02-21-06 Regular
CITY OF RICHFIELD, MINNESOTA
TUESDAY, FEBRUARY 21,2006
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SPECIAL CONCURRENT CITY COUNCIUHOUSING AND REDEVELOPMENT
AUTHORITY/PLANNING COMMISSION WORKSESSION
RICHFIELD CITY HAll
COUNCil CHAMBERS
6700 PORTLAND AVENUE
6:00 P.M.
Call to order
Roll call
1. Discussion regarding proposed study of Penn Avenue
Adjournment
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REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING
RICHFIELD CITY HAll
COUNCil CHAMBERS
6700 PORTLAND AVENUE
7:00 P.M.
AGENDA
Call to order
1. Approval of minutes of Regular HRA Meeting of January 17,2006
Notes:
2. HRA approval of agenda
3. Consideration of resolution consenting to assignment of professional services agreement with
Conworth, Inc. to SRF Consulting Group, Inc. for land acquisition services related to Cedar
Point project
Staff Report NO.8
Notes:
4. Consideration of resolution authorizing modifications to Richfield Rehabilitation Deferred Loan
Program guidelines
Staff Report NO.9
Notes:
5. Executive Director report
Notes:
6. Claims and payroll
Adjournment
Auxiliary aids for individuals with disabilities are available upon request. Requests
must be made at least 96 hours in advance to the City Clerk at 612-861-9738.
AGENDA ITEM # 3
REpORT # 8
........
STAFF REpORT
RICHFIELD
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
FEBRUARY 21, 2006
REpORT PREPARED By:
KA TIA MEDVETSKI,
REDEVELOPMENT SPECIALIST
NAME, TITLE
REpORT PRESENTER:
BRUCE P ALMBORG, COMMUNITY
DEVELOPMENT DIRECTOR
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTNE DIRECTOR:
ITEM FOR HRA CONSIDERATION:
Consideration of a resolution consenting to assignment of Professional Services Agreement
with Conworth, Inc. to SRF Consulting Group, Inc. for land acquisitions services related to the
Cedar Point Proiect.
1. RECOMMENDED ACTION:
By Motion: Approve the attached resolution consenting to
assignment of certain contract.
I II. BACKGROUND I
· On May 16, 2005, the Richfield Housing and Redevelopment Authority (HRA)
approved a resolution accepting assignment of a Professional Services
Agreement (Agreement), dated April 26, 2006, with Conworth, Inc.
(Conworth) from the City of Richfield (City) for land acquisition services in
connection with the Cedar Point Project (Project).
· The City assigned the Agreement to the HRA because a Cooperative
Agreement between Hennepin County, Hennepin County Housing and
Redevelopment Authority, City and HRA, dated March 22,2005, for $2
million in grant multi-jurisdictional project funds called for the HRA to
undertake acquisition activities for the Project.
· Currently, the Agreement needs to be assigned from Conworth to SRF
Consulting, Inc. (SRF) because SRF acquired Conworth on January 1, 2006.
22106 AssignConworthPSA
. The Agreement contains a Non-Assignment clause that provides for the
assignment of the Agreement only by written permission.
. Personnel from Conworth who were performing the contract for Conworth are
now employees of SRF and will continue to perform the Agreement on behalf
of SRF.
. The attached resolution provides the necessary consent for the assignment
of the Agreement to SRF.
I III. BASIS OF RECOMMENDATION I
IA. POllCY I
. The Agreement between the City and Conworth, which was
subsequently assigned to the HRA, contains a Non-Assignment
clause that provides for the proper assignment of the Agreement.
I B. CRITICAL ISSUES I
. The consent to the assignment of the Agreement from Conworth to
SRF requires the written permission of the HRA.
. Staff would like to expedite the consent of the assignment to allow the
consultant to carry on with land acquisition services in accordance
with the Ag reement.
I C. FINANCIAL I
. There is no impact on the contracted fees for this undertaking.
I D. LEGAL I
. Staff consulted with legal counsel on this matter.
I IV. ALTERNATIVE RECOMMENDATION(S) I
. Delay approval of the consent; however, the contractor will not be able to
continue to perform his duties.
. Do not approve the consent; however, this may have legal implications.
I V. ATTACHMENTS
. Resolution.
. Professional Services Agreement.
I VI. PRINCIPAL PARTIES EXPECTED AT MEETING
. N/A
HRA RESOLUTION NO.
RESOLUTION CONSENTING TO
ASSIGNMENT OF CERTAIN CONTRACT
WHEREAS, the City of Richfield (City) and Conworth, Inc. (Conworth) entered into
a certain Professional Services Agreement (Agreement) dated April 26, 2005, relating to
the acquisition of properties for the Cedar Point Project (Project); and
WHEREAS, the Agreement was assigned from the City to the Housing and
Redevelopment Authority in and for the City of Richfield (HRA) on May 16, 2005 in
accordance with the terms of a Cooperative Agreement, dated March 22,2005, between
Hennepin County, Hennepin County Housing and Redevelopment Authority, City and
HRA; and
WHEREAS, Conworth has been acquired by SRF Consulting Group, Inc. (SRF),
and a request has been made that the HRA consent to the assignment of the Agreement
to SRF; and
WHEREAS, the individuals who will perform the contract on behalf of SRF are the
same individuals who were formerly employed by Conworth and had performed the
Agreement on behalf of Conworth; and
WHEREAS, the HRA deems the assignment of the Agreement to be in the public
interest.
NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment
Authority in and for the City of Richfield as follows:
1. The Housing and Redevelopment Authority in and for the City of Richfield
hereby consents to the assignment of the Agreement by Conworth, Inc. to
SRF Consulting Group, Inc.
2. The Executive Director is authorized and directed to provide a copy of this
resolution to SRF Consulting Group, Inc. as evidence of the City's consent to
the assignment.
Adopted by the Housing and Redevelopment Authority in and for the City Richfield,
Minnesota this 21st day of February, 2006.
Suzanne M. Sandahl, Chair
ATTEST:
Donna Drummond, Secretary
22106 AssignConworthPSA
PROFESSIONAL SERVICES AGREEMENT
Ol?/SIA/
',v4t.
Conworth, Inc.
THIS AGREEMENT made and entered into by and between the City of Richfield,
State of Minnesota, hereinafter referred to as the "CITY", and Conworth, Inc.,
hereinafter referred to as "CONWORTH".
WITNESSETH:
WHEREAS, the CITY wishes to purchase the services of CONWORTH; and
WHEREAS, there are funds available for the purchase of these services.
NOW, THEREFORE, in consideration of the mutual undertakings and
agreements hereinafter set forth, the CITY and CONWORTH agree as follows:
1. TERMS AND COST OF THE AGREEMENT
CONWORTH agrees to furnish services to the CITY for the implementation of
various phases of a land acquisition process that include appraisal and review
appraisal (if required), acquisition, relocation, property management,
professional environmental services, demolition specifications and related
activity services, well capping (if required) and legal services in the Cedar Point
Project area, specifically related to 6300,6320,6400,6500,6520, and 6528
Cedar Avenue, as described in the CONWORTH proposal dated April 18, 2005.
The total cost of this Agreement shall not exceed $144,350.00 unless amended
by the CITY. This figure does not include the cost for title insurance, well
capping (if required), fixture appraisals (if required) and review appraisals (if
required). Should these additional services be required, an amendment to the
AGREEMENT will be necessary. All reports, memos, and other data produced
by CONWORTH become the property of the CITY.
2. PAYMENT FOR SERVICES
Invoices may be submitted monthly. Payment for services shall be made directly
to CONWORTH by check. Invoices shall be of sufficient detail for the CITY to
determine the line item task being completed. Payment shall be made within 30
days of receipt of an invoice by the CITY. The cost of the work conducted under
this Agreement shall not exceed $144,350.00 unless amended by the CITY.
1
3. INDEPENDENT CONTRACTOR
CONWORTH shall select the means, method, and manner of performing the
services herein in consultation with the CITY. Nothing is intended or should be
construed in any manner as creating or establishing the relationship of
copartners between CONWORTH and the CITY or as constituting CONWORTH
as the agent, representative, or employee of the CITY for any purpose or in any
manner whatsoever. CONWORTH is to be and shall remain an independent
contractor with respect to all services performed under this Agreement.
CONWORTH represents that it has or will secure at its own expense all
personnel required in performing services under this Agreement. Any and all
personnel of CONWORTH or other persons while engaged in the performance
of any work or services required by this Agreement shall have no contractual
relationship with the CITY, and shall not be considered employees of the CITY.
Any and all claims that mayor might arise under the Unemployment
Compensation Act or the Workers' Compensation Act of the State of Minnesota
on behalf of said personnel, arising out of employment or alleged employment,
including, without limitation, claims of discrimination against CONWORTH, its
officers, agents, contractors, or employees shall in no way be the responsibility
of the CITY. CONWORTH shall defend, indemnify, and hold the CITY, its
officers, agents, and employees harmless from any and aU such claims
irrespective of any determination of any pertinent tribunal, agency, board,
commission, or court. Such personnel or other persons shall neither require nor
be entitled to any compensation, rights, or benefits of any kind whatsoever from
the CITY, including, without limitation, tenure rights, medical and hospital care,
sick and vacation leave, Workers' Compensation, Unemployment Insurance,
disability, severance pay, and PERA.
4. NONDISCRIMINATION
The CITY operates in accordance with the City of Richfield's policies against
discrimination. No person shall be excluded from or denied the benefits of any
service performance or contemplated under the terms of this Agreement on the
grounds of race, color, creed, religion, age, sex, disability, marital status, public
assistance status, ex-offender status, or national origin; and no person who is
protected by applicable Federal or State laws against discrimination shall be
otherwise subjected to discrimination. CONWORTH shall (1) furnish all
information and reports which may be required by the City's Affirmative Action
Policy, and (2) it shall comply with the City's Equal Employment
Opportunity/Affirmative Action Policies with regard to employment and
contracting (See Exhibit A).
2
5. INDEMNITY AND INSURANCE
CONWORTH agrees to defend, indemnify, and hold the CITY, its officers, and
employees harmless from any liability claims, damages, costs, judgments, or
expenses, including reasonable attorney, fees, resulting directly or indirectly
from a negligent act or omission (including without limitation professional errors
or omissions) of CONWORTH, its agents, employees, or assignees in
performance of the services provided by this contract, and against all loss by
reason of the failure of CONWORTH to fully performance in any respect, all
obligations under this contract.
6. RECORDS - AVAILABILITY
CONWORTH agrees that the CITY, the State Auditor, or any of their duly
authorized representatives at any time during normal business hours and as
often as they may reasonably deem necessary, shall have access to and the
right to examine, audit, excerpt, and transcribe any books, documents, papers,
records, etc., which are pertinent to the accounting practices and procedures of
CONWORTH and involve transactions relating to this Agreement. Records shall
be retained for three years from date of final payment with respect to the project.
7. DATA PRACTICES COMPLIANCE
This contract is governed by Minnesota Statutes, ~ 13.05, subds. 6 and 11, the
provisions of which are incorporated by reference into this contract. The CITY
agrees to give CONWORTH access to data collected or maintained by the CITY
as necessary to perform CONWORTH 's obligations under this contract.
CONWORTH agrees to maintain all data obtained from the CITY consistent with
the requirements of the Minnesota Government Data Practices Act, Minn. Stat.
~~ 13.02 elseQ. (the "Act"). CONWORTH will not release or disclose the
contents-of data classified as not public to any person except at the written
direction of the CITY. CONWORTH agrees to defend and indemnify the CITY
from any claim, liability, damage or loss asserted against CITY as a result of
CONWORTH 's failure to comply with the requirements of this paragraph;
provided that CONWORTH shall have no duty to defend or indemnify where the
CONWORTH has acted in conformance with the CITY's written directions. Upon
termination of this contract, CONWORTH agrees to return data to the CITY, as
requested by the CITY.
8. NON-ASSIGNMENT
CONWORTH shall not assign, subcontract, transfer, or pledge this contract
and/or the services to be performed hereunder, whether in whole or in part,
without the prior written consent of the CITY.
3
9. MERGER AND MODIFICATION
a. It is understood and agreed that the entire Agreement between the parties
is contained herein and that Agreement supersedes all oral agreements
and negotiations between the parties relating to the subject matter hereof.
Allitems referred to in this Agreement are incorporated or attached and
are deemed to be part of this Agreement.
b. Any material alterations, variations, modifications, or waivers of provisions
of this Agreement shall only be valid when they have been reduced to
writing as an amendment to this Agreement signed by the parties hereto.
10. DEFAULT AND CANCELLATION
a. If CONWORTH fails to perform any of the provisions of this Agreement or
so fails to administer the work as to endanger the performance of the
Agreement, this shall constitute a default. Unless the default is excused,
the CITY, may upon written notice, immediately cancel the Agreement in
its entirety.
b. The CITY's failure to insist upon strict performance of any provision or to
exercise any right under this Agreement shall not be deemed a
relinquishment or waiver of the same, unless consented to in writing.
Such consent shall not constitute a general waiver or relinquishment
throughout the entire term of the Agreement.
c. This Agreement may be canceled without cause by either party upon
thirty (30) days written notice.
11. CONTRACT ADMINISTRATION
In order to coordinate the services of CONWORTH with the activities of the CITY
so as to accomplish the purposes of this contract, John Stark, Assistant Director
of Community Development, shall manage this contract on behalf of the CITY.
In addition, from time to time, meetings shall be held between CONWORTH and
CITY staff. CONWORTH may also report directly to the City Council of the
CITY.
12. NOTICES
Any notice or demand which must be given or made by a party hereto under the
terms of this Agreement shall be in writing.
4
Notices shall be sent as follows:
Community Development Department
John Stark, Assistant Director of Community Development
City Hall
6700 Portland Avenue South
Richfield, MN 55423
Conworth, Inc.
Ken Helvey
4725 Excelsior Boulevard
Suite #200
Minneapolis, MN 55416
CONWORTH havinQ signed this contract, and the CITY having duly approved this
contract on ~ --2 ~ , 2005, and pursuant to such approval and the
proper CITY officials having signed this contract, the parties hereto agree to be bound
by the provisions herein set forth.
CITY OF RICHFIELD, MINNESOTA
By:
.-J.. . ... In .
/) LiJ~
Steven L. Devich
Its: City Manager
CONWORTH.; l f
By: V
Ken Helvey
Its: Vice.Presid
5
EXHIBIT A
AFFIRMATIVE ACTION REQUIREMENTS
On January 1, 1988, the Richfield City Council approved an affirmative action program
which requires the City "to provide equality of opportunity in employment to all person
and to prohibit discrimination because of race, color, religion, national origin, place of
residents, political affiliation, disability, marital status, status with regard to public
assistance, sex, or age in all aspects of the City's personnel policies, programs, and
practices" .
The program further requires that the City support the various relationships with
contractors, subcontracts and vendors. Therefore, requirements have been adopted
for contracts as follows:
a. The contractor shall submit a signed statement (Exhibit B) signifying that they
are in compliance with the standards of equal employment and anti-
discrimination as cited in the Civil Rights Act of 1964 as amended in 1972 by the
Equal Employment Opportunity Act.
b. In accordance with the City of Richfield's Affirmative Action policy, no person
shall, on the ground of race, creed, color, sex, age, disability, or national origin
be excluded from full employment rights in, participation in, be denied the
benefits of, or be otherwise subjected to discrimination under any program,
service, or activity for which the parties received, or will receive financial
assistance under the provisions of any and all applicable federal and state laws
against discrimination. The contractor will furnish all information and reports if
required by the City of Richfield or by Executive Order No. 11246 and Revised
Order No.4, and by the rules and regulations and orders of the Secretary of
Labor or the State of Minnesota for purposes of investigation to ascertain
compliance with such rules, regulations, and orders.
c. 1971 Minnesota Statutes 181.59 is made a part of this contract. See
Exhibit C.
EXHIBIT B
STATEMENT OF COMPLIANCE
The undersigned, in hislher capacity as agent for CONWORTH, hereby states that
CONWORTH is in compliance with the standards of equal employment and anti-
discrimination as cited in the Civil Rights Act of 1964 as amended in 1972 by the Equal
Employment Opportunity Act.
Dated:
By:
Its:
EXHIBIT C
181.59 DISCRIMINATION ON ACCOUNT OF RACE, CREED, OR COLOR
PROHIBITED IN CONTRACT.
Every contract for or on behalf of the State of Minnesota, or any county, city,
town, township, school, school district, or any other district in the state, for materials,
supplies, or construction shall contain provisions by which the contractor agrees:
(1) That, in the hiring of common or skilled labor for the performance of any
work under any contract, or any subcontract, no contractor, material supplier, or
vendor, shall, by reason of race, creed, or color, discriminate against the person or
persons who are citizens of the United States or resident aliens who are qualified and
available to perform the work to which the employment relates;
(2) That no contractor, material supplier, or vendor, shall, in any manner,
discriminate against, or intimidate, or prevent the employment of any person or persons
identified in clause (1) of this section, or on being hired, prevent, or conspire to
prevent, the person or persons from the performance of work under any contract on
account of race, creed, or color;
(3) That a violation of this section is a misdemeanor; and
(4) That this contract may be canceled or terminated by the state, county, city,
town, school board, or any other person authorized to grant the contracts for
employment, and all money due, or to become due under the contract, may be forfeited
for a second or any subsequent violation of the terms or conditions of this contract.
History: 1941 c 238; 1973 c 123 art 5 s 7; 1984 c 609 s 11
AGENDA ITEM # 4
REpORT # 9
~
STAFF REpORT
RICHFIELD
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
FEBRUARY 21, 2006
REpORT PREPARED By:
KELLY BERG, HOUSING COORDINATOR
NAME, TITLE
REpORT PRESENTER:
BRUCE NORDQUIST, HOUSING AND
REDEVELOPMENT 11ANAGER
REVIEWED BY EXECUTIVE DIRECTOR:
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW:
ITE11 FOR HRA CONSIDERATION:
Consideration of resolution regarding modifications to the Richfield Rehabilitation Deferred
Loan ProQram Guidelines.
I. RECOMMENDED ACTION:
By Motion: Approve the attached resolution authorizing
modifications to the Richfield Rehabilitation Deferred Loan Program
Guidelines.
I II. BACKGROUND I
The Housing and Redevelopment Authority (HRA) instituted the Richfield
Rehabilitation Deferred Loan Program (Deferred Loan Program) in 1978 with annual
allocations from the City's Community Development Block Grant (CDBG) allocation.
This year's allocation of approximately $165,000 for rehabilitation will serve
approximately 7-8 households if those households borrow the maximum loan
amount of $25,000.
HRA staff administers the Deferred Loan Program according to the program
procedural guidelines, which are based on program criteria established by
, Hennepin County.
022106_Deferred Loan Program changes
Occasionally Hennepin County updates its program procedural guidelines, which
requires response from the HRA.
The attached guidelines include procedural changes recommended by Hennepin
County. In cases where the recommended HRA guidelines differ from Hennepin
County's guidelines, Hennepin County has been informed, in writing, of the
procedural differences. The only difference this year where Richfield departs from
Hennepin County is to maintain a 3D-year lien period, rather than the 15-year lien
period recommended by the County. The HRA has always maintained a 3D-year
lien period, allowing for more program income as homeowners sell their homes and
are required to pay back their loans.
The attached summarizes changes to the HRA guidelines.
I III. BASIS OF RECOMMENDA nON I
I A. POLICY I
. The HRA's Deferred Loan Program is administered according to
procedural guidelines, in accordance with requirements of the
Department of Housing Urban Development (HUD) and Hennepin
County. However, local discretion is allowed in some areas, including
the lien period.
. The revised procedural guidelines, attached, reflect the changes
recommended by Hennepin County.
I B. CRITICAL ISSUES I
. Hennepin County has been notified that the Richfield HRA will retain
the 3D year lien period.
. The HRA needs to respond to the recommended procedural guideline
changes to keep the HRA's program consistent with Hennepin
County.
I C. FINANCIAL I
. The Deferred Loan Program remains the only reliable, affordable
financing option for fixed-income seniors and low-income families and
individuals. Deferring loan proceeds to a future time, upon sale of the
home usually rather than requiring monthly payments is important for
household stability. The HRA must keep its guidelines current with
requirements from HUD and Hennepin County to continue the
program.
I D. LEGAL I
. To maintain the locally managed Deferred Loan Program the HRA is
required to respond to procedural guideline changes as recommended
by HUD and Hennepin County.
I IV. ALTERNATIVE RECOMMENDATION(S) I
. Delay adoption of the revised procedural guidelines.
. Make other changes to the guidelines.
I V. ATTACHMENTS
. Resolution
. Summary of changes to Deferred Loan Program Procedural Guidelines
. Revised Deferred Loan Guidelines
I VI. PRINCIP AL PARTIES EXPECTED AT MEETING
. N/A
HRA RESOLUTION NO.
RESOLUTION AUTHORIZING APPROVAL OF MODIFICATIONS TO THE RICHFIELD
HOME REHABILITATION DEFERRED LOAN PROGRAM
WHEREAS, the Richfield Housing and Redevelopment Authority (the "HRA")
provides a Rehabilitation Deferred Loan Program which utilizes Community Development
Block Grant (CDBG) funds to assist lower income homeowners with rehabilitating their
homes; and
WHEREAS, the program's Procedural Guidelines were approved by the HRA in
1999 and are modified periodically as program requirement and needs dictate; and
WHEREAS, Richfield staff has identified modifications to update the program's
Procedural Guidelines; and
WHEREAS, the HRA has reviewed the modifications.
NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment
Authority in and for the City of Richfield, Minnesota that the Richfield Rehabilitation
Deferred Loan Program Procedural Guidelines will be modified according to the changes
made by Hennepin County.
Adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota this 21st day of February, 2006.
Suzanne M. Sandahl, Chair
ATTEST:
Donna Drummond, Secretary
022106_Deferred Loan Program changes
Summary of Changes to the Richfield Rehabilitation Deferred Loan Program
Guidelines
The most significant changes are the following:
. Two additional documents regarding lead assessment must be added to program
files.
. The maximum loan amount for loans has been increased to $30,000 to reflect the
increasing costs of rehabilitation that includes abatement of lead.
. Lead Risk Assessments must be conducted on all properties built before 1978.
. IRS methodology of calculating income must be used in all cases; typically the
average of the past two years of adjusted gross income from Form 1040.
. Hennepin County recommends a lien period of 15 years. However, Administering
Entities are allowed to select their own lien periods. Richfield's has always been 30
years and will remain 30 years. This allows for more program income as
homeowners sell their homes and are required to pay back their loans.
RICHFIELD HRA'S
REHABILITATION DEFERRED LOAN
PROCEDURAL GUIDELINES.
Approved February 2006
February 2006
CONTENTS
Section I
S ction II
S ction III
Section IV
Section V
Section VI
Section VII
Section VIII
RICHFIELD REHABILITATION DEFERRED LOAN PROGRAM
TABLE OF CONTENTS
Introduction/Administrative Procedures
Definitions
Conditions Governing Administration
A. Amendments, directives
B. Federal and State Regulations
C. Administrative Subcontracts
D. Delivery of Loan Funds
E. Approval of Loan Packages
F. Certifications
G. Expediency of Loan Processing
H. Maximum Loan Amount
Responsibilities Of The HRA
A. Outreach and Public Information
B. Inspection of Properties
C. Applicant Selection Criteria
D. Preparation of Scope of Improvements/Work Proposal
E. Preparation of Loan Package
F. Requests for Changes in Loan Amount
G. Disbursement of Funds
H. Service Fee Charges
I. Temporary Relocation Policy
Eligible Properties
Improvement Standards (HQS)
Eligible Improvements
Eligible Recipients
A. Ownership
B. Household- Gross Annual Income
C. Exclusions From Gross Income
D. Deductions From Gross Income
E. Asset Determination
Loan Applications
A. Homeowner Application for Loan
B. Acknowledgement & Authorization to Release
Information
C. Letter to Historical Society
D. Income Verification
E. Asset Verification
F. Mortgage Status Verification
G. Zoning Status Verification
H. Title Verification
I. Property Inspection Report
1
Section IX
Section X
Section XI
Section XII
Section XIII
Section XIV
J. Scope of ImprovementslWork Proposal
K. Rehabilitation Work Summary
L. Contractor Bids
M. Work Contract
N. Amendment Request/Change Order Request
O. Contractor Bills
P. Sworn Construction Statement
a. Lien Waivers
R. Completion Certificate
S. Data on Individual Loans
T. Repayment Agreement
U. Complaint Record/Memo
Acceptance & Notification Procedures
Completion And Disbursement Procedures
Procedures For Accessibility Improvement Loans
A. Accessibility Improvements
B. . Requirements for Participation
C. Amount of Loan for Accessibility Improvements
D. Responsibilities of the HRA
E. Standard Procedures
General Conditions Relating To Loans
Emergency Loan Guidelines
General Conditions Relating to 3% Interest Loans
27
27
27
27
37
28
28
28
28
28
28
31
31
32
33
33
34
34
34
34
35
35
37
2
February 2006
COMMUNITY DEVELOPMENT BLOCK GRANT
HOME REHABILITATION DEFERRED LOAN PROGRAM
Introduction
These guidelines, as adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota (HRA), set forth the process and criteria for reviewing applications for the
Richfield Home Rehabilitation Program.
The objective of these assistance programs is to upgrade and maintain the Richfield housing stock
with assistance to low and moderate-income homeowners.
From time to time, the HRA may, by resolution, discontinue or add program components. At that
time, these guidelines will be amended to reflect those changes.
ADMINISTRATIVE PROCEDURES
A. The Housing and Redevelopment Authority Board of Commissioners is responsible for
establishing and adopting the program. Commissioners set forth the intent and objectives of
the program. They are responsible for the appropriation of the operating funds. The
Commissioners will also hear appeals from applicants as presented by the Executive Director.
B. The HRA Executive Director will review and forward any pertinent information to the HRA
Commissioners. The Executive Director will also receive written appeals and take appropriate
action.
.
C. The HRA staff will be responsible for taking and processing applications and obtaining all
necessary information to complete them. The staff is responsible for interpreting the guidelines
established and approved by HRA Commissioners. Applications will be reviewed for eligibility
as they are received. Upon review of each application, staff will determine the eligibility or
ineligibility of each application according to the review guidelines and criteria. Applicants will be
notif~ed in writing of the decision.
D. A summary of the loan cases, and actions taken relating to each case, will be written and
forwarded to the Housing and Redevelopment Authority Commissioners, as requested.
E. An applicant who is denied funding may re-apply after 90 days and be reconsidered on the
basis of new information. The decisions of the HRA staff will be final; however, appeals may be
made in those cases where applicants believe they were not treated equitably. Appeals shall
be in written form and submitted to the HRA staff administrator outlining the applicant's
concerns, An HRA staff review will evaluate the appeals. If a solution by the staff is not
reached, the case will be referred to the HRA Executive Director for review. A reply in written
form to the appeal will be sent to the applicant within fifteen (15) days.
F. When a homeowner is dissatisfied with work done by the contractor, the contractor shall be
informed verbally of the problems by the homeowner. If a satisfactory response is not obtained,
the homeowner shall prepare a written request for the contractor, specifying which items are to
be repaired or improved. The homeowner must send a copy of this letter to the loan
3
.
February 2006
administrator. If subsequent repairs still do not meet the homeowner's approval, either
mediation or arbitration services may be pursued. The loan administrator and the homeowner
will agree upon which service will be selected based on the cost of specified improvements and
the process most likely to best meet homeowner needs.
In the event the HRA is notified of a problem arising after completion of the loan, additional loan
funds can be made available to the borrower if:
. applicable warranties have expired; or
· the contractor is no longer in business or refuses to make corrections; and
· if failure to make repairs will cause property damage or create health and safety
concerns; and
. the borrower is still income ql!alified.
Alternately, on a case by case basis for income qualified households, adjustments may be
made to the lien amount based on the cost of correcting the deficiency.
G. CDBG Funds are received from Hennepin County as part of an entitlement grant. The HRA's
program is subject to County review and approval, on behalf of the U.S. Department of Housing
and Urban Development.
The eligibility and priority guidelines follow. Applications will be reviewed and processed
according to the criteria established.
I. DEFINITIONS
A. Accessibility Improvements - include improvements, to one or two unit dwellings, which are
designed to enable a handicapped person to function independently in a residential setting, such
as provisions for adequate space for maneuvering, access and egress, (both in exteriorand interior
spaces), and location of the equipment to facilitate ease of use.
B. Administerina Entity - means the person and/or agency processing the loan. In these GUidelines,
the agency is the Richfield Housing and Redevelopment Authority (HRA).
C. Applicant - means an individual or household submitting an application for a loan who has not yet
been approved for funding. .
D. Assets - means those resources held by household members that yield a return that is regarded
as income under the IRS Form 1040 definition of income. Assets yielding income include taxable
interest, dividends, prizes/awards and gambling/lottery/raffle winnings. The Administering Entity
should contact Hennepin County if any questions about income earning assets arise.
E. Borrower - means an individual or household meeting the requirements of Section VII who receives
a loan.
F. Emeraency Situation - means a condition requiring immediate and urgent attention which threatens
or imperils the health and/or safety of the applicant household. The written opinion of a city building
or housing inspector detailing a code or safety violation or violations may, at the discretion of the
4
February 2006
Administering Entity, be an acceptable definition of an emergency situation.
G. Handicapped Person - means a person who has a permanent physical condition which substantially
impairs the ability to function independently in a residential setting, or which substantially limits the
ability to become employed or to participate in the community. A person with a condition such as
chronic emphysema, arthritis, heart disease and other "invisible" conditions not requiring the use
of devices to increase mobility shall not be deemed a handicapped person, unless a licensed
physician verifies in writing that a particular condition does substantially limit the ability to function
independently in a residential setting or to become employed or to participate in the community.
H. Hennepin County - means the Housing, Community Works and Transit Division of Hennepin
County Department of Transit and Community Works.
I. Household Gross Income - means the annual income of all residents of the applicant'sl
borrower's household, as determined in accordance with Section VII. Household income is not
limited to members of the applicant's family but includes all residents, such as renters.
J. Housing Rehabilitation Deferred Loan - means the commitment of funds on behalf of recipients for
the purpose of making eligible improvements to eligible properties, as described in Sections IV, V
and VI of these Procedural Guides.
K. Loan Package - consists of all applicable documents listed below and explained in Section VIII.
Homeowner Application for Loan
Acknowledgement & Authorization to Release Information Form (acknowledging
homeowner receipt of Individual Data Confidentiality form and the Lead-Based
Paint Poisoning Notification booklet)
Letter to Historical Society (if required)
· Lead-Safe Housing Rule - Applicability Form
· Lead-Safe Housing Rule Checklist
Income Verification
Asset Verification
· Mortgage Status Verification (if required)
· Title Verification
Property Inspection Report
· Lead Assessment Report (if required)
Scope of ImprovementslWork Proposal
· Rehabilitation Work Summary
Contractor Bids
Work Contract
Amendment Request Certificate (if required)
Contractor Bills/Proof of Payment
Sworn Construction Statement
Lien Waivers
Lead Clearance Report (if required)
Completion Certificate
· Data on Individual Loans
· Repayment Agreement
Complaint Record (if needed)
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February 2006
For loans administered in whole or in part by the Hennepin County Office of Housing,
Community Works and Transit, the loan package shall also include:
· Federal Income Tax Returns for the two previous years
· Zoning Status Verification
· Credit Bureau Report
L. ParticioatinQ Community - means Hennepin County, the Richfield HRA, or any city or town
cooperating as a participant in the Urban Hennepin County Community Development Block Grant
Program with funds made available from that program for use in the Urban Hennepin County
Housing Rehabilitation Deferred Loan Program.
M. Resident - means a person, other than a renter, living in the household for at least nine months of
the year.
N. Three Percent Loan.
II. CONDITIONS GOVERNING ADMINISTRATION
A. Amendments; Directives
These Procedural Guides may be amended or supplemented by Hennepin County by issuance
of revised pages, which shall be effective as of the date of issue, or such later date as the
amendmentshall specify. Administrative memoranda may also be issued which discuss policy
interpretations, clarification of procedures and other administrative matters. Any Administering
Entity wishing to deviate in any way from these Procedural Guides must first describe in writing
the proposed change to, and then be granted written approval by, Hennepin County.
B. Federal, State and Local ReQulations
Nothing in these Procedural Guides shall be construed in such a manner as to conflict with, alter,
or amend any Federal, State and Local regulation.
C.Administrative Subcontracts
The Participating Community may enter into agreements with other agencies for the purpose of
oPlCiining assistance in the performance of certain administrative tasks with respect to the
delivery of loan funds. Regardless of such agreements, the participating community shall fulfill
the following requirements:
1. Responsibility for the performance of any subcontracting agency with
respect to the loan program. Such performance shall include, but is not
limited to, the full adherence to policies and procedures set forth in these
Procedural Guides.
2. Full liability for all warranties and representations made regardless
of who does the actual originating and/or packaging of grants.
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February 2006
3. Exercise the option to allow Hennepin County to administer the program
on its behalf. In this event, Hennepin County will assess a fee equal to
twelve per cent (12%) of total CDSG funds allocated by the participating
community for housing rehabilitation and will assume full responsibility for
meeting the requirements of C 1 and C2 above.
An Administering Entity may recapture only those expenses directly related to the
operation of the rehab deferred loan program. No more than twenty per cent (20%) of
CDSG funds allocated for housing rehabilitation may be used for administrative costs.
D. Delivery of Loan Funds
The Administering Entity will disburse funds to contractors for completed work, in compliance
with Sections III and X. The Administering Entity will be reimbursed by Hennepin County for loan
amounts as outlined in Section X.
Loans made and delivered by the Administering Entity cannot exceed the amount stated in
Sections II and III unless approved in writing by Hennepin County.
E. Approval of Loan PackaQes
No work shall commence on any structure prior to the proper completion of a Work Contract and
Proceed to Work Order referring to specific work items under that particular loan.
F. Certifications
1.. The Administering Entity is legally authorized and constituted to administer the Housing
Rehabilitation Deferred Loan Program in the State of Minnesota.
2. No payments, fees or remuneration of any type whatsoever have been solicited or
received from any applicants or borrowers for loan application.
3. The Administering Entity has no knowledge that any improvement covered. by the loan is
in violation of any applicable zoning law or regulation.
4. Any employee of the Administering Entity who is authorized to sign or countersign checks,
drafts, or to certify vouchers shall be covered by a fidelity and forgery bond in an amount
at least equal to the lesser of (1/3) of the Administering Entity's total authorized loan
funding; such an employee must be an authorized signatory as evidenced by a written
instrument of the governing body.
5. The Administering Entity shall maintain documentation accounting for all funds received
through the collection of liens as prescribed in the Repayment Agreement. Such funds
must be submitted to Hennepin County since they are identified as program income.
Hennepin County shall return the funds to the relevant project account.
6. If an Administering Entity disburses loan funds without meeting all of the certifications
contained in Section II, then Hennepin County may, at its option, take whatever action it
deems necessary, including legal action, to recover from the recipient and/or the
Administering Entity, the loan funds so disbursed in violation of such warranties.
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February 2006
G. Expediency of Loan ProcessinQ
Loans shall be processed in a reasonable length of time in an efficient and accurate manner.
Normally, a loan shall be completed, with the repayment agreement filed, within six (6) months
from the date loan processing is begun.
H. Maximum Loan Amount
For loans completed after July 1, 2005, the maximum loan amount shall be $30,000. (But
see sections III F 5&6.) Administering Entities must secure Hennepin County approval
before disbursements exceed $25,000 on any project involving a property built prior to 1978.
This is to ensure that all requirements of Subpart J of the Lead Safe Housing Rule are
properly addressed. Any Administering Entity that fails to secure Hennepin County approval
may have requests for reimbursement of project expenditures denied.
In an attempt to best address both client needs and funding availability, wherever possible,
program funds should be used in conjunction with funds from the Minnesota Housing Finance
Agency (MHFA). If necessary, the combined maximum loan amounts of $30,000 (CDBG) and
$20,000 (MHFA) may be' used.
III. RESPONSIBILITIES OF THE ADMINISTERING ENTITY
A. Outreach and Public Information
The Administering Entity will be primarily responsible for the promotion of the housing
rehabilitation loan program within its boundaries. The Administering Entity must exercise care
in avoiding any advertising or outreach methods that may be deemed to systematically exclude
potentially eligible applicants. Access to program materials may not be denied to any person for
any reason.
The program should include efforts to reach those persons who traditionally would not have been
expected to apply for housing programs. In order to develop an affirmative marketing program,
the Administering Entity should review its normal outreach methods to ensure that the loan
program is made available to persons who otherwise might not apply for assistance.
B. Inspection of Properties
1. The Administering Entity is responsible for carrying out at least two inspections of each
approved property. The first inspection shall be PE?rformed immediately following the
establishment of applicant's eligibility. The Property Inspection Report is a formal record
of that first inspection which lists all deficiencies in the dwelling and is used to establish
that sufficient funds are available to render the dwelling reasonably habitable, safe and
energy efficient.
The second mandatory inspection shall take place after the work is finished, to determine
that all work has been completed in a satisfactory manner consistent with these guides,
the Scope of Improvements, the contractor bid and the Work Contract.
For properties built before 1978, a Risk Assessment must be carried out before any work
orders are issued. The Risk Assessment must be conducted by a licensed risk assessor
who, if necessary, will also prepare work specifications designed to address any identified
lead hazards that are to be included as part of the funded improvements. If lead hazard
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February 2006
reduction activities are funded through this program, the property must pass a clearance
inspection (also conducted by a properly qualified individual) before any payment for the
lead hazard reduction activities can be authorized. Failure to properly comply with
lead hazard reduction requirements will result in payments/reimbursements being
withheld and may result in sanctions from HUD. Hennepin County should be
contacted if an Administering Entity has any doubts or questions about proper lead
hazard protocols.
2. The Administering Entity may conduct interim inspections of the property as is deemed
necessary.
C. Applicant Selection Criteria
A "first come, first served" applicant selection process will govern the administration of the
program except that priority may be given to applicants who require CDBG funding so that work
funded by the Minnesota Housing Finance Agency and/or the Sustainable Resources Center or
Energy Assistance Program can proceed.
An Administering Entity may, at its discretion, elect to allow preference to applicants requiring
emergency assistance for repairs that directly affect the health and safety of the occupants of
the property. Particular importance should be attached to properties with identified lead hazards
that have resulted in an Elevated Blood Lead Level (more than 20 micrograms per deciliter-
20J.lg/dl) in a child under the age of six. The Administering Entity may elect to limit assistance to
the correction of the emergency situation (after which the applicant will be returned, or added to,
the waiting list) or the Administering Entity may elect to access the applicant to all available and
necessary loan funds at the time that the emergency situation is being addressed. The
Administering Entity should notify Hennepin County of its intentions regarding the use of CDBG
funds for emergency improvements.
It is imperative that each application be dated immediately upon receipt. The date of receipt
shall be used as the sole criteria for recording priority ranking of the applicants.
The Administering Entity shall adhere to the following guidelines:
1. The process must be uniformly applied during the entire funding year.
2. No eligible applicant shall be rejected on the basis of judgements as to personal character
or lifestyle as outlined in Section XII.
3. Where no funds are available for assistance to applicants, the following procedure Shall
be used:
a. Explain to the applicant that the funding for the current year has been either depleted
or allocated.
b. Inform the applicant of the other possibilities including the MHFA Rehabilitation Loan
Program, the MHFA Home Improvement Loan Program, and other local, state and
federal programs.
c. Send the applicant a letter indicating that the application has been placed on a waiting
list but that there is no guarantee of future funding. This letter should outline the other
possible avenues of obtaining home improvement funds.
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February 2006
.
D. Preparation of Scope of ImprovementslWork Proposal
The Scope of Improvements is based on the Property Inspection Report and shall list all eligible
improvements for which contractors shall provide bids. The Administering Entity shall provide
the homeowner with copies of the Scope of Improvements as described in Section VIII of these
guides. If lead hazard reduction activities are included in the funded improvements, these
specifications must be prepared bya licensed Lead Project Designer.
E. Preparation of Loan Packaae
The Administering Entity is responsible for the thorough and accurate completion. of all program
documents, as specified in Section VIII of these Procedural Guides. Care must be taken to
maintain current information on the eligibility of the borrower consistent with Section VII.
The Administering Entity shall assist the borrower with the preparation of the loan package, upon
request, although the solicitation of bids on the borrowers behalf should be done only at the
written request of the borrower. The borrower must be notified that the Administering Entity does
not endorse or recommend any contractor(s) and that the Administering Entity accepts no
responsibility for the performance of the contractor(s) appointed to carry out the work.
F. Requests for Chanaes in Loan Amount
At the discretion of the Administering Entity, an expenditure of funds in excess of the approved
loan amount may be approved in the event of justifiable over-runs in the cost of improvements.
The Administering Entity must document increases or decreases in the Ipan amount according
to the following procedures:
1. All requests for increases, decreases or changes must be submitted on an Amendment
Request Certificate, signed by the borrower and contractor.
2. The Administering Entity shall inspect the property to determine that the increase or
decrease is justified.
3. The Administering Entity will issue authorization for those loan amount increases or
decreases which meet the eligibility criteria set forth in Section VI of these Procedural
Guides. Such authorization will be given by the Administering Entity signing the
Amendment.
4. When a new contractor is chosen, a new Work Contract must be executed by the
borrower and contractor.
5. Should unforeseen circumstances arise while work is in progress which require that the
maximum loan amount stated in Sections II and III be exceeded, the Administering Entity
must provide Hennepin County with written justification of the need for additional funds.
The additional funds used must not exceed twenty-five per cent (25%) of the maximum
loan amount adopted by the Administering Entity. However, any project requiring the
expenditure of deferred loan funds in excess of $25,000 must be approved in advance
by Hennepin County to ensure that all appropriate lead-based paint requirements are
being met.
6. Notwithstanding the terms of Section III.F.5. above, an Administering Entity may elect to
exceed the maximum loan amount by more than twenty-five per cent (25%) before work
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February 2006
contracts are signed provided that the participating community provides Hennepin County
with written authorization detailing the revised loan amount and the unique and specific
circumstances requiring the additional loan funds. This written authorization must include
formal acknowledgement that a precedent has been established which would allow future
applicants access to the revised loan amount if they experience the same unique and
specific circumstances.
G. Disbursement of Funds
The Administering Entity shall bear the responsibility of disbursing funds to contractors who have
performed work as described in the Improvement Certificate. No disbursement for any work
completed shall be made until the property has been inspected and a Completion Certificate has
been signed, according to the procedures set forth in Section X.
H. Service Fee Charges
The HRA shall not charge any applicants an application fee. However, reasonable fees for HRA
services may be charged when extra costs are incurred. Specifically, the fees for Subordination
Agreements will apply. The loan recipient will pay $50.00 for each Subordination Agreement
processed, regardless of successful refinancing. This fee reflects staff time and administrative
preparation.
I. Temporary Relocation Policy
Relocation assistance will only be provided when it is determined and documented that
relocation is necessary and appropriate. The determining factors for eligibility will be
alleviating hardship or hazards for the family while containing construction costs, and
evaluating recommendations that may be obtained from a designated relocation consultant.
A prepared statement will be executed documenting the total number of days of temporary
displacement, the total amount of assistance to be provided, and in what time intervals
payment shall occur. The HRA may contract with a professional relocation consultant,
experienced in compliance with the Uniform Relocation Act to determine the amount and
form of assistance for which the homeowner may be eligible.
Relocation funds may come from total loan funds available to the homeowner, and thus
would be included in the lien on the property. If insufficient, funds of the HRA may be
accessed.
IV. ELIGIBLE PROPERTIES
A. The property to be improved must not be in violation of applicable zoning ordinances.
Properties being improved must constitute a permitted use or be subject to a conditional or
special use permit under the applicable zoning ordinances.
B. The property must be located within the jurisdiction of the Administering Entity and must be
used primarily for residential purposes, and must contain no more than two dwelling units,
one of them owner-occupied. Improvements can only be made to the owner-occupied unit,
unless the improvement serves both units. Improvements that can be made to both sides
include re-roofing; painting, re-siding or re-stuccoing; replacement of doors and windows;
upgrading of shared heating or electrical systems and commonly vented plumbing fixtures.
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February 2006
C. Loan funds must be used to finance only improvements upon or in connection with existing
structures.
D. The property to be improved must be permanent structure. That includes owner-occupied
trailers or mobile homes located on land owned by the applicant. Trailers or mobile homes
located on land not owned by the applicant are eligible for assistance but are subject to a
separate lien process. The lien document (available from Hennepin County) is filed with
the Minnesota Department of Public Safety and places a ten-year lien against the home.
E. No property shall be eligible for a housing rehabilitation loan if it has been improved through
the process of such a loan within the five-year period immediately preceding the date on
which application for such a loan is made, except in extraordinary circumstances relating
to damage to the property as a result of events beyond the control of the applicant or
Jelating to health and safety concerns, as determined by the Administering Entity or by the
building or housing inspector in whose jurisdiction the property is located. In such
circumstances, provided that funding is available, the borrower, if still eligible, can receive
assistance limited to correcting the damaged or failed system(s) only. No other eligible
work can be carried out until another five year period has elapsed, except in the
extraordinary circumstances outlined above.
F. Urban Hennepin County CDBG rehab monies can only be used when federal flood
insurance is in effect, where such insurance is available. However, Richfield is not in a
flood zone.
G. To the greatest extent feasible; the Administering Entity should ensure that adequate equity
exists in the property to cover the cost of the rehabilitation work. I n order to account for any
difference between the estimated market value (EMV) shown on the borrowers property tax
statement and the real market value, two options are available. The Administering Entity
can either: multiply the EMV by 110% and add 50% of the maximum loan amount; or, the
borrower can request that a local realtor provide a written market analysis of the post-rehab
value of the property. If serious health and safety issues exist which directly and negatively
affect the habitability of the dwelling, the Administering Entity can elect to waive or amend
the equity requirement, provided that the same waiver/amendment opportunities are
presented to all future borrowers who find themselves affected by the same conditions.
V. IMPROVEMENT STANDARDS
Goals for housing rehabilitation assistance for homeowners have been established in the Urban
Hennepin County Consolidated Plan. For the property to be counted toward meeting housing
rehabilitation goals in the Consolidated Plan, it must be determined to be substandard and
suitable for rehabilitation. Upon completion of rehabilitation, the housing unit must meet minimum
Section 8 existing housing quality standards pursuant to 24 CFR, as follows:
Dwellings improved under this program shall generally meet the Performance Requirements and
Acceptability Criteria set forth in this section except for such variations as are proposed by the
Administering Entity and approved by HUD. Local climatic or geological conditions or local
codes are examples that may justify such variations.
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February 2006
A. Sanitarv Facilities
1. Performance Requirement. The dwelling unit shall include its own sanitary facilities
which are in proper operating condition, can be used in private, and are adequate
for personal cleanliness and the disposal of human waste.
2. Acceptability Criteria. A flush toilet in a separate, private room, a fixed basin with
hot and cold running water, and a shower or tub with hot and cold running water
shall be present in the dwelling unit, all in proper operating condition. These
facilities shall utilize an approved public or private disposal system.
B. Food Preparation
1. Performance Requirement. The dwelling unit shall contain suitable space and
equipment to store, prepare, and serve foods in a sanitary manner. There shall be
adequate facilities and services for the sanitary disposal of food wastes and refuse,
including facilities for temporary storage where necessary.
2. Acceptability Criteria. The unit shall contain the following equipment in proper
operating condition: a cooking stove or range and a refrigerator of appropriate size
for the unit and a kitchen sink with hot and cold running water. The sink shall drain
into an approved public or private system. Adequate space for the storage,
preparation and serving of food shall be provided. There shall be adequate facilities
and services for the sanitary disposal of food wastes and refuse, including facilities
for temporary storage where necessary (e.g. garbage cans).
C. Thermal Environment
1. Performance Requirement. The dwelling unit shall have and be capable of
maintaining a thermal environment healthy for the human body.
2. Acceptability Criteria. The dwelling unit shall contain safe heating facilities which
are in proper operating condition and can provide adequate heat to each room in
the dwelling unitto ensUre a healthy living environment. Unvented room heaters
which burn oil or kerosene are unacceptable.
E. Illumination and Electricitv
1. Performance Requirements. Each room shall have adequate natural or artificial
illumination to permit normal indoor activities and to support the health and safety
of occupants. Sufficient electrical outlets shall be provided to permit use of
essential electrical appliances while assuring safety from fire.
2. Acceptability Criteria. Living and sleeping rooms shall include at least one window.
A ceiling or wall type light fixture shall be present and working in the bathroom and
kitchen area. At least two electric outlets shall be present and operable in the living
area, kitchen area and each bedroom area.
F. Structure and Materials
1. Performance Requirements. The dwelling unit shall be structurally sound so as not
to pose any threat to the health and safety of the occupants and so as to protect the
occupants from the environment.
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February 2006
2. Acceptability Criteria. Ceilings, walls and floors shaH not have any serious defects
such as severe bulging or leaning, large holes, loose surface materials, severe
buckling or noticeable movement under walking stress, missing parts or other
serious damage. The roof structure shall be firm and the roof shall be weather tight.
The exterior wall structure and exterior wall surface shall not have any serious
defects such as serious leaning, buckling, sagging, cracks or holes, loose siding,
or other serious damage. The condition and equipment of interior and exterior
stairways, halls, porches, walkways, etc. shall be such as not to present a danger
of tripping or falling. In the case of a mobile home, the home shall be securely
anchored by a tie down device that distributes and transfers the loads imposed by
the unit to appropriate ground anchors so as to resist wind overturning and sliding.
G. Interior Air Qualitv
1. Performance Requirement. The dwelling unit shall be free of pollutants in the air at
levels that threaten the health of the occupants.
2. Acceptability Criteria. The dwelling unit shall be free from dangerous levels of air
pollution from carbon monoxide, sewer gas,fuel gas, dust and other harmful air
pollutants. Air circulation shall be adequate throughout the unit. Bathroom areas
shall have at least one operable window or other adequate exhaust ventilation.
H. Water Supplv
1. Performance Requirement. The water supply shall be free from contamination.
2. Acceptability Criteria. The unit shall be served by an approved public or private
sanitary water supply.
I. Lead Based Paint
1. Performance Requirement. The dwelling unit shall be in compliance with HUD Lead
Based Paint regulations, 24 CFR, Part 570, issued pursuant to the Lead Based
Paint Poisoning Prevention Act. 42 U.S.C. 4801.
2. If the property was constructed prior to 1978, the family, upon occupancy, shall have
been furnished the notice required by HUD Lead Based Paint regulations and
procedures regarding the haza~ds of lead based paint poisoning, the symptoms and
treatment of lead poisoning and the precautions to be taken against lead poisoning.
Documentation of the applicant's receipt of the notice must be included in the file.
3. Acceptability Criteria. Same as Performance Requirement.
J. Access
1. Performance Requirement. The dwelling unit shall be usable and capable of being
.maintained without unauthorized use of other private properties, and the building
shall provide an alternate means of egress in case of fire.
2. Acceptability Criteria. The dwelling unit shall be usable and capable of being
maintained without unauthorized use of other private properties. The building shall
provide an alternate means of egress in case of fire (such egress through windows).
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February 2006
K. Site and Neiahborhood
1. Performance Requirement. The site and neighborhood shall be reasonably free
from disturbing noises and reverberations and other hazards to the health, safety
and general welfare of the occupants.
2. Acceptability Criteria. The site and neighborhood shall not be subject to serious
adverse environmental conditions, natural or man made, such as dangerous walks,
steps, instability, flooding, poor drainage, septic tank back-ups, sewage hazards or
mud slides, abnormal air pollution, smoke or dust, excessive noise, vibration or
vehicular traffic, excessive accumulations of trash, vermin or rodent infestation or
fire hazards.
L. Sanitarv Conditions
1. Performance Requirement. The unit and its equipment shall be in sanitary
condition.
2. Acceptability Criteria. The unit and its equipment shall be free of vermin and rodent
infestation.
VI. ELIGIBLE IMPROVEMENTS
A. Each improvement must be a permanent general improvement. Permanent general
improvements shall include such alterations, renovations, or repairs upon or in connection
with existing structures, which correct defects or deficiencies in the property affecting
directly the safety, habitability or energy consumption of the property. A permanent
general improvement must be economically viable in terms of a determination that after
the improvement is made:
1. The structure will have remaining useful life such that the total amount of the repairs
required to bring the house up to Section 8 quality standards may be amortized over
such life in an economically prudent manner.
2. For the term of the repayment agreement, the lien should be collectable. Thus all
existing mortgages, contracts for deed, and other encumbrances, including the
repayment agre,ement, should not exceed the value of the property as stated in the
County Property Taxation Office. Any Administering Entity wishing to waive this
requirement must provide Hennepin County with written justification and must
receive written approval from Hennepin County in return. In communities where
Hennepin County acts as the Administering Entity, the city must formally approve
this waiver. Examples where the waiver might be requested include an emergency
situation or circumstances where repairs are needed to make a vacant property
habitable for a low-income family intending to purchase it.
3. The structure will be reasonably livable, safe and habitable. Permanent general
improvements shall not include materials, fixtures, or landscaping of a type or
quality exceeding that customarily used in the locality for properties of the same
general type as the property improved. .
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February 2006
B.
Each improvement must be made in compliance with all applicable health, fire prevention,
building and housing codes and standards. However, no application for a loan shall be
denied solely because the improvements will not bring the property into full compliance
with all such codes and standards.
.
Further, when work is done on any system within the house, upon completion of the work,
that entire system must meet applicable codes and standards; however, the entire
structure may still contain other systems, on which no work was done, which are not up
to applicable codes and standards.
C. Loan funds may be used for the portion of improvements located on the property which
will bring an individual water supply system or an individual sewage disposal system
(including septic systems) into compliance with local, state or federal environmental and
sanitary standards provided no public utility service is available. Payment of applicable
SAC charges is an eligible loan expense.
D. No loan funds shall be used in whole or in part for the purpose of refinancing or paying off
an existing indebtedness. All such funds mustbe used to finance improvements begun
after the execution of a Work Contract prepared by the loan administrator and signed by
the loan recipient and the contractor. .
E. The city may approve special improvements only in the described circumstances indicated
below:
1. Bedroom additions may be allowed in cases of severe overcrowding. For the
purpose of this program, a dwelling will generally be considered "overcrowded" if
there is an average of more than one person per room (excluding bathroom) in the
dwelling, or as otherwise approved by the city.
2. Bathroom additions may be allowed in cases of inadequate indoor bathroom
facilities only if no other space in the struC?ture is appropriate for such facilities.
3. In cases of applicants with impaired mobility, request for room additi.ons will be
reviewed in compliance with procedures for loans including accessibility
improvements, as outlined in Section XI.
F. Demolition of out buildings is allowed only when such clearance is required by the local
building code or when the intent of the demolition is lead hazard control. Loan funded
improvements cannot be limited to demolition only, except in circumstances determined
as exceptional by the loan administrator.
G. Reconstruction of sidewalks and driveways is allowed only on private property and only
if existing conditions represent a clear and imminent safety hazard.
H. All Richfield homes should be connected to City water. No new wells may be dug.
However, CDBG funds may be used to seal wells according to Minnesota Department of
Health rules and standards.
I. Exterior finishing (painting or siding) is allowed only to the extent that there is severe
16
February 2006
deterioration of current exterior finishing. Exterior finishing requested solely for cosmetic
purposes will not be approved.
J. Where property is not reasonably energy efficient, loan funds must be used to the extent
necessary to increase such efficiency. Energy saving features shall be consistent with the
energy standards promulgated as part of the State building code, but such improvements
need not bring the housing into compliance with such energy standards.
K. Smoke detectors must be installed in all dwellings being improved with Deferred Loan
funds unless detectors are already properly installed. At least one detector is required in
each sleeping room, in every hallway leading to a sleeping room and on each level of the
dwelling unit. If a smoke detector is already properly installed, that must be reported on
the inspection report. All properties being improved must contain adequate smoke
detectors following completion of the rehabilitation work.
L. Where the house numbers are not present or are not installed to applicable city codes and
ordinances, they shall be installed properly.
M. The installation, replacement or repair of cook tops, oven ranges and refrigerators is
eligible provided that it is absolutely necessary and consistent with Section V. B. 2.
N. Improvements Pertaining to Lead-Based Paint
1. Applicable to all clients:
a. The use of lead-based paint in any structure rehabilitated with CDBG funds is
prohibited.
b. Inspection and/or test results for all clients will be maintained for a minimum of
three years, although every effort should be made to permanently retain these
records.
c. All clients will receive a copy of "Lead-Based Paint Poisoning Notification." Upon
receipt of this notification, the client will sign and date a form verifying receipt of
this information.
2. Applicable for clients whose house was constructed prior to 1978:
a. The Administering Entity shall either perform paint testing on the painted
surfaces to be disturbed or replaced during rehabilitation activities, or presume
that all these painted surfaces are coated with lead-based paint.
b. For properties receiving funding not exceeding $5,000 in federal rehabilitation
assistance, the Administering Entity shall:
.. Conduct paint testing or presume the presence of lead-based paint. If
paint testing indicates that the painted surfaces are not coated with lead-
based paint, safework practices and clearance are not required.
· Implement safe work practices during rehabilitation work in accordance
with Section 35.1350 (of US Department of HUD Requirements for
Notification, Evaluation and Reduction of Lead-Based Paint Hazards in
Federally Owned Residential Property and Housing receiving Federal
Assistance: Final Rule) and repair any paint that is disturbed.
· After completion of any rehabilitation disturbing painted surfaces, perform
a clearance examination of the work site(s) in accordance with Section
35.1340 (of US Department of HUD Requirements for Notification,
17
February 2006
,
Evaluation and Reduction of Lead-Based Paint Hazards in Federally
Owned Residential Property and Housing receiving Federal Assistance:
Final Rule.) Clearance is not required if rehabilitation did not disturb
painted surfaces of a total area of 20 square feet (2 square meters) on
exterior surfaces; 2 square feet (0.2 square meters) in anyone interior
room or space; 10 per cent of the total surface area on an interior or
exterior type of component with a small surface area (such as window
sills, baseboards and trim.)
c. For properties receiving between $5,000 and $25,000 in federal rehabilitation
assistance, the Administering Entity shall:
. Conduct paint testing or presume the presence of lead-based paint. If
paint testing indicates that the painted surfaces are not coated with lead-
based paint, safe work practices and clearance are not required.
. Perform a risk assessment in the property in accordance with Section
35.1320 (b) (of US Department of HUD Requirements for Notification,
Evaluation and Reduction of Lead-Based Paint Hazards in Federally
Owned Residential Property and Housing receiving Federal Assistance:
Final Rule) before rehabilitation begins.
. Perform interim controls in accordance with Section 35.1330 (of US
Department of HUD Requirements for Notification, Evaluation and
Reduction of Lead-Based Paint Hazards in Federally Owned Residential
Property and Housing receiving Federal Assistance: Final Rule) of all
lead-based paint hazards identified pursuant to the two preceding sub.,.
paragraphs and any lead-based. paint created as a result of the
rehabilitation work.
d. For properties receiving more than $25,000 in federal rehabilitation assistance,
the Administering.Entity shall:
. Conduct paint testing or presume the presence of lead-based paint. If
paint testing indicates that the painted surfaces are not coated with lead-
based paint, safe work practices and clearance are not required.
. Perform a risk assessment in the property in accordance with Section
35.1320 (b) (of US Department of HUD Requirements for Notification,
Evaluation and Reduction of Lead-Based Paint Hazards in Federally
Owned Residential Property and Housing receiving Federal Assistance:
Final Rule) before rehabilitation begins.
. . Abate all lead-based paint hazards identified by the paint-testing or risk
assessment conducted pursuant to the two preceding sub-paragraphs
and any lead-based paint created as a result of the rehabilitation work, in
accordance with Section 35.1325 (of US Department of HUD
Requirements for Notification, Evaluation and Reduction of Lead-Based
Paint Hazards in Federally Owned Residential Property and Housing
receiving Federal Assistance: Final Rule), except that interim controls are
acceptable on. exterior surfaces that are not disturbed by rehabilitation.
3. Treatment/Abatement of lead-based paint: The work write-up shall include either
a covering or a removal method approved by HUD.
O. The installation, repair or replacement of a central air conditioning unit is eligible provided
that the client has produced a written statement from a physician indicating that the good
18
February 2006
health of a permanent occupant of the dwelling is dependent upon such an installation,
repair or replacement. A statement that a permanent occupant will"benefit" from central
air conditioning is not sufficient justification.
P. Work on exterior decks, attached to the house and used as a means of entry is eligible
provided that:
1. The condition of the existing deck is unsafe.
2. . The work shall be limited to making the deck safe and structurally sound.
3. Bids are obtained on both:
a. the cost of repairing the deck to make it safe and structurally sound; and
b. replacing the deck with steps or stairway which meet code requirements; and
that the loan funded improvements are limited to the lesser or the two costs.
(If replacement with steps or stairway is the cheaper option the client can
elect to use those funds toward repairing or replacing the deck itself provided
that the balance of the cost is met by the client.)
4. If the deck is made of pine or other untreated or non-water resistant material, it must
be removed and replaced with steps or stairway because it will not retain its
structural integrity throughout the lien period.
If a client refuses to accept the replacement of a deck with steps or stairway and
declines to contribute towards the cost of repairlreplacement then, the maintain
eligibility, the client must sign a waiveracknowledging the condition of the deck and
holding the Administering Entity and Hennepin County harmless.
.
VII. ELIGIBLE RECIPIENTS
Applicants must meet all the requirements set forth in these Procedural Guides.
A. Ownership
1. The property to be improved must be the borrowers principal place of residence
(Le., for nine months in any twelve month period), and the borrower must have a
qualifying interest in the property, although that interest may be aggregated with the
ownership interest of other individuals occupying the property as their principal
place of residence. A qualifying interest shall consist of:
a. A valid life estate. Such life estate must be recorded and must appear in the
records of the County; or
b. A one-third interest in the fee title. Such interest maybe subject to a
mortgage; or
c. A one-third interest as a purchase in a contract for deed in the property to be
improved. Such contract for deed must be recorded and must appear in
the records of the County.
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February 2006
2. All individuals having an ownership interest in the property to be improved must sign
the Repayment Agreement, except in the case of a Life Estate where only one-third
of the remainderpersons need sign.
3. Ownership shall be based on the information recorded in the appropriate County
Recorder's/Registrar of Titles Office.
4. The borrower must be current on contract for deed payments, mortgage payments
and property taxes on the property to be improved. If any of these payments are in
arrears, they must be made current before the application can be approved for
funding. If the applicant is delinquent on any of these above mentioned payments
or taxes, the loan may only be given if the applicant is current on a payment
schedule with the appropriate agency.
B. Household Gross Annual Income
HUD requires that, in determining household income for CDSG program purposes, one
of three methods be used (24 CFR Part 570.3.) The three methods are: Section 8
Housing Assistance Payments program; Annual Income as reported under the Census
long-form from the most recently available decennial census; or adjusted gross income
as defined for purposes of reporting under Internal Revenue Service (IRS) Form 1040 for
individual Federal annual income tax purposes. Hennepin County requires that the IRS
methodology be used: since rehabilitation funds are provided to administering entities
under the Urban Hennepin County CDBG program and Hennepin is thus the grantee,
administering entities must use the methodology adopted by Hennepin County.
1. Borrowers must have a household gross annual income at or below 80% of the Area
Median Income for the household size, (the HUD regulation definition of a low- and
moderate-income household as a household having an income equal to or less than
the Section 8 low-income limit also known as Section 8 Very Low Income).
Hennepin County will notify the administering entities of applicable income limits by
household size. It will, however, be the responsibility of the Administering Entity to
ensure that the changes in income limits are implemented properly.
Gross annual income is defined as the gross annual income, from all sources before
taxes or withholding, of all individuals living in the housing unit.
The Administering Entity should be aware that non-recurring types of income should
be included as assets rather than as income. Items for inclusion under this category
may include a single gift of cash from a party or parties, cash sales of property,
receipt of one-time survivor benefits, etc.. A one-time sale of stock does not count
as income, but rather the proceeds are counted as assets.
2. Gross annual income includes:
a. Wages, salaries, tips, etc.
b. Taxable interest.
c. Dividends.
d. Taxable refunds, credits or offsets of State and local income taxes. (There
are some exceptions - refer to Form 1040 instructions.)
e. Alimony (or separate maintenance payments) received.
20
February 2006
f. Business income (or loss.)
g. Capital gain (or loss.)
h. Other gains (or losses) - Le. assets used in a trade or business that were
exchanged or sold.
L Taxable amount of individual retirement account (IRA) distributions. This
includes simplified employee pension (SEP) and savings incentive match
plan for employees (SIMPLE) IRA.
j. Taxable amount of pension and annuity payments.
k. Rental real estate, royalties, partnerships, S corporations, trusts, etc. Income
from rental properties, including rents from the property to be improved, shall
be included in gross income. A copy of the lease, or a statement, signed
and dated by the tenant(s), which shows the monthly rent paid is adequate
verification of rental income. Expenses allowable for deduction for rental
purposes include a proportional share of mortgage interest payments, utilities,
taxes, insurance, and maintenance. In no event shall such deductions
exceed gross rental income.
I. Farm income (or loss.)
m. Unemployment compensation payments.
n. Taxable amount of Social Security benefits.
o. Other income. This includes: prizes and awards; gambling, lottery or raffle
winnings; jury duty fees; Alaska Permanent fund dividends;
reimbursements for amounts deducted in previous years; income form the
rental of property if not in the business of renting such property; and
income form an activity not engaged in for profit.)
3. Gross annual income shall be based upon annualized weekly or monthly income as
of the date of verification.
4. In cases where the gross income of the applicant's household is extremely low, the
applicant must produce written verification of the household's monthly expenditures,
clearly itemizing the amount of money and its source on all of, but not necessarily
only, the following applicable items: mortgage; contract for deed; insurance; loans;
income and property taxes; transportation expenses; charge accounts; health costs;
food; utilities; clothing; and entertainment. These expenses shall determine the
household maintenance income.
5. Any income determination resulting in a net LOSS of income must be considered
as $0 income. That is, an income loss from one source may not be subtracted from
a separate source of income for the purpose of determining total household gross
annual income.
6. Projected bonus and/or overtime may be determined by the loan administrator
through contacting an employer. The amount may be based on prior years figures
or average amounts awarded to other employees with the same status. The most
recent IRS tax return may also be used for these purposes.
7. Self-employed persons must submit signed copies of IRS tax returns, as sent, for
the previous two years. Applications processed before April 15th of any given year
may use the IRS tax returns from the second and third preceding years if that for the
21
February 2006
first preceding year is not available. Applications processed after April 15th of any
given year must use the IRS tax returns from the first and second preceding years.
The Administering Entity will determine gross annual income by averaging the
income from the two submitted returns. Normal out-of-pocket business expenses
such as office rents, telephone, etc., are generally deductible items. Property or
equipment depreciation and entertainment are not deductible and must be added
back to establish income for program purposes.
8. Individuals who have been self-employed for less than two years must submit both
a Net Worth Statement and a properly prepared cash basis Profit and Loss
Statement detailing the business income and expenditure. Both Statements should
be prepared and signed by a reputable third party although the applicant may
prepare one provided that it is endorsed by a reputable third party and that it
includes a declaration that all information contained in the Statement is accurate
and complete and that the applicant is aware that any errors or evasions may result
in prosecution. If the individual can produce a signed IRS return for one complete
year of self-employment and a Profit and Loss Statementfor the subsequent period,
that will be acceptable.
9. The Calculation of Gross Annual Income may NOT be based on a temporary
condition such as unemployment or temporary worker's compensation. Households
receiving unemployment compensation are ineligible for assistance unless:
a.. unemployment recurs on a reaular basis and is a consistent ~Iement in gross
annual income. In such instances, income from this source shall be
determined as follows. Establish the anticipated annual income if the
individual were to be employed for twelve months at the weekly rate current
at the time. of verification; deduct the average number of weeks the individual
received unemployment for the past two years (from the federal income tax
returns); add an amount equal to the average number of weeks unemployed
multiplied by the weekly amount to which the individual is currently; or
b. the individuals income, when working, was such that it would not bave been
an obstacle to eligibility. The individual must be able to demonstrate at least
two years history of employment at such an income (either with copies of
federal income tax returns or by statements from former employers if the
income received was too low to require tax returns to be filed.) In instance
where two years of such employment cannot be verified, the Administering
Entity should consult Hennepin County.
Gross Annual Income may not be based on temporary nonrecurrina unemployment
of known duration, such as that due to I ay-ofts , maternity leave, sabbatical leave,
etc. Rather, income shall be calculated based on the normal annual Income of the
temporarily unemployed person.
22
February 2006
Application of those who are unemployed for an unknown period of time shall not
be considered until the unemployed household member has exhausted all eligibility
for unemployment compensation and the employer indicates a callback date is
unknown. At that time, the household must be able to demonstrate that it is both
income eligible and capable of meeting its monthly obligations, as outlined in
paragraph VII B 4 above. If worker's compensation is permanent income, it must
be verified by the insurance company.
C. Exclusions from Gross Income
1. Child support.
2. Money or property that was inherited, willed or given as a gift.
3. Life insurance proceeds received as a result of someone's death.
D. Deductions from Gross Income
Once the gross income figure is obtained, applicable deductions must be subtracted to
arrive atthe household's adjusted gross income. The deductions are:
1. IRA deduction.
2. Medical savings account deduction.
3. Moving expenses.
4. One half of self-employment tax.
5. Self-employed health insurance deduction.
6. KEOGH and self-employed SEP and SIMPLE plans.
7. Penalty on early withdrawal of savings.
8. Paid alimony.
E. Asset Determination
There is no asset limit as such when using the IRS Form 1040 process. However,
income derived from certain assets must be included as part of annual household
income. These income-earning assets include, taxable interest, dividends, prizes,
awards, and gambling, lottery or raffle winnings. Life insurance proceeds and inherited
money or property are not included in the income calculation. If in doubt, the .
Administering Entity should.contact Hennepin County to establish if an asset should be
included in the income calculation.
VIII. LOAN APPLICATIONS
In order to assist in the monitoring of individual loans, file folders shall be divided into two parts.
The right hand side of the file folder shall contain, in chronological order, all correspondence,
memos to the file, any photographs, all unused bids, a copy of the filed Repayment Agreement,
and any other relevant documentation including, if necessary, the Complaint Record. The left-
hand side of the file folder shall contain, either front to back or back to front, --the documents,
identified as items A through S, in the following order:
A. Homeowner Application for Loan
The application shall be completed in full and signed and dated by the Applicant:
23
February 2006
The Homeowner Application for Loan provides:
1. Household information.
2. Income information.
3. Asset information.
4. Property information.
B. Acknowledaement and Authorization to Release Information Form
This form combines the Individual Data Confidentiality form and the Lead Based Paint
Poisoning form. By signing it, the Borrower acknowledges that he or she has received the
Individual Data Confidentiality form, the booklet "Protect Your Family from Lead in Your
Home" and the "Instructions for Completing Your Application" form. The Borrower's
signature also authorizes the Administering Entity to collect date needed in support of the
application, including obtaining a credit report.
C. Letter to the Minnesota Historical Society
If the property to be improved is more than fifty (50) years old, Historical Society Clearance
must be requested from the Minnesota Historical Society. A form letter to be used in. these
instances will be provided by Hennepin County.
D. Income Verification
All sources of income listed on the Homeowner Application for Loan must be verified by
the Administering Entity. Evidence of such verification must be included in the loan
package. The following is a list of acceptable forms of income verification evidence:
1. Written verification from employers or other income providers.
2. Copies of recent checks or check stubs, which must include the year-to-date
earnings.
3. IRS forms onlv in the case of self-employed individuals (See Section VII.)
4. Statements of depositfrom bank.
5. Copies of deposit slips indicating the deposits of a particular check.
6. Income derived from rent must be verified by the renter in writing or by examining
copies of checks or rent receipts, or by a copy of the current lease, or by a copy of
the applicant's most recent federal income tax return.
The date of document used in verifying income must not be more than .180 days previous
to the date of approval. If it is more than 180 days, income(s) must be reverified before
a loan application can be approved
E. Asset Verification
All assets listed on the Homeowner Application for loan must be verified by the
Administering Entity. Evidence of such verification must be included in the loan package.
The following is the only acceptable form of asset verification evidence:
1. Written verification from banks, insurance companies or other asset holders.
24
February 2006
2. Copies of bank statements, insurance policies, premium notices and the like.
The date of document used in verifying assets must not be more than 180 days previous
to the date of approval. If it is more than 180 days old, the assets must be reverified
before a loan application can be approved.
F. Mortaaae Status Verification
The Administering Entity must ensure that the mortgage(s) and/or contract for deed(s) on
the property to be improved are current. If payments are in arrears, the applicant must be
given four weeks to make them current. The date of the document used in verifying the
mortgage and/or contract for deed must not be more than 180 days previous to the date
of approval. If it is more than 180 days old, the mortgage status must be reverified before
a loan application can be approved. A copy of the Borrower's credit report, provided that
it includes information from the Borrower's mortgage company, is an acceptable
verification. Should the mortgage company charge a fee for verification of mortgage
status, the fee must be paid by the applicant. Alternatively, the Administering Entity can
accept copies (front and back) of cancelled checks accounting for mortgage payments for
the last six months. -
H. Zonina Status Verification
The property to be improved must be in compliance with all applicable zoning
requirements. Cities acting as their own administering entities can elect to forego include
formal verification of zoning status for properties located within city limits.
I. Title Verification
1. The Administering Entity must obtain the following information from the County
Recorder or Registrar of Titles regarding each property:
a. The full name(s) and marital status of all owners of record, exactlv as they
appear on the title.
b. Whether it is Torrens or Abstract.
c. Confirmation that applicants are either current on their property tax payments
or are current on a Confession of Judgement to repay delinquent taxes.
d. The relevant document number (plus book and or page, number if necessary)
of the deed establishing the applicant's interest in the property.
e. A complete and accurate legal description of the property to be
improved.
2. Upon obtaining this information, the Administering Entity must determine that the
applicant individually or in the aggregate has a qualifying interest in the property
consisting of at least:
a. A valid life estate. Such life estate must be recorded and must appear in the
records of the County; or.
25
February 2006
b. A one-third interest in the fee title. Such interest may be subject to a
mortgage; or
c. A one-third interest as a purchaser in a contract for deed with respect to the
structure being improved.
3. In addition, the applicants must occupy the property as the principal place of
residence. To consider a property the principal place of residence, an individual
must:
a. Reside inthe property at the time of application (except where extraordinary
circumstances have made the property temporarily uninhabitable); and
b. Occupy the property for at least nine months of the year. --
4. For the purpose of complying with ownership requirements, the borrower may
aggregate his/her interest in such property with the ownership interest of other
individuals occupying the property as their principal place of residence.
Administering entities are strongly encouraged to ensure that no alterations to the title to
properties to be rehabilitated have occurred in the period between initial verification and
execution of the Work Contract.
J. Property Inspection Report
1. Must be included in the loan package and must include the following items:
a. General condition of the structure.
b. Structural soundness.
c. Plumbing systems, including: water supply, waste disposal, fixtures and
piping systems.
d. Heating systems.
e. Electrical systems.
f. Roof.
g. Energy efficiency including: insulation, infiltration, windows, doors and
ventilation.
h. General exterior conditions.
i. General interior conditions.
An explanation should be provided for any deficiency that appears on the inspection
report but does not appear on the Rehabilitation Work Summary for correction. The
inspection report must be signed and dated by the inspector performing the
inspection.
2. Major infractions of the city building codes constituting a health and/or safety hazard
or seriously diminishing the habitability of the residence will be noted and explained
to the applicant. The applicant will be required, as a condition of funding, to contact
the City Building Inspector to establish that repair of these major infractions is within
the scope of available monies. A copy of the City Building Inspectors written report
26
February 2006
must be included in the file. If it is determined that the cost of necessary repairs
exceeds the available monies, then the loan application will be withdrawn.
K. Scope of Improvements and Work Proposal
This listing of all eligible improvements should be kept on file in case the borrower requires
additional copies. At least three copies will be sent to the borrower along with a
mandatory cover letter encouraging the consideration of minority or women-owned
contractors as potential bidders and including information on how to access such
contractors. A copy of this letter must also be included in the file.
The Scope should allow contractors the opportunity to submit alternates or amendments
to work items; however, funding of any such alternate or amendment is dependent upon
the existence of a second bid for the same alternate or amendment. The Scope must also
contain an explanation of the bidding procedures, contract procedures, contract
amendment procedures, completion procedures and payment procedures.
L. Rehabilitation Work Summary
The Administering Entity in conjunction with the borrower, determines the work to be done
with the funds available. If the borrower disagrees with the Administering Entity's choice
of improvements, items may be waived by the borrower, in writing, at the discretion of the
Administering Entity. The Rehabilitation Work Summary lists;
1. The improvements as itemized on the Scope of Work, with the cost of each work
item along with the name of the contractor performing the work.
2. The total cost of the work to be performed.
M. Contractor Bids
The borrower should obtain a minimum of two bids for each of the authorized
improvements. All bids must conform to the minimum standards of the technical
specifications. Under certain circumstances, such as extremely adverse working
conditions, uncooperative clients or unusual or uncommon types of improvements, the
Administering Entity may elect to secure only one bid, provided that the file, contains a
proper cost estimate (prepared by the Administering Entity) which demonstrates cost
reasonableness. Cities acting as their own Administering Entity must secure the written
agreement of Hennepin County. In instances where Hennepin County is acting as
Administering Entity, the written agreement of the city providing the rehabilitation funds
must be secured.
N. Work Contract
The ,contractor submitting the lowest acceptable bid must sign a Work Contract provided
by the Administering Entity. A copy of each bid for all work to be performed by each
contractor must be included in the Work Contract as Schedule A. Work shall be completed
within the time frame specified on the Work Contract. The city may grant an extension
under unusual circumstances. This extension must be in writing with a copy given to the
homeowner and contractor.
O. Amendment Reauest Certificate or Chanae Order Reauest
The form outlines all changes in the approved loan amount, either additions or
27
February 2006
subtractions by each contractor. It must be signed by the contractor and the borrower and
approved by the Administering Entity. A revised bid must be attached. Every effort must
be made to keep Amendment Requests to a minimum. The use of excessive Amendment
Requests tends to indicate failures in either the Property Inspection Report and/or the
Scope of Improvements and this in the administration of the program itself. Since housing
rehabilitation is not an exact science, it is appropriate to use the Amendment Request as
a means of dealing with unforeseeable problems.
P. Contractor Bills
Bills must be obtained from each firm or individual contracted to . perform work on the
residence (in other words, a general contractor can submit bills on behalf of a sub-
contractor). Bills must be provided for all payments, interim or final.
Q. Sworn Construction Statement
Any firm or individual contracted to perform work on the residence must submit a Sworn
Construction Statement along with the bill before any payment, interim or partial, can be
released. The Sworn Construction Statement must list all subcontractors and/or suppliers
contributing to the work for which the bill is being submitted and must be signed by the
contractor holding the Work Contract. The contractor's signature must be notarized. The
purpose of this form is to ensure that the contractor holding the Work Contract is liable for
any failure to pay sub-contractors/suppliers involved in the project.
R. Lien Waivers
Original lien waivers referred to in the Sworn Construction Statement, plus the lien waiver
from the contractor holding the Work Contract, must be included in the file and must be
secured before any payment is released. Copies of all lien waivers may be passed onto
the borrower following close-out of the file.
S. . Completion Certificate
This form should be signed by the borrower and the contractor when the loan work
undertaken by the contractor is completed. If the work involves a building permit, or if
code work is involved, then the relevant inspector should sign in the space provided. If the
approval of more than one inspector is required, then copies of the Inspection Notice(s)
should be attached. The Completion Certificate must always be accompanied by a bill for
. the work done. .
T. Data on Individual Loans
Regardless of the manner in which documents A through S are placed in the file, when
the loan is closed out, this form should be at the front of the file on the left hand side. The
form provides information pertaining to environmental assessment, historical preservation,
Section 8 quality housing standards, census tract data and household size and annual
income. It is required that the Flood Zone information (line 7) be properly completed. The
Administering Entity must list the Flood Zone Classification (A, B, or C). and the National
Flood Insurance Rate Map Number. '
u. Repavment AQreement
The original Repayment Agreement, or the copy returned by the Registrar of Titles, must
be included in the loan package and should be located on the right-hand side of the file.
The Repayment Agreement must make it clear that this is a deferred loan that requires no
28
February 2006
monthly payments and that, if all conditions of the Repayment Agreement are met, the
loan will be forgiven after thirty years and will become a grant. As specified in the
provisions of the Repayment Agreement, the borrower shall be required to notify the
Administering Entity immediately upon sale, transfer, conveyance or cessation of
residency of the property. A copy of the Repayment Agreement must be sent to the
borrower and to any other signatories requesting a copy. Administering entities may elect
to keep the Repayment Agreements in a separate file dedicated for that purpose.
1. The Repayment Agreement for borrowers with incomes at or below 50% of median
provides that in the event that the improved property is sold, transferred, or
otherwise conveyed by the borrower within thirty (30)* years from the date upon
which the loan application was approved, or in the event that such property ceases
to be the borrower's principal place of residence within thirty (30) years from the
date upon which the loan package was approved, then the borrower shall repay the
full amount of the loan. The Repayment Agreement is a lien on the improved
property, in favor of the Administering Entity, as security for the loan amount.
* Administering entities have the option of adopting a different lien period
and/or structure provided that Hennepin County is notified in writing.
2. The Administering Entity must exercise extreme care in the execution of the
Repayment Agreement document to ensure that the lien is valid. Any inaccuracy
or omission may have a negative effect on the validity of the lien. Prior to the
approval of the loan package, the Administering Entity must ensure that the
Repayment Agreement be properly completed in as much as:
a. The property description must be exactlv as it appears in the property records.
If the applicant owns property other than that on which the structure to be
improved is located, only the description of the property to be improved
should be included.
b. The record names (the names exactly as they appear in the property records)
must be used by all whose signatures are required. The following is' a brief
discussion of the signatures required under particular property ownership
situations: .
i. Any JOINT TENANCY--signatures of all joint tenants are required.
ii. Property held by ONE SPOUSE--signatures of BOTH spouses are
required.
iii. Property held in LIFE EST A TE--signatures of the applicant (life estate
holder) and signature of sufficient remainderpersons to comprise one-
third interest, or remainderpersons.
iv. Property being purchased on CONTRACT FOR DEED--signatures of
the applicant and all individuals who are aggregating their interest to
meet the ownership requirement; and the fee title holder (and spouse
or others, as applicable) of the property; and the signatures of any
intervening vendees of the contract for deed.
v. Under normal circumstances, contract for deed vendors, separated
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February 2006
spouses or others not in residence and adequate numbers of
remainderpersons MUST execute the Repayment Agreement to render
it legally binding. However, administering entities can elect to waive
this requirement and record a Repayment Agreement only under the
applicant's interest SOLELY because the funds secured by the
Repayment Agreement are required to address issues severely
affecting the health and safety of the applicants household or to correct
chronic structural problems identified by the city building official. Cities
acting as their own Administering ,Entity must secure the written
agreement of Hennepin County. In instances where Hennepin County
is acting as Administering Entity, the written agreement of the city
providing the rehabilitation funds must be secured.
c. All required signatures must be notarized, including the "mark" of a signatory
who is unable to write (such a mark must be witnessed by at least two
persons other than the notary).
i. Additional acknowledgements may be added to the Repayment
Agreement form to accommodate any necessary notarizations.
ii. All dates (except those in the notary's acknowledgements) in the
Repayment Agreement shall be left blank until the loan is approved.
,
d. In order to best protect its interest in the property to be improved, the
Administering Entity may opt to record the Repayment Agreement, in the
amount of the contracted work, before any work begins. The Administering
Entity shall, in writing, inform the borrower and all selected contractors that
no amendments to the loan amount will be approved. without first obtaining
a signed repayment agreement indicating the altered loan amount. If this
early recording of the repayment Agreement is regarded as being
administrative burdensome, the Administering Entity has the following
options:
i. The loan amount in the Repayment Agreement should be left blank at
the time the loan package is approved. This allows the Administering
Entity flexibility with regard to amendment requests by not requiring a
new agreement to be signed should the loan amount change upon
completion of the work (but it may also allow the property to be sold
before the work is completed, thus rendering the Repayment
Agreement invalid); or
ii. The Administering Entity may accept the document with the maximum
loan amount in place, recognizing that a new document must be
executed to reflect the final loan amount.
e. The RepaymentAgreement shall be filed with the proper recording office in
such a manner as to create a valid lien against the property.
3. If any loan funds are used for purposes other than an eligible improvement upon an
eligible property or if the borrower application is found to contain a material
misstatement of fact, the borrower shall be liable for repayment of all or part of the
originally approved loan funds. In addition, any fraudulent use of funds may subject
the recipient to fines and/or imprisonment under the Minnesota Criminal Code.
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February 2006
4. Mobile homes which are not taxed as real property will be subject to a ten-year lien
period as an acknowledgement that such dwellings are both usually the home of
very low-income borrowers and that they are unlikely to remain habitable for more
than ten years. Borrowers living in mobile homes will be notified that participation
in the program essentially means a commitment to remain in the mobile home for
at least the lien period. The Repayment Agreement will be filed with the Department
of Motor Vehicles and participation in. the program will depend upon the borrower's
ability and willingness to hand over the title documents to the Administering Entity
prior to work beginning on the mobile home.
V. Complaint Record/Memo
Any complaints brought to the attention of the Administering Entity, pertinent to the
administration/implementation of the program and the response of the Administering Entity
to the. complaint, should be properly noted in the file.
IX. ACCEPTANCE PROCEDURES
The Administering Entity objectives are to encourage necessary improvements whereby the
structure will be reasonably livable, safe, habitable and energy efficient.
A. Applications will be processed as follows:
1. Applicants must submit their request for a Rehabilitation Loan on Hennepin
County LoanApplication form. It should be submitted to the Administering Entity.
2. The Administering Entity will review the individual packages using the qualifications
as outlined in Section VI. Loan packages shall contain all of the necessary
documents listed in Section VIII of these Procedural Guides.
The Administering Entity may rejectl,macceptable packages and hold them untilthe
necessary information is provided after notification of same to the applicant. If the
necessary information is not provided within a reasonable time, the application may
be withdrawn and the file closed out.
3. The decision of the Administering Entity will be final. However, appeals maybe
made in those cases where applicants believe they were not treated equitably.
Appeals shall be in written form submitted to the Administering Entity outlining the
applicant's concerns. The Administering Entity should review the concerns and
respond to them in written form to the applicant within fifteen (15) days. If, after this
review, disagreement is still evident, the satisfactory resolution is not reached, the
complaint will be resolved by Hennepin County.
B. Notification of Ineliaibilitv
If the applicant, or the applicants dwelling, is determined to be ineligible, the Administering
Entity must notify the applicant of that denial, in writing, within five (5) days of the denial
indicating the reason(s) for denial and outlining the appeal process as stated above.
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February 2006
C. Loan Approval
a. Upon approval of a loan package, the Administering Entity must notify the applicant
of that approval.
b. The Repayment Agreement for each approved loan will be held by the Administering
Entity. The Repayment Agreement will have been executed by the Administering
Entity and dated according to the date on which the loan pac.kage was approved.
c. The executed Repayment Agreement acts as the contract between the Administering
Entity and the borrower.
D. Pre-Construction Meetino
In as much as it is feasible to do so, the Administering Entity should strive to hold a pre-
construction meeting with the client and the contractor(s) before the Work Contract is
signed so that the approved work can be discussed in detail. By doing so it can be
ensured that all parties are in complete agreement on the work to be done and the manner
in which it is to be done. While the Administering Entity may elect to waive the pre-
construction meeting when one contractor and limited improvements are involved, any
project involving a general contractor and a number of tradesmen should include a pre-
. construction meeting before any work is authorized.
X. COMPLETION AND DISBURSEMENT PROCEDURES
A. Completion Procedures
No loan will be considered complete until the following steps have been accomplished:
1. Inspection of the Property. All improvement work, as specified in the Rehabilitation
Work Summary, must be inspected for completeness, conformity to specification
and quality of workmanship. The Administering Entity must require completion.or
correction of any item found lacking. Failure of a contractor to comply with such a
request for completion or correction of work is considered grounds for withholding
payment.
2. Completion Certificate. Following the final inspection and successful completion of
work, the Completion Certificate must be signed by the Borrower, all of the
contractors who performed work on the property, by the Inspector of the property,
and the Deferred Loan Administrator. In the event that the homeowner will not sign
the Completion Certificate, payment may be issued to the contractor provided that
the contractor, the Inspector, and the Deferred Loan Administrator all sign the
Completion Certificate indicating that the work was done properly, and a letter
written by the Deferred Loan Administrator is attached outlining in detail the situation
resulting in the recipient refusing to sign the Completion Certificate and confirming
proper completion of work.
3. Recordina of the Repavment Aoreement. The Administering Entity must insert the
amount of the loan in the Repayment Agreement and check the document for
completeness and accuracy. The Repayment Agreement must then be recorded
by the Administering Entity with the Registrar of Deeds or the Registrar of Titles.
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February 2006
B. Disbursement Procedures
1. No disbursement of funds shall be made to a contractor until the Administering
Entity is in receipt of:
a. a completion certificate signed by the contractor, inspector and borrower; and
b. a bill from the contractor for the amount of the work performed; and
c. a properly completed Sworn Construction Statement; and
d. lien waivers provided by the contractor and/or sub-contractor(s) and/or
supplier's for the amount of the work performed.
Upon receipt of the above items, payment may be made to the contractor using
funds from the general revenue fund of the Administering Entity. Payment will
normally be made within three weeks of receipt by the Administering Entity of the
bill, the signed completion certificate and the lien waivers.
2. To be reimbursed by Hennepin County, the Administering Entity must forward to the
County the completed and signed Warrant Request and copies of the following:
a. Signed Completion Certificates and all Amendment Requests.
b. Data on Individual Loans (need to submit only one per client).
c. Contractor's Invoice(s) (bill).
d. Proof(s) or payment(s) to contractor(s) (Administering Entity check).
e. Summary of Project Disbursement Sheet(s).
The originals must remain in the applicant files with the Administering Entity.
XI. PROCEDURES FOR ACCESSIBILITY IMPROVEMENT LOANS
A. Accessibilitv Improvements
1. Accessibility Improvements may include:
a. Structural Improvements:
Construction installation or modification of ramps, handrails, kick plates and
door widths; repair or replacement of doors; relocation of doorways;
installation of lever-action hardware; construction or expansion of rooms.
b. Exterior Improvements:
Construction of exterior ramps, railing, walkways, landings and porch
extensions; site grading and other site improvements,
c. Bathroom Improvements:
Installation of elevated water closets, grab bars, shower stalls, tub seats,
hand-held showers; accessible sinks, electrical outlets, medicine cabinets
and other accessories. Modification or expansion of bathroom area to allow
a five-foot turning radius.
d. Kitchen Improvements:
Construction, modification or replacement of cupboards or shelves to provide
access to sinks, cook tops, ovens, or storage areas; installation of accessible
electrical outlets and switches, lever-action hardware, garbage disposals;
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February 2006
insulation of hot water pipes; modification or expansion of kitchen area to
allow for a five-foot turning radius in the workspace; installation of "lazy
~usans" in cupboards; replacement of floor covering in order to improve
wheeling surface.
e. Other Improvements:
In exceptional circumstances, installation of central air conditioning and/or
stair glides or electric lifts when the need for these improvements is verified
by the handicapped person's doctor in writing.
2. Improvements which are not determined by the Administering Entity to be eligible
as accessibility improvements may be funded under the other provisions of these
procedural guides.
B. Requirements for Participation
Loans may be made to handicapped persons for accessibility improvements only if the
conditions of Section VI (except the portion thereof relating to Eligibility of Improvements)
of these procedural guides have been fully satisfied.
C. Amount of Loan for Accessibility Improvements
See Section II H.
D. Responsibilities of the Administerina Entity
With respect to loans for accessibility improvements, the Administering Entity shall:
1. Be governed by the general conditions set forth in Section II of these procedural
guides.
2. Assist the handicapped person with the preparation of the Application form, upon
request. Such assistance shall include a personal visit by the Administering Entity
to the home of the handicapped person or to any other reasonable location which
is accessible to the handicapped person should the. offices housing the
Administering Entity not be deemed accessible in accordance with Chapter 751,
Laws of Minnesota, 1978.
3. Carry out the duties required of the Administering Entity pursuant to Section III, of
these procedural guides, including the duty to complete the loan package for
accessibility improvements. A complete loan package for accessibility shall include
all required materials. .
E. Standard Procedure for Compilina Accessibility Portion of Loan
In addition to all the documents described in Section VIII, a loan package including
handicapped improvements must include the following:
1. Accessibility improvements inventory containing a description of the accessibility
improvements to be made shall be included with the inspection report.
2. A letter describing:
a. the . level and specific type of disability experienced by the handicapped
34
February 2006
person signed by a licensed physician; and
b. the specific accessibility improvements requested by the physician.
3. Bids from contractors.
4. Architectural drawings, if needed.
5. Any other materials requested.
XII. GENERAL CONDITIONS RELATING TO LOANS
A. All programs funded through the Hennepin County CDBG program must provide equal
access to employment, programs and services without regard to race, color, creed,
religion, age, sex, handicap, marital status, affectional preference, public assistance,
criminal record, or national origin. Areas not specifically mentioned in this statement will
still be governed by the spirit of this statement. If an applicant or borrower believes they
have been discriminated against, they should contact the Affirmative Action Programs
Department, A-303 Government Center, Minneapolis, Minnesota, 55487,348-4096.
B. The Administering Entity shall have full responsibility for program implementation including
public information, reviewing and screening applicants, choosing recipients, and assuring
that work will be satisfactorily completed.
C. No loan application fee shall be charged to an applicant.
XIII. EMERGENCY DEFERRED LOAN GUIDELINES
A. The HRA may authorize an Emergency Deferred Loan for providing rehabilitation
funds to eligible applicants in emergency situations. Specific emergency situations
are defined below.
B. The Emergency Deferred Loan application process, within a very short response
time, informally assembles all required information, verifies the information, receives
required signature on forms, and authorizes loan financing. Verbal verifications and
bidding often occur to prevent delay. The Emergency Deferred Loan package will
be completed in a permanent, written form as soon as possible following loan
approval and initiation of work.
C. The following conditions shall apply to an Emergency Deferred Loan:
1. The applicant, property, and improvements must be determined eligible as
stated in the general Rehabilitation Deferred Loan program.
2. The following forms must be completed and included in the Emergency
Deferred Loan Package when submitted for approval:
a. Homeowner Application for Deferred Loan
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February 2006
b. Property Inspection Report (limited)
c. Scope of Improvements (limited)
d. Contractor bids (phone quotes acceptable)
e. Asset Verification (phone verification acceptable)
f. Individual Data Confidentiality
g. Title Verification
h. Mortgage Status Verification (phone verification acceptable)
i. Repayment Agreement
j. Emergency Deferred Loan Approval
k. Improvement Certificate
I. Data on Individual Loans
m. Work Contract (may be faxed)
n. Acknowledgment of Data Confidentiality
o. Entry Permit
p. Zoning Verification
3. The HRA verifies that an emergency condition exists, such as:
a. The dwelling unit contains defects or deficiencies which, if left
uncorrected, would render the unit immediately uninhabitable; or
b. Such defects are the direct result of occurrences which include, but
are not limited to, natural causes such as floods, tornadoes, fire,
blizzards, and storm; or mechanical failures such as burst pipes,
furnace breakdowns, or clogged sewer lines; or
c. A child under the age of seven years, living in the home, is found to
have an Elevated Blood Level.
4. The applicant agrees that other improvements found to be necessary to the
unit must be completed on a non-emergency basis by means of a Deferred
Loan or other financing. The HRA will make available funds for such
improvements to the applicant on.a first-come, first serve basis. Additional
improvements can be undertaken at the same time as the emergency
improvements if sufficient funds exist to assist all applicants ahead of the
emergency application. .
5. The property to be improved will be inspected to ensure that an Emergency
Deferred Loan expenditure is a "permanent general improvement". The
improvement(s) must be economically viable in that the structure will have a
remaining useful life; a lien to the maximum amount available would be
collectable; and the structure is reasonably livable, safe, and habitable. It is
understood that additional repairs of a non-emergency nature may be
needed and that those repairs may not have been determined in final form.
6. All other conditions required in these Procedural Guides must be met.
D. In administering an Emergency Deferred Loan, the HRA is aware that an applicant
that initially agrees to perform additional repairs may, at some time, not pursue the
36
February 2006
additional repairs. However, the emergency nature of the repairs to protect the
health and safety of eligible residents warrants "the risk" as it r lates to future
performance. Every effort will be taken to ensure that Emergency Deferred Loan
recipients fol/ow through with appropriate repairs on a first-come, first-serve basis.
XIV. GENERAL CONDITIONS FOR THE THREE PERCENT INTEREST LOAN
A. Improvements
Three Percent Interest Loan improvements may include all improvements as specified
under the regular Deferred Loan Program in Section VI.
B. Eliaibilitv
Three Percent Interest Loans may be made to applicants who meet the following criteria:
1. Applicant may have qualified at the time the application was submitted,but while on
the waiting list, income limits changed or applicant's situation changed, making them
income ineligible per the Fifty Percent of Area Median Standard. Applicant's assets
must be insufficient to make required improvements.
2. Applicant has no other means for making required improvements, such as inability to
make minimum monthly payments or to qualify for an MHFA or other loan.
3. Applicant must be at risk in some manner, such as being elderly with a fixed income
or being faced with a substantial health or safety issue as determined by staff
inspection.
.~
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February 2006