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266548 WHITE - CITV CLERK � /o���Q � PIM`C - FINANCE 7 CDUIICll �V U CANARY - DEPARTMENT G Y OF AINT PALTL BLUk: '�OVOR File NO. � � - ` ' ution r Presented By Referred To Committee: Date Out of Committee By Date WHEREAS, the Council of the City of Saint Paul adopted Council F�.le No. 264630 on November 21, 1974, approving the Saint Paul Rehab�.lattation Loan and Grant Program Concept and Guidelines and ass3.gned the administration of the Housing Rehabilitation Program to the Housing and Redevelopment Authority; and WHEREAS, based upon actual experience in operating the program, both the Housing and Redevelopment Au�hority Board of Commissioners -._ and the l�ayor' s Rehabilitation Advisory Committee have recommended changes in the program concept and guidelines; now, therefore, be it RESQ�,VED, that the Counci,l of the City of Saint Paul hereby amends the Rehabilitation Loa,n and Grant Program Concept and Guide- lines as follows: T. Paqe 2, Definition 7, first paragraph, should be amended to read: Income. Means for purposes of these guidelines the term "annua� adjusted gross household incosne" (see � definition 6 above) and includes the gross annual income from all sources and befo=e taxes or withholding � persess er-me�er-e�-the-fe�i�e-re,e�ag-irt-t�he-���ec�e� e�eeept-ti�-the�e--sise��-�e-e�e�t�ded: of (1) the a licant; (2� the members of the a licant' s fami who are over e hteen ears of a e an are owner-occu ants o the e e ro t • the a �.cant s s ouse i e or s e s xesi n n the e �. le ro ert . The a � icant' s ami nc u es t e a icant an an ot er erson or ersons re ate b o marr a e o eration o the law w o res e in t e e i le ro ert • non-bloo re ate a ults who resi e w th a �.cant in a dwellin unit contaa.ne n t e eli ib e ro ert ; an al ersons who, bv operation o law, are members of a tenant cooperative COUNCILMEN Requested by Department of: Yeas Nays Christensen � gunt In Favor Levine Rcedier Against BY Sylvester Tedesco President y�(t HOZZa Form Approved by Ci��,.Attor y Adopted by Council: Date � � , Certified Passed by Council Secretary BY ' By ._ Approved by Mayor: Date Approve yor f o Co cil By By . •.: � t .� Page 2. and reside in �he eli ible ro ert . If ownershi of t e e �, i e r �rt rests in more t an one erson the a licant is` eac owner an ami The a icant' s income t ere or�, 1.s t e s`�1 p the ami inco es o a a cants ah nc u es u�t s contri t�te or ai •to the em ori a re ar� a s i`s a ami me er who is over ez ht+een ears °o "a e' ut who, oes not ave an ownersh interest in t e e i 1 e ro ert . Exc u ed rom Income _ is: IT, Page �4.>aft�r it�m j ��ddz' � � . k. "Conditions of or omissions cancerning an eligible property, : ownied fl�; ocCupied by ha`ndicapped persons, whi:cli constitt�te ari archi`tectural barrier to sueh handic.�pped gerson� anc�,/'or which limit the �'�" accessibil�ty o�€� su�h.��hanc�i��.�ped ,persoit�s to the properfi�y*" - _._ .;.__ _ . _ ___ ZIT;s. . ,, , _ , __ - . ,��'"��&�,:'_�ef�.nition ���,"=`3�ft`�°'�A�i�T1ority. " insert:- .,., "�'aer pur-�oses af determining wher� the conditions ° ��;. of or omiss,ions concerning an eligible property constitute '� a "'violation of applicable codes which materially and immediately endanger the health and safety of "Iiandicapped occ.upants of the building i�nvolved" as those terms are used in Definition 14 and these guidelines, codes shall i.nclude the stan�.ards specified in the "American National Standard Institute Tnc, ' s, Speci,�ications for Making Bu�,Zdings and Faci.lities Accessi.ble to and Usable by, the Physi.cally Handicapped, A1�iS� A 117�1-1961 (Reaffirmed 1971) and amendments and supplenents thereto." -------�,. Iy. Page 9, item 8 should be a�ended to read; City rehabilztation grants ma,y be approved in conjunction wi,th City rehabila.tation loans, �t�t-��--e�-apg��eaat eern-�a��erd�-a-�?�tY-re�ieb#��ta�#en-�ea�i-the�t-�e��ed-ee*o*e� t�e-��t�re-eeet-e.�-t�e-p�e�eeea-e�4gtb�e-txtp�e�c�eat r+e��,-��ne�e�e�s�g-t�te-cer��e�#er�-e�-��►ee��ate-�ee�tk-e�d WH17E -- CITV CLERK PINK - FINANCE GITY OF SAINT PALIL Council CA�VARV - DEPARTMENT BLUE � - MAYOR File NO. '. . � � ��� � Council Resolution . �. Presented By ' Referred To Committee: Date Out of Committee By Date Page 3. aa�etY-ha�a�sT-eeexp�ed-N�t�i-an-app��eer��9�e�i�e� i�en�fn�-�e�ate�-experr�ea,-w#ti�sn-��5�-ef-ti�e-epp�teentls �r�eeate=-t�e�-9�ek-a�p��eer�t-�r#��-r�et-�e-e�t4���e-�er-e- g�a�t. V. Page 9, item 10 should be amended to read: The maxi,mum amount of the City rehabilitation grant shall be the lesser of; (1) $5,000; (2) the actual cost of the eligible improvement work. �3}-t�e-a�te��t--neeeaea�� te-��d�ee-tI�e-e�t�-reh�b#��tatten-�ean�rtnetpe��-ar�e� ��te�est-and f er-eti�e��i�e�ee��sg-�e�atee�-expen'e�-te-��5� e�-t�e-e��gtb�e-g�ant-reetptent�-�enth�y-t�eeme. Approved as to Funding: r�� � i�-Yc��,� Director, Finance and Ma.nagement Services COUIVCILMEN Requested by Department of: Yeas Nays � Christensen H� Hunt In Favor �. JRcedler Against BY n��"_-a^_ ����� Tedesco President � HOZZd ^ �C 2� ��j Form Approved by �y Att rney � Adopted by Council: te � Certified Pas by i Secretar � BY i t By � �-� J Approved �layor: ate Approved by M r for Submission to Council By By � � � � _ .. � -7- 1 �,�. -- \ �_i J,� ��J 9 �1 i A.i�'�''i� �.�1 l.J .1 a � • ��� • /� � \ r � . :, ���t ;�:r� �� �1,�: ���� ��v_�.�:��, 2s�548 - l t u i� � ;� it ' .� l �. .��� � :./ . . . . . . . . ���,�J�� . �a ; e ; Dec. is, i9�5 � � � I'f3� �`.� 1 �� � � � � � � � i' � � : �ai�; P�+� � Gi��+ �Q�� c� � _ , � � � �•'� � �C�II'1�1 i[?� C3�'l FINANCE ' _ . Robert Sylvester , c1�i�man, mcik�s �t�e �ct1oLF�ing � re�or� on C. F. � O;ai����ce � Resal�tion . �] oth�r i. � � �-�. : Amendments to the St. Paul Rehabilitation Loan anc� Grant Program Concept and Guidelines. -' Please be advised that this Resolution was approved by the Fiaance, Management and Personnel Committee _ at its meeting December 17, 1975. � , Remove this item from the calendar of. action to be taken by this committee. Cr'-_ .:=�:--. ' S'" , _'��i FJ_,;U": S,li'tiT r r>L'i_, ..f!'�r��:SJTa. 55.�}? _ • ' . . (��' ,; REPORT TO THE HON. LAWRENCE D. COH��. MAYOR �V�� FRQM: Thomas S. Kelley, City Administrator DATE: Novembe r 2 I , I 975 REGAR�UING: Arr�ndments to the St. Pau l Rehab i I i taf i on Loan = and Grant Program Concept and Guidelines ACTION REQUESTED: App rova J of 'resoJ ut i on for subm i ss i on to Counc i l . RATIONALE �'OR THIS ACTION: Exper i ence i n ppe rat i ng the p rogram has indica#ed .the need' for amendments to the initiallY aPProved: guid�fines. SOURCE: Commun i ty Deve l oproent Sect i on : Mr. Williaro Q. Pattan ATTACHNiENTS: Reso l ut ion an d p roposed amendments to the St. Pa u l Rehabiiitation Loan and Grant Program Concept and Guidelines. � ,� I � . ����� • CITY OF SAINT PAUL REHABILITATION LOAN AND GRANT PROGRAM CONCEPT AND GUIDELINES Approved by City Council Resolution No. 264630, November 21, 1974. Definitions For purposes of these guidelines, the terms defined in this section have the meaning ascribed to them. l. Housing related expenses. Means the normal and ordinary expenses related to homeownership, including, but not limited to, principal and interest paid on any outstanding indebtedness, including the pri,ncipal and interest paid on a City rehabilitation loan, used to finance the purchase, cor.struc- tion, improvement, or rehabilitation of residential housing and related taxes, special assessments, insurance, maintenance costs, utility expenses and the like. 2. Neighborhood rehabilitation project plan. Means a plan developed in whole or part by a neighborhood organization or association or a nonprofit or redevelopment corporation for the concentrated rehabilitation of a specified neighborhood area within the City of Saint Paul and approved by the Planning � Commission and City Council. For further explanation see Appendix I. 3. Nei�hborhood rehabilitation program. Means a program, prepared and/or considered by the City Planning Department and approved by the Planning Commission and the City Council, for concentrated rehabilitation within specific geographic areas. Such a program may be based in whole or part on approved neighborhood rehabilitation project plans. For further explanation, see Appendix I. 4. Authority. Mea�s the Housing and Redevelopment Authority, as designated by the City Council, pursuant to Minnesota Laws, 1974, Chapter 351, Minn. Stat. 462.445 (4) (2) and 462.581 (8) , and other provisions of Minn. Stat. 462.415 to 462.711 to cooperate with and act as an agent for the City of Saint Paul in implementing, administering and carrying out the provisions of the City of Saint Paul rehabilitation loan and grant program as authorized by and consistent with Chapter 351 and these program guidelines as adopted by the City Council. 5. Owner-Occupant. Means persons or families who are the f ee owners or contract for deed purchasers of eligible properties and who occupy and, purs�ant to Minn. Stat. Ch. 273, homestead such property. 6. Persons and families of low and moderate income. Means those natural persons or families whose income is within the following income limits and categories. For purposes of this Act, families shall include nonblood related adults and . tenant cooperatives. . . ANNUAL ADJUSTED GROSS HOUSEHOLD INCOME CATEGORIES - � Low Interest Middle Interest Upper In.terest Loan (%) Loan (%) Loan (%) Famil Size (Low Income) (Low-Moderate Income) (Moderate Income) 1 person up to $ 7,200 $ 7,201 to $13,650 $13,651 to $14,500 2 persons up to $ 8,750 $ 8,751 to $13,650 $13,651 to $15,000 3 persons up to $10,�00 $10,001 to $13,950 $13,951 to $15,500 4 persons up to $10,300 $10,301 to ;14, ,250 $14,251 to $16,000 5 persons up to $11,850 $11,851 to $14,550 $14,551 to $16,500 6 persons up to 512,150 $12,151 to $14,850 $14,851 to $17,000 7 persons up to $12,500 $12,501 to $15,150 $15,151 to $17,500 8 persons up to $12,800 $12,801 to $15,450 $15,451 to $18,000 9 persons up to $13,100 $13,101 to $15,750 $15,751 to $18,500 10 persons (or more) up to $13,400 $13,401 to $16,050 $16,051 to $19,000 � � 1"t��7. Income. P4eans for purposes of these guidelines the term "annual adjusted ' gross household income (see definition 6 above) and includes the gross �� annual income frum all sources and before taxes or withholding of � �t�@�� ve-���ua�u a. The income of any family member (other than the head of the household or his or her spouse) who is under eighteen years of age or is a full- �` �•�S time student; � ,.y.� b. The first $300 of the income of secondary wage earners other than those included in paragraph 7a above; c. An amount equal to $300 for each member of the family residing in the household who is under eighteen years of age or who is eighteen years of age or older and is disabled or handicapped and is not a fu11-time wage earner, as determined by the Authority, or a full-time student; d. Nonrecurring income, food stamps and other non-monetary income, as determined by the Authority, and payments to volunteers under the "Domestic Volunteers Service Act of 1973," Public Law 93-113, October 1, 1973; � e. Five per centum of the person or family's gross income (ten per centum in the case of elderly persons or families) ; f. Such extraordinary medical or other expenses as the Authority approves for exclusion including, but not limited to, all expenses incurred by working parents or parent for child care in a licensed child care facility; g. An amount equal to the sums received by the head of the household or his or her spouse from, or under the direction of, any public or private nonprofit child pla.cing agency, for the care and maintenance of one or • more persons who are under eighteen years of age and were placed in the household by such agency. _ 2 _ , • ������ � 8. Eli�ible loan recipients. Means those persons or families of low and moderate income who are owner occupants of eligible properties and meet other requirements and qualifications for a City rehabilitation loan as set forth in these guidelines. 9. Eli�ible �rant recinients. Means those persons or families of low income who are owner occupants of eligible properties and meet other requirements and qualifications for a City rehabilitation grant as set forth in these guidelines. 10. Citv rehabilitation loan. Means a loan made to eligible loan recipients for eligible improvements and/or refinancing of existing indebtedness under the City rehabilitation loan and grant program and includes loans financed by "leveraging" and the use of bond proceeds, but does not include those loans financed by "reserving." 11. Citv rehabilitation �rant. Means a grant to an eligible grant recipient for eligible impro�sements under the City rehabilitatian loan and grant • program. 12. EliQible nrouerties. Means residential housing and real property which contains eight (8) dwelling units or less; meets the requirements set forth in the "Eligible Properties" section of these guidelines; and is owned and occupied by an eligible loan or grant recipient. 13. Eli�ible imnrovements. Means the repairs, rehabilitation, reconstruction, conversions, modernization, replacement, remodeling, alternation or improvements to eligible properties which are authorized to be made under a City rehabilitation loan or grant as set forth in the "eligible improve- ments and expenditures" section of these guidelines. 14. Immediate health and safetv hazards. Means those violations of applicable codes which materially and immediately endanger the health and safety of occupants of the building involved. Such violations include, but are not limited to: a. Heating systems that are unsafe due to: burned out or rusted out heat exchanges (fire box) ; burned out, or plugged flues; not being vented; being connected with unsafe gas supplies; or being incapable of adequately heating the living space. � - 3 - . b. Water heaters that are unsafe due to: burned out or rusted out heat exchanges (fire box) ; burned out, rusted out, or plugged flues; not being vented; being connected with unsafe gas supplies; or lack of temperature and pressure relief valves. c. Electiical systems that are unsafe due to: dangerous overloading; damaged or deteriorated equipment; unproperly tapped or spliced wiring; exposed uninsulated wires; distribution systems of extension cords or other temporary methods; ungrounded systems, ungrounded appliances in contact with earth. d. Plumbing systems that are unsanitary due to: leaking waste systems, fixtures and traps; lack of a water closet, lack of washing and bathing facilities; or cross connection of pure water supply with fixtures or sewage lines. e. Structural systems, walls, chimneys, roofs, foundations, ceilings, and floor systems, that will not safely carry imposed loads. f. Refuse, garbage, human waste, decaying vermin or other dead animals, animal waste, other materials rendering it unsanitary for human occupancy, including lack of light or air. • g. Infestation of rats, insects, and other vermin. h. All existing handrails that are not permanently and solidly mounted to provide safe service. i. Lead paint that is peeling, chipping or exposed in areas that ma.y be hazardous to children and others. j. Conditions of windows, doors and other electrical, mechanical and � structural items that are condusive to fire and safety hazards, • Q K � ���� �� . . .-�� 15. Genera mvrovem ts. S�a11 only include additions, enlargements, renovations or remodeling of existing roams or structures, interior and exterior painting, decorating and outdoor remodeling, or the provision for a garage or fence; and the finishing of spaces within the property such as an attic, porch or basement. The addition of a complete new function or room will only be permitted where required by Code. Except as provided above, general improvements shall not include materials, fixtures, .equipment or landscaping of a type or quality which exceed that customarily used in the locality for properties of the same general type as the property to be rehabili- tated. General improvements shall also include kitchen equipment of a permanent nature, including stove and refrigerator and the acquisition of contiguous property, necessary to provide an adequate site for the structure. � - 4 - - �� � � �66�48 .., 16. Codes. Means applicable state, county or city health, housing, building, � fire prevention, housing maintenance, and zoning codes and other public standards applicable to housin , as determined by the City Council and the 'T'� � Authority. �pr �p�ir�.9¢S 1 �LL G��/'Mi/!in . . . ....... 17. Levera�ing. Includes, for purposes of these guidelines, the terms "leverage" or "leveraged" and refers to the process, whereby the Authority borrows monies from private lenders or the Minnesota Housing Finance Agency (herein- after MHFA) to be used to make City rehabilitation loans and/or for refinancing of existing indebtedness under the City rehabilitation loan and grant program. 18. City rehabilitation loan and grant program. For purposes of these guide- lines refers to the City of Saint Paul rehabilitation loan and grant program suthorized by Minnesota Laws, 1974, Chapter 351. 19. Reserving. Includes, for purposes of these guidelines, the terms "reserve" or "reserved" and refers to the process, whereby the Authority acting on behalf of the City of Saint Paul and with City Council approval, requests that a portion of rehabilitation funds, available through the MHFA rehabilitation loan and grant program, be set aside for use in a specific geographic area. Such geographic area may include the entire City of Saint Paul and/or specific neighborhood areas identified as part of an approved neighborhood rehabilitation program. 20. Boz�d proceeds. Means those monies, to be used to assist in financing the � City rehabilitation loan and grant program and available as a result of the issuance and sale of general obligation bonds of the City of Saint Paul, pursuant to Minnesota I,aws, 1974, Chapter 351. ' 21. Redevelopment Corporation. Means limited dividend corporations created pursuant to Minn. Stat. 462.591 to 462.711. 22. Contract. Means a written agreement to perform eligible improvement work. Eligible Persons and Families 1. To be eligible for a City rehabilitation loan, applicants must be persons or families of low or moderate income; owner-occupants of residential housing; must have the ability to repay the loan; and arei "acceptable credit risks" as determined by the Authority or its designee. Applicants with poor credit histories may be eligible if screening show sufficiently extenuating circumstances in an applicant's credit behavior and income patterns to give reasonable assurance of ability to repay the loan. 2. To be approved for a City rehabilitation loan or grant, the Authority must first of all determine that the applicant is unable to afford and secure rehabilitation funds from other sources, including private lender programs at market interest rates, the Federal 312 and 115 rehabilitation � _ 5 _ . ,•. loan and grant programs and the Minnesota Housing Finance Agency rehabilitation loan and grant program. This determination shall be � based on the availability of rehabilitation funds from such other sources; the eligibility of the applicant for such funds; and shall be further based on sufficient data showing that a rehabilitation loan, for comparable correction of code violation work, from other sources, would result in the applicant's housing related expenses being beyond 25% of his or her income. If it appears that an applicant is able to afford and secure rehabilitation funds from other sources, the Authority shall refer the applieant to the appropriate source or sourees. After referral, if an otherwise eligible applicant can demonstrate that he or she is not able to secure rehabilitation funds from other sources, such applicant may then be approved for a loan and/or grant. 3. In the event an applicant for a City rehabilitation loan and/or grant shall be rejected, the Authority shall furnish a written statement to the applicant specifying the reasons for such rejection and the applicant's right to an appeal and independent review and determination if the appli-- cant feels he or she is sggrieved by the decision and/or application of these guidelines and the manner and time in which to do so. Eligible Properties 1. The prop�rty must not be a nonconforming use under the City's Zoning Ordinance and the use must be permitted under an Urban Renewal or � Development District Plan if located in such an area. 2. A property shall not be eligible if it has been identified for public acquisition for which funding is presently available unless that property is being formally reexamined for potential rehabilitation, in which case waivers shall be considered. Upon request by the owner of such property and •tith the consent of the acquiring agency, the property may be formally reexamined for potential retention in which case waivers shall be also considered. Properties which are identified for conditional or possible acquisitions are eligible. 3. The property must be at least ten years of age or in need of repair to correct damages resulting from a natural disaster. 4. After rehabilitation, the property must be insurable through an established public or private insurance program. Eligible Improvements and Expenditures 1. City rehabiZitation loans shall be made primarily to rehabilitate eligible properties so that they are in compliance with applicable code requirements. 2. Bringing an eligible property into full comp�iance with applicable codes shall be required as a condition to making a City rehabilitation loan or � grant, except if an applicant cannot afford to correct all code violations. This determination shall be based on sufficient data showing that a City rehabilitation loan and grant, to the extent an applicant is eligible, for - 6 - . � .: � . �ss��� � correction of all code violation work and eligible general improvements� allowed in item ��5 below, would result in the applicant's housing related expenses being beyond 25% of his or her income. 3. As a condition for receiving financial assistance under the City rehabilitation loan and grant program or any other public program, including, but not limited to, the Federal 312 and 115 rehabilitation loan and grant program and the MHFA rehabilitation loan and grant pro- gram (including funds "reserved" by the authority), administered in whole or in part by the Authority, the applicant shall call upon the Authority in conjunction with Community Service Housing Code Inspection Department to provide an inspection and written evaluation assessing and outlining all violations of applicable codes, necessary to be corrected if the property is to be in full compliance with applicable codes and further assessing and outlining, when requested by the applicant, other repair, rehabilitation or improvement items that are eligible improvements under the City rehabilitation loan and grant pro- gram or any other public program administered by the Authority. This inspection and evaluation shall not be a mechanism which wfll require tt:e applicant, except as• provided in item 2 above, to bring property into full compliance with applicable codes and Legal action and assistance will be taken only on those violations of applicable codes that immediately and materially endanger the health and safety of the occupants of the eligible property, as this standard is defined and interpreted in Minn. Stat. Sec. 566. 18 (6). � 4. To the extent an applicant is eligible for, can afford, and requests a City rehabiLitation loan and is eligible for a City rehabilitation grant, such loan and grant proceeds shall first be used to correct violations of applicable codes which �onstitute i�anediate health and safety hazards. 5. If all violations of applicable codes which constitute immediate health and safety hazards are corrected under City rehabilitation loan and/or grant then eligible recipient may use up to 20% of the total loan amountA he or she is eligible for, can afford and requests under this program, for eligible general improvements. The remainder of any such loan amount must be expended to correct violations of applicable codes. If all code violations are to be corrected under a City rehabilitation loan and/or grant, then the eligible recipient may use up to 40% of the total loan amount he or she is eligible for, can afford and requests, for eligible general improvements. 6. Upon the request of an eligible loan and/or grant recipient, the Authority may make City rehabilitation loans (including refinancing) that will result in the recipient's housing related expenses being beyond 25% of his or her income, if the Authority determines that the recipient can reasonably afford such loan amounts. 7. City rehabilitation grants shall only be approved to provide financing for the correction of violations of immediate health and safety hazards. � 8. All work performed must meet applicable codes. 9. Preference shall be given to rehabilitation work that decreases or does not significantly increase consumption of energy and natural resources. .. 7 _ Rehabilitation Loan and Grant Terms. 1. The interest rate of a City rehabilitation loan sha11 be determined by � applyfng the "adjusted gross annual household income" categories to the income of the eligible loan recipient. The Authority, from time to time, based on the interest rate incurred on monies "leveraged" by the Authority and the availability of bond proceeds to pay "interest differentials" as that term is used in this Act, shall determine what the interest rate will be for each of the "adjusted gross annual household income" cate- gories but in every event such interest rate shall be established at a 2 point interest differential between each category with the "low income" category receiving the lowest interest rate; the "low-moderate" income category receiving the second lowest interest rate; and the "moderate income" category receiving the highest interest rate. The Authority shall review these "annual adjusted gross household" income figures from time to time in order to recommend adjustment to the City Council. 2. In the event the housing related expenses, including the payment required for the principal and interest of a City rehabilitation loan, of .the eligibie loan recipient exceed 25% of the recipient's income, the interest rate of the rehabilitation loan shall be reduced to the next lowest interest rate category. Eligible loan recipients, whose income is in the "upper interest loan-moderate income category," shall not however be eligible to have the interest rate on their rehabilitation loan reduced to lower interest rate categories. 3. Maximum loan terms, except in the cases of refinancing, shall be for twenty years or the remaining economic life of the eligible property, � � whichever is less, as deteYtnined by the Authority. In all cases, approved loan recipients sha11 be encouraged to retire loans as rapidly as their incomes will allow. 4. There shall not be any prepayment penalty in the event a City rehabilitation Loan is prepaid at a date earlier than scheduled in the loan agreement. 5. Except as provided below, all City rehabilitation loans must be secured by a mortgage or other recorded lien or appropriate document against the elfgible property. Rehabilitation Loans to contract for deed purchasers must either be: a. Included as part of the refinancing of existing indebtedness as provided for in these guidelines, with a mortgage as security; b. Secured by the contract vendor's written agreement, included in the written te mis of the appropriate lien or other document, to sub- ordinate his or her legal and equitable interest in the property to that of the Authority; c. Secured by a note, lien or other appropriate document on the contract vendee's equitable equitable interest in the eligible property. If the eligible loan recipient is providing a land sales contract as security, it must be recorded. An approved loan recipient shall not � transfer the property during the term of the loan without the consent of the Authority. Notwithstanding any of the above provisions to the - 8 - � � ��6��� contrary, the Authority may make unsecured City rehabilitation loans of � up to $3,500, in order to permit eligible improvement work which could not otherwise be secured by an otherwise eligible applicant because of the impossibility of providing security for a City rehabilitation loan, but only after all reasonable efforts have been made to provide the necessary security as outlined in "a -- c" above. 6. The maximum amount of a City rehabilitation loan except in the case of refinancing shall be the lesser of and not exceed: a. $17,400 per dwelling unit as set forth in the Department of Housing and Urban Development's (HUD) Rehabilitation Financing Handbook 7375.1. The Authority shall review this limit from time to time to recommend potential adjustments to the City Council; b. The actual cost of the eligible improvement work; c. That amount which, when added to other debts secured by the eligible property, would exceed the market value of the eligible property after the eligible improvements are completed plus 10 per centum. 7. The following costs may be included in a City rehabilitation loan or grant: a. Building permits and fees; b. Architectural and other design services; • c. Loan origination and servicing fees, fees and incidental costs, such as appraisal fees, inspection fees, title reports, credit reports, record- ing and f iling fees, etc. �� 8. City rehabilitation grants may be approved in conjunction with City �� L_ rehabilitation loans, b�� ��-aa—e���#ee�t-�carr-e�€---�--��T,� , �t�-' '�=�e�r� ...�►-/I�(�4t' HL1FtF T n o i 1•���, F � o��' c' t ,7 c g,c�, t��,^r.��r.�.e�e��g—re�e�e� ex ;,-'� • ����-e� the „�aiannt�� a.n�� iq��i ti.,. 71 ..�.s.. �1t - L _, ._ ., , � {- r 7 L'r' ��cllslvic �CC"�l. 9. To be eligible for a City rehabilitation grant, an applicant must have limited assets available to pay for eligible improvements and an income not to exceed the income limits of "very low--income families" for public housing as that term is defined in the Title II of the Housing and Community Development Act of 1974, amendments to the United States Housing Act of 1937, Sec. 201 (a) , Sec. 3 (2) , and approved by the Department of Housing and Urban Development. The Authority shall review this income limit from time to time to recommend potential adjustments to the City Council. � 10. The maximum amount of a City rehabilitation grant shall be the lesser of: �� r�yi (1) $5,000; (2) the actual cost of the eligible improvement work; {�3}--ti�e 0 � � . _ g _ 11. City rehabilitation grants are provided under the condition that, if the eligible property is sold or transferred within three years of the date on � which the grant is made, the grant must be repaid in one of the following amounts: a. In full if sold or transferred within the first year; b. Two-thirds (2/3) if sold or transferred during the second year; c. One-third (1/3) if sold or transferred during the third year. In making grants, the Authority shall require a lien or other appropriate document to be filed on the property to reflect the above provisions. The Authority shall adopt further administrative guidelines to provide for hardship exceptions to these provisions, where there is no evidence of abuse by grant recipients, forced by circumstances beyond their control, to sell or transfer the eligible property within three years from the date on which the grant was made. Ref inancing To the extent capital is available, as determined by the Authority, ref inancing may be used to permit eligible improvement work which could not otherwise be afforded or secured by an applicant. The Authority shall closely monitor refinancing to insure that capital available to make City rehabilitation loans is being primarily expended on eligible improvement work. Also, the Authority . shall take precautions to insure that refinancing is not used for the purpose of financing the purchase price for a property. Therefore, in all cases involviiig refinancing of existing indebtedness secured by eligible properties that have been recently purchased by the applicant, the Authority shall, as a condition to making a City rehabilitation loan, satisfy itself that the applicant has not made collusive prearrangements in order to obtain refinancing, which is in reality purchase price financing. The following provisions shall be used in implementing a refinancing program: 1. Refinancing of existing indebtedness secured by eligib.le singl�-family or duplex properties at an interest rate affordable to the eligible loan recipient, but not lower than 5%, will be permitted when such recipient's principal and interest payments on existing indebtedness, combined with the payment required for the principal and interest of a City rehabilitation loan, exceed 20% of the recipz��nt's monthly income, provided that the recip�ent obtains fee title by the time the refinanced loan is closed and a satisfactory title insurance policy is obtained for the property. 2. To be approved for refinancing, the Authority must first of all determine that the applicant is unable to afford and secure refinancing funds from other sources, including private lender programs at market interest rates, federal homeownership programs and the MHFA single-famil� residence program. If it appears that an applicant is able to afford and secure refinancing from other sources, the Authority shall first refer the applicant to the appropriate source or sources. After referral, if an otherwise eligible � applicant can demonstrate that he or she is not able to secure refinancing from other sources, such applicant may then be approved for refinancing. - 10 - . . .� �. � �ss��� 3. To be approved for refinancing, the cost of eligible improvements must � be equal or exceed 33% of the principal of the existing indebtedness of the eligible property. 4. Refinanced loan terms may not exceed 30 years, or the remaining economic life of the eligible property, whichever is less, as deter- mined by the agency. 5. The Authority, with the consent of the eligible refinancing recipient, may provide for a front end deposit by the recipient of up to 3 points, to be placed in an interest-bearing escrow account for a specified period of years, to be used by the recipient for maintenance and repair of the eligible property over the specified period of years. Any monies remaining in the account after expiration of the specified period of years will be returned to the recipient. 6. All other provisions of these guidelines shall apply to City rehabilitation loans or grants made as part of a refinanced mortgage or contract for deed as set forth in this section. Sweat Equity 1. Performance and completion of eligible improvements by eligible loan and grant recipients, neighborhoods associations, organizations, cooperatives • or collective contract groups ("Sweat Equity") will be permitted. How- ever, close scrutiny 'shall be maintained to insure that such work is carried out in a timely manner, without providing delays for the entire rehabilitation process. 2. Al1 eligible improvements work approved under a City rehabilitation loan or grant must be covered by a contract requiring full completion of such work, including work being done directly by the eligible loan or grant recipient ("Sweat Equity") , and the approved loan or grant amount must be based on that figure. The contract must identify work being done by the recipient; allow specific credit for this work; specify the time for completion of work done by the recipient; and provide for the contractor's completion of work not completed, within the specified ti�e, by the recipient. Recipients performing work through "5weat Equity" shall be permitted to draw upon their escrow account in order to pay for required materials. Contractor Performance 1. Nothing in these guidelines shall be construed to limit or restrict the applicability of state or city laws relating to the home improvement business or the repair, rehabilitation and improvement of residential housing and real property and all persons and contractors performing eligible improvements work under a City rehabilitation loan or grant must be "licensed" as required by such laws. � - 11 � 2. To be eligible to be awarded a contract under the City rehabilitation • program a contractor must: a. First, be identified and placed on a list of eligible contractors developed and maintained by the Authority. To be eligible for such a list, contractors must attend a pre-qualification seminar conducted by the Authority. The purpose of this seminar is to inform contractors about the City rehabilitation loan and grant program and to specifically instruct contractors concerning the following: 1. The quality and workmanship standards required; 2. The contractors' role and the various contractor requirements and procedures contained in the City rehabilitation loan and grant program; 3. The business ethics required while under contract; 4. The proper rnethod of bidding contracts covered by this program; 5. The arbitration policy for resolving disputes arising from contract execution. b. Must demonstrate that they are equal employment opportunity employers. 3. All contractors being awarded a contract under a City rehabilitation loan . or grant must provide the eligible loan or grant recipient and the Authority with evidence of a 100% performance bond, in the full amount of such contract, effective for two years beyond the date of completion and accep- tance by the recipient and the Authority of the work. To the extent legally permissible, these bonding requirements may be waived, or modified if the Authority determines that the contractor is "bondable" and that such bonding requirements will be met within 12 months of the date of the loan or grant. 4. All eligible improvements work performed pursua.nt to a City rehabilitation loan or grant must be covered by an Authority approved warranty concerning the quality of materials used and workmanship in performing such work. The warranty system will be monitored and enforced by the Authority in coordin- ation, where appropriate, with the MHFA. 5. All contractors performing eligible improvements work under a City rehabilitation loan or grant must: a. Carry all, adequate and required by law, insurances; b. Possess all, necessary and required by law, licenses and permits to perform contracted eligible improvements work. � -- 12 - ; � �����g � 6. Final payment cannot be made to a contractor until the eligible loan or grant recipient and the Authority have accepted the completed eligible improvements work in writing. If the contractor requests periodic draws on completed eligible improvements work, during the period of such work, such draws must be accompanied by appropriate lien waivers concerning the work completed and will be subject to a 10% holdback on the overall eligible improvements work contract. Lien waivers must also be provided prior to making final payment on the eligible improvements work contract. 7. The holdback shall be used to correct unsatisfactory eligible improvements work and to defray any costs required to be incurred by using a replace- ment contractor, should the first contractor be removed from the job. 8. The Authority shall provide necessary administrative assistance and procedures so that minority contractors and sub-contractors are provided equal opportunity to be awarded contracts to perform eligible improvements work under the City rehabilitation loan and grant program. Additional Administrative Responsibilities. The Authority, in implementing, administering and carrying out the provisions of the City of Saint Paul rehabilitation loan and grant program shall, in addition to the duties, responsibilities, determinations, functions and other provisions contained in these guidelines, be responsible for and carry out • the following duties and functions: 1. Administer the City rehabilitation loan and grant program, in such a manner so as to complement other public rehabilitation and related programs, and not be competition with or as a substitute for any other public program. Particular administrative emphasis shall be placed on encouraging lower- income homeowners, who live in neighborhoods where the need for rehabilita- tion is recognized, to avail themselves of the City rehabilitation loan and grant program. To this end, based on the income limits being adopted in these guidelines for various loan interest rate categories, the Authority shall adopt procedures that will insure a loan approval ration of 2-1-1 (lower interest rate - middle interest rate - higher interest rate) over the length of the program. This guideline, however, shall be adjustable by the Authority based on rehabilitation needs and in reference to approved neighborhood rehabilitation programs. Also, the Authority shall establish a monitoring system, particularly during the early stages of implementation, that will detect and advise the Authority, steering coirmnittee, and the City Council of any trends inconsistent with the intent of Minnesota Laws 1974, Chapter 351. 2. Adopt, consistent with the provisions of Minnesota Laws, 1974, Chapter 351 and the provisions of these guidelines, further administrative guide- lines, procedures and/or rules and regulations necessary to implement and administer this program. To this end the program shall be implemented • - 13 - by the Authority with as few administrative rules and procedural steps as possible and should be a eorresponding flexible program which meets � real rehabilitation needs and satisfies the intent of Chapter 351. In this regard, the Authority shall recotrnnend to the City Council necessary changes in these guidelines on a continuing basis. These administrative guidelines, procedures and/or rules and regulations shall include provisions designed to insure that financing of rehabilitation through this program will be available to eligible persons or families on a city wide basis and in addition will be available to: a. Eligible persons or families required to repair, improve, or rehabil- itate housing because of an urban renewal or code enforcement program; or if under court order; b. Eligible persons or families unable to receive property insurance because of physical hazards; c. Eligible persons or families who have agreed to rehabilitate their property in conjunction with and pursuant to an approved neighborhood rehabilitation project, plan or program; d. Eligible persons or families unable to afford rehabilitation loans at a market rate of interest; e. Eligible persons or families whose home contains violations of applicable codes which constitute immediate health and safety hazards; f. Eligible persons or families who have acquired property through or • pursuant to an urban homesteading program; g. Eligible persons or families required to rehabilitate their homes under or pursuant to approved relocation plan. 3. Coordinate with the Mayor and City Council in their establishment of an advisory committee composed of community group representatives, private citizens, and public officials to act in an evaluation and advisory capacity after implementation of this program. 4. Borrow or leverage monies pursuant to Minn. Stat. 462.415 to 462.711 and Minnesota Laws, 1974, Chapter 351, from grivate lenders and the MfiFA to be used to make rehabilitation loans and to refinance existing indebtedness under the City loan and grant program, in such amounts, and under such terms and conditions, as the Authority, in coordination with the City Council deems appropriate. 5. Make available, on a coordinated and comprehensive basis, other related housing programs administered in whole or part by the agency, such as urban homesteading, the hazardous building act (Minn. Stat. 463. 15-.261) spot renewal, federal rehabilitation loan and grant and homeownership programs and the MHFA rehabilitation loan and grant program (including "reserved funds") to compliment approved neighborhood rehabilitation , programs. • 14 - , �• ������ 6. Provide necessary administrative and technical assistance in carrying • out the provisions of the City rehabilitation loan and grant program. 7. Coordinate with the City Planning Department and the City Council in the preparation and implementation of neighborhood rehabilitation programs and upon direction of the Council: a. Prepare appropriate documentation and submit reservation requests to the MHFA for the reservation of MHFA rehabilitation funds to be available on a City-wide basis and/or to be available for approved neighborhood rehabilitation programs; b. Set aside funds available through or as a result of the City rehabilitation loan and grant program including bond proceeds or "leveraged" funds for approved neighborhood rehabilitation programs. 8. Coordinate with and, to the extent legally permissible, contract with other state public bodies as that term is defined in Minn. Stat. 462.421 (4) such as the Community Services Housing Code Inspection Division and the City Planning Department concerning the delineation of responsibilities and functions in carrying out the provisions of Minnesota Laws, 1974, Chapter 351 and these guidelines including but not limited to the exercise of powers relating to the repair, closing, acquisition, or demolition of hazardous, unsafe, unsanitary or unfit buildings; the inspection of residential housing; and the authorization and delivery of public and other related improvements. • 9. Coordinate with, and to the extent possible, provide assistance, in conjunction with the City Planning Department, to neighborhood organiza- tions or associations to assist such groups in assessing the potential for, in organizing, and in developing and formulating neighborhood rehabilitation project plans; and in conjunction with the City Planning Department, inform interested neighborhood organizations and citizens on the specifics of the City and MHFA rehabilitation loan and grant program and disseminate information concerning these progzams on a City- wide basis. 10. Coordinate and contract with neighborhood organizations and associations and non-profit and redevelopment corporations concerning the delineation of authority, organization, association or carporation functions and responsibilities as regards an approved neighborhood rehabilitation program. To the extent legally and economically permissible, such a contract may include an agreement by the Authority to reimburse such associations and corporations for expenses and salaries incurred in carrying out such functions and responsibilities. 11. Coordinate and contract with local lending institutions concerning their involvement in the origination and servicing of City rehabilitation loans and grants, but in all cases the final decision concerning the making of a City rehabilitation loan or grant rests with the Authority. 12. Coordinate and contract with the City of Saint Paul concerning the receipt • and use of bond proceeds, authorized by Minnesota Laws, 1974, Chapter 351, " and made available to the Authority pursuant to Minn. Stat. 462.415 to 462.711 and Chapter 351. - 15 - 13. Provide an adequate information and referral system, whereby persons and • families who are potentially eligible for and desire to avail themselves of other public and private programs and funds relating to rehabilitation and homeownership including "reserved" or (excluding "leveraged" MHFA funds) otherwise available MHFA rehabilitation and refinancing funds, (instead of City rehabilitation loans and grants) are given full informa- tion concerning the use and availability of such funds and programs and proper referral to rehabilitation programs and administering entities. 14. Provide, upon completion of and acceptance by the eligible loan or grant recipient and the authority of eligible improvements work, a "Certificate", setting forth what violations of applicable codes and immediate health and safety hazards have been corrected by the eligible improvements work and what other eligible improvements work has been completed, and stating that the completed eligible improvements work is in compliance with applicable codes. 15. Provide,an appeal or review process and procedures and information so con- cerning,wherein any person who feels he or she is aggrieved by the application of these guidelines may appeal such grievance for independent review and determination. Use of Bond Proceeds. 1. Consistent with the provisions of Minnesota Laws, 1974, Chapter 351, and these guidelines, bond proceeds shall be utilized by the Authority to pay • the following costs and for the following purposes: a. Interest Differentials. To pay the difference between the interest rates on approved City rehabilitation loans and refinanced indebtedness and the interest rate incurred on monies borrowed or "leveraged" by the Authority and used to make and issue City rehabilitation loans and/or to refinance existing indebedness, provided, however, that in no event shall the payment of interest difference on any City rehabilitation loan exceed 2 points. b. Default Reserves, To be set aside and used, at a percentage rate not to exceed 6% of the total amount of monies used to make City rehabili- tation loans, and at a level and upon such terms and conditions determined, as a result of negotiations with private lenders and the MHFA, by the Authority, with the consent of the Council, to pay for City rehabilitation loans and refinanced indebtedness defaults. c. Administrative Costs and Technical Assistance, To pay, in an amount approved by the City Council, for administrative and technical assistance costs incurred by the Authority or its agents which are directly related to the development, implementation, administration and carrying out the City rehabilitation loan and grant program, do Rehabilitation Grants. To provide and make a maximum of $150,000 in City rehabilitation grants, consistent with the provisions of Chapter 351. e. Rehabilitation Loans. To provide and make City rehabilitation loans, • consistent with the provisions of Chapter 351. -lb- � : � � �ss54� • 2. Any interest charged and received under a City rehabilitation loan that is in excess of Authority costs, as regards that loan, may be used by the Authority in making additional City rehabilitation loans or for any of the purposes specified in (1) above. i • , - �� - �� 2ss5�� • APPENDIX I AREA IMPROVEMENT PROGR{�1M FOR RESIDENTIAL REHABILITATION Recognizing the importance of structural conditions throughout an area to an individual property and the value of any investment in the rehabilitation of a residential structure, the City of Saint Paul will establish a program to encourage the concentration of rehabilitation resources in limited areas with the following objectives: 1 . Support and encourage eooperative neighborhood improvement efforts by ensuring the availability of financing and technical assistance for area improvement efforts. 2. Achieve substantial , visible improvement sufficient to strengthen neighborhood stability and encourage continuing private reinvestment in residential areas with substantial rehabilitation needs. 3. Through concentrated assistance, ensure that as many rehabilitation needs as possible are met, including those which can be met exclusively through the private market. 4. Reinforce existing sound neighborhoods and previous investment in • neighborhood improvement by extending improvement eftorts to nearby areas threatened by blight. 5. Coordinate completion of required public improvements and other co►n�nunity development needs with area rehabilitation ef�orts where possible to strengthen area-wide impact. 6. Maximize public/private cooperation in neighborhood improvement so that increasingly the efforts of private citizens, neighborhood organizations, lending institutions, the City, the State and other public agencies reinforce each other in reaching the corr►xnnon objective of a high-quality residential environment in City neighborhoods. Rehabilitation Plan The City Planning Coordinator will prepare a general plan for residential rehabilitation in Saint Paul . This plan will indicate generally th�t portion of the City for which concentrated rehabilitation effort is particularly appropriate. The plan will identify criteria for the evaluation of area rehabilitation project proposals, will indicate the range of activities which should be considered for neighborhood or small area projects and will indicate the specific informational requirements for a project plan. The priority areas identified For rehabilitation activities will indica�te those areas of the City where need exists for positive effort to encourage • rehabilitation interest and will provide a basis for the coordination of public irr�provement activities with residential rehabilitation efforts. Identified priority areas then will be considered in the evaluation of rehabilitation projects proposed by neighbonc�od organizations; however, projects will not be restricted to the priority areas identified. Page 2 APPENDIX I The rehabilitation plan will also address the need for rehabilitation • assistance throughout the City outside of concentrated project areas; measures which may be needed to ensure that resaurces are available both for area projects and for the remainder of the City; and measures other than formally designated area projects which may be used to encourage neighborhood cooperation or otherwise increase the effectiveness of rehabilitation efforts throughout the City. Neighborhood Rehabilitation Program The City Planning staff, working with the Housing and Redevelopment Authority, will prepare a program of specific area rehabilitation activities to be undertaken. The program will be revised annually and forwarded to the City Council by the Planning Commission. The program will include: a. Neighborhood project plans and the estimated resources required for each project. Each plan will specify how the technical assistance and community organization assistance is to be provided and will identify the local citizen organization with continuing responsibility for the project. b. Identification of any City and/or MHFA loan and grant funds to be reserved or set aside for each project. c. Identification of resources required for pre-project planning in some • areas and reservation to be made for potential projects. d. Indication of demands which proposed projects can be expected to make on City staff for building inspection. e. Identification of ineasures other than rehabilitation loans and grants which can be programed for area projects including public improvements, urban homestead, recycling acquisitions , etc. While the intent of the annual program will be to ensure that project needs and available resources are matched for a given year, reservations of loan and grant funds for longer periods of time may be indicated. Neighborhood Project Plans Development of project proposals will be coordinated by the City Planning staff. It is anticipated that wotential projects will , in some cases, be initially proposed by local neighborhood organizations. In any case, area residents will be expected to play a major role in the development of a projeet proposal or plan. In those areas of the City where rehabilitation is identified as a high priority need, a positive effort will be made to ensure that information and assistance are available to residents as required to identify area needs and develop project proposals. � . -. . �ss5�� , ' APPENL�IX I Page 3 . • Where desirable, loan and grant resources may be reserved for potential projects in a given priority area for a specified perio�l of time less than one year to encourage interest on the part of residents. If, after the specified time period, an adequate plan has not been developed with strong community support, such a reservation would lapse. Project Implementation Where a project is established, techr..ical and corr�nunity organization assistance and informational materials for rehabilitation will be provided to resident groups as required to achieve broad participation and accomplish rehabilitation work in a satisfactory and efficient manner. It will be the responsibility of the Housing and Redevelopment Authority as the administrative agency for neighborhood projects to ensure that the necessary technical and community organization assistance is provided. The City Planning staff will monitor and evaluate the progress of the rehabilita- tion program and will propose revisions in the program as they become necessary. In assisting neighborhoods with identification of desirable project areas and in evaluating proposals for an annual program of area improvement activities, the following factors will be considered: � age of housing structural condition of area housing income profile of area population incidence of home ownership residential structure types property values and value trends area improvement needs that cannot be met through rehabilitation neighborhood improvement efforts which go beyond rehabilitation and increase the possibility of significant upgrading public improvement and community facility needs and projects and plans which may s�rengthen the improvement effort other compl�mentary improvement programs potentially or actually in effect which would strengthen rehabilitation impact corr�nitment and interest of area residents previous improvement activity natural boundaries, adjacent sound neighborhoods and blighting influences It is understood that organized projects for which funds are reserved under the City program need not constitute the entire range of locally-organized rehabili- tation activity. Residents are to be encouraged to work cooperatively in whatever way they find feasible and appropriate to achieve neighborhood improve- ment, making use of available loan and grant assistance. � 8/5/74 . � APPENDIX II . TYPICAL REHABILITATION LOAN PROCESS �s�548 SAINT PAUL REHABILITATION PROGRAM The purpose of this Appendix is to describe a "typical" case and the procedures to be followed for a homeowner to obtain a rehabilitation loan under the program guidelines that are outlined in the previous documents. Certain assumptions were made for purposes of describing this procedure. Those asswmptions include the existence of a small "store-front" office in a neighborhood that has been identi- fied and approved for a concentrated rehabilitation program. We further assumed the office is staffed with two rehabilitation advisors, a part-time community organizer and a part-time secretary. A rehabilitation loan officer would be located at a central administrative office. The process would begin when the homeowner contacts the co�nunity organizer (or rehabilitation advisor) at the site office. The contact may result from the homeowner obtaining information about the program at a rehabilitation "block party." During this initial meeting, the organizer would describe the generai rules, procedures and guidelines of the city rehabilitation program, screen the homeowner for eligibiiity and attempt to determine the homeowner's interest in rehabilitating his property. Assuming that positive interest and eligibility are established during the • initial contact, the organizer would ask the homeowner to fill out a data sheet and schedule an inspection of the property by the full City Inspection Team. The data sheet wouid be forwarded to the rehabi7itation loan officer for review and a further determination of eligibility of the homeowner to receive a loan. During this time, tfie City Inspection Team will have completed their work and prepared a written list of all code violations found on the property. A copy of the list wou d e sent to the homeowner and the rehabilitation advisor at the site office. A meeting between the homeowner and the rehabilitation advisor would be the next step in the process. After determining the scope of general improvements desired by the homeowner and deciding which code items are to be corrected, the rehabili- tation advisor wii] instruct the homeowner to have a contractor prepare a preliminary scope of work for bidding purpose. The homeowner would subsequently select an approved contractor and obtain an informai bid from him. After receiving an informal bid, the homeowner wou7d review the scope of work and cost with the rehabi7itation advisor. Upon agreement by the homeowner to the final scope of work, the contractor's bid would be obtained by the homeowner. During the time that final bids are being prepared by the contractor, the site office would fill out a preliminary loan application with the homeowner and the property would be appraised by an independent reai estate appraiser. The "loa� package" consisting of the final bids and scope of work, loan application and appraisal are then delivered to the loan officer at a central location for process- ing. During this processing, the loan application wou]d be reviewed and approved (denied) by a Special Rehabilitation Review Comnittee. � � . . , Page 2 APPENDIX II . .' • . Assuming that the package is approved, a closing would be set between the homeowner and loan officer. Upon closing, the contractor will be issued an • order to proceed with the work. During the construction work, the rehabilita- tion advisor will coordinate with the homeowner in monitoring its progress. Completion of all construction work would be followed by a final inspection by a group consisting of the homeowner, City Inspectors, and the rehabilitation advisor. Items found to not be in compliance with city codes and the scope of work would be corrected prior to final payout to the contractor by the loan officer. Lien waivers will be obtained at the time of final payment. Partial payments may be arranged, if the term of construction is anticipated to be lengthy. In order to provide you with a further understanding of the above process, a graphical presentation is attached hereto. 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