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CC - Item 2D - Home-Funded Tenant Based Rental Assistance ProgramE M E. S O 4 Q7 s 1] ROSEMEAD CITY COUNCIL STAFF REPORT TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: ANDREW C. LAZZARETTO, CITY MANAGE DATE: JULY 11, 2006 SUBJECT: REVIEW AND APPROVAL OF HOME-FUNDED TENANT BASED RENTAL ASSISTANCE PROGRAM (TBRA) SUMMARY The City has received HOME funds since 1996-1997 for use in providing affordable housing to the City. Currently, there exists a need within the community for affordable rental housing, especially for residents who may be displaced through government action or through private development of existing affordable mobile home parks. In addition, the City has $511,719 in HOME funds, which it must commit to a project prior to July 31, 2006. Staff Recommendation Staff recommends that the City Council take the following actions: ■ Approve and adopt the City's Tenant-Based Rental Assistance Program. Approve a contract with the Rosemead Housing Development Corporation for TBRA operations. ■ Authorize the City Attorney to finalize the contract and all program agreements. ANALYSIS Background Since 1996-1997, the City has been a HOME Participating Jurisdiction. HOME funds must be used for affordable housing development, home buyer programs, or rental assistance programs. The City's past use of HOME funds includes the Mortgage Assistance Program (MAP) for first time home buyers in the City; funding for multi-family residential rehabilitation programs within the City's target areas; property acquisition costs for the Garvey Senior Housing Project; and funds for a regional rental housing project developed by the East Los Angeles Community Corporation in the unincorporated County in East Los Angeles. APPROVED FOR CITY COUNCIL AGENDA: ITEM NUMBER: City Council Meeting July 11, 2006 Page 2 of 4 HOME funds must be committed within 24 months of receipt and expended within five years. To date, no multi-family property has applied for assistance through the Multi- family residential rehabilitation program and no loans have been made through the City's Mortgage Assistance Program. In the multi-family rehabilitation program, the owner with whom the City was negotiating cited that current rental rates without assistance were higher than HOME rental rates would allow if the units were rehabilitated. In the case of the Mortgage Assistance Program (MAP), property values have escalated, making it difficult for first time homebuyers to qualify for assistance at current thresholds. Because of this, the City finds that it must commit $511,719 in HOME funds prior to July 31, 2006. Need A need exists for additional forms of affordable housing. According to the 2000 Census, 22.8% of all Rosemead individuals fell below the poverty threshold and 19.4% of all families were below the poverty threshold. 51.2% of all Rosemead residents were renters and 41.1 % of all renter households paid more than 35% of their income for rent. In addition, 47.6% of all families in the City earned less than 60% of the median income, while 16.7% of households fell below 80% of median income for a total low income population percentage of 64.3%. 80% of median income for a family of four (4) is $55,450. Approximately 26.9% of all Rosemead residents between the ages of 21 and 64 are disabled according to the Census and the City's median income continues to lag behind both the County and the U.S. median. The County median in 2000 was $42,189, while the U.S. median was $41,994. The median income for the City of Rosemead was $36,552, which was 86.6% of the County median and 87% of the U.S. median. Of the total units within the City, some of the most affordable units are located in the City's mobile home parks. Mobile homes comprise 3% of the City's housing stock. However, these numbers are continuing to decline as parks are developed by the private marketplace. Between 1990 and 2000, the number of units declined from 438 to 389 units, an overall loss of 11.2% of the City's affordable housing stock. Proposed Use of Funds After a review of current use of funds, the City's housing goals and community need, staff proposes to create a new Tenant-Based Rental Assistance program (TBRA) using HOME funds. TBRA is an eligible use of funds under the HOME program. In order to assist persons with the most urgent needs in finding affordable housing, staff proposes to make TBRA assistance available to persons displaced through governmental action (e.g. condemnation due to serious health/safety or code enforcement items) and to persons displaced through development of the City's existing mobile home parks. This program would be available to households at or below 60% of median income. City Council Meeting July 11, 2006 Page 3 of 4 Program elements include the following: Program modeled on the existing Housing Voucher (formerly known as Section 8 Rental Assistance) program, which already operates within the City. This program uses a Payment Standard based on local prices. The assisted tenant would pay the difference between the actual rent and the Payment Standard or a maximum of 30% of monthly income; minimum rent would be set at $50.00 per month. Rents must be reasonable for the area; ■ Program would establish a residency preference and would require that those assisted be in imminent danger of displacement due to governmental action or to mobile home parks being developed into other, non-affordable, uses; ■ Units must pass an initial and annual inspection based on Section 8 Housing Occupancy Standards; ■ The lease would be for a one-year term, renewable; ■ The subsidy would go with the tenant, not the property; ■ The City would provide funding for up to 35 households. Implementation The City could choose to administer the program through a variety of mechanisms, such as through the Rosemead Housing Development Corporation; or with the Los Angeles Community Development Commission - Housing Authority; or it could contract the service to another entity. Staff did outreach to the City's current Section 8 provider, but they did not indicate interest in providing this service. Based on the foregoing, staff recommends that the City contract with the Rosemead Housing Development Corporation to provide TBRA assistance on behalf of the City. Program operations would be overseen by Housing and Grants staff, who have the responsibility for monitoring the City's subrecipients. FINANCIAL REVIEW There is no impact to the City's General Fund. The City has sufficient HOME funds for the project and is required to commit $511,719 in HOME funds prior to July 31, 2006. • • City Council Meeting July 11, 2006 Page 4 of 4 PUBLIC NOTICE PROCESS This item has been noticed through the regular agenda notification process. Submitted by: Lisa A. Baker Housing and Grants Administrator Attachment A: Proposed Program Guidelines 0 • City of Rosemead TENANT BASED RENT ASSISTANCE (TBRA) PROGRAM 1. Guidelines 9. Program Overview The Tenant Based Rent Assistance Program is designed to assist eligible City residents to receive rent assistance to make housing affordable. The assistance is as follows: Rental Assistance payments to a qualified landlord, based on the County's Section 8 Voucher Program. To qualify for assistance, the applicant must satisfy specific eligibility criteria. Assistance is provided through the City of Rosemead ("City") and is subject to the availability of Program funds from the City or other funding sources. 2. Eligible Participants ■ Households earning 60% or less of the median income; Households displaced or in imminent threat of displacement through governmental action or through private development of existing mobile home parks. Third party documentation of displacement is required; 3. Eligible Properties ■ Houses, condominiums, mobile homes within the City that are available to rent, where the landlord wishes to participate and which can pass a Section 8 Housing Occupancy inspection; Where a participant is not able to locate a qualifying unit within the City, the participant may relocate to a qualifying unit within a local jurisdiction if the jurisdiction so approves in writing. 4. Participation Priorities Funding is based on a first-come first-served basis. All complete applications will be date stamped and processed in the order received. Incomplete applications will not be processed until all requested information is submitted. Applicants who do not provide all requested information will be given a deadline to provide information. If information is not given by the deadline, the application will be • • closed and the applicant will be notified and given the opportunity to have the application reinstated. The City withholds the right to deny assistance at any time if any false information is found on the application. 5. Type of Assistance ■ Applicants receiving assistance through the program may receive HOME funds for up to two (2) years, based on annual lease. Assistance is renewable in two (2) year increments, based on need. ■ Participants shall not permit criminal activities to occur on the property or permit property to suffer deterioration or decline, or maintain, or permit to be maintained any public or private nuisance on or about the property. ■ Applicants/Participants will be recertified annually for continued participation. Participants who no longer qualify for assistance will be terminated from the program. The City shall use the Section 8 income qualification guidelines in determining household income. ■ For property owner, there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, ancestry, or disability in the selection of tenants for assisted properties. Owners can and should take an application and conduct a rental check for each prospective tenant. ■ Maximum rental payment is the difference between 30% of income and the City's payment standard. If rent payment would be less than $50.00 per month, applicant shall pay the higher of 30% of income or $50.00. Costs of utilities based on a utility standard shall count towards total affordable rental cost. The City's Payment standard will be based on the Payment Standard for the County of Los Angeles, including existing Utility standards. ■ Rents must be comparable to other, unassisted units. ■ Occupancy standards for assistance shall be based on two (2) persons per bedroom plus one. Children over the age of four (4) shall not be required to share a bedroom. 6. Lead-Based Paint Lead-Based Paint: All assisted properties that were built prior to January 1, 1978 must be inspected for lead-based paint, except: Property that has been found free of lead-based paint by a certified lead- based paint inspector. A copy of the lead hazard evaluation report must be submitted to the City; ■ Property where all lead-based paint has been removed. A copy of the lead-based paint clearance report must be submitted to the City; or Lead safe paint inspections, in accordance with federal Section 8 requirements will be conducted for properties. Such inspections look only for damaged or peeling exterior or interior paint. Owners of properties with damaged/peeling paint will receive notification to repair the paint prior to contracting for assistance. 7. Some Common Reasons for Denial ■ Applicant is not displaced or in imminent danger of displacement ■ Applicant owns other properties in which to live ■ Applicant commits fraud or submits false information during application process. ■ Applicant will not commit to HOME rental and property requirements. 0 • 0 City of Rosemead Community TBRA PROGRAM II. Procedures Step 1: Application and Required Documents A complete application includes a signed application and all required documents as listed in the application. An incomplete application will not be processed nor reviewed. Step 2: Review of Application Upon receiving a complete application, the application will be reviewed to determine applicant's income eligibility. Step 3: Certification One approved for participation in the program, applicant will be given 60 days to locate qualifying housing. Offer of participation may be extended for an additional 60 days. If no qualifying housing is located after this time, the application will expire. Step 4: Property Inspection Once the owner is determined eligible, a property inspection is conducted to determine compliance with Section 8 Housing Occupancy Standards. Units failing inspection will have the deficiencies itemized and the owner will be given a time frame in which to correct the deficiencies. No rental assistance will be given until the unit passes inspection. Step 5: Final Approval and Signing of Documents Once unit and rental price is approved, participation documents will be prepared. All participants over the age of 18 must be present to sign required documents. All signers must bring a current and valid California Driver's License or a current DMV identification card. Documents, such as the lease, must also be signed by the property owner or designated legal representative authorized to sign on behalf of the owner. Participants are to be provided with a copy of the documents. Step 6: Schedule and Disbursement of Payments Rental assistance payments will be made monthly, on or around the first day of the month to the property owner. Payments shall be mailed. Acceptance of rental payment by owner signifies that the participating family is occupying the premises and that the unit meets Section 8 Occupancy Standards. Failure to comply with program requirements by owner is subject to cancellation or withholding of assistance payments for up to 30 days. If corrections are not made after 30 days, the contract shall be cancelled unless owner can prove extenuating circumstances.