HomeMy WebLinkAboutAGENDA REPORT 2003 0507 CC REG ITEM 09BMOORPARK CITY COUNCIL
AGENDA REPORT
To: Honorable City Council
From: Nancy Burns, Senior Management Analyst V
Date: April 25, 2003 (CC Mtg. of May 7, 2 03)
Subject: Consider Revising Terms of CalHome Mobilehome
Rehabilitation Loan Program
BACKGROUND
On June 28, 2001, the City was awarded $420,000 by the State
Department of Housing and Community Development (HCD) for
mobilehome rehabilitation loans. Any of these funds that are
not expended by August 28, 2003, will be disencumbered and no
longer available to the City.
These loans for mobilehome rehabilitation are deferred (no
payments due) for fifteen (15) years. A balloon payment is due
at time of sale, transfer, when the mobilehome is no longer
owner - occupied, or when the loan term expires. Program
guidelines allow for 0 % -3% interest on the loans. So far, the
City's program has seen limited participation, primarily due to
the balloon payment requirement. Most low - income citizens view
the loan as impractical, considering they are encumbering a
mobilehome with an uncertain appreciation value.
DISCUSSION
The purpose of the loans is to assist low income households make
needed repairs to their mobilehomes. The funds cannot be used
for improvements to the mobilehome park. Typical repairs, so
far, have included skirting, roofing, plumbing, water heaters,
electrical repairs, and HVAC systems. Seven (7) loans have been
funded to date under the CalHome program, totaling $76,778. All
7 are at 0% interest. Four (4) more loans are in process and
Honorable City Council
Date 04/29/03
Page 2
three (3) applications have been denied, due to the applicants'
income exceeding program guidelines.
The non - profit owner of the park maintains income certifications
for park residents, as required by the bonds which facilitated
acquisition of the park. The owner reports that at least sixty -
six per cent (66 %) of the residents of Villa del Arroyo are low
and very low income households. This means that at least 158
residents are eligible to participate in this program.
Funds from the deferred loans, when repaid, are returned to the
City's approved Reuse Account, to be used for affordable housing
purposes. A trust fund has been established for this purpose.
At the close of each rehabilitation project, the City receives a
one -time activity delivery fee. The activity delivery fee is
five per cent (5 %) of the loan made to the mobilehome owner.
The activity delivery fee is deposited into the General Fund.
Housing Setaside funds are being used to fund the contractor
hired to manage the program. These costs include $3,000 to
prepare program documentation and for marketing purposes, and
approximately thirteen hundred dollars ($1,300) per loan.
Total costs to date are $16,741.
The CalHome program has been modified to enable "conditional
grants" to be offered for mobilehome rehabilitation, as well as
deferred loans. The eligibility requirements are the same for
the conditional grants as for the deferred loans (low and very
low income households). The grants have a ten (10) year term,
and are forgiven on a graduated scale. During the first five
(5) years of the conditional grant, upon sale, transfer, or
cessation of owner - occupancy, the full principal amount, plus
interest, if applicable, is due. At the end of each of the
subsequent years (Years 6 -10), twenty per cent (20 %) of the
principal and accrued interest is forgiven. (See Attachment
"A ".)
Staff from the Department of Housing and Community Development
(HCD) who administer the CalHome Program advised that most of
the cities participating in this program are now offering the
conditional grants to their mobilehome residents. These cities
see this as an opportunity to invest more of their grant money
into needed mobilehome repairs for their residents. These
Honorable City Council
Date 04/29/03
Page 3
cities do not charge interest on their loans or conditional
grants.
Staff recommends modifying the Promissory Note to provide for
15 -year 0% loans to low and very low income mobilehome owners,
with the provision that the loan will be forgiven at the end of
the 15 -year term, providing the mobilehome continues to be
occupied by the borrower, who is the original owner.
STAFF RECOMMENDATION
1. Authorize a revision to the Promissory Note to provide 0%
interest to low and very low income borrowers and
forgiveness of the loan at the end of the term, providing
the mobilehome is still occupied by the original owner; and
2. Extend these terms to mobilehome residents who have already
signed loan documents for this program by substituting a
New Promissory Note for their original Note.
Attachment "A" CalHome Management Memo 402 -03
ATTAC H M EN'KI
iTAZF OF -A IFO NIA - BllSINESS_ TRANSPOR7ATIQ4 AN6 HOUSING A + N -Y
GRAY ❑AVIC r nxernor
i)EPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT
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tBoo Third Street, Suite 390
:2
P. O. Box 952054
Sac Ito. CA 94252 -2054
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nY DEVf?'
CALHOME MANAGEMENT MEMO #02 -03
DATE: November 6, 2002
TO: CalHome Man d sin cipients
gram FROM: Peter.Solomon Manager
NO V 15 2002
ASSWC yMapapsOffice
SUBJECT: Authorization to offer conditional grants on Manufactured Housing
rehab /replacement
The purpose of this memo is to notify all CalHome recipients awarded funds under the November 7,
2000 Manufactured Housing NOFA of a change in the Replacement Housing and Rehabilitation Loan
Underwriting requirements.
1. Effective November 6, 2002 funds available to eligible manufactured housing owner/occupants
can be given in the form of conditional grants with certain conditions:
• For Replacement or Rehabilitation:
A. Funds are given in the form of a conditional grant with the following conditions:
-` 1. Within the first 5 years after the conditional grant is made, upon sale or transfer, or
when the property is no longer owner - occupied, the entire principal amount is due
and payable to the recipient (along with interest at 0% to 3% per year at the
recipient's option).
2. At the end of the-sixth year, upon sale or transfer, or when the property is no longer
owner- occupied, 20% of the principal and accrued interest is forgiven.
3. At the end of year seven, and for each year after, upon sale or transfer, or when the
property is no longer owner - occupied, an additional 20% of the principal and
interest is forgiven.
4. At the end of ten years, no principal or interest is due.
5. At the recipient's option, the forgiveness timetable can be accelerated. A
memorandum describing the reasons for the acceleration must be in the file.
Prior to awarding the first conditional grant, recipients must have their new loan documents
reviewed and approved by CalHome staff.
These changes effect Pages 18, and 26 -27 of the CalHome Operations Handbook for Manufactured
Housing (June 2001). Attached are new Pages 18, and 26 -27 as replacements in the CalHome
Operations Handbook for Manufactured Housing.
The minimum and maximum loan amounts per homebuyer/homeowner remain $2,000 (minimum) and
$20,000 (maximum).
CalHome Manufactured Housing Management Memo #02-03 November 6, 2002