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1979-1128_SECURITY PACIFIC NATIONAL BANK_Operating Agreement Amd32400 P.ASF0 ADELANTo SAN JUAN CAPISTRANO, CALIFORNIA 92675 ` PHONE 493.1171 �4 April 10, 1980 Phil Long, Vice President Community Development Center SECURITY PACIFIC BANK P. O. Box 4430 Downey, California 90241 Re: Housing and Community Development Grant and Loan Account - Los Rios Area Dear Mr. Long: Following receipt of your letter of March 25, 1980, advising that the Annual Percentage Rate for FHA Title I Program Accounts will be incr.ea-,ed to 170 effective April 14th, the proposed Amendment to the Operating Agreement was withdrawn. Thank you for your cooperation in this matter. Very truly yours, (MRS) MARY ANN HANOVER, CMC City Clerk MAH/cj cc: Director of Community Planning and Development AGENDA ITEM April 2, 1980 TO: James S. Mocalis, City Manager FROM: Thomas G. Merrell, Director Community Planning and Development SUBJECT: HCDA Grant and Loan Account - Amendment to Security Pacific Bank Agreement SITUATION As part of the implementation of the Los Rios Precise Plan, the City has established the Los Rios Home Improvement Program. The program includes providing both low-interest loans and fix -up grants to rehabilitate and restore the dwellings in the Los Rios area. On March 7, 1979, the City entered into an agreement with Security Pacific National Bank to assist with the operation of the loan program. (Exhibit A). The agreement permitted the City to subsidize the loans by making an interest subsidy payment to the bank, provided that the annual percentage rate did not exceed 12 percent. The City agreed to subsidize the loans in order to reduce the finance charges payable by the borrowers to 3% percent (for low -to - moderate income persons), and 61z percent (for others). On November 28, 1979, after the bank announced a new interest rate of 13 percent, the City Council voted to amend the Operating Agreement accordingly and absorb the increased rate so that borrowers would still pay 3' and 61-2 percent. The City has been notified by Security Pacific National Bank that the FHA Title I Annual Percentage Rate has now increased to 14 percent, effective March 15, 1980. (Exhibit B). The bank has requested that the City amend our agreement to reflect the increased 14 percent rate. Two alternatives for dealing with this increased interest rate are as follows. The finance charge could be amended so that the borrower would pay a higher interest rate. The second alternative is to utilize additional Community Development Block Grant (CDBG) Funds to pay the increased interest subsidy. The City has made a commitment to provide low-interest loans to the residents of the Los Rios area. In order to continue processing the loan requests and to maintain the low-interest rates of 3z percent and 61-, percent, the City has previously utilized CDBG Funds to absorb an increased interest rate. Staff recommends that the City use further CDBG Funds to absorb this most recent increased interest rate and that Section 3.0 on page two of the attached operating Agreement be amended to read: "Rates to be charged as determined by Bank, prior to any interest subsidy, but not to exceed 14.00% Annual Percentage Rate." FOR CITY COUNCIL AGENDA .... Agenda Item -2- April 2, 1980 Other communities and the County of Orange have established and maintained a similar home improvement program with Security Pacific National Bank. They are also in the process of amending their agreement to reflect the increase in the Annual Percentage Rates. FINANCIAL CONSIDERATIONS The City of San Juan Capistrano has received funding through the Community Development Block Grant Program to implement the Los Rios Home Improvement Program. These funds are being used to subsidize the interest and can be used to cover the increase in the interest subsidy. ALTERNATE ACTIONS 1. Direct staff to amend Section 3.0 of the Operating Agreement per staff recommendation and authorize the Mayor to execute the amended agreement. 2. Direct staff to amend the finance charge payable by the borrower and authorize the Mayor to execute the amended agreement. RECOMMENDATION By motion: 1. Direct staff to amend section 3.0 of the Operating Agreement to read: "Rates to be charged as determined by Bank, prior to any interest subsidy, but not to exceed 14.00% Annual Percentage Rate." 2. Authorize the Mayor to execute the amended agreement. Respe tfully submitted, 'J ,0 -1 Thomas G. Merrell, Director Community Planning and Development TGM:AJM:gvg 6'. SECURITY PACIFIC NATIONAL BA{*� -',so COMMUNITY DEVELOPMENT CENTER n 8141 2rvo STREET, SUITE 330, DO WNEY, CALIFORNIA 12131923-55 �, �\ MAILING ADDRESS: POST OFFICE BOX 4430, DOWNEY, CALIFORNIA 90241 March 25, 1980 Mr. Ray Becerra Senior Planner City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, California Dear Mr. Becerra, You have barely received the rate charts at 14.00 APR, and probably not yet used them, and we have to announce they are nearly obsolete. There is a further rate increase to 17.00 APR effective April 14, 1980. All Loans, irrespective of amount, will only be made on a secured basis. Now is the time to re-evaluate your programs and the programs that best suits the needs of your Community, obviously, with the substantial increas- es in our base rate, the 3% loan is no longer feasible. We urge you to consider the Formal Assurance Program, even in the light of a "stop gap" measure, until Interest Rates become more stable. We also share with you, that we are, regretfully, unable to accept any new Communities into the Program, hopefully, if the World ever returns to normal, it will be "business as usual". In house, our emphasis will be on delinquency and loss control. Throughout the Lending industry, there is deep concern that inflation and feverish purchasing using credit, on the assumption that products will be more expensive later, will cause the bubble to burst with far reaching results. To keep you advised on the past due status of loans originated through your Community, we will in future forward to you delinquent account reports, on a weekly, rather than monthly basis. As our agreements state, you are not liable for any borrowers default, but we know that you share our concerns. No doubt this letter will generate many phone calls, and today I cannot tell you where we go from here, I have no "inside information" only the hope that we can continue to serve your needs to the best of our ability. Sincerely, Phil Long Vice President PL: lb ADDITION TO AGENDA ITEM 4/2/80 77 L 0 SECURITY PACIFIC NATIONAL BANK COMMUNITY DEVELOPMENT OPPORTUNITY CENTER 8141 2nD STREET, SUITE 330, DOWNEY, CALIFORNIA (213) 92.3-5551 MAILING ADDRESS: POST OFFICE BOX 4430, DOWNEY, CALIFORNIA 90241 February 22, 1980 Mr. Ray Becerra Senior Planner City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, California Dear Mr. Becerra, Today, Prime Rate reached a record high of 16.25% with predictions of further increases. The cost of funds has risen drastically. F.H.A. has recognized this and on February 11, 1980, increased the permissable rate of the F.H.A. Title I Program to 14.00 Annual Percent. Regretfully, we have to announce that our Rate to you has to increase to the new level, if we intend to keep our Community Development Program going. The new rate of 14.00 APR will be effective for all loan applica- tions received after March 15, 1980. New Rate Charts have been ordered, and will be forwarded to you, as soon as we have them available. Sincerely, L, l Phil Long Vice President PL:lb s^ ^- ? 141v 0 98p` Tn 0 0 SA 14 JU.l. +l F!�l I'f ... _ _Cl tto 92675 F=« C r: i_ - 3. 1 171 December 6, 1979 Phil Long, Vice President Community Development Opportunity Center Security Pacific Bank P. O. Box 4430 Downey, California 90241 Re: Amendment to Agreement for Home Improvement Program - Los Rios Area Dear Mr. Long: At their meeting of November 28, 1979, the City Council took action to approve the amendment to the Operating Agreement for the home improvement loan program in the Los Rios Area to reflect the change in the annual percentage rate, not to exceed 1-%. Enclosed are two copies of the agreement. Please complete both copies and return one fully -executed copy back to this office; the remaining copy is for your files. Thank you for your cooperation. Very truly yours, (MRS) 14ARY ANN HANOVER City Clerk MAH/cj Enclosures cc: Director of Community Planning and Development AGENDA ITEM November 28, 1979 TO: James S. Mocalis, City Manager FROM: Thomas G. Merrell, Director Community Planning and Development SUBJECT: Amendment to Security Pacific Bank Agreement - Home Improvement Program (Los Rios Area) SITUATION As part of the implementation of the Los Rios Precise Plan, the City has established the Los Rios Home Improvement Program. The program includes providing both low-interest loans and fix -up grants to rehabilitate and restore the dwellings in the Los Rios area. We are currently processing six loan applications and have distributed eleven grants. The City entered into an agreement with Security Pacific National Bank to assist with the operation of the loan program. (Exhibit A). The agreement permits the City to subsidize the loans by making an interest subsidy payment to the bank, provided that the annual percentage rate does not exceed 12 percent. The City has agreed to subsidize the loans in order to reduce the finance charge payable by the borrower to 3 1/2 per- cent and 6 1/2 percent. The 3 1/2 percent interest rate is available to persons of low -to -moderate income. Persons above that income level may apply for a 6 1/2 percent loan. The City has been notified by Security Pacific National Bank that the FHA Title I Annual Percentage Rate will increase to 13 percent, effective December 1, 1979. (Exhibit B). The bank has requested that the City amend our.agreement to reflect the increased 13 percent rate. Two alternatives for dealing with this increased interest rate are as follows. The finance charge could be amended so that the borrower would pay a higher interest rate. The second alternative is to utilize Community Development Block Grant (CDBG) Funds to pay the increased interest subsidy. The City has made a commitment to provide low-interest loans to the residents of the Los Rios area. In order to continue processing the loan requests and to maintain the low-interest rates of 3 1/2 percent and 6 1/2 percent, the City can utilize CDBG Funds to absorb the increased interest rate. Staff recommends that Section 3.0 on page two of the attached Operating Agreement be amended to read: "Rates to be charged as determined by Bank, prior to any interest subsidy, but not to exceed 13.00% Annual Percentage Rate." FOR CITY COUNCIL AGENDA .... . Agenda Item -2- November 28, 1979 Other communities and the County of Orange have established a similar home improvement program with Security Pacific National Bank. They are also in the process of amending their agreement to reflect the increase in the Annual Percentage Rates. FINANCIAL CONSIDERATIONS The City of San Juan Capistrano has received funding through the Com- munity Development Block Grant Program to implement the Los Rios Home Improvement Program. These funds are being used to subsidize the interest and can be used to cover the increase in the interest subsidy. ALTERNATE ACTIONS 1. Direct staff to amend Section 3.0 of the Operating Agreement per staff recommendation and authorize the Mayor to execute the amended agreement. 2. Direct staff to amend the finance charge payable by the borrower and authorize the Mayor to execute the amended agreement. 3. Direct staff to terminate the agreement. RECOMMENDATION By motion: 1. Direct staff to amend Section 3.0 of the Operating Agreement to read: "Rates to be charged as determined by Bank, prior to any interest subsidy, but not to exceed 13.00% Annual Percentage Rate." 2. Authorize the Mayor to execute the amended agreement. Respectfully submitted, Thomas G. Merrell, Director Community Planning and Development TGM:SJP:lcl Attachment r �CrfIED SECURITY PACIFIC NATIONAL BANK, COMMUNITY DEVELOPMENT OPPORTUNITY CENTER 8141 2nD STREET, SUITE 330, DOWNEY, CALIFORNIA (213)923-555! MAILING ADDRESS: POST OFFICE BOX 4430, DOWNEY, CALIFORNIA 90241 October 31, 1979 Ms. Sara Pashalides Asst. Planner City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, California Dear Ms. Pashalides, We have to announce a further rate increase, effective December 1, 1979, to the new PHA Title I maximum of 13.00 Annual Percentage Rate. Please review your Operating Agreement, as in many cases the statement "not to exceed 12.00 Annual Percentage Rate" is indicated. This prior notice is being given in the event you need Council or Board Approval in the form of an amendment to that existing agreement. New Rate Charts will be forwarded when prepared. F.H.A. has also increased the loans permitted for multiple units. Effective October 24, 1979 the new amounts are $7,500.00 per unit to a maximum loan of $37,500.00, term has increased to 15 years. As in the past all requests for loans exceeding $15,000.00 will require prior approval by the F.H.A. In house, we request that you direct questions and problems that you have as follows: Credit decisions/problems: Artie Thyer or Katie Branch Operational gaestionslproblems, eg incorrect documents, title, etc: Terry Gonzalez or Sue Trujillo Request for documents: Any one of us. We have been asked how we determine net income (take home pay) when the application shows gross income. In the event we are unable to obtain recent pay stubs, as a rule of thumb, we deduct 25% from gross to estimate the net. Where income is from Social Security, etc., no deduction is made. This month we lose Al Garcia, my assistant, to the Security Pacific Mortgage Corporation where he hopes that the grass is greener. Al has been with u since September 1976 and takes with him a lot of expertise. We wish him every success in his new venture. As yet we do not have a replacement name to give you, we will keep you advised. Sincerely, Phil Long Vice Fr1del,L AGENDA ITEM Play 2, 1979 TO: James S. Mocalis, City Manager FROM: Thomas G. Merrell, Director Community Planning and Development SUBJECT: Los Rios Area Application for Discretionary Grant SITUATION The City has received notification from the Department of Housing and Urban Development that some of the Housing and Community Development Block Grant funds have been reallocated and designated for expenditures within Orange County. H.U.D. is presently accepting applications for the discretionary grants. The maximum amount of funds available per jurisdiction is $300,000. The funds may be used to address problems with housing needs, economic conditions or public facilities which affect the public health and safety. Implementation of the Los Rios Precise Plan qualifies as an eligible activity for use of the funds. As part of the 5th year H.C.D. program, the City has submitted an application for $180,000 to implement Phase I of the Housing Program of the Los Rios Precise Plan. The application has received final approval from the Orange County Board of Supervisors. In order to accelerate the development of the Planned Housing District, the $300,000 grant could supplement the cost of land acquisition and infrastructure development. The Los Rios Review Committee reviewed the discretionary grant proposal on April 23, 1979 and recommended to the City Council that they authorize staff to apply for the H.U.D. Discretionary Grant. The City's Citizen Participation Plan requires that the Planning Commission and the City Council hold a public hearing on the application. In order to meet the May 31, 1979 deadline, the schedule staff proposes is a Planning Commission public hearing on Play 8, 1979 and a City Council public hearing on May 16, 1979. FINANCIAL CONSIDERATIONS This grant will supplement the existing Housing and Community Development pro- gram which was previously approved by the City Council. The City is in the process of implementing the Los Rios Precise Plan using Housing and Community Development funds. ALTERNATE ACTIONS 1. Authorize staff to apply for the H.U.D. Discretionary Grant. 2. Authorize staff to apply for the H.U.D. Discretionary Grant subject to conditions. 3. Refer item to Los Rios Review Committee for further information. ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ FOR CITY COUNCIL AGENDA • • • • / /1 Agenda Item -2- May 2, 1979 RECOMMENDATION Authorize staff to proceed with the application and to set May 16, 1979 for a public hearing. Respectfully submitted, ><�q , )nj' e Thomas G. Merrell, Director Community Planning and Development TGM:SP:mjw RECEIVED SECURITY PACIFIC NATIONAL %Nr 11 4-7 AN,7.9 COMMUNITY DEVELOPMENT OPPORTUNITY CENTER 8141 2ND STREET, SUITE 330, DOWNEY, CALIFORNIA (213)923-5551 MAILING ADDRESS: POST OFFICE BOX 4430, DOWNEY, CALIFORNIA 90241 April 2, 1979 Mrs. Mary Ann Hanover City Clerk City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, Calif. 92675 Re: Home Rehabilitation Program Dear Mrs. Hanover, CITY OF SAN JUAN CAPI TP;iN' As requested, in your letter of March 29, 1979, we have executed the Operating Agreement for the Los Rios Home Improvement Program, and have returned two copies. We look forward to working with the City of San Juan Capistrano in this very worthwhile program. Sin59rely, � qq �. t Phil Long % Ass't. Vice Pre3'i�ertt PL: lb Enc. 32400PASFO AOELANTO SAN JUA14 CAPISTRANO, CALIFORNIA 92575 .t r °PHONE 49 3.117 1 March 29, 1979 Mr. William L. Miller Community Development Opportunity Center Security Pacific National Bank 8141 Second Street, Suite 330 Downey, California 90241 Re: Home Rehabilitation Program Dear Mr. Miller: At their meeting of March 7, 1979, the City Council approved the Los Rios Home Improvement Program which would grant funds under the Community Development Block Grant Program for minor repairs and low interest loans, pursuant to the City's Los Rios Precise Plan. Enclosed are three copies of the Operating Agreement and one certified Minute Extract from the March 7th Council meeting. Upon execution by the appropriate persons, please return two fully -executed copies of the agreement to this office. Thank you for your cooperation. Very truly yours, (MRS) MA9 MA/ANN HANOVER City Clerk MAH/cj Enclosures CC: Director- of Community Planning and Development 32x00 PASEO ADELAN7'0 a SAN JUAN CAPISTRANO, CALIFORNIA 42675 \�° 'yam+' ♦ ]Y March 13, 1979 Ms. Dolores Ervin Housing and Community Development Environmental Management Agency P. O. Box 4048 Santa Ana, California 92702 Re: Home Rehabilitation Program Dear Ms. Ervin: At their meeting of March 7, 1979, the City Council approved the Los Rios Home Improvement Program which would grant funds under the Community Development Block Grant Program for minor repairs, low interest loans to improve dwellings, improve current housing conditions, and preserve the character of the historical area, pursuant to the Los Rios Precise Plan. A certified Minute Extract is being forwarded to you under separate cover. Thank you for your cooperation in this matter. Very truly yours, (MRS) MA ANN HANOVER City Clerk MAH/cj CC: Director of Community Planning and Development AGENDA ITEM March 7, 1979 TO: James S. Mocalis, City Manager FROM: Raymundo Becerra Acting Director of Community Planning and Development SUBJECT: Home Rehabilitation Program - Los Rios Area STTIIATTON The Los Rios Precise Plan was approved by the Council in February of 1978. An implementation component of the Los Rios Precise Plan includes the development of a Home Improvement Program which will improve the housing conditions of the area. Housing objectives of the Los Rios Precise Plan include: grants for minor repairs, low interest loans to improve dwellings that are structurally sound, improve current housing conditions to accommodate present residents, and to preserve the character of the historic area. The Los Rios Home Improvement Program was established to meet these housing objectives. The City of San Juan Capistrano has been allocated $25,000 during year IV of the Community Development Block Grant Program (CDBG) to be used for housing rehabilitation. We have requested an additional $75,000 under Program Year V to continue this activity. We anticipate receiving the first $25,000 in early April. The remaining $75,000 will be available in July. The City Council and the Los Rios Review Committee expressed a desire to implement the Home Improvement Program as soon as possible. The County of Orange has established an improvement program through Security Pacific National Bank. In order to expedite the program, staff will be working with the same banking institution in the design of the program to meet the needs of the Los Rios Area residents. The loans are insured under the FHA Title I program, in which the Federal Government and the lender cover the risk of the loan. The City assumes no financial liability. Attachment 1 is a summary information sheet explaining the Home Improvement Program. Attachment 2 outlines the program and details the requirements, eligible improvements, and program procedures. The Program has been reviewed by the Los Rios Review Committee and their suggested modifications have been included. The Committee recommended approval of the Los Rios Home Improvement Program at their meeting of February 26, 1979. FINANCIAL CONSIDERATIONS The City has made a commitment in accepting the CDBG funding to administer the program. This involves participation by both the Community Planning and Development Department and the Building and Safety Department. ALTERNATE ACTIONS 1. Approve the Los Rios Home Improvement Program as submitted by the Los Rios Riveiw Committee. FOR CITY COUNCIL AGENDA ... ... • l� e. u Agenda Item -2- March 7, 1979 2. Refer the Program to Los Rios Review Committee for further study. 3. Approve the Los Rios Home Improvement Program subject to modifications. RECOMMENDATION By motion, approve the Los Rios Home Improvement Program as submitted by the Los Rios Review Committee. l ectfully 14mitted, RB: t11r Attachments ector opment 0 0 ATTACHMENT 1 Los Rios Home Improvement Program Information Sheet Objectives of the Program The Home Improvement Program was designed to meet the needs of the Los Rios Area residents and to meet the following housing objectives that were approved as part of the Los Rios Precise Plan: o "Fix -Up" and repair grants of up to $500 should be provided to allow residents to make minor repairs to their home which are essential to keep the residence habitable. o Provide a rehabilitation loan program to accommodate the special needs of dwellings which are structurally sound. o Improve current housing conditions in order to accommodate the present residential population, both owner and tenant. o Provide a counseling service to help residents of the area improve their homes. o Preserve the character of the historic area and prevent demolition and deterioration of original structures. What Does the Program Do? The City of San Juan Capistrano has established a Home Improvement Program to assist families living in the Los Rios Area to improve their homes. Examples of repair work includes: plumbing, electrical, roofing, painting, siding, flooring, heating, fencing, screen doors and windows. What Services are Provided? The services which the City provides under this program are: o Low interest home improvement loans o Grants for minor repairs o Free home improvement advice o Free loan counseling o Free assistance in contracting for repair work Who Is Eligible? Any owner occupant or absentee owner of a residential structure located within the Los Rios area may apply for a loan or grant. A tenant (renter) who lives within the Los Rios area may apply for a grant, provided the poperty owner has consented. 0 Attachment 1 -2- Who Approves the Loans and Grants? The lending institution decides whether or not you are eligible for a loan. The City will determine if you are eligible for a grant. How Much May I Borrow? You may borrow up to $6,000 to improve your residential structure. You may receive a grant of up to $500 for minor repairs. How Long Will I Have to Repay It? If you receive a loan, you will have up to 10 years to pay the loan off. A grant need not be repaid. What is the Interest Rate on the Loan? There are two interest rates, 3 1/2% and 6 1/2%. The 3 1/2% rate is available to applicants whose incomes do not exceed the following limits: Number of Persons in Household Annual Income 1 $10,400 2 11,900 3 13,400 4 14,900 5 15,800 6 16,750 7 17,650 8 18,600 The 6 1/2% rate is available to any person in the rehabilitation area whose income exceeds the limits shown above. If you qualify for a 6 1/2% loan and wish to repay in 10 years, your monthly payment would be as follows: Amount of Loan $1,000 2,000 3,000 4,000 5,000 6,000 Monthly Payment $11.35 22.70 34.06 45.41 56.77 68.12 If you qualify for a 3 1/2% loan and wish to repay in 10 years, your monthly payment would be the following: Amount of Loan $1,000 2,000 3,000 4,000 5,000 6,000 Monthly Payment $ 9.88 19.77 29.66 39.55 49.44 59.33 0 0 Attachment 1 -3- What Type of Improvements Can I Make? The money may be used to improve both the inside and the outside of your home, in order to preserve the structure and to make it more livable. Who Do I Contact? You may contact Raymundo Becerra at the City's Community Planning and Development Department at 493-2171 for further information and to apply for a loan or grant. • 0 ATTACHMENT 2 Los Rios Home Improvement Program I. Introduction The Home Improvement Program provides both grants and loans to rehabilitate residential properties, both owner occupied and absentee owned, located within the Los Rios Area. (Exhibit A - Los Rios Area) The program is designed to meet the needs of the Los Rios Area residents and to meet the following housing objectives that were approved as part of the Los Rios Precise Plan: o "Fix -Up" and repair grants of up to $500 should be provided to allow residents to make minor repairs to their home which are essential to keep the residence habitable. o Provide a rehabilitation loan program to accommodate the special needs of dwellings which are structurally sound. o Improve current housing conditions in order to accommodate the present residential population, both owner and tenant. o Provide a counseling service to help residents improve their homes. o Preserve the character of the historic area and prevent demolition and deterioration of original structures. Funding for the Program is through the Community Development Block Grant Program (CDBG), a federally funded program under which urban counties (and cities of under 50,000 within those counties, such as San Juan Capistrano) are allocated funds for housing and community development purposes. The primary objective of the CDBG Program is to improve and develop urban communities by providing decent housing, a suitable living environment and expanded economic opportunities, primarily to persons of low and moderate income. The rehabilitation and preservation of housing is one of the key eligible activities permitted and encouraged by the CDBG Program. The County Board of Supervisors has allocated $25,000 during Year IV of the CDBG Program to be used for housing rehabilitation in San Juan Capistrano. The City has requested an additional $75,000 under Program Year V for the continuation of this activity. In October of 1977, the Board of Supervisors approved an operating agreement with Security Pacific National Bank whereby the bank agreed to consider making low interest loans to applicants approved by the County. A similar operating agreement (Exhibit B attached) can be established between the City of San Juan Capistrano and the bank. In order to allow such low interest on rehabilitation, the City will pay Security Pacific Bank a prepaid sum of interest thus reducing the prevailing conventional rate of interest. Attachment 2 -2- The Los Rios Home Improvement Program has two components: the loan program and the grant program. The loan program will allow a maximum of $6,000 to be used for residential improvements. There are 5 steps to the program: Step 1: Assessment of Improvements Needed Step 2: Loan Application Step 3: Work Contract Step 4: Construction Step 5: Completion In processing a loan, the property owner works with the City in assessing the type of improvements needed and the amount of loan required. The City provides loan information and assistance in preparing the loan application on the transmittal to the Lender. The Lender will notify both the property owner and the City of loan approval. The Lender forwards the loan proceeds to the City for transmittal to the property owner (Exhibit C - Loan Program). The Grant Program will provide up to $500 per dwelling unit to be utilized for minor repairs. The program consists of 5 steps: Step 1: Assessment of Improvements Needed Step 2: Grant Application Step 3: Supplies Provided Step 4: Construction Step 5: Completion The property owner or tenant works with the City to assess the needed improvements. A grant application is submitted to the City for review and approval. An account would be established at a designated retail outlet, where the approved applicant could charge supplies needed to complete specific work identified in the application. The expenses for the supplies would be billed to the City and its applicable account number. Repair work begins and periodic inspections are made by the City. After final inspections, a completion certificate is signed by the applicant. (Exhibit D - Grant Program) II. Eligibility Requirements A. Loan Program The owner occupant or absentee owner of a residential structure located within the Los Rios area may apply for a loan. The applicant must evidence adequate capacity to repay the loan, as determined by the lending institution. Since the Program is designed primarily to assist low to moderate income families, a 3 1/2% interest rate is available to applicants whose incomes do not exceed the following limits: Attachment 2 • -3- • Number of Persons in Household 1 2 3 4 5 6 7 8 Annual Income $10,400 11,900 13,400 14,900 15,800 16,750 17,650 18,600 Since it is the City's goal to improve the entire Los Rios Area, a 6 1/2% interest rate is available to persons whose income exceeds the limits shown above. The income limits are set by the Section 8 Housing Assistance Payment Program and is equivalent to 80% of the median income. These income limits are subject to change. HUD issues periodic updates of income guidelines. The maximum amount of loan funds available is $6,000 per dwelling unit, with a maximum maturity of 10 years. The following is a listing of elements included as income, for the purposes of a rehabilitation loan. Income of an applicant includes income of his/her family. The family includes any person related by blood, marriage or operation of law, who share the same dwelling unit. Applicant's income is established on an annual basis, at the time of applying for a loan and includes: 1. The applicant's earnings. 2. Spouse's earnings and earnings of all other members of the family who share the household. 3. Other income regularly received by the applicant or his/her family from any source. 4. Income from assets other than income producing real estate such as savings, stocks, bonds, vacant land, etc. 5. Net income from real estate, other than the property to be rehabilitated, and any other net business income. 6. Income from rental units on the property to be rehabilitated based on: a. gross rental income, and b. the average (derived from experiences of two or more years) expenditures for mortgage principal and interest, mortgage insurance premium, service charges, hazard insurance, real estate taxes, special assessments, maintenance and repairs, heating and utilities, ground rent, and other cash expenditures for the property such as advertising shall be calculated and deducted to obtain net income amount. If the applicant has not owned the property for two or more years, then the City shall estimate the income and expenditures based on the available information. Attachment 2 -4- For the purposes of establishing the applicant's income, children's income shall be excluded, providing the child is a dependent as defined by the U.S. Internal Revenue Service. B. Grant Program The owner occupant, absentee owner or tenant of a residential structure located within the Los Rios area may apply for a grant. In the case of a tenant (renter), the individual is required to submit a written agreement with the property owner consenting to the proposed improvements. The maximum amount of a grant available is $500 per dwelling unit. III. Eligible Improvements The following list includes examples of eligible improvements of the rehabilitation program. An emphasis will be placed upon making improvements to both the interior and the exterior of the residence. A. Exterior work to preserve the structure: painting, roofing, siding, fencing, etc. B. Interior work to make the structure more livable: painting, plastering, new flooring, etc. C. Improvements to mechanical elements of the structure: heating, system, plumbing repairs, electrical system, etc. Ineligible improvements are those items that are unnecessary as determined by the City and the Lender. IV. Procedures A. Loan Program Step 1 - Assessment of Improvements Needed The applicant discusses with a representative of the City's Community Planning and Development Department the type of home improvements needed. The City's representative will inspect the property and complete a work write-up and cost estimate for the applicant's approval. Step 2 - Loan Application The loan application and assistance in completing it is provided to the property owner. A completed application and work write-up is sent by the City to the Lender. The Lender will advise both the City and the applicant in writing of approval/disapproval. The Los Rios Review Committee will review the improvements proposed. 0 0 Attachment 2 -S- Step 3 - Work Contract A repair specifications form is completed by the City. The applicant is assisted in obtaining bids for the work (minimum of three). When a bid is accepted, a contract is prepared, signed and sent to the Lender. The Lender then forwards the loan documents to the City for the applicant's signature. After the documents are signed and returned to the Lender along with the City's interest subsidy, the Lender will transmit the Loan proceeds. Step 4 - Construction Repair work is initiated, with periodic inspections made by the City. Step S - Completion After the work is completed and final inspections are made, a completion certificate is signed by the property owner and sent to the Lender. B. Grant Program Step 1 - Assessment of Improvements Needed The applicant discusses with a representative of the City's Community Planning and Development Department the type of improvements needed. The City's representative will inspect the property and complete a work write-up and cost estimate for the applicant's approval. Step 2 - Grant Application A grant application is provided to the property owner or a tenant. In the case of a tenant, the individual is required to submit a written agreement with the property owner consenting to the proposed improvements. The application is reviewed by the Los Rios Review Committee and the City staff, after which the applicant is notified in writing of approval/disapproval. Step 3 - Supplies Provided An account would be established at a designated retail outlet, where the approved applicant could charge supplies needed to complete the specific work identified in the application. The expenses for the supplies would be billed to the City and its applicable account number. Step 4 - Construction Construction begins with periodic inspections made by the City. Attachment 2 Step S - -6- Completion Final inspections are certificate is signed file with the City. IR made by the City. A completion by the applicant and kept on 9 ❑ o uu ❑❑ Y9 a� IRS ��:>❑9❑�� ❑ 0 0 Q 0 S STEP LOAN PROGRAM STEP 1 - Assessment of Improvements Needed o Property Owner contacts City to apply for a loan o City assesses repairs needed STEP 2 - Loan Application o City files loan application with Lender o Lender notifies City and Property Owner of loan approval STEP 3 - Work Contract o City assists Property Owner in obtaining bids o Contract is awarded and sent to Lender o Loan proceeds transmitted to Property Owner through the City STEP 4 - Construction o Construction begins with periodic City inspections STEP S - Completion o Final inspections are made o Completion certificate sent to Lender 0 5 STEP GRANT PROGRAM 0 STEP 1 - Assessment of Improvements Needed o Property Owner or Tenant contacts City to apply for a grant o City assesses repairs needed STEP 2 - Grant Application o Grant application is filed with the City o City notifies applicant of grant approval/disapproval STEP 3 - Supplies Provided o Applicant receives supplies at designated retail outlet STEP 4 - Construction o Construction begins with periodic City inspections STEP 5 - Completion o Final inspections are made o Completion certificate filed with City P OPERATING AGRL119M' 111IS AGRENUN1' is entered illlto this 7th day of March ,1979 between City of Sn Jn C strno horeuiHaTcr re erred LO as locality" and the SECURITY PACIFIC NATIOrL,i, BAi1k hereinafter referred to as "Bank" IMERPAS, the Locality is carrying out a Neighborhood Conser- vation Program as a part of: the. Locality's Coim:nmity Develolnncnt Block Grant Program under the Ihuited States Housing and Conammity Development Act of 1974 which was re -authorized by the 1977 Act; and I'IMPd.15, the Locality <^sid the Bank desire to mutually agree upon the methods and procedures under which they will make loans for rchabili- tation and improvement purposes. NOW, 11MRGrORE, ME PARTIES MUALLY AGREE AS FOLLOWS: 1. Loan Application Package Locality shall refer all persons desiring credit lutder this Agreement to the Bank by fon+'arding to the Bank a Loma Application Package consist- ing of at least the followijig documents and materials: A. Letter of Introduction from City; B. Loan Application; Application Supplement and Bank's form of Fair Lending Notice; C. Construction Contract or Bids or Description of work with cost estimate; D. Applicant Authorization of Confidential Disclosure. Review of Loan Applications Within five (5) days of: receipt of the Loan Application Package, Bank shall review the Loan Application Pachage and fon:ard to the Locality, in addition to the applicant, a written notice indicating either the Bank's approval or disapproval of the loan application. Ue information contained in the Loan PackaV,c and in the L'ink's written notice shall be held by the Locality as d priviledgcd and confidential document and not as a public record. Locality warrants that Bank shall be held hcrnnless from any acts of locality's eiiyloycos in the course of the loam process, that may be in violation of State and/or Pcdei:al. credit granting statutes and regula- tions. Locality employees shall not express credit worthiness opinions to applicants. Loan Provisions -z A. Bank agrees to promptly mal:c loans for the Neighborhood Conservation Program in all cases where loan applications are approved by the Bank and the Locality B. The Locality shall subsidize the loan by making a single, "Lunmp Sunt" interest subsidy payment to the Bank at the time of loan funding so that the finance charge payable by the borrower shall be 33 enc( 6 Z. C. Rates to be charged as determined by Bank, prior to any interest subsidy, but not to exceed 12.009 Amival Percentage Rate. D. In cases where a borrower prepays a loan, Ban], shall refund to the Locality the unused prepaid interest subsidy, providing that such reftmud exceeds $50.00. Refund to be calculated based on the Rule of 78ths method. 4. Loan Documentation $ Disbursement A. Locality obtains a dated and signed rehabilitation contract. The contract must specify the t)lic: of improvements and the itemized cost of those improvements. If the property owner performs the work him- self or herself, the locality must certify the rehabilitation speci- fications and the itemized cost of each improvement. B. Locality fon%,ards the executed contract or locality -certified speci- fications to Bank with a request for loan do cements. C. Bank prepares and forwards loan documentation at the interest rate previously detemincd and. advises locality of the interest subsidy due. Payments on the loan shall be equal monthly instalments. The first payment is due 30 days from Note date. D. Locality obtains borrower's signature on loan documentation, arranges for notarial acknowledgments and returns all documtents to Bank. B. Bank fowards to the Locality loan proceeds in the faun of one or more Cashier's Checks payable to the borrower. If more than one check is necessary, the locality will inform the Bank of the number of checks to be issued. S. Completion Certificate A. Locality makes a final inspection. B. Locality executes the completion certification. (i) The certificate must be properly filled in and signed by both the customer and the contractors. It rust be dated the day it is sided by the borrowers, and borrowers must sign it only AI•'IT;R work has been completed. The completion certificate shall be accompanied by the necessary lien releases. -s (ii) Locality forwards the conj)leted and signed completion certifi- cate to Bank. 6. Collection of Funds The Basil: shall collect all monthly payments made on account of lomis originated under this loan program. 7lierc shall be nio additional cl.argc to the borrower or tho Locality for servicing of loans except charges to the borror:er resulting from late paynerts,defaults and/or foreclosures. The Federal Government and/or Bank or their designees arc not barred by this provi5jon from collecting amounts from the borrower which represent a loss of principal, interest and/or acbuinistrative or legal costs re- sulting froim a foreclosed loan. I)el.inxlucncy acid Foreclosure The Barth shall forward to the Locality a copy of defaults and fore- closure o}-, proposed foreclosure proceedings. The locality shall have the option to cure any default of the borroti-rcr. 'Ilio report by the Bank to the Locality of loan delinquencies shall be made at least once a month unless the Bank finds that the number of delinquent loans is to small to justify such reporting or the locality elects to waive such reporting. 8. Locality's Loan Liability Locality shall not be liable or responsible in any maiuler, in the event of borrower's default on the promissory note with Balilc, related to the loan. Teminati.on The tenor of this agreement shall be ongoing from the date of execution by the Locality and Bank. This agreement may be amended so long as such amend- ment is in writing and agreed upon by both Locality and Laid,. Termination of this agreement may he made by either Locality or Bank so long as written notice of intent to terminate is given by the other party at least 60 clays prior to the termination date. Any teniiination of this agreement shall not affect the operation thereof as it relates to loans outstanding at the time of said termination. �7 By-_ ` `}— Title < 1 i Y i/ I L i CR c( i, 1979 'APR 2 1979 d Approved by: 1979 By 4� P,! 6ancia Title kslsiant Vice President City Council. March 7 X1979 SLCUItl Y PACIFIC NATIONAL BANK 1.979 Approved as-to–form: 0