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CC - Item 4C - 2020 Home Investment Partnership Act (HOME) Policies and Procedures ManualROSEMEAD CITY COUNCIL STAFF REPORT TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: GLORIA MOLLEDA, CITY MANAGER J. Y _A . DATE: MAY 12, 2020 SUBJECT: 2020 HOME INVESTMENT PARTNERSHIP ACT (HOME) POLICIES AND PROCEDURES MANUAL SUMMARY The HOME Investment Partnership Act (HOME) program is a federal program directed by the U.S. Department of Housing and Urban Development (HUD) and is designed to create affordable housing for low-income households. The City of Rosemead has qualified to receive these funds and is responsible for the administration of its HOME Program. The purpose of the federal HOME Program includes expanding the supply of affordable housing for low- and very low-income persons; improving the means of state and local governments to implement strategies to achieve adequate supplies of decent, affordable housing; and providing both financial and technical assistance to participants to develop model programs for affordable, low- income housing. In order to administer these programs, the City is required to have in place a Policies and Procedures manual that addresses all the programs for which the City is responsible. Staff has updated the Policies and Procedures for the HOME Program. STAFF RECOMMENDATION That the City Council receive and approve the Policies and Procedures for the HOME Program. DISCUSSION The City of Rosemead is a federal entitlement grant recipient of Home Investment Partnership Act (HOME) funds from the U.S. Department of Housing and Urban Development (HUD). As part of the process in receiving the HOME allocation, the City prepared the five-year Consolidated Plan and every year adopts the Annual Action Plan. The City is also required by HUD to prepare and implement policies and procedures (i.e., HOME Policies and Procedures Manual) for HOME funded programs and activities. The intent of the said manual is to clearly AGENDA ITEM 4.0 City Council Meeting May 12, 2020 Page 2 of 3 identify HUD's pertinent regulations and requirements related to the administration, implementation and monitoring of the programs. The City's current HOME Policies and Procedures manual was prepared in 2013. An update is needed in order to add implementation policies and procedures for any new HOME programs. Staff has also enhanced the 2020 HOME Policies and Procedures Manual so that it is one comprehensive document with the applicable HUD guidelines and procedures. The following is a brief summary of the HOME programs: • Administration — 10% of the annual HOME allocation expended for Program Administration Costs (PACs). • Owner Occupied Rehabilitation (OOR) Loans — Loans to eligible households and handicapped/disabled persons for critical health and safety-related improvements. The loan may be used for repairs related to code deficiencies, health and safety items. Each eligible homeowner may apply for a loan once every 5 years. • Homebuyer Activities — HOME funds can be used to finance the acquisition and/or rehabilitation or new construction of homes for homebuyers. • Rental Housing — Affordable rental housing may be acquired and/or rehabilitated or constructed. • Tenant -based rental assistance (TBRA) — Financial assistance for rent, security deposits and, under certain conditions, utility deposits may be provided to tenants. Assistance for utility deposits may only be provided in conjunction with a TBRA security deposit or monthly rental assistance program. With the enhanced description of the program guidelines, the 2020 HOME Policies and Procedures Manual is a complete and more defensible document. In contrast, the HOME Policies and Procedures from 2013 were saved as separate documents for only two programs the First Time Homebuyer Down Payment Assistance Loan Program and the Owner -Occupied Loan Program. Consequently, the 2020 HOME Investment Partnership Act Policies and Procedures has been updated into one comprehensive manual. FISCAL IMPACT - None STRATEGIC PLAN IMPACT The 2020 HOME Policies and Procedures Manual update implements the "Key Organizational Goals" of ensuring the City's continued financial viability by actively pursuing quality economic development; enhance public safety and quality of life; and beautify residential neighborhoods and commercial corridors. City Council Meeting May 12, 2020 Pate 3 of 3 PUBLIC NOTICE PROCESS This item has been noticed through the regular agenda notification process. Prepared by: Angelica austo-Lupo, Director of Community De lopment Attachments: A: 2020 HOME Investment Partnership Act Policies and Procedures Manual B. 2013 FTHB Down Payment Assistance Loan Program Policies and Procedures C: 2013 Owner Occupied Loan Program Policies and Procedures Attachment A 2020 HOME Investment Partnership Act Policies and Procedures Manual 7Xcl, A, Awl k HOME INVESTMENT PARTNERSHIP PROGRAM POLICIES AND PROCEDURE MANUAL Community Uevelol)ment Department 8838 (last V;dley BOOK-Viird, Rosemead, CA 01770 July 2010 Draft To— Amc,k., TABLE OF CONTENTS CHAPTER 1 OVERVIEW OF HOME PROGRAM...............................................................................8 A. INTRODUCTION......................................................................................................................................................8 B. PURPOSES AND GOALS...........................................................................................................................................8 DISCLAIMER...................................................................................................................................................................9 C. ALLOCATION OF FUNDS (92.50 and 92.102)........................................................................................................10 Timeframes..................................................................................................................................................................10 Useof Funds................................................................................................................................................................10 D. HOME -FUNDED ACTIVITIES..................................................................................................................................11 HOME Program Roles and Relationships.....................................................................................................................11 E. OBLIGATIONS (MATCH) 24 CFR 92.218-92.222....................................................................................................13 Recordkeeping, Reporting, and Monitoring (992.508 and 92.509).............................................................................13 CHAPTER 2 HOME PROGRAM RULES.........................................................................................14 PARTI: GENERAL Program Rules................................................................................................................................14 A. DEFINITION OFA PROJECT...................................................................................................................................14 B. SUBSIDY................................................................................................................................................................15 EligibleForms of Subsidy.............................................................................................................................................15 ProjectSubsidy Limits..................................................................................................................................................17 C. ELIGIBLE COSTS....................................................................................................................................................19 ProhibitedActivities....................................................................................................................................................21 D. PROPERTY.............................................................................................................................................................23 E. APPLICANTS AND BENEFICIARY............................................................................................................................26 Definitionof Annual Income.......................................................................................................................................27 IncomeVerification.....................................................................................................................................................28 F. LONG-TERM AFFORDABILITY................................................................................................................................29 Occupancy...................................................................................................................................................................29 G. OTHER FEDERAL REQUIREMENTS........................................................................................................................32 PART II - COST ALLOCATION AND SUBSIDY LAYERING.................................................................................................32 H. COST ALLOCATION...............................................................................................................................................33 Determining a HOME Assisted Unit.............................................................................................................................33 I. SUBSIDY LAYERING...............................................................................................................................................33 CHAPTER 3 CHDO REQUIREMENTS AND ACTIVITIES...................................................................36 PART 1: HOME PROGRAM REQUIREMENTS................................................................................................................36 A. CHDO SET-ASIDE REQUIREMENT..........................................................................................................................36 B. CHDO QUALIFYING CRITERIA................................................................................................................................37 C. CHDO SET-ASIDE ROLES: OWNER, DEVELOPER, AND SPONSOR..........................................................................47 D. CHDO ELIGIBLE USES............................................................................................................................................50 E. CHDO SPECIAL ASSISTANCE..................................................................................................................................50 PART II: PROGRAM DESIGN AND IMPLEMENTATION.................................................................................................51 2 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small To— America F. CHDO CAPABILITY.................................................................................................................................................52 G. TYPES OF PROJECTS..............................................................................................................................................53 APPLICATIONPERIOD..................................................................................................................................................53 PRE -APPLICATION FOR CHDO STATUS........................................................................................................................53 RECAPTUREDAND RESALE FUNDS..............................................................................................................................55 H. CHDO CHECKLIST..................................................................................................................................................63 I. PROJECT APPLICATION.........................................................................................................................................65 J. CHDO PROCEEDS..................................................................................................................................................66 K. CHDO CERTIFICATION...........................................................................................................................................69 CHDO Certification/Recertification Requirements......................................................................................................69 L. Monitoring...........................................................................................................................................................69 M. DEFAULT...............................................................................................................................................................71 CHAPTER 4 HOMEOWNER REHABILITATION ACTIVITIES.............................................................72 PART I: HOME REHABILITATION LOAN PROGRAM......................................................................................................72 A. Program Summary................................................................................................................................................72 B. General Definitions..............................................................................................................................................72 C. Program Guidelines..............................................................................................................................................76 LoanProcess................................................................................................................................................................76 D. Program Scope.....................................................................................................................................................77 Eligibility......................................................................................................................................................................78 Levelof Assistance.......................................................................................................................................................78 Typeof Assistance.......................................................................................................................................................79 QualifyingProperties...................................................................................................................................................80 Typesof Rehabilitation................................................................................................................................................80 SelectionProcess.........................................................................................................................................................82 BidProcedures............................................................................................................................................................83 ContractImplementation............................................................................................................................................84 DisputeResolution......................................................................................................................................................84 AdministrativeSupport...............................................................................................................................................85 UnderwritingCriteria..................................................................................................................................................85 EligibleRehabilitation Costs........................................................................................................................................86 Procurement Standards (Conflict of Interest).............................................................................................................87 FairHousing and Affirmative Marketing.....................................................................................................................87 LOANServicing Requirements.....................................................................................................................................87 EligibleUse of Funds....................................................................................................................................................88 IneligibleUses of Funds...............................................................................................................................................88 EligibleHouseholds.....................................................................................................................................................88 EligibleProperty..........................................................................................................................................................89 MaximumAfter -Rehabilitation Value..........................................................................................................................89 LoanDocumentation...................................................................................................................................................90 LoanTerms..................................................................................................................................................................90 FloodInsurance...........................................................................................................................................................93 PropertyTaxes.............................................................................................................................................................93 Annual Homeowner Certification................................................................................................................................93 3 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E`AD I Today's Small Town Amcrica Subordination..............................................................................................................................................................93 Re -Use Account...........................................................................................................................................................94 Demand/Payoff........................................................................................................................................................... 95 Default......................................................................................................................................................................... 95 Foreclosure by Senior Lien Holder...............................................................................................................................95 Foreclosure by the City upon Default of Borrower under Loan..................................................................................96 Failureto Comply........................................................................................................................................................96 E. Reuse Plan............................................................................................................................................................96 ReuseAccount.............................................................................................................................................................96 Reuseof Funds............................................................................................................................................................97 Monitoring...................................................................................................................................................................97 F. Subsidy Layering...................................................................................................................................................97 ProjectEvaluation.......................................................................................................................................................97 Compliance..................................................................................................................................................................98 SubsidyLimits..............................................................................................................................................................99 G. ELIGIBLE COSTS..................................................................................................................................................100 H. THE PROPERTY....................................................................................................................................................101 EligibleProperty Types..............................................................................................................................................101 MaximumProperty Value.........................................................................................................................................101 Determining the 95 Percent of Median Purchase Price Limit...................................................................................102 PropertyStandards....................................................................................................................................................102 I. THE APPLICANT/BENEFICIARY............................................................................................................................103 Principalresidence....................................................................................................................................................103 J. LONG-TERM AFFORDABILITY..............................................................................................................................103 K. OTHER FEDERAL REQUIREMENTS......................................................................................................................104 PART If: PROGRAM DESIGN AND IMPLEMENTATION...............................................................................................109 A. OBJECTIVES .........................................................................................................................................................109 B. GOALS.................................................................................................................................................................109 CHAPTER 5 DOWN PAYMENT ASSISTANCE LOAN.....................................................................110 A. Program Goals....................................................................................................................................................110 B. Second Mortgage Loan.......................................................................................................................................110 C. Fair Housing Policy.............................................................................................................................................111 D. Public Information Program...............................................................................................................................111 E. Determining Property Value..............................................................................................................................111 F. Disclosure of Voluntary Sale Notice...................................................................................................................111 G. Lead -Based Paint................................................................................................................................................112 H. Double-Dipping..................................................................................................................................................112 I. Program Administration.....................................................................................................................................112 J. Program Guidelines............................................................................................................................................113 Locationof Program Activity.....................................................................................................................................113 EligibleParticipants...................................................................................................................................................113 IncomeLimits............................................................................................................................................................113 IncomeDefined.........................................................................................:...............................................................113 FirstTime Homebuyer...............................................................................................................................................114 4 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSENTE`AD Tod WSmall Town America ResidencyPreference................................................................................................................................................116 MaximumLiquid Assets.............................................................................................................................................116 K. Eligible Properties..............................................................................................................................................116 L. Affordable Housing Costs...................................................................................................................................117 M. Occupancy Standards.........................................................................................................................................118 N. Covenants and Restrictions................................................................................................................................118 MaintenanceCovenant.............................................................................................................................................118 CriminalActivity Covenant........................................................................................................................................118 AffordabilityCovenant..............................................................................................................................................118 Residential Overcrowding Restriction.......................................................................................................................119 Time Periods Required for Covenants.......................................................................................................................119 LoanRepayment Terms.............................................................................................................................................119 EquityShare Program................................................................................................................................................120 ComplianceMonitoring.............................................................................................................................................121 0. Participation Priorities........................................................................................................................................121 P. Financing............................................................................................................................................................121 FirstDeed of Trust.....................................................................................................................................................121 SecondDeed of Trust................................................................................................................................................121 Prohibitionof Co-Signors...........................................................................................................................................122 Prohibition of Additional Deeds of Trust...................................................................................................................123 Insurance...................................................................................................................................................................123 Useof Proceeds.........................................................................................................................................................123 Q. Amendments......................................................................................................................................................123 R. Educational Services...........................................................................................................................................124 Aboutthe Educational Program................................................................................................................................124 ReferralServices........................................................................................................................................................124 S. Program Procedures...........................................................................................................................................124 Initiationand Submission..........................................................................................................................................124 Resale, Refinancing, and Subordination....................................................................................................................129 RecaptureGuidelines................................................................................................................................................129 T. Other Programmatic Requirements...................................................................................................................130 Violationsand Penalties............................................................................................................................................130 Bonus, Commission or Fee........................................................................................................................................130 Conflictof Interest.....................................................................................................................................................130 EqualOpportunity Policy...........................................................................................................................................131 Fire and Flood Insurance Requirements....................................................................................................................131 LeadBase Paint Notification......................................................................................................................................131 ConflictResolution....................................................................................................................................................131 U. EXHIBITS.............................................................................................................................................................132 EXHI B IT A...................................................................................................................................................................132 EXHIBITB...................................................................................................................................................................134 EXHIBITC...................................................................................................................................................................135 EXHIBITD...................................................................................................................................................................135 EXHIBITE...................................................................................................................................................................137 5 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town America CHAPTER 6 PROCUREMENT, CONSTRUCTION MANAGEMENT, ENVIRONMENTAL . ................138 A. PROCUREMENT..................................................................................................................................................138 2. Use and Reversion of Assets..............................................................................................................................138 ProcurementTypes...................................................................................................................................................139 B. OTHER CONSIDERATIONS...................................................................................................................................142 Conflictof Interest.....................................................................................................................................................143 ExcludedParties........................................................................................................................................................143 Minority/Woman Owned Business Enterprises........................................................................................................144 CHAPTER 7 CONSTRUCTION MANAGEMENT............................................................................145 A. STANDARDS AND CODES RELATED TO CONSTRUCTION....................................................................................145 PROPERTY STANDARDS (24 CFR 92.251)...................................................................................................................145 HousingCodes/Standards.........................................................................................................................................145 BuildingCodes...........................................................................................................................................................146 B. REHABILITATION CODES.....................................................................................................................................146 RehabilitationStandards...........................................................................................................................................147 C. SPECIAL CONSTRUCTION — LEAD SAFE REGULATIONS.......................................................................................163 REHABILITATION STANDARD/ REPLACEMENT STANDARD.......................................................................................163 D. International Energy Conservation Code...........................................................................................................163 E. Section 504 and Fair Housing.............................................................................................................................163 F. CONSTRUCTION PROCESS REQUIREMENTS.......................................................................................................163 G. SCREENING CONTRACTORS: BIDDING AND CONTRACT AWARD PROCESS .......................................................167 Debarment and Suspension Policy (24 CFR 85.35)....................................................................................................167 Pre -construction Conferences...................................................................................................................................170 H. Working with Contractors..................................................................................................................................171 I. Construction Schedule.......................................................................................................................................172 J. Timeliness and the Construction Schedule........................................................................................................172 K. Change Orders....................................................................................................................................................173 L. Managing Payments...........................................................................................................................................174 M. Periodic Reporting..............................................................................................................................................175 CHAPTER 8ENVIRONMENTAL REQUIREMENTS AND PROCEDURES ............................................ 178 C. OVERVIEW..........................................................................................................................................................178 D. Roles and Responsibilities of City of Rosemead.................................................................................................179 E. Environmental Review Process..........................................................................................................................180 F. Environmental Decision-Making........................................................................................................................181 G. Environmental Action.........................................................................................................................................182 H. ENVIRONMENTAL REVIEW PROCEDURES..........................................................................................................184 Actions Triggering the Requirements of Part 58.......................................................................................................184 Limitations Pending Environmental Clearance..........................................................................................................185 "CONTEMPLATE" AND "COMMITMENT" DEFINITION FOR THE ENVIRONMENTAL REVIEW ....................................187 CHAPTER 9 ADMINISTRATIVE REQUIREMENTS.........................................................................226 PART1: GENERAL REQUIREMENTS............................................................................................................................226 0 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T—n America A. ELIGIBLE ADMINISTRATIVE AND PLANNING COSTS...........................................................................................226 B. UNIFORM ADMINISTRATIVE REQUIREMENTS Sub -part K (24 CFR 92.500 -92.509) ..........................................227 C. WRITTEN AGREEMENTS.....................................................................................................................................228 Requiredprovisions...................................................................................................................................................228 D. CONFLICT-OF-INTEREST......................................................................................................................................232 E. HOME Provisions for Nonprofit and For -Profit Owners, Developers, CHDOs, and Sponsors ............................233 F. RELIGIOUS ORGANIZATIONS..............................................................................................................................234 G. HOME INVESTMENTTRUST FUND ACCOUNT ....................................................................................................234 H. HOME PROGRAM INCOME.................................................................................................................................236 I. PRE -AWARD COSTS............................................................................................................................................237 J. HOME PROGRAM DRAWS..................................................................................................................................237 A. INTERNAL CONTROLS.........................................................................................................................................239 B. RECORD-KEEPING...............................................................................................................................................239 C. REPORTING REQUIREMENTS..............................................................................................................................243 OVERVIEW.................................................................................................................................................................243 D. MONITORING.....................................................................................................................................................244 E. HOME PROGRAM RISK ANALYSIS, MONITORING PROCESS, AND PLAN.............................................................245 F. INTEGRATED DISBURSEMENT AND INFORMATION SYSTEM (IDIS)....................................................................253 CHAPTER 10 OTHER FEDERAL REQUIREMENTS........................................................................254 A. NON-DISCRIMINATION AND EQUAL ACCESS......................................................................................................258 B. EMPLOYMENT AND CONTRACTOR.....................................................................................................................262 PROCEDURE............................................................................................................................................................... 263 ASSESSMENT.............................................................................................................................................................264 CORRECTIVEACTIONS...............................................................................................................................................264 C. SECTION 3...........................................................................................................................................................265 D. SITE AND NEIGHBORHOOD STANDARDS............................................................................................................268 E. LEAD-BASED PAINT SAFE HOUSING RULE (24 CFR part 35, subpart J)...............................................................269 GLOSSARY OF HOME TERMS...................................................................................................272 APPENDIX 282 AppendixA................................................................................................................................................................282 AppendixB................................................................................................................................................................285 AppendixC................................................................................................................................................................287 AppendixD................................................................................................................................................................................290 7 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSMEAD Today's Small Town Am k., CHAPTER 1 OVERVIEW OF HOME PROGRAM A. INTRODUCTION The HOME program is a federal block grant program directed by the U.S. Department of Housing and Urban Development (HUD) and is designed to create affordable housing for low- income households. The City of Rosemead is responsible for the administration of its HOME Program. The purposes of the HOME Program include expanding the supply of affordable housing for low - and very low-income persons; improving the means of state and local governments to implement strategies to achieve adequate supplies of decent, affordable housing; and providing both financial and technical assistance to participants to develop model programs for affordable, low- income housing. Eligible forms of assistance include loans, advances, equity investments, interest subsidies and other forms of investment that HUD approves. HOME grants are awarded each year through a competitive application process to construct, acquire and/or rehabilitate rental housing, or develop new housing for homeownership. Successful grant applicants have included Community Housing Development Organizations (CHDOs). B. PURPOSES AND GOALS The HOME Program purposes and goals are: 1. Expanding the supply of decent, safe, sanitary, and affordable housing for very low- income and low-income families in Rosemead (those at or below 80 percent of area median income). 2. Mobilizing and strengthening the abilities of units of local governments, public housing authorities, and community housing development organizations to implement strategies for achieving an adequate supply of decent, safe, sanitary, and affordable housing. 3. Providing participating entities, on a coordinated basis, with various forms of federal housing assistance. The City of Rosemead will focus on the following purposes and goals: 1. Assisting in preserving existing or constructing decent, safe, sanitary, and affordable housing in areas of greatest demonstrated need in the City of Rosemead, ensuring geographic distribution, where and when possible, taking into consideration the 0 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual W Town America historical information of the property and area, the current housing market, and the prospects for future demand. 2. In areas where greatest need is identified, giving preference to those projects which provide the greatest number of qualified affordable units relative to the HOME funds allocated, while considering serving lower income families in Rosemead. 3. Ensuring units are affordable to households for the applicable period of affordability. 4. Allocating only the minimum amount of HOME funds that the City of Rosemead determines to be necessary for the financial feasibility of the project and its viability as a qualified affordable housing project throughout the period of affordability. 5. Assisting in providing housing to meet the needs and priorities outlined in the City's Consolidated Plan and its corresponding Annual Action Plan. 6. Providing opportunities for CHDOs to access the HOME Program on behalf of low- and very low-income residents. 7. Encouraging innovative approaches in planning, designing, constructing, enhancing energy efficiency, and financing that are cost effective in providing affordable housing. 8. Giving preference to those applications that show a greater degree of readiness to proceed with the development. 9. Allowing applicants, the ability to self -monitor their capabilities, based on geographic area, population, need and capacity. 10. Maximizing the investment of private capital to leverage HOME funds and use existing agencies and private sector mortgage financial institution resources, while retaining the affordability of housing with local and private investment. In accordance with these stated purposes and goals, the City of Rosemead will not process any application that is not consistent with the purposes and goals of the City's Consolidated Plan. The City of Rosemead will consider the capacity of its management team, and the availability of contractors and subcontractors in assessing the viability of each proposed project. DISCLAIMER This manual is a tool created for City of Rosemead HOME Program staff, participants and/or any related parties as a support and practical guidance related to the HOME Program. E City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T -n A. -k. This manual is not intended to change, enlarge, or restrict any requirement found in the contracts, Department of Housing and Urban Development (HUD) Final Rule, City of Rosemead rules and policies and/or any related federal or state rule governing this program. This manual is not meant to be a substitute for HOME Program regulations, but as a supplement to them. It is not exhaustive regarding all considerations affecting the use of HOME Program funds. While careful consideration and due care has been used in developing the manual, HOME Program participants are encouraged to consult with the City of Rosemead HOME Program staff to ensure correct interpretation of policies, regulations, and procedures. The City of Rosemead reserves the right to implement additional policies as needed. It must be noted that while the City of Rosemead does not operate all HOME program activities, they may be addressed throughout this policy and procedure manual in the possibility that the City may decide to operate such in the future. C. ALLOCATION OF FUNDS (92.50 and 92.102) HOME funds are allocated annually by formula to State and local governments by HUD. The City of Rosemead receives funds through this formula and the Planning and Community Development Division is the lead agency that administers those funds. Under the HOME Program, the City of Rosemead is designated as a "Participating Jurisdiction" ("PJ"). The City of Rosemead is subject to several HOME Program requirements when allocating funds to other entities. These requirements affect the way the City of Rosemead and its recipient's run its HOME Program. TIMEFRAMES The City of Rosemead has 24 months to enter into written agreements with developers, owners, contractors, Subrecipients, and Community Housing Development Organizations (CHDOs), a type of nonprofit housing organization), to commit HOME funds and 5 years to expend HOME funds. If the City does not meet these timeframes, it risks losing the allocated HOME funds. USE OF FUNDS The HOME Program places the following limits on the "use" of funds: 10 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E`AD Today's 5, e11 Toren America • Planning and Administration (92.207): The City of Rosemead may use up to 10 percent of their HOME Program allocation and program income received for eligible and reasonable planning and administration costs. • CHDOS: The City of Rosemead must reserve a minimum of 15 percent of its annual HOME Program allocation for activities undertaken by qualified Community Housing Development Organizations (CHDOs). D. HOME -FUNDED ACTIVITIES The City's HOME funds may be used to support four general affordable housing activities: 1. Homeowner rehabilitation: HOME funds may be used to assist existing owner - occupants with the repair, rehabilitation, or reconstruction of their homes. 2. Homebuyer activities: HOME funds can be used to finance the acquisition and/or rehabilitation or new construction of homes for homebuyers. 3. Rental housing: Affordable rental housing may be acquired and/or rehabilitated or constructed. 4. Tenant -based rental assistance (TBRA): Financial assistance for rent, security deposits and, under certain conditions, utility deposits may be provided to tenants. Assistance for utility deposits may only be provided in conjunction with a TBRA security deposit or monthly rental assistance program. The City of Rosemead will use its HOME Program funds for a Homeowner Housing Rehabilitation and Preservation Program (HRPP), and a CHDO Program. Additionally, depending on the availability of funds, a Rental Program. HOME PROGRAM ROLES AND RELATIONSHIPS The City of Rosemead may rely on numerous partners to create affordable housing under its HOME program. Partners play different roles at different times, depending upon the project or activity being undertaken. Defined below are some of the types of partners: 1. CHDOs: A CHDO is a private, nonprofit organization that meets a series of qualifications prescribed in the HOME regulations. The City of Rosemead must 11 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual use a minimum of 15 percent of its annual allocation for housing owned, developed, or sponsored by CHDOs. The City will evaluate the organizations' qualifications and designate them as CHDOs. CHDOs also may be involved in the program as Subrecipients, but the use of HOME funds in this capacity is not counted toward the 15 percent set-aside. 2 Subrecipient: A Subrecipient is a public agency or nonprofit organization that may be selected by the City to administer all or a portion of the City's HOME Program. It may or may not also qualify as a CHDO. A public agency or nonprofit organization that receives HOME funds solely as a developer or owner of housing is not considered a Subrecipient. 3. Developers, Owners, and Sponsors: Individuals, for-profit entities and nonprofits can participate in the HOME Program as owners, developers, or sponsors of housing. When CHDOs use HOME funds as owners, developers or sponsors, this use of HOME funds counts toward the 15 percent CHDOset-aside. 4. Private Lenders: One of the goals of the HOME Program is to establish strong public/private partnerships. The City is required to make all reasonable efforts to maximize participation by private lenders and other members of the private sector. The Community Reinvestment Act (CRA) requirements provide an incentive to private lending institutions to become involved with HOME Program activities. 5. Faith Based Organizations: Faith -based or religious organizations are now able to compete on an equal footing with other organizations for HUD funding. Funding may be provided directly to any Recipient, as long as those funds are not used to support inherently religious activities. As of the September 30, 2003 Final Rule for 24 CFR Part 92, HUD identified regulations for eight programs, includingthe HOME Program, to eliminate barriers and ensure that these programs are open to all qualified organizations regardless of their religious character. 6. Third -Party Contractors: The City may contract with a private for-profit contractor to administer all or part of its HOME Program. Unlike public agencies or nonprofits, contractors must be procured through a competitive process in accordance with applicable Office of Management and Budget (OMB) procurement requirements. These requirements are found in 24 CFR Part 85 (for PJs) and Part 84 (for nonprofits). 12 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 0SMIND J Today's Small Tmvn America E. OBLIGATIONS (MATCH) 24 CFR 92.218-92.222 Generally, the City must make contributions to housing that qualifies as affordable housing under the HOME program, throughout a fiscal year. The contributions must total not less than 25 percent of the funds drawn from the City's HOME Investment Trust Fund Treasury account in that fiscal year. However, match reductions were granted for FY 2019 due to fiscal distress. Due to a low average per capita income, the City of Rosemead was eligible to receive a 100% HOME match reduction community and was not required to provide a match of non-federal funds towards eligible disbursements completed during that FY. It is assumed that the City will continue to be a 100% HOME match reduction community in FY 2020-21, and, therefore, still not be subject to the match requirement. However, HOME funds used for administrative and planning costs, community housing development organization operating expenses, capacity building of community housing development organizations, and project specific assistance to community housing development organizations are not required to be matched and do not count toward the matching requirement. RECORDKEEPING, REPORTING, AND MONITORING (992.508 AND 92.509) 1. The City of Rosemead is required to keep records that enable HUD to determine whether it has met program and project requirements. The City is also responsible for enforcing these requirements with all its HOME Program Recipients. Monitoring and record-keeping requirements are outlined in this manual at Chapter 7; Part II: Recordkeeping, Reporting, and Monitoring. 2. The City of Rosemead must also submit an annual performance report to HUD known as the Consolidated Annual Performance and Evaluation Report (CAPER). The City requires that all Recipients (including CHDOs) meet certain reporting obligations to assist with this annual responsibility. (See Chapter 7: Recordkeeping, Reporting, and Monitoring for further information on reporting requirements.) 13 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Tmvn Anieflu CHAPTER 2 HOME PROGRAM RULES PART I: GENERAL PROGRAM RULES The City of Rosemead allocates funds to develop eligible HOME projects. The HOME program contains several basic rules that apply to all program activities. These rules involve: 1. The definition of a project; 2. The form and amount of subsidy; 3. Eligible costs; 4. The property; 5. The applicant or beneficiary; 6. The long-term affordability of the project; and 7. Applicability of other federal requirements. The following two definitions are critical to understanding the requirements that are outlined in the following sections. A. DEFINITION OFA PROJECT Project: A site or sites together with any building (including manufactured housing unit) or buildings located on the site(s) under common ownership, management, and financing, to be assisted with HOME funds as a single undertaking. The "project" includes all the activities associated with the site and building. For tenant -based rental assistance (TBRA), "project" means assistance to one or more families. HOME -Assisted Units: The HOME Program distinguishes between the units in a project that have been assisted with HOME funds and those that have not -- hence the term HOME -assisted unit. This distinction between HOME -assisted and unassisted units allows HOME funds to be spent on mixed -income projects while still targeting HOME dollars only to income -eligible households. 14 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD Todayk Small T—n America B. SUBSIDY ELIGIBLE FORMS OF SUBSIDY HOME allows virtually any form of financial assistance, or subsidy, to be provided for eligible projects and to eligible beneficiaries through the City. The HOME regulation lists the following forms of subsidy as eligible: 1. Interest bearing loans or advances: These loans are amortizing loans. Repayment is expected on a regular basis, usually monthly, so that over a fixed period, all the principal and interest is repaid. a. Such loans may have interest rates at or below the prevailing market rate. Often, very low interest rates (i.e., one to three percent) can make monthly payments affordable to the borrower. b. The property or some other assets are used as collateral. c. The term of the loan may vary. For home purchase, a term of up to 30 years is common while rehabilitation and construction loans tend to have terms of 10 to 15 years. 2. Non-interest-bearing loans or advances: The principal amounts of such loans are paid back on a regular basis over time, but no interest is charged. As with interest-bearing loans, these loans will use the property or other assets as collateral and the term of the loan will vary depending on the nature of the activity funded. Such loans are made when the borrower is able to make regular payments but even a small amount of interest is not affordable. 3. Deferred loans (forgivable or repayable): These loans are not fully amortized. Instead, some, or even all, principal and interest payments are deferred to some point in the future. Deferred loans can be structured in many ways. a. Deferred payment loans can be forgivable or repayable. b. If forgivable, the forgiveness might be structured to occur at one point in time (such as at the end of the affordability period) or forgiven incrementally (such as forgiving one-fifth of the loan each year over five years). 15 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD J Tudaq's Snwll Town 4mcrice c. If repayable, repayment might be required at the sale or transfer of the property or at the end of a fixed period. d. Like the amortizing loans discussed above, these loans can accrue interest or be non-interest bearing. e. Deferred payment loans require the property or some other form of collateral to be used as security for repayments. f. Deferred payment loans are also referred to as "soft seconds." They are increasingly being used to leverage private first mortgage financing in homeownership. They may also be used to help rental projects by allowing deferral of loan payments for the first few years until the project becomes stable. Grants: Grants are provided with no requirement or expectation of repayment. a. Grants require no liens on the property or other assets. b. Grants are most commonly used for down payment and closing cost assistance in homebuyer programs or to aid very low-income owner - occupants for rehabilitation. 4. Interest Subsidies: This is usually an up -front discounted payment to a private lender in exchange for a lower interest rate on a loan. An interest subsidy may also be a deposit in an interest-bearing account from which monthly subsidies are drawn and paid to a lender along with the homeowner's monthly payment. 5. Equity Investments: An equity investment is an investment made in return for a share of ownership. Under this form of subsidy, the City acquires a financial stake in the assisted property and is paid a monetary return on the investment if money is left after expenses and loans are paid. 6. Rent Subsidy: The amount of the monthly assistance the City of Rosemead may pay to, or on behalf of, a family may not exceed the difference between a rent standard for the unit size established by the City and 30 percent of the family's monthly adjusted income. The City of Rosemead must establish a minimum tenant contribution to rent. The rent standard for a unit size must be based on 16 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEI�E`AD Today's Small Toon A—H,. local market conditions or the Section 8 Housing Choice Voucher Program (24 CFR part 982). 7. Loan Guarantees and Loan Guarantee Accounts: HOME funds maybe pledged to guarantee loans or to capitalize a loan guarantee account. A loan guarantee or a loan guarantee account ensures payment of a loan in case of default. a. A loan guarantee is a written promise to pay the lender some percentage of the outstanding principal balance of a loan in the event the borrower defaults. It may be held for a specified period of time or reduced by a specific amount over time as the loan principal is repaid. b. A loan guarantee account is a loan loss reserve held by the lender in an amount equal to some percentage of the outstanding principal. c. The lender holding the loan guarantee account may require a minimum balance, as well as a percentage of the principal amount of the loan. The percentage of the loan amount held as guarantee may vary from loan to loan, or from program to program. HOME rules require that the amount of money in a loan guarantee account must be based on a reasonable estimate of the default rate on the guaranteed loans and may not exceed 20 percent of the total outstanding principal guaranteed, except that the account may include a reasonable minimum balance. 8. Other forms approved by HUD: Other forms of assistance require HUD approval. If the City intends to use a form of assistance not listed above, the City's Consolidated Plan or Action Plan should describe the proposed form of assistance. Once approved by HUD as part of the Plan, no other HUD approval is required. PROJECT SUBSIDY LIMITS 1. Minimum HOME investment: The minimum amount of HOME funds is an average of $1,000, multiplied by the number of HOME -assisted units in the project. 17 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Town America a. The minimum only relates to the HOME funds, and not to any other funds that might be used for project costs. b. The minimum HOME investment does not apply toTBRA. 2. Maximum HOME Investment: The maximum per-unit HOME subsidy limit varies by PJ. HUD determines the maximum amounts, which are based on the City's Section 221(d)(3) program limits for the metropolitan area, each year. 3. Maximum per-unit subsidy limit is: a. 100 percent of the dollar limits for a Section 221(d)(3) nonprofit sponsor, indexed for base city high cost areas, and adjusted for the number of bedrooms. 4. Actual HOME Investment: The actual subsidy provided will depend on the following factors: a. The proportion of the total project cost that is HOME -eligible -- some planned project costs may not be eligible expenses under the HOME Program. b. The number of units in the project is HOME -assisted -- projects may have a mix of HOME- and non -HOME -assisted units. c. The financial needs of the project -- HOME projects may not receive more subsidy than is required to make them financially feasible. PROCEDURE To determine what is required and reasonable, the City of Rosemead will complete a cost allocation and subsidy layering analysis. HOME project awards are based on the completed cost allocation and subsidy layering analysis. Cost allocation and subsidy layering are impacted by any changes in the number of HOME - assisted units, total number of units in the project, development cost, and/or financing sources. NOTE: Because of these requirements, all the City of Rosemead HOME Recipients are obligated to contact the City as soon as there are any changes in project size, scope, cost, or financing sources. E City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 1^ OSE EAD Today's Small Tmvn America C. ELIGIBLE COSTS Eligible costs depend on the nature of the program activity. A general list of eligible costs is: 1. New construction: HOME funds may be used for new construction of both rental and ownership housing. Any project that includes the addition of dwelling units outside the existing walls of a structure is considered new construction. 2. Rehabilitation: This includes the alteration, improvement, or modification of an existing structure. It also includes moving an existing structure to a foundation constructed with HOME funds. Rehabilitation may include adding rooms outside the existing walls of a structure but adding a housing unit is considered new construction. 3. Reconstruction: This refers to rebuilding a structure on the same lot where housing is standing at the time of project commitment. HOME funds may be used to build a new foundation or repair an existing foundation. Reconstruction also includes replacing a substandard manufactured house with a new manufactured house. During reconstruction, the number of rooms per unit may change, but the number of units may not. 4. Reconstruction and Environmental Review (24 CFR Part 58): Reconstruction may take place anywhere on the lot; however, reconstruction of a single-family unit in a new location on the lot is classified as new construction for purposes of environmental review. Reconstruction of multi -family is viewed as new construction for the purposes of environmental review if the number of units is increased or decreased by more than 20 percent and/or the cost of reconstruction is more than 75 percent of the total estimated cost of the replacement after the work is completed. 5. Conversion: Conversion of an existing structure from another use to affordable residential housing is usually classified as rehabilitation. If conversion involves additional units beyond the walls (envelope) of an existing structure, the entire project will be deemed new construction. Conversion of a structure to commercial use is prohibited. 19 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E`AD L J Toda4'SSm,IITown America 6. Site improvements: Site improvements must be in keeping with improvements to surrounding standard projects. They include new, on-site improvements (sidewalks, utility connections, sewer and water lines, etc.) where none are present. They are essential to development or repair of existing improvements. Building new, off-site utility connections to an adjacent street is also eligible. Off- site infrastructure is not eligible as a HOME expense but may be eligible for match credit. Example: Infrastructure, such as sewer and water lines in a public street in front of a HOME - assisted property, cannot be paid for with HOME funds. However, the connections that run from the HOME -assisted property to the street are eligible HOME costs since they are essential to the property. 7. Acquisition of property: Acquisition of existing standard property, or substandard property in need of rehabilitation, is eligible as part of either a homebuyer program or a rental housing project. After acquisition, rental units must meet HOME rental occupancy, affordability and lease requirements. 8. Acquisition of vacant land: HOME funds may be used for acquisition of vacant land only if construction will begin on a HOME project within 12 months of purchase. Land banking is prohibited. 9. Demolition: Demolition of an existing structure may be funded through HOME only if construction will begin on the HOME project within 12 months. 10. Relocation costs: The Uniform Relocation Act and Section 104(d) (also known as the Barney Frank Amendments; see the appendix for detailed information on these requirements) apply to all HOME -assisted properties. Both permanent and temporary relocation assistance are eligible costs. Staff and overhead costs associated with relocation assistance are also eligible. 11. Project -related soft costs: These costs must be reasonable and necessary. Examples of eligible project soft costs include: a. Finance -related costs including refinancing; b. Architectural, engineering and related professional services; 20 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E`AD Today's Small Toren America c. Tenant and homebuyer counseling provided the recipient of counseling ultimately becomes the tenant or owner of a HOME -assisted unit; d. Project audit costs; e. Affirmative marketing and fair housing services to prospective tenants or owners of an assisted project; and f. PJ staff costs directly related to projects (not includingTBRA). PROHIBITED ACTIVITIES The HOME Program regulations explicitly prohibit certain including: 1. Project reserve accounts: HOME funds may not be used to provide project reserve accounts (except for initial operating deficit reserves) or to pay for operating subsidies. 2. Tenant -based rental assistance for certain purposes: HOME funds may not be used as rental assistance in conjunction with the federal Rental Rehabilitation Program (Section 17) to prevent displacements. They also may not be used for certain mandated existing Section 8 Program uses, such as Section 8 rent subsidies for troubled HUD -insured projects. 3. Match for other programs: HOME Program funds may not be used as the "nonfederal" match for other federal programs except to match McKinney Act funds 4. Development, operations, or modernization of public housing: HOME Program funds may not be used to aid authorized under section 9 of the 1937 Act (Public Housing Capital and Operating Funds). 5. Properties receiving assistance under 24 CFR Part 248 (Prepayment of Low - Income Housing Mortgages): Properties receiving assistance through the Low - Income Housing Preservation and Resident Homeownership Act (LIHPRHA) or the Emergency Low Income Preservation Act (ELIHPA) are not eligible for HOME assistance except if the HOME assistance is provided to priority purchasers. These programs are no longer funded. 6. Double-dipping: During the first year after project completion, the City may commit additional funds to a project. After the first year, no additional HOME funds may be provided to a HOME -assisted project during the relevant period of affordability, except for: 21 _ City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSE 1 Todads Small a. Rental assistance to families may be renewed. b. Rental assistance may be provided to families that will occupy housing previously assisted with HOME funds. c. A homebuyer maybe assisted with HOME funds to acquire a unit that was previously assisted with HOME funds. 7. Acquisition of a City -owned property: The City may not use HOME Program funds to reimburse itself for property in its inventory or property purchased for another purpose. However, in anticipation of a HOME project, the City may use HOME funds to: a. Acquire property. b. Reimburse itself for property acquired specifically for a HOME project with other funds. 8. Project -based rental assistance: HOME funds may not be used for rental assistance if receipt of the funds is tied to occupancy in a project. Funds from another source, such as Section 8, may be used for this type of project -based assistance in a HOME assisted unit. Further, HOME funds may be used for other eligible costs, such as rehabilitation, in units receiving project -based assistance from another source -- for example, Section 8 or state -funded project -based assistance. 9. Pay for delinquent taxes, fees, or charges: HOME funds may not be used to pay delinquent taxes, fees, or charges on properties to be assisted with HOMEfunds. M City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEWU \ � TuJ;rv's Small Town D. PROPERTY The HOME Program rules concerning the type and value of properties eligible for assistance are: 1. Property Types Depending on the nature of the program activity, HOME rules specify the types of property that are eligible for funding. 2. Property Value For owner -occupied and homebuyer properties, HOME limits the value or purchase price of the property. In summary, the price or, in the case of rehabilitated properties, the value may not exceed 95 percent of the area median purchase price. 3. Property Standards HOME -funded properties must meet the following minimum property standards: 1. State and local standards: State and local codes and ordinances apply to any HOME funded project regardless of whether the project involves acquisition, rehabilitation, or new construction. 2 Model codes: For rehabilitation or new construction projects where there are not state or local building codes, the City must enforce national model code. 3. Housing quality standards: For acquisition -only projects, if there are no state or local codes or standards, the City must enforce Section 8 Housing Quality Standards (HQS). 4. Rehabilitation standards: The City is required to develop written rehabilitation standards to apply to all HOME -funded rehabilitation work. These standards are similar to work specifications, and generally describe the methods and materials to be used when performing rehabilitation activities. 5. International Energy Conservation Code: New construction requires compliance with the International Energy Conservation Code. 6. Broadband Infrastructure: New construction of a housing project with more than 4 rental units must include installation of broadband infrastructure, as this 23 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town America term is defined in 24 CFR 5.100, except where the location of the new construction makes installation of broadband infrastructure infeasible or the cost of installing the infrastructure would result in an alteration in the nature of its program or in an undue financial burden. 7. Disaster mitigation: The City of Rosemead's standards must require the housing to be improved to mitigate the impact of potential disasters (e.g., earthquake, hurricanes, flooding, and wildfires) in accordance with State and local codes, ordinances, and requirements. 24 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual EXHIBIT 1 MINIMUM PROPERTY STANDARDS ACTIVITY MINIMUM PROPERTY STANDARD TO BE MET Tenant -Based Rental Assistance Section 8 HQS Acquisition of Existing Housing Applicable state or local housing quality standards and code (no rehabilitation or requirements. construction) If no local standards/codes apply, Section 8 HQS. Rehabilitation of Housing Local written rehabilitation standards. AND State and local code requirements. If no local codes apply, one of the following national model codes: ➢ Uniform Building Code (ICBO) ➢ National Building Code (BOCA) ➢ Standard Building Code (SBCCI) OR Council of America Building Official one- or two-family code (CABO) OR ➢ Minimum Property Standards at 24 CFR 200.925 or 200.926 (FHA). AND Handicapped accessibility requirements, where applicable. New Construction of Housing ➢ State and local code requirements. ➢ If no state and local codes apply, on the of the following national model codes: ➢ Uniform Building Code (ICBO) ➢ National Building Code (BOCA) ➢ Standard Building Code (SBCCI) OR ➢ Council of America Building Official one- or two-family code (CABO) OR ➢ Minimum Property Standards (FHS) at 24 CFR 200.925 (for 25 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual multi -family) or 200.926 (for one- and two -unite dwellings). AND ➢ Handicapped accessibility requirements, where applicable. ➢ New construction of rental housing must meet site and neighborhood standards at 24 CFR 893.6(b). *Note: The City of Rosemead using MPS may rely on inspections performed by a qualified person. 8. Handicapped accessibility: In some cases, handicapped accessibility requirements apply Section (504). 9. Energy Star: The City of Rosemead requires new construction projects (single- family and multifamily) to be certified by a HERS rater as meeting a HERS Index Score of 70 or less. 10. Site and neighborhood standards: The site and neighborhood standards of 24 CFR 983.6(b) applies only to the new construction of rental housing. 11. Universal Design standards: The City of Rosemead requires units to adhere to the City of Rosemead Rehabilitation Standards for Housing: a. The applicable standards vary by the type of activity. Exhibit 1 explains the minimum property standards that apply to each type of HOME activity. b. All new manufactured housing units must meet the construction and safety standards of 24 CFR 3280. New manufactured housing units must be installed according to state or local codes or the manufacturer's written instructions. E. APPLICANTS AND BENEFICIARY The HOME Program is designed to provide affordable housing to low-income and very -low income families and individuals. Therefore, the program has rules about targeting program resources and establishing applicant eligibility. 1. Program Targeting: The City of Rosemead will use 100 percent of its HOME funds to assist families with incomes below 80 percent of the area median income. 26 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 2. Rental Housing or TBRA: If the City elects to use HOME funds for rental housing or for TBRA, additional targeting requirements apply: a. For each annual HOME allocation, the City of Rosemead will require that 90 percent of the occupants of HOME -assisted rental units and households assisted with HOME -funded TBRA must have incomes that are 60 percent or less of the area median. b. 20 percent of the units in each rental housing project containing five or more units must be occupied by tenant families with incomes at or below 50 percent of median income. c. Owners must adopt written tenant selection policies and procedures. 3. Applicant Income Eligibility a. Income eligibility: Beneficiaries of HOME funds --homebuyers, homeowners, or tenants -- must be low-income or very -low-income. Their income eligibility is determined based on their annual income. b. Annual income: Annual income is the gross amount of income anticipated by all adult household members during the 12 months following the effective date of the determination. DEFINITION OF ANNUAL INCOME In accordance with 2013 HOME Final Rule, the City of Rosemead has selected a single definition of income for each of its HOME -assisted programs (e.g., Housing Rehabilitation and Preservation Program, Rental Housing Program, etc.) administered by the City. Annual income will be determined by examining at least 2 months of source documents evidencing annual income (e.g., wage statement, interest statement, unemployment compensation statement) for the family. Furthermore, when determining whether a family is income eligible, the City will use the following definition of "annual income": (1) Annual income as defined at 24 CFR 5.609 will be utilized while applying exclusions from income established at 24 CFR 5.611 as further required by the 2013 HOME Final Rule. 27 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town America The City will calculate the annual income of the family by projecting the prevailing rate of income of the family at the time that the City determines that the family is income eligible. Annual income will include income from all persons in the household and income or asset enhancement derived from the HOME -assisted project will not be considered in the calculation. The City will not re-examine the family's income at the time the HOME assistance is provided, unless more than six months has elapsed since the City determined that the family qualified as income eligible. Note: The definition listed above provides guidance on what items to include in annual income calculation (for example, wages, salaries, tips, etc.). They do not affect the method in which income is verified (discussed under "Income Verifications" below) or how income is adjusted when calculating rents or TBRA). INCOME VERIFICATION L Initial Verification: To determine if program applicants are income -eligible, Recipients must verify their income using source documentation such as wage statements, interest statements, and unemployment compensation statements. a. Income eligibility is based on anticipated income. When collecting income verification documentation, also consider any likely changes in income. Example: A last year's tax return does not establish anticipated income; nor is it adequate source documentation. b. Once initial income verification is completed, a Recipient is not required to re-examine the applicant's income unless six months has elapsed before assistance is provided. 2 Annual Re-examinations: For rental and TBRA programs, annual re- certifications of income are required. While the HOME Program regulations require that income must be verified with source documentation every five years, the City of Rosemead requires income be verified with source documentation annually. 28 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Town America F. LONG-TERM AFFORDABILITY To ensure that HOME investments yield affordable housing over the long term, HOME imposes rent and occupancy requirements over the length of an affordability period. Affordability Periods For homebuyer and rental projects, the length of the affordability period depends on the amount of the HOME investment in the property and the nature of the activity funded. Exhibit 2 below provides the affordability periods. EXHIBIT 2 HOME INVESTMENT PER UNIT LENGTH OF THE AFFORDABILITY PERIOD LESS THAN $15,000 5 YEARS $15,000 - $40,000 10 YEARS MORE THAN $40,000 15 YEARS NEW CONSTRUCTION OF RENTAL HOUSING 20 YEARS REFINANCING OF RENTAL HOUSING 15 YEARS OCCUPANCY Throughout the affordability period, the HOME -assisted housing must be occupied by income - eligible households. 1. Rental housing: When units become vacant during the affordability period, subsequent tenants must be income -eligible and must be charged the applicable HOME rent. (See Chapter 6 Rental Housing Program for more information.) 2. Homebuyer assistance: If a home purchased with HOME assistance is sold during the affordability period, resale or recapture provisions apply to ensure the continued provision of affordable homeownership. (See Chapter 5: Homeowner Housing Program Homebuyers for more information.) 29 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEME`AD ► J n,day's 5n,all Town nmcrica QUALIFICATION AS AFFORDABLE HOUSING: RENTAL HOUSING The HOME -assisted units in a rental housing project must be occupied by households that are eligible as low- income families and must meet the HUD requirements of to qualify as affordable housing. If the housing is not occupied by eligible tenants within six months following the date of project completion, the City of Rosemead must submit marketing information or a marketing plan. HUD will require the City to repay HOME funds invested in any housing unit that has not been rented to eligible tenants 18 months after the date of project completion. HOME rent limits applyto the rent plus the utilities orthe utility allowance. The maximum HOME rents (High HOME Rents) are the lesser of: • The fair market rent for existing housing for comparable units in the area as established by HUD under 24 CFR 888.111; or • A rent that does not exceed 30 percent of the adjusted income of a family whose annual income equals 65 percent of the median income for the area, as determined by HUD. See the HOME rent limits provided by HUD. The City of Rosemead may designate more than the minimum HOME units in a rental housing, project, regardless of project size, to have Low HOME Rents. In rental projects with five or more HOME -assisted rental units, at least 20 percent of the HOME -assisted units must be occupied by very low-income families and meet one of the following rent requirements: • The rent does not exceed 30 percent of the annual income of a family whose income equals 50 percent of the median income for the area, as determined by HUD, with adjustments for smaller and larger families. HUD provides the HOME rent limits which include average occupancy per unit and adjusted income assumptions. However, if the rent determined under this paragraph is higher than the applicable rent under paragraph (a) of this section, then the maximum rent for units underthis paragraph is that calculated under paragraph (a) of this section. • The rent does not exceed 30 percent of the family's adjusted income. If the unit receives Federal or State project -based rental subsidy and the very low-income family pays as a contribution toward rent not more than 30 percent of the family's adjusted income, then the maximum rent (i.e., tenant contribution plus project -based rental subsidy) is the rent allowable under the Federal or State project -based rental subsidy program. 30 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSE1V_T1 TodlC S Snnll For single room occupancy (SRO) units that have both sanitary and food preparation facilities, the maximum HOME rent is based on the zero -bedroom fair market rent. The rent limits mentioned above apply. SRO units that have no sanitary or food preparation facilities or only one of the two, the maximum HOME rent is based on 75 percent of the zero -bedroom fair market rent. The project must meet the occupancy requirements. The City of Rosemead must establish maximum monthly allowances for utilities and services (excluding telephone) and update the allowances annually. The HUD Utility Schedule Model must be used or otherwise determine the utility allowance based on the type of utilities used. The City of Rosemead must review and approve rents proposed by the owner for units, subject to the maximum rent limitations and ensure that rents do not exceed the maximum rent minus the monthly allowances for utilities and services. The affordability requirements always apply and must be imposed by a deed restriction or other mechanisms approved by HUD and must give the City of Rosemead the right to require specific performance must be recorded in accordance with State recordation laws. The City of Rosemead must provide project owners with information on updated HOME rent limits so that rents may be adjusted in accordance with the written agreement between the participating jurisdiction and the owner. Owners must annually provide the City with information on rents and occupancy of HOME -assisted units to demonstrate compliance. The income of each tenant must be determined initially in accordance with §92.203(a)(1)(i). In addition, each year during the period of affordability the project owner must re-examine each tenant's annual income in accordance with one of the options in §92.203 selected by the participating jurisdiction. Tenants who no longer qualify as low-income families must pay as rent the lesser of the amount payable by the tenant under State or local law or 30 percent of the family's adjusted income, except that tenants of HOME -assisted units that have been allocated low-income housing tax credits by a housing credit agency pursuant to section 42 of the Internal Revenue Code of 1986 (26 U.S.C. 42) must pay rent governed by section 42. In addition, in projects in which the Home units are designated as floating, tenants who no longer qualify as low-income are not required to pay as rent an amount that exceeds the market rent for comparable, unassisted units in the neighborhood. 31 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 9 G. OTHER FEDERAL REQUIREMENTS HOME is subject to several cross -cutting Federal regulations, which are detailed and highlighted as applicable in the chapter covering the City's Homeowner Rehabilitation and Preservation Program (HRPP). PART II - COST ALLOCATION AND SUBSIDY LAYERING The City of Rosemead performs a cost allocation and subsidy layering review of HOME projects to determine the appropriate subsidy amount to the project. The actual HOME Investment in a project depends on: 1. The proportion of the total project cost that is HOME -eligible -- some planned project costs may not be eligible expenses under the HOME Program. 2. How many of the units in the project are HOME -assisted -- Projects may have a mix of HOME- and non -HOME -assisted units. 3. The financial needs of the project-- HOME projects may not receive more subsidy than is required to make them financially feasible. 4. Cost allocation and subsidy layering are impacted by any changes in the proportion of HOME -assisted unit to total units in the project, development cost, or financing sources. 5. Because of these requirements, CHDOs, developers or subrecipients must contact the City of Rosemead as soon as there are any changes in project size, scope, cost, or financing sources at any point during the development of the project. 32 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSENTEAD ► ) TWWa Small Town America H. COST ALLOCATION The HOME Program distinguishes between the units in a project that have been assisted with HOME funds and those that have not resulting in the term HOME -Assisted Unit. The distinction between HOME -assisted and unassisted units allows HOME funds to be spent on mixed -income projects while still targeting HOME dollars only to income -eligible households. DETERMINING A HOME ASSISTED UNIT HOME rules create a floor (minimum) for the number of HOME -assisted units a project must have. This floor is based on the proportional share of total eligible costs to be paid with HOME funds. 1. Before determining the allowable HOME subsidy amount, the City will establish the total HOME -eligible cost for the project. 2. Once the total HOME -eligible costs are established for the project, the City must allocate costs across units. 3. If both the assisted and non -assisted units are comparable in size, features, and number of bedrooms, the HOME -eligible costs can be pro -rated across units. (Since floating units, by definition, must be comparable, costs should always be pro -rated.) 4. If the assisted and non -assisted units are not comparable, the actual costs must be determined and allocated unit -by -unit. The specific units identified to "receive" HOME funds must be fixed -- that is, designated as HOME -assisted. I. SUBSIDY LAYERING HUD establishes limits on the amount of HOME funds that may be invested in affordable housing on a per-unit basis for specific areas as specified below: 1. Before committing funds to a project that combines the use of any other local, State or Federal assistance, the City of Rosemead will evaluate the project in accordance with guidelines that it has adopted, to ensure that the City does not invest any more HOME funds than are necessary to provide affordable housing. 33 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual ='AD Town America 2. The City of Rosemead will conduct a subsidy layering review in accordance with the guidelines presented in HUD Notice CPD -98-01. These guidelines include review of the following project documents: a. Sources and/or uses of funds: CHDOs/Developers/Subrecipients are required to provide the City of Rosemead the sources/uses of funds statement for the project with supportive documentation. This statement should reflect the project development budget and should list: L All proposed sources (both private and public) of funds and the dollar amounts for each respective source; ii. Construction costs, and iii. Financing costs and professional fees associated with the project. b. Certification of governmental assistance: CHDOs/ Developers/ Subrecipients must provide a formal certification as to whether additional governmental assistance will be provided to the project, and if so, what kind of assistance. c. Project development budget: CHDOs/Developers/Subrecipients must provide the City of Rosemead the project development budget so that the City can determine whether the development costs are necessary and reasonable. The budget should include all costs associated with the development of the project, regardless of the funding sources. d. "Reasonableness" of costs will be based on all the following three factors: L Costs of comparable projects in the same geographical area; ii. Qualifications of the cost estimators that developed the various budget line items; and iii. Comparable costs published by recognized industry cost index services. e. Proforma: The City of Rosemead will determine the reasonableness of the rate of return on equity investment by looking at the CHDOs/Developers/Subrecipients proforma (project income and expense statement). L The proforma should include achievable operating expenses. 34 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV-11 ii. It should also specify the consequences of tax benefits, if any, and any other assumptions used in calculating the project cash flow. iii. The proforma should represent, at a minimum, the term of the HOME affordability requirements, or longer if other funding sources require longer affordability terms. 35 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Tarn Amcfl,. CHAPTER 3 CHDO REQUIREMENTS AND ACTIVITIES Part I of this chapter details the CHDO set-aside requirements, the qualifications of a CHDO, CHDO set-aside roles, and the types of assistance the City of Rosemead may provide CHDOs while Part II of this chapter covers the City's CHDO selection process. PART 1: HOME PROGRAM REQUIREMENTS A Community Housing Development Organization (CHDO) is a private nonprofit, community- based service organization that has obtained or intends to obtain staff with the capacity to develop affordable housing for the community it serves. The City of Rosemead is committed to support City -approved certified Community Housing Development Organizations (CHDOs) that have the appropriate capacity and consent to develop quality affordable housing throughout the City of Rosemead. Therefore, the City of Rosemead continues to encourage qualified nonprofit organizations to apply for certification as a CHDO. A. CHDO SET-ASIDE REQUIREMENT Reservation of Set -Aside of Funds for CHDOs: 1. The City of Rosemead has up to 24 months from after the last day of the month in which HUD signs the HOME Investment Partnership Agreement transmittal letter to identify and designate the CHDOs they plan to work with, and to reserve funds for the CHDOs' use. 2. The City of Rosemead may set aside 15 percent of their funds for housing owned, developed, or sponsored by CHDOs. 3. CHDOs may engage in other HOME -eligible activities in which they are not the owners, developers, or sponsors of the housing. However, the HOME funds committed to those activities will not count toward the set-aside. 4. The CHDO reservation of funds can be made by the City before specific projects are identified. IS City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E`AD ► ) T.dn's Small Toren America B. CHDO QUALIFYING CRITERIA The City of Rosemead will certify a nonprofit agency as a CHDO to qualify for the CHDO set- aside. As such, the City of Rosemead will accept applications for certification on a continuous basis and the certification is valid for one (1) year. A CHDO is a specific type of private nonprofit entity. CHDOs must meet certain requirements pertaining to their: 1. Legal status; 2. Organizational structure; and 3. Capacity and experience. (HUD Notice CPD 97-11 details these requirements). 1. Legal Status a. Organized under State/local law: CHDOs must be organized under State and local law. b. Purpose of organization: Provision of decent housing that is affordable to low- and moderate -income persons must be among the purposes of the organization. This commitment must be evidenced in the CHDO's: i. Charter; ii. Articles of incorporation; iii. By-laws; or iv. A resolution of the CHDO's board of directors. c. No individual benefit: No part of the CHDO's earnings (profits) may benefit any members, founders, contributors, or individuals. d. Clearly defined service area: A CHDO should have a clearly defined geographic service area. i. CHDOs do not need to represent a single neighborhood. ii. For urban areas, a CHDO may include in its service area a neighborhood or neighborhoods, city, county, or metropolitan area. 37 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEME`AD k / Todav's Sm, II Town America iii. For rural areas, a CHDO may include in its service area a neighborhood or neighborhoods, town, village, county or multi - county area (but not the entire State.) iv. Nonprofits serving special populations must also define the geographic boundaries of their service areas in order to qualify as CHDOs. e. Nonprofit status L A CHDO must have received a tax-exempt ruling from the IRS under Section 501(c)(3) of the Internal Revenue Code of 1986 in order to be designated by the PJ as a CHDO. ii. There are many incorporation options under Section 501(c), depending on the type and purpose of the organization seeking the designation for tax -exemption. f. The 501(c) designation status: The 501(c) designation status permissible under HOME is: L 9 501(c)(3) -- a charitable, nonprofit corporation; ii. 9 501(c)(4) -- a community or civic organization; iii. 9 Section 905 -- a subordinate organization of a 501(c) organization. g. IRS standards for granting a 501(c)(3): L Designation for housing development organizations are narrowly applied, lengthening the time it can take to receive a 501(c)(3) designations. ii. Designation can take 9 to 24 months. iii. The timeframe varies by IRS region. h. Conditional designation: L The IRS will usually grant new applicants a conditional designation of 501(c) status, valid for a specified period (usually three years.) ii. During that period, the organizations may operate legally as 501(c) organizations, with all benefits pursuant to that designation, while the IRS monitors their operations. i. Final designation: W City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEME`AD L ) TudaY's Small Town Amcrice Assuming the CHDO operates in compliance with applicable regulations during this period, the IRS will grant them final 501(c) designation. NOTE: The City of Rosemead requirement for a 501(c) designation can only be fulfilled by having a final designation from the IRS. NOTE: Pending 501(c) Status Documentation that the CHDO has an application for 501(c) status pending at the IRS will not suffice to fulfill the nonprofit status requirement. 2. Organizational Structure The City's requirement for a CHDOs organization structure is: a. The structure of the board of directors of a CHDO is viewed as the main indicator of community control over the CHDO. With that, a CHDOs Board of Directors must be composed of the following: i. At least one-third must be representatives of the low-income community. ii. No more than one-third may be public officials or employees of the City. iii. The balance is unrestricted and may include people such as human and social service providers, lenders, individuals with access to philanthropic resources, or others willing to contribute their professional expertise. iv. There are also maximum limits on representation and control by a for-profit entity when the CHDO is sponsored by a for-profit entity. b. Low-income community representation: As noted above, a minimum of one-third of the board must consist of representatives of the low-income community. There are three ways to meet this requirement: L Residents of low-income neighborhoods in the community. ➢ Low-income neighborhoods are defined as neighborhoods where 51 percent or more of the residents are low-income. ➢ Residents of low-income neighborhoods on CHDO boards do not have to be low income themselves. and/or ii. Low-income residents of the community. 39 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 7mrn America ➢ In urban areas, "community" is not necessarily limited to a single neighborhood, but may include several neighborhoods, the city, county or metropolitan area. ➢ In rural areas, "community" may also cover a multi -county area (but not the whole state). The board need not include low- income residents from each county in the multi -county area. ➢ Low-income residents of low-income neighborhoods in the community do not need to submit proof of their income. ➢ If low-income residents of the community who do not live in low-income neighborhoods are necessary to meet this threshold, the CHDO must obtain a certification from the resident that the resident does qualify as low-income. and/or iii. Elected representatives of low-income neighborhood organizations. ➢ A low-income neighborhood organization is an organization composed primarily of residents of a low-income neighborhood. ➢ The primary purpose of the organization must be to serve the interests of the neighborhood residents. ➢ Block groups, town watch organizations, civic associations, neighborhood church groups, and NeighborWorks organizations can be examples of low-income neighborhood organizations. ➢ The governing body of the low-income neighborhood organization may elect the representative(s) to serve on the CHDO board. c. Low-income input: Input from the low-income community is not met solely by having low-income representation on the board. The CHDO must meet the requirements as follows: L The CHDO must also provide a formal process for low-income program beneficiaries to advise the CHDO on design, location of 40 _ City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual To— AMncdu sites, development, and management of the organization's by- laws or a board resolution. ii. This requirement is especially important for CHDOs serving a large geographic area, where it may not be possible for a CHDO to have low-income board representation from every neighborhood in which the CHDO will develop, own, or sponsor housing. iii. CHDOs should establish systems for community involvement in parts of their service areas where housing will be developed, but which are not represented on their boards. Such systems might include special committees of neighbors of a proposed development site, neighborhood advisory councils, or open town meetings. d. Public -sector limits: A maximum of one-third of the governing board may consist of representatives of the public sector. e. This limitation is intended to ensure that separation exists between the City and CHDOs, and that CHDOs are indeed community-based and community -controlled organizations. L A member of the governing board of a CHDO would be considered a representative of the public sector if he or she is a public official, including: ii. Elected officials of the City of Rosemead- council members, aldermen, commissioners, state legislators, members of a school board, etc. iii. Appointed public officials- members of a board or State commission or of any other regulatory and/or advisory boards or commissions that are appointed by the State. iv. Public employees of the City - all employees of public agencies (including the schools) or departments of the local government (e.g., a clerk in the water and sewer department, a public facility janitor or a secretary in the tax assessment office); or v. Appointed by a City official - any individual who is not necessarily a public official, but who has been appointed by a City official to serve on the CHDO board 41 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual A Members of the board appointed by public officials cannot select other members of the board. f. If the public official is low-income: Public officials and/or appointees who themselves are either low-income community residents or residents of a low-income neighborhood count against the one-third maximum limit of public sector representatives. However, they do not count toward the one- third minimum requirement of community representatives. g. Cities, public bodies, or instrumentalities: Cities, public bodies or instrumentalities of public bodies cannot be considered CHDOs. Examples of instrumentalities of public bodies include public housing authorities (PHAs), urban renewal agencies, redevelopment authorities, and downtown development authorities. L The limits on public -sector representation on CHDO boards only serve to define CHDOs. There are other (not specific to HOME) restrictions on the participation of public officials on the boards of nonprofit organizations seeking public funds. The City should observe their conflict-of-interest guidelines in this regard as well. h. Sponsored CHDOs: Nonprofits that have been sponsored by other nonprofits, charities, religious organizations, local or state government, public agencies, or for-profit corporations may qualify as CHDOs, but certain additional requirements and board limitations can apply. L Nonprofit and charity sponsors: L There are no limits on the proportion of the board that may be appointed by nonprofit or charity sponsors, as long as the minimum one-third community representation is met, and the maximum one-third public representation is not exceeded. ii. A one-year minimum history of service to the community by the sponsoring nonprofit or charity may help a new nonprofit to qualify as a CHDO. j. Religious organization sponsors: L Organizations that are religious or faith -based are eligible, on the same basis as any other organization, to participate in the HOME Program. Government entities are not to discriminate against an 42 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 'OSEMEAD 1 r d,,VS S-A ruwn Ann k, organization based on the organization's religious character or affiliation. ii. However, organizations directly funded under HOME may not engage in inherently religious activities. If the organization conducts such activities, they must be offered separately, and participation must be voluntary for the beneficiaries of the assistance provided. Additional guidance regarding religious or faith -based organizations is provided in 24 CFR 92.2.57 of the HOME final rule. k. Local, state government and public agency sponsors: i. A local or state government and/or a public agency cannot qualify as a CHDO but may sponsor the creation of CHDOs. ii. Government officials and appointees of the government cannot exceed one-third of the members of the board. iii. All other CHDO rules and requirements also apply. I. For-profit corporate sponsors: i. A CHDO cannot be controlled by, nor be under the direction of, for- profit entities or individuals seeking profit from the organization. ii. CHDOs maybe sponsored or organized by a for-profit if: ➢ The primary purpose of the for-profit sponsor is not the development or management of housing (that is, a builder, developer or real estate management firm may not spin off a CHDO); ➢ The for-profit appoints no more than one-third of the CHDO's governing board and the board members appointed by the for- profit do not appoint the remaining members of the board; and ➢ The CHDO is free to contract for goods and services from any vendors it selects. 43 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS EI�E`AD ► ) Today's Small Torvn A. m,,k. 3. Experience and Capacity a. CHDO experience: A CHDO must demonstrate that it has at least one year of experience serving the community where it intends to develop the HOME -assisted housing. L Newly created organizations wishing to become CHDOs can meet this requirement if the parent (or sponsoring) organization is a nonprofit and has provided services to the community for at least one year. ii. The year of service does not have to be directly related to housing. iii. Prior service to the community cannot consist of a for-profit organization's work in that community. b. CHDO capacity: A CHDO must demonstrate the capacity of their key staff to carry out the HOME -assisted activities they are planning. This means that CHDOs must have: L Experienced key staff who have successfully completed projects like those proposed by the CHDO; or ii. Key staff with limited or no experience, who will use experienced consultants for the planning and development activities, if there is a plan in place for the consultant to train the key staff. c. Differences in required experience and capacity: There are significant differences in the type of experience and capacity that is required to carry out the variety of housing development activities eligible under the HOME program. Therefore, "experience in having completed similar projects" is different for development/management of rental housing and development/sale of housing for homebuyers. L Because the purpose of the CHDO capacity requirement is to build staff expertise, CHDOs must have their own professional staffs. This means that the key staff required to demonstrate CHDO capacity cannot be: ✓ Municipal, county or state employees; or ✓ Consultants (paid or volunteer) not planning to train the CHDO's key staff. 44 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD Tod.ys Small T—n America 4. Financial and Accounting Systems a. Financial standards: CHDOs must have financial accountability standards that conform to 24 CFR 84.21, "Standards for Financial Management Systems." L If a CHDO or nonprofit is in the role of a subrecipient, it must comply with certain provisions or 24 CFR Part 84 and OMB Circular A-122 "Cost Principals for Non -Profit Organizations." Both publications are included are in the appendices. ii. If a CHDO is acting as an owner, sponsor, or developer of HUD HOME assisted housing, the requirements at 24 CFR 84.21, "Standards for Financial Management Systems" apply. This means the CHDO must relate financial data to performance data and develop unit cost information. The systems include the following: ➢ Accurate, current, and complete financial results; ➢ Records that identify the sources and uses of the funds; ➢ Control over and accountability of all funds and assets; ➢ Comparison of actual expenditures against budgets; ➢ Written procedures to minimize time between the transfer of funds in and the payment of funds out; ➢ Written procedures for determining reasonableness, allocability, and allowability of costs; and ➢ Accounting records including cost accounting records supported by sources documents. b. Accounting systems: CHDOs/Nonprofits should establish accounting systems that include at a minimum the following reports: L A chart of accounts that includes: ✓ The categories of accounts; ✓ The name of the account; ✓ The number of the account; 45 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T.—America ii. Cash receipts journal that includes; ✓ The date the funds were received listed in chronological order; ✓ The amount received; ✓ The source of the funds; ✓ The purpose of the funds; iii. Cash disbursements journal that includes; ✓ The date funds were paid out listed in chronological order; ✓ The date the expense was incurred; ✓ The purpose of the expense; ✓ The amount paid; ✓ To whom it was paid; iv. Payroll journal that includes; ✓ A listing of employees; ✓ Amounts paid to the employees; ✓ Benefit expenses paid; v. General ledger that includes; ✓ A summary of all account activities listed in chronological order; and ✓ The financial status of all the accounts of the organization. c. Source documentation: Costs charged against the HOME program must be supported by source documentation that shows that the costs were: L Incurred during the effective period of the agreement; ii. Actually paid out; iii. Expended on eligible items and activities; and iv. Approved by the appropriate officials of the organization. 46 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town Amc,k. C. CHDO SET-ASIDE ROLES: OWNER, DEVELOPER, AND SPONSOR The City of Rosemead provides CHDO set-aside funds to CHDOs acting as owners, developers, and sponsors of projects that create new units of affordable housing in their communities. To qualify for the set-aside funds, the CHDO must have effective decision-making authority. CHDO set-aside funds may be used by CHDOs for those HOME activities where the CHDO acts as the owner, developer, or sponsor of the housing. 1. Owner: The CHDO is an "owner" when it holds valid legal title to or has a long- term (99 -year minimum) leasehold interest in a rental property. The CHDO may be an owner with one or more individuals, corporations, partnerships or other legal entities. a. The CHDO may be the owner and developer of its own project. b. The CHDO may own a property in partnership with either a majority or minority interest. However, the CHDO -- in partnership with a wholly owned for-profit or nonprofit subsidiary -- must be the managing general partner with effective control. 2. Developer: A CHDO is a "developer" when it either owns a property and develops a project, or has a contractual obligation to a property owner to develop a project. a. If the CHDO owns the property, it must obtain financing and rehabilitate or construct the project. i. For HOME -assisted rental housing: At project completion, the CHDO may maintain ownership and manage the project over the long-term, or it may transfer the project to another entity for long- term ownership and management. ii. For HOME -assisted homebuyer project: The CHDO transfers title of the property and the HOME obligations to an eligible homebuyer within a specified timeframe of project completion. b. If the CHDO does not own the property, it must be under a contractual obligation with the owner to obtain financing and rehabilitate or construct the project. Under this scenario, the CHDO assumes all of the risks and rewards associated with being the most detail the CHDO's specific obligations. 47 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E`AD L ) Tudw's Small Town A.—k., iii. For HOME -assisted rental housing: The CHDO may, at project completion, manage the project for the owner. iv. For homebuyer housing: The owner must transfer title of the property and the HOME obligations to eligible homebuyers within a specified timeframe of project completion. c. If the CHDO develops the property for an owner pursuant to a written or other agreement with the City, the CHDO is acting in the capacity of a subrecipient. 3. Sponsor: A CHDO is a "sponsor" for HOME -assisted rental or homebuyer housing according to the circumstances outlined below. a. For HOME -assisted rental housing: The CHDO develops a project that it solely or partially owns and agrees to convey ownership to a second nonprofit organization at a predetermined time. The conveyance may take place prior to, during, or upon completion of the development phase. b. The HOME funds are invested in the project owned by the CHDO sponsor. c. The CHDO sponsor identifies the nonprofit organization that will obtain ownership of the property prior to commitment of HOME funds. d. The other nonprofit will assume from the CHDO at a specified time all HOME obligations (including repayment of loans and tenant and rent requirements) for the project. If the property is not transferred to the nonprofit organization, the CHDO sponsor will remain liable for the HOME obligations. e. The other nonprofit organization must be financially and legally separate from the CHDO sponsor. (The second nonprofit may have been created by the CHDO; nevertheless, it is a separate entity from the CHDO.) f. The CHDO sponsor must provide enough resources to the nonprofit organization to ensure the completion of development and long-term operation of the project. 4. Similar Roles: The developer and sponsor roles are similar in many ways. a. In both the developer and sponsor roles, the CHDO carries out some or all of the principal project development activities -- such as acquisition, financing, construction management and putting together a capable development team -- to bring project from conception to completion. 48 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Tmrn America b. However, as developer, the CHDO need not own the property. c. As sponsor, the CHDO must own the property and shift the responsibility from the CHDO to another specific nonprofit at some specified time in the development process. Transfer could occur, for example, at: i. Initiation of the construction; ii. Completion of the construction; or iii. Issuance of the certificate of occupancy. The HOME long-term affordability requirements for the project are the responsibility of the owner or subsequent owners of the property. 5. CHDOs vs. Subrecipients A community-based nonprofit organization may meet all of the regulatory requirements to be designated as a CHDO. However, in order for CHDO activities to count toward the CHDO set-aside, the CHDO must be the developer, sponsor and/or owner of the HOME -assisted housing. 6. CHDO as a Subrecipient: CHDOs may play the role of a "subrecipient" undertaking all other HOME -eligible activities, even if these activities do not count toward the CHDO set-aside. a. A HOME subrecipient is an entity selected by the City to administer aspects of a HOME program (that is, screen projects, market activities, review and certify tenant income, counsel potential homebuyers) or an entire HOME activity (review requests for HOME funds forthe rental housing production set-aside). i. Restrictions: When a CHDO is acting in the capacity of a HOME subrecipient, it may not also receive HOME funds to develop, sponsor or own housing funded through the subrecipient activity the CHDO administers. Doing so would constitute a conflict-of- interest for the CHDO. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS EIV�E`AD J Today's Small Town Anm k. D. CHDO ELIGIBLE USES With the City of Rosemead's approval, CHDOs may use HOME funds for all eligible HOME activities. However, only certain types of activities count toward the minimum 15 percent set- aside. 1. Eligible Uses: Eligible set-aside activities include the following when carried out by a CHDO acting as an owner, developer or sponsor: a. Acquisition and/or rehabilitation of rental housing; b. New construction of rental housing; c. Acquisition and/or rehabilitation of homebuyer properties; d. New construction of homebuyer properties; and e. Direct financial assistance to purchasers of HOME -assisted housing sponsored or developed by a CHDO with HOME funds. 2. Ineligible Uses: The following activities are ineligible set-aside activities, but may be carried out by the CHDO as a subrecipient: a. Tenant -based rental assistance (TBRA); b. Homeowner rehabilitation; and c. Brokering or other real estate transaction. E. CHDO SPECIAL ASSISTANCE The City of Rosemead may use HOME funds to provide special assistance to CHDOs that Include: 1. Project pre -development loans; 2. Use of HOME project proceeds; and 3. Capacity -building assistance. NOTE: In contrast to the 15 percent set-aside, which is mandated, the City has total discretion over whether to provide these special forms of assistance. 50 _ City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small To—America 1. Project Pre -development: The City of Rosemead may set-aside a portion of CHDO set-aside funds to be provided to the CHDO for project -specific pre- development assistance (see Part II: Program and Design). a. The project specific pre -development assistance is intended to assure that CHDOs have access to funds for up -front, eligible project expenditures. This assistance provides a form of project feasibility "line of credit" that many nonprofit developers need, but often have difficulty obtaining from private sources. b. All costs must be related to a specific project which, if deemed feasible, would receive HOME funds for development. c Project pre -development costs may not exceed customary and reasonable project preparation costs. 2. Types of pre -development assistance: The two primary types of project pre - development assistance are: 1. Technical assistance and site control loans, and 2. Seed money loans. PART II: PROGRAM DESIGN AND IMPLEMENTATION This section discusses the City's CHDO program design and implementation procedures. PROCEDURES (General) 1. City of Rosemead CHDO applicants must request a specific amount, not to exceed $80,000, in the Project Application. 2. All pre -development loans must be repaid or rolled over into the permanent subsidy at on construction close. Operating Assistance 3. The City of Rosemead permits CHDO proceeds and pre -development loans but does not provide CHDO operating expenses. 4. Applicants requesting pre -development loans must complete both the CHDO Pre - Application and the Project Application as defined below before a loan can be considered or authorized. 51 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town Amc iu Eligibility Determination 1. Once the CHDO candidates are identified, the City of Rosemead will determine whether organizations meet the CHDO qualifications outlined in the HOME regulations. a. Eligible Applicant The only eligible applicant for the city's HOME CHDO Program is a Community Housing Development Organization ("CHDO") as defined by the HOME Investment Partnership Act and the regulations adopted by the US Department of Housing and Urban Development (HUD") is a private nonprofit, community-based organization that meets the definition at 24 CFR 92.2. The governing law and regulations may be found at 24 CFR 92.2 and 92.300-303, and in CPD Notice 97-11, CPD Notice 97-09, and HUD CPD Notice 96-09. To assist the City of Rosemead in determining the qualifications and capacity of a CHDO organization the City designed a CHDO Determination Worksheet (see Exhibit 3). The worksheet is designed to assist the City in processing a CHDO application in the minimum time necessary. Each section is a table which can be filled out and the table will adjust to the length of the CHDO's response. This document is available on the City's website at http://www.cityofrosemead.org. The CHDO must save this document as (Acronym of the CHDO) CHDO Application. Any questions regarding the CHDO Determination Worksheet should be directed to Ernesto Hidalgo at: EHidalgo@cityofRosemead.com, or (323)887-1403. F. CHDO CAPABILITY 1. Once an organization has been determined eligible as a CHDO, the City of Rosemead will establish whether the CHDO is capable of carrying out the responsibilities of a CHDO by assessing the CHDOs capacity. Determining the CHDOs capacity assists the City to determine which organization(s) are qualified and capable of carrying out CHDO-eligible activities, and which ones need to make changes or build capacity to quality. S2 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSENNEAD k ) Tud.s`Small T. v America G. TYPES OF PROJECTS 1. The City permits CHDOs to bring any type of project which is an eligible CHDO activity as follows: a. Acquisition and/or rehabilitation of rental housing; b. New construction of rental housing; c. Acquisition and rehabilitation of homebuyer properties for resale to eligible, qualified buyers; d. New construction of homebuyer properties for sale to eligible, qualified buyers; and e. Direct financial assistance to purchasers of HOME -assisted housing sponsored or developed by a CHDO with HOME funds. 2. The City permits CHDO proceeds and pre -development loans but does not provide CHDO operation expenses. Applicants requesting a pre -development loan must complete both the CHDO Pre -Application and the Project Application as defined below before a loan can be considered or authorized. APPLICATION PERIOD 1. The City of Rosemead welcomes applicants for CHDO status at anytime during the calendar year. PRE -APPLICATION FOR CHDO STATUS 1. The City of Rosemead pre -application process procedures require the applicant to meet ALL the requirements of being a CHDO as defined by the "CHDO Determination Worksheet" provided by the City. 2. All documentation necessary for meeting the requirements contained in the CHDO Determination Worksheet must accompany the pre -application form. The documents necessary for determination include: 53 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Tman America a. The CHDO Determination Worksheet; b. A copy of the Articles of Incorporation; c. A copy of the By -Laws; d. A copy of the Conflict of Interest Policy; e. Any applicable signed Board Minutes or resolutions required by the CHDO Determination Worksheet; f. A Board Form for each Board member, signed and dated by the Board member g. A current financial statement and the most recent annual audit; and h. A statement of the applicant's capacity to undertake a project of the scope and size proposed; i. Including staff resumes 3. The City will review the application for compliance, completeness, and capacity. 4. The Pre -Application Process results in Pre -Qualification letter from the City HOME Program Administrator to the CHDO advising the CHDO to submit a qualifying CHDO project within 180 days of the date of the Pre -Qualification letter. 5. The City certifies CHDO's only at the point where the CHDO has an approved City CHDO project. 6. Completion of the pre -application process for CHDO status does not guarantee funding by the City. 7. In the event any of the items contained in the CHDO Determination Worksheet change between the time of the Pre -Qualification letter and the submission of a CHDO project, the CHDO must notify the City in writing of the change (at the time of project application) and provide the documentation necessary to assess whether or not the CHDO remains compliant with the CHDO requirements. 8. Changes in the Board of Directors require the CHDO submit the Board Form for any new Board member and identify any Board members who have left the CHDO at the time of project application and again at the HOME closing. 54 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T.- An -k. RECAPTURED AND RESALE FUNDS As discussed in the City's Annual Action Plan, the following requirements relate to CHDOs only. This requiring is not required for rental or homebuyer programs. 1. RECAPTURED FUNDS (24 CFR 92.254(a)(5)(ii)(A)(4)) Recapture is defined as the recovery of HOME funds upon the sale or transfer, rental or lease, refinancing, or the Borrower(s) no longer being a physical occupant of the property. GENERAL PROVISIONS :j;101419b1l1I'll I a. Any amount repaid as a result of a homebuyer property being sold within the affordability period. b. The recaptured provisions must be stated in written agreements between Recipients and the income of any eligible homebuyers. c. Recaptured funds are a return of the original HOME investment and are technically not program income. d. Therefore, unlike program income, 10 percent of recaptured funds cannot be used for planning and administrative costs and must be returned to the City. a. The City of Rosemead will impose HOME recapture provisions on any property sold by a Community Housing Development Organization (CHDO) to a homebuyer when the City provides a direct subsidy for down payment and or closing costs to the homebuyer. b. The balance of the loan shall be due and payable upon sale or transfer, rental or lease, refinancing, or the Borrower(s) no longer being a physical occupant of the property. 55 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSENTEAD J TodaysSmalfTow Am ,ki c This recapture provision shall remain in force from the date the legal documents are executed at loan closing until the expiration of the affordability period. d. Net Proceeds from Sale for the purpose of Recapture are defined as follows: i. Sales Price ii. Less Seller's Closing Costs iii. Less First Mortgage Balance iv. Less documented Capital Improvements in excess of $500 V. Less Down payment and closing costs paid from the Homebuyer's cash at purchase vi. Equals Net Proceeds from Sale e. The City shall recapture from the net proceeds from sale, the remaining Development, and/or Homebuyer direct subsidy and return the recaptured funds to the HOME Investment Trust. f. Funds remaining after Recapture shall accrue to the Homebuyer. g If there are no Net Proceeds from Sale, then the City shall forgive the remaining balance of the loan. RESALE PROVISIONS [24 CFR 92.254(a)(5)(ii)(5)] Resale requirements must ensure, if the housing does not continue to be the principal residence of the family for the duration of the period of affordability that the housing is made available for subsequent purchase only to a buyer whose family qualifies as a low- income family. The price at resale must also provide the original HOME -assisted owner a fair return on investment and ensure that the housing will remain affordable to low- income homebuyers. PROCEDURE a. The City of Rosemead will impose HOME resale provisions on any property sold by a Community Housing Development Organization (CHDO) or any other entity receiving a HOME development subsidy from the City, to a homebuyer when the City does not provide a direct subsidy for down payment and or closing costs to the homebuyer. 56 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSENTEAD ToJads Small To— America b. Resale is defined as the recovery of HOME funds upon the sale or transfer, rental or lease, refinancing, or the homebuyer(s) no longer being a physical occupant(s) of the property: i) In instances where the home has been rented or leased, refinanced, or the Borrower(s) are no longer are physical occupant(s) of the property the total outstanding balance of the HOME loan shall be immediately due and payable to the City. ii) In instances where the Homebuyer's home is sold to a qualified low-income buyer at an affordable price, the HOME loan balance shall be transferred to the subsequent qualified buyer and the affordability period shall remain in force. c. The resale provision shall remain in force from the date the legal documents are executed at loan closing until the expiration of the affordability period defined in the Written Agreement between the City and the homebuyer(s). d. Resale requires the homeowner to sell the home to a low-income family and at an affordable price as defined below: i) A low-income family is defined as a family whose income at the time of purchase from the homebuyer is no greater than 80% of the area median income as defined by HUD under the Part V income definition. e. The contract for sale of the home must include a provision requiring the family acquiring the home to be qualified by the City prior to acquiring the property. i) The affordable sale price of the HOME assisted property shall be determined as follows: (1) The City shall determine 80% of area median income (AMI) for: 57 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEMEAD L ) T.60 Small Tmvn Amc,k., (a) A family of two (2) if the unit is a one (1) bedroom unit (b) A family of three (3) if the unit is a two (2) bedroom unit (c) A family of four (4) if the unit is a three (3) bedroom unit (d) A family of six (6) if the unit is a four (4) bedroom unit (2) The applicable AMI shall be multiplied bytwenty-five percent (25%) to determine the annual housing expense ("HE") and divided by twelve (12) to determine the monthly HE. (3) The mortgage interest rate shall be the average fixed rate, thirty (30) year mortgage interest rate as published by the Federal Housing Administration (FHA) at the time of determination. (4) The term shall be thirty (30) years. (5) The present value of an affordable mortgage shall be calculated utilizing the monthly HE, the determined interest rate, and the term. (6) The present value shall be divided by 95 and multiplied by 100. The result shall be the affordable sales price. f. The homeowner must list the property at or below the City determined affordable price. 1. Fair Return and Appreciated Value [24 CFR 92.254(a)(5)(i)] a) Determination of Fair Return i) Fair Return shall be the sum of: (1) Down payment and closing costs paid from the buyer's cash at purchase. (2) Seller's (homeowner's) closing costs at sale. (3) Principal payments only made by the buyer in excess of the amount required by the loan. (4) Documented capital improvements in excess of $500. b) Fair Return is paid to the buyer at sale once first mortgage debt is paid and all other conditions of this agreement are met. 58 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T.-, i) In the event there are no funds for fair return, then fair return does not exist. ii) In the event there are partial funds for fair return, then fair return shall remain in force. c) Appreciated value is: i) The Affordable Sales Price ii) Less first mortgage debt iii) Less Fair Return iv) Equals appreciated value. (1) If appreciated value is zero, or less than zero, then no appreciated value exists. d) Appreciated Value is shared with the homebuyer based on the City's initial investment of HOME funds as follows: i) The homeowner's initial investment of down payment and closing costs divided by the City of HOME investment equals the percentage of appreciated value that shall be paid to the homeowner. ii) The balance of appreciated value shall be paid to the City. 2. CHDO Determination Worksheet The CHDO Determination Worksheet is designed to assist the City in processing your CHDO application in the minimum time necessary. Each section is a table which can be filled out and will adjust to the length of the CHDOS response. Please remember to save this document as (Acronym of the CHDO) CHDO Application. Questions regarding the CHDO Determination Worksheet should be directed to the Director of Community Development at: (626) 569-2140. 59 _ City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small T.— America City Name State Home Address Zip City/State Contact Person Zip Office Phone Telephone Cell Phone E-mail E-mail BOARD OF DIRECTORS LIST CHAIR Name Home Address City/State Zip Telephone E-mail PRESIDENT Name Home Address City/State Zip Telephone E-mail VICE-PRESIDENT Name Home Address City/State Zip Telephone E-mail TREASURER Name Home Address City/State Zip 60 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town America Telephone E-mail SECRETARY Name Home Address City/State Zip Telephone E-mail BOARD MEMBER Name Home Address City/State Zip Telephone E-mail BOARD MEMBER Name Home Address City/State Zip Telephone E-mail BOARD MEMBER Name Home Address City/State Zip Telephone E-mail BOARD MEMBER Name 61 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Home Address City/State Zip Telephone E-mail BOARD MEMBER Name Home Address City/State Zip Telephone E-mail BOARD MEMBER Name Home Address City/State Zip Telephone E-mail BOARD MEMBER Name Home Address City/State Zip Telephone E-mail 62 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIMEAD k I Today's Small T.— America H. CHDO CHECKLIST The information contained in the CHDO Checklist refers to the definition of Community Housing Development Organizations (CHDOs) in Subpart A, 92.2 of the HOME Rule. The City of Rosemead requires the CHDO to fill the Checklist out completely stating where the response to each requirement may be found in the accompanying documentation. 1. LEGAL STATUS A. The nonprofit organization is organized under State or local laws, as evidenced by either Charter (Articles of Incorporation) or By -Laws B. No part of its net earnings inures to the benefit of any member, founder, contributor, or individual, as evidenced by: C. Has a tax exemption ruling from the Internal Revenue Service (IRS) under Section 501(c)(3) or (4) of the Internal Revenue Code of 1986, as evidenced by a 501(c)(3) or (4) Certificate from the IRS. OR Is classified as a subordinate of a central organization non-profit under section 905 of the Internal Revenue code, as evidenced by a group exemption letter from the IRS that includes the CHDO. D. Has among its purposes the provision of decent housing that is affordable to low - and moderate -income people, as evidenced by a statement in the organization's: CAPACITY11. A. Conforms to the financial accountability standards of 24 CFR 84.21, "Standards for Financial Management Systems", as evidenced by a notarized statement by either the president or chief financial officer of the organization; OR a certification from a Certified Public Accountant, OR a HUD approved audit summary. B. Has a demonstrated capacity for carrying out activities assisted with HOME funds, as evidenced by either resumes and/or statements that describe the experience of key staff members who have successfully completed projects similar to those to be assisted with HOME funds, OR contract(s) with consultant firms or individuals who have housing experience similar to projects to be assisted with HOME funds, to train appropriate key staff of the organization. C. Has a history of serving the community within which housing to be assisted with HOME funds is to be located, as evidenced by either a statement that documents at least one year of experience in serving the community, OR for newly created organizations formed by local churches, service or community organizations, a 63 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 0 statement that documents that its parent organization has at least one year of experience in serving the community. The CHDO or its parent organization must be able to show one year of serving the community prior to the date the participating jurisdiction provides HOME funds to the organization. In the statement, the organization must describe its history (or its parent organization's history) of serving the community by describing activities which it provided (or its parent organization provided), such as, developing new housing, rehabilitating existing stock and managing housing stock, or delivering non -housing services that have had lasting benefits for the community, such as counseling, food relief, or childcare facilities. The statement must be signed by the president or other official of the organization. D. A defined service area which includes or overlaps the City of Rosemead as evidenced by: A resolution of the Board of Directors; the Charter, or the By -Laws E. A current financial statement of the CHDO ORGANIZATIONAL A. Maintains at least one-third of its governing board's membership for residents of low-income neighborhoods, other low-income community residents, or elected representatives of low-income neighborhood organizations as evidenced by the Organization's By -Laws, Charter, OR Articles of Incorporation. B. Provides a formal process for low-income, program beneficiaries to advise the organization in all of its decisions regarding the design, siting, development, and management of affordable housing projects, as evidenced by: the organization's By- laws, a resolution of the Board of Directors, OR a written statement of operating procedures approved by the governing body. C. A CHDO may be chartered by a State or local government, but the following restrictions apply: (1) the State or local government may not appoint more than one-third of the membership of the organization's governing body; (2) the board members appointed by the State or local government may not, in turn, appoint the remaining two-thirds of the board members; and (3) no more than one-third of the governing board members are public officials (including any employees of the PJ), as evidenced by the organization's: By-laws, Charter, OR Articles of Incorporation. LOCAL REQUIREMENT: A Board Information Form must be submitted for each Board member D. If the CHDO is sponsored or created by a for-profit entity, the for-profit entity may not appoint more than one-third of the membership of the CHDO's governing body, and the board members appointed by the for-profit entity may not, in turn, appoint the remaining two-thirds of the board members, as evidenced by the CHDO's: By-laws, Charter, OR Articles of Incorporation. 64 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual a M11 RELATIONSHIP FOR-PROFIT A. The CHDO is not controlled, nor receives directions from individuals, or entities seeking profit from the organization, as evidenced by the organization's By-laws, OR a Memorandum of Understanding (MOU). B. A Community Housing Development Organization may be sponsored or created by a for-profit entity, however: (1) the for-profit entity's primary purpose does not include the development or management of housing, as evidenced in the for-profit organization's By-laws (2) the CHDO is free to contract for goods and services from vendor(s) of its own choosing, as evidenced in the CHDO's By-laws, Charter, OR Articles of Incorporation V. OTHER FEDERALREQUIREMENTS (1) Has a conflict of interest policy for Board of Directors and Staff that meets the requirements of 24 CFR Part 92.356 of the HOME Regulations I. PROJECT APPLICATION Once the City has provided the CHDO with a Pre -Qualification letter, the CHDO applicant must submit a viable, compliant CHDO project to the City within 180 days. PROJECTS The following describes the required submissions for various types' projects allowed by the City: Single Family Single Family program applicants are required to submit a complete program description that Defines: 1. The buyer(s) to be served; a. By family size and household income 2. The type of program activity: b. Acquisition/Rehabilitation/Sale c. New Construction d. Other 3. The project timeframe and timeline 65 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual L 4. The total project cost a. Including all Sources and Uses 5. The total subsidy per buyer a. The City does not offer a separate down payment and closing costs assistance program. The applicant must define what portion of the funds requested will be a development subsidy and what portion of the subsidy will be down payment and closing cost assistance to the buyer. Multifamily Multifamily program applicants are required to submit a site-specific project, including: 1. A development and operating pro forma. 2. The type of program activity: a. Acquisition/Operation b. Acquisition/Rehabilitation/Operation c. New Construction d. Special Needs 3. The project timeframe and timeline. 4. The total project cost: a. Including all Sources and Uses for the development. b. The total HOME subsidy requested. 5. An operating pro forma showing all income and expenses for the entire HOME required compliance period: a. Rents must be compliant with the HUD allowable rents for the Los Angeles MSA. b. Escalation rates must be 5 percent for expenses and 3 percent for income. c. The project must have a positive cash flow for the entire HOME compliance period. J. CHDO PROCEEDS CHDO Proceeds result from the sale of a single family or multifamily property financed by the City through the HOME program. Proceeds include both HOME funds and any other funds from any source which are realized by the sale of property assisted in any form or fashion with HOME funds. 1. In single family sales, the total HOME funds provided by the City to the CHDO for any specific project under the HOME contract, less the actual expenses for the project, the buyer's down payment, the buyer's contribution, and any non -HOME or non- CDBG mortgages are defined as CHDO Proceeds, or Proceeds. .. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSENTEAD T.dn's Small Town Am ,k., 2. In multifamily sales, the total HOME funds provided by the City to the CHDO for any specific project under the HOME contract, less the actual expenses of the project, the buyer's down payment, the buyer's contribution, and any non -HOME or non- CDBG mortgages are defined as CHDO Proceeds, or Proceeds. 3. Allowable Uses of CHDO Proceeds: An eligible activity defined by eitherthe HOME program regulations or this agreement that directly supports the creation of affordable housing in our community shall be collectively known as an "allowable use". Allowable uses are further defined and limited by this agreement as follows: a. Any eligible use of HOME funds, as defined in 24 CFR Parts 91 and 92 of the Final HOME Rule shall be an allowable use under this contract, so long as the allowable use results in or supports the creation of new units of affordable single-family housing for purchase by HOME qualified buyers or for rent by HOME qualified tenants 4. Prohibited Uses a. Proceeds may not be used to fund, finance or pay for a loan counseling, debt counseling or homebuyer counseling programs or efforts as long as the City provides funding to any other organization or entity to provide these services. b. Proceeds may not be used to fund any operating reserves of the CHDO. c. Proceeds may not be utilized to make repairs, reconstruct, or rebuild any unit previously financed with HOME funds without the express written permission of the City. Governing Law and Regulation a. Final HOME Rule: 24 CFR Parts 91 and 92; b. CPD Notice 97-9; and c. The City's Contract with the CHDO 6. Accounting for Proceeds a. The CHDO shall retain proceeds in a separate bank account and shall provide an accounting of the use of proceeds to the City on a quarterly basis. b. The accounting shall designate the project and show the flow of funds into and out of the project account until all funds in the account are expended in accordance with the CHDO Contract and the CHDO Proceeds Addendum c. To facilitate proper accounting for the proceeds, the CHDO shall utilize the spreadsheet designated by the City and included here by reference. d. The auditor of the CHDO shall, at each annual audit, review the CHDO proceeds account of the CHDO and shall include in the annual audit specific language stating whether or not the CHDO has complied with the terms of the CHDO Proceeds Addendum to the Contract between the City and the CHDO. 7. Allocation and Use of Proceeds 67 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEME`AD J Today's Small Tonin America a. Under the CHDO's contract with the City, the City provides the CHDO with a development subsidy to assist in the development of either multifamily or single-family housing within the City; b. The development subsidy is expended by the CHDO; c. Proceeds are realized upon the sale of the completed property to a qualified buyer as defined by the City's contract with the CHDO. d. Proceeds are realized on the date of the close of the property to the end owner. e. At the close of each project which yields proceeds to the CHDO, the CHDO shall allocate proceeds as follows: L If proceeds are less than $5,000, then all proceeds from the associated property account shall be allocated by the CHDO to the general administration (salaries, benefits and/or administrative costs) of the CHDO for the support of the development of affordable housing. ii. If proceeds are more than $5,000, then: 1. Ten percent (10 percent) of proceeds shall be immediately allocated to the general administration (salaries, benefits and/or administrative costs) of the CHDO for the support of the development of affordable housing; 2 Ninety percent (90 percent) of proceeds shall be allocated to land acquisition, site development, and/or construction financing. 3. Each subsequent return of proceeds shall follow the same methodology until the proceeds are less than $5,000, at which time the proceeds account for the project shall be closed. iii. To facilitate the quick rollover and expenditure of proceeds, the CHDO will invest proceeds in the next available project as soon as the proceeds are realized, and before a request for additional funds for development activity from the City. 8. Draw Requests a. Requests to the City for disbursement of funds for land acquisition, site development and/or construction financing on any subsequent project under this contract, shall include the following: i. The full amount of the requested disbursement; ii. The amount drawn from proceeds iii. Including the project name or names, the amount is drawn from. iv. The net amount of the requested disbursement. 9. CHDO proceeds must be specifically requested in the CHDO's Project Application. 10. The City of Rosemead will not assign staff to a CHDO on either a full or a part-time basis in order to fulfill the CHDOs capacity requirement. 68 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSE 1 - 11. Allow CHDOs pay the City of Rosemead for any technical assistance and/or training that the City provides. K. CHDO CERTIFICATION CHDO CERTIFICATION/RECERTIFICATION REQUIREMENTS: Certified CHDOs or organizations that wish to be certified as a City of Rosemead CHDO must use the City's application to apply for certification. Certified CHDOs must be re -certified on an annual basis, providing all documentation required for initial certification is up to date and accurate. Agencies meeting the CHDO certification requirements as indicated in the CHDO section of these operating procedures will be recommended by the City of Rosemead staff for certification. A City of Rosemead CHDO seeking recertification or an agency seeking certification as a City of Rosemead CHDO must currently demonstrate capacity to carry out HOME assisted activities either with: a. Experienced staff who have successfully completed similar projects, that draws a distinction between development, management of rental housing and development, sale of housing for first-time homebuyers, M b. Key staff with limited or no experience who will utilize experienced consultants (if consultants are in charge of development, there must be a written plan submitted yearly to the City of Rosemead indicating how the consultant will train key staff during that funded year). L. Monitoring The City of Rosemead will monitor the performance of the CHDO to assist the City to identify: ➢ Strengths and weaknesses in CHDO operations and the support systems necessary for CHDOs to operate and for the HOME program to succeed. ➢ Identifying what needs to be changed, and for securing the appropriate technical assistance and training needed to do so. ➢ Determining the level, type, and areas of need will vary from CHDO to CHDO, and, within CHDOs, from year to year. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T.— America Monitoring CHDO performance will include a review of the following factors: 1. Compliance with HOME requirements; 2. A risk assessment of the CHDO; 3. Completion of funded projects; 4. Timeliness and ability to complete projects within established budget parameters; 5. Human resources; 6. Adequate financial resources; 7. Ability to leverage other resources; 8. Adequate financial systems; 9. Board operations; 10. Strategic plans; 11. Organizational work plans; 12. Record-keeping; 13. Compliance with HOME tar targeting requirements; and 14. Board composition and operations. PROCEDURE 1. The City will issue a letter ninety (90) days in advance of monitoring specifying a set of files, policies, procedures, and accounts the City will require the CHDO deliver to the City on a date certain; a. Each year, within 120 days of the close of the CHDO's fiscal year, the CHDO shall deliver an audit by a certified public accountant to the City; L The audit shall contain the CHDO Proceeds provision noted under accounting, if applicable. 2. After the CHDO has submitted the required documents the City will conduct a desk review to ensure compliance with the HOME and local requirements. 3. Upon completion of the desk review the City will establish a mutually acceptable date for the on-site monitoring. 70 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town America 4. The City will specify, at its sole discretion, the items the City will review on-site. 5. The City will conduct on the on-site monitoring. 6. Within thirty (30) days of the on-site monitoring, the City will issue a Monitoring Report delineating any deficiencies found. 7. The CHDO shall have thirty (30) days to address or correct those deficiencies identified in the monitoring report. M. DEFAULT Any of the following conditions shall result in default by the CHDO: 1. Failure by the CHDO to deliver the audit within the prescribed period; 2. Failure by the CHDO to submit the required quarterly reports; 3. Failure by the CHDO to segregate the CHDO Proceeds in a separate account, or to properly account for the Proceeds to the standard provided by this agreement (if applicable); 4. Failure by the CHDO to meet the development or program benchmarks contained in the City's Contract with the CHDO; and 5. Any action of the staff or Board of Directors which violates the laws and regulations of the United States; the laws and regulations of the State of California; and/or the laws and regulations of the City. NOTE: If the CHDO defaults as defined herein, the City, may, at the City's sole discretion, end or suspend the Contract between the City and the CHDO. 71 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEW 1 Todav's Small CHAPTER 4 HOMEOWNER REHABILITATION ACTIVITIES This chapter describes how HOME funds may be used to assist owners in the rehabilitation of owner -occupied housing. Eligible activities, forms of assistance and property types are covered in this chapter. PART I: HOME REHABILITATION LOAN PROGRAM A. Program Summary The City of Rosemead (City) has established the Federally Funded Owner -Occupied Loan Program (Loan Program) to assist homeowners of low- and moderate -income (0 to 80% of MFI) who own and occupy their home in Rosemead and need financial assistance for housing rehabilitation or reconstruction by providing a zero to three percent (0 to 3%) interest, deferred payment loan. To maximize the effectiveness of the Loan Program as a vehicle for enhancing affordability, Borrowers pay no current principal or interest until the loan due date which is 30 years from the date shown on the signed Deed of Trust and Promissory Note. Principal and interest are due and payable upon a variety of conditions and circumstances, the most common being the sale of the home, transfer of the home, or death of homeowner. Interest is calculated at 0% for senior citizens (62 years and older) and handicapped/disabled citizens, and 3% simple interest rate for all others based on the principal owed. B. General Definitions As used in this Manual and all program documents, unless the context requires otherwise, the following words and terms have the meanings set forth below: AFFORDABLE: In reference to housing costs, this means that the financial obligation can be paid by the person or household, along with all other financial responsibilities of that person or household, without endangering the financial stability of the household. APPLICANT: Any person who applies for the Loan Program. ASSISTED UNIT: A unit funded under the Loan Program. 72 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 5ma11 Tmvn America BORROWER: A person who has or will receive a loan for the rehabilitation or reconstruction of an eligible property. CAPITAL IMPROVEMENTS: Expenditures for improvements to land or improvements and remodeling of existing buildings that increase the value and extend the useful life of the property. CERTIFICATION: A written statement of fact filed in connection with the Loan Program and subject to penalties of perjury. CITY: The City of Rosemead, California. CURRENT SALES PRICE: 1 In the event of a first sale or transfer after the date of a loan issued under this Loan Program, the current sales price shall be defined as the amount received by Borrower as the sales price of the property (less capital improvements) plus amounts received but paid out to third parties for any closing costs and commissions paid by Borrower. 2 In the event of a default and subsequent foreclosure and acquisition of the property by a creditor, the current sales price shall be defined as the amount paid for the property upon the creditor's sale of the property. 3. In the event of Borrower's cash -out refinance of the property, the current sales price shall be defined as the market value as determined by an appraisal acceptable to the City. 4. In the event of the first note and deed of trust becoming payable, the current sales price shall be defined as the market value of the property, as determined by an appraisal acceptable to the City, on the maturity date of the first note and deed. 5. In the event the property ceases to become Borrower's principal place of residence, the current sales price shall be defined as the market value of the property, as determined by an appraisal acceptable to the City, on the date the City determines that Borrower does not occupythe property as his or her principal place of residence. 73 _ City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual � 1 DATE OF ISSUE: The date the loan is signed and executed by the City. DEVELOPMENT SUBSIDY: 1. Federal funds invested in a property that indirectly benefit a homeowner and are not subject to recapture. 2. The difference between the total development cost and the market value of the property. ELIGIBLE HOUSEHOLD: A household that is owned and occupied by a person and who meets applicable criteria specific to the funding source used. ELIGIBLE PROPERTY: Real property located in the city limits of the City which also meets additional criteria relative to the specific funding sources utilized. EXISTING HOMEOWNER: An owner -occupant of residential property who holds legal title to the property and who uses the property as his/her principal residence. FEDERALLY FUNDED OWNER -OCCUPIED LOAN PROGRAM: Loan or Loan Program. GROSS INCOME: An individual's taxable income before any appropriate adjustments are made. HOUSEHOLD: Household to include all person(s) living in the same housing unit (excludes foster children, live -in -aides, children of live -in -aides, unborn children, and children being pursued by legal custody). HUD: The U.S. Department of Housing and Urban Development. INCOME: To determine a Borrower's eligibility for program assistance, income is determined using definitions specific to the Federal guidelines. INTEREST: The interest due on the loan's deed of trust and calculated in accordance with the regulations pertaining to the Loan Program. LOWER INCOME HOUSEHOLD: Persons and families whose incomes do not exceed the qualifying limits for lower income families as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937. Such limits are 74 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSE101 J TuJade Small defined as 80% of the area median income as adjusted for household size and revised annually. MANUFACTURED HOUSING UNIT: A home manufactured offsite and transported to a lot, and a mobile home as defined by Section 18007 of the California Health and Safety Code. A manufactured home can be either in a rental mobile home park, on leased land or on property owned by the occupant. It can be either on a permanent foundation or on an alternate foundation system. MATURITY DATE: The date upon which a mortgage loan comes due and payable in full in accordance with the regulations pertaining to the Loan guidelines. MORTGAGE: A deed of trust used to secure a lien on real property or, in the case of some manufactured housing, another security interest acceptable to HUD. NET INCOME: For an individual, gross income minus taxes, allowances, and deductions. An individual's net income is used to determine how much income tax is owed. OWNERSHIP INTEREST: Any of the following interests in residential real property: • Fee simple estate • Community Property • Joint tenancy • Community Property with Right of Survivorship • Tenancy in common • Title Holding Trust Ownership does not include a remainder interest, a lease with or without an option to purchase or any interest acquired on the execution of the purchase contract. PRINCIPAL RESIDENCE: A property occupied by the Borrower continuously all year. RELATED PERSON: As defined under the Internal Revenue Code and applicable regulations: siblings, spouses, ancestors and lineal descendants, or any other related persons. SECOND MORTGAGE: A mortgage that is junior or subordinate to a first mortgage. OWNER -OCCUPIED RESIDENCE: A housing unit intended and used for occupancy by one household which is the owner of the property. 75 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEI01 1 T.d.v's Small SILENT SECOND: A second mortgage in which there are no payments required of either principal or interest on the mortgage until such payments are required in accordance with the regulations pertaining to the funding source(s) used. C. Program Guidelines The City of Rosemead has developed program guidelines for the operation of the Federally Funded Owner -Occupied Rehabilitation Loan Program (herein referred to as the Loan Program). These guidelines are based, in part, on procedures that the City has used in the administration of a wide range of housing rehabilitation and construction activities. The following describes the loan process in short, which is explained in further detail throughout this section. LOAN PROCESS ➢ Application and required supporting documentation submitted by Homeowner(s) ➢ Application is reviewed and approved/denied by City staff (Approved applications continue through the Loan Process. Denied applications stop at this point.) ➢ On-site property inspection by the City staff (includes the review of lead-based paint procedures with the Homeowner) ➢ On-site lead inspection by a City approved Lead Contractor ➢ Lead test results and Lead brochure reviewed with Homeowner by City staff ➢ Scope of Work letter mailed to Homeowner(s) ➢ Pre -Bid Job Walk/Bidders Conference with bidding Contractors ➢ Homeowner receives a minimum of two (2) estimates from the City based on Scope of Work. ➢ Homeowner selects contractor ➢ Homeowner/Contractor Construction/Loan Signing Meeting (This meeting is held at City Hall) • Review the contract with Homeowner/Contractor 76 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS EIV�E`AD k J Today's Small Town America • Review lead-based paint requirements with Homeowner/Contractor • Loan documents reviewed and signed by Homeowner • Notice to Proceed issued to Homeowner and Contractor o Construction can begin only when Notice to Proceed is issued ➢ Project Monitoring • On-going site inspections conducted by City staff • Progress Payments minus 10% Retention as work is completed and inspected by City staff, and approved by Homeowner • Change Orders (as needed) processed by City staff and approved by City staff and Homeowner • Project Completed and signed off by City staff following Final Inspection and verification of final approval by the Building Department (if applicable); Notice of Completion signed by Homeowner • Retention Release Payment issued to Contractor 35 days after Notice of Completion as signed by Homeowner D. Program Scope Federal funds will be used to provide zero to three percent (0 to 3%) simple interest deferred payment loans to homeowners of low- to moderate -income (0 to 80% of Area Median Family Income) who own and occupy their home and need financial assistance for housing rehabilitation or reconstruction. The loan amount will vary for each project depending on the scope of work. However, the maximum amount of federal dollars that can be invested in each assisted unit will not exceed Section 221(d)(3) limits as published by HUD. Total repayment of the deferred loan and all accrued interest will be due in year 30 of the loan term. Payment would be due sooner if the home is sold, transferred in ownership, or in some cases refinanced. On September 15, 2000, a new Lead -Based Paint regulation became effective. As a result, all units built prior to 1978 must be inspected for defective paint and any defective paint must be tested for lead content. All defective lead containing paint and surfaces must be treated or abated. Additionally, any painted surfaces that will be disturbed during construction must be 77 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual tested. In cases where painted surfaces are found to contain lead, these surfaces must be abated before proceeding with the scope of work. The cost associated with a homeowner having their unit inspected for defective paint will be absorbed through the Federal funds. The cost for the treatment or abatement of the defective lead contained surfaces will be incorporated into the homeowner's loan or paid through the Lead Grant when funds are available. ELIGIBILITY Program assistance will be provided to qualified property owners who own and occupy a home and do not exceed the low to moderate -income limits set by HUD. Specifically, applicants must have an annual gross income that does not exceed 80% of the median income for the area as established and published annually by HUD. In determining income eligibility, all persons on title are considered household members. There is an exception to this rule, it is possible that a person is identified on the title but is not part of the household. In this case, proof of other residency would be required, and that person would not be considered part of the household for determining income eligibility. All persons living in the residence are considered household members. A household's income must be within the most recent HUD approved income limits for Los Angeles County at the time the household is approved for the loan. In addition, the housing unit being considered for rehabilitation or reconstruction must be the principal residence of the owner -occupant. Under no circumstance will a tenant -occupied property be eligible for assistance under the loan. LEVEL OF ASSISTANCE It is the City's intent to correct as many cases of housing deterioration as possible with the available funds. The maximum amount of Federal funds invested in a project will be at a level to correct all deficiencies without going over the loan -to -value limit or the Section 221(d)(3) limits published annually by HUD. It is the City's desire to rehabilitate housing units to create safe, decent and affordable housing for the homeowners. In no case shall the after -rehabilitation value of the assisted unit exceed 95% of the median purchase price for homes in the area, as published by HUD or approved by HUD. The median purchase price for the City is subject to periodic revision. For the purpose of this program, the after -rehabilitation value will be established by an estimate of value conducted by City staff. 0 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS ENFEA TYPE OF ASSISTANCE Federal funds will be used to provide a zero to three percent (0% to 3%) simple interest deferred payment loan to homeowners of low- to moderate -income (0 to 80% of Area Median Family Income) who own and occupy their home and need financial assistance for housing rehabilitation or reconstruction. Interest is calculated at 0% for senior citizens (62 years and older) and handicapped/disabled citizens, and at 3% simple interest rate for all others based on the principal owed. The loan amount will vary for each project depending on the scope of work. However, under no circumstance will the loan -to -value exceed 95% of the median purchase price. Total repayment of the deferred loan and, all accrued interest will be due in year 30 of the loan term. Payment would be due sooner if the home is sold, transferred in ownership, or in some cases refinanced. Refinancing will only be allowed if the overall housing costs of the borrower will be reduced and made more affordable. Affordability will be up to the City's discretion to determine. Also, in the case of refinancing, no additional cash can be taken out by the homeowner with the exception to assist with closing costs. On September 15, 2000, a new Lead -Based Paint regulation became effective. As a result, all units built prior to 1978 must be inspected for defective paint and any defective paint must be tested for lead content. All defective lead containing paint and surfaces must be treated or abated. Additionally, any painted surfaces that will be disturbed during construction must be tested. In cases where painted surfaces are found to contain lead, these surfaces must be abated before proceeding with the scope of work. The cost associated with a homeowner having their unit inspected for defective paint will be absorbed through the Federal funds. The cost for the treatment or abatement of the defective lead contained surfaces will be incorporated into the homeowner's loan or paid through the Lead Grant when funds are available. In determining a household's qualification for a loan, the City will utilize low- to moderate - income housing affordability standards identified by HUD. Households that qualify for a loan are subject to have their continued eligibility reviewed, at the discretion of the City, until the loan has been completed and a Notice of Completion has been filed with the County Recorder's Office. To ensure that the property owners remain owner -occupants for the life of the loan, the City plans to track all real estate -related information on the home to ensure there is no change in 79 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E`AD TuJay's Small Town Anm k. the property owners mailing address or that the property owners become delinquent in paying the property taxes. In addition, property owners are required to add the City of Rosemead as additionally insured to their homeowner's insurance policy for the life of the loan. The City will be notified through the insurance company if there is a change in the property owner's address, non-payment of homeowner's insurance, or cancellation of homeowner's insurance policy. QUALIFYING PROPERTIES All owner -occupied housing units (i.e. single-family, condominiums, town homes, manufactured housing) located within the City of Rosemead will be eligible under the loan. Work on condominiums and town homes will be limited to the applicant's sphere of responsibility. Work will not be conducted in the sphere of an association's responsibility. TYPES OF REHABILITATION As noted in the guidelines established for this program, the City is interested in focusing the use of Federal funds on the community's more serious cases of housing deterioration. It is the intent of the City to renovate this existing housing stock whenever feasible. However, in cases where the cost of rehabilitation exceeds 49% of the after -rehabilitation value of the dwelling, the structure may be demolished and reconstructed providing the overall cost of the project will not exceed the 221(d)3 limits set forth by HUD "Rehabilitation" means, in addition to the definition in Section 50096 of the Health and Safety Code, repairs and improvements to a manufactured home necessary to correct any condition causing the home to be substandard pursuant to Section 1704 of Title 25, California Code of Regulations. Rehabilitation also includes room additions to alleviate overcrowding. Rehabilitation also means repairs and improvements where necessary to meet any locally adopted standards used in local rehabilitation programs. Rehabilitation does not include replacement of personal property. Rehabilitation includes reconstruction. Federal law and policy allow the use of HOME funds to demolish and reconstruct owner -occupied residential structures. Reconstruction is defined as the demolition and construction of a structure. The Housing Project Coordinator must document that the reconstruction costs are less than the cost to rehabilitate the existing substandard housing. Additionally, the Housing Project Coordinator must determine that the project's value after reconstruction (housing and land combined) is less that the Maximum After -Rehabilitation. The residential structure to be reconstructed must be a structure with 80 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSE]WEAD J Todn's Small Tm ,n America cooking, eating, sleeping, and sanitation facilities which has been legally occupied as a residence within the preceding 12 months. Fifth wheels or recreational vehicles, for example, are not considered dwellings and therefore are not eligible under this Program. Like for like requires that the structure being demolished must be replaced with a like structure (replace manufactured housing with manufactured housing, for example). Temporary relocation benefits must be planned for and budgeted into the total allowable subsidy for the project, but if required would be in the form of a grant. Rehabilitation will address the following issues in the order listed. Eligible costs are included for each item. 1. Health and Safety Issues Eligible costs include, but are not limited to, energy-related improvements, lead- based paint hazard evaluation and reduction activities, improvements for handicapped accessibility, repair or replacement of major housing systems. A driveway may be considered part of rehabilitation if it is determined to be a health and safety issue. 2 Code and Regulation Compliance Eligible costs include, but are not limited to, additional work required to rehabilitate and modernize a home, and bring it into compliance with current building codes and regulations. Painting and weatherization are included. 3. Demolition Eligible costs include, but are not limited to, the tear down and disposal of dilapidated structures when they are a part of the reconstruction of an affordable housing unit. If a garage or carport is detached, it may not be rehabilitated but may be demolished, if it is determined to be a health and safety issue. 4. Upgrades Eligible costs include additional bedrooms and bathrooms if the need can be demonstrated per HUD's overcrowding guidelines. The Program will not fund additions to a home for a den or family room, or for any luxury items. Z City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T.— Amcdu 5. General Property Improvements Eligible costs include, but are not limited to, installation of a stove, refrigerator, and/or dishwasher; and repair or installation of fencing. All improvements must be physically attached to the property and permanent in nature. Non -code property improvements (fencing, landscaping, driveway, etc.) will be limited to 15 percent of the rehabilitation loan amount. Any cash contribution by the property owner will be considered a general property improvement and be included in this percentage. Luxury items are not permitted. Items such as refrigerators, stoves and dishwashers that are not built-in may be replaced due only to incipient failure or documented medical condition of the homeowner and must be of moderate quality. 6. Rehabilitation Standards All repair work related to health and safety conditions will meet Local Building Code standards. The priority will be the elimination of health and safety hazards and code compliance. SELECTION PROCESS The Loan Program is advertised ongoing through the City's web site (http://www.cityof rosemead.org) and brochures located at City Hall. In addition, as new funding is received or as needed, articles are placed in the local newspaper (any judicated newspaper specifically for the City of Rosemead) as well as the Rosemead Chamber of Commerce Periodical (Rosemead Report), and the City's local newsletter (Rosemead Resource). The City attempts to maintain a waiting list of properties that have been identified as potentially eligible for the Federally funded loan. Any owner -occupied property within the City can be placed on this waiting list. Once all documents are received, reviewed, and processed, the Housing Project Coordinator will notify the applicant of eligibility status. If eligible, an appointment for an initial inspection is scheduled to determine the eligible items that will be included in the Scope of Work. Funds are distributed based on a first-come, first -serve basis. There is an exception to this rule. It is possible for a property to be given priority because of code, building, or health & safety violations. Code Enforcement Officers and Building Inspectors from the City are able to identify 82 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual and assess residential properties that might require immediate assistance through the Loan Program. BID PROCEDURES The Housing Project Coordinator and property owner will work together in developing a work write-up. A written cost estimate, using appropriate reference or cost manuals, will be prepared by the City staff and reviewed by either the City's Housing Project Coordinator or Management Analyst to ensure that project costs do not exceed the program limits established by the City. If necessary, a change in project scope reducing or eliminating general property improvements, will be made. A project may be denied or cancelled if it is determined that the cost to meet HQS standards and relief of code violations will exceed the 221(d)3 limits set forth by HUD. The property owner will be ultimately responsible for selecting the licensed contractor they wish to complete the rehabilitation work, based on the following three methods of obtaining estimates: 1) the property owner will be provided copies of the scope of work and they will obtain three estimates by licensed and insured contractors; 2) the property owner can request the Housing Project Coordinator to schedule a Pre -Bid Job Walk/Bidders Conference with contractors that have been vetted to participate in this program; and 3) the property owner can request a Pre -Bid Job Walk/Bidders Conference and the property owner can invite one or more contractors to attend with or without additional contractors invited from the City's courtesy list (as long as at least three contractors attend the conference and at least two bids are received). Prior to the property owner's selection of a contractor, the Housing Project Coordinator will be responsible for reviewing the bids against the preliminary cost estimate prepared by the Management Analyst. Bids must be within 15% (high/low) of the cost estimate prepared by the Management Analyst. If the bid is higher or lower than the 15% cost estimate, the bid will be rejected and disqualified from the bidding process. The Housing Project Coordinator will also be responsible for ensuring that the selected contractor follows all state requirements by verifying that the contractor is licensed and in good standing with the State of California. In addition, the Housing Project Coordinator will be responsible for ensuring the current federal eligibility status of the contractor by verifying that the contractor does not appear on the "List of Parties Excluded from Federal Procurement or Non -procurement Programs" 83 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD Today's Small Town America CONTRACT IMPLEMENTATION Once a contractor is selected, City staff will prepare the appropriate loan documents for execution in concert with the construction contract documents. Progress payments will be made based on a schedule agreed upon by the City, homeowner, and contractor. Release of progress payments will be made at the discretion of the City. Interim inspections will be conducted on each project by the Housing Project Coordinator. The number of interim inspections will vary for each project based on the scope of work involved for that project. Quality control will be an important component of this program's implementation. Both the Building Inspector and the Housing Project Coordinator will monitorthe workmanship and quality of materials used in these projects. The contractor will be required to obtain release of liens from subcontractors and suppliers as the construction project proceeds, and as deemed necessary. A ten percent (10%) retention of the contract amount will be retained until 35 days after the final inspection is signed -off and a notice of completion is filed for the project. DISPUTE RESOLUTION The contract is between the homeowner(s) and the Contractor chosen by the homeowner. The City of Rosemead is not a party to any contracts, nor is the City of Rosemead responsible for the performance of said contract by the Contractor. The homeowner(s) selects the Contractor based on the estimate provided by the contractor through the competitive bid process. The City of Rosemead is only the lending institution providing the funds and insuring that the work they bill for has been completed per Scope of Work and Building Code. However, when a dispute arises, the City will provide mediation services for the homeowner and contractor to resolve differences. Dispute resolution services provide mediation services at either the homeowners or the contractors request and is typically conducted at City Hall by City staff. Mediations that are unsuccessful at this level must be mediated by an Arbitration/Mediation service solicited by either the Participant or the Contractor; the City will not be a party to this form of mediation except to provide any requested information regarding the project or the process. _ 84 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small T.— Anmfln ADMINISTRATIVE SUPPORT The City has been involved in administering housing rehabilitation programs for several years. Existing City employees will provide the staff support needed to implement this program. UNDERWRITING CRITERIA Upon receipt of a loan application package, the City will review the package to determine that support materials are present and that all forms are complete. Support materials may include but are not limited to, income verification (i.e. paycheck stubs, unemployment stubs, social security benefit printouts, IRS 1040 form, W-2 statements, etc.), assets verification (i.e. bank statements, IRA statement, stocks, bonds, etc.), mortgage statements, property tax bills, deed of trust and insurance policies when applicable, etc. Afterthe package has been reviewed and found to be complete, a preliminary risk analysis will be developed to determine that it is reasonable to proceed with processing. The preliminary risk analysis can be developed before incurring outside costs, such as Title Reports, and can even avoid sending out inspection personnel to prepare a work write-up and cost estimate on a loan that cannot be approved. The preliminary risk analysis will include the borrower's annual income to ensure that it is at or below the 80% FMI as established by HUD, an estimate of the amount the borrower can afford to borrow, and an estimate of the borrower's ability to pay (when applicable). Upon approval to proceed, the City will order applicable outside services such as a title report, lead inspection, verifications, etc. Once the firm cost of rehabilitation is known (a contractor bid has been awarded), a final underwriting analysis will be prepared, addressing the following items: • Affordability • Financial interest in the property (Loan to Value) • Subsidy layering • Status of title to secure lien position Upon receipt of verifications and reports, the following loan package will be prepared for signature by all interested parties. • Deed of Trust City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Cou Small Tman America • Promissory Note • Notice to Proceed • Notice of Right to Cancel • Truth -in -Lending Disclosure Statement • Itemization of the Amount Financed • Notice of Subordination • Fair Lending Notice ELIGIBLE REHABILITATION COSTS The following are eligible costs that may be paid or reimbursed with loan funds: • Development Hard Costs • Work necessary to meet local building code requirements • Work necessary to meet locally adopted rehabilitation standards • Energy-related improvements • Lead-based paint hazard mitigation • Improvements for handicapped accessibility • Repair or replacement of major housing systems • Repairs and general property improvements of a non -luxury nature • Demolition costs (when part of the reconstruction/to relieve illegal conditions) • Site Improvements and Utility Connections • On-site infrastructure costs • Off-site utility connections from the property line to an adjacent street • Related Soft Costs (reasonable and necessary only) 86 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual To— America • Specification writing, underwriting, notary, building inspection, lead inspection, title costs, recordation fees, building permits, appraisals, and relocation costs, if applicable PROCUREMENT STANDARDS (CONFLICT OF INTEREST) When purchasing and contracting for supplies, equipment, construction, and other services acquired in whole or in part with Federal funds, the City will comply with the procurement procedures and requirements of 24 CFR Part 84.40 and 85.36. FAIR HOUSING AND AFFIRMATIVE MARKETING The City recognizes the effect that discrimination has in limiting housing choice and equal opportunity in renting, selling, financing, and rehabilitating housing, and therefore, follows all relevant Equal Opportunity and Fair Housing requirements. The City's effort to eliminate discrimination is overseen by the Southern California Housing Rights Center. Rosemead has contracted this organization to implement its Fair Housing Program and to ensure that no property owner is unfairly denied benefits or subjected to discrimination under the Federally - funded Loan Program based on race, color, national origin, religion, age, ancestry, familial status, handicap, sex, or any other arbitrary basis. As already indicated under "Selection Process", the loan is advertised ongoing through the City's web site (http://www.cityofrosemead.org) and brochures located at City Hall. In addition, as new funding is received or as needed, articles are placed in the local newspaper (any judicated newspaper specifically for the City of Rosemead) as well as the Rosemead Chamber of Commerce Periodical (Rosemead Report), and the City's local newsletter (Rosemead Resource). Any owner - occupied property within the City can be placed on this waiting list and if the owner meets the residency, income, and other program requirements, they will be approved for funding when funds are available. LOAN SERVICING REQUIREMENTS The U.S. Department of Housing and Urban Development's Federal Program provides funding to assist eligible Borrowers under the City Owner -Occupied Loan Program. The following applies to all loans made with Federal funds. 87 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 0 ELIGIBLE USE OF FUNDS Federally funded loans may be used only for the provision of providing low interest (0 to 3%), deferred payment loans to homeowners of low-income (0 to 80% of IVIFI) who own and occupy their home and need financial assistance for housing rehabilitation or reconstruction. INELIGIBLE USES OF FUNDS Federal funds may not be used for: • Refinancing of existing loans • Recurring loan costs • Payoff of all or any portion of a Borrower's consumer debt, liens or judgments • Cash out ELIGIBLE HOUSEHOLDS To be eligible to receive these funds, an individual household shall: 1. Be a low to moderate -income household (income equal to or less than 80% of area median income as adjusted for household size and published by HUD) when considering the gross income of all household residents 18 years old or older. a. Gross income is as defined in the California Code of Regulations (CCR), Title 25, Section 6914 and is: "The anticipated income of a person or family for the 12 - month period following the date of determination of income. b. The City shall determine annual gross income in accordance with the CCR, Title 25, Section 6914) attached hereto as Exhibit "A". c. Income from assets is recognized as part of annual income under 24 CFR Part 5. The City shall determine income from assets in accordance with 24 CFR 5 attached hereto as Exhibit "B". 88 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E`AD ► 1 r��a.,,•'s s�,,, a m�.� � n. ��a�, 2. Include as Borrowers all persons who will be, or who are on title to the property. 3. Bea homeowner and occupy the property as a principal place of residence. 4. Not own any property (residential and/or commercial) other than their principal place of residence. ELIGIBLE PROPERTY 1. Property must be located within the City of Rosemead. 2. Property type must be: a. Single-family housing; or b. Condominium unit; or c. Town home unit; or d. Manufactured unit 3. Eligible property must have the following occupancy characteristic: a. Is currently occupied by the owner MAXIMUM AFTER -REHABILITATION VALUE The maximum after rehabilitation value for a home with the assistance of a loan under this Program shall not exceed 95% of the median purchase price for homes in the area, as published by HUD or approved by HUD. For the purpose of this program, the after -rehabilitation value will be established by an estimate of value conducted by City staff. 89 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E`AD Tndw%Small Tnwn America LOAN DOCUMENTATION All loans shall be evidenced by the following documents and provisions. 1. Promissory Note (attached hereto as Exhibit "C") payable to City in the principal amount of the loan and stating the terms and rate of interest. 2. Deed of Trust (attached hereto as Exhibit "D") securing the Notice; this deed shall be recorded and shall secure the City's financial interest in the property. 3. Other appropriate security instrument naming the City as beneficiary (for instance, with regards to mobile homes, a Statement of Lien must be filed with the State of California Department of Housing and Community Development identifying the City as a lien holder. 4. Request for Copy of Notice of Default. LOAN TERMS Security 1. Loans shall be secured by the property or leasehold interest, as applicable. 2. The lien securing repayment of the loan shall be subject only to liens, encumbrances and other matters of record reviewed and approved by the City. Deferment Principal and interest payments shall be deferred for the term of the loan. Under no condition will the principal or interest be forgiven. Repayment 1. The loans principal and interest shall be repayable upon: a. Sale, transfer, death of borrower(s), or lease of the property. 90 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Town America b. Borrower's failure to occupy the property as Borrower's principal place of residence. c. The loans maturity date. d. Upon default of the promissory note, deed of trust or other recorded documents of record pertaining to the property. 2. If it is determined by the City that repayment of the loan at maturity will cause a hardship to the Borrower, the City may, at its option, elect to: a. Approve additional deferral periods in intervals up to 5 years for a maximum 30 years in length at 0% additional interest, or; b. Convert the debt (principal and accrued interest) to a 15 -year amortized loan at 0% additional interest. Assumability These loans are not assumable. Transfer of Interest Exceptions The transfer of interest shall not require repayment of the loan in the following cases: 1. The transferee was on title at the time of City loan approval. 2. A transfer, in which the transferee is a person who occupied the home at the time of the City loan approval and the household's income is recertified and proven to be at or below the 80% FMI as established by HUD. 3. A transfer into an inter vivo trust in which the Borrower is and remains the beneficiary and occupant of the property. 91 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS ENVEAD Todn% Small Town Ammica Loan Term The loan term shall be 30 years, except upon the occurrence of any condition requiring repayment as noted above. Prepayment A Borrower may prepay the loan, in part or completely, at any time without penalty. Interest Interest is calculated at 0% for senior citizens (62 years and older) and handicapped/disabled citizens and 3% simple annual interest rate for all others based on the principal owed. Unused Funds Funds not used under the loan will be used to decrease the amount of loan principal owed after the work is finished. Funds may not be used to pay interest or cash out. Loan -to -Value Limits The loan -to -value (LTV) ratio for a loan, when combined with all other indebtedness to be secured by the property, shall not exceed 100% of the sales price plus a maximum of up to 5% of the sales price to cover closing costs. Cash -Out A Borrower may not receive "cash out" for a loan. Hazard Insurance The Borrower must provide and maintain fire insurance in an amount at least equal to the replacement value of the improvements. The City must be named as an additional loss payee on the policy upon loan closing. The City must be notified by the insurance company if there is a change in the Borrower's address, non-payment of homeowner's insurance, or cancellation of homeowner's insurance policy. If the Borrower fails to maintain the required hazard insurance, the City may take out a "forced place" insurance policy to coverthe property. The City shall obtain a judgment for any amounts expended by the City and shall record a judgment lien against the property. 92 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEI�E`AD J Today's Small Town Amc,k. FLOOD INSURANCE The City of Rosemead is not located within the 100 -year flood plan and has been designated by Federal Emergency Management Agency (FEMA) as Zone C. Therefore, the Borrower is not required to provide and/or maintain Federal Insurance. PROPERTY TAXES To ensure that the Borrower remains as an owner -occupant for the life of the loan, the City will contract with a Title Company to track all real estate -related information on the home. The Title Company will notify the City if there is a change in the Borrowers mailing address or if the Borrower becomes delinquent in paying the property taxes. If the Borrower fails to maintain payment of property taxes, the City may pay the taxes current. The City shall obtain a judgment for any amounts expended by the City and shall record a judgment lien against the property. ANNUAL HOMEOWNER CERTIFICATION Each year the Borrower will be required to show proof of continued residency. The Housing Project Coordinator will mail a Self -Certification Affidavit Form to each Borrower with an outstanding loan. The Borrower will be required to deliver to the Housing Project Coordinator a completed Self -Certification Affidavit Form with an original signature and a copy of a recent utility bill (requested utility bill will alternate each year). To ensure the Participant maintains current on property taxes, the Housing Project Coordinator will also conduct an annual search on the Los Angeles County Office of the Assessors website. SUBORDINATION If the Borrower wishes to refinance any superior loans, the Borrower must submit a Request for Subordination to the City of Rosemead, Community Development Department. Subordinations will be granted only under the following conditions: 93 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E`AD k ) T.dm`' S-11 Toren America 1. No cash -out allowed. 2. No third -party debt pay-offs or debt consolidations. 3. No additional encumbrances on the property. 4. Total indebtedness secured by the property may not exceed the current market value of the property. The Community Development Director for the City will review and approve or deny the Request for Subordination and, if approved shall execute appropriate documentation as submitted by the originating party. RE -USE ACCOUNT 1. All repayments of loan principal and interest shall be received by the City and deposited into a separate reuse account maintained by the City's Department of Finance. 2. The reuse account shall be an interest-bearing account into which all earned interest shall be deposited. 3. All funds deposited into the reuse account shall be the property of the City. 4. A line item for reuse of funds will be inserted into the City's fiscal year budget allocating and approving use of funds for eligible activities. 5. All reuse funds shall be expended in accordance with the Federal Regulations and the Standard Agreement between the City and HUD. Reuse funds may be used for: a. Additional rehabilitation assistance. b. Loan processing activity delivery fees as applicable. c. Cost (up to 5% of reuse funds deposited) of loan servicing by the City. 6. The City shall allow HUD full access to the reuse account records for the purpose of determining the City's compliance with Federal regulations. 94 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T—n America DEMAND/PAYOFF Upon receiving a Notice of Demand/Pay-off, the City's Department of Finance shall calculate the amount of principal and interest due and transmit the payoff amount to the requesting party. Upon receipt of all due principal and interest, the City shall reconvey the loan's deed of trust. DEFAULT Upon receipt of a Request for Notice of Default for each lien senior to the City's loan, the City shall determine the feasibility of bringing the defaulted loan current as outlined below. FORECLOSURE BY SENIOR LIEN HOLDER In case of a foreclosure action brought by a senior lien holder, the City may elect to cancel the foreclosure proceedings by reinstating the senior lien holder if the Community Development Director for the City determines that the Borrower can, upon the City making the senior lien holder current, resume making future payments on the senior lien. All costs to bring the senior lien current shall be added to the outstanding principal of the second mortgage. If the City determines that the Borrower does not have the capacity or resources to continue to make future payments on the senior lien, the City may: 1. Pay off the senior lien in full and restructure the Borrower's debt such that the Borrower's housing costs are affordable; or 2. Reinstate the senior lien holder (pay all of Borrower's delinquent payments, late charges and fees to date) and institute foreclosure proceedings on its own behalf. All such proceedings, at the direction of the City and on the City's behalf, shall either be performed by the City or by the Trustee so named on the Borrower's loan deed of trust. 95 _ City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS ENFEAD \ I TnJav's Small Tnwn Amcrica FORECLOSURE BY THE CITY UPON DEFAULT OF BORROWER UNDER LOAN In the event of a default by Borrower under any term of the Borrower's loan deed of trust or promissory note, all principal and interest will become immediately due and payable. FAILURE TO COMPLY Failure to comply with any applicable City policy or procedures or the U.S. Department of Housing and Urban Development Federal requirements will constitute a breach of the loan agreement. Such a breach will result in the City action to recover moneys determined to have been spent on ineligible projects or activities. E. Reuse Plan All repayments of loan principal and any loan interest accrued shall be deposited to a separately maintained reuse account governed by the City of Rosemead's Department of Finance. All funds deposited into the reuse account shall be the property of the City. REUSE ACCOUNT The City of Rosemead will establish an account for funds that is separate from any other funding sources (no co -mingling of funds) and provides: 1. A tracking system to ensure reuse of funds are used for appropriate activities as described below; 2 Appropriate reporting ability; 3. Provides for timely processing; and 4. Any accrued interest earned on funds is to accrue to the Reuse Account. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual REUSE OF FUNDS Funds in the reuse account shall only be used by the City of Rosemead for: 1. Loans to individual homeowners as allowed pursuant to Program requirements; 2. A loan processing activity delivery fee, as applicable, in accordance with Program requirements; and 3. Up to 5% of funds deposited may be used towards the costs of loan servicing provided by the City of Rosemead. MONITORING The City of Rosemead will monitor the reuse account according to the most current requirements. F. Subsidy Layering HUD establishes limits on the amount of HOME funds that may be invested in affordable housing on a per-unit basis for specific areas. Before committing funds to a project that combines the use of any other local, state, or federal assistance, the City will evaluate the project to ensure that the City does not invest any more HOME funds than are necessary to provide affordable housing. PROJECT EVALUATION Each project file will contain the subsidy layering evaluation. 97 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual u COMPLIANCE ➢ The City will comply with the guidelines presented in HUD Notice CPD -98-01. These guidelines include review of the following documents from the applicant: Sources/uses of funds - As part of the application process, the City will require a sources/uses of funds statement for the project with supportive documentation. This should reflect the project development budget and should list: • All proposed sources (both private and public) of funds and the dollar amounts for each respective source; and • All uses of funds (including rehabilitation and/or construction costs, financing costs and professional fees) associated with the project. ➢ Certification of governmental assistance - The City will obtain a formal certification from the applicant as to whether additional governmental assistance will be provided to the project, and if so, what kind of assistance. ➢ Project development budget - The City will review the project development budget to determine whether the development costs are necessary and reasonable. The budget should include all costs associated with the development of the project, regardless of the funding sources. • "Reasonableness" of costs should be based on all of the following factors: (1) costs of comparable projects in the same geographical area, (2) the qualifications of the cost estimators for the various budget line items, and (3) comparable costs published by recognized industry cost index services. ➢ Proforma - The City will determine the reasonableness of the rate of return on equity investment by looking at the applicant's proforma (project income and expense statement). It should also specify the consequences of tax benefits, if any, and any other assumptions used in calculating the project cash flow. The proforma should represent, at a minimum, the term of the HOME affordability requirements, or longer if other funding sources require longer affordability terms. The subsidy guidelines will be used to determine the appropriate level of HOME funds to be used in a project absent other governmental assistance. 98 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS EIV�E`AD k ) T .Wa Small T.—America The City of Rosemead may structure HOME assistance for owner -occupied rehabilitation using any forms of assistance: I Grants; 2. Deferred -payment loans; 3. Non-interest-bearing loans; and 4. Interest-bearing loans. There are several other less common forms of financial assistance that may be used in homeowner rehabilitation programs. These forms include interest subsidies and loan guarantees. Both methods enable the City to use small amounts of HOME funds to leverage private money for rehabilitation. They include: 5. Interest subsidies: Interest subsidies, also referred to as interest reduction grants or interest rate buydowns, are similar to principal reduction grants or loans except that the HOME funds are used to" buy down" the interest rate to an affordable level. In this case, the HOME subsidy is paid directly to the lender and not provided to the homeowner. 6. Loan guarantees: Loan guarantees are another way to leverage HOME funds for homeowner rehabilitation. A loan guarantee could be used as a credit enhancement when a borrower otherwise eligible for a private loan is denied because of a real or perceived risk factor. In these cases, the City could provide a loan guarantee that would ensure payment, thus making an otherwise risky loan acceptable to a private lender. SUBSIDY LIMITS 1. Minimum HOME investment: The minimum amount of HOME funds is an average of $1,000, multiplied by the number of HOME -assisted units in the project. a. The minimum only relates to the HOME funds, and not to any other funds that might be used for project costs. _ 99 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Tarn America 2. Maximum HOME investment: The maximum per-unit HOME subsidy limit varies by PJ. HUD determines the maximum amounts, which are based on the City's Section 221(d)(3) program limits for the metropolitan area, each year. An economist in a local HUD field office can provide these limits. a. The maximum per-unit subsidy limit is: b. 100 percent of the dollar limits for a Section 221(d)(3) nonprofit sponsor, elevator -type development, indexed for base city high cost areas, and adjusted for the number of bedrooms. C. In some instances, the 221(d)(3) limit has already been increased to 210 percent of the base limit. If this is the case, HUD will allow, upon request, an increase in the per-unit subsidy amount on a program -wide basis. However, the absolute maximum subsidy limit that HUD will allow is 240 percent of the base 221(d)(3) limits. G. ELIGIBLE COSTS Under HOME, both the actual cost of rehabilitating the housing and related soft costs are eligible. Exhibit 4 lays out the specific eligible HOME costs under a homeowner rehabilitation program. HARD COSTS ➢ Meeting the rehabilitation standards ➢ Meeting applicable codes, standards and ordinances ➢ Essential improvements ➢ Energy-related improvements ➢ Lead-based paint hazard reduction* ➢ Accessibility for disabled persons ➢ Repair or replacement of major housing systems ➢ Incipient repairs and general property SOFT COSTS ➢ Financing fees ➢ Credit reports ➢ Title binders and insurance ➢ Recordation fees, transaction taxes ➢ Legal and accounting fees ➢ Appraisals ➢ Architectural/engineering fees, including specifications and job progress inspections ➢ Project costs incurred by the PJ that are directly related to a specific project 100 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD ► J Tod.,O S-11 Town An mic, improvements of a non -luxury nature ➢ Refinancing of secured existing debt if the ➢ Site improvements and utility connections housing is owner -occupied and refinancing allows the overall costs of borrower to be *Note: Lead hazard reduction costs are not reduced and the housing is made more counted as hard costs for the purposes of affordable determining the level of assistance under 24 CFR Part 35 (the Lead Safe Housing Rule). H. THE PROPERTY ELIGIBLE PROPERTYTYPES To be eligible for HOME assistance, a property must be: a. Occupied by an income -eligible homeowner; and b. The owner's principal residence. 2. The following property types maybe included under the program: a. Traditional single-family housing that is owned fee simple (this housing may contain one to four dwelling units); b. A condominium unit; c. A cooperative unit or unit in a mutual housing project (if state law recognizes these as forms of homeownership); or d. A manufactured home, including a mobile home. 3. If HOME funds are used to assist the rental units in a two- to -four -unit residence, the HOME rental requirements apply --including provisions regarding tenant occupancy, initial rent levels, and long-term affordability. 4. If HOME funds are used to rehabilitate only the owner -occupied unit in a two- to - four -unit residence, the rental housing rules do not apply. MAXIMUM PROPERTY VALUE To use HOME funds, the value of the HOME assisted property after rehabilitation must not exceed 95 percent of the median purchase price for the area, as published by HUD, or, in accordance with the Final Rule, as determined locally through market analysis. 101 _ City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E`AD T.d,,Ys Small Town America 1. Determining after -rehabilitation value: To establish project eligibility, after - rehabilitation value must be established prior to any work being performed. The after -rehabilitation value may be established by one or more of the following methods: a. Estimates of value: Estimates of value by the City or subrecipient may be used. Project files must contain the estimate of value and document the basis for the value estimates. b. Appraisals: Appraisals, whether prepared by a licensed fee appraiser or by a staff appraiser of the City, may be used. Project files must document the appraised value and the appraisal approach used. 2. Tax assessments: Tax assessments for a comparable property located in the same neighborhood may be used to establish the after -rehabilitation value if the assessment is current and accurately reflects market value after rehabilitation. DETERMINING THE 95 PERCENT OF MEDIAN PURCHASE PRICE LIMIT The Final Rule offers the City two options for determining the 95 percent of median purchase price limit for owner -occupied single-family housing. The City may either perform a: 1. A local market survey, or 2. Use the figures published by FHA for its 203(b) programs. (The national cap established by the 203(b) programs does not apply.) PROPERTY STANDARDS As with all HOME -assisted properties, properties that are rehabilitated with HOME funds must meet certain standards. The City is required to have written rehabilitation standards describing the methods and materials to be used when performing rehabilitation. All HOME -assisted rehabilitation projects must meet the City's written rehabilitation standards. 102 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T.— Amc,k., I. THE APPLICANT/BENEFICIARY PRINCIPAL RESIDENCE Loan documents or other forms of written agreement between the purchaser and the City must incorporate this requirement. Forms include: 1. Owns or has a membership in a cooperative or mutual housing project that constitutes homeownership under state law; or 2 Maintains an equivalent form of ownership approved by HUD. 3. Life estates and land contracts/ contracts for deeds are not approved by HUD as eligible forms of ownership. J. LONG-TERM AFFORDABILITY 1. There are no long-term affordability or occupancy requirements associated with rehabilitation assistance to owner -occupants. However, the City may choose to impose such requirements. 103 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual X K OTHER FEDERAL REQUIREMENTS Exhibit 5 identifies the other federal requirements that must be followed when HOME is used for rehabilitation of homeowner properties, while Exhibit 6 identifies rules on how to documents a homeowner rehabilitation program. These exhibits are meant to serve as checklists only. EXHIBIT 5 OTHER FEDERALREQUIREMENTS Other Federal Apply to Special/Issues/ Regulatory Citations and Requirements homeowner Considerations References Rehabilitation? Non -Discrimination and Equal Access Rules Fair Housing and Yes. Must ➢ 92.202 and 92.250 Equal affirmatively ➢ Title VI of Civil Rights Act of Opportunity further Fair 1964 (42 U.S.C. 2000d et. Housing. seq.) ➢ Fair Housing Act (42 U.S.C. 3601-3620) ➢ Executive Order 11063 (amended by Executive Order 12259) ➢ Age Discrimination Act of 1975, as amended (42 U.S.C. 6101) ➢ 24 CFR 5.105(a) Affirmative NO ➢ 92.251 Marketing Handicapped No. (Note: ➢ Section 504 of the Accessibility Accessibility Rehabilitation Act of 1973 improvements are (implemented at 24 CFR eligible costs.) Part 8) ➢ For multi -family buildings only, 24 CFR 100.205 (implements the Fair Housing Act) Employment and Contracting Rules Equal Yes Small projects offer ➢ Executive Order 11246 Opportunity opportunities for minority (implemented at 41 CFR Employment and resident -contractors. Part 60) 104 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Section 3 Economic Opportunity Minority/Women Employment Davis -Bacon Yes, if amount of assistance exceeds $200,000 OR contract or subcontract exceeds $100,000. Yes No Conflict of Yes Interest Debarred Yes Contractors Other Federal Requirement Environmental Reviews Flood Insurance Site and Neighborhood Standards Yes Yes, for PJs that are cities/counties. No for state programs. \[.3 Include Section 3 clause in ➢ contracts and subcontracts. Must develop procedures and include in contracts and subcontracts. Check HUD's list of debarred contractors. ➢ Neighborhood reviews may facilitate targeted programs, but individual checklist still required for each project site ➢ Special attention should be paid to flood insurance and historic requirements. Must obtain flood insurance if located in a FEMA designated 100 - year flood plain. Community must be participating in FEMA's flood insurance program. 24 CFR 893.6(b) 105 Town America Section 3 of the Housing and Urban Development Act of 1968 (implemented at 24 CFR Part 135) ➢ Executive Orders 11625, 12432 and 12138 ➢ 24 CFR 85.36(e) ➢ 92.354 ➢ Davis -Bacon Act (40 U.S.C. 276 276a-5) ➢ 24 CFR Part 70 (volunteers) ➢ Copeland Anti -Kickback Act (40 U.S.C. 276c) ➢ 92.356 ➢ 24 CFR 85.36 ➢ 24 CFR 84.42 ➢ 24 CFR Part 5 ➢ 92.352 ➢ 24 CFR Part 58.35 a(4) ➢ National Environmental Policy Act (NEPA) of 1969 ➢ Section 202 of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4106) ➢ Site and Neighborhood Standards City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small T.—America Lead -Based Paint Yes, for pre -1978 Notices to owners. ➢ 92.355 ➢ Completed application in the units. median income based on the ➢ Lead Based Paint Poisoning upcoming 12 months. ➢ Paint testing of Prevention Act of 1971 (42 ➢ Income is defined by one of statements, interest statements) in surfaces to be U.S.C. 4821 et.seq.) the project file. disturbed. ➢ 24 CFR Part 35 Census long form; or adjusted ➢ Risk assessment, if ➢ 982.401 (j) (except gross income under IRS Form applicable, based on paragraph 982.401(j)(1)(i)) level of rehabilitation assistance. ➢ Safe work practices and clearance. ➢ Provisions included in all contracts and subcontracts. Relocation Yes Relocation is required if ➢ 92.353 tenants are living in the ➢ Uniform Relocation other units. Relocation is Assistance and Real not required for owner- Property Acquisition occupied units. Policies Act of 1970 (URA) (42 U.S.C. 4201-4655) ➢ 49 CFR Part 24 ➢ 24 CFR Part 42 (subpart B) ➢ Section 104(d) "Barney Frank Amendments" EXHIBIT 6 SUMMARY OF HOMEOWNER REHABILITATION RULES AND HOW TO DOCUMENT Key HOME Requirement Documentation Eligible Participants Owner Income ➢ Gross income <80 percent of ➢ Completed application in the median income based on the project file. upcoming 12 months. ➢ Source documentation (wage ➢ Income is defined by one of statements, interest statements) in three options: Section 8 annual the project file. income; annual income under Census long form; or adjusted gross income under IRS Form 1040. 106 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual U Owner Occupancy ➢ Applicant must occupy unit as ➢ Client must sign a clause on the his/her principal residence. application form certifying that the property is the principal residence. Ownership of ➢ Applicant must have ownership ➢ Title check documentation in of the property through: project file. ■ Free simple title, ➢ Copy of deed or other ownership ■ 99 -year leasehold interest document in the project file. (50 years on trust or restricted Indian lands), or ■ Ownership/membership in a cooperative or mutual housing project. Eligible Property Property Type ➢ Eligible property types include: ➢ If two -to -four units, indicate status ■ One -to -four -unit property; of non -owner -occupied units in the ■ Condominium unit; application. ■ Cooperative or mutual ➢ If non -owner units were assisted housing unit, if recognized with HOME funds, provide by state law; or agreement with homeowner ■ Manufactured or mobile regarding rental requirements and home. reference to the property's rental monitoring file. Property Location ➢ Property must be located within ➢ Application should include address geographic area of the PJ. in PJ's geographic area. HOME Minimum ➢ A minimum of $1,000 in HOME ➢ Maintain records in project file funds must be invested in each demonstrating that the per-unit assisted unit. HOME investment exceeded ➢ The maximum per-unit subsidy $1,000. limit is determined by HUD. ➢ Maintain records in the project file indicated total HOME subsidy did not exceed maximums provided by HUD. Property Value ➢ After -rehabilitation value must ➢ If using local value limits, not exceed 95 percent of the document data used to determine area median purchase price. limits as well as evidence of HUD ➢ Use 203(b) limits; OR approval in the program file. ➢ Establish local limits and obtain ➢ Document method for HUD approval determining value in the project file. ➢ Copy of value estimate held in project file. 107 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town America Eligible• • • • Property Standards ➢ Property must meet PJ's ➢ Document local code or model code written rehabilitation used in program files standards. • Property must ➢ Maintain written rehabilitation meet applicable codes (state or standards in program files. local codes/standards or one of ➢ Include inspection report or three nationally accepted certification by inspector in project codes/standards). file. ➢ Keep inspection checklist and work write-up in project file. Eligible Activities ➢ Rehabilitation, reconstruction. ➢ Document all expenditures. E City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual I PART II: PROGRAM DESIGN AND IMPLEMENTATION A. OBJECTIVES The City of Rosemead receives an annual allocation of HOME funds from the U.S. Department of Housing and Urban Development (HUD). HOME funds are designed to provide or preserve affordable housing for families at or below eighty (80 percent) percent of the Area Median Income ("AMI"). The City is included in the Los Angeles Metropolitan Statistical Area ("LA MSA"). Under the HOME Program, the City of Rosemead has elected to design and implement a homeowner rehabilitation program referred to as the HOME Housing Rehabilitation and Preservation Program (HRPP). This program is designed to meet the following objectives: 1. Implement a City-wide program designed to serve very low- and low-income households, 2. Provide a valuable service to qualified homeowners and residents, 3. Preserve existing single-family homes, either detached, or attached, within the City limits. B. GOALS The City's HRPP goals include: 1. Utilizing project selection criteria to establish criteria for determining which projects are chosen (i.e., the level of needed repair or ability of the owner to leverage other funds). 2. Assertively marketing the HRPP to ensure the program information is widely and fairly distributed. 109 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual u CHAPTERS DOWN PAYMENT ASSISTANCE LOAN A. Program Goals In general, neighborhoods containing a high proportion of owner -occupied properties remain more economically stable and more physically attractive than comparable neighborhoods with a higher percentage of investor-owned housing. The pride of ownership evident among many owner -occupants can maintain or increase neighborhood property values, provide for long term stability, and enhance the local property tax base. Homeowners' long-term commitment to a "home" and to the neighborhood can also result in lower subsequent public expenditures for property rehabilitation. Affordable homeownership provides benefits to low and moderate -income families as well as to the communities in which they live. The goals of the Program are: • To encourage home ownership and increase the number of owner -occupied single- family properties in the community; • To preserve and promote decent affordable housing opportunities within the community; • To provide working individuals and families with the opportunity to become homeowners; • To facilitate the resale of existing housing; • To provide affordable opportunities for homeownership; • To beautify neighborhoods; • To make neighborhoods safe; and • To instill neighborhood pride. B. Second Mortgage Loan The City's loan will be a "silent -second" lien, subordinate to the Lender's first lien. There is a decreasing interest charged on the City's second mortgage loan and the loan payments are deferred until the sale, transfer, refinancing of the house (subject to staff review), the owner ceases to occupy the home, or year 30. At no time will the loan terms exceed 30 years. The loan is neither transferable nor assumable. Each borrower will execute on behalf of the City, a Promissory Note secured by a Deed of Trust on the property purchased. 110 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual C. Fair Housing Policy The City and other entities acting on behalf of the City in the administration of this Program will not discriminate against any Participant for a loan. The City will also urge Participants to examine all housing opportunities throughout the City. D. Public Information Program The City will provide information to the public on the Program. Some of the available resources are: • Public notice • Press release • City website • Advertisements in local newspapers • Notification to local Board of Realtors • Meetings with local brokers (as requested) • Community meetings, home -buyer fairs, and seminars • Meetings with residents of lower income census tracts The following information will be provided during the course of these activities: • Objectives of the Program • Terms of the financial assistance • Eligibility criteria • Income limits • Other information helpful to the first-time homebuyer E. Determining Property Value The process for determining the property value for a HOME -assisted property for a new homebuyer is as follows: • An appraisal performed by a licensed fee appraiser. Sales price must not exceed 95% of the area median purchase price as established by HUD; and Establish local limits and obtain HUD approval. F. Disclosure of Voluntary Sale Notice A description of the Disclosure of Voluntary Sale Notice (Exhibit E), which contains the items listed below provided to the seller prior to making the purchase offer, as follows: 111 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E`AD J Today's Small Tm%n America • The purchaser has no power of eminent domain and therefore will not acquire the property if negotiations fail to result in an amicable agreement. • An estimate of the fair market value of the property. • That the property is owner -occupied or purchased by an existingtenant. • If an acquisition notice will not be provided prior to the purchase offer, a provision that the seller may withdraw from the agreement after this information is provided. G. Lead -Based Paint Environmental requirement for special issues/consideration and regulatory citations and references for pre -1978 units, as follows: Notices to purchasers and tenants Visual assessment must be performed Paint stabilization must be completed (if applicable) Safe work practices and clearance Compliance with Title 24 CFR 92.355 Lead -Based Paint Poisoning Prevention Act of 1971 (42 U.S.C. 4821 et.seq.) • 24 CFR Part 35 982.401(j) (except paragraph 982.401(j)(1)(i)) H. Double -Dipping No additional HOME funds maybe provided to a HOME -assisted project during the relevant period of affordability, except that: • A homebuyer may be assisted with HOME funds to acquire a unit that was previously assisted with HOME funds. I. Program Administration Requests for assistance and program inquiries will be handled by the Community Development Department. The Management Analyst will manage day-to-day activities of the Program and will assist the Participant with the Program. The Management Analyst will be under the direction of the Community Development Director. This allows a single source of contact with the public and lenders. The Management Analyst will conduct outreach to households within the City and to all City employees (with the exception of any governing body of the City, or any staff member who exercises any functions or responsibility in connection with the administration of the Program) 112 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEMP h, / Today's Small Toren to make potential homebuyers aware of the Program, as well as to local real estate agents and brokers. This outreach will be in the form of published notices and printed brochures, meetings, and other forms of outreach. Participation in the Program will be on a first come, first served basis, within Program preferences. Once potential buyers submit applications for assistance, staff will conduct the screening and selection process. This five-step process includes: 1) determination of the eligibility; 2) determination of priority status of the Participant if several applications are pending; 3) qualification by the lender for the first trust deed loan; 4) eligibility of the property; and 5) execution of the first and second trust deed loans. J. Program Guidelines LOCATION OF PROGRAM ACTIVITY The Program will apply to the entire City of Rosemead. ELIGIBLE PARTICIPANTS The Program is limited to first-time homebuyers, as defined herein, who will occupy the property as their principal residence and who are below 80% of area median income. INCOME LIMITS In orderto qualifyforthe Program, a Participant's total combined gross household income cannot exceed 80% of area median income adjusted for family size. The maximum income a household may earn to qualify for Program participation is established and published by HUD annually. INCOME DEFINED In general, annual income is the gross amount of income anticipated to be received by household members eighteen (18) year and older during the twelve (12) months following the effective date of loan approval. Anticipated income is generally determined by annualizing current income. Current income determination is based on the projected income of all household members over the age of 18 for the last six months. Annual income will be determined using federal Section 8 guidelines as required by the HOME program. 113 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEME`AD ► J T,,d,Y's Sm 11 T,.w,,Amen., FIRST TIME HOMEBUYER Based on applicable Federal and State regulations, in order to qualify for the Program, a Participant must meet the following requirements: (i) The Participant(s) may not have held an ownership interest in a principal residence within the past three years. The Participant applying for a Program loan cannot have had interest in a home or have had an outstanding debt on a home within the last three-year period ending on the date the mortgage is executed. This requirement qualifies the borrower as a "first-time homebuyer" under Federal law. In general, household(s) (which includes anyone who will be living in the home regardless of relationship) who do not own a home at the time of application; and have not owned a home, held interest in a home, or have an outstanding debt on a home within the last three years from the date of the application can qualify. To be eligible, the combined income of the household (again, anyone who will be living in the home regardless of relationship) must not exceed the limits as set by the U.S. Department of Housing and Urban Development and no member of the household may currently own any residential property. In addition, the applicant(s) (who will be listed on the deed) must have been employed in the same line of work for at least 24 months; have a good, established credit history and be approved for credit by a participating lender; and be either a U.S. Citizen, or have obtained legal permanent residency immigration status. (ii) Exceptions to the three (3) year time period shall be those listed under the definitions section of the HOME Regulations. The Participant must present an affidavit to the effect that the Participant had no ownership interest in a principal residence at any time during the three-year period prior to the date on which the mortgage relating to the Program Loan is executed. To demonstrate compliance with this three-year requirement, the Participant must complete and sign the Program affidavit and provide copies of their last three (3) years signed, state and federal tax returns (or acceptable alternative exhibits as noted below). This information will be verified by City staff through an acceptable real estate record/database search. Exceptions to the rule include property lost as a result of divorce, where the Participant was unable to retain ownership of the property. (iii) The Participant must submit with the application to the City, a signed 1040A, 1040EZ, or 1040 federal income tax returns for the three preceding years with all schedules which demonstrate that no deductions were taken for mortgage interest or real estate taxes for a principal residence. If the Participant filed the 1040 Long Form and cannot produce an original copy of the signed tax returns, the Participant can request a copy of the returns from the IRS by using IRS Request Form 4506. The Participant should allow approximately 45 days for receipt of copies from the IRS. (iv) If the Participant has filed the short form 1040A or 1040EZ for the last three (3) years, completed and signed the required affidavits, but is unable to produce the 114 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 'OS EMEAD L ) To Jay's Small T.—A—do signed returns, the City will accept a letter from the IRS verifying the filing status of the Participant. The letter should confirm that the Participant filed the 1040A or 1040EZ for the years in question. The Participant can request tax account information, which is available free of charge, from the local IRS office. This information will be provided on IRS Letter Form 1722 and will include: (1) name and social security number; (2) type of return filed; (3) marital status; (4) tax shown on return; (5) adjusted gross income; (6) taxable income; (7) self- employment tax; and (8) number of exemptions. If the address on the tax returns filed is different from the current address, the Participant should also provide a handwritten note (signed by all Participants) indicating that the previous returns had been filed at a different address. Note: The tax account information should be requested, in person, from the IRS office. The Participant can expect a written reply within, (15) fifteen days. The tax returns must have an original signature certifying, "They are a true and exact copy of the returns submitted to IRS". In the event the Participant was not obligated to file Federal income tax returns for any of the preceding three (3) years, it will be necessary for the Participant to provide a completed and signed Income Tax Affidavit. This will be required in place of above, along with the other Program Affidavits. This document is to be presented to the City with the Application Affidavit. The Income Tax Affidavit must be accompanied by documented proof of the reason for not filing tax returns. For example, if the Participant were in school, a copy of transcripts to support the status of the Participant for that period of time would be required. The affidavit must also be accompanied by documented proof that the Participant was a renter during the specified period (i.e., a notarized letter from the landlord or manager, rental/lease agreement, canceled checks, rent receipts, or other acceptable methods of verification). (v) When a Program application is submitted during the period between January 1 and April 15 and the Participant has not yet filed their Federal income tax return for the preceding year with the IRS, the City may, with respect to such year, rely on an affidavit of the Participant that the Participant is not entitled to claim deductions for taxes or interest on indebtedness with respect to property constituting their principal residence for the preceding calendar year. The affidavit must be forwarded to the City with the submission package. (vi) Notwithstanding the above, at the discretion of the City, this requirement may be modified or waived in order to allow households meeting all other eligibility criteria to participate in the Program. Special circumstances will be documented, and consideration given to households that have sold or transferred an ownership interest, because of death or illness of spouse or dissolution of marriage, job- related relocation, or other significant reasons. 115 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEME'AD � ) TodaY's Sm, II Town Anlcrica RESIDENCY PREFERENCE Preference will be given in the Program for Participants who live and/or work within the City of Rosemead. MAXIMUM LIQUID ASSETS The Participant's liquid assets at the close of escrow cannot exceed the sum of (i) the portion of the down payment to be paid from Participant's personal funds; (ii) the portion of the closing costs to be paid from the Participant's personal funds; (iii) an amount equal to six months' payments of principal and interest on the first trust deed, and (iv) an emergency allowance of $10,000. K Eligible Properties Only properties that will serve as the principal residence of the purchaser can be used in this Program. This includes: • Single-family homes (one unit); and • Condominium/Town Home units (in a single-family or multifamily building). The dwelling unit purchased must be located within the City of Rosemead. The cost of the property cannot exceed 95% of the area median purchase price as established by the HUD approved Rosemead local market survey median price. An independent third -party inspector, at buyer or seller's expense, must inspect all properties. The condition of the property as reported by such inspector must satisfy the standards established by the institutional lender funding the first trust deed loan. Any serious code violations or other health and safety deficiencies reported by such inspector must be corrected as a condition precedent to funding the Program assistance. A copy of the inspection report must be provided to the City. 11 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small T.— America L. Affordable Housing Costs "Housing Costs" are defined as the estimated monthly cost for housing -related expenses for a twelve (12) month period. In calculating housing costs, all the following expenses associated with the financing and maintenance of the home shall be included: • Principal and interest on a mortgage loan including any rehabilitation loans, and any loan insurance fees; • Property taxes and assessments; • Fire and casualty insurance covering replacement value of property improvements; • A reasonable allowance for utilities (Utility allowances are provided by the County of Los Angeles and are updated annually.); and • Homeowners Association fees. Housing cost limitations vary depending on the income level of the Participant. Housing cost limitations will be determined on an individual basis in accordance with program requirements. Subsidy Layering HUD establishes limits on the amount of HOME funds that may be invested in affordable housing on a per-unit basis for specific areas. Before committing funds to a project that combines the use of any other local, state, or federal assistance, the City will evaluate the project to ensure that the City does not invest any more HOME funds than are necessary to provide affordable housing. Project Evaluation Each project file will contain the subsidy layering evaluation. 117 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 1-J M. Occupancy Standards Small T.— Amc,k,, The dwelling unit must be used as the principal residence of the Participant and Participant's family and for no other purpose. The maximum occupancy of the dwelling unit shall not exceed two persons per bedroom plus one. N. Covenants and Restrictions Maintenance, criminal activity, and affordability covenants are required as a condition of Down Payment Assistance Loan Program participation. It is required that these covenants or restrictions be recorded in the office of the county recorder for each parcel or unit of real property subject to these covenants. MAINTENANCE COVENANT A maintenance covenant is a promise to maintain the property and improvements in a reasonable manner and consistent with community standards which will uphold the value of the property. CRIMINAL ACTIVITY COVENANT A criminal activity covenant is a promise to keep the property free from drug-related activities or from other felonious criminal activity or public nuisance. AFFORDABILITY COVENANT An affordability covenant is a promise to maintain ownership of the property for a specified period of time. 1 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEME`AD Today's Small Town Amcrira RESIDENTIAL OVERCROWDING RESTRICTION A restriction against residential overcrowding will be required as a condition of participation in the Program. Single-family and owner -occupied residences are housing units intended and used for occupancy by one household. A household as defined by the Program must occupy the housing unit. TIME PERIODS REQUIRED FOR COVENANTS The maintenance and criminal covenants do not expire until the City loan is repaid in full. The affordability covenant is in effect for the earlier of: 1) fifteen years; or 2) upon sale of the home. LOAN REPAYMENT TERMS While the goal of the Program is to encourage long-term homeownership, the City recognizes that in some instances a Participant may wish to sell his or her home. Under the Program, there are no restrictions on the amount the home may be sold for after the expiration of the fifteen -year affordability covenant. However, if the Participant wishes to sell his or her property, the Participant must repay all outstanding principal and interest on the City loan under the following formula: 0-2 years 5.0% 2 years and 1 day 4.5% 3 years and 1 day 4.0% 4 years and 1 day 3.5% 5 years and 1 day 3.0% 6 years and 1 day 2.5% 7 years and 1 day 2.0% 8 years and 1 day 1.5% 9 years and 1 day 1.0% 10 years 0.5% 10 years and 1 day 0% The "Program Loan" is the amount of the loan provided by the City to the Participant pursuant to the Program. 119 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Town America The "Purchase Price" is the original purchase price paid by the Participant to the seller for the seller's interest in the property excluding escrow fees, title insurance costs, broker's commission, and loan fees of any other closing or transaction costs. EQUITY SHARE PROGRAM While the goal of the Program is to encourage long-term homeownership, the Corporation recognizes that in some instances a Participant may wish to sell their home to a non-qualified buyer at a price, which does not comply with the terms of the affordability covenant. The Corporation can release the affordability covenant and permit the resale of the property at a cost higher than permitted under the affordability covenant only pursuant to an adopted program that protects the Corporation's investment. Under the Program, there are no restrictions on the amount the home may be sold for after the expiration of the fifteen -year affordability covenant. However, if the Participant wishes to sell his or her property free and clear of all restrictive covenants, the participant must repay all outstanding principal and interest on the Corporation loan and must agree to pay the Corporation a share of any appreciation realized upon sale of the property pursuant to the following equity sharing formula: Corporation Equity Share equals (Program Loan / (Purchase Price + Qualified Capital Improvements) x Total Appreciation The "Program Loan" is the amount of the loan provided by the Corporation to the Participant pursuant to the Program. The "Purchase Price" is the original purchase price paid by the Participant to the seller for the seller's interest in the property excluding escrow fees, title insurance costs, broker's commission, and loan fees of any other closing or transaction costs. "Qualified Capital Improvements" is the total cost of verifiable major capital improvements (not to include maintenance projects such as plumbing repairs etc.) to the Property in excess of Two Thousand Five Hundred Dollars ($2,500) made while the Participant owned and occupied the property. "Total Appreciation" is the amount equal to the price to be paid by the non-qualified buyer to the Participant for the Participant's interest in the property less the sum of the original Purchase Price and Qualified Capital Improvements excluding escrow fees, title insurance costs, broker's commissions, loan fees or any other closing or transaction costs. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Tmvn America COMPLIANCE MONITORING Participants receiving assistance will be required to demonstrate at least annually that the household is owner -occupied. EXCEPTION: Participant may request a temporary waiver of the principal residence requirement in situations involving extreme hardship, such as the property owner temporarily placed in a nursing home. The waiver request shall be submitted to the Community Development Director or like, at which time a decision will be rendered within eight (8) business days. O. Participation Priorities Households currently living or working in the City of Rosemead, who qualify to participate in the Program, shall be given priority status during the application intake and the loan approval processes. P. Financing Households financing the purchase of a qualified unit must meet the financing criteria set forth below. FIRST DEED OF TRUST In order to finance a home under this Program, Participants must obtain a mortgage loan secured by a First Trust Deed from a private lending institution. Any institutional lenders approved by the State of California and the Fannie Mae Community Seconds Program may participate in the Program. The financial criteria used by the private lender may be different and possibly more stringent than that used by the City. Default in payments on the first mortgage will also cause a default in the second trust deed loan and may result in foreclosure. The City is not required to approve any financing that cannot be demonstrated to be at fair market lending rates in the City's sole and exclusive discretion. SECOND DEED OF TRUST While the first mortgage loan is obtained from a private lender, with conventional terms of financing, the second mortgage is provided by the City under the following terms: City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual CFA Sn,all T.— America Terms of • Payment Assistance Loan 1. Maximum The amount required to make the home purchase affordable, not to assistance exceed $70,000. 2. Interest rate Declines per year of ownership of home on .5% rate 3. Down payment A minimum of three percent (3%) of the sales price excluding closing costs. 4. Loan to Value Total encumbrances (the sum of the first lien and the City Loan) may not exceed ninety-seven percent (97%) of the current fair market value of the property as determined by the private lender's appraisal. 5. Security Subordinated second trust deed. 6. Back -End Ratio Back -end housing cost ratio of not more than 55%. This is a ratio that indicates what portion of a person's monthly income goes toward paying debts. Total monthly debt includes expenses such as mortgage payments (made up of PITI), Homeowner Association fees (HOA), credit card payments, child support, loan payments, etc. Back -End Ration=Total Monthly Debt Expense Gross Monthly Income 7. Term of Loan Payments of the principal (interest and equity share as applicable) are due upon sale, transfer, or maturity of loan (30 -year term). If the property is refinanced to take out equity, it is no longer occupied by the owner, or the owner is in violation of any restrictive covenant, the loan will become immediately due and payable. 8. Main Covenants Affordability covenant is in affect for 15 years, criminal activity and maintenance covenants are in affect for the life of the City -funded loan. 9. Payments Participant must maintain current payments on the first deed of trust, property taxes, HOA fees, and hazard insurance. PROHIBITION OF CO -SIGNORS There will be no co-signing for the City loan by non -Participants. All Participants and co - Participants shall meet all the eligibility requirements for a City loan. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town America PROHIBITION OF ADDITIONAL DEEDS OF TRUST Without the consent in writing of the City, the property cannot be used to secure a debt other than the first mortgage held by a private lender and the second lien held by the City. INSURANCE The City requires that the Participant, during the term of the Loan, maintain an all-risk property insurance policy insuring the property in an amount equal to the full replacement value of the structures on the property. The City shall be named as a beneficiary on all insurance policies and shall be notified of modifications or cancellations of insurance coverage. The City will obtain Loss Payable Endorsements to said policies. Any certificate of insurance must be, in form and content and with insurance companies, approved by the City. USE OF PROCEEDS The proceeds of the City's loan will be used as down payment assistance in order to provide a total down payment not to exceed 25% (Participant and City contribution combined), thereby making the property affordable to a lower income purchaser. Escrow closing costs may also be included as a part of the loan, inclusive of non-recurring acquisition costs, if the full assistance contribution by the City can be recorded as a lien against the property. Q. Amendments These guidelines may be changed in the future by action of the City staff for programmatic reasons or to make certain technical changes as the Program is implemented due to regulatory changes applying to lenders participating in the Program, government requirements, or loan guarantee entities such as FHA (i.e. annual changes to income limits and purchase price limits). 123 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Torn R Educational Services ABOUT THE EDUCATIONAL PROGRAM The City understands that the success of the Program depends on the ability to clearly communicate the benefits of responsible homeownership. For this reason, Participants must attend and complete one of the many education programs available, that focus on the needs of homeowners as part of participation in this Program. All Participants must complete a homeownership class offered by the First Trust Deed lender. REFERRAL SERVICES The Community Development Department will maintain a list of agencies that provide housing - related services to homeowners. Information regarding the Community Reinvestment Act, Fair Housing Foundation, code enforcement, and graffiti removal programs are some examples of the information that will be available through the Program. S. Program Procedures INITIATION AND SUBMISSION The City announces the initiation of the Down Payment Assistance Loan Program and conducts outreach to all households within the City. The Program is to be used in conjunction with conventional mortgage loan application procedures. The processing procedures minimize the administrative burdens of Program implementation and complements the processing procedures in place at most mortgage lending institutions. Upon commencement of the application process, interested persons will be required to complete and submit all the required information contained in the application packet to qualify for the Program. The following outline sets forth the general responsibilities, procedures, and sequence of events for the Program. 1. Application Phase a. Participant submits an application with the City. The application phase will allow the City to determine eligibility of the Participant and to explain the Program. b. City determines if Participant is an eligible candidate for the Program, based on indications of income, prior home ownership, tax liability and other factors. Participant is notified of eligibility. 124 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Toren America Participants are requested to carefully read this Program and Procedure Manual and will be required to sign a statement on the application to acknowledge that: he/she has read the Manual and based on the requirements hereof believes that he/she is eligible for a City Loan. In the event assistance is awarded, applicant shall comply with the procedures and requirements set forth herein. Each application must be completed in its entirety, including signature(s) of all borrowers, and submitted together with all the required documentation to be considered complete and eligible for review by City staff. All complete applications will be date stamped when received. Incomplete applications will not be processed until all requested information is submitted. The Participant shall submit all documentation required for a complete application, including the following: • Authorization for Release of Information (as needed). • Such other documentation as may be requested by City staff. Applications will be reviewed in a two-step process. Applications from households currently living or working in the City of Rosemead and from employees of the City will be reviewed first in the order in which they are received. Following the review of the priority applications, all other applications will be reviewed in the order in which they are received. The City will maintain a waiting list for all prospective clients. Unqualified Participants shall be notified by letter of their ineligible status. Within the time frame established for the application process, application packets are submitted for review and screening. Failure by Participants to comply with application procedures will result in disqualification. The qualification of an application shall not be final and the rights to a Down Payment Assistance Loan shall not vest until the Participant and the City, or its authorized designee, have executed a Loan Agreement and related loan documents and escrow has closed. 2. Lender Phase a. Participant selects Lender. b. Lender provides Participant with brochures and other materials, which explain the mortgage programs and contain consumer information. C The Lender is required to certify that the Participant has completed a HUD approved Home Buyer Education Seminar. 125 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual C Small T.— America Under Fannie Mae's Guidelines and HOME regulations, a prospective homebuyer is required to attend a homebuyer's counseling session, as part of the approval process. The counseling sessions will present information on homeownership topics such as: • Preparing for homeownership -- identifying what the Participant wants and needs in a home and determining what the Participant can afford to spend. • Shopping for a home -- size requirements, how a real estate agent can help, house evaluation, submitting an offer, and the professional home inspection process. • Obtaining a mortgage -- discussion of loan terms, loan processing. • Closing -- title insurance, termite inspection, estimate of closing costs, advance payments, understanding the obligation, procedures for the formal loan closing. • Life as a homeowner -- identifying the basic steps to ensure home safety, maintenance, and setting a household budget. d. Lender determines the appropriate Program Loan limit and ensures that the Participant understands the appropriate home cost for their available income. e. Participant finds an eligible dwelling, enters into a purchase contract and returns to the Lender and applies for a mortgage loan. f. The City verifies that the Participant's selected eligible dwelling and the proposed mortgage transaction comply with Program restrictions on type, purchase price, and other Program terms. g. As part of the mortgage application process, the Participant must certify the following (Exhibit G): (i) Certification that residence will be used as principal residence throughout the affordability period and that the Participant must notify the City and the Lender when the home ceases being the principal residence of the Program Participant. (ii) Certification that Participant has not had an ownership interest in a property during preceding 3 -year period. (iii) Certification that the purchase price does not exceed purchase price limits. (iv) Certification that the mortgage loan does not relate to the acquisition or replacement of an existing mortgage. (v) Certification that the loan applied for does not constitute a prohibited mortgage. (vi) Certification that the Participant was not forced to apply through a specific lender. (vii) Certification that Participant's income does not exceed permitted income limits. (viii) Certification that no interest with respect to the mortgage loan is being paid to a related person. (ix) Certification that the Program cannot be transferred. (x) Acknowledgment that any material misstatement or fraud is made under penalty of perjury. (xi) Tenant Displacement Restrictions: The City will not pay relocation expenses for a tenant. The property to be purchased is to be either: new construction (never occupied), currently occupied by the seller, vacant, or occupied by the borrower as a tenant purchasing the property. 126 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual x 3. Commitment Phase Small Town Anuflo a. Lender prepares an Initial Reservation Request and transmits to the City for review and confirmation. In addition, the Lender shall transmit information on the home to be purchased. The City shall obtain a copy of the Participant's credit report. b. City reviews the Initial Reservation Request as submitted by the Lender and, if in order, completes the bottom portion of the Form and transmits same back to the Lender confirming a Program reservation of funds. C The Management Analyst to arrange an onsite inspection of the property to determine that the property meets all City Health and Safety Codes and Standards, and HUD's Housing Quality Standards (HQS) and lead based paint standards. The City's Inspection Report is submitted to both the Participant and Lender. Any nonstandard items noted on the report will require repair/ replacement prior to final approval and funding of the First -Time Homebuyer loan to the Participant, who may use the report in their negotiations with the seller. d. The Participant must also contract with a Certified Home Inspector to provide a pre- purchase inspection based on industry practices. A copy of the resulting report must be delivered to the City. Items found deficient in the Home Inspectors report may also be considered in the final determination of eligibility of this home for funding by the City. e. An appraisal of the property must be made, and a copy of the resulting report delivered to the City. The appraisal must be prepared by a licensed real estate appraiser according to the standards set by FNMA, FHIMC, FHA, VA, and/or underwriting guidelines. f. The above items A — E must be accomplished within the Participant's period of discovery and must be delivered to the City with a minimum two business days before the end of the discovery period (Note: The City is closed every Friday and City business days are Monday through Thursday). After the City has confirmed the Program reservation, the Lender performs their standard verification and underwriting procedures. h. In conjunction with Lender's regular verification process and under the agreement with the City, the Lender performs a reasonable investigation to verify that all Program requirements with respect to the borrower, the home, and the mortgage transaction have been satisfied. Lender may verify these facts in any reasonable, efficient manner, according to standard industry practices for processing mortgage loan applications. i. Lender performs standard mortgage loan underwriting procedures, taking into consideration the effect of the Program Loan when determining the net amount of the monthly housing payment. Lender determines acceptability of the loan in accordance with applicable FNMA, FHIMC, FHA, VA, and/or underwritingguidelines. 127 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD ► ) TnAay i Snrell Town A.—ki, j. During the commitment phase, Lender must immediately notify the City in writing of cancellations of reservations or commitments. The reason(s) for cancellation must be clearly stated. 4. Final Approval Phase a. Lender submits a final approval package to the City. The final approval package must contain the following documentation: a copy of Purchase Contract, a copy of the preliminary closing statement, and estimated date of close of escrow and title vesting information. The City requires a minimum of 30 days' notice and processing time prior to the date of the close of escrow. b. Upon receipt of the final approval package from the Lender, the City will confirm that the Program Reservation is still active and has not expired. If the reservation has expired, the Lender must request an extension for an additional (30) days. C The City reviews the Program Final Approval package for completeness and determines whether all necessary documents are included and properly executed. d. If the City determines the Program Final Approval Package has been completed properly and that the Participant(s), the home and the overall transaction are in compliance with Program provisions, the City will issue a Program Final Approval Letter to the Lender stating that the Application is approved and indicating that the City is prepared to issue a Program loan upon confirmation of the mortgage closing, so long as there are no material changes from the time of this review. The City retains a complete copy of the Final Approval package. e. The City will prepare and deliver a request for payment to the City's Finance Department. The check will be delivered to escrow once issued. 5. Closing Phase a. The Lender confirms that the Program Commitment is still active and has not expired. b. Lender notifies the City of approval of loan application and forwards all loan and Program materials to selected Escrow officer with instructions for closing the loan. Closing Affidavit is to be signed at closing by the Participant(s) and returned by the Escrow Officer to the City at close of escrow. C The City prepares Program second mortgage loan documents. d. The City will have the Participant sign the Program Loan documents. e. The City will execute the Program documents. All Program funding and documents will be transmitted to Escrow for recording at the same time as the first mortgage deed of trust. f. At the close of escrow Lender forwards to the City, documentation indicating that the loan has closed, including: (i) Photocopies of all executed documents forwarded for recording. (ii) Lender's Closing Certificate (FHP -5) certifying that there have been no material changes that would disqualify Participant from Program. 128 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small T.—An ka (iii) Photocopies of all executed primary lender documents conforming to program requirements. (iv) Hazard Insurance endorsement of coverage indicating City added as a loss payee. Staff provides new applicant(s) with a list of important phone numbers of departments and services for local government, emergency, and utilities. 6. Processing As a goal, processing time from the date the City determines that the Participant is eligible for assistance under the Program until a loan is approved or denied shall be a maximum of sixty (60) days. 1. Notice of Default Upon receipt of a Request for Notice of Default for any lien, senior to the City's loan, the City shall determine the feasibility of bringing the defaulted loan current as outlined below. 2. Lender shall, upon receipt, provide City with any Notice of Default on taxes and Hazard Insurance City shall be named as a beneficiary on hazard insurance policies and shall be notified of modifications or cancellations of insurance coverage. RESALE, REFINANCING, AND SUBORDINATION 1. Property shall not be sold for less than the sum of the existing liens and encumbrances, including property tax liability, without the express written consent of the City. 2. Refinancing of the first position loan shall not be allowed. RECAPTURE GUIDELINES HUD regulations require the City to establish guidelines for the recapture of funds invested for down payment and closing cost assistance. The City limits the amount to be recaptured to the net proceeds available from the sale. Net proceeds are the price of the house minus commissions, closing costs, costs of any repairs and inspections that may need to be undertaken, and realtor's charges. This limitation applies to all units regardless of the nature of the sale (voluntary sales including short sales, and involuntary sales including foreclosures). The City will implement the following recapture guidelines: a. Recapture of funds will be required upon the following: (i) Sale or transfer of any kind (excluding those related to the dissolution of marriage or death of a spouse when both parties were originally on the deed of trust). 129 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEMEAD L J Today's Small Town America (ii) When the residence ceases to be used as the primary residence; (iii) Upon the leasing or renting of the property; (iv) Unapproved refinancing of the property; or, (v) Failure to maintain the property in a decent, safe and sanitary condition. b. Recapture of funds will be required during and after the term of affordability has been met. The recapture period takes place at the time of sale, refinances, leases, or when the homeowner ceases to reside in the property, whichever comes first. C The funds subject to recapture include all funds advanced in connection with the City's First -Time Homebuyer assistance. d. In transactions where there are sufficient funds from the net proceeds of the sale, the City will recapture the entire amount of funds invested. e. If there are not sufficient funds from the net proceeds to recapture the entire amount of City and homeowner funds invested in the property, the City may allow the amount of funds subject to recapture to be reduced, subject to the City's analysis of the pertinent transaction details. f. All recaptured funds will be returned to the City's Program. T. Other Programmatic Requirements VIOLATIONS AND PENALTIES The City shall demand full repayment of the principal and interest on the loan if the borrower willfully and knowingly made a false statement or representation, or knowingly fails to disclose a material fact for the purpose of qualifying for the program, or, in completing certifications, affidavits, or re -certification documents. BONUS, COMMISSION OR FEE The Participant shall not pay any bonus, commission or fee, for the purpose of obtaining approval of the City loan application, or for any other approval or concurrence required by the City. CONFLICT OF INTEREST No Down Payment Assistance Loan will be granted to any member of the governing body of the City, nor any designee of the City, nor to any staff member who exercises any functions or responsibilities in connection with the administration of the Program; no member of the above stated organizations shall have any interest, direct or indirect, in the proceeds from the Down 30 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS ENVEAD �4 Tnd. Small Tmm America Payment Assistance Loan or in any contract entered into by the Participant for the performance of the work financed, in whole or in part, with the proceeds of the loan. EQUAL OPPORTUNITY POLICY In accordance with federal requirements, the City shall not discriminate upon the basis of sex, age, race, creed, color, religion, national origin, marital status, ancestry, or physical handicap in accepting applications and processing City loans. FIRE AND FLOOD INSURANCE REQUIREMENTS Participants are obligated to carry sufficient fire insurance coverage (and flood insurance where applicable) on the property to be purchased under this Program, prior to any loan assistance. Minimum fire insurance coverage for each dwelling unit must be equivalent to the value of dwelling including rehabilitation improvements, if applicable. Uninsured Participants must obtain coverage in the required amount prior to receiving assistance. City shall be named as a beneficiary on all insurance policies and shall be notified of modifications or cancellations of insurance coverage. Participants in a 'Flood Hazard Area' will be required to purchase flood hazard insurance if required by the federal government. LEAD BASE PAINT NOTIFICATION The City, as part of the application process shall provide a Lead Base Paint Notification to all Participants. Such notice shall be signed and dated by the Participant and a copy shall be maintained in the project file. A lead base paint visual inspection shall also be performed as part of the initial inspection and any corrections must be made prior to close of escrow (Exhibit D). CONFLICT RESOLUTION Complaints concerning the Program must be in writing and addressed to the Management Analyst. The Management Analyst will contact the complainant and attempt to resolve the problem. A written response will be made within thirty (30) days of receipt of a written complaint. If the complainant is not satisfied after the written response, a complaint may be filed with the 13 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEMEAD ► ) TWWa Snwll Town M w,k., Community Development Director who will schedule a meeting with the /Management Analyst. A written response will be made within fifteen (15) working days of the receipt of the subsequent complaint. U. EXHIBITS EXHIBIT A TITLE 25 SECTION 6914 GROSS INCOME INCLUSION "Gross income" shall mean the anticipated income of a person orfamily forthe twelve-month period following the date of determination of income. If the circumstances are such that it is not reasonably feasible to anticipate a level of income over a twelve-month period, a shorter period may be used subject to a predetermination at the end of such a period. "Income" shall consist of the following: (a) Except as provided in subdivision (b), all payments from all sources received by the family head (even if temporarily absent) and each additional member of the family household who is not a minor shall be included in the annual income of a family. Income shall include, but not be limited to: (1) The gross amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses; (2) The net income from operation of a business or profession or from rental or real or personal property (for this purpose, expenditures for business expansion or amortization of capital indebtedness shall not be deducted to determine the net income from a business); (3) Interest and dividends; (4) The full amount of periodic payments received from social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic receipts; (5) Payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay (but see subdivision (b)(3)). 13 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T.— America (6) Public Assistance. If the public assistance payment includes an amount specifically designated for shelter and utilities which is subject to adjustment by the public assistance agency in accordance with the actual cost of shelter and utilities, the amount of public assistance income to be included as income shall consist of: (A) The amount of the allowance or grant exclusive of the amount specifically designated for shelter and utilities, plus (B) The maximum amount which the public assistance agency could in fact allow for the family for shelter and utilities, (7) Periodic and determinable allowances such as alimony and child support payments, and regular contributions or gifts received from persons not residing in the dwelling; (8) All regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is head of the family or spouse (but see subdivision (b)(5)) TITLE 25 SECTION 6914 GROSS INCOME EXCLUSION (b) The following items shall not be considered as income: (1) Casual, sporadic or irregular gifts; (2) Amounts which are specifically for or in reimbursement of the cost of medical expenses; (3) Lump -sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and worker's compensation), capital gains and settlement for personal or property losses; (4) Amounts of educational scholarships paid directly to the student or to the educational institution, and amounts paid by the government to a veteran for use in meetingthe costs of tuition, fees, books and equipment. Any amounts of such scholarships, or payments to veterans not used for the above purposes of which are available for subsistence are to be included in income; (5) The special pay to a serviceman head of a family away from home and exposed to hostile fire; (6) Relocation payments made pursuant to federal, state, or local relocation law; (7) Foster child care payments; (8) The value of coupon allotments for the purchase of food pursuant to the Food Stamp Act of 1964 which is in excess of the amount actually charged the eligible household; and 133 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSMEAD J Today's Small Torn America (9) Payments received pursuant to participation in the following volunteer programs under the ACTION Agency: (A) National Volunteer Antipoverty Programs which include VISTA, Service -Learning Programs and Special Volunteer Programs. (B) National Older American Volunteer Programs for persons aged 60 and over which include Retired Senior Volunteer Programs, Foster Grandparent Program, Older American Community Services Program, and National Volunteer Program to Assist Small Business Experience, Service Corps of Retired Executive (SCORE) and Active Corps of Executives (ACE). EXHIBIT B TITLE 25 SECTION 6914 ANNUAL INCOME NET FAMILY ASSET INCLUSIONS AND EXCLUSIONS Where a family has net family assets in excess of $5,000, income shall include the actual amount of income, if any, derived from all of the net family assets or 10 percent of the value of all such assets, whichever is greater. For purposes of this section, net family assets mean value of equity in real property other than the household's full-time residence, savings, stocks, bonds, and other forms of capital investment. The value of necessary items such as furniture and automobiles shall be excluded. Inclusions 1. Cash held in savings accounts, checking accounts, safe deposit boxes, homes, etc. For savings accounts, use the current balance. For checking accounts, use the average 6 -month balance. 2. Cash value of revocable trusts available to the Participant. 3. Equity in rental property or other capital investments. Equity is the estimated current market value of the asset less the unpaid balance on all loans secured by the asset and all reasonable costs (e.g., broker fees) that would be incurred in selling the asset. Under HOME, equity in the family's primary residence is not considered in the calculation of assets for owner -occupied rehabilitation projects. 4. Cash value of stocks, bonds, Treasury bills, certificates of deposit and money market accounts. 5. Individual retirement and Keogh accounts (even though withdrawal would result in a penalty). 6. Retirement and pension funds. 7. Cash value of life insurance policies available to the individual before death (e.g., surrender value of a whole life or universal life policy). 134 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Sm, II Town America 8. Personal property held as an investment such as gems, jewelry, coin collections, antique cars, etc. 9. Lump sum or one-time receipts, such as inheritances, capital gains, lottery winnings, victim's restitution, insurance settlements and other amounts not intended as periodic payments. 10. Mortgages or deeds of trust held by a Participant. Exclusions 1. Necessary personal property, except as noted in number 8 of Inclusions, such as clothing, furniture, cars and vehicles specially equipped for persons with disabilities. 2. Interest in Indian trust lands. 3. Assets not effectively owned by the Participant. That is, when assets are held in an individual's name, but the assets and any income they earn accrue to the benefit of someone else who is not a member of the household and that other person is responsible for income taxes incurred on income generated by the asset. 4. Equity in cooperatives in which the family lives. 5. Assets not accessible to and that provide no income for the Participant. 6. Term life insurance policies (i.e., where there is no cash value). 7. Assets that are part of an active business. "Business" does not include rental of properties that are held as an investment and not a main occupation. EXHIBIT C LOAN AGREEMENT EXHIBIT D SELLER'S AFFIDAVIT DOWN PAYMENT ASSISTANCE LOAN PROGRAM CITY OF ROSEMEAD TO BE COMPLETED AND SIGNED BY SELLER FOR THE CITY OF ROSEMEAD BY A FIRST MORTGAGE LENDER ON BEHALF OF THE PURCHASER(S). 135 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEME'AD 'dry's Small T.— Au—k The undersigned, , as Seller of the property located at Rosemead, California, hereby warrants and represents as follows: 1. That I/we are satisfied that the sales price of the subject property represents the dwelling's fair market value. 2. That I/we are aware that the Purchaser(s), who may be the beneficiary (ies) of financial assistance from a public agency in acquiring the property, does not have power of eminent domain and therefore, will not acquire the property if negotiations fail to result in a mutually satisfactory sales agreement. 3. That the subject property, as of the date of this Affidavit, is (check one): _ Vacant _ Occupied by the Seller _ Occupied by the Purchaser Occupied by a tenant who has given written notice of his/her intention to move voluntarily 4. That once the subject property is vacant, no other tenant shall be permitted to occupy the property before the sale is complete. 5. That, because the purchase is a voluntary transaction, the Seller is not entitled to relocation payments or other relocation assistance under the federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) or State Relocation Guidelines. I/We declare under penalty of perjury that the foregoing warranties and representations are true and correct. Executed on the date or dates shown below: Date: Seller: Date: Seller: In , California in , California 136 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town America EXHIBIT E APPLICATION AFFIDAVIT I/We (buyer) hereby certify the following: 1. That residence will be used as principal residence throughout the affordability period and that the Participant must notify the City and the Lender when the home ceases being the principal residence of the Program Participant. 2. That Participant has not had an ownership interest in a property during preceding 3 -year period. 3. That the purchase price does not exceed purchase price limits. 4. That the mortgage loan does not relate to the acquisition or replacement of an existing mortgage. 5. That the loan applied for does not constitute a prohibited mortgage. 6. That the Participant was not forced to apply through a specific lender. 7. That Participant's income does not exceed permitted income limits. 8. That no interest with respect to the mortgage loan is being paid to a related person. 9. That the Program cannot be transferred. 10. That any material misstatement or fraud is made under penalty of perjury. 11. Tenant Displacement Restrictions: The City will not pay relocation expenses for a tenant. The property to be purchased is to be either: new construction (never occupied), currently occupied by the seller, vacant or occupied by the borrower as a tenant purchasing the property. Printed Name Signature Date Printed Name Signature Date 137 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual CHAPTER 6 PROCUREMENT, CONSTRUCTION MANAGEMENT, ENVIRONMENTAL A. PROCUREMENT This chapter provides an overview of the HUD standards for Federal procurement requirements 24 CFR Part 85.36 and 24 CFR Part 84.40-48. The City of Rosemead needs to ensure that all applicable Federal requirements are followed throughout the process. While the City has its own procurement and contracting requirements, the use of Federal funding requires compliance with Federal regulations at a minimum. The primary purpose of the procurement procedure is to assure free and open competition is achieved. The City of Rosemead and its Recipients must follow procurement procedures as they pertain to the HOME Program: 1. OMB Standards -Materials shall be procured in accordance with the requirements of24 CFR 84.40-48 and the procurement standards set forth in OMB Circular A-110, and shall subsequently follow the property standards, covering utilization and disposal of property, set forth in OMB Circular A-110. 2. USE AND REVERSION OF ASSETS - The use and disposition of real property and equipment must be in compliance with the requirements of 24 CFR Part 84 and CFR 570.502, 570.503, 570.504, and HERA as applicable, which include but are not limited to the following: 3. Any HOME Program funds on hand and any accounts receivable attributable to the use of funds shall be transferred to the City of Rosemead at the time of expiration, cancellation, or termination of the Agreement. 4. Real property under the "Recipients" control that was acquired or improved, in whole or in part, with funds under the Agreement shall be used to meet one of the HOME Program Activities. 38 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E`AD J Today's Small T.— A—H,., PROCUREMENT TYPES A. 1st Procurement Method: Competitive Sealed Bids (formal Advertising) The sealed bid method is required for procuring all construction contracts or for goods costing more than $100,000. The only exceptions to this rule are single family housing rehabilitation projects where the total cost does not exceed $100,000. These projects may be conducted under the Small Purchases Method. During this process, bids are publicly solicited, and a firm fixed- price contract is awarded to the responsible bidder whose bid, conforming to all the material terms and conditions of the invitation for bids, is the lowest in price. In order for sealed bidding to be feasible, the following conditions should be present: 1. A complete, adequate, and realistic specification or purchase description is available; 2. Two or more responsible bidders are willing and able to compete effectively for the business; and 3. The procurement lends itself to a firm -fixed-price contract and the selection of the successful bidder can be made principally based on price. When sealed bids are used, the following requirements apply: 1. Publication Period: The invitation for bids will be publicly advertised and bids shall be solicited from an adequate number of known suppliers, providing them enough time prior to the date set for opening the bids; 2. Federal Funding Advertised: The advertisement should indicate that the project is being funded with HOME funds and that federal requirements will apply to the contracts. 2. Clear Definition: The invitation of bids, which will include any specifications and pertinent attachments, shall define the items or services for the bidder to properly respond; 3. Itemized Costs: Bids must show the quantity and cost of each line item. Lump sum bids and/or bid items that are not specifically identified or are generally grouped as miscellaneous or contingency are not allowed. 4. Public Opening: All bids will be publicly opened at the time and place prescribed in the invitation for bids; 5. Selection and Contracting: A firm fixed-price contract award will be made in writing to the lowest responsive and responsible bidder; and 6. Rejection of all Bids: Any or all bids may be rejected if there is a sound documented reason. 139 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD J Today's Small Town An—k. Negotiations after Unsuccessful Competitive Sealed Bidding: Negotiations are permitted within the following guidelines, which consider that time or other circumstances will not permit a re - solicitation of competitive sealed bids. 1. Bids Over Construction Budget by 10 percent or Less: When bids are received and the low bid exceeds available funds and it is determined in writing from the procuring agency that time or other circumstances will not permit the delay required to re -solicit competitive sealed bids, a contract may be negotiated with the lowest responsive and responsible bidder, provided that the lowest base bid does not exceed available funds by an amount greater than five percent of the construction budget established for that portion of work. The procuring agency may change the scope of the work (with prior approval from the Authority) to reduce the cost to be within the established construction budget. 2 Bids Over Construction Budget by more than 10 Percent: When bids are received and the low bid exceeds available funds by more than 10 percent of the construction budget and it is determined in writing from the procuring agency that time or other circumstances will not permit the delay required to re -solicit competitive sealed bids, a contract may be negotiated provided that: a. Each responsible bidder who submitted a bid under the original solicitation is notified of the determination and is given reasonable opportunity to negotiate. b. The negotiated price is lower than the lowest rejected bid by any responsible and responsive bidder under the original solicitation. c. The negotiated price is the lowest negotiated price offered by any reasonable and responsible offeror. d. If the scope of services originally addressed has been significantly changed, prior Authority approval is required, and a project amendment may be necessary. B. 2nd Procurement Method: Competitive Sealed Proposals (RFPs/RFQs) Competitive sealed proposals are used in two instances: 1. The acquisition of any engineering or architecture services, or 2. The purchase of other professional services where the total cost will exceed $100,000. Under this procurement method, the Recipient must publish a written request for submissions and then review these submissions based on established selection criteria. This method of procurement differs from the small purchases method in that the solicitation must be 1 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E`AD Today s Small Town Amcrira published and cannot be restricted to a smaller or limited number of bidders. Under this approach, there are two possible methods of soliciting proposals: I. A Request for Proposals asks that officers submit both qualifications and cost information. 2. A Request for Qualifications only asks for information on the offeror's expertise/ experience and not on cost. When acquiring any service that is not architecture or engineering, the full RFP process must be used. For example, if the City were to hire a for-profit HOME Program contract administrator and that contract exceeded $100,000, an RFP would be required. When acquiring architectural or engineering services, either an RFP or an RFQ may be used. The City recommends the use of an RFP process when feasible or practical, since it provides the recipient additional information. Request for Proposals (RFP): When an RFP process is required, the City must develop a written document outlining the scope of the services and the selection criteria. The scope must be sufficiently detailed so that potential bidders are able to develop effective pricing proposals and submit appropriate qualifications. Request for Qualifications (RFQ): The RFQ process may only be used in two instances: 1. For complicated architectural or engineering services, or 2. When the RFQ is used to narrow a pool of potential bidders and a formal RFP will follow. In any other competitive proposal instance, the RFP must be used. The RFQ process does not request cost information at the time of solicitation. C. 3rd Procurement Method: Small Purchase Procedures The Small Purchase Procedures Method allows acquiring goods and services totaling no more than $100,000, without publishing a formal request for proposals or invitation for bids. This method of procurement is typically used to purchase commodities such as equipment or other materials. In the highly unlikely event materials are purchased that will exceed $100,000, they must use the Sealed Competitive Bid Method. 141 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Sm, II Town A—&r The Small Purchases Method can also be used to acquire eligible types of services, such as professional consulting, environmental review, or planning. This method cannot be used if the services contract will exceed $100,000 in value. If the services contract will exceed $100,000, an RFP must be issued under the competitive proposals approach. Note that engineering architectural and construction services cannot be procured using the small purchase method and must always be acquired using the competitive proposal approach. These acquisitions must occur under the competitive sealed bid method. In general, the small purchase procedure should not be used to acquire construction contractors. The only exception to this is when the City is contracting for single family rehabilitation, where the total cost of the rehabilitation will not exceed $100,000. D. 4th Procurement Method: Noncompetitive Proposals Procurement by noncompetitive proposals is procurement through solicitations of a proposal from only one source, or after solicitation of a number of sources, competition is determined inadequate. Procurement by noncompetitive proposals may be used only when the award of a contract is infeasible under small purchase procedures, sealed bids, or competitive proposals and one of the following circumstances applies: a. The item is available only from a single source; b. The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation; c. The City authorizes noncompetitive proposals; or d. After solicitation of several sources, competition is determined inadequate. B. OTHER CONSIDERATIONS Aside from selectingthe method of procurement, there are several other considerations the City of Rosemead adheres to when procuring goods or services with Federal funds including: 42 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 0SEIVTEAD f Today's Sm, II Town America CONFLICT OF INTEREST 1. A written code of conduct must be maintained to help prevent conflicts of interest in procurement. 2. The written code of conduct must apply to all employees, officers, agents of the City or its Recipient, and members of their immediate family, and partners. 3. The code shall prevent financial interest or other benefits earned for any of these persons due to a HOME Program -related procurement action. These persons also cannot solicit or accept gratuities, favors or other items of monetary value from contractors. EXCLUDED PARTIES 1. The City must adhere to the prohibitions in 24 CFR Part 24 on the use of debarred, suspended, or ineligible contractors. Regulation 24 CFR Part 24 codifies Executive Order 12549, which provides that a person who is debarred or suspended shall be excluded from Federal financial and non-financial assistance and benefits under Federal programs and activities. 2. Federal funds may not be used to directly or indirectly employ, award contracts to, or otherwise engage the services of any contractor during any period of debarment, suspension, or placement on ineligibility status. 3. The City should regularly check all contractors, subcontractors, and lower -tier contractors against the Federal publication that lists debarred, suspended, and ineligible contractors. 4. In addition, the City should check this list before signing any contract with contractors or subcontractors. 5. Information on parties excluded from Federal procurement and non -procurement programs is available at.http://epls.arnet.gov/. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 5 MINORITY/WOMAN OWNED BUSINESS ENTERPRISES Small T.— America 1. The City of Rosemead is required by Federal law to ensure that minority and women - owned business have information about and the opportunity to bid on federally funded competitive contracts. 2. The City is required bylaw to use minority and women's businesses whenever possible. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Tmvn Anwrica CHAPTER 7 CONSTRUCTION MANAGEMENT In order to ensure HOME Program compliance and the overall success of projects, there are a wide number of critical tasks that the City must undertake to properly manage HOME -funded construction, including tasks such as formulating effective standards, managing inspections for quality, and the proper approaches to change orders, contingency funding, and periodic reporting by partners. Part I of this section covers the applicable standards and codes while Part II addresses the City's HOME requirements related to the construction process and the procedures that the City has developed to effectively manage construction activities. A. STANDARDS AND CODES RELATED TO CONSTRUCTION PROPERTY STANDARDS (24 CFR 92.251) Property standards are required in the HOME Program to achieve two major purposes: 1. Set a minimum standard for habitability/functionality, for purposes of inspecting and specifying necessary improvements listed in the scope of work; and 2. Establish materials, methods, and standards for any work to be performed. The property standards that are applicable to the City's HOME Program are described briefly below. HOUSING CODES/STANDARDS 1. Housing codes/standards specify the basic living and structural conditions for existing properties. They are used to determine if an existing residence is habitable and identify health and safety conditions. 2. Housing codes/standards are used as the basis for initial inspections of existing properties to identify needed repairs and appropriate improvements. Their purpose is to ensure that existing housing is not occupied unless it is decent, safe, and sanitary. 14 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEMEAD L J Todn's Sinal) T.— An uk. Waivers can be requested for rehabilitation developments if structural constraints prohibit adherence to the minimum design standards. Waiver requirements are detailed as part of the City's Minimum Design Standards. BUILDING CODES 1. Building codes are a series of requirements that specify how new construction or rehabilitation work is to be carried out. They inform contractors about how to do the work and are used by inspectors to check completed work. a. The City of Rosemead building codes are mandatory citywide. The City requires that, owners, and developers comply with the building codes adopted in the City's jurisdiction. 2. Several related codes, such as the fire code and plumbing code, are incorporated into the City building codes. 3. Most work governed by building codes requires that licensed contractors obtain permits prior to starting the work. 4. A building permit alerts building officials and inspectors to the fact that certain types of construction are about to begin and completed work must be inspected to determine if it meets requirements. B. REHABILITATION CODES 1. Rehabilitation codes provide specific guidance about applying building codes to guide repair, remodeling, and rehabilitation of existing structures. Appendix J of the International Residential Code provides the minimum requirements for existing structures being rehabilitated. 2. They serve the same purpose as building codes but are moderated to be reasonable approaches to existing conditions because it would be very expensive (perhaps impossible) to renovate an existing older building to meet the same standards for new constructed buildings. 146 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual O S EIVI-EAD j Today's Small T.— America REHABILITATION STANDARDS 1. A rehabilitation standard defines the quality of materials and workmanship that must be used when a repair is made. Rehabilitation standards (sometimes called construction standards) speak to the quality, durability, and aesthetics of the end product. 2 They define what methods and materials are eligible for HOME payment. 3. The City of Rosemead has written rehabilitation standards for rehabilitation of owner - occupied units, single-family and multi -family, whether the work is done by contractors, or nonprofits. EXHIBIT 7 CITY OF ROSEMEAD REHABILITATION STANDARDS SECTION I: SITE IMPROVEMENTS NOTE: All work requires review by the Building Division regarding need for plans/permits. SITE IMPROVEMENTS—OUTBUILDINGS REHABILITATION STANDARD: 75% or more salvageable Minimum Life: 5 Years Unsafe, illegal or unapproved structures, including outbuildings, additions and patio covers will be removed if it is not financially feasible (up to $5,000) to complete rehabilitation required to make them structurally sound, leak free and building and zoning code legal. REPLACEMENT STANDARD: No outbuilding shall be provided. SITE IMPROVEMENTS — PAVING AND WALKS NOTE: Any work may require a permit from the Engineering Division. REHABILITATION STANDARD: Minimum Life: 15 Years Badly deteriorated, essential paving, such as front sidewalks, will be replaced to match. Deteriorated paving may be removed or replaced. REPLACEMENT STANDARD: Minimum Life: 20 Years 147 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual I Today's Small T.— America Essential walks and drives shall be replaced with 4" thick, 4% air entrained, 3000 PSI concrete with metal reinforcement. SITE IMPROVEMENTS — LANDSCAPING REHABILITATION STANDARD: Site shall be graded to direct water to run away from foundation. Trees that are too close to the structure shall be removed. REPLACEMENT STANDARD: Only for -sale homes' front yards may be landscaped with a $500 maximum allowance. SITE IMPROVEMENTS — FENCING/GATES REHABILITATION STANDARD: Minimum Life: 5 Years Fencing shall be rehabilitated to meet the local code. REPLACEMENT STANDARD: When funding is sufficient for nonessential improvement, additional wood fencing may be installed to create defensible space in conformance with neighborhood/homeownership association requirements. SITE IMPROVEMENTS —SWIMMING POOLS/HOT TUBS REHABILITATION STANDARD: Minimum Life: 3 Years Beyond scope of federal financing. Pools may be filled. REPLACEMENT STANDARD: N/A SECTION II: EXTERIOR SURFACES NOTE: All work requires review by the Building Division regarding need for plans/permits. EXTERIOR SURFACES — EXTERIOR CLADDING REHABILITATION STANDARD: 148 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual u Small T.— Anmrica Minimum Life: 10 Years Siding and trim will be intact and weatherproof. All exterior wood components will have a minimum of one continuous coat of paint, and no exterior painted surface will have any deteriorated paint. REPLACEMENT STANDARD: Minimum Life: 25 Years Historically sensitive vinyl siding with 45 -year material warranty. EXTERIOR SURFACES — EXTERIOR PORCHES/BALCONIES REHABILITATION STANDARD: Minimum Life: 10 Years Unsafe or unsightly porches and balconies will be rehabilitated to conform closely with porches in the neighborhood. Porch rehabilitation will be structurally sound, with smooth and even decking surfaces. REPLACEMENT STANDARD: Minimum Life: 20 Years Deteriorated porches and balconies shall be replaced with preservative treated structural lumber and tongue and groove pine or synthetic deck material. Replace with concrete if economically possible. EXTERIOR SURFACES — EXTERIOR RAILINGS REHABILITATION STANDARD: None REPLACEMENT STANDARD: Minimum Life: 20 Years Railings that do not meet the current code and shall be removed and replaced with synthetic wood or like materials. EXTERIOR SURFACES — EXTERIOR STEPS AND PATIOS REHABILITATION STANDARD: Minimum Life: 10 Years Steps, stairs and decks shall, be structurally upgraded to adopted building code; free from all significant deterioration. 149 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 0SEIQUAD Today's Small Tmvn Mncrica REPLACEMENT STANDARD: Minimum Life: 20 Years Any replacement patio, deck or stoop shall be of a minimum functional size, design and construction. SECTION III: FOUNDATIONS & STRUCTURE NOTE: All work requires review by the Building Division regarding need for plans/permits. FOUNDATIONS & STRUCTURE — FIREWALLS REHABILITATION STANDARD: Minimum Life: 15 Years Party walls and garage ceilings shall be maintained without cracks and plaster deterioration and upgraded with 5/8" type X gypsum, glued and screwed to structure. REPLACEMENT STANDARD: Minimum Life: 20 Years All party walls shall conform to the 2010 edition of the California Building Code's new construction requirements for fire separation at both walls and roofs. FOUNDATIONS AND STRUCTURE — FOUNDATIONS REHABILITATION STANDARD: Minimum Life: 20 Years Foundations shall be rehabilitated to be sound and water resistant if financially feasible. REPLACEMENT STANDARD: Foundation replacements above 25% are beyond the scope of the program and usually indicate an infeasible project. FOUNDATIONS & STRUCTURE — STRUCTURAL WALLS REHABILITATION STANDARD: Minimum Life: 20 Years All structural members shall be free from deterioration, rot and termite damage and be sized in conformance to building code. Any member not in conformance with code shall be re -supported as determined by a structural engineer. 150 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town America REPLACEMENT STANDARD: Minimum Life: 40 Years Walls shall be 2" x 4", 16" on center with at least R-19 insulation and solid sheathing to match existing. SECTION IV: WINDOWS AND DOORS WINDOWS AND DOORS — INTERIOR DOORS PLACEMENT REHABILITATION STANDARD: Minimum Life: 10 Years All bedrooms, baths and closets shall have operating doors. Privacy locksets on bath and master bedroom. All other doors shall have passage locks. Recycle doors when possible. REPLACEMENT STANDARD: Minimum Life: 15 Years Doors may be solid core or composite in paint grade jambs. WINDOWS AND DOORS — EXTERIOR DOORS REHABILITATION STANDARD: Minimum Life: 10 Years Exterior doors shall be 1 % inch thick, solid core, insulated to minimum R-6, weather stripped, operate smoothly, including a peep site, a dead bolt, and an entrance lock set. Rod iron installations require review by the Building Division. REPLACEMENT STANDARD: Minimum Life: 20 Years All replacement doors at the front of the property will be neighborhood sensitive, Energy Star, steel or fiberglass solid core doors with peep sight and deadbolt. Garage/house doors shall be 20- minute fire rated with self-closing hinges. Energy Star, solid core doors with peep sight, dead bolt, and entrance locksets shall be installed at entrances not visible from the front street. Garage doors shall be R-5, embossed metal with a lockable assembly. WINDOWS AND DOORS — WINDOW PLACEMENT REHABILITATION/REPLACEMENT STANDARD: Bedrooms shall have all operable windows with a screen and meet egress requirements (one per room) per California Building Code. 151 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS MEAD f Today's Small Tnwn America WINDOWS AND DOORS — WINDOWS & SLIDING GLASS DOORS REHABILITATION STANDARD: Minimum Life: 10 Years All windows and sliding glass doors shall be weather tight, include a locking device, and where required for egress, be fully functioning/operational. REPLACEMENT STANDARD: Energy Star Minimum Life: 20 Years Double glazed, PVC or fiberglass, a minimum R -value of 2.8 (U=.33), SHGC of 0.30 and DP of 45. SECTION V: ROOFING ROOFING — FLAT AND LOW SLOPE ROOFING REHABILITATION STANDARD: Minimum Life: 10 Years Rehabilitate roofing when cost is less than 30% of total replacement cost. Built-up roofing, flashing and accessories shall be rehabilitated per California Building Code 2010 wherever a 15 -year leak free warranty is available from a certified roofing company. REPLACEMENT STANDARD: Minimum Life: 15 Years The most cost-effective Energy Star certified roof of: 3 ply hot built-up, T.P.O. or EPDM per California Building Code 2010. ROOFING — PITCHED ROOFS REHABILITATION STANDARD: Minimum Life: 10 years with warranty Rehabilitate when cost is less than or equal to 5% of total replacement cost. Missing and leaking shingles and flashing shall be rehabilitated on otherwise functional roofs per California Building Code 2010. Concrete, metal and tile roofs shall be rehabilitated when at all possible. Antennae and communication disks shall be permanently removed. REPLACEMENT STANDARD: Moderate: Minimum Life: 30 Years Fiberglass, asphalt, 3 -tab, class A shingle weighing at least 235 and up to 270 lbs., architectural grade, 30 -year warranty with ridge ventilation system per California Building Code 2010. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSE11-EAD f Today's Small Yawn America SECTION VI: INSULATION AND VENTILATION INSULATION AND VENTILATION — ATTIC VENTILATION NOTE: All new work requires permits from the Building Division. REHABILITATION STANDARD: Minimum Life: 5 -Year Any pre-installed ventilation shall be maintained or if powered and not functioning, replaced. REPLACEMENT STANDARD: Minimum Life: 20 Years Attics will be ventilated with a minimum of one (1) square foot of free vent for each 150 square feet of roof area or be redesigned for integration with new insulation system. Solar powered roof vents may be used when possible. INSULATION AND VENTILATION — BATH VENTILATION REHABILITATION STANDARD: None REPLACEMENT STANDARD: Minimum Life: 10 Years Energy Star, exterior ducted, 70 CFM, max 20 zones and separate switch or humidistat in all full and three-quarter baths. INSULATION AND VENTILATION — INFILTRATION REHABILITATION/REPLACEMENT STANDARD: Minimum Life: 5 Years All exterior doors and attic hatches shall be weather stripped. All visible cracks shall be caulked. INSULATION AND VENTILATION — INSULATION REHABILITATION STANDARD: Not Applicable REPLACEMENT STANDARD: Minimum Life: 15 Years Attic insulation goal is R-30, crawls spaces R19. New walls will be insulated to capacity with blown cellulose, fiberglass or closed cell foam to cavity capacity. Attic access panel must be insulated to R- 30 with rigid foam. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual X INSULATION AND VENTILATION — KITCHEN VENTILATION REHABILITATION STANDARD: N/A REPLACEMENT STANDARD: Minimum Life: 5 Years Town America Energy Star, exterior ducted range hoods or exhaust fans with less than 10 zones, at least 120 CFM and capped with a functional back draft. SECTION VII: INTERIOR STANDARDS INTERIOR STANDARDS — INTERIOR RAILINGS REHABILITATION STANDARD: Minimum Life: 10 Years Handrails will be present on one side of all interior steps or stairways with more than two risers and around platforms over 30" above floor level with adequate structural attachment, in compliance with the California Building Code 2010. REPLACEMENT STANDARD: Minimum Life: 15 Years Hand and guardrails shall be replaced with universal design standard material and construction in compliance with the California Building Code 2010. INTERIOR STANDARDS — INTERIOR WALLS AND CEILINGS REHABILITATION STANDARD: Minimum Life: 5 Years Walls shall be stripped of wallpaper, holes, cracks and deteriorated surfaces. All visual surfaces shall be patched and sanded as to create a smooth surface and recoated using premium, low VOC, vinyl acrylic paint. REPLACEMENT STANDARD: Minimum Life: 10 Years Walls shall be plumb, ceiling level with a smooth finish on at least 1/2" gypsum with water resistant board in wet areas. 5/8" Type X over 16" on center studs installed per the American Gypsum Association. Kitchen tile backsplashes and wainscot in ceramic tile baths. INTERIOR STANDARDS — HAZMAT TESTING AND TREATMENT City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 1701 REHABILITATION STANDARD: SAFE PRACTICES Low: Minimum Life: 3 Months Small lawn America Asbestos and lead paint hazards, when previously identified, shall be addressed in conformance with applicable local, state, and federal laws. Rehabilitated properties shall be cleaned to pass a Lead Dust clearance test to the levels prescribed by HUD regulations. Moderate: Minimum Life: 1 Year All properties shall be visually inspected for asbestos and lead suspect materials. No friable asbestos and all interior and exterior lead suspect surfaces shall be repainted using premium acrylic latex. Properties shall pass HUD lead dust clearance standards prior to occupancy. High: Minimum Life: 1 Year All properties shall undergo visual "Risk Evaluations" by rehab supervisors and be treated with the most affordable interior, exterior and site clean-up to clearance standards. REPLACEMENT STANDARD: IN PLACE MANAGEMENT & ABATEMENT High: Minimum Life: 20 Years After an inspection by an EPA Certified Inspector, all hazardous material shall be removed from all moving parts, floors and mountable surfaces. Encapsulants and enclosures may be used. INTERIOR STANDARDS — CLOSETS REHABILITATION STANDARD: Minimum Life: 10 Years Existing closets will be maintained. REPLACEMENT STANDARD: Minimum Life: 10 Years All bedrooms shall have a closet with a door, clothes rod, and shelf. Baths must include linen storage and coat hooks must be near the front door. INTERIOR STANDARDS — FLOORING REHABILITATION STANDARD: Minimum Life: 10 Years Ceramic tile flooring may be rehabilitated, and wood floors sanded and refinished. Salvageable carpet may be cleaned. Minimum life for carpet is 5 years. REPLACEMENT STANDARD: 1s City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual O S E]WEAD f Today's Small Tam America Minimum Life: 20 Years Stone, tile or vinyl flooring may be installed over reinforced cement underlayment in baths. Wood or laminate flooring may be installed in living and dining rooms and halls. Kitchen and utility to be ceramic tile. FHA approved carpet over 6 Ib. rebound underlayment is allowed in bedrooms when economically feasible. INTERIOR STANDARDS — APPLIANCES Assessment of existing appliances shall be made to determine if replacement is necessary. REPLACEMENT STANDARD: Energy Star and Water Sense. The following appliances are eligible to be installed only when funding allows: • Dishwasher: Energy Star rated; • Washing Machine: Energy Star rated (required); • Dryer: 7 CF with sensor dry system; • Refrigerator: Energy Star rated (required); • Range — Gas or electric, 4 burners; • Garbage disposal —1/2 hp, with minimum 3 -year warranty; • Microwave/Hood combination (if replacing current equipment); and • Built-in Oven (to match) Energy Star rated. INTERIOR STANDARDS — MINIMUM KITCHEN DESIGN REHABILITATION/REPLACEMENT STANDARD: Cabinet Storage: 2 bedroom — 8' minimum; 3 bedroom — 10' minimum; 4 bedroom — 12' minimum. SECTION VIII: ELECTRIC NOTE: All electrical work requires permits from the Building Division. ELECTRIC — SPECIALIZED CIRCUITS REHABILITATION STANDARD: Rehabilitate existing devices to operate. REPLACEMENT STANDARD: Minimum Life: 15 Years 15 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 0 Kitchen receptacles within 6 feet of a sink, all bath receptacles and at least one exterior receptacle shall be protected by a GFCI. Arc fault receptacles shall be installed in all bedrooms, family, dinning, and living rooms, closets, hall walls, and recreation rooms per National Electric Code 2008. ELECTRIC — KITCHEN ELECTRIC DISTRIBUTION REHABILITATION STANDARD: Minimum Life: 15 Years Electric service may be supplied to trash compactors, microwave ovens, double ovens, range grills, and any appliance proposed for installation. REPLACEMENT STANDARD: Minimum Life: 15 Years Permanently installed or proposed stoves, refrigerators, freezers, dishwashers and disposals, washer and dryers shall have separate circuits sized to N.E.C. Two separate 20 amp counter circuits are required with each kitchen area. ELECTRIC — FIXTURES REHABILITATION STANDARD: None REPLACEMENT STANDARD: Minimum Life: 20 Years All halls, rooms necessary to cross to other rooms and stairways must be well lighted and controlled by a 3 -way switch using concealed wiring. Attics must have utility fixtures. All fixtures shall be Energy Star. Replace all incandescent bulbs with fluorescent or LED bulbs. Exterior door lighting shall provide 100 lumens at ground level (motion detectors allowed). Garage doors shall be equipped with electric openers with laser safety devices. Bedrooms and living areas may receive Energy Star ceiling fans. ELECTRIC — ALARMS REHABILITATION STANDARD: Minimum Life: 5 Year Existing fire and smoke, CO shall be rehabilitated to operating condition. Security system may be rehabilitated as needed. Exterior doors shall be alarmed when pools are present. REPLACEMENT STANDARD: Minimum Life: 15 Years 57 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEME`AD Today's Small Tmvo America Directly wired, battery back-up smoke detectors are required on each dwelling floor. Interconnected smoke detectors are required for special needs and wheelchair users' homes. CO detectors are required with all fuel burning furnaces. Security systems may be installed at 1st floor doors and windows when economically feasible. ELECTRIC — INTERIOR DISTRIBUTION REHABILITATION STANDARD: None REPLACEMENT STANDARD: Minimum Life: 20 Years All rooms shall be rewired to the 2008 Edition of the National Electric Code using affordable fixture allowances and Energy Star fixtures. Minimum of one 20 -amp circuit per room. ELECTRIC — SERVICE AND PANEL REHABILITATION STANDARD: Minimum Life: 15 Years Distribution panels shall have a main disconnect, at least 10 circuit breaker protected circuits, a 100 - amp minimum capacity and be adequate to safely supply existing and proposed devices. Electrical panel shall be replaced if not properly grounded, to local codes. All panel upgrades require approval by Southern California Edison. REPLACEMENT STANDARD: Minimum Life: 20 Years Single Family: 200 -amp service with a 24 -circuit panel is allowed for homes of up to 1,800 SF. Homes larger than 1,800 SF or all electric require 200 -amp service with a main disconnect panel containing at least 30 circuit breaker positions. Two -Four Family: 100 -150 -amp service to each unit with a main disconnect panel containing at least 20-24 circuit breaker positions. All panel upgrades require approval by Southern California Edison. SECTION IX: PLUMBING SYSTEM NOTE: All plumbing work requires permits from the Building Division. PLUMBING SYSTEM — DRAIN, WASTE, VENT LINES REPLACEMENT STANDARD: 15 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS ENFE'AD L f Today's Small Town An c iu Minimum Life: 20 Years ABS replacement lines shall be installed in accordance with the most recently approved version of the State of California plumbing code. PLUMBING SYSTEM — PLUMBING FIXTURES REHABILITATION STANDARD: Minimum Life: 5 Years All fixtures and faucets when replaced will be retrofitted with low flow aerators: kitchen faucets with a maximum flow rate of 2.0 gal/min; bath faucets with a maximum flow rate of 1.5 gal/min. Tub and shower valves shall have thermostatic or pressure balance valves. REPLACEMENT STANDARD: California Water Sense Minimum Life: 20 Years Single lever, low flow, 2.0 gal/min kitchen and 1.6 gal/min bath, metal faucets and 2.5 gal/min maximum shower diverters with lifetime drip -free warranty. White ceramic, 1.1 GPF ultra low flow toilets, double bowl stainless steel or porcelain kitchen sinks, fiberglass tubs and surrounds and steel or porcelain enameled 5' tubs. Tub and shower valves shall have thermostatic or pressure balance valves. PLUMBING SYSTEM — PLUMBING MINIMUM EQUIPMENT REHABILITATION STANDARD: None REPLACEMENT STANDARD: Minimum Life: 10 Years Every dwelling shall contain a double or single bowl kitchen sink, and a 3 -piece bath. PLUMBING SYSTEM — FIRE SPRINKLERS REHABILITATION STANDARD: Rehabilitate all. REPLACEMENT STANDARD: Required in homes for wheelchair bound populations when economically feasible. PLUMBING SYSTEM — WATER HEATERS City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Town America REHABILITATION STANDARD: Minimum Life: 5 Years The minimum capacityfor units with two bedrooms or less shall be 30 gallons, larger units shall have a minimum capacity of 40 gallons. Water heaters shall have pressure relief valves with drip legs that extend to within one foot of the exterior ground, in copper pipe. All water heaters shall have seismic strapping. REPLACEMENT STANDARD: Minimum Life: 12 Years Energy Star, high efficiency, pilotless, Energy Star, gas fired or dual element electric (0.97) water heaters with at least R-7 insulation and a 12 -year replacement warranty. 40 gallons electric for l- and 2 -bedroom units and 40 gallons gas or 52 gallons electric for 3- and 4 -bedroom units. Install heat pump water heaters when feasible. All water heaters shall have seismic strapping. PLUMBING SYSTEM — WATER SUPPLY NOTE: No pipe, plumbing, fixture, fitting, or faucet intended to convey drinking or cooking water shall contain no more than .25 percent lead (AB 1953). REHABILITATION STANDARD: 10 Years Minimum Life: All homes shall be tested to identify and eliminate all leaks. All fixtures must be supplied with 2 gallons per minute water flow and shut off valves must operate. Lead and galvanized pipe shall be replaced with copper, PVC or PEX, if local code allowed. All accessible hot water lines shall be insulated; maximum static pressure is 60 psi. REPLACEMENT STANDARD: Minimum Life: 20 Years All fixtures shall have brass shut off valves. Exterior hose bibs with air gap are required. SECTION X: HVAC NOTE: All work requires permits from the Building Division. HVAC — CHIMNEY/FIREPLACE REHABILITATION REHABILITATION STANDARD: Minimum Life: 20 Years Unsound chimneys shall be rehabilitated or removed. When chimneys must be used for combustion ventilation, they shall be replaced. 160 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 301 REPLACEMENT STANDARD: Minimum Life: 20 Years Small Town America Replacement furnace flues when required shall be metal double or triple walled as recommended by the equipment manufacturer. If the service life of the chimney is comparable to service life of heating plant, then no replacement is necessary. If the chimney needs replacing or a new liner, the chimney will be eliminated and replaced with a high efficiency, power vented unit. HVAC— DISTRIBUTION/VENTILATION SYSTEM REHABILITATION STANDARD: Minimum Life: 5 Year Central air conditioning shall be inspected, serviced and refurbished per diagnostic testing of unit and distribution system — per (BPI) technical standards for air conditioning and heat pump specialist as described in Chapter 6 of the Saturn Mechanical Systems Field Guide, 2006. Must meet 2008 Title -24 Standards. REPLACEMENT STANDARD: Minimum Life: 20 Years All ductwork shall be insulated to R-4, seams sealed with Mastic and run in conditioned space within the building envelope. Air leakage and ventilation may be brought into conformance to Chapter 4 of HPSWC. Must meet Title -24 Standards. HVAC — CENTRAL EQUIPMENT REHABILITATION STANDARD: Minimum Life: 5 Years Heating plants that are less than 5 years old and rated 65 AFUE efficiency or better shall be tested and tuned -upper BPI. Energy Star setback thermostats are required. REPLACEMENT STANDARD: Minimum Life: 20 years Condensing gas furnaces rated over 86 AFUE and heat pumps over 13.5 SEER with 10 -year warranty on parts and 5 years labor. Air to air heat exchangers are eligible for this program. HVAC system shall be sized to maintain 689F measured 36" off the floor when the outside temperature is 845?F (the average yearly maximum), in all habitable and essential rooms. Interior design temperature used for heating and cooling load calculations per Title -24. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 'OSEIVTEAD -Tnday's Small T.— America SECTION XI: SPECIAL CONSTRUCTION SPECIAL CONSTRUCTION.— ACCESSIBILITY FOR SPECIAL NEEDS CLIENTS One of the following levels of accessibility shall be met dependent upon the clients' physical needs and financial resources: Visit ability: 1. No -Step Entry; 2. Adequate Doorways; and 3. Usable Bathroom. Usable Home: If requested by a physically disabled tenant, home shall meet this level of accessibility when funding is available: 1. Accessible Route into and Through the Dwelling Unit; 2. Accessible Switches, Outlets & Controls; 3. Reinforced Walls for Grab Bar Installation; 4. Usable Kitchens; and 5. Ground Floor Bedroom. Full Accessibility: 1. Wheelchair turning space in kitchen, bath and hall areas; 2. Doors— maximize space and lever hardware throughout; 3. Kitchen — accessible to wheelchair bound; 4. Bathroom fixtures per universal design standard; 5. Accessible controls in all areas; and 6. Communication devices in bath and at front and rear door. 162 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 0SENAP ► ) TWWa Sm, II Toren C. SPECIAL CONSTRUCTION — LEAD SAFE REGULATIONS REHABILITATION STANDARD / REPLACEMENT STANDARD In all federally -funded projects, the City shall follow the requirements listed on the attached "Summary of Lead -Based Paint Requirements" (09/10). D. International Energy Conservation Code 1. All new construction work must also conform to the International Energy Conservation Code (IECC) and applicable state or local energy conservation codes. 2. Additionally, the City requires that all new building construction complies with the State of California Energy Code. E. Section 504 and Fair Housing 1. Section 504 and Fair Housing rules impact the design of your project by setting standards for the appropriate number and characteristics of accessible units in your project. The applicability of these standards depends on the size and type of the project. F. CONSTRUCTION PROCESS REQUIREMENTS In addition to the requirements related to property standards discussed in Part I above, the City of Rosemead HOME program has requirements that relate to the following aspects of the construction process itself: 1. Inspection protocols; 2. Screening contractors; 3. Construction Scheduling; 4. Pre -construction conferences: who is included, what is covered; 5. Processing and tracking payments; 6. Change order management and payment processes; and 7. Monitoring reports from partner organizations City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small T.— America INSPECTIONS AND SPECIFICATIONS The City shall follow inspection procedures as described below to ensure that all work is being completed on time and within stated quality guidelines. 1. Initial inspections: establish scope of work and must be allotted sufficient time for interviewing the owner or others, delving into the property's functional characteristics, and to develop thorough, articulate scopes specific to the job inspected. a. The specifications must include detailed drawings and reference material as needed to fully explain all aspects of the scope, especially special conditions requiring unusual steps in the repair. 2. Final approval of plans and specifications: The City requires that plans and specifications are submitted for final review and approval. The following must be addressed prior to approval: a. The final plans and specifications must be consistent with the scope of work defined in the Recipient's agreement with the City. b. Note that advertisements for construction contract bids may not be published until plans and specifications for such contract have been unconditionally approved by the City. c. Final construction cost estimates, including deductive alternatives, must be provided. Estimates for line item bids must include estimated quantities, unit costs, and total costs. 3. Progress inspections: a. The City and HUD requires that inspections be documented and include the signature of the inspector and the date. b. An inspection will determine if work completed corresponds to the work write-up, the construction contract, and the schedule before payment is made to the contractor; c. It may address a need for a change order and intervene in owner/contractor disputes in a rehabilitation project; d. It ensures that safety and security measures are being taken and that all necessary code inspections have occurred; e. It allows the inspector to view the project at key construction points. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T... America 4. Timing of inspections: The construction schedule will determine the expected times for progress inspections. a. Key points in the construction process would include inspections by qualified persons before work is concealed to determine that it is satisfactory and meets the work specifications and contract. b. An inspection should occur when reinforcing bars are installed; wiring, plumbing, and insulation are in place. c. An unscheduled inspection may reveal a great deal about work quality and progress, as well as answer concerns a property owner may have. d. It may be necessary when a dispute arises between the parties involved. 5. Final inspection: A final inspection must be made by the appropriate professional and work must pass this inspection before the retainage is released to the contractor. 6. Logistics: Upon substantial completion of the project, the City must confirm that a final inspection is requested. a. The City will schedule a final inspection to be attended by the owner, project administrator/consultant, contractor, and the City of Rosemead Housing Inspector. b. Notice of this inspection must be scheduled with the City at least 3-5 days prior to the scheduled date. c. The final inspection shall consist of a field inspection to confirm that the project has been completed. The following documents must be available at the final inspection: a. Punch List(s); b. Certificate(s) of Final Inspection; and c. Release of Lien Form for each contractor d. General items of discussion at the final inspection include e. Acceptance of work by all parties; f. Transfer of insurance coverage to the owner; g. Utility considerations; h. Establishment of warranty period; and i. Final payment (Disbursed by the City of Rosemead 90 days from a successfully completed Final Inspection.) 7. Punch list and close out: Although a few punch list items may be pending at the time of the final inspection, all major problems should be resolved, and a Certificate of Final Inspection should be issued at this time. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Today's Small T.— America V a. The City requires that the project inspector and architect, if applicable, conduct a pre- final inspection to ensure that a comprehensive punch list is developed and that the project will be substantially complete at the time of the City's Final Inspection. b. A schedule for completing these items should be negotiated with the contractor, and a corresponding percentage of the cost, plus retainage, should be held back until the punch list items are completed. c. If an architect was used, he or she will issue a notice of substantial completion. d. This notice verifies that the structure may be used for its intended purpose. e. The notice of substantial completion may be issued either before or after punch list items are completed, depending on the situation and the extent of remaining items. In all cases, the Certificate of Final Inspection must be signed by the City prior to release of final retainage payment. f. Even when an architect signs off on work, the city will conduct its own inspection to verify that work is complete and complies with programmatic and other federal requirements. g. The final inspection must be performed by the City of Rosemead Planning and Community Development staff. h. After completion of the punch list items, and (if appropriate) the architect's notice, the City should see that the contractor provides: L Cost certifications; ii.Warranties of work performed; iii. Operations manuals (for furnaces and other systems); iv. Guarantees from manufacturers of materials and systems installed; and v. Release of liens by suppliers, all subcontractors, and the general contractor. L No final payment will be made until all documents are received and lien releases are verified. j. An IDIS completion report must be completed to closeout the project. 8. Warranty inspection: A one-year warranty period must be instituted for each contract completed to ensure that the workmanship and materials of the contractor(s) and subcontractor(s) have been sufficient. a. A final warranty inspection must be conducted by the City of Rosemead staff eleven months after the initiation of the warranty period to finalize any adjustments needed to correct covered deficiencies. b. Any such deficiencies shall be noted by the City or architect, if applicable, and provided to the contractor in writing and corrected. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 'OSEMEAD Today's Small T.— America EXHIBIT 8 Timing •PurposeofProperty Inspections When to Inspect: Purpose Preliminary — before work ✓ Check existing conditions against drawings (for new begins construction) or against work write up/approve specification; ✓ Review applicable codes and standards During Construction ✓ Determine adequacy of work completed; ✓ Assess compliance with approved drawings or specifications; ✓ Assess completed work against construction schedule; ✓ Determine completed work that is eligible for payment; ✓ Resolve any disputes among parties. Final ✓ Go over items in "punch list" to determine completion; ✓ Document compliance with codes and standards. Warranty Inspection ✓ Assess workmanship and materials used; ✓ Document deficiencies G. SCREENING CONTRACTORS: BIDDING AND CONTRACT AWARD PROCESS The City of Rosemead is expected to pre-screen contractors and to use applications, bidding documents, agreements, and pre-bid/p reconstruction conferences for screening contractors. In general, performance standards and consequences to meet them must be part of every construction program and must be covered in sufficient detail in bidding documents and the pre- construction conference. The City's specific requirements for the bidding and contract award process are detailed below: DEBARMENT AND SUSPENSION POLICY (24 CFR 85.35). The City of Rosemead complies by the debarment and suspension policy pursuant to 24 CFR, 85.35 Part 5. PROCEDURE 1. The City will verify that they and any or all persons, contractors, consultants, businesses, sub - recipients, etc., that are conducting business with the City are not presently debarred, proposed for debarment, suspended, declared ineligible, or voluntarily excluded from 167 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual S EME`AD Tnlay's Small Town America participation in the covered transaction or in any proposal submitted in connection with the covered transaction. 2. The City will check the Excluded Parties Listing System at www.epis.gov, print and maintain evidence of the search results. In the event that the search results indicate, a prior or current debarment or suspension of the contractor, the City will include the printout in the application. 3. The City will certify that neither it nor its principals are presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any entity from a federally funded transaction. Any contractor that remains in a debarred or suspended condition will be prohibited from participation in the City of Rosemead HOME Program if they are classified in this manner. 4. The City will not award any HOME Program funds to applicants that are presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from participation from the covered transaction. The City takes the following steps to assure a contractor is qualified to work based on the California State Labor Board (CSLB) and the HUD debarment List: 1 If the contractor is NOT on the debarment list, the City makes a copy of the Debarment List and encloses the list in the contractor package. 2 If the contractor IS found on the debarment list, the contractor is disqualified further consideration. 1. Advertisements for construction contract bids. The City of Rosemead policy requires publication of advertisement for bids in a newspaper of citywide circulation one time in at least one newspaper of greatest general circulation in the City of Rosemead or posting by electronic media. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEMEAD Today's Small Town A, -du PROCEDURE a. The date of publication of the notice shall not be less than five (5) days nor more than 30 days before the date established for the receipt of bids. b. In addition to citywide newspaper advertisement, the City may directly solicit prospective bidders and advertise in construction industry trade journals. c. Note that advertisements may not be published until plans and specifications for such contract have been unconditionally approved by applicable agencies. d. Additionally, wage determinations, if applicable, must be included as part of the contract documents for the project. The City requires to be contacted 10 days prior to the bid opening date. 2. Interpretations of plans and specifications. All questions regarding interpretation of the plans, specifications, drawings, and other contract documents should be addressed only to the design architect. Questions specific to the content of the Sample Bid Package for City of Rosemead funded projects should also be addressed to: City of Rosemead, Housing Projects Coordinator, 8838 E. Valley Blvd. Rosemead, CA 91770. a. Any inquiry or other action requiring written interpretation or instruction from the architect that will modify the plans and specifications and affect bidders (e.g., modified wage determination, redesigns, etc.) must be done so by addendum. NOTE: An addendum is written instruction issued prior to the opening of construction bids that modifies or interprets contract documents, drawings, and specifications by additions, deletions, clarifications, or corrections. All addenda must be approved by the City prior to issuance. b. An Addendum must be issued by certified mail at least five days prior to the date of bid opening. Failure to attain approval may result in disallowance of affected costs. 3. Receipt of all sealed bids will be documented by date and time of receipt and the name of the submitting contractor. Bids received after the established deadline shall not be accepted. 4. Bids in excess of project budget. If the lowest base bid exceeds the amount of funds appropriated for project budget, then the application of deductive alternatives in numerical order will commence until the bid is within the appropriated amount. 5. Apparent low bidder. Once the apparent low bidder is identified, the City will determine if he/she is responsible. NOTE: All prime contractors are responsible for ensuring that the subcontractors they employ are not debarred or suspended. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T.—Amcri,. 6. Notification of bid award. Once the apparent lowest responsive, responsible bidder(s) for each contract(s) is determined, the City will notify all bidders whether they were successful. a. Successful bidders must be notified of acceptance of their bid within the time frame specified in the contract documents. b. Such notification shall be made through issuance of a Notice of Award which requests the contractor to provide acceptable payment and performance bond(s) and certificates of insurance within 10 calendar days. c. Upon reception of these documents, the City must determine if: a. The contractor has sufficient bonding and insurance. The insured amounts must be consistent with requirements of state law as specified in the contract documents, e.g., 100 percent payment and 100 percent performance bond(s) coverage and sufficient liability coverage amount. d. Contracts must be awarded within the time frame specified in the contract documents. Note: Licensing and underwriting limitations of insurance companies in the State of California can be checked by referencing U.S. Department of the Treasury, Circular 570 Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies as updated in the Federal Register. 7. Post award requirements. After all contract documents have been executed and sufficient bonding and insurance is confirmed, a fully executed set of contract documents must be submitted by the City of Rosemead. PRE -CONSTRUCTION CONFERENCES A pre -construction conference can be valuable in providing direction to the parties involved and prevent potential misunderstandings. PROCEDURE 1. The architect or Housing Projects Coordinator shall coordinate scheduling the preconstruction conference with all applicable parties. 2. At a minimum, the City shall give 10 days' notice to persons who must attend the preconstruction conference, including: a. City representative, if applicable 170 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual L b. Developer/Owner, c. Prime Contractors; Sm, II T.— America d. If applicable, the architect (especially the person representing the firm and the resident observer); 3. The preconstruction conference will be conducted in accordance with a Preconstruction Agenda and Report. 4. Signed copies of the report, with an attached attendance list, must be distributed to each of the parties identified above within five calendar days of the conference. 5. Location of the conference: Project Site H. Working with Contractors PROCEDURE The Housing Projects Coordinator shall: 1. Retain a qualified person in charge of the work who understands the business and the constraints faced by those in the building trades. 2. Clearly inform contractors about work expectations, program requirements as they impact the project, about the payment process, and seek their feedback after project completion. a. Timing of a pre -construction conference will take place after an Environmental Review and Request for Release of Funds (RROF) have been completed (if applicable), and 3. Distribute communicate of the project to all team members on his or her role and responsibilities; 4. Identify deadlines and critical phases of the work; 5. Review the scope of work and schedule to prevent future problems; 6. Explain basic operating procedures, including reports, meetings and other communications required and expected during construction; 7. Review applicable programmatic and federal requirements, such as Davis -Bacon, labor standards, and Lead Safe Housing Rules; 8. Review procedures for: a. Inspections — when they must occur and who initiates them; b. Payment requests — when they should be submitted, who receives them, what they must include, when payment will be made if satisfactory; c. Change orders —the process for requesting one; what would/ would not be considered in weighing the request; d. Lien releases —the process and who is involved; e. Monitoring of progress and reporting; f. Dispute resolution; and City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small T... Mn k. g. Closing out the project. 9. Review the construction contract and ensure all parties have read, understood, and signed it; 10. Confirm that subcontractors' names, addresses, and phone numbers are accurately listed; 11. For occupied structures: a. Discuss the handling of service shut -offs and restricting access to bathrooms, kitchens, etc. during lead -paint work as well as other relevant rehabilitation work; b. Define moving and relocation roles and schedules; and c. Review/discuss safety and security measures during construction. 12. At the conclusion of the pre -construction conference and after the contractor has executed the construction contract, the City will issue a notice to proceed with work. 13. Construction should commence no later than 10 days after receipt of this Notice. I. Construction Schedule PROCEDURES The Housing Projects Coordinator will: 1. Maintain access to many information sources and understand construction methods, trades involved, and the sequence of tasks that must occur; 2. Retain knowledge of: a. The building materials required for the project, ordering and delivery methods and protocols; b. The various applicable building codes and standards. c. Anticipate the key points at which an inspection is required; d. Determine how weather variations can impact construction progress; e. Understand each development team member's roles and responsibilities; and f. Understand the development budget; g. costs can be paid from each source; h. When funds are available; i. How to request payment (including the form that will be used to request payments and the documentation to be provided.); j. Document each step in the process and list them sequentially, recognizing that some steps must occur simultaneously. J. Timeliness and the Construction Schedule PROCEDURE 1. Assure that construction will starts within twelve months from the date of property or land acquisition; 172 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS EVTE`AD I Today's Small Tmvn Amcrira 2. Assure that funds will be expended within the required five-year timeframe of the allocation; 3. Maintain a construction schedule that is realistic — and enforceable. 4. If a project is behind schedule, the City may attempt one of the following options: a. Eliminate or redesign the critical path activities (which may reduce the scope of the project); b. Rearrange critical path activities so that some are performed simultaneously; or c. Reduce the duration of critical activities (if the critical path is shortened, other activity paths through the network may become critical.) d. If none of these options can be accomplished, the project completion date must be adjusted; this will most likely have cost or timeliness ramifications and is highly undesirable. 5. Comply with timelines in the construction schedule to avoid severe consequences to the project: 6. Ensure that timelines are met, or that there is ample recourse to pursue if they are not, schedules must be enforceable including: a. Reference the schedule in the written agreement between the City and the developer; b. Reference the schedule in the contract with the general contractor and all subcontracts; c. Reference it in the architect's contract. 7. Cover the schedule and stress its importance during the pre -construction conference. K. Change Orders PROCEDURE 1. Any changes to construction documents must be reviewed and approved by the City. 2. Contractors must submit change orders when there is: a. A change to the project design or work specification; b. An alteration, addition, or deletion to the approved scope of work; c. An addition or change to the work schedule; or d. A change in cost for any reason. 3. Change orders must be written and address its completeness and appropriateness and its effect on budget, timeframe to the City. 4. The City requires that a Written Change Order is submitted any time that contract documents are changed, including additions, deletions, modifications, and time extensions after bid opening. 5. In addition, all change orders must be reviewed and approved by the City prior to issuance. 6. Changes that have no cost implications (or reductions in costs) require a change order. 7. Change orders will be evaluated for their impact on the project cost, schedule, and scope of work before they are approved by the City. 173 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small T.— A—Hu L Managing Payments PROCEDURE 1. Payments will be reviewed by: a. The City, the property owner and the contractor prior to signing a rehabilitation contract; b. The developer and contractor for smaller, uncomplicated new construction projects at the pre -construction conference; or c. The entire development team for larger new construction projects at the pre - construction conference. 2. For all projects, a portion of all payments will be retained at 5 - 10 percent until 90 days after completion of the work or satisfactory completion of the final punch list items. 3. The draw schedule will include in the overall construction schedule to establish clear expectations for when the contractor may request and can expect payments. 4. Payment requests for housing rehabilitation projects will be submitted to the City by the general contractor at the completion of each stage of the schedule. 5. Payment requests will be provided to the City's Housing Projects Coordinator, and the property owner. 6. The property owner will sign off on the request before the City processes it. 7. For new construction projects, the developer assembles the draw requests for both hard and soft costs from the general contractor and other professionals involved in the project. The invoice should include: a. Total budget obligated; b. Amount of previous payments received to date; c. Cost for materials stored; d. Costs incurred during the pay period; e. Total costs incurred to date (includes previous and current expenses); f. Percentage of work completed to date: g. Remaining budget; and h. Amount of payment retained until project completion. i. No payment should be made when there have been changes to the original contract or scope of work without approval of a relevant change order. 8. All payment request documentation will be logged in as soon as it is received and recorded as soon as it is released. 9. The City's Community Development Director will review payment requests and approve them. 10. The documentation that must accompany a payment request, includes: a. For all projects, an inspection report that supports satisfactory completion of work according to the work write-up, specifications, and/or construction schedule; b. Lien waivers as appropriate; c. If needed, approved change orders; 174 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD J Today's Small Town America d. For projects subject to Davis -Bacon requirements, signed certifications that demonstrate compliance. e. Once a payment request has been approved by the City, it should be paid promptly in accordance with the agreed-upon schedule. f. If payment delays occur from participating in public programs and if payment is delayed according to the construction schedule (through no fault of the contractor), the contractor can stop work. 11. Final payment and release of retainage less any liquidated damages shall be made to the contractor after: a. Final inspection is completed; b. A Certificate of Final Inspection is signed; c. Certificate of Plumbing, Certificate of Electrical, Certificate of HVAC are signed; d. Release of Liens are received, if applicable; e. All punch list items are resolved; and f. Final payrolls and equal employment opportunity data are accepted by the City, if applicable. 12. Contingency funds may be set aside for a project for which there is no known specific use at the beginning for unforeseen problems that may require funds. a. These funds may not be drawn or expended unless an appropriate written change order is executed. b. Funding must be established at the beginning or project for unforeseen circumstances. c. Set up is allowed but only work performed and documented through written change orders is paid. M. Periodic Reporting PROCEDURE 1. During the construction period, the City's Housing Projects Coordinator will require periodic status reports from partners such as contractors, private developers, and property owners. 2. The City will maintain a reporting system to track progress of meeting larger program goals, as well as tracking progress for individual projects. a. The City's reporting system includes: b. milestones that need to be measured in the construction process and the draws against the contract; c. When the milestones need to be measured (e.g., the critical points in a housing rehabilitation or development project); and d. Measure and review the milestones. 3. Request essential information to track including: a. Performance milestones in the construction schedule or written agreement; or 175 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS EXTEAD Today's Snwll T.— America b. Required documentation for IDIS or the CAPER reporting. c. Provide clear, detailed report forms and instructions to those responsible for initiating the report. 4. Take immediate action if reports are late, inaccurate, or incomplete. 5. Inform partners that the information provided in reports is useful for: a. Preparing reports for City of Rosemead; b. Identify performance and timeliness issues early; c. Plan on-site monitoring visits; d. Making future funding decisions; and e. Developing descriptions of projects for elected officials and citizens. 6. Measure progress in individual projects; or 7. Compare progress in similar projects to identify slower performers and take further action. 8. Examine funding requests to evaluate the fiscal aspects of performance against the construction schedule or written agreement. 9. Identify any missed milestones and which projects have or may put the City at risk of failing to meet timeliness requirements in the HOME program. Exhibit 9 Rehabilitation of Owner -Occupied Progress Reporting What to Track How How Often to How to Analyze information report Date of application At application Look for demand (or lack) by targeted population Date of requested income When requested Check for follow up activity if not verifications; date received received Date of proof of ownership At time of proof Check for determination of eligibility for established assistance Date of initial inspection At time of Look for "fail" items and LBP initial inspection Date, name of contractor selected At time of Check for compliance with City's approved selection system Date of Pre -construction conference At time of Look for subjects covered, who were present, conference notes taken Date of Proceed Order At time of order Check against approved procedures Date of initial progress Inspection At time of Note items passed or failed inspection Pass/fail items in inspection Same as above Note for payment requests or change orders 176 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual W Date of initial payment request; Date of requests Check for adequate documentation to subsequent payments requested support request Date payments made Date payments Check for time elapsed; is it late or on time made Date of final inspection Date of Check against inspector's report of inspection satisfactory work Punch list items completed Date of punch Check for completed work list Final release of liens received Release date Look for presences of all releases Final payment Date of payment Check for timing; adequate documentation Project closed Date of close-out Check for completion report and Interim reports in IDIS 177 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual CHAPTER 8 ENVIRONMENTAL REQUIREMENTS AND PROCEDURES C. OVERVIEW The purpose of this chapter is to provide guidance on the environmental review process required under federal HOME regulations. These regulations (24 CFR §92.352) require a formal assessment of possible environmental effects for each activity carried out with HOME funds. This assessment must be done according to requirements found in 24 CFR Part 58. This chapter provides current rule requirements, and clarifies review responsibilities of the City of Rosemead, and Community Housing Development Organizations (CHDOs), about the environmental review process. The U.S. Department of Housing & Urban Development (HUD) places restrictions on project activities in accordance with 24 CFR §58.22, Limitations on activities pending clearance. Completion of the environmental review process is mandatory before taking physical action on a site or making a commitment or expenditure of HOME or non -HOME funds for property acquisition (purchase), rehabilitation, conversion, lease, repair, or construction activities. "Non- HOME funds" means any Federal, state, local, private, or other funds. Since funds for a project will not be released until the environmental review has been completed and approved, the City will begin the environmental review process at the earliest possible time so that potential conflicts between program procedures and environmental requirements are identified at an early stage. The Environmental Checklist in the Uniform Application submitted, as part of a competitive HOME grant application does not meet HUD requirements for an environmental review. The purpose of the checklist is to assist the City to initially evaluate environmental circumstances that may affect the proposed project and to raise awareness of possible problems if the grant is awarded. This chapter details the HUD environmental review rules and related Federal laws and authorities that are applicable to all projects and activities receiving HOME assistance. It describes: City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS EM-EAD I Today's Small Taw. America 1. The roles and responsibilities of the City of Rosemead and its Recipients, who have the primary responsibility for conducting environmental reviews; 2. The role of CHDO's and nonprofit organizations as project partners in the environmental review process; 3. The primary procedures and operating principles that guide the environmental review process; and 4. The categories of environmental review that are required for various HOME funded activities and projects. D. Roles and Responsibilities of City of Rosemead As outlined in 24 CFR Part 58, units of local government are required to assume Federal environmental review responsibilities for compliance with the National Environmental Policy Act (NEPA), and related Federal laws and authorities. HUD's environmental review regulations identify states and units of general local government as the "responsible entity" (RE) ---those entities having legal authority to assume this role because they exercise control over planning, permitting, and supplying infrastructure to support HUD -assisted projects for their jurisdictions. For the HOME Program, the City receives a formula allocation of HOME funds directly from HUD. In addition, through a written agreement with the City of Rosemead, assumes responsibility for compliance with NEPA and Part 58. In cases where the City of Rosemead does not have the technical capacity or administrative capability (§ 58.12) to assume the role of RE or an applicant (e.g., CHDO, or nonprofit or for profit organization) has applied directly to the City for HOME grant assistance, then the City of Rosemead must develop the technical capacity or administrative capability and take on the role of RE. In most cases the City of Rosemead will assume the RE role. In the role of responsible entity (RE), the City not only assume the responsibility for environmental review, decision-making, documentation, and mitigation (if necessary), but also the legal responsibility for compliance with NEPA and all other applicable laws, regulations, and authorizations. Whenever Recipients have assumed the role of RE, then the City is responsible for overseeing compliance with HUD's environmental review procedures, as well as providing assistance to those Recipients in meeting their compliance responsibilities under Part 58. The City's role in this capacity is to conduct post -review monitoring of the Recipient's Environmental Review Records (ERR); enforcing violations of Part 58; receiving certifications of compliance from the Recipients; 179 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS EIV�E`AD Today's Small Town An—ica accepting objections from the public or other agencies; and other responsibilities related to the release of funds process (§ 58.18 and Subpart H). When the City assumes the role of RE, then HUD performs the oversight responsibilities described in the paragraph above (24 CFR 58, Subpart H). E. Environmental Review Process The City must ensure that activities or projects that are funded by HOME assistance, in total or in part, are in compliance with NEPA and Part 58 requirements. This means creating a written environmental review record (ERR) for every activity and project regardless of the level of review (§ 58.38). Later in this chapter, more details will be provided as to the appropriate levels of environmental review for every type of HOME assisted activity or project. The ERR is a type of "environmental diary" that the City uses to substantiate its decisions and conclusions concerning protection and enhancement of the environment as a result of approving the project. Keeping good records and having complete documentation is necessary to fulfill the City's environmental review obligations. This is a public record. Legal challenges to a project's environmental compliance may be won or lost over how complete or incomplete the City's ERR documentation. The ERR shall contain all the environmental review documents, public notices and written determinations or environmental findings required by 24 CFR § 58.38 as evidence of review, decision making and actions pertaining to a project of a recipient. The document shall: 1. Describe the project and the activities that the recipient has determined to be part of the project; 2. Evaluate the effects of the projector the activities on the human environment; 3. Document compliance with applicable statutes and authorities, those cited in § 58.5 and 58.6; and 4. Record the written determinations and other review findings required by this part (e.g., exempt and categorically excluded projects determinations, findings of no significant impact). The ERR shall also contain verifiable source documents and relevant base data used or cited in EAs, EISs or other project review documents. These documents may be incorporated by reference into no City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town America the ERR provided that each source document is identified and available for inspection by interested parties. Proprietary material and special studies prepared for the recipient that are not otherwise generally available for public review shall not be incorporated by reference but shall be included in the ERR. The City of Rosemead will periodically monitor the content of the environmental records to determine whether corrective actions or sanctions are necessary. In addition, the HUD Field Office will conduct a monitoring review of the City's project ERRS. The City is required to maintain technical capacity and administrative capability to ensure compliance with NEPA and Part 58 is achieved (§ 58.12). With regard to technical capacity, the City staff needs to have sufficient knowledge of the Federal laws and authorities, as well as an understanding of Part 58 requirements in order to make informed decisions about whether: 1. The appropriate level of review has been completed; 2. Compliance with NEPA and Federal laws and authorities has been achieved; 3. The public notification requirements have been met (if required); and 4. When HUD approval is necessary. This is true whether environmental reviews are completed by City staff, prepared by program partners, or a consultant is hired to perform the review. The City is still responsible for the content of the ERR and must make an independent evaluation of the environmental issues, take responsibility for scope and content of the compliance findings, and make the final environmental decision concerning project approval. With regard to administrative capability, City staff should have sufficient knowledge about the Part 58 procedures to understand when funds may be committed and spent, the time periods for the public notification and release of funds process, and the minimum content of the ERR. F. Environmental Decision -Making For purposes of compliance with NEPA and Part 58, the chief executive officer of the City, or its formal designee, is the certifying officer (CO) (§ 288 of the Act). The certifying officer is recognized as the "responsible Federal official under NEPA" (§ 58.13, 40 CFR 1508.12) and, therefore, the decision -maker as to whether a project is approved or rejected based on the environmental review findings. This is a Federal legal responsibility. As such, if someone other than the chief executive officer for the City is designated to fulfill this role, HUD requires there be a formal designation by the governing body identifying this officer. ivf City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD Today's Small T.— America The CO represents the City in Federal court if there is legal challenge to the content of the environmental review record and the City's decision based upon that record [§ 58.13(a)]. The CO is also the only person with the legal authority to sign the Request for Release of Funds and Certification (HUD form 7015.15.). The CO is responsible for all the requirements of section 102 of NEPA and the related provisions in 40 CFR parts 1500 through 1508 Other responsibilities required of the certifying officer are: 1. To ensure that the City reviews and comments on all EIS documents prepared for Federal projects that may have an impact on the City of Rosemead's HOME program [§ 58.13(b)]; 2. Making health and safety decisions related to whether to approve residential construction projects that are exposed to high levels or noise from major roadways, railroads, and/or military or civilian airports [HUD regulation on Noise Abatement and Control, 24 CFR 51.104(a)(2) and (b)(2)]; and 3. Making health and safety decisions related to the construction, rehabilitation, or conversion of buildings exposed to blast overpressure or thermal radiation from aboveground storage tanks within line -of -site of the project (HUD regulation on placement of HUD- assisted projects in the vicinity of explosive or flammable operations, 24 CFR 51.206.). G. Environmental Action The City of Rosemead is also responsible for ensuring that any environmental conditions or safeguards resulting from completion and approval of the environmental review document are implemented. With that, the City has developed a monitoring plan to ensure conditions that are identified as necessary for protecting and enhancing environmental quality or minimizing adverse environmental impacts are included in agreements or other relevant documents and implemented during completion of the project. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD J Today's Small Town America In addition, the City must re-evaluate its environmental findings and decision if: 1. Substantial changes in the nature, magnitude, or extent of the project are proposed by the project proponent (e.g., new activities not anticipated in the original project scope); 2. New circumstances and environmental conditions arise that were not previously considered or evaluated for effect (e. g, conditions discovered during implementation of the project, such as archeological resources, asbestos containing materials, endangered species, underground storage tanks, dry wells, etc.); or 3. The project proponent proposes selection of an alternative not previously considered. Upon re-evaluating its original findings and conclusions, the City must decide whether its original determination is still valid, or that a new environmental review document must be prepared instead. If the original findings are still valid, document this in the ERR in writing. Role of CHDO's and Nonprofit Organizations as Project Partners Any other individuals and entities that utilize HOME program assistance fall into the category of project participants with regard to compliance with Part 58 (§ 58.22) Limitations on activities pending (environmental) clearance. HUD assistance must not be committed on an activity or project until HUD or the state has approved the recipient's request for release of funds (RROF) and the related certification from the responsible entity. This includes CHDOs, public or private nonprofit or for-profit entities, contractors, and individual borrowers receiving HOME grants and loans. These partners must: 1. Not acquire, repair, rehabilitate, convert, demolish, or lease properties or undertaking construction prior to receiving approval from the City of Rosemead; 2. Not commit non -HUD funds to project activities that would have an adverse environmental impact or limit the choice of project alternatives; City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS ENTEAD kL J Today's Small Tawe America 3. Carry out any mitigation and/or conditions associated with approval of the project; 4. Provide the City with information about the project. The City may require by executed agreement that CHDOs or developers supply available, relevant information necessary for the City to perform the environmental compliance review. This could mean: 1. The CHDO or developer submits certain types of information to the City, or 2. The CHDO or developer prepares the environmental compliance review for submission to the City for its review and adoption, or 3. The CHDO or developer may decide to hire a consultant to prepare the environmental review for the City's review and adoption. H. ENVIRONMENTAL REVIEW PROCEDURES ACTIONS TRIGGERING THE REQUIREMENTS OF PART 58 Once a project participant (i.e., CHDO's, developers, owners, sponsors of housing, and third -party contractors) has applied for HOME funds to the City or the City has designated funds for a specific project in its Consolidated Plan or Annual Action Plan ("AAP"), Part 58 requirements are applicable to the project. At this point, the City must request the participant to: 1. Cease all project activity until the environmental review (ER) has been completed. Part 58 prohibits further project activities and actions from being undertaken prior to completion of the ER and the determination of environmental clearance. Projects in violation of this prohibition risk the denial of HOME funds. Where a project participant has begun a project in good faith as a private project, the City is not precluded from considering a later application for Federal assistance for the project, but must request the third -party applicant to: 2. Cease further actions on the project until the environmental review process is completed. Project participants may proceed with the project upon receiving approval from the City, after the environmental review process has been completed for the project. 184 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Sm, II Tnwn America There are certain kinds of activities that may be undertaken without risking a violation of requirements of Part 58. For example, the act of either hiring a consultant to prepare a Phase I Environmental Site Assessment (an investigative study for environmental hazards) or hiring a consultant to complete an engineering design study or plan, or a study of soil and geological conditions. Activities that have physical impacts or which limit the choice of alternatives cannot be undertaken, even with the project participant's own funds, prior to obtaining environmental clearance to use HUD funds. This process may include public notification and approval from HUD. If prohibited activities are undertaken prior to receiving approval from the City, the applicant is at risk for the denial of HOME assistance. Such actions include: a. Purchasing real estate; b. Demolishing structures or buildings; c. Excavating or dredging soils; d. Placing fill dirt on the site; e. Rehabilitation or converting a new building; and f. New construction. NOTE: Undertaking any of these actions interfere with the City's ability to comply with NEPA and Part 58. If prohibited actions are taken prior to environmental clearance, then environmental impacts may have occurred in violation of the Federal laws and authorities and the standard review procedures that ensure compliance. Below is further discussion of issue under the heading, "Limitations Pending Environmental Clearance." LIMITATIONS PENDING ENVIRONMENTAL CLEARANCE According to the NEPA (40 CFR 1500-1508) and Part 58, the City is required to ensure that environmental information is available before decisions are made and before actions are taken. The City may not commit or expend resources, either public or private funds (HUD, other Federal, or non -Federal funds), or execute a legally binding agreement for property acquisition, rehabilitation, conversion, repair or construction pertaining to a specific site until environmental clearance has been achieved. In other words, the City must avoid any and all actions that would City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIVTE'AD k ) TodWY Small Tm America preclude the selection of alternative choices before a final decision is made ---that decision being based upon an understanding of the environmental consequences, and actions that can protect, restore, and enhance the human environment (i.e., the natural, physical, social, and economic environment.) In order to achieve this objective, Part 58 prohibits the commitment of HOME funds by the City of Rosemead until the environmental review process has been completed by the City and HUD approves the release of funds. NOTE: until the City has completed the environmental review process (including receipt of HUD approval), neither the City nor project participant may commit non -HUD funds or undertake an activity if that action would have an adverse environmental impact or limit the choice of reasonable alternatives. For the purposes of the environmental review process, "commitment of funds" includes: 1. Execution of a legally binding agreement; 2. Expenditure of HOME funds; 3. Use of non -HUD funds on actions that would have an adverse impact - e.g., demolition, dredging, filling, excavating; and 4. Use of non -HUD funds on actions that would be "choice limiting"-e.g., acquisition of real property; leasing property; rehabilitation, demolition, construction of buildings or structures; relocating buildings or structures, conversion of land or buildings/structures. NOTE: The standard for what constitutes a commitment of HOME funds for compliance with Part 58 is different from the HOME funds commitment and the CHDO reservation deadlines applicable under the HOME Program regulations in 24 CFR Part 92. Prior to completion of the environmental review process and receiving HUD approval, the City may enter into a non-binding agreement to conditionally commit HOME funds---i.e., a contractual agreement between the City and project participant to use a specific amount of HOME funds to produce affordable housing, or an executed written agreement reserving a specific amount of funds to a CHDO. The conditional commitment must incorporate language that will ensure the project participant does not have a legal claim to any amount of HOME funds to be used for the specific project or site until the environmental review process is satisfactorily completed. In City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSENAE`AD T.d.y's Small T... America addition, the agreement must explicitly state that the agreement to provide funds to the project is conditioned on the City's determination to proceed with, modify, or cancel the project based on the results of a subsequent environmental review. (See CPD Notice 01-11, page 10 for suggested agreement language.) Other types of actions that are not considered a commitment of funds for purposes of Part 58 compliance are statements of funding reservation, e.g., approval of Consolidated Plan or Annual Action Plan or planning for and reserving non -HUD funds, including tax credits for the project for HUD funding. If the City is considering an application from a prospective participant and is aware that the participant is about to take an action within the jurisdiction that is prohibited by Part 58, then the City must take appropriate action to ensure that its objectives and procedures of NEPA and Part 58 are achieved [§ 58.22(c)]. "CONTEMPLATE" AND "COMMITMENT" DEFINITION FOR THE ENVIRONMENTAL REVIEW Once the City contemplates assisting a project or activity with HUD funds, (§ 58.32), neither HUD funds nor non -HUD funds may be committed (§ 58.22) until compliance with Part 58 has been achieved and documented. The following guidance is provided to clarify the meaning of the terms contemplate and commitment as these apply to the environmental review process. Contemplated HUD assisted action: 1. The City is considering an application from a prospective owner or beneficiary. 2. The City has identified a specific activity or project in its application. Commitment of funds: 1. Execution of a legally binding agreement—e.g., awarding construction contracts, entering into project agreements with developer, etc. 2. Expenditure of HUD funds—e.g., purchase of materials by a force account crew, hiring a consultant to prepare a Phase I Environmental Site Assessment, etc. 187 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSENFEAD L J Today's Small Town America 3. Use of HUD funds or non -HUD funds on "choice limiting actions": a. Actions having an adverse impact-e.g., demolition, dredging, filling, excavation. b. Actions limiting the choice of reasonable alternatives---e.g., real property acquisition, leasing, rehabilitation, demolition, related site improvements, relocating buildings or structures, conversion of land or buildings/structures. A commitment of funds is not: I Statements of funding reservation---e.g., approval of an application, CHDO reservations, planning for and reservation of non -HUD funds (including tax credits for the project for HUD funding.) 2 Non -legally binding agreements---e.g., An agreement with language such as, "Notwithstanding any provision of this Agreement, the parties hereto agree and acknowledge that this Agreement does not constitute a commitment of funds or site approval, and that such commitment of funds or approval may occur only upon satisfactory completion of environmental review and receipt by Recipient's determination to proceed with, modify or cancel the project based on the results of a subsequent environmental review. AGGREGATION OF PROJECT ACTIVITIES To determine the appropriate level of environmental review for a project, the City must group together (aggregate) all related project activities, whether the project is funded entirely by HOME funds, or only certain portions of the project will be funded by HOME funds. An environmental review must evaluate all activities that are geographically or functionally related, or part of a multi- year project. The appropriate level of environmental review for an aggregated project will be determined by whichever activity or activities being undertaken by the City or its partners will have the greatest environmental impact. For example, real property acquisition will have less of a physical impact on the human environment than newly constructing 30 units of affordable housing. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS ENIE`/ ► J Todav's Small Town Geographically related project activities, for example, might include a proposal to acquire four units for rehabilitation and resale to first time homebuyers. All the related activities are occurring on a single site. In aggregation, all these activities must be evaluated in a single review, regardless of the fact that HOME funds may only be used for rehabilitation. One activity cannot occur without the others, and therefore all the associated environmental impacts must be evaluated together. The environmental review for the acquisition of the properties cannot be separated from the environmental review for the rehabilitation of the properties. Multi-year aggregation is a process that addresses phased project activities. For instance, consider a three-year project, during which, real property will be acquired in the first year, infrastructure improvements will be installed in years two and three, along with several phases of affordable housing construction. Again, a single environmental review must be completed for all phases of the project before any of the activities may be undertaken. Only one request for release of funds (covering all project phases) needs to be submitted to HUD for approval. After HUD approval is received, no other approval or environmental action is required, unless circumstances arise that require the City to re-evaluate its original environmental findings. SOURCE DOCUMENTATION FOR ENVIRONMENTAL REVIEWS FIELD OBSERVATION — A visit to the project site to make observations of the general site conditions. 1. There should be written documentation of the conditions observed. 2. Include the name and title of the observer and the date of the site visit. PERSONAL CONTACT — Personal contacts are useful only when the individual contacted is an accepted authority on the subject or subjects. Documentation should include: 1. The name and title of the person contacted, 2. The date of the conversation, and brief notes of the key points. 3. Whenever the person that was contacted cites reports, records, or other document, the title, date, and source of the report should be noted. 4. Contacts can include staff experienced in an area (e.g., engineer, planner, historian, etc.). City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Town America PRINTED MATERIALS — Printed materials that are useful sources of detailed information may include: 1. Comprehensive land use plans, maps, statistical surveys, and studies are useful sources of detailed information. 2. The material must be current and reflect accepted methodologies. 3. Complete citations for all material must be included. REVIEWER'S EXPERIENCE — Professional judgment by City staff is acceptable if their expertise is relevant to the compliance issue. For example, a reviewer's knowledge may include: 1. Reviewing previous projects in the same area. 2. Professional finding of the reviewer in subjects where he or she has the background to make judgments about a specific factor, or 3. Reviewers that have the expertise to evaluate soil conditions, while others will need to consult an engineer or other specialist. SPECIAL STUDY — This is a study conducted for a project performed by qualified personnel using accepted methodologies. Some tests are relatively simple to perform but others may require elaborate equipment or personnel with additional expertise. The reviewer is responsible for obtaining assistance from others in order to have the appropriate tests or studies conducted. Examples of tests and/or studies include: 1. Archeological reconnaissance surveys, 2. biological assessment concerning threatened and endangered species, or 3. Phase I Site Assessments to determine site contamination. See HUD Handbook 1390.2, http://www.hudclips.org/sub nonhud/cgi/hudclips.cgi 190 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Sources of Compliance Documentation There are several types of resources necessary to demonstrating compliance with NEPA and the Federal laws and authorities. These resources provide written documentation in the environmental review record that is credible, traceable, and supportive of the conclusions reached by the RE. CATEGORIES OF ENVIRONMENTAL REVIEW One of the primary purposes that the environmental review process serves is to require the City to include environmental impacts as part of the overall deliberation process surrounding proposed projects. The HUD environmental review requirements at Part 58 were written to best strike a balance between the imposition of reasonable requirements upon the City (i.e., expediting the decision process for activities that clearly have no physical impact and requiring sufficient analysis for those that will alter environmental conditions), while ensuring that project decisions are well- documented. Therefore, the environmental review requirements are divided based on the level of impact that a proposed project might be anticipated. There are four (4) levels of environmental review identified in Part 58. The criteria for these levels span the range of possible impacts, from none whatsoever to significant physical impact. The levels under Part 58 include: 1. Exempt (§ 58.34); 2. A. Categorically Excluded subject to (§ 58.35); B. Categorically Excluded not subject to § 58.5 3. Environmental Assessment (§ 58.36 and Subpart E); and 4. Environmental Impact Statement (§ 58.37 and Subparts F and G). City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual America NEPA and the implementing regulations at 40 CFR 1500-1508 establish direction for these review levels. The bases for these review levels and categorizing various HOME -funded activities into the review levels is to determine if there is potential to cause significant impact on the human environment (i.e., natural resources, ecosystems, aesthetic, historic, cultural, social, economic, health, etc.). 1. Exempt HUD has determined that exempt activities will have neither a physical impact, nor potential for altering any environmental conditions. Therefore, these actions are exempt from compliance with NEPA and the Federal laws and authorities cited at § 58.5. According to 24 CFR 58.34, the following types of activities have been categorized as exempt from NEPA and other environmental laws and authorities: a. Environmental and other studies, resource identification, and the development of plans and strategies; b. Information and financial services; c. Administrative and management activities; d. Public services that will not have a physical impact or result in any physical changes, including but not limited to services concerned with employment, crime prevention, childcare, health, drug abuse, education, counseling, energy conservation, and welfare or recreation needs; e. Inspections and testing of properties for hazards or defects; f. Purchase of insurance; g. Engineering or design costs; h. Assistance for temporary or permanent improvements that do not alter environmental conditions and are limited to protection, repair, or restoration activities necessary only to control or arrest the effects from disasters or imminent threat to public safety including those resulting from physical deterioration; and L Any of the categorical exclusions listed in § 58.35(a) provided there are no circumstances that require compliance with any other Federal laws and authorities cited in § 58.5. 192 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEMEAD Today's Small Tow- America NOTE: Under HOME program rules, 24 CFR 92, in order to qualify as project costs, these activities must be associated with a specific project. Otherwise, they are considered administrative costs. Content of ERR — Exempt Activities 1. The City must document in writing its determination that an activity meets the conditions for exemption. The City does not have to issue a public notice or request release of funds (RROF) [§ 58.34(b)]. 2. In addition to making a written determination of exemption, the City must also determine whether the activity triggers any of the other requirements at 24 CFR 58.6, which are the Flood Disaster Protection Act; the Coastal Barriers Resources Act; and HUD's requirement for disclosure of properties located in airport runway clear zones. 2. Categorical Exclusions This term refers to a category of actions that do not individually or cumulatively have potential for significant effect on the human environment (40 CFR 1508.4). Therefore, neither an environmental assessment (EA) nor environmental impact statement (EIS) is required to comply with NEPA. Although these actions are categorically excluded under NEPA, a determination must still be made as to whether they would alter any environmental conditions that would require a review or compliance determination under the Federal laws and authorities cited in § 58.5. The laws and authorities cited in § 58.5 are freestanding from NEPA, such as the National Historic Preservation Act of 1966, the Executive Orders on Floodplain Management and Wetlands Protection, and several regulations specific to HUD concerning the health and safety of project occupants, to name a few. 193 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town America The City must certify that it has complied with the requirements under these laws and consider the criteria, standards, policies, and regulations of these laws and authorities. The section on "Compliance with NEPA and Related Federal Laws and Authorities" provides guidance on this. However, HUD has determined that certain kinds of categorical exclusions, because of the nature of the actions, would never alter any environmental conditions to create circumstances requiring compliance with these laws and authorities. Therefore, §58.35 identify two types of categorical exclusions: 1. Categorical exclusions subject to §58.5, and 2. Categorical exclusions not subject to § 58.5. 3. Categorical Exclusions subject to §58.5. Categorical exclusions subject to §58.5 are excluded from compliance with NEPA but must comply with the other related Federal laws and authorities cited in §58.5. It is generally evident from the nature and magnitude of such activities they do not have potential to have a significant impact on the human environment however, these types of activities are physical in nature and will alter environmental conditions that could, for example, affect historic properties, floodplains, wetland areas, and endangered species. Actions in this category include: 9. Acquisition, repair, improvement, reconstruction, or rehabilitation of public facilities (other than buildings)-e.g., replacement of water or sewer lines where the capacity is not changed more than 20 percent, reconstruction of curbs and sidewalks, and repaving of streets; 2 Removal of material and architectural barriers restricting the mobility of and accessibility to elderly and disabled persons; 3. Rehabilitation and improvement of single family (one -to -four unit) dwellings provided: a. The unit density is not increased beyond four units, b. The land use is not changed, and the footprint of the building is not increased in a floodplain or wetland; City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual W Small Town America 4. Rehabilitation and improvement of multifamily dwellings provided: a. the unit density is not increased more than 20 percent, b. it does not change residential use to non-residential use, c. and the estimated cost of rehabilitation is less than 75 percent of the replacement cost; 5. An individual action on one to four dwelling units where there is a maximum of four units on any one site. The term "individual action" refers to new construction, development, demolition, acquisition, disposition, or refinancing; 6. An individual action on five or more housing units developed on scattered sites when the sites are more than 2,000 feet apart and there are not more than four units on any one site; 7. Acquisition (including leasing) or disposition of, or equity loans on, an existing structure provided the structure acquired, financed, or disposed of will be retained for the same use; and 8. Any combinations of the above activities. Content of ERR — Categorical exclusions subject to § 58.5 The City of Rosemead will complete the Certification of Categorically Exclusion (subject to 58.5) and the Statutory Checklist forms to document its environmental findings. Such documentation must support the City's determinations related to compliance with the Federal laws and authorities cited in § 58.5. (Guidance on compliance is provided below in "Compliance with NEPA and Related Federal Laws and Authorities".) Upon completion of the checklist, the City will make one of three environmental findings in writing: 1. The project converts to exempt and does not require public notification or approval from the City [§ 58.34(a)(12)]; 2. The project invokes compliance with one or more of the laws and/or authorities and, therefore, requires public notification and approval from the City before funds are committed or spent; or 195 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E`AD Tndn, Small Town America 3. The unusual circumstances of the project may result in a significant environmental impact and, therefore, compliance with NEPA is required. Therefore, an environmental assessment (EA) must be completed. The ERR must also contain: 4. Supporting documentation used to prepare the review (See Source Documentation for Environmental Reviews). 5. If the project did not convert to exempt, a copy of public Notice of Intent to Request Release of Funds that was issued. 6. Copy of the Request for Release of Funds and Certification (HUD form 7015.15); and 7. Copy of Authority to Use Grant Funds (HUD form 7015.16), issued by the City of Rosemead (or HUD). In addition to making a written determination of categorical exclusion, subject to § 58.5, the City must also determine whether the activity triggers any of the other requirements at 24 CFR 58.6, which are the Flood Disaster Protection Act; the Coastal Barriers Resources Act; and HUD's requirement for disclosure of properties located in airport runway clear zones. [See Compliance Documentation Checklist (58.6) form and discussion in "Other Requirements (§ 58.)6]. 4. Categorical Exclusions not subject to § 58.5. The activities that are categorically excluded not subject to § 58.5 have been determined by HUD not to have potential for altering any environmental conditions where a review or determination of compliance with the Federal laws and authorities would be required. Actions in this category include: 1. Tenant -based rental assistance; 2. Activities to assist homebuyers to purchase existing dwelling units or dwelling units under construction---e.g., closing costs, down payment assistance, interest buy downs, and similar activities that result in the transfer of title; 3. Affordable housing pre -development costs with no physical impact---e.g., legal consulting, developer and other costs related to obtaining site options, project financing, administrative costs and fees for loan commitments, zoning approvals, and other related activities which do not have a physical impact; and 196 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSENTEAD Tw.y's Small Town America 4. Approval of supplemental assistance (including insurance or guarantee) to a project previously approved under Part 58, if the approval is made by the same RE that conducted the environmental review on the original project and re-evaluation of the environmental findings is not required under § 58.47. Content of ERR — Categorical exclusion not subject to § 58.5 The City will document in writing its determination that an activity meets the conditions for categorical exclusion not subject to § 58.5 and complete the Certification of Categorical Exclusion (not subject to 58.5) form to document designation of a HOME project or activity in this category. The City does not have to issue a public notice or request release of funds (RROF) [§ 58.34(b)]. In addition to making a written determination of categorical exclusion, subject to § 58.5, the City must also determine whether the activity triggers any of the other requirements at 24 CFR 58.6, which are the Flood Disaster Protection Act; the Coastal Barriers Resources Act; and HUD's requirement for disclosure of properties located in airport runway clear zones. [See Certification of Categorical Exclusion (not subject to 58.5) form and discussion in "Other Requirements (§ 58.6] 5. Environmental Assessment. Environmental Assessment (EA) refers to a category of actions which, either individually or cumulatively, have potential for significant effect on the human environment (40 CFR 1508.4). Therefore, the potential environmental impacts on the human environment resulting from the proposed activity must be analyzed and evaluated according to NEPA procedures, as well as the other Federal laws and authorities cited at §58.5. The environmental assessment (EA) is a public record that, upon completion, documents the City's findings and conclusions about environmental effects, and the reasons for its decision concerning those effects, as well as compliance with Federal laws and authorities. Actions that may be funded by HOME and that fall into the category requiring an Environmental Assessment (EA) would include, but are not limited to: 197 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual X 1. New construction of five or more residential units on a single site; SmaII Town 2. New construction of five or more single family units on scattered sites that are less than 2,000 feet apart; 3. Major rehabilitation or reconstruction of residential units that increases or decreases the unit density more than 20 percent; 4. Expanding the footprint of a single-family unit into the floodplain or wetland area; 5. Conversion of a non-residential structure to create a residential use; 6. Acquisition of land for development of a housing subdivision; and 7. Categorical exclusions with "extraordinary circumstances"-i.e., actions that are unique or without precedent, actions that are substantially similar to those that normally require an Environmental Impact Statement (EIS), actions that are likely to alter existing HUD policy or HUD mandates, or action that, due to unusual physical conditions on the site or in the vicinity, have the potential for significant impact on the environment or in which the environment could have a significant impact on users of the facility. Content of ERR — Environmental Assessment (EA) The City will complete a written determination that the project falls within this category. The EA includes the following information and analysis, according to NEPA regulations (40 CFR 1500-1508): 1. Determination of existing conditions; 2. Identification, analysis, and evaluation of all potential impacts on the human environment (i.e., social, economic and natural resources); Examination and recommendation of feasible ways to eliminate or minimize adverse environmental impacts; 4. Examination of alternatives to the proposed action; City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual COu Small Town America 5. Compliance determination for all other Federal laws and authorities cited in §58.5; And Determination as to a finding of no significant impact (FONSI) or a finding of significant impact (FSI), which requires the execution of an Environmental Impact Statement (EIS). The City will use the Environmental Assessment form in evidence of compliance with NEPA and the Federal laws and authorities cited in § 58.5. Upon completion of the environmental assessment, the City will make either a finding of no significant impact (FONSI), or a finding of significant impact (FOSI) determination. If a FONSI is made, the City must issue two public notices, submit a release of funds request and certification to HUD, and receive a release of funds from HUD before funds are committed or spent. The ERR must also contain: 1. Supporting documentation used to prepare the review. 2. Copy of public Notice of Intent to Request Release of Funds, if project did not convert to exempt. 3. Copy of the Request for Release of Funds and Certification (HUD form 7015.15); and 4. Copy of the Authority to Use Grant Funds (HUD form 7015.16) issued by the City of Rosemead (or HUD.) In addition, the City must also determine whetherthe project triggers any of the other requirements at 24 CFR 58.6, which are the Flood Disaster Protection Act; the Coastal Barriers Resources Act; and HUD's requirement for disclosure of properties located in airport runway clear zones. 6. Environmental Impact Statement (EIS) It is not typical for a HOME project to trigger the Environmental Impact Statement requirements. If the City believes that a project it is contemplating as a possible HOME project may in fact trigger these requirements, it should consult with HUD immediately before taking any further action. 199 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T... America COMPLIANCE WITH NEPA AND RELATED FEDERAL LAWS AND AUTHORITIES The following section provides guidance to assist the City in compliance with NEPA and the related Federal laws and authorities cited at § 58.5. 1. Historic Preservation (36 CFR Part 800) Section 106 of the National Historic Preservation Act requires the City to: a. Consider the effects of their undertakings on historic properties; and b. Provide the Advisory Council on Historic Preservation with a reasonable opportunity to comment with regard to such undertakings. Compliance with Section 106 is achieved by initiating procedures the Advisory Council on Historic Preservation has outlined at 36 CFR Part 800. Section 800.2(a) recognizes the City's certifying officer as having authority to carry out these procedural responsibilities. The focus of Part 800 is on the City deciding whether a proposed project will affect buildings, structures, or places that are listed on or are eligible for listing on the National Register of Historic Places (NR). In making this determination, the City must follow a detailed review process in consultation with the State Historic Preservation Officer (SHPO). This process also provides an opportunity for interested persons, agencies, and Indian tribes to be part of the City's decision concerning historic properties that may be affected. It is important to remember that before approval is given to proceed with HOME -funded projects, the environmental review record must show the Part 800 consultation process was completed. Basic steps for compliance with the Section 106 Review Process (36 CFR Part 800) include: 1. Determine whether the project is an undertaking, or has no potential to cause effects on historic properties; 2. Define the area of potential effects (APE) for the undertaking; 3. Identify and evaluate historic properties in the APE; 4. Determine the effect of the undertaking; M11 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual X 5. Assess the effects on listed and/or eligible properties; and 6. Resolve any adverse effects. Compliance Documentation Required — Historic Preservation The ERR should contain one of these types of documentation: 1. Letter from SHPO that no historic properties will be affected; Town Awd,i 2. The City adequately documented its finding of no historic properties affected and SHPO does not object within 30 days; 3. City documents that the project meets stipulations of a Programmatic Agreement executed with the SHPO; or 4. Memorandum of Agreement has been executed between the City and SHPO regarding mitigations measures that will be implemented to resolve adverse effects. 2. Floodplain Management (Executive Order 13.988 and 24 CFR Part 55) The purpose of Executive Order 11988 is to require the City to consider alternatives to developing projects in floodplains when other alternatives are available that achieve the same objective. This is to avoid risking lives and loss of propertythat results from occupying a floodplain, and to avoid losing the beneficial values of floodplains. Naturally vegetated floodplains can provide a broad area to spread and slow floodwaters, thereby reducing velocities and flood peaks. Slower floodwaters help maintain water quality because the slowed runoff allows sediments to be deposited. Floodplains are also important for recharging groundwater. Rainwater and surface water infiltrate through the generally porous soil of the floodplain into the groundwater. The City of Rosemead is required to avoid floodplain development whenever there are practicable alternatives to development in the floodplain. According to HUD regulation 24 CFR Part 55, floodplains are those land areas identified on maps published by FEMA as 100 -year floodplain (Zones A or V). If the project is a "critical action," the regulation also applies to areas in the 500- year floodplain (Zone B). Coastal high hazard areas are subject to high velocity waters, such as hurricane wave wash. FEMA maps designate these as Zones V1-30, VE, or V. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD Tnd,Y%Sin, II Tm An c 1,. Most, if not all, communities in the U.S. have been mapped by FEMA. However, if a community has not been mapped by FEMA, the City must establish whether or not the area is subject to one percent or greater chance of flooding in any given year [Section 6(c) of the Executive Order]. The City must research the best available information to determine whether buildings or structures could be damaged by floodwaters because of their location. The City may contract to have a special study completed or, use the following sources of information: 1. U.S. Corps of Engineers, 2. Community Flood Administrators; 3. U.S. Geological Survey Maps; 4. U.S.D.A. Natural Resources Conservation Service (formerly Soil Conservation Service); state departments of water resources; 5. county public works; or 6. Local flood control or levee districts. The City of Rosemead must follow and comply with the Basic steps for compliance with floodplain management requirements located at Section 55.20, which identifies the "eight -step" decision making process. Executive Order 11988: Step 1 Determine whether the proposed action is located in a 100 -year flood plain; Step 2 If the project is in a floodplain, publish notice of the proposal to consider an action in the floodplain (15 calendar day comment period); Step 3 Evaluate practicable alternatives to locating the proposed action in a floodplain ("Practicable" means capable of being done within existing constraints); Step 4 Identify the potential impacts associated with occupancy and modification of the floodplain; 202 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 'OSEMEAD L ) Today's Small Taw. America Step 5 Design or modify the action to minimize adverse impacts and preserve the beneficial values of the floodplain; Step 6 Reevaluate whether the proposed action is practicable; Step 7 If the RE decides to proceed with the project, it must publish a notice of the decision, addressing why there is "no practicable alternative", the alternatives that were considered, and the mitigation measures being adopted. (Seven calendar day comment period.); and Step 8 Implement the proposed action with mitigation measures. HUD has determined that certain activities are excluded from the 8 -step decision-making process, including: 1. HUD assistance for purchasing, 2. mortgaging or refinancing one -to four family properties, and 3. minor repairs or improvements on one -to four -family properties [§ 55.12]. NOTE: Part 55 is not applicable if FEMA has issued a Letter of Map Revision (LOMR) or Letter of Map Amendment (LOMA) for the subject site in a floodplain. Compliance Documentation Required — Floodplain Management The ERR should contain one of these types of documentation: 1. Evidence the proposed action is not within a special flood hazard area mapped by FEMA (i.e., 100 -year floodplain or 500 -year floodplain for critical actions); 2. Documentation of the decision-making process is not applicable (§ 55.12); or 3. The 8 -step decision making process was completed and a decision made that there is no practicable alternative City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD Today's Small Tmvn Amcrica 3. Wetlands Protection (Executive Order 11990) The purpose of the Executive Order 11990 (Wetlands Protection, May 24, 1977) is to: 1. Avoid, if possible, any long and short-term adverse impacts associated with destruction or modification of wetlands; and 2. To avoid direct or indirect support of new construction in wetlands whenever there is a practicable alternative. Compliance Requirements for Wetlands Protection 1. If new construction or conversion of vacant land is being proposed in a designated wetland, the RE should follow the decision-making process in § 55.20 (24 CFR Part 55) and conclude whether there is a practicable alternative to destroying or modifying the wetland. NOTE: A permit from the U.S. Army Corps of Engineers is required if the wetland is within or adjacent to navigable waters of the U.S. or within the jurisdiction of the Corps. Compliance Documentation Required — Wetlands Protection The ERR should contain one of these types of documentation: 1. The proposed action does not include new construction or expanding the footprint of a building; 2. Evidence the new construction will not occur in a designated wetland or expand the footprint of a building into a wetland; or 3. There is no practicable alternative, according to the completed 8 -step decision making process. (U.S. Army Corps of Engineers has issued a permit where they have wetland jurisdiction.) City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 7mvn Anicrica 4. Endangered Species (Endangered Species Act and 50 CFR 402) Section 7 of the Endangered Species Act requires that, when Federal assistance is used for a project, a determination must be made whether continued existence of Federally -listed endangered or threatened species is likely to be affected, and whether it will result in their Critical Habitats being destroyed or adversely modified. The regulation implementing compliance with the Act is 50 CFR 402, issued by the Departments of Interior (U.S. Fish and Wildlife Service) and Commerce (U.S. National Marine Fisheries). The regulation also covers species or critical habitat that is proposed for Federal -listing and is likely to be jeopardized by the project. Compliance Documentation Required — Endangered Species The ERR should contain one of these types of documentation: 1. Evidence the habitat will not be altered, or species affected. 2. If the proposed action may affect species or their habitat, there is evidence the USFWS or NMFS has reviewed the biological assessment and agrees with the findings of no effect. 3. If the proposed action will likely adversely affect species or their habitat, the USFWS or NMFS has issued either a "no jeopardy" or "jeopardy" biological opinion. S. Coastal Zone Management Act If the City chooses to use HOME funds for physical changes to properties or land within or adjacent to the coastal zone, the City must decide whether the project is consistentwith the state's approved coastal management program. Compliance Documentation Required — Coastal Zone Management 1. The ERR should contain a general location map or statement establishing there are no coastal zone management areas in the community or State of California or use other documentation that may be available. 205 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS ENUEAD Today's Small T.— America 6. Sole Source Aquifers Aquifers are underground geological formations that yield a significant amount of water to a well or spring. The regulations at 40 CFR Part 149 requires the City to: 1. Determine whether a project is within a Critical Aquifer Protection Area designated by EPA; and 2. Whether project activities have the potential to contaminate the aquifer. For example, drilling water wells and constructing water treatment and industrial facilities have the potential of contaminating aquifers. Compliance Documentation Required —Sole Source Aquifers The ERR should contain one of these types of documentation: 1. Documentation the proposed action is not within the boundaries of an EPA designated SSA; 2. Documentation the action is not a regulated activity within the boundaries of an SSA; or 3. Documentation that EPA has reviewed and commented on the proposed action within an SSA. 7. Wild and Scenic Rivers Act Entire river systems or portions of rivers may be designated wild, scenic, or recreational and included in the National Wild and Scenic Rivers System (NWSRS) either by Act of Congress or may be designated by a state or states if the U.S. Secretary of Interior finds it meets the criteria established by the Act. In order to be in compliance with this Act, the City must: City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD I T.d.,O Sov 11 Town Awdu 1. Determine whether any river listed in the NWSRS, or that is designated for inclusion in the NWSRS, would be directly and adversely affected by development activities associated with the project; and 2. If the project is located above or below a listed river, the City must determine whether the project will impact the river management area or could unreasonably diminish the scenic, recreational, and fish and wildlife values present in the area. Compliance Documentation Required — Wild and Scenic Rivers The ERR should contain one of these types of documentation: 1. Evidence the proposed action is not within one mile of a designated Wild, Scenic, or Recreational River (http://www.nps.gov/rivers/wildriverslist.html); or 2. Documentation that contact was made with the Federal (or State) agency that has administrative responsibility for management of the river and that the proposed action will not affect river designation. 8. Clean Air Act The Clean Air Act is a Federal law; however, the states do much of the work to carry out most of the Act. Each state develops state implementation plans (SIP) that contain its objectives and regulations for carrying out the Clean Air Act. The purpose of an implementation plan is to ensure that ambient concentrations of any of six air pollutants are within the established levels of the National Ambient Air Quality Standards (NAAQS). The six pollutants are: 1. Ozone, 2. Carbon Monoxide, 3. Particulate Matter, City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town America 4. Sulfur Dioxide, 5. Lead, And 6. Nitrogen Sources for pollutants include transportation vehicles, industrial facilities, and farming operations. Asbestos removal and abatement are a part of the Clean Air Act. Refer to 40 CFR 61, Subpart M, National Emission Standards for Hazardous Air Pollutants (NESHAP.) Compliance Documentation Required — Clean Air Act The ERR should contain one of these types of documentation: 1. A resource expert has determined the proposed action is not of a type that would contribute air pollution; 2. The proposed action is within an area in attainment with the NAAQS for all six pollutants; or 3. The proposed action is within a non -attainment area for one or more of the pollutants but is in conformance with the State Implementation Plan (SIP). 9. Farmland Protection Policy Act Q CFR Part 658) The purpose of the Farmland Protection Policy Act is to minimize the effect of Federal programs on the unnecessary and irreversible conversion of farmland to nonagricultural uses. The Act does not apply to lands already in, or committed to, urban development (i.e., 30 structures per 40 acres or water impoundment). However, land that meets the definition of prime or unique farmlands or is determined to be of statewide or local significance (with concurrence by the U.S. Secretary of Agriculture) is subject to the Act. 208 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Tmvn America If the City cannot determine whether or not the land is classified as prime or unique, it should request the USDA Natural Resources Conservation Service (NRCS) to make the determination by submitting Form AD -1006, the Farmland Conversion Impact Rating form. These forms are available at NRCS offices. Compliance Documentation Required — Farmland Protection The ERR should contain one of these types of documentation: Evidence the current zoning classification is not for farmland use (i.e., residential use, commercial use, etc.); 2. Information from NRCS that shows the site is not prime or unique farmland; or 3. Evidence from NRCS shows the site is classified prime or unique agricultural land, and the RE completed and submitted form AD -1006 to NRCS and received its comments. 10. Environmental Justice (Executive Order 12898) The Executive Order on Environmental Justice directs each Federal agency, and in the case of Part 58 the RE, to make achieving environmental justice part of its mission by "identifying and addressing as appropriate disproportionately high and adverse human health or environmental effects of its programs, policies, and activities on minority populations and low-income populations." Presently, there aren't any regulations for implementing the Executive Order. However, HUD has issued a Strategy Plan for Implementing Environmental Justice, which it uses as guiding principle in deciding whether the project could result in disproportionate high and adverse effects on these populations. During the environmental review process, health and environmental issues may arise concerning the suitability of the project site for its intended use, particularly its suitability for human habitation. The City should document how the Executive Order was given consideration in its final decision. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual W Compliance Documentation Required — Environmental Justice The ERR should contain ALL these types of documentation: 1. The proposed action is compatible with surrounding land uses; Small T—o America 2. The site or surrounding neighborhood does not suffer from adverse environmental conditions; 3. The proposed action would not create a negative environmental impact or aggravate an existing impact. 11. Site Contamination from Hazardous and/or Radioactive Materials [§ 58.5(i)(2)] Section 58.5(i)(2) states that all properties receiving HUD assistance must be free of hazardous materials, contamination, toxic chemicals and gases, and radioactive substances that "could affect the health and safety of the occupants of conflict with the intended utilization of the property." Properties having clear health risks for the occupants or inhabitants should be rejected. For multifamily housing (5 or more dwelling units) compliance with this policy requires efforts to identify any hazardous substances and radioactive materials that may be on site or off site that could harm inhabitants, as well as an evaluation of previous uses of the properties. Compliance Documentation Required — Site Contamination The ERR should contain one of these types of documentation: 1. Evidence the site is not contaminated (For multifamily housing projects this includes on-site and off-site contamination and previous uses of the site); 2. Evidence supporting a determination the hazard will not affect health and safety of the occupants or conflict with the intended use of the site City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSENUFAD J Today's Small T.— A.—!,c 12. Explosive/Flammable Operations (24 CFR 51, Subpart C) The purpose of this HUD regulation is to ensure there is an acceptable separation distance between people and buildings from stationary aboveground storage tanks more than 100 gallons in size and that contain materials that are explosive or flammable in nature (e.g., gasoline, fuel oil, kerosene, crude oil, propane). This is to prevent injury to people and damage to property from industrial accidents. The City must determine if there are hazardous liquids and gases being stored within one mile of the project, and within line -of sight of the project. The regulation does not apply to rehabilitation of buildings that will not increase residential densities, convert buildings for habitation, or makes vacant buildings habitable (§ 51.201). Neither does the regulation apply to individual fuel supply for one to four family housing units (Memorandum from Office of Environment and Energy, HUD, October 3, 1992). Compliance Documentation Required — Stationary Aboveground Storage Tanks The ERR should contain one of these types of documentation: 1. Document the proposed action does not meet the definition of a "HUD assisted project" (§ 51.201); 2. Field review documentation or aerial photos show no aboveground tanks within one mile; 3. If tanks are within one mile: 4. There's an effective barrier; 5. There's an acceptable separation distance for people and buildings; 6. The people and buildings can be protected with mitigation measures. 7. Noise Abatement and Control (24 CFR 51, Subpart B) 211 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual X 13. Noise Abatement and Control (24 CFR 51, Subpart B) Small Town America The purpose of this HUD regulation is to encourage suitable separation between noise sensitive lands uses, particularly housing, and major noise sources (i.e., roadways, railroads, and military and civilian airports). The City must determine whether there are any major roadways with 1,000 feet, railroads within 3,000 feet, and military or civilian airports (regulated by the Federal Aviation Administration) that are within 15 miles of the project. HUD's noise standards are based on the Day -Night Average (DNL) Sound Level System ---a system of calculating noise exposure instead of measuring it with instruments. This system is a 24-hour average sound level (expressed in decibels), with an additional 10 decibels added for nighttime noise. The calculation is based upon projected conditions that are expected at least 10 years beyond the project approval date. Noise is considered Acceptable when the exterior noise level is 65 DNL or less. Otherwise, attenuation measures must be incorporated into construction plans (66-75 DNL, Normally Unacceptable). If the exterior noise level is above 75 DNL (Unacceptable), the project requires special approval from the certifying officer, or it should be disapproved [24 CFR 51.104(a)(2)]. The City must determine whetherthe exterior noise level at the project site is within HUD's standard for acceptability, or whether noise attenuation is required, or another site should be selected for the project. Making this determination may require completing a noise calculation for roadways, railroads, and/or airports according to guidelines provided in The Noise Guidebook [HUD -953 -CPD (1)]. This guidebook is issued by and available from HUD online. Compliance Documentation Required — Noise Abatement and Control The ERR should contain one of these types of documentation: 1. Documentation the proposed action is not: 2. A noise sensitive land use, according to [§ 51. 101(a)(2)] (i.e., housing); City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSENFEAD Tnday', Small T.— An miu 3. Within 1000 feet of a major roadway, 3,000 feet of a railroad, or 15 miles of a military of FAA -regulated civil airfield. 4. If within those distances, documentation shows there's an effective noise barrier; 5. If within those distances, documentation shows the noise level is Acceptable (at or below 65 DNL); 6. Documentation shows the noise generated by the noise source(s) is Normally Unacceptable, and noise attenuation requirements are identified and will bring the interior noise level to 45 DNL and/or exterior noise level to 65 DNL. 14. Airport Clear Zones (24 CFR 51, Subpart D) Clear Zones, Runway Clear Zones, and Accident Potential Zones are designated areas at the end of airport runways where the greatest number of airplane accidents occur (about 75 percent). This HUD regulation prohibits using HUD assistance for: 1. New construction; and 2. Major or substantial rehabilitation and modernization activities if projects are located within a Clear Zone or Runway Clear Zone. It also prohibits using HUD assistance for these activities in an Accident Potential Zone, if such activities would: 1. Change the current use of the facility; 2. Significantly increase the density or number of people at the site; or 3. Introduce explosive, flammable, or toxic materials to the area. However, this prohibition does not apply to the purchase, sale, or rental of existing properties, nor to minor rehabilitation/modernization or emergency assistance activities. NOTE: (Minor rehabilitation/modernization would mean, for Clear Zones and Runway Clear Zones, it does not significantly prolong the physical or economic life of a building. for Accident Potential Zones, it does not change its use, increase density, or introduce explosive, flammable, or toxic materials. See § 51.302.) 13 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual COVA Compliance Documentation Required — Airport Clear Zones The ERR should contain one of these types of documentation: Small Town America 1. Documentation there are no FAA -regulated airports within 2500 feet and/or Department of Defense airfields within 15,000 feet (about 2.8 miles) of the proposed project; 2. There's documentation the rule is not applicable to the proposed project (i.e., acquisition of an existing building, "minor" rehabilitation, or emergency action); 3. The project is within the specified distances, but the map of the airport/airfield shows the proposed action is not located within a Runway Clear Zone, Clear Zone, or Accident Potential Zone. Compliance with NEPA The focus of NEPA is on addressing potential impacts related to the human environment (i.e., social, economic and natural resources). So, not only must the Environmental Assessment (EA) address compliance with the Federal laws and authorities (§ 58.5) that were previously discussed in this chapter, but the City must also address additional environmental factors. The City must determine the effects of the proposed project on the character, features and resources of the project area. Determinations of impact should be based on: 1. site observations, 2. information from relevant documents and reports, 3. special studies, or 4. correspondence with the appropriate government agencies. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Tmvn America The City of Rosemead will visit the project site to assess or determine the presence/absence of the following factors included in the Environmental Assessment Checklist that includes: 1. Unique and natural features; 2. Site suitability, access, and compatibility with the surrounding environment; 3. Soil stability, erosion, and drainage; 4. Nuisances and hazards (manmade or built); and 5. Commercial/retail and transportation. The City must contact the appropriate local agencies to assess the impact that the project will have on the areas listed in the checklist. Detailed guidance is provided in the HUD publication entitled Environmental Review Guide for Community Development Block Grant Programs under Title I of the Housing and Community Development Act of 1974, as Amended (HUD -CPD -782(2), September 1991). A summary of some of this guidance is includes: I Unique and natural features. To supplement the determination of unique and natural features, contact your state agency that deals with natural resources to determine if any designated Natural Areas or Rare Species Habitats will be affected by the project. 2 Site suitability, access, and compatibility with the surrounding environment. To supplement the determination of site suitability, accesses, and compatibility with the surrounding environment, contact the local planning agency or board. 3. Soil stability, erosion, and drainage. To supplement the determination of soil stability, erosion and drainage, refer to the Natural Resource Conservation Service (NRCS) County Soil Survey to determine if engineering restraints are indicated. The Soil Survey may be obtained by contacting the local NRCS office. Provide comments from the site engineer or local development department if engineering restraints are indicated based on the Soil Survey. Where applicable, a review of a geologic map produced by the state geological surveys may be required. 4. Water supply/sanitary sewers. To assess water supply/sanitary sewers, contact the local public works department. 215 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEMEAD Today's Small T—n America 5. Solid waste disposal. To assess solid waste disposal, contact the local public works department. 6. School services. To assess school services, contact the local school board. 7. Parks, recreation, and social services. To assess parks, recreation, and social services contact the local planning department, parks and recreation department, and social services department. 8. Emergency health care, fire and police services. To assess emergency health care, fire, and police services contact the local fire department, police department, and emergency management organization. 9. Transportation. To assess transportation, contact the state or city transportation department. Once determinations have been made, the appropriate impact code must be entered from the list provided in the EA that signifies: a. No impact anticipated; b. Potentially beneficial; c. Potentially adverse; d. Requires mitigation; and e. Requires project modification. The City must note names, dates of contact, telephone numbers and page references as well as any mitigation measures required. Attach additional source documentation to the EA as appropriate. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSENTEAD L J Today's Small Town America 15. OTHER REQUIREMENTS (§ 58.6) The following section outlines other Environmental Review requirements. A. Flood Insurance Section 202 of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4106) requires that Federal funds shall not be provided to an area identified by the Federal Emergency Management Agency (FEMA) as having special flood hazard areas unless: 1. The community is participating in the National Flood Insurance Program, or it has been less than a year since the community was designated as having special hazards; and 2. Flood insurance is obtained. The City of Rosemead is responsible for ensuring that property owners receiving HOME assistance take flood insurance on properties located in a 100 -year floodplain. Flood insurance must be taken for the life of a loan, or the useful life of an improvement funded by a grant. B. Coastal Barriers HUD Assistance may not be used for HOME assisted activities proposed in the Coastal Barrier Resource System. The Act prohibits Federal assistance for development or improvement of barrier islands that are subject to frequent damage by hurricanes and high storm surges. C. Runway Clear Zone or Clear Zone 1. The City must advise buyers of existing property whether the property is located in a runway clear zone or clear zone. 2. The City must inform the buyer of the implications of such a location, and that there is a possibility that the property may, at a later date, or be acquired by the airport operator. 3. The buyer must sign a statement acknowledging receipt of this information. (A copy of this disclosure statement, Notice to Prospective Buyers of Properties Located in Runway Clear Zones and Clear Zones/Accident Potential Zones, is contained in the EA form.) 217 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual X 16. RELEASE OF FUNDS AND APPROVAL PROCESS Small T—n America The City of Rosemead will adhere to the following steps related to the release of funds and approval process. Public Notification The public notification process is an integral part of the environmental review process that allows the public, interested persons, and agencies to voice their opinions about the project's potential environmental impact and the City's environmental findings. Public notices are required when the City determines that: 1. a project which is categorically excluded subject to § 58.5 cannot convert to exempt, or 2. when the City prepares an environmental assessment (EA) or environmental impact statement (EIS). Categorical Exclusions That Cannot Convert to Exempt The City must issue a Notice of Intent to Request Release of Funds if: 1. the proposed activity triggers compliance with any of the Federal laws and authorities, and 2. There is documentation supporting the finding, Publish or post/mail a Notice of Intent to Request Release of Funds (NOI/RROF), according to §§ 58.45 and 58.70. Public Comment 1. A minimum of 7 calendar days must be allowed for public comment if the notice is published in a newspaper of general circulation in the affected community, or 2. A minimum of 10 calendar days if the notice is posted and/or mailed, according to established citizen participation procedures. 18 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Town America NOTE: If the notice is published, it only needs to appear once in the newspaper and does not have to be published again for each of the 7 days of the comment period. If posted, the notice must be maintained in place until after the public comment period has expired. 3. The public comment period begins at 12:01 a.m. local time on the day following the publication or posting/mailing date of the notice (§ 58.21). The City must consider and respond to any comments received and resolve any outstanding issues before signing and submitting a Request for Release of Funds and Certification to HUD. 4. A copy of the public notice must accompany this request. 5. HUD has 15 calendar days from the date it receives the City's request (or 15 days from the date that it appears in the notice, whichever is later) before it may approve release of funds, (Authority to Use Grant Funds is issued). Additionally, the City must when publishing or posting/mailing the notice, at minimum distributes a copy of the notice, to: 1. individuals and groups known to be interested in the project/activities, 2. to the local news media, 3. to the appropriate tribal, 4. local, state and Federal agencies, and 5. Regional Office of the Environmental Protection Agency having jurisdiction, and to HUD (§ 58.45). Environmental Assessments Upon completion of the EA, the City will make either: 1. A finding of no significant impact (FONSI), or 2. A finding of significant impact (FOSI) determination. 19 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual X small Tmvn America In the event that a FONSI determination is made, the City must issue two public notices: 1. Finding of No Significant Impact (FONSI) and 2. Notice of Intent to Request Release of Funds (NOI/RROF). NOTE: These notices may be published concurrently. When there is a combined FONSI/NOI-RROF notice: 1. A minimum of 15 calendar days must be allowed for public comment if the notice is published in a newspaper of general circulation in the affected community, or 2 A minimum of 18 calendar days if the notice is posted and/or mailed, according to established citizen participation procedures. NOTE: If the notice is published, it only needs to appear once in the newspaper and does not have to be published again for each of the 15 days of the comment period. If the notice is posted, it must be maintained in place until after the public comment period has expired. The public comment period begins at 12:01 a.m. local time on the day following the publication or posting/mailing date of the notice (§ 58.21). I The City must consider and respond to any comments received and resolve any outstanding issues before signing and submitting a Request for Release of Funds and Certification to HUD. 2 A copy of the public notice must accompany this request. 3. HUD has 15 calendar days from the date it receives the City's request (or 15 days from the date that appears in the notice, whichever is later) before it may approve release of funds, (Authority to Use Grant Funds is issued.) In the event that a FOSI is made: 1. The City must initiate an Environmental Impact Statement (EIS) in accordance with Subparts F and G of Part 58. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual C An EIS has additional public involvement and notification requirements. Small Twn A—do Additionally, the City must at minimum when publishing or posting/mailing the notice distribute a copy of the notice, to: 1. Individuals and groups known to be interested in the project/activities, to the local news media, 2. To the appropriate tribal, 3. Local, state, and Federal agencies, 4. To Regional Office of the Environmental Protection Agency having jurisdiction, and to HUD (§ 58.45). NOTE: All projects involving the rehabilitation of existing buildings or structures must be free of friable asbestos. Testing by a state -certified asbestos testing company or individual for the presence of friable asbestos must be conducted before HOME assistance can be approved. SUMMARYEXHIBIT 10 .O ACTIVITY Activity Action Documentation/Form Notes Administration Exempt § 58.34 (a) Complete Certification Under HOME rules, funds of Exemption must be associated with a specific project to be considered a project cost rather than an administration cost. TBRA Cat. Ex. Not Complete Certification Public notification and subject to § 58.5 of Categorical Exclusion HUD approval is not § 58.35 (b)(1) (not subject required. to § 58.5) Homeowner- Cat. Ex. Subject to Complete Certification If project does not Rehabilitation § 58.5 of Categorical Exclusion convert to exempt, public § 58.35 (a)(3)(i) (subject to 58.5), notification and HUD Statutory Checklist, and approval is required prior Compliance to committing and Documentation expending funds. Checklist (58.6) City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Ee Small Torn America Homeowner- Cat. Ex. Subject to Complete Certification If project does not Reconstruction § 58.5 of Categorical Exclusion convert to exempt, public § 58.35 (a)(4)(ii (subject to 58.5), notification and HUD Statutory Checklist, and approval is required prior Compliance to committing and Documentation expending funds. Checklist (58.6) Homebuyer Cat. Ex. Subject to Complete Certification If project does not Acquisition existing § 58.5 of Categorical Exclusion convert to exempt, public unit § 58.35 (a)(5) (subject to 58.5), notification and HUD Statutory Checklist, and approval is required prior Compliance to committing and Documentation expending funds. Checklist (58.6) Homeowner -New Cat. Ex. Subject to Complete Certification If project does not Construction § 58.5 of Categorical Exclusion convert to exempt, public development (single (subject to 58.5), notification and HUD family 1-4 units) Statutory Checklist, and approval is required prior Compliance to committing and Documentation expending funds. Checklist (58.6) New Construction Cat. Ex. Subject to Complete Certification If project does not development (5 or § 58.5 of Categorical Exclusion convert to exempt, public more single-family § 58.35 (a)(4)(ii) (subject to 58.5), notification and HUD units on scattered Statutory Checklist, and approval is required prior sites: Compliance to committing and • The scattered sites are Documentation expending funds. more than 2,000 feet Checklist (58.6) apart, and • No more than 4 units per site Acquisition, Cat. Ex. Subject to Complete Certification If project does not Rehabilitation and § 58.5 of Categorical Exclusion convert to exempt, public Resale (single family (subject to 58.5), notification and HUD 1- 4 units) Statutory Checklist, and Approval is required prior Compliance to committing and Documentation expending funds. Checklist (58.6) Rental Acquisition Categorically Complete Certification If project does not existing building Excluded Subject of Categorical Exclusion convert to exempt, public (single family 1-4 to § 58.5 (subject to 58.5), notification and HUD units or multifamily) Statutory Checklist, and approval is required prior Compliance to committing and City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual C SmaII Town America 23 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Documentation expending funds. Checklist (58.6) Rental Rehabilitation Categorically Complete Certification If project does not (multi -family 5 or Excluded subject of Categorical Exclusion convert to exempt, public more units): to § 58.5 (subject to 58.5), notification and HUD ✓ Unit density will Statutory Checklist, and approval is required not change more Compliance prior to committing and than 20% as a Documentation expending funds. result of rehab; Checklist (58.6) ✓ Current use will not change from ✓ residential to nonresidential; and/or ✓ Estimated cost of rehab is less than ✓ 75% of replacement cost after rehab Vacant Land Environmental Complete Public notification and Acquisition for New Assessment Environmental HUD approval is required Construction (Rental Assessment (which prior to committing and or Single Family, 5 or includes NEPA and expending funds more units on a site) related Federal laws and authorities at § 58.5, as well as§58.6 requirements) New Construction Environmental Complete Public notification and development (5 or Assessment Environmental HUD approval is required more single-family Assessment (which prior to committing and units on scattered includes NEPA and expending funds sites): related Federal laws and ✓ The scattered sites authorities at § 58.5, as are less well as § 58.6 ✓ than 2,000 feet requirements apart, and/or ✓ There a more than 4 units per site Homeowner- Environmental Complete Public notification and Rehabilitation Assessment Environmental HUD approval is required ✓ Footprint of Assessment (which prior to committing and building is includes NEPA and expending funds 23 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual increased in a floodplain or wetland. related Federal laws and authorities at § 58.5, as well as § 58.6 requirements) Rental Rehabilitation Environmental Complete Public notification and (multi -family 5 or Assessment Environmental HUD approval is required more units): Assessment (which prior to committing and ✓ Unit density is includes NEPA and expending funds changed more than related Federal laws and 20% as a result of authorities at § 58.5, as rehab; well as § 58.6 ✓ Current use will be requirements) changed from residential to nonresidential or vice versa; and/or ✓ Estimated cost of rehab is more than 75% of replacement cost after rehab NOTE: Except for administrative costs, combinations of activities above that make up a project must be evaluated in a single environmental review. Whichever of the project activities requires the highest level of review dictates the type of review required for the entire project. PROCEDURE 1. The City of Rosemead City Manager is the designated Certifying Official. The City Manager (or designee) will sign all appropriate HUD certifications and the like. 2. The City's environmental review process will be completed by the Community Development Department Director and/or his/her designee. 3. The City will ensure the proper classification, completeness, and accuracy of the environmental review preparation. 4. The Housing Projects Coordinator will execute the request of release of funds (RROF), and submit to HUD, which issues the environmental clearance, if applicable. 5. By the City's Certifying Official (CO) signing the RROF, he/she is certifying the City: City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD f Ilulay's Small Town America a. Request of Release of Funds and Certification, has carried out its responsibilities for environmental review, decision-making and action pertaining to the proposed HOME -funded project b. Has assumed responsibility for and complied with and will continue to comply with, the National Environmental Policy Act of 1969 (NEPA), as amended, and the environmental procedures, permit requirements and statutory obligations of the laws cited in 24 CFR §58.5; and agrees to comply with the authorities in 24 CFR §58.6 and applicable State and local laws. c. Has, after considering the type and degree of environmental effects identified by the environmental review completed for the proposed project, found that the proposal did not require the preparation and dissemination of an environmental impact statement (EIS). (Note: If it is an EIS is needed, contact the HOME Program immediately for further guidance.) NOTE: In certain limited instances, a project that is considered Categorically Excluded, and Subject to 24 CFR Part 58.5, may convert to Exempt after the Statutory Checklist has been completed (see instructions for the Statutory Checklist, http:Hhousing.mt.gov/content/HM/docs/HMAdminManuaI/Chap2/2011/HMChapO2Exh2G2C ESTlnstruct.docfor further guidance Exhibit xxx). d. Has disseminated and/or published in the manner prescribed by 24 CFR §§58.43 and 58.55 a notice to the public in accordance with 24 CFR §58.70 and evidenced by the copy (copies) or evidence of posting and mailing procedure attached to the environmental review package submitted to the HOME Program. e. Follows procedures and requirements of 24 CFR Part 58 relating to the dates for all statutory and regulatory time periods for review, comment, or other action. f. Has, in accordance with 24 CFR §58.71(b), advised the recipient (if different from the responsible entity) of any special environmental conditions that must be adhered to in carrying out the project. g. As the duly designated certifying official of the responsible entity, the CO is also certifying that: i. He/she is authorized to and consents to assume the status of Federal official under the National Environmental Policy Act of 1969 and each provision of law designated in the 24 CFR §58.5 list of NEPA-related authorities insofar as the provisions of these laws apply to the HUD responsibilities for environmental review, decision-making, and action that have been assumed by the responsible entity. ii. He/she is authorized to and accepts on behalf of the recipient personally, the jurisdiction of the Federal courts for the enforcement of all these responsibilities, in his/her capacity as certifying officer of the responsible entit City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E`AD J Tod,0 S, ,11 Tnwn An,cHu CHAPTER 9 ADMINISTRATIVE REQUIREMENTS PART 1: GENERAL REQUIREMENTS A. ELIGIBLE ADMINISTRATIVE AND PLANNING COSTS The City of Rosemead will implement the following general administrative procedures: 1. Charge no more than the allowed maximum of 10 percent of the HOME allocation for reasonable administrative and planning costs including staff costs as well as other administrative costs. 2. Charge no more than the 20 percent cap for certain soft costs incurred that is project related. a. If a consultant it used the consultant fee, if any, must be included in an amount not to exceed ten percent (10 percent) of the requested HOME Program allocation in the proposed development budget. b. If a consultant is not used the amount must not exceed ten percent (10 percent) of the requested HOME Program allocation as reimbursement of project delivery costs. c. The HOME Program allocation may not include both a consultant fee and a project delivery cost reimbursement. 3. Utilize ONLY one of the two following options when charging eligible administrative and planning costs that include expenditures for salaries, wages, and related costs of City staff responsible for the HOME Program administration: Option 1: Include the entire salary, wages, and related costs of each person whose primary responsibility involves program administration assignments. OR Option 2: Determine the pro rata share of salary, wages, and related costs of each person whose job includes any program administration assignments for each person. 4. Restrict charging other planning and administrative costs to include: a. Goods and services necessary for administration (utilities, office supplies, etc.); b. Administrative services under third party agreements (e.g., legal services); c. Administering a tenant -based rental assistance (TBRA) program; City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 'OSENMEAD L f 7oda)•'s Small Tmvn America d. Providing public information; e. Fair housing activities; f. Indirect costs under a cost allocation plan prepared in accordance with applicable Office of Management and Budget (OMB) Circular requirements and approved by the City of Rosemead; and g. Complying with other Federal requirements. 5. Restrict charges of eligible project -related soft costs to include Staff and overhead costs: incurred by the City or a third -party contractor that are directly related to carrying out specific HOME projects that include: a. Appraisals; b. Preparation of work specifications; c. Loan processing and underwriting; d. Construction inspections and oversight; e. Inspections for the presence of lead hazards or defective paint; f. Advisory and other relocation services; g. Project -specific environmental reviews; and 6. Administrative costs charged to the project will not be included in the loan to the project owner. 7. If the project does not go forward, project costs must be charged as administrative costs. For further guidance, refer to HUD Notice CPD 06-01 "Administrative Costs, Project -related Soft Costs, and Community Housing Development Organization (CHDO) Operating Expenses under the HOME Program," which is available online at: http://www.hud.gov/offices/cpd/affordablehousing/lawsandregs/notices/. B. UNIFORM ADMINISTRATIVE REQUIREMENTS Sub -part K (24 CFR 92.500 - 92.509) The City of Rosemead will comply with the following administrative requirements pertaining to the financial management and audit standards. 1. OMB Circular A-87 "Cost Principles for State, Local, and Indian Tribal Governments": This circular establishes principles and standards to provide a uniform approach for determining allowable costs under Federal grants and other agreements with states and local governments and Indian tribal governments. 2. Certain provisions in 24 CFR Part 85: These regulations set forth uniform requirements for financial management systems, procurement, reports and records, and grant close- outs for Recipients of Federal grant funding. 27 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small T—n America 3. OMB Circular A-133 (Audit Requirements): Audit thresholds and requirements are outlined in OMB Circular A-133. 4. OMB Circular A-122, "Cost Principles for Non -Profit Organizations," or, for institutions of higher education, OMB Circular A-21 "Cost Principles for Educational Institutions": This circular establishes principles for determining allowable costs under grants, contracts and other agreements with nonprofit organizations. 5. Certain provisions of 24 CFR Part 84: The regulations at 24 CFR Part 84 implement OMB Circular A-110 and set forth uniform requirements for nonprofit organizations, including financial management systems, property standards, procurement standards, reporting and record-keeping. Attachment 3-1 lists the applicable provisions. 6. The requirements at 24 CFR 84.21, "Standards for Financial Management Systems" applies to CHDOs who are acting as an owner, developer or sponsor of HOME assisted housing. C. WRITTEN AGREEMENTS Written agreements are important legal documents that assist the City of Rosemead to protect investments and enforce HOME Program rules, for verifying compliance and monitoring performance, and methods of enforcing program requirements. The City of Rosemead's written agreement will serve as a concise statement of the relationship between the City and a funded entity/beneficiary of HOME funds. It will also clearly state the conditions under which the HOME funds are provided. REQUIRED PROVISIONS The City of Rosemead HOME agreements will include at minimum provisions based on the Final Rule (24 CFR Part 92) that details the specific HOME provisions that must be included in written agreements for beneficiaries that may receive HOME funds. The provisions are: a. Use of funds: Description of tasks to be performed, schedule for completing tasks, a budget in sufficient detail to effectively monitor performance and the period of the agreement. (For nonprofit and for-profit housing owner, sponsor, or developers, the duration of the agreement will be in a separate clause.) 28 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small T.— A—ft. b. Reversion of assets/program income requirements: States whether program income, unexpended funds, or other assets will be returned to the City. c. Uniform administrative requirements: Compliance with applicable Federal administrative requirements (OMB Circular A-87 and applicable provisions of 24 CFR Part 85 for governmental entities, or OMB Circular A-122 and applicable provisions of 24 CFR Part 84 for non-profit entities). d. Other Federal requirements: Requirements regarding non-discrimination and equal opportunity; affirmative marketing and minority outreach; environmental review; displacement, relocation and acquisition; labor standards; lead-based paint; and conflict-of-interest. e. Affirmative marketing: Requirements for affirmative marketing in projects of five or more HOME -assisted units. f. Requests for disbursements of funds: Requirement that HOME funds may not be requested until funds are needed for payment of eligible costs. The amount of each request must be limited to the amount needed. Program income must be returned to the City of Rosemead before any new funding requests will be provided. g. Records and reports: Enumeration of records that must be maintained, and information and reports that must be submitted. h. Enforcement of the agreement: This provision is in the agreement with all parties, including owners, and is the means of enforcing the provisions of the written agreement. 1. Template agreements a. The City's template contracts, agreements and other legal documents as provided by the City's Planning and Community Development staff must be used. 2. Duration of agreements a. The agreement must specify the duration of the agreement. If the housing assisted under the agreement is rental housing, the agreement must be in effect through the affordability period required by the City of Rosemead. If the housing assisted under this agreement is homeownership housing, the agreement must be in effect at least until the completion of the project and transfer of ownership to a low- income family. 29 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual X 3. Amending the documents Town America a. Written agreements may be amended by mutual agreement of the parties when regulations and requirements change, or when adjustments to funding levels or other conditions related to a specific project are needed. EXHIBIT 11 WRITTEN AGREEMENT REQUIRED PROVISIONS OWNERS, REQUIRED PROVISION (§92.504) SUBRECIPIENTS SPONSORS, DEVELOPERS CONTRACTORS HOMEOWNERS (CHDOS) Use of HOME Funds ✓ V Affordability (§92.252 or §92.254) Program Income ✓ Uniform Administration requirements (§92.505) Project requirements (as applicable in Subpart F) � 2.254 (b) only Property Standards (§92.251 and (§92.355) `/ Other Program Requirements Except (Subpart H except (§92.252 and 92.505, (§92.357) 92.506, 92.352 Affirmative Marketing ((§92.351) ✓ V/ Requests for Disbursement of Funds ✓ 230 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD f Today's Small 7mvn Amuk. Reversion of Assets ✓ I/ Records and Reports ✓ V Enforcement of the Agreement (§92.252 and 24 CFR Part 85 as applicable) ✓ V/ Duration of the Agreement CHDO Provisions ((§92.300 and (§92.301) V Suggested Provisions (not HOME Requirements) `/ Roles and Responsibilities ✓ V Description of the Project ✓ Performance Standards ✓ Conflict of Interest Monitoring ✓ V Close-out Requirements ✓ V/ Non -Compliance ✓ V City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town Anwriu PROCEDURE 1. Before any City of Rosemead HOME funds are committed or disbursed the City will enter into a written agreement. 2. For all development activities, the City of Rosemead will select and/or approve a closing entity to provide closing services for all HOME Program transactions using the City's approved documents. 3. The City of Rosemead Community Development Department staff will provide closing instructions for all HOME Program funded transactions to the closing entity. 4. The City of Rosemead will be responsible for payment of costs associated with closing the HOME Program portion of the transaction on both homeowner and rental activities. D. CONFLICT-OF-INTEREST The City of Rosemead will comply with the following conflict of -interest provisions: 1. 24 CFR Parts 84 and 85, and CFR 85.36 and 24 CFR 84.42. 2. Provisions not covered by 24 CFR Parts 84 and 85, set forth in the HOME regulations. Additionally, the HOME regulations include conflict of interest provisions for nonprofit, for- profit owners/developers/sponsors and CHDOs. 3. No employee, officer, agent of the city shall participate in the selection, award or administration of a contract supported by HOME if a conflict -of interest, either real or apparent, would be involved; 4. City employees, officers and agents do not accept gratuities, favors or anything of monetary value from contractors, potential contractors or parties to sub -agreements; and 5. Enforce provisions for penalties, sanctions or other disciplinary actions for violations of standards. 6. no person who exercises or has exercised any functions or responsibilities with respect to HOME activities or who is in a position to participate in decisions or gain inside information: a. May obtain a financial interest or benefit from a HOME activity; or the City of Rosemead HOME Program Operations; City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD J TnAay's Small T.— America b. Have an interest in any contract, subcontract, or agreement for themselves or for persons with business or familyties. NOTE: This requirement applies to covered persons during their tenure and for one year after leaving the Recipient entity. 7. Include the conflict-of-interest provision in written agreements and other documents with owners, developers, and sponsors. Monitoring of projects will include necessary actions to ensure that the conflict of interest provision is adhered to. E. HOME Provisions for Nonprofit and For -Profit Owners, Developers, CHDOs, and Sponsors The City of Rosemead will comply with the HOME Final Rule that includes a conflict-of-interest provision applicable to for-profit and nonprofit owners, developers, and sponsors of HOME- assisted housing. This provision states that: 1. No owner, developer, or sponsor of HOME -assisted housing, including their officers, employees, agents, consultants, or elected or appointed officials, may occupy a HOME - assisted unit in a development. NOTE: This provision does not apply to: a. An individual receiving HOME funds to acquire or rehabilitate his/her principal residence, or, b. An individual living in a HOME -assisted rental housing development where he/she is a project manager or a maintenance worker in that development. Exceptions: Exceptions to this conflict-of-interest provision (governing owners, developer, and sponsors of HOME -assisted housing) may be granted by the City after obtaining a waiver from HUD on a case-by-case basis based on the following factors as set forth in the regulations: a. Whether the person receiving the benefit is a member of a group or class of low- income persons intended to be the beneficiaries of assisted housing, and the exception will permit him or her to receive generally the same interests or benefits as are being made available or provided to the group as a whole; 233 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEM-EAD I Today's Small T.— America b. Whether the person has withdrawn from his or her functions or responsibilities, or the decision-making process with respect to the specific assisted housing in question; c. Whether the tenant protection requirements of CFR 92.253 (prohibited lease terms, termination of tenancy and tenant selection) are being observed; d. Whether the affirmative marketing requirements are being observed and followed; and e. Any other factor relevant to the City's determination, including the timing of the requested exception. F. RELIGIOUS ORGANIZATIONS HOME FUNDS MAY BE PROVIDED TO PRIMARILY RELIGIOUS ORGANIZATIONS FOR ANY ACTIVITY, EXCLUDING INHERENTLY RELIGIOUS ACTIVITIES. 1. AS OF THE SEPTEMBER 30, 2003 FINAL RULE FOR 24 CFR PART 92, HUD IDENTIFIED REGULATIONS FOR EIGHT PROGRAMS, INCLUDING THE HOME PROGRAM, TO ELIMINATE BARRIERS AND ENSURE THAT THESE PROGRAMS ARE OPEN TO ALL QUALIFIED ORGANIZATIONS REGARDLESS OF THEIR RELIGIOUS CHARACTER. G. HOME INVESTMENT TRUST FUND ACCOUNT The HOME Investment Trust Fund Account is the account established by the U.S. Treasury and managed through HUD's Integrated Disbursement and Information System for the Program. 1. Establishment The Secretary shall establish for each participating jurisdiction a HOME Investment Trust Fund, which shall be an account (or accounts as provided in section 12749(c) of this title) for use solely to invest in affordable housing within the participating jurisdiction's boundaries or within the boundaries of contiguous jurisdictions in joint projects which serve residents from both jurisdictions in accordance with the provisions of this part. 2. Line of credit The Secretary shall establish a line of credit in the HOME Investment Trust Fund of each participating jurisdiction, which line of credit shall include: 234 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual C Small Town America a. funds allocated or reallocated to the participating jurisdiction under section 12747 of this title, and b. any payment or repayment made pursuant to section 12749 of this title. 3. Reductions A participating jurisdiction's line of credit shall be reduced by: a. funds drawn from the HOME Investment Trust Fund by the participating jurisdiction, b. funds expiring under subsection (g) of this section, and c. any penalties assessed by the Secretary under section 12754 of this title. 4. Certification A participating jurisdiction may draw funds from its HOME Investment Trust Fund, but not to exceed the remaining line of credit, only after providing certification that the funds shall be used pursuant to the participating jurisdiction's approved housing strategy and in compliance with all requirements of this subchapter. When such certification is received, the Secretary shall immediately disburse such funds in accordance with the form of the assistance determined by the participating jurisdiction. S. Investment within 15 days The participating jurisdiction shall, not later than 15 days after funds are drawn from the jurisdiction's HOME Investment Trust Fund, invest such funds, together with any interest earned thereon, in the affordable housing for which the funds were withdrawn. 6. No interest or fees The Secretary shall not charge any interest or levy any other fee with regard to funds in a HOME Investment Trust Fund. 7. Expiration of right to draw funds If any funds becoming available to a participating jurisdiction under this subchapter are not placed under binding commitment to affordable housing within 24 months after the last day of the month in which such funds are deposited in the jurisdiction's HOME Investment Trust Fund, the jurisdiction's right to draw such funds from the HOME Investment Trust Fund shall expire. The Secretary shall reduce the line of credit in the participating jurisdiction's HOME Investment Trust Fund by the expiring amount and shall reallocate the funds by formula in accordance with section 12747(d) of thistitle. 35 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIVTEAD L J Today's Small Town America S. Administrative Provision The Secretary shall keep each participating jurisdiction informed of the status of its HOME Investment Trust Fund, including the status of amounts under various stages of commitment. a. In general Any repayment of funds drawn from a jurisdiction's HOME Investment Trust Fund, and any payment of interest or other return on the investment of such funds, shall be deposited in such jurisdiction's HOME Investment Trust Fund, except that, if the jurisdiction is not a participating jurisdiction when such payment or repayment is made, the amount of such payment or repayment shall be reallocated in accordance with section 12747(d) of this title. b. Assurance of repayment Each participating jurisdiction shall enter into an agreement with the Secretary ensuring that funds invested in affordable housing under this part are repayable when the housing no longer qualifies as affordable housing. Any repayment under the previous sentence shall be for deposit in the HOME Investment Trust Fund of the jurisdiction making the investment; except that if such jurisdiction is not a participating jurisdiction when such repayment is made, the amount of such repayment shall be reallocated in accordance with section 12747(d) of this title. c. Availability The Secretary shall take such actions as are necessary to ensure that any repayments deposited in a HOME Investment Trust Fund in accordance with this section shall be immediately available to the participating jurisdiction for investment subject to the provisions of this part that apply to funds that are allocated under section 12747 of this title. Actions authorized under the preceding sentence may include authorizing the establishment for a participating jurisdiction of a HOME Investment Trust Fund account outside of the Federal Government that, under arrangements satisfactory to the Secretary, shall be used solely to invest in affordable housing within the participating jurisdiction's boundaries in accordance with the provisions of this subchapter. Such accounts shall be established in such a manner that repayments are not receipts or collections of the Federal Government. H. HOME PROGRAM INCOME Program income is defined as any revenue received by the City directly generated from the use of HOME funds or matching contributions. Program income includes, but is not limited to: 236 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T.— Amc,kc 1. Proceeds from the sale or long-term lease of real property acquired, rehabilitated or constructed with HOME funds or matching contributions; 2. Income from the use or rental of real property owned by a Recipient that was acquired, rehabilitated or constructed with HOME funds or matching contributions, minus the costs incidental to generating that income; 3. Payments of principal and interest on loans made with HOME or matching funds, and proceeds from the sale of loans or obligations secured by loans made with HOME or matching contributions; 4. Interest on program income; and 5. Any other interest or return on the investment of HOME and matchingfunds. Note: The City of Rosemead requires that all program income is returned to the City. I. PRE -AWARD COSTS With the publication of the Final Rule, the City may incur eligible costs prior to the effective date of its annual HOME Investment Partnership Agreement, subject to certain conditions: 1. Both administrative/planning and project costs may be incurred. Only costs eligible under the HOME Program rules in effect at the time the costs are incurred are included. 2. Expenditures must meet all regulatory requirements, including environmental review regulations. J. HOME PROGRAM DRAWS HOME funds are available on a reimbursement basis only based on documentation of incurring the expense and payment of the expense. 7 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 1SE11RE`AD L f Today's Sm, II T.— America PROCEDURE 1. The City of Rosemead will reimburse funds based upon information submitted by the Recipient. Any expenditures occurring after the effective date of the contractual agreement between the City of Rosemead and the Recipient are eligible for reimbursement. 2. Expenditures must be consistent with the approved budget as stated in the contractual agreement between the City of Rosemead and the Recipient. Only eligible expenses will be reimbursed. 3. Payments will be adjusted by the City in accordance with program income balances available in sub -recipient accounts, if applicable. 4. In order to ensure accurate billing and fund management sub -recipients should keep track of the following information for activities funded: a. Funds budgeted. b. Funds received in City of Rosemead. c. Reimbursements to -date. d. Funds obligated in the most recent period and to -date. e. Funds expended in the most recent period and to -date. f. Cash on hand (including program income identified as such), if applicable. g. Previous reimbursements requested but not yet received, if applicable. 5. All requests for final reimbursements must be submitted to the Planning and Community Department Division within 15 days after the last date of the contract. To request reimbursement: 1. The "Reimbursement Request" form must be completed and signed by either the Planning or Planning and Community Development Director or another authorized personnel. 2. Provide original invoices for all expenditures to be reimbursed. 3. Payment receipts, copies of checks, and/or all documentation proving that payment has been made prior to requesting reimbursement. 4. For salary reimbursement, time sheets must include total time worked and a breakdown of funding sources covering the salary and benefits associated. 238 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual EIV�E'AD T.day's Small Town America All reimbursements will be made within thirty (30) days of receipt of the request, if proper documentation has been submitted. Please be advised that the City of Rosemead will not provide reimbursements if quarterly reports have not been submitted within the time limits stated in the contractual agreement between the City of Rosemead and the Recipient. PART 2: FINANCIAL MANAGEMENT: INTERNAL CONTROLS, RECORD-KEEPING, REPORTING, MONITORING A. INTERNAL CONTROLS The City of Rosemead internal controls include a combination of procedures, specified job responsibilities, qualified personnel, and records that together create accountability in an organization's financial system and safeguard its cash, property, and other assets. The City's internal controls make sure that: 1. Resources are used for authorized purposes and in a manner consistent with applicable laws, regulations, and policies, 2. Resources are protected against waste, mismanagement, or loss, and 3. Reliable information on source, amount, and use of resources are secured up-to-date, and recorded. Additionally, internal controls will ensure that no one individual has authority of an entire financial transaction. Specifically, that the City has a separation of power for the following three responsibilities: 1. Authorization to execute a transaction, 2. Recording of the transaction, and 3. Custody of assets involved in the transaction. This type of separation of responsibilities will create a system of checks and balances for grant and general organization expenditures. 4. The City will periodically reconcile its financial records to actual assets and liabilities which will safeguard resources as well as detect instances of fraud or misuse. B. RECORD-KEEPING OVERVIEW The HOME Program has recordkeeping and reporting requirements to document that HOME funds are used appropriately and that HOME Program objectives are being met. 39 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T.— Anwriw Under the HOME Program regulations, the City of Rosemead is required to meet certain record- keeping and reporting requirements that are designed to: a. Ensure consistency with HOME program requirements; b. Clarify the record retention periods; and c. Include new records that exercise any of the three new options allowed in the Final Rule (i.e., multi -family refinancing, presumption of affordability for homebuyer assistance, and locally established 95 percent of area median purchase price limits). PROCEDURE 1. The City of Rosemead will maintain records that include: a. Program records; b. Project records; c. CHDO records; d. Financial records; e. Program administration records; and f. Records concerning other Federal requirements. 2. Maintain PROGRAM RECORDS that include: a. Written agreement with the City of Rosemead and documentation of compliance with the written agreement; b. A copy of the application originally submitted to the City of Rosemead; c. Forms of assistance used; and d. Procedures for establishing 95 percent of median value. 3. Maintain Project Records that include: a. Location (with a map); b. Form of assistance; c. Number and identification of units or tenants associated with HOME; d. Source and application of funds; e. Compliance with maximum per-unit subsidy limits and subsidy layering guidelines; f. Compliance with property standards and lead-based paint requirements; g. Compliance with income -eligibility requirements; City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEME'AD Toclay's Small Tawn Mncriea h. For rental projects, compliance with income targeting, affordability and lease requirements; L If multi -family or single-family refinancing is provided, compliance with established guidelines and/or requirements; j. If multi -family new construction, results of the site and neighborhood standards review conducted; k. For homeownership projects, compliance with maximum property value and affordability requirements; and I. If pre -award costs, compliance with applicable requirements. 4. Maintain CHDO records that include: a. Written agreement with the City of Rosemead; b. Documentation of qualification as a CHDO, including: L Documentation of nonprofit status; ii. Current board list that identifies low-income representation; iii. Documentation of low-income community input (e.g., minutes from community meeting); iv. Documentation of organizational capacity (e.g., resumes of staff members); c. Documentation of uses of CHDO set-aside funds, including funds for capacity - building (if applicable); and d. Current project descriptions. 5. Maintain Financial Records that include: a. Source and application of funds; b. Treasury and local HOME accounts; c. Source and application of program income, repayments and recaptured funds; and d. Budget control measures, including periodic account reconciliations. 6. Maintain Program Administration Records that include: a. Compliance with written agreements; b. Compliance with applicable uniform administrative requirements; and 241 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIITEAD J Today's Small T.—America c. Inspections, monitoring reviews and audits, and resolution of any findings or concerns. 7. Maintain Documentation Records that include: a. Equal opportunity and fair housing; b. Affirmative marketing and minority/women's business outreach; c. Environmental review; d. Acquisition, relocation, displacement, and replacement of housing; e. Labor standards; f. Lead-based paint; g. Conflict-of-interest; and h. Debarment and suspension. 8. RETAIN RECORDS FOR a period is five (5) years including: a. Housing Rehabilitation: L General records must be kept for five years after project completion b. Rental: For rental housing records: i. General records must be kept for five years after project completion; and ii. Tenant income rent and inspection information must be kept for the most recent five years, until five years after the affordability period ends. c. Homeownership: Homeownership records must be kept for: L Five years after project completion; and ii. For resale/recapture records, five years after the affordability period ends. d. Written agreements: Generally, all written agreements must be maintained for five years after the agreement ends. e. Displacement and acquisition: Displacement and acquisition records must be kept for five years after final payment to displacees. 9. ACCESS TO RECORDS a. Provide citizens and other interested parties with reasonable access to records. Access will be consistent with applicable state'and local laws regarding privacy and obligations of confidentiality. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEREAD J T.,hy's 9w11 Town Mwk. b. Provide citizens, public agencies and other interested parties with reasonable and timely access to information and records relating to the City's Consolidated Plan and the use of assistance under the programs covered by the Consolidated Plan. c. Provide access to HUD and the Comptroller General of the United States, or any of their representatives, to any records for auditing, excerpt, or transcript purposes. C. REPORTING REQUIREMENTS OVERVIEW HOME Program regulations require the City of Rosemead to submit an annual report, called the Consolidated Annual Performance and Evaluation Report (CAPER), to HUD within 90 days of the close of City's program year. This is in accordance with the Consolidated Plan regulations at 24 CFR Part 91. The CAPER incorporates not only HOME Program information, but also the reporting requirements for the Community Development Block Grant (CDBG), Housing Opportunities for Persons with AIDS (HOPWA) and Emergency Shelter Grants (ESG) programs. 1. The City of Rosemead's HOME Program is required to meet certain reporting requirements, which are outlined below, in order to support the City in meeting its annual HOME Program reporting requirements. 2. The CAPER must include: a. A summary of resources and programmatic accomplishments; and b. The status of actions taken during the year to implement the overall strategy, which includes a self-evaluation of progress during the past year in addressing priority needs and specific objectives. PROCEDURE 1. The Housing Projects Coordinator will complete a Semi -Annual Status Report as well as Project Set Up and Completion Reports for all projects. 2. The Housing Projects Coordinator will complete a Semi-annual Status Report for all open projects. This report will include, at a minimum, the following sections: a. Narrative. A narrative section outlining project milestones achieved; 243 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS ENTEAD L I Today's Sm, II Tmvn America b. Funding. A funding status update including all draws; and c. Issues/Concerns. The report should outline any issues or concerns that may require the assistance. 3. The Housing Projects Coordinator will complete a Project Setup and Completion Form with request for retainage payment. The forms used differ by activity (Homeowner Rehab, Rental, and/or Homebuyer). 4. The Housing Projects Coordinator will enter the data into the IDIS system and report completed projects to HUD. D. MONITORING OVERVIEW To meet reporting requirements, the City must monitor its HOME Program activities for compliance and document the results. PROCEDURE The Housing Projects Coordinator will maintain and implement the following: 1. Maintain monitoring reports in each project file. 2. Monitor the HOME Program based on the individual activity. a. Owner Occupied Projects (Homeowner Rehabilitation and Homebuyer (if applicable): The City will monitor owner occupied projects for principal residency throughout the affordability period. b. Rental Projects (if applicable): The City will monitor rental projects for the following factors: L Occupancy (income requirements); ii. HOME Rents; and iii. Property standards (units must meet HQS.) City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T.— Amuka E. HOME PROGRAM RISK ANALYSIS, MONITORING PROCESS, AND PLAN The Risk Analysis and Monitoring Process It is the policy of the City of Rosemead HOME Program to monitor all HOME -projects for risk analysis, program compliance, and long-term sustainability. The City's Monitoring plan will address three HOME components: 1. The structures and infrastructures financed with HOME funds; 2. The actual beneficiaries of HOME program expenditures; and 3. The actual documentation that describes the actions and intentions of program participants (whether subrecipient, developer, or contractor). PROCEDURE The City's Monitoring Procedure will include the review of three general areas: 1. Administrative and Financial Monitoring a. This monitoring will address program compliance and cross -cutting requirements; 2. Program Monitoring a. This monitoring will address overall HOME program performance; 3. Project Monitoring a. This monitoring will address specific HOME project compliance. The goal of the City's monitoring process is to conduct a risk analysis to determine which program areas and specific HOME -funded projects should receive intensive monitoring in a given year. While attention will be paid to "higher risk" projects, the HOME Program will, at a minimum, conduct a "desk monitoring review" of all funded HOME projects on an annual basis. To the greatest degree possible, the City's monitoring checklists will incorporate the questions and concerns outlined in the CPD Monitoring Handbook 6509.2, Rev -6, Chapter, 7 Program exhibits on the following 245 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual page: 5me11 Town America CPD Monitoring Handbook 6509.2, Rev -6, Chapter 7: Exhibit 7 - 1 HOME Participating Jurisdiction Pre -Monitoring Information Sheet Exhibit 7 - 2 Guide for Review of Overall Management Systems Exhibit 7 - 3 Guide for Review of Homeowner Rehabilitation Projects Exhibit 7 - 4 Guide for Review of Homeowner Rehabilitation Programs Exhibit 7 - 5 Guide for Review of Homebuyer Projects Exhibit 7 - 6 Guide for Review of Homebuyer Programs Exhibit 7 -7 Guide for Review of Rental Projects Exhibit 7 - 8 Guide for Review of Rental Programs Exhibit 7 - 9 Guide for Review of Tenant -Based Rental Assistance (TBRA) Projects Exhibit 7 - 10 Guide for Review of Tenant -Based Rental Assistance (TBRA) Programs Exhibit 7 - 11 Guide for Review of Community Housing Development Organization (CHDO) Qualifications and Activities Exhibit 7 - 12 Guide for Review of Community Housing and Development Organization (CHDO) Procedures Exhibit 7 -13 Guide for Review of Match Requirements Exhibit 7 - 14 Guide for Review of Beneficiary Written Agreements Exhibit 7 - 15 Guide for Review of Contractor Written Agreements Exhibit 7 - 16 Guide for Review of Owner, Developer, Sponsor Written Agreements Exhibit 7 - 17 Guide for Review of State Recipient Written Agreements Exhibit 7 - 18 Guide for Review of Subrecipient Written Agreements Exhibit 7 - 19 Guide for Review of Subrecipient Management Exhibit 7 - 20 Guide for Review of Financial Management Attachment: Attachment to Exhibit 7-20 Reviewer's Guide for Financial City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Town America PROCEDURE Note: While the City of Rosemead does not operate all HOME program activities, they are listed here in the possibility that the City of Rosemead may decide to operate such in the future. a. Timing of HOME Monitoring It is the policy of City of Rosemead to conduct HOME monitoring as an ongoing process. The City will conduct on-going monitoring in three phases: 1. Initial review, analysis, and feasibility of project eligibility during threshold reviews 2. Monitoring during project development, implementation and operation 3. Monitoring for long-term sustainability and project completion The on-going monitoring process is outlined in the following graphic: Conduct Risk Analysis Monitoring - Pass Along Plan: Choose Results for Partners/ Future $ Programs/ Projects Analyze Conduct Desk and Results/Issue Onsite Report Monitoring 7 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Management Review of HOME Participating Jurisdictions (PJs) Exhibit 7 - 21 Guide for Review of Cost Allowability Exhibit 7 - 22 Guide for Review of Procurement Exhibit 7 - 23 Guide for Review of Equipment and Equipment Disposition PROCEDURE Note: While the City of Rosemead does not operate all HOME program activities, they are listed here in the possibility that the City of Rosemead may decide to operate such in the future. a. Timing of HOME Monitoring It is the policy of City of Rosemead to conduct HOME monitoring as an ongoing process. The City will conduct on-going monitoring in three phases: 1. Initial review, analysis, and feasibility of project eligibility during threshold reviews 2. Monitoring during project development, implementation and operation 3. Monitoring for long-term sustainability and project completion The on-going monitoring process is outlined in the following graphic: Conduct Risk Analysis Monitoring - Pass Along Plan: Choose Results for Partners/ Future $ Programs/ Projects Analyze Conduct Desk and Results/Issue Onsite Report Monitoring 7 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T.—Anwdo b. Monitoring Objectives c. At a minimum, the objectives of the City's HOME Monitoring process will include the following: 1. Identify and track HOME program and project results; 2. Identify technical assistance needs for HOME, Subrecipient, developer and contractor staff; 3. Ensuring timely and appropriate expenditures of HOME funds; 4. Documenting compliance with all HOME and federal cross -cutting requirements; 5. Guaranteeing that federal funds are spent on eligible, allowable, and allocable costs; and 6. Making programmatic changes as necessary to safeguard the HOME program for the future. It is the policy of City of Rosemead to guarantee that all HOME program participants, whether Subrecipients, developers, contractors, or other HOME -funded entities, will comply with all HOME monitoring policies and objectives. d. Risk Assessment Process The City of Rosemead's monitoring process is based on risk analysis that attempts to quantify certain factors that can diminish the productivity and compliance of a funded HOME activity. To determine the relative risk of a specific HOME funded activity, the City of Rosemead will use the following HOME Risk factors to help determine those HOME projects and activities that receive both immediate monitoring preference (including on- site visit, greater than normal staff attention) and possible program interventions. e. HOME Risk Assessment Criteria, City of Rosemead The City of Rosemead has adopted the following criteria to be used in determining the relative risk of a HOME project or activity is found on the following page. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T.— America EXHIBIT12 HOME Project Risk Assessment • • • • • • . Type of Risk Factor Risk Criteria Comments Risk Factor Type of Program Homeowner Rehab Rental CHDO-set-aside Other (Specify) Project Complexity Number of units How many? Number of beneficiaries How many? Multi-year project Yes or No? Multi -financed project HOME only? # of lenders: Project staff turnover Last year? Past staff HOME experience List projects Projects completed Number Capacity of Current awards $ Subreciplent or Developer Project Completion Est. date Meeting all timelines Yes or No? Spending timeliness Yes or No? Changes in organization Within last year? Amount of contract $ Project Capacity Duration of contract # days: Development Team findings Outstanding findings? 249 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual X Small Tm n America f. Monitoring Schedule and Strategy Based on the risk analysis factors outlined above, the City will conduct HOME monitoring in the following manner: 1. Desk Reviews are conducted throughout the program year as reimbursement requests are submitted and quarterly when status reports are submitted. Desk reviews will include an analysis of all submitted reports, IDIS reports, draw requests and invoices and the risk factors outlined below. When desk reviews trigger "high risk" projects, the City will schedule on-site monitoring. A desk review should pay attention to the HOME application and executed HOME written agreement. 2. On-site Monitoring will involve a site visit to the project to conduct an on-site document review and a physical assessment of any structural expenditure paid for with HOME funds at commencement of construction, completion of project, or when warranted by risk assessment. The on-site monitoring process with include the following steps and sample formats for letters of notification may be found in Exhibit A. 2 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Timely Reports Any outstanding? Documentation Audit submissions Always timely? Any audit findings? Project documentation Documents missing? Regulatory compliance Outstanding issues? Regulatory Knowledge Yes or no? Outstanding issues Yes or no? Other Concerns Beneficiary complaints Yes or no? General Comments Yes or no? f. Monitoring Schedule and Strategy Based on the risk analysis factors outlined above, the City will conduct HOME monitoring in the following manner: 1. Desk Reviews are conducted throughout the program year as reimbursement requests are submitted and quarterly when status reports are submitted. Desk reviews will include an analysis of all submitted reports, IDIS reports, draw requests and invoices and the risk factors outlined below. When desk reviews trigger "high risk" projects, the City will schedule on-site monitoring. A desk review should pay attention to the HOME application and executed HOME written agreement. 2. On-site Monitoring will involve a site visit to the project to conduct an on-site document review and a physical assessment of any structural expenditure paid for with HOME funds at commencement of construction, completion of project, or when warranted by risk assessment. The on-site monitoring process with include the following steps and sample formats for letters of notification may be found in Exhibit A. 2 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS EIV�E'AD Today's Snell Town America 3. PRE -SITE VISIT PREPARATION IS PREPARED BY HOME staff for the on-site visit by reviewing the following in-house information: a. HOME funding application b. HOME written agreement c. HOME progress reports d. Draw requests and supporting documentation e. IDIS reports f. Any HOME project correspondence g. Any previous monitoring reports h. The most recently submitted financial audits 4. Pre -Visit Letter prepared by the HOME staff to the project staff outlining the date, agenda, information to be available, staff to be accessible, and any specific areas that the staff plans to monitor on-site. 5. Monitoring Checklist will be provided by the HOME staff will provide the appropriate project monitoring checklists from Exhibit 15, which will be utilized during the site visit. As necessary, HOME staff will use exhibits from the CPD Monitoring Handbook, Exhibit 7, HOME Program. 6. Conducting the Monitoring Visit At a minimum, the on-site monitoring visit will consist of the following steps: a. Entrance conference: to reiterate the purpose and goals of the visit b. On-site data documentation and research c. Visits with staff and beneficiaries d. Exit conference: to present preliminary conclusions and "next steps" 7. Post -site Visit Follow-up Within two weeks of the exit interview, the HOME monitor will follow-up with the monitoring visit with a follow-up letter that outlines: a. Projects monitored b. Monitoring staff who conducted the visit c. Date(s) of the monitoring visit d. List of documents reviewed e. List of individuals interviewed 251 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD TW.Wy Small Town America f. Any conclusions reached from the visit g. Strengths and weaknesses of the project h. Any specific areas of non-compliance or findings L Suggested corrective actions to "cure" any findings 8. Corrective Actions (if necessary) The HOME Monitor will establish a date specific for a response to the monitoring letter, for all corrective actions to be completed, and for the City to respond to the corrective actions. 9. Subsequent Follow-up The City reserves the right to revisit the project to determine compliance and when corrective actions are not undertaken, to use any and all remedies outlined in the HOME written agreement and HUD rules and regulations to enforce compliance. In the final analysis, the results of City HOME monitoring will be a factor in determining funding in future year's HOME competition for funding. 252 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual EXHIBIT 13 - Monitoring Checklists PJ Name: Subrecipient Name (if applicable): Reviewer: Date: City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual ANSWER QUESTIONS x tv NOTES A. PROGRAM POLICIES AND PROCEDURES 1. Is the program administered in a manner consistent with the Consolidated Plan? a. If not, did the PJ receive approval to modify the program's design? 2. It there an adequate written program description for the program? 3. Are there adequate procedures for making the program description available to the public? & OUTREACH 4. Is there an acceptable outreach and marketing plan? 5. Is the outreach plan being implemented? C. PARTICIPANT SELECTION 6. Are there procedures to ensure that all applicants get fair consideration for assistance? 7. Are adequate application forms used? 8. Based on a review of case files, has there been proper determination and documentation of the eligibility of program participants? 9. Do 90 percent of all program participants have incomes at or below* 60 percent of area median income? 10. Are there adequate procedures for determining and documenting participant eligibility? a. Is the correct definition of annual income used? b. Do files contain the appropriate documentation to verify each household's income eligibility? 11. Are there established selection criteria? 12. Are the local preferences structured in a non- discriminatory way? 13. Do tenant selection criteria assign weights consistently to any preferences (if applicable)? City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T.—A, wH,c 14. Is there a clearly established method of determining which households should receive offers and in what order? 15. Is the offer date consistently documented in applicant files? 16. Do case files contain the following required dame ew__ a. Program contract? b. Lease? c. Total tenant payment? d. Annual income recertification? e. Documentation of termination (if applicable)? 17. Do case files document unit compliance with local codes and standards and Section 8 HQS: a. At initial occupancy? b. At annual reinspection? c. After any code related complaint? 18. Do case files document that units meet the following qualifications: a. Unit is located within the proper jurisdiction or approved program area? b. Unit is not an owner -occupied co-operative unit? 19. Based on a review of case files, are rents for participating units reasonable compared to similar unassisted units? 20. Is there a system for ensuring that rents are reasonable by comparing them to similar units? 21. Does a spot-check of comparable units indicate that the units are actgWh,_Qf comparable quality? 22. Are there clear policies for determining appropriate unit size, and do case files show that these policies have been applied consistently? E. SUBSIDY ADMINISTRATION AND FILE DOCUMENTS 23. Does the program's payment standard fall between the minimum and maximum allowed under the HOME Program, and is there adequate documentation of the payment standard? 24. Do case files show that annual rent adjustments are consistent with a proper rent reasonableness determination? City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Town A.—Ia, 25. Do case files include notices informing the tenant and the owner of changes in the program and tenant's share of the rent? 26. Are exception payment standards used properly? 27. Do case files show that proper utility allowances (either PHA allowances or proper local estimates) were used when determining contract rents? 28. Is there a current utility allowance schedule? 29. Is there a consistent policy for applying updated utility allowances? 30. Do case files indicate proper calculation of the Total Tenant Payment (TTP) and any utility City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small T.— Am Mu F. INTEGRATED DISBURSEMENT AND INFORMATION SYSTEM (IDIS) The City of Rosemead is required by HUD to use the IDIS system to accomplish two key objectives: 1. To manage and account for disbursements of HOME funds; and 2. To collect, consolidate and report information regarding HOME Program performance. The City of Rosemead will implement the following general IDIS procedures: 1. Complete all HOME Program Set-up forms to ensure that all HOME Program requirements have been met, no work shall begin until all documentation has been executed and a Notice to Proceed is issued by the City of Rosemead. 2. Disburse HOME Program funds only when all of the following conditions have been met: a. Required environmental review process has been satisfactorily completed. b. Project closing documents are finalized. c. The City has approved the timing of HOME Program fund disbursements (e.g., how the funds will be disbursed: at the beginning of the project or on a prorated basis, or as final funds are disbursed); and d. Disburse funds according to the payment details including timeline for reimbursement outlined in the project closing documents, specifically the HOME Written Agreement. e. Retainage will be released thirty (30) days after the final inspection is approved and upon the City's receipt of pay request and all completion documentation. 3. If any HOME Program funded project has an available balance after development completion and release of retainage, City of Rosemead will de -obligate those funds and reallocate such balance of HOME Program funds to other eligible activities according to City of Rosemead adopted HOME Program allocation process. 253 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS DAE'AD ► ) Today', Small T.— America CHAPTER 10 OTHER FEDERAL REQUIREMENTS The Federal requirements addressed in this chapter are non-discrimination and equal access, employment and contracting, environmental requirements, lead-based paint, and relocation. While the HOME Program has its own regulations, there are additional cross -cutting federal requirements that must be identified and complied with at the appropriate point in project management. a. Exhibit 16 presents guidance on the impact of these additional requirements on the HOME project; and b. Exhibit 17 describes how the City may demonstrate compliance with applicable requirements. EXHIBIT 14 Managing A Project Subject to Other FederalRequirements Requirement Impact on the Project Environmental review of A City cannot commit funds to a project until the appropriate level of activities environmental review is completed, and a Release of Funds is received. Section 3 Construction contracts of $200,000 or more must include language regarding best efforts to include businesses and low-income residents in the project area. This applies to the hiring of additional workers and training them and using project -area suppliers for materials. The City of Rosemead may set specific goals based on additional requirements set by HUD that may impact how quickly the project can get under construction. Women/Minority Business All competitive bidding must include Women and Minority Enterprise Businesses, including sub -contracts. The City must ensure that these firms have a fair opportunity to participate and current lists of W/MBE firms must be maintained. Contractor selection The City must check the website at www.epls.gov to determine if a contractor has been suspended or disbarred before awarding HOME funds to any firm. All building projects in excess of $100,000 must be designed by a state -licensed architect and all infrastructure projects in excess of $25,000 must be designed by a state licensed engineer. Procurement The City's procurement policies specify bidding requirements for construction, including competitive and formal bidding. Conflict of interest The City need be fully aware of parties involved in a contract and seek legal counsel if there is the potential for real or perceived COI. 254 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual I To -i Mnirin Equal Employment The City must ensure that all construction contracts over $10,000 Opportunity (including sub -contracts) have language prohibiting employment discrimination based on race, color, religion, sex, or national origin. Lead Safe Housing When there is HOME assistance involving pre -1978 properties, the Requirements City must have qualified staff (or hire them for the project) to notify (rehab of pre -1978 units) occupants of the hazards of LBP and take the appropriate approach for various activities; qualified staff must be involved in inspections and clearance actions and report preparation. Cost reasonableness The City must have qualified cost estimators available to assist in bid preparation and contract awards, as well as reviewing payment requests. Americans with Disabilities The City must make an internal review of its programs and Act (ADA) communications to ensure they are accessible to and usable by persons with disabilities. This may include working with advocacy groups to achieve compliance. Fair Housing requirements The City must determine if there are under -served populations who are eligible for HOME assistance, and if they are non-English speaking or have literacy challenges, the agency may work with advocacy groups to translate or otherwise reach these households. Affirmative Marketing The City must develop and adopt an Affirmative Marketing Plan and ensure that owners of properties with five or more HOME units are aware of the policy and follow it. Section 504 The City must ensure that specifications for new construction of multifamily dwellings meet the design and construction standards of the Fair Housing Act to make units accessible and the requirements were included in contracts for substantial rehabilitation of buildings with 15 or more units when rehab exceeds 75% of replacement costs. In other projects, the Recipient should work with the developer/owner to make units adaptable and/or accessible as is financially feasible. Energy conservation The City must become familiar with the International Energy Conservation Code and include its requirements in all contracts for residential new construction. Labor requirements, Before beginning construction or rehab of projects with 12 or more including Davis -Bacon HOME assisted units, the City must obtain the prevailing wages for various building trades must be obtained from the Department of Labor (DOL); someone must be designated to monitor work on site and payrolls; report as required by D -B and related acts. Uniform Relocation Act The City is responsible for ensuring that tenants in properties that and Section 104(d) may be acquired or rehabilitated receive correct and timely notices and protections; owners of units to be acquired through a Homebuyer assistance program must receive the "Notice to Owner" for voluntary acquisitions, and tenant living in units purchased with City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 0SEMEND L J Today's Small Town Amcrica HOME funds are protected by the URA. If units are demolished or converted with HOME funds, 104(d) may be triggered and appropriate notices and assistance must be provided. Since no one can be forced to move (displaced) without at least 30 days' notice, a project may not meet a developer's schedule. EXHIBIT 15 Documenting Compliance with Other Federal Requirement Documentation Environmental review of Files demonstrate appropriate level of review, notification, requests activities for release of funds, publications, and dates for commitments and covered activities were not begun until funds were released. Section 3 To the greatest extent feasible, efforts were made to include businesses and low-income residents in the project area in construction contracts for workers and suppliers; training programs, as appropriate were developed and used to provide opportunities for construction employment. Women/Minority Business Files demonstrate that the City followed its policies for reaching out Enterprise and including MBE/WBE firms in contracts and invitations for bidding work. Contractor selection File supports selection of contractor(s) who were not on the list of suspended or de -barred contractors Procurement There is evidence of free and open competition for funds and contracts according to the City of Rosemead policies and program requirements that apply. Conflict of interest There is no evidence of preferential treatment for developers, beneficiaries, contractors, or suppliers due to relationships to those in decision-making positions. Equal Employment Language prohibiting employment discrimination based on race, Opportunity color, religion, sex, or national origin is included in all construction contracts over $10,000. Lead Safe Housing Appropriate notices and approaches are used for various activities; Requirements (rehab of qualified staff is involved in inspections and clearance actions; pre -1978 units) reports demonstrate a knowledge of rules and compliance. Cost reasonableness Cost estimates are prepared prior to bids by knowledgeable persons; bidding and payments are within estimates or documented if they deviated; payment requests are supported by bills, invoices or other documentation. Americans with Disabilities Programs were accessible to and usable by persons with disabilities, Act (ADA) including removing communications barriers. Fair Housing requirements Files support outreach to all classes; programs were available to all persons and efforts were made to overcome barriers to participation S6 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual X Sn ,ll Town Ame6,. Affirmative Marketing Files demonstrate that projects with five or more HOME -assisted units were affirmatively marketed by following policies, and records document actions taken. Section 504 Specifications for new construction of multi -family dwellings met the design and construction standards of the Fair Housing Act to make units accessible and requirements were included in contracts for substantial rehabilitation of building with 15 or more units when rehab exceeded 75% of replacement costs. When this threshold was not triggered, to the extent financially feasible, units were made adaptable or accessible. Energy conservation Drawings and specifications for newly constructed units must reference the requirements of the International Energy Conservation Code. Structures rated by a certified rater for Energy Star qualifications. Labor requirements, For rehabilitation or new construction of projects with 12 or more including Davis -Bacon HOME assisted units, the prevailing wage must be obtained from the Department of Labor (DOL) and paid for each of the trades; payments must be monitored on site and reported. Wage determination applicable to each project must be included as part of the contract documents. Uniform Relocation Act For properties with tenants in occupancy, correct and timely notices and Section 104(d) and protections were provided and are on file. 57 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Town A. NON-DISCRIMINATION AND EQUAL ACCESS No person in the United States shall on the grounds of race, color, national origin, religion, or sex be excluded, denied benefits or subjected to discrimination under any program funded in whole or in part by HOME funds. The City will take the following measures to ensure non-discriminatory treatment, outreach, and access to program resources. This applies to employment and contracting, as well as to marketing and selection of program participants. 1. Fair Housing and Equal Opportunity The City of Rosemead will comply with all of the following Federal laws, executive orders and regulations pertaining to fair housing and equal opportunity as summarized below. a. Title VI of the Civil Rights Act of 1964, As Amended (42 U.S.C. 2000d et seq.): States that no person may be excluded from participation in, denied the benefits of, or subjected to discrimination under any program or activity receiving Federal financial assistance on the basis of race, color, or national origin. The regulations implementing the Title VI Civil Rights Act provisions for HUD programs may be found in 24 CFR Part 1. b. The Fair Housing Act (42 U.S.C. 3601-3620): Prohibits discrimination in the sale or rental of housing, the financing of housing or the provision of brokerage services against any person on the basis of race, color, religion, sex, national origin, handicap or familial status. Furthermore, section 104(b)(2) of the Act requires that each grantee certify to the secretary of HUD that it is affirmatively furthering fair housing. The certification specifically requires grantees to conduct a fair housing analysis, develop a fair housing plan, take appropriate actions to overcome the effects of any impediments identified, and maintain records on the analysis, plan, and actions in this regard. Fair Housing Act implementing regulations for HUD programs may be found in 24 CFR Part 100- 115. c. Equal Opportunity in Housing (Executive Order 11063, as amended by Executive Order 12259): Prohibits discrimination against individuals on the basis of race, color, religion, sex or national origin in the sale, rental, leasing or other disposition of residential property, or in the use or occupancy of housing assisted with Federal funds. Equal Opportunity in Housing regulations may be found in 24 CFR Part 107. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town Anierica d. Age Discrimination Act of 1975, As Amended (42 U.S.C. 6101): Prohibits age discrimination in programs receiving Federal financial assistance. Age Discrimination Act regulations may be found in 24 CFR Part 146. 2. Affirmative Marketing In the event that the City of Rosemead implement a housing program using funds with five or more HOME -assisted units, the City will adopt an affirmative marketing plan that that includes procedures and requirements including: a. Methods for informing the public, owners and potential tenants about fair housing laws and the City's policies (for example: use of the Fair Housing logo, or equal opportunity language); b. A description of what owners and/or the City will do to affirmatively market housing assisted with HOME funds; c. A description of what owners and/or the City will do to inform persons not likely to apply for housing without special outreach d. Maintenance of record to document actions taken to affirmatively market HOME - assisted units and to assess marketing effectiveness, and e. A description of how efforts will be assessed and what corrective actions will be taken where requirements are not met. 3. Handicapped Accessibility The City will adhere to the HOME regulations governing the accessibility of Federally assisted buildings, facilities, and programs. Americans with Disabilities Act (42 U.S.C. 12131; 47 U.S.C. 155, 201, 218, and 2251: Provides comprehensive civil rights to individuals with disabilities in the areas of employment, public accommodations, state and local government services, and telecommunications. The Act, also referred to as the ADA, also states that discrimination includes the failure to design and construct facilities (built for first occupancy after January 26, 1993) that are accessible to and usable by persons with disabilities. The ADA also requires the removal of architectural and communication barriers that are structural in nature in existing facilities. Removal must be readily achievable, easily accomplishable, and able to be carried out without much difficulty or expense. 9 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Town Anm&a Fair Housing Act: Multi -family dwellings must also meet the design and construction requirements at 24 CFR 100.205, which implement the Fair Housing Act (42 U.S.C. 3601- 19). Section 504: Section 504 of the Rehabilitation Act of 1973 prohibits discrimination in Federally assisted programs on the basis of handicap. Section 504 imposes requirements to ensure that "qualified individuals with handicaps" have access to programs and activities that receive Federal funds. Under Section 504, recipients and subrecipients are defined more broadly than under the HOME program. Section 504 recipients and subrecipients include any entity that receives Federal funding (for example, a subrecipient, or CHDO). The specific requirements under Section 504 are summarized in Exhibit 16 below: Removal of Physical Barriers ■ For new construction of multi -family projects, 5 percent of the units in the project (but not less than one unit) must be accessible to individuals with mobility impairments, and an additional 2 percent of the units (but not less than one units) must be accessibly to individuals with sensory impairments. ■ The Section 504 definition of substantial rehabilitation multi -family projects includes construction in a project with 15 or more units for which the rehabilitation costs will be 75 percent or more of the replacement cost. In such developments, 5 percent of the units in the project (but not less than one unit) must be accessible to individuals with mobility impairments, and an additional 2 percent (but not less than one unit) must be accessible to individuals with sensory impairments. ■ When rehabilitation less extensive than substantial rehabilitation is undertaken, alterations must, to the maximum extent feasible, make the unit accessible to and usable by individuals with handicaps, until 5 percent of the units are accessible to people with mobility impairments. Alterations to common spaces must, to the maximum extent feasible, make the project accessible. ■ Accessible units must be, to the maximum extent feasible, distributed throughout projects and sites, and must be available in a sufficient range of sizes and amenities so as to not limit choice. ■ Owners and managers of projects with accessible units must adopt suitable means to assure that information regarding the availability of accessible units reaches 260 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town AmcHu eligible individuals with handicaps. They also must take reasonable non- discriminatory steps to maximize use of such units by eligible individuals. ■ When an accessible unit becomes vacant, before offering the unit to a non - handicapped individual, the owner/manager should offer the unit: first, to a current occupant of the project requiring the accessibility feature; and second, to an eligible qualified applicant on the waiting list requiring the accessibility features. ■ The usual standards for ensuring compliance with Section 504 are the Uniform Federal Accessibility Standards (UFAS), although deviations are permitted in specific circumstances. Provide Program Accessibility ■ Individuals with handicaps must be able to find out about, apply for, and participate in Federally assisted programs or activities. ■ Special communication systems may be needed for outreach and ongoing communication (e.g., Telecommunications Devices for the Deaf (TDD), materials on tape or in Braille, accessible locations for activities and meetings). ■ Policies and procedures must be non-discriminatory (e.g., housing providers may not ask people with handicaps questions not asked of all applicants, screen individuals with handicaps differently or assess an individual's ability to live independently). Make Employment Accessible ■ Employers must not discriminate. ■ Employers must remove physical and administrative barriers to employment. ■ Employers must make reasonable accommodations for individuals with known handicaps (e.g., job restructuring, providing readers or sign interpreters, making facilities accessible). Administrative Requirements ■ If recipients or subrecipients have 15 or more employees, they must: ■ designate a Section 504 Coordinator, and ■ notify program participants and employees of non-discrimination policies. ■ All recipients and subrecipients must conduct self -evaluations of compliance with Section 504. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEWEAD J Today's Small Town America For any recipient or subrecipient principally involved in housing or social services, all the activities of the agency -- not just those directly receiving Federal assistance -- are covered under Section 504. Contractors and vendors are subject to Section 504 requirements only in the work they do on behalf of a recipient or subrecipient. The ultimate beneficiary of the Federal assistance is not subject to Section 504 requirements. Under Section 504, recipients and subrecipients are not required to take actions that create undue financial and administrative burdens or alter the fundamental nature of the program. B. EMPLOYMENT AND CONTRACTOR The cross -cutting Federal regulations discussed below govern employment and contracting opportunities, including equal opportunity, labor requirements and contracting/procurement procedures. 1. Equal Opportunity The City of Rosemead has established an "Affirmative Fair Housing Marketing Plan" to ensure that the allocated HOME Funds promote fair housing and ensures outreach to all potentially eligible households, especially those least likely to apply for assistance. The City's policy is to provide information and attract eligible persons to available housing without regard to race, color, national origin, sex, religion, familial status (persons with children under 18 years of age, including pregnant women), or disability. The procedures followed are intended to further the objectives of the Equal Employment Opportunity, Executive Order 11246, as amended and Prohibits discrimination against any employee or applicant for employment because of race, color, religion, sex, or national origin. Note: Provisions to effectuate this prohibition must be included in all construction contracts exceeding $10,000. Implementing regulations may be found at 41 CFR Part 60. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Town America PROCEDURE Currently, the City of Rosemead is not administrating a program containing five or more HOME assisted units. However, in the future the City will abide by the HOME Final Rule regarding affirmative marketing procedures and requirements apply to rental and homebuyer projects containing five or more HOME -assisted units. Should the City decided to implement such program it will commit to the goals of affirmative marketing that will be implemented through the following procedures: 1. Providing equal service without regard to race, color, religion, sex, handicap, familial status, or national origin of any client, customer, or resident of any community; 2. Keeping informed about fair housing laws and practices; 3. Informing clients and customers about their rights and responsibilities under the fair housing laws by providing verbal and written information; 4. Evaluating the effectiveness and compliance of all marketing as it relates to fair housing; 5. Including the Equal Opportunity logo or slogan, and where applicable the accessibility logotype, in all ads, brochures, and written communications to owners and potential tenants; 6. Displaying the HUD's fair housing posters (at a minimum, English and Spanish versions) in rental offices or other appropriate locations; 7. Soliciting applications for vacant units from persons in the housing market who are least likely to apply for assistance without the benefit of special outreach efforts; working with the local public housing authority and other service and housing agencies to distribute information to a wide and diversified population; 8. Maintaining documentation of all marketing efforts (such as copies of newspaper ads, memos of phone calls, copies of letters); and 9. Maintaining a record of applicants for vacant units with a general profile of the applicant, how the applicant learned of the vacancy, the outcome of the application, and if rejected, why; maintaining this record for two years or through one compliance audit, whichever is the shorter period of time. W City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS EXTEND J Tnday's Small Town An a ka ASSESSMENT In conjunction with the annual on-site compliance reviews, the City of Rosemead will: 1. Review and evaluate records of affirmative marketing efforts (advertisements, flyers, and electronic media spots, etc.); 2. Evaluate outcomes and effectiveness of marketing efforts and make changes where needed. 3. Evaluate whether good faith efforts have attracted a diversified cross-section of the eligible population. CORRECTIVE ACTIONS Failure to meet affirmative marketing requirements will result in the following corrective actions: 1. For failure to comply, the City of Rosemead will set a probationary period for compliance, not to exceed six months, during which time the City will provide more specific guidelines for compliance. 2. Further failure to comply with the affirmative marketing requirements may result in the withdrawal of HOME support. 3. Further failure to take appropriate actions to correct discrepancies in affirmative marketing programs may result in steps to recover all invested HOME funds. 64 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEMEAD L ) T.&W., Small T.— America C. SECTION 3 Section 3 of the Housing and Urban Development Act of 1968 requires that, to the greatest extent feasible, opportunities for training and employment arising from HOME will be provided to low- income persons residing in the program service area. In addition, to the greatest extent feasible, contracts for work (all types) to be performed in connection with HOME will be awarded to business concerns that are located in or owned by persons residing in the program service area. Several resources are available at www.hud.gov/offices/fheo/section3/section3.cfm, including: 1. The Section 3 Regulations: 24 CFR 135; 2. A sample Section 3 Plan; and 3. The Section 3 Summary Report (HUD Form 60002). Guidance on compliance and recordkeeping for Section 3 is available at http://www.hud.gov/offices/cpd/communitvdevelopment/toolkit/files/MBEWBEOutreach. Minority/Women's Business Enterprise Under Executive Orders 11625, 12432 and 12138, the City of Rosemead must prescribe procedures acceptable to HUD for a minority outreach program to ensure the inclusion, to the maximum extent possible, of minorities and women, and entities owned by minorities and women, in all contracts (See 24 CFR 85.36(e)). PROCEDURE 1. The City of Rosemead will commit to support the participation of Rosemead Minority/Women's Business Enterprises (M/WBE) by establishing a goal to procure contracted goods and services from Rosemead MBE/WBEs. Minimum acceptable outreach standards are specified by HUD and are available at: http://www.hud.gov/offices/cpd/communitvdevelopment/toolkit/files/MBEWBEOutreach. 265 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEI�E'AD Toda$s Small Toren America Davis Bacon Labor Requirements The City of Rosemead will comply with regulations on wage and labor standards. In the case of Davis -Bacon and the Contract Work Hours and Safety Standards Acts, every contract for the construction of housing (rehabilitation or new) that contains 12 or more units assisted with HOME funds triggers the requirements. Davis -Bacon and Related Acts (40 USC 276(A)-7) The Davis -Bacon and Related Acts ensures that mechanics and laborers employed in construction work under Federally assisted contracts are paid wages and fringe benefits equal to those that prevail in the locality where the work is performed. This act also provides for the withholding of funds to ensure compliance and excludes from the wage requirements apprentices enrolled in bona fide apprenticeship programs. PROCEDURE 1. The City of Rosemead requires that any contract for the construction of Affordable Housing with 12 or more units will require that all laborers and mechanics who are employed to perform work on any project, or any contractor or construction work which is financed, in whole or in part, with assistance which is received under the Housing and Community Development Act of 1974 shall be paid wages at rates which are not less than those that prevail in the locality for similar construction and shall receive overtime compensation in accordance with the Contract 2 Work Hours and Safety Standards Act. 3. The contractor and its subcontractors shall also comply with all applicable Federal laws and regulations which pertain to labor standards, including the minimum wage law. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual X Title I of Housing and Community Development Act of 1974: The City of Rosemead will not: Small Town America 1. Discriminate against any employee or applicant for employment on the basis of religion and not limit employment or give preference in employment to persons on the basis of religion; and 2. discriminate against any person applying for such public services on the basis of religion and not limit such services or give preference to persons on the basis of religion; and 3. provide no religious instruction or counseling, conduct no religious worship or services, engage in no religious proselytizing, and exert no other religious influence in the provision of such public services. Additional information regarding Executive Orders is available by: ➢ 11625 - Prescribing additional arrangements for developing and coordinating a national program for minority business enterprise, ➢ 12432 - Minority business enterprise development, and ➢ 12138 - National Women's Business Enterprise Policy and National Program for ➢ Women's Business Enterprise. ➢ http://www.archives.gov/federal register/codification/executive order/11625.html ➢ http://www.archives.gov/federal register/codification/executive order/12432.html ➢ http://www.usdoi.gov/crt/cor/byagency/sbaeol2l38.htm Contract Work Hours and Safety Standards Act, as amended (40 USC 327-333) This ACT provides that mechanics and laborers employed on federally assisted construction jobs are paid time and one-half for work in excess of 40 hours per week and provides for the payment of liquidated damages where violations occur. This act also addresses safe and healthy working conditions. Copeland (Anti -Kickback) Act (40 USC 276c) The Copeland Anti -Kickback Act governs the deductions from paychecks that are allowable. Additionally, it makes it a criminal offense to induce anyone employed on a federally assisted 67 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual C Town M—ka project to relinquish any compensation to which he or she is entitled and requires all contractors to submit weekly payrolls and statements of compliance. Fair Labor Standards Act of 1938, As Amended (29 USC 201, et. seq.) The Fair Labor Standards Act establishes the basic minimum wage for all work and requires the payment of overtime at the rate of at least time and one-half. It also requires the payment of wages for the entire time that an employee is required or permitted to work and establishes child labor standards. Additional guidance on the Application of Federal Labor Standards to HOME Projects is provided in the Labor Relations Letters (Letter No. LR -96-02, October 21, 1996) located at ht_tp://nhl.gov/offices/adm/hudclips/letters/lr96-02.txt. D. SITE AND NEIGHBORHOOD STANDARDS Housing provided through the HOME Program must promote greater choice of housing opportunities. Specific rules are as follows: 1. HOME -provided housing must be suitable from the standpoint of facilitating and furthering full compliance with the Title VI of the Civil Rights Act - 1964, the Fair Housing Act and Executive Order 11063. 2. The Final Rule requires only new construction rental projects to meet site and neighborhood standards from 24 CFR 983.6(b), which places limiting conditions on building in areas of "minority concentration" and that are "racially mixed." PROCEDURE 1. The City of Rosemead uses project information provided by owners/ developers/ sponsors/CHDOs to complete the Site and Neighborhood Standards Review form and document compliance with the Site and Neighborhood requirements. 2. The City reserves the right to request additional clarification and materials from owners/developers/sponsors for adequate documentation of compliance. 268 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD L J Today's Small Town An c ica E. LEAD-BASED PAINT SAFE HOUSING RULE (24 CFR part 35, subpart J) On September 15, 1999, HUD issued a new Federal lead-based paint regulation implementing Title X of the Housing and Community Development Act of 1992. This regulation makes many important changes in the lead-based paint requirements applicable to housing funded through HUD's Community Planning and Development (CPD) programs. The Lead Safe Housing Rule regulations that apply to rehabilitation activities are found at 24 CFR part 35, subpart J. The rehabilitation regulations distinguish among four approaches depending on the size of the rehabilitation effort. Understanding each approach and how to determine the level of rehabilitation assistance is the first step in deciding what lead safe housing requirements apply to a rehabilitation project. The purpose of the regulation is to identify and address lead- based paint hazards before children are exposed to lead. The regulation is divided into subparts that apply to the HOME program include: 1. Subpart A: Disclosure 2. Subpart B: General Requirements and Definitions 3. Subpart J: Rehabilitation 4. Subpart K: Acquisition, Leasing, Support Services, and Operations 5. Subpart M: Tenant -Based Rental Assistance 6. Subpart R: Methods and Standards for Lead -Based Paint Hazard Evaluation and Reduction On April 22, 2008, the EPA issued the Renovation, Repair, and Painting Rule (RRP) a rule requiring the use of lead -safe practices and other actions aimed at preventing lead poisoning. Under the rule, beginning April 2010, contractors performing renovation, repair and painting projects that disturb lead-based paint in homes, child care facilities, and schools built before 1978 must be certified and must follow specific work practices to prevent lead contamination. Until that time, HUD and EPA recommend that anyone performing renovation, repair, and painting projects that disturb lead-based paint in pre -1978 homes, child care facilities and schools follow lead -safe work practices. %I City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OS EIV�E`AD L I Todn%Small Town Anka There are some differences between the EPA RRP Rule and the HUD Lead Safe Housing Rule. A major difference is that the LSHR requires clearance examinations. All housing receiving federal assistance must still comply with the LSHR. All contractors should follow these three simple procedures: 1. Contain the work area. 2. Minimize dust. 3. Clean up thoroughly. From December 2008, the rule has required that contractors performing renovation, repair and painting projects that disturb lead-based paint provide to owners and occupants of child care facilities and to parents and guardians of children under age six that attend child care facilities built priorto 1978 the lead hazard information pamphlet Renovate Right: Important Lead Hazard Information for Families, Child Care Providers, and Schools (PDF) I en espanol (PDF). Starting on April 22, 2010, the rule affected paid renovators who work in pre -1978 housing and child -occupied facilities, including: ➢ Renovation contractors ➢ Maintenance workers in multi -family housing Painters and other specialty trades. Under the rule, child -occupied facilities are defined as residential, public, or commercial buildings where children under age six are present on a regular basis. The requirements apply to renovation, repair, or painting activities. The rule does not apply to minor maintenance or repair activities where less than six square feet of lead-based paint is disturbed in a room or where less than 20 square feet of lead-based paint is disturbed on the exterior. Window replacement is not minor maintenance or repair. For additional guidance, refer to: EPA's Lead Renovation, Repair, and Painting Program Rule. Additional information on becoming an EPA -certified renovator or training provider is available on EPA's Renovator and Trainer Tool Box site. HUD defines four approaches to address lead-based paint in HOME funded Projects. The Exhibit 20 on the following page details each approach. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual X S-11 Tuna, America EXHIBIT 17 APPROACHES • IMPLEMENTING LEAD HAZARD EVALUATION• APPROACH 1- DO NO HARM LEAD HAZARD EVALUATION LEAD HAZARD REDUCTION Options ■ Paint testing performed on ■ Repair surfaces disturbed Presume lead-based paint is surfaces to be disturbed. during present and use safe work work. practices on all surfaces ■ Safe work practices used being disturbed. when working on areas identified as lead-based paint. ■ Clearance performed. APPROACH 2 - IDENTIFY AND STABILIZE DETERIORATED PAINT LEAD HAZARD EVALUATION LEAD HAZARD REDUCTION Options ■ Visual assessment ■ Paint stabilization of Perform paint testing on performed identified deteriorated paint. deteriorated paint. Safe work to identify deteriorated ■ Safe work practices used. practice requirements only paint. ■ Clearance performed. apply to lead-based paint. APPROACH 3 - IDENTIFY AND CONTROL LEAD HAZARDS LEAD HAZARD EVALUATION LEAD HAZARD REDUCTION Options ■ Paint testing performed on ■ Interim controls performed on Presume lead-based paint surfaces identified hazards. and/or lead based paint to be disturbed. ■ Safe work practices used. hazards are ■ Risk assessment performed ■ Clearance performed present and perform standard on entire dwelling. treatments. APPROACH 4 - IDENTIFY AND ABATE LEAD HAZARDS LEAD HAZARD EVALUATION LEAD HAZARD REDUCTION Options ■ Paint testing performed ■ Abatement performed on Presume lead-based paint on surfaces to be disturbed. identified hazards. and/or ■ Risk assessment performed ■ Interim controls performed on lead-based paint hazards are on identified hazards on the present entire dwelling. exterior and perform abatement on all that are not disturbed by applicable surfaces — Rehabilitation. deteriorated, ■ Safe work practices used. impact, friction, chewable ■ Clearance performed. surfaces, and surfaces to be disturbed. 27 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD J Tadn',, Small Town America GLOSSARY OF HOME TERMS Action Plan: The one-year portion of the Consolidated Plan (see below). It includes the PJ's annual application for HOME funds. Adjusted Income: Adjusted income is annual (gross) income reduced by deductions for dependents, elderly households, medical expenses, handicap assistance expenses and childcare (these are the same adjustment factors used by the Section 8 Program). Adjusted income is used in HOME to compute the actual tenant payment in TBRA programs and the low HOME rent in rental projects in which rents are based on 30% of a family's adjusted gross income. Affordability: The requirements of the HOME Program that relate to the cost of housing both at initial occupancy and over established timeframes, as prescribed in the HOME Final Rule. Affordability requirements vary depending upon the nature of the HOME assisted activity (i.e., homeownership or rental housing). Annual Income: The HOME Program allows the use of one of three definitions of annual income: Section 8 annual income; annual income as reported on the U.S. Census long form; and adjusted gross income as defined for reporting on IRS Form 1040. Applicant(s): A person or persons who appear on the title to the property and that apply for a loan under the HRPP. All persons appearing on the title must agree to apply and execute all documents required. Borrower: A person or persons who appear on the title to the property, signs the Written Agreement with the City and signs the loan documents with the City, thereby becoming legally responsible for any repayment of the HRPP loan. Building and Safety Code: The City's residential codes and ordinances pertaining to housing construction, land use, occupancy and maintenance of existing residential properties which are applicable to the property through Code Enforcement action. 272 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Ta n America Building Inspector: The City employee(s) responsible for inspection(s) of structural, electrical, plumbing, improvements; The inspector assures compliance of work to applicable Building and Safety Codes. Building Division: The Department of the City responsible for issuance of building permits. Building Permit: An authorization by the Building Division to commence building repairs or improvements on a specific property; Permits must be issued for most home improvements, including, but not limited to, roofing, electrical, plumbing, structural changes, and foundations. A fee is charged for permits and inspections are included in the permit cost. California Preliminary Notice: A notice sent to the owner of the dwelling unit by any person or supplier providing labor, services, equipment, or materials for the rehabilitation work. The notice is sent in the event that the primary contractor is listing, as security, the property being rehabilitated with the person or supplier sending notice. Commitment: Commitment means one of three things: (1) The PJ has executed a legally binding agreement with a State recipient, subrecipient, or contractor to use a specific amount of HOME funds to produce affordable housing or provide tenant -based rental assistance; or (2) has executed a written agreement reserving a specific amount of funds for a CHDO; or (3) has met requirements to commit to a specific local project as defined below. Commitment to a specific local project: Commitment to a specific local project means that a legally binding agreement was executed meeting one of the following sets of requirements: (1) For rehabilitation or new construction projects, the PJ (or other entity) and the project owner will execute an agreement for an identifiable project under which construction can reasonably be expected to start within 12 months of the agreement date. If the project is owned by the PJ, the project must be set up in the disbursement and information system and construction reasonably expected to start within 12 months of the set-up date. (2) If the project consists of acquisition of standard housing by the PJ, the agreement must be a binding contract for the sale of an identifiable property and the property title must be transferred to the PJ (or other entity) within six months of the date of the contract. (3) If the project involves the acquisition of standard housing and the PJ is providing HOME funds to a purchaser, under the agreement, the title of the property must be transferred to the purchaser within six months of the agreement 273 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Tonal America date. (4) If the project consists of TBRA, the PJ must enter into a rental assistance contract with the owner or the tenant in accordance with the provisions of 24 CFR Part 92.209. Community Housing Development Organization (CHDO): A private, nonprofit organization that meets a series of qualifications prescribed in the HOME regulations at 24 CFR Part 92.2. A participating jurisdiction must award at least 15 percent of its annual HOME allocation to CHDOs. Consolidated Plan: A plan prepared in accordance with the requirements set forth in 24 CFR Part 91 which describes community needs, resources, priorities and proposed activities to be undertaken under certain HUD programs, including HOME. Consortium: Geographically contiguous units of general local government consolidated to be in a single unit of general local government for HOME Program purposes when certain requirements are met. Contractor: An eligible contractor is a general contractor licensed in compliance with Federal, State, and City regulations to do the necessary housing rehabilitation work. No contractor may be utilized who has been disbarred or suspended by order of the City, State or Federal Government. The City permits contractors to apply to the City for eligibility determination at any time. Deed of Trust: The legal document which secures the loan with the property that is being rehabilitated. The Deed of Trust is for the same amount as the loan and must be signed by the borrower in the presence of a public notary. Development: A site or an entire building or two (2) or more buildings, together with the site or sites on which the building is located, that are under common ownership, management and financing and are to be assisted with HOME Program funds -under commitment by the owner -as a single undertaking. Development Fees: Compensation to the developer for developing the property, includes overhead and profit, consult/processing agent fees, project administration, the value of 274 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSENVEAD TW.V4 Sm.II T.—America personal guarantees and a portion of any reserves determined by the housing credit agency to be in excess of industry norms. Draw -Down: The process of requesting and receiving HOME funds. Ph and authorized state recipients draw down funds from a line of credit established by HUD. Eligible Improvements: All improvements required to bring the property up to City Codes and the City's Rehabilitation Standard Equity: The value of a property less the amount of outstanding debt on it. Final Rule: The Final HOME Rule was published at 24 CFR Part 92 on September 16, 1996 and became effective on October 16, 1996. It was amended on October 22, 1997. Financing Plan: The proposed financing for a project. General Partner: A partner who is liable and responsible for completing a project as proposed, managing the partnership and guaranteeing funding required to complete the project. A general partner oversees construction, leasing, and property management; maintains the books and records of the partnership; and submits periodic reports to the limited partners on the project's financial status. General Partnership: A form of ownership in which all partners participate materially in the partnership's operations and share liability. Group Home: Housing occupied by two or more single persons or families consisting of common space and/or facilities for group use by the occupants of the unit, and (except in the case of shared one -bedroom units) separate private space for each family. HOME -Assisted Units: A term that refers to the units within a HOME project for which rent, occupancy, and/or resale restrictions apply. The number of units designated as HOME -assisted affects the maximum HOME subsidies that may be provided to a project. 275 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small T Anka HOME Funds: All appropriations for the HOME Program, plus all repayments and interest or other returns on the investment of these funds. HOME Investment Trust Fund: The term given to the two accounts - one at the Federal level and one at the local level - that "hold" the PJ's HOME funds. The Federal HOME Investment Trust Account is the U.S. Treasury account for each participating jurisdiction. The local HOME Investment Trust Fund account includes repayments of HOME funds, matching contributions and payment of interest or other returns on investment. Housing Investment Partnerships Act ("HOME Program"): The act that created a formula- based allocation program intended to support state and local affordable housing programs. The goal of the program is to increase the supply of affordable rental and ownership housing through acquisition, construction, reconstruction, and moderate or rehabilitation activities (Title I, National Affordable Housing Act of 1990). HUD: U.S. Department of Housing and Urban Development. Household: A household includes all persons living in the unit at the property at the time of application, except persons who are paid caregivers of elderly or disabled individuals. Household Income Verification: The process used to determine gross household income, including Applicant submittal of most current income tax returns; employer verification of wages; W-2 Forms; Social Security verification, profit/loss statements, etc. Housing Projects Coordinator: The person who conducts inspections and produces work write- ups and cost estimates. Inspection Card: Card posted at the site of rehabilitation once building permits are issued. Building Inspector(s) sign off various inspections on Card as job progresses. Insular Areas: Guam, the Northern Mariana Islands, the United States Virgin Islands and American Samoa. 276 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Town An k., Interest Subsidy: The amount of subsidy required to reduce the interest rate on a loan to a below- market rate over the term of the loan. Jurisdiction: A state or unit of general local government. Limited Partner: A passive investor in a limited partnership who, in exchange for contributing equity to the project, receives a pro rata share of cash flow and tax benefits and the right to approve the sale or refinancing of the property and removal of the general partner in the event of gross negligence or breach of contract. Limited Partnership: An ownership vehicle comprising limited and general partners that allows for central management but has no tax liability, instead passing tax benefits through to its limited and general partners. Loan Disbursement: The principal amount of the loan which is paid out to the Applicant as the rehabilitation work progresses; The disbursement may be in accordance with a contractual agreement between Applicant and contractor. Prior to disbursement, the work accomplished must be in accordance with the scope of work as detailed in the work the work write-up. If inspection by the Building Division is required for the particular rehabilitation item, the inspector must sign off for said work prior to disbursement. Loan Documents: All forms relevant to the actual execution of the loan, including a Three -Day Right of Recession Notice, Truth -In -Lending Form, Promissory Note, and Deed of Trust. Low -Income Families: Families whose annual incomes do not exceed 80 percent of the median income for the area (adjusted for family size). Match: Match is the PJ's contribution to the HOME Program -- the local, non -Federal contribution to the partnership. The PJ's match contribution must equal not less than 25 percent of the HOME funds drawn down for projects in that fiscal year. 77 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 0 New Construction: The creation of new dwelling units. Any project which includes the creation of new or additional dwelling units in an existing structure is considered new construction. Participating Jurisdiction (PJ): The term given to any state, local government or consortium that has been designated by HUD to administer a HOME Program. HUD designation as a PJ occurs if a state or local government meets the funding thresholds, notifies HUD that they intend to participate in the program, and has a HUD -approved Consolidated Plan. Program Income: Gross income received by the PJ, state recipient, or a subrecipient directly generated from the use of HOME funds or matching contributions. Project: A site or an entire building or two or more buildings, together with the site or sites on which the building or buildings is located, that are under common ownership, management and financing and are to be assisted with HOME funds, under a commitment by the owner, as a single undertaking. The HOME Final Rule eliminated the requirement that all buildings fall within a four - block radius. Project completion: All necessary title transfer requirements and construction work have been performed; the project complies with all HOME requirements; the final drawdown has been disbursed for the project; and the project completion information has been entered in the disbursement and information system established by HUD. For TBRA, project completion means the final draw -down has been disbursed for the project. Promissory Note: A form, part of the loan documents, which is the borrower's agreement to pay back the amount borrowed in accordance with the established terms of the loan. The Promissory Note must be signed by all persons on the Title to the Property. Property Rehabilitation Standards: A standard established by the Cityto ensure that the housing rehabilitated under HRPP meets or exceeds Recapture: Repayment of HOME funds to the PJ from a homebuyer project during the period of affordability. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E'AD Today's Sma11 Town Amedra Reconstruction (also rehabilitation): The rebuilding, on the same lot, of housing standing on a site at the time of project commitment. The number of housing units on the lot may not be changed as part of the reconstruction project, but the number of rooms per unit may change. Reconstruction also includes replacing an existing substandard unit of manufactured housing with a new or standard unit of manufactured housing. Rehabilitation Contract: A legally binding, standardized form which spells out, in detail, the entire scope of work, specific quality, brands of materials, and all other data pertinent to the rehabilitation of the property. The Contract must be signed by both Contractor and Applicant. Rehabilitation Cost: The total cost of repairs and improvements and other costs for rehabilitation to be incurred by the Applicant that may be included in a Loan. Right of Recession: The borrower's right within a three working day period from the date of loan settlement to rescind the entire loan transaction. Recipient: Any entity under contract with the City to undertake activities funded by the City's HOME Program. Restrictive Covenant: A limitation placed on a property, which is recorded and attached to the deed, thereby passing to subsequent owners. Section 8 Tenant -Based Rental Assistance Program: A federal program that provides rental assistance to low-income families who are unable to afford market rents. Assistance is provided in the form of vouchers. Single -Room Occupancy (SRO): Housing consisting of single -room dwelling units that is the primary residence of its occupant or occupants. The unit must contain food preparation and/or sanitary facilities if the project involves new construction, conversion of non-residential space, or reconstruction. If the units do not contain sanitary facilities, the building must contain sanitary facilities shared by the tenants. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual OSEIV�E`AD L � Today's Small Town Amcrice Soft Costs: Development costs exclusive of the cost of acquisition, site improvements, construction, and contingencies. Soft Second Mortgage: A loan provided by public and nonprofit lenders at below market interest rates and with flexible repayment terms, using as collateral a second mortgage on the project property, to fill a financial gap for a project serving a public purpose (for instance, affordable housing.) Subrecipient: A public agency or nonprofit organization selected by a PJ to administer all or a portion of the PJ's HOME Program. A public agency or nonprofit organization that receives HOME funds solely as a developer or owner of housing is not a subrecipient. Substantial Rehabilitation: The cost of a rehabilitation project that costs more than $25,000. Surplus Cash (Net Operating Income (NOI)): The operating income derived by the project owner from development cash flow that exceeds 1st mortgage loan payments and the following operating expenses: property management fee, grounds maintenance, accounting services, amounts deposited into a replacement reserve account, legal services, taxes and insurance and utility expenses, each specifically related to the development. Developer fees and depreciation of assets may not be included in calculating expenses. Syndicates: Individuals or firms who arrange for the sale of ownership shares in a project to raise equity from investors. Targeting: Requirements of the HOME Program relating to the income or other characteristics of households that may occupy HOME -assisted units. Tenant -Based Rental Assistance (TBRA): A form of direct rental assistance in which the recipient tenant may move from a dwelling unit with a right to continued assistance that includes security and utility deposits associated with the rental of dwelling units. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Town Anrt ice Total Development Cost (TDC): The sum of all costs for site acquisition, relocation, demolition, construction and equipment, interest and carrying charges. Truth in Lending Statement: The form included in the loan document package which details all terms of the Loan. Applicant must sign receipt of said form. Very -Low -Income Families: Families whose annual incomes do not exceed 50 percent of the median income for the area (adjusted for family size). Work Write-up: A form to be completed by the Housing Projects Coordinator outlining a complete and suggested scope of work to be performed for the rehabilitation of the property; Written Agreement: The Written Agreement defines the terms and conditions of the HRPP Loan to the Applicant. The Written Agreement is executed prior to the Applicant engaging a Contractor to complete the defined rehabilitation. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 9 APPENDIX A TITLE 25 SECTION 6914 GROSS INCOME INCLUSION "Gross income" shall mean the anticipated income of a person or family for the twelve-month period following the date of determination of income. If the circumstances are such that it is not reasonably feasible to anticipate a level of income over a twelve-month period, a shorter period may be used subject to a predetermination at the end of such a period. "Income" shall consist of the following: (a)Except as provided in subdivision (b), all payments from all sources received by the family head (even if temporarily absent) and each additional member of the family household who is not a minor shall be included in the annual income of a family. Income shall include, but not be limited to: (1) The gross amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses; (2) The net income from operation of a business or profession or from rental or real or personal property (for this purpose, expenditures for business expansion or amortization of capital indebtedness shall not be deducted to determine the net income from a business); (3) Interest and dividends; (4) The full amount of periodic payments received from social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic receipts; (5) Payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay (but see subdivision (b)(3)). (6) Public Assistance. If the public assistance payment includes an amount specifically designated for shelter and utilities which is subject to adjustment by the public assistance agency in accordance with the actual cost of shelter and utilities, the amount of public assistance income to be included as income shall consist of: (A) The amount of the allowance or grant exclusive of the amount specifically 282 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Town America ISI designated for shelter and utilities, plus ISI (B) The maximum amount which the public assistance agency could in fact allow for the family for shelter and utilities, (7) Periodic and determinable allowances such as alimony and child support payments, and regular contributions or gifts received from persons not residing in the dwelling; (8) All regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is head of the family or spouse (but see subdivision (b)(5)) TITLE 25 SECTION 6914 GROSS INCOME EXCLUSION III (b) The following items shall not be considered as income: ISI (1) Casual, sporadic or irregular gifts; (2) Amounts which are specifically for or in reimbursement of the cost of medical expenses; (3) Lump -sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and worker's compensation), capital gains and settlement for personal or property losses; (4) Amounts of educational scholarships paid directly to the student or to the educational institution, and amounts paid by the government to a veteran for use in meeting the costs of tuition, fees, books and equipment. Any amounts of such scholarships, or payments to veterans not used for the above purposes of which are available for subsistence are to be included in income; (5) The special pay to a serviceman head of a family away from home and exposed to hostile fire; (6) Relocation payments made pursuant to federal, state, or local relocation law; (7) Foster childcare payments (8) The value of coupon allotments for the purchase of food pursuant to the Food Stamp City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Town A.—k. III Act of 1964 which is in excess of the amount charged the eligible household; ISI (9) Payments received pursuant to participation in the following volunteer programs under the ACTION Agency: (A) National Volunteer Antipoverty Programs which include VISTA, Service-Learningll Programs and Special Volunteer Programs. (B) National Older American Volunteer Programs for persons aged 60 and over which include Retired Senior Volunteer Programs, Foster Grandparent Program, Older American Community Services Program, and National Volunteer Program to Assist Small Business Experience, Service Corps of Retired Executive (SCORE) and Active Corps of Executives (ACE). City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual T.— AmMc., 4►11]E41:3 TITLE 25 SECTION 6914 ANNUAL INCOME NET FAMILY ASSET INCLUSIONS AND EXCLUSIONS Where a family has net family assets in excess of $5,000, income shall include the actual amount of income, if any, derived from all of the net family assets or 10 percent of the value of all such assets, whichever is greater. For purposes of this section, net family assets mean value of equity in real property other than the household's full-time residence, savings, stocks, bonds, and other forms of capital investment. The value of necessary items such as furniture and automobiles shall be excluded. Inclusions 1. Cash held in savings accounts, checking accounts, safe deposit boxes, homes, etc. For savings accounts, use the current balance. For checking accounts, use the average 6 - month balance. 2 Cash value of revocable trusts available to the applicant. 3. Equity in rental property or other capital investments. Equity is the estimated current market value of the asset less the unpaid balance on all loans secured by the asset and all reasonable costs (e.g., broker fees) that would be incurred in selling the asset. Under HOME, equity in the family's primary residence is not considered in the calculation of assets for owner -occupied rehabilitation projects. 4. Cash value of stocks, bonds, Treasury bills, certificates of deposit and money market accounts. 5. Individual retirement and Keogh accounts (even though withdrawal would result in a penalty). 6. Retirement and pension funds. 7. Cash value of life insurance policies available to the individual before death (e.g., surrender value of a whole life or universal life policy). 8 Personal property held as an investment such as gems, jewelry, coin collections, antique cars, etc. 9. Lump sum or one-time receipts, such as inheritances, capital gains, lottery winnings, victim's restitution, insurance settlements and other amounts not intended as periodic payments. 10. Mortgages or deeds of trust held by an applicant. Exclusions 1. Necessary personal property, except as noted in number 8 of Inclusions, such as clothing, furniture, cars and vehicles specially equipped for persons with disabilities. 2. Interest in Indian trust lands. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Today's Sinal) T.— America 3. Assets not effectively owned by the applicant. That is, when assets are held in an individual's name, but the assets and any income they earn accrue to the benefit of someone else who is not a member of the household and that other person is responsible for income taxes incurred on income generated by the asset. 4. Equity in cooperatives in which the family lives. 5. Assets not accessible to and that provide no income for the applicant. 6. Term life insurance policies (i.e., where there is no cash value). 7. Assets that are part of an active business. "Business" does not include rental of properties that are held as an investment and not a main occupation. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual APPENDIX C Promissory Note Secured By Deed Of Trust Aloe&a DO NOT DESTROY THIS ORIGINAL NOTE: When paid or when Note reaches maturity, said Original Note, together with the Deed of Trust securing same, must be surrendered to Trustor for cancellation and retention before reconveyance will be made. DATE Rosemead, CA City (insert address) Rosemead CA 91770 Property address City State Zip Code 1. BORROWER'S PROMISE TO PAY In return for a loan received, Borrowers promise to pay U.S. AMOUNT (spell number out) (this amount will be called "Principal"), to the order of the Lender. The Lender is THE CITY OF ROSEMEAD, a municipal corporation. Borrowers understand that the Lender may transfer this Note. The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note will be called the "Note Holder". 2. INTEREST The annual interest rate is #%. 3. PAYMENT In payment as herein stated for value received, We promise to pay the City of Rosemead at 8838 E. Valley Blvd., Rosemead, CA 91770 the sum of spell number out ($AMOUNT). 4. THIS NOTE SECURED BY A DEED OF TRUST In addition to the protection given to the Note Holder under this Note, a Deed of Trust, dated the same day as this Note, protects the Note Holder from possible losses, which might result if Borrowers do not adhere to agreement made in this Note. That Deed of Trust describes how and under what conditions Borrowers may be required to make immediate payment in full of all amounts that are owed under this Note. Some of those conditions are described as follows: Should the Trustor herein sell, convey, alienate, transfer or be divested of title to the property described in the Deed of Trust which secures this Note, whether voluntary or by operation of law, the entire unpaid balance of this Note shall become due and payable, as set forth in this Note. Upon the occasion of either instance above to cause said payment to become due, I understand that I have ninety (90) days to either pay the entire sum due in full, or to agree upon a repayment to the City of Rosemead. M City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual 'OSENTEAD Tod.% Sm. II T... A, -r&. 5. BORROWERS PAYMENTS BEFORE THEY ARE DUE Borrowers have the right to make payments of principal at any time before they are due. A payment of this type is known as a "prepayment". When a prepayment is made, Borrowers will tell the Note Holder in a letter that the amount is a prepayment. A prepayment of all of the unpaid principal is known as a "full prepayment". A prepayment of only part of the unpaid principal is known as a "partial prepayment". Borrowers may make a full prepayment or a partial prepayment. The Note Holder will use all prepayments to reduce the amount of principal that owed under this Note. If a partial prepayment is made, there will be no delays in the due dates or changes in the amounts of any monthly payments unless the Note Holder agrees in writing to those delays or changes. A full prepayment may be made at any time. If Borrowers choose to make a partial prepayment, the Note Holder may require Borrowers make the prepayment on the same day that one of the monthly payments is due. The Note Holder may also require that the amount of the partial prepayment be equal to the amount of principal that would have been part of the next one or more monthly payments. 6. BORROWER'S WAIVERS I waive my rights to require the Note Holderto do certain things. Those things are: (A) to demand payment of amounts due (known as "presentment"); (B) to give notice that amounts due have not been paid (known as "notice of dishonor"); to obtain an official certification of nonpayment (known as a "protest"). Anyone else who agrees to keep the promises made in this Note, or who agrees to make payments to the Note holder if I fail to keep my promises under this Note, or who signs this Note to transfer it to someone else also waives these rights. These persons are known as "guarantors, sureties and endorsers". 7. GIVING OF NOTICES Any notice that must be given under this Note will be given by delivering it or by mailing it by certified mail addressed to Borrowers at the Property Address above. A notice will be delivered or mailed to Borrowers at a different address if Borrowers give the Note Holder a notice of a different address. Any notice that must be given to the Note Holder under this Note will be given by mailing it by certified mail to the Note Holder at the address stated in Section 3 above. A notice will be mailed to the note Holder at a different address if Borrowers are given a notice of that different address. 8. RESPONSIBILITY OF PERSONS UNDER THIS NOTE If more than one person signs this Note, each signatory is fully and personally obligated to pay the full amount owed and to keep all of the promises made in this note. Any guarantor, surety, or endorser of this Note (as described in Section 7 above) is also obligated to do these things. The Note Holder may enforce its rights under this Note against each party individually or against all parties together. This means that any one of us may be required to pay all of the amounts owed under this Note. Any person who takes over the rights or obligations under this Note will have all of the Borrowers rights and must keep all of Borrowers promises made in this Note. Any person who takes over the rights or obligations of a guarantor, surety, or endorser of this Note is also obligated to keep all of the promises made in this Note. City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual NOTICE TO BORROWER Do not sign this Note if it contains blank spaces. All spaces should be completed before you sign. First and Last Name ...................................................................... First and Last Name (Sign Original Only) City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual `AD Town America APPENDIX D RECORDLNG REQUESTED BY ,eM «EMN RECORDED 1VUL TO City of Rosemead Attn: Housing Administrator 8838 East Valley Boulevard Rosemead, CA 91770 APN No: ###-# 4Nt-## SPACE ABOVE THIS LINE FOR RECORDER'S USE DEED OF TRUST AND ASSIGNMENT OF RENTS Town America BY THE DEED OF TRUST, made this Mft Month. Year, between Name of Borrower herein called Trustor, whose address is: ADDRESS ROSEMEAD CA 91770 (number and street) (City) (State) (zip) and City of Rosemead, a California Corporation, herein called Trustee, of Rosemead herein called Beneficiary, Trustor grants, transfer, and assigns to trustee, in trust, with power of sale, that property in Los Angeles County, California, described as: See Exhibit A Attached Hereto. Trustor also assigns to Beneficiary all rents, issues and profit of said realty reserving the right to collect and use the same except during continuance of default hereunder and during continuance of such default authorizing Beneficiary to collect and enforce the same by any lawful means in the name of any party hereto. For purpose of securing: (1) Payment of the indebtedness evidenced by one promissory note in the principal sum of ## ###.## of even date herewith, payable to Beneficiary, and any extensions or renewals thereof. 92) the payment of any money that may be advanced by the Beneficiary to Trustor, or his successors, with interest thereon, evidenced by additional notes (indicating they are so secured) or by endorsement on the original note, executed by Trustor or his successor; (3) performance of each agreement of Trustor incorporated by reference or contained herein. On October 25, 1973, identical fictitious Deeds of trust were recorded in the offices of the County Recorders of the Counties of the State of California, the first page thereof appearing in the book and at the page of the records of the respective County Recorder as follows: MINTY Book Page COUNTY Book Page COUNTY Book Page COUNTY Page Book Alameda 3540 89 Kings 1018 394 Placer 1528 440 Siskiyou 697 407 Alpine 18 70 Lake 743 552 Plumas 227 443 Solano 1860 581 Amador 2M 243 Lassen 271 367 Riverside 1973 139405 Sonoma 2810 975 Butte 1870 R7R Los Angeles T8512 751 Sacramento 731025 59 Stanislaus 2587 332 Calaveras---------W 92 Madera 1176 234 San Benito 386 94 Sutter 817 182 Colusa er►a 347 Marin 2736 463 San Bernardino 8294 877 Tehama 630 522 Contra Costa 70T7 ---M Mariposa 143 717 San Francisco 8820 585 Trinity 161 393 Del Norte ------ J11A 526 Mendocino 942 242 San Joaquin 3813 6 Tulare 3137 567 EI Dorado 1229 A94 Merced 1940 361 San Luis Obispo 1750 491 Tuolumne 396 309 Fresno 6227 411 Modoc 225 668 San Mateo 6491 600 Ventura 4182 662 Glenn -%S 290 Mono 160 215 Santa Barbara 2486 1244 Yolo 1081 335 Humboldt 1213 31 Monterey R77 243 Santa Clara 0623 713 Yuba 564 163 Imperial 1355 Rn1 Napa 922 96 Santa Cruz 2358 744 File No. Inyo 2n5 660 Nevada 665 303 Shasta 1195 293 San Diego 73-299568 Kem 4809 2351 Orange 10961 398 Sierra 59 439 City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Small Town Amuica The provisions contained in Section A, including paragraph 1 through 5, and the provisions contained in Section B, including paragraphs 1 through 9 of said fictitious Deeds of Trust are incorporated herein as fully as though set forth at length and in full herein. The undersigned Trustor requests that a copy of any notice of default and any notice of sale hereunder be mailed to Trustor at the address here in above set forth, being the address designated for the purpose of receiving such notice. SIGNATURE: First and Last Name, Trustee SIGNATURE: MUST ATTACH NOT.kRY ACKNOWLEDGMENT City of Rosemead: HOME INVESTMENT PARTNERSHIP PROGRAM Policies and Procedure Manual Attachment B 2013 FTHB Down Payment Assistance Loan Program Policies and Procedures CITY OF ROSEMEAD DOWN PAYMENT ASSISTANCE LOAN A Program for First Time Homebuyers E M-",*� -%%�URP0RATEO� Policies and Procedures Manual (HOME Investment Partnerships Program) Reserved The City of Rosemead does not discriminate on the basis of race, color, creed, national origin, sex, religion, marital status, status with regard to public assistance, disability familial status, or sexual or affectional orientation in the provision of services. An equal opportunity employer. This information will be made available in alternative format upon request. ,at 0YP0dW" ®�rn� � arit�is•�rrn�rri/�aa, �nra�rilari�.,� TABLE OF CONTENTS Introduction 7 Program Overview 11 Program Goals 11 Second Mortgage Loan 12 Fair Housing Policy 12 Public Information Request 12 Determining Property Value 12 Disclosure of Voluntary Sale Notice 13 Lead -Based Paint 13 Double Dipping 13 Program Administration 13 Program Guidelines 17 Location of Program Activity 17 Eligible Participants 17 Eligible Properties 19 Affordable Housing Costs 20 Occupancy Standards 20 Covenants and Restrictions 20 Participation Priorities 23 Financing .... 23 Amendments. 25 Educational Services 29 About the Educational Program 29 Referral Services 29 Program Procedures 33 Initiation and Submission 33 QyofRosemead 3 DPAL Program CommunityDeve%pmentDeparMent June 2013 Resale, Refinancing, and Subordination Recapture Guidelines Other Programmatic Requirements Attachment A — Gross Income Inclusions Attachment B — Asset Inclusion and Exclusions Attachment C — Loan Agreement Attachment D — Lead -Based Paint Visual Assessment Attachment E — Seller's Affidavit Attachment F — Application Affidavit 38 38 39 CkyofRosemead 4 DPAL Program Commun&yDevelopmentDepartment June 2013 12t EQW►a�ra �►i�it►��A�rirliii�r��r�i//�lai�/ira�iMsl/iNi/ CityofRosemead 5 DPAL Program Commun&yDeve%pmentDepartment June 2013 C Reserved CityofRosemead 6 DPAL Program CommunityDeve%pmentDepartinent June 2013 12t "' Introduction This manual sets forth policies and procedures for the City of Rosemead's Federally - funded Down Payment Assistant Loan Program, herein referred to as "Program". With funding supplied through the U.S. Department of Housing and Urban Development, herein referred to as "HUD", the loan is administered by the City of Rosemead's Community Development Department, hereinafter referred to as "City". The loan is designed to provide financial assistance to first time homebuyers of low and moderate - income (0 to 80% of AMFI) purchasing a single-family or condominium/town home within the City of Rosemead. In the event that these policies and procedures are revised or new ones implemented, this manual shall be revised accordingly. Mailing Address: City of Rosemead Community Development Department 8838 E. Valley Boulevard Rosemead, California 91770 Telephone: (626) 569-2100 Fax: (626) 307-9218 QvofRosemead 7 DPAL Program CommunityDeveiopmentDepartment June 2013 �°'�' ► �'°'�''®nn�i�As�ritliiiAn- i�r-r�i//�Ias�Irira�sll�i� Reserved CityofRosemead 8 DPAL Program CommunVDeveiopmentDepartment June 2013 Equ�I Hou.pg oppor�u�ly 91/I1��1/�I/tlI//�//�I�I//�I{f!/%�q�/Nir/N// CityofRosemead 9 DPAL Program CommunityDeve%pmentDeparftnent June 2013 Reserved CityofRosemead 10 DPAL Program CommunityDeve%pmentDepartment June 2013 C eq* "Wft a -►a �a Overview This document summarizes the City of Rosemead's Down Payment Assistance Loan (DPAL) Program. This Program was established to assist in the removal of barriers to homeownership that exist within the community for low and moderate -income (0 to 80% of Area Median Family Income) households. Property values that are too high and personal savings that are too small to permit households to become homeowners are the barriers that this Program is intended to overcome. The Program has been designed to benefit individual households and properties located within the City of Rosemead (the "City") by providing down payment assistance to participating households. Participation in this Program is reserved for households at or below 80% of area median family income that could not enjoy the benefits of homeownership without assistance. This Program is funded by the Department of Housing and Urban Development (HUD) through the HOME Investment Partnerships (HOME) program. Program Goals In general, neighborhoods containing a high proportion of owner -occupied properties remain more economically stable and more physically attractive than comparable neighborhoods with a higher percentage of investor-owned housing. The pride of ownership evident among many owner -occupants can maintain or increase neighborhood property values, provide for long term stability, and enhance the local property tax base. Homeowners' long-term commitment to a "home" and to the neighborhood as a whole can also result in lower subsequent public expenditures for property rehabilitation. Affordable homeownership provides benefits to low and moderate -income families as well as to the communities in which they live. The goals of the Program are: • To encourage home ownership and increase the number of owner -occupied single-family properties in the community; • To preserve and promote decent affordable housing opportunities within the community; • To provide working individuals and families with the opportunity to become homeowners; • To facilitate the resale of existing housing; • To provide affordable opportunities for homeownership; • To beautify neighborhoods; • To make neighborhoods safe; and • To instill neighborhood pride. CityofRosemead 11 DPAL Program CommunVDevefopmentDepartment June 2013 121 Second Mortgage Loan The City's loan will be a "silent -second" lien, subordinate to the Lender's first lien. There is a decreasing interest charged on the City's second mortgage loan and the loan payments are deferred until the sale, transfer, refinancing of the house (subject to staff review), the owner ceases to occupy the home, or year 30. At no time will the loan terms exceed 30 years. The loan is neither transferable nor assumable. Each borrower will execute on behalf of the City, a Promissory Note secured by a Deed of Trust on the property purchased. Fair Housing Policy The City and other entities acting on behalf of the City in the administration of this Program will not discriminate against any Participant for a loan. The City will also urge Participants to examine all housing opportunities throughout the City. Public Information Program The City will provide information to the public on the Program. Some of the available resources are: Public notice Press release City website Advertisements in local newspapers Notification to local Board of Realtors Meetings with local brokers (as requested) Community meetings, home -buyer fairs, and seminars Meetings with residents of lower income census tracts The following information will be provided during the course of these activities: Objectives of the Program Terms of the financial assistance Eligibility criteria Income limits Other information helpful to the first-time homebuyer Determining Properly Value The process for determining the property value for a HOME -assisted property for a new homebuyer is as follows: • An appraisal performed by a licensed fee appraiser. Sales price must not exceed 95% of the area median purchase price as established by HUD • Establish local limits and obtain HUD approval QyofRosemead 12 DPAL Program Commun&yDeveiopmentDepartment June 2013 112t r4* 1 °�R°'[irri rn�r�i��a�ssirArra�rn�rir.� Disclosure of Vo/untarySale Notice A description of the Disclosure of Voluntary Sale Notice (Exhibit E), which contains the items listed below provided to the seller prior to making the purchase offer, as follows The purchaser has no power of eminent domain and therefore will not acquire the property if negotiations fail to result in an amicable agreement; An estimate of the fair market value of the property; That the property is owner -occupied or purchased by an existing tenant; If an acquisition notice will not be provided prior to the purchase offer, a provision that the seller may withdraw from the agreement after this information is provided. LeaaLBased Paint Environmental requirement for special issues/consideration and regulatory citations and references for pre -1978 units, as follows: Notices to purchasers and tenants Visual assessment must be performed Paint stabilization must be completed (if applicable) Safe work practices and clearance Compliance with Title 24 CFR 92.355 Lead -Based Paint Poisoning Prevention Act of 1971 (42 U.S.C. 4821 et.seq.) 24 CFR Part 35 982.4010) (except paragraph 982.401(j)(1)(i)) Double -Dipping No additional HOME funds may be provided to a HOME -assisted project during the relevant period of affordability, except that: A homebuyer may be assisted with HOME funds to acquire a unit that was previously assisted with HOME funds. Program A dministration Requests for assistance and program inquiries will be handled by the Community Development Department. The Management Analyst will manage day-to-day activities of the Program and will assist the Participant with the Program. The Management Analyst will be under the direction of the Community Development Director. This allows a single source of contact with the public and lenders. The Management Analyst will conduct outreach to households within the City and to all City employees (with the exception of any governing body of the City, or any staff member who exercises any functions or responsibility in connection with the administration of the Program) to make potential homebuyers aware of the Program, as well as to local real estate agents and brokers. This outreach will be in the form of published notices and printed brochures, meetings, and other forms of outreach. GiyofRosemead 13 DPAL Program Commun&yDevelopmentDepartment June 2013 M_ 10- A WA fifff FMN M MAYN SM th 90 OM NOM/ Participation in the Program will be on a first come, first served basis, within Program preferences. Once potential buyers submit applications for assistance, staff will conduct the screening and selection process. This five-step process includes: 1) determination of the eligibility 2) determination of priority status of the Participant if several applications are pending; 3) qualification by the lender for the first trust deed loan; 4) eligibility of the property; and 5) execution of the first and second trust deed loans. CityofRosemead 14 DPAL Program CommunityDeveiopmentDepaftment June 2013 Program Guidelines CifyofRosemead 15 DPAL Program Commun&yDevelopmentDepartment June 2013 C �°'"`" ► � Biw,��rirarit[,iiri�rn�►rara�,irrirawrar..�,� Reserved CityofRosemead 16 DPAL Program CommunAyDeve%pmentDepartnient June 2013 12t Eq'' ►�'�'°�°"'''""�' "' Program Guidelines Location of ProgramActkdi y The Program will apply to the entire City of Rosemead. Eligible Pafticipants The Program is limited to first-time homebuyers, as defined herein, who will occupy the property as their principal residence and who are below 80% of area median income. 1. Income Limits In order to qualify for the Program, a Participant's total combined gross household income cannot exceed 80% of area median income adjusted for family size. The maximum income a household may earn to qualify for Program participation is established and published by HUD annually. 2. Income Defined In general, annual income is the gross amount of income anticipated to be received by household members eighteen (18) year and older during the twelve (12) months following the effective date of loan approval. Anticipated income is generally determined by annualizing current income. Current income determination is based on the projected income of all household members over the age of 18 for the last six months.. Annual income will be determined using federal Section 8 guidelines as required by the HOME program. 3. First Time Homebuyer Based on applicable Federal and State regulations, in order to qualify for the Program, a Participant must meet the following requirements: (i) The Participant(s) may not have held an ownership interest in a principal residence within the past three years. The Participant applying for a Program loan cannot have had interest in a home, or have had an outstanding debt on a home within the last three-year period ending on the date the mortgage is executed. This requirement qualifies the borrower as a "first-time homebuyer" under Federal law. In general, household(s) (which includes anyone who will be living in the home regardless of relationship) who do not own a home at the time of application; and have not owned a home, held interest in a home, or have an outstanding debt on a home within the last three years from the date of the application can qualify. To be eligible, the combined income of the household (again, anyone who will be living in the home regardless of relationship) must not CV ofRosemead 17 DPAL Program CommunityDevelopmentDepartment June 2013 12t ram tm++ �b BNW?AMAWANMAtMMAVIMNJWISIMRRIhVAUWMNSMlrfI exceed the limits as set by the U.S. Department of Housing and Urban Development and no member of the household may currently own any residential property. In addition, the applicant(s) (who will be listed on the deed) must have been employed in the same line of work for at least 24 months; have a good, established credit history and be approved for credit by a participating lender; and be either a U.S. Citizen, or have obtained legal permanent residency immigration status. (ii) Exceptions to the three (3) year time period shall be those listed under the definitions section of the HOME Regulations. The Participant must present an affidavit to the effect that the Participant had no ownership interest in a principal residence at any time during the three-year period prior to the date on which the mortgage relating to the Program Loan is executed. To demonstrate compliance with this three-year requirement, the Participant must complete and sign the Program affidavit and provide copies of their last three (3) years signed, state and federal tax returns (or acceptable alternative exhibits as noted below). This information will be verified by City staff through an acceptable real estate record/database search. Exceptions to the rule include property lost as a result of divorce, where the Participant was unable to retain ownership of the property. (iii) The Participant must submit with the application to the City, a signed 1040A, 1040EZ, or 1040 federal income tax returns for the three preceding years with all schedules which demonstrate that no deductions were taken for mortgage interest or real estate taxes for a principal residence. If the Participant filed the 1040 Long Form and cannot produce an original copy of the signed tax returns, the Participant can request a copy of the returns from the IRS by using IRS Request Form 4506. The Participant should allow approximately 45 days for receipt of copies from the IRS. (iv) If the Participant has filed the short form 1040A or 1040EZ for the last three (3) years, completed and signed the required affidavits, but is unable to produce the signed returns, the City will accept a letter from the IRS verifying the filing status of the Participant. The letter should confirm that the Participant filed the 1040A or 1040EZ for the years in question. The Participant can request tax account information, which is available free of charge, from the local IRS office. This information will be provided on IRS Letter Form 1722 and will include: (1) name and social security number; (2) type of return filed; (3) marital status; (4) tax shown on return; (5) adjusted gross income; (6) taxable income; (7) self-employment tax; and (8) number of exemptions. If the address on the tax returns filed is different from the current address, the Participant should also provide a handwritten note (signed by all Participants) indicating that the previous returns had been filed at a different address. CityofRosemead 18 DPAL Program CommunityDeveiopmentDepartment June 2013 121 Eq®iw,►irit�iiirrn�r�i//aa,'ilra�irariNi� Note: The tax account information should be requested, in person, from the IRS office. The Participant can expect a written reply within (15) fifteen days. The tax returns must have an original signature certifying, "They are a true and exact copy of the returns submitted to IRS". In the event the Participant was not obligated to file Federal income tax returns for any of the preceding three (3) years, it will be necessary for the Participant to provide a completed and signed Income Tax Affidavit. This will be required in place of above, along with the other Program Affidavits. This document is to be presented to the City with the Application Affidavit. The Income Tax Affidavit must be accompanied by documented proof of the reason for not filing tax returns. For example, if the Participant were in school, a copy of transcripts to support the status of the Participant for that period of time would be required. The affidavit must also be accompanied by documented proof that the Participant was a renter during the specified period (i.e., a notarized letter from the landlord or manager, rental/lease agreement, canceled checks, rent receipts, or other acceptable methods of verification). (v) When a Program application is submitted during the period between January 1 and April 15 and the Participant has not yet filed their Federal income tax return for the preceding year with the IRS, the City may, with respect to such year, rely on an affidavit of the Participant that the Participant is not entitled to claim deductions for taxes or interest on indebtedness with respect to property constituting their principal residence for the preceding calendar year. The affidavit must be forwarded to the City with the submission package. (vi) Notwithstanding the above, at the discretion of the City, this requirement may be modified or waived in order to allow households meeting all other eligibility criteria to participate in the Program. Special circumstances will be documented and consideration given to households that have sold or transferred an ownership interest, because of death or illness of spouse or dissolution of marriage, job-related relocation, or other significant reasons. 4. Residency Preference Preference will be given in the Program for Participants who live and/or work within the City of Rosemead. 5. Maximum Liquid Assets The Participant's liquid assets at the close of escrow cannot exceed the sum of (i) the portion of the down payment to be paid from Participant's personal funds; (ii) the portion of the closing costs to be paid from the Participant's personal funds; (iii) an amount equal to six months' payments CityofRosemead 19 DPAL Program CommunityDeveiopmentDepafVnent June 2013 C EQN11 ®iw, ►NrA r it[aiAViMEPiININNAthraArar y,1 of principal and interest on the first trust deed, and (iv) an emergency allowance of $10,000. E/igib/e Properties Only properties that will serve as the principal residence of the purchaser can be used in this Program. This includes: • Single-family homes (one unit); and • Condominium/Town Home units (in a single-family or multifamily building). The dwelling unit purchased must be located within the City of Rosemead. The cost of the property cannot exceed 95% of the area median purchase price as established by HUD. The current limit for a single-family residence is $394,250. An independent third party inspector at buyer or seller's expense must inspect all properties. The condition of the property as reported by such inspector must satisfy the standards established by the institutional lender funding the first trust deed loan. Any serious code violations or other health and safety deficiencies reported by such inspector must be corrected as a condition precedent to funding the Program assistance. A copy of the inspection report must be provided to the City. Affordable Housing Costs "Housing Costs" are defined as the estimated monthly cost for housing -related expenses for a twelve (12) month period. In calculating housing costs, all of the following expenses associated with the financing and maintenance of the home shall be included: ➢ Principal and interest on a mortgage loan including any rehabilitation loans, and any loan insurance fees; ➢ Property taxes and assessments; ➢ Fire and casualty insurance covering replacement value of property improvements; ➢ A reasonable allowance for utilities (Utility allowances are provided by the County of Los Angeles and are updated annually.); and ➢ Homeowners Association fees. Housing cost limitations vary depending on the income level of the Participant. Housing cost limitations will be determined on an individual basis in accordance with program requirements. Subsid. vering HUD establishes limits on the amount of HOME funds that may be invested in affordable housing on a per-unit basis for specific areas. Before committing funds to a project that combines the use of any other local, state, or federal assistance, the City will evaluate the project to ensure that the City does not invest any more HOME funds than are necessary to provide affordable housing. ProjectEva/uation Each project file will contain the subsidy layering evaluation. CkyofRommead 20 DPAL Program CommunVDeve%pmentDepartment June 2013 121 4W eiwi�i�► ► it l�nit� ,i�rrir�rra�as,ir�irwri�ar a,� OccupancyRandards The dwelling unit must be used as the principal residence of the Participant and Participant's family and for no other purpose. The maximum occupancy of the dwelling unit shall not exceed two persons per bedroom plus one. Covenants and Restrictions Maintenance, criminal activity, and affordability covenants are required as a condition of Down Payment Assistance Loan Program participation. It is required that these covenants or restrictions be recorded in the office of the county recorder for each parcel or unit of real property subject to these covenants. 1. Maintenance Covenant A maintenance covenant is a promise to maintain the property and improvements in a reasonable manner and consistent with community standards which will uphold the value of the property. 2. Criminal Activity Covenant A criminal activity covenant is a promise to keep the property free from drug-related activities or from other felonious criminal activity or public nuisance. 3. Affordability Covenant An affordability covenant is a promise to maintain ownership of the property for a specified period of time. 4. Residential Overcrowding Restriction A restriction against residential overcrowding will be required as a condition of participation in the Program. Single-family and owner - occupied residences are housing units intended and used for occupancy by one household. A household as defined by the Program must occupy the housing unit. 5. Time Periods Required for Covenants The maintenance and criminal covenants do not expire until the City loan is repaid in full. The affordability covenant is in effect for the earlier of: 1) fifteen years; or 2) upon sale of the home. 6. Loan Repayment Terms While the goal of the Program is to encourage long-term homeownership, the City recognizes that in some instances a Participant may wish to sell his or her home. Under the Program, there are no restrictions on the amount the home may be sold for after the expiration of the fifteen -year affordability covenant. However, if the Participant wishes to sell his or her CityoMbsemead 21 DPAL Program CommunityDeve%pmentDeparMent June 2013 12t Equal H ""p °AP°'''"'"'' omh#PMJ RYM&jMfAVMNWWN8M&1 property, the Participant must repay all outstanding principal and interest on the City loan under the following formula: 0-2 years 5.0% 2 years and 1 day 4.5% 3 years and 1 day 4.0% 4 years and 1 day 3.5% 5 years and 1 day 3.0% 6 years and 1 day 2.5% 7 years and 1 day 2.0% 8 years and 1 day 1.5% 9 years and 1 day 1.0% 10 years 0.5% 10 years and 1 day 0 % The "Program Loan" is the amount of the loan provided by the City to the Participant pursuant to the Program. The "Purchase Price" is the original purchase price paid by the Participant to the seller for the seller's interest in the property excluding escrow fees, title insurance costs, broker's commission, and loan fees of any other closing or transaction costs. 7. Equity Share Program While the goal of the Program is to encourage long-term homeownership, the Corporation recognizes that in some instances a Participant may wish to sell their home to a non-qualified buyer at a price, which does not comply with the terms of the affordability covenant. The Corporation can release the affordability covenant and permit the resale of the property at a cost higher than permitted under the affordability covenant only pursuant to an adopted program that protects the Corporation's investment. Under the Program, there are no restrictions on the amount the home may be sold for after the expiration of the fifteen -year affordability covenant. However, if the Participant wishes to sell his or her property free and clear of all restrictive covenants, the participant must repay all outstanding principal and interest on the Corporation loan and must agree to pay the Corporation a share of any appreciation realized upon sale of the property pursuant to the following equity sharing formula: Corporation Equity Share equals (Program Loan / (Purchase Price + Qualified Capital Improvements) x Total Appreciation The "Program Loan" is the amount of the loan provided by the Corporation to the Participant pursuant to the Program. CVofRosemead 22 DPAL Program CommundyDevelopmentDepartment June 2013 C The "Purchase Price" is the original purchase price paid by the Participant to the seller for the seller's interest in the property excluding escrow fees, title insurance costs, broker's commission, and loan fees of any other closing or transaction costs. "Qualified Capital Improvements" is the total cost of verifiable major capital improvements (not to include maintenance projects such as plumbing repairs etc.) to the Property in excess of Two Thousand Five Hundred Dollars ($2,500) made while the Participant owned and occupied the property. "Total Appreciation" is the amount equal to the price to be paid by the non- qualified buyer to the Participant for the Participant's interest in the property less the sum of the original Purchase Price and Qualified Capital Improvements excluding escrow fees, title insurance costs, broker's commissions, loan fees or any other closing or transaction costs. 8. Compliance Monitorinq Participants receiving assistance will be required to demonstrate at least annually that the household is owner -occupied. EXCEPTION: Participant may request a temporary waiver of the principal residence requirement in situations involving extreme hardship, such as the property owner temporarily placed in a nursing home. The waiver request shall be submitted to the Community Development Director or like, at which time a decision will be rendered within eight (8) business days. Participation Priorities Households currently living or working in the City of Rosemead, who qualify to participate in the Program, shall be given priority status during the application intake and the loan approval processes. Financing Households financing the purchase of a qualified unit must meet the financing criteria set forth below. First Deed of Trust In order to finance a home under this Program, Participants must obtain a mortgage loan secured by a First Trust Deed from a private lending institution. Any institutional lenders approved by the State of California and the Fannie Mae Community Seconds Program may participate in the Program. The financial criteria used by the private lender may be different and possibly more stringent than that used by the City. Default in payments on the first mortgage will also cause a default in the second trust deed loan, and may result in foreclosure. The City is not required to CV&Rosemead 23 DPAL Program Commun&yDeve1opmentDepa1Vnent June 2013 I. €gue' ►'` °°"'"®nn�►�slrrit�i�l�ninrri��aasirrira�rnar,�,� approve any financing that cannot be demonstrated to be at fair market lending rates in the City's sole and exclusive discretion. 2. Second Deed of Trust While the first mortgage loan is obtained from a private lender, with conventional terms of financing, the second mortgage is provided by the City under the following terms: Terms of Down Pavment Assistance Loan 1. Maximum assistance The amount required to make the home purchase affordable, not to exceed $70,000. 2. Interest rate Declines per year of ownership of home on .5% rate 3. Down payment A minimum of three percent (3%) of the sales price excluding closing costs. 4. Loan to Value Total encumbrances (the sum of the first lien and the City Loan) may not exceed ninety-seven percent (97%) of the current fair market value of the property as determined by the private lender's 7. Term of Loan appraisal. 5. Security Subordinated second trust deed. 6. Back -End Ratio Back -end housing cost ratio of not more than 55%. This is a ratio that indicates what portion of a person's monthly income goes toward paying debts. Total monthly debt includes expenses such as mortgage payments (made up of PITI), Homeowner Association fees (HOA), credit card payments, child support, loan payments, etc. Back -End Ration=Total Monthly Debt Expense Gross Monthly Income 7. Term of Loan Payments of the principal (interest and equity share as applicable) are due upon sale, transfer, or maturity of loan (30 year term). If the property is refinanced to take out equity, it is no longer occupied by the owner, or the owner is in violation of any restrictive covenant, the loan will become immediately due and Payable. 8. Main Covenants Affordability covenant is in affect for 15 years, criminal activity and maintenance covenants are in affect for the life of the City -funded loan. 9. Payments Participant must maintain current payments on the first deed of trust, property taxes, HOA fees, and hazard insurance. 3. Prohibition of Co -Signors There will be no co-signing for the City loan by non -Participants. All Participants and co -Participants shall meet all of the eligibility requirements for a City loan. 4. Prohibition of Additional Deeds of Trust CVofRosemead 24 DPAL Program CommunAyDevefopmentDepartment June 2013 C '''�' ►'�` "° ° °"' ' RMARMA rOfit arit[��1rrn rrisirrira irariMFsI Without the consent in writing of the City, the property cannot be used to secure a debt other than the first mortgage held by a private lender and the second lien held by the City. 5. Insurance The City requires that the Participant, during the term of the Loan, maintain an all-risk property insurance policy insuring the property in an amount equal to the full replacement value of the structures on the property. The City shall be named as a beneficiary on all insurance policies and shall be notified of modifications or cancellations of insurance coverage. The City will obtain Loss Payable Endorsements to said policies. Any certificate of insurance must be, in form and content and with insurance companies, approved by the City. 6. Use of Proceeds The proceeds of the City's loan will be used as down payment assistance in order to provide a total down payment not to exceed 25% (Participant and City contribution combined), thereby making the property affordable to a lower income purchaser. Escrow closing costs may also be included as a part of the loan, inclusive of non-recurring acquisition costs, if the full assistance contribution by the City can be recorded as a lien against the property. Amendments These guidelines may be changed in the future by action of the City staff for programmatic reasons or to make certain technical changes as the Program is implemented due to regulatory changes applying to lenders participating in the Program, government requirements, or loan guarantee entities such as FHA (i.e. annual changes to income limits and purchase price limits). CV ofRoseinead 25 DPAL Program CommunVDeve%pmentDepartment June 2013 C ' ► •"� °�"'�"�'' Din/ r A iritLisi�Jrri�r'i//�V'a�i��itra aNiw&/ Reserved L&� CityofRasemead 26 DPAL Program CoinmunityDeveiopmentDepartment June 2013 C BiWIF mw"M, Mnrslmemo/ Educational Services CVofRasemead 27 DPAL Program Commun&yDeve%pmentDepartment June 2013 C r;qwft ft u* OiwOPROMMISINsirrira�rnariAWs/ Reserved CityofRosemead 28 DPAL Program CommunityDeve%pmentDepartment June 2013 12t FQ*D�aq►►ilisiritr/n�►ri//e�l�si��Yrra�i��sl/siss/ x Educational Services About the Educational Program The City understands that the success of the Program depends on the ability to clearly communicate the benefits of responsible homeownership. For this reason, Participants must attend and complete one of the many education programs available, that focus on the needs of homeowners as part of participation in this Program. All Participants must complete a homeownership class offered by the First Trust Deed lender. Referral Services The Community Development Department will maintain a list of agencies that provide housing -related services to homeowners. Information regarding the Community Reinvestment Act, Fair Housing Foundation, code enforcement, and graffiti removal programs are some examples of the information that will be available through the Program. Qyofftsemead 29 DPAL Program Commun&yDeve%pmentDepaftment June 2013 ► o � y Im P161Enos/ Reserved CliyofRosemead 30 DPAL Program Commun&yDevelopmentDepartment June 2013 12t aiw�� ratA iit�i PMiniriIraa r issl Program Procedures QvoMuemead 31 DPAL Program CommunVDevefopmentDepartment June 2013 C �� Dlwl�i�r�il�n�t�ii�iri�rr�i//aa,•r�lrra�narsirs� Reserved CkyofRosemead 32 DPAL Program CommunVDeve1opmentDepa1Vnent June 2013 C "' Program Procedures Initiation and Submission The City announces the initiation of the Down Payment Assistance Loan Program and conducts outreach to all households within the City. The Program is to be used in conjunction with conventional mortgage loan application procedures. The processing procedures minimize the administrative burdens of Program implementation, and complements the processing procedures in place at most mortgage lending institutions. Upon commencement of the application process, interested persons will be required to complete and submit all the required information contained in the application packet to qualify for the Program. The following outline sets forth the general responsibilities, procedures, and sequence of events for the Program. 1. Application Phase a. Participant submits an application with the City. The application phase will allow the City to determine eligibility of the Participant and to explain the Program. b. City determines if Participant is an eligible candidate for the Program, based on indications of income, prior home ownership, tax liability and other factors. Participant is notified of eligibility. Participants are requested to carefully read this Program and Procedure Manual and will be required to sign a statement on the application to acknowledge that: he/she has read the Manual and based on the requirements hereof believes that he/she is eligible for a City Loan. In the event assistance is awarded, applicant shall comply with the procedures and requirements set forth herein. Each application must be completed in its entirety, including signature(s) of all borrowers, and submitted together with all of the required documentation to be considered complete and eligible for review by City staff. All complete applications will be date stamped when received. Incomplete applications will not be processed until all requested information is submitted. The Participant shall submit all documentation required for a complete application, including the following: • Authorization for Release of Information (as needed). • Such other documentation as may be requested by City staff. CkyofRasemead 33 DPAL Program Commun&yDeve%pmentDepartment June 2013 e� ►► � Dnn��►1a�As�iitLlsirilll/�iri//e�►asi�riraw�a�►�ii/ Applications will be reviewed in a two-step process. Applications from households currently living or working in the City of Rosemead and from employees of the City will be reviewed first in the order in which they are received. Following the review of the priority applications, all other applications will be reviewed in the order in which they are received. The City will maintain a waiting list for all prospective clients. Unqualified Participants shall be notified by letter of their ineligible status. Within the time frame established for the application process, application packets are submitted for review and screening. Failure by Participants to comply with application procedures will result in disqualification. The qualification of an application shall not be final and the rights to a Down Payment Assistance Loan shall not vest until the Participant and the City, or its authorized designee, have executed a Loan Agreement and related loan documents and escrow has closed. 2. Lender Phase a. Participant selects Lender. b. Lender provides Participant with brochures and other materials, which explain the mortgage programs and contain consumer information. c. The Lender is required to certify that the Participant has completed a HUD approved Home Buyer Education Seminar. Under Fannie Mae's Guidelines and HOME regulations, a prospective homebuyer is required to attend a homebuyer's counseling session, as part of the approval process. The counseling sessions will present information on homeownership topics such as: • Preparing for homeownership -- identifying what the Participant wants and needs in a home, and determining what the Participant can afford to spend. • Shopping for a home -- size requirements, how a real estate agent can help, house evaluation, submitting an offer, and the professional home inspection process. • Obtaining a mortgage -- discussion of loan terms, loan processing. • Closing -- title insurance, termite inspection, estimate of closing costs, advance payments, understanding the obligation, procedures for the formal loan closing. • Life as a homeowner -- identifying the basic steps to ensure home safety, maintenance, and setting a household budget. d. Lender determines the appropriate Program Loan limit and ensures that the Participant understands the appropriate home cost for their available income. e. Participant finds an eligible dwelling, enters into a purchase contract and returns to the Lender and applies for a mortgage loan. CityofRosemead 34 DPAL Program CommunityDevelopmentDepaitment June 2013 C m ►eu o w+ DIM F4 -W Lir�iyrinrh//Wasi��ira Il�i�/ f. The City verifies that the Participant's selected eligible dwelling and the proposed mortgage transaction comply with Program restrictions on type, purchase price, and other Program terms. g. As part of the mortgage application process, the Participant must certify the following (Exhibit G): (i) Certification that residence will be used as principal residence throughout the affordability period and that the Participant must notify the City and the Lender when the home ceases being the principal residence of the Program Participant. (ii) Certification that Participant has not had an ownership interest in a property during preceding 3 -year period. (iii) Certification that the purchase price does not exceed purchase price limits. (iv) Certification that the mortgage loan does not relate to the acquisition or replacement of an existing mortgage. (v) Certification that the loan applied for does not constitute a prohibited mortgage. (vi) Certification that the Participant was not forced to apply through a specific lender. (vii) Certification that Participant's income does not exceed permitted income limits. (viii) Certification that no interest with respect to the mortgage loan is being paid to a related person. (ix) Certification that the Program cannot be transferred. (x) Acknowledgment that any material misstatement or fraud is made under penalty of perjury. (xi) Tenant Displacement Restrictions: The City will not pay relocation expenses for a tenant. The property to be purchased is to be either: new construction (never occupied), currently occupied by the seller, vacant, or occupied by the borrower as a tenant purchasing the property. 3. Commitment Phase a. Lender prepares an Initial Reservation Request and transmits to the City for review and confirmation. In addition, the Lender shall transmit information on the home to be purchased. The City shall obtain a copy of the Participant's credit report. b. City reviews the Initial Reservation Request as submitted by the Lender and, if in order, completes the bottom portion of the Form and transmits same back to the Lender confirming a Program reservation of funds. c. The Management Analyst to arrange an onsite inspection of the property to determine that the property meets all City Health and Safety Codes and Standards, and HUD's Housing Quality Standards (HQS) and lead based paint standards. The City's Inspection Report is submitted to both the Participant and Lender. Any nonstandard items QyofRosemead 35 DPAL Program CommunVDeve/opmentDeparbnent June 2013 �� C ►'°""'� °�°°�'"�'' oiw,'�►�iit�isi�itr�nrri��aasir�rrra�ris� noted on the report will require repair/ replacement prior to final approval and funding of the First -Time Homebuyer loan to the Participant, who may use the report in their negotiations with the seller. d. The Participant must also contract with a Certified Home Inspector to provide a pre -purchase inspection based on industry practices. A copy of the resulting report must be delivered to the City. Items found deficient in the Home Inspectors report may also be considered in the final determination of eligibility of this home for funding by the City. e. An appraisal of the property must be made and a copy of the resulting report delivered to the City. The appraisal must be prepared by a licensed real estate appraiser according to the standards set by FNMA, FHIMC, FHA, VA, and/or underwriting guidelines. f. The above items A — E must be accomplished within the Participant's period of discovery and must be delivered to the City with a minimum two business days before the end of the discovery period (Note: the City is closed every Friday and City business days are Monday through Thursday). g. After the City has confirmed the Program reservation, the Lender performs their standard verification and underwriting procedures. h. In conjunction with Lender's regular verification process and under the agreement with the City, the Lender performs a reasonable investigation to verify that all Program requirements with respect to the borrower, the home, and the mortgage transaction have been satisfied. Lender may verify these facts in any reasonable, efficient manner, according to standard industry practices for processing mortgage loan applications. i. Lender performs standard mortgage loan underwriting procedures, taking into consideration the effect of the Program Loan when determining the net amount of the monthly housing payment. Lender determines acceptability of the loan in accordance with applicable FNMA, FHIMC, FHA, VA, and/or underwriting guidelines. j. During the commitment phase, Lender must immediately notify the City in writing of cancellations of reservations or commitments. The reason(s) for cancellation must be clearly stated. 4. Final Approval Phase a. Lender submits a final approval package to the City. The final approval package must contain the following documentation: a copy of Purchase Contract, a copy of the preliminary closing statement, and estimated date of close of escrow and title vesting information. The City requires a minimum of 30 days notice and processing time prior to the date of the close of escrow. QVofRosemead 36 DPAL Program Commun&yDeveiopmentDepalVnent June 2013 C b. Upon receipt of the final approval package from the Lender, the City will confirm that the Program Reservation is still active and has not expired. If the reservation has expired, the Lender must request an extension for an additional (30) days. c. The City reviews the Program Final Approval package for completeness and determines whether all necessary documents are included and properly executed. d. If the City determines the Program Final Approval Package has been completed properly and that the Participant(s), the home and the overall transaction are in compliance with Program provisions, the City will issue a Program Final Approval Letter to the Lender stating that the Application is approved and indicating that the City is prepared to issue a Program loan upon confirmation of the mortgage closing, so long as there are no material changes from the time of this review. The City retains a complete copy of the Final Approval package. e. The City will prepare and deliver a request for payment to the City's Finance Department. The check will be delivered to escrow once issued. 5. Closing Phase a. The Lender confirms that the Program Commitment is still active and has not expired. b. Lender notifies the City of approval of loan application and forwards all loan and Program materials to selected Escrow officer with instructions for closing the loan. Closing Affidavit is to be signed at closing by the Participant(s) and returned by the Escrow Officer to the City at close of escrow. c. The City prepares Program second mortgage loan documents. d. The City will have the Participant sign the Program Loan documents. e. The City will execute the Program documents. All Program funding and documents will be transmitted to Escrow for recording at the same time as the first mortgage deed of trust. f. At the close of escrow Lender forwards to the City, documentation indicating that the loan has closed, including: (i) Photocopies of all executed documents forwarded for recording. (ii) Lender's Closing Certificate (FHP -5) certifying that there has been no material changes that would disqualify Participant from Program. (iii) Photocopies of all executed primary lender documents conforming to program requirements. (iv) Hazard Insurance endorsement of coverage indicating City added as a loss payee. g. Staff provides new applicant(s) with a list of important phone numbers of departments and services for local government, emergency, and utilities. CityofRosemead 37 DPAL Program CommunVDevelopmentDepartment June 2013 CAy NMNPAWAIrA=&AWbArPNOWNPOIIOINMiMVNAMNmosI 6. Processing As a goal, processing time from the date the City determines that the Participant is eligible for assistance under the Program until a loan is approved or denied shall be a maximum of sixty (60) days. 1. Notice of Default Upon receipt of a Request for Notice of Default for any lien, senior to the City's loan, the City shall determine the feasibility of bringing the defaulted loan current as outlined below. 2. Lender shall, upon receipt, provide City with any Notice of Default on taxes and Hazard Insurance City shall be named as a beneficiary on hazard insurance policies and shall be notified of modifications or cancellations of insurance coverage. Resale, Refinancing, and Subordination 1. Property shall not be sold for less than the sum of the existing liens and encumbrances, including property tax liability, without the express written consent of the City. 2. Refinancing of the first position loan shall not be allowed. Recapture Guidelines HUD regulations require the City to establish guidelines for the recapture of funds invested for down payment and closing cost assistance. The City limits the amount to be recaptured to the net proceeds available from the sale. Net proceeds are the price of the house minus commissions, closing costs, costs of any repairs and inspections that may need to be undertaken, and realtor's charges. This limitation applies to all units regardless of the nature of the sale (voluntary sales including short sales, and involuntary sales including foreclosures). The City will implement the following recapture guidelines: a. Recapture of funds will be required upon the following: (i) Sale or transfer of any kind (excluding those related to the dissolution of marriage or death of a spouse when both parties were originally on the deed of trust). (ii) When the residence ceases to be used as the primary residence; (iii) Upon the leasing or renting of the property; (iv) Unapproved refinancing of the property; or, (v) Failure to maintain the property in a decent, safe and sanitary condition. b. Recapture of funds will be required during and after the term of affordability has been met. The recapture period takes place at the time of sale, refinances, leases, or when the homeowner ceases to reside in the property, whichever comes first. Ci6yofRosemead 38 DPAL Program CommunityDeve%pmentDeparMent June 2013 m►� ► oan�►i r ®nn� r i l 'irh NFOINSYSS HAWS&I c. The funds subject to recapture include all funds advanced in connection with the City's First -Time Homebuyer assistance. d. In transactions where there are sufficient funds from the net proceeds of the sale, the City will recapture the entire amount of funds invested. e. In the event that there are not sufficient funds from the net proceeds to recapture the entire amount of City and homeowner funds invested in the property, the City may allow the amount of funds subject to recapture to be reduced, subject to the City's analysis of the pertinent transaction details. f. All recaptured funds will be returned to the City's Program. Other Programmatic Requirements 1. Violations and Penalties The City shall demand full repayment of the principal and interest on the loan if the borrower willfully and knowingly made a false statement or representation, or knowingly fails to disclose a material fact for the purpose of qualifying for the program, or, in completing certifications, affidavits, or re -certification documents. 2. Bonus, Commission or Fee The Participant shall not pay any bonus, commission or fee, for the purpose of obtaining approval of the City loan application, or for any other approval or concurrence required by the City. 3 Conflict of Interest No Down Payment Assistance Loan will be granted to any member of the governing body of the City, nor any designee of the City, nor to any staff member who exercises any functions or responsibilities in connection with the administration of the Program; no member of the above stated organizations shall have any interest, direct or indirect, in the proceeds from the Down Payment Assistance Loan or in any contract entered into by the Participant for the performance of the work financed, in whole or in part, with the proceeds of the loan. 4. Equal Opportunity Policy In accordance with federal requirements, the City shall not discriminate upon the basis of sex, age, race, creed, color, religion, national origin, marital status, ancestry, or physical handicap in accepting applications and processing City loans. 5. Fire and Flood Insurance Requirements Participants are obligated to carry sufficient fire insurance coverage (and flood insurance where applicable) on the property to be purchased under this Program, prior to any loan assistance. Minimum fire insurance coverage for each dwelling QvofRosemead 39 DPAL Program CommunVDeveiopmentDeparMent June 2013 121 Eq* Houft QpWwk AIR= rNt Li�PiDFNNN//eflaAlrra�i�al/l/ss/ unit must be equivalent to the value of dwelling including rehabilitation improvements, if applicable. Uninsured Participants must obtain coverage in the required amount prior to receiving assistance. City shall be named as a beneficiary on all insurance policies and shall be notified of modifications or cancellations of insurance coverage. Participants in a 'Flood Hazard Area' will be required to purchase flood hazard insurance if required by the federal government. 6. Lead Base Paint Notification The City, as part of the application process shall provide a Lead Base Paint Notification to all Participants. Such notice shall be signed and dated by the Participant and a copy shall be maintained in the project file. A lead base paint visual inspection shall also be performed as part of the initial inspection and any corrections must be made prior to close of escrow (Exhibit D). 7. Conflict Resolution Complaints concerning the Program must be in writing and addressed to the Management Analyst. The Management Analyst will contact the complainant and attempt to resolve the problem. A written response will be made within thirty (30) days of receipt of a written complaint. If the complainant is not satisfied after the written response, a complaint may be filed with the Community Development Director who will schedule a meeting with the /Management Analyst. A written response will be made within fifteen (15) working days of the receipt of the subsequent complaint. CV ofRosemead 40 DPAL Program CommunityDeveiopmentDepalMent June 2013 C ��""' "°'�"° °�°'""�"'' Aiw��►it�irai�iirin•►ri��aasir�nraris� EXHIBITS CilyofRosemead 41 DPAL Program CommunVDeve%pmentDepartment June 2013 EQW Houft +w* DNnHAMM" i�/�rinr�rH//ahrsi�hlra ial/sis�/ Reserved CityofRosemead 42 DPAL Program Commun&yDeveiopinentDeparbnent June 2013 C �°�' °�° oiw,�i�rarA�arirasirirmrri�ra�sirrirra�r�arsias� EXHIBIT A TITLE 25 SECTION 6914 GROSS INCOME INCLUSION "Gross income" shall mean the anticipated income of a person or family for the twelve-month period following the date of determination of income. If the circumstances are such that it is not reasonably feasible to anticipate a level of income over a twelve-month period, a shorter period may be used subject to a predetermination at the end of such a period. "Income" shall consist of the following: (a) Except as provided in subdivision (b), all payments from all sources received by the family head (even if temporarily absent) and each additional member of the family household who is not a minor shall be included in the annual income of a family. Income shall include, but not be limited to: (1) The gross amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses; (2) The net income from operation of a business or profession or from rental or real or personal property (for this purpose, expenditures for business expansion or amortization of capital indebtedness shall not be deducted to determine the net income from a business); (3) Interest and dividends; (4) The full amount of periodic payments received from social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic receipts; (5) Payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay (but see subdivision (b)(3)). (6) Public Assistance. If the public assistance payment includes an amount specifically designated for shelter and utilities which is subject to adjustment by the public assistance agency in accordance with the actual cost of shelter and utilities, the amount of public assistance income to be included as income shall consist of: (A) The amount of the allowance or grant exclusive of the amount specifically designated for shelter and utilities, plus (B) The maximum amount which the public assistance agency could in fact allow for the family for shelter and utilities, (7) Periodic and determinable allowances such as alimony and child support payments, and regular contributions or gifts received from persons not residing in the dwelling; (8) All regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is head of the family or spouse (but see subdivision (b)(5)) CityofRosemead 43 DPAL Program CommunityDeve%pmentDepafiment June 2013 C eve ► o�►i�ry Alwl/�1IN!ALIsllrilll%J�h//A/I�I�%�Jll�a�IMfr��s/ TITLE 25 SECTION 6914 GROSS INCOME EXCLUSION (b) The following items shall not be considered as income: (1) Casual, sporadic or irregular gifts; (2) Amounts which are specifically for or in reimbursement of the cost of medical expenses; (3) Lump -sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and worker's compensation), capital gains and settlement for personal or property losses; (4) Amounts of educational scholarships paid directly to the student or to the educational institution, and amounts paid by the government to a veteran for use in meeting the costs of tuition, fees, books and equipment. Any amounts of such scholarships, or payments to veterans not used for the above purposes of which are available for subsistence are to be included in income; (5) The special pay to a serviceman head of a family away from home and exposed to hostile fire; (6) Relocation payments made pursuant to federal, state, or local relocation law; (7) Foster child care payments (8) The value of coupon allotments for the purchase of food pursuant to the Food Stamp Act of 1964 which is in excess of the amount actually charged the eligible household; (9) Payments received pursuant to participation in the following volunteer programs under the ACTION Agency: (A) National Volunteer Antipoverty Programs which include VISTA, Service Learning Programs and Special Volunteer Programs. (B) National Older American Volunteer Programs for persons aged 60 and over which include Retired Senior Volunteer Programs, Foster Grandparent Program, Older American Community Services Program, and National Volunteer Program to Assist Small Business Experience, Service Corps of Retired Executive (SCORE) and Active Corps of Executives (ACE). CityofRosemead 44 DPAL Program CommunVDem1opme17tDepa1tment June 2013 O Fq* Ho ftOp'P°''u* aon�ii1�►�t lisiririn�rri//e�la�i�rira�ir�I NEW EXHIBIT B TITLE 25 SECTION 6914 ANNUAL INCOME NET FAMILY ASSET INCLUSIONS AND EXCLUSIONS Where a family has net family assets in excess of $5,000, income shall include the actual amount of income, if any, derived from all of the net family assets or 10 percent of the value of all such assets, whichever is greater. For purposes of this section, net family assets means value of equity in real property other than the household's full-time residence, savings, stocks, bonds, and other forms of capital investment. The value of necessary items such as furniture and automobiles shall be excluded. Inclusions 1. Cash held in savings accounts, checking accounts, safe deposit boxes, homes, etc. For savings accounts, use the current balance. For checking accounts, use the average 6 -month balance. 2. Cash value of revocable trusts available to the Participant. 3. Equity in rental property or other capital investments. Equity is the estimated current market value of the asset less the unpaid balance on all loans secured by the asset and all reasonable costs (e.g., broker fees) that would be incurred in selling the asset. Under HOME, equity in the family's primary residence is not considered in the calculation of assets for owner - occupied rehabilitation projects. 4. Cash value of stocks, bonds, Treasury bills, certificates of deposit and money market accounts. 5. Individual retirement and Keogh accounts (even though withdrawal would result in a penalty). 6. Retirement and pension funds. 7. Cash value of life insurance policies available to the individual before death (e.g., surrender value of a whole life or universal life policy). 8. Personal property held as an investment such as gems, jewelry, coin collections, antique cars, etc. 9. Lump sum or one-time receipts, such as inheritances, capital gains, lottery winnings, victim's restitution, insurance settlements and other amounts not intended as periodic payments. 10. Mortgages or deeds of trust held by an Participant. CityofRosemead 45 DPAL Program CommunVDeveiopmentDepartment June 2013 121 Now ?MFORPOINYWORIMMAMEM981 Exclusions 1. Necessary personal property, except as noted in number 8 of Inclusions, such as clothing, furniture, cars and vehicles specially equipped for persons with disabilities. 2. Interest in Indian trust lands. 3. Assets not effectively owned by the Participant. That is, when assets are held in an individual's name, but the assets and any income they earn accrue to the benefit of someone else who is not a member of the household and that other person is responsible for income taxes incurred on income generated by the asset. 4. Equity in cooperatives in which the family lives. 5. Assets not accessible to and that provide no income for the Participant. 6. Term life insurance policies (i.e., where there is no cash value). 7. Assets that are part of an active business. "Business" does not include rental of properties that are held as an investment and not a main occupation. QyofRosemead 46 DPAL Program CommunVDevelopmentDepaftment June 2013 C Eq* unny Dnn�ratAitlisiritrin�M//�hsii��rirari�tall�i�� EXHIBIT C LOAN AGREEMENT CityofRasemead 47 DPAL Program CommunityDeveiopmentDepartment June 2013 Reserved CityofRosemead 48 DPAL Program Commun&yDeve%pmentDepartment June 2013 C �''�°' ►�'"�° °�P°''"'�' 6i�n�i�r�iitlisi�ir�rri//a�ssi�'ira�l�i�/ QyofRosemead 49 DPAL Program Commun&yDevelopmentDepalVnent June 2013 C eq*i ®nnhPjWNPOINNswAftm&MHMFN/ CityofRosemead 50 DPAL Pmgram CommunilyDeveiopmentDepartinent June 2013 C �� D�n�i�►ir�iLiHHrDniMDe�li�si��rari�al/iiis/ CityofRasemead 51 DPAL Program Community Development DepartMent June 2013 C equal rn�r'i��irrar�rnaNOW/ C11yofRosemead 52 DPAL Program CommunilyDeveiopmentDepar[ment June 2013 CityofRosemead 53 DPAL Program CommunityDeve%pmentDepalMent June 2013 Eg* 1 C �'"a'° °P°°'►'"�" BiwaPONAWi &urirnyrh/ra�sirhra�ir�r CityofRosemead 54 DPAL Program CommunityDeveiopmentDepariment June 2013 121 �°"�'' "��""'� °�0'''"�'' 6�n��►�ilisi�iirly�rh//ehssi��Jr�ra�rl/sis�/ CityofRosemead 55 DPAL Program CommunityDeveiopmentDepartment June 2013 CityofRosemead 56 DPAL Program CommunityDeveiopmentDeparGment June 2013 C C11yofRosemead 57 DPAL Program Commun&yDeve%pmentDeparlment June 2013 C CityofRosemead 58 DPAL Program CommunilyDeve%pmentDepar[ment June 2013 12t Fq* 4wft OpWunrtloiw�� r i li fir"N'W/afiVMrrra�r��►s�rss/ CityofRosemead 59 DPAL Program CommunityDeve%pmentDepartment June 2013 C '�`�' � 9an�i�►�i1�r�lisi'iri�riri/k�hrsi�hrra�mll�is/ CityofRosemead 60 DPAL Program CommunityDeveiopmentDepartment June 2013 C Bien'i�[iH�irr�n�r�i//ealasi��lrna�iral/His/ CityofRosemead 61 DPAL Program CommunityDeveiopmentDeparMent June 2013 C °'�' ► ° °''"�'' ®nn�iq►�r�tA iitLiuHr�rM//�l�si��r�ra smog/ CkyofRosemead 62 DPAL Program CommunilyDeve%pmentDepar[ment June 2013 C �'�"' ►'�'"�° °�°�'"'�'®iw,'��[ii�irn�•rri/�aasirrira.�ri�aris� QyofRosemead 63 DPAL Program Commun&yDevefopmentDepartment June 2013 Equw CVoMbsemead 64 DPAL Program Commun&yDevefopmentDepar[ment June 2013 C �a�' ►�°"'"Q °�°''''"""'' DHn��►�ilisD�irDni'i//elhssiD�lnarinal/iDs�/ CVofRosemead 65 DPAL Program CommunityDeveiopmentDepartment June 2013 �°"`�" "°�""'° °�°"'`"�'' 6�n��►�Lisi�ilrln�rr//e�hssi��rra�►�rl/sns/ CityofRosemead 66 DPAL Program CommunityDeve%pmentDepartment June 2013 121 ��'�' ►�'""° "�°"''"'�' Biw��tnr�iir�i��ir�ncM/�a�si��rrrar�s,� CityofRosemead 67 DPAL Pfogram CommunVDeveiopmentDepart hent , June 2013 C CflyofRosemead 68 DPAL Program CommunityDeve%pmentDeparbnent June 2013 C ��' ""'"�Q °p°°'''"�" aiw�'�r�i�iii�ir�nrM�ra�sir�lrra�all�•s� CityofRosemead 69 DPAL Program Commun&yDeve%pmentDeparMent June 2013 C eq*i ®I/Il'/y1 A l/Hple"NMllaff ANEW QvofRosemead 70 DPAL Program Commun&yDeveiopmentDeparlment June 2013 12t eq*"°"�° CityofRosemead 71 DPAL Program CommunityDeve%pmentDepartment June 2013 C Eq* opwri-h 6an�s�ratA CityofRosemead 72 DPAL Program CommunityDeve%pmentDepartnient June 2013 C �� ► � B��ir�r�li��ilri�r�rh//�lasi�/itra�nal/sios/ CityofRosemead 73 DPAL Program CommunityDeveiopmentDepaMnent June 2013 C �"�' ►'° "'° ° °�"'�''' ®OnFi MEM, lisi/irin�rri//eaasi��lrra sll�i�/ CityofRasemead 74 DPAL Program CommunityDeveiopmentDepaitment June 2013 121 equlldk ®Iw1��1► i l�N�/I11/��►h//ilia .ff WAFMWHNFRI CityofRasemead 75 DPAL Program CommunVDeve1opmentDepa1Vnent June 2013 s Fqwlk NanPMOMM,i lidhVINAVAlli l - Pira&MMM981 CityofRosemead 76 DPAL Program CommunityDeveiopmentDepardnent June 2013 121 Eqw l'` °`'�°'''""�''' Dnn�syr itlir�rmrri/�aasir�rlra�narr•,/ CV ofRosemead 77 DPAL Program CommunVDevefopmentDepartment June 2013 C �� ►�°`�'° `�°�""'�'®iw,��u►it�il�nit�isi�i�rn�rrh/�a�ssir�lnariiar�,� CityofRosemead 78 DPAL Program CommunityDeve%pmentDepartment June 2013 Q ��,.► ►+ o�M�ri Qiw��►�A`liu�iirln�rh//e�hrsi��JrlraIl�i/ CityofRosemead 79 DPAL Program CommunityDeveiopmentDepartment June 2013 C �� r � Ain'i�r�`iii/irin�►M//ahssi��ira�inal/iiss/ CityofRosemead 80 DPAL Program CommunityDeveiopmentDeparlment June 2013 C �'4""' w�+�o�onwry oi�n��r�lisi/ilr�i/y//a►a�i��rrarinall�i� City ofRosemead 81 DPAL Program CommunityDeve%pmentDepartment June 2013 C COW I®nn�►�liaritiln�rh//�l�si�hra/lii/ CityofRosemead 82 DPAL Program CommunityDeveiopmentDepartment June 2013 s -V M .a ~bM?WFMBpfAkyM smog/ QyofRasemead 83 DPAL Program CommunityDeveiopmentDepalMent June 2013 �°'�' "°�"�° o�n�r Dnn��r�Alisi�irinih//e�la�iD'lrrrari�al►�ii/ CityofRosemead 84 DPAL Program Commun&yDeve%pmentDeparlment June 2013 12t Equw Dnniri�,irirn�•rh/�asir�rra�rir�r�s,� CityofRoseinead 85 DPAL Program CommunityDWe%pmentDepar[ment June 2013 O "' ►'°"""° °°*°""' ' BMW FA -,r A [ism r .rri��a sir rare rsiss� CityofRosemead 86 DPAL Program CommunityDeve%pmentDepalMent June 2013 C �''"�' ► � Diner�i�iiriri�•rri/�a�,ir�rira�sr�s� 0yofRasemead 87 DPAL Program CommunVDevefopinentDepartment June 2013 C eauu k Alm AM_A - - - i��ir�nrM//ell�si��lrlra�ina�lasi/ QvofRosemead 88 DPAL Program Coinmun&yDeveiopmentDepafbnent June 2013 C CityofRosemead 89 DPAL Program COn7rnunVDeve1opmentDepa1Vnent June 2013 �� a+�ry D�n��►�il��ir�n�rh//e�lasiD�lrra�sl/siis/ CityofRosemead 90 DPAL Program CommunityDeve%pmentDepartment June 2013 C ►+bw�a+� 6�n� PMA Mih//AIa�i��lrrrari�sl/Hoi/ CityofRosemead 91 DPAL Program CommunWDevelopmentDeparbnent June 2013 C �°'�' ►�""�'° °�"°�"'�'' D��r�i,it�isiM�rnyr'i��a�sr/hrraraiar�s,� Reserved CityofRosemead 92 DPAL Program CommunityDeveiopmentDepwMent June 2013 C r:q*k ®fin' r i Lisifiroymps/klwsiipinaAFAWNUffel EXHIBIT D LEAD BASED PAINT VISIAL ASSESSMENT CityofRosemead 93 DPAL Program CommunWDeve%pmentDeparunent June 2013 C EQLW Hwft °PP°`''"'"'' ®nn� r A Li��irmrM//Wasi��rlra asmog/ Reserved CV ofRosemead 94 DPAL Program CommunilyDeveiopmentDeparMent June 2013 s ear air DI�I��q►III�LIs�/�lI//��M//�flllfs�%�lla�/II{�I/s��s/ C11yofRosemead 95 DPAL Program Commun&yDeve/opmentDepalMent June 2013 C eqww k®nn�ritlisi�ioln�rM/k�l�si��ra�ntall�►i�/ CityofR"emead 96 DPAL Program Commun&yDeveiopmentDepartment June 2013 C EXHIBIT E SELLER'S AFFIDAVIT DOWN PAYMENT ASSISTANCE LOAN PROGRAM CITY OF ROSEMEAD TO BE COMPLETED AND SIGNED BY SELLER FOR THE CITY OF ROSEMEAD BY A FIRST MORTGAGE LENDER ON BEHALF OF THE PURCHASER(S). The undersigned, located at warrants and represents as follows: as Seller of the property Rosemead, California, hereby 1. That I/we are satisfied that the sales price of the subject property represents the dwelling's fair market value. 2. That I/we are aware that the Purchaser(s), who may be the beneficiary (ies) of financial assistance from a public agency in acquiring the property, does not have power of eminent domain and therefore, will not acquire the property if negotiations fail to result in a mutually satisfactory sales agreement. 3. That the subject property, as of the date of this Affidavit, is (check one): Vacant Occupied by the Seller Occupied by the Purchaser Occupied by a tenant who has given written notice of his/her intention to move voluntarily 4. That once the subject property is vacant, no other tenant shall be permitted to occupy the property before the sale is complete. 5. That, because the purchase is a voluntary transaction, the Seller is not entitled to relocation payments or other relocation assistance under the federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) or State Relocation Guidelines. Qyoffosemead 97 DPAL Program CommunVDeveiopmentDeparlment June 2013 C EQ* Oxod o�u�rirn�•r'irra�srrsnarsi UWe declare under penalty of perjury that the foregoing warranties and representations are true and correct. Executed on the date or dates shown below: Date: Seller: Date: Seller: In . California In . California QyofRasemead 98 DPAL Program CommunVDeveiopmentDepartment June 2013 C eq►► ,ate ®M AIRI.M tMril EXHIBIT F APPLICATION AFFIDAVIT Me certify the following: (buyer) hereby 1. That residence will be used as principal residence throughout the affordability period and that the Participant must notify the City and the Lender when the home ceases being the principal residence of the Program Participant. 2. That Participant has not had an ownership interest in a property during preceding 3 -year period. 3. That the purchase price does not exceed purchase price limits. 4. That the mortgage loan does not relate to the acquisition or replacement of an existing mortgage. 5. That the loan applied for does not constitute a prohibited mortgage. 6. That the Participant was not forced to apply through a specific lender. 7. That Participant's income does not exceed permitted income limits. 8. That no interest with respect to the mortgage loan is being paid to a related person. 9. That the Program cannot be transferred. 10. That any material misstatement or fraud is made under penalty of perjury. 11. Tenant Displacement Restrictions: The City will not pay relocation expenses for a tenant. The property to be purchased is to be either: new construction (never occupied), currently occupied by the seller, vacant or occupied by the borrower as a tenant purchasing the property. Printed Name Date Printed Name Date 0yofRasemead 99 CommunV De vrelopment Department Signature Signature DPAL Program June 2013 C Reserved CVofRosemead 100 DPAL Program CommunAyDeve%pmentDeparlment June 2013 C �� Dlwl��r�ilisiM�rn�•►M��a�,i��rrail�r�•,� Reserved CilyofRasemead 101 DPAL Program CommunityDeveiopmentDeparlment June 2013 Attachment C 2013 Owner Occupied Loan Program and Procedures CITY OF ROSEMEAD OWNER OCCUPIED LOAN PROGRAM A Program for Owner Occupied Loan Rehabilitation E M F R Policies and Procedures Manual (Community Development Block Grant Funding or HOME Investment Partnerships Funding) The City of Rosemead national origin, sex, assistance, disability provision of services. Reserved does not discriminate on the basis of race, color, creed, religion, marital status, status with regard to public familial status, or sexual or affectional orientation in the An equal opportunity employer. This information will be made available in alternative format upon request. C Owner -Occupied loan Program Policies and Procedures Manual TABLE OF CONTENTS Introduction 7 Overview 11 Purpose of Manual 11 Program Summary 11 General Definitions 11 Program Guidelines 17 Introduction 17 Program Scope 18 Level of Assistance 18 Types of Assistance 19 Qualifying Properties 20 Types of Improvements 20 Selection Process 22 Bid Procedures 22 Contract Implementation 23 Dispute Resolution 24 Administrative Support 24 Underwriting Criteria 24 Eigible Rehabiltation Costs 25 Procurement Standards 25 Fair Housing and Affirmative Marketing 26 Loan Servicing 29 Overview 29 Eligible Use of Funds 29 Ineligible Use of Funds 29 Eligible Household 29 Eligible Property 30 Maximum After -Rehabilitation Value 30 Community Development Department Owner -Occupied Loan Program City of Rosemead 3 April 2013 C EqW Hwft QXodwdy Owner -Occupied Loan Program Policies and Procedures Manual Loan Documentation 30 Loan Terms 30 Loan -to -Value Limits 31 Cash -Out 32 Hazard Insurance 32 Flood Insurance 32 Property Taxes 32 Annual Homeowner Certificaiton 32 Subordination 33 Re -Use Account 33 Demand/Payoff 33 Default 33 Failure to Comply 34 Reuse Account 37 Introduction 37 Reuse Account 37 Reuse of funds 37 Monitoring 37 Subsidy Layering 41 Introduction 41 Project Evaluation 41 Compliance 41 Exhibit A — Gross Income Inclusion Exhibit B — Asset Inclusion and Exclusion Exhibit C — Form of Promissory Note Exhibit D — Form of Deed of Trust Community Development Department Owner -Occupied Loan Program City of Rosemead 4 April 2013 4* Hw'"' °''W -NY Owner -Occupied Loan Program Policies and Procedures Manual Introduction Community Development Department Owner -Occupied Loan Program City of Rosemead 5 April 2013 C Owner -Occupied Loan Program Policies and Procedures Manual Reserved Community Development Department Owner -Occupied Loan Program City of Rosemead 6 April 2013 12t Owner -Occupied Loan Program Policies and Procedures Manual r� , " Introduction This manual sets forth policies and procedures for the City of Rosemead's federally funded Owner -Occupied Loan Program, herein referred to as "loan program". With funding supplied through the U.S. Department of Housing and Urban Development, herein referred to as "HUD", the loan is administered by the City of Rosemead's Community Development Department, hereinafter referred to as "City". The loan is designed to provide financial assistance to make needed repairs and improvements to low and moderate -income (0 to 80% of AMFI) owner - occupied properties within the City of Rosemead. In the event that these policies and procedures are revised or new ones implemented, this manual shall be revised accordingly. Mailing Address: City of Rosemead Community Development Department 8838 E. Valley Boulevard Rosemead, California 91770 Contact Name: Marcy Marquez, Housing Project Coordinator Email: mmarquez(a�cityofrosemead.org Telephone: (626) 569-2119 Fax: (626) 307-9218 Amendments This manual may be changed in the future by City staff for programmatic reasons or to make certain technical changes as the program is implemented due to regulatory changes (e.g. annual changes to income limits, maximum after rehabilitation value, etc.) and HUD monitoring reviews. Community Development Department Owner -Occupied Loan Program City of Rosemead April 2013 Fain t Owner -Occupied Loan Program Policies and Procedures Manual Reserved Community Development Department Owner -Occupied Loan Program City of Rosemead 5 April 2013 EQUW Hwft oppwiwft Owner -Occupied Loan Program Policies and Procedures Manual Overview Community Development Department Owner -Occupied Loan Program City of Rosemead 9 April 2013 121 EgUW H ft0Pp° Wft Owner -Occupied Loan Program Policies and Procedures Manual Department of Housing Services City of Rosemead Reserved 10 Owner -Occupied Loan Program January 2008 Q EqVW Hmft oppwwft Owner -Occupied Loan Program Policies and Procedures Manual Q\ Overview Purpose of Manual The purpose of this Manual is to describe the federally funded Owner -Occupied Loan Program and set forth the roles of the participating entity, the City of Rosemead, and the program applicants. This Manual contains the regulations pertaining to the federal funding sources and the Program's general requirements and processing procedures. The City is continually searching for new funding sources to utilize. Program Summary The City of Rosemead (City) has established the Federally funded Owner -Occupied Loan Program (Loan Program) to Apo,dpf o e b 0 ; ) Jho oW artd ,00c ry th ;:'�� 4. � d a 1 Fa t p fps: hhs -bili a i0 'or recahs r�Cl'io by; xo `d IST ' a p� (0 to °l�� I�reSt . ie ii cit Fant Ion. To maximize the effectiveness of the Loan Program as a vehicle for enhancing affordability, o ers p`�:y no 04,,a f l o l ° 1 � Principal and interest are due and payable upon a variety of conditions and circumstances, the most common being the s1hl1r. o; �lq Interest is calculated at Q% fbr s"eg.'t "t'k -1, K 'A., 1�) clle ? w / 1 e llopoh = and 30/stir le iritarest rate dor ,11.41 b4�o�414 4b-n�,€h t-,11 . '' D10W, & General Definitions As used in this Manual and all program documents, unless the context requires otherwise, the following words and terms have the meanings set forth below: AFFORDABLE: In reference to housing costs, this means that the financial obligation can be paid by the person or household, along with all other financial responsibilities of that person or household, without endangering the financial stability of the household. APPLICANT: Any person who applies for the Loan Program. SISTED UNIT: A unit funded under the Loan Program. BORROWER: A person who has or will receive a loan for the rehabilitation or reconstruction of an eligible property. Department of Housing Services Owner -Occupied Loan Program City of Rosemead 11 January 2008 12t EvuW Hwft OPWW* Owner -Occupied Loan Program Policies and Procedures Manual CAPITAL IMPROVEMENTS: Expenditures for improvements to land or improvements and remodeling of existing buildings that increase the value, and extend the useful life of the property. CERTIFICATION: A written statement of fact filed in connection with the Loan Program and subject to penalties of perjury. CITY: The City of Rosemead, California. CURRENT SALES PRICE: 1. In the event of a first sale or transfer after the date of a loan issued under this Loan Program, the current sales price shall be defined as the amount received by Borrower as the sales price of the property (less capital improvements) plus amounts received but paid out to third parties for any closing costs and commissions paid by Borrower. 2. In the event of a default and subsequent foreclosure and acquisition of the property by a creditor, the current sales price shall be defined as the amount paid for the property upon the creditor's sale of the property. 3. In the event of Borrower's cash -out refinance of the property, the current sales price shall be defined as the market value as determined by an appraisal acceptable to the City. 4. In the event of the first note and deed of trust becoming payable, the current sales price shall be defined as the market value of the property, as determined by an appraisal acceptable to the City, on the maturity date of the first note and deed. 5. In the event the property ceases to become Borrower's principal place of residence, the current sales price shall be defined as the market value of the property, as determined by an appraisal acceptable to the City, on the date the City determines that Borrower does not occupy the property as his or her principal place of residence. D.A _9 } .)? eel 0,1h Wgigned and.expcuted.by the City. DEVELOPMENT SUBSIDY: 1. Federal funds invested in a property that indirectly benefit a homeowner and are not subject to recapture. 2. The difference between the total development cost and the market value of the property. ELIGIBLE HOUSEHOLD: A household that is owned and occupied by a person and who meets applicable criteria specific to the funding source used. ELIGIBLE PROPERTY: Real property located in the city limits of the City which also meets additional criteria relative to the specific funding sources utilized. EXISTING HOMEOWNER: An owner -occupant of residential property who holds legal title to the property and who uses the property as his/her principal residence. Department of Housing Services Owner -Occupied Loan Program City of Rosemead 12 January 2008 C Owner-Occupied Loan Prouram Policies and Procedures Manual FEDERALLY -FUNDED OWNER -OCCUPIED LOAN PROGRAM: Loan or Loan Program. GROSS INCOME: An individual's taxable income before any appropriate adjustments are made. HOUSEHOLD: Household to include all person(s) living in the same housing unit (excludes foster children, live -in -aides, children of live -in -aides, unborn children, and children being pursued by legal custody). HUD: The U.S. Department of Housing and Urban Development. INCOME: To determine a Borrower's eligibility for program assistance, income is determined using definitions specific to the Federal guidelines. INTEREST: The interest due on the loan's deed of trust and calculated in accordance with the regulations pertaining to the Loan Program. LOWER INCOME HOUSEHOLD: Persons and families whose incomes do not exceed the qualifying limits for lower income families as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937. Such limits are defined as 80% of the area median income as adjusted for household size and revised annually. MANUFACTURED HOUSING UNIT: A home manufactured offsite and transported to a lot, and a mobile home as defined by Section 18007 of the California Health and Safety Code. A manufactured home can be either in a rental mobile home park, on leased land or on property owned by the occupant. It can be either on a permanent foundation or on an alternate foundation system. MATURITY DATE: The date upon which a mortgage loan comes due and payable in full in accordance with the regulations pertaining to the Loan guidelines. MORTGAGE: A deed of trust used to secure a lien on real property or, in the case of some manufactured housing, another security interest acceptable to HUD. NET INCOME: For an individual, gross income minus taxes, allowances, and deductions. An individual's net income is used to determine how much income tax is owed. OWNERSHIP INTEREST: Any of the following interests in residential real property: • Fee simple estate • Community Property • Joint tenancy • Community Property with Right of Survivorship • Tenancy in common • Title Holding Trust Ownership does not include a remainder interest, a lease with or without an option to purchase or any interest acquired on the execution of the purchase contract. Department of Housing Services Owner -Occupied Loan Program City of Rosemead i3 January 2008 12t Owner -Occupied Loan Program Policies and Procedures Manual PRINCIPAL RESIDENCE: A property occupied by the Borrower continuously all year. RELATED PERSON: As defined under the Internal Revenue Code and applicable regulations: siblings, spouses, ancestors and lineal descendants, or any other related persons. SECOND MORTGAGE: A mortgage that is junior or subordinate to a first mortgage. OWNER -OCCUPIED RESIDENCE: A housing unit intended and used for occupancy by one household which is the owner of the property. SILENT SECOND: A second mortgage in which there are no payments required of either principal or interest on the mortgage until such payments are required in accordance with the regulations pertaining to the funding source(s) used. Department of Housing Services Owner -Occupied Loan Program City of Rosemead 14 January 2008 Q Owner-Occupied Loan Prouram Policies and Procedures Manual Department of Housing Services Owner -Occupied Loan Program City of Rosemead 15 January 2008 112t °�' ►+ow +r Owner -Occupied Loan Program Policies and Procedures Manual Reserved Community Development Department Owner -Occupied Loan Program City of Rosemead 16 April 2013 121 Owner -Occupied Loan Program Policies and Procedures Manual 'r4 Program Guidelines Introduction The City of Rosemead has developed program guidelines for the operation of the Federally Funded Owner -Occupied Rehabilitation Loan Program (herein referred to as the Loan Program). These guidelines are based, in part, on procedures that the City has used in the administration of a wide range of housing rehabilitation and construction activities. The following describes the loan process in short, which is explained in further detail throughout this section. Loan Process ➢ Application submitted by homeowner(s) ➢ Application is reviewed and approved/denied by City staff (Approved applications continue through the Loan Process. Denied applications stop at this point.) ➢ On-site property inspection by the City staff (includes the review of lead-based paint procedures with the Homeowner) ➢ On-site lead inspection by a City approved Lead Contractor ➢ Lead test results and Lead brochure reviewed with homeowner by City staff ➢ Scope of Work letter mailed to homeowner(s) ➢ Pre -Bid Job Walk/Bidders Conference with bidding contractors ➢ Homeowner receives a minimum of two (2) estimates from the City based on Scope of Work. ➢ Homeowner selects contractor ➢ Homeowner/Contractor Construction/Loan Signing Meeting (This meeting is held at City Hall) • Review the contract with Homeowner/Contractor • Review lead-based paint requirements with Homeowner/Contractor • Loan documents reviewed and signed by Homeowner • Notice to Proceed issued to Homeowner and Contractor Construction can begin only when Notice to Proceed is issued ➢ Project Monitoring • On-going site inspections conducted by City staff • Progress Payments released as work is completed and inspected by City staff, and approved by Homeowner • Change Orders (as needed) processed by City staff and approved by City staff and Homeowner • Project Completed and signed off by City staff following Final Inspection and verification of final approval by the Building Department (if applicable) Community Development Department Owner -Occupied Loan Program City of Rosemead 1 April 2013 Owner -Occupied loan Program Pollcies and Procedures Manual Program Scope Federal funds will be used to provide zero to three percent (0 to 3%) simple interest deferred payment loans to homeowners of low-income (0 to 80% of Area Median Family Income) who own and occupy their home and need financial assistance for housing rehabilitation or reconstruction. The loan amount will vary for each project depending on the scope of work. However, the maximum amount of federal dollars that can be invested in each assisted unit will not exceed Se;io21(d)(3) linitis as published by IIUD Total repayment of the deferred loan and all accrued interest will be due in year 30 of the loan term. Payment would be due sooner if the home is sold, transferred in ownership, or in some cases refinanced. On September 15, 2000, a new Lead -Based Paint regulation became effective. As a result, all units built prior to 1978 must be inspected for defective paint and any defective paint must be tested for lead content. All defective lead containing paint and surfaces must be treated or abated. Additionally, any painted surfaces that will be disturbed during construction must be tested. In cases where painted surfaces are found to contain lead, these surfaces must be abated before proceeding with the scope of work. The cost associated with a homeowner having their unit inspected for defective paint will be absorbed through the Federal funds. The cost for the treatment or abatement of the defective lead contained surfaces will be incorporated into the homeowner's loan or paid through the Lead Grant when funds are available. Eligibility Program assistance will be provided to qualified property owners who own and occupy a home and do not exceed the low to moderate -income limits set by HUD.p@criJy, aip'�=ate ,3 ri o . >. a ,� ,s cone �1 at, d� of e need $'Q% .o t> � , r.��d`l��i ;i� b ?u lied atd-DW-0 ar nob�YMWI Z� _40ppiJt r c Opp �Iigibili7y,._b pwoo.411.1 t tts1There is an exception to this rule, it is possible that a person is identified,,, thtairl&u0 .the 4aiise;h d4 In this case, proof of other residency would be required and that person would not be considered part of the household for determining income eligibility. AIIV, , - . tie tejC4 AW,004,8' io Oslo Ol fti ml :e rs.; A household's income must be within the most recent HUD approved income limits for Los Angles County at the time the household is approved for the loan. In addition, the housing unit being considered for rehabilitation or reconstruction be =lhe.,'pri 1 rg�c e oe'a INO .ovy� �occ�4�j?a�i�; Under no circumstance will a tenant -occupied property be eligible for assistance under the loan. Level of Assistance It is the City' s intent to correct as many cases of housing deterioration as possible with the available funds 'b iiia rri snot t o. ad al d . � v I�� iii: a pro sect cw 11 b , a, � ;e1' 1A, co e -t `ah c�� 4d s Witlabat going o�ex e ;Ioat� to al a:li s iii the Seo ion X21 k � ).X ?? t .. ptxl�blied'.b I[T It is the City's desire to rehabilitate housing units to create safe, decent and affordable housing for the homeowners. Community Development Department Owner -Occupied Loan Program City of Rosemead 18 April 2013 Owner -Occupied Loan Program Policies and Procedures Manual i no case shall the''afte � ��i t roti ;vim® 'off tie assisted unit exceed 95%q of floe fhdd an urchase price for 1xbt�as it iYa , shs: t Z �d by;HiTD`;dt ap xoved by HUD. The median purchase price for the City is subject to periodic revision. For the purpose of this program, the after -rehabilitation value will be established by an estimate of value conducted by City staff. Type of Assistance Federal funds will be used to provide a zero to three percent (0% to 3%) simple interest deferred payment loan to homeowners of low-income (0 to 80% of Area Median Family Income) who own and occupy their home and need financial assistance for housing rehabilitation or reconstruction. Interest is calculated at 0% for senior citizens (62 years and older) and handicapped/disabled citizens and 3% simple interest rate for all others based on the principal owed. The Maxi amoi wq`I try t e $o�ntg`an the saolsa of Woxk, IZowever, under no itance.Vi1lori<�lY¢eld�% themediad puihase price. Total repayment of the deferred loan and all accrued interest will be due in year 30 of the loan term. Payment would be due sooner if the home is sold, transferred in ownership, or in some cases refinanced. Refinancing will only be allowed if the overall housing costs of the borrower will be reduced and made more affordable. Affordability will be up to the City' s discretion to determine. Also, in the case of refinancing, no additional cash can be taken out by the homeowner with the exception to assist with closing costs. On September 15, 2000, a new Lead -Based Paint regulation became effective. As a result, all units built prior to 1978 must be inspected for defective paint and any defective paint must be tested for lead content. All defective lead containing paint and surfaces must be treated or abated. Additionally, any painted surfaces that will be disturbed during construction must be tested. In cases where painted surfaces are found to contain lead, these surfaces must be abated before proceeding with the scope of work. The cost associated with a homeowner having their unit inspected for defective paint will be absorbed through the Federal funds. The cost for the treatment or abatement of the defective lead contained surfaces will be incorporated into the homeowner's loan or paid through the Lead Grant when funds are available. In determining a household' s qualification for a loan, the City will utilize low to moderate - income housing affordability standards identified by HUD. Households that qualify for a loan are subject to have their continued eligibility reviewed, at the discretion of the City, until the loan has been completed and a Notice of Completion has been filed with the County Recorder's Office. To ensure that the property owners remain owner -occupants for the life of the loan, the City plans to track all real estate -related information on the home to ensure there is no change in the property owners mailing address or that the property owners become delinquent in paying the property taxes. Community Development Department Owner -Occupied Loan Program City of Rosemead 19 April 2013 Owner -Occupied Loan Program Policies and Procedures Manual 7? acl ltori, pr operty ow, Ors are required to adcl tl`.� City of Rosomead;� a0ftonally. ns=4 to. tl $ {l ©leo s� 's t u� mc; ,polis fot tl e 166 of the loon.The City will be notified through the insurance company if there is a change in the property owner's address, non-payment of homeowner's insurance, or cancellation of homeowner's insurance policy. Qualifying Properties All owner -occupied housing units (i.e. single-family, condominiums, town homes, manufactured housing) located within the City of Rosemead will be eligible under the loan. Work on condominiums and town homes will be limited to the applicant's sphere of responsibility. Work will not be conducted in the sphere of an association's responsibility. I think this section is for multi - Types of Improvements Ifamily projects. As noted in the guidelines established this program, the City is interested in focusing the use of Federal funds on the communit ' more serious cases of housing deterioration. It is the intent of the City to renovate this e ting housing stock whenever feasible. However, in cases where the cost of rehabilitatio exceeds 49% of the after -rehabilitation value of the dwelling, the structure may be d olished and reconstructed providing the overall cost of the project will not exceed the,24, d13`I1tnft 1dt f61t. h by HVD, The City has determined that the Housing Quality Standards (HQS) used in the administration of the U.S. Department of Housing and Urban Development's (HUD' s) Section 8 Rental Assistance Program will be used in implementing this program. The City will also rely on the City's adopted Uniform Building Code, National Electrical Code, and City/zoning ordinances in implementing this program. ]axc dts 1' vol ,, M; 1st i Y -'r-0 '0"d 1 MAK ')} �o3't tl� e P, '�'et�a :n' ori+*�atib' aid.�h 1� Cs¢3izl Podovig rt0-1 v codasttoa�1;;fid_ o 1foi `)itl,';. y Code: A sampling of work items that would be eligible and ineligible under these standards includes the following: Roofing ]WIN J ' �t 7�dA�ei! Exterior painting, sandblasting and restuccoing Rain gutters and downspouts Sewer lines Foundation improvements (including strapping of dwelling frames) Ramps and handrails Windows, screens and doors Electrical, plumbing and heater replacement/repairs Community Development Department Owner -Occupied Loan Program City of Rosemead 20 April 2013 C rZvu41 "�`"'""� °j�°''"""'' Owner -Occupied loan Program Policies and Procedures Manual Interior painting Flooring (carpet, laminate, linoleum, vinyl) Ceiling Fans Fumigation Insulation Bathroom and kitchen remodeling Ax,orl�iitiog units ,ttQdQ`d" fir r0'oa1 raaorz Q air oyotern needed for medical rea�o Heating systems S�� kl r ystern neede' i for senior c ti eras <and d'Us bl individuals Weatherization Lead-based paint mitigation Demolition Additional bedrooms and bathroom to alleviate overcrowded conditions Legalization of non -permitted structures Conversion of illegal structures to original condition Water Heaters Filling/Abandoning Swimming Pools Granite countertops or any other type of natural stone countertops Wood flooring/Natural Stone flooring Dumbwaiters Barbecue pits Television antennas Swimming pools/Hot Tubs Burglar alarms Interior wall coverings other than paint Additional rooms (other than a bedroom or bathroom to alleviate overcrowded conditions) Patio Covers MICRO��it�o�g C e i g sSsfe k("o bq#04far MRai ho Chandeliers Freestanding electrical appliances 20% can be paid Enlarging of rooms with HOME funds? Window Coverings Appliances/materials/items not permanently fi to the home In developing rehabilitation standards,Kr this program, the City sees itself as being in a partnership role with the owner-oc pant. Thus, while certain improvements would never be considered eligible under this rogram, the City is cognizant of the need to be flexible in budaetina for aeneral tiro improvements that can instill a sense of bride in ownership and bring the property mL,ghtormance with the neighborhood Cbtisedi a l_'Wu o; a a irnun of 200/6,44Y pr*0' s cost tQ 1 sl3e it o era�.pio � o ter t . Community Development Department Owner -Occupied Loan Program City of Rosemead 21 April 2013 112t Owner -Occupied Loan Program Policies and Procedures Manual z�p1`e o e, o , iP�t; ;tlZat would be cot�idexed ellgxbg as _general .property 1 z dAp409"I' M __9 Pg60r _faead# , 'chitvwt The City will also allow improvements needed to comply with the City's adopted Uniform Building Code, National Electrical Code, and City/zoning ordinances. It is anticipated that, in most cases, the design of these amenities will be able to be completed by City staff without incurring outside design costs. In addition, the City recognizes that proper use of household appliances and equipment and the on-going maintenance of new improvements may be unintentionally neglected by homeowners. Therefore, at the completion of each project the City staff, accompanied by the general contractor, will review pertinent property maintenance procedures with the homeowner as an educational maintenance effort. Typical types of proper use of equipment and maintenance include heater filter replacements, use of GFCI receptacles, utility disconnections, proper use of appliances, resetting of circuit breakers, etc. Selection Process The UW Pt o ;. i cd opgoing Orottgh the C4's web ,site (] d ) cab OQW* 14�aAted at;City Hall. In addition, as new funding is received or as needed, articles are placed in the local newspaper (any judicated newspaper specifically for the City of Rosemead) as well as the Rosemead Chamber of Commerce Periodical (Rosemead Report), and the City's local newsletter (Rosemead Resource).;The �0 y. tkat:le bn idea ted as lxntally eligllsle iiiN: &MG ^10,2404101t wt �r occupied props t ithi�n the Ctty eah, be plaae.d on " Wai[ t Once all documents are received, reviewed, and processed, the Housing Project Coordinator will notify the applicant of eligibility status. If eligible, an appointment for an initial inspection is scheduled to determine the eligible items that will be included in the Scope of Work. Funds are distributed based on a first-come, first -serve basis. There is an exception to this rule. It is possible for a property to be given priority because of code, building, or health & safety violations. Code Enforcement Officer's and Building Inspector's from the City are able to identify and assess residential properties that might require immediate assistance through the Loan Program. Bid Procedures :'Cao"w, h , P oty OYO vyt& vo 1 toget*:ing, 4 york IN ?' c. o cost #Ia u `� . re pt pa�rO'd .'{ t 0-01 x1 CttYs,Rotl ,,ill jl,-?,tpjkot ::Cool 4 1 ' d "M -W-49, 111®1t P( y t•`' d e t t_.P of `et o o woe d the ;pro a�n l�rn�ts estabitsk�d' � tha City, If necessary, a change in project scope reducing or eliminating general property improvements, will be made. A project may be denied or cancelled if it is determined that the cost to meet HQS standards and relief of code violations will exceed the 221(d)3 limits set forth by HUD. Community Development Department Owner -Occupied Loan Program City of Rosemead 22 April 2013 C Owner -Occupied Loan Program Policies and Procedures Manual Thi property _ iy r w%�1 bo ultimately respob abl £or ; elec gr a lice s.ed eor Acta I xay �v s V e-0j'A i b 11 at Q. work based the lollovvi ig ? ods ©.f,ob 4ft��?.� —TTt e property owner will e provided copies'of the scope of work and they will o tam ee estimates by licensed and insured contractors; 2) the property owner can request the Housing Project Coordinator to schedule a Pre -Bid Job Walk/Bidders Conference with contractors that have been vetted to participate in this program; and 3) the property owner can request a Pre -Bid Job Walk/Bidders Conference and the property owner can invite one or more contractors to attend with or without additional contractors invited from the City's courtesy list (as long as at least three contractors attend the conference and at least two bids are received). Prior to the property owner's selection of a contractor, the Housing Project Coordinator will be responsible for reviewing the bids against the preliminary cost estimate prepared by the Management Analyst. Bids must be within 15% (high/low) of the cost estimate prepared by the Management Analyst. If the bid is higher or lower than the 15% cost estimate, the bid will be rejected and disqualified from the bidding process. The Housing Project Coordinator will also be responsible for ensuring that the selected contractor is in compliance with all state requirements by verifying that the contractor is licensed and in good standing with the State of California. In addition, the Housing Project Coordinator will be responsible for ensuring the current federal eligibility status of the contractor by verifying that the contractor does not appear on the '1% igt'of Parties ExdU* " dG' iron Te�e�r�l.' N:ftPr6aurem4glia-ms". Contract Implementation :C11ty Staff_ z]1 40 1 p cta 3?;c?1�?st co�ruProgress payments will be made based on a schedule agreed upon by the City, homeowner, and contractor. Release of progress payments will be made at the discretion of the City. Interim inspections will be conducted on each project by the Housing Project Coordinator. The number of interim inspections will vary for each project based on the scope of work involved for that particular project. Qt j� tS' c0 # i1 ' _lze art rnpo t co n i c of h '0 mplBe r ie ,g t l ;of vn,4 i ` as d ixk;til The contractor will be required to obtain release of liens from subcontractors and suppliers as the construction project proceeds, and as deemed necessary. A ten percent (10%) retention of the contract amount will be retained until 30 days after the final inspection is signed -off and a notice of completion is filed for the project. Community Development Department Owner -Occupied Loan Program City of Rosemead 23 April 2013 Fa* """� °°`'" Owner -Occupied Loan Program Policies and Procedures Manual Dispute Resolution `The eo tract' b�tw � i, e homdoWne (s) a l` h .CotLttactor chosen by` the hemeowheri The City of Rosemead is not a party to any contracts, nor is the City of Rosemead responsible for the performance of said contract by the Contractor. Tli� h owner() s�)�ots the` Con, tr ator bad®ti ©. �. -010 estimd 0�4 ke ; o�rl�atore U-0gg ; 18 co petit � bid';pi=ac ss The City.;`®f 000nead is 01YW1 1' lk WWA�'pPOt# fiord W1 that 1h&'iWofk, tkiey M o has :actually bboh Qi'Mi 0yed bier Scope WWWOWWl �uildirig Co.i However, when a dispute arises, the City will provide mediation services for the homeowner and contractor to resolve differences. Dispute resolution services provide mediation services at either the homeowners or the contractors request and is typically conducted at City Hall by City staff. Mediations that are unsuccessful at this level must be mediated by an Arbitration/Mediation service solicited by either the Participant or the Contractor; the City will not be a party to this form of mediation except to provide any requested information regarding the project or the process. Administrative Support The City has been involved in administering housing rehabilitation programs for a number of years. Existing City employees will provide the staff support needed to implement this program. "000*Kft�cftft Upon receipt of a loan application package, the City will review the package to determine that support materials are present and that all forms are complete. Support materials may include but are not limited to, income verification (i.e. paycheck stubs, unemployment stubs, social security benefit printouts, IRS 1040 form, W-2 statements, etc.), assets verification (i.e. bank statements, IRA statement, stocks, bonds, etc.), mortgage statements, property tax bills, deed of trust and insurance policies when applicable, etc.weand fetnc to;=,b 40, 4V� 5'�ri%tic c to i. d :to de t i e t t. it is &400lb}le alo Wti oc The preliminary risk analysis can be developed before incurring outside costs, such as Title Reports, and can even avoid sending out inspection personnel to prepare a work write-up and cost estimate on a loan that cannot be approved. The preliminary risk analysis will include the borrower's annual income to ensure that it is at or below the 80% FMI as established by HUD, awe" 1: a o Qr n .the boo o eaf ; ai ford to borr ' and an estimate of the borrower's ability to pay (when applicable). Upon approval to proceed, the City will order applicable outside services such as a title report, lead inspection, verifications, etc. Once the firm cost of rehabilitation is known (a contractor bid has been awarded), a final underwriting analysis will be prepared, addressing the following items: • Affordability • Financial interest in the property (Loan to Value) • Subsidy layering Community Development Department Owner -Occupied Loan Program City of Rosemead 24 April 2013 12t ►•wr Owner -Occupied loan Program Policies and Procedures Manual • Status of title to secure lien position Upon receipt of verifications and reports, the following loan package will be prepared for signature by all interested parties. • Deed of Trust • Promissory Note • Notice to Proceed • Notice of Right to Cancel • Truth -in -Lending Disclosure Statement • Itemization of the Amount Financed • Notice of Subordination • Fair Lending Notice Eligible Rehabilitation Costs The following are eligible costs that may be paid or reimbursed with loan funds: Development Hard Costs Work necessary to meet local building code requirements Work necessary to meet locally adopted rehabilitation standards Energy-related improvements Lead-based paint hazard mitigation Improvements for handicapped accessibility Repair or replacement of major housing systems Repairs and general property improvements of a non -luxury nature Demolition costs (when part of the reconstruction/to relieve illegal conditions) Site Improvements and Utility Connections On-site infrastructure costs Off-site utility connections from the property line to an adjacent street Related Soft Costs (reasonable and necessary only) Specification writing, underwriting, notary, building inspection, lead inspection, title costs, recordation fees, building permits, appraisals, and relocation costs, if applicable Procurement Standards (Conflict of Interest) sp 1 e t co Ii st�v Qd?? EcFeal�.y 'z11.eQyVvti ��t'o�`Ucr�rri8n r ',P�e� aJ',o�f{C�'R'Pat 84AQ ANAS:5,36 3'F:. Community Development Department Owner -Occupied Loan Program City of Rosemead 25 April 2013 Owner -Occupied Loan Program Policies and Procedures Manual Fair Housing and Affirmative Marketing The City recognizes the effect that discrimination has in limiting housing choice and equal opportunity in renting, selling, financing, and rehabilitating housing, and therefore, follows all relevant Equal Opportunity and Fair Housing requirements. The City's effort to eliminate discrimination is overseen by the Southern California Housing Rights Center. Rosemead has contracted this organization to implement its Fair Housing Program and to ensure that no property owner is unfairly denied benefits or subjected to discrimination under the Federally - funded Loan Program based on race, color, national origin, religion, age, ancestry, familial status, handicap, sex, or any other arbitrary basis. As already indicated under "Selection Process", the loan is advertised ongoing through the City's web site (http://www.cityofrosemead.org) and brochures located at City Hall. In addition, as new funding is received or as needed, articles are placed in the local newspaper (any judicated newspaper specifically for the City of Rosemead) as well as the Rosemead Chamber of Commerce Periodical (Rosemead Report), and the City's local newsletter (Rosemead Resource). Any owner -occupied property within the City can be placed on this waiting list and if the owner meets the residency, income, and other program requirements, they will be approved for funding when funds are available. Community Development Department Owner -Occupied Loan Program City of Rosemead 26 April 2013 112t a"'"Q °w°`'-f°' Owner-Occupied Loan Program Policies and Procedures Manual Loan Servicing Requirements Community Development Department Owner -Occupied Loan Program City of Rosemead 27 April 2013 C EgUW HWft +ter Owner -Occupied Loan Program Policies and Procedures Manual Reserved Community Development Department Owner -Occupied Loan Program City of Rosemead 28 April 2013 Owner -Occupied Loan Program Policies and Procedures Manual Q_ Loan Servicing Requirements Overview The U.S. Department of Housing and Urban Development's Federal Program provides funding to assist eligible Borrowers under the City Owner -Occupied Loan Program. The following applies to all loans made with Federal funds. Eligible Use of Funds Federally -funded loans may be used only for the provision of providing low interest (0 to 3%), deferred payment loans to homeowners of low-income (0 to 80% of MFI) who own and occupy their home and need financial assistance for housing rehabilitation or reconstruction. Ineligible Uses of Funds Federal funds may not be used for: • Refinancing of existing loans • Recurring loan costs • Payoff of all or any portion of a Borrower's consumer debt, liens or judgments • Cash out To be eligible to receive these funds, an individual household shall: 1. Be a low to moderate -income household (income equal to or less than 80% of area median income as adjusted for household size and published by HUD) when considering the gross income of all household residents 18 years old or older. a. Gross income is as defined in the California Code of Regulations (CCR), Title 25, Section 6914 and is: "The anticipated income of a person or family for the 12 -month period following the date of determination of income. b. The City shall determine annual gross income in accordance with the CCR, Title 25, Section 6914) attached hereto as Exhibit "A". c. Income from assets is recognized as part of annual income under 24 CFR Part 5. The City shall determine income from assets in accordance with 24 CFR 5 attached hereto as Exhibit "B". 2. Include as Borrowers all persons who will be, or who are on title to the property. 3. Be a homeowner and occupy the property as a principal place of residence. 4, Not 000--, a�yl?Q.%�sd�a�ilo �ocial)i otk��xhark�rr.aicxpa� place of r®e Community Development Department Owner -Occupied Loan Program City of Rosemead 29 April 2013 12t a Owner -Occupied Loan Program Policies and Procedures Manual Eligible Property 1. Property must be located within the City of Rosemead. 2. Property type must be: a. Single-family housing; or b. Condominium unit; or c. Town home unit; or 3,� Lthe following occupancy charactdristio aJf� re lTq ovo Ih owner k. ii L l l t p value fof �` hogio with tike a i Gat ce Q 10 :uncle tl%1 1�1 1e Q/.o'fhe rnc�inoh'e prl far{®e stnhea# pVblI�h For il0 *altte X17" e tal h � 7 t a e of value Gond ted y C sl f> r h®bio berets 4 W" .,: "C' d). 'a1gYe? to ,Cly fi i .the_ ?�:ihclpa 2 "yhb�u(fe�heeo:EYlribat sz_co� deed sh:l be '1166,o4 Ad WW'' 4,,.e e t � Cifi i a tela? l to t'fitx p Qp tt 3. Other appropriate security instrument naming the City as beneficiary (for instance, with regards to mobile homes, a Statement of Lien must be filed with the State of California Department of Housing and Community Development identifying the City as a lien holder. ,$ - x C y�o NOW& of p ault,: Loan Terms Security 1. Loans shall be secured by the property or leasehold interest, as applicable. 2. The lien securing repayment of the loan shall be subject only to liens, encumbrances and other matters of record reviewed and approved by the City. neferment Principal and interest payments shall be deferred for the term of the loan. 1 . -or, �o= evi l kelp di p l or Aterest lie forgiven: Repayment 1. The loans principal and interest shall be repayable upon: a. Sale, transfer, death of borrower(s), or lease of the property. Community Development Department Owner -Occupied Loan Program City of Rosemead 30 April 2013 C Owner-Occupied loan Program Policies and Procedures Manual b. ;Borrower's :failure to occupy the grope y'`4( Bor'rower's' prin`6 al pace of residence,': c. The loans maturity date. d. Upon default of the promissory note, deed of trust or other recorded documents of record pertaining to the property. 2. If it is determined by the City that repayment of the loan at maturity will cause a hardship to the Borrower, the City may, at its option, elect to: a. Approve additional deferral periods in intervals up to 5 years for a maximum 30 years in length at 0% additional interest, or; b. Convert the debt (principal and accrued interest) to a 15 year amortized loan at 0% additional interest. Assumability These loans are not assumable. Transfer of Interest Exceptions The transfer of interest shall not require repayment of the loan in the following cases: 1. The transferee was on title at the time of City loan approval. 2. A transfer, in which the transferee is a person who occupied the home at the time of the City loan approval and the household's income is recertified and proven to be at or below the 80% FMI as established by HUD. 3. A transfer into an inter vivos trust in which the Borrower is and remains the beneficiary and occupant of the property. Loan Term Tl e la l all be .0 ,yea , e pt.. poo.",06 �.o;cct� do ofdltl eq xttng' 'Vdp ; ?iiahl a�tei Abt�e: Prepayment A Borrower may prepay the loan, in part or completely, at any time without penalty. Interest Interest is calculated at 0% for senior citizens (62 years and older) and handicapped/disabled citizens and 3% simple annual interest rate for all others based on the principal owed. Unused Funds Funds not used under the loan will be used to decrease the amount of loan principal owed after the work is finished. Funds may not be used to pay interest or cash out. Loan -to -Value Limits The loan -to -value (LTV) ratio for a loan, when combined with all other indebtedness to be secured by the property, shall not exceed 100% of the sales price plus a maximum of up to 5% of the sales price to cover closing costs. Community Development Department Owner -Occupied Loan Program City of Rosemead 31 April 2013 C Owner -Occupied Loan Program Policies and Procedures Manual Cash -Out A Borrower may not receive "cash out" for a loan. Hazard Insurance The Borrower must provide and maintain fire insurance in an amount at least equal to the replacement value of the improvements. The City must be named as an additional loss payee on the policy upon loan closing. The City must be notified by the insurance company if there is a change in the Borrower's address, non-payment of homeowner's insurance, or cancellation of homeowner's insurance policy. If the Borrower fails to maintain the required hazard insurance, the City may take out a "forced place" insurance policy to cover the property. The City shall obtain a judgment for any amounts expended by the City, and shall record a judgment lien against the property. Flood Insurance The City of Rosemead is not located within the 100 -year flood plan and has been designated by Federal Emergency Management Agency (FEMA) as Zone C. Therefore, the Borrower is not required to provide and/or maintain Federal Insurance. Property Taxes To ensure that the Borrower remains as an owner -occupant for the life of the loan, the City will contract with a Title Company to track all real estate -related information on the home. The Title Company will notify the City if there is a change in the Borrowers mailing address or if the Borrower becomes delinquent in paying the property taxes. If the Borrower fails to maintain payment of property taxes, the City may pay the taxes current. The City shall obtain a judgment for any amounts expended by the City, and shall record a judgment lien against the property. �N.y�� _ k�� `@ e� ��.�Q .��o� prQ:�� of�ptlte r��erric� ��.,�o�ag. Tol,e e.®1,7m�g�i .(�7�p�00ga/�OQ 4aC��y°B(�0;�J�'r�i: Y�!'�+ inf . t ft -W. 45, ,'[ � 4'0 i -a .k�,"� *+�E i, D. Y - 11 Ri r l�.� }` —71 04 r e ��k 07�Tte an fly bl (x a Nt?a)' T'o �°�0Ine ouect C:Qrdznao w l� o0wbs� al pc �Tg� g a oot.: Community Development Department Owner -Occupied Loan Program City of Rosemead 32 April 2013 a Owner -Occupied Loan Program Policies and Procedures Manual Subordinbldon, If the Borrower wishes to refinance any superior loans, the Borrower must submit a Request for Subordination to the City of Rosemead, Community Development Department. Subordinations will be granted only under the following conditions: 1. No cash -out allowed. 2. No third party debt pay-offs or debt consolidations. 3. No additional encumbrances on the property. 4. Total indebtedness secured by the property may not exceed the current market value of the property. The Commu',nity. Development Director for the�-Gity;will review and approve or deny the Request for Subordination and, if approved shall execute appropriate documentation as submitted by the originating party. Re -Use Account 1. All repayments of loan principal and interest shall be received by the City and deposited into a separate reuse account maintained by the City's Department of Finance. 2. The reuse account shall be an interest bearing account into which all earned interest shall be deposited. 3. All funds deposited into the reuse account shall be the property of the City. 4. A line item for reuse of funds will be inserted into the City's fiscal year budget allocating and approving use of funds for eligible activities. 5. All reuse funds shall be expended in accordance with the Federal Regulations and the Standard Agreement between the City and HUD. Reuse funds may be used for: a. Additional rehabilitation assistance. b. Loan processing activity delivery fees as applicable. c. Cost (up to 5% of reuse funds deposited) of loan servicing by the City. 6. The City shall allow HUD full access to the reuse account records for the purpose of determining the City's compliance with Federal regulations. Demand/Payoff Upon receiving a Notice of Demand/Pay-off, the City's Department of Finance shall calculate the amount of principal and interest due, and transmit the payoff amount to the requesting party. Upon receipt of all due principal and interest, the City shall reconvey the loan's deed of trust. Default Upon receipt of a Request for Notice of Default for each lien senior to the City's loan, the City shall determine the feasibility of bringing the defaulted loan current as outlined below. Community Development Department Owner -Occupied Loan Program City of Rosemead 33 April 2013 Owner -Occupied Loan Program Policies and Procedures Manual Foreclosure by Senior Lien Holder In case of a foreclosure action brought by a senior lien holder, the City may elect to cancel the foreclosure proceedings by reinstating the senior lien holder if the Community Development Director for the City determines that the Borrower can, upon the City making the senior lien holder current, resume making future payments on the senior lien. All costs to bring the senior lien current shall be added to the outstanding principal of the second mortgage. If the City determines that the Borrower does not have the capacity or resources to continue to make future payments on the senior lien, the City may: 1. Pay off the senior lien in full and restructure the Borrower's debt such that the Borrower's housing costs are affordable; or 2. Reinstate the senior lien holder (pay all of Borrower's delinquent payments, late charges and fees to date) and institute foreclosure proceedings on its own behalf. All such proceedings, at the direction of the City and on the City's behalf, shall either be performed by the City or by the Trustee so named on the Borrower's loan deed of trust. Foreclosure by the Citygpon Default of Borrower under Loan In the event of a default by Borrower under any term of the Borrower's loan deed of trust or promissory note, all principal and interest will become immediately due and payable. Failure to Comply Failure to comply with any applicable City policy or procedures or the U.S. Department of Housing and Urban Development Federal requirements will constitute a breach of the loan agreement. Such a breach will result in the City action to recover moneys determined to have been spent on ineligible projects or activities. Community Development Department Owner -Occupied Loan Program City of Rosemead 34 April 2013 C Owner-Occupied Loan Program Policies and Procedures Manual Reuse Plan Community Development Department Owner -Occupied Loan Program City of Rosemead 35 April 2013 C EaUW HVWIWW °p"°' W* Owner -Occupied Loan Program Policies and Procedures Manual Reserved Community Development Department Owner -Occupied Loan Program City of Rosemead 36 April 2013 EQ* ` °''"°''"' Owner -Occupied Loan Program Policies and Procedures Manual QReuse Plan Introduction All repayments of loan principal and any loan interest accrued shall be deposited to a separately maintained reuse account governed by the City of Rosemead's Department of Finance. All funds deposited into the reuse account shall be the property of the City. Reuse Account The City of Rosemead will establish an account for funds that is separate from any other funding sources (no co -mingling of funds) and provides: 1. A tracking system to ensure reuse of funds are used for appropriate activities as described below; 2. Appropriate reporting ability; 3. Provides for timely processing; and 4. Any accrued interest earned on funds is to accrue to the Reuse Account. Reuse of Funds Funds in the reuse account shall only be used by the City of Rosemead for: 1. Loans to individual homeowners as allowed pursuant to Program requirements; 2. A loan processing activity delivery fee, as applicable, in accordance with Program requirements; and 3. Up to 5% of funds deposited may be used towards the costs of loan servicing provided by the City of Rosemead. Monitoring The City of Rosemead will monitor the reuse account according to the most current requirements. Community Development Department Owner -Occupied Loan Program City of Rosemead 37 April 2013 C EaUW k° ''" '' Owner -Occupied Loan Program Policies and Procedures Manual Reserved Community Development Department Owner -Occupied Loan Program City of Rosemead 38 April 2013 e°u' k14"'""Q °°''"" Owner -Occupied loan Program Policies and Procedures Manual Subsidy Layering Community Development Department Owner -Occupied Loan Program City of Rosemead 39 April 2013 C Owner -Occupied loan Program Policies and Procedures Manual Reserved Community Development Department Owner -Occupied Loan Program City of Rosemead 40 April 2013 121 Owner -Occupied loan Program Policies and Procedures Manual y� M; Subsidy Layering Introduction HUD establishes limits on the amount of HOME funds that may be invested in affordable housing on a per-unit basis for specific areas. Before committing funds to a project that combines the use of any other local, state, or federal assistance, the City will evaluate the project to ensure that the City does not invest any more HOME funds than are necessary to provide affordable housing. Project Evaluation Each project file will contain the subsidy layering evaluation. Compliance The City will comply with the guidelines presented in HUD Notice CPD -98-01. These guidelines include review of the following documents from the applicant: ➢ Sources/uses of funds - As part of the application process, the City will require a sources/uses of funds statement for the project with supportive documentation. This should reflect the project development budget and should list: • All proposed sources (both private and public) of funds and the dollar amounts for each respective source; and • All uses of funds (including rehabilitation and/or construction costs, financing costs and professional fees) associated with the project. ➢ Certification of governmental assistance - The City will obtain a formal certification from the applicant as to whether or not additional governmental assistance will be provided to the project, and if so, what kind of assistance. ➢ Project development budget - The City will review the project development budget to determine whether the development costs are necessary and reasonable. The budget should include all costs associated with the development of the project, regardless of the funding sources. • "Reasonableness" of costs should be based on all of the following factors: (1) costs of comparable projects in the same geographical area, (2) the qualifications of the cost estimators for the various budget line items, and (3) comparable costs published by recognized industry cost index services. Community Development Department Owner -Occupied Loan Program City of Rosemead 41 April 2013 Owner -Occupied loan Program Policies and Procedures Manual ➢ Proforma - The City will determine the reasonableness of the rate of return on equity investment by looking at the applicant's proforma (project income and expense statement). It should also specify the consequences of tax benefits, if any, and any other assumptions used in calculating the project cash flow. The proforma should represent, at a minimum, the term of the HOME affordability requirements, or longer if other funding sources require longer affordability terms. The subsidy guidelines will be used to determine the appropriate level of HOME funds to be used in a project absent other governmental assistance. Community Development Department Owner -Occupied Loan Program City of Rosemead 42 April 2013 Eq'"W "«+r Owner -Occupied Loan Program Policies and Procedures Manual EXHIBITS Community Development Department Owner -Occupied Loan Program City of Rosemead 43 April 2013 12t Owner -Occupied Loan Program Policies and Procedures Manual Reserved Community Development Department Owner -Occupied Loan Program City of Rosemead 44 April 2013 Owner -Occupied Loan Program Policies and Procedures Manual EXHIBIT A TITLE 25 SECTION 6914 GROSS INCOME INCLUSION "Gross income" shall mean the anticipated income of a person or family for the twelve-month period following the date of determination of income. If the circumstances are such that it is not reasonably feasible to anticipate a level of income over a twelve-month period, a shorter period may be used subject to a predetermination at the end of such a period. "Income" shall consist of the following: (a) Except as provided in subdivision (b), all payments from all sources received by the family head (even if temporarily absent) and each additional member of the family household who is not a minor shall be included in the annual income of a family. Income shall include, but not be limited to: (1) The gross amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses; (2) The net income from operation of a business or profession or from rental or real or personal property (for this purpose, expenditures for business expansion or amortization of capital indebtedness shall not be deducted to determine the net income from a business); (3) Interest and dividends; (4) The full amount of periodic payments received from social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic receipts; (5) Payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay (but see subdivision (b)(3)). (6) Public Assistance. If the public assistance payment includes an amount specifically designated for shelter and utilities which is subject to adjustment by the public assistance agency in accordance with the actual cost of shelter and utilities, the amount of public assistance income to be included as income shall consist of: (A) The amount of the allowance or grant exclusive of the amount specifically designated for shelter and utilities, plus (B) The maximum amount which the public assistance agency could in fact allow for the family for shelter and utilities, (7) Periodic and determinable allowances such as alimony and child support payments, and regular contributions or gifts received from persons not residing in the dwelling; (8) All regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is head of the family or spouse (but see subdivision (b)(5)) Community Development Department Owner -Occupied Loan Program City of Rosemead 45 April 2013 Owner -Occupied loan Program Policies and Procedures Manual TITLE 25 SECTION 6914 GROSS INCOME EXCLUSION (b) The following items shall not be considered as income: (1) Casual, sporadic or irregular gifts; (2) Amounts which are specifically for or in reimbursement of the cost of medical expenses; (3) Lump -sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and worker's compensation), capital gains and settlement for personal or property losses; (4) Amounts of educational scholarships paid directly to the student or to the educational institution, and amounts paid by the government to a veteran for use in meeting the costs of tuition, fees, books and equipment. Any amounts of such scholarships, or payments to veterans not used for the above purposes of which are available for subsistence are to be included in income; (5) The special pay to a serviceman head of a family away from home and exposed to hostile fire; (6) Relocation payments made pursuant to federal, state, or local relocation law; (7) Foster child care payments (8) The value of coupon allotments for the purchase of food pursuant to the Food Stamp Act of 1964 which is in excess of the amount actually charged the eligible household; (9) Payments received pursuant to participation in the following volunteer programs under the ACTION Agency: (A) National Volunteer Antipoverty Programs which include VISTA, Service Learning Programs and Special Volunteer Programs. (B) National Older American Volunteer Programs for persons aged 60 and over which include Retired Senior Volunteer Programs, Foster Grandparent Program, Older American Community Services Program, and National Volunteer Program to Assist Small Business Experience, Service Corps of Retired Executive (SCORE) and Active Corps of Executives (ACE). Community Development Department Owner -Occupied Loan Program City of Rosemead 46 April 2013 FQ* """ °`'"'°''"" Owner-Occupied Loan Program Policies and Procedures Manual EXHIBIT B TITLE 25 SECTION 6914 ANNUAL INCOME NET FAMILY ASSET INCLUSIONS AND EXCLUSIONS Where a family has net family assets in excess of $5,000, income shall include the actual amount of income, if any, derived from all of the net family assets or 10 percent of the value of all such assets, whichever is greater. For purposes of this section, net family assets means value of equity in real property other than the household's full-time residence, savings, stocks, bonds, and other forms of capital investment. The value of necessary items such as furniture and automobiles shall be excluded. Inclusions 1. Cash held in savings accounts, checking accounts, safe deposit boxes, homes, etc. For savings accounts, use the current balance. For checking accounts, use the average 6 -month balance. 2. Cash value of revocable trusts available to the applicant. 3. Equity in rental property or other capital investments. Equity is the estimated current market value of the asset less the unpaid balance on all loans secured by the asset and all reasonable costs (e.g., broker fees) that would be incurred in selling the asset. Under HOME, equity in the family's primary residence is not considered in the calculation of assets for owner - occupied rehabilitation projects. 4. Cash value of stocks, bonds, Treasury bills, certificates of deposit and money market accounts. 5. Individual retirement and Keogh accounts (even though withdrawal would result in a penalty). 6. Retirement and pension funds. 7. Cash value of life insurance policies available to the individual before death (e.g., surrender value of a whole life or universal life policy). 8. Personal property held as an investment such as gems, jewelry, coin collections, antique cars, etc. 9. Lump sum or one-time receipts, such as inheritances, capital gains, lottery winnings, victim's restitution, insurance settlements and other amounts not intended as periodic payments. 10. Mortgages or deeds of trust held by an applicant. Community Development Department Owner -Occupied Loan Program City of Rosemead 47 April 2013 C r;q* Hwft opw-.* Owner -Occupied loan Program Policies and Procedures Manual Exclusions 1. Necessary personal property, except as noted in number 8 of Inclusions, such as clothing, furniture, cars and vehicles specially equipped for persons with disabilities. 2. Interest in Indian trust lands. 3. Assets not effectively owned by the applicant. That is, when assets are held in an individual's name, but the assets and any income they earn accrue to the benefit of someone else who is not a member of the household and that other person is responsible for income taxes incurred on income generated by the asset. 4. Equity in cooperatives in which the family lives. 5. Assets not accessible to and that provide no income for the applicant. 6. Term life insurance policies (i.e., where there is no cash value). 7. Assets that are part of an active business. "Business" does not include rental of properties that are held as an investment and not a main occupation. Community Development Department Owner -Occupied Loan Program City of Rosemead 48 April 2013 C Owner-Occupied loan Program Policies and Procedures Manual EXHIBIT C FORM OF PROMISSORY NOTE Community Development Department Owner -Occupied Loan Program City of Rosemead 49 April 2013 12t Owner -Occupied Loan Program Policies and Procedures Manual Reserved Community Development Department Owner -Occupied Loan Program City of Rosemead 50 April 2013 12t V Owner -Occupied Loan Program Policies and Procedures Manual Community Development Department Owner -Occupied Loan Program City of Rosemead 51 April 2013 C Egn, "Wft °pWW* Owner -Occupied Loan Program Policies and Procedures Manual Community Development Department Owner -Occupied Loan Program City of Rosemead 52 April 2013 FAuW HWft 09WU* Owner -Occupied loan Program Policies and Procedures Manual Community Development Department Owner -Occupied Loan Program City of Rosemead 53 April 2013 Fain Hwft OPWW* Owner -Occupied Loan Program Policies and Procedures Manual Reserved Community Development Department Owner -Occupied Loan Program City of Rosemead 54 April 2013 Owner -Occupied Loan Program Policies and Procedures Manual EXHIBIT D FORM OF DEED OF TRUST Community Development Department Owner -Occupied Loan Program City of Rosemead 55 April 2013 C Owner-Occupied Loan Program Policies and Procedures Manual Reserved Community Development Department Owner -Occupied Loan Program City of Rosemead 56 April 2013 FauW HwftOP WAY Owner -Occupied Loan Program Policies and Procedures Manual Community Development Department Owner -Occupied Loan Program City of Rosemead 57 April 2013 C Owner-Occupied Loan Program Policies and Procedures Manual Community Development Department Owner -Occupied Loan Program City of Rosemead 58 April 2013 12t owner -Occupied Loan Program Policies and Procedures Manual Community Development Department Owner -Occupied Loan Program City of Rosemead 59 April 2013 Owner -Occupied Loan Program Policies and Procedures Manual Reserved Community Development Department Owner -Occupied Loan Program City of Rosemead 60 April 2013