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HomeMy WebLinkAboutRDA AG PKT 2004-02-23 #B AGENDA REPORT DATE: February 23, 2004 TO: Chairperson and Members of the Redevelopment Agency THRU: John B. Bahorski, Executive Director FROM: Lee Whittenberg, Director of Development Services SUBJECT: HOME IMPROVEMENT PROGRAM STATUS REPORT SUMMARY OF REQUEST: Receive and File Staff Report. BACKGROUND: This Staff Report updates information presented to the Agency on August 25, 2003 regarding the status of the Home Improvement Program. At the August 25, 2003 Agency meeting the Redevelopment Agency was informed that it had obligated all available funds for the various rehabilitation loan and grant programs and mortgage assistance programs. Thus, the Agency would not be able to authorize funding of any pending applications until further notice. It was indicated at the August 25, 2003 Agency meeting that since the program inception, funds for these programs have always been available on a first -come, first serve basis. Due to the large number of applications that had been received, the state budget crisis and the delay in the State funding of a loan, there are no available un- obligated funds at the present time. Home Improvement Program Summary — February 18, 2004 Provided below is a summary of the current status of the program, including both Mortgage Assistance and Home Improvement program components: Mortgage Assistance Program Loans: Number of Loans Funding Amount Loans Closed - 3 $ 84,800 Pending Loans — 0 - 0 - RDA It8m B Z:\My Documents \RDA \Home Imp Program Procedures \Program Status Report 2.RDA Staff Report.doc \LW\02 -18 -03 Home Improvement Program Status Report Redevelopment Agency Staff Report February 23, 2004 Home Improvement Program Loans: Number of Loans Funding Amount Loans Closed —9 $ 230,152 Loans under Construction/Funded — 10 $ 573,968 Loans on Suspension — 11 $ 570,000 CalHome Program Status (State of California Department of Housing and Community Development): At the August 25, 2003 Agency meeting staff was authorized to submit an application for funding through the CalHome Program, and an application for $498,000 was submitted to the state in October 2003. The City has received formal notice from the California Department of Housing and Community Development that our application for Owner - Occupied Housing Rehabilitation funding assistance was 'not approved. A total of 102 applications for a funding level of $56.8 million were received by the State. The State ultimately funded 72 applications at an expanded funding level of $39.7 million. The State received requests for funding that exceeded the available program funds by $17.1 million, our application being one of the un- funded applications. MPROP Loan Status: At this time the remaining potential funding source for the continuation of all of the various grant, loan and mortgage assistance programs is the potential approval of an " MPROP" loan by the State of California. At the time the Agency issued bonds to provide financing of the acquisition of the Seal Beach Trailer Park, the State offered a $1,000,000 loan to assist in the purchase. Due to processing time, the Agency contributed a $1,000,000 "bridge loan" to complete the purchase, with the understanding that, when and if the MPROP loan funded, such funds would be used to repay the Agency the bridge loan. At this time it is extremely uncertain as to the potential of the Agency to ever receive those funds. The approval of the MPROP Loan is contingent upon approval by 2 /3rds of the residents within the Seal Beach Trailer Park. At the time of the purchase in 2000, apparently a sufficient number of residents had provided their consent to the MPROP loan. However, since the sale of the park, lawsuits against the purchaser and seller have been filed and some residents have withheld their consent to the MPROP loan. If the approval by the residents of the Seal Beach Trailer Park is granted within the time period required by the State of California, (all necessary application materials to be provided to the State in a time frame in order for the State to approve the MPROP loan by March 1, 2004), those MPROP funds are then scheduled to be re- deposited into the Redevelopment Agency's Low and Moderate Income Housing Set -Aside Fund, and then deposited back into the various loan programs for the funding of those projects already in the pipeline. The funding of the MPROP Loan by the State of California and the depositing of those funds with the Redevelopment Agency Program Status Report 2 . RDA Staff Report 2 Home Improvement Program Status Report Redevelopment Agency Staff Report February 23, 2004 would then allow the Agency to fund all pending applications. Again, this appears highly unlikely at this time, in the opinion of staff. Fund Availability from Low -Mod Housing Set Aside Account Deposits: Due to high demand for the program, there will be no substantial funds available for additional project funding until Fiscal Year 2005 -2006 at the earliest, or approximately July 2005. City staff will be aggressively pursuing various state programs that may be able to provide funds to allow for continued funding of those projects that are currently impacted by the lack of available funds. Status of Program Participants that are Under Suspension at this Time: A total of 11 applicants are unfortunately still subject to the suspension of the program at this time due to the lack of funds. There are 5 applicants within the Seal Beach Trailer Park and 6 applicants throughout the remainder of the community. Following is the current status of these program participants: ❑ 4 have selected a contractor to proceed with the work, and have executed a contract with the selected contractor ❑ 3 have received bids from contractors and have not selected a contractor, and ❑ 4 are in the process of receiving bids from contractors. The total funding for those projects placed in suspension at this time is estimated to be $570,000. Receipt of the MPROP funds will completely fund those projects and have additional funding of approximately $400,000 for future program participants. Staff sent letters to those program participants impacted by the initial suspension in August 2003, explaining the current situation and expressing the apology of the City for this situation. Staff has also sent a follow -up letter to those same program participants indicating the decision of the State to not fund the CalHome program application. Understandably, those program participants that cannot proceed are quite upset, and the letter expresses the City's apology for having to inform them of this situation. A copy of this letter is provided as Attachment 1 for the information of the Agency members. County Orange Community Department Block Grant Program: Staff has also contacted the County of Orange Department of Housing and Community Development regarding potential funding sources available to the City through the Community Development Block Grant Program. The City has utilized this program in the past for "emergency rehabilitation and repair" work as certain specific problems have arisen in the community in the past. Exploratory discussions have been held with County staff, and it appears there be some limited funds available. These funds in all likelihood will be available for the repair of health and safety aspects of a project that are considered to be "emergency" in nature, and in all probability will not be able to fund the entire scope of many of the projects that are in suspension at this time. Staff is continuing to Program Status Report 2.RDA Staff Report 3 Honie Improvement Program Status Report Redevelopment Agency Staff Report February 23, 2004 explore funding availability with the County of Orange, and has no certain answers from the County at this time. However, these funds may allow the most critical aspects of a project that deal with health and safety issues to proceed without the uncertain timing involved with the potential MPROP funding by the State. Responses to Public Concerns Regarding Program Implementation: Staff and the City consultant, CivicStone, have prepared "City of Seal Beach Home Improvement Program — Frequently Asked Questions" to respond to many of the general day -to -day operational questions that interested citizens ask regarding the program. A copy of this information is provided as Attachment 2 for the information of the Agency members and public FISCAL IMPACT: The lack of available funds for the program implementation has resulted in the suspension of the program at this time. All projects that have formally executed contracts and other required program documents by the Redevelopment Agency Executive Director will be able to proceed to completion. Projects that have not received formally executed documents by the Executive Director of the Redevelopment Agency will continue to be suspended until such time as funds are again available within the Redevelopment Agency Low- and Moderate - Income Housing Set -aside Fund. Existing staff resources will be allocated to pursue potential funding for project implementation with the County of Orange and the State of California Department of Housing and Community Development. RECOMMENDATION: Receive and File Staff Report. NOTED D APP VED: e Whittenberg John :. Bahorski, Executive Director D irector of Development Service Re.:-velopment Agency Attachments: (2) Program Status Report 2 . RDA Staff Report 4 Home Improvement Program Status Report Redevelopment Agency Staff Report February 23, 2004 Attachment 1: Letter to Program Participants re: Program Suspension — Seal Beach Home Improvement Programs Attachment 2: "City of Seal Beach Home Improvement Program — Frequently Asked Questions ", dated February 2004 Program Status Report 2.RDA Staff Report 5 Home Improvement Program Status Report Redevelopment Agency Staff Report February 23, 2004 ATTACHMENT 1 LETTER TO PROGRAM PARTICIPANTS RE: PROGRAM SUSPENSION - SEAL BEACH HOME IMPROVEMENT PROGRAMS Program Status Report 2.RDA Staff Report 6 • Home Improvement Program Status Report Redevelopment Agency Staff Report Februa v 23, 2004 BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED AND FIRST CLASS MAIL February 18, 2004 (Program Participant Address) SUBJECT: PROGRAM SUSPENSION - SEAL BEACH HOME IMPROVEMENT PROGRAMS On August 13, 2003, I sent you a letter informing you of the suspension of the Seal Beach Home Improvement Program due to the lack of funds to continue the program. As was indicated at that time, funds for these programs have always been available on a first -come, first serve basis. Due to the large number of applications that preceded your application, the state budget crisis and the delay in the State funding of a loan, there were no available funds at that time. CalHome Program Status (State of California Department of Housing and Community Development): At the August 25, 2003 Agency meeting staff was authorized to submit an application for funding through the CalHome Program, and an application for $498,000 was submitted to the state in October 2003. The City has received formal notice from the California Department of Housing and Community Development that our application for Owner - Occupied Housing Rehabilitation funding assistance was not approved. A total of 102 applications for a funding level of $56.8 million were received by the State. The State ultimately funded 72 applications at an expanded funding level of $39.7 million. The State received requests for funding that exceeded the available program funds by $17.1 million, our application being one of the un- funded applications. MPROP Loan Status: At this time the remaining potential funding source for the continuation of all of the various grant, loan and mortgage assistance programs is the potential approval of an "MPROP" loan by the State of California. At the time the Agency issued bonds to provide financing of the acquisition of the Seal Beach Trailer Park, the State offered a $1,000,000 loan to assist in the purchase. Due to processing time, the Agency contributed a $1,000,000 "bridge loan" to Program Status Report 2.RDA Staff Report 7 Home Improvement Program Status Report Redevelopment Agency Staff Report February 23, 2004 complete the purchase, with the understanding that, when and if the MPROP loan funded, such funds would be used to repay the Agency the bridge loan. At this time it is extremely uncertain as to the potential of the Agency to ever receive those funds. The approval of the MPROP Loan is contingent upon approval by 2 /3rds of the residents within the Seal Beach Trailer Park. At the time of the purchase in 2000, apparently a sufficient number of residents had provided their consent to the MPROP loan. However, since the sale of the park, lawsuits against the purchaser and seller have been filed and some residents have withheld their consent to the MPROP loan. If the approval by the residents of the Seal Beach Trailer Park is granted within the time period required by the State of California, (all necessary application materials to be provided to the State in a time frame in order for the State to approve the MPROP loan by March 1, 2004), those MPROP funds are then scheduled to be re- deposited into the Redevelopment Agency's Low and Moderate Income Housing Set -Aside Fund, and then deposited back into the various loan programs for the funding of those projects already in the pipeline. The funding of the MPROP Loan by the State of California and the depositing of those funds with the Redevelopment Agency would then allow the Agency to fund all pending applications. Again, this appears highly unlikely at this time, in the opinion of staff. Continued Suspension of Program: Due to high demand for the program, there will be no substantial funds available for additional project funding until Fiscal Year 2005 -2006 at the earliest, or approximately July 2005. City staff will continue to aggressively pursuing various state programs that may be able to provide funds to allow for continued funding of those projects, like yours, that are currently impacted by the lack of available funds. Please contact my office at your earliest convenience to schedule a private meeting with me to discuss this situation in greater detail. I understand the deep disappointment this will place on you and wish to avail myself to discuss these matters on an individual and private basis. Please understand that we are taking every step possible to find funds so that more applications may be processed and approved; however, without the MPROP funding and the State "takeaways ", there does not appear to be any other sources of funds. Please do not contact CivicStone, as these decisions are decisions of the Redevelopment Agency and cannot be modified or changed in any manner by CivicStone. I can be reached at (562) 431 -2527, extension 313, or by e -mail at lhittenberg @ci.seal - beach.ca.us. Sincerely, Lee Whittenberg Director of Development Services Program Status Report 2 . RDA Staff Report 8 Home Improvement Program Status Report Redevelopment Agency Staff Report February 23, 2004 Cc: City Manager City Council CivicStone Program Status Report ?.RDA Staff Report 9 Home Improvement Program Status Report Redevelopment Agency Staff Report February 23, 2004 ATTACHMENT 2 "CITY OF SEAL BEACH HOME IMPROVEMENT PROGRAM - FREQUENTLY ASKED QUESTIONS ", DATED FEBRUARY 2004 Program Status Report 2.RDA Staff Report 10 Home Improvement Program Status Report Redevelopment Agency Staff Report February 23, 2004 City of Seal Beach Home Improvement Program Frequently Ask Questions Q: How does an applicant apply for the Program? A: An applicant contacts CivicStone requesting information (909) 885 -0229. CivicStone then sends a package to the applicant containing a cover letter, necessary applications and a flyer explaining the qualifications for the grant and loan products. Q: Why is there a waiting list? A: The Home Improvement Program has been operating in Seal Beach for several years. The original design of the program did not attract many applicants and the City's funding was in jeopardy of being lost because of low Program participation. As a result, the program was redesigned and approved by the City Council in 2002. The redesigned program attracted many more applicants than the City anticipated and that the funding levels could accommodate. Today people who request to be on the waiting list complete an application and send it to CivicStone. The date the application is received determines the order in which they will be notified if future funding becomes available. Q: How was the Home Improvement Program advertised? A: The local cable channel advertised the Program with text messaging and in the program was also advertised in the City of Seal Beach "City View and Recreation Guide ". Public Hearings were conducted and were televised on the local cable channel. Since most of the qualified applicants and work would likely be performed in the Seal Beach Trailer Park, residents were informed of the Program by an application package mailed to each resident in October 2002. In addition, one of the Resident Boards also sent out flyers on several occasions. Q: How come work started on some applicant's homes before others? A: Work commences when the applicant has completed the following steps: 1. The application is completed and all the required backup documentation, including all of the required income verification (i.e. income tax returns, W -2, payroll stubs) is properly submitted. Program Status Report 2.RDA Staff Report 11 Home Improvement Program Status Report Redevelopment Agency Staff Report February 23, 2004 2. CivicStone prepares a Scope of Repairs under the direction of the homeowner. Many people delay getting CivicStone a signed copy because they can't decide on some of the details. 3. Project plans are submitted to the City for review and approval prior to the initiation of construction. Depending on the nature of the project, one or both of the following may need to occur prior to contract execution: ❑ Projects not requiring discretionary approval by the Planning Commission: ❑ These are typically projects that meet all general zoning and construction standards of eh City and no special, discretionary approval, is necessary by the Planning Commission. The most typical project that requires this type of approval is requests for two -story cabana structures within the Seal Beach Trailer Park. • ❑ If the proposed project meets all city requirements and no discretionary approvals are needed, a "plan check" process is completed by the Building Department to ensure compliance with all building, plumbing. Electrical and other construction code requirements. ❑ If the project entails an addition of living space and is located in the Coastal Zone (located between Westminster Avenue and the pacific Ocean) an additional approval must be received from the California Coastal Commission before the necessary construction permits can be issued and the work commences. ❑ Projects requiring discretionary approval by the Planning Commission: ❑ The most typical project that requires this type of approval is requests for two -story cabana structures within the Seal Beach Trailer Park. ❑ Upon consideration and approval by the Planning Commission of the necessary discretionary permit, the process described above is then applicable. 4. The applicant selects a general contractor and signs all of the documents necessary to start construction. CivicStone helps the applicants with the bidding process but some people take longer than others to make their selection. Q: Why is there no more funding available? A: The City Council approved the Home Improvement Program, anticipating a certain level of MPROP funds. The City incurred more legal costs on housing issues than anticipated and the MPROP funds have not come Program Status Report 2.RDA Staff Report 12 Home Improvement Program Status Report Redevelopment Agency Staff Report February 23, 2004 through yet. One million dollars of MPROP funding is available from the State of California. In order for these funds to be released, the residents of the Seal Beach Mobile Home Park need to sign an MPROP agreement. The required number of signatures has not been obtained for the agreement. Therefore, the State of California has not released these funds and the fund reservation by the State will expire on March 1, 2004. At the August 25, 2003 Agency meeting staff was authorized to submit an application for funding through the CalHome Program, and an application for $498,000 for Owner- Occupied Housing Rehabilitation funding assistance was submitted to the state in October 2003. The City received formal notice on February 4, 2004 from the California Department of Housing and Community Development that the City's application for Owner - Occupied Housing Rehabilitation funding assistance was not approved. A total of 102 applications for a funding level of $56.8 million were received by the State. The State ultimately funded 72 applications at an expanded funding level of $39.7 million. The State received requests for funding that exceeded the available program funds by $17.1 million, our application being one of the un- funded applications. Q: If the MPROP funds are eventually provided to the City, will all of those funds be allocated to the Seal Beach Trailer Park? A: No. Most of the funds could be allocated to the Trailer Park residents, due to the income levels of the applicants from the park. However, the MPROP funds would be available to all residents of the City. Q: Other than the MPROP funds, are there any other funds the City is pursuing? A: The City applied for $498,000 housing funding from the State of California in a competitive process with other cities and counties throughout the State. The funding for this money is from Proposition 46 Bond Financing and is not in jeopardy of being withdrawn due to the State budget crisis. Although the City had an excellent chance to receive these funds due to their experience, cities with larger populations received bonus points and consequently beat out the City of Seal Beach. The City intends on applying for the same funding in mid -2004 and every six months until the State runs out of money. Q: Does the Home Improvement Program allow luxury items such as spas, pools, etc.? A: No. Some applicants have chosen to contribute their own funds and pay for these improvements outside of their contract under this Program. This Program Status Report 2 .RDA Staff Report 13 Home Improvement Program Status Report Redevelopment Agency Staff Report February 23, 2004 allows the applicant to have extra home improvements completed by the same contractor, and take advantage of the contractor already working on the premises. Q: What is the process for paying the contractors? A: No money is ever given directly to CivicStone or the Homeowner for Contractor payments. At the same time, no payment is ever made to the Contractor without the Homeowner's approval. The process consists of the following: 1. A "Scope of Improvements" is prepared and approved by the homeowner. 2. A contract is approved between the homeowner and the contractor that includes a schedule of progress payments. 3. The contractor completes their work and submits an invoice for payment. 4. CivicStone and the homeowner inspect the work and both sign for approval. 5. CivicStone submits the invoice and progress payment approvals to the City. 6. Upon receipt of the necessary documentation from CivicStone, the City pays the contractor directly. CivicStone does not control the funds to implement this program. The City of Seal Beach Department of Administrative Services makes all program payments. Program Status Report 2 .RDA Staff Report 14