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

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.

Copyright © 2002. The City of Redwood City, Housing. All rights reserved.