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HomeMy WebLinkAboutReso 1984-11689 RESOLUTl ON NO. 11689 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A RENTAL REHABILITATION PROGRAM DESCRIPTION AND RELATED DOCUMENTS AND AUTHORIZING SUBMITTAL TO HUD The City Council of the City of Chula Vista does hereby resolve as follows: WHEREAS, the City has been informed by the U.S. Department of Housing and Urban Development (HUD) that funds are available to the City in the amount of $61,800 for the implementation of the HUD Rental Rehabilitation Program, which program is aimed at improvement of substandard rental units occupied by lower income families; and, WHEREAS, the City of Chula Vista is desirous of providing assistance for improvement of substandard rental units occupied by lower income families; and, WHEREAS, eligibility and application for the available HUD funds require that a local Rental Rehabilitation Program be de- signed with public input; and, WHEREAS, a local Rental Rehabilitation Program has been designed anc) a public hearing has been conducted to consider that design; and, WHEREAS, submittal documents, including a narrative program Description, Certifications, and a Tenant Application policy have been prepared and attached as Exhibits A, B, and C, respectively, and are incorporated her8in as though fully set forth. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula vista hereby approves the Rental Rehabilitation Program description and related documents, authorizes the Mayor to sign said documents as necessary, and authorizes the City Manager to submit said documents to HUD. ~y~ Paul G. Desroc ers, Community Development Director AP;;0'!~~ Thomas J. Harron, City Attorney ADOPTED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF ILA VISTA, CALIFORNIA, this 84 ,by the following vote, to-wit: Councilmen Scott, Malcolm, Cox, Moore, McCandliss 3rd day of July :S: 'ES: Councilmen None >rAIN: ColJ'lcilmen None iENT: Councilmen None f!~ City of Chula Vista tn&., -:I?; City Clerk ~ TE OF CALIFORNIA ) INTY OF SAN DIEGO ) s s. ( OF CHULA VISTA ) I, JENNIE M. FULASZ, CMC, CITY CLERK of the City of Chula Vista, California, HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 11689 ,and that the same has not been amended or repealed. ED (seal) City Clerk .660 R ~\\~'l,C\ nding Approval ntal Rehabilitation Program u.s. Department of Housing and Urban Development ~ ,r Community Planning and Development 1527R ler Section 17 of The United States Housing Act of 1937 (42 U.S.C. 14370) ~ity ofChula_-'lista__ "antee's Address Community Development Department 276 Fourth Street Chula Vista, Ca. 92010 _...-~-_...._- Original Funding Approval Amendment (No.) -- - 2. Grant No. R-84-MC-06-0540 1me of Grantee - - 4. HUD Geographic Locator Code No. 06-0720 ls. a) Date of HUDReC81pt of Pr~g-ram Descnpt-;on--7-/9 /84 ----- b) Date Grantee Notified of Approval 9/14/84 c) FIscal Year 1984 - - - -- ltegory of Rental Rehabilitation Program Grant for this Funding Action (Check Only One) Direct Formula Grantee X~ City over 50,000 --, Urban County I] Consortium , State Grantee [-J HUD-Administered Rental Rehabilitation Program Small City Grantee f1 HUD-Administered City Grantee nount of Rental Rehabilitation Program (RRP) Grant FY: 1984 FY: FY: FY: FY: Amount of RRP funds previously obligated for this grantee L_ Amount of RRP funds currently being obligated for this grantee 6.1_,8 QQ. Amount of RRP funds currently being deobligated for this grantee ~-- New total of RAP funds now obligated for this grantee _61,800 lecial conditions (Check applicable box) Xl Not applicable [-~ Attached \ U.S. ~epartment of Housing and Urban Development -~hcd.l-"-l t l\.t:-:::::------ --- -~: D . Ben'amin F. Bobo Mana er ;k l/(rr~/ DateSEP 1 <1 1984 HUO-40015 (8-84) 24 CFR Part 511 Instructions for Completing the Funding Approval Form and Grant Agreement This form and the Grant Agreement should be filled out in five (5) copies. One (1) copy should be held for informational purposes, one (1) copy should be sent to the RAD, and three (3) copies should be transmitted to tl grantee for signature. The grantee should be requested to keep one (1) copy for its records and to return two (2) signed original copies to the Field ~ffice. Funding Approval Form Block No. 1. Enter the Grantee's name as shown in Item 4 of Standard Form 424. 2. Enter the number shown in item 30 of Standard Form 424, and indicate the Fiscal Year for which the funding is to be made. (See the memorandum dated 7/10/84, which establishes the system for assigning Grant numbers.) 3. Enter the Grantee's complete address as shown in Item 4 of Standard Form 424. 4. Enter the appropriate HUD Geographic Locator Code available from the Geographic Codes System Directory (See computer print-out-D.71AAC). 5. a. Enter the month, day and year that the submission was reqeived. b. Enter the date that the grantee is notified of funding approval. This will be the date appearing on the letter transmitting the HUD Form 40015 to the grantee and is considered the point of obligation for accounting purposes. c. Enter the appropriate fiscal year for the source of funds involved. 6. Check the appropriate box. Check "Original Funding Approval" for the first funding approval form executed under the grant number shown in Block NO.2. This is the Funding Approval for the formula allocation. Check "Amendment" for subsequent Funding Approval forms executed under the same grant number. Number amendments under the grant number consecutively starting with "1". Amendments may be for the purpose of reallocating funds or for the purpose of deobligating funds. 7. Check the appropriate box. 8. Fill out the correct fiscal year(s). In filling out this section, be sure to enter the amounts of funds previously obligated, currently being obligated or deobligated, and the new totals under the correct fiscal year for the source of funds. For example, in Fiscal Year 1985, funds may be deobligated from a grantee's 1984 grant or additional funds may be obligated for the grantee from 1984 funds. Such obligations/deobligations would be shown under a Fiscal Year 1984 column not under 1985. a. If this is the funding approval form for the [Irantee's formula amount for the fiscal year, th line will be blank. If this is a funding approval form for the purpose of reallocating or deobligatlng funds, enter the amount from line of the previous funding form. b. Enter the amount of funds now being obligated for the grantee. If this is the funding approval form for the grantee's formula amount for this fiscal year, enter that amount. If this is a reallocation of funds enter the amount of funds being reallocated. c. Enter the amount of funds being deobligated (- for the grantee. d. Enter the new total of funds currently obligatec for the grantee. 9. Add Special conditions, if applicable. Grant Agreement 1. Fill in the name of the Grantee in the first paragraph. 2. Fill in the appropriate Fiscal Year in sub-paragrap 1 of the second paragraph. irant Agreement U.S. Department 01 Housing and Urban Development Office of Community Planning and Development ~ 1r lis Grant Agreement is made by and between the 3partment of Housing and Urban Development (HUD) and .he City of Chula Vista, Ca. (the Grantee) Jrsuant to the authority of Section 17 of the United States Dusing Act of 1937 (42 USC 14370). The Grantee's approved .ogram Description and the HUD regulations at 24 CFR Ht 511 (as now in effect and as may be amended from ne to time), which are incorporated by reference, together ,th the HUD Funding Approval Form 40015 and any speciai mditions, which are hereto attached, constitute part of this Jreement. reliance upon and in consideration of the mutual presentations and obligations hereunder, HUD and the 'antee agree as follows: Subject to the provisions of this Grant Agreement, HUD will make the funding assistance for Fiscal Year 1984 specified in the attached HUD Funding Approval Form 40015 available to the Grantee upon execution of the Agreement by the parties. The obligation and utilization of the funding assistance provided is subject to the requirements of the regulations and any special conditions set forth in the HUD Funding Approval Form 40015, including the requirement for a release of funds by HUD under the Environmental Review Procedures at 24 CFR Part 58 for any activities requiring such release. 3. HUD's payment of funds under this Grant is aiso subject to the Grantee's compliance with HUD's electronic funds transfer and information reporting procedures issued pursuant to 24 CFR 511.74. To facilitate such payment, the grantee hereby designates Computer Data Systems, Inc. (CDSI), and its agent bank, Maryland National Bank, as its attorney-in-fact to receive grant payments pursuant to this Agreement from HUD. This power of attorney in no way authorizes any assignment of the right to use those funds for their benefit. 4. To the extent authorized by the HUD regulations at 24 CFR Part 511.33 and 511.82, HUD may, by its execution of an amendment to the HUD Funding Approval Form 40015 deobligate funds previously awarded to the grantee without the Grantee's execution of such form or other consent. Such a deobligation of Rental Rehabilitation Program grant funds may also cause a recapture of a commensurate amount of Section 8 Existing Certificate or voucher contract authority. 5. The Grantee further agrees to accept responsibility for adherence to the Agreement by subrecipient entities and property owners to which it makes funding assistance hereunder available. lr: U.S, ~epartment 01 Hous~~~nd Urban Development .J' ,- , I Title I t:t("<<i l Lll (C( , _ p Dr. Benjamin,~.~Bobo N~Il~~er " Ir: Grantee I .,~ I DatSEP 10 1984 / ;' / ,- -I Tit:ayor ] Date: 9/21/84 ^ /IY'l HUD-40015,1 (8.84) 24 CFR Part 511 4 REPORT ON HUD RENTAL REHABILITATION PROGRAM by Dave Gustafson, Housing Coordinator July 3, 1984 1. I NTRODUCTI ON This report is to aid the City Council and the public's consideration of the recently enacted HUD Rental Rehabil itation Program, under which the City is eligible for $61,800 in Federal Grant funds for FY 1984-85. It will discuss the federal intentions for the program, federal funding and federal restrictions on local program design, and local program design recommendations. II. FEDERAL PROGRAM INTENTIONS The Rental Rehabilitation Program of the 1983 Housing and Urban-Rural Recovery Act is desi gned to increase the supply of standard hous i ng units affordable to lower-income families. The program uses a dual approach: it provides grants to localities for rehabilitation assistance to private property owners of substandard multi-family units occupied by lower-income families; and it provides rental subsidies through the 1 oca 1 housi ng authori ty to the 1 ow-i ncome tenants of those rehabil itated units to assure hous i ng affordabil i ty. The provi si on of the rental subs i di es to the units' tenants avoi ds those frequent circumstances where debt service incurred by property owners is passed on to the tenants in higher rents to the degree that the tenants' rents are no longer affordable. The Rental Rehabilitation Program's creation reflects the recent federal emphasis on improving and preserving the nation's existing housing stock rather than underwriti ng new housi ng constructi on. Rehabil i tati on is seen as more cost effective and more socially appropriate than building new rental units. The program al so responds to the federal trend towards local determination. After establishing basic benefit and management requirements, the enabling Act allows broad opportunities for local program design and flexibility. III. FEDERAL FUNDING AND RESTRICTIONS ON PROGRAM DESIGN The Rental Rehabil i tati on Program allocates grants for property rehabilitation assistance to localities of 50,000 people or more using a formula which takes into account locality, income levels, and housing stock conditions. As a result of that allocation process, Chula Vista is eligible to $61,800. In addition, HUD has set aside 12 Section 8 Existing Rental Subsidy Certificates for the Housing Authority to use in ,'/ y'-... / C'r;' -/ko/ Chula Vista, based on the formula of one certificate for each $5,000 of Rehabil itation Grant funds. Program funding on a national basis is assured by the Act for three years, but local funding for three years will be based on performance evaluation, with the possibility of increase, decrease, or elimination of funding over the three-year period. The basic federal program requirements are as follows: 1. Between 70% and 100% of rehabil itated units must be occupied by lower-income households. To maximize lower-income benefit, 100% of all the units in any project must be occupied initially after rehabilitation by lower-income households. Localities may ask for waivers to allow 70% such occupancy where local circumstances make such an occupancy requirement too restrictive. 2. The program may be operated only in neighborhoods where the median income does not exceed 80% of the area median income. This requirement is intended to guarantee the continued affordability of the rehabilitated units by avoiding the inclusion of projects in neighborhoods clearly "gentrifying"--transitioning to middle and upper-middle income tenancy. 3. The program can be operated only in nei ghborhoods where rents are unl ikely to increase over a five-year period to a level above the locality's prevailing market rents during that period. Thi s requi rement is also intended to guarantee the conti nued affordability of the rehabilitated units by avoiding the inclusion of projects in neighborhoods clearly "gentrifying"--transitioning to middle and upper-middle income tenancy. 4. A minimum of 70% of all units rehabilitated under the local program must be two bedrooms or larger. Th is requirement responds to the concl us ions of Housing Study, which indicates that large households have the most serious housing problems. the Annual 1 ow- income 5. Project units for rehabilitation must have at least one substandard condition, and all substandard conditions must be corrected. This requirement assures that rehabilitation will be needed and significant, not just cosmetic. 6. Priority will be given to substandard units occupied by very low-income families. - 2 - ,).2 - //(;,F:; This requirement emphasizes the two goals of the program, improvement of substandard rental units and housing assistance for large very low-income families. 7. The property owners must agree to a lO-year period during which they will not convert the assisted uni ts to condomi ni urns and wi 11 not discriminate against tenants receiving housing assistance. This requirement is intended to preserve program benefit to tenants for at least 10 years. 8. No rent control provisions not generally applicable to the locality can be applied to the assisted units. 9. A written Tenant Assistance Policy must be established with public input which assures that financial and technical assi stance for relocation must be provided to low-income households displaced by program action, and that very low-income families cannot be displaced from a unit by non very low-income families. 10. Matching of public and private funds is required, with no more than 50% of rehabilitation cost per unit, to a maximum of $5,000, coming from program funds. IV. PROGRAM DESIGN RECOMMENDATIONS There are numerous ways in which a City could design a rental rehabilitation program in response to the HUD requirements. Flexibility has been incorporated in the regu1 ati ons so that 1 oca 1 iti es can best respond to the characteristics of the local housing environment and the operating procedures of the locality. This section considers Chula Vista conditions and makes recommendations for program design. Unlike many cities, Chu1a Vista has already been pursuing rental rehabil itation for some time under the CHIP Program. As a result, we have mechanisms and staff in place which can be used to do the HUD Renta 1 Rehabil i tati on Program. The regu1 at ions of the Community Development Block Grant Program and the HUD Rental Rehabilitation Program are dissimilar enough that the two programs must remain distinct, rather than combining the funding under one program design. However, many i n-p 1 ace components of the CH IP Program can be used to pursue the Rental Rehabilitation Program, and utilization of those components will be recommended wherever possible. The following recommendations are made regarding the design of a Rental Rehabilitation Program: 1. Administration: Use the Housing Coordinator, the CHIP Housing Rehab,litation Administrator, and the Housing Rehabilitation Special ist to staff the Rental Rehabil itation Program. Inspections, loan packaging, contractor bidding and negotiation, - 3 - j/ . l!fJ? and tenant income determinations similar to CHIP rental procedures will be required. Rental projects can be initially evaluated for either the CHIP or HUD programs and processed through the most appropriate program. Due to this parallel processing, current staffing level should be adequate to administer the new program. 2. Project Selection: Rental projects should be considered for selectlon by the CHIP Loan Committee (the Mayor, Finance Director, Community Development Director, and Building and Housing Director). Projects should be considered on a first-come/first- serve basis and selected according to how the projects satisfy the goals of the program. Those goals would be: a. Maximum emphasis on correction of the most substandard units, especially those occupied by very low-income families. b. Maximum emphasis on higher bedroom size units, with a program- average minimum of 70% two-bedroom or above. c. Maximization of investment rehabilitation projects. d. Minimization of displacement of tenants. of private do 11 ars in 3. Form of Ass i stance: The HUD Grant funds can be passed on to program clients in most any form the City chooses. Possibilities include front-end interest subsidies, below-market interest rate direct loans, principal reduction grants, repayable interest- bearing deferred loans, etc. It is recommended that the HUD funds be used to give forgiven deferred loans. The deferred loan would have a term of 10 years, with no interest accrual. If a project were maintained as a rental project for the la-year term, the loan would be completely forgiven. If the loan were paid off prior to the la-year term, the entire principal would be payable. This forgiven deferred loan vehicle is recommended because it leverages the maximum amount of private dollars. Providing a port i on of the rehab costs wi thout debt servi ce increases the amount of pri vate doll ars the bank wi 11 be wi 11 i ng to loan to a property owner. The amount of debt the project income will service can all come from the bank, since no project revenues are needed to pay the deferred loan. The forgiven deferred loan also acts as a stronger incentive to property owners to make the commitment to rehabilitate, as it represents potentially debt-free improvement funds. Given the experi ence of the low 1 evel of 1 andl ord assi stance 1 endi ng under the CHIP Program, it is assumed that a strong incentive is needed under the Rental Rehabil itation Program in order to create loan activity. - 4 - ~z -116Ff' Additionally, using a 10-year deferred loan forgiven only at the completion of the term gives the City the necessary leverage to enforce the requi red 10-year owner commitment to rentals and to non-discrimination against the recipients of housing assistance subsi di es. A 1 i en wou1 d be placed on the property securi ng the loan and stipulating that condominium conversion or such discrimination would be events of default which would make the full loan due and payable. It ;s also recommended that the forgiven deferred loans be assumab 1 e, so that a sale of the property mi ght occur and the commitments to rentals and the acceptance of assisted tenants would be sustained. Al though substantial recapture of funds would not occur using the forgiven deferred loan mechanism, since most loans would likely go to term and be forgiven, recapture of funds under this program is somewhat probl emmatica1 and is not necessarily bei ng encouraged by HUD. The program has been designed as a sp1 it-subsidy program, with rehabilitation financing combined with tenant rental subsidies. But the subsidies are provided only initially, at a rate of one subsidy per $5,000 of initial rental rehabilitation grant money. If loan money is recaptured and re10aned, no further subsidies will be available to accompany the new loans. The component which provides tenant affordability will be missing. 4. Amount of Subsidy: It is recommended that the maximum subsidy be $o,UUU per Unlt or 50% of the rehabilitation cost, whichever is less. A minimum subsidy per unit of $1,000 is recommended. 5. Area of Operation: The area of operation would be identical to the CHIP program boundaries. The neighborhoods within the boundaries are predominantly low income, and the rents in those neighborhoods are likely to escalate less rapidly than the City as a whole. 6. Percentage of Low Income Occu ancy: The City should apply for the walver w lC a ows occupancy after rehabilitation by low income households, rather than 100%. No nei ghborhoods in Chul a Vista have such concentrations of low-income households that there would be many rental projects with 100% low-income occupancy. 7. Tenant Assistance Policy: The program Tenant Assistance Policy would guarantee technlcal and financial assistance to all displaced low-income households, under the requirements of the Federal Uniform Property Acquisition and Relocation Assistance Act, which could cost as much as $4500 per displaced household. No very low-income tenants would be displaced in favor of non very-10w- income tenants. - 5 - 116'6') t\- 8. Lending Services: Discussions are under way with Bank of America regardlng lendlng services for the program. It is unclear at this time whether the bank can provide the desired service, which would be as general depository for program funds, lender for the private portion of rehabilitation costs, and originator for program deferred loans. Program participation by Bank of America would be most advantageous, since CHIP landlord assistance loans are serviced through the bank. A specific rental project could be processed through either program as most appropriate. Negotiations will be completed prior to the execution of the funding contract between the City and HUD. V. CONCLUSION The program as proposed responds to the basic HUD Program requirements and intentions and to the particular housing environment of Chu1a Vista. As designed, the program would be equitable. It could be practically managed with existing staff levels. How effective it would be remains to be seem. It is clearly a program that would need to be marketed, given a rental c1 imate which property enhancement at any cost holds few incentives for owners. Whether the combi nati on of HUD restri cti ons, 1 oca 1 criteri a, and fi nanci ng mechanisms creates sufficient benefit for multi-family property owners must be tested in the market place. In this light, the program should be viewed as a demonstration program. For minimal expense, the City can test the program for one year to see if it should be pursued, modified, or scrapped. In the meantime, the City would be making a good faith effort in pursuing housing assistance in the form now emphasized by HUD. DG:nr WPC 090lX - 6 - f..- I \ to ~''\ EXHIIIT A (Revised 7/31/84) CITY OF CHULA VISTA RENTAL REHABILITATlbN PROGRAM PROGRAM DESCRIPTION The City of Chula Vista will encourage and assist in the rehabil itation of residential rental units in Chula Vista under the Rental Rehabilitation Program authorized by the U. S. Community Development and Urban-Rural Recovery Act of 1983. Grant and rental subsidy resources available from HUD will be used to increase the stock of standard rental housing in the City and to assure the affordabil ity of such housing to lower income famil ies. The program has been designed to maximize both improvement assistance to substandard rental units which will house 1 arger famil ies and affordabil ity to very 1 o\/-i ncome househol ds. I. PROGRAM ACTIVITIES In FY 1984-85, the City of Chula Vista will encourage and assist in the rehabilitation of approximately 35 rental dwelling units. The program will be pursued by the City's existing staff responsible for the Block Grant-funded multi-family rehabilitation program, the Community Housing Improvement Program (CHIP). Rental projects in the targeted neighborhoods will be identified for assistance consideration, using the Housing Rehabil itation Special ist/Code Enforcement Officer and the Housing Rehabil itation Administrator. Projects evidencing substandard conditions and predominant occupancy by lower income tenants will be encouraged to apply for program assistance. Proposed projects will be evaluated by the Loan Committee of the existing CHIP Rehabil itation Program for satisfaction of program goals. Approved projects will be referred to the Bank of JlInerica for loan processing, for both market rate private rehabilitation loans and program loans. Program loans will be in the form of ten-year, 0% interest deferred loans, forgiven in full at term, but payable in full if prepaid prior to full term or at violation of condominium conversion or assisted tenant discrimination prohibitions. Maximum assistance will be 50% of the per unit rehabilitation cost, to a maximum of $5,000 per unit. Program loans and attendant prohibitions \~ill be secured by alien on the subject property. Matching private investment will be accomplished where possible by the underwriting of private property improvement loans by the Bank of America. Affected eligible tenants will receive Section 8 Existing rental subsidies from the Public Housing Authrity. Affected 10lo/er income tenants not suitably housed in rehabilitated units will receive technical and financial relocation ass i stance from program funds. 11. NEIGHBORHOOD SELECTION The Rental Rehabil itation Program will be operated in the CHIP target nei ghborhoods. These nei ghborhoods are among the lowest income nei ghborhoods in the City, with 1980 Census data indicating that the median income in the Census Tracts these nei ghborhoods comprise is below 80% of the area median n ~/\\\o7,\ income. These nei ghborhoods are a mi x of singl e-family and multi -family units, with the great majority of rental rates being below prevail ing market rates in Chu1a Vista and below the current Section 8 Existing Fair Market Rents. Community Development Block Grant-funded Housing Rehabilitation and Capital Improvement activi ti es, and redevelopment of the adjacent downtoun commercial section, promise to revital ize these decl ining neighborhoods, but tile modest nature of the housing stock and the scope of the revital ization activities will not result in gentrification of the neighborhoods. Rent levels will rise over the next five years, but not at as great a rate as rents in the market area. Selection of these neighborhoods is based on 1980 Census data, A Housing Study for the City of Chula Vista, dated l4ay 1984, and field observation. II I. LOWER INCO~1E BENEFIT A minimum of 70% of the rental rehabilitation grant will be used to assist lower income famil ies. One-hundred percent lower income benefit will be striven for, but achieving that level is unlikely. No neighborhoods in Chula Vista are so significantly lower income, and no rental projects are so significantly substandard, that more than 70% low income occupancy of a rental project woul d 1 ikely be encountered. If 100% lower income occupancy were necessary, significant numbers of non-lower income families would have to be displaced by the property owner/applicant, which the City feels is an unacceptable circumstance. Given the characterisitics of the Chula Vista nei ghborhoods and the di spl acement whi ch woul d result, no practi ca1 program design exists which could achieve 100% loti income benefit level. Through the public hearing process to consider the program description, the public has been consulted regarding the inability to achieve a 100% lower income benefit 1 evel. IV. USE OF RENTAL REHABILITATION GRANTS FOR HOUSING FOR FAMILIES A minimum of 70% of the units assisted under the program will be two-bedroom or larger. All assistance given under the program will be approved by tile City's CHIP Loan Committee, using as one of their criteria for project selection the goal of a minimum of 70% total program assistance to units of two bedrooms or larger. V. USE OF RENTAL REHABILITATION GRANTS FOR UNITS IN SUBSTANDARD CONDITION THAT ARE OCCUPIED BY VERY LOW-INCOME FAMILIES Priority will be given to projects with substandard units occupied by very low-income fami1 ies. All assistance given under the program will be approved by the City's CHIP Loan Committee, using as one of their criteria for project selection the priority to projects with substandard units occupied by very low-income families. - 2 - VI. SELECTION OF PROPOSALS Proposals will be selected by the CHIP Loan Committee based on the following criteria: a. Correction of substandard units, especially those occupied by very low-income families. b. Predominance of assistance to large famil ies in lower-income categories, with a minimum of 70% of all units assisted being two bedrooms or 1 arger. c. Maximum stimulation of private investment. d. Minimization of displacement of tenants. The Loan Committee will also evaluate the pro forma and loan processing information in order to select financially feasible projects with maximum program benefit. Operating income and replacement reserve levels will be considerea. The Loan Committee will consider the distribution of Section 8 Existing certificates to a project or the provision of financial relocation assistance in their evaluation of program benefit. Relocation expenses paid to project unit displacees will be deducted from the $5,000 per unit maximum assistance levels. VII. FINANCIAL FEASIBILITY The Rental Rehabil itation Program will be financially feasible. Private funds will be available through private lending institutions, with negotiations under way to obtain lending services for both program deferred loans and private loans from Bank of America. VII I. NEIGHBORHOOD PRESERVA nON Ne i ghborhood preservati on is currentl y under way in th e target neighborhood, using Block Grant-funded housing rehabilitation, Block Grant-funded Capi tal Improvement Projects, and Block Grant-funded soci al servi ce activiti es. Addi ti onal property improvement under the program coul d only enhance that neighborhood preservation. IX. SCHEDULE FOR COMMITTING RENTAL REHABILITATION GRANT AMOUNTS Specific projects have not yet been sel ected for the program, but as the City runs an existing Block Grant-funded multi-family rehabilitation program, projects suitable for this program can be easily identified. All staff and mechanisms for processing and approving loans are in place. Anticipating the receipt of identical funding for the 1985 fiscal year in FY 1984, tile program is scheduled to expend $122,000 in FY 1984. - 3 - \ \ 10 ;;'\ Our best local estimate is that the average subsidy per unit will be approximately $3,500. That means that the program would rehabil itate 35 units in 12 months. As it wou1 d be most advantageous for the Loan Committee to eva1 ua te a n umber of project proposal s s imu1 taneous1y, project proposal swill be batched for consideration in the second quarter of FY 1984. We wou1 d anticipate committing funds to approximately 12 units at that point. That commitment wou1 d be $42,000, or 34% of our 1984 and 1985 grant funds. By the middle of the third quarter of FY 1984, we would anticipate a total unit commitment of 20 units or $70,000 (57%). The total grant amount should be committed by f'lay of 1985. X. NEED FOR RENTAL HOUSING ASSISTANCE. Not app1 icab 1 e. XI. NON-DISCRIMINATION AND EQUAL OPPORTUNITY Affirmative marketing and fair housing principles will be pursued by the program. The program will not participate in unit marketing, but property owners will be counseled in affirmative marketing principles and monitored for comp1 iance. The City will provide fair housing counsel ing to owners of assisted units and to perspective tenants. The following steps will be taken: Written material on Federal Fair Housing Laws distributed to owners and tenants. All advertisements annoucements regarding the program will inc1 ude Housing Opportunity logo. b. Each unit assisted through the Rental Rehabi1 itation Program will be marketed in a manner to affirmatively further fair housing, including but not limited to the following: will be or pub 1 i c the Equal a. 1) Listing available units with the Section 8 Existing Marketing Section of the Housing Authority. 2) Attempting to fill vacant units with families who are active certificate holders through the Sect10n 8 program, or who are appl icants on the waiting 1 ist for Section 8 certificates or vouchers. 3) Using the Equal Housing Opportunity logo in any newspaper advertisement or written communication to community groups, organizations, agencies, or other community contacts. Owners will util ize various community contacts to advertise unit availability to those persons in the housing market area least 1 ike1y to apply for the unit. App1 ications will be sol icited from such individuals. - 4 - The City will gather and maintain records to demonstrate compliance as foll ows: a. Copies of all written material regarding vacant units for rent will be kept by the property owner and by the City. Records will be kept of appl ications received in response to available vacancies. b. The City will periodically review affirmative marketing efforts made by owners to ensure compl iance with Equal Housing Opportunity provisions. Where an owner has failed to follow affirmative marketing requirements, appropriate actions, available under program regulations and/or appl icable laws, will be taken to enforce conformity. In cases where housing discrimination is established to have occurred, such established housing discrimination shall be a condition of default on program deferred loans. Owners will be encouraged to comply with provlslons of affirmative marketing of the units for no less than seven years after the completion date of rehabil itation of all units in the project. XII. GRANTEE ORGANIZATIONAL STRUCTURE The Rental Rehabil itation Program contact person for the City of Chula Vista is: David Gustafson, Housing Coordinator, City of Chula Vista, 276 Fourth Avenue, Chula Vista, CA 92010. XII 1. PUBLIC HOUSING AUTHORITY PARTlCIPAT ION The Housing Authority of the County of San Diego has appl ied to HUD for Section 8 Existing certificates to provide to the City Rental Rehabil itation Program. A Memorandum of Understanding will be executed prior to the execution of an annual contributions contract. The Section 8 Existing Rental Rehabil itation Program contact person is: Josephine Silva, Chief, Housing Programs, Housing Authority of the County of San Diego, 7917 Ostrow Street, San Diego, CA 92111-3694, at 565-3444. XIV. CERTIFICATIONS The necessary certifications are attached. They were approved by City Council Resolution on July 3, 1984. WPC 0907X - 5 - ~_\16~/ EXHIBIT B RENTAL REHABILITATION PROGRAM CERTlF ICATlONS The grantee certifies that: (I) The submission of this Program Description 1', duthorized under State and local law (as applicable), and the gram"e possesses the legal authority to carry out the Rental Rehabilitation Program described herein, in accordance with 24 CFR Part 511; (2) The grantee's Rental Rehabilitation Program wa. developed after consultat ion with the publ ic and its descripL Ion of progl'dlll activities in the "Program Activities" sectiun of this Progl'alll Description has been made available to the public; (3) !Xr (Check if this paragraph is applicable.) The grantee's lower income benefit standard IS hereby reduced to 70 percent as provided by 24 CFR 511.10(a)(2). The discussion of lower income benefit in this Program Description cOJltains a spec ific explanation of the reasons why this reduced benefit standard is necessary, whiCh explanation complies with 2q eFR 511.10(a)(2). (4) The grantee has adopted a written tenant as" I'.lance policy confor,nlli>! to the requirements of 24 CFR 511.10(h)(2), "lid such policy will l,I.! made available to the public on request; (5) The gl"antee will conduct and administer its I,<'nlal Rehabi I i1.al ion Program, and, if appl icable, ensure that St", ~ l'ecipients (Onduct and administer theil" Rental Rehabilitation Prog' "II', in confoJ'lIi1ty with the requirements of 24 CFR 511.IO(m); and (6) The grantee will conduct and administer its Ikntal Rehabilitation Program, and, if appl icable, ensure that Stat,; recipients LO'h.iu,.t ,",J administer their Rental Rehabilitation Prog, ,';1', in accon1dllu, Illc" the requirements of 24 CFR Part 511. r-._\\l'i;~\ EXHIBIT ~ RENTAL REHABILITATION PROGRAM TENANT ASSISTANCE POLICY 1. INTENT The Chula Vista Rental Rehabilitation Program will seek to mlnlmlze permanent displacement of residential rental tenants as a result of program activities. In cases where permanent displacement of low income families, (less than 80% of median income) is unavoidable, financial and technical relocation assistance will be provided to those families. Very low-income families (less than 50% of median income) will not be permanently displaced in favor of non very low-income families. Cost and assistance needs resulting from temporary displacement of tenants during property improvement will be the responsibility of the property owner and will not be paid from program funds. The Rental Rehabilitation Program will be administered so as to not cause the displacement of persons because of their particular, race, color, religion, sex, age, handicap, or natural origin. 11. DEFINITIONS OF DISPLACEMENT A. Non low-income families moving from a unit undergoing rehabilita- tion under the program will not be considered displacees under the Tenant Assistance Program. B. Low- income and very 1 ow- i ncorne famil i es will be consi dered displacees if their displacement is a direct result of program activity and not an action for cause. C. Examples of program related displacement include, but are not limited to, unit underutilization, unit overcrowding, ho~sing cost overpayment (family paying more than 30% of monthly gross income for housing expenses), or tenant ineligibility to Section 8 Existing rental subsidy assistance as a result of unit rent ex- ceeding Section 8 Fair Market Rent. No tenant will be considered displaced if the tenant has been offered a decent, safe, and sanitary dwelling unit in the project at an affordable rent. Qualification as displacees will be solely determined by the City. III. ASSISTANCE TO DISPLACEES A. Displacees will receive either Section 8 rental subsidy assistance, or relocation assistance under the provisions for permanent dis- placement of the U.S. Uniform Relocation Assistance and Property Acquisition Act of 1970, at the option of the City. Provisions of the Act include technical assistance, moving allowances, and rental differential payments. Oisplacees receiving Section 8 certificates will also be eligible for technical assistance and moving allowances. \ ~S C\ \- \ B.-I \l, '6'1 B. Technical assistance will include information and counseling to familiarize displacees with opportunities to select appropriate replacement housing within the full range of available housing, with individual rights under the federal Fair Housing Law, and with methods for searching for suitable replacement housing. c. No displacees will be discriminated against in the provision of information, counseling, referrals, or other relocation services. -2-