Rental Rehabilitation Program


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  • Good evening Mayor and Council. David Brower with the Planning & Development Services Community Development Unit. At your October 14 th Workshop meeting we presented information regarding a possible Rental Rehabilitation Program and received direction to return with guidelines for your consideration. After benchmarking, and speaking with stakeholders and representatives from HUD we are back with those guidelines!
  • First I’ll briefly give a refresher on some of the background of the City’s community development and affordable housing programs followed by a review of the data presented on Oct. 14 th . Finally I’ll present the proposed guidelines for questions and approval.
  • Since 1975 the City has received over $31 mil in Community Development Block Grant funding. Since 1992 the City has received over $11mil in HOME funds. Total Amount of Funding Received as of Sept 2011: CDBG - $31,625,001 HOME - $11,682,190 Total - $43,307,191
  • This is a snapshot of what has been done to help families through our programs since 1997. They have helped families but also neighborhood integrity and City tax rolls.
  • These are the objectives of our affordable housing programs that have been adopted through annual plans. Safe and Decent done by us but also Code Enforcement, Capital Works, etc….
  • Funds to benefit lmi people and most lmi people live in renter occupied housing Good way to provide quality (decent safe) affordable units Keep it affordable for years
  • Meter Readers from Feb/Mar 2010
  • Our target population (income under $35,000) consists almost entirely of renters. A traditional housing program that caters to homeowners should not be the main focus in this community because only about 1,400 homeowner households would even income-qualify for our programming (4% of all households). Since the majority of our target population is renters, therefore the majority of our housing funding should address renter housing needs.
  • The multifamily units that renters primarily live in consist of the oldest segment of our City’s housing stock This is problematic because rental units are expected to get return on investment in 15 years. BCAD from GIS 2/2012
  • Good evening Mayor and Council. David Brower with the Planning & Development Services Community Development Unit. At your October 14 th Workshop meeting we presented information regarding a possible Rental Rehabilitation Program and received direction to return with guidelines for your consideration. After benchmarking, and speaking with stakeholders and representatives from HUD we are back with those guidelines!
  • This program is intended to benefit low income renters by increasing the quality and preserving the affordability of rental units assisted. This program will incentivize upgrades that do not necessarily increase the marketability of the units, but rather ones that make rental housing more safe, decent, and affordable. We view this as a very positive public/private partnership – we have engaged stakeholders – apartment managers and owners – and look forward to partnering with them to make rental units more safe and decent while keeping them affordable. This type of redevelopment – rehabilitation – is the most sustainable and cost effective way to create affordable housing As mentioned before, these upgrades are primarily intended to benefit the low income tenant that will be living there – increasing the energy efficiency of units is direct way to save these families money every month. And finally, bringing units closer to current code might maintain or possibly increase their value, resulting in increased or maintained tax revenue for the City.
  • When units are being considered for the program, staff will evaluate their condition compared to current City Code and HUD Housing Quality Standards Units that are vacant will be preferred over units that are occupied and to the extent feasible in-place tenants will have the opportunity to lease a unit in the project following completion of the rehabilitation. Federal regulations dictate that if someone is temporarily or permanently displaced because of this program those tenants would be entitled to help in finding a comparable or better place to live, moving expense payments, and if permanently displaced and low income – to cash assistance in securing a new dwelling. It would be our goal to avoid permanent displacement. Must be current of taxes and have no liens on the property due to non-payment of pervious debt This program would not be to fix code violations – a hole in the wall or roof would be addressed through code enforcement and not this program Must be compliant with Rental Registration Program
  • There will be annual monitoring to ensure that residents who occupy the affordable units are at or below these income limits – that property is maintained
  • Example: If 20 units are assisted with HOME funds, 4 of the units would be designated “Low” Rent units
  • Safe Housing: Upgrade knob tube or aluminum wiring – replace with copper wiring Decent Housing – Upgrade to be handicap accessable
  • Affordable Housing – Upgrade HVAC System to be more energy efficient – saves family money every month Other – Not our main focus – will look for these to be funded with match
  • * Bid – if 49,999 or less must get three quotes and submit to city. If $50,000 or more must go out for bid and receive at least 2.
  • We are excited about these proposed guidelines – the response from the stakeholders we’ve engaged has been very positive and we have received letters of support for the proposed guidelines from the DASH Committee, Project Unity, and The BVCOG. This program will help families with limited incomes and limited choices to acquire more safe, decent, and affordable housing. This will be a loan program, so funds from quarterly payments will be able to fund future projects. As mentioned, units will be upgraded while rents are maintained as affordable While units will be available to all income eligible households, students that are dependents (can be claimed on their parents tax return) would not qualify to live in these units.
  • Most are students, but not all. Individuals below Poverty: 30,775 Source: 2008-2010 ACS
  • Rental Rehabilitation Program

    1. 1. Rental Rehabilitation Program February 9, 2012 Bob Cowell Executive Director, Planning & Development Services
    2. 2. <ul><li>Council Strategic Initiatives </li></ul><ul><li>Providing Core Services and Infrastructure </li></ul><ul><li>Neighborhood Integrity </li></ul>
    3. 3. <ul><li>Objectives of Presentation </li></ul><ul><li>Background of City’s community development and affordable housing programs </li></ul><ul><li>Review of data </li></ul><ul><li>Proposed Rental Rehabilitation Program Overview </li></ul>
    4. 4. <ul><li>Background </li></ul><ul><li>Funded by the U.S. Department of Housing and Urban Development (HUD) </li></ul><ul><li>Community Development Block Grant (CDBG) since 1975 </li></ul><ul><ul><li>$31,625,001 </li></ul></ul><ul><li>HOME Investment Partnership Program (HOME) since 1992 </li></ul><ul><ul><li>$11,682,190 </li></ul></ul>
    5. 5. <ul><li>Housing Activities Since 1997 </li></ul><ul><li>Met housing needs of ~900 families through: </li></ul><ul><ul><li>137 down-payment assistance loans </li></ul></ul><ul><ul><li>15 owner-occupied rehabilitations or repairs </li></ul></ul><ul><ul><li>26 owner-occupied reconstructions </li></ul></ul><ul><ul><li>24 new single-family homes built by City and non-profit partners </li></ul></ul><ul><ul><li>96 units of affordable rental housing through partnership with for-profit developers </li></ul></ul><ul><ul><li>646 rental units assisted with security deposits </li></ul></ul>
    6. 6. <ul><li>Affordable Housing Objectives </li></ul><ul><li>Safe </li></ul><ul><li>Decent </li></ul><ul><li>Affordable – Less than 30% of Household Income </li></ul><ul><li>Neighborhood Objectives </li></ul><ul><li>Diverse </li></ul><ul><li>Desirable </li></ul><ul><li>Nurturing </li></ul>
    7. 7. <ul><li>Current Affordable Housing Programs </li></ul><ul><li>Down Payment Assistance </li></ul><ul><li>Tennant Based Rental Assistance </li></ul><ul><li>Home Owner Minor Repair/Rehabilitation </li></ul><ul><li>Home Owner Reconstruction </li></ul><ul><li>New Construction (Non Profit Partners) </li></ul>
    8. 8. Need for Rental Rehabilitation Program
    9. 9. <ul><li>Address Needs of Low-Income Renters </li></ul><ul><li>Most low-income residents are renters </li></ul><ul><li>Rental stock is aging and potentially hazardous </li></ul><ul><li>Little market incentive for rental owners to upgrade aging product </li></ul><ul><li>No existing Program to address substandard rental units </li></ul><ul><li>Rental rehab would allow upgrades to rental units while maintaining affordability </li></ul>
    10. 10. Housing Conditions Survey Excellent Condition Conservable Substandard or Dilapidated
    11. 13. Proposed Rental Rehabilitation Program
    12. 14. <ul><li>Rental Rehabilitation Goals </li></ul><ul><li>Benefit low-income households </li></ul><ul><li>Increase quality of affordable units </li></ul><ul><li>Preserve affordability of rental housing </li></ul><ul><li>Public / private partnership </li></ul><ul><li>Sustainable redevelopment </li></ul><ul><li>Increase energy efficiency of existing rental housing </li></ul><ul><li>Increase tax base </li></ul>
    13. 15. <ul><li>Program Parameters </li></ul><ul><ul><li>Bring up to City Code and HUD standards </li></ul></ul><ul><li>Unit must be vacant or, if occupied, relocation plan required </li></ul><ul><li>Must be current on taxes & have no liens </li></ul><ul><li>No outstanding code violations </li></ul><ul><li>Single family unit must be in compliance with City’s Rental Registration Program </li></ul>
    14. 16. <ul><li>Financing Parameters </li></ul><ul><li>0% Interest loan with quarterly payments </li></ul><ul><li>Term will match affordability period (5,10, or 15 years) </li></ul><ul><li>At least 10% match required </li></ul><ul><li>Up to 25% forgivable at end of term for these priorities: </li></ul><ul><ul><li>Bring property up to City Code & HUD Standards (10%) </li></ul></ul><ul><ul><li>System upgrades (10%) </li></ul></ul><ul><ul><li>Energy conservation upgrades (5%) </li></ul></ul>
    15. 17. <ul><li>Financing Parameters </li></ul><ul><li>Loan amount per unit $5,000 minimum </li></ul><ul><li>Maximum determined by funding available </li></ul><ul><li>Secured by Note & Deed of Trust </li></ul><ul><li>Default on loan – total due at 5% interest </li></ul>
    16. 18. <ul><li>HOME Minimum Affordability Periods </li></ul>HOME Investment per Unit Length of Affordability Period Less than $15,000 5 years $15,000 - $40,000 10 years More than $40,000 15 years
    17. 19. <ul><li>Affordable Units Required </li></ul><ul><li>The percentage of HOME funds used in a project determines the number of affordable units. </li></ul><ul><li>These must be rented to households at or below 60% AMI for the affordability period. </li></ul>
    18. 20. <ul><li>Low- and Moderate-Income Persons </li></ul><ul><li>2012 Income Limits – 60% AMI </li></ul><ul><li>1 $24,450 </li></ul><ul><li>2 $27,937 </li></ul><ul><li>3 $31,425 </li></ul><ul><li>4 $34,912 </li></ul><ul><li>5 $37,725 </li></ul><ul><li>6 $40,500 </li></ul><ul><li>7 $43,312 </li></ul><ul><li>8 $46,087 </li></ul>Source: Department of Housing and Urban Development, 2012
    19. 21. <ul><li>High and Low HOME Units </li></ul><ul><li>If five or more HOME-assisted units , at least 20 percent must be designated low HOME units </li></ul><ul><li>The remainder of HOME may be high HOME units </li></ul>
    20. 22. <ul><li>Maximum Rents for HOME Units </li></ul>Efficiency 1BR 2BR 3BR 4BR High Home Rent Limit 610 680 818 936 1025 Low Home Rent Limit 510 546 655 756 845
    21. 23. <ul><li>Selection Criteria </li></ul><ul><li>Type of improvements: beyond City Code or HUD’s Housing Quality Standards </li></ul><ul><li>Financial Feasibility/ Owners financial capacity </li></ul><ul><li>Overall benefits to low-income tenants </li></ul>
    22. 24. <ul><li>Proposal Priority </li></ul><ul><li>Safe Housing </li></ul><ul><li>Bring property up to City Code & HUD Standards </li></ul><ul><li>System upgrades </li></ul><ul><li>Decent Housing </li></ul><ul><li>System upgrades </li></ul><ul><li>Energy conservation </li></ul><ul><li>Exterior repairs </li></ul>
    23. 25. <ul><li>Proposal Priority Cont. </li></ul><ul><li>Affordable Housing </li></ul><ul><li>System upgrades </li></ul><ul><li>Energy conservation </li></ul><ul><li>Other </li></ul><ul><li>Upgrade marketability </li></ul>
    24. 26. <ul><li>City Responsibilities </li></ul><ul><li>Accept Proposals </li></ul><ul><li>Staff and/or Committee Review </li></ul><ul><li>Develop Scope of Work and Bid Specifications </li></ul><ul><li>Developer will responsibly bid project </li></ul><ul><li>Develop contract documents </li></ul><ul><li>Pay contractor </li></ul><ul><li>Service loan </li></ul><ul><li>Monitor affordability and report </li></ul>
    25. 27. <ul><li>Client Responsibilities </li></ul><ul><li>Submit Application/Proposal </li></ul><ul><ul><li>Organizational and Financial Capacity </li></ul></ul><ul><ul><li>Project Description </li></ul></ul><ul><ul><li>Define required match </li></ul></ul><ul><ul><li>Relocation Plan for occupied units </li></ul></ul><ul><li>Reporting and monitoring for affordability period </li></ul><ul><li>Maintain Property to HUD Standards </li></ul>
    26. 28. <ul><li>Rental Rehabilitation will: </li></ul><ul><li>Help families with limited income and choices </li></ul><ul><li>Be a loan program requiring a portion of equity from the landlord </li></ul><ul><li>Maintain affordable rents available to all income- eligible families </li></ul><ul><li>Be available to all income-eligible households – students that are dependents would likely not qualify </li></ul>
    27. 29. <ul><li>Recommendations </li></ul><ul><li>Approve Rental Rehabilitation Guidelines </li></ul>
    28. 30. <ul><li>Questions? </li></ul>
    29. 31. <ul><li>Poverty in College Station </li></ul><ul><li>Poverty level in College Station 37.4% </li></ul><ul><li>Total individuals below poverty 30,775 </li></ul><ul><li>Students* </li></ul><ul><ul><li>Below poverty level 21,338 </li></ul></ul><ul><ul><li>Percent of population 26% </li></ul></ul><ul><li>Non-Students </li></ul><ul><ul><li>Below poverty level 5,343 </li></ul></ul><ul><ul><li>Percent of population 7% </li></ul></ul>*Enrolled in College Undergraduate, Graduate, or Professional School