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HomeMy WebLinkAboutAGENDA REPORT 1999 0421 CC REG ITEM 10KTO: FROM: DATE: SUBJECT: MOORPARK CITY COUNCIL AGENDA REPORT Honorable City Council ITEM,_ 0 . K , CITY OF MOORPARK, CALIFORNIA City Council Meeting Of '�- � I -riel ACTION: -la ff 1'c?C D rirn e n(- 6H i o vi BY: John E. Nowak, Assistant City Manager G1Cr0 07 April 1999 (Council meeting of 04- 21 -99) Consider the Mobile Home Rehabilitation Loan Program. BACKGROUND: On October 7, 1998 the City Council and the Redevelopment Agency Board of Directors adopted a rehabilitation loan program for mobilehomes in the City. Certain conditions and criteria were established for the loans at that time. DISCUSSION: On October 7, 1998 the City Council and Redevelopment Agency approved the creation of a rehabilitation loan program for mobilehome owners in Moorpark. A series of criteria were established for that program (see attached staff report from the October 7 meeting). One mobilehome applicant has identified repairs that exceed the $6,500 funding limit established by the Council. Improvements completed thus far are a re- roofing and pipe replacement. The additional work to be done are to replace damaged siding ($1,700) and replace the oven ($795). Document costs would total $190, for a total increase of $2,685 required for that one project. No other application received requires an amount above the approved limit. These funds come from the City housing fund. If the Council is interested in increasing the amount of funds available for repair work on mobilehomes it could place certain requirements on who is eligible for a higher Mobilehome Rehab Loans Meeting of 21 April 199 Page 02 amount, such as limiting it to owners who have been granted rent increase waivers in the past three (3) years (1996. 1997 and 1998) . The increase could be limited to 50% of the base loan amount, provided the other limiting criteria are met (i.e., ratio to value and lien limitation). RECOIwMENDATION: Approve the modifications to the mobile home rehabilitation loan program as indicated in the staff report, Attached: 10/07/98 staff report 0 ®0,« .�S R:: IT-.V,,_f b CITY COUNCIL and MOORPARK REDEVELOPMENT AGENCY AGENDA REPORT TO: Honorable City Council and Honorable Agency Board of Directors FROM: Nancy Burns, Senior Management Analys 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 C: \M \NLE \AGNDARPT \MH REPAIRS- 6/9/98- September 28, 1998 1 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 iiened 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. C: \M \NLB \AGNDARPT \MH REPAIRS - 6/9/98- September 26, 1998 2 ( ) ()1� 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 1 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. C: \M \NL9 \AGNDARPT \MH REPAIRS- 6/9/98- September 26, 1998 g 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 ($85) 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 staff's 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 $5,500 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 %) 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 %) of the value of the coach, and all liens combined not to exceed fifty percent (50 %) of the coach's value; C: \M \NLB \AGNDARPT \MH REPAIRS - 6/9/98- September 28, 1998 4 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. C: \M \NLB \AGNDARPT \MH REPAIRS - 6/9/98- September 28, 1998 6 () () OZ: _11.