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2005-305 S;\Our DocIlffiClltsIQ,dinal>Ccs'Jl5\HolllcJmP'ovcmcm Program Ord.doc ORDINANCE NO. 2.()()5-.305' t~~ ~; , AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, [! APPROVING GUIDELINES FOR OPERATION OF THE CITY OF DENTON HOME IMPROVEMENT PROGRAM AND ELIGIBILITY CRITERIA; AUTHORIZING EXPENDITURES IN EXCESS OF $25,000 FOR PROJECTS MEETING PROGRAM GUIDELINES 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 Home Improvement Program administered by the City of Denton Community Development Division and funded through a federal grant from the Department of Housing and Urban Develop~ent; and WHEREAS. The City Council deems it to be in the public interest to approve the Program " Eligibility Criteria for the 2005 Program year; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Council approves the 2005 Home Improvement Program Guidelines and Home Improvement Program Eligibility Criteria which are attached hereto and made a part of this ordinance for all purposes as Exhibit "A" and authorizes the City of Denton Community. Development Division to administer this program. SECTION 2. The City Council authorizes the expenditure of funds in excess of$25,000 the Community Development Division for projects meeting Program Guidelines and Criteria, subject to compliance with competitive bidding laws, where applicable. SECTION 3. This ordinance shall become effective immediately upon approval. PASSED AND APPROVED this the M day of its passage and ~kA/ C~~JL j~: , ,2005. EULINE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY"' BY: ~. S:'Ou, DocUn'ellU\Ordin.n<eol.05\Homc r",prOVClllCllI Program Ord.doc " ',< APPROVED AS TO LEGAL FORM: EDWIN M. SNYDER, CITY ATTORNEY BY: Page 2 of2 Exhibit A 2005 Home Improvement Program Guidelines . ,\'1/ ~~ ~I Ii ISeCID I ::;>,> tit 'OUAl""U"~G OPPORTUNITY Available in Spanish I Disponible en Espanol Effective Date: 1010112005 tit ~~'m~i~ 1 Applicant(s) Is Subject To All Guideline Changes Up To The Time Contracts Are Signed And Project Begins 2 T ABLE OF CONTENTS INTRODUCTION .. ....... ....... ..... ... .... ... .......... ..... ... .......... ........ ..... ... ... ....... ... ... ... .... ... ... ..... ....... ... ... ... ... ...... .... .... ..... ... ...... ..... 4 Home Improvement Program........................................ ......................................... ......... ........... ............ .............. ...............,.. 5 Description of General Program Procedures..... .................. .......... ................... ..................... ....... .......................... ........ ... .....5 1. PURPOSE ... .................................................................................................. ......................................... .................. 5 II. DESIGNATED AUTHORITY ...............................:.................................................................................................5 III. ELIGIBILITY REQUIREMENTS: .... ............. .............................. ........... ..... ............... ............ .............. .................. 5 A. Applicant(s) / Household Eligibility Requirements: ........................................................................................5 B. Property Eligibility Requirements...... ..... ............... ................... ................ ..... ....... ..... ....... ......................... ...... 6 APPLICATION PROCESSING........ ..... ........ ............. ..................... .......... ...... ....................... ................... .............. 7 SELECTION OF RECIPIENTS FOR ASSISTANCE .............................................................................................7 WAIVERS AND APPEALS PROVISION .............................................................................................................. 8 FINANCIAL ASSISTANCE. ..... ... ... ... ....... ... ... ....... ... ....... ... ... .... ... ... ... ................ ... ... ...... ... ... .... ...... .... ..... ... ............8 CONTRACT REQUIREMENTS ............................................................................................................................. 8 PROJECT FEASIBILITY CRITERIA ........ ............. ............. ................ .......... ............... ..... .......... ....... ............... ..... 9 PROJECT COST LIMITS..... ..................... ............. ............. ............. ..................... ....... ........ .... ............................. 10 ALLOWABLE EXPENSES................................................................................................................................... 10 PROGRAM ACTIVITY OPTIONS.... .......... ........ ...... ..... ........ ........ ........................ ............ .................... ............... 10 A. Owner-Occupied Rehabilitation .................................. ..................... ......... ........... ............. ............. ........ ........ 11 B. Optional Reconstruction ...............................................................................................................................11 C. New Construction Assistance........................:............................................................................................... 11 XIII. CONTRACTOR SELECTION AND PROJECT MONITORING......................................................................... 11 XIV. PAYMENTS TO CONTRACTOR ........................:...............................................................................................12 XV. CONTRACTOR DEBARMENT ...........................................................................................................................13 APPENDICES .. .... .... ...... ... .... ..... ... ... ..... ... ... ... .... ... ... ..... ..... ." ... .... ... ... ... .... ... ...... ....... .... ..... ... ... ...... ... ... ...... ..... ... ............ ..... 14 APPENDIX 1 QualifYing Income Limits for Federally Assisted Programs......................................................................... 15 Moderate........ ...... ............................. ....... ...... ............. ............. ........................ ........... ............ ................................ 15 Low .......................................................................................................................................................................15 Very-Low. ....... .... ... ......... ... ... ..... ... ... ... .... ... ... ....... ... ... .... ... ... ... .... ... ... ... ....... ... ......... ... ... ... ... ... ... ....... .... ..... ... ... .... .... 15 , Extremely-Low.............................................. ............. ............................ ..... ........ ....... ............ ...... ............. ...... ....... 15 2004 Maximum Home Per-Unit Subsidy Limits for Denton ..............................................................................:...15 95 Percent of the 2005 Single Family Mortgage Limit for Denton = $162,360......................................................15 - APPENDIX 2 Targeted Neighborhoods Map......................................................................................................................16 APPENDIX 3 Optional Reconstruction Assistance Application & .....................................................................................17 Temporary Relocation Questionnaire........................... ..................... ........................................................ ........ .................. 17 APPENDIX 4 Optional Reconstruction Rehousing Agreement .........................................................................................18 APPENDIX 5 New Construction Assistance Application And Questionnaire ................................................................... 19 APPENDIX 6 New Construction Housing Agreement.......................................................................................................20 APPENDIX 7 Space & Amenity Allowances For Reconstruction & New Construction Activities ...................................21 IV. V. VI. VII. VIII. IX. X. XI. XII. 3 INTRODUCTION The City of Denton Home Improvement Program's objective is to assist low and moderate-income families with securing safe, sanitary and decent housing. This objective is accomplished through owner-occupied rehabilitation, optional reconstruction or new construction activities. Rehabilitation of an owner-occupied dwelling corrects code violations and makes needed repairs when a dwelling is feasible for rehabilitation. When a dwelling is not feasible for rehabilitation, the applicant may be eligible for a replacement single-family dwelling. New construction provides affordable homeownership opportunities to eligible low-income renters or displaced households who own eligible land. Both optional reconstruction, and new construction activities provide funds to demolish dilapidated dwellings and construct new modest, energy efficient and safe single- family dwellings on owners' lots. The Home Improvement Program is administered by the City of Denton Community Development Division and is funded by federal grant dollars from the United States Department of Housing and Urban Development (RUD), participating owner funds, program income and other grant and private dollars, when available. The following pages contain a detailed description of the Home Improvement Program including program and project guidelines, policies and procedures and application and project bidding eligibility criteria. The purpose of the guidelines is to explain to potential applicants and the citizens of Denton , the Home Improvement Program and the levels of assistance available. For further information or clarification of the guidelines, please contact the: Community Developmeut Division 101 S. Locust Street, Suite 500 Denton, Texas 76201 (940) 349-7726 (Located on the Denton Square in the Wells Fargo Bank Building - Fifth Floor) '4 Home Improvement Program Description of General Program Procedures I. PURPOSE A. The City of Denton Home Improvement Program provides technical and financial assistance for eligible low and moderate-income households to complete rehabilitation, reconstruction or new construction activities to provide, as their principal residence, modest, decent, safe and sanitary single-family dwellings. B. Assistance shall be subject to the availability of grant funds, program loan income and HUD implementing regulations. Administrative procedures will be modified to meet any change in rules and regulations ofHUD that may occur over time. II. DESIGNATED AUTHORITY A. Administrative authority for implementation of the program will rest with the City of Denton Community Development Division. Community Development staff approves rehousing/housing agreements, 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 assistance to be made available to individual applicants, in accordance with the implementing procedures. 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. III. ELIGIBILITY REQUIREMENTS: Eligibility requirements must be met for both the applicant's household and the property. Eligibility for assistance is completed in two phases as described in sections A. and B. below. A. Applicant(s) / Household Eligibility Requirements: 1. Must be a United States citizen or a legal resident alien. 2. Must have owned and occupied the dwelling for not less than three consecutive years. (The period oftime an applicant has lived in a property under a lease for purchase or contract for deed form of purchase may be taken into consideration in calculating the three consecutive years.) New construction applicants must have owned property for not less than three consecutive years. 3. Must hold a Fee Simple Title to the property. City staff will verifY ownership through a general title search. a. If applicant is purchasing their home by a "contract for deed" (or a like contract), where applicant does not gain title to the property deed until all contractual obligations have been met, applicant is not eligible for assistance. The seller must provide the purchaser with a filed warranty deed on the property to satisfY this eligibility requirement. b. If applicant(s) inherited the property, the legal documents establishing applicant(s) has fee simple title to the property must be on file in the Denton County Clerk's Office. Applicant must provide proof of financial responsibility for the properly (i.e. tax payments, and/or utility payments, fee simple title, executed, filed affidavit of heirship, etc.), and, except for new construction assistance, proof of residency, both, for not less than the most recent, three consecutive years. 4. Must meet program's income limits. a. Gross annual total household income is at or below the following, adjusted for family size. Current maximum income limit by household size is: 5 Number of People Livina in Household 1 2 3 4 5 6 7 8 Rehabilitation f Reconstruction 80% of the AMI Maximum Income Limit $37,250 $42,550 $47.900 $53,200 $57,450 $61,700 $65,950 $70,200 New Construction: 65% of the AMI Maximum Income Limit $30,250 $34.600 $38,900 $43,250 $46,700 $50,150 $53,600 $57,050 b. Must not have assets (total combined for all household members) in excess of$100,000. New construction: Must not own standard renter or owner-occupied property. NOTE I: The appraised value of the applicant's property is excluded in total assets calculation. NOTE 2: Annual income and asset income are calculated using HUD's most current Section 8 Income guidelines and rules as established in the Technical Guide for Determining Income. 5. Must be in good credit standing with and exhibit the financial ability to pay creditors, including the following basic housing expenses: a. Home Mortgage Payment, including the loan with the City of Denton for Home Improvement assistance. b. Loan and revolving credit payment(s). c. Property Taxes (City, County, DISD) for all owned properties. d. Homeowner's Insurance Policy premiums e. Utilities: electrical/water/sewage/solid waste and gas 6. Applicants denied assistance due to poor credit history may be reconsidered for the program upon verifiable completion of six (6) consecutive months of successful debt management with Consumer Credit Counseling of North Texas or other debt management companies with written approval. Note: Debt management will be recertified prior to signing contracts. , 7. Must demonstrate that income exceeds projected housing expenses and the ability to maintain the dwelling. 8. Homeowner may be required to provide owner contribution toward project cost (see Section VII.A.). 9. Pre-existing mortgage note balance cannot exceed 80 percent of the property's appraised value for rehabilitation and 70 percent ofthe property's appraised value for reconstruction. - 10. New construction activity required property to be 100% owned with no prior liens. NOTE: The City of Denton reserves the right to request an independent market analysis. B. Property Eligibility Requirements I. Must be zoned to allow for single-family construction and be situated in a Targeted Neighborhood within the city limits of Denton (Refer to Targeted Neighborhoods Map - Appendix 2). 2. Must exhibit building code deficiencies that make the dwelling unsafe or unsanitary. New construction is exempt from this requirement. 3. May not have existing property code violations (such as high weeds, trash, debris, junk vehicles, etc). Any liens placed on a property for correcting any past or present code violations must be paid in full by the time application processing occurs. Any items cited as a code violation must be removed or corrected from the property before assistance is rendered. 4. Must be serviced or be accessible to a City-approved water supply, sanitary sewer and electrical system. 5. Must meet all ofthe City of Denton's Land Development Codes. 6. Must comply with and meet all environmental regulations; i.e., historical, floodplain, noise, lead, etc. 7. May not exceed Community Development Division Replacement Housing Space Allowances Policy for new construction and reconstruction. proje'cts that would exceed the set standards due to property deed restrictions or neighborhood minimum requirements are not eligible for assistance. , 6 IV. 8. Must be covered by an approved homeowner's insurance policy. NOTE: If an applicant's property is not curreniIy insurable because of its present condition or the property has no structures, the applicant must sign a HOMEOWNER AFFIDAVIT OF UNDERSTANDING AGREEMENT FOR HOMEOWNER'S INSURANCE to satisfy this eligibility requirement. Proof of homeowners insurance must be provided at completion of a rehab, reconstruct or new construction. 9. A property that has been previously assisted with Federal or State grant funds after March 1996 is not eligible for assistance. Properties having received assistance before April 1996 may be eligible for additional assistance after eight (8) years from the date of the last assistance. Provided all liens have been paid and/or released. 10. With the exception of I.B.9., households previously assisted with HOME funds may be eligible for rehab assistance based on availability of funds and federal regulations. APPLICATION PROCESSING A. To be placed on the waiting list, applicants must meet the following guidelines: 1. Household's total gross annual income does not exceed current program income limits. 2. Owner is living in and owns a single-family dwelling for not less than two consecutive years. New construction: Owner must have owned property for two consecutive years. 3. Property is located in a Targeted Neighborhood (see Appendix 2). 4. Applicant must complete a Waiting List Application Form and attach a copy of property deed or proof of ownership. (Waiting List Application Forms are available at the Community Development Division, lO 1 S. Locust Street, Suite 500 Denton, Texas, 176201,940-349-7726.) B. Prospective applicants are assigned the next available number on the waiting list in the order the completed waiting list application is received by the Community Development Division. C. When applicant reaches the top of the waiting list, s/he will be notified in writing to complete the application process and must provide all items requested per checklist. Further documentation, in addition to items listed on the checklist, may be required to process application. NOTE: Deadlines given for contacting the COInmunity Development office to make an appointment to apply and those given for submitting application information will be stated in the notice to apply letter. The deadlines will be enforced. " D. Applicant must provide all information requested and information must be complete and accurate regardir,g their household composition, household income, and housing situation. All information submitted by the applicant must be current and up to date. All information will be veriticd and recertified by Community Development staff as required by Federal regulations. Any intentionally falsified information will cause the application to be rejected and the applicant will not be allowed to reapply. Failure to disclose information that may affect eligibility requirements shall also constitute fraud. Applicants shall be required to make full restitution to the City in the event Community Development 'Division services are provided to applicants who provide inaccurate or incomplete information in order to meet eligibility requirements. E. Applicant must attend a credit, debt and monthly expenses evaluation meeting with Consumer Credit Counseling Services, Inc. F. Applicant must attend a Successful Homeownership Workshop, with emphasis being placed on maintenance, budgeting, cost effective decorating, and responsibilities of home ownership. G. Community Development staff will notify eligible applicant(s) of the financial assistance category he/she is eligible for under the program guidelines. Applicant will be notified that final eligibility for assistance is determined upon completion of the feasibility study of the property. Ineligible applicants will be notified of the reason their application for assistance is being rejected. H. Any applicant who feels that s/he has been unjustly denied assistance under the Home Improvement Program should follow the appeal procedure outlined in Section VI. V. SELECTION OF RECIPIENTS FOR ASSISTANCE 7 VI. VII. VIII. A. Date Qf application completion and eligibility will determine the order of assistance. B. Community Development Staff will provide counseling, and assistance as needed, to applicants in order to facilitate the applicant's rehousing/housing, including the following: I. Information on the program and rehousing/housing options available. 2. Assistance in soliciting bids for replacement housing. 3. Assistance in contractual compliance between applicant and contractor. 4. Assistance in inspection of construction of replacement dwelling, if applicable. WAIVERS AND APPEALS PROVISION A. Request for Waiver: The City of Denton Home Improvement Program has been developed to adhere to a set of guidelines in order to assure proper administration and management. In the event that an applicant feels that his/her circumstances require special consideration, s/he can request, in writing, a waiver from the usual requirements. All requests should specify the requirement(s) to be considered for waiver and state the applicant's reason(s) or special circumstances why s/he believes a waiver should be approved. The Community Development Administrator will review requests on a case-by-case basis. Applicant will be notified in writing of the final decision. B. Appeals Procedure: Applicants, who have been, determined by the Community Development Administrator to be ineligible for assistance, may appeal this decision to the Department Director. A written appeal must be submitted. C. The Department Director shall issue a written response within fifteen days of receiving the request. FINANCIAL ASSISTANCE A. Owner Contribution is a percentage of the total project cost that the applicant must provide at contract signing. These funds are held in an escrow account and will be expended before City funds are used when making contractor payments. Owner contribution increases on a sliding scale as household income increase~, See Appendix I for percent of owner contribution by income ranges and family size. R City Of Denton Funds: The City of Denton will fund the remaining project costs using Federal HUD CDBG and HOME dollars, program income and private funds, when available. C. Term of the Note is determined by the activity to be completed and/or total project cost as follows: Activitv / Proiect Cost Term RehabilitationlBelow $10,000 60 months ( 5 years) Rehabilitation/Between $10,000 - $25,000 120 months (10 years) Rehabilitation/Above $25,000 180 months (15 years) Reconstruction and New ConstructionlTotal C~nst 240 months (20 years) D. Financial Assistance Levels: The City-funded dollars are payable through a two-part loan. See Appendix I for income ranges by household size, payable to deferred loan ratios and description of Payable and Deferred loans E. Applying to the Home Improvement Program is voluntary. Funds for temporary relocation are not provided. CONTRACT REQUIREMENTS A. Liens are in effect until all requirements ofthe deed and promissory note are satisfied. The City of Denton will be in the first lien position. When a first lien position is not possible, the City may accept second lien position, subject to the review and approval of the Community Development Administrator. Property approved for the new construction activity must be free of all liens and City of Denton will be in the first lien position. Liens are released once all the requirements and conditions of the deed and note have been met. B. If the applicant defaults on their contract, the lien will be called due in full, and referred to the City of Denton's Legal Department to begin acceleration of the note as allowed by law. The City will make every effort to work with the applicant to avoid foreclosure and will examine each situation on a case-by-case basis. Examples of loan default include, but are not limited to: I.) Elelinquent loan payments; 2.) Failure of grantee to reside in the ,8 , assisted dwelling unit as the principal residencc of applicant; 3.) Failure to maintain adequate homeowner insurance coverage; 4.) Failure to pay property taxes when due. C. In the event the grantee sells the property prior to maturity of the note, the sum of the unpaid balance of the loan and the unforgiven balance of the deferred loan amount will become due immediately. . D. In the event the owner(s) passes away prior to the maturity date, or the owner(s) can no longer reside'''in the property due to a permanent medical condition, if the heirs decide to sell the property, the City of Denton will accept as settlement of the note the lesser of: 1. Pay 70 percent of the property's market value at the time of sale (the City reserves the right to conduct an independent appraisal), or, 2. Pay the payoff balance of the lien owed at the time the grantee passed away or was no longer able to reside in hislher home If the heirs keep the property the City of Denton will negotiate a modified and/or continuation of the note depending on beneficiary income and ownership circumstances. Heirs using property for rental income will pay the can request the note balance E. If, after the project begins, a household experiences a permanent, substantial loss of household income, an applicant can request are-evaluation oftheir total annual gross household income. This evaluation may result in a decrease in the payable portion of the note. The loss of ill come must befrom all illcome-eamillg household member(s) whose illcome was used ill determillillg the origillalloall assistallce category. Please note: Loss of employment (voluntarily or involuntarily) is not considered a "permanent loss". For purpose of this program "permanent loss" is defined as: 1. deaths 2. retirement (must be 62 years of age or older) 3. permanent disability 4. Other substantial permanent loss of income, when approved by Community Development Administrator. All household members must complete all income information and forms as required in section IV. Application Processing - Re-application processing will be completed to determine if an adjustment and/or extension to the payable portion of the note is eligible. A determination will be made after evaluating the household size and income using the program guideline income limits and financial assistance categories that are being used at the time the request for reduced loan payment is made. When a loan adjustment and/or extension is granted, the applicant must sign a Modificatioll alld Extellsion of Real Estate Note and Lien reflecting the adjustment and/or extension of the note. IX. PROJECT FEASIBILITY CRITERIA A. A decision as to the type and amount of assistance an applicant is allowed is based on the feasibility of a property to be rehabilitated. An assessment will be completed using the following factors: 1. Determine ifthe rehabilitation cost will be affected by: the zoning of a property, a property being located in a designated 100-year floodplain or floodway, a need to abate possible presence of lead-based paint, possible historical restoration requirements, or i I' a rehab will reduce noise levels if property is in a high noise area. NOTE: The Floodplain Management regulations limit the total cost of all non-code repairs for any dwelling located in a designated I OO-year floodplain to 50 percent of a property's pre-rehabilitation appraised value as set by the Denton Central Appraisal District (dwelling [not land] value only). .< 2. Determine if the framework and foundation of a dwelling are stable, or can be made stable through rehabilitation. (May allow for structural engineer evaluation of structure when staff cannot determine.) 3. Lead-based paint hazard reduction techniques will be used when lead-based paint exceeds HUD' s acceptable limits for lead content in existing paint. The limits for lead content exceed HUD's limits when lead content exceeds 1 mg per cm2 (one milligram per centimeter squared), or 5000 ppm (parts per million). The reduction techniques used by this program are described and found in the U. S. Department of Housing & Urban Development's publication, Guidelines For The Evaluation and Control Of Lead-Based Paint Hazards In Housing, issued June 1995. . 9 ;~I, X. XI. 4. Is a room addition(s) needed to relieve serious overcrowding? NOTE: Room additions and improvements to relieve serious overcrowding may be eligible and require the approval of the Community Development Administrator. B. A structural evaluation and project cost determination is completed. Projects that will exceed the Project Cost Limits (Section X) are not eligible for rehabilitation assistance. Applicant may be referred for optional reconstruction assistance. PROJECT COST LIMITS A. A rehabilitation project must meet all of the following 3 tests to be considered feasible to rehabilitate. Projects not feasible for the rehabilitation activity may be eligible for reconstruction or new construction and must meet the cost criteria in items 2 and 3 of this section. 1. Rehabilitation will not exceed $40 per square foot of total living space (using after rehabilitation square footage). Exceptions: An additional $10 per square foot is available, if the house needs to comply with lead reduction. An additional $10 per square foot is available to comply with historical requirements. 2. Total project cost will not exceed of the current Maximum Home Subsidy Limits for Denton as set by HUD (See Appendix I). 3. The after project appraised property value plus all costs expended to complete the project (including "other funds" and "owner's contribution") will not exceed 95% of the current Single Family Mortgage Limit for Denton as established by HOD (See Appendix I). B. PROGRAM MINIMUM LIMITS FOR Home Improvement projects: A dwelling needing less than $5000 of repairs is not eligible for Home Improvement Program assistance. !'J ALLOWABLE EXPENSES Federal CDBG and HOME grant funds will be used to pay for eligible project costs to complete substantial rehabilitation of existing owner-occupied properties, reconstruction of substandard owner-occupied properties and new construction of single-family modest dwelling units for eligible applicants who own eligible vacant lots.. Some allowable fees are: o Cost of room addition(s), to relieve serious overcrowding when approved by the Community Development Administrator. o Demolition of substandard structures as needed to complete projects. o Costs necessary to build modest, energy efficient, safe and sanitary replacement of principal residences o Other eligible expenses the Community Development Division determines necessary to facilitate the completion of activities allowed by this program (Example: title search, filing fees, platting, engineering reports, permit and tap fees, etc.) o Eligible administrative costs. o Other fees and costs as allowed by the CDBG and HOME regulations. NOTE: Funds for temporary relocation during project construction are not provided. XII. PROGRAM ACTIVITY OPTIONS The Home Improvement Program provides three options. The process required for all activities will be: Process o CD staff will complete a project feasibility study. This inspection will include a detailed evaluation of all deficiencies needing to be addressed to bring the dwelling up to'minimum program standards. o Activity option determined based on feasibility criteria (Section IX.). o Project details completed and approved by applicant. o CD staff completes a cost estimate of the work to be completed. o CD Administrator certifies the project as "eligible" or "not eligible." o If eligible, applicant signs a rehousing agreement (Appendix 4 or 6). 10 o Bid packet is prepared, bid out as described in Contractor Selection and Monitoring (Section XIII), owner chooses contractor from eligible bids, contracts are signed and project begins. o The City's Building Inspections Division and CD staff inspects project's progress routinely to ensure compliance with City codes and project specifications. Community Development staff completes final inspection. o For reconstruction and new construction activities, owner must have utilities connected and provide proof of homeowner's insurance before property can be occupied. o Project is closed upon contractor receiving contingency payment; owner receives loan payment schedule; invoicing begins. In the event a procedure is not addressed in these guidelines the Program Manager will determine the best course of action. A. Owner-Occupied Rehabilitation This activity will assist eligible applicants rehabilitate single-family principal residences by making needed repairs with the first priority being to correct code violations. This activity is eligible when a completed project will yield a structurally sound, safe, sanitary and decent single-family dwelling that meets City's building codes (see Section IX). B. Optional Reconstruction The reconstruction activity is offered when existing dwellings are not feasible for rehabilitation. Optional reconstruction provides funds to demolish existing dilapidated dwellings and reconstruct modest, energy efficient, safe and sanitary replacement single-family dwellings. C. New Construction Assistance The City of Denton will provide homeownership opportunities to eligible low-income families who own eligible property. New construction provides funds to construct a modest, decent, energy efficient, safe, and affordable single-family dwelling. I. Applicant cannot currently own a residence or a mobile home. Exceptions are made for substandard properties. 2. Community Development Division will determine the condition of the dwelling. 3. Substandard residential properties in the flood plain/flood way, may also be eligible for this activity, if the owner owns an eligible vacant lot, not in the flood plain/flood way. XIII. CONTRACTOR SELECTION AND PROJECT MONITORING All applicants are responsible for finding a contractor who will develop a proposal to complete approved home improvement activity. Eligible applicants may request assistance from Community Development staff to help homeowner with the bidding process, The homeowner may elect to seek a bid proposal from a qualified contractor of their choice. Bids by contractors submitted by the applicant must be reasonable (within 10 percent, high or low;.ofthe Community Development cost estimate). Contractors selected by the applicants must meet eligibility and insurance requirements. Contact any reputable and experienced contractor and request a bid for the required work. IF YOU HAVE ANY TROUBLE FINDING A CONTRACTOR, contact any of the following places for assistance: . Your local Better Business Bureau . Any friends or neighbors who have had remodeling done to their properties. . Chamber of Commerce . Community Development Division Contractor's List When a contractor comes to meet with you, you should: . Show hirnlher the mandatory work items that have been identified by the Community Development Division per the work write up, construction plans and project standards. . Advise hirnlher that the bid proposal must be retumed to you for submission to the rehabilitation program by a due date. DO NOT SIGN ANY AGREEMENT WITH THE CONTRACTOR. f:..-/ Owner must submit the contractor's bid proposal to the Community Development Division at 101 S. Locust Street. II " Suite 500. Denton, TX. The Community Development staff will review the proposal to verifY that: 1. The contractor is licensed and has all City-required insurance coverage. 2. All required improvements have been included. in the bid. 3, The proposed work is in conformance with the program's General Specifications. 4. All proposed costs are reasonable (as verified by CD staff prepared cost estimate). 5. The contractor chosen by owner has not been disqualified by any local, State or Federal government agency. Any contractor whose name appears on the most current HUD or City of Denton Debarred Contractor's List will not be eligible to participate in this program. References will be checked and claims of substandard workmanship will be cause to declare a contractor ineligible. The contractor must also submit all required proof of insurance forms and bonds (if applicable), Failure to submit these will result in rejection of the bid proposal. '. ,- The bid proposals that are submitted by the applicant will be reviewed by the Community Development Division to determine ifthe total bid price is reasonable per cost estimate and under the maximum allowable amount. THE CITY OF DENTON AND THE APPLICANT RESERVE THE RIGHT TO REJECT ANY AND ALL BIDS. If the Community Development Administrator approves the bid proposal submitted by the applicant, the Community Development staff shall proceed. A construction contract must be signed. Before the contractor can start work, the applicant must issue a notice to proceed .. The contractor's work will be monitored by the applicant, the Community Development staff and the City of Denton building code inspector. If the applicant considers any work done by the contractor to be unsatisfactory or incomplete, the applicant should advise the contractor ofthe discrepancy and ask that it be corrected. In the event a dispute exists between the applicant and the contractor with respeqt to the work, the City shall take appropriate action in accordance with the provisions of the construction contract to assure that the applicant is satisfied before making any payment to the contractor. In the event a dispute cannot be resolved, the Department Director shall consider all pertinent facts and shall decide an appropriate course of action to resolve the dispute. Acceptance of Work 1. Final Inspection -In order for the contractor to close out a project, a final inspection shall be made by the City of Denton building code inspector, the Community Development staff, and the applicant. If the final insPection results in no additional work or no specified corrections, the applicant shall sign final payment request stating that all work has been completed to their (applicant's) satisfaction. The building code inspector shall sign a final inspection form to confirm the same. At this time, the contractor is advised to submit to the Community Development Division copies of all warranties and releases of liens from subcontractors and suppliers prior to contingency payment. Community Development staff will make copies of warranties and other documentation. The applicant will receive original warranty and guarantee documents. The Community Development Division will retain copies of these documents for the file. 2. Warranty of Work - As stated in the contract, thb contractor shall guarantee the work performed for a period of at least one-year from the date of final acceptance. :The contractor will return in thirty (30) days and ask the applicant if any additional repairs are necessary. Any deficiencies or necessary repairs to specified work will be completed at this time. If no repairs are needed, the contractor will request that the applicant release the contingency payment. XIV. PAYMENTS TO CONTRACTOR A. The contractor shall receive approved final paYment, minus a 10 percent contingency, for completed contract within IS working days after final inspection approval. The contingency is calculated on the final contract amount by adding the total project bid amount plus or minus change orders, minus, if applicable, the cost for demolition. Contingency is withheld for thirty (30) days from the date of final acceptance by Community Development Division staff. After thirty days, if no additiomil or warranty work remains, the contractor must request written approval from owner and CD staffto release withheld contingency funds. Contractor must endorse the Mechanic's Lien Note over to the City of Denton and sign a release of note and lien of the Mechanic's Lien Contract before contingency payment can be released. B. A contractor may request interim-project payments throughout the course of the project. Interim payments will be 12 made available to the contractor upon applicant and CD staff approval of any contract work that has been completed. Contractor will submit a CONTRACTOR REQUEST FOR PAYMENT AND PERIODIC STATEMENT form to the applicant when requesting payments. C. An "All Bills Paid" affidavit and release of lien from all subcontractors and suppliers must be submitted to the Community Development Division before final payment can be released to contractor. Any electrical, plumbing, mechanical, window and/or roofing permits and termite inspection report must also be submitted to the Community Development Division prior to releasing contingency payment to the contractor. XV. CONTRACTOR DEBARMENT A. A contractor will be declared ineligible to participate in projects funded by the City of Denton Home Improvement Program for one or more of the following causes: I. Failure to complete a project within the prescribed contract period. , 2. Failure to complete warranty repairs within a reasonable time period. " 3. Failure to use licensed plumbing and electrical subcontractors. 4. Failure to obtain City-required insurance, i.e., general contractor's liability, automobile liability and builder's risk (if applicable). 5. Failure to complete work in accordance with program specifications and/or accepted standards of. workmanship. 6. Failure to pay all subcontractors working on the project appropriately and/or by not submitting affidavits of payment signed by all subcontractors. 7. Failure to obtain proper permits for work in progress. 8. Failure to treat applicants with respect and courtesy. 9. Other offenses not described here when the Community Development Director believes a contractor's action(s) does not serve the best interest of the program, the City or the applicant. (.; B. Contractors will be notified of their proposed debarment and will be afforded the opportunity to comment or appeal the action. All appeals must be made in writing to the Community Development Division by the 15th day from the date of the notification letter. :', ,13 APPENDICES Appendix I Qualifying Income Limits and Ranges for the City of Denton's Federally Assisted Programs Appendix 2 Target Neighborhoods Map Appendix 3 Optional Reconstruction Assistance Application and Temporary Relocation Questionnaire Appendix 4 Optional Reconstruction Rehousing Agreement Appendix 5 New Construction Assistance Application And Questionnaire Appendix 6 New Construction Housing Agreement 14 APPENDIX 1 FY 2005/2006 City of Denton Community Development Division ualif in Income Limits for Federal! Assisted Pro rams Rehabilitation and Optional Reconstruction Eligible Income Ranges New Construction Eligible Income Ranges 2-Part Loan Ratio. 70% Payable /30% Deferred 40% Payable /60% Deferred 20% Payable /80% Deferred 10% Payable /90% Deferred Owner Contribution 1 % of Total Project Cost .75% of Total Project Cost .5% of Total Project Cost .25% of Total Project Cost Income Range Moderate Low Very-Low Extremely-Low Famil Size 80% AMI- <65% AMI 65% AMI - <50% AMI 50% AMI- <30% AMI <30% AMI $37,250 - $30,251 $30,250 - $23,301 $23,300 - $13,951 $13,950 or Below 2 $42,550 - $34,601 $34,600 - $26,601 $26,600 - $15,951 $15,950 or Below 3 $47,900 - $38,901 $38,900 - $29,951 $29,950 - $17,951 $17,950 or Below 4 $53,200 - $43,251 $43,250 - $33,251 $33,250 - $19,951 $19,950 or Below 5 $57,450 - $46,701 $46,700 - $35,901 $35,900 - $21 ,551 $21,550 or Below 6 $61,700-$50,151 $50,150 - $38,551 $38,550 - $23,151 $23,150 or Below 7 $65,950 - $53,601 $53,600 - $41,251 $41,250 - $24,751 $24,750 or Below 8 $70,200 - $57,051 $57,050 - $43,901 $43,900 - 26,351 $26,350 or Below 'In this two-part loan: Part I: Pavable Loan is based on a percentage of the total City-paid project cost (see Section VILD.). The payable portion of the loan is amortized over the term of the note (60 to 240 months - see Section VILC.), and carries a 3 percent interest rate. There is no penalty for paying the payable loan off early. Part II: Deferred Loan is based on a percentage of the total City-paid project cost (see Section VII.D.). This portion of the loan carries a zero percent interest rate. For every month applicant complies with deed and note requirements, a fraction of the deferred loan is forgiven (on a 5-year note, li60, on a 10-year note 1/120, on a l5-year note 1/180, and on a 20-year note 1/240). The deferred loan terms are from between 60 to 240 months (5 to 20 years) based on project cost and/or type of assistance activity (see Section VILC.). At the end of the contract term the deferred loan is forgiven, .. provided applicant has satisfied all the conditions listed in the Deed of Trust and Promissory Note. The deferred loan is secured by a lien on the property. ReDortable Income: Gross income for all household members aged 18 and above must be included to determine household's eligibility to receive assistance: however, some household members' incomes may be excluded when determining the payback category that the eligible househofd will be approved for. They are: applicant's children, grandchildren or legal guardians of the applicant who are aged 18 up to 22 and/or children aged 22 up to 25 who are full or part-time students. Incomes for household members aged 25 and older will be included in determining the payback category for the household. Income Limit Source: U.S. Department of Housing and Urban Development. Effective: February II, 2005 2004 Maximum Home Per-Unit Subsidy Limits for Denton 0-BDR=$74,180 l-BDR=$85,032 2-BDR=103,440 3-BDR=$133,763 4-BDR=$146,831 95 Percent of the 2005 Single Family Mortgage Limit for Denton = $164,000 Effective: August 31, 2005 15 APPENDIX 2 City of Denton, Tex~s Targeted Neighborhoods Map ;' ,16 APPENDIX 3 OPTIONAL RECONSTRUCTION ASSISTANCE APPLICATION AND TEMPORARY RELOCATION QUESTIONNAIRE Your participation for optional reconstruction assistance is voluntary. Reconstruction funds are limited therefore; the Program does not cover costs necessary for household to relocate during reconstruction of the property. Please complete the following questionnaire. This information will help our staff in determining if you will be eligible for optional reconstruction assistance. 1. I understand that it is my responsibility to relocate my household and that I am responsible for all costs hyolyed to do so? Yes No 2. I understand that as a result of reconstruction, my appraised property yalue, set by the Denton Central Appraisal, may increase significantly from the amount at which it is currently yalued. Yes No 3. I understand that an increase in my property value may cause my properly taxes to increase by a significant amount. I am financially prepared to meet any increase. Yes No 4. I understand that I am obligated to carry homeowner's insurance for the duration of the lien (20 years) that the City of Denton will haye on my property. Yes No 5. I understand that my homeowner insurance premium will most likely increase as a result of the reconstruction. I am aware that my insurance policy must coyer the after-reconstruction appraised yalue of my property. I am financially prepared to meet this increase. Yes No 6. I understand that I must request that my insurance company list the City of Denton as a "Certificate Holder" on my policy. Yes No 7. I understand that The City of Denton is limited in the amount of funds they can spend to reconstruct a properly. I haye been briefed on these limits and understand that my eligibility for optional reconstruction assistance will be granted only if it is detennined that the total of all costs inyolyed to reconstruct my property will be at or below the allClNable program limit. Yes No This APPLICATION was completed by on. By signing below, I am requesting that the City of Denton's Community Deyelopment Diyision to accept this as my application to be considered for optional reconstruction assistance. Date Applicant's Signature 17 d APPENDIX 4 CITY OF DENTON COMMUNITY DEVELOPMENT DIVISON HOME IMPROVEMENT PROGRAM OPTIONAL RECONSTRUCTION REHOUSING AGREEMENT THIS AGREEMENT, made and entered into on (Date document will be siqned), by and between the City of Denton, Texas, and (Name of applicant siqninq document) hereinafter referred to as Applicant. This agreement covers the dwelling occupied at the following legal address: (Legal property description of dwelling to be reconstructed) WHEREAS, The Applicant has heretofore requested and qualified for the Home Improvement Program with assistance from the City in order to obtain adequate, decent, safe, and sanitary housing under the City's Community Development Block Grant and HOME Program; and WHEREAS, the City has determined that rehabilitation of the Applicant's residence is not a feasible alternative; and ." WHEREAS, the City has determined that the Community Development Program will not provide the Applicant relocation payments and assistance necessary to accomplish the voluntary relocation ofthe Applicant from the substandard, unrehabable dwelling currently occupied into an adequate, safe, and sanitary replacement dwelling. NOW, THEREFORE, the City and the Applicant for and in consideration of the covenants and promises as hereinafter set forth, do agree as follows: I. The Applicant agrees to vacate permanently the currently occupied substandard dwelling within 10 days notice by the City for the need to vacate. 2. The Applicant agrees and hereby authorizes the demolition and removal of the currently occupied dwelling and clearance by the City of the property. The Applicant further releases the City from any and all claims arising from this action. 3. The Applicant 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 Applicant further agrees to sign any required instruments to effect this item. 4. The Applicant agrees to provide and bear all financial costs necessary to relocate Applicant's household and furnishings without assistance from the City of Denton. 5. The maximum budget authority for optional reconstruction assistance is (Maximum allowable funds for project), which includes, but is not limited to, property title search fee, the cost to demolish the existing dilapidated dwelling and the cost to reconstruct an adequate, decent, safe, and sanitary replacement dwelling on the original site (lot) of the dwelling vacated by the applicant. 6. Applicant agrees to the time limitations as set forth in the Optional Reconstruction Guidelines in which to be moved from the substandard property. Applicant' Signature Date 2"d Applicant' Signature 'Date CITY OF DENTON: Community Development Administrator , 18 APPENDIX 5 HOME IMPROVEMENT PROGRAM NEW CONSTRUCTION ASSISTANCE APPLICATION AND QUESTIONNAIRE Your participation for new construction assistance is voluntary. Program funds are limited. Please complete the following questionnaire. This information will help our staff in determining if you will be eligible for new construction. 1. I understand that the appraised yalue will include the cost of the new construction and the land and will be set by the Denton Central Appraisal District. This will cause your property yalue to increase sgnificantly from the amount at which it is currently yalued. Yes No 3. I understand that an increase in my property yalue will cause my property taxes to increase by a significant amount. I am financially prepared to meet any increase. Yes No 4. I understand that I am obligated to carry homeowner's insurance for the duration of the lien (20 years) that the City of Denton will haye on my property. I am financially prepared to meet any increase. Yes No 5. I understand that I must request that my insurance company list the City of Denton as a "Certificate Holder" on my policy? Yes No 6. I understand that The City of Denton is limited in the amouni of funds they can spend for new construction. I haye been briefed on these limits and understand that my eligibility for the Home Improyement Program will be granted only if it is determined that the total of all costs inyolyed for new construction on my property will be at or below the allowable program limit. Yes No ;, This APPLICATION was completed by on By signing below, I am requesting that the City of Denton's Community Deyelopment Diyision accept this as my application to be considered for new construction of the Home Improyement Program. . Applicant's Signature Date 19 APPENDIX 6 CITY OF DENTON COMMUNITY DEVELOPMENT PROGRAM HOME IMPROVEMENT PROGRAM NEW CONSTRUCTION HOUSING AGREEMENT THIS AGREEMENT, made and entered into on (Date document will be signed), by and between the City of Denton, Texas, and (Name of applicant signing document) hereinafter referred to as Applicants. This agreement covers the property located at the following legal address: (Legal property description of dwelling to be reconstructed) WHEREAS, The Applicant has heretofore requested and qualified for the Home Improvement Program with assistance from the City in order to obtain adequate, decent, safe, and sanitary housing under the City's Community Development Block Grant and HOME Program; and NOW, THEREFORE, the City and the Applicant for and in consideration ofthe covenants and promises as hereinafter set forth, do agree as follows: 1. The Applicant agrees to take possession and occupy the new constructed dwelling when such dwelling is compleied and the City determines it to be ready for occupancy. The Applicant further agrees to sign any required instruments to effect this item. 2. The Applicant agrees to provide and bear all financial costs necessary to relocate Applicant's household and furnishings without assistance from the City of Denton to the new constructed dwelling. 3. The maximum budget authority for new construction is (Maximum allowable funds for project), which includes, but is not limited to, property title search fee and cost of new construction of an adequate, decent, safe, and sanitary dwelling. Applicant' Signature Date 2".. Applicant' Signature Date CITY OF DENTON: Community Development Administrator 20 APPENDIX 7 SPACE & AMENITY ALLOWANCES FOR RECONSTRUCTION & NEW CONSTRUCTION ACTIVITIES , ., The City of Denton may provide replacement or new single-family modest, safe, energy-efficient, decent dwellings. Space and room limits for replacement housing are determined by household need. ' Replacement housing will provide up to the following: Provided Space 1 Kitchen I Laundry Alcove 1 Coat Closet 1 Living Area 1 or 2 Bathrooms* 1 Dining Area or Kitchenette I Food Pantry Closet and/or Cabinet I Linen Closet 2-3 Bedrooms*** W/Closets** I Attached (Non-Conditioned) Storage Area Maximum Square Feet Allowed (Within 1 percent hil!h or low) 2 Bedrooms I bath - 985 SF 2 Bedrooms 2 baths - 1040SF 3 Bedrooms 1 bath - 1100 SF 3 Bedrooms 2 baths - 1180 SF 4 Bedrooms 2 baths - 1225 SF (***must be approved) Amenities 1 Brick Mailbox I Ceiling fan per bedroom and I in Living Room 1 HV AC Unit (l4-Seer AC) I Front & I Rear Exterior Weatherproof Electrical Outlets 1 Front Entry Door 1 Rear or Side Entry Door 1 50 gallon Water Heater 1 Front & I Rear Hose Bib 2-Car Driveway Space I Attic Access Stairs Programmable Thermostat Standard lighting including exterior safety lights front and back 1 Energy Star Refrigerator I 4 burner Gas or Electric Range/single Oven (appliances if needed) Sod will be installed at a minimum of 5' wide around entire foundation/perimeter, 3' wide around sidewalks and driveway. Season-appropriate seed will be spread on remainder of un-sod yard. * A full bathroom may be made A.D.A. accessible to accommodate a physically handicapped household member. Household may also select a 1/2 or 3/4 bath in place of a second full bath, if desired. **Clothes closets will ideally, when possible, provide a minimum of 4' X 2' of space per bedroom. ***Determining Maximum Number of Bedrooms from household makeup: A household may select up to a 3 bedroom 2 bathroom house based on need. A fourth bedroom may be requested in writing when a household believes there is a valid need for the additional space. The Community Development Administrator approves requests on a case-by-case basis. Under no circumstances will this program provide space exceeding that described above. 21