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SR-CC-3 CC.-3 APR 1 2 199't JM:PB:MS:homepro.mem Santa Monica, California Council Meeting: April 12, 1994 To: Mayor and City Council From: City Staff Subject: Recommendations Regarding the Establishment of the HOME Investment Partnership (HOME) Program INTRODUCTION This report provides information regarding the establishment of the HOME Investment Partnership (HOME) Program, a HUD funded affordable housing program, and recommends that city Council: (1) approve the HOME Trust Fund Guidelines, and (2) designate Communlty Corporation of Santa Monica (CCSM) as the HOME Community Housing Development Organization (CHDO) authorized to receive HOME set-aside funds. BACKGROUND On February II, 1992 the City Council adopted Resolution #8354 (CCS) authorizing the City Manager to apply for HOME funds and permitting the expenditure of HOME funds for new construction and rehabilitation of affordable housing. Since then, staff has worked to identify a CHDO as required by HUD, draft HOME Trust Fund Guidelines and identify eligible project(s} for which to use HOME funds. As mentioned in the staff report of February 1l, 1992, The HOME Program was created under the National Affordable Housing Act of 1990, and was developed to provide a new source of federal funds to 1 APR 121M ec...-3 help expand the supply of decent and affordable housing, particularly rental housing, for lower-income households. The HOME program design is limited by rules established by HUD in 24 CFR part 92. Local jurisdictions must submit an annual Program Description which includes a general description of the city's intended use of HOME funds. The city's HOME Program Description, which has been approved by HUD for FY 94, specifies that funds will be used for new construction and rehabilitation of affordable rental housing for lower-income households. To date, the city has received three years of HOME allocations. The first year, FY 1992, the City received $1,091,000 in HOME funds, the second year, $723,000, and this year, FY 1994, the City will receive $572,000 for a cumulative allocation of $2,386,000. As required by HUD, HOME funds must be committed within two years of receipt. As such, the FY 92 allocation must be committed by June 30, 1994, or funds will be recaptured by HUD. Currently, Staff anticipates committing approximately $990,000 of the FY 92 HOME allocation for a construction/permanent loan to the Upward Bound House (UBH) Transit10nal Housing Project. The UBH Transitional Project is a proposed new construction project of 22 units for homeless families to be located at 1020 12th Street. The Task Force on Homelessness Report specifically mentions this project as a housing project of immediate priority and urges the City's full cooperation. 2 - Homeless families selected to participate in the UBH Transitional Housing Project would reside in the facility for up to 2 years and receive supportive services while they prepare themselves for IItransitionll to permanent housing. The project has the necessary zoning and planning approvals and is planned for operation within the next 24 months. DISCUSSION HOME Trust Fund Guidelines staff recommends that a new housing trust fund known as the HOME Investment Partnership (HOME) Trust Fund be established as the mechanism by which loan requests for HOME funds will be processed. Further, staff recommends that the Guidelines be based on the city's existing housing trust fund guidelines and requisite federal requirements. Establishing a separate trust fund will ensure that HOME funds are expended to increase the supply of affordable hous ing to the lowest income households, as required by federal law. currently, the City has three housing trust fund programs; the Citywide Housing Trust Fund (CWHTF), the Pico Neighborhood Housing Trust Fund (PNHTF) and the City-wide Housing Acquisition and Rehabilitation Program (CHARP) Trust Fund. All three existing programs provide capital funds to eligible borrowers to fill the financial gap between available non-program resources, including 3 the borrower's equity and private financing, and the cost of developing affordable mUlti-family and SRO rental housing. The HOME Trust Fund 1S seen as a complement to the CWHTF, PNHTF and CHARP and it is recommended that the HOME Program utilize similar procedures and funding mechanisms. . Loan Mechanism As in the CWHTF, CHARP and PNHTF programs, HOME funds would be made available in the form of a deferred or residual receipts loan, evidenced by a promissory note, and secured by a deed of trust. Each loan vii II also be secured by a regulatory agreement restricting the occupancy, rent levels, and management and maintenance of the property for a term of not less than fifty (50) years. Principal and interest which are not repaid through residual rece1pts vii II be due and payable at the end of the loan term, unless the loan term and regulatory restrictions are extended. Upon expiration of the Regulatory Agreement and any extensions, the remaining principal and interest shall be due and payable in full, to the extent that the fair market value of the project exceeds the principal balance of the existing indebtedness. The difference between paid and accrued interest may be forgiven if the borrower has complied with the Regulatory Agreement for its full term. 4 ~ - -- -- - . Eligibility Requirements Eligible borrowers are community based non-profit housing development corporations (HDC) and private owners of mUlti-family and SRa rental buildings of 4 or more units. . Eligible Projects Projects eligible for HOME funding must involve 4 or more apartments or single-room-occupancy (SRO) units or a group home which will be rented to eligible lower-income households at rents that do not exceed rents as defined by HUD and the city; have at least 20% of the HOME assisted units rented to very low income families as defined by HUD and the city; demonstrate financial feasibility -- including the ability to maintain rents for the subsidized units at affordable levels for the periods specified; be free of significant adverse environmental impacts; minimize tenant displacement; make efficient use of public funds; and, be located anywhere in Santa Monica. . Eligible Uses of the Fund New construction activities eligible for HOME funding include~ site acquisition, cost of demolishing existing structures, site preparation costs, financing costs, architectural, engineering and other related soft costs, construction costs, relocation costs; and, affirmative marketing and audit costs related to HOME program requirements. 5 Substantial rehabilitation costs eligible for HOME funding include project acquisition, costs of temporary or permanent relocation for existing tenants, certain financing costs, architectural, engineering or other design costs, utility upgrade or extension costs, costs associated with demolition (where necessary) , construction costs, project audit costs/ and, affirmative marketing costs. All expenditures would be subject to city approval and verificat~on. . Low Income Benefit HOME funds may only be used to flnance new construction or substantial rehabil~tation of rental housing which is affordable to very low and low-income as deflned by Hun and the city. Eighty percent (80%) of the subsidized units must be affordable to lower-income households (65% of area median income) and at least an additional 20% to very low income households (50% of area median income). In addition, at least 90% of each years funds must be invested in units occupied by families whose incomes do not exceed 60% of the median family income. The remaining 10% must be invested in units occupied by families earning below 80% of median. . Per unit Subsidy Consistent with existing trust fund guidelines, the maximum HOME subsidy would be $60,OOOjunit. Any project requiring more than $60,OOOjunit, or more than a total of $2 Million, must be 6 approved by the city Council. · Application Procedures Consistent with other guidel~nes, HOME guidelines will provide for an "open-window" process for project submittal and approval, allowing for submittal of applications for available program funds throughout the fiscal year. An open-window process is effective in Santa Monica and allows properties to be presented at any time to the city for assistance. Project loan requests which are cons~stent with Program Guidelines will be reviewed and approved administratively as are loan requests for the CWHTF, CHARP and PNHTF programs. Selection among competing project applications w~ll be based, ln part, on criteria such as the degree to which proJects significantly increase affordable housing opportunitles for large famllies, or persons traditionally served by SRO housing and the disabledi assist homeless persons; benefit a high percentage of very low and low- income households; and, effectively leverage non-City sources of financing. . Public Notice As with existing trust fund guidelines, a neighborhood review process will be required and will provide neighbors with an opportun~ty to review and comment on the proposed project prior to the release of program funds. 7 Community Housinq Development Orqan1zation (CHDO) Staff recommends that Community corporation of Santa Monica (CCSM) be designated as the HOME CHDO for Santa Monica. Local jurisdictions are required to set-aside 15% of each year's funds for local CHDO's housing activities. For FY 92 the set-aside amount was $163,650. The total set-aside for the past three years is $357,900. In addition, the CHDO would be eligible to receive operating funds equal to 5% of each years allocation. CHDO set-aside activities, new construction or acquisition and rehabilitation, must be the same activities as outlined in the City's approved HOME Program Description. A CHDO must be a private non-profit organization that is organized under the State, and has no part of its earnings inuring to the benefit of its member. In addition, the CHDO must maintain accountability to lower-1ncome community residents by maintain1ng at least one-third of its board members for residents of low-income neighborhoods, have demonstrated capacity to carry out hous1ng activities and have a history of serving the community within which the housing is to be located. staff of CCSM and the City are currently considering several eHDO acquisition/rehabilitation projects that would be HOME eligible and address the following concerns; a multi-family building that is adversely impacting, either aesthetically or socially, the neighborhood within wh1ch it is located: a building that is 8 suffering from deferred maintenance or is earthquake damaged; or a building that has more than 30% of the units vacant. Staff expects to have a CHDO project identified and underway by this summer. FINANCIAL/BUDGETARY IMPACTS The Program wlll expend funds allocated by HUD to the City pursuant to City Council Resolutlon No. 8354. HOME Administrative funds will be used to hlre an as-needed Senior Administrative Analyst to implement the HOME Program. Funds have been approprlated on an annual basls as part of the annual budget process. RECOMMENDATIONS It is recommended that the Clty Council: (1) approve the HOME Trust Fund Guidelines, and (2) designate Community Corporation of Santa Monica as the Community Housing Development corporatlon (CHDO) authorized to receive HOME set-aslde funds. Prepared by: Jeff Mathleu, Resource Management Dlrector Paula Burrier, Housing and Redevelopment Manager Mike Strader, Senior Development Analyst Attachments: HOME Investment Partnership (HOME) Program Trust Fund Guidelines 9 April 12, 1994 HOME INVESTMENT PARTNERSHIP (HOME) PROGRAM TRUST FUND GUIDELINES INTRODUCTION The HOME Investment Partnership Trust Fund (HIPTF) Program provides funds to eligible borrowers in the form of low interest or deferred payment loans to support the development of affordable housing throughout the city of Santa Monica. These funds provide supplemental financIng for the acquisitIon, rehabilItation, and new construction of properties to preserve and Increase affordable housing opportunitIes for lower-income households. HOME Funds are disbursed to eligible private owners and non-profit borrowers as deferred loans to make up the fInanCIal gap between available non-HOME Fund resources, including the borrower's equity and private financIng, and the costs of developing affordable multi-family housIng. In each fiscal year, commencing wIth FY 92-93, the City will allocate HOME funds pursuant to ResolutIon No. 8354 which authorizes use for construction or rehabilitation of affordable housing In complIance with each funding year's HOME Program Description. The CIty establIshed operatIng polICIes and procedures for the administratIon of the HOME Investment Partnership Funds are 1 - - - described in these program guidel~nes. PROGRAM REQUIREMENTS Eligible Borrowers: Ellgible borrowers are community based non-profit housing development corporations (HDC) duly organized to promote and undertake community development activities on a not-for-profit basis and private owners of multi-famlly and SRO rental buildings of 4 or more units wlth proven capacity to develop, own and operate affordable housing. Partnerships between a private owner and a non-profit HDC are encouraged and are also eligible to borrow Program funds. Eligible projects: Projects eligible for HOME funding shall: (1) be rental projects located in the city of Santa Monlca; (2) contrlbute to the achlevement of the Clty'S fair houslng goals; (3 ) involve 4 or more apartments or slngle-room-occupancy (SRO) units or a group home which will be rented to eligible lower-income households x at rents that do not exceed rents as defined by 24 CFR 92.252,; ( 4) at least 20% of the HOME asslsted units shall be rented to very low income families under the terms and conditions set forth in 24 CFR 92.252 (a)(4); (5) demonstrate financial feasibility -- includlng the ability to maintain rents for the subsldized units at affordable levels for the periods specified in 24 CFR 92.252; 2 (6) be free of significant adverse environmental impacts, except those that can be mitigated through the project itself; (7) Minimize tenant displacement; (8) comply with all local building and zonlng codes and standards, including energy efficiency and water conservation standardsl meet housing quality standards in Sectlon 882.109 of thlS title. Newly constructed housing must meet the current edltion Model Energy Code of the Councll of American BUllding Offlcials; (9) make efficient use of public funds and avoid "layering" of subsidies beyond those necessary to achieve a financlally feasible project. Eligible Uses of HOME Funds: HOME funds may only be used to finance new construction or substantial rehabilitatlon of rental housing which lS affordable to very low and low-income as defined by 24 CFR 92.2. Eighty percent (80%) of the subsidized units must be affordable to lower income households (65% of area median income) and at least an additlonal 20% to very low income households (50% of area median lncome), described below. Eligible Activities: New constructlon costs eligible for HOME fundlng shall be as speclfied in 24 CFR Part 92, includlng: 1. site acqulsltlon; 2. cost of demolishlng existing structures; 3. site preparation costs (gradlng, filllng, etc. ) 4. financing costs as descrlbed in 24 CFR 92.206; 3 5. architectural, englneering, and other related soft costs; 6. the cost of extending or upgrading utilities to the slte to support the proposed project; 7. construction costs; 8. relocation costs; and, 9. affirmative marketing and audit costs related to HOME program requlrements. Substantlal rehablli tation costs ellglble for HOME funding include: 1- project acquisltlon; 2. costs of temporary or permanent relocation for existing tenants; 3. flnanclng costs, as described in 24 CAR 92.206; 4. architectural, englneering, or other deslgn costs; 5. utillty upgrade or extenslon costs; 6. costs aSSQClated with demol~tion (where necessary); 7. construction costs; 8. project audit costs; and, 9. affirmative marketing costs. Ineligible uses include: 1- project reserve accounts for replacement operat~ng reserves/ and operating subsidles; 2. Payment of impact fees; 3 . Other activitles prohlbited by Federal regulatlons. PROJECT REQUIREMENTS Minimum Loan: All HOME ~nvestments must total not less than 4 $1000 times the number of HOME assisted units in the project. xaximum Loan: The maximum amount of subsidy per unlt shall be $60,000 per unit. Any proJect requiring more than $60,OOOjunlt (but in no case more than is allowed in 24 CFR 92.250), or more than $2 Million, must he approved by the Clty Council. The city will avoid unnecessary layering of subsidies from different federal, state and local programs and seek to maximize the benefit to target households from the investment of HOME funds in a project. property standards: Housing that lS assisted wlth HOME funds must meet, at a mlnimum, the housing quality standards of all local codes, rehabilitation standards and zoning codes. Newly constructed houslng must meet the current edltion of the Model Energy Code published by the Council of American Building Officials. Substantlally rehabl11tated housing must meet the cost-effectlve energy conservatlon and effectiveness standards in CFR 39. Qualifications as Affordable Housinq and Income Tarqetinq: A housing proJect quallfies as a HOME assisted affordable housing proJect if rents are limited as follows: 1. Has at least 20 % of the HOME asslsted unlts rental units: a) Occupied by very low-income families who pay toward rent not more than 30 % of the family adjusted income, or b) Occupied by very low-lncome faml1ies and bearing 5 - _.~-~- Dear Santa Monica Planning Commissioners, As a neighbor to~posed site of The Santa Monica Bed & Breakfast, I (we) sUpPOrt the project Aftermee~g with mem~ mfJh~~~~ding commumty, the developers of the project have agreee\oP~ide a much desired security patrol as a condition of approval. "93 AlIi 23 P 1 '1 7 Please approve the project when it comes before yOU. Thank YOU. Itr'Af.r~ ~ (~~o ~#,e-4F()IJE pofCoj /7~ '$ NAME AND AnDRESS ..... .. -- --- -- -----..... --- -~---- _ -~ ~ ----~-~--- ...--------- - - - -- - - Dear Santa Monica Pl3iiiring Commissioners, As a neighbor to the proposed site of The Santa Monica Bed & Breakfast, I (we) supPOrt the project Aftermcc1i?g w4tb'~mJhe. surrounding commumty, the developers of the project h~~ ~ to proVIde a much desired security patrol as a condition of app~v'Jk 23 P 1 :1 7 Please approve the project when it comes before you. Thank you. --::r; wi (s t? fV\;NE'R \l \~~13 OF~ . . NAME AND ADDRESS f. 0 0 0 5 8 HOME FUND LOAN TERMS HOME funds may be invested in eligible affordable housIng projects as deferred or residual receIpts loan. HOME fund loans from the Trust Fund shall have the following terms and conditions: Term: Loans shall be for a fifty (50) year term subject to the terms of the Regulatory Agreement. Interest Rate and payments: The interest rate shall be set at the rate establIshed by the Federal Home Loan Mortgage corporation for the average conventional commitment of a fixed rate, thirty-year (30) mortgage, and shall be compounded annually. (l) Payments of prIncipal and interest shall be deferred for no less than five {5} years, and for no more than thirty (30) years. Deferral for thlrty (30) years shall only be avaIlable to proJects WhICh provide signIfIcant benefit to very low income households, i.e. at least 75% affordable to very lOW-Income households. After such period, payments of principal and Interest shall be made from project Residual Receipts, if any, as approved by the City. Payments shall be applied first to accrued Interest, and then to prinCIpal. (2 ) The Borrower may elect to pay the PromIssory Note prior to the end of the term, however, the Regulatory Agreement shall remaIn in full force and effect for its term regardless of any repayment. 7 (3) If the Borrower violates the terms of the Regulatory Agreement such that the city declares the Promissory Note in default, the entire amount of unpaid principal plus the accrued interest at the rate establlshed at the time of loan closing, shall be due. (4) Unless paid in full earlier, the remainlng principal balance of the Program loan and accrued interest shall be due and payable at the end of the term of the Promissory Note. The remaining princlpal and accrued but unpaid interest shall be payable only to the extent that the falr market value of the ProJect exceeds the principal balance of the existing indebtness secured by the property. The difference between paid and accrued compounded interest and simple interest at the same rate may be forgiven lf the borrower has complied with the terms of the Regulatory Agreement for its full term. (5) The Clty may accept an extenslon of the term of the existing Regulatory Agreement for a minimum of twenty- flve (25) years ("Extension Perlod") in lleu of full payment of remalnlng princlpal and accrued but not unpaid lnterest at the end of the term of the Promissory Note. security: The loan shall be secured by a Deed of Trust and Promissory Note which may be subordinated to Deeds of Trust securing other federal or state agency loans, loans from 8 - ---- - - conventional financing instltutions, or loans from seller take back financing, used in conjunction wlth the Trust Fund Loan on the same property. The loan shall be further secured by a Regulatory Agreement to assure that Trust Fund Program funds are used to provide long-term affordable housing opportunities for lower-income households. The Borrower and City shall execute an Agreement regulat1ng project rents, tenant selection procedures, use of project income, management and ma1ntenance, and perm1tted forms of project ownership and/or use. The Regulatory Agreement shall be recorded wlth the Deed of Trust and Note. Rent Schedule and Tenant Income: The Clty must review and approve rents proposed by the owner for un1ts assisted with HOME Funds. The owner must recertify the lncome of each tenant household living in the low-income unit at least annually. The maXlmum monthly rent must be reviewed and approved by the city and notice of any increase in rent must be provlded to the tenants at least 30 days 1n advance of the effective date of the increase. The maXlmum monthly rent may not exceed the MaXlmum Allowable Rent (MAR) as determined by the Rent Control Board. Increases in Tenant Income: Where a tenant's lncome after occupance exceeds the income llmlts for the program, the rental housing will continue to qualify as affordable as affordable. However, the next vacant unit must be filled with an lncome qualified tenant, except for proJects developed under the low- income houslng Tax Credit program. Tenants who no longer qualify 9 -- - - -- as low-income families must pay as rent the lesser of the amount payable by the tenant under state of local law or 30 percent of the family's adjusted monthly income, as recertified annually. Tenant and participant Protection: a) Lease: the lease between tenant and owner must be for not less than one year. b) Tenant selection: The borrower must adopt wr1tten tenant selection policies and criteria that are consistent with the purpose of providing houslng for the very low-income and low- income families. Mixed-Income Projects: All unlts in a project are not requlred to be assisted under the HOME program. A project where less than 100% of the dwelling unlts quallfy as affordable is eligible, if the houslng meets the rent llmitations and income targeting criteria described ln these guidelines. Mixed-use pro;ects: Houslng in a mixed use project may qualify as affordable if such housing meets the rent limltations and lncome targetlng criterla of the gUldelines) , and the residential living space constitutes at least 51% of the project space. Reliqious organizations HOME funds may not be provlded to prlmarily religious organizatlons, such as churches, for any actlvity lncluding secular actlvlties. In addltion, HOME funds may not be used to rehabilitate or construct housing owned by primarlly rellgious organizatlons or to assist prlmarlly religious organizatlons ln acquirlng housing. However, HOME funds may be used by a secular 10 entity to acquire housing from a primarlly religlous organization, and a primarlly religious entity may transfer title to property to a wholly secular entity and the entlty may participate in the HOME program in accordance with the requirements of thls part. The entity may be an existing or newly establlshed entlty (WhlCh may be an entlty establlshed, but not controlled, by the rellglous organization). The completed housing project must be used exclusively by the owner entity for secular purposes, available to all persons regardless of religion. In particular, there must be no religious or membership criterla for tenants of the property. COMPLIANCE WITH FEDERAL AND LOCAL REGULATIONS Equal opportunity and Fair Housinq: No person shall on the grounds of race, color, national origin, religion, or sex be excluded from participatlng In, be denled the benefits of, or be subjected to discriminatlon under any program or activity funded in whole or in part with HOME funds. Affirmative Marketinq: The Borrower shall establlsh an affirmatlve marketing and tenant selection plan for each proJect containing 5 or more units. The plan shall descrlbe the marketing efforts and tenant selectlon procedures the Borrower to attract eliglble persons from all raclal, ethnlc and & gender groups ln the housing market area to the avallable housing. The marketing and tenant selectlon plan shall be subrnltted wlth the loan application. 11 ---~---- Environmental review: The city shall assess the environmental effects of each activity proposed to be carr led out wlth HOME funds in accordance with the provisions of the National Environmental Policy Act of 1969 (NEPA) . The RMD staff will commence the review simultaneous with issuance of the prellminary commitment. The environmental review will take approxlmately 45 days to complete. No loan funds except for activltles normally exempted from the environmental clearance requlrements 1n 24 CFR Part 58.34, shall be released until the env1ronmental review 1S completed, the notice of finding and environmental assessment results are publlshedr and the 15 day publlC comment period expires. Displacement, Relocation and Acquisition: consistent with the other goals and Ob]ectlves of thlS partr borrowers must ensure that all reasonable steps are taken to mlnimlze the dlsplacement of persons as a result of project activitles. To the extend feasible, persons displaced by the project must be provided a reasonable opportunity to lease and occupy a sUltabler decent, safe and sanitary and affordable dwelllng unlt ln the buildlng upon completion of the project. A displaced person must be provided relocation assistance at the levels described in accordance with the requirements of the Uniform Relocation Ass1stance and Real Property Acquisitlon Policies Act of 1970. 12 - ----- Temporary relocation benefits must be provided to tenants who will not be required to move permanently because of the project. Reimbursement of all reasonable out-of-pocket expenses lncurred in connection with the temporary relocation, lncluding the cost to and from temporary housing and any increase in monthly rent/utility costs. Labor: Any contract for constructlon (rehab or new) of affordable housing with 12 or more units asslsted with HOME funds must contain a provlsion requlring that not less than the prevailing wages paid ln the locality, as determined by the Secretary of Labor pursuant to Davis-Bacon Act, will be paid to all laborers and mechanics employed in the development of the project. Contractors and subcontractors must comply with regulations issued under this Act and pertaining to labor standards and HUD Handbook 1344.1. Lead-based Paint: Houslng assisted with HOME funds constitutes HUD-associated housing for the purpose of the Lead-Based Paint Poisoning Prevention Act and is therefore subject to 24 CFR part 35. Unless otherwise provided, borrowers are responsible for testing and abatement. Conflict of Interest: No person who is an employee, agent, consultant, offlcer, or elected official or appointed officlal of the City who exerClses or has exercised any function or responsibillty with respect to activitles assisted with HOME funds or who is in a position to particlpate ln a declsionmaking process or gain inslde information wlth regard to these 13 activitles, may obtain a financlal interest or beneflt from a HOME assisted activity, or have an interest in any contract, subcontract or agreement with respect thereto, or the proceeds thereunder, either for themselves or those wlth whom they have family or business ties, during thelr tenure or for one year thereafter. contractinq Requirements: All Borrowers wlll be required to submit an affirmative action/equal employment opportunity plan lndicating the methods that they wlll use to encourage the participation of certified MBEjWBEs ln their development project. city staff will review the plan and competitive bid and selection process to ensure that required procedures have been followed. City staff will also monitor construction to ensure that MBEjWBEs are particlpating ln the project as indlcated ln the construction contract. In accordance with the City's Women and Minorlty BUSlness Enterprise Program approved by city Council on March 8, 1983, all Borrowers are required to consider the City's Women and Minorlty Business Enterprise Program Llbrary of Dlrectories and Minorlty and Women Vendors' listing the procurement of equipment, material, supplles and professlonal services. All work shall be completed by state-licensed contractors which shall have Santa Monica business llcenses. All contracts must comply with competitive biddlng requlrements. Contracts over 14 $10,000 must be in accordance with City's Women and Minority Business Enterprlse Program. All efforts shall be made by the private owner or the HDC to provide equal opportunlty for employment without discrimination as to race, martial status, sex color, age, religion, national origin, ancestry, AIDS, or sexual orientation, in seeking contractors and subcontractors. APPLICATION SUBMITTAL AND REVIEW PROCEDURES All applicatlons for Trust rund loans shall be submltted to RMD and shall be revlewed and approved through the admlnistrative review process as establlshed in these guidelines. All applications shall be reviewed for consistency wlth the Clty'S CHAS and Houslng Element. Application submittal: The Borrower shall complete and submit to the City the Applicatlon for HOME Program Trust Funds and prepare all required attachments, lncludlng the management plan, tenant selection and marketlng plan, relocatlon plan If necessary, signed purchase agreement and escrow instructions, prellminary title report, and limited partnership documents, if necessary. Applications may be submitted at any time durlng the program year and will be considered In the order submltted to RMD. Application Review: The Housing and Redevelopment DiVlsion staff shall review the application to: (1 ) determine that the minimum program requlrements are met. (2 ) ensure that the estimated development costs are 15 reasonable. (3 ) reVlew the estlmated mortgage amount in accordance with the program's underwriting gUldelines. (4) review the availabillty of funds. (5) determ~ne the extent to which the proJect conforms with established Clty policies and priorities. The Housing and Redevelopment Division shall make a preliminary determination regarding the eligibillty of the application wlthin forty five (45) days of its submittal. UNDERWRITING GUIDELINES Determination of Reasonable Costs and Expenses: RMD shall review the borrower's estimates and projectlons of rents, expenses, reserves and development costs. Minimum percentage for reserves will be determined on a case-by-case basis, as wlll the maximum allowable developer fee. The Borrower shall prov~de background documentation on all costs as necessary. The City may adJust cost and expense amounts as appropriate to conform to current market and industry standards. The total amount of the HOME loan and all prlvate loans shall never exceed the total approved development costs. Clear Title: The Borrower will submit for city approval a preliminary title report. RMD will conduct a title review of the proposed property, includlng reviewing rent control registration records and removal permit issues, conditions, covenants and 16 restrictions, and the legal descriptlon of the property. The City Attorney will approve the title report prior to recordation of loan documents. Other Financinq: The Borrower shall secure other resources such as tax exempt financlng, federal rental houslng subsldies, and available private financing to mlnlmize the amount of the program loan. The Borrower will submit to the city for review the terms and conditions of all other financing. The City shall analyze the feaslbility of the project to carry the loan. pro;ect Manaqement Plan: The Borrower shall prepare a Project Management Plan for the Clty's review and approval. The Plan shall be an attachment to the Regulatory Agreement. The Plan shall describe the Borrower's policies and procedures concerning: (1) Tenant selectlon procedures, including applications, walting lists, and lease agreements. (2) Procedures for determlnlng tenant ellgibility and certifying lncomes. (3 ) Management/tenant relations and assistance to tenant organizations, includlng the training and use of tenants to perform rnalntenance and management functions as approprlate. (4) Maintenance and repalr serVlces, including a schedule for on-going major maintenance and repair ltems. (5 ) On-site management facilities. (6 ) Rent collection. (7) Records and reporting requirements. 17 (8) Personnel and staffing including quallficatlons of the firm, or key staff responslble, and cllent references if applicable. (9 ) Fee schedule. LOAN COMMITMENT AND CLOSING PROCEDURES preliminary Commitment: A Prelimlnary Commitment letter shall be prepared by the Housing and Redevelopment Divislon, reviewed by the Director of RMD, and signed by the City Manager. The letter shall state the maximum HOME amount reserved for the project and list all the addltlonal condltlons, documents and steps that must be taken by the Borrower to obtain a flrm commitment of HOME Funds. Public Notice: Notlces will be mailed by the City to nelghbors of the proposed proJect informlng them of the City lntent to loan funds to the Borrower a least one month before the proposed loan closing. Borrowers shall provide the Clty with a complete Ilst of addresses of all resldents wlthin 300 feet of the project. Architectural Review: Borrowers involved in new constructlon or change of use proJects will be responsible for notifying the neighbors of the proposed proJect plans for the site at the time the project is submltted to the Archltectural Revlew Board (ARB) for approval. Neighbors will be invited to reVlew and comment on at the ARB meeting. The Borrower shall notlfy neighbors at least seven (7) days prior of the scheduled meeting date. Final Commitment: The Borrower shall submit to the city the loan 18 approval from the senior lender, and shall obtain all other required approvals building permits and removal permit as appropriate, and meet all other conditions of the Prellminary Cornrnltment Letter. The Housing Dlvision shall review the flnal loan package, and if acceptable shall prepare a Final Commitment letter and closing documents for the Trust Fund loan. Leqal Documents: simultaneous with the review of the final loan package the Housing Dlvision shall submit a request for a Promissory Note, Deed of Trust, and Regulatory Agreement from the Clty Attorney's Offlce. The request shall include copies of the prelimlnary title report, the instructions to escrow concerning the items that may appear on the title upon loan closing, and the purchase agreement. Final Approval and Release of Loan Funds: The Director of RMD shall revlew, and the City Manager shall sign the final letter and loan package. The c~ty Manager shall authorize release of the deferred loan funds. A request for warrant for the full amount of the loan wlll be submltted to the Finance Director accompanled by the Final Commitment letter and the final loan documents. The Finance Department shall transmit a warrant to the Housing Division to be deposited into the escrow account assigned to the loan. This warrant shall be delivered to the private escrow officer with the legal documents to be executed by the borrower and the escrow instructions twenty-four hours (24) prior to the scheduled close of escrow. 19 ------- --- PROJECT MONITORING The Housing Division shall monitor the project during rehabilitation or constructlon as needed to ensure compllance with HOME regulatlons. The Housing and Redevelopment Division shall request notlfication of the flnal inspection and flnal construction release from the primary lender, and shall reVlew management practices and reporting procedures with the Borrower and project management agent at that time to ensure full understanding of program requirements. Borrowers shall be required to certify annually that they have compiled wlth affirmative marketlng and tenant selectlon procedures. Thereafter the Housing and Redevelopment Dlvislon shall monitor compliance with the Regulatory Agreement on an annual basis. Notices stating that a housing project is subject to Fair Housing and Equal Employment Opportunity requirements of 24 CFR 92.350 and 351 will be posted at each project site. The name and telephone number of the Fair Houslng Offlcer of the Clty of Santa Monica wlll be included on the notices. Fair Houslng complaints are referred to the Clty Attorney's office for investigation. If, after lnvestlgation, it is determined that discrimlnatlon in the rental or sale of housing has occurred, the City Attorney wlll attempt to mediate a settlement between the owner/seller and the complalnlng party. Mediation is usually successful. However, if lt is not, the 20 party with the complalnt may proceed to file agalnst the owner/seller. If a pattern of discrimination has occurred, the city may file suit for unfair business practlces. LIST OF EXHIBITS Exhibit A: Definitions B: Deferred Loan Application with checklist of documents required before loan closing MS\a:HOMETFG.3 21 ATTACHMENT A DEFINITIONS RMD: Resource Management Department, C1ty of Santa Monica. This Department will adm1nister the program for the City under the direction of the City Manager. CHDO: A Community Housing Development Organization is a private non-profit organization organ1zed under California state law, maintains accountability to the lower-income neighborhoods it serves and has demonstrated capac1ty to carry-out hous1ng development and management activ1t1es as defined by HUD. CRAS : Comprehensive Hous1ng Affordability strategy. A strategy developed by the city to assist 1n the delivery of affordable housing serV1ces. Lower Income Households: Households w1th incomes below 80% of the Los Angeles Standard Metropolitan statistical Area median, adjusted for family s1ze, as published by the U.S. Department of Housing and Urban Development ( HUD) from time to time. With~n this group of households those with incomes below 50% of the median are considered Very Low Income. Fair Market Rents: Maximum rents as determined by HUD for the section 8 Existing or Moderate Rehabilitation programs for the Los Angeles area, adjusted for unit size. HOME Rents: (estab11shed by HUD) A. High HOME Rents: E1ghty (80%) of the HOME assisted units must have rents that do not exceed 30% of adjusted gross income for household at 65% of median ------- income, mlnus tenant pald utilities. B. Low HOME Rents: At least 20% of HOME assisted unlts must have rents which are equal to or less than 30% of annual incomes of households at 50% of median income, minus tenant paid utilities. Maximum Allowable Rent (MAR) : The legal rent for the unit under Santa Monica Rent Control Charter Amendment, wlth adjustments allowed by the Rent Control Board for annual expense increases, or for capital improvements. Moderate-Income Families: Families whose annual lncomes are between 80% and 95% of the medlan lncome for the area, as determined by HDD, with adJustments for smaller and larger famllies. New construction: The constructlon of new houslng lncluding, but not limited to assembly of factory-bullt modular houslng, or conventional on-slte construction. participating Jurisdiction: Any Jurlsdiction that has been so designated by HUD in accordance with 92.105, such as the city of Santa Monlca. Rehabilitation: Correction of local code vlolations and removal of health and safety hazards; upgradlng of housing unlts to decent, safe and sanitary conditions to comply wlth the Housing Quality standards promulgated by HUn, and with local standards; and repair or replacement of maJor bUlldlng systems or components in danger of failure. Eligible rehabllltatlon work may lnclude alterations, additions and lmprovements needed to lmprove the basic livability, energy efflclency, accesslbllity for the disabled, security of the property, and reduction of overcrowding. substantial Reconstruction: Means the rehabilitation of residential property at an average cost for the project ln excess of $25,000 per dwell1ng unit. Transitional Housinq: Housing that is deslgned to provlde housing and supportive serV1ces to persons including deinstitutionalized individuals w1th dlsabilit1es, homeless individuals with disabillties, and homeless families with children, and whose purpose is to move individuals and families to lndependent living within a time per10d that 1S not less than one year but not longer than two years. Very low-income Families: Famllies whose annual income do not exceed 50 percent of the median fam1ly income for the area, as determined by HUD, with adJustments for small and large famllies. ATTACHMENT B CITY OF SANTA MONICA Re~aurce Managemeot Department Deferred Loan Applicatlon HOME TRUST FUND Date: Applicant: Address: Phone.: Property Address: . Legal Descriptlon: Existing Use of Property 0 Nature of Applicant's Interest: Fee Leasehold Names and addresses of sponsors (if corporation, partnership, etc. identify officers and stockholders) : -' General Contractor's name, address and license number: Architect's name and address: Applicatlon submitted by: Name Title Date Submlssion approved by: - Signature, Executive Director I. DESCRIPTION OF PROPOSED PROJECT A. GENERAL INFORMATION New Construction conversion Substantial Rehabilitation project Type: Row Detached Semi-Oetached__ Walk-up__ Elevator Mixed-Use Foundat~on Type: Full Basement Partial Basement__crawl space__ SlabjGrade_ Number of Stories: Number of Un~ts: Number of Buildings: Building Sq. Ft. Number of Parking Spaces Parking Type: Subterranean Semi-Subterranean Tuck-Under - On-Grade - - Amenities: Pool Laundry Other Accessory Buildings ( no. , type, size): B. SITE INFORMATION Lot Size: sq. ft. Zoning: Lot Dimensions: X ft. Rear Alley Width: Date Escrow Opened: Deposit in Escrow: Date Escrow Closes: Purchase Price: Existing Improvements: Building Sq. Ft. : Residential Area: Commercial Area: Exterior Finish: Yr. Built: Construction Type: - Heating/AC System: -- Park~ng Type: No. of Parking Spaces: -- C. EQUIPMENT AND SERVICES INCLUDED IN RENT (check items included) Ranges {gas} elec) Dishwasher Refrig (gas/elec) Carpet Air Cond (equip only) Drapes Kitchen Exhaust Fan Hot Water Laundry Facility Heat Garbage Disposal Water Gas Electr1city Other - D. ESTIMATE OF RENTAL INCOME (provide below or attach rent schedule) Unit# Bedrooms Existing Proposed Rent Rent Total Anticipated Income: II. INCOME AND EXPENSES A. ESTIMATE OF ANNUAL EXPENSE ADMINISTRATIVE 1. Marketing $ 2. Management $ 3. Other $ 4. TOTAL $ OPERATING 5. Electricity $ - 6. Water $ 7. Gas $ 8. Garbage $ 9. Employee Payroll $ 10. Insurance $ 11. Other $ 12. TOTAL $ . MAINTENANCE 13. Repairs $ 14. Service Contracts $ 15. Other $ 16. TOTAL $ TAXES 17. Real property $ 18. Pers. Property $ 19. Payroll $ 20. Other $ 21. TOTAL $ , RESERVES 22. Replacements $ 23. Operating $ 24. TOTAL $ TOTAL EXPENSES.... III . . . .. . . .. ... . ... . . ... ... III . . . . . . . ... . ... . ... II ... $ B. NET INCOME COMPUTATION GROSS PROJECT INCOME $ VACANCY LOSS 1:r % EFFECTIVE GROSS INCOME $ TOTAL PROJECT EXPENSES $ NET PROJECT INCOME $ III. ESTIMATED DEVELOPMENT COSTS A. SITE IMPROVEMENTS 1- New Utilities $ - - ~ 2. Public Works $ 3 . Site Work/Demolition $ TOTAL SITE IMPROVEMENTS $ B. CONSTRUCTION COSTS 4. Construction Contract $ A. Bond $ B. o & p $ 5. Cont.ingency @ % of 4. $ 6. Architect - Des~gn $ -- 7. Architect - Supervision $ 8. Engineering $ - 9. Soils/Survey $ ~ 10. Permits $ 1l. Other $ TOTAL CONSTRUCTION $ C. CARRYING CHARGES AND FINANCING 12. Construction Interest $ ( Mos. @ %) On $ 13. Loan Fees $ 14. Taxes $ --' $ 15. Insurance 16. Title and Recording $ 17. Expenses of Syndication $ 18. Other: $ TOTAL FINANCING $ D. LEGAL, ORGAN I ZATIONAL, AND DEVELOPMENT FEES 19. Temporary Relocation $ 20. Legal Fees $ 2l. organizat1onal $ 22. Development Fee ( % of $ ) $ TOTAL LEGAL/ORGANIZATIONAL $ - TOTAL ESTIMATED CONSTRUCTION........................ $ E. LAND/BUILDING ACQUISITION $ TOTAL ESTIMATED DEVELOPMENT COST.................... $ IV. PRE-CLOSING EXPENSES DESCRIPTION AMOUNT REQUESTED DATE NEEDED TOTAL REQUEST $ V. PROJECT FINANCING A. PROPOSED PRIVATE FINANCING . 1. Construction Loan - - Amount $ Interest % Terms - Lender 2. Permanent Loan Amount $ Interest % Fixed Variable If Variable, describe terms . Monthly debt service $ Lender 3. Sponsor Equity Amount $ --" Source 4. other Loans Amount $ Interest % Terms - Monthly Debt Service Lender 5. Total Monthly Debt Service B. TOTAL FINANCING SOURCES - 1. citywide Housing Trust Fund $ 2. Sponsor Equity $ 3. Pr~vate Lender(s) $ 4. Other $ TOTAL SOURCES $ VI. OCCUPANCY PROFILE UNIT# FAMILY SIZE/ OCCUPANCY BY INCOME TYPE OF RENTAL BEDROOMS 50% 60%' 80% 100% 120% ASSISTANCE SUMMARY OF PROJECT BENEFIT #UNITS AFFORDABLE/AVAILABLE TO HOUSEHOLDS EARNING: 50% OF MEDIAN INCOME 60% OF MEDIAN INCOME 80% OF MEDIAN INCOME 100% OF MEDIAN INCOME -- 120% OF MEDIAN INCOME - OTHER - TOTAL VII. ATTACHMENTS Attach the following documents to this application: 1. Est1mated Costs and Support Documents 2. 3o-year Cash Flow Projection 2. Project Schedule 3. Purchase Agreement with Seller/Escrow Instructions 4. Preliminary Title Report 5. Corporate Resolution Approving Transaction VIII. ADDITIONAL SUBMITTALS The following items must be-submitted and approved before a loan commitment is finalized: 1. Rehabilitation/Construction Work Write-Ups/Bid Package 2. Prelimi~ary Plans 3. Description of Terms and Conditions of Financing (final commitment: attach copies of financing documents) 4. Evidence qf Permissive Zoning & any necessary Variances, etc. 5. Management Plan 6. Limited Partership Agreement (if applicable) See the attacned checklist for additional items to be submitted and approved before loan funding. HOME- TRUST FUND PROGRAM CHECKLIST OF DEFERRED LOAN CLOSING DOCUMENTS THE FOLLOWING DOCUMENTS MUST BE SUBMITTED PRIOR TO THE DEFERRED LOAN CLOSING: LOAN DOCUMENTS 1. APPLICATION FOR DEFERRED LOAN 2. EXECUTED FINAL COMMITMENT LETTER FROM TRUST FUND PROGRAM 3. FINAL COMMITMENT OF CONSTRUCTION AND PERMANENT FINANCING FROM PRIMARY LENDER(S) 4. REGULATORY AGREEMENT WITH CITY ORGANIZATION DOCUMENTS 5. CERTIFIED ARTICLES OF INCORPORATION 6. CERTIFIED BY-LAWS 7. CERTIFIED RESOLUTION OF BOARD OF DIRECTORS -. AUTHORIZING TRANSACTION 8. TAX EXEMPTION RULING LETTERS FROM IRS AND FRANCHISE - TAX BOARD - 9. LIMITED PARTNERSHIP AGREEMENT (where applicable) CONTRACTOR DOCUMENTS 10. BORROWER - CONTRACTOR CONTRACT 11. PERFORMANCE BOND/LETTER OF CREDIT , 12. FINAL COST BREAKDOWN BY TRADE 13. INSURANCE POLICIES OR BINDERS INCLUDING WORKER'S COMPENSATION, LIABILITY AND BUILDER'S RISK 14. BUILDING PERMITS IF REQUIRED 15. CONSTRUCTION SCHEDULE -' 16. OWNER - ARCHITECT AGREEMENT (SUPERVISION AND DESIGN) OTHER 16. PRO FORMA ALTA LENDER'S POLICY IN FAVOR OF CITY FOR AMOUNT OF PROGRAM LOAN 17. INDORSEMENTS TO ALTA INCLUDING: A. 100 COVERING CC&R VIOLATION B. 116 COVERING STREET ADDRESS AND LEGAL DESCRIPTION (AT RE-WRITE) C. MECHANICS' LIEN GUARANTEES (FOR EACH DISBURSEMENT) D. TAX SERVICE 18. ALTA SURVEY OF PROPERTY CERTIFIED WITHIN 60 DAYS OF CLOSING - :--loan3 ~8 APR 1 2 199't CA: F:ATTY\MUNI\LAWS\JL\QUAKE. RES City Council Meeting 4-12-94 Santa Monica, California RESOLUTION NUMBER - (CCS) CITY COUNCIL SERIES A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA DECLARING THE EXISTENCE OF A CONTINUING LOCAL EMERGENCY WHEREAS, on January 17, 1994, an earthquake struck Southern California causing severe damage within the City of Santa Monica; WHEREAS, on January 17, 1994, as a result of the earthquake the City's Director of Emergency Services issued a declaration of local emergency; WHEREAS, on January 17, 1994, as a result of the earthquake a state of emergency was declared in the County of Los Angeles by the federal, state and county governments; WHEREAS, as a result of the earthquake a state of local emergency continues to exist within the City of Santa Monica. NOW, THEREFORE, the City Council of the City of Santa Monica does resolve and proclaim as follows: SECTION 1. The City Council declares that a state of local emergency continues to exist within the City of Santa Monica. SECTION 2. The city Council directs the Director of Emergency Services or his or her designee to take such actions as 1 APR 1 2 199ft loB ~~ ----- ~ . i CA: F:ATTY\MUNI\LAWS\JL\QUAKE. RES City Council Meeting 4-12-94 Santa Monica, Caliform.a RESOLUTION NUMBER ~O(CCS) CITY COUNCIL SERIES A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA DECLARING THE EXISTENCE OF A CONTINUING LOCAL EMERGENCY WHEREAS, on January 17, 1994, an earthquake struck Southern California causing severe damage within the City of Santa Monica; WHEREAS, on January 17, 1994, as a result of the earthquake the City's Director of Emergency Services issued a declaration of local emergency; WHEREAS, on January 17, 1994, as a result of the earthquake a state of emergency was declared in the County of Los Angeles by the federal, state and county governments; WHEREAS. as a result of the earthquake a state of local emergency continues to exist within the City of Santa Monica. NOW, THEREFORE, the City Council of the City of Santa Monica does resolve and prOClaim as follows: SECTION 1. The City Council declares that a state of local emergency continues to exist within the City of Santa Monica. SECTION 2. The City Council directs the Director of Emergency Services or his or her designee to take such actions as 1 ... \ are appropriate to the fullest extent provided by federal, state and local law, to protect the public health, welfare, safety and property of the residents of the city of Santa Monica. SECTION 3. The City Council further authorizes the Director of Emergency Services or his or her designee to negotiate or execute such contracts, agreements, applications or other documents with such other federal, state or local agencies or other groups and organizations as are necessary to provide or to obtain emergency aid, assistance or services to the City of Santa Monica and to contract for the immediate expenditure of public funds to safeguard life, health or property, including when necessary to protect public health and safety to expedite, including, but not limited to shortening all requl.red notice periods, or waive competitive bidding procedures for pUblic works and other City projects. SECTION 4. A copy of this Resolution shall be forwarded to the State Director of the Office of Emergency Services with a request that he or she find it acceptable. SECTION 5. The City Clerk shall certify to the adoption of this Resolution, and thenceforth and thereafter the same shall be in full force and effect. APPROVED AS TO FORM: ItttD~~~~ MARSHA JONES~MOUTRIE city Attorne 2 " , Adopted and approved thiS 12th day of Apnl, 1994 Ct I<?) ~l/ Mayor I hereby certify that the foregomg Resolution No 8740 (CCS) was duly adopted at a meetmg of the CIty Council held on the 12th day of April, 1994 by the followmg vote: Ayes Councilmembers: Abdo, Genser, Greenberg, Holbrook, Olsen, Rosenstem, Vazquez Noes. CouncIlmembers Abstam CouncIlmembers Absent: Councllmembers: ATTEST ~ /r)d. A~2Lu p ~ U~ ~ City Clerk