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Rehabilitation Program Guildlines
Town
of Chester
Martin
L. Heft
First
Selectman
203
Middlesex Avenue
P.O.
Box 218
Chester,
CT 06412-0218
June 30, 2004
TABLE OF CONTENTS
1. Introduction
2. Definitions
3. Eligibility Requirements
4. Verification of Income
5. Eligible Properties/ Activities
6. Ineligible Properties/ Activities
7. Financial Assistance
8. Subordination Policy
9. Scope of Work
10. Typical Rehabilitation Process
11. Displacement Relocation
12. Historic Preservation
13. Flood Plain Properties
14 Fair Market Rents
15. Further Information Contact
Attachments
Chester Housing Rehabilitation Application
1. Introduction
The Town of Chester, Connecticut, has received funding from the State of Connecticut Department of Economic and Community Development, as administered under Title I of the Housing and Community Development Act of 1974, and with amendments made in 1977 and 1987 . These funds are available to assist income eligible households by providing funding to perform eligible housing rehabilitation and general improvements to residential properties resulting in providing safe, decent and sanitary living conditions.
2. Definitions
The following are definitions of various terms as used with respect to the Town of Chester Housing Rehabilitation Program.
1. Annual income
The term annual income is defined as the anticipated income received by the all family members, including all net income derived from assets for the 12 month period following the effective date of initial determination.
2. Applicant
The term Applicant refers to the property owner requesting rehabilitation assistance. Tenants are not eligible to apply for funding.
3. Contract Documents
Plans and specifications which describe the improvements and provide the agreement between the Applicant and the Contractor.
4. Household Income
Household income is defined as the total amount of income derived from all individuals over the age of 18 regardless of relationship.
5. Municipality
The term Municipality refers to the Town of Chester, The Office of the First Selectman and their Agents, with the authority to act on behalf of the Town to implement and administer the Chester Housing Rehabilitation Program.
6. Program
The term Program refers to the Town of Chester Housing Rehabilitation Program guidelines. This Program is funded under the Connecticut Department of Economic and Community Development Small Cities Program, and is being administered by the Town of Chester.
7. Rehabilitation Assistance
The term Rehabilitation Assistance shall refer to those public funds expended by the Town for the improvement of structures within the Town of Chester in accordance with the rehabilitation guidelines.
8. Rehabilitation Specialist
The term Rehabilitation Specialist shall mean the individual or entity employed by the Town acting as a designated representative, who shall inspect the property, prepare the scope & budget, contract documents, other related documents necessary for the implementation of said program. The Rehabilitation Specialist shall monitor the project for compliance with the Town’s Rehabilitation Program and the Federal regulations which dictates the usage of the funding.
9. Rehabilitation
The term Rehabilitation shall mean the physical repair, renovation, alternation, removal or improvement to a property in accordance with the rules and regulations of the Town of Chester Rehabilitation Program as pursuant to 24 CFR 570.202.
10. Residential Property
The term Residential Property shall refer to an eligible property which, after rehabilitation, shall be devoted primarily to residential use. The property may be single family or multi-family structures.
11. Residential Unit
The term Residential Unit shall refer to that portion of a structure which is occupied or intended for residential use.
3. Eligibility Requirements
To qualify the Applicant must:
a. Own property in the Town of Chester.
b. The Occupants' income levels must not exceed the income limits shown on Attachment “A”, based the appropriate household sizes as shown below. Income limits are established by HUD and the State of Connecticut using the Non MSA Middlesex Metropolitan Statistical Area as determined by the Department of Economic and Community Development for the Town of Chester.
c. The property must have sufficient equity to support the proposed financial assistance provided by the Town. Typically, the Town will not exceed 80% of the after rehabilitation loan to valve ratio. The loan to value ratio is based on the Towns estimate of the after rehabilitation value of the property which includes the value of the proposed rehabilitation minus the existing and projected encumbrances. The Owner may, at their cost, provide an appraisal to determine current market property value if they disagree with the town assessment. The Municipality retains the right to perform their own appraisal to validate the Owners appraisal if necessary. Under special circumstances, as decided by the Municipality, at their own discretion, may waive the loan value ratio cap.
d. The proposed renovations must be eligible under CDBG program requirements.
4. Verification of Income
To qualify, the applicant must provide adequate income verification to establish annual household income for each household member over the age of 18, not a full time student at an accredited school, within each unit applying for rehabilitation assistance.
Annual income is defined as the anticipated income from all sources received by the Household head and spouse and by each additional member of the Household, including all net income derived from assets for the 12 month period following the effective date of initial determination.
24 CFR § 5.609 (b) annual income includes, but is not limited to:
1. The full amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses, and other compensation for personal services;
2. The net income from the operation of a business or profession. Expenditures for business expansion or amortization of capital indebtedness shall not be used as deductions in determining net income. An allowance for deprecation of assets used in a business or profession may be deducted, based on straight line deprecation, as provided in the Internal Revenue Service regulations. Any withdrawal of cash or assets from the operation will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by the family.
3. Interest, dividends, and other net income of any kind from real or personal property. Expenditures for amortization or capital indebtedness shall not be used as deductions in determining net income. An allowance for depreciation is permitted only as defined in 24 CFR § 5.609 (b)(2). Any withdrawal of cash or assets from an investment will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested by the family. When the family has net family assets in excess of $ 5,000.00, annual income shall include the greater of the actual income derived from all net family assets or a percentage of the value of such assets based on current passport savings rate as determined by HUD.
4. The full amount of periodic payments received from Social Security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic receipts;
5. Payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay;
6. Welfare Assistance. If the Welfare Assistance payment includes an amount specifically designated for shelter and utilities that is subject to adjustment by the Welfare Assistance agency in accordance with the actual cost of shelter and utilities;
7. Periodic and determinable allowances such as alimony and child support payments, and regular contributions or gifts received from organizations or from persons not residing in the dwelling.
8. All regular pay, special pay and allowances of a member of the Armed Force
The following items are acceptable forms of income verification
a. Signed Federal tax return (if filed within the last three months)
b. Recent payroll stubs that show year to date earnings (minimum three (3) pay checks)
c. Social Security Statement of benefit
d. Bank statements showing direct deposit of pensions
e. Employer income verification.
f. Notarized self certification (tenants only)
5. Eligible Properties/ Activities
Properties participating in the Housing Rehabilitation Program must meet the following conditions:
1. The property must be located within the Town of Chester. Property taxes must be current or an approved payment plan must be in place.
2. The property must be residential. non-residential space may be converted into residential use using CDBG funds.
3. The property must meet Housing Quality Standards upon completion. Additional repairs such as structural deficiencies, code violations, weatherization improvements, lead paint hazard reduction activities and mechanical upgrades will be considered on an as needed basis.
4. The property must have sufficient equity to make the proposed rehabilitation economically feasible and justified. The Municipality retains the right to review each project on a case by case basis if insufficient equity is determined.
5. 100% of all units rehabilitated must be occupied by eligible low and moderate-income households.
6. Any proposed rehabilitation, on properties more than 50 years old, or buildings with significant architectural or historical significance, not in accordance with the Secretary of the Interiors Standards of Rehabilitation shall be reviewed by the State Historic Preservation Office (SHPO) for compliance with the Secretary of the Interiors Standards of Rehabilitation.
7. All rehabilitated properties shall address lead based paint hazard reduction activities in accordance with 24 CFR part 35 as applicable.
6. Ineligible Properties/Activities
1. Any non-residential property, unless the intention of the rehabilitation is to create residential property.
2. Any property with outstanding back taxes where no approved payment plan is in place.
3. Luxury construction activities such as pools, decks, skylights, additions which does not result in additional bedrooms. Additions are permissible only with the express written consent of the Municipality.
4. Landscaping, plantings or fencing.
5. Out-buildings, with exception to detached garages, when the work on the garage is incidental to the over all project.
7. Financial Assistance
Subsidy Agreement
All property owners with eligible properties will be required to sign a Subsidy Agreement prior to executing a contract with the "Contractor." The conditions of this agreement will be attached on the properties' land records. This agreement will commit the owner to the following for a period of 5 years:
1. Low and Moderate Income Occupancy
2. Chester Housing Code Standards
3. Fair Market Rents
4. Fair Marketing Efforts for newly vacant units
Types of Assistance
1. Deferred Loan Program: Low or Moderate Income Eligibility.
2. This loan will include a deferred loan re-payable upon sale of property at:
3. 0% interest for households less than 50% of median income adjusted for household size.
4. 2% interest for households at or greater than 50% of median income adjusted for household size.
5.
Senior citizen homeowners pay 0% and non-senior homeowners pay 2%.
Repayment of the loan will be deferred until the sale of the rehabilitated
housing
unit.
6. To provide housing rehabilitation grants to the elderly. The covenants of the Subsidy Loan Agreement shall remain in effect for a period of five years following the date of completion and acceptance of the work by the Applicant and the Agency The covenants of the Subsidy Loan Agreement shall be secured by the rehabilitated property and shall bind the heirs, successors and assigns of the Applicant. The grant shall be due and payable to the Town of Chester at the time of any transfer of the ownership of the property during the five-year period to anyone other than the Applicant, whether by sale, gift, death or inheritance.
8. Subordination Policy
In the event of a refinance the Owner may request a subordination agreement from the Town. The Owner would be responsible to provide the following information for review by the Town before rendering a decision.
a. Written request from applicant requesting subordination of Small Cities Loan. Applicant shall include name, address and phone number of potential lender.
b. Dollar amount of proposed refinance, amount of current mortgage and/or any additional debt to be consolidated in the refinance.
c. Current income information from all household members over the age of 18 years old, not full time students. This information will be utilized to determine eligibility of the household in relationship to the current annual income limits as established by HUD for Section 8 programs.
d. A summary of the intention of the refinance, i.e., debt consolidation, reduction of interest, cash out, etc.
e. A current appraisal and title search of the subject property. Appraisals shall be provided by the applicant, however the Town reserves the right to obtain independent verification at the applicants cost.
f. Copy of current homeowner’s insurance policy in the form of a certificate of insurance in amounts and from a company acceptable to the Town.
9. Scope of Work
The scope of work covered under this program will include the correction of existing code violations, incipient code violations, preventive maintenance, and other reasonable items of work requested by the owner and approved by the Town and any activities eligible pursuant to 24 CFR Part 570.2
It is the Town's express intent to upgrade and extend the economic life and livability of structures receiving assistance.
The Town reserves the right to review each application to determine if said application is an emergency situation or not. If emergency conditions exist, i.e., failed heat, non-potable water, lack of water, septic violations, structural or conditions which jeopardize the integrity of the unit and/or its occupants, the Town retains the right to prioritize this application.
At any time, if deemed necessary, the Town can approve those items being addressed to eliminate the emergency conditions.
The Town also retains the right to waive compliances full H.Q.S. and Energy Standards requirements if extenuating circumstances exist.
10. Typical Rehabilitation Process
The following is a typical course of events that will transpire during a rehabilitation project:
a. The Municipality will solicit and accept applications from interested owners. Tax check information, assessors’ cards and other pertinent information will be provided by the Municipality and the application will be forwarded to the Rehabilitation Specialist.
b. The Rehabilitation Specialist will receive applications and contact interested applicants, to set-up initial inspections.
c. During the initial inspection the owner will be re-qualified based on income if necessary, and informed of the program process and requirements. The scope of work requested by the owner will be reviewed and an initial inspection of the property performed.
d. All applicants will be notified of their eligibility status.
e. Eligible applicants may be contacted by the Building Official and/or Fire Marshal to inspect the property if necessary. The Building Official and/or Fire Marshal will submit a written report of their findings to the Rehabilitation Specialist for inclusion in the scope of work.
f. Lead tests will be performed on all homes built before 1978. All lead based paint must be addressed through the rehabilitation process.
g. The Municipality will obtain a title search of the property to ascertain the amount of equity available. Lack of sufficient equity satisfactorily to secure the Towns loan may prohibit funding.
h. The Rehabilitation Specialist will then schedule a meeting with the property owner to review the inspection reports and recommendations.
i. The Rehabilitation Specialist will then prepare a cost estimate of all eligible rehabilitation costs for property owner's approval.
j. The Rehabilitation Specialist will review the proposed project cost and owner's income against standard loan ratios used in lending to provide a preliminary determination of the owner's ability to afford a loan. Preliminary determination of the financial subsidy will be determined at this point.
k. The Rehabilitation Specialist will prepare detailed specifications and meet with owner to review the specifications and obtain the applicant's approval.
l. Cost estimates/bids from contractors will be obtained (as part of bidding process when jobs are formally advertised pre-bid conferences will be held with interested contractors to explain the specifications and view the project site). The Municipality may allow the owner to solicit bids if determined to be in the Town's best interest. This includes Section 3 outreach efforts at this time. The Municipality will make additional out-reach efforts to inform and employ Minority/Female contractors on these projects.
m. The Rehabilitation Specialist will review bids with property owners in detail. The Municipality will base its funding on the lowest responsive bid received. The owner may select any bidder provided that they pay the difference between the low responsive bid/proposal price and the selected bid/proposal price.
n. The Rehabilitation Specialist will prepare a contract between the owner and selected contractor.
o. The Rehabilitation Specialist will prepare loan documents to secure funding. Prior to the contract signing, there may be a pre-construction conference with the property owner and the contractor to review the scope of work, approximate starting date, method of payment, etc.
p. A notice to proceed will be issued to the contractor authorizing the start of work. The Contractor and Owner shall coordinate the work schedule.
q. All invoices will be checked against actual work performed before payments are made. The Municipality and property owner will sign off on all payment requests authorizing the release of funds. Payment shall be issued by the Municipality as a two party check made payable to the Contractor and owner.
r. Any disputes between the property owner and the contractor which can not be resolved by the Rehabilitation Specialist or Program Coordinator will be submitted to a third party for binding arbitration pursuant to DECD requirements. The decision of the arbitration will be final and binding on both parties.
s. Upon completion of the job, final inspection will be performed by the Rehabilitation Specialist and the Building Official if required.
t. Any deficiencies found during the final inspection, shall be addressed by the Contractor prior to release of final payment.
u. The Contractor will provide a final lien waiver to the Owner
v. Close out documentation such as clearance tests, lien waivers, warranty information, Building Official and or Fire Marshal approvals must be obtained before final payment is issued.
11. Displacement/Relocation
1. No project which requires permanent relocation or permanent displacement will be eligible for funding.
2. No funding will be provided for temporary relocation of owner occupied properties.
3. Temporary relocation of tenants during construction will be considered only if the work cannot be staged to allow the tenants to remain in their unit during construction.
4. Any project which requires temporary relocation assistance must receive approval by the Municipality prior to the commitment of any funds. Income eligible tenants may receive relocation benefits through the Uniform Relocation Act and Section 104(d) if eligible.
12. Historic Preservation
Any property over 50 years old shall be rehabilitated in accordance with the Secretary of the Interiors Standards for Rehabilitation for older homes. This process includes State historical review from the State Historic Preservation Office (SHPO) and possible concurrence with local historical jurisdictions. If the subject property is located within a surveyed area and listed on the survey all work must conform to the Secretary of the Interiors Standards of Rehabilitation for older homes.
If the subject is located in a surveyed area but not listed on the survey the proposed work does not need to comply with the Secretary of the Interiors Standard of Rehabilitation of older homes. If the subject property is not in a surveyed area but 50 years old or older then any work not in accordance with the Secretary of the Interiors Standards of Rehabilitation of older homes must be review and approved by the SHPO prior to performing the work.
13. Flood Plain Properties
Federal regulations require that any property receiving Federal funding located within a 100 year flood plain have adequate flood insurance coverage as a condition of participation.
14. Fair Market Rents (FMR)
Any rental unit receiving assistance shall not be rented in excess of the current Fair Market Rent (FMR) as listed by the Department of Economic and Community Development for a period of five (5) years from the date of completion of rehabilitation assistance. See Attachment “B”
Existing Rents
Existing rents cannot be increased in excess of the current FMR or, in excess of 30% of the tenants’ adjusted gross income, including utility allowances, which ever is less. Existing rents in excess of 30% of the tenants adjusted gross income, but less than the posted FMR, are acceptable, however, in no circumstances can these rents be increased beyond the 30% of the tenants adjusted gross income. Any existing rent greater than the current FMR must be lowered to the 30% of the tenants adjusted gross income or the FMR which ever is greater.
New Rents
New rents cannot be in excess of the current FMR as listed by the Department of Economic and Community Development or 30% of the tenants income whichever is less.
Rent levels may be increased beyond 30% of the tenants’ adjusted gross annual income or the present FMR when extenuating circumstances exist and the property owner receives written consent from the Municipality.
The Department of Housing & Urban Development modifies FMS and utility allowances annually. The Property Owner may contact the Municipality to obtain the updates. The current rent levels per month, including utility allowances are as follows:
15. For Further Information Contact: L. Wagner & Associates, 51 Lakeside Blvd. East Waterbury, CT 06716, 203-573-1188, Monday – Friday 8:30 a.m. – 5:00 p.m.
Program
Guidelines are subject to change, without notice, as may be amended by
Federal, State or Local regulation or requirement.
