TOWN OF HULL
Housing Rehabilitation Program
Policies, Guidelines, and Procedures
The Town of Hull s Housing Rehabilitation Program (Rehab) is funded through various Federal Grant programs. The Rehab Program targets properties with existing code violations occupied by low (50% of median income) and moderate (80% of median income) income households. Both rental and owner-occupied properties are eligible for assistance. Persons who have received a housing rehabilitation loan from the Town within the last five years from the date that new applications are made available are not eligible to apply. Assistance is offered to eligible residents through deferred payment loans (DPL) and direct loans as follows (description is based on Community Development Block Grant which accounts for 80% of rehab program funds. Other grants may have slightly different
loan amounts and terms):
Total maximum loan for single unit homes not to exceed $27,500. For multi-family units, each additional unit cost not to exceed $15,000.
Deferred payment loan equal to 50% of eligible portion of rehabilitation cost for owner occupied homes only.
Direct, no interest loan, payable upon subsequent sale or transfer of the property, for 50% of eligible rehabilitation costs for owner occupied and 100% of portion of rehabilitation costs for investor owner properties.
Eligible costs and DPL terms to be determined as follows:
For owner occupants, three levels of assistance are offered.
1. All low income households receive 15 year deferred payment loans. Total cost of rehabilitation work is eligible for assistance.
2. Moderate income households whose monthly housing expense exceeds 30% of gross income receive 15 year deferred payment loans. Total cost of rehabilitation work is eligible for assistance. Generally, these households cannot afford to increase their monthly housing costs, however, the term of the loan is lengthened to discourage speculation.
3. Moderate income households whose monthly housing expense is less than 30% of gross income receive 15 year deferred payment loans. Seventy five percent (75%) of the total cost of the rehabilitation work is eligible for assistance. The household must pay the remaining 25% from its own funds. Costs of the rehabilitation are partially borne by the household due to overall higher household income and a longer loan term is utilized to discourage speculation.
For owner investors, only direct loans payable upon sale or transfer of the property are offered. Seventy-five percent (75%) of the total cost of the rehabilitation work is eligible for assistance. Owner's portion of the rehabilitation cost is due prior to start of work and owner must agree to a ten (10) year rental agreement. In the case of financial hardship and if approved by the Director of Community Development, owner may pay 25% of each payment due rather than the full 25% up front.
Based on the age of the housing stock, as reported in the 1990 US Census, and the large number of properties with serious code violations and the number of persons interested in the program, as evidenced by the history of the Housing Rehabilitation Program, it is critical that a fair selection process be maintained that both addresses the most serious threats to the health and safety of the occupants and also is manageable administratively. The system developed by the Town is a two tiered system of lottery and prioritization. A lottery is utilized to determine and limit the potential number of participants. Specifics of the lottery system include:
Eligibility to enter lottery determined through review of applicant's self-declaration of income.
Pre-applications numbered and numbers subsequently drawn randomly. An oversupply of applications is selected to allow for disqualification and/or withdrawals.
It is not necessary to be present at the lottery in order to be selected. Applicants are cautioned that selection in the lottery does not guarantee that you will be offered financial assistance.
Following the lottery, the pool of potential participants is prioritized based on number and seriousness of code violations. Inspections are conducted by the Housing Program Director/Rehabilitation Specialist. Based on inspection report, the Community Development Director and Building Commissioner do "blind" prioritization (no names or addresses attached) to identify properties with most serious code violations. For example, a property with lead paint and housing young children would be a higher priority than a similar property where no children reside.
Beginning with those of highest priority, homeowners are invited to file formal applications for housing rehabilitation assistance. At this time, they are also notified that the Town is acting solely as a funding source and that all construction related contracts are between the homeowner and the contractor. The Town will monitor construction to insure funds are properly utilized.
Once formal application is received, the following procedure is set in motion.
Incomes of applicant verified by pay stubs, direct employer (or other source) verification, documentation from social security administration, and as otherwise specified by HUD regulations. Self employed individuals will have their adjusted gross income verified by the Internal Revenue Service.
Housing Rehabilitation Specialist re-inspects the property to develop scope of work. Cost estimates are also developed and reviewed by the Community Development Director.
Scope of work reviewed with homeowner. Homeowner and the Rehabilitation Specialist sign and date the agreed upon scope. Homeowner also agrees that no changes to scope of work will be made without written approval from the Office of Community Development.
Property owners may solicit bids from a minimum of three qualified contractors or the Office of Community Development will send out a request for bids to pre-qualified contractors. Bids for hazardous material abatement, if applicable, are also solicited. Pre-construction site inspection is conducted with all bidding contractors. Sealed bids are date and time stamped when received and all bids are opened at a set time on the announced date. Rehabilitation Specialist reviews low bid to assure that it is within 10-15% of in-house cost estimate and verifies that low bidder is licensed and all insurance certificates are current. Property owner is contacted and accepts bidder or may select alternative bid but is then responsible for difference in cost. Letter
sent to successful bidder. If only one bid is received, bid may be accepted at Community Development Director s discretion if bid is within 15% of cost estimate.
Lowest estimate or bid amount determines loan amount. Once loan amount set, the Office of Community Development sends offer letter to property owner. Property owner agrees to accept financial terms and to use the financing only to fund the rehabilitation work as outlined in work write-up. Property owner returns signed offer letter. Legal documentation is processed by Office of Community Development staff. Property owners sign rent regulatory agreement, if applicable. After three day right to cancel period, the Office of Community Development draws down loan amount. Recapture agreement not recorded at registry of Deeds until project completed to allow for any change orders and avoid amended filings.
Homeowner signs offer letter and an order to proceed is issued by Community Development Director after three day right to cancel period is over.
If lead paint abatement is required, work and relocation are scheduled, tenants are notified of schedule, and receipt of notice is confirmed. Tenants are then relocated and abatement work begun. Deleading is coordinated with general contractor to facilitate process. Rehabilitation Specialist verifies that household has left premises and authorizes start of deleading work. Upon completion of abatement work, a Certificate of Compliance is obtained and submitted with payment request for approval by Director of Community Development.
During construction period, contractor submits invoice on contractor's letterhead for all progress and final payments, and submits signed "request for progress payment" form. Supporting documentation and evidence of permits are required. The Town's Rehabilitation Specialist conducts both periodic and random inspection visits and verifies completion and quality of work by signing progress payment form. Owner also signs form acknowledging satisfaction with work. Finally, Community Development Director approves payment. Retainage of 10% of amount due held on all progress payments. Retained amount included in final payment upon satisfactory completion of work. Contractor's release of lien and guarantee form must be submitted to the Office of
Community Development prior to issuance of final payment.
Upon completion of work, all. legal documentation is processed by Office of Community Development staff. All loans are secured with liens recorded at the Registry of Deeds. Properties are also filed with the Town's Tax Collector to insure lien appears on municipal lien certificate in the event of property transfer. Transfer of property to heirs or successors due to death of the owner will not necessitate repayment unless the property is subsequently sold or transferred. In the case of financial hardship, owners may request a waiver of repayment from the Director of Community Development who will make a recommendation to the Town Manager. Recapture agreement not recorded at registry of Deeds until project completed to allow for any change orders and avoid
amended filings.
All rental properties will be subject to a Rental Regulatory Agreement, to be in effect for 10 years from date rehabilitation work is complete. The Office of Community Development is responsible for notifying property owners of annual adjustment factor increases and verifying with tenants that owners are adhering to program requirements. Finally, periodic random monitoring will be conducted on all rental properties to insure compliance with Fair Housing Laws and Anti-Discrimination policies.
Completed projects will be subject to periodic (at least annually) inspection, during the term of the DPL, by the Town's rehabilitation specialist and/or building inspector to insure project is properly maintained. An inspection report will be completed and submitted to the Community Development Director for review. Should the report note unsatisfactory maintenance, the Director will review the report with the Town Manager for further action. An unsatisfactory report or the reporting of building code violations will be grounds for the calling of the loan and shall be so stipulated in the recapture agreement.
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