CITY OF SANTA MONICA RESIDENTIAL REHABILITATION PROGRAM GUIDELINES

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1 CITY OF SANTA MONICA RESIDENTIAL REHABILITATION PROGRAM GUIDELINES Proposed June 2014

2 TABLE OF CONTENTS Page l. MULTIFAMILY REHABILITATION... 1 II. OWNER-OCCUPIED REHABILITATION... 2 III. ELIGIBLE REPAIRS/IMPROVEMENTS... 3 IV. INELIGIBLE REPAIRS/IMPROVEMENTS... 4 V. GRANT PROCESS... 5 VI. DEFINITIONS... 9 Residential Rehabilitation Program City of Santa Monica Guidelines revised June 2014

3 RESIDENTIAL REHABILITATION PROGRAM The purpose of the Residential Rehabilitation Program (RRP) is to provide financial assistance in the form of grants for eligible repairs through the following two (2) options: 1. Multifamily rental properties occupied primarily by low-income tenants; and 2. Single-family properties occupied by low-income owners. Low-income eligibility is based on the U.S. Department of Housing and Urban Development (HUD) income requirements for low-income families in the Los Angeles area and is defined as incomes of no more than 80 percent of median income. I. MULTIFAMILY REHABILITATION A. Description: This option provides financial assistance to owners of multifamily rental properties in which at least 51 percent of the apartments are occupied by low-income tenants. Such assistance will fund a variety of eligible repairs and upgrades, including structural, health and safety, plumbing, electrical, accessibility and sustainability improvements, painting and other needed repairs. 1. Grants: The City will provide one of two types of grants: Full or Matching. a. Full Grant: The City will provide a Full Grant for an eligible property in combination with a written agreement to continue the occupancy of a majority of the apartments by low income tenants (i.e., at least 51 percent), for a period to be negotiated in conjunction with the grant amount. Maximum Amount: $15,000 per apartment. b. Matching Grant: The City will provide a Matching Grant for an eligible property in combination with a written agreement to continue the occupancy of a majority of the apartments by low income tenants (i.e., at least 51 percent), for a period to be negotiated in conjunction with the grant amount. The affordability period will be shorter than otherwise required for the equivalent amount of a Full Grant, in consideration for the matching contribution by the property owner. Maximum Amount: $3 of Matching Grant for every $1 of property owner financial contribution. The Matching Grant should not to exceed $12,000. B. Eligibility Requirements: Eligible multifamily properties, at the time of the grant and in future years pursuant to a grant agreement, must be occupied by at least 51 percent low-income households based on the current income limits for lowincome households in the Los Angeles area, as published by HUD. The income 1

4 limits are updated annually and posted on the City website. Limits for 2014, for example, are as follows: HOUSEHOLD INCOME GUIDELINES* (80 PERCENT OF MEDIAN INCOME) 1 person $47,850 2 persons $54,650 3 persons $61,500 4 persons $68,300 5 persons $73,800 6 persons $79,250 7 persons $84,700 8 persons $90,200 * Includes incomes for all persons living in dwelling, including retirement income, Social Security benefits, other unearned income, etc. Eligible multifamily properties may only receive a maximum of one (1) grant every five (5) years. II. OWNER-OCCUPIED REHABILITATION A. Description: This option provides financial assistance to single-family homes and mobile homes, which are owner-occupied by low-income households. Such assistance will fund a variety of eligible repairs and upgrades, including structural, health and safety, plumbing, electrical, accessibility and sustainability improvements, painting and other needed repairs. 1. The City will provide a grant to eligible owner-occupied properties in combination with a written agreement that some or all of the grant funds would have to be repaid to the City in the event the owner sells the property within 3 years receiving the grant. Maximum Amount: $15,000 per eligible household. B. Eligibility Requirements: Eligible single-family homes or mobile homes, at the time of the grant and in future years pursuant to a grant agreement, must be occupied by a low-income homeowner, based on the current income limits for low-income households in the Los Angeles area, as published by HUD. The income limits will be updated annually and posted on the City website. 1. Eligible owner-occupied homes may only receive a maximum of one (1) grant every five (5) years. 2

5 2. Priorities: Grants will be prioritized as follows: a. Homeowners who are sixty-two (62) years of age and over; b. Households with a permanently disabled member; and c. Other low-income owner-occupants (who do not meet either of the criteria above). III. ELIGIBLE REPAIRS/IMPROVEMENTS Eligible repairs/improvements include but are not limited to the following: Correction of health and safety code violations; Repair/replacement of unsanitary plumbing fixtures, leaking roofs, unsafe/inoperable electrical fixtures/wiring, and worn, deteriorated floor coverings; Replacement of principal fixtures and existing structure components, such as plumbing, heating, electrical, or connections to water and sewer distribution lines; Improving energy efficiency by replacing doors, windows, siding and insulation, using solar, or upgrading the heating and cooling equipment; Improving water usage efficiency by installing water saving faucets and shower heads; Disabled access improvements, such as ramps; Treatment of pest infestation; Relocation: If necessary, the City will follow all of the requirements of the Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA); Testing and abatement for environmental hazards such as lead hazards, asbestos, molds, fungus and other air carried toxins; Installing security devices such as smoke detectors and dead-bolt locks; Other general repairs as approved by the City. 3

6 IV. INELIGIBLE REPAIRS/IMPROVEMENTS The following improvements are ineligible per federal guidelines: Barbecue Pits; Bathhouses; Burglar Alarms; Burglar Protection Bars; Dumbwaiters; Fire Extinguishers; Greenhouses; Hangars (airplanes); Kennels; Kitchen appliances, except stoves, which are designed and manufactured to be freestanding and are not built-in and permanently affixed as an integral part of the kitchen in a residential structure; Outdoor Fireplaces or Hearths; Penthouses; Photo Murals; Radiator Covers or Enclosures; Steam Cleaning of Exterior Surfaces; Swimming Pools; Television Antenna, Cable or Satellite Dishes; Tennis Courts; Valance or Cornice Boards Waterproofing of a structure by pumping or injecting any substance in the earth adjacent to or beneath the basement or foundation or floors; and Other items as determined by the City. 4

7 V. GRANT PROCESS The Santa Monica City Council annually allocates federal Community Development Block Grant funds be used for the Residential Rehabilitation Program. Grant applications may be submitted throughout the year to the Housing Division of the Housing and Economic Development Department. Grant applications are reviewed by the Housing Division, evaluated by a review committee, and considered for approval administratively in conformance with these Guidelines and regulations. Grants which are approved are subject to a Grant Agreement, which is then approved by the Grantee and the City Manager, as well as attested to by the City Clerk. The Housing Division then works with the Grantee to coordinate, manage and complete the rehabilitation. Compliance with federal regulations occurs throughout the process. The following is a step-by-step outline of the grant process: A. Application Intake and Processing: Applications can be submitted year-round and are processed pending funding availability. 1. Application: Property owners will submit a program application and include the following information: a. Owner s name and property address; b. Grant deed/proof of ownership; c. Proof of tenants (or homeowner s) income eligibility; d. Proposed scope of rehabilitation and rough estimate of cost; and; e. Overall rehabilitation budget. 2. Eligibility Determination: Staff will review the application for completeness and determine eligibility regarding income limits and qualifying repairs and improvements. 3. Environmental and Historic Preservation Review: All eligible properties will comply with the National Environmental the historic preservation regulations found in the Code of Federal Regulations at 36 CFR Part 800. B. Review Committee: City shall convene a Review Committee to review and approve any grants. The Review Committee shall consist of the staff program administrator, the Housing Administrator, the Housing Manager, and the Redevelopment Successor Agency Administrator. C. Property Inspection: All properties will be inspected by the City to determine eligible improvements. 1. City will inspect eligible properties, including individual units to determine eligible repairs/improvements. 2. Licensed Contractors will prepare a scope of work and cost estimate. 5

8 D. Contractor Selection/Bidding: Property owner will review and approve the scope of work and cost estimate, in conjunction with the City, before selecting a contractor to perform the work. 1. The owner is to obtain three (3) bids. 2. City will review the selected bids and advise owner as to cost reasonableness. 3. Owner will select the contractor and enter into a written agreement with the selected contractor. The City will review and approve the contract prior to owner signing; a copy of the executed contract will be submitted to the City. 4. Contractor must include in his/her bid the cost of any waste disposal, such as storage, waste profile testing, transportation, and disposal fees. E. Rehabilitation Work: The property owner and contractor will comply with the following requirements as part of any eligible scope of work: 1. Attend a pre-construction meeting, conducted by the City, prior to the start of work. 2. Prevailing Wages (Davis-Bacon Act; if applicable); City may require owner to hire a consultant, as part of the grant budget, to monitor compliance with prevailing wages. 3. City will determine when owner may issue a Notice to Proceed to the contractor. 4. City will monitor rehabilitation work during construction as well as compliance with Davis-Bacon Act (if applicable). 5. City will conduct final inspection for program compliance and contract completion upon notification by property owner and contractor that all rehabilitation work is completed. F. Contractor Guidelines: All contractors must be eligible to participate in CDBGfunded contract work for the length of the contract. 1. The contractor must comply with all applicable Federal and State regulations, including: a. Resource Conservation Recovery Act; b. California Department of Toxic Substance Control; and c. Department of Transportation Regulations. 6

9 G. Grant Disbursement: The City will disburse Grant funds on a percentage complete basis after receiving appropriate documentation of actual costs. 1. The contractor must submit proof of payment to any subcontractors for all completed work. 2. Contractor must submit proof of Building and Safety Division s final approval for all required permits. 3. The contractor must submit all required prevailing wage records (if applicable). H. File Close-Out: City will verify that all case files contain the following: 1. Completed Application Form; 2. Evidence of Property Ownership; 3. Activity Record Sheet; 4. Historic Clearance Documentation; 5. Inspection Report; 6. Work Write-up on Plans and Specifications; 7. Copies of Bids; 8. Construction Contracts; 9. Full Warranties; 10. Notice to Proceed; 11. Permits (if applicable); 12. Progress Inspection Reports; 13. Change Order Requests (if applicable); 14. Notice of Completion Certificate of Final Inspection; 15. Lien Releases and Payment Records; 16. Davis-Bacon Act Reports and Wage/Salary Information (if applicable); 17. Section 3 documentation; and 18. Monitoring Reports. I. Summary Records: City staff will maintain records summarizing the following information, and enter the information into the federal Integrated Disbursement and Information System (IDIS): 1. Names of property owner and tenants; 2. Address of property assisted; 3. Number of units involved; 4. Year property built, if known; 5. Income level of tenants; 6. Race/ethnicity of tenants; 7. Number of female-headed households; 7

10 8. Loan/Grant amount; 9. Type of rehabilitation; and 10. All directly-related costs. J. Waiting List: Depending on availability of Program Funds, the City may establish a waiting list for participation in the program. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 8

11 VI. DEFINITIONS APPLICANT: Any person or legal entity that applies for a grant under the Residential Rehabilitation Program. APPLICATION PACKET: Forms disbursed to potential participants that are used to submit their applications. CONTRACT: A legally binding, standardized form that specifies, in detail, the entire scope of work, specific quality of materials, and all other data pertinent to the rehabilitation of the property, including the insurance coverage required for the grantee and the contractors, and the timeline for the work to be performed. The Contract must be signed by both the contractor and the applicant. CONTRACTOR: An eligible contractor is a person licensed in compliance with State regulations to do the necessary rehabilitation work and is not debarred from working on federally funded projects. No contractor may be utilized who has been debarred or suspended by order of any County or State in the United States. DISBURSEMENT: The amount that is paid the grantee to cover the direct and indirect costs of the rehabilitation work, on a percentage complete basis, including instances requiring advance deposits. Prior to disbursement, the work accomplished must be in accordance with the contract Scope of Work as detailed in the Work Write-Up. ELIGIBLE IMPROVEMENTS: All improvements required to bring the dwelling unit up to Federal Housing Quality Standards (safe, sanitary, and decent) and in compliance with local building codes, or otherwise allowable under CDBG regulations. GRANT: Amount of financial assistance provided for the purpose of rehabilitation, the conditions of which are specified in a grant agreement between the City and a property owner. INCOME VERIFICATION: The process used to determine gross household income, including the submittal of the most recent income tax returns, employer verification of wages, W-2 Forms, Social Security verification, profit/loss statements, etc. OWNER/OCCUPIED UNIT: A single-family dwelling of mobilehome used entirely for residential purposes and occupied by the owner household. PARTICIPANT: Any person or legal entity that has applied for and is in the process of rehabilitating a unit through the Program. PERSON: One or more persons who occupy a unit that is to be rehabilitated. 9

12 PROGRAM ADMINISTRATOR: The City staff member having the primary day-today responsibility for administering and coordinating the projects for the Program. REHABILITATION COST: The total direct and indirect cost of repairs and improvements and other costs for rehabilitation to be incurred by the participant that is paid with Grant funds. SCOPE OF WORK: A detailed description of the repairs and improvements to be completed as the rehabilitation project, including quantities and materials specifications. 10

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