1996-047-Adopting Housing Conservation Program Guidelines And Rescinding Resolution 1989-223RESOLUTION 1996 - 47
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
ADOPTING HOUSING CONSERVATION PROGRAM GUIDELINES AND
RESCINDING RESOLUTION 1989 -223
WHEREAS, the Town of Los Gatos has a Housing Conservation Program allowing it
to provide Community Development Block Grant (CDBG) funded low interest loans and
grants to income eligible property owners for home rehabilitation purposes; and
WHEREAS, the Town of Los Gatos desires to revise the guidelines which govern the
Housing Conservation Program; and
NOW, THEREFORE, THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
DOES HEREBY RESOLVE AS FOLLOWS: (1) adopt the Housing Conservation Program
Guidelines attached as Exhibit A; and (2) rescind Resolution 1989 -223.
THEREFORE, BE IT RESOLVED:
This decision constitutes a final administrative decision pursuant to Code of Civil
Procedure section 1094.6 as adopted by section 1.10.085 of the Town Code of the Town of
Los Gatos. Any application for judicial relief from this decision must be sought within the
time limits and pursuant to the procedures established by Code of Civil Procedure section
1094.6, or such shorter time as required by state or federal law.
CSD08:A: \RESOS \041596.847 1
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of
Los Gatos, California, held on the 15th day of April, 1996 by the following vote:
COUNCIL MEMBERS:
AYES: Steven Blanton, Linda Lubeck, Patrick O'Laughlin,
Mayor Randy Attaway
NAYS: None
ABSENT: Joanne Benjamin
ABSTAIN: None
ATTEST: \ 7 I
CLERK OF THE TOWN OF LO�-St ATOSv
LOS GATOS, CALIFORNIA
CSD08:A: \RES0S \041596.847 2
TOWN OF LOS GATOS
HOUSING CONSERVATION PROGRAM
GUIDELINES
I. PURPOSE
EXHIBIT A
The Town's housing goal is to provide adequate housing for Town citizens, regardless of age, income,
race or ethnic background. The Town encourages conservation and construction of housing adequate for
future populations and replacement needs consistent with environmental limitations and in proper
relationship to community facilities, open space and transportation. The Housing Conservation Program
(HCP), managed by the Community Services Department since 1976, contributes to the Town's overall
housing goal by providing CDBG funded low interest loans and grants to income eligible property
owners for home rehabilitation purposes. In this manner, the Town preserves its existing housing stock
and promotes safe housing for Los Gatos residents. Housing conservation is achieved through:
1. Owner Occupied Housing Rehabilitation Loans
2. Rental Housing Rehabilitation Loans
3. Emergency Loans
4. Rehabilitation Grants (Emergency and Safety)
The Housing Conservation Program is funded entirely by federal Community Development Block Grant
(CDBG) monies.
II. GENERAL ELIGIBILITY CRITERIA
A. Income Eligibility: The Town's Housing Conservation Program is designed to assist low and
very low income residents, i.e., those with annual household incomes not exceeding 80% of the
County Median Income (CMI) adjusted for household size as defined by the Federal Department
of Housing and Urban Development for the San Jose PMSA. The Town offers 6% rehabilitation
loans to qualified applicants with incomes exceeding 80% of the CMI.
Very Low Income: Annual household income at or below 50% of CMI.
Low Income: Annual household income greater than 50 %, but not exceeding 80 %, of CMI.
Moderate Income: Annual household income greater than 80 %, but not exceeding 100 %, of CMI.
Non - profit organizations providing affordable housing or other housing related services to
persons at or below 80% of the CMI are eligible for assistance through the Town's HCP pending
analysis of direct benefit to Los Gatos residents.
B. Eligible Structures: Single - family detached, single - family attached, multi - family structures, and
mobile hojnes. Structure must be located within the Town's boundary limits, except as otherwise
approved by the Loan Review Committee in instances where the housing unit, located elsewhere
in Santa Clara County, serves a housing need benefiting a segment of the Los Gatos population.
Structure to be rehabilitated must also be of legal status.
C. Hazard Insurance: Prior to disbursement of funds, applicant must provide proof of adequate
hazard insurance on the structure, which must be maintained for the life of the loan. The amount
of coverage must equal the full replacement cost of the insured structure, and the Town of Los
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Gatos must be named in the policy as a lenders loss payee. Hazard insurance coverage will be
monitored by the Town.
D. Applications: A Town application must be completed to initiate the process for a rehabilitation
loan and grant. Applicants may apply for more than one loan or grant program.
In administering the Housing Conservation Program, the Town does not discriminate on the basis of
age, sex, color, race, marital status, sexual orientation, ancestry, physical or mental disability, national
origin, religion, medical condition, or any other basis prohibited by law.
III. LOAN AND GRANT PROGRAMS
The cost of rehabilitation materials, labor, permits, credit report, lot book, termite report, loan processing
fee, architectural fees, engineering fees, business license fee, and completion of rehabilitation contract
specifications may be included in the principal loan/grant amount.
A. LOANS - ELIGIBILITY CRITERIA
REHAB LOANS
OWNER OCCUPIED
RENTAL HOUSING
EMERGENCY
INCOME
See Interest Rate below.
Applicant must own property to
Annual household income
ELIGIBILITY
be rehabilitated.
cannot exceed 80% of CMI
Over the life of the loan, only ten-
ants with an annual household
income of 80% or less of CMI
may occupy rehabilitated units.
MAXIMUM
$50,000 (Loans over $35,000
Single -Unit: $15,000
$15,000
LOAN
require special approval consist-
Multi- Units: $25,000
AMOUNT
ing of a secondary review of the
Complex: $100,000
Rehab Work Write -Up Inspec-
tion List by the Loan Review
Program applicable to structures
Committee.)
with I to 10 rental units only.
INTEREST
0 %: Annual household income
From 3% to 6% as determined by
3%
RATE
at or below 50% of CMI (pay-
Loan Review Committee.
ments may be deferred)
Payments may be deferred up to
3 %: Annual household income
five years upon Loan Review
between 50 % -80% of CMI (pay-
Committee's approval of owner's
ments may be fully or partially
pro forma outlining improvement
deferred)
costs and expected rental income.
6 %: Annual household income
exceeds 80% of CMI
LOAN TERM
3 to 20 years depending upon
15 years
3 to 5 years
Applicant's financial condition.
RESTRICTIONS
Over the life of the loan, rent on
Emergency condition must
rehabilitated unit(s) is restricted to
exist (i.e., threat to life and
30% of the household's annual
property).
gross income.
2 -
LOANS: OTHER CONDITIONS
1.
Ability to Repay
Applicant must evidence adequate capacity to repay rehabilitation loan(s).
2.
Assets
Applicant's assets will be considered by the Loan Review Committee during the loan
2.
Disabled Access
evaluation process.
3.
Credit Worthiness
Applicant's credit history must be in good standing. A credit report will be obtained
by the Town for verification purposes.
4.
Elimination of
The rehabilitation loan, when combined with other resources, must be sufficient to
Substandard Conditions
eliminate substandard conditions.
5.
Loan to Value Ratio
The principal amount of the rehabilitation loan, together with the principal amount of
any other debt secured by the property, cannot exceed 90% of the projected post -
rehabilitation value of the structure.
6.
Documentation
HCP loans are evidenced by a Promissory Note, executed by the owner, and secured
5.
General Property
by a Deed of Trust, satisfactory to the Town. An Owner Participation Agreement
Improvements
outlining HCP loan terms and conditions is also executed by the owner and Town.
ELIGIBLE WORK
Eligible repairs are recommended to the Loan Review Committee by the County Rehab Specialist. Repairs
must eliminate substandard conditions as they exist throughout the housing unit and address one or more of
the following:
1.
Code Violation
Repairs which correct deficiency violations under applicable Building and Housing codes,
including incipient violations.
2.
Disabled Access
Removal of architectural barriers which help provide for the independent functioning of a
disabled household member, or modifications which make the housing unit fully accessible
to the disabled household member.
3.
Earthquake
Repairs or modifications which enhance the structural safety of the housing unit during an
Safety
earthquake.
4.
Overcrowding
Rehabilitation or alteration of a housing unit which alleviates conditions creating
overcrowding, including expansion of the unit to a size adequate to house the occupants (i.e.,
eligible repair work may provide for increased bedroom and bathroom space through
addition or conversion).
5.
General Property
General improvements such as landscaping, fence repair, and painting for cosmetic effect,
Improvements
may be financed only if all substandard conditions (i.e., code violations or deficiencies) are
corrected. The purpose of the Housing Conservation Program is to provide loan funds to
make needed repairs, not to upgrade the property for resale.
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B. GRANTS -ELIGIBILITY CRITERIA
GRANTS
EMERGENCY
SAFETY: Owner Occupied
SAFETY: Rental Housing
INCOME
Annual household income
Annual household income cannot
Annual household income of tenant
ELIGIBILITY
cannot exceed 80% of
exceed 80% of CMI.
cannot exceed 80% of CMI.
Residential Fire Preven-
CMI.
tion
gas fixtures and combustibles, removal of hazardous combustibles, the sweeping, inspection, and
repair of fireplaces, including installation of spark arrests, etc.
Security Improvements
For a five year period following
Elderly/Disabled Resident
Installation of grab bars, wheelchair ramps, accessible door openings, hand -held shower heads,
Assistance
completion of rehab work, annual
household income of tenant(s)
occupying rehabilitated rental unit(s)
cannot exceed 80% of CMI.
ELIGIBLE
Only owner occupied
Program applicable to structures
HOUSING
housing is eligible.
with 1 to 10 rental units only.
MAXIMUM
$3,000
Up to $10,000
Up to $3,000 per unit within any five
GRANT AMT
year period.
CONDITIONS
Emergency condition must
• Owner approval required.
exist (i.e., threat to life
• For a five year period following
and property).
completion of rehab work, rent on
rehabilitated units is restricted to
30% of the household's annual gross
income.
ELIGIBLE
Limited to housing code
Limited to that which•
Limited to that which -
WORK
violations. Resources
• Allows a structure to meet
• Helps prevent residential fires
must be sufficient to
minimum health and safety
through fire prevention
eliminate emergency
requirements.
mechanisms.
substandard condition.
. Provides minimum (non-
• Provides security improvements.
engineered) earthquake retrofitting.
• Improves accessibility for elderly
• Helps prevent residential fires
and disabled residents.
through fire prevention mechanisms
• Provides security improvements.
• Improves accessibility for elderly
and disabled residents.
Examples of Eligible Work:
Minimum Health /Safety
Concealing exposed wires orjunctions, installing stair or porch railings, correcting unsanitary
Requirements
conditions, grounding electrical systems.
Earthquake Retrofitting
Fastening floor framing (mudsills) to foundations, installing plywood (shear) panels as required
to prevent lateral movement at walls during earthquakes, strapping /securing gas fixtures (water
heaters or clothes dryers), replacing rigid gas connectors with flexible type to prevent gas leaks
during or after earthquakes, etc.
Residential Fire Preven-
Installation of smoke alarms and fire extinguishers, correction of inadequate clearances between
tion
gas fixtures and combustibles, removal of hazardous combustibles, the sweeping, inspection, and
repair of fireplaces, including installation of spark arrests, etc.
Security Improvements
Deadbolts on exterior doors, window locks, motion sensor controlled exterior lighting, etc.
Elderly/Disabled Resident
Installation of grab bars, wheelchair ramps, accessible door openings, hand -held shower heads,
Assistance
etc.
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IV. PROGRAM RESPONSIBILITIES
A. Community Services Department
The Community Services Program Coordinator:
- administers the Housing Conservation Program;
- conducts program marketing and outreach;
- conducts initial interviews, processes applications and determines eligibility;
- conducts preliminary housing surveys;
- presents applications and projects to the Loan Review Committee;
- prepares and executes loan and other necessary documents;
- coordinates rehabilitation projects with the Rehabilitation Specialist;
- mediates disputes between homeowners and contractors;
- processes progress and final payments;
- monitors monthly loan payments, payoffs, foreclosures, and program incomes for loan
portfolio; and,
- prepares quarterly and annual rehab reports for County of Santa Clara's Community
and Housing Development Program.
B. Loan Review Committee: The Loan Review Committee is appointed by the Town Manager,
The Committee interprets and applies Housing Conservation Program quidelines in evaluating
and approving loans and grants, establishes terms and conditions for loans and grants, and assures
the appropriate use of funds. It also recommends policy and procedural changes and advises the
Program Coordinator on housing related issues.
C. Town Manager: The Town Manager is authorized to sign various program documents, including
owner participation agreements, payment authorization forms, bank agreements, and requests for
full reconveyance. An applicant denied a loan or grant by the Loan Review Committee may
appeal to the Town Manager, who shall make the final determination as to the applicant's
eligibility and appropriate use of housing conservation program funds. Appeal procedures are
defined in Section V below.
D. Finance Department: The Finance Department performs various loan management functions: it
tracks HCP loan transactions through the Town's accounts receivable system, collects and
deposits monthly loan payments, approves payment authorization forms, and generates monthly
aged invoice reports for loan monitoring purposes.
E. Urban County Housing and Community Development Program: The County Rehabilitation
Specialist surveys property to determine extent of rehabilitation work; establishes project work
scope with Client and Program Coordinator; prepares construction and bid specifications; assists
property owner and contractor(s) in negotiating construction contracts; inspects construction
work in progress and approves change orders; approves payments to contractor(s) as appropriate;
resolves conflicts; conducts progress and final inspections, and; performs tasks relating to
project close out. County Staff reviews rehab quarterly and annual reports and monitors program
administration.
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V. APPEAL PROCEDURES
A. An applicant who believes s/he is aggrieved by a determination of the Loan Review Committee
may elect to have his/her application reviewed by the Town Manager.
B. If the Loan Review Committee denies or refuses to approve an HCP loan or grant, it shall provide
a written explanation of the determination and the basis therefore to the applicant within two
weeks following the determination. The written explanation shall also inform the applicant of
procedures for obtaining review of the decision.
C. The applicant may request a meeting with the Town Manager by submitting a written request to
the Town within ten days following receipt of notice of determination by the Loan Review
Committee. The applicant's written request for appeal should include any statement of fact within
the applicant's knowledge or belief or other material which may have bearing on the appeal. The
Town Manager shall afford the applicant the opportunity for a meeting within fifteen days
following receipt of the written request.
D. The Town Manager has the authority to revise the initial determination of the HCP loan or grant
application.
E. The Town shall prepare a summary of the matters discussed in the meeting to be included as part
of the applicant's file.
F. The Town Manager shall review and reconsider the initial determination of the applicant's case
in light of:
1. All material upon which the Town based its original determination, including all applicable
rules and regulations;
2. The reasons given by the applicant for requesting review and reconsideration of the
application;
3. Any additional written or relevant documentary material submitted by the applicant; and
4. Any further information which the Town, in its discretion, obtains by request, investigation,
or research to ensure fair and full review of the application.
G. The determination on review by the Town Manager shall include, but is not limited to, the Town's
decision or reconsideration of the application, and the factual and legal basis upon which the
decision rests, including any pertinent explanation or rationale. The determination shall be in
writing with a copy provided the applicant and Loan Review Committee no later than four weeks
following the applicant's meeting with the Town Manager.
C SD24: A:\hcp \GU1D LINE. HCP
(Last Rev. 01/31/96)
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