1994-188E:\~PDOC$\ORD\OPTRECON.O
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS,
APPROVING GUIDELINES FOR OPERATION OF THE CITY OF DENTON OPTIONAL
RECONSTRUCTION PROGRAM AND ELIGIBILITY CRITERIA; AUTHORIZING EXPEN-
DITURESi IN EXCESS OF $15,000 FOR PROJECTS MEETING PROGRAM GUIDE-
LINES AND CRITERIA; AND PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the city Council of the City of Denton recognizes the
need to assist low and moderate income families in securing safe,
sanitary and decent housing; and
WHEREAS, the city of Denton participates in a Housing Rehabili-
tation Program administered by the City of Denton Community Devel-
opment office and funded through a federal grant from the Depart-
ment of Housing and Urban Development; NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION I. That it approves the Optional Reconstruction
Program Guidelines and Optional Reconstruction Program Eligibility
Criteria which is attached to this ordinance as Exhibit "A" and
authorizes the city of Denton Community Development Office to
administer this program.
SECTION II. That it authorizes the expenditure of funds in
excess of $15,000 by the Community Development Office for projects
meeting program guidelines and criteria.
SECTION III. That this ordinance shall become effective immed-
iately upon its passage.
PASISEDAND APPROVED this the ~-~day of ~--~x._~, 1994.
BOB'CASTLE ~
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
A~oVED~ TO LEGAL FORM:
DEBRA A. DRAYOVITCH, CITY ATTORNEY
EXHIBIT "A"
CITY OF DBNTON
OPTIONAL RECONSTRUCTIO~ PRO~RAM
GUIDELII','ES
Unless herein stated otherwise, general operating procedures contained in the
City of Denton's Community Development Housing Rehabilitation Program Guidelines
will be followed.
I. pURPOSE
A. The City of Denton, Texas, will provide assistance necessary to
accomplish the reconstruction of dwellings not feasible for
rehabilitation through the Homeowner Rehabilitation Program. The
Optional Reconstruction Program will provide funds to temporarily
relocate occupants from dilapidated structures into adequate, decent
safe, and sanitary dwellings, demolish existing dilapidated
dwellings and reconstruct adequate, decent, safe and sanitary
replacement dwelling. In addition, the City will also promote the
elimination of slum and blight that exists in the City.
B. Reconstruction payments and assistance will be carried out under the
City of Denton's Community Development Program as an eligible
expense from project funds. Assistance shall be subject to the
availability of grant funds and U.S. Department of Housing and Urban
Development (HUD) implementing regulations. Administrative
procedures will be modified to meet any change in rules and
regulations of HUD which may occur over time.
II. DESIGNATED AUTHORITY
A. Administrative authority for implementation of the program will rest
with the City of Denton's Community Development Office. This office
will serve as the approving office for Rehousing Agreements and for
contractual and budget changes as needed for project completion.
B. The Community Development Administrator will have the responsibility
for final determination of the amount of reconstruction and
relocation assistance to be made available to individual applicants
in accordance with the implementing procedures. This determination
will be based upon evaluations of the costs to be incurred by
alternative housing options and upon needs of individual applicants
with respect to temporary relocation assistance and other expenses
required in order to facilitate the rehousing of the occupants.
C. The Community Development Administrator will be responsible for
approval of applicant eligibility for the program and final approval
of selection of applicants to be assisted. This will be based upon
relative need of applicants on the City's list of houses which have
been determined infeasible for rehabilitation under the City's
Housing Rehabilitation Program.
III. IMPLEMENTATION PROCESS
Steps in implementing the program will be as follows:
A. ! Community Development Office maintains list of applicants for
housing rehabilitation program assistance where a determination has
been made that the structure is not feasible to rehabilitate to
minimum standards under the City's Housing Rehabilitation Program.
B. Homeowner is notified that the rehabilitation of the structure has
been determined to be infeasible. Eligibility requirements for the
Optional Reconstruction Program must be met for applicants to be
placed on the Optional Reconstruction Program waiting list.
C. Staff evaluates applications for reconstruction assistance as
specified in Section VI. Staff processes applications as possible
under funding and staff limitations.
D. Homeowner is informed of available housing options, including
temporary relocation payments and assistance.
E. Homeowner submits a Replacement Housing Assistance Request,
acknowledging receipt of information explaining the city's program,
and requesting reconstruction payments and assistance to enable
homeowner to obtain suitable and adequate housing.
F. Community Development Staff determine whether or not approval of
homeowner's Replacement Housing Assistance Request reasonably may be
expected to result in the successful and feasible rehousing of the
homeowner. In cases where the homeowner's general health or income
level would preclude his or her adequate and responsible operation
of a replacement dwelling; and/or cases in which the costs of the
replacement dwelling would be substantially above the costs of
typical cases; and to the extent that the probability of the City
reaching its Community Development Program goals would be endangered
due to cost overruns, the homeowner's request may be denied. The
homeowner will be notified in writing of the determination and, if
the request is not approved, the reasons for denial. When the
determination is approval of the applicant's request, a Notice of
Approval will be sent informing the homeowner that the city is
authorized to enter into a Rehousing Agreement with the homeowner
for a specified Replacement Housing Payment determined appropriate
by the city pursuant to its Reconstruction Policy. Prior to any
agreement being executed between the homeowner and the City, the
community Development Office will comply with the public disclosure
and notification/authorization to and from HUD requirements
according to 24CFR Part 70, Section 104(d), Reconstruction and One-
for-One Replacement Housing Requirements.
G. A Rehousing Agreement is executed between the homeowner and the
City, under the terms of which the homeowner agrees to move
permanently and voluntarily from the dwelling on or before a
specified date. The City agrees to provide the homeowner with a
specified amount of Replacement Housing Payment to be used for the
sole purpose of obtaining a suitable decent, safe, and sanitary
replacement dwelling.
H. Community Development Staff will provide counseling and assistance
as needed to approved homeowners in order to facilitate the
homeowner's rehousing, including referrals to builders, suppliers,
etc.; and in extreme hardship cases, provision of temporary housing
or reimbursement of temporary housing expenses and reimbursement of
moving, storage, and other necessary expenses related to rehousing
the applicant as specified in the terms of the Rehousing Agreement.
I. The homeowner and the Community Development office agree to the
arrangement and method of the approved payments, the homeowner will
Revised 8/16/9& Page 2
execute a contract with a builder for the selected replacement
.dwelling. The homeowner will also contract for the demolition of
the substandard dwelling and for lot and site clearance and
preparation.
K. When appropriate, the homeowner voluntarily vacates the substandard
dwelling.
L. The replacement dwelling is constructed and appropriately inspected
by the City to determine adequacy and compliance with City codes.
M. City certifies that the replacement dwelling is decent, safe, and
sanitary and ready for occupancy. City issues Certificate of
Occupancy.
N. Homeowner accepts replacement home.
O. Ail remaining approved payments are made to homeowner at a formal
closing ceremony, and homeowner acknowledges receipt of payment.
P. Upon completion of all actions in regards to reconstruction,
homeowner acknowledges in writing that all payments, assistance, and
conditions of the Rehousing Agreement have been received to the
applicant's satisfaction.
Q. Homeowner occupies replacement structure.
IV. ELIGIBILITY REQUIRE~ENTS
Eligibility for reconstruction payments and assistance shall be estab-
lished as follows:
A. Applicant must have applied for rehabilitation assistance under the
City of Denton's Housing Rehabilitation Program.
B. Applicant must have been rejected for rehabilitation assistance on
the grounds that the applicant's occupied dwelling was not feasible
to rehabilitate.
C. Applicant must be an owner occupant of the dwelling for which
rehabilitation assistance is requested and reside within the city
limits of Denton. The dwelling must be the applicant's principal
residence for a minimum of 2 years prior to the submission of a
completed application for assistance.
D. Applicant must present proof of ownership by General or Special
Warranty deed. City staff will verify proof of ownership with title
searches as necessary on the property where the dilapidated
structure exists and/or the site where the replacement housing will
be built. In situations where the applicant does not have clear
title, attempts to clear the title will be initiated with the
assistance of the applicant. When meeting this guideline require-
ment is not feasible, applicant must present proof of ownership
(General or Special Warranty Deed) showing fee simple title of 50%
or more ownership in the applicant's name. (All other title holders
will be requested to relinquish their title rights to the appli-
cant.) Applicants with less than 100% fee simple title must have a
continuing right to occupy the premises. Applicant must provide
documentation for all existing liens. All current lienholders will
be requested to subordinate their lien position to the City.
Revised 8/16/94 Page 3
E. Applicant must establish that all property taxes are paid on the
.property to be vacated (and/or the proposed construction site) and
that all other liens are satisfied or released. No assistance will
be provided on properties with taxes in arrears. The City will
relinquish first lien position only to a mortgage company. In all
other cases, lienholders will need to relinquish first lien position
to the City.
F. Applicants shall provide complete and accurate information regarding
their household composition, household income, and housing situa-
tion. Failure to disclose information which may affect eligibility
requirements shall also constitute fraud. Applicants shall be
required to make full restitution to the City in the event Community
Development services are provided to applicants who provided
inaccurate or incomplete information in order to meet eligibility
requirements. Requests for further assistance will be denied unless
restitution is made in full.
G. Applicants must be certified as financially able to maintain their
housing expenses.
H. Applicants will agree to conform with Denton Code Enforcement
requests prior to being determined eligible for replacement housing
assistance. Applicants agree to maintain dwelling and exterior
grounds in accordance with applicable city ordinances.
I. Applicants will be encouraged based on individual needs to attend
Community Development homeowner education classes, with emphasis
being placed on maintenance, budgeting, cost effective decorating,
and responsibilities of home ownership when available.
V, FEASIBILITY OF REHABILITATION
A. Feasibility of rehabilitation of property to minimum program
standards will be made following a detailed inspection of the
property by Community Development Program staff. This inspection
includes completing a list of deficiencies which must be corrected
in order to bring the structure into compliance with HUD codes and
City of Denton codes as defined in the Uniform Building Code, 1991.
B. Feasibility of rehabilitating structures under established program
limits will be determined by an assessment of the following
criteria:
The estimate costs needed to correct all code violations and
to correct all deficiencies in order to bring a structure into
compliance with HUD codes and City rehabilitation standards
must fall below program limits and, the estimated cost to
rehabilitate shall not exceed 75 percent of the total esti-
mated after rehabilitation value of a structure.
Units not meeting these standards will be determined infeasible for
rehabilitation assistance and, therefore, may be eligible to apply
for reconstruction assistance.
VI. SELECTION OF RECIPIENTS FOR ASSISTANCE
Revised 8/16/94 Page
A. Initial recipients of this program will be taken from the list of
~homeowners residing in structures determined to be infeasible to
rehabilitate. Additional recipients will be added during subsequent
operation of the City of Denton Housing Rehabilitation Program.
B. The number of recipients to receive assistance will be subject to
availability of funds.
C. Applicants will be placed on a waiting list for reconstruction
assistance based on the time and date they originally applied to the
Community Development Office for assistance.
VII. FORMS OF ASSISTANCE AND ALLOWABLE EXPENSES
The primary form of assistance to be provided will be the use of HOME
grant funds to pay for the cost of the replacement dwelling. The maximum
allowable HOME Subsidy Limits listed below are the maximum budget total to
be spent on a project. Project costs include, but are not limited to, the
cost of demolition, site preparation, temporary rehousing expenses, cost
of replacement dwelling, etc. These limits are:
Number of bedrooms Maximum HOME Subsidy Limits
1 $41,054.00
2 $49,921.00
3 $64,581.00
4 $70,890.00
In cases of both rehabilitation or replacement dwelling, no reconstruction
will net fewer bedrooms than the number of bedrooms a family has before
reconstruction. Room additions and improvements to relieve serious
overcrowding may be eligible only with the approval of the community
Development Administrator. In general the City will follow the standards
consistent with the applicable Housing Quality Standards described at
24CFR 882.209(b)(2) when considering the number of bedrooms needed to
avoid overcrowding: '
~ of Occugants in Household
~ of Bedrooms Minimum Maximum
2 i 4
3 3 6
4 6 8
Generally, these standards allow for two persons of the same sex per
bedroom.
The City of Denton has four financial assistance categories for those who
qualify for the Optional Reconstruction Program. These categories are
based on the Oualifvinq Income Limits and Ranqes for the City of Denton's
Federally Assisted Proqrams (see appendix to these guidelines for current
income limit ranges). A description of the financial assistance
categories and their requirements are:
Revised 8/16/94 Page 5
A. Twenty Percent Reconstruction Loan/Eiqhty Percent Deferred Payment
Loan:
Clients whose gross annual household income falls above 65% up to
80% of Denton's MSA median family income limits will qualify for
this two-part loan;
1. a 3% interest loan with the loan amount being based on 20% of
the total project cost (excluding temporary relocation and
demolition costs). The 3% loan will be amortized over a 10-
year period (120 months). The lien will not be released on
this part of the loan until all 120 payments are received in
full by the City of Denton; and
2. a deferred payment loan with the loan amount being based on
80% of the total project cost (excluding temporary relocation
and demolition costs). A detailed description of the deferred
payment loan is found below after section VII.D.
B. Ten Percent Reconstruction Loan/Ninety Percent Deferred Payment
Clients whose gross annual household income falls above 50% up to
65% of Denton's MSA median family income limits will qualify for
this two-part loan;
1. a 3% interest loan with the loan amount being based on 10% of
the total project cost (excluding temporary relocation and
demolition costs) to be amortized over a 10-year period. The
lien will not be released on this part of the loan until all
120 payments are received in full by the City of Denton; and
2. a deferred ~ayment loan with the loan amount being based on
80% of the total project cost (excluding temporary relocation
and demolition costs). A detailed description of the deferred
payment loan is found below after section VII.D.
C. Five Percent Reconstruction Loan/Ninety-five Percent Deferred
Payment Loan
Clients whose gross annual household income falls above 30% up to
50% of Denton's MSA median family income limits will qualify for
this two-part loan;
1. a 3% interest loan with the loan amount being based on 5% of
the total project cost (excluding temporary relocation and
demolition costs) to be amortized over a 10-year period. The
lien will not be released on this part of the loan until all
120 payments are received in full by the City of Denton; and
2. a deferred payment loan with the loan amount being based on
95% of the total project cost (excluding temporary relocation
and demolition costs). A detailed description of the deferred
payment loan is found below after section VII.D.
D. Two and one half Percent Reconstruction Loan/Ninety-seven and one
half Percent Deferred Payment Loan
Revised 8/16/94 Page 6
Clients whose gross annual household income falls at or below 30% of
~Denton's MSA median family income limits will qualify for this two-
part loan;
1. a 3% interest loan with the loan amount being based on 2.5% of
the total project cost (excluding temporary relocation and
demolition costs) to be amortized over a 10-year period. The
lien will not be released on this part of the loan until all
120 payments are received in full by the City of Denton; and
2. a deferred payment loan with the loan amount being based on
97.5% of the total project cost (excluding temporary reloca-
tion and demolition costs). A detailed description of the
deferred payment loan is found below.
*DESCRIPTION OF A DEFERRED pA%q~ENT LOAN
A deferred payment loan shall carry 0% interest and continues until
the applicant satisfies the conditions listed in the promissory note
executed prior to project start date. There are no monthly
payments. Deferred payment loans are secured by a lien on the
property. The lien will be for 120 months (TEN years). For each
month the homeowner lives on the property, 1/120 of the total
deferred payment loan amount will be forgiven. If the reconstructed
dwelling is sold or transferred before the lien period expires, the
homeowner is credited for every month spent in the house. The
credit is subtracted from the total loan amount. The unforgiven
balance is owed and becomes due upon sale or rental of the property
to the Community Development Program and received and used thereof
as program income. The City of Denton will be in the 1st lien
position on all reconstructed dwellings. However, in situations
where 1st lien position is not feasible, the City will accept a
lower lien position subject to the review and approval of the
Community Development Administrator. The lien will not be forgiven
until the following conditions are met:
1. the homeowner must reside in the unit for a period not less
than ten years; and
2. the property must be maintained to meet city code require-
ments; and
3. mortgage payments must be met on a timely basis; and
4. homeowner must provide documentation of adequate homeowner's
insurance, including casualty and fire coverage, and the City
must be listed on the Certificate of Insurance to be notified
in case of policy cancellation; and
5. in the event of a sale or transfer of ownership during the
ten-year period, the following conditions will apply:
a. sell or offer the assumption of the loan to a low/moder-
ate income family approved by the Community Development
Office; or
b. make the unit available for lease to a low-moderate
income family by making the unit priced affordable and
maintaining the unit to meet applicable city codes.
If within this ten-year period the homeowner defaults on their deferred
payment loan, and/or if the homeowner defaults on payments on their 3%
Revised 8/16/94 Page 7
interest loan, the loan will be called due in full and foreclosure
proceedings may be initiated. The City will make every effort to work
with the homeowner to avoid foreclosure and will examine each situation on
a case by case basis.
E. Allowable expenses will include:
1. Cost of total demolition and clearance of the dilapidated
structure, lot clearance, and preparation of job site for new
replacement dwelling.
2. City approved actual and reasonable moving expenses, plus
storage of homeowner's belongings as needed.
3. Cost of utility and appliance transfers and hookups as
necessary (excluding cable TV).
4. City approved legal and filing fees necessary to obtain a
clear title to property.
5. Cost of temporary housing in extreme hardship cases when
determined necessary by the community Development Administra-
tor.
6. Other expenses the Community Development Office determines to
be necessary to facilitate the relocation of the homeowner.
7. Cost to reconstruct safe, sanitary, decent replacement
dwelling.
F. community Development staff will also provide assistance and
counseling to applicants as needed, including the following:
1. Information on the program and rehousing options available.
2. Assistance in soliciting bids for replacement housing.
3. Assistance in temporary relocation and related concerns.
4. Assistance in contractual compliance between homeowner and
contractor.
5. Assistance in inspection of construction of replacement
dwelling, if applicable.
6. Assistance to applicant in evaluation of future maintenance
burdens of various housing options.
VIII. REHOUSING AGREEMENT
A. Each applicant assisted through the program will sign a Rehousing
Agreement with the City which outlines the responsibilities of each.
The agreement establishes a date on which the homeowner agrees to
permanently vacate the present structure, agrees to demolition of
the present dilapidated structure, agrees to occupy the replacement
structure when structure is completed and ready to be inhabited, and
agrees that temporary housing will terminate when structure is ready
for occupancy as determined by the City of Denton.
Revised 8/16/94 Page 8
B. The Rehousing Agreement outlines the City's responsibility to
provide replacement housing payment, that includes bearing the cost
of temporary relocation and moving expenses that have been deter-
mined reasonable, and obligates the City to bear the cost of utility
and appliance hookups and other fees which may be necessary to make
the rehousing possible.
XI, FINAL INSPECTION - CERTIFICATE OF OCCUPANCY
The City of Denton will be responsible for final inspection of all housing
units made available through the program to determine that the replacement
unit made available through the program to determine that the replacement
unit and all items identified in a "punch list" have been corrected. This
Certificate of Occupancy will serve as evidence to HUD of the City's
determination that the dilapidated structure has been replaced by a
decent, safe, and sanitary dwelling and that the family has been
successfully relocated.
Revised 8/16/94 Page 9
CITY OF DENTON
COMMUNITY DE~LOPMI~NT PROGRAM
OPTIONAL RECONSTRUCTION PROGRAM
REHOUSING AGREIEMENT FOR HOMEOWNERS
THIS AGREEMENT, made and entered into FIELD(l), by and between
the city of Denton, Texas, and FIEI~(2) hereinafter referred to
as Owners. This agreement covers the structure occupied at the
following legal address:
WHEREAS, The Owner has heretofore requested and qualified for the
Homeowner Rehabilitation Program with assistance from the city in
order to obtain adequate, decent, safe, and sanitary housing
under the C~ty's community Development Block Grant and HOME
Program; and
W~EREAS, the City has determined that rehabilitation of the
Owner's residence is not a feasible alternative; and
WHEREAS, the city has determined that it is appropriate under the
community Development Program to provide the Owner certain
relocation payments and assistance necessary to accomplish the
voluntary relocation of the Owner from the substandard,
unrehabable dwelling currently occupied into an adequate, safe,
and sanitary replacement dwelling.
NOW, T~REFORE, the city and the Owner for and in consideration
of the covenants and promises as hereinafter set forth, do agree
as follows:
1. The owner agrees to vacate permanently the currently
occupied substandard dwelling within 10 days notice by
the City for the need to vacate.
2. The Owner agrees and hereby authorizes the demolition
and removal of the currently occupied dwelling and
clearance by the City of the property. The Owner
further releases the City from any and all claims
arising from this action.
3. The owner agrees to take possession and occupy the
replacement dwelling when such dwelling is completed
and the city determines it to be ready for occupancy.
The Owner further agrees to sign any required
instruments to effect this item.
4. The city agrees, subject to the provisions of the
City's Optional Reconstruction Program Administrative
Guidelines, to provide the Owner a Temporary Housing
Payment.
5. The maximum budget authority for the Optional
Reconstruction Program is FIHLD(4), which includes, but
is not limited to, the cost to demolish the existing
dilapidated structure, approved Temporary Relocation
Payments and the cost to reconstruct an adequate,
decent, safe, and sanitary replacement dwelling on the
original site (lot) of the dwelling vacated by the
homeowner.
6. If required, the city agrees to pay a Temporary Housing
Payment: Utility transfer or hook-up fees determined
by the City as necessary; approved moving and related
expenses necessary to effect the moving of the Owner's
personal belongings from the eriginal vacated dwelling
into temporary housing and back into replacement
dwelling; and other expenses determined necessary by
the City to complete the rehousing of the Owner.
HOMEOWNER DATE HOMEOWNER DATE
C~TY OF DENTON~
BARBARA ROSS~ COMMUNITY
DEVELOPMENT ADMINISTRATOR
NANCY BAEER~ HOUSING
REHABILITATION SPECIALIST
MERGE FIELD DOCUMENT EXPLANATION:
FIELD 1 = DATE DOCUMENT WILL BE SIGNED
FIELD 2 = NAME(S) OF HOMEOWNER SIGNING DOCUMENT
FIELD 3 = LEGAL PROPERTY DESCRIPTION OF DWELLING TO BE
I{E CONSTRUCTED
FIELD 4 = MAXIMUM ALLOWABLE FUNDS FOR PROJECT: I.E., 1 BDRM --
$41,054; 2 BDRM = $49,921; 3 BDRM = $64,581; AND 4 BDRM
= $70,890. (TP~ESE DOLLAR AMOUNTS ARE SET BY HUD FOR
THE DENTON AREA AND WILL BE CHANGED TO REFLECT HUD~S
REQUIREMENTS FOR DENTON AS DIRECTED. )