HomeMy WebLinkAbout2246RESOLUTION NO. 2246
CITY OF BREMERTON
HOUSING REHABILITATION LOAN PROGRAM
A RESOLUTION to adopt a Housing Rehabilitation Loan Program
for the City of Bremerton, to authorize the release of $80,000
of 1989 CDBG funds to implement the program, and to support
application to the State for Rental Rehabilitation Program
funds.
WHEREAS, the City of Bremerton recognizes that improvement of
the quality and integrity of its housing stock is important to the
long term livability and development of the City; and
WHEREAS, the City of Bremerton recognizes that rehabilitation
of its low income owner occupied and renter occupied units is a
good public investment in community development; and
WHEREAS, the City of Bremerton desires to increase affordable
home ownership opportunities and to maintain affordable rental
housing for its low and very low income residents, particularly
families with children; and
WHEREAS, the City of Bremerton recognizes the value of
targeting its limited funds to smaller neighborhood areas to
compliment City programs and land use policy in order to make
efficient use of its housing funds while having the greatest
impact; and
WHEREAS, the City of Bremerton has identified neighborhoods
within West Bremerton as target areas for increased home ownership
and neighborhood revitalization because of the age and condition
of the housing stock and the incomes of the residents; and
WHEREAS the City of Bremerton desires to establish
rehabilitation of owner occupied housing as a higher priority than
renter occupied housing; and
WHEREAS, the Bremerton City Council directed Community
Development Staff to develop a Housing Rehabilitation Loan Program
for the City to incorporate the goals outlined above and
acknowledges the importance of establishing a loan program that
provides for a minimum monthly payment, yet is affordable due to
low interest rates and provides incentives for loan recipients to
remain in the assisted units for at least five (5) years; and
WHEREAS, the Bremerton City Council approved $80,000.00 for
low income housing rehabilitation as part of the 1989 C.D.B.G.
program to be released upon approval of a Housing Rehabilitation
Loan Program by the Council; now, therefore
BE IT RESOLVED BY THE BREMERTON CITY COUNCIL:
That the Council does adopt the Housing Rehabilitation Loan
Program for the City of Bremerton attached hereto as Exhibit "A"
and incorporated herein by this reference; and
BE IT FURTHER RESOLVED that the City Council does authorize
the release of $80,000.00 of 1989 Community Development Block Grant
funds and supports application to the State for Rental
Rehabilitation Program funds to be used in the Housing
Rehabilitation Loan Program.
PASSED by the City Council of the City of Bremerton this 10th
day of May, 1989.
SPENCER HORNING, Council President
APPROVED this 12 day of May, 1989.
GENE LOBE, Mayor
ATTEST:
KATHLEEN L. McCLUSKEY, Clerk
EXHIBIT "A"
HOUSING REHABILITATION LOAN PROGRAM
CITY OF BREMERTON
MAY 1989
SUMMARY
HOUSING ASSISTANCE NEEDS
FEDERAL HOUSING PRIORITIES
LOCAL HOUSING GOALS
INTRODUCTION
1989-1990 PROGRAM OBJECTIVES
PROGRAM. DESCRIPTION
4.
5.
6.
9.
10.
11.
USE OF FUNDS
ELIGIBLE PROJECTS
Er.IGIBLE OWNERS AND TENANTS
TARGET AREAS FOR ASSISTANCE
OCCUPANCY AND RENT REQUIREMENTS
LOAN CONDITIONS
LEVERAGING
REHABILITATION REQUIREMENTS
CONTRACTING POLICIES
RELOCATION
NON-DISCRIMINATION AND AFFIRMATIVE MARKETING
HOUSING REHABILITATION LOAN:.:PROGRAM/CITY OF B~~N
~ARy: '.:
An effective housing strategy for. the City of Bremerton is one that
combines local housing assistance needs with Federal and State
housing priorities and funding. The first step in the strategy is
to target locally administered funds such as Community Development
Block Grant funds. It involves working actively with the State,
non-profit and private sectors to market those housing finance
programs to meet local housing needs and priorities.
HOUSTNG A~T~TANCR
Currently there are 15,455 housing units in the City of
Bremerton. Approximately 15% or 2374 of these units are in
substandard condition suitable for rehabilitation. Most of
these units are occupied by low and moderate income people;
622 units are owner occupied and 1752 units are renter
occupied. In addition, there are 191 vacant rental units in
substandard condition suitable for rehabilitation. Only 5%
of the housing stock is dilapidated and cannot be economically
rehabilitated. The majority of housing units occupied by low
and moderate income people and in need of rehabilitation are
located in West Bremerton.
FRDRWAT. HOU,~TNG PRTORTTTR~:
The federal government has five housing priorities: 1)
homeless; 2) home ownership; 3) fair housing; 4) rental
assistance reform; and 5) expand and rehabilitate the existing
housing stock to be affordable for all families.
The Community Development Block Grant (CDBG) and Rental
Rehabilitation Programs are the major federal funding
programs targeted to improving the existing housing stock.
These programs are limited to assisting only low and very low
income households, particularly families with children. These
programs are administered locally by the City and the State.
2
T.OCAT, HOU~TNG GOAT.~:
The combination of local housing needs with federal housing
priorities and funds that are administered locally suggests
the following goals:
improve thequalitYand integrity of the existing housing
stock through rehabilitation;
Increase home ownership opportunities for all residents,
particularly, low and moderate income families with
children; and
Encourage construction of infill housing in
vacant structures that are dilapidated and
economically rehabilitated-
place of
cannot be
3
TNTgOnO~TON :.
The City of Bremerton receives Community Development Block
Grant~ (CDBG) funds as an annual entitlement- A potation of
each entitlement has been set aside for housing rehabilitation
loans to low and moderate income people. Approximately
$250,000 of CDBG funds is currently available for housing
rehabilitation loans.
In addition, the City is eligible to apply tothe State for
Rental Rehabilitation Program funds to provide low interest
loans to renovate rental units 'occupied by ver~ low income
families wit/lchildren. Private owners are required to match
public funds dollar for dollar with private funds· Bremerton
has been successful in receiving State Rental Rehabilitation
funds on two occasions.
Community Development Block Grant and the Rental
Rehabilitation Programs are the only locally administered
programs currently available to the City of Bremer~con for
housing rehabilitation assistance. Development and aggressive
administration of a Housing Rehabilitation Loan Program is the
most effective strateg~ for meeting our number one housing
goal - to improve the quality and integrity of the existing
housing stock.
1989--1990 I:~B,OGI~AM OR.TI~.~-J..,V~.q:
The following objectives are recommended to guide use of
locally administered funds in meeting local housing goals
through the Housing Rehabilitation Loan Program.
· Target housing program to certain areas within the
Central Bremerton Residential-Zone (CBR) in West
Bremer~on;
Use Community Development Block Grant funds for
rehabilitation loans to low and very low income
single family home owners; and
Use Rental Rehabilitation Program funds for
rehabilitation loans to owners of rental units
occupied by low and very low income families with
children (first priority) and individuals (second
priority).
4
PROGI~xM nF. RCRTPTTON
The Housing Rehabilitation Loan Program is the primary tool
available to assist.owners to rehabilitate their properties.
Incentives are. provided to encourage maximum leverage of
available' private funds and to expand =he effectiveness of
limited public funds.
Following is:'a description of 13'program e.lements common to
administration of a Housing Rehabilitation Loan Program
designed to. implement the City of Bremerton's 1989-1990
Housing Objectives.
The standards. for each program element will apply differently
to home...owners and rental owners in most cases. These
difference are noted and described separately in t31e
discussion of each program element.
Housing Rehabilitation Program funds can only be used to
pay for rehabilitation and certain associated development
costs. Funds cannot be used for construction of new
housing units.
Eligible associated development costs include reasonable
costs such as:
Financing fees
Appraisal costs
Closing Costs
Past due real estate =axes
Refinancing of existing indebtedness may be included as
a d~ve]opment cost if the project is not feasible without
refinancing and the rehabilitation cost exceeds $10,000.
It should be noted that the costs listed above may not
apply to every project financed through the program.
2. ~ligihle P'r'oject~:
Existing single family and multifamily properties located
in West Bremerton (see map, Attachment 1) are eligible
for assistance through the Housing Rehabilitation Loan
Program. Preference will be given to units containing
two or more bedrooms.
Owner-occupied single family structures, and multifamily
structures containing up to four units are also eligible
for assistance if the owner and tenants in the rental
units are low and very low income.
5
In addition, funds can be used to assist units.in mixed-
income and mixed-use buildings, for some one-bedroom
units, and for single family rental proper%ies subject
to the provisions described below.
Mixed'Income Projects:
HOusing RehabilitatiOn Program. funds may be used in
combination with private and/or other non-City
administered funds for projects occupied by low, moderate
and middle income . tenants. However, Housing
Rehabilitation Loan Program funds can only be used to
assist low and very low income tenants and owner
occupants.
Mixed-Use Projects:
Housing Rehabilitation Program funds can be used for
projects which combine residential and other uses. The
proportion of City administered funding to total
development cost must reflect the amount of residential
space in a building serving low and very low income
households.
Housing Rehabilitation Program funds can be used in
nonresidential areas of mixed use buildings only for work
necessary to produce. the residential units, e.g. work
that is part of overall exterior building improvements
or work necessary to ensure the structural integrity of
the building.
One-Bedroom Units:
Use Housing Rehabilitation Program funds for one-bedroom
units is not a preferred use of funds. However, City-
administered funds may be used in buildings containing
a mix of one and two or more bedroom units. Some
buildings containing all one-bedroom units may be
eligible provided the amount of Housing Rehabilitation
Program funds used for one-bedroom units does not exceed
30% of the total funds available for multifamily rental
projects under that program.
Single-Family Rental Properties:
Single family rental properties containing two or more
bedrooms are eligible for assistance through the Housing
Rehabilitation Program.
6
1~.1 'i g'~ hl e Owne'e"'R ;qrl~ Ten~rats:
Owner-occupants and owners of rental properties will be
considered to be eligible if: 1) they are in fee-simple
ownership; and 2) they or their tenants meet the income
guidelines described below.
Owner Occupied Units:
In order to be eligible for Housing Rehabilitation
Program assistance owner occupants must have incomes at
or below 80% of area median income for Bremerton based
on family size consistent with Table I.
First-Time Home Buyers:
Participants in the Washington State Housing Finance
Commission single family program for first-time home
buyers who have incomes at or below 80% of area median
income for Bremerton based on family size consistent with
Table I may also be eligible for a rehabilitation loan.
In those instances, the rehabilitation loan couldqualify
as owner equity. The terms and conditions for owner
occupied units for rehabilitation loans would apply.
Renter-Occupied Units:
In order to be eligible for Housing Rehabilitation
Program assistance, tenants must have incomes at or below
50% of area median income for Bremerton based on family
size consistent with Table I.
Detailed rent requirements are outlined in Section 5,
Occupancy and Rent Requirements.
7
TABT.R I
INCOME LIMITS
FAMILY SIg. R
LOW INCOME
80% ARRA MRDTAN
VERY LOW INCOME
50% ~RRA MRDIAN
1 $19,400 $12,100
2 22,150 13,850
3 24,950 15.550
4 27,700 17,300
5 29,450 18,700
6 31,150 20,050
7 32,900 21,450
8 34,650 22,850
SOURCE~ HUD FY 1989 Median Family Income for Bremerton
8
for
Housing Rehabilitation Program funds can be used
renovate single family homes and multifamily structures
located in the Central Bremerton Residential Zone (CBR)
in West Bremerton. See map, Attachment 1.
There are four target areas within West Bremer~con. These
are listed below in order of priority. Loan applications
will be processed for each area by priority until all
loan funds have been committed.
Priority Area #1:
North Sixth Street
South First Street
West Rainier/Bryan Avenue
East Naval Avenue
Priority Area #2:
North Sixth Street
South First Street
West Naval Avenue
East Chester Avenue
Priority Area #3:
North Eleventh Street
South Sixth Street
West High Avenue
East Warren Avenue
Priority Area #4:
Remaining CBR-Zone in West Bremer~con
5. Occ~3~ncy and Rent Req3~:{r~;
Owner-Occupied Units:
Low andvery low income owner occupants of single family,
duplex, tri-plex and four-plex structures are eligible
for assistance using Community Development Block Grant
funds.
Renter-Occupied Units;
Rental units, including those described above in duplex,
tri-plex, and four-plex structures, as well as single
family rental units assisted using Rental Rehabilitation
funds must be affordable to tenant households with
incomes aC or below 50% of area median income for
Bremerton based on family size.
9
Rents, including utilities, should not exceed 35% of a
tenant household's monthly income. After-rehabilitation
rents generally should not exceed before-rehabilitation
rents. Higher after-rehabilitation rents for vacant
units should generally not exceed an average of the
monthly rent for comparable units.
Vacant units are to be rented to income.eligible tenants
during the term of the rehabilitation loan through the
City.
T~ar~ Cond'i t~ on~:
The City will make rehabilitation loans to eligible
participants and properties as follows;
Loan Principal
Owner-occupied units: The maximum loan amount will
be $20,000 per unit using City-administered funds.
Renter-occupied units: The maximum loan amount per
unit will vary, as outlined below based on bedroom
size. City administered funds must be matched
dollar-for-dollar using private lender funds or
owner's cash.
$5,000
$6,500
$7,500
$8,500
Studio and SRO* units
one bedroom units
two bedroom units
for three bedroom units
*SRO - Single Room Occupancy
Loans will be secured through a Deed of Trust with the
City in second or third.position behind a secured first
mortgage. The City prefers owners to be in fee simple
ownership secured through a mortgage rather than a Real
Estate contract or similar convention. City loans to
owners having Real Estate contracts will be evaluated on
a case by case basis.
The indebtedness secured by the property may not exceed
ninety percent (90%) of the after-rehabilitation value
based on a qualified appraisal of after-rehabilitation
value approved by the City or the after-rehabilitation
value determined by the assessed value plus the hard-
rehabilitation costs.
10
Repayment
The program will provide amortizing loans. There
will be a minimum monthly payment of $30.00. A
repayment schedule will be established to increase
the minimum payment over time at regular intervals,
and will be included in the loan documents.
The City reserves the right to consider deferring
loan payments on a case by case basis such as, for
low income elderly home owners, or for loans that
are highly leveraged using private lender funds.
In all cases, loans must be repaid at the end of
the loan term, upon change of use, or transfer of
ownership.
Loan funds repaid or returned to the City will be placed
in a special loan repayment fund. These funds will be
reallocated according to priorities established by the
City Council annually through the budget process. The
City Council may or may not choose to use repaid loan
funds for housing rehabilitation.
Loan Term:
Loan terms will be 15 years for owner occupied
single family units.
Loan terms will be 15 years for single family and
multifamily rental units.
Interest Rate:
Interest on program loans will accrue annually as
simple interest for the term of the loan.
Owner occupied units: The interest rate will be 3%
for loans financed 100% using City administered
funds. The interest rate will be reduced to 1%, if
the owner leverages at least 50% of the total cost
of rehabilitation Using private lender funds.
Renter occupied units: The interest rate will be
5% for loans financed using City administered funds.
prepayment Penalty
The prepayment penalty shall be 50% of the original
loan principal if the loan is repaid during the
first five years of the loan term. There will be
no penalty in years 6 through 15.
11
Commercial Space Income
In the case of mixed residential 'and commercial
buildings, commercial space rental income should be
used to reduce residential rents whenever possible.'
r~ve~glng:
Leveraging of other private lender, foundation and
grant funds, and owner equity are strongly
encouraged. In the case of tenter occupied units
owners are required to match City-administered
Rental Rehabilitation program funds dollar-for-
dollar with any combination of private or grant
funds or owner equity. Grants or low-interest loans
talrough state and local utilities and local non-
profit energy conservation programs are strongly
encouraged as leverage of City-administered funds.
Rehshl 3 i ~stl on Re~d rem~n~--~:
Units assisted through the Housing Rehabilitation
Program will be expected to be of such quality that
will last for 20 years. Rehabilitation standards
will be flexible. to accommodate a wide variety of
unit and building types.
At a minimum, all structures will be required to
meet health and safety requirements of the Uniform
Building Code and/or a Minimum Housing Code, and
other codes as may be required by the City. Permits
will be required for cer~zain work consistent with
City Code, and work requiring permits will be
inspected by the Building Official or his designee
per City requirements.
Rehabilitation work will largely focus on
repair/replacement of major building systems
necessary to ensure viable long-term housing. In
addition, overall design of the project and proposed
improvements must be appropriate to the owner
occupant or tenants to be housed. Exterior building
deterioration problems which create a blighting
effect on the surrounding neighborhood such as
peeling paint or loose siding must be corrected,
plus any immediate lead-based paint hazards. All
units assisted through the Housing Rehabilitation
Program will be required to paint or otherwise
improve the exterior of the structure.
12
Cost effective energy conservation work must be
completed if funding is available through the City
administered program· Owners are strongly
encouraged =o obtain energy/conservation grants
through state and local utilities and local non-
profit energy conservation programs·
Modernization work can only be financed if the above
rehabilitation work can be financed for less than
the maximum eligible loan amounts, and is restricted
to improvements which enhance overall liveability.
For example, liveability maybe enhanced through
creating more bedrooms in overcrowded situations.
Restrictions on the work to be financed in addition
to the priorities for rehabilitation described
above:
Not more than ten percent (10%) of loan funds
may be used to pay for landscaping work and
repair of accessory buildings~
Not more than twenty-five percent (25%) of loan
funds may be used to pay for modernization
improvements~
Additions are not eligible except
required to alleviate overcrowding~
where
Non-essential luxury improvements, area rugs,
furniture, non-essential appliances, cosmetic
improvements and signs are not eligible
rehabilitation costs.
Con~ctl ng Po]i c{ e-~:
Utilization of one contractor under one contract for
all of the rehabilitation work is the preferred
contracting method in order to ensure that the work
is completed for a'fixed price, on schedule and of
such quality to ensure the Housing Rehabilitation
Program goals are met. Two or more competitive bids
must be obtained to ensure that a reasonable cost
is being paid for the rehabilitation work.
13
Alternate methods for completing the rehabilitation
work may be considered by the City for qualified
owners.
Use of specialty contractors: In order to use
several specialty contractors, the owner must,
with the City's review and approval, prepare
a detailed work list including specifications,
obtain two or more competitive bids for each
specialty to be contracted, and must be capable
of completing all miscellaneous work. All
rehabilitation work must be finished within a
maximum of four months of loan closing.
Self-contracting: In order they qualify to
contract to do his/her ownwork, the owner must
provide certain information for the City's
review and approval; 1) a detailed work list,
2) material list, 3) cost estimate and
construction schedule. In addition, the owner
must demonstrate to the City that he/she has
successfully completed similar construction
improvements in the same scope, cost and time
frame. The work must be completed within six
months of loan closing. Payment will be made
'to the owner in full once all work has been
successfully completed.
Except when self-contracted, all work must be
completed by a registered, licensed, insured, bonded
contractor. All construction work including self-
contracted will be monitored and accepted by the
Community Services Division prior to payment of all
construction draws.
Minority and women owned contractors and suppliers
are strongly encouraged to participate in the
Housing Rehabilitation Program.
Davis Bacon wage rates shall be paid to all workers
on projects containing 12 or more units
rehabilitated using Rental Rehabilitation Program
funds.
14
10.
11.
Re1 oc~t~ on . ..
Since the purpose"of-.the. HOusing Rehabilitation
Program is to improve the quality of the existing
housing stockl.that will.likely be occupied, some
temporary and possibly. permanent relocation may be
necessary. It'.. is:' anticipated that most
rehabilitation work wil. i beable to be carried out
while tenants and homeowners remain in their units.
Relocation costs are aN eligible rehabilitation
cost. Relocation benefits shall be provided
consistent with the Federal Uniform Relocation Act
in consultation with the City.
Non-n~ gcr~ m{ nmt~ on mud ~ rmmt~ ve Mmrket{ ng
Use of federal funds for the Housing Rehabilitation
Program prohibit owners from discriminating against
potential tenants consistent with Executive
Order #11246. Potential tenants will receive
consideration without regard to race, color,
religion, sex, or national origin.
Owners of rental units are also required to market
availableunits to the general public, in particular
using marketing methods designed to reach minority
families with children. Owners will be required to
maintain records of their affirmative marketing
efforts and to report annually to the City on those
efforts.
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ATTACHMENT I
HOUSING REHABILITATION
PRIORITY AREAS