COUNTY OF SANTA CLARA Department of Planning and Development Office of Affordable Housing Housing and Community Development Program

Transcription

1 COUNTY OF SANTA CLARA Department of Planning and Development Office of Affordable Housing Housing and Community Development Program Owner-Occupied Residential Housing Rehabilitation Program Loan and Grant POLICIES and PROCEDURES MANUAL The Urban County consists of: The Unincorporated Areas of Santa Clara County and the Cities of: Campbell, Los Altos, Los Altos Hills, Los Gatos, Monte Sereno, and Morgan Hill, and Saratoga SCC Housing Rehab Guidelines Page 1 of 43 Updated June, 2013

2 Table of Contents PROGRAMS OVERVIEW... 4 PROGRAM FUNDING SOURCES... 5 FEDERAL FUNDS... 5 Community Development Block Grant (CDBG)... 5 STATE FUNDS... 5 CalHome Program... 5 HOUSING REHABILITATION GRANTS... 6 Emergency Home Repair Terms and Conditions... 6 The Healthy Home Repair Grant Program... 7 The Accessibility Grant Program... 7 ELIGIBILITY... 7 Eligible Applicants:... 7 Low-income:... 7 Owner-occupants of a mobile home, single family home, or duplex, whose gross annual income does not exceed 80% of the Santa Clara County Area Median Income (AMI), adjusted for household size. Refer to Exhibit A, the Maximum Income Limit sheet for eligible income levels Eligible Properties: Owner-occupied mobile homes and owner-occupied single-family properties located in the Urban County. The Urban County consists of:... 7 ELIGIBLE REPAIRS... 8 ADDITIONAL HOMEOWNER GRANT CONDITIONS... 9 REHAB GRANT AND LOAN PROGRAM APPLICATION PROCESS HOUSING REHABILITATION LOAN and GRANT PROGRAM GUIDELINES Residency Requirement Assets COUNTY UNDERWRITING GUIDELINES NEXT STEPS, SCOPE-OF-WORK, CONSTRUCTION PROCESS Approval Process Withdrawal from Program Accomplishment of Work Scope of Work, Contractor Change-Orders Contractor and Contract Ineligible Contractors Page 2 of 43 Updated June 2013

3 Bid Opening and Review Progress Payment Procedure Retention Payment Financing Loan Limits The County has established a loan limit of one hundred thousand dollars ($100,000) for repairing an owner-occupied dwelling using CDBG funds. Loans approved with CalHome funds have a maximum $57,000 loan limit but may be combined with CDBG funds for a maximum loan amount of $100,000 per project. The County Housing loan Committee does have discretion to approve funds over the $100,000 limit if needed LOAN/GRANT REQUIREMENTS and DOCUMENTS CONTRACTOR INFORMATION EXHIBIT A FY 2013 UNCAPPED PROGRAM MAXIMUM INCOME LIMITS EXHIBIT B Examples of ELIGIBLE and INELIGIBLE COSTS EXHIBIT C CDBG and HOME LEAD BASED PAINT REQUIREMENTS for REHABILITATION PROJECTS of HOMES BUILT PRIOR to EXHIBIT D DEFINITIONS EXHIBIT E RENTAL REHABILITATION PROGRAM (RRP) Page 3 of 43 Updated June 2013

4 PROGRAMS OVERVIEW The goal of the County Housing Rehabilitation Loan Program and the Health and Safety Home Repair Grant Program (the Programs ) is to maintain the existing supply of affordable housing and to provide financial assistance to homeowners who lack sufficient resources to make needed repairs to bring the property up to decent, safe, and sanitary, health, and safety code as defined in the Health and Safety Code Section and Section The County of Santa Clara s Health and Safety Home Repair Grant Program is a Rehabilitation Program and not a remodeling program. The Program is primarily intended to repair homes that are in poor or dilapidated condition, have numerous code deficiencies, and do not meet current building and or Housing Quality Standards (HQS) established by the U.S. Department of Housing and Urban Development (HUD) because of deferred maintenance, age, natural or accidental causes. The Program is not intended to remodel homes but to conserve and preserve the existing housing stock in the Urban County. These Guidelines are designed to encourage County residents and property owners to improve their properties by accessing below market interest rate loans for home improvement projects. Applications for the County s Housing Rehabilitation Loan and Grant Programs can be obtained by calling the County Santa Clara at (408) , picked up at the Office of Affordable Housing, 70 West Hedding Street, 7 th Floor, San Jose, CA 95110, or downloaded from There are several funding sources used by the County of Santa Clara in the Housing Rehabilitation Program including the Community Development Block Grant (CDBG), the CalHome funded program, and the Emergency Grant Repair Program. After receiving a completed application, County Housing staff will determine the program for which the applicant will be best qualified. This handbook describes how the Rehabilitation Program achieves its goals and objectives through the policies and procedures. Goals: The main goals and objectives of the Rehabilitation Program are to: Improve the physical condition of single-family dwellings, duplexes, and mobile homes owned and occupied by lower-income households; Improve the physical condition of rental housing occupied by low-income tenants with rents equal to or less than 30% of the tenant s monthly income. Respond to immediate health and safety issues through the provision of grant funds to make urgent repairs through the Emergency Home Repair Grant Program Enhance the exterior appearance of homes that are visible from public areas; Page 4 of 43 Updated June 2013

5 Assist those individuals and households who lack the financial capacity to make necessary repairs and improvements to their homes; Improve the energy efficiency of rehabilitated homes. PROGRAM FUNDING SOURCES The Program is funded by multiple federal and state funding sources. In an effort to maintain adequate funding for the Program, staff continues to aggressively seek additional funding sources for the housing rehabilitation. Each type of funding comes with its own rules and regulations regarding the use of funds within the Program. This Chapter provides a summary of common funding sources of the single-family rehabilitation program. FEDERAL FUNDS Community Development Block Grant (CDBG) The federal CDBG program was established by the federal Housing and Community Development Act of 1974, as amended (42 USC 5301). The primary federal objective of the CDBG program is the development of viable urban communities by providing decent housing and a suitable living environment, to low-and moderate-income households. Since the establishment of the CDBG program in 1974, the County of Santa Clara has used a portion of these funds to provide housing rehabilitation services for lower-income homeowners. CDBG funds may be used to make both grants and loans. Specific rules and regulations related to implementation of the CDBG program are found in the Code of Federal Regulations (25 CFR Part 570). The Rehabilitation Loan Program is funded primarily using the Revolving Loan Fund. This fund is accounted separately in Fund 36, cost center 1162 and used primarily for singlefamily rehabilitation projects of eligible homeowners provided in form of a loan (24 CFR (b). The loans generate future program income for the RLF. The interest earned on the deposits in RLF fund is remitted to HUD on an annual basis. General Federal Requirements. All federal funds are required to comply with numerous other federal regulations including, but not limited to, Davis-Bacon Wage Rates, the National Environmental Policy Act (NEPA), the Uniform Relocation Act (URA), Minority and Women Owned Business Outreach Policies, Federal Fair Housing Laws. Federal lead-based paint statutes are also triggered with the use of CDBG funds. All federally funded projects must be tracked and reported in the Integrated Disbursement & Information System (IDIS) as required by the U.S Department of Housing and Urban Development (HUD). STATE FUNDS CalHome Program One of the primary purposes of the CalHome program is to enable low-income households to remain homeowners and live in decent, safe, and sanitary conditions. Regulations related to the use of these funds are found in the CalHome Operations Handbook and are governed by the California Code of Regulations (Title 25, Division 1, Chapter 7, Subchapter 9) and California Health and Safety Code Section Page 5 of 43 Updated June 2013

6 These funds may be used solely for 30-year deferred loans. CalHome can only be used to assist homeowners with after rehabilitation home values not to exceed 100% the HUD established purchase price/value limits for Santa Clara County as published each year by HUD. The current purchase price value limit is $729,750. PROGRAM DESCRIPTIONS The Office of Affordable Housing currently administers a number of loan and grant programs for Urban County residents: 1. Health and Safety Home Repair Grant Programs consists of: a. The Emergency Home Repair Grant Program, b. The Healthy Home Repair Grant Program, and c. The Accessibility Grant Program. 2. The County Housing Rehabilitation Loan Program (Rehab Loan Program) 3. The CalHOME Owner-Occupied Housing Rehabilitation Program (CalHOME) 4. The Rental Rehabilitation Program (RRP) HOUSING REHABILITATION GRANTS The following conditional Grant programs will fund one-time grants for low and very-low income homeowners whose homes are located in the Urban County. The grant is conditional upon the homeowner maintaining primary residency status for three years. The grant is forgiven by 1/3 per year and 100% forgiven at the end of three years. The Urban County consists of the unincorporated areas of the County and the cities of Campbell, Los Gatos, Los Altos, Los Altos Hills, Monte Sereno, Morgan Hill, and Saratoga. The conditional grant programs below will cover those homes which do not require major rehabilitation and whose repairs are not covered by other housing rehabilitation programs. The Grant is condition The Emergency Home Repair Grant Program (Urgent Repairs) The Emergency Home Repair Grant Program will provide grants to eligible low-income households with urgent repair needs with a maximum grant amount up to $15,000. An emergency is defined as a sudden, generally unexpected negative occurrence or set of circumstances demanding immediate attention. Emergency Home Repair Terms and Conditions Certain improvements may be ineligible or beyond the scope of the County s Emergency Home Repair Grant; a final determination will be given by the Housing Rehabilitation Specialist and/or Contractor. Grants are made at the discretion of the County Housing Loan Committee. OAH Staff will arrange for a licensed contractor to make the necessary repairs once eligibility in the program is established. Repairs generally include of one or more of the following conditions: 1. Roof leaks Page 6 of 43 Updated June 2013

7 2. Furnace or water heater repair/replacement 3. Plumbing 4. Electrical 5. Lack of toilet/bathing facilities 5. No Hot Water 6. Direct water intrusion into the Home 7. Gas Leaks (call PG&E immediately) 8. Hazardous electrical (call PG&E immediately) 9. Other emergency repairs as authorized by Housing staff The Healthy Home Repair Grant Program Broaden home repair assistance to low and very-low income households who do not have the financial resources to correct essential critical health and/or safety repairs which have resulted in code violations with a maximum grant amount up to $20,000. The Accessibility Grant Program Offers technical and financial assistance to low income households with permanent disabilities and/or seniors to enhance mobility and access to the home. The program will ensure that lowincome seniors and specials needs clients receive funding to address needs such as ramps and grab bars with a maximum grant amount up to $15,000. Eligible Applicants: ELIGIBILITY Low-income: Owner-occupants of a mobile home, single family home, or duplex, whose gross annual income does not exceed 80% of the Santa Clara County Area Median Income (AMI), adjusted for household size. Refer to Exhibit A, the Maximum Income Limit sheet for eligible income levels. Eligible Properties: Owner-occupied mobile homes and owner-occupied single-family properties located in the Urban County. The Urban County consists of: Unincorporated areas of the County, Campbell, Los Altos, Los Altos Hills, Los Gatos, Morgan Hill, Monte Sereno, and Saratoga. Page 7 of 43 Updated June 2013

8 ELIGIBLE REPAIRS The Emergency Home Repair Grant Examples: (Emergency Repairs generally include of one or more of the following conditions:) Roof leaks Furnace or water heater repair/replacement Plumbing Electrical Lack of toilet/bathing facilities No Hot Water Direct water intrusion into the Home Gas Leaks (call PG&E immediately) Hazardous electrical (call PG&E immediately) Other emergency repairs as authorized by Housing staff Maximum Grant amount is $15,000 The Accessibility Grant Repair Examples: Permanent ramps Exterior lifts Grab bars and safety rails Tub shower conversions Widening entry doors Other emergency repairs as authorized by Housing staff Maximum Grant amount is $15,000 The Healthy Home Repair Grant Examples Roofing and weatherization Heating, plumbing, and electrical systems Structural integrity of dwelling Removal (not repair) of inoperable vehicles Exterior and interior trash and debris removal Lead Based Paint remediation Other emergency repairs as authorized by Housing staff Maximum Grant Amount is $20,000 Mobile Homes Repairs Repairs for Mobile Homes must include one of the following conditions: Roof replacement Nonfunctioning furnace Water heater leaking/no hot water Major plumbing leaks (typically at water supply lines under home) Waste-line(s) leaking (typically at main connection or under home) Raw sewage backup into the home Gas leaks (call PG&E immediately) Page 8 of 43 Updated June 2013

9 Hazardous electrical problems Other emergency repairs as authorized by Housing staff Ineligible Repairs Include: Significant structural alterations First to second story lifts and elevators Personal property such as whirlpool spas or exercise equipment ADDITIONAL HOMEOWNER GRANT CONDITIONS Homeowner Grant Terms and Conditions: The applicant must live in and own the property for a minimum of one year prior to application Certain exterior improvements to the property may be required by the County Properties constructed prior to 1978 will require testing for lead based paint The Grants are conditional and will require repayment if the property is sold within three years from grant approval date. 1/3 of the grant will be forgiven each year for three years. The grant is forgiven after the end of the third year. Grants are made at the discretion of the County Housing Loan Committee. The actual cost of repairs cannot exceed the established grant maximum established per program. Repairs or improvement will be prioritized by the Housing Rehabilitation Staff based on health and safety first. Certain improvements may be ineligible or beyond the scope of the grant; the decision is determined by the Housing Rehabilitation Staff. Grant approval is subject to underwriting criteria and asset limitations in effect at the time of application. Applicant must sign a County Grant Agreement (secured by the Resale Restrictions Lien Agreement). Applicants must sign a Resale Restrictions Lien Agreement Grants are available only onetime per property and onetime per owner, regardless of the actual grant amount approved or utilized in prior years. The grants may be combined with the County Housing Rehab Loan Program, if qualified and funds are available The actual cost of repairs cannot exceed the established grant amount in effect at the time of application Page 9 of 43 Updated June 2013

10 REHAB GRANT AND LOAN PROGRAM APPLICATION PROCESS Pre-Screening Interview The applicant is encouraged to complete a pre-screening interview to determine pre eligibility and continue with the application process. To complete a pre-screening interview please: 1. Call Jennifer Mercado at (408) , to complete a phone interview, 2. the complete Pre-Screening questionnaire to Jennifer.Mercado@pln.sccgov.org 3. Complete and mail in the Pre-Screening questionnaire to: County of Santa Clara Office of Affordable Housing 70 West Hedding Street, 7 th Floor San Jose, CA Attn: Jennifer Mercado After review of the pre-screening interview, the Office of Affordable Housing staff will determine if an applicant qualifies and mail out a grant application. Grant application can also be printed from Office of Affordable Housing Website at and mailed to the address above. Who must complete the Application? An application must be completed by all persons who hold title to the property. This includes listing all household members, their income and asset information. Household bills should include mortgages, utility payments, and revolving debts. A credit report and Preliminary Title report will be run at this time. The credit report will be used to determine outstanding debt and ability to repay a loan. The title report is used to determine the status of any loans, mortgages, and liens which may be levied against the property. An appraisal may be ordered if necessary. Preliminary Approval Upon receipt of a complete Loan or Grant Application, OAH staff will evaluate the application and all supporting documentation to determine if the applicant meets the preliminary requirements for the Housing Rehabilitation Loan or Grant Program. Preliminary eligibility will be based upon income, debt to income ratios, assets, amount of outstanding liens on the property, and other criteria established by the County and funding source. If the OAH staff approves the application for eligibility, the Housing Rehabilitation Specialist will make an appointment with the applicant to determine the necessary repairs and create a preliminary work write up. The application will then be presented to the County Housing Loan Committee for official approval or denial. Cancellation/Denial On occasion, Housing Staff may need to cancel or deny a loan or grant application. Once the application is cancelled or denied, the applicant must wait one full year from the date of Page 10 of 43 Updated June 2013

11 cancellation to reapply for a Housing loan and/or grant. Causes for cancellation would include but are not limited to: Failure to respond in timely manner (31 days from the date of the written request from the Department) Disposition of property Defective Title Failure to meet County guidelines Failure to accept Deed Restrictions Failure to provide necessary documents HOUSING REHABILITATION LOAN and GRANT PROGRAM GUIDELINES Conflict of Interest No County of Santa Clara official, employee, or agent who exercises policy, decision-making functions, or responsibilities in connection with the planning and implementation of the program shall directly or indirectly be eligible for this program, unless the application for assistance has been reviewed and approved according to applicable California Department of Housing and Community Development (HCD) guidelines and by the County Housing Loan Committee. A building contractor with a vested interest in the property may not bid on a rehabilitation job. Residency Requirement The property owner must use the dwelling as his or her principle residence and must be recorded on the Deed of Trust. All persons recorded on the Deed of Trust must sign the Housing Rehabilitation Loan or Grant Documents. In the event the owner occupant sells, transfers title, or discontinues residency in the rehabilitated property for any reason, the loan or grant is due and payable based upon the repayment terms. In the event the borrower dies, their heirs are not eligible to assume the CalHome loan the loan is due and payable, but they could assume the County Housing Rehabilitation loan if they meet the eligibility guidelines. Income To be eligible to participate in the Housing Rehabilitation Program, total household income may not exceed 80 percent (80%) of the median income for Santa Clara County, which is adjusted for family size and reported in the most current income guidelines published by the HUD. Exhibit A lists the current uncapped income limits for Santa Clara County by family size and is updated annually as the information becomes available from HUD. The applicant s income combined with the income of all household members, related or nonrelated, age 18 or older who will occupy the property for a period of twelve months cannot exceed the allowable income limits. Annual income will be based on the borrower s current earnings projected 12 months into the future. Children who do not live at the property, do not deduct the property on their income taxes, and can document a different place of residence, can Page 11 of 43 Updated June 2013

12 have their income excluded. The County of Santa Clara uses Part 5 Income Calculations Methodology to calculate total household income: What is the gross household income of all adults living in the household? Gross income generally includes, but is not limited to, income from the following sources: Wages and Salaries New Business Income (if self employed) Unemployment, State Disability, and other Government payments, Social Security Income Payments, Pensions, Annuities, and Ongoing stipends from other sources, Rental Income, Child Support, Alimony, Monthly Income drawn from Individual Retirement Accounts (eg 401K s), Annuities, and IRA s Assets If the applicant s current assets total in excess of $25,000 that applicant is determined to have substantial resources and does not qualify for the Housing Rehabilitation Program loan. Assets include: Funds in checking and savings accounts. Interest or dividends earned from IRAs, CDs, stocks, bonds, mutual funds, or pension accounts. Assets also include the value of real estate (other than primary residence). Assets do not include: pre-tax payroll deductions, deferred compensation accounts, 401Ks, health or dependent care allowances, two vehicles, the subject property, and furnishings and fixtures. If assets are $25,000 or above, income on all assets (actual or imputed per worksheet) must be included to determine income eligibility. However, earnings from retirement accounts do not need be included unless the funds are being removed from the account. Page 12 of 43 Updated June 2013

13 COUNTY UNDERWRITING GUIDELINES Debt-to-Income Ratio (For Rehab Loan Only) The maximum debt-to-income ratio for the Housing Rehabilitation Program is 40% front-end and 45% back-end expressed as a ratio of 40/45 percent. The debt-to-income ratio (DTI) is the percentage of a consumer's monthly gross income that goes toward paying debts. The debt-to-income ratio often covers more than just debts. The ratios can include certain taxes, fees, and insurance premiums as well. There are two main kinds of DTIs. The first DTI, known as the front-end ratio, indicates the percentage of income that goes toward housing costs, which for homeowners is PITI (principal, interest, taxes and insurance). The maximum front-end-ratio for the Housing Rehabilitation Program is 40 percent. The second DTI, known as the back-end ratio, indicates the percentage of income that goes toward paying all recurring debt payments: including credit card payments; car loan payments; student loan payments; child support payments; alimony payments; and legal judgments. The maximum back-end-ratio for the Housing Rehabilitation Program is 45 percent. Example of a Debt-to-Income Ratio Calculation: Yearly Gross Income = $45,000 / Divided by 12 months = $3,750 per month income. $3,750 x.40% = $1,500 allowed for housing expense. (front end) $3,750 x.45% = $1,687 allowed for housing expense plus recurring debt. (back end) In this example no more than $1,500 in monthly income may be used for housing payments and no more than $1,687 may be used for housing payments plus recurring monthly debt payments. Application Denial Grounds for denial of a loan request include, but are not limited to, the following items: 1. The County may deny a loan request if the applicant has any unexplained or unresolved delinquencies for any payments or amounts owed in the twelve months prior to applying for assistance. The County will consider all delinquencies in the evaluation, including delinquent payments to public or private utility service providers. 2. The County may deny a loan request if the loan-to-value (LTV) ratio will exceed ninety percent (90%). The loan to value ratio is based on either an appraisal or on comparables taking into consideration the rehabilitated value of the subject property and any other debt already secured by the property. The county also includes the rehabilitation loan amount when determining the LTV ratio. The after rehab LTV cannot exceed 100% of the County average area purchase price. Page 13 of 43 Updated June 2013

14 3. The after rehabilitation loan to value ratio may not exceed 100% the HUD established purchase price/value limits for Santa Clara County as published each year by HUD. The current purchase price value limit is $729, The County may deny a loan request if the applicant has any bankruptcies in the past seven years or has filed bankruptcy prior to loan funding and recordation of the deed of trust. 5. The County may deny a loan request if the applicant has provided false or erroneous information, or failed to complete the application process, or if there are any unresolved clouds to the property s title at the time of applying for a loan from the County. Examples of clouds to title include, but are not limited to, persons named on title who have not signed the loan application, persons named on title that are deceased, judgments against the property for nonpayment of taxes of any kind, and mechanics liens filed against the property. POLICIES Fair Housing The Program will be implemented in ways consistent with the County s commitment to fair housing. No person shall be excluded from participation in, denied the benefit of, or be subjected to discrimination under any program or activity funded in whole or in part with Community Development Block Grant (CDBG) funds. The Fair Housing Act prohibits discrimination in housing because of race or color, national origin, religion, gender, disability, familial status (including under the age of 18 living with parents or legal custodians, pregnant woman, and people securing custody of children under 18). Temporary Relocation CalHOME Loan: In the event, for any reason, the owner is displaced as a result of the owner s voluntary participation in the Program, any costs of relocation may be considered an eligible cost if initially made part of the CalHOME loan. CDBG Loan: In the event, for any reason, the owner is displaced as a result of the owner s voluntary participation in the Program, any costs of relocation will be the sole responsibility of the owner, and the County shall not be liable for any person being displaced as a result of voluntary participation in the Program. Preferences The County will establish a waiting list and will provide assistance on a first-come, first-served basis. Properties that have been determined to be uninhabitable by the County Building Department, Code Enforcement, or Program Inspector may be given preference to correct a hazardous condition that impacts the neighborhood or the community. Race and Ethnicity Applicants will be requested to identify race and ethnicity at the time of application. Page 14 of 43 Updated June 2013

15 Property Eligibility Conformity with Current Design and Land Use Standards To be eligible to participate in the Housing Rehabilitation Program, the property must be able to conform to current land use and density designations on the County s General Plan and to the applicable density, design standards specified in the Zoning Ordinance and the Building Code. Properties that do not conform to these standards at the time of application may be eligible if the County determines that the existing improvements were authorized by the County and building permits are issued for the improvements. If there are no records, the property must comply with current standards. If there are violations under the Enforcement Ordinance, the property owner must agree to correct any violations, demolish illegal structures, and cease any illegal activities prior to beginning the rehabilitation work. Rehabilitation Standards All repair work must meet Uniform Building Code standards. Additionally, all repair work must comply with any special design or construction standards established by the County or City to preserve historic buildings. Furthermore, rehabilitation work should incorporate energy efficiency/green building, and must eliminate health and safety hazards to occupants and the public. The property owner must agree to make improvements, to discourage the conduct of illegal activities. Title Applicants for Housing Rehabilitation Program must hold title to and occupy the property, as his or her primary residence, for which the loan is being made. All persons on the title must agree to sign a Deed of Trust, Promissory Note, and the Owner Participation Contract to secure the Housing Rehabilitation loan. CalHome Rehabilitation activities can only be performed on that portion 100% owned and lived in by the Borrower. Title may be held in any of the following ways: 1. Fee simple interest 2. Joint Tenancy 3. Tenancy in Common 4. Community Property 5. Interest of a shareholder in a cooperative agreement 6. Life Estates of Living Trusts Title may not be held in the following ways: 1. Any interest acquired on the execution of a purchase contract 2. A lease with or without an option to purchase; or 3. A remainder interest. Page 15 of 43 Updated June 2013

16 Life Estates of Living Trusts Applicants who hold a Life Estate on a property or property with title held by a Trust are eligible to participate in the Housing Rehabilitation Program provided the following criteria are met: 1. The beneficiary of the Life Estate or Trust must occupy the property; 2. The beneficiary s household income must meet the income criteria for the Housing Rehabilitation Program; 3. Loan documents must be signed by the Trustee of the Trust and person(s) who hold the remainder interest in a Life Estate; 4. The beneficiary must agree to the condition that the rehabilitation loan is due and payable when any of the following occur: a. The property is sold or title is transferred to another person or entity; and/or b. The beneficiary s Life Estate terminates or is rescinded; and/or c. The County determines that the beneficiary is not complying with the terms of the Owner Participation Contract or the Promissory Note. Property Improvements Eligible Costs and Allowable Improvements The goal of the Housing Rehabilitation Program is to remove deficiencies or health and safety hazards, improve energy efficiency, remediate lead based paint, and extend the useful life of the property. All improvements must be attached to the property and permanent in nature. Examples of eligible items are foundation construction and repair; electrical rewiring or repair; plumbing repair; roof replacement or repair; heating system installation or repair; window and door replacement; repair of structurally significant damaged wood; and floor coverings where they pose a hazard. Removal of dilapidated ancillary structures is also eligible. Ineligible Costs and Prohibited Use of Funds (CalHome Loans) Free-standing appliances and luxury items are not permitted. Examples of luxury items are: swimming pools; patios and patio covers room additions that are for leisure; landscaping upgrades hot-tubs; custom cabinets; and high-end appliances. Upgrades such as granite counters are not allowed unless the Recipient can show a small differential in the costs when compared to tile or formica or the like (restricted to CalHome Loans only). Landscaping is also not allowed except to protect the structural viability of the house, to address a Borrower s disability, or if required by local ordinance. Items done for beautification or energy efficiency must be in conjunction with a repair required for health or safety reason. Ineligible Costs and Prohibited Use of Funds (County Rehab Loans) Free-standing appliances and luxury items are not permitted. Examples of luxury items are: swimming pools; patios and patio covers, room additions that are for leisure; hot-tubs; custom Page 16 of 43 Updated June 2013

17 cabinets; and high-end appliances. A maximum of 20% of the CDBG loan may be used for landscaping, or more if required by local ordinance. Call if in doubt. Lead-Based Paint Program participants rehabilitating homes constructed prior to January 1, 1978, must be provided with the proper disclosure notification concerning lead-based paint (LBP) hazards. Whenever pre-1978 houses are rehabilitated under CDBG, a lead-based paint test must be performed and a report generated. If work is done to correct lead-based paint issues, in conjunction with the rehabilitation then the costs of inspection and remediation are eligible to be paid for with CDBG or CalHome funds, and should be considered during program design. A complete application consists of: Deleted: 1. Application and checklist requirements; 2. Verification of income from all sources for all household members aged 18 or older; 3. Tax returns and all attachments; 4. Title report; 5. Hazard (Homeowner s) insurance for property; and 6. Lead-Based Paint notification. SCOPE-OF-WORK, CONSTRUCTION PROCESS Approval Process The County Housing Loan Committee (the Committee) was formed by the County Board of Supervisors and the County Executive is authorized by the Board to appoint the Committee members. The Committee decides if a housing rehabilitation loan or grant application will be approved or denied. The application package including the completed application, credit and title reports, work write-up, appraisal, and analysis of outstanding loans and debt ratios, will be presented to the Committee. The applicant will be notified by County OAH staff of the Committee s decision. If the application is approved the County Rehabilitation Specialist ( Inspector ) completes a thorough property inspection, and determines which items are eligible under the Housing Rehabilitation Program and creates a scope-of-work. Eligible repairs will include removing deficiencies or health and safety items, lead based paint remediation, energy efficiency improvements done in conjunction with required work, and repairs that prevent untimely deterioration of the structure. Page 17 of 43 Updated June 2013

18 Choosing Contractor The homeowner chooses a contractor; the homeowner and contractor enter into a construction contract which identifies the start and completion dates, description of work, contract amount, schedule of payments, bid, and other contractual items. The contractor will be responsible for making sure all required permits have been secured, depending on the type of work to be performed. Withdrawal from Program The Owner may withdraw from the Program prior to the execution of the Contract between the owner and the contractor. After the execution of the Contract, Owner may withdraw from the Program and terminate the Contract prior to commencement of the Work with written permission of the Contractor. Once the Work has commenced, the Owner shall not terminate the Contract without the written permission of County. In the event the Owner terminates the Contract, the County shall not be obligated to disburse any undisbursed portions of the Grant and the Owner may be responsible for costs incurred by the County or Contractor in connection with the Agreement or the Contract. Accomplishment of Work. The Owner and Contractor agree to carry out all rehabilitation work specified in the application and its supporting documentation with all practicable dispatch in a sound, economical and efficient manner, either personally or through a written contract let by Owner with the prior concurrence of the County, or its designee. In accomplishing such rehabilitation, the Owner and Contractor will comply with housing codes of the County of Santa Clara. a. Owner or Contractor to secure all necessary building permits. b. Owner or Contractor to pay all necessary permit fees. Scope of Work, Contractor. The County Housing Rehabilitation Specialist ( Rehab Specialist ) will provide the Owner a written scope of work (the Work ) on the Property for owner s review and approval. The Owner shall provide a written response to the Rehab Specialist within 10 calendar days of receipt of the scope of work. If the owner does respond in writing within the 10 calendar days, the scope of work shall be deemed approved. The approved Scope of Work shall become a part of the Agreement and the County will choose a contractor to perform the scope of work. Change-Orders Any changes in the approved scope-of-work requires a Change Order must be created by the contractor and approved by both the County Rehabilitation Specialist and the Homeowner. Page 18 of 43 Updated June 2013

19 Contractor and Contract. Once the scope of work has been finalized and approved, the Owner may solicits bids from the County s list of pre-qualified licensed contractors (the Contractor ) or the owner may solicit bids for their project from a contractor not on the County s pre-qualified contractor list, as long as the contractor is licensed, in good standing, and meets the eligibility criteria of the County. The contractor(s) chosen by the homeowner to submit a bid will receive a scope of work, created by the County Rehabilitation Specialist, and a date and time the bid must be submitted. Ineligible Contractors. The Owner agrees not to award any contract or purchase order for rehabilitation work, other services, materials, equipment or supplies to be paid for, in whole or in part, with the proceeds of the grant, to any contractor or subcontractor, or whom the owner has been advised is unacceptable to the County, or its designee. Bid Opening and Review Once the bids have been received by the homeowner, the Rehabilitation Specialist and homeowner will review the bid(s) for reasonableness, competitiveness, and completeness. Upon reviewing the bid(s), the homeowner will compare the bids to the cost estimate. Any bid received that is 15% above or below the Rehabilitation Specialist cost estimate will be automatically disqualified and the project will be re-bid. The homeowner will then choose a contractor and enter into a contractual agreement with the contractor based upon their bid and the scope-of-work. The owner has three business days to choose a bidding contractor or the County will assign a bidding contractor. Equal Employment Opportunity. Contract subject to Executive Order The Owner hereby agrees that it will incorporate or cause to be incorporated into any contract for construction work, or modification thereof, as defined in the regulations of the Secretary of Labor at 41 CFR Chapter 60, or as amended, which is paid for in whole or in part with funds obtained from the County of Santa Clara, whatever affirmative actions are necessary to assure equal employment opportunity in all aspects of employment, irrespective of race, color, religion, national origin, or sex. The provisions of all applicable requirements on Equal Employment Opportunity and Affirmative Action Policy and Regulations as amended shall be incorporated into any and all contract documents. Disbursement of the Program Funds The Owner understands that the County will disburse the Grant Program Funds directly to the Contractor after completion and inspection of the Work and receipt of any required documentation. After completion of the work, any undisbursed Program Funds will be retained by the County. Page 19 of 43 Updated June 2013

20 Access and Utilities to be Provided to Contractor. Owner will provide the Contractor access during normal business hours except as approved otherwise by Owner, to all areas of the Property as necessary to complete the Work and will cooperate with and assist the Contractor to meet the Contractor s construction schedule. Unless approved in advance by Owner, work shall not be done on Saturday, Sunday, or legal holidays, except as necessary for the proper care and protection of work already performed, or except in the case of an emergency, or with the prior written permission of Owner. The County Access to Property The Owner agrees to provide County staff, as appropriate, access to the property at reasonable times for inspections and to facilitate the preparation of reports before and after construction, if applicable, and to perform tests for hazardous substances that could affect construction. County staff will inform the Owner of any non-compliances with respect to the Contract for the rehabilitation work, but will not issue any orders or instructions to the contractor or subcontractor performing the work. The Owner will take all necessary steps to assure that the County, or its designee, is permitted to examine and inspect the rehabilitation work, and all contracts, materials, equipment, payrolls, and conditions of employment pertaining to the work, including all relevant data and records. Owner shall also provide, at no cost to the Contractor, electrical power, light facilities, and water as necessary to perform the Work. Owner s Required Site Preparation. Prior to the start of construction, Owner must: (a) remove and/or secure all fragile items; (b) clear areas around windows and doors; (c) contain or remove pets from the site (d) move personal property from windows and doors and work areas. Owner shall take steps to protect personal property from construction effects such as dust and vibrations by complying with suggestions of the Contractor. Moving, covering or securing Owner s personal property is not within Contractor s scope of work. Pre-existing Conditions. Owner understands that assessments or inspections by the Rehab Specialist and/or County Building Inspector are for the purpose of determining improvements or repairs for work funded through the Program. A building permit from the County of Santa Clara is required for certain repairs. This requires a construction inspection by the County Rehab Specialist or County Building Inspector. Owner agrees to provide access to the building inspectors for this purpose. Owner understands that in the course of such inspection, the County Rehab Specialist and/or Building Inspector may discover building code violations including but not limited to work that was performed without permits, work that does not conform to applicable building codes, and unsafe conditions. If such building code violations are discovered, the County Rehab Specialist and/or County Building Inspector may require the violation to be corrected by the Owner. If the Page 20 of 43 Updated June 2013

21 violation is not within the approved scope of work, Owner may apply to the County for a Housing Rehabilitation Loan to cover the cost of such work. Owner s, Relationship with Contractor. Owner or his/her representative does not need be present during construction on the property. Owner shall provide prior written consent to the County that construction and inspections may commence and continue until complete without Owners presence at property prior to start of construction. Owner shall refrain from interfering with the operations of the Contractor during construction. In the event that the Owner observes any deficiencies in the Contractor s work, or experiences any problems with the Contractor, Owner shall immediately notify the Rehab Specialist. The Rehab Specialist will assist the Owner in addressing such deficiencies with the Contractor. Inspection and Acceptance of the Work. When construction has been substantially completed, the Contractor will request an inspection to be performed by the Rehab Specialist and the Owner. Owner hereby consents to such inspection and shall provide access to the Property for purposes of such inspection. After completion of the Work and inspection and acceptance by the Owner, any subsequent repairs or adjustments to the work will be the sole responsibility of the Contractor. It is the Owner s responsibility to notify the Contractor immediately if he/she detects faults with the Contractor s work within the one year warranty period provided in the Contract. Progress Payment Procedure Upon execution of the Contract between the Owner and the Contractor, progress payments may be made. No progress payment may be made within seven (7) calendar days following the Notice to Proceed, and may be made at intervals of not less than seven (7) calendar days thereafter. A maximum of four progress payments will be authorized by the County. The County retains 10% of each Progress Payment as the Contractor s Retention. Owner s Acceptance of Work and Waiver of Lien Final payment shall not be due until the Owner and the County has signed a Notice of Completion, indicating that all work has been satisfactorily completed and the Owner has received a Waiver of Liens from the contractor, each of the subcontractors and material suppliers. In lieu of the latter, the Contractor may supply the Owner with a bond, satisfactory to the Owner, protecting the Owner against any possible lien. Retention Payment The County retains 10% of each Progress Payment as the Contractor s Retention. Prior to the issuance of the final retention payment of the grant, the Contractor or Owner shall show evidence of the following: a. That all claims for labor and material have been paid and all warranties obtained; Page 21 of 43 Updated June 2013

22 b. That no claims have been presented to the Owner or County by any person, based upon any act or omission of the contractor; c. That no liens or notices to withhold have been filed against said work or property for a period of thirty-five (35) days after the Notice of Completion recoding date. The final Retention Payment will be automatically released to the Contractor 35 calendar days after the Notice of Completion recoding date, provided that no liens or notices have been filed against the property. Construction Bids Once the Rehab application has been approved by the Loan Committee: 1. County Housing Specialist will make an appointment to do a walkthrough and create a scope-of-work, 2. Final scope-of-work is determined, the homeowner shall solicit a bid or bids from a licensed contractor, in good standing, who meets the eligibility criteria of the County. The County maintains a list of pre-qualified contractors which the homeowner may consult to solicit bids or the homeowner may also solicit bids for their project from licensed contractors not on the County contractor list. The contractor pre-qualification list only means that those contractors s have submitted the necessary documents for OAH staff to verify, at that time, the contractor had met the County s eligibility requirement. The contractor(s) chosen by the homeowner to submit a bid will receive a scope of work, created by the County Rehabilitation Specialist, and a date and time the bid must be submitted. Bid Opening and Review Once the bids have been received by the homeowner, the Rehabilitation Specialist and homeowner will review the bid(s) for reasonableness, competitiveness, and completeness. Upon reviewing the bid(s), the homeowner will compare the bids to the cost estimate. Any bid received that is 15% above or below the Rehabilitation Specialist cost estimate will be automatically disqualified and the project will be re-bid. The homeowner will then choose a contractor and enter into a contractual agreement with the contractor based upon their bid and the scope-of-work. CONTRACTOR INFORMATION The County does not have a required list of Contractors whom the homeowner must use, whoever the County maintains a pre-qualified list of contractors whose credentials have been verified and meet the minimum program requirements. Page 22 of 43 Updated June 2013

23 The County conducts affirmative marketing outreach efforts to notify Minority Business Enterprises and Women Business Enterprises of bidding and contract opportunities under the program, including publishing notices of rehabilitation information seminars in local newspapers in several languages. The County generates public service announcements on local radio. Minimum Contractor Qualifications The contractor must hold a current and valid State of California General Contractor s license. The contractor must be in good standing with the State of California. The contractor cannot be on the State or Federal Contractor s debarred list. The contractor must have a business license. The contractor must have current and valid General Liability and Workmen s Compensation Insurance not less than $1,000,000 combined single limit for bodily injury and property damage for each occurrence, and The contractor must be Lead-safe Certified and posses a Renovation, Repair, and Painting (RRP) Certification. The contractor must follow all State and Federal regulations regarding prevailing wages, if applicable. Inspections During construction and prior to each contractor s request for progress payment, the homeowner must indicate their approval of the completed work by signing the progress payment request. Next, the County s designated inspector will review the completed work and either authorize or deny the payment request. The inspector will authorize payment if the work completed agrees with the work write-up. Ten percent (10%) of each progress payment is held by the County as retention. If the request is denied, the contractor must complete those items that have been determined to be incomplete, or unsatisfactory. Prior to issuing the retention construction payment, the inspector will do a final inspection to ensure that all work is complete per the contract and the work write-up and a Notice of Completion (NOC) recorded. The retention payment will be released no earlier than 35 days after the NOC is recorded. If a residential rehabilitation property has lead based paint (LBP) issues, a certified LBP inspector will be utilized for any inspections involving the areas contaminated with LBP. Contractor Progress Payments Contractors shall bill the County for cost of materials and actual work done. Contractors are allowed to make 4 progress payments, with the final retention payment released 35 days after the Notice of Completion is recorded. The County will process the bill for payment after: inspection by the Rehab specialist, approval by the Program Manager and review of eligible cost by the Program Accountant. 10% of the amount billed will be withheld by the County for retention and remitted 35 days after the Page 23 of 43 Updated June 2013