Loading...
HomeMy WebLinkAboutM-83-072570 Howard V. Gary July 14, 1983 City Manager Dena Spillman, Director Proposed modification to Community Development Single Family Housing Rehabilitation Loan Guidelines We are recommending that the City's current Single Family Housing Rehabilitation Program eligibility requirements be modified to allow for participation in the program by investor owners. Statistics indicate that approximately 2/3 of the single family dwellings located in the City's C.D. Target areas (excluding Overtown and Downtown) are owned by absentee owners. Current program guidelines prohibit investors owners from obtaining rehabilitation financing from the City. Allowing for the participation of investor -owners will greatly enhance our ability to provide decent, safe, and sanitary housing as required in our housing assistance plan as well as meeting our objective of preserving the City's housing stock. The revised guidelines are attached for your review and will become effective upon your approval. or�� N 83-725- CITY OF MIAMI rRnjai ITAiION'PwrtAN, GOB ELIN-E DEFINITIONS: Decent, Safe and Sanitary Hou,inrl - d dwelling unit or Lai Idin.T meetinq Federal Occupancy 'tandards as defined inUP 89Z.109 and CFR 862.405 ('•ee ,,ppendi, I for standards). D.;eIIing Unit - An independent living unit containing, at a minimum, a bathroom, kitchen or kitchenette and a living area/bedroom. Grant - An outright gift of cash requiring no repaynent. Hazardous Condition - A code violation that is an immediate, serious threat to the health and/or safety of the occupant of a structure. Income - The aross amount received frr.m all sources by every ;;ems-n in the family resid•,r, in the dwelling i•rcludinq wanes, pension, Social Security, interest, rent, dividends, etc. Income Limits - See the Income SfheJvle for the maximum amounts thit can be earner; to yuaiify for an assistance category. Income limits ar., based on family size (actually living at the property) and the median income for Dade Count as determined by thc• Department of H3usinq and 11rhin Development and revised annually. Investor-�1wn,r - the Title holder to a residential structure wh-j does not live in the structure. Loan - An advance of funds which must be repaid and is secured by a mortgage on the property. Owner -Occupant - The Title holler to a residential structure whose primary livin-; unit is kcat.d in the structure. Principal_ reductionrirant - The amount required to reduce the interest rate charged by a private lendor to the interest rate for ..hich the applicant qualifies. Si^qle Family Dwelling - A property �4 one to four dwelling units. Target Ar_a - An administratively designated geographic part of the City of Miami in which Conmunity Development activities are 'leing carried out. PROGRAM UF-'-CRIPTION: Owner (-)ccup3nt 1. I,ireet Assie.tan .� a. Grant A f snily having a oru,-. income ender 5' of median incn:Ilc• (L,,tequry 1 ut the 8c•ne'it :,chedule) ray receive a Tr ant to correct a hazardous conditiun or cf-nriitir,ns and correct other er,le vioIati n,. 1he .,runt m.,y rant exceed the lessor of (1) the ectu.,l coat of rehabilitation or (2) iI'J,CCO. No grant r„ar t,e made if any hazardous eonditicns would remain after rehauilitation. If all h,:rardozs Ccngiticns are carrected, other code vialatiuns may be corrected within the $10,000 limit. In no event may a grant be made for a property containing rental units. b. Dcp�rtmNrt Lonn A family having a qro<; incune ur,.'��r 8(:'. of median inr nme -ay rereiv^ a loan to hrin•T tfre pr,,ver!v to the decents.ifc and ,ut,itar•v housing standard. The loan may riot exreei the lessor of ( I ) the actual cost of rehabilitation ur ( 2 ) $30,00o per dwelling u.it. Properties receiving a loan mi,;t be ;,ble to nprt the decent, safe and sanita-, housinr; standard after rehabilitation. Properties may receive a loan only if failure to provide the assistance will result in a continued bIightiny inrluenre upon the neighborhood or block so as to n-rllifv the other rehabilitation efforts u•- derway in the neighborhood or brook. A loan may t,e used in conjunction with any other assistance program to make rehabilitation feasible. If uther such assistance is available, it must be used to the maxinun extent possible before makinq a jepartment Loan. c. Secticn 312 To the extent funded by the United States, Section 312 Rehabilitation Loans will be made available to applicants qualifying for that program. 2. Leveraged Assistance a. Leveracer'. Loan An eligible family (Categories I through XI of the Benefit Schedule) may receive a loan to bring the property to the decent, safe and sanitary housing standard. Loan funds will be administered through 3 private lender and are conditioned on applicant receiving a commitment for an FHA Title I Guaranteed Home Improver.ent loan or other home improvement loan through a private lender. The City will provide sufficient funds in a Principle Redur:tion Grant to reduce the effective interest rate on such a loan to the rate specified in the Benefit Schedule for the family inccme. The cost of rehabilitation may not exceed $15,000 for the first dweliinc unit and $5,000 for each additional dwelling unit to a ma■imum of i30,000 per property. Properties receivinq assistance must be able to meet the decent, safe and sanitary stanr'..:lrd after rehabilitation. b. Sweat-e;uity loan An etigibie fa^iI' rzay receive a loan for the purchase of materials to rehabilitate the property to the decent, safe and sanitary housing standard provided the fzimily will supply all labor F,r the reh3t.ilitatiun. The loan may not exceed the lessor of 1.) the actual cost of the materiels or 2.) $5,000 for the First dwelling unit and $2,000 for each additional dwelling unit to a maxinum of $11,000 per property. Properties receiving a loan must I able to meet the decent, safe an,l sanitary huusinn after rehabilitation. 3. Ccmt,ined Assi:.tanc.e Except as otherwise stated in these guidelines, combinations of Direct and Leveraged assistance are permitted to the moximum stated for each assistance catr•ror•y. in such combin.:tions funds ;hall he approved in such a manner to macimize the amount of Ievera;ed assistance used except thit when an applican* is eligible for a grant, the applicant shall receive the full amount of the grant prior to other assistance. An applicant who is eligible for 3 grant may choose to decline all or part of the 1-ant in favor of other assistance offeref. I& G. Inve,Jor owner +n irv?,.tor awner may a lu,rn to bring a rent,l, simile family 'wPllinq to the decent, safe in sanitary stand,irj. Luan fund, will be administered tnrough Private Irndor and are conoIt.innrd on appli_.uit recrivIny a committment for assistance through the private lendrr. The owner will receive a principal reduction grant to reduce the eFfectivn annual interest rate of that loan to 9%. The cost of rehabilitation may not exr.eed $15,000 for the first dwelling unit and a5,000 for cacti a.,litiunil dwelling unit to a maximum of $30,000 oer property. (The owner may r)t project a return on investment exceeding 20% per year, bayed or. an ;,cc':pancy rate of 95% for the first vP.,r after rehabilitation), A rent regulatory agorenc-0 will be required for existing tenants. Pi-n ertie. receivirr.T assistance must be able to -,t,. the d?cent, safe and ;,nitary standard =,flee r-hahilitation. ELIGIBILITY; A. ;rants 1. An applicant must be the owner occupant of a residential property lorated in a Target Area in which rehabilitation assistance funds have been allcc,lted and are currently available. 2. The property shall not have received assistance for heusinti rehabilitation from the City of Miami, Dade County or the U.S. Department of Housing and Urban Developnent durina the previous five years. 3. The applicant's income is less than 50e of the median income for Dace County. 4. The applicant shall have evidence of title to the prooer•ty to be rehabilitated. Property held via a Iind sales contract, where title is transferred only upon co,opletic.� of a series of in7,taIIr,ent T;ayments may be considered eligible if the requirements in Appendix 2 are met. F The applicant shall have paid all doe city, county and school tapes. 6. the Property mist rice,' repairs to reet the decent, safe and sanitary standard. 1. IT.. property shall hive rental units. 8. The property must conform to the requirements of the City of Miami Zoning Ordinance. fs. '_o,rns 1. All loan .rp[A grant:, must satisry the following requirements. a. The applicant r,L,;;t he the owner of a residential 1,ruperty lo(Ite:t ir• a 6 ignatf. target Area in which rehabilitation assistance fund, have• been al'.,,cated and am currently ..,v.tilable. b. The Property rust need repairs to meet the decent, safe nd ,anitar) c,tandard. c. The appIicort ,hall have adequate evidence of clear t i t i e t:, the ;property to be rehabilitated. d. '1-. .3pT11rI-- r,IJ .{0 the ability In repay the loan ..thin tha len'3nated lcin IPrn. n. 'hr ao, 11, in! - i,t hiv, Pik all due city, cninry ind scinul taxis. 'he urnpert, c.hall nct bare n e1ved ass isIan, o fur housing rob hilitaticc from the fits or N111i, pa, tNon'r or I1.S. Depart^ent of ftuusinq d hrb::. Development durirq the Vrry ais f i v� vo :rs. a. Thu ,r,uer,t: suit ccnfurc to Ur requirements of the Cit; of Mani Zoning V dinance. Owner -Occupant an!icant; for d ` P t Bet' p irec, assistance are subject o he ollowinq addi ionat requiremerts: a. Property hek via a land sales contract may be considered eliqible if the r„quirerents in Append R 2 are met. b. Any r.a5e Where the loan rep3ynent plu,, all other estimated housing costs (utilities, taxes, prior mortgages, insurance, maintenarcn, etc.) exceeds 400 of the applicant's family income ;hall ba reviexrd to insure that an undue burden is not placed on the applicant. Any case where the total estimated housinq cost, including loan payment, plus current credit liability plus fixed monthly charges exceeds M! of the applicant's family income shall be reviewed to insure that an undue bu%en is not placed on the applicant. Applicant's disposable income after current obligations should be sufficient to provide arplP ant adequate fond, entertainment, transportation and incidental e,purnes. An applicant oho cioen nut demonstrate the ability to repay the loan within the loan period may have the loan c.a signed by an individual who can demonstrate that he has ,he ability to rnf,ay ttte loan within the loan term. The co-signer crust meat the same credit requirements as the applicant and furnish appropriate verifications as requested. W le not required, the co-signer should be a family member, if possible one who will inherit an interest in the property. For the purpose of assigning a category nuncor, the co -borrower's income will not be used. c. The applicant may not have been a party to a foreclosure judgement within ten years prior to the loan closing. d. The applicant should satisfy any liens recorded agiinst the property G'rior to loan proce,.si nq. e. The applic,rrt's credit nist,vy for the past twelve month period may not show any outstanding credit prohlo- . APPKCK! Pr1lnAKY: Applicant; a:all be accepted on a first come, first serve b.: io. if an applicant cannot be processed immoK ate Ij, stparate wait in; Iist. ohail be established by I,irget Area. Applicants shall be placed on this tiait:nq list in the followinq order; A. Applicants having a cl"ar and present health or safety prnblem. b. 'pplirInts h3viog a „ritten urcer rrum a City, County or Stare Agency to correct a housing IioIation. C. Ali other applicants in the crier their applications are received. ELIGIDLL COST: A. Grant The actual cost repairs inc ludini renia(c-.-it required to c,)rrect a hazard^us cor�ition er a code violation. All hazy -dons conditions mlj0 be crrr,cted befcrc any othrr work may be done. B. Loam 1, All itcr; finIn-ed by the private iena�-r must be eligible under tie Title I home Irprove-en! Lc�in egul.tion, if a Title 11(an is used. 2. The foli)wing items are eli,ibl-I frr ;�;istance usinu ;OBG fun:i,. a. The actual cost of rehabilitation necessary to bring the proner`y to the decent, safe and sanitary standard. (This is the mandatory minimum work required for any loan). b, The actual cost tF rehabilitation necessary to bring the property to the South Florida Building Code. c. The cost of rehabilitation to correct or remove incipient violations including all physical conditions of the property which, if not repaired, would deterior,:te into actual violation of the decent, safe and -anitory standard or the South flur-1da Building rode within two years. d. The cost of general property improvements (G.P.I.). Such improvements shall not be the najcr focus of the loan, and shall usually be less than 40 percent of the cost of rehabilitation. however, in a Department Loan such improvements shall usually be less than 10 percent of the cost of rehabilitation. (Rehabilitation paid by grant funds shall not he considered part of the cost of rehabilitation for the purpose of calculating G . P . I . I s . r,wrer su^p1,ied funds shall also be excluded from such calculations.) G.P.I.°s may Le included only if the minimum improvements required are satisfied first. e. The cost of rehabilitation to convert a property, if allowed by the City of Hiani. Zoning Ordnance, by incre3sin; or iecreasing the numEer of units on the property, f. The cost of building permits and related fees required to carry out the proposed rehabilitation work, incli;ding but not limited to architect and engineerirg fees. q. The cost of ch,in;ing a permitted nonconforming u •e to meet the reC,;irements of the City of Miami Zoni:ig Ordinance. INE:LIGIBLF rGST;: 1. Gr3nts Any it^_^ not meeting the eli-iele cost requirement is ineligible. H. Loan 1. Nark so extensive as to be equivalent to new construe,ion or reconstruction of the property. (This does not exclude s.o-called "gum." rehabilitation of a property if necessary to meet the South florid3 duildin:, C(,de). ;. ixce.sivr ;.P.I.' which ?rr i-,,rIn-,i-tent with Ihr f,.?.I. rrgair^,r.nts r.tate' a ove. (However, the own- -ii pr„vido, the (iifterence in c•r,,h .,_ the turn 3. fhr rrnair or cor leer lion of suir.mir� pools, but not tho r.o;t to fill in rr ruminate then frnm the proprrv. 4. 4a'eri.+lc, fi<t.ur s, r11.ipn4,nt. or landscaping of a ty;e "r quality which substantially exceeds that CI:StomariIv r,.,d in Miami for pro;•:rFic. t.r the sane genera'. type, a, the prepFrty to be rehabilitated. (ticwevrr, the owner may provide the difference between the cost of ;uch materijl fiat,-res, .tc., as he desirr> .ind a, t.hr G,o7ram wiiallow in cash at the loan cio;inul. 5. Purchase, installation or repair of furnishings. 6. Costs of acquiring the property to be rehabilitated. 7. Any reimbursement for work done prior to the approval of the le m, or contracted for, either verbally or in writing, prior to the aprrcval of the loan. S. Payment of any lien or Judgement against the property includinq back taxes. In general, the applicant should be allrwed considerable leeway, within the guidelines to use the rehabilitation funds to his advantage, needs and desires. Except in matters of health and/or safety, the required minimum work and the FHA requirements, the owner shr,uld hr- able to choose both what should be done and the materials for the work. LOAN REPAYMENTS A, Interest for Cwner-Occupied loans ;hall be based on family income. Specific rates may be fcund in the Benefit Schedule. investor -Owners shall pay interest at the rate of nine percent per year on the remaining principal bal:rce. B, The minimum monthly payment for all Community Development loans shall be twr,nty dc!lars. This requirement shall not be wrived. C. Department loans may be made for, a period not to exceed twenty years. Loans shall be nade for the shortest tine possible without causing an undue burden on the applicant. As a guideline, the applicant should not be paying more than 4V.' of his income for housing costs nor more than 700 of his income for housing cost;, credit liability and fixed expenses. D. The borrower may pre -pay either p,.rt or all of the loan at any time with no penalty charged for such payment. I6.� annual interest charge shall be pro -rated to the date of such ;13yment. In the event that part of the loan is pre -paid, the monthly payment i,hall not be changed. f. Rorrowers for Department loans Shall be allowed a 15 calendar day grace period to pay each monthly installment with no late charges. A late charge equal to 4% of the amount due shall be added to each payment received after the grace period. the late charge shall be compounded monthly. A borrower shall ire considered delinquent if any installment i-, not paid within the grace period. Delinquency can be voided upon payment of all due installments. A borrower who is delinquent for three cor,r.ecutive months may be in default of tf,, loan. The City of "lami may take legal action against such delinquent borrowers includinq it formal "default" proceeding to take possession of the property .and sell the property to recover the unpaid loan principal. 5ur,h legal proceeding may also be used if the torrower• violates any of the conditions -of the loan specified in these Guidelines, the Loan Note, or the 'rjrtgage, if any. iiStiY.i:W_..Lflol3a:.r:.. •+&" .. SNlKi�rdi're'yyypul i k F, There shall be no reni�re- z require.! r n r Either a Grant .r a Principal Rec.c tion !rant provided, in 0 e :aye of an owner cr.cupant, `.hat tho borrower maintain; the property as his zrincipal place of resivrr.r- for a period or not In;s 03n five years from the date of loan clasir'q. In addition, bothowner-accuponts .ani in us for owners must retain title t: the property for the same period of tire. Up.-r a reaucst in writing, the City ray p e r n i t 3 In9rrnwer to transfer title befi.re the five year period has eYvircc! . A bo-r,we, who d,ns not comply with t.hi-, or,.vlsion m . t , be required to re^a, the amount prori•!• i t•y the rity of 14iami at an interest ra'.•a as .it atori in writing at the time Vf cloning. A Note .,nd Mort1we will ho required for the five year Teri A. All rhlkationr of the owner to the City shall cea�e at the end of the five year period. G. Failure of th • City rf Miami to okerni •e any option or penalty trovi Ad in tnv,v nuidnlints, tN,- dote or M,rkaoe shall not be conAdered a permanent waiver of such ,pti,n nr porlity. The following prnvision applies only to caner-accupant borrower;. H. The 7irertor of the Department of Community Development nhill have the power to waive all or part of time monthly loan repayment for Department loans above the midrum payment. Such waiver may be For a period not to exceed two years. The waiver may be extended for additional two year periods. The Director shall document the reasons for such waiver in the :ippli':ant's file. To extend a waive:, the Director must examine the reasons for the waiver and determine that thr_r have not changed or that new facts would justify an extension of the waiver. The waiver shall constitute an -O ension in the time of the loan. The minimum payment shall reduce the loan principal during the term of the waiver. Upon the expiration of the w .iver, the borrower shall resucy paying the originak y specified monthly payment and shall be informed of the time required to finish repzying the loan, WAIVERS The Q rcctur of the Department of Cormunity Development shall have the authority to waive any requirement utatcd in these guidelines to further the purpow s and objective> of the Community ^evelopment Program of the E1ty of Miami. All such waiver: sh i1 be documented in tte applicant loan file. dewever, the fullM nc items shall not be waived: 1. The requirerr,-::t th,:t property receiving a loan must Tent the rehabilitation standards of 24 CFK 80.109 and 24 JP 882.40b; and 8, the minimum ron:hly loan repayment of $:0.