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HomeMy WebLinkAboutProposed Resolution - 5/6/2025 (2)1 RESOLUTION NO.________ OF 2025 (A Resolution to Adopt Legislative Policy and Budgetary Guidelines for the Salt Lake City Home Repair Program) WHEREAS, Salt Lake City Corporation (City), through the Home Repair Program, supports the goals of providing financial assistance to low- and moderate-income homeowners for expenses related to maintaining safe and stable housing in order to preserve the housing stock and the health and wellbeing of occupants; and WHEREAS, adopting a legislative policy for the Home Repair Program will facilitate budgetary and reporting transparency, streamline recipient application and recommendation processes, ensure alignment with City best practices, and increase compliance with state and federal requirements; and WHEREAS, the City Council does now meet on this ____ day of __________, 2025 to adopt a legislative policy for the Salt Lake City Home Repair Program. NOW, THEREFORE, be it resolved that the City Council of Salt Lake City, Utah, hereby adopts the attached legislative policy for the Salt Lake City Home Repair Program as set forth in Exhibit A. Passed by the City Council of Salt Lake City, Utah, this _____ day of ______________, 2025. SALT LAKE CITY COUNCIL By _____________________________ CHAIR Approved as to form: __________________________ Salt Lake City Attorney’s Office Date: ___________________________ ATTEST: _________________________________ City Recorder Exhibit A April 17, 2025 2 3 Exhibit A to the Resolution Salt Lake City Home Repair Program Legislative Policies 1. GENERAL 1.1 Mission The Salt Lake City Corporation (City) Home Repair Program (Program) provides financial assistance to low- and moderate-income homeowners (Homeowners) for expenses related to maintaining safe and stable housing in order to preserve the housing stock and the health and wellbeing of occupants. Financial assistance is facilitated through the execution of an agreement between the City, Homeowner, and a construction contractor. The City provides project management services and issues funding directly to the construction contractor on behalf of the Homeowner. 1.2 Project Types The Program includes two types of projects (Project Types), as follows: A. Minor Repair: Intended to address minor home repairs and accessibility needs. B. Home Rehabilitation: Intended to correct deficiencies and bring homes up to applicable City and state building codes. 1.3 Program Administration The Program shall be administered by the Department of Community and Neighborhoods (CAN) and its Division of Housing Stability, including staff to manage the administration, construction management, and loan servicing aspects of the Program. 2. PROGRAM FUNDING 2.1 Funding Sources The Program shall be primarily funded from the Tenant and Homeowner Loan Fund (THLF) pursuant to the Salt Lake City Housing Program Funds Legislative Policy, attached hereto as Exhibit A (Funds Policy), or its successor. 2.2 Program Income Any and all repayment of principal and interest on loans issued through the Program, as well as other sources of revenue generated from the Program, shall be considered Program Income. The financial management of Program Income shall be pursuant to the Funds Policy. 2.3 Uses of Funding Funding allocations shall be utilized to issue grants and loans to eligible Homeowners. 3. ELIGIBILITY REQUIREMENTS 4 3.1 Eligible Properties Eligible properties shall be owner-occupied housing units located within Salt Lake City boundaries. The property’s real estate taxes, water, and sewer payments must be current and in good standing with the City, provided however that Program funding may be utilized to address code violations. 3.2 Eligible Costs Eligible Costs shall include up to 100% of the cost of labor and materials to correct substandard conditions, correct violations of applicable City and state building codes, and to implement certain types of improvements, as follows: A. Replacement and repair of principal fixtures B. Replacement and repair of components of existing structures C. Installation of security and safety devices D. Weatherization and conservation improvements including for water and energy efficiency E. Accessibility improvements and upgrades F. Lead, radon, and other hazard mitigation G. Closing costs, loan origination fees, and loan servicing fees 3.3 Eligible Homeowners Homeowner eligibility shall be based on the following criteria by Project Type: A. Minor Repair: a. Have a household income of 80% of the area median income (AMI) and below; and b. Have a primary resident that is either a senior (aged 62 years or older) or living with a disabling condition that is recognized by the U.S. Department of Housing and Urban Development (HUD). B. Home Rehabilitation: a. Homeowners shall reside at the property as their principal residence for the term of the loan; b. Have a household income of 80% AMI and below; and c. For households obtaining an amortizing loan: i. Have sufficient income to pay back the loan, as determined by the ratio of the Homeowner’s debt-to-income (DTI). Total monthly revolving debts, including the costs for the Home Repair Program loan, cannot exceed a DTI of 45% of the gross monthly income or the maximum amount allowed under HUD’s First Time Homebuyer Program or its successor. In addition to a DTI of 45% or lower, the Homeowner shall be required to demonstrate sufficient income, defined as the amount of money a household has left over each month after paying major expenses such as mortgages and car loans, to cover the cost of household needs such as food, clothing, and other household essentials. 5 ii. Have a good history of meeting their financial obligations, as determined by the Homeowner’s credit report. 4. FUNDING TERMS AND CONDITIONS Funding awards shall be based on the following terms and conditions: PROJECT TYPE: MINOR REPAIR HOME REHABILITATION Type of Assistance Grant Conditional grant Deferred loan Amortized loan AMI Up to 80% AMI; and a senior or disabling condition Up to 30% AMI and a senior or disabling condition Up to 50% AMI 51% to 80% AMI Debt to Income Requirement n/a 40% or below Homeowner Occupancy Requirement Primary resident upon distribution of funds 5 Years Term of the loan Term n/a 5 Years As long as ownership and occupancy requirements are met Up to 20 Years Interest Rate n/a n/a 0% 1-4% Default Interest Rate n/a 4% on the outstanding balance Payment Type n/a n/a Payments are deferred Payments shall be due monthly Maximum Assistance Up to $2,500 annually; lifetime limit of $20,000 per Homeowner Lifetime limit of $50,000 per Homeowner Up to $50,000 with only one active loan per property Collateral None Deed of trust NOTES: • Senior: Senior is defined as solely occupied by persons 62 years of age or older or the head of household(s) are 62 years of age or older. • Disabling Condition: Disabling Condition as defined by HUD. • Conditional Grants: Conditional grants shall be forgiven over a 5-year term on a prorated basis if compliance with terms is maintained. Accordingly, 20% of the grant shall be forgiven annually. If conditions are not met, the outstanding balance of the Conditional Grant shall convert to an Amortized Loan at the Default Interest Rate with a maximum Term of 10 years. • Deferred Loans: Deferred loans shall become payable upon sale or transfer of the property or if the homeowner no longer lives in the property as an owner- occupant. • Transfer of Loans: Loans may be transferred to certain heirs, including a spouse, child, or domestic partner, that assume title of the property, subject to prior 6 written approval from the City. Eligibility of loan transfer will subject to income qualification and be analyzed on a case-by-case basis. • Amortized Loans:  Term: Amortized loans shall have a 20-year term but may be shorter if the applicant demonstrates the ability to accelerate repayment based on a DTI analysis.  Interest Rate: Amortized loans shall have an interest rate that is competitive to the current market rate but shall be no lower than 3% unless the applicant demonstrates the need for a lower payment based on a DTI analysis.  Maximum Assistance: The Maximum Assistance amount for amortized loans shall be sized to the lower of $50,000 or the maximum amount affordable with the DTI maximum established in Section 3: Eligibility Requirements. 5. APPROVAL PROCESS Funding shall be awarded on a first come first served basis, as per the date a complete application is submitted. Once a completed application is submitted, the application shall be processed for approval as follows: A. Staff shall verify that all Eligibility Requirements are met. If requirements are not met, the application will be denied. B. If Eligibility Requirements are met, Staff shall make a recommendation to the Housing Program Funds Loan Committee regarding the maximum assistance amount and other funding terms and conditions based on the standards established in Section 4: Funding Terms and Conditions. C. The Housing Program Funds Loan Committee shall review and has the authority to provide final approval of the funding request within the standards set forth in this policy. 6. PROCUREMENT, CONTRACTING, AND DISBURSEMENT OF FUNDS Once an application is approved by the Housing Program Funds Loan Committee, a procurement and contracting process that complies with City ordinances and policies, as well as HUD policy, shall be carried out. Housing Stability staff shall provide project management services, in coordination with the Homeowner and contractor, to establish and carry out a scope of work. Grant/loan proceeds may be disbursed to the contractor through construction draws. 7. LOAN DEFERMENT AND MODIFICATION 7.1 Temporary Deferment of Amortized Loans On an annual basis, existing Program borrowers can apply for a partial or full deferment of monthly loan payments if the household’s DTI percentage exceeds 45% considering all debt including the Program loan. The amount of monthly loan payments to be deferred shall be based on the 45% DTI threshold. Requests for deferments shall be evidenced by a financial analysis of the household’s income and debt obligations. Deferments may be approved by the Housing Program Funds Loan 7 Committee for up to 12 months and may be reauthorized on an annual basis for up to five (5) years, consecutive or nonconsecutive, during the term of the loan. If a loan deferment is granted, the loan shall be extended for an equivalent period of time. 7.2 Permanent Modification or Deferment of Amortized Loans The following options may be considered if a Program borrower continues to experience an economic hardship and has exhausted the temporary loan deferment option provided under Section 7.1: A. Loan Modification If a borrower continues to experience an economic hardship, the loan holder may request a permanent loan modification. The loan modification may include extension of the loan term up to 30 years and/or an interest rate reduction. Such requests shall be reviewed and approved by the Housing Program Funds Loan Committee. B. Permanent Loan Deferment If a borrower has experienced a severe and permanent economic hardship, the borrower may request a permanent deferment of the loan with the loan due upon sale or transfer of the property. Notwithstanding, the loan may be transferred to certain heirs including a spouse, child, or a person living in the household for at least one year prior to Homeowner’s death. The eligibility of a loan transfer shall be analyzed and approved on a case-by-case basis. In order to be authorized, such requests shall be reviewed and recommended by the Housing Program Funds Loan Committee and approved by the Director of CAN. 8. REPORTING Staff shall submit a report on the Program to the City Council on an annual basis. The report shall include outcomes associated with the Program, including a summary of projects completed, number of new grants and loans, total outstanding balance of the loan portfolio, and number of delinquencies. 8 Exhibit A to Salt Lake City Home Repair Program Legislative Policies Salt Lake City Housing Program Funds Legislative Policy 1. GENERAL 1.1 Scope Salt Lake City Corporation (City) utilizes various funding sources to support housing and community development activities (Housing Program Funds), primarily through two different classes of programs: (1) to local organizations for the implementation of activities that support the City’s goals (Subrecipient Programs); and (2) to administer activities and programs that pass funds directly to tenants, homeowners, landlords, and property owners (Direct Delivery Programs). Direct Delivery Programs initially include the Home Repair Program, the Community Land Trust (CLT) Program, and the Naturally Occurring Affordable Housing (NOAH) Program. This policy establishes financial and reporting standards for the Housing Program Funds. In addition, this policy establishes a revolving loan fund as a self-replenishing pool of revenue to fund the Direct Delivery Programs. 1.2 Intent Housing and community development policies are outlined in various plans that have been adopted or approved by the City Council. The intent of the Housing Program Funds is to implement the goals and objectives that are outlined in various pre-adopted plans, including but not limited to the City’s moderate- income housing plan, anti-displacement plan, and the 5-year consolidated plan required by the U.S. Department of Housing and Urban Development (HUD). The uses of the funds for the Direct Delivery Programs shall be outlined in the specific program policy. 1.3 Program Administration The Housing Program Funds shall be administered by the Department of Community and Neighborhoods (CAN) and its Division of Housing Stability. 2. FINANCIAL 2.1 Revenue Housing Program Funds revenue sources shall include: A. Federal Ongoing: Revenue from federal funding sources that is allocated annually to the City for affordable housing and community development activities, including the following HUD programs: Community Development Block Grant (CDBG), Home Investment Partnership Program (HOME), Emergency Solutions Grant (ESG), and Housing Opportunities for Persons with AIDS (HOPWA). B. Funding Our Future (FoF): FoF sales tax dollars that are designated annually for housing programs. C. Program Income: Revenue generated from the sale of property, the repayment of principal and interest, or other sources of revenue generated from an 9 activity funded with the Housing Program Funds. To comply with the various statutory requirements for each revenue source, the City shall separately account for Program Income according to the associated source, as follows: • Restricted Program Income: Program Income generated from Federal Ongoing or other sources with federal, state, or other restrictions shall be administered according to associated requirements. For example, Program Income generated from Federal Ongoing funding sources maintains federal requirements in perpetuity and shall be recaptured and reallocated annually pursuant to federal regulations. • Unrestricted Program Income: Program Income generated from sources that do not have restrictions on the utilization of program income shall be deposited into a revolving loan fund, pursuant to Section 3: Tenant and Homeowner Loan Fund, to continue to support the implementation of the Direct Delivery Programs. D. Other Housing Program Funds: The City may designate general fund or other one-time funding from federal, state, or other sources for housing or community development purposes. 2.2 Annual Budget Allocations The City Council shall appropriate the Housing Program Funds revenue to specific Direct Delivery and Subrecipient programs through the annual budget process. The Administration shall propose funding recommendations to the City Council either through a competitive application process or through administrative budget recommendations, as follows: A. Competitive Application Process The following sources of Revenue shall fund either Subrecipient or Direct Delivery programs and shall be subject to an annual competitive application process: a. Federal Ongoing b. FoF c. Restricted Program Income d. Other Housing Program Funds (on a case-by-case basis) Applications shall be subject to a review and funding recommendation process conducted first by the Community Development and Capital Improvement Program Advisory Board (CDCIP Board), or its successor, then by the Mayor. The CDCIP Board and Mayor’s funding recommendations shall be submitted to the City Council during the budget deliberation process for the upcoming fiscal year. B. Administrative Budget Recommendations The following sources of revenue shall fund Direct Delivery Programs to support their financial viability. Funding recommendations shall be submitted through the Mayor’s Recommended Budget: a. Unrestricted Program Income 10 b. Other Housing Program Funds (on a case-by-case basis) 3. HOUSING PROGRAM FUNDS LOAN COMMITTEE Once the City Council has appropriated funding to a Direct Delivery Program, funding allocations to specific project recipients shall be determined by the respective Direct Delivery Program policy. A Housing Program Funds Loan Committee (Loan Committee) shall be established to provide recommendations or provide final approval of funding, as established by the respective Direct Delivery Program policy, and shall be comprised of five (5) members, as follows: A. Two (2) members of the CDCIP Board, or its successor B. The Director of Community and Neighborhoods, or designee C. The Director of Housing Stability, or designee D. The City’s Chief Financial Officer, or designee The Loan Committee shall be subject to the Utah Open and Public Meetings Act and shall meet on an as-needed basis. 4. TENANT AND HOMEOWNER LOAN FUND The Tenant and Homeowner Loan Fund (THLF) shall be established and maintained as a restricted account in the general fund to facilitate the revolving of Unrestricted Program Income for the implementation of the Direct Delivery Programs. The THLF shall be financially managed by the Department of Finance (Finance). There shall be deposited into the fund all revenue received by the City that does not have federal or state restrictions and that is dedicated to community development and affordable housing programs, including, but not limited to: A. Unrestricted Program Income; B. In lieu payments, mitigation fees, contributions, and other monies that may be received by the City for the purposes of tenant and homeownership housing programs; and C. Other monies appropriated by the City Council. No expenditure shall be made from the THLF without approval of the City Council. Through the annual budget, the City Council shall allocate funds from the THLF to specific Direct Delivery Programs pursuant to Section 2.2. 5. REPORTING CAN and Housing Stability shall submit a report to the City Council on an annual basis that provides an overview of budget expenditures, revenues, and associated outcomes. The report shall include a summary of property transactions, loans, grants, and populations served. To keep the identity of individuals, tenants, homeowners confidential, reporting shall include the census block group of the property, household, or individual served rather than the address.