attached and
permanent in nature as follows:
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1. Repairs that remedy existing nonconforming uses such as garage
conversions, additions, etc.
2. Exterior work ~ QØ9¡;¡9$ê~YIgpreserve or protect structures such as
painting, roofing, siding landGoaping, grading of site to control flooding,
!?Qg$Ç?p!Q9(.....H~hQ~ç¥$$aW!9Ç6httPt¥t9$iÞQ)¡ skirting, releveling,
bracing, repair/replacement of screens/windows, doors and door locks,
structural and/or foundation damage, repair of sidewalks and driveways,
fencing.
3. Interior work to make a structure more livable and repair/replace/restore
important parts such as plumbing, damaged flooring, faulty or inadequate
heating/cooling systems, inoperable built-in appliances, damaged ceilings,
water heaters, electrical wiring and service, painting.
4. Weatherization and energy conservation items such as insulation, caulking,
weatherstripping and window coverings.
5. Fumigation and treatment for termites and pest control.
6. Modifications which aid the mobility of the elderly and physically disabled
such as shower units with seats, lever hardware, retrofitting toilets to
-- achieve adequate height, moving power points and light switches, ramping,
reconstructing doorways lowering sinks in kitchens and bathroom.
VII. INELIGIBLE IMPROVEMENTS
Examples of ineligible improvements include the following:
1. Repair, purchase or installation of kitchen appliances which are designed
and manufactured to be freestanding.
2. Recreational items such as barbecues, bathhouses, greenhouses,
swimming pools, saunas, television antennae, tennis courts.
3. Luxury items such as burglar alarms, burglar protection bars, dumbwaiters,
kennels, murals, flower boxes, awnings, patios, decks and storage
sheds/workshops.
4.5; Other items as deemed ineligible by the Agonoy EJcooutive Direotor BiD!
N!~gêQ~r or his/her designated representative.
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VIII. PROGRAM CONDITIONS
Both the A§eRey Q!tYiand the applicant will adhere to certain conditions as
follows:
ACENCY CITYOFiPOWAV
1. A§eAeyth~QitYWili comply with the Fair Credit Reporting Act that stipulates
and guarantees the applicant's privacy and right to have all information
regarding the loan transaction kept in a confidential manner.
2. The A§eRey QItYishall not discriminate upon the basis of sex, age, race,
creed, color, class, national origin, or ancestry in the awarding of financial
assistance.
APPLICANT
1. The applicant shall agree to use the loan proceeds only to pay for costs of
services and materials necessary to carry out the renovation as detailed in
the Work Write-up for which the loan is approved.
2. The applicant will permit inspections by the A§eRey Qtly of the property to
be renovated for compliance with the Building Standards of the City.
3. The applicant agrees to not award any contract for rehabilitation work to be
paid in whole or in part with the proceeds of the loan to any general
contractor who, at the time, does not meet standards of the Program as an
eligible contractor.
4. The applicant shall not allow any A§eRey Staff member who exercises
any function of responsibility in connection with the administration of the
Program, to have any interest, direct or indirect, in the proceeds of the loan,
or in any contract entered into by the applicant for the performance of work
financed, in whole or in part, with the proceeds of the loan.
5. The applicant will not pay any bonus, commission or fee for the purpose of
obtaining approval of the loan application.
6. The applicant shall maintain the housing unit in good condition during the
term of the loan.
7. The applicant will maintain hazard insurance coverage on the housing unit
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in an amount that is at least the value of the entire indebtedness and keep
- property taxes current during the term of the loan.
8. The applicant shall add the A§eRey City as an additional insured on the
hazard insurance policy at the time of loan closing and tí1âiijtâiritbï:! CitY ii$
anadditiona! insured for the duration of the loan.. ..... ..w~~.... ..
9. The applicant shall not discriminate upon the basis of sex, age, race, creed,
color, class, national origin, or ancestry in the awarding of the construction
contract.
10. The applicant will fully utilize funds within 90 days of loan closing unless
granted a written time extension by the A§eRey City.
11. In the event that the applicant fails to adhere to the conditions and
restrictions contained within the Program Conditions, the A§eAey þitý
reserves the right to terminate the individual's participation in the loan
and/or demand full repayment of the loan.
X. PROGRAM PROCEDURES
This section sets forth the steps that are to be followed in the application processing of
a Program loans.
1. Property owner contaeta Program.
administrator
ð. Complete application returned.
42.
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a. Applications submitted by very low-income homeowners and
applications submitted by low-income homeowners who need to
construct improvements to make their home accessible for a '
disabled family member or members.
3.
4. The Program administrator establishes a file for each" applicant 'and
determines iRffiaj eligibility by reviewing income, household size and location
of subject property.
5. If the applicant is not eligible not foOGiblo, Program administrator so notes
disposition and notifies interested applicant of finding in writing. Application
is filed under Ineligible Projects.
6. If foOGiblo, When, applicants are determined' to' be, eligiþle . the. Program
administrator' sets up appointment for a' site inspection 'and work
write-up/cost estimate.
7. The Construction Manager conducts a property inspection to document
existing code violations, incipient code violations, otherwise eligible items
and any requested home improvements. An explanation regarding what
improvements are eligible and/or ineligible and priorities for the work to be
accomplished occurs. The inspection win inC!udedocu "'" "
lead based paint hazards and the work write-up wíll i
necessary for compliance with the Lead-Based Paint ,
of 1992 (Title 10 of the Housing and Community Development Ad of
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8. Applicant is provided with a Work Write-up which includes:
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* Scope of work
* Construction method
* Quantity
* Quality
* Location
Applicant is also provided with a list of eligible contractors and a booklet
regarding How to Hire a General Contractor, printed by the State
Contractors License Board.
9. Responsibility for the selection of a contractor rests with the
owner/occupant. For projects which will involve three or more trades, it is
recommended t~qy¡t~ç! that applicants select a licensed gê{jêf~ contractor.
All contracting work must be done in accordance with the State of California
Contractors License Board Laws and Regulations. No contract agreements,
.- written or otherwise may be entered without prior approval of the Program.
10. The selected bid must come within fifteen (15%) of the in-house cost
estimate. Owner transmits bids and the selected bid to the Program
administrator for review. The selected contractor must give a one-year
guarantee on all labor and materials to the owner.
11. Program administrator reviews selected bid to determine cost
reasonableness and compliance with Program requirements.
12. Program administrator determines credit worthiness, verifies income and
orders title insurance.
13. Program administrator submits the application package to the Agency':;
Ç!itY;§ Loan Committee for approval/denial.
14. Upon approval, Program administrator orders the preparation of all
necessary loan documents which include:
* Promissory Note
* Deed of Trust (real property)
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Statement of Lien (mobilehomes)
* Truth-in-Lending Statement
* Request for Notice
* Escrow Instructions
* Recision Notice
15. Program administrator schedules and holds the loan
closing/preconstruction meeting at tho Agonoy offioos ~:g@~iš!'!~~@~
li;îbàt!ótì;
16. Applicant executes all loan documents and construction contract. The
payment schedule is outlined so that all parties are aware of the timeline
and order of job progression.
17. Upon completion of the loan closing, the necessary documents are sent to
the appropriate recording entity. Program administrator forwards appropriate
documents to City Finance for funding to escrow.
18. The selected general contractor contacts the Construction Manager to
arrange a job site inspection for progress payment.
19. The Construction Manager visits the job site and verifies that the work
included for payment is completed and that all necessary inspections by the
Building Division regarding building permits have been satisfactorily
accomplished. It is the policy of the Program to disburse funds for items
that have been completed.
20. The Construction Manager transmits a Disbursement request to the
Program's escrow agent. A completed Disbursement form includes the
amount of payment, name and address of the applicant, a description of the
work completed, the date of inspection and the signature of the
Construction Manager.
21. In the event of any dispute between the owner and the selected general
contractor concerning the contracted scope of work, the Construction
Manager will work with both parties to negotiate' a satisfactory solution.
Should a resolution not be possible on an informal basis, the parties may
elect to have a hearing by a professional arbitrator.
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22. Upon completion a Notice of Completion is signed and recorded.
23. The .^.genoy haG retainedÇ~Yþ?$?9ê$f9rj?têg(p?Qm?rj?g§mêQ!?Q
çgqttgtêýêtêm a Gcrvioc agentmêqå9êtWÞp for tho purpooo of c .
any excess loan funds; af!€I.processif짧s reconveyances ?pgmÞõ¡tÞr§!qêõ
ståtÙSi .......................
X. PROGRAM ADMINISTRATION
A. The E)(ceutive Direotor of the rOWDY Redevelopment Agency ÇityM?Q?9ê[
and/or his/her designee shall administer the Program.
B. The G¡W Po'Nay Redevelopment )\genoy may utilize consultants in the
administration of the Program, however, the E)(ccutivo Dirootorþ¡tYrøê!;!êg~r
shall designate an Agoncy a City employee to administer the dayit6idaÿ
operations of this program.
C. In the event of any disputes arising under the Program, the Homeowner,
contractor or any other party shall submit a written letter the nature
of the complaint to the E)(couti'JC Dircotor
for his/her resolution of this dispute.
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XI. PROGRAM DEFINITIONS
APPLICANT: Any person or other legal entity that applies for a loan under the QQ~@
RoGidontiol ProGorvotion/ !JpQêÎbg Rehabilitation Program. . .........
APPLICATION PACKET: Forms disbursed to potential participants.
BORROWER: Any person or other legal entity who holds title to a property being
rehabilitated with the assistance of the Program and who is legally responsible for any
repayment of said loan.
BUILDING AND PROPERTY REHABILITATION STANDARDS: The standards contained
in the Building and Safety Code of the City and other local codes and ordinances
pertaining to housing construction, land use, occupancy, and maintenance of existing
residential properties which are applicable to the property through Code Enforcement
action.
BUILDING INSPECTOR: City employee(s) responsible for inspection(s) of structural,
electrical, and plumbing repairs and improvements. The inspector assures compliance of
work to applicable Building and Safety Codes.
BUILDING DIVISION: The Department of the City responsible for issuance of building
permits.
BUILDING PERMIT: Building Division authorization to commence building repairs or
improvements. Permits must be issued for most home improvements, including, but not
limited to, roofing, electrical, plumbing, structural changes, foundations, etc. A fee is
charged for permits, and inspections are included in the permit cost.
CALIFORNIA PRELIMINARY NOTICE: A notice sent to owner of dwelling by any person
or supplier providing labor, services, equipment, or materials for the rehabilitation work.
The notice is sent in the event that the primary contractor is listing, as security, the
property being rehabilitated with the person or supplier sending notice.
CONSTRUCTION MANAGER: The person who conducts inspections and produces
Work Write-Ups/Cost Estimates.
CONTRACT: A legally-binding, standardized form which spells out, in detail, the entire
scope of work, specific quality, brands of materials, and all other data pertinent to the
rehabilitation of the property. The Contract must be signed by both contractor and
applicant.
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DEED OF TRUST: The legal document which secures the loan with the property which
.- is being rehabilitated. The Deed of Trust is for the same amount as the loan and must be
signed by the borrower in the presence of a public notary.
DEFERRED FORGIVABLE LOAN: A loan available on a City-wide basis for households
of low and moderate income and in need of repair. The maximum loan is $10,000 unless
extraordinary conditions exist and warrant additional funding. Payment is required at such
time that the home is sold or rented or the title is transferred. The balance of the loan is
reduced by 10 percent for each year the applicant resides in the home. After the tenth
year the loan becomes a grant and is forgiven in full.
DIRECT LOAN: The ~ CitY directly loans monies to eligible and approved
participants when work exceeds the maximum deferred forgiven amount. All principal and
interest repayment by participants return to the Program's revolving loan funds, from
which subsequent loans and administrative expenses are funded.
ELIGIBLE CONTRACTOR: An eligible contractor is any contractor who is in good
standing with the State Contractors License Board and Better Business Bureau and has
been licensed in compliance with City and State regulations to do the necessary housing
rehabilitation work. For rehabilitation projects which involve three or more trades, an
eligible contractor sf1eI:II€I ¡nust have a valid general contractor's license. An eligible
contractor may not be the owner of the property for which the rehabilitation project is
proposed.
ELIGIBLE IMPROVEMENTS: All improvements required to bring the dwelling unit up to
Housing Quality Standards (safe, sanitary, and decent) and Local Housing Codes.
HOUSEHOLD: An individual head of household or a head of household and all other
persons living in same household who are related to the head of household by blood,
marriage, or adoption. Any live-in care provider is considered to be excluded from the
household definition.
INCOME VERIFICATION: The process used to determine gross household income,
including participant submittal of most current income tax returns, employer verification
of wages, W-2 Forms, Social Security verification, profit/loss statements, etc.
INSPECTION CARD: Card posted at the site of rehabilitation once building permits are
issued. Building Inspector(s) sign off various inspections on Card as job progresses.
LIEN RELEASE: A form signed by the contractor upon payment for labor services in the
rehabilitation process. A Material Lien Release may also be provided which is also signed
by the material supplier or contractor.
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LOAN DISBURSEMENT: The principal amount of the loan which is paid out to the
participant as the rehabilitation work progresses. The Disbursement may be in
accordance with a contractual agreement between participant and contractor. Prior to
disbursement, the work accomplished must be in accordance with the scope of work as
detailed in the Work Write-Up. If inspection by the Building Division is required for the
particular rehabilitation item, the inspector must sign off for said work prior to
disbursement.
LOAN DOCUMENTS: All forms relevant to the actual execution of the loan, include 3-Day
Recession Notice, Truth-In-Lending Form, Promissory Note, and Deed of Trust.
MOBILEHOME: A structure transportable on a street or highway by authorization or a
permit in one or more sections, designed and equipped for human habitation, to be used
with or without a foundation system. Does not include recreation vehicles, commercial
coach, or factory-built housing resting upon permanent foundations.
OWNER/OCCUPIED PROPERTY: A property used entirely for residential purposes and
occupied by the owner.
PARTICIPANT: Any person or legal entity that has applied for and is in the process of
rehabilitating a property through the Program.
PERSON: One or more persons who occupy a property to be rehabilitated.
PROGRAM ADMINISTRATOR: The staff member having the primary responsibility for
administering and coordinating the housing rehabilitation projects for the Program.
PROMISSORY NOTE: A form, part of the loan documents, which is the borrower's
agreement to pay back the amount borrowed in accordance with the established terms
of the loan. The Promissory Note must be signed by all persons on Title to the Property.
REHABILITATION COST: The total cost of repairs and improvements and other costs
for rehabilitation to be incurred by the participant that may be included in a Loan.
REHABILITATION ESCROW ACCOUNT: An account used for deposit and disposition
of all funds used in the rehabilitation of specific property.
RIGHT OF RESCISSION: The borrower's right, within a three working day period from
the date of loan settlement to rescind the entire loan transaction.
STATE DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT: The Agency
of the State of California that has jurisdiction over aspects of Mobilehomes including title
search.
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- TRUTH IN LENDING: The form included in the loan document package which details all
terms of the Loan. Participant must sign receipt of said form.
WORK WRITE.UP: A form to be completed by the Construction Manager outlining a
complete and suggested scope of work to be performed in the rehabilitation project. it
also includes the name and address of the applicant and other pertinent information.
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