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Res 2626 9/16/1980RESOLUTION NO. .5CO C A RESOLUTION AMENDING THE CITY OF WICHITA FALLS COMMUNITY DEVELOPMENT BLOCK GRANT HOUSING REHA- BILITATION ASSISTANCE PROGRAM WHEREAS, Resolution 2380, August 7 , 1980, established a housing rehabilitation program for the City of Wichita Falls, and; WHEREAS, the FY 1979-80 pilot rehabilitation program has been completed, and; WHEREAS, the pilot rehabilitation program demonstrated a need to amend certain areas of the program. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF ALDERMEN OF THE CITY OF WICHITA FALLS, TEXAS, THAT: The Rehabilitation Assistance Program is hereby amended in accordance with the attached document. PASSED AND APPROVED THIS THE 16th day of September,1980. e e . M A Y O R ATTEST: ITY CLERK REHABILITATION ASSISTANCE PROGRAMS WICHITA FALLS,TEXAS I, PURPOSE OF THE PROGRAM A. The City of Wichita Falls, Texas, acting by and through its Planning Division, shall provide financial assistance to those applicants of Wichita Falls who reside in those areas specified in the grant application for Community Development Block Grant funds as approved by the Department of Housing and Urban Development and who meet the eligibility criteria specified herein. B. The sole purpose of the financial assistance provided shall be to provide decent, safe and sanitary housing for low and moderate income residents by rehabilitation of existing structures to a condition which brings the structures into compliance with the housing code of the City of Wichita Falls,Texas. C. This program shall be operated in accordance with all applicable rules and regulations of the City of Wichita Falls, the State of Texas, and the Department of Housing and Urban Development. II. DESIGNATED AUTHORITY A. The Planning Division of the City of Wichita Falls, Texas, shall be the designated authority to administer the rehabilitation program of the City of Wichita Falls. B. The office of the Director of the Planning Division shall be the office designated as the approval officer. C. The office of the Community Development Section shall be the office which is designated the authority to prepare and submit applications for approval on behalf of the applicants. This authority shall apply to all housing related programs. III. ELIGIBILITY REQUIREMENTS FOR CDBG FINANCIAL ASSISTANCE A. The applicant must be an individual or family who owns and occupies a residential unit. The applicant will be considered the owner if he: 1. Is the "owner of record"on the books at the County Court House. 2. Possesses a valid contract for deed which has been or may be filed for record at the County Court House and which includes reasonable rights of redemption and quiet and peaceable possession of the property, or 3. Possesses a life estate which has been, or may be filed for record at the County Court House. B. The owner occupied structure must be located in any of the following census tracts: 101 105 109 113 102 106 110 114 103 107 111 116 104 108 112 127 C. Since Community Development Block Grant funds are intended to serve low and moderate income residents or hardship cases who have no other means of financing repair or improvements, such funds shall not be available to any owner occupants who have substantial financial resources available. D. To qualify for assistance, the income of the applicant shall not exceed the limits defined by the Department of Housing and Urban Development for eligibility for the Section 8 Housing Assistance Payments Program. The income limits of the CDBG rehabilitation program shall be automatically amended by changes in the Section 8 guidelines as authorized by the Department of Housing and Urban Development. All income by any family member who resides in the dwelling unit of the applicant shall be counted as a part of the applicant's income providing such person has a security interest in the property. E. Secondary Requirement In cases where the applicant's income exceeds the limits specified in Section III D, the applicant will be eligible for financial assistance for rehabilitation if the housing expense of the applicant exceeds 25% of his monthly gross income. Housing expense shall be determined by totaling the following monthly expenses on the property to be rehabilitated: 1. Mortgage Principal and Interest 2. Property Taxes 3. Property Insurance 4. Property Utility Cost (Not Including Telephone) 5. Property Maintenance Cost Property maintenance and utility costs shall be determined by the square footage of the living area of the structure as shown on scheduled charts as approved by the area office of the Department of Housing and Urban Development. Said charts shall be regularly updated (at least once each year) to make allowance for inflation costs. IV. INCLUDABLE COST FOR CDBG FUNDED REHABILITATION CDBG rehabilitation funds shall be used only for those repairs and/or replacements which are necessary to correct actual or incipient violations of the Housing Codes of the City of Wichita Falls, Texas, or which have been designated as eligible items and identified by notice from the Department of Housing and Urban Development or as named in the HUD Rehabilitation Financing Handbook 7375.1 Rev., or other such handbooks and/or notices which may be received from the Department of Housing and Urban Development. V. CDBG REHABILITATION ASSISTANCE AMOUNTS A, When all qualifications have been met by the Applicant, he shall be entitled to receive CDBG rehabilitation assistance in the amount necessary to bring the property up to meet minimum property standards and the City Codes but not to exceed $7,500.00. No applicant may receive more than one CDBG rehabilitation assistance. B. In the event $7,500.00 is not sufficient to bring the property up to meet minimum property standards and the City Codes, CDBG rehabilitation assistance will not be approved unless: 1. Used in conjunction with an approved Section 312 Loan of the Department of HUD, or 2. The applicant places the necessary funds in escrow with the CDBG rehabilitation assistance funds when the contract is signed, or 3.Used in conjunction with an approved rehabilitation loan from a private investor as defined in Section VI and VII. C. All funds to be used in rehabilitation shall be placed in the escrow account, regardless of the source of funds. VI. CDBG USED IN CONJUNCTION WITH OTHER REHABILITATION FUNDS A. Section 312 Rehabilitation Loans The Planning Division may submit applications for Section 312 rehabilitation loans to the Department of Housing and Urban Development on behalf of applicants who meet the requirements of the Section 312 Program at the time of application. All rules and regulations of the Department of Housing and Urban Development governing such loans shall be adhered to, and documentation of such compliance shall be maintained in the Planning Division applicant's file. B. CDBG rehabilitation funds may be used in conjunction with Section 312 rehabilitation loans; however, CDBG funds shall not exceed the maximum amount specified in Section V or the amount necessary to reduce the applicant's monthly housing expense, after rehabilitation, to 25% of the applicant's gross monthly income, whichever is less. VII. LOAN SUBSIDY PROGRAM A. CDBG rehabilitation funds may be used to subsidize interest rates for rehabilitation loans secured from private investors such as banks, savings and loans, mortgage companies, etc. The subsidy paid from CDBG Funds shall be restricted to payments necessary to reduce the interest rate from the current market rate to a more favorable rate to be determined by the private lending institution and the Planning Division of the City of Wichita Falls. The Planning Division shall prepare and submit the loan application to the private investor for approval. The private investor shall be given the first position of security by means of a promissory note and mortgage from the applicant to the private investor. B. If there is an existing mortgage on the property to be rehabilitated, the private investor may, at their discretion, disapprove the application or accept a secondary mortgage position. Terms of the mortgage shall not exceed ten (10) years or a maximum amount of 10,000. C. CDBG funds may be used in conjunction with a subsidized loan;however, CDBG funds shall not exceed the maximum amount specified in Section V or the amount necessary to reduce the applicant's monthly housing expense after rehabilitation to 25% of the applicant's gross monthly income. In such cases,the City's security requirement shall be secondary to the private institution's security interest. VIII. SECURITY REQUIREMENTS A. A Promissory Note and Mortgage to the City of Wichita Falls, Texas, or such Agency as they may designate shall be required on every CDBG rehabilitation assistance. Said Note and Mortgage will be properly filed and include the following provisions: 1.Zero percent (0%) interest rate. 2. No payments shall be due from the property owner as long as the property is the legal residence of the recipient. 3.If the property is transferred by sale or the recipient ceases to occupy the property as his legal residence, repayments of the CDBG rehabilitation assistance shall be due and payable immediately. At the end of each year, the repayment amount shall be reduced by twenty percent (20%) or one-fifth (1/5) of the total amount of the CDBG rehabilitation assistance until a zero balance is obtained at the end of five (5) years. For example, on the maximum CDBG rehabilitation assistance of $7,500.00 the following repayment schedule would apply: Date of Mortgage Repayment Amount End of Year 1 6,000 End of Year 2 4,500 End of Year 3 3,000 End of Year 4 1,500 End of Year 5 0- 4. The City of Wichita Falls or such agency as they may designate will file a Release of Mortgage upon receipt of payment, or at the conclusion of the fifth (5th) year of occupancy by the applicant. 5. The requirement of security documents (Note and Mortgage) may be waived by the Director of Planning when it is determined to be in the best interest of the program. IX. OTHER REHABILITATION ASSISTANCE CDBG funds may be used for temporary off-site relocation expenses for those displaced temporarily by rehabilitation activities being carried out with CDBG Assistance. X. HISTORIC PRESERVATION Upon approval of the City Council, the use of CDBG funds for rehabilitation assistance may include property listed on the National, State, and Local Registers of Historic Places. XI. EMERGENCY REPAIRS A. The Planning Division shall have the authority to grant funds for emergency repairs on any structure which it determines to be feasible. Such funds shall be granted for the following reasons: 1. Any act of nature resulting in critical damage to the structural condition. 2. To eliminate specific hazards to health and sanitation. B. The Director of Planning and the City Manager or their designated representative(s) shall review all applications for emergency repairs prior to approving a grant, and the decision of the review shall be final. C. The applicant must meet the eligibility requirements for the CDBG rehabilitation assistance to receive emergency repairs. The Division shall have the authority to waive prior verification of eligibility in cases where an immediate danger to health, safety, or sanitation exists. The applicant shall be notified that in event the verification of eligibility should reveal the applicant does not fall within the requirements, they shall be required to make full restitution to the Department. D. No applicant shall be eligible to receive more than one emergency repair in any one year and not more than $750.00 per repair. XII. CONTINGENCY FUNDS At the discretion of the Community Development Section, additional funding not to exceed ten percent (10%) of the original contract, or $750.00, whichever is less, may be utilized as a contingency fund to pay the cost of repair and/or replacement of actual or incipient code violations which were not observed and included in the original contract. Example 1: Termite infestation and damage not discovered until floor repairs were begun. Example 2: Collapsed sewer lines not discovered until roto-rooting was attempted. XIII. FILES AND REPORTS The Planning Division shall maintain accurate files and records on each applicant and all documentation pertinent to the applicant shall be included. Such files shall be open for inspection as to qualifications, bid procedures, inspections of work, and payments from the escrow account. XIV. ESCROW ACCOUNTS All funds for CDBG rehabilitation assistance shall be placed in the rehabilitation escrow account as recommended by the Department of Housing and Urban Development and as required on all Section 312 rehabilitation loans. Checks for rehabilitation assistance shall be made payable to the applicant, who shall endorse said check at the time the contract is signed. The contractor shall not be allowed to make preliminary withdrawals from this account on any CDBG rehabilitation assistance. Such funds deposited in escrow shall serve as a statutory bond for the contractor and shall not be disbursed until all proper lien waivers are received. XV. BIDDING PROCEDURE A. The homeowner shall have the right to select any qualified contractor. If the contractor selected has not been previously approved by the Department, he shall submit contractor qualification forms, a credit report, and a Certificate of Insurance. If the contractor is approved by the Department, then he will be awarded the contract. B. The homeowner shall have the right to select more than one contractor for competitive bidding. All contractors bidding must meet Department's requirements to be eligible to do rehabilitation. If the homeowner has no preference, two or more contractors will be assigned from the approved contractor rotation file to bid on their job. XVI. CONTRACTOR QUALIFICATIONS A. The Planning Division shall adopt and abide by the qualifications and regulations established by the Department of Housing and Urban Development Rehabilitation Handbook, February 1974, and all subsequent revisions thereto. B. Contractor shall carry insurance as required by the City of Wichita Falls and State of Texas. XVII. RECEIPT OF APPLICATIONS The Planning Division will accept applications for verification from owner occupants of the specified area. All applications shall be verified as to eligibility and shall be graded on the first working day of each month. Those applications receiving the highest number of points shall be considered as first priority applications. The Rehabilitation Specialist shall be responsible for the grading of the applications in accordance with the following schedule. 1. Income Maximum 5 points One point for each 10% below eligibility limit. 2. Housing Conditions Maximum 10 points Lack of essential plumbing 3 points Lack of essential heating 2 points Lack of adequate electrical 2 points Condition of foundation, roof, or exterior walls 2 points Condition of windows and doors 1 point 3. Age of Occupant or Handicapped Maximum 5 points One point for every 5 years over 60 of head of household or 5 points for handicapped 4.Female head of household 2 points 5. Large family above 4 dependents) 2 points 6. Length of time as qualified applicant Maximum 6 points One point for each six months Total maximum points 30 points XVIII. CONTRACTING REHABILITATION WORK A. This section sets forth requirements and procedures with respect to construction contracts for rehabilitation financed through a rehabilitation grant, a rehabilitation loan, or both. Construction work for rehabilitation financed through a rehabilitation grant and/or a rehabilitation loan shall be undertaken only through a written contract between the contractor and the recipient of the grant or loan. The Planning Division shall assist each applicant in arranging for and obtaining an acceptable construction contract. 1.Form of Contract The construction contract will consist of a single document signed by the contractor and accepted by the applicant, only following approval of the rehabilitation grant and/or loan. It shall contain a bid and proposal by the contractor and the general conditions, as well as the specifications for the work to be performed. 2. Acceptable Contractors The Planning Division shall always exercise care and good judgment in approving a contractor. An approved contractor shall be of good reputation, financially sound, have adequate financial resources to carry out his contract, and be qualified to do the required work. The Division shall frequently monitor its list of contractors to assure that they continue to be acceptable. 3. The contractor shall be required to obtain all permits required by the City of Wichita Falls, and shall require the same of his sub-contractors. Copies of all permits shall be submitted to the Planning Division with all other final papers before disbursement is made from the escrow account. XIX. INSPECTION OF REHABILITATION WORK A. This section sets forth the requirements for the inspection of rehabilitation work financed in whole or in part with a rehabilitation grant and/or loan. B. Responsibility for making inspections The Planning Division shall arrange inspections of construction work in cases involving a residential loan and for such loans under $5,000 regardless of the number of dwelling units involved. To accomplish this, the Planning Division shall ensure: 1. Compliance inspection, as necessary, to assure that the construction work has been completed in accordance with the construction contract. 2.A final inspection to determine that the construction work has been completed in accordance with the construction contract. C. Final Inspection Upon completion of the rehabilitation work and receipt of the contractor's invoice containing his certification of satisfactory completion of all the work in accordance with the contract and his warranty, the Planning Division shall arrange for inspection of the completed work. D. Making Final Payment When the final inspection determines that the work has been satisfactorily completed in accordance with the contract, the Planning Division shall obtain from the contractor a release of liens, and a copy of each warranty due the applicant for the work. After receipt of a release of liens, including releases from all subcontractors and suppliers and a copy of each warranty, the Division shall make final payment from the escrow account in accordance with rules and regulations. E. One Year Guarantee on Work by Contractor All work performed by the contractor is covered by a one (1) year guarantee. For a period of one year the homeowner may require the contractor to correct significant defects and inadequacies in the work performed under his contract. XX. CHANGES,WAIVERS, AND/OR CONFLICTS A. The City Council shall have the right to change, modify, or revoke all or any part of the plan by a majority vote of the Council. B. The right to waive minimum property standard requirements or code violations shall be retained by the Planning Division providing such waiver will not diminish marketability of the property, when long-standing local acceptance is evident or topography or the architecture of the structure makes compliance unfeasible.