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Home My WebLink About20E - CALHOME REHABILITION & REPLACEMENT PROGRAM CITY COUNCil MEETING DATE: ~ ~ REQUEST FOR COUNCIL ACTION CLERK OF COUNCil USE ONLY: APRIL 3, 2006 TITLE: APPROVED CALHOME REHABILITATION AND REPLACEMENT PROGRAM o As Recommended o As Amended o Ordinance on 1" Reading o Ordinance on 2"' Reading o Implementing Resoiution o Set Public Hearing For [2d;J(2~ CONTINUED TO FILE NUMBER CITY MANAGER RECOMMENDED ACTION 1. Approve an Appropriation Adjustment recognizing $500,000 in Ca1Home Program funds and appropriating same. 2. Adopt the Ca1Home Rehabilitation and Replacement Program. COMMUNITY REDEVELOPMENT AND HOUSING COMMISSION RECOMMENDATION Recommended that the City Council: 1. Approve an Appropriation Adjustment recognizing $500,000 in CalHome Program funds and appropriating same. 2. Adopt the CalHome Rehabilitation and Replacement Program. By a vote of 7:0 at its Regular Meeting of March 21, 2006. DISCUSSION On September 20, 2005, the City Council approved the submission of an application for funding from the California Department of Housing and Community Development. We have received notice that the City has been awarded $ 500, 000. In accordance with CalHome Program regulations, the proposed CalHome Rehabilitation and Replacement Program (Exhibit 1) will be used to offer deferred payment, thirty-year rehabilitation loans with zero percent interest rates to low-income owner occupied mobile home and single-family home residents. The program is available to households located in CDBG eligible census tracts (Exhibit 2) . 20E-1 CalHome Rehabilitation and Replacement Program April 3, 2006 Page 2 The maximum CalHome rehabilitation loans will be $15,000 for mobile homes and $75,000 for single-family homes. Previously the maximum loan amounts were $10,000 and $50,000 , respectively. The increases are necessitated by the rising costs of material and labor. Depending on fund availabili ty, the CalHome funds may be leveraged with existing below market interest rate loan programs offered by the City and the Community Redevelopment Agency. In cases where it is financially infeasible to rehabilitate the mobile home, the owners may be eligible for CalHome replacement loans totaling no more than $ 75,000. Previously the maximum loan amount was $70,000. The increase is necessitated by the rising costs of material and labor. Depending on fund availability, the CalHome funds may be leveraged with existing below market interest rate loan programs offered by the City and the Community Redevelopment Agency. FISCAL IMPACT Funds will be available in the CalHome Rehabilitation and Replacement Program fund (account no. 143-149-6951), Community Development Block Grant fund (account no. 135-148-6951) and in the HOME Investment Partnership Act Program account (account no. 130-148-6951). APPROVED AS TO FUNDS AND ACCOUNTS: ~~i~~Qi~~ Executive irector Community Redevelopment ~~..t j ~rancisco Gutierrez D Executive Director Agency Finance and Management '0 Services Agency/~ PCW/TG/mlr H:\ACTI0NS\2006 CC\CalHomeRehab&Replaceprog 4-3-06.doc 20E-2 CALHOME REHABILITATION AND REPLACEMENT PROGRAM The CalHome Rehabilitation and Replacement in accordance with the requirements of CalHome Program. Program will be operated the State of California Eligible Borrowers · Borrower(s) must be the owner(s) of a single-family home, or of a manufactured/mobile home that is permanently affixed to a space in a legal, properly permitted manufactured housing park. Properties must be located in a CDBG eligible census tract in the City of Santa Ana. · Manufactured homes must be designed for long-term occupancy. Vehicles designed for recreational purposes do not qualify. · Total annual income must be at or below 80 percent of area median income, as published by the U. S. Department of Housing and Urban Development and the California Department of Housing and Community Development. Effective March 31, 2005 the maximum household incomes are as follows: Household Size 1 2 3 4 5 6 7 8 Maximum Income 42,400 48,400 54,500 60,600 65,400 70,200 75,100 79,900 · Borrower (s) must occupy the home as their principal residence, and shall not lease or rent the property during the term of their loan. . Borrowers must have a prudent use of debt obligations. current and a credi t history that demonstrates commitment to meeting financial General Program Guidelines . Funds budgeted annually will be made available on a first-come, first-served basis. Priority for loan funding will be based upon the date and time a completed application and all necessary documents are submitted. The City reserves the right to make the sole determination as to when such completed applications and documents are received. EXHIBIT 1 Page I 20E-3 . For manufactured homes, loan funds may only be used for repairs necessary to bring the home into compliance with applicable federal and state building codes. All code deficiencies must be addressed. In cases where it is economically infeasible to rehabilitate the home, funds may also be used to purchase, transport and install a new unit on a spot located in a legally permitted manufactured housing park in the City of Santa Ana. . Funds may not be used to refinance existing debt or for repairs to the park. . For single-family homes, all code deficiencies must be addressed, and must account for at least 40 percent of the total rehabilitation cost. . The Loan Committee will make the final determination as to the eligibility of specific repairs or purchases. . All persons with an ownership interest in the home must sign the application and all loan documents. . Borrower (s) will be required to carry hazard insurance for the life of the loan. If applicable, they will also be required to carry flood insurance. Rehabilitation Guidelines . Licensed general contractors who have licensing and insurance requirements rehabilitation and construction work. complied with must perform City all Terms of CalHome Rehabilitation Loans . CalHome Rehabilitation Loans may not be forgiven. . The interest rate for these loans will be zero percent. No loan payments will be due during the term of the loans, which will be 30 years. . The entire loan will be due and payable upon sale or transfer of the property, when the property ceases to be owner occupied, or upon the loan maturity date. . Upon the loan maturity date, and in accordance with CalHome Program regulations, these loans may be amortized over a period of time to be determined by Loan Committee, or may be deferred for an additional period of time to be determined by Loan Committee. . The maximum amount for rehabilitation of an existing manufactured home is $15,000. The maximum amount for rehabilitation of a single-family home is $75,000. Depending on fund availability, up to $25,000 of the $75,000 maximum for single family homes may be funded through the existing owner occupied rehabilitation loan programs offered by the City of Santa Ana and the Community Redevelopment Agency of the City of Santa Ana. EXHIBIT 1 Page 2 20E-4 · All but the first $2,500 of these additional funds spent to remediate health hazards created by lead-based paint, asbestos or mold may be forgiven after all work required by the City or Agency has been completed. As a result, proj ect expenditures funded by the City or Agency may exceed $75,000. · The ratio between total debt on a single family home and its after-rehabilitation value as determined by an appraisal cannot exceed 90 percent. This requirement does not apply to manufactured homes. · Borrower (s) will be required to execute appropriate loan documents incorporating the terms of their loan and the requirements of the CalHome Program. · Loans on single family homes will be secured by means of a promissory note and deed of trust recorded on the property. Loans on manufactured homes will be secured by means of a Statement of Lien added to the home's registration. Replacement Guidelines · Licensed manufactured housing dealers and their representatives must perform all work for the transportation and installation of the replacement unit. · Replacement homes must be newly manufactured, and must be located on an appropriate site in a fully permitted manufactured housing park located in a CDBG eligible census tract in the City of Santa Ana. · Replacement units must be of comparable size as the existing home, unless it is determined the household is overcrowded and a larger unit is required. Terms of CalHome Replacement Loans · The maximum loan amount is availability, up to $25,000 of City loan funded through the Program. · The ratio between total debt on the home and its market value cannot exceed 100 percent plus a maximum of up to five percent of the sales price to cover actual closing costs. · The City's loan servicer will collect and manage impound accounts for payment of property insurance for the term of the loan. . Borrower (s) will be required to execute appropriate documents incorporating the terms of their loans and the requirements of the CalHome Program. · The CalHome Program loan will be secured by means of a Statement of Lien added to the home's registration. · CalHome Replacement loans may not be forgiven. $ 7 5, 000. Depending on fund this total may be provided by a HOME Investment Partnership Act EXHIBIT 1 Page 3 20E-5 . The interest rate for these loans will be zero percent. No loan payments will be due during the term of the loans which will be 30 years. . The entire loan will be due and payable upon sale or transfer of the property, when the property ceases to be owner occupied, or upon the loan maturity date. . Upon the loan maturity date, and in accordance with CalHome Program regulations, these loans may be amortized over a period of time to be determined by Loan Committee, or may be deferred for an additional period of time to be determined by Loan Committee. City Replacement Loan . The City loan will be amortized for 30 years. . Interest rates will be as follows: Household Income Interest Rate 0 - 50 Percent of Area 1.00% Per Annum or 300 basis points below Median the 11th District Federal Home Loan Bank Monthly Cost of Funds Index, whichever is higher. 51 - 80 Percent of Area 1.50% Per Annum or 250 basis points below Median the 11th District Federal Home Loan Bank Monthly Cost of Funds Index, whichever is higher. . Determination of the interest rate will be made at the time of loan approval. . During the term of the loan, upon sale or transfer, when the home is no longer owner-occupied, or upon loan maturity date, the entire principle is due and payable to the City along with the applicable interest rate. . Borrower (s) whose monthly housing debt, inclusive of the City loan, is less than or equal to 30 percent of their gross monthly income will make equal monthly payments in an amount that will fully amortize that loan by its scheduled maturity date. . Borrower(s) whose monthly housing debt allows for partial payments only of the City loan will be required to make such payments. Partial loan payments will be applied first to accrued interest and then to principal. Such borrower (s) must be income-certified every five years to ensure that their monthly housing debt still allows for partial payments only. . Borrower (s) whose monthly housing debt , exclusive of the City loan, is equal to or more than 30 percent may have their loan payments deferred. Such borrower (s) must be income-certified every five years to ensure that their monthly housing debt is still equal to or greater than 30 percent. EXHIBIT 1 Page 4 20E-6 D D D ;1" ,"" ~ 89.03 '" r"iy~, 99 .,,,, L.., a(,.1 t -N- t 89001 ~ ,,' City of Santa Ana 2000 Census Tracts and Block Groups ", f' _. G1' I r1'"..,." ... ~, :,\ ";60 0 ~ A"~ ~02 ';,8,06r: ! / ,,' . \. ,~.'"" .'i'89107~/BG" aG-1 I\h BG 7540400., 7~~~ 754.01 _'Ow....v ~891~02 ~53rJ-2~~_ j7::~3 j ~BG_' ElG., BG2 <lG.-\ BGr" eG.' r I ~ i 75405 BG_1 J "'"ThO"''' AV (""rt 00_' - BG1 1lG.' 8~-~4.1 9l0V 1 ~ST ~1 - 1~ST ~ ;_1 ~ ! aG1"l%o~-'r ~75202" ';,;; ~,:;, I~~~~'" 18G., ~~ 891.05 / I BG-l """:.7''''" '; -,./ 44.0.5 1'(;-'; 75403 ~ 00_' BG_~ 1 ~ 8G_, BG-, ", / ,. ......vo 6(;-, 8Gl 74406 60_3 ~ 00_' "it'" ElG-l BO., BG_1 75002 I ";'1ST \ I 748_0~~ ,:~~i01 ',......, 3 I aG-~ \ ...: 9246G-l sc..,::o1!C.2 Bo_' BG-l~--J6(;_5L ~olOO-l ~ Be., l ~ ElG-J EIG-3 ~~"I BG-l BG-' .. !l: 748 5 L, aG_' _ I. 745 -....14803 BG-' &G. 2 00., 74806 74 02& LaG.' BG.3 '" 99202 00_' '- BG-J _ ElG-1 ~ 7462-' &G_. ~ Census Tracts Census Block Groups CDBG Eligibility 1/ ", 8~?4 , r .175505 ""-, ""g~2148 I I~, 7447 '" , 74601 i aco: 'OI:~~J 741 Den' "'~o~/ 741':2' BG_t BG-t r ""'V 1j6-, 8(;-) &;., 747.02 " t 74403 BG_, / ....... B(;-' flG-J aG- ~ lIG-' BG-' M ~, 74502 ~ "'NO~"'V ~-' "'~ ~, 743.00 ~ 741.03 i BCd :...J ~, 7420 ~'l B(;_1 ~ _/l / I ~, ~, I~., I~ . ~G_) <>!<:.1~ ........",,,,,,. 8(;., . BG-' 118(;-1 ~, 741.10 I " k- .' BG_' ",. , "- ~ S" ~, """T"0..,\'0741.07 , ~, ~U;6' BG_:;: ~ 740,06 '''''',owf" " ~(;. 1 ~ 8G., ", 74003 I ~ 741 UG ", '" 8G.) ~, l! 74004 ",/ I' '-... ", ~'" '" ) 0.0 0.5 1.0 1.5 -=----=- 2.0mi , ~ ~ Source: 2000 Census Data CDSG Eligibility Updated March. 2004 C,...~"''''I'',..'~''''_., EXHIBIT 2 20E-7 20E-8