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Rental Rehabilitation Program

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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

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