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HomeMy WebLinkAboutResolutions - 1996.06.27 - 24792MISCELLANEOUS RESOLUTION #96151 June 27, 1996 BY: PLANNING AND BUILDING COMMITTEE, CHARLES E. PALMER, CHAIRPERSON IN RE: COMMUNITY DEVELOPMENT DIVISION - HOME IMPROVEMENT PROGRAM GUIDELINE CHANGES TO THE OAKLAND COUNTY BOARD OF COMMISSIONERS Mr. Chairperson, Ladies and Gentlemen: WHEREAS the Community Development Division has administered the Home Improvement Program since 1976 to rehabilitate single family owner occupied housing for low and moderate income persons and improve our residential neighborhoods; and WHEREAS in Miscellaneous Resolutions #81237, #82233, #90201 and #94082 the Oakland County Board of Commissioners approved guidelines and amendments for administering the Home Improvement Program; and WHEREAS annual rates of inflation and rising construction costs have reduced the purchasing power of the $11,000 (plus 10% contingency) maximum home improvement loan amount set in 1994 and have eroded the Program's capacity to bring a house to a decent, safe and sanitary condition as required by the U.S. Department of Housing and Urban Development (HUD); and WHEREAS costs incurred to comply with additional federal and local rehabilitation requirements have further reduced the scope of work that can be accomplished under the current $11,000 (plus 10% contingency) maximum loan amount; and WHEREAS the Community Development Division recommends that the current maximum loan amount of $11,000 (plus 10% contingency) be increased to $12,000 (plus 10% contingency) as a means to offset negative economic and regulatory influences that have eroded the program's housing rehabilitation capacity; and WHEREAS the Home Improvement Program provides 3 percent interest installment loans, 0 percent interest deferred payment loans or a combination of the two; and WHEREAS the proportion of installment and deferred loan is based on the applicant's Adjusted Household Income; and WHEREAS the current Adjusted Household Income is computed by family size and adjusting household income by subtracting $1,000 per family member from the total gross household income; and WHEREAS the current method of determining the Adjusted Household Income penalizes large families with very low incomes by requiring installment payments and rewards some small families with low incomes by waiving installment payments; and WHEREAS the Community Development Division recommends that the Adjusted Household Income methodology be eliminated and that loan repayments be deferred for families with low incomes (50 percent of area median income) or less and loan repayments be based on a sliding scale for families with incomes between low and moderate income limits in accordance with Attachment A; and WHEREAS the Oakland County Community Development Citizens Advisory Council has recommended approval (by an 8-0 voice vote) of the Home Improvement Program Guideline changes which increase the maximum home improvement loan amount to $12,000 (plus 10% contingency) and eliminates the current Adjusted Household Income methodology and changes loan repayments to deferred for families with low incomes (50 percent of area median income) or less and establishes loan repayments based on a sliding scale for families with incomes between low and moderate income limits in accordance with Attachment A ; and NOW THEREFORE BE IT RESOLVED that the Oakland County Board of Commissioners approve the Home Improvement Program Guideline changes which increase the maximum home improvement loan amount to $12,000 (plus 10% contingency) and eliminates the current Adjusted Household Income methodology and changes loan repayments to deferred for families with low incomes (50 percent of area median income) or less and establishes loan repayments based on a sliding scale for families with incomes between low and moderate income limits in accordance with Attachment A. CHAIRPERSON, on behalf of the Finance and Personnel Committee, I move the adoption of the foregoing resolution. PLANNTVG p,ND BUILDMQ_COMMITTEE , ' OAKLAND COUNTY COMMUNITY DEVELOPMENT HOME IMPROVEMENT PROGRAM GUIDELINES I. INTENT AND DEFINITIONS The intent of the Home Improvement Program is to rehabilitate single family owner occupied housing for low and moderate income persons and improve residential neighborhoods. Standards of Rehabilitation Housing rehabilitation standards must meet HUD Section 8 requirements that a home be decent, safe and sanitary or meet minimum housing code standards. Form of Assistance to Homeowners Home Improvement Program funds are to be used to pay for the cost of improvements for single family owner-occupied dwellings through an installment and/or deferred payment loan program. Installment Loan A loan in which the principal and interest must be repaid on a scheduled monthly basis. Installment loan payments are calculated for 20 year repayments. Deferred Loan A loan in which the principal only is to be repaid at some future time. There are no installment payments and no interest is charged on the principal. II. ELIGIBILITY REQUIREMENTS Any Oakland County homeowner, who lives in his/her home and resides within the boundaries of a local jurisdiction that is participating with the County in the Community Development Block Grant program is eligible to apply for a housing rehabilitation loan subject to the following conditions: A. Person(s) owning or buying their home under a mortgage or 1 land sales contract are considered to be eligible applicants. B. The property to be rehabilitated must be the primary residence of the applicant. Properties purchased for resale or rental purposes are not eligible. C. Property taxes may not be more than one year delinquent. D. An applicant may secure only one loan through this program in any five year period. III. LOAN LIMITATIONS The total property related indebtedness after improvement, shall not exceed the State Equalized Value doubled or a market value analysis. Total indebtedness is determined as a sum of the existing property debt and that which is incurred by the installment and/or deferred loan. IV. APPLICATION PROCEDURE A. Loan application forms are available at offices of local jurisdictions participating with the County in Community Development activities and at the Oakland County Community Development Division, 1200 North Telegraph Road, BOB Room 112, Pontiac, Michigan 48341-0414. B. Applicants must submit a completed loan application with required documents to the Oakland County Community Development Division or to local communities that have staff to provide rehabilitation services. V. ELIGIBLE IMPROVEMENTS Examples of rehabilitation work that can be financed with a rehabilitation loan may include, but are not limited to, the following: plumbing, wells, septic systems, structural repairs, electrical work, heating, replacement of roofs, masonry work, energy items and to provide barrier-free access for handicapped and elderly. •,-. 2 VI. INELIGIBLE IMPROVEMENTS Examples of rehabilitation work that cannot be financed with a rehabilitation loan may include, but are not limited to, the following: special assessments, patios, fencing, additions, accessory building, mobil home improvements, air conditioners and air cleaners. Air conitioners and/or air cleaners may be installed if applicant provides documentation from a physician that these items would provide a medical benefit to a resident of the home. VII. INCOME ELIGIBILITY FOR INSTALLMENT AND DEFERRED LOANS A. Gross household income is the annual gross income from all sources of all residents of a housing unit who are 18 years of age or older. The gross household income is the amount determined by projecting all income (including gross wages, salaries, dividends, rent,room and board, interest, public assistance payments and pensions) of all eligible residents. Social Security benefits, aid to dependent children and child support payments when received by the applicant for minor children is considered income and will be used in determining eligibility for the applicant. Exceptions to the above are as follows: 1. Income of full-time students who are under 23 years of age. 2. Income of non-family member who is a roomer and boarder. B. If any eligible family member has become unemployed or has resigned from employment for a period of six months prior to the application of a loan, the gross income of the family member shall be computed at the rate of pay immediately prior to the layoff or resignation period. The period of unemployment may be considered in determining gross income of the applicant with the following exceptions: 1. Applicant has permanently retired. 2. Applicant has received a permanent medical leave. 3 • 4 C. Income eligibility for the Home Improvement Program is determined by using the 1996 HUD Section 8 income limits as reflected in Table 1. This table is used to determine income eligibility based on family size and gross household income. Home Improvement Program income limits are pPriorlirally updated in accordance with HUD revisions. TABLE Maximum Gross Household Income Family Size (HUD Section 8 Income Limits) 1 $ 28,050 2 32,050 3 36,050 4 40,100 5 43,300 6 46,500 7 49,700 8 52,900 HUD Section 8 Income Limits Revised 1/29/96 D. The Home Improvement Program provides 3% interest installment loans, 01; interest deferred payment loans or a combination of the two. The attached table indicates by family size and income amount the proportion of the loan that is deferred and/or installment. For example, a family of four with a gross household income of $36,000 would have a loan that was 80 percent installment and 20 percent deferred. This table is adjusted pprinHirally in accordance with HUD Section 8 income limit revisions. E. The maximum amount of a contract may not exceed $12,000. The maximum amount of an Installment Loan, a Deferred Loan or a combination shall not exceed $12,000 plus a ten percent (10t) contingency. 4 OAKLAND COUNTY HOME IMPROVEMENT PROGRAM INSTALLMENT/DEFERRED LOAN REPAYMENT SCHEDULE (Installment Loan Payments are calculated for 20 year repayment.) FAMILY VERY LOW Installment Installment Installment Installment installment LOW SIZE (Maximum) 50% 60% 70% 80% 90% MAXIMUM NO PAYMENT 1 $17,550 $17,551 522,801 $23,801 $24,801 $25,900 $26,951 or to to to to to to Less $22,800 $23,800 524,800 525.900 $26,950 $28,050 2 $20,050 $20,051 $26,051 527,251 $28,451 $29,651 1530,851 or to to to to to to Less 526,050 $27,250 528,450 S29,650 $30,850 $32,050 A. 1 3 $22,550 $22,551 $29,301 530,651 $32,001 $33,351 $34,701 or to to to to to to Less $29,300 $30,650 $32,000 533,350 $34,700 $36,050 4 525.050 $25,051 $32,576 $34,081 $35,586 $37,091 $38,596 or to to to to to to Less 532.575 534,080 535.585 537,090 $338,595 $40,100 - 5 527,050 527,051 535,176 $36,801 $38,426 $40.051 $41,676 or to to to to to to Less 535,175 536,800 538,425 540,050 $41,675 $43,300 6 $29,050 529,051 537,776 539,521 541.266 $43,011 $44,756 or to to to to to to Less 537,775 539,520 541,265 543,010 544,755 $46,500 7 $31,050 $31,051 540,376 542,241 544,106 $45,971 $47,836 or to to to to to to Less $40.375 542,240 544,105 545,970 547,835 $49,700 8 533,050 533,051 542,976 544.961 546,945 548,931 550,916 or to to to to to to Less $42,975 $44,960 $46,945 548,930 $50,915 $52,900 9 $34,052 534,053 $45,097 S47,306 $49,515 S51,723 $53,932 or to to to to to to Less $45,096 $47,305 549,514 551,722 $53,931 $56,140 10 535,070 535,071 $47,210 549.638 552,066 $54,493 556,921 or to to to to to to Less 547,209 549,637 552.065 554,492 556,920 559,348 11 S39,078 $39,079 550,021 552,209 554.397 556,585 560,961 or to to to to to Less $50,020 552,208 554,396 556,584 558,773 12 541,082 541,083 $53,424 555,892 558.360 560,829 563.297 or to to to to to to Less 553,423 S55,891 558,359 560,828 S63,296 $65,764 13 543,086 543,087 556,030 558,619 $61,207 563.796 566,384 or to to to to to to Less $56,029 558,618 $61,206 563,795 566383 568,972 14 545.090 545,091 558,636 561,344 564,053 566,762 569,471 or to to to to to to Less $58,635 561344 564,053 566,762 569,471 $72,180 5 F. A ten percent (10%) contingency of the contract amount is permitted, i.e. $1,200. Contingency funds shall be used to fund additional work that is deemed to be necessary through the rehabilitation process. G. The loan will be secured by a mortgage. VIII. TERMS OF AN INSTALLMENT LOAN A. Homeowners who qualify for an Installment Loan will pay interest at a rate of 3% per annum on the unpaid balance of the loan. Monthly payments are based on a term of three (3) to a maximum of twenty (20) years, depending on the amount of the loan and the homeowners ability to pay. B. Minimum monthly payments will be $20.00 per month. C. In the event that the applicant moves and/or rents the rehabilitated property, the mortgage becomes due and payable at that time. D. Upon death of a loan recipient, or the conveyance of any interest in the property, the outstanding balance of the mortgage shall become due and payable on such terms and conditions as the County shall designate. IX. TERMS OF A DEFERRED LOAN A. The principal sum of a "Deferred Loan" shall become due and payable under the following terms and conditions: 1. The Mortgagor transfers any interest in the property. 2. The Mortgagor moves, rents or leases the property. 3. The death of the Mortgagor. 4. Failure of the Mortgagor to maintain adequate fire and hazard insurance to cover the debt insured by the loan and any pre-existing property debt. B. Upon occurrence of any of the above conditions, the 6 outstanding balance of the mortgage shall become due and payable on such terms and conditions as the County shall designate. Adopted by the Oakland County Board of Commissioners, July 23, 1981. Revised May 1, 1994. Revised DMJ -MANUAL1 7 (249r, ETT-57 Allen, County Clerk Resolution #96151 June 27, 1996 Moved by Palmer supported by Quarles the resolution be adopted. AYES: Jacobs, Jensen, Johnson, Kaczmar, Kingzett, Law, McCulloch, McPherson, Moffitt, Obrecht, Palmer, Pernick, Powers, Quarles, Schmid, Taub, Wolf, Amos, Crake, Devine, Dingeldey, Douglas, Garfield, Holbert, Huntoon. (25) NAYS: None. (0) A sufficient majority having voted therefor, the resolution was adopted. THE FOREGo!N.r. PFSOLUTION 7/2 /T6 STATE OF MICHIGAN) COUNTY OF OAKLAND) I, Lynn D. Allen, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true and accurate copy of a resolution adopted by the Oakland County Board of Commissioners on June 27, 1996 with the original record thereof now remaining in my office. In Testimony Whereof, I have hereunto set my hand and affixed the seal of the County of Oakland at Pontiac, Michigan this 27th day of June 1996.