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HomeMy WebLinkAboutRDA Packet 1997/11/18 \'.11\ \ ",!II "'1'" \ "Ð \e(Ì f ......1 ' . I' \ ' '1'°5 ~Ð1"e""'\\"~ ,;",,~~",,~Ü"'\' \1eU","""C"O\ . at\ne "\óec3 ,f"e'" " ell",\O,:e1 P, "~. c01l\\'(""1'\.,¡',"'\"'.", ",~'o-'" , \,,'I$I\¡;,en':.cos';I,P"" . Tuesday, November 18, 1997 pU';J\\C ~S\GN..i) Council Chambers 6:00 p,m, .. ( Public Services Building (immediately following the City Council meeting)Op.í ' Joint Meeting of the Redevelooment Agencv/Citv Council of the Citv of Chula Vista CALL TO ORDER 1. ROLL CALL: Agency/Council Members Moot -' Padilla -' Rindone -' Salas -' and Chair Horton - CONSENT CALENDAR ( Items 2 through 4 ) (Will be voted on immediately following the Council Consent Calendar during the City Council meeting) The staff recommendations regarding the following item listed under the Consent Calendar will be enacted by the Agency/Council by one motion without discussion unless an Agency/Council member, a member of the public or City staff requests that the item be pulled for discussion. If you wish to speak on one of these items, please fill out a "Request to Speak Form" available in the lobby and submit it to the Secretary of the Redevelopment Agency or the City Clerk prior to the meeting, Items pulled from the Consent Calendar will be discussed after Action Items, Items pulled by the public will be the first items of business. 2, APPROVAL OF MINUTES: October 21, 1997 (Joint Meeting); October 28, 1997 (Special Meeting) 3, COUNCIL 1) AUTHORIZING SUBMITI AL OF AN APPLICATION TO THE CALIFORNIA RESOLUTION 18817 DEBT LIMIT ALLOCATION COMMITIEE (CDLAC) FOR AN AND ALLOCATION OF QUALIFIED MORTGAGE BONDS AND ITS ASSIGNMENT AGENCY AND ALLOCATION TO THE REDEVELOPMENT AGENCY; 2) ELECTING RESOLUTION 1566 TO EXCIIANGE SAID ALLOCATION FOR MORTGAGE CREDIT CERTIFICATES; 3) CERTIFYING THE AVAILABILITY OF FUNDS FOR THE REQUIRED PERFORMANCE DEPOSIT OF $25,000; AND 4) ApPROPRIATING $2,100 FROM THE UNAPPROPRIATED BALANCE IN THE Low AND MODERATE INCOME HOUSING FUND-- The Mortgage Credit Certificate (MCC) Program was authorized by Congress in the Tax Reform Act of 1984 as an alternative to mortgage revenue bond- backed financing to provide home ownership assistance to lower income households, Applications for authority to issue Mortgage Credit Certificates are made by local agencies to the California Debt Limit Allocation Committee, The City has participated in the MCC Program since 1991, and has issued approximately 400 certificates to assist first time homebuyers, which have generated approximately $2 million in real estate activity, Staff recommends approval of the resolutions, (Community Development Director) 4/5ths VOTE REQUIRED, - - " - Agenda -2- November 18, 1997 4, RESOLUTION 1567: ApPROVING THE REVISED COMMUNITY HOUSING IMPROVEMENT PROGRAM (CHIP) GUIDELINES--On 211/77, Council approved the implementation of a Community Housing Improvement Program (CHIP) to provide low interest loans and grants for low income Chula Vista residents to rehabilitate their homes, On 6/7/77, Council adopted a (CHIP) Manual which assists staff in administering program requirements and detailing property rehabilitation standards, Because program demand has continued to increase, staff has updated the program guidelines, Staff recommends approval of the resolution, (Community Development Director) . .. END OF CONSENT CALENDAR' .. ADJOURNMENT TO CITY COUNCIL MEETING At this time, the Redevelopment Agency will adjourn to the Council meeting. ************* ORAL COMMUNICATIONS This is an opportunity for the general public to address the Redevelopment Agency on any subject matter within the Agency's jurisdiction that is not an item on this agenda. (State law, however, generally prohibits the Redevelopment Agency from taking action on any issues not included on the posted agenda.) If you wish to address the Agency on such a subject, please complete the "Request to Speak Under Oral Communications Form" available in the lobby and submit it to the Secretary to the Redevelopment Agency or City Clerk prior to the meeting, Those who wish to speak, please give your name and address for record purposes and follow up action. ITEMS PULLED FROM THE CONSENT CALENDAR This is the time the Redevelopment Agency will discuss items which have been removed from the Consent Calendar, Agenda items pulled at the request of the public will be considered prior to those pulled by Agency Members. OTHER BUSINESS 5, DIRECTOR/CITY MANAGER'S REPORT(S) 6, CHAIRIMAYOR'S REPORTiS) 7, AGENCY/COUNCIL MEMBER COMMENTS ADJOURNMENT The meeting will adjourn to the Regular Redevelopment Agency Meeting on December 16, 1997 at 6:00 p,m" immediately following the City Council meeting, in the City Council Chambers, [M:\HOME\COMMDEV\AGENDAS\ll-18-97,RDA] - - -- MINUTES OF A JOINT MEETING OF THE REDEVELOPMENT AGENCY AND CITY COUNCIL OF THE CITY OF CHULA VISTA Tuesday, October 21, 1997 Council Chambers 8:23 p,m, Public Services Building CALL TO ORDER L ROLL CALL: PRESENT: Agency ICouncilmembers: Moot, Padilla, Rindone, Salas, and Chair/Mayor Horton ABSENT: Agency/Councilmembers: None ALSO PRESENT: Assistant Executive Director, Sid Morris; Legal Counsel, John M, Kaheny; and City Clerk, Beverly A, Authelet 2, APPROVAL OF MINUTES: October 7, 1997 (Joint meeting) MSC (Rindone/Horton) to approve the minutes of October 7, 1997. Motion carried 4-0-1 (Padilla absent), CONSENT CALENDAR (None submitted) ORAL COMMUNICATIONS There were none, PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES 3, PUBLIC HEARING: REGARDING THE SALE OF SPACE NUMBER 122 AT ORANGE TREE MOBILEHOME PARK - In November 1987, Orange Tree Mobilehome Park converted to resident ownership, The Agency assisted the residents in purchasing their park with a $600,000 acquisition loan which was converted to loans for lower income residents to help them purchase their spaces, At that time, 29 residents did not wish to purchase their space, and the Agency agreed to purchase these spaces after the newly-formed homeowner's association was unable to secure financing to purchase these unsold spaces, The residents who did not purchase their space remained as renters, The Agency's desire is to sell these spaces as new home buyers move into the park, The Agency currently owns 16 spaces, having sold 13 spaces, Resolution was approved, (Director of Community Development) AGENCY RESOLUTION 1561 APPROVING THE SALE OF SPACE NUMBER 122 AT ORANGE TREE MOBILEHOME PARK AND AUTHORIZING THE COMMUNITY DEVELOPMENT DIRECTOR TO EXECUTE A PURCHASE AGREEMENT This being the time and place as advertised, the public hearing was opened, There being no one indicating a desire to address the Agency, the public hearing was closed, RESOLUTION 1561 OFFERED BY MEMBER RINDONE, heading read, text waived, passed and approved unanimously 5-0, ó)-I Minutes October 21, 1997 Page 2 4, PUBLIC HEARING: CONSIDERATION OF AN AMENDED AND RESTATED OWNER PARTICIPATION AGREEMENT WITH SCRIPPS HEALTH FOR THE EXPANSION OF HOSPIT AL AND RELATED FACILITIES AT THE NORTHEAST CORNER OF "H" STREET AND FIFfH AVENUE - On 1117/91, the Agency approved an Owner Participation Agreement with Scripps Memorial Hospital (now Scripps Health) for expansion of their hospitaL Changes in the medical services industry resulted in substantial downsizing of Scripps' expansion plans, Scripps and City staff have negotiated an amended Agreement. Resolution was approved. (Community Development Director) AGENCY RESOLUTION 1562 ADOPTING AN Em ADDENDUM 90-07 A AND APPROVING AN AMENDED AND RESTATED OWNER PARTICIPATION AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA AND SCRIPPS HEALTH FOR THE EXPANSION OF HOSPITAL AND RELATED FACILITIES AT THE NORTHEAST CORNER OF "H" STREET AND FIFfH A VENUE Fred Kassman, Redevelopment Coordinator, added that the resulting agreement embodies all the terms and conditions which were approved by the Agency in January 1997 with the one exception of the in-lieu fee payoff that is owed to the City because the project did not develop as originally scheduled, That was negotiated with Scripps in light of the taxes that have accrued from the site and are still accruing from the site because the site is still on the tax rolls, We took all of those taxes into consideration and derived an amount which staff is recommending which is less than the total amount in lieu fees owed, but staff feels it is a fair compromise, Although the revenues which will accrue from the project when it is developed as now planned will not approach the revenues as originally projected until the completion of Phase II, The Agency will he guaranteed a respectable now of income which will increase every year, The grading for the project has started, Construction will begin before the end of the calendar year, The restated agreement has been approved and executed by Scripps, Member Salas asked for clarification of some of the verbiage in the report regarding the in-lieu payment. Several times it refers to "if the property is exempted from taxes, the Agency will still receive a higher amount." What determines whether or not something is going to be exempted from taxes, Mr. Kassman stated that the applicant has a right to apply for a tax exemption for projects, The property has to qualify for tax exemption, It will depend on how Scripps uses the property, and it also depends upon the County Assessor approving their application for abatement of taxes, James Leary, architect representing Scripps Hospital, stated that exemption from taxes has to do with the uses and whether the uses are consistent with the non-profit status, Member Rindone stated he understood from the report was there was $113,193 less the receipts from property taxes which leaves a balance of $72,000, In the tïnancial analysis, it indicates the $72,000 again, So where does the $40,000 figure come from, It was not stated in the staff report, nor was it a part of staffs recommendation, Glen Googins, Deputy City Attorney, stated thai the $40,000 tïgure was a negotiated tïgure amongst the parties, It does not correlate to any particular formula or equation for calculating what the past due tn-lIeu amounts would be, After the January 7 approval by the Council of the deal and concept where the $72,000 figure was presented as the additional amounts that would be owing under the in-lieu formula that had been negotiated between the parties, the parties discovered in discussions that they all had different notions a~out how that calculation should be reached. The formula that staff had originally proposed resulted in a $72,000 fIgure stIll OWtng over and above what staff had already collected in actual property taxes, Others came up with different figures, The partIes finally decided to compromise to the $40,000 tïgure as satisfying Scripps' oblIgatIOn to pay addttlOnal amounts that were due above and beyond property taxes actually collected from the tllTIe Scnpps acquIred the property up through December 31, 1996, That was a compromise and settlement of past due amounts that the partIes reached agreement on, Although it might not be as conspicuous as it ought to be, he did tïnd it referenced on top ot page 4-7 ot the staff report where it refers to the $40,000 figure having been approved by Scripps, and it was recommended by Ctty staff, He agreed it could have been highlighted better in the staff report, .:J-d- Minutes October 21, t997 Page 3 This being the time and place as advertised, the public hearing was opened, There being no one indicating a desire to speak, the public hearing was closed, RESOLUTION 1562 OFFERED BY MEMBER SALAS, heading read, text waived, passed and approved unanimously 5-0, ACTION ITEMS 5. AGENCY RESOLUTION 1563 AND COUNCIL RESOLUTION 18801 ADOPTING NEGATIVE DECLARATION IS-98-02, DEEMING ALL OWNER PARTICIPATION RIGHTS WAIVED, AND APPROVING PURCHASE AND SALE AGREEMENT BY AND BETWEEN THE CITY COUNCIL OF CHULA VISTA, AND THE RESPECTIVE PROPERTY OWNERS OF 3554 MAIN STREET, CHULA VISTA, FOR THE PURPOSES OF SITING THE OTAY GYMNASIUM PROJECT - On 5/6/97, the Agency/Council authorized staff to negotiate for the acquisition of property at 3554 Main Street for the proposed Otay Gymnasium, An Initial Study was conducted and a Negative Declaratioo was issued for public review, Resolution was approved. (Community Development Director) Lyle Haynes, Assistant to the Community Development Director, reported the item is to approve a purchase and sale agreement for the property at 3554 Main Street for the purposes of siting the Otay Gymnasium, The purchase price includes the value for the improvements, That is important because it is the subject of some revisions that we need to make to the purchase agreement. Council needs to be aware that the fiÙnor revisions associated with the purchase agreement is that we need to reflect a decrease in the purchase price of $7,890 from $410,000 to $402,110, The decrease represents the residual value of the site improvements that the tenant will actually be relocating to his new business site, In addition, there will be another fiÙnor adjustment in the purchase agreement that the City Attorney has already crafted that relates to the disbursements of those proceeds, It came to our attention that the tenant actually installed thoso improvements; therefore, for the improvements that are still left on site, the disbursements from the proceeds need to be paid to the tenant and not to the property owners which is the way it is reflected in the existing agreement. Staffs recommendation would include the modifications, Member Salas stated that the report indicates the Main Street improvements and traftïc signal was not projected into the cost of the project. The report talks about an immediate need for the improvements, She wanted to know if the project was accelerating the need for those improvements or was the need already there, Sid Morris, Assistant Executive Director, stated that the funds for those capital improvement projects were included in a previous budget for capital expenditures by the City. The reason we are not including them into our capital cost related to the Otay Gym is it is something which we had already anticipated and needed regardless of what was happening with the Otay Gym at that site or the other site, Those funds were already budgeted, Member Moot asked Parks and Recreation regarding the increase in the budget for this, there was an increase under the building section and a corresponding increase in the construction cost. He asked for a clarification and what the distinction was between the two, Sunny Shy, Deputy Director of Recreation, replied that originally the architect's estimate was $90 per square foot. A more recent estimate is $110 to $120 per square foot for construction costs, This included the upgrades which had to be made to provide internal sprinkling systems in order not to have the turn-around radius that would be needed for the fire department. That increased the square foot cost considerably, With regards to some of the other construction costs, our original plan was behind the Otay MAC Center. No parkIng was Included SInce we were using the school parking lot. There was none of the hardscaping or lighting needed on the Mam Street property, We are now developing parking lofs and more hardscape which includes secunty lightIng that tS necessary to accommodate those parking structures and in increased plaza areas, .;J....!J Minutes October 21, 1997 Page 4 AGENCY RESOLUTION 1563 AND COUNCIL RESOLUTION 18801 OFFERED BY CHAIR/MAYOR HORTON, heading read, text waived, passed and approved 5-0, OTHER BUSINESS 6. DIRECTOR/CITY MANAGER'S REPORT(S) - none 7, CHAIR/MAYOR'S REPORTiS) - none 8, AGENCY/COUNCIL MEMBER COMMENTS - none ADJOURNMENT The meeting adjourned at 8:52 p,m, Respectfully submitted, Beverly A, Authelet, CMC/AAE City Clerk .,2 ... t./ - - MINUTES OF A SPECIAL MEETING OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA Tuesday, October 28, 1997 Council Chambers 8:23 P,ffi, Public Services Building CALL TO ORDER L ROLL CALL: PRESENT: Agency members: Moot, Padilla, Rindone, Salas, and Chair Horton ABSENT: Agency members: None ALSO PRESENT: Assistant Executive Director, Sid W, Morris; Legal Counsel, John M, Kaheny; and City Clerk, Beverly A, Authelet. CONSENT CALENDAR (Item pulled: 3) 2, RESOLUTION 1564 WAIVING THE CONSULTANT SELECTION PROCESS, AND AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE A TWO PARTY AGREEMENT WITH KEA ENVIRONMENTAL, INC, RELATED TO CONSULTING SERVICES FOR PREPARATION OF AN ENVIRONMENTAL IMPACT REPORT FOR THE BA YFRONT REDEVELOPMENT PLAN AMENDMENT AND APPROPRIATING FUNDS THEREFOR - On 10/7/97, the Agency approved Preliminary Plans for the Bayfront and Town Centre project areas, as the tlrst step in the plan amendment process, Amendment to tbe Plans is considered to be a project under CEQA and an Environmental Impact Report needs to be prepared, Consultant services are required for preparation of an EIR as staff does not bave adequate resources to complete tbe study, Resolution was approved. (Community Development Director 4/5th's vote reQuired, 3, RESOLUTION 1565 AUTHORIZING THE COMPLETION OF SOIL REMEDIATION ON AGENCY-OWNED PROPERTY LOCATED AT 760 BROADWAY, AUTHORIZING THE EXECUTIVE DIRECTOR TO ARRANGE FOR CONTRACTUAL SERVICES FOR REMEDIATION, APPROVING A LOAN FROM THE OTAY VALLEY ROAD REDEVELOPMENT PROJECT AREA FUND TO THE SOUTHWEST REDEVELOPMENT PROJECT AREA FUND AND APPROPRIATING FUNDS THEREFOR FROM THE SOUTHWEST PROJECT AREA FUND - Contaminated soils from both Phase I and II of the Broadway Business Homes site at 760 Broadway were excavated and stockpiled on the Pbase II site, Excavation and treatment costs of this material was to be split equally between the developers and the Agency, but the developer is not able to commit these funds in the necessary timeframe for remediation, Additional Agency funds are required to complete the remediation, Resolutinn was approved. (Community Development Director) 4/5th's vote reQuired. Joe Monaco, Environmental Projects Manager, claritled that this item was related to clean up of the 760 Broadway site, and not to the Business Ho~es project. It is an action that needs to be taken by the Agency regardless of any progress that might be made on the Business Homes project. Addressing the Agency was: Josef Citron, 765 Banter Road, San Diego, 92106, stated he had heard that there was an understanding by the Agency that their project was dead and they bad abandoned it. He stated that the project was not dead, and they have not abandoned it. The fact is they have been working for the past year to overcome the Impact ot the negattve facts that were taken by a former member of city staff who had subsequently bragged that he had killed the project. It has impacted the actions that tbey have been working on since that time, They now have new life and have every indication that they can finance the project. They have cleared the site, put a sales huilding on the site, have b""n ,;J-:r- Minutes October 28, 1997 Page 2 working to have water run to it, and have hired an organization, Vince Davies ERA Real Estate Company, to handle the sales of the project. What they are working on is the pre-sales of the project so they can be sure that the financing will go through. People who have looked at the project have asked about the pile of dirt on the site, His response is that it was occasioned by the former owner of the property who by federal law is responsible for its removal and the cost of the remediation, He was not aware of any action by the City to see that the proper individual is taking care of this, Their position is that if they have 120 days from now, they feel that they will be able to consummate their duties under the DDA and go forward with the project. Member Salas stated the reason she pulled this item was on the matter of the remediation, She felt the citizens of Chula Vista were tired of seeing that dirt mound on Broadway. Actually, the project was supposed to alleviate blight and yet it has become blight itself, She asked why was this taking so long when the responsibility was on someone else to take care of it. Mr. Monaco responded that Fuller Ford was responsible for the clean up, The purpose for the Agency and the developer agreeing to proceed with the clean up in advance of Fuller Ford's action on the site was to facilitate the development project which at the time had been under extreme time constraints, We are working with Fuller Ford and with their insurance agents to see if insurance coverage is accessible and if not pursuing other mechanisms to seek reimbursement. Member Salas stated that if we knew all along that it was Fuller Ford's responsibility to clean it up, and this project has been going on for a long time, why have we had to wait tor anything to get started on this particular project before Fuller was responsible for cleaning it up, Chris Salomone, Community Development Director, stated that the process that we developed for mediation was based on expediency of the imminent development of the site, We were told that the site was going to develop and lets do the most expedient remediation in order to allow the tirst phase to be cleared and for the project to go forward. There have been a number of deadlines and a number of imminent schedules of development that haven't occurred, We were abiding by those schedules and creating a remediation that was expedient to meet those schedules. We stopped when we thought that the financial situation was not imminent. Now we are trying to come to a more reasonable way of remediating the site rather than the costly exportation of that material. Glen Googins, Deputy City Attorney, stated that there are a couple of policy and legal issues involved, In the City's agreement with Fuller Ford, there were indemnity agreements that Fuller Ford executed that committed them to being responsible for remediating any hazardous materials that were leti on the site that they vacated, Those would be the indemnities that the City would proceed to entorce against Fuller Ford in order to obtain reimbursement tor amounts spent by the City in remediating the site, The process in entorcing the indemnity and the involvement of insurance companies was not conducive to the pace of development as it was originally proposed, Those types of law suits and the actual remediation can drag out tor years, The approach that was taken when the project came forward with the developer was to indicate to the developer that on an upfront basis the City and the developer would share the cost of remediating the soils, The scope of that problem wasn't defined until the buildings were demolished and the maintenance bays were removed and the amount of soil was determined, This was well into the project before we had a good handle on what the clean up cost would be, The City conunitted to the developer as part of that process. acknowledging the fact that Fuller Ford did owe us an obligation to remediate the site, but that we would proceed in good faith in order to obtain reimbursement for the site that would reltnburse us and reimburse them for costs that we had asked them to expend in connection with that remediation, It was a questIOn of timing, We do believe we have good and righlful authority to obtain reimbursement from them and are attempting through consultations with their insurance brokers to detenmne whether or not there IS available insurance that would avoid the costliness of cOlmnencing litigation and in occurring legal costs, Chair Horton stated that we were getting off the subject being considered, The facts are that we have to continue with the mediation process and then negotiate with the prior owner to be reimbursed tor the expenses that we have incurred, It is clear that we have to go forward witb the completion of the soil remediation, RESOLUTION 1565 OFFERED BY CHAIR HORTON, heading read, text waived, .2-(. Minutes October 28, t 997 Page 3 Member Rindone asked what are we voting on and who are we mediating with, Mr, Monaco responded that this item is related to the completion of the clean up, What has been done on the site todate has been the subsurface contamination found on the site on both Phase I and Phase II. It was removed and stockpited to certain locations on the Phase II, Agency owned portion of the site, The total cost for completion of the remediation was anticipated to be split between the Agency and the developer on an ongoing basis, In lieu of the developer's contributions to that effort, the Agency expended their half of the funds on the excavation of the soils and stockpiling, The removal of the soils could not have been completed within the budget that we had established originally, This item is requesting additional funds to complete that remediation either on site remediation of those soils or removal of the soils and importation of clean tilL This is required because it is a liability for the future owner and users of the site, This is intended to be a quasi residential development. If it were a commercial development or industrial development, the concern would not be so great. Member Rindone clarified that basically the City is going to upfront the other half of the costs, to get it done, and then we will move on the original owner for a full reimbursement. Mr. Monaco replied that was correct. Member Moot felt that we had a contract, and the contract had not heen fulfilled, He felt that it was important that when we have public testimony from one side of this dispute that the record fairly reflect what was his memory over many discussions about how we were going to work the remediations and what we were going to do about it. The agreements were committed to writing and both parties agreed to them in writing, VOTE ON RESOLUTION: Passed and approved unanimously 5-0, . . . ENIJ OF CONSENT CALENDAR' .. ORAL COMMUNICATIONS There were none ITEMS PULLED FROM THE CONSENT CALENDAR (Item 3 was pulled, but the minutes will reflect the published agenda order) OTHER BUSINESS 4. DIRECTOR'S REPORTiS) - none 5, CHAIR'S REPORT(S) - none 6, AGENCY MEMBER COMMENTS - none ADJOURNMENT The meeting adjourned at 9:30 p.m, Respectfully submitted. cJ-1 Beverly A, Authelet. CMC/AAE City Clerk JOINT REDEVELOPMENT AGENCY/COUNCIL AGENDA STATEMENT Item J Meeting Date 11118/97 ITEM TITLE: COUNCIL RESOLUTION /rl/1 AUTHORIZING SUBMITTAL OF AN APPLICATION TO THE CALIFORNIA DEBT LIMIT ALLOCATION COMMITTEE (CDLAC) FOR AN ALLOCATION OF QUALlFIEO MORTGAGE BONOS ANO ITS ASSIGNMENT ANO ALLOCATION TO THE REDEVELDPMENT AGENCY AGENCY RESOLUTION /$~f. 1) AUTHDRIZING SUBMITTAL OF AN APPLICATION TO THE CALIFORNIA DEBT LIMIT ALLOCATION COMMITTEE (CDLAC) FDR AN ALLOCATION OF QUALIFIED MORTGAGE BDNDS AND ACCEPTING ITS ASSIGNMENT AND ALLDCATION TO THE REDEVELOPMENT AGENCY; 2) ELECTING TD EXCHANGE SAID ALLOCATION FOR MDRTGAGE CREDIT CERTIFICATES; 3) CERTIFYING THE AVAILABILITY OF FUNDS FDR THE REOUIRED PERFORMANCE DEPOSIT OF $25.000; AND 4) ApPRDPRIATING $2.100 FRDM THE UNAPPROPRIATED BALANCE IN THE Low AND MODERATE INCOME HOUSING FUND SUBMITTED BY: Community Development Director L:; , REVIEWED BY: &oc", ,,"'"' J4 ~ ~ (4/5ths Vote: Yell No_I BACKGROUND: The Mortgage Credit Certificate Program (MCC Program) was authorized by Congress in the Tax Reform Act of 1984, as an alternative to mortgage revenue bond.backed financing as a tool for providing home ownership assistance to lower income households, Applications for Mortgage Credit Certificates issuing authority are made by local agencies to the California Debt Limit Allocation Committee (CDLACI, MCCs are an allocation of Private Activity Bonds which are converted to Mortgage Credit Certificates according to a federal conversion ratio required by the Tax Reform Act of 1986. Staff recommends that the City of Chula Vista apply for a $5,000,000 Mortgage Revenue Bond allocation. Based on the competitive nature of the application process, the $5,000,000 requested by the City would be consistent with amounts being requested by other jllrisdictions of similar size, The $5,000,000 allocation, when converted to Mortgage Credit Certificates using the conversion ratio of 4 to 1, would convert to $1,250,000 ($5,000,000 divided by 4) and the City could issue approximately 62 Mortgage Credit Certificates, Therefore, in order to receive authority to issue $1,250,000 of Mortgage Credit Certificates, the City must apply for an allocation of $5,000,000 of private activity bonds, The CDLAC application is a standard document similar to the 1997 application, a copy of which is included as Attachment A, CDLAC anticipates mailing the 1998 application in early December with a due date of December 15, 1997 for the schedllied Janllary 1998 CDLAC application meeting, .j -I - .. . - Page 2, Item .J Meeting Date 11118/97 Since the inception of the MCC Program in 1991, the City has received $30,844,333 in Mortgage Revenlle Bonds, which converted into MCCs equals approximately 372 certificates which have been used to assist first. time homebuyers in the City of Chula Vista, In 1997, Chula Vista received an allocation of $1,187,540 which assisted 15 first,time home buyers and generated approximately $2 million in real estate activity. RECOMMENDATION: That the City Council and Redevelopment Agency adopt the resoilltions, allthorizing the following: 1) City/Redevelopment Agency approve the COLAC application for an allocation; 2) City assign its allocation and the MCC Program to the Redevelopment Agency of the City of Chula Vista; 3) The Redevelopment Agency accept the assignment of the MCC Program; 4) The Redevelopment Agency set,aside 10% of its allocation for low income hollseholds; 5) The Redevelopment Agency certify the availability of funds for the Performance Oeposit; 6) Appropriate $2,100 from the unappropriated balance in the Low and Moderate Income Hollsing Fund; and 7) The Redevelopment Agency certify the agreement to forfeit deposit. BOARDS/COMMISSIONS RECOMMENDATION: The City's Housing Advisory Commission strongly supports the MCC Program, DISCUSSION: A Mortgage Credit Certificate (MCC) is a document awarded to a home buyer, whose income is below 110% of the area median income or $53,460, which allows the bllyer a credit each year on his/her federal income tax in an amount equal to 20% of the mortgage interest paid for that year, The MCC reduces, through a direct credit, the borrower's Federal income tax liability, thus increasing the income available to qualify for a mortgage loan. A MCC can have the effect of allowing lower income buyers to qualify for higher loan amounts. As a result, the lower income buyers can afford to buy within the City of Chula Vista, The certificate is registered with the IRS; it is not transferable, and it is revoked if the certificate holder moves Ollt of the qualifying home, Under the current MCC Program for the City of Chula Vista, a family applies for a MCC through one of the participating lenders while applying for the loan to purchase the home, The potential borrower pays a non, refundable $200,00 to the lender at the time the application is made, and the lender forwards $150.00 of the $200.00 fee to the City's Community Oevelopment Oepartment. Community Development Staff reviews the application for program compliance and reserves a Mortgage Credit for the bllyer; the MCC is issued at the close of escrow, In order to assist low,income families (those families earning 80% or less of area median income.) staff recommends that 10% of the allocation be set aside for low.income families, A concerted effort will be made J-~ Page 3. Item J Meeting Date 11118/97 to identify and link qualified buyers and housing stock to meet the goals of the low.income objective, Should it prove infeasible to reach this objective, the application includes an option to release these funds from the low income restriction by the following formula: One, half of unexpended set.aside funds released after twelve months, and the remainder at the end of eighteen months, Home buyers in Chula Vista, particularly those purchasing their first home, suffer from a large disparity between income and housing affordability, A MCC Program is an excellent way to bridge this existing gap, A MCC Program is considered preferable to a single family bond program in Chula Vista because it allows home buyers the flexibility to choose from both newly constructed homes and lower priced existing housing stock. According to federal guidelines, program participation is open to all interested mortgage brokers and lenders. Lenders consider the MCC Program an effective way to increase first,time buyer business, and the Program also assists lenders in fulfilling their requirements, Ilnder the Community Reinvesment Act. Currently, there are 45 lenders participating in the City of Chula Vista MCC Program, The California Debt Limit Allocation Committee has stated that the MCC Program mllst first be approved by the City of Chula Vista City Council. and then the authority must be given to the Agency to implement the Program, Therefore, it is staff's recommendation that implementing authority be given to the City of Chula Vista Redevelopment Agency. FISCAL IMPACT: The California Debt Limit Allocation Committee reqllires an application fee of $2,100 and a Performance Deposit of $25,000 (,005% of the reqllested allocation). The Performance Deposit is a requirement of California Government Code Section 8869,84(e) which attempts to insure that the allocation is used properly, The Performance Deposit requirement is satisfied by the Agency certifying the availability of $25,000 for this pllrpose and funding availability in the Low/Moderate Income Housing fllnd, The full amount of the Performance Deposit should be released by the California Debt Limit Allocation Committee as long as the first Mortgage Credit Certificate is issued within 120 days of receiving an allocation, Staff will meet this deadline. Funds are budgeted in the Low and Moderate Income Housing Fund Staff Services account for administration of the MCC program, In addition, funds are available in the Ilnappropriated balance of the Low and Moderate Income Housing Fund for the $2,100 application fee. IJFI H,\HOME\COMMOEVISTAFF,REP\11.18,97\COlAC,113[No"mb" 13. 1997 [lUOamll ."ß-.!J RESOLUTION NO, It'l'I RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA AUTHORIZING SUBMITTAL OF AN APPLICATION TO THE CALIFORNIA OEBT LIMIT ALLOCATION COMMITTEE (COLAC) FOR AN ALLOCATION OF QUALIFIED MORTGAGE BONOS AND ITS ASSIGNMENT I AND ALLOCATION TO THE REDEVELOPMENT AGENCY WHEREAS, the Health and Safety Code of the State of California, commencing at Section 50171. ("the Act") authorizes cities or their redevelopment agencies to issue mortgage credit certificates pursuant to a duly adopted and qualifying mortgage credit certificate program ("MCC Program"); and, WHEREAS, federal law limits the amount of mortgage credit certificates that may be issued in any calendar year by entities within a state and authorizes the legislature of such state to provide the method of allocation within the state; and, WHEREAS, Chapter 3,5 of Part I Division 31 of the Health and Safety Code, commencing at Section 50171. governs the allocation among governmental units in the state having the authority to issue mortgage credit certificates; and, WHEREAS, Section 50191 of the Act requires a local agency to file an application with the California Debt Limit Allocation Committee 1 ("Committee") prior to the issuance of mortgage credit certificates; and, WHEREAS, the Committee has, under the authority of Health and Safety Code Section 50191. required a deposit of up to one,half of one percent of the portion of the allocation requested, NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA DOES HEREBY FIND, DETERMINE, DRDER. AND RESOLVE as follows: Section 1. Agency's Application for Allocation The City Council approves the application for an allocation of qualified mortgage bonds in the amollnt of $5,000,000, a copy of which is on file with the City Clerk registered therein as Document No, xx XX'XXX, and authorizes and directs the City Manager to execute same, The enacting legislation describes a committee entitled "Mortgage Bond and Tax Credit Allocation Committee", To the extent that this is the State committee authorized to implement Chapter 3,5 of Division 31 of the Health and Safety Code Section, to wit: the Qualified Mortgage Bond and Mortgage Credit Certificate Program for the State, the use of the word "Committee" shall be intended as a reference to this State Committee J ...t./ - - " - Section 2, Assignment of Allocation and MCC Program Pursuant to the authority of Health and Safety Code Section 50193, or such other provision of law which permits same, the City Council hereby assigns all of its allocation of qualified mortgage bonds under Chapter 3,5 of Division 31 of the Health and Safety Code to the Redevelopment Agency of the City of Chula Vista, and delegates the authority and responsibility to implement and administer the MCC Program to the Agency, Section 3, This resolution shall take and be in full force and effect immediately upon the passage and adoption hereof, Section 4. Minutes The City Clerk shall certify to the passage and adoption of this Resolution; shall enter the same in the book of original Resolutions of said City Council; and shall make a minute of the passage and adoption hereof in the minutes of the meeting at which the same is passed and adopted, Presented by Approved as to form by &, ~ ' Chris Salomone Director of Community Development IIJ'} H:IHOMEICOMMOEV\RESOSIC,COLAC,RES IN"emb" 13, 1997 (11:26amll ..4-6' - . . - RESOLUTION NO, /S,t, RESOLUTION OF THE REDEVElOPMENT AGENCY OF THE CITY OF CHULA VISTA. CALIFORNIA: 1) AUTHORIZING SUBMITTAL OF AN APPLICATION TO THE CALIFORNIA DEBT LIMIT AllOCATION COMMITTEE (CDlAC) FOR AN ALLOCATION OF QUAlIFIEO MORTGAGE BONDS AND ACCEPTING ITS ASSIGNMENT AND ALLOCATION TO THE REDEVElOPMENT AGENCY; 2) ElECTING TO EXCHANGE SAID ALLOCATION FOR MORTGAGE CREDIT CERTIFICATES; 3) CERTIFYING THE AVAILABILITY OF FUNDS FOR THE REQUIRED PERFORMANCE DEPOSIT OF $25.000; AND 4) APPROPRIATING $2.100 FROM THE UNAPPROPRIATED BALANCE IN THE LOW AND MODERATE INCOME HOUSING FUND WHEREAS. the Health and Safety Code of the State of California. commencing at Section 50171. ("the Act") authorizes cities or their redevelopment agencies to issue mortgage credit certificates pursuant to a duly adopted and qualifying mortgage credit certificate program ("MCC Program"); and. WHEREAS. federal law limits the amount of mortgage credit certificates that may be issued in any calendar year by entities within a state and authorizes the legislature of such state to provide the method of allocation within the state; and. WHEREAS. Chapter 3,5 of Part I Division 31 of the Health and Safety Code. commencing at Section 50171. governs the allocation among governmental units in the state having the authority to issue mortgage credit certificates; and. WHEREAS. Section 50191 of the Act requires a local agency to file an application with the California Debt limit Allocation Committee! ("Committee") prior to the issuance of mortgage credit certificates; and. WHEREAS. the Committee has. under the authority of Health and Safety Code Section 50191. required a deposit of up to one.half of one percent of the portion of the allocation requested, NOW. THEREFORE. THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA DOES HEREBY FIND. DETERMINE. ORDER. AND RESOLVE as follows: 1 The enacting legislation describes a committee entitled "Mortgage Bond and Tax Credit Allocation Committee". To the extent that this is the State committee authorized to implement Chapter 35 of Division 31 of the Health and Safety Code Section, to wit: the Qualified Mortgage Bond and Mortgage Credit Certificate Program for the State, the use of the word "Committee" shall be intended as a reference to this State Committee J.f. - - " - Section 1. Agency's Application for Allocation The Agency Board approves the City's application for an allocation of qualified mortgage bonds in the amount of $5,000,000, a copy of which is on file with the City Clerk registered therein as Document No, xx xx,xxx, Section 2. Acceptance of Assignment by Agency The Agency Board accepts the assignment of the City's allocation of qualified mortgage bonds, and accepts the authority and duty to implement and administer the MCC Program, Agency further agrees to issue MCCs to qualifying homeowners of property located within the territory of the City, provided however, that if, after a reasonable attempt and for reasons beyond the control of the Agency, the Agency is unable to issue all of the assigned certificates to homeowners of property located within the territory of the City, any remaining certificates may be issued to qualifying homeowners of property located within the county of San Diego, Section 3, Agency Sets Aside 10% of Allocation for lower Income Households The Agency agrees to set aside 10% of the allocation received from the State of California for low income households (Those households earning 80% or less of area median income), If the set-aside is unused, this set,aside may be released by the following formllla: One.half of the unexpected set.aside funds released after twelve months, and the remainder at the end of eighteen months. Section 4, Authority to Convert to Mortgage Credit Certificate Pursuant to the authority of Section 59197,2, the Agency Board hereby elects to exchange all of its authority to issue qualified mortgage bonds for authority to isslle mortgage credit certificates ("MCC's"), The Executive Director shall notify the Committee of its election, and explain to the Committee the mechanism established in its program that will assure that the dollar amount of the mortgage credit certificate authority will not be exceeded, Section 5, Appropriating Funds The Agency hereby appropriates $2,100 from the unappropriated balance of the low and Moderate Income Housing Fund 993 and transfers said funds into the Professional Services Account 993,9930-5201 for the Application Fee. Section 6, Authority to Certify Funds and Agreement to Forfeiture Rule The Executive Director, or his designee, the Finance Director, or other written designee, is hereby authorized to certify the amount of $25,000 from the Agency's low and Moderate Income Housing fund, and maintain certification in accordance with the cllrrent rIlles and regulations of the Committee, and to certify such fact to the Committee, including the promise to pay same over to the Committee upon a event of forfeiture, J..? - - -, - Section ], This resolution shall take and be in full force and effect immediately upon the passage and adoption hereof, Section 8, Minutes The Secretary to the Agency shall certify to the passage and adoption of this Resolution; shall enter the same in the book of original Resolutions of said Agency; and shall make a minute of the passage and adoption hereof in the minutes of the meeting at which the same is passed and adopted, Presented by Approved as to form by ~J-' ~ Chris Salomone Director of Community Development IIJ" H,\HOME\COMMOEVIRESOSIA,COlAC,RES INovemb" '3, 1997 (",'a,mll J--'i - - . - ATTACHMENT "A" CALIFORNIA DEBT LIMIT ALLOCATION COMMITTEE APPLICATION FOR 1997 ALLOCATION OF PRIVATE ACTIVITY BONDS FOR EXISTING MORTGAGE CREDIT CERTIFICATE PROGRAMS All references to state and federal statutes are cited for information only. Bond Counsel must be consulted as the requirements are subject to change. ------------------------------------------------------------------------------------------------------------------------------- PART I - ISSUER (APPLICANT)/ADMINISTRATOR INFORMATION ------------------------------------------------------------------------------------------------------------------------------- 1. Name, address, contact person and telephone number of the issuer (applicant) of the MCCs and the filer of the conversion election: City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91910 Contact Person: Judith Foland (619) 691-5036 Issuer's federal employer identification number: 95-6000690 2, Agency name, address, contact person and telephone number of program administrator if different from above' Redevelopment Agency of the City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91910 Contact Person: Judith Foland~ (619) 691-5036 3, County: San Diego 4, Attach a list of the participating jurisdictions if this is a multiple jurisdictional program, If this is a change ffom the current program participation, indicate what constitutes the change, Issuers must certify in PART V that all necessary resolutions and publicly adopted documents are in place, or will be in place prior to receiving allocation. If the program is adding new jurisdictions, publicly adopted documents for each of the new participants must be provided. When were publicly adopted documents for the continuing participants last submitted to CDLAC (indicate month and year)? N/A J.., I MCC-ExistingfRev, 11196 - - , - . 5, Name, address, contact person and telephone number of tax counsel firm: Orrik, Herrington & Sutcliff Wells Fargo Building 400 Capital Mall, 30th Floor Sacramento, CA 95814 Contact Person: Perry Isreal (916) 329-7921 6, Name, address, contact person and telephone number of financial advisor firm, if applicable: ------------------------------------------------------------------------------------------------------------------------------- PART II - ALLOCATIONIPROGRAM INFORMATION ------------------------------------------------------------------------------------------------------------------------------- L Amount of allocation requested: $10,000,000 2, Date MCCs will be advertised: December 21,1996 3, Proposed issuance date offirst MCC: March 21, 1997 4, Number of units expected to be financed and average mortgage amount: Unit Number %of Average ~ of Units Total Mortgage Amount New Units 0 --L 0 Resale Units --l25.- -100%-. $n~,nnn Rehabilitated Units 0 0 0 Total 125 100% $135,000 5, Are the above numbers estimates or actual program requirements imposed by the issuer? The above estimates are based on current demand. 6, What type of housing is expected to be financed? The type of housing expected to be financed includes single-family homes, townhomes, and condominiums. J-/O 2 MCC-ExistinglRev'o 11/96 - - " - 7, Ifprogram contains a reservation for new construction, attach a) schedule of when new homes or developments are expected to become available, and b) description of the mechanism which is in place to use the allocation if construction is postponed or otherwise delayed, Not applicable. 8, What is the proposed tax credit rate? 20% Indicate any change ftom previous program's tax credit rate, No change. 9, Prol!ram Performance a) Provide the following information relating to previous MCC allocations: Allocation Allocation Month/Year Amount Used MCCs Issued 11/94 $5,800,000 $5,800,000 60 06/95 $4,488,000 $4,488,000 46 01/96 $2,032,000 $2,032,000 25 b) Attach explanation for any unused allocation, and the anticipated usage of allocation during the remaining term of the program, c) Current avera~e monthly rate of issuance over the past 6-9 months: 20/month MCC's were committed in the first month of issuance. d) Expected average monthly rate of issuance: 20/month e) Explain any differences between the current and expected rates of issuance, J ../1 3 MCC-Existing/Rev, 11/96 - - , - . f) Number of homes sold in past year which were within the purchase price limits (identity the source): 1294 homes were sold in the City of Chula Vista ranging from $60,000 to $204,000. These prices fall within the price guidelines for both target and non-target areas. Source: South Bay Board of Rea Hors 1O, Past Prol!ram ExDerience a, Identity the time period for which infonnation is being provided: July 1991 to January 1996 b, Total number ofMCCs issued during the specified time period: 379 c, Non-tanzet areas: Number of new construction MCCs issued: 105 Average new construction mortgage amount: $125,000 Average new construction purchase price: $149,000 Number of resale MCCs issued: 198 Average resale mortgage amount: $135,000 Average resale purchase price: $148,000 d, Target areas: Number of new construction MCCs issued: NA Average new construction mortgage amount: NA Average new construction purchase price: NA Number of resale MCCs issued: 76 Average resale mortgage amount: $130,000 Average resale purchase price: $159,000 e, Median income on which program maximum limits were based: Average income & its percent of median income in non-target areas: $46,500 @ 100% median Number/percent oflower income participants in non-target areas: 30% Average income & its percent of median income in target areas: $48,900 @ 120% median Number/percent oflower income participants in target areas: 15% ------------------------------------------------------------------------------------------------------------------------------- PART III - PUBLIC BENEFITS INFORMATION ------------------------------------------------------------------------------------------------------------------------------- 1. Maximum Purchase Prices. For purchase price requirements, refer to Internal Revenue Code Section 143(e), The proposed maximum limits are: Non-Target Area Target Area Unit Average Area Maximum Maximum ~ Purchase Price* Purchase Prices Purchase Prices New Units $166,592 $149,932 $ 183,251 Existing Units $185,813 $ 167,231 $ 204,394 *This is (check one): ~IRS safe harbor limitations _as detennined by special survey (attach copy of survey along with bond counsel confinnation that survey methodology complies with federal law) J-/~ MCC-Existing/Rev, 11/96 - .. , - 2, Maximum Income Limitations. For income requirements, refer to Internal Revenue Code Section 143, Please provide the information requested below, a, Area median income on which program limits are based: $46,600 Above median income is (check one): _statewide median _county median ----2LMSAlPMSA median _local median as determined by special study (attach copy of study along with bond counsel confirmation that study methodology complies with federal law) b, Are there target areas in the jurisdiction(s)? -LYes _No If yes, percent of bond proceeds reserved for target areas: 20% c, The proposed maximum limits are: Household Size Non-Target Area Tar~et Area 1-2 persons $46,600 $ 55,920 3+ persons $53,590 $ 64,308 3, Prol!ram Reservations Describe any reservations for lower purchase prices and/or lower incomes, Under the MCC program, 10% of the allocation is reserved for persons earning at or below 80% of the median income. ------------------------------------------------------------------------------------------------------------------------------- PART IV - OTHER RELATED INFORMATION ------------------------------------------------------------------------------------------------------------------------------- 1. Attach description of applicant's financial participation in the program, See IIAttachement 1" 2, Attach explanation of how this program helps attain the housing goals of the participatingjurisdiction(s), See "Attachment 1" J-/~ 5 MCC-ExistinglRev, 11/96 - - " - ATTACHMENT #1 ""' ...... -- Part IV - OTHER RELATED INFORMATION 1. The City is currently establishing a First-time Home Buyer Assistance Program to work in conjunction with the Mortgage Credit Certificate Programto assist low-income families or individuals qualify for a mortgage loan. _2. This program will help those families or individuals who are unable to qualify fö{-a - mortgage loan by offering assistance, either in the form of a silent second or down payment assistance. . - ,J..l¥ - - . - REDEVELOPMENT AGENCY AGENDA STATEMENT Item -4 Meeting Date 11118197 ITEM TITLE: RESOLUTION /S'~? ApPROVING THE REVISED COMMUNITY HOUSING IMPROVEMENT PROGRAM (CHIP) GUIDELINES SUBMITTED BY: '.m..my D.._.pm.. D;,octo, ~ REVIEWED BY: Executive Director J C1 ~ ~ (4lliths Vote: Yes- No..x.1 BACKGROUND: On February 1, 1977 the City Council adopted resolution 8492 approving the implementation of a Community Housing Improvement Program (CHIP) to provide low interest loans and grants for low income residents to rehabilitate their home, This program became eligible under Title 1 of the Housing and Community Development Act of 1974 which provided funds to cities and counties to implement a wide variety of programs, including property rehabilitation and neighborhood conservation, Prior to implementation of the CHIP program, a housing stlldy conducted by the City indicated there were clearly recognizable signs of neighborhood decay occurring in Chula Vista, Two programs were designed to provide assistance to households who could not otherwise qualify for a regular conventional home improvement loan to: 1. Home Rehabilitation Loans for owner.occupants 2, Standard and Emergency Repair Grants. As the demand for rehabilitation assistance began to increase, an in.house Community Housing Improvement Program (CHIP) Manual was developed to assist staff in administering the program requirements and detailing the property rehabilitation standards of the Health and Safety Code and the Uniform Building Codes, On June 7, 1977 the City Council adopted resolution 8650 approving the CHIP Manual. A provision in the CHIP Manual established a Community Hollsing Improvement Program Loan Committee to approve loan and grant applications, This Committee is represented by staff from the Building and Housing Department, Community Development Department, and the Finance Department The CHIP program continues to provide loans and grants to assist low income residents to rehabilitate their homes in conformance with City housing standards, As the demand for this program continues to increase, staff has determined the program guidelines need to be updated and made available to the public regarding the qllalifying criteria for the program, Exhibit A outlines the loan guidelines and Exhibit B outlines the grant guidelines, RECOMMENDATION: That the Redevelopment Agency adopt the resolution approving the revised CHIP Guidelines, 4-1 - .. .. .. Page 2, Item '" Meeting Date 11/18/97 BOARDSICOMMISSIONS RECOMMENDATION: The Housing Advisory Commission and the Community Housing Improvement Program (CHIP! Committee have reviewed and approved the revised CHIP Guidelines, DISCUSSION: The purpose of revising the existing CHIP guidelines is to streamline the program, delete any outdated material, and to establish limits on the amount of loans and grants, As applications for this program continue to increase, there is not enough funding to assist all of the requests and a waiting list has been established, Currently, 62 applicants are on the waiting list for the loan program and 50 applicants are on the waiting list for the grant program, The funding sollrce for the CHIP program is from the Redevelopment 20% set,aside funds, These fllnds are restricted to providing affordable housing assistance. Funds are budgeted on an annual basis through the fiscal budget process, Currently, $300,000 has been budgeted for the CHIP program, Of the $300,000 budgeted, $200,000 is used to provide loans and $100,000 is used to provide grants, Table 1 references the changes from the existing loan gllidelines to the revised loan guidelines, Table 1 EXISTING CHIP LOAN GUIDEliNES REVISED CHIP LOAN GUIDELINES loan amount to be determined by CHIP Committee loan amount capped at $25,000 for Single,family residence and $5,000 for a mobile home. loan Terms: 8,25% for 15 years, no income limit These loan terms no longer available loan Terms: 5% for 15 years, income 80% or loan Terms: 4% for 15 years, income 80% or below AMI below AMI 1 for a Single, family residence and 10 years for a mobile home, Oeferred loan available to applicants @ 50% or loan Terms: 0% Oeferred loan available to seniors 162 and below AMI older) @ 50% or below AMI subject to repayment at sale or transfer of property loans available to absentee owners Loans to absentee owners no longer available' Existino loan Program Guidelines The loan program was developed to assist low,income households to rehabilitate their home in conformance with City housing standards, Under the existing loan program, the CHIP Committee determined the amount of the loans based on an inspection of the property by a City Code Enforcement Officer, Any residence in violation 1 AMI represents the area median income for San Diego County and is currently $48,600, A household at 80% of AMI and 50% of AMI adjusted for a household sl,e of four is $38,900 and $24,300, respectively, 2 With a current waiting list of 62 applicants, there are insufficient funds to assist absentee owners, 4..~ - - Page 3. Item 4 Meeting Date 11118/97 of the health and safety code regulations were required to correct the violations, If the household qualified as low.income (annual income at or below 80% of area median income), that household was eligible to apply for a CHIP loan, The amount of the loan was based on estimates from licensed contractors to correct the code violations. Since the households that received loans were in a deteriorated condition and in need of substantial rehabilitation, the loan amounts averaged between $45,000 and $55,000, In many cases, the household's annual income fell below 50% of area median income which was insufficient to support payment on the CHIP loan, therefore the household received a deferred loan. Many of the households that received deferred loans were located in the Montgomery Area that was annexed by the City, At the time, this area was in a deteriorated state and in need of rehabilitation. Revised Loan Program Guidelines The purpose of revising loan guidelines and limiting the loans to $25,000 is to assist more low,income households, The applicants that are currently on the waiting list require minor rehabilitation to their homes, The loans will be for a period of 15 years at 4% interest for a single, family residence and 5 years at 4% interest for a mobile home. Also, seniors (age 62 and older) will receive a deferred loan if their income is at or below 50% of area median income, The deferred loans will be due and payable upon sale or transfer of the property, In order to assist the applicant in determining what items are allowable under the loan program, a priority ranking has been created, Table 2 delineates the priority ranking. Table 2 Rallitillg Repairs Priority #1 Correction of Health & Safety Code Violations Priority #2 Exterior Landscaping & Painting 3 Priority #3 Applicant Wish List 4 As Table 2 demonstrates, correction of health and safety code violations continlles to be a top priority of the program, Exterior landscaping and painting is also a priority in an attempt to stimulate other area residents to follow suit and revitalize the neighborhood, The Applicant Wish list was developed in the event there are sufficient funds left over from correcting code violations and exterior landscaping to provide upgrades inside the home. These 3 The purpose for ranking exterior landscaping and painting as priority #2 is to attempt to stimulate neighborhood revitalization in the area, 4 In the event there are sufficient funds available from the $25.000 to rehabilitate the home to health and safety code standards. the Applicant's Wish list will be used to provide certain upgrades to the applicant's home, The upgrades may include such items as new cabinets, carpeting, fences. kitchen flooring, etc., and will be determined by the CHIP Committee, 4-A - - .- Page 4, Item 4 Meeting Date 11/18/97 upgrades include new carpeting, interior painting, kitchen flooring, cabinets, etc, The program does not allow new pools, spas, microwave ovens, marble flooring, or the like, In the event an applicant may have special circumstance over and above minor rehabilitation repairs, the CHIP Committee will have the authority to approve loans in excess of $25,000, Special needs include providing a room addition to eliminate overcrowding or providing a bathroom renovation for a disabled applicant. These types of special needs will reviewed be on a case'by,case basis. Grant Program Guidelines The purpose of establishing a grant program was to assist with emergency and minor repairs to single,family homes and mobile homes, Under the existing program guidelines, the grant amount is limited to $1,000, This amount is inadequate to cover the cost of emergency and minor repairs, Staff recommends increasing the grant from $1,000 to $2,000, It is also recommended that the CHIP Committee have the authority to increase this amount based on special circumstances. Special circllmstances include an elderly single head,of,household earning at or below 50% of area median income. In these types of cases, the CHIP Committee can authorize exceeding the grant in an amount not,to,exceed $3,000, Applications qualifying under these conditions will be reviewed on a case,by,case basis, Housing Inspection Contractor In order for staff to provide a priority ranking to the applicant, a House Inspection contractor will be hired to do a complete inspection of the applicant's residence and provide a written report to the Community Development Department. The inspection report will detail the condition of the unit and will provide staff with a listing of repairs that need to be corrected using the priority ranking, The purpose of hiring an independent House Inspection contractor is due to the limited number of code enforcement staff in the Building and Housing department. In prior years, a code enforcement officer was assigned to the Community Housing Improvement Program to provide inspections of substandard properties, The position was reassigned to provide code enforcement strictly for the Building and Housing department due to budgetary cuts in fiscal year 1995,96 for that department. During that time, staff was attempting to inspect properties in order to conti nile to offer the CHIP program, Due to workload existing staff could not perform this task and an independent contractor will be used, The House Inspection contractor will provide an initial inspection of the applicant's property and prepare a detailed written report to the Commllnity Development Department. In addition, an on,site work,in,progress monitoring visit will be performed by the House Inspection contractor to verify the construction contractor is conforming to the bid estimate, Once the rehabilitation work is completed, a final inspection of the property will be performed to ensure the work was completed by the construction contractor in accordance with applicable health and safety code regulations, 4-4 - - . - Page 5. Item 4 Meeting Date 11/18/97 With the assistance of the House Inspection contractor, staff anticipates assisting five low, income household on a monthly basis. With approximately 62 applicants on the waiting list, within one year, all Dr most of the applicants will receive assistance. Affordabilitv Covenants The use of Low and Moderate funds for "substantial" rehabilitation projects can trigger the reqllirement that afford ability covenants be imposed for ten years against the benefitted property, "Substantial" rehabilitation is not expressly defined by State law, but a commonly used rule of thumb is that "substantial" means an amount equal to 25% of the property value after rehabilitation, As conceived, the CHIP program is not expected to trigger this requirement very often, if at all. The loan/grant amounts are too small. However, appropriate affordability restrictions will be imposed as required by law as good housing practices. FISCAL IMPACT: Currently, $3,500,000 is available in the Low and Moderate Income Housing Fllnd, Of this amollnt $300,000 has been approved through the annual budget process for the CHIP program ($200,000 for loans and $100,000 for grants). Staff costs to administer the CHIP program are budgeted in the Low and Moderate Income Housing Fund Staff Services account IIJ'I H,\HOME\COMMOEV\STAFF,REP\l1,18,97\CHIP,113IN",mb<, 12. 199711 4.s- - - . - RESOLUTION NO, ~ '1 RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA APPROVING THE REVISED COMMUNITY HOUSING IMPROVEMENT PROGRAM (CHIP) GUIDELINES WHEREAS, on February 1, 1977 the City Council adopted resolution 8492 approving the implementation of a Community Housing Improvement Program (CHIP) to provide low interest loans and grants for low-income residents to rehabilitate their home; and WHEREAS, On June 7, 1977 the City Council adopted resolution 8650 approving the Community Housing Improvement Manual including a provision establishing a Community Housing Improvement Program Committee to approval loan and grant applications; and WHEREAS, the existing guidelines are being revised to streamline the program, delete any outdated material, and to establish limits on the amount of loans and grants. NOW, THEREFORE, BE IT RESOLVED the Redevelopment Agency of the City of Chula Vista does hereby find, order, determine and resolve to approve the revised Community Housing Improvement Program (CHIP) Guidelines in substantially the form presented in Exhibit A and Exhibit B attached to this Resolution, BE IF FURTHER RESOLVED, that subject to the approval of the Executive Director, the CHIP Committee and the Agency Attorney, minor modification to the Guidelines may be made, which are consistent with overall program purposes, if needed, in order to accommodate changes in market conditions, Presented by Approved as to form by ~ ~ Chris Salomone Director of Community Development [(ENTER AUTHOR'S INITIALS) M,\HOME\COMMDEVIRESOS\CHIP,RES (N"om'" 13, 1997 (11'20=)] 4-l. - . . - EXHIBIT "A" ~~ft.. ~.- ~--- ---- -:::5- - CrlY OF CHULA VISTA COMMUNITY DEVELOPMENT DEPARTMENT HOUSING DIVISION COMMUNITY HOUSING IMPROVEMENT PROGRAM (CHIP) LOAN GUIDELINES Dear Property Owner: The City of Chula Vista through the Community Development Department is providing home improvement loans at an interest rate of four percent (4%) to low-income families throughout Chula Vista, These loan funds are available under the following conditions: 1, Applicants must be owner-occupants in residency for at least one year. 2, Loans will be awarded based on the following priorities: RANKING REPAIRS Priority #1 Correction of Health & Safety Code Violations Priority #2 Exterior Landscaping & Painting Priority #3 Applicant Wish List 1 Items from the Applicant Wish List will be approved in the event there are sufficient funds available from the $25,000 loan after health and safety code violations have been corrected along with exterior landscaping and painting, Loans will not be approved for pools, spas, microwave ovens, marble flooring, or other items, 3. Maximum loan is $25,000, ($5,000 for a mobile home), 4, Maximum term (length of loan) is 15 years (10 years for a mobile home), 5, The cost per month for a 4% loan running the total 15 year term is approximately $7.40 for each $1,000 borrowed, For example, a $10,000 loan at 4% would cost $74,00 per month ($10,000 X $7.40), You may be eligible for program benefits if your total gross family income is less than the amount shown on the following chart when compared to household size, This income range is based on 80% of area median income adjusted for household size, I In the event there are sufficient funds available from the $25,000 loan to rehabilitate the home to Health and Safety Code Standards, the Applicant's Wish List will be used to Provid4ain upgrades to the applicant's home (for example: new cabinents, carpeting, fences, etc,), - ? - - - - Community Housing Improvement Program Loan Guidelines Page 2 CHIP Loan Program Income Qualification Income includes wages, salary, tips, commissions, interest, government benefits such as social security, 881, unemployment benefits, pensions, child support, alimony, and business income, A family includes a person or persons related by blood, marriage, or operation of law, who share the same dwelling unit. Very low income families (50% of median income) unable to support a 15 year amortized mortgage, are eligible for a $2,000 non-repayable grant for life safety work items. Seniors (age 62 and older) who earn up to 50% of area median income, adjusted for household size, qualify for a deferred loan. The maximum loan amount will not exceed $15,000 and will be due and payable upon transfer or sale of the property, Credit reports are reviewed to assure acceptable payback responsibility, Total family expenses, including new loan, should not exceed 30% of total family income, and at least 10% equity in the home should remain after rehabilitation. No charge for origination or discount points. Generally, about the only loan costs are our direct costs for Title Information (approximately $70.00), credit report (approximately $400.00). Loan funds are meant to be spent in a relatively short period of time, Therefore, the entire loan is interest bearing from the start, All funds are maintained at an independent Escrow Office and made available to owner or contractor as work is undertaken. When you submit your application, please be sure to include the following information, Failure to submit the required documentation will delay review of your application, . Copy(ies) of the last 2 years 1040's or W-2, . Copy(ies) of the last 2 months of employment check stubs, social security payments, retirement checks, and any other source of income. . Copy(ies) of most recent Income/Loss Statement, if self-employed, . Copy(ies) of 3 project cost estimates, including copies of contractor's Errors & Omission Insurance, General Liability Insurance, and Worker's Compensation Insurance, . Copy of current home insurance policy, . Copy of billing statement from the County Tax Collector showing property taxes paid, including a copy of the canceled check, 4-g Community Housing Improvement Program Loan Guidelines Page 3 The project cost estimates will be reviewed by the Community Development Department for comparison costs, Since the bid estimates are provided to the Community Development Department by the applicant, it is the applicant's responsibility to contract with the contractor and to assume responsibility for the work to be performed, In the event that the work is not performed to the satisfaction of the applicant, it is the applicant's responsibility to assume liability that may occur between the applicant and the contractor. The Community Development Department will not get involved in applicant/contractor disputes. Processing time for these grants varies with the number of applicants, time of the year, and fund availability, You will be placed on a waiting list if there are numerous applicants at any given time, Currently, a waiting list with 62 applicants has been established for this program. This loan assistance is available on a one-time basis, This letter is meant to provide general information regarding the CHIP Loan program and are subject to change without notice, If you would like additional information please call (619) 585-5722 4-'1 - - -- EXHIBIT "B" ~~~ -.- r -- -"""--- --. CllY OF CHUlA VISTA COMMUNfTY DEVELOPMENT DEPARTMENT HOUSING DIVISION COMMUNITY HOUSING IMPROVEMENT PROGRAM (CHIP) GRANT GUIDELINES Dear Property Owner: The City of Chula Vista through the Community Development Department is providing home improvement grants to low-income families throughout Chula Vista, These grant funds are available under the following conditions: 1, Applicants must be owner-occupants in residency for at least one year. 2. Almost all property improvements are eligible including roofs, fences, safety repairs, energy conservation, painting, stucco, and some landscaping, Ineligible items include furniture, microwave ovens, and refrigerators, Priority will be given to emergency and critical types of improvement needs, 3, Maximum grant is $2,000, The grant does not have to be paid back, You are eligible for program benefits if your total gross family income is less than the amount shown on the following chart when compared to household size, This income range is based on 50% of area median income adjusted for household size, Income includes wages, salary, tips, commissions, interest, government benefits such as social secy, 881, unemployment benefits, pensions, child support, alimony, and business income, A family includes a person or persons related by blood, marriage, or operation of law, who share the same dwelling unit. When you submit your application, please be sure to include the following information, Failure to submit the required documentation will delay review of your application, . Copy(ies) of the last 2 months of employment check stubs, social security payments, retirement checks, and any other source of income, Also required is a copy of your federal tax returns for 1996, . Three (3) bid estimates from qualified licensed contractors estimating the cost of the requested repairs, Contractors will be required to submit verification of insurance, 4-10 Community Housing Improvement Program Grant Guidelines Page 2 The project cost estimates will be reviewed by the Community Development Department for comparison costs, Since the bid estimates are provided to the Community Development Department by the applicant, it is the applicant's responsibility to contract with the contractor and to assume responsibility for the work to be performed, In the event that the work is not performed to the satisfaction of the applicant, it is the applicant's responsibility to assume liability that may occur between the applicant and the contractor. The Community Development Department will not get involved in applicant/contractor disputes. Processing time for these grants varies with the number of applicants, time of the year, and fund availability, You will be placed on a waiting list if there are numerous applicants at any given time, Currently, a waiting list with 60 applicants has been established for this program. The $2,000 grant will be awarded on a one-time basis, This letter is meant to provide general information regarding the CHIP grant rehabilitation program and are subject to change without notice, If you would like additional information please feel free to call (619) 585-5722, 4-11 - - . .