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History of Program and Project Area
In 1980 the City Council approved, under HUD definition as a Neighborhood
Strategy Area, the Middlefield Neighborhood Housing Conservation Program. This
program would operate as a Systematic Code Enforcement Program to upgrade an
entire neighborhood to eliminate slum and blight. The Housing Conservation
Program replaced the single family Housing Rehabilitation Program which had been
in operation since 1977. This neighborhood, recommended to City Council by the
Housing Rehabilitation Loan Committee, had unique characteristics which would
challenge Housing Advisory Staff in this new pilot program.
• The majority of dwellings were pre-1940 structures with a number of properties
listed in the Local Historic Resources Inventory.
• Approximately 79% of the housing stock was owned by absentee landlords.
• 70% of the single and multi-family units were substandard and occupied by
low-income families of various racial and ethnic origins.
• Based on the latest census data, everyone in the area was presumed low and
moderate income.
This program would begin the City's track record for granting loans to investor
owners and making an active move to encourage decent, safe and sanitary housing
for tenants and, at the same time, maintaining affordable rents. The Middlefield
Neighborhood is bounded by Spruce, Pennsylvania Avenue, Maple, Spring and Hilton
Streets. The initial pilot area was a four-block area bounded by Pine,
Middlefield Road, Stambaugh and Chestnut Streets.
By 1983, federal eligibility requirements changed and loans could only be made
to households with incomes at or below 80% of the median income for the area. In
1984, the City participated in a demonstration program utilizing Section 8
subsidies in conjunction with rehabilitation of rental units. The focus for
rehabilitation of multi-family housing was to create and maintain affordable
housing for low-income tenants. Funds for the Rental Demonstration Program were
approximated in 1985 and the City successfully competed for Rental
Rehabilitation Program funds and expanded the City's program.
Rehabilitation not only involves cleanup, fix-up and paint-up activities, but
major work to make structures more safe and comfortable, such as the
installation of up-to-date electrical, mechanical and plumbing equipment,
installation of energy conservation measures, correction of health and safety
violations and modifications for disabled access. The result is improved
housing, more attractive neighborhoods and a halt in the deterioration of older
homes.
Objective of the Home Improvement Loan Program
The objective of the Program is to maintain safe and attractive housing that is
affordable for the city’s low-income population. Increasingly, Redwood City’s
housing stock is becoming prohibitively expensive for both low-income owners and
renters; and without city assistance, many homes and apartment buildings will
deteriorate, often leaving occupants living in hazardous conditions.
The Program approaches its goal of improving the city’s affordable housing stock
in two ways: First, in order to make needed repairs to homes, the Program offers
low-interest loans to any low-income household that meets the eligibility
criteria. Second, in order to fix deteriorating rental units and buildings, the
Program offers low-interest loans to owners of rental properties where, at the
time of the loan, 51% of the units are occupied by low-income households at
affordable rents.
Major features of the Home Improvement Program loan are:
* Funded through the Community Development Block Grant (CDBG) Program.
* Loans available to improve owner-occupied residential properties or rental
properties.
* Loans up to $100,000 for owner-occupied or detached rental units; loans up to
$20,000 per unit for attached rental units.
* Available to owners whose gross annual income does not exceed 80% of HUD’s
income limits for Redwood City (see Appendices for limits). Also available to
owners of rental properties in which at least 51% of the property’s occupants
are low-income.
* Loans are amortized for fifteen years. Payments of principal and accrued
interest can be deferred for owners on fixed incomes.
* Three percent (3%) simple interest rate.
* Loan to Value ratio 80:20 before rehabilitation.
* All code items must be addressed prior to any general property improvements.
General property improvements are limited to 33% of the total loan value.
* Refinancing is permitted on a case-by-case basis in order to make loan
payments feasible for an owner who can otherwise afford to participate in the
program.
Home Improvement Loan
Program at a Glance
|
|
Owner Occupied 1-4 Units
|
Rental Units detached |
Rental Units attached |
Location
|
Citywide
|
Citywide but targeted marketing in several
neighborhoods |
Citywide but targeted marketing in several
neighborhoods |
|
Type |
Amortized loan (deferred for owners on fixed
incomes) |
Amortized loan |
Amortized loan |
|
Period |
15 years |
15 years |
15 years |
|
Interest rate |
3% |
3% |
3% |
|
Maximum Amount |
$65,000 |
$65,000 per unit |
$30,000 per unit |
|
Affordability Requirements |
N/A |
51% affordable rents for 5 years; 51% LMI
occupancy for life of loan |
51% affordable rents for 5 years; 51% LMI
occupancy for life of loan |
THE PROCESS
1. Application Process
Evaluation of application (verification of tenant profile forms and supporting
documents).
Home Improvement Loan Program staff orders preliminary title report, credit
report and pre-screens application for eligibility.
Home Improvement Loan Program staff conducts a property inspection and prepares a deficiency list.
Owner/ Home Improvement Loan Program staff announces invitation to bid.
2. Pre-Construction Phase
Open House is held by Home Improvement Loan Program staff at owner's request.
Bid Opening is set for 15-30 days after invitation to bid.
Owner and Program reviews bids and pre-approves contract.
3. Loan Approval
Application is submitted to the Home Improvement Loan Committee.
If approved, staff sends disposition letter advising owner of conditions of
approval.
4. Loan Funding
Staff holds Pre-construction conference (may be held at loan closing).
Owner signs loan documents.
Owner signs construction contract.
Deed of Trust is recorded. (72 business hours or after recision period)
Funds are transferred to construction escrow account.
5. Construction Phase
Owner issues Notice to Proceed.
Contractor begins construction.
Staff conducts inspections according to progress payments.
6. Project Completion
Final completion inspection.
Owner, contractor and staff conduct final walk-through.
Punch list as applicable.
File Notice of Completion.
Evaluation at final disbursement of funds.
Owner completes evaluation and reviews construction accounting.
LEAD BASED PAINT HAZARD REDUCTION
The City has positioned the Home improvement Loan Program for compliance with
new lead based paint laws. Staff is trained and certified to
conduct risk assessments and to test for the presence of
lead hazards.
A grant program of up to $10,000 per household has been established from
Redevelopment funds to assist owners participating in the Home Improvement
Program to remove lead hazards. Any costs above the $10,000 maximum would be
provided through the Home Improvement Loan. This program is necessary in order
to comply with Lead Based Paint rules and at the same time, not affect the
marketability of the Home Improvement Loan Program. The first such project is
under consideration at this time.
The City is attempting to coordinate capacity building as an economic
development activity in both training programs for low-income persons who want
to work in lead hazard removal and assisting small businesses to build capacity
to carry out lead hazard abatement. Discussions have been held with Opportunity
Industrialization Center West (OICW) regarding connecting certified workers with
contractors qualified to carry out lead hazard removal.
The Home Improvement Loan Committee is charged with making decisions on program
design issues, underwriting standards and approval of low interest loans to
low-income homeowners and landlords to promote preservation and affordability.
Their contributions further implement the City’s Consolidated Planning Strategy.
The Home Improvement Loan Committee contributions further implement the City’s
Consolidated Planning Strategy by increasing the affordable housing stock for
low and very low-income households.
• The Home Improvement Loan Program will preserve the housing stock, promote
decent safe and sanitary housing and remove lead based paint hazards in housing
occupied by children. This program will also provide emergency grants to low
income homeowners as well as improvements for mobile homes. |