Loading...
HomeMy WebLinkAboutResolution - 2001-R0314 - Loan Application For Housing Rehabilitation And Reconstruction Program Funding - 08/30/2001Resolution No. 2001-RO314 August 30, 2001 Item No. 25 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock, a Section 108 Loan Application to the U.S. Department of Housing and Urban Development for the funding of the Housing Rehabilitation and Reconstruction Program, and all related documents. Said Application is attached hereto and incorporated in this resolution as if fully set forth herein and shall be included in the minutes of the City Council. Passed by the City Council this 30th da: ATTEST: Re ecca Garza, City Secretary AS TO CONTENT: Nancy Haneyr Communityelopme t Manager AS TO FORM: y S. o - Assista�{ 4 Attorney cp ccd0 cs/HUD-Sec108App1.res August 21, 2001 Resolution No. 2001-RO314 SAMPLE APPLICATION FORM To complete and submit your Sample Application Form, answer the following 10 questions. For ease in preparing your responses, we suggest you download the Form and save it as a Word Document. When completed, attach the Sample Application Form to an e-mail message and send it to your local CPD Director. If you don't have e-mail, you can fax a copy of your completed Sample Application Form to the CPD Director. TEN BASIC QUESTIONS TO FINANCING YOUR ECONOMIC DE VEL OPMENT PROJECT I. Project Description Describe your project. Provide sufficient detail for a clear understanding. For example: • What is the purpose of the project? • Who will own the land? • Who will own the improvements? • What type of business(s) will be assisted? The purpose of the Section 108 application is to provide the necessary funding for the Community Development Department to offer a Housing Rehabilitation and Reconstruction Program within the city limits of Lubbock. The hope is to bring substandard housing up to the current code. This will be accomplished by rehabilitating those houses that are just in need of repair. Reconstruction will only be used when the house in not salvageable. We will strive to provide decent, safe, and sanitary housing to individual families. This will, in turn, serve as an improvement for the entire community as a whole. The land that will be targeted through the program will remain in the ownership of the homeowner. Our program will be used to assist owner/occupants, only. The City of Lubbock, through the Urban Renewal Agency Board, will place a lien on the property equal to the amount of the work completed on the residence. Community Development staff is currently administering several similar programs. The expertise necessary to carry out this project is already in place. We have four Rehab Loan Specialists. Their duties will include soliciting the application, underwriting the application, and to service it after approval. This will include accepting payments and any collection work that will be necessary. The entire loan process will be handled in house. Also, CD has five Housing Inspectors that will oversee the construction work on the homes. Since the department is currently operating a similar project, staff is also aware of the relocation guidelines that must be followed. Steps that will be followed during the process: 1. Advertise city wide for participants 2. Accept applications for program 3. Housing Inspector will complete inspection of home 4. Determination is made whether house should be rehabilitated or reconstructed 5. Write-up is completed and bids are solicited 6. Contractor is awarded job 7. Contractor and homeowner execute a contract for the pending work 8. Payments begin once the work is completed The main goal of the program is to have a large injection of funds dedicated to the improvement of the housing conditions for families of low- to moderate -income within Lubbock. We plan to utilize the program income in a way that will allow Community Development to eventually offer a self- sustaining Rehabilitation and Reconstruction Program. This will probably mean the submission of future Section 108 applications dedicated to this same idea. 2. Sources and Uses Indicate how the financial sources (including the Section 108 loan) will relate to the project costs (uses). For example: • Show each financing source and its related dollar amount; - Be sure to include the of debt and/or equity the owners of developers will be putting into the project; • Show how the sources will be allocated to the principal project cost components. Sources and Uses Statement Sources: Section 108 Loan $2,00000 Total Sources: $2,000,000 Uses: Construction/Rehab/Demo $1,776,000 Remediation of lead paint (5%) $100,000 Marketing of Program (to be done in conjunction w/other CDBG/HOME Programs) $0 Soft Costs (Title Search & Filing Fees) $24,000 Contingency (5%) $100,000 Total Uses: $2,000,000 3. Project Structure and Participants Describe the principal parties in your deal and how funds will flow to the project. For example: • Who will be the principal developer? • Who will be the developers' contractor? leasing agency? • Who will provide the equity? • Who will provide the permanent financing? • Who will own the assets upon completion? Indicate the type of entity that will act as the borrower of the Section 108 loan funds and undertake the project. For example: • The City will borrow loan funds to undertake the project; • A designated public agency (DPA) will borrow loan funds to carry out the project; • The City or its DPA will borrow loan funds and re -lend them to a "qualified" community-based development organization (CBDO) or a subrecipient to carry out the project; • The City or its DPA will borrow loan funds and re -lend them to a third party, such as a for-profit business, to carry out the project. a. The City of Lubbock will borrow the Section 108 loan funds to undertake the Housing Rehabilitation and Construction Program. b. The department organization is depicted below. Community Development 2001 Organizational Chart Citbenr of Lubbock City CouncJ Bob Caaa City Manager ��Tammy femaslu� Atsbtant City Manager �.._ Naney Haney Manager PAVilis Bmm� Fleld Serviro ConrJinator Brat Reel Senior Huusing lnspecta r i4y Adax Rusxell Sell i S vete Stmwn— RoJnyUnnvn t DaryManA. lmce Ahmnt VolanJa Pmtnno Adminbtmtive Asaismnt Terri Marti_ Rehab Lia. Spedalbt ..._.._.... _.... _.. __........... Rosa Salazar Rehab I—Specialist Carol Furrealer Rehab loan Spedaliat Sham. Pattilm Real Estate SpexMW RMnJa Ratliff-Wilri Todd Staelman Armunb Analyst ! . Contract Manneroent Cardinamr liaa Mamvia Bill }krwcrton,J� Ba�kkeeper [ Sr. PmgmmSpeeialist Jce Rangel Ls,na McGrew Rehab loan Spedalut Prot m5pvdalist Karon Mu ud i Pmgmm Sla: list Leric Eaton 1.... Prrgram Slwda. ? -Carolyn h. Ii.}9 i AJmini irativc Aaeistant i C. The homeowner themselves will provide the equity for the program. The homeowner must have a minimum of 10% equity in the house before they are qualified to apply under the program. d. The only permanent financing that will be used for the program will be the Section 108 loan funds. There will be no second party permanent financing involved. The Community Development Department will service all of the loans in-house. To reiterate, the necessary staff needed to service the loans is already in place. e. The homeowner will actually be the owner of the assets following the completion of the work. The City of Lubbock, through the Urban Renewal Agency, will have a lien on the individual properties in the amount of the funds expended on the house. This will be accomplished through a Deed of Trust. f. Individual homeowners applying for the loans will not be eligible if they have any outstanding CDBG loans. g. The developer in this project is the City of Lubbock. All work will be bid out to approved and eligible general and demolition contractors. Since the project is only for single family homeownership homes, there will be no need for a property manager. This results in no identity of interest relationship. 4. fta-yment Schedule Indicate your preferred repayment schedule. Show the amount of principal, in a minimum increment of $1,000, to be repaid annually. Note that the maximum allowable term is 20 years. Community Development is seeking to set up an 8 -year payback of the Section 108 loan. The expedited payback will allow us to quickly meet our obligations for the loan and allow us to then start accumulating program income to be used to extend the Housing Rehabilitation and Reconstruction Program. Calendar Year 2002 2003 2004 2005 2006 2007 2008 2009 Principal Amount to be Paid $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 Total Principal To Repay $290001,000 Community Development plans to make the annual principal payment of $250,000 on the required August 1 payment date. The interest payments will be made on the February 1 and August 1 dates stipulated through the Section 108 Program. This means that 50% of the annual interest will be paid on each date. 5. Collateral Apart from the underlying pledge of the CDBG entitlement, the Section 108 program requires that each loan be collateralized. Describe the collateral for the Section 108 loan; and, if applicable, the proposed collateral for other project debt. Examples of collateral might be: • A first or second lien on real property; • A lien on machinery or equipment; • The pledge of an income stream; or • A pledge of future tax increments. Beyond the CDBG Entitlement, the Section 108 Loan will be collateralized through a first or second lien on the homes that participate in the program. As has been mentioned previously, Community Development staff is currently operating several programs that result in a substantial amount of a monthly in -flow of cash. The average received in the revolving fund over the past eighteen months is approximately $39,000 per month. We have obviously had fluctuations during that period of time, but staff feels very comfortable with the stability of this source of funds. This program income comes only from our Housing programs that require some level of payback. This excludes repayment amounts from our Micro Loan Program and from our non-profit agencies. 6. Project Implementation Indicate the estimated project schedule, and at what point Section 108 financing will need to be in place. The project would require three years to complete. The Community Development Department will be ready to begin the implementation at any time. For example if the Section 108 funds become available in March 2002, staff would begin the program in April 2002. This would result in the completion of the program being in April 2005. Project completion will be 36 months from the date that the funds are made available to the Department. 7. Eligible Activitv Indicate how the activity(s) you will be undertaking is eligible under the Section 108 Loan Guarantee Program. The Housing Rehabilitation and Reconstruction Program will be carried out for the purposes of providing or improving permanent residential structures, which, upon completion, will be occupied by low- and moderate -income households. This includes but is not limited to, the rehabilitation of property for an individual homeowner. Housing activities that are eligible under the CDBG program are also eligible under Section 108. 8. National Objective Each eligible activity must meet a national objective. Indicate how your activity will meet a national objective. The program will be a Limited Clientele activity. The Housing Rehabilitation and Reconstruction Program will consist of income eligibility requirements that will limit the accessibility of the services to only low- and moderate -income persons. 9. Public Benefit Standards If your proposed project will be an eligible special economic development activity (sd set forth at 24 CFR 570.703(1)(1) or (2), it must provide a certain level of public benefit. For example, if it is a job creation or retention activity, it must create or retain a proportionate number of jobs for the dollar amount of CDBG assistance. If the project serves a low- and moderate -income community, the amount borrowed must result in a proportionate level of benefit to low- and moderate - income persons living within the service area. Therefore, if applicable, indicate the following: The total amount of CDBG funds (e.g., Section 108 funds, EDI, BEDI, and any other CDBG-related funds) to be used in the project: • The total number of permanent full-time equivalent jobs to be created or retained as a result of the project: • The total number of low- and moderate -income persons living within the project's service area: ; This project will not include an eligible special economic development activity nor will it be expected to provide a certain level of public benefit, so the public benefits standard will not be applicable. 10. Whom May We Contact In order for a CPD Representative to contact you directly, please provide the following: • The name and title of contact person • A street mailing address (No PO Boxes please.) • A telephone number and fax number • An e-mail address Todd Steeman, Community Development Contracts Manager 162513"' Street Lubbock, TX 79401 Phone: (806) 775-2297 Fax: (806) 775-3081 Tstee1man@mai1.ci.1ubbock.tx.us SUBMITTING YOUR SAMPLE APPLICATION FORM To submit your Sample Application Form, simply attach it to an e-mail message scheduled for delivery to your local CPD Director. Upon receipt of your Sample Application Form, a local CPD Representative will contact you. At that time, you'll have an opportunity to obtain answers to any additional questions you may have about Section 108 financing.