1989-223-Adopting The Housing Conservation Program GuidelinesRESOLUTION 1989 - 223
RESOLUTION OF THE TOWN OF LOS GATOS
ADOPTING THE HOUSING CONSERVATION PROGRAM GUIDELINES
RESOLVED, BY THE TOWN COUNCIL OF THE TOWN OF LOS GATOS, that the Town
Council hereby repeals Resolution 1988 -91 and adopts the attached Housing
Conservation Program Guidelines.
PASSED AND ADOPTED at a regular meeting of the Town Council of the
Town of Los Gatos held on the 20th day of November, 1989, by the following vote:
AYES: COUNCIL MEMBERS
NAYES: COUNCIL MEMBERS
ABSENT: COUNCIL MEMBERS
ABSTAIN: COUNCIL MEMBERS:
SIGNED:
ATTEST:
CLERK OF THE TOWN OF LOS GAT/bS
A: \AES0S \CS112089.R12
Joanne Benjamin, Eric D. Carlson
Robert L. Hamilton, Brent N. Ventura
Mayor Thomas J. Ferrito
NONE
NONE
NONE
COUNCIL AGENDA
DATE: NOVEMBER 20,1989
ITEM NO:
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
DATE: November 15, 1989
TO: MAYOR AND TOWN COUNCIL
FROM: DEBORAH A. ACOSTA, TOWN MANAGEK(�
SUBJECT: ADOPTION OF THE REVISED HOUSING CONSERVATION PROGRAM
GUIDELINES
RECOMMENDATION:
That Council approve the attached Resolution adopting revised
Housing Conservation Program Guidelines.
BACKGROUND:
The Housing Conservation Program (HCP) policy guidelines were
originally adopted by Council on June 1, 1981; several amendments
have been made to the guidelines since the document's adoption.
During the past program year, it has become apparent that the
financial restrictions to loans and emergency grants have not kept
pace with increased housing rehabilitation costs as reflected in
applications and the scope of work to be performed on houses in Los
Gatos and throughout the County.
It is recommended that Council adopt the attached Resolution which
would result in the adoption of the guidelines as rewritten. The
Discussion section below outlines the specific changes from the
existing guidelines.
(Continued on page 2)
PREPARED BY: Regina A. Falkner, Mangr
Community Services Div n.
RAF:dr
A: \CNCLRPTS \HCPREV.89
Reviewed by: Attorney
TOWN COUNCIL ACTION DIRECTED TO:
ACTION OF COUNCIL:
PAGE TWO
MAYOR AND TOWN COUNCIL
ADOPTION OF THE REVISED HOUSING CONSERVATION PROGRAM GUIDELINES
NOVEMBER 20, 1989
DISCUSSION:
GUIDELINE REVISIONS:
A summary of the Housing Conservation Program (HCP) Guideline
changes follows:
1. The large loan formula is being discontinued. Since May
of 1988 this formula has been utilized to approve or
reject requests by applicants for housing rehabilitation
loans above $25,000. The large loan formula was devised
at a time when the majority of rehabilitation work to be
completed on single family residences in Santa Clara
County could be accomplished for under $25,000. Since
1988 the average cost of rehabilitation per residence in
Santa Clara County has risen to a range of $30,000 -
$40,000. The first quarter average of loans approved in
FY 1989 -90 was $34,000 per loan originated.
Prior to and since the inception of the large loan
formula an underlying assumption has been in operation
that homeowners in need of additional financing beyond
$25,000 would be eligible for and seek conventional loans
to make up any difference beyond what the Town was able
to loan. In practice that has not been the case. The
majority of applicants to the Housing Conservation
Program are senior citizens on fixed incomes. The only
viable loans available to this elderly population in low
income brackets who are "land rich and cash poor" are the
reverse annuity plans; many low income homeowners are
skeptical of these plans for they are fearful of
decreasing their equity by more than $30,000 - $50,000.
Resultingly, a loan by the Housing Conservation Program
for these applicants is needed for the total amount of
rehabilitation work to be completed.
On November 8, 1989, the Housing Conservation Program
Loan Review Committee recommended that a cap of $35,000
per loan be set with the stipulation that all loans of
$25,000 and above receive, prior to loan approval, an in-
depth secondary review of the rehabilitation work write -
up inspection list.
2. The current limit on emergency grants is $3,000. Provi-
sions for earthquake related grants - up to $6,000 - have
been added to the Emergency Grant category. Application
and determination of assistance eligibility by FEMA
(Federal Emergency Management Agency) is a requirement
PAGE THREE
MAYOR AND TOWN COUNCIL
ADOPTION OF THE REVISED HOUSING CONSERVATION PROGRAM GUIDELINES
NOVEMBER 20, 1989
and prerequisite for approval of a Town earthquake
related emergency grant. The earthquake related grants
application period is November 7, 1989, through June 30,
1990.
Staff anticipates providing Housing Rehabilitation Loans to
residents whose homes were damaged by the recent earthquake in
addition to the emergency grants.
CONCLUSION:
Adoption of the revised guidelines, attached, will provide staff
a more effective tool for implementing the Housing Conservation
Program.
FISCAL IMPACT•
No fiscal impact upon the Town's General Fund Operating Budget.
The HCP is funded completely with Community Development Block Grant
monies received as a grant from the Federal Government.
EXHIBIT•
1. Draft Resolution and Revised Housing Conservation Guidelines
DISTRIBUTION•
Charlie Chew, Santa Clara County, Housing and Community Development
Housing Conservation Loan Committee
RESOLUTION 1989 - 223
RESOLUTION OF THE TOWN OF LOS GATOS
ADOPTING THE HOUSING CONSERVATION PROGRAM GUIDELINES
RESOLVED, BY THE TOWN COUNCIL OF THE TOWN OF LOS GATOS, that the Town
Council hereby repeals Resolution 1988 -91 and adopts the attached Housing
Conservation Program Guidelines.
PASSED AND ADOPTED at a regular meeting of the Town Council of the
Town of Los Gatos held on the 20th day of November, 1989, by the following vote:
AYES: COUNCIL MEMBERS
NAYES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS
ABSTAIN: COUNCIL MEMBERS
SIGNED:
ATTEST:
/s/ Marian V. Cosgrove
CLERK OF THE TOWN OF LOS GATOS
A: \RES05\CS112089.R12
Joanne Benjamin, Eric D. Carlson
Robert L. Hamilton, Brent N. Ventura
Mayor Thomas J. Ferrito
NONE
NONE
NONE
/s/ Thomas J. Ferrito
MAYOR OF THE TOWN OF LOS GATOS
HOUSING CONSERVATION PROGRAM GUIDELINES
I. PURPOSE
The Town of Los Gatos Housing Conservation Program is funded with Com-
munity Development Block Grant funds made available through the Housing and
Community Development Act of 1974. The aim of the program is to conserve
and improve the quality and safety of the existing housing stock in the
Town. This will be achieved in four ways:
A. Owner occupied housing loans
B. Rental Rehab loans
C. Emergency grants
D. Home Safety grant
II. PROGRAM ELIGIBILITY CRITERIA
A. Structure located within Town's boundary agreement area.
B. Must evidence adequate capacity to repay.
C. Rehab loan in combination with private resources must be suffi-
III. HOUSING CONSERVATION PROGRAMS
A. Rehab Loans
1. Owner Occupied Housing Loans
- 0% interest rate: client's income under 50% County Median In-
come - payments may be deferred.
- 3% interest rate: client's income 50% - 80% County Median In-
come.
- 3 - 20 year term (Loan Review Committee determines term of
loan based on financial condition).
- Maximum loan amount is $35,000. Any loans over $25,000 re-
quire special approval which consists of an indepth secondary
review of the rehabilitation work write -up inspection list by
the Loan Review Committee.
cient to eliminate substandard condition.
D.
Structure must be of legal status.
E.
Sum of mortgages (including rehab loan) not to
exceed 90% of
appraised value.
F.
Clients may apply for one or more of the available programs.
G.
Client's income to debt ratio not to exceed 50%
gross income
(including rehab loan debt).
H.
Client can't own other real estate (exception:
Rental rehab
loans).
I.
Eligible work determined by County.
J.
Eligible structures: single family homes, duplexes,
approved mo-
bile homes (exception: Rental rehab loans).
K.
Must have evidence of adequate fire insurance.
III. HOUSING CONSERVATION PROGRAMS
A. Rehab Loans
1. Owner Occupied Housing Loans
- 0% interest rate: client's income under 50% County Median In-
come - payments may be deferred.
- 3% interest rate: client's income 50% - 80% County Median In-
come.
- 3 - 20 year term (Loan Review Committee determines term of
loan based on financial condition).
- Maximum loan amount is $35,000. Any loans over $25,000 re-
quire special approval which consists of an indepth secondary
review of the rehabilitation work write -up inspection list by
the Loan Review Committee.
2. Rental Rehab Loans
- 518 of units must be rented to tenants whose income is under
808 County Median Income.
15 year term.
Maximum loan per unit $15,000 for single unit; $25,000
multi -unit. Maximum loan of $100,000.
Eligible structures 1 - 10 unit dwellings.
Payments may be deferred up to five years, upon request of
applicant, upon the approval of the Loan Review Committee
based on the pro forma submitted by the applicant stating
costs of the improvements and the expected return of rental
income.
Rent restrictions apply for life of loan - not to exceed Fair
Market Rent Schedule established by HUD for the Section 8
Housing Assistance Program. Rent restrictions apply only to
those 518 of the units occupied by low- moderate income
tenants.
3. Emergency Loans
Income not to exceed 1008 County Median Income.
Maximum loan - $15,000
Eligible work - only A rated housing code items.
68 interest rate.
3 - 5 year term.
Owner- occupied housing only.
- Emergency condition (threat of life and property) exists.
B. Rehab Grants
1. Emergency Grants
- Income under 808 of County Median Income.
- < Maximum emergency grant - up to $3,000.
Emergency earthquake related grants - up to $6,000-, applica-
tion and determination of assistance eligibility by FEMA
(Federal Emergency Management Agency) required Earthquake
related grants application period - November 17 1989 through
March 17, 1990.>
- Eligible work - only A rated housing code violations.
Resources must be sufficient to eliminate substandard
conditions.
- Owner occupied housing only.
- Emergency condition (threat of life and property) exists.
IV. GENERAL GUIDELINES
A. Guidelines For Loan Approval
1. Credit worthiness verified by credit report mortgage verifi-
cation
2. Income to debt ratio not to exceed 50 %.
3. Income verified by most recent IRS 1040 Form or other appro-
priate means, such as, but not limited to, recent pay stubs,
social security verfication, and income verification.
B. Subordination
If a client refinances their home moving the Town's position down,
the loan is due and payable, with the exception of Reverse Annuity
Mortgage loans. If the Town's position remains the same or is
moved up, the Loan Review Committee reserves the right to review
the client's financial status to determine whether or not the loan
is due and payable.
C. Rental of Property
Owners receiving owner occupied rehab loans are not permitted to
lease, rent, sublet, or otherwise assign their interests in the
property, except that the property may be leased for limited
periods of time when the owner is required to live elsewhere and
expects to return within one year. Tenants will be limited to
persons qualified under the Section 8 income limits.
D. Due on Sale Clause
In the event the property described in the Deed of Trust or any
part thereof is sold, agreed to be sold, conveyed or alienated by
the Trustor or by the operation of law which includes but is not
limited to transfers resulting from death or otherwise, the obli-
gation evidenced in the Note, irrespective of the maturity date
expressed herein at the option of the holder thereof and without
demand of notice, shall immediately become due and payable.
E. Delinquencies and Default
A loan is delinquent when it is 30 days or more in arrears. A
loan is in default when it is 60 days or more in arrears, or the
Loan Review Committee determines default has occurred because the
loan is more than 30 days in arrears in consideration of the pay-
ment history of the debtor.
The Town Attorney is to take all lawful measures at his /her
discretion to collect amount due. These measures include the ex-
ercise of the power of sale and civil litigation. If, in the Town
Attorney's opinion, there is a question about the adequacy of se-
curity or collectability of a judgment, he /she reports the matter
to the Town Council.
V. RESPONSIBILITIES
A. Community Services Division
1. Community Services Coordinator - locates eligible clients,
determines eligibility, verifies income data, compiles loan
package for Loan Review Committee, and makes recommendations
for loan approval. Monitors payments on a monthly basis.
2. Community Service Manager - supervises Community Services
Coordinator and serves on Loan Review Committee.
B. Loan Review Committee - consists of Director of Planning, Director
of Building Services, Community Services Division Manager. They
recommend policy changes and determine loan approval. Loan Review
Committee reviews eligible work recommended for each project.
C. Town Manager is authorized to sign payment authorization forms,
bank agreements, and other pertinent documents.
D. Treasurer - sign payment authorization forms; can transfer funds
within accounts to maximize interest payments received from bank.
E. County
1. Rehab Specialist - surveys property to determine work neces-
sary; puts the job out to bid and makes progress and final
inspections of all work done.
2. County Staff - reviews quarterly reports, monitors program.
F. Bank (or its designee) - collects the installment loan payments.
CSD:HSCONSERPR
DELETE
EXHIBIT A
LARGE LOAN FORMULA
hdeermine ts if an applicant should be granted a loan which would b
is el
outanding loan balance over $25,000, the following formul
be so ed for LL
t:
4-
LLt = B - max (SL,, Lt) -� Li
where
i =t +1
t = current quarter
LL - large loans; those with a outstanding lance over $25,000
B budget; funds available for thZamount
mainder of the year, t through
4th quarter.
t estimated loaSL small loans; anding balance of ss than $25,00a
i�
That is, the tal amount of large loans made in any quarter ' If cannot be greater han the budget available for the remainder of the yea "B" minus
the sm loans made during quarter "SL If or the total loans expected o be
mad during the quarter "Lt'° whichever is less; and, minus the small loan
xpected to be made the remainder of the year.
"
November 20, 1989
Los Gatos, California
SIGNAL /AUDIO PEDESTRIAN /LOS GATOS BLVD/VAN METER SCHOOL
Motion by Mrs. Benjamin, seconded by Mr. Ventura, that Council approve the installation of
an audio pedestrian signal on Los Gatos Boulevard at the Van Meter School. Carried
unanimously.
SOUTH SANTA CRUZ AVE 22 /CRIDER /NOTICE OF COMPLETION
Motion by Mrs. Benjamin, seconded by Mr. Ventura, that Council authorize the Mayor to
execute and the Town Clerk to record a Certificate of Acceptance and Notice of Completion for
22 South Santa Cruz Avenue. Carried unanimously.
PARKING /DOWNTOWN DISTRICT /LOTS #4 AND #9 /NOTICE OF BID OPENING
Informational report to Council advising plans and specifications for Lots #4 and #9 of the
Downtown Parking District are available for contractors as of November 17, 1989 and bids will
be opened on December 20, 1989 at 3:00 p.m.
FORRESTER RD 204 /REVOCABLE ENCROACHMENT /SINGH /RESOLUTION 1989 -221
Motion by Mrs. Benjamin, seconded by Mr. Ventura, that Council adopt Resolution 1989 -221
entitled, RESOLUTION OF THE TOWN OF LOS GATOS AUTHORIZING TOWN
ENGINEER TO ISSUE A REVOCABLE ENCROACHMENT PERMIT FOR AN EXISTING
FENCE IN PUBLIC RIGHT -OF -WAY ALONG 204 FORRESTER ROAD. Carried unanimously.
EMERGENCY LOCAL /EXTENSION OF /RESOLUTION 1989 -222
Motion by Mrs. Benjamin, seconded by Mr. Ventura, that Council adopt Resolution 1989 -222
entitled, RESOLUTION OF THE TOWN OF LOS GATOS EXTENDING THE EXISTENCE
OF A LOCAL EMERGENCY approving the extension of emergency in the Town of Los Gatos.
Carried unanimously.
HOUSING CONSERVATION PROGRAM /REVISED GUIDELINES /RESOLUTION 1989 -223
Motion by Mrs. Benjamin, seconded by Mr. Ventura, that Council adopt Resolution 1989 -223
entitled, RESOLUTION OF THE TOWN OF LOS GATOS ADOPTING THE HOUSING
CONSERVATION PROGRAM GUIDELINES amending original guidelines adopted June 1,
1981. Carried unanimously.
BOONE LANE /PARKING DISTRICT / CILKER SMITH /GRANT DEED /RESOLUTION 1989 -224
Motion by Mrs. Benjamin, seconded by Mr. Ventura, that Council adopt Resolution 1989 -224
entitled, RESOLUTION OF THE TOWN OF LOS GATOS APPROVING RIGHT OF WAY
AGREEMENT BETWEEN THE TOWN AND HAZEL CILKER SMITH AND AUTHORIZING
THE TOWN MANAGER TO EXECUTE SAID AGREEMENT and authorizing acceptance of
grant deed by the Town Engineer and recordation by the Town Clerk. Carried by a vote of 3
ayes. Mr. Hamilton and Mayor Ferrito abstained due to possible conflict of interest.
NEW YORK AVE /INTENT TO VACATE /MARIA'S BERRY FARM /RESOLUTION 1989 -225
Motion by Mrs. Benjamin, seconded by Mr. Ventura, that Council adopt Resolution 1989 -225
entitled, RESOLUTION OF THE TOWN OF LOS GATOS ORDERING VACATION OF A
PORTION OF PUBLIC RIGHT -OF -WAY CALLED NEW YORK AVENUE (FROM THE STATE
RIGHT -OF -WAY FENCE TO 230 FEET SOUTHEASTERLY), for the purpose of siting the
buildings of Maria's Berry farm for Public Use, and set a Public Hearing for December 18, 1989.
Carried unanimously.