City of Hesperia Neighborhood Stabilization Plan (NSP) Management Plan

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1 City of Hesperia Neighborhood Stabilization Plan (NSP) Management Plan The City of Hesperia (City) is pleased to submit the following to meet the special condition to Funding Approval and Grant Agreement for NSP funds. Program Description Purpose The Housing and Economic Recovery Act signed into law on July 30, 2008 provided Neighborhood Stabilization funds to assist local governments to acquire land and property for demolition, rehabilitation, and sale of foreclosed and abandoned properties or land bank in areas of greatest need to address neighborhood decline. The policies and procedures outlined in this document will be carried out in compliance with the Federal Register Volume 23, Notice 194 dated October 6, 2008 by: Addressing neighborhoods with the greatest need based on United States Daprtment of Housing and Urban Development (HUD) data Purchasing and rehabilitating foreclosed or abandoned properties for resale or rental to income eligible households; or Demolishing those that are considered blighted structures and provide the vacant land to a non-profit for redevelopment as affordable housing. Eligible properties Properties to be acquired under this program include properties that are: 1. Abandoned. A home is abandoned when mortgage or tax foreclosure proceedings have been initiated for that property, no mortgage or tax payments have been made by the property owner for at least 90 days, AND the property has been vacant for no less than 90 days. 2. Foreclosed. A property has been foreclosed upon at the point that, under state or local law, the mortgage or tax foreclosure is complete. HUD generally will not consider a foreclosure to be complete until after the title for the property has been transferred from the former homeowner under some type of foreclosure proceeding or transfer in lieu of foreclosure, in accordance with state or local law. Staff Capacity 1. Describe the existing staffing resources for administering the CDBG program (FY08 and prior). The City of Hesperia has three full-time staff members who have focused a portion of their time on the CDBG program during FY08 and prior. City of Hesperia 1 May 1, 2009

2 Steven Lantsberger, CED, Deputy Director of Economic Development, acts as the NSP Administrator. He oversees the development of the program goals and objectives, use and distribution of funds, and implementation of program activities. He possesses administrator priviledges within HUD s IDIS system. Karen Hardy, Senior Management Analyst, is responsible for tracking and reporting of all grant funding information on IDIS. Ms. Hardy maintains the general ledger, balances the general ledger with IDIS, and works with Shaw & Associates, LLC, the City s CDBG consultant, on drawdowns from IDIS. Ms. Hardy also works with CDBG sub recipients, including approving reimbursements to sub recipients. Susie Flores, Senior Office Assistant, accepts funding applications submitted by potential sub-recipients and provides administrative assistance to Mr. Lantsberger and Ms. Hardy on implementing CDBG program activities. She ensures that all public noticing and public hearings are conducted according to CDBG regulations. She maintains notebooks for tracking public information on each sub recipient. The City s Finance Department works with Ms. Hardy on fund drawdown and ultimately approves or disapproves a fund draw, to ensure segregation of financial duties. In addition, the City of Hesperia enlists the support of an outside consultant, Shaw & Associates, LLC. Shaw & Associates, LLC brings decades of HUD expertise and experience. Shaw & Associates, LLC ensures that City of Hesperia is in compliance with HUD regulations, prepares the City s Action Plan and CAPERs. Kim Shaw of Shaw & Associates, LLC provides oversight on CDBG contractors and subcontractors. Finally, Ms. Shaw loads draw requests into IDIS system after receiving approval from the City. Each year, the City s outside auditor conducts a single audit on CDBG, as required for any federal grant monies. 2. What additional resources will be used for implementation of the NSP grant funds? In addition to NSP grant funds, the City of Hesperia will utilize Hesperia Community Redevelopment Agency (Agency) low and moderate income housing funds to support the City s existing First-Time Homebuyer Downpayment Assistance Program (DAP) and Housing Rehabilitation Loan Program (HRLP). The DAP funds will facilitate the resale of NSP homes purchased by the City by eligible buyers. Furthermore, and to compliment the goals of the NSP, the Agency has committed to investing $10M to acquire and rehabilitate other abandoned homes in the City. City of Hesperia 2 May 1, 2009

3 3. How are responsibilities for implementing and managing the NSP program assigned and delegated? The NSP program will be managed and implemented by the same team who manages the CDBG program, as described in response to question 1, along with an additional team member, Juli L. Peterson, Senior Management Analyst. Steven Lantsberger, CED; Deputy Director of Economic Development, will be responsible for managing the overall NSP strategy and direction, overseeing the implementation of all activities, and supervising the tracking and reporting of performance measures. Mr. Lantsberger is a licensed California Real Estate Broker and Appraiser and acts as the City s Director of Real Estate. Over the course of the past three years the City, under Mr. Lantsberger s direction, has acquired over 275 acres of property (including some residentially developed), with a transaction value of $40M. He will manage the real estate acquistion/disposition/leasing functions of the NSP on behalf of the City. Ms. Peterson will be the primary contact for day-to-day NSP administration and implementation. Working closely with Mr. Lantsberger, Ms. Peterson will implement the activities outlined in the NSP Substantial Amendment. She will also be responsible for implementing the internal policies and procedures to track NSP requirements. Karen Hardy, Senior Management Analyst, will serve as the secondary contact for NSP. Ms. Hardy will continue her role in tracking financial expenditures and drawing down funds from DRGR. Susie Flores, Senior Office Assistant, will continue to provide administrative assistance on the implementation of NSP program activities. The City s Finance Department will continue to serve as final draw approval in DRGR. The NSP will be included to the City s outside single audit. Shaw & Associates, LLC, the City s CDBG and NSP outside consultant, will provide support on DRGR quarterly reporting and load draw requests into DRGR. In addition, Shaw Associates will advise on policies and procedures for tracking funds to ensure compliance with program requirements. All of the team members are experienced with the City s CDBG program, and they will implement the NSP program to ensure compliance with all NSP and relevant CDBG regulations. City of Hesperia 3 May 1, 2009

4 Policies/Procedures 4. What systems or procedures have the NSP grantee implemented to ensure that NSP funds are used in accordance with program requirements? The City of Hesperia has established a separate internal fund for tracking NSP dollars. All NSP program funds will be drawn down into this separate fund, and all NSP expenditures will be made from the fund to ensure the most accurate record keeping. The City will ensure all funds at least equal to the NSP allocation are obligated within 18 months of the Grant Agreement execution, in accordance to NSP regulation, by reviewing monthly reports prepared by the City s Finance Department on monthly grant expenditures and total expenditures. Prior to authorizing the expenditure of any NSP funds, City staff will ensure that the following requirements are met: NSP Eligible Activities NSP funds will be spent on one of Hesperia s NSP eligible activities as outlined in the Substantial Amendment: 1. Acquisition/Rehabilitation and Resale 2. Acquisition/Rehabilitation and Rental 3. Financing Mechanisms for Purchase of Foreclosed Homes 4. Redevelop Demolished or Vacant Properties Income Eligible Households NSP funds will only be used to assist income eligible households at or below 120% AMI, and 25% of funds will assist households at or below 50% AMI. Each potential purchaser will be required to provide income verification of income using the same process the City currently uses for administering its HOME program. Purchase Price Limit The City will ensure that all homes purchased with NSP funds are purchased at the minimum 5% discount from the current market-appraised value. Bulk purchases will be made at a minimum 10% average discount if using a methodology that includes carrying costs (with a minimum 5% on each property), or at a 15% minimum average discount if not using this methodology. The City has already started to assemble a list of property that meets NSP criteria placing priority on FHA foreclosed properties being made available by Fannie Mae at a discount. The City will also work with local brokers to negotiate discounts where applicable. Property Appraisals Appraisals will be conducted individually and are to be ordered during initial purchase analysis and completed within 60 days of final offer. Appraisals can be paid by the City, sub recipient, developer or homebuyer. The Appraiser must be California State Certified and licensed in good standing with the State of California. Appraisals must be performed in conformity with the appraisal requirements of URA at 49 CFR An additional appraisal may be ordered after rehabilitation is complete by the first mortgage lender in accordance with standard underwriting guidelines. City of Hesperia 4 May 1, 2009

5 Environmental Assessments All properties to be purchased, rehabilitated and sold will be subject to an environmental review in accordance with 24 CFR Part 58 prior to a request of release of funds from HUD. Activities that are categorically excluded and convert to exempt, per Section (a)(12), because they do not require any mitigation will contain the HUD approved checklist in each file. Activities that are categorically excluded, per Section 58.34(b), because they do require mitigation will contain the appropriate documentation in with HUD regulation. No funds will be drawn until all environmental activities have been concluded and cleared. Lead Based Paint Units assisted with NSP funds are subject to the Lead Based Paint Poisoning Prevention Act (42 U.S.C ), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C ), and implementing regulations at part 35, subparts A, B, J, K, M and R of this title. Lead based paint will be addressed for all units constructed prior to 1978 and receiving repairs that exceed $5,000 as follows: - All damaged paint surfaces will be repaired. - The entire property will be evaluated by a risk assessment. - Units assisted between $5,000 and $25,000 will have all lead hazards addressed by interim controls using lead safe work practices. - Assistance above $25,000 will have all lead hazards, as identified by the risk assessment, abated. Lead hazard reduction will be performed in a manner consistent with the findings in the risk assessment report ( ). Flood Plain Homebuyers who purchase improved properties within the 100- year flood plain will be required to purchase and maintain flood insurance for the term of the affordability period. In general, the city will seek to purchase properties outside of the 100-year flood plain. Historical Preservation Prior to making an offer on the property the City staff will review the public records from the Property Appraiser or Tax Assessor to document the age of the property. If the age of the property is greater than 50 years old and staff still chooses to purchase the property, information on the property will be submitted to the State Office of Historic Preservation to determine if the property is historically significant. All requirements of the State and the National Historic Preservation Act of 1996 will be followed for properties that are deemed historically significant. If the property is over 50 years old, the local historic preservation program will also be checked to determine if the property is on a local register of historic places. Citizen Participation The City will comply with all citizens participation requirements throughout the execution of the NSP program and should the City undertake any program amendments. City of Hesperia 5 May 1, 2009

6 Performance Measurement/Reporting 5. Describe the system that the NSP grantee has in place that will collect sufficient documentation and records to demonstrate compliance with NSP requirements. The City of Hesperia will maintain a filing system to track critical information on NSP requirements, as it currently does for its CDBG program. Documentation will be stored electronically and in hard copy. In addition, City staff will maintain a database that will track critical information on each home purchased. Staff will also aggregate data collected on individual transactions to ensure that program wide requirements are being met. Initially, the City plans to undertake the acquisition, rehabilitation and resale of foreclosed homes (Activity # 1 in NSP Substantial Amendment) and the acquisition, rehabilitation and rental of foreclosed homes (Activity # 2 in NSP Substantial Amendment). The City will maintain records for each home purchased under either activity. The records will include: - A spreadsheet or database containing all NSP acquired, rehabilitated, and sold or rented properties. - A map of the property showing that the property is within the area of greatest need. - Site appraisal in conformity with URA requirements completed within 60 days prior to an offer. - Documentation to show the purchase price and applicable discount. - Completion of an environmental checklist prior to purchase of property. - Verification that all properties acquired under this program for resale comply with the locally adopted rehabilitation standards, HUD Section 8 Housing Quality Standards (24 CFR ), and all applicable standards. - Public notices for public hearing published in newspaper before sale of property. - Documentation of public hearing conducted before sale of property. For homes made available for resale under Activity #1, the City will maintain records on: - Income verification data to document that all NSP assisted households have incomes at or below 120% AMI. - The income level of buyers for each unit to ensure half of the resale units are made available to households at 51-80% AMI and half are made available to households at % AMI, per Hesperia s NSP Substantial Amendment. - Resale restriction agreements, for terms of 15 to 45 years. - Cost of housing to ensure affordable ownership cost, as defined in Health and Safety Code Section (b), is met. - Verification of the homebuyer s completion of at least 8 hours of homebuyer counseling from a HUD-approved housing counseling agency before purchasing the home. City of Hesperia 6 May 1, 2009

7 For homes made available for rental under Activity #2, the City or third party partner will maintain records on: - The income level of buyers for each unit to ensure units are made available to households at or below 120% AMI. - Number of units made available at each income level to ensure half of the rental units are made available to households at 50% AMI or below. - Use of NSP funds to ensure operating costs are not covered by NSP funds. - Affordable rents, as specified in NSP Substantial Amendment, at the following levels: 30% of 50% for very low income households; 30% of 60% for moderate (low) income households; 30% of 110% for middle (moderate) income households. Rent includes an allowance for tenant-paid utilities. For financing activities implemented under Activity #3, the City will maintain records on: - Income verification data on buyers to show assistance is made available to households at % AMI, per Hesperia s NSP Substantial Amendment. - Verification of the homebuyer s completion of at least 8 hours of homebuyer counseling from a HUD-approved housing counseling agency before purchasing the home. Should the City decide to undertake Activity #4, redevelop demolished or vacant properties, the City will maintain records on: - Income verification data on buyers to ensure assistance is made available to households at or below 50% AMI to meet the low income housing requirement. For Activity #5, NSP administration, the Finance Department will provide the City with monthly reports on the level of administrative expenses. The City will make sure administration expenses will not exceed 10 percent of the City s NSP grant award plus 10 percent of program income receipts. The City of Hesperia will report on performance measures on the DRGR system quarterly, no later than 30 days following the end of each quarter, beginning July 31, 2009 and continuing until the end of the 15 th month after initial receipt of grant funds. Hesperia will also report monthly expenditures beginning 30 days after the end of the 15th month following the receipt of funds, and continuing until reported total obligations are equal to or greater than the total NSP grants. City of Hesperia 7 May 1, 2009

8 Other Federal Requirements: 1. Affirmatively furthering fair housing The City will follow its affirmative fair housing marketing plan in implementing all activities under this program. 2. Acquisition and relocation All properties acquired with NSP funds will comply with the Uniform Acquisition and Real property acquisition policies Act of 1970 under 49 CFR Part 24, except for modifications for the NSP program published by HUD. All transactions under the NSP program will be voluntary transactions. The seller will receive written notice that it is a voluntary transaction and the City will not exercise its power of eminent domain if negotiations between the seller and buyer fail. The seller will be advised of the fair market value of the property in writing. Any non-profit or for profit contracted to carry out acquisition of property under this program will also provide proper written notices to the seller that it is a voluntary transaction and of the fair market value of the property. 3. Section 3 The City will comply with section 3 of the Housing and Urban Development Act of 1968, if contract or subcontract exceeds $100,000 for the total project. 4. Conflict of Interest All contractors, board members, City staff, sub recipients, and program beneficiaries must disclose all potential conflicts of interest in writing to the City staff. All conflicts of interest notices received by staff will be presented to City Council and will be acknowledged in the meeting minutes. Any request for an exception must be made in writing to the Department of Housing and Urban Development (HUD). The City shall defer to all exception determinations made by HUD and administer the assisted program in compliance therewith. 5. The City will comply with all other applicable Federal regulations. City of Hesperia 8 May 1, 2009