2023-013 Community Development Rental Repair Program February 17, 2023 Report No. 2023-013
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
Community Development Rental Repair Program
BACKGROUND:
On February 15, 2022, City Council adopted the Denton Affordable Housing Strategic Toolkit
(Toolkit), which included five recommended strategies with the activities targeted to deliver
affordable housing units by leveraging a variety of resources available from private and non-profit
developers,the City, and other housing stakeholders. The Toolkit strategies involve increasing the
number of affordable rental housing units. Activity 4 in Year 1 includes the creation of a rental
maintenance grant including a program for landlords who lease to low-moderate income
households.
During the June 25,2022, City Council budget retreat, Community Services staff presented budget
items for the 2022/23 Fiscal Year. Included in the presentation was a new Rental Repair Program
for landlords who lease to low-income households. During the budget discussions, Council
Members provided recommendations regarding program parameters.
DISCUSSION:
This report provides additional information ahead of the City Council meeting on February 21,
2023, when Council will consider approval of the program guidelines (ID 22-1791).
The objective of the City of Denton Rental Repair Program will be to increase affordable housing
within the city limits of Denton. The program will assist with essential repairs, structural
accessibility modifications, and/or repairs to major systems of recently acquired rental property.
Income for tenants must be below 80% of the Area Median Income Limits (AMI). Financial
assistance is available up to $24,500 per unit as a 5-year forgivable loan. The number of units will
be limited to 1-4 single-family or multi-family units. In exchange for the repair assistance, the
rental property owner agrees to rent the property to income-eligible tenants during the term of the
loan, known as the Affordability Period.
This is a pilot program and changes may be considered in the future,based on the findings.
Developing the Program Guidelines
Staff surveyed ten cities (attached) with rental repair programs to help determine program
guidelines. Program guidelines reviewed were service area, property requirements, income
maximums (owner and tenant), rent, maximum programs funds, owner-required funds, types of
units, and type of loan and lien period.
SERVICE AREA:
• Five of the ten cities surveyed provide the program city-wide. Four targeted specific
areas within the city limits.
February 17,2023 Report No. 2023-013
• The City of Denton program will provide grant funding to repair rental properties
located within the city limits of Denton.
PROPERTY REQUIREMENTS:
• All cities surveyed assist applicants with existing rental properties;three of the ten also
assist applicants with new properties.
• The City of Denton program will target new properties to increase the number of units
by providing grant funding to repair rental property that has not previously been rented
by the applicant.
INCOME MAXIMUMS (OWNER AND TENANT):
• All ten cities surveyed had a maximum income limit for the tenants but not for the
owner.
• The City of Denton program will require the applicant to rent to tenants at or below
80%AMI as defined by HUD.
RENT:
• All ten cities surveyed required Fair Market Rent rates.
• The City of Denton program will require rent limits using the HUD Fair Market Rent
rate updated annually.
MAXIMUM PROGRAMS FUNDS:
• The ten cities surveyed provide a range of funding from $5,000 to reconstruction.
• The City of Denton program will provide $24,500 consistent with other City repair
programs.
OWNER-REQUIRED FUNDS:
• Four of the ten cities surveyed require the owner to provide funds from 5% to 50% of
the total repair cost.
• The City of Denton program will require the owner to provide funds over $24,500
consistent with other City programs.
NUMBER AND TYPES OF UNITS:
• Four of the ten cities surveyed assist from one to four units but did not list the type of
units.
• The City of Denton program will limit the number of units from one unit to four units.
This includes single-family, duplex, triplex, and four Alex units. This excludes
properties with more than four units including multifamily housing.
TYPE OF LOAN:
• Six of the ten cities surveyed provide forgivable loans, and two cities require payable
loans.
• The City of Denton program will provide a forgivable loan allowed by HUD that is
forgiven at the end of the five year affordability period.
February 17, 2023 Report No. 2023-013
LIEN PERIOD:
• Four of the ten cities surveyed require five-year liens, three require ten-year liens, and
three required terms from five to twenty-year liens depending on the amount of
assistance.
• The City of Denton program will require a five-year lien during the period of
affordability.
Program Funding
Community Development staff submitted a funding application to the Community Services
Advisory Committee (CSAC) to establish the Rental Repair Program for $100,000. On April 8,
2022, the Community Services Advisory Committee (CSAC) recommended to City Council an
allocation of$100,000 in CDBG funds for the Rental Repair Program. The recommendation was
included in the 2022 Action Plan that City Council approved on July 19, 2022.
Additional funding for the Rental Repair Program for $100,000 was also included in the FY
2022/23 Annual Program of Services (Budget) and the Capital Improvement Program of the City
of Denton, Texas approved by the City Council on September 27, 2022.
CONCLUSION:
The program supports initiatives adopted by the Denton City Council as part of the 2020-2022
Consolidated Plan for Housing and Community Development and the Denton Affordable Housing
Strategic Toolkit. In the Plans, the City of Denton recognizes that affordable housing is essential
to the quality of life and building diverse and stable communities.
STAFF CONTACT:
Luisa Garcia, Community Services
REOUESTOR: Staff Initiated
PARTICIPATING DEPARTMENTS:
Community Services
STAFF TIME TO COMPLETE REPORT:
4 hours
February 17, 2023 Report No. 2023-013
Income
Property Maximums R Maximum Program Owner #of Type of Lien
City Program Area Requirements Rent Funds Per Unit Required Units Loan Period
Funds (yrs)
Owner Tenant
Rental Repair Not previously No Funds overForgivable
Denton,TX program City Limits rented Limit 80% FMR $24,500 per unit $24,500 1-4 Loan at end 5
of loan
Dallas,TX Landlord Program City Limits New&Existing 80% FMR $271,000/per unit N/A 1-4 3%Payable 5-20
Loan
25%
Michigan Eco match/non
Dev Corp CDBG Rental Rehab Targeted area Existing 80% FMR $100,000/per unit CDBG from N/A N/A 5
Owner
Florence Rental Housing Forgivable
City Limits Existing 80% FMR $15,000/per unit N/A N/A 10
Township,NJ Rehab Program Loan
Janesville,WI Rental Rehab City Limits Existing o 50-60% FMR Low interest
Program y g = $14,999/per unit N/A N/A Loan 10 15
3
City of Fremont Rental Rehab Forgivable
Newaygo Program Targeted area New&Existing 80% FMR $35,000/per unit N/A N/A loan 5
County,MI
Rental Rehab o 5%minimum Forgivable
Phoenix,AZ Program Targeted areas Existing 80/ FMR $40,000/per unit from owner 1 24 Loan 10
25%match
from owner
Rental Rehab owner pays for Forgivable
Battle Creek,MI Priority areas New&Existing 80% FMR $60,000/per unit lead-based N/A 5
Program loan
paint&
asbestos
February 17, 2023 Report No. 2023-013
Income
Property Maximums R Maximum Program Owner #of Type of Lien
City Program Area Requirements Rent Funds Per Unit Required Units Loan Period
Funds (yrs)
Owner Tenant
Match dollar
Targeted per dollar
Milwaukee,WI Rental Rehabilitation Investment Existing 800/ /p from owner Forgivable
FMR $14,999 er unit 1-4 5
Loan Program Neighborhood App Fees$50 loan
&Closing
Fees$246
Rental Rehab Loan Owner funds Loan/due
Saint Paul,MN Program City Limits Existing 60% FMR $40,000 if needed 1 7 Quarterly 10
Grant:$5,000 Grant 10-20
Single
Family/$75,000
2-unit bldg./$60,000
City limits/adjacent 3-unit bldg./$45,000
Napa,CA Rental Rehab unincorporated Existing 80% FMR 4-unit bldg./$30,000 N/A Forgivable
Program Napa County 5-unit N/A 10-20
pockets bldg./Decrease Loan
$30,000/unit by 2%
for
each additional unit
per building.