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Home My WebLink AboutAGENDA REPORT 1999 0421 CC REG ITEM 10J112-.`°2-(0) ITEM —10: CITY OF MOORPAIM CALIF(?:; ` ' � City Council Meeting MOORPARK CITY COUNCIL ACTTON: A— =�`�G= Q[ for) AGENDA REPORT TO: Honorable City Council FROM: John E. Nowak, Assistant City Manager 4--t DATE: 07 April 1999 (Council meeting of 04- 21 -99) SUBJECT: Consider Information Pertaining to Housing Rehab Loan Program - Erickson BACKGROUND: In 1994 the City Council established a housing rehabilitation loan using the City housing funds for areas outside the Redevelopment Project Area. The program initially provided up to $15,000 in loans for rehab projects. In 1998 the City Council amended the program to increase the maximum amount to $20,000. DISCUSSION: Ms. Marilyn Erickson, residing at 4368 Cloverdale obtained a City residential rehab loan in 1996 under the City funded program for the purpose of making improvements at her home. A total of $9,394 was loaned at that time and various work items were completed (i.e., painting, patio deck removal, termite inspection, retaining wall, and rear yard sprinkler system and sod). $956 remains unexpended from that loan amount. At that time, Ms. Erickson wanted to have the roof replaced, but the cost would exceed the balance of the available loan funds, capped at $15,000. However, the equity in the house permitted a maximum loan of only $10,356. In accordance with the Council's policy, the loan was at no interest and is payable at the time of sale of the property. On October 7, 1998, the City Council amended the loan program to increase the maximum amount of the loans to $20,000. Ms. Erickson submitted an application for a 00 0 .'a6 Erickson Loan Meeting of 21 April 1999 Page 02 second loan for a roof replacement on October 15, 1998. The roof would change from a wood shake to a composite roof. A final cost figure has not been established since contracts have not been executed. An appraisal of the property indicates that up to $20,000 can be loaned and remain within the required equity ratio guidelines. Therefore, the total amount available to Ms. Erickson is $11,562 (balance of current loan {$956) plus balance to $20,000 {$10,6061). Due to Ms. Erickson's current financial status, she would be required to pay interest on the new loan at the rate of 3 %, resulting in a monthly payment of approximately $111.64, assuming a maximum loan of $11,562 is used. Ms. Erickson is asking that the entire loan amounts be interest free and payable on sale. Options for the Council's consideration are: 1) . Have Ms. Erickson subject to the existing loan guidelines and make the new loan subject to the 3% interest; or 2) Have an amount up to $15,000 (the maximum she would have been eligible for prior to the Council's action in 1998) be interest free and the balance subject to the interest payments. This would make Ms. Erickson's monthly payment $48.28. 3) Have the full combined loan interest free and payment deferred. If the Council approves makes any changes to the City rehab program guidelines, it is recommended that similar changes be made to the Redevelopment Agency's rehab loan program. RECOMMENDATION: Staff recommends that Option 2 described in the staff report be adopted by the City Council for the City housing rehab program. Attachments: Staff report for 10/07/98 meeting Minutes from 10/07/98 meeting iTi iii 6*A* MOORPARK CITY COUNCIL and MOORPARK REDEVELOPMENT AGENCY AGENDA REPORT TO: Honorable City Council and Honorable Agency Board of Directors FROM: Nancy Burns, Senior Management Analyst DATE: September 17, 1998 (CC Meeting of October 7,1998) SUBJECT: Consider Modifying Housing Rehabilitation Loan Programs Background 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. C: \M \NLB \AGNDARPT \REHAB PROGRAM MODIFICATIONS- 9/17/98- September 23, 1998 1 V AW j) r. — M 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). C: \M \NLB \AGNDARPT \REHAB PROGRAM MODIFICATIONS- 9/17/98- September 23, 1998 2 (U () 6� () 8 0" 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. C: \M \NLB \AGNDARPT \REHAB PROGRAM MODIFICATIONS - 9/17/98- September 23, 1998 0 11. tes of the City Council park, California Page 16 October 7, 1998 recommendation. The motion carried by voice vote 4 -0, Councilmember Evans absent. F• Consider Modifying Housing Rehabilitation Loan Programs. Staff Recommendation: 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. MOTION: Councilmember Perez moved and Councilmember Wozniak seconded a motion to 1) Extend the Housing Rehabilitation Loan Program maximum loan amount to twenty thousand dollars ($20,000); 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 and a maximum of twenty thousand dollars ($20,000); and 3) Retain the requirement for a two -to -one (2:1) equity to loan amount ratio. The motion carried by voice vote 4 -0, Councilmember Evans absent. G. Consider Rehabilitation Program. for Mobilehomes. Staff Recommendation: Authorize a housing rehabilitation program for Low and Very Low Income households in Villa del Arroyo Mobilehome Park for repairs as described in the staff report, using the City's housing fund. MOTION: Councilmember Perez moved and seconded a motion to authorize a housing for Low and Very Low Income households Mobilehome Park for repairs as described using the City's housing fund. The motion 4 -0, Councilmember Evans absent. CONSENT CALENDAR: Councilmember Wozniak rehabilitation program in Villa del Arroyo in the staff report, carried by voice vote MOTION: Councilmember ,Wozniak moved and Councilmember Perez seconded a motion to pull Item ll.A. and approve the balance of the Consent Calendar. The motion carried by roll call vote 4 -0, Councilmember Evans absent. B. Consider Approval of Warrant Register of October 7, 1998. Fiscal Year 1998/99 Manual Warrants 42582 - 42586 $ 3,893.34 () () Q1 =- J()