HomeMy WebLinkAboutAG RPTS 1998 1007 RDA REGTO:
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CITE' OF MOORPARK, CALIFOIC IARedevelopmentAgencyMeeting
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AGENDA REPORT ICY: o 2' 1 C U !-a 104 n
Gmour1- {-a} to
Honorable City Council and
Honorable Agency Board of Directors
Nancy Burns, Senior Management Analyst
September 17, 1998 (CC Meeting of October 7,1998)
Consider Modifying Housing Rehabilitation
Loan Programs
When the Housing Rehabilitation Loan and Grant Program was
established August 3, 1994, by the Moorpark Redevelopment Agency
MRA), guidelines included the provision of grants of up to five
thousand dollars ($5,000) and loans of up to ten thousand dollars
10,000) to qualified Low and Very Low Income households for
eligible repairs to their residences. This program was modified
February 19, 1997, to eliminate grants and allow loans of up to
fifteen thousand dollars ($15,000) for eligible repairs. This
program is funded by Tax Increment Set Aside funds and has been
limited to properties within the Redevelopment Project Area.
To date, twenty -four (24) properties have been assisted within
the Project Area. Loan terms are zero percent (0 %) interest, due
on sale for Very Low Income households, and three percent (3%),
amortized for ten (10) years for Low Income households. Twenty -
three (23) of the loans in this program carry no interest. one
1) loan was made at three percent (3 %) interest; that loan has
been paid in full.
The Moorpark City Council established a Housing Rehabilitation
Loan Program February 7, 1996, for owner - occupied properties
outside of the Redevelopment Project Area. This program provides
for loans only of up to fifteen thousand dollars ($15,000) and
parallels the MRA program, but requires a two -to -one (2:1) ratio
of equity to rehabilitation loan amount.
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Three (3) properties outside the Project Area have been assisted
to date. All three loans are at zero percent (0%) interest.
Homeowners wishing to make needed repairs to their homes often
are unable to complete all needed repairs during a rehabilitation
project, due to the funding limitation of fifteen thousand
dollars ($15,000). The maximum funds expended per project has
remained constant, while the effects of inflation have increased
the costs of repairs. Likewise, homeowners who have previously
availed themselves of this program may have additional repair
needs that are more serious now than when they obtained
rehabilitation assistance. This may be particularly true of
those homeowners who were limited by the City Program's equity -
to -loan ratio requirements. With recent appreciation in real
estate values, many homeowners may currently have more equity in
their homes than in recent years.
For instance, one rehabilitation project completed two years ago
was unable to address needed roof repairs, due to the Housing
Rehabilitation Loan Program's loan cap and the equity -to -loan
ratio limitation. The roof is in greater need of repair now than
it was two years ago and, in all likelihood, the property has
appreciated measurably since then.
In its September, 16, 1998, meeting, the Budget and Finance
Committee discussed these issues and recommended the City Council
and the MRA consider modifications to the Housing Rehabilitation
Loan Programs as outlined below.
MRA Housing Rehabilitation Loan Program
1. Extend the Housing Rehabilitation Loan Program maximum loan
amount, or combination grant and loan amount, to eighteen
thousand dollars ($18,000); and
2. Allow homeowners who have previously participated in this
program to apply for additional funds for major repairs only,
to correct an unsafe condition, in the amount of the
difference between their original loan, or the combination of
grant and loan, and a maximum of eighteen thousand dollars
18,000).
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City Housing Rehabilitation Loan Program
1. Extend the Housing Rehabilitation Loan Program maximum loan
amount to eighteen thousand dollars ($18,000);
2.Allow homeowners who have previously participated in this
program to apply for additional funds for major repairs only,
to correct an unsafe condition, in the amount of the
difference between their original loan and a maximum of
eighteen thousand dollars ($18,000); and
3. Remove the requirement for a two -to -one (2:1) equity to loan
amount ratio.
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ITEM
C.ITN' OF MOORPARK, CALIFORNIA
Redevelopment Agency MeetWg
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ACTION: Ugoyrnd
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MOORPARK CITY COUNCIL
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and
MOORPARK REDEVELOPMENT
AGENDA REPORT
BY;
AGENCY
TO: Honorable City Council and
Honorable Agency Board of Directors
FROM: Nancy Bums, Senior Management Analys op_
DATE: September 28, 1998 (Meeting of October 7, 1998)
SUBJECT: Consider Rehabilitation Program for Mobilehomes
Introduction
Certain residents of the City's mobilehome parks need to make repairs to their coaches
and may be unable to fund these repairs due to limited personal resources.
Applications have been received from three (3) mobilehome owners for financial
assistance with mobilehome rehabilitation expenses. This report will discuss
consideration of City and Agency funding for mobilehome repairs that differ from the
repairs made to conventional housing through the City's and Agency's existing Housing
Rehabilitation Loan Programs.
Background
The Moorpark Redevelopment Agency (MRA) established the Housing Rehabilitation
Loan and Grant Program in 1994 to enable low and very low income homeowners
within the Redevelopment Project Area to make needed repairs to their homes.
Twenty -two (22) homes have been completed to date through this program and two
more are in process. On February 19, 1997, the Agency eliminated the grant portion of
the program, effective with applications received after that date. Loans of up to
15,000 are available to low and very low income homeowners for eligible repairs.
On February 7, 1996, the City established a housing rehabilitation loan program to
assist low and very low income homeowners outside the project area. This program
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provides loans of up to $15,000 and has assisted three (3) homeowners to date. The
guidelines are essentially the same for both housing rehabilitation loan programs, but a
ratio of at least 2:1 is required of homeowner equity to rehabilitation loan amount for
properties outside the Redevelopment Project Area.
Discussion
The City's and Agency's Housing Rehabilitation loan Programs require a lien on each
property being rehabilitated. Any loan balance remaining at the time of sale of the
property is recovered at that time.
Mobilehomes may be liened through the State, in a manner similar to the process for
liening real property through the County. However, as personal rather than real
property, and since the mobilehome owners do not own the real property on which the
coaches are sited, mobilehomes do not represent as much of an investment. In
general, their value depreciates over time.
Housing rehabilitation loan applications have been received from two residents of Villa
del Arroyo Mobilehome Park (outside the Redevelopment Project Area) and one
resident of Moorpark Mobilehome Park (inside the Project Area), all of whom are very
low income residents. The requested repairs are for items such as replacement of an
air conditioner for medical reasons (emphysema), new roof, replacement of kitchen
floor covering, repairs to the mobilehome skirting, painting, etc. Contractor bids have
not been obtained, but staff estimates the repairs for each to be within the range of
4,000 to $8,000.
Staff has investigated funding sources for repairs to mobilehomes, including
Community Development Block Grant (CDBG), HOME, Redevelopment Tax Increment
Set - Aside, and Title I Home Improvement Loans from local lenders. (Title I loans are
FHA insured loans written by approved lenders, using their own funds, for property
improvement.) CDBG and/or Tax Increment funds are the primary funding sources for
mobilehome repairs. The CDBG requirements such as environmental clearance and
ongoing monitoring make this funding source more suitable for large rehabilitation
programs than for small ones from an efficiency standpoint. Redevelopment housing
set -aside funds are used by many cities to fund mobilehome rehabilitation for reasons
of the financial constraints mentioned previously and for ease of administration. In
many cases, grants or forgivable loans are provided, for the same reasons. The City of
Oxnard offers a loan of up to $5,000, in addition to a $7,500 grant for eligible
mobilehome repairs. HOME funds cannot be used for mobilehome repairs, per current
direction by County staff, unless the property on which the coach is sited is owned in
fee simple by the owner of the coach, or covered by a long -term lease of at least five
5) years, for a rehabilitation project of under $15,000. HOME funds may be used for
related purposes, however, such as providing temporary quarters for residents whose
mobilehomes are being repaired.
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Title I loans are high interest loans, and generally not made on mobilehomes by local
lender First Western Bank. A year ago, one loan was arranged by Simi Valley Bank
First Western) as a consumer loan. The City of Simi Valley writes down the interest on
Title I loans to six per cent (6 %) below market rate, not to be below four per cent (4 %).
Low and very low income residents must qualify for the loan and make payments to the
lender.
The State's Housing and Community Development Department (HCD) has jurisdiction
over health and safety matters within mobilehome parks. A 1991 legislative mandate
required HCD to inspect all mobilehome parks in the State within five (5) years. The
time frame was subsequently extended to seven (7) years. Villa del Arroyo has already
been inspected this year and Moorpark Mobilehome Park was inspected August 26,
1998. The inspection done by HCD staff includes common areas, roadways, utility
hook -ups, etc. It does not include an inspection of the coaches.
HCD offers a "technical services" inspection of a coach for a nominal fee which is
designed to evaluate an identified item or system, either in its pre- or post - repair
condition, to determine if the item or system meets state codes for mobilehomes. This
inspection is not designed to identify deficiencies of a coach, or to produce a punch list
of corrections to be made.
Staff has identified a certified real estate appraiser who has specialized in mobilehome
appraisals for thirty years. He does appraisals for the City of Oxnard, as required by
their program. (No other cities contacted used the services of an appraiser.) An
appraisal would provide a valuation of the coach and could be used to identify code
deficiencies. Staff also has identified consultants used by other jurisdictions for the
purpose of identifying deficiencies and specifying repair materials and techniques.
Typical Health and Safety Code violations for mobilehomes include structurally
unsound porches and stairways, inadequate tie - downs, substandard sewer and/or
water connections, faulty gas piping and inadequate electrical grounding.
The NADA (National Auto Dealers' Association) Cost Guide can be used to provide an
estimate of value early in the process of determining the feasibility of funding repairs to
a mobilehome. Once bids are received and staff has determined that sufficient value
exists to consider the expenditure of funds for repairs, an appraisal can be conducted
and funded through escrow.
Funding restrictions can limit the City's or Agency's financial exposure. Such
restrictions include limiting mobilehome rehabilitation loans to the correction of health
and safety deficiencies only and establishing loan limits that are lower than those of the
City's and Agency's Housing Rehabilitation Programs for conventional housing.
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Additional protection of City /Agency funds can be provided by stipulations that the
rehabilitation loan not exceed twenty -five percent (25 %) of the coach's value and that
all liens combined not exceed fifty percent (50 %) of the coach's value. Projects outside
the Redevelopment Project Area could be further limited by a requirement of two -to -one
equity ratio (equity to proposed loan amount).
Amortized loans for Low Income mobilehome owners can carry the same three percent
3 %) interest rate and a shorter term than the ten year term provided for projects
involving conventional housing. A loan of sixty -five hundred dollars ($6,500) at three
percent (3 %) interest for seven (7) years will require a payment of eighty -six dollars
86) per month.
At its September, 23, 1998, meeting, the Affordable Housing/ Community Development
Committee (Mayor Hunter and Councilmember Perez) discussed issues related to a
rehabilitation program for mobilehomes and recommended the City Council and the
MRA consider a Mobilehome Rehabilitation Loan Program as outlined below. The
Committee recommended increasing staffs suggested maximum loan amount of six
thousand dollars ($6,000) to sixty -five hundred dollars ($6,500), to include the cost of
an appraisal.
Summary
A need exists for assistance to low and very low income mobilehome residents to make
needed repairs to their coaches. Staff estimates the demand for a mobilehome
rehabilitation program based on the following criteria to be a maximum of twenty
applications from both parks over a two -year period:
A. Health and safety deficiencies only;
B. Eligible "mobilehomes" only, as defined in the Mobilehome Residency Law,
Section 798.3 of California Civil Code;
C. Funding limitation of $6,500 per project;
D. Costs of appraisal, escrow, title and other costs of the transaction to be
funded from each project's funding allocation;
E. Tax Increment Set Aside funds for mobilehomes within the Redevelopment
Project Area; City Housing funds for mobilehomes located outside the Project
Area;
F. Zero percent interest (0°x6) non - amortizing loans with ten (10) year terms for
Very Low Income; three percent interest (3 %) loans with fully amortized
seven (7) year terms for Low Income;
G. Rehabilitation loan to be in no lower than second position in order of lien
recording;
H. Rehabilitation loan amount not to exceed twenty -five percent (25°x6) of the
value of the coach, and all liens combined not to exceed fifty percent (50 %)
of the coach's value;
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I. Two- to-one equity ratio required (equity to proposed loan amount) for
mobilehomes located outside the Redevelopment Project Area; and
J. Funding during FY 1998/99 to be provided by amounts budgeted for Agency
and City Housing Rehabilitation Loan Programs.
Recommendation
The City Council authorize a housing rehabilitation program for Low and Very
Low Income households in Villa del Arroyo Mobilehome Park for repairs as
described in this staff report, using the City's housing fund.
2. The Moorpark Redevelopment Agency Board of Directors authorize a housing
rehabilitation program for Low and Very Low Income households in Moorpark
Mobilehome Park for repairs as described in this staff report, using the Agency's
Housing Set -aside funds.
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