HomeMy WebLinkAbout16- Planning & Building Services CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
From: Michael E. Hays, Director Subject: Expansion of City's Acquisition, Rehabilitation,
and Resale (ARR) Program with HUD
Dept: Planning & Building Services -- Building Inspection Services
Date: September 26, 1997 MCC Date: October 20, 1997
Synopsis of Previous Council Action: ; (� 09W
On October 15, 1997, the Council Personnel Committee recommended this item
for approval .
Recommended Motions: ORIGINAL
1. That the Mayor and Council authorize the Planning and Building Services Dept. to provide expanded building
inspection services to HUD for a one year period as part of the expanded ARR Program.
2. That the additional positions of one (1) Building Inspector I and one (1) Typist Clerk 11 be established in the
Inspection Services Division of the Planning and Building Services Department.
3. That the Personnel Department be directed to update Resolution No. 97-244 to reflect the two additional
positions noted in Motion No. 2.
4. That the Mayor and Council authorize the Director of Finance to amend the Fiscal Year 1997-98 budget to
reflect the cost of implementing the expansion of the Acquisition, Rehabilitation, and Resale (ARR) Program
with HUD and to reflect the expected revenue to be generated from payments made to the City by HUD for
inspection services as outlined in the attached staff report.
.t
Michael Hays
Contact person: Michael E. Hays Phone: 384-5357
Supporting data attached: Staff Report Ward(s): City-wide
FUNDING REQUIREMENTS: Amount: Budget Expenditures Totaling $78,500
Various Expense Accounts 001-174-5xxx
Source: Revenue Reimbursements from HUD 001-000-4719 $128,000
(Acct. Description) See Attachment B for detailed breakdown.
Finance: icz
Council Notes:
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Agenda Item No./
CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
STAFF REPORT
Subject: Expansion of City's Acquisition, Rehabilitation, and Resale (ARR) Program with HUD --
Building Inspection Services
Mayor and Council Agenda of October 20, 1997
In recent months the Planning and Bldg. Svcs. Dept. has been working with EDA on the expansion of the ARR
Program with HUD. An outline of the program is included as Attachment A of this staff report. In this
program the Department of Planning and Building Services will provide inspection services on all properties
acquired by HUD which are within the City limits, although concentrating in the targeted area south of 30th
Street.
For the past five - six years, the Department of Planning and Building Services has been providing inspection
reports to HUD on properties it has acquired which have code enforcement cases on them. The proposed
expansion of the program will increase the number of inspections requested by tenfold in that it will include
all properties acquired by HUD regardless of whether or not there is code enforcement activity on them. This
could mean that the dept. could receive requests for up to 22 inspection reports per week.
Services provided by the Department of Planning and Building Services entail review of land use designation
to assure conformance and an inspection of the property and assessment of whether or not the structure meets
building and housing codes. An inspection report is prepared which identifies substandard or
illegal/unpermitted construction, building or housing code violations, and when a permit is required for repairs.
This report is typed and mailed to HUD and will be considered when determining the sale price of the property.
Because of the number of inspection requests anticipated and in order to meet the timeframe required by HUD
to include the inspection report when determining the sale price of the property, additional staff is needed.
Current staffing level is inadequate to meet the demand for inspections anticipated with expansion of the
program. One additional Building Inspector I and one additional Typist Clerk II should enable the department
to meet this workload demand. Attachment B provides a breakdown of the proposed budget. Hiring these
additional staff members on a full-time, temporary basis would allow the City to monitor the program's
success.
Costs for staffing would be offset by the revenue from fees paid by HUD for the inspection reports. The fee
for each report is $120; at an anticipated average rate of 89 reports requested per month, this could generate
an estimated $128,000 in annual revenue.
Expected benefits from this program are numerous. The expanded ARR program will provide EDA with a
more realistic idea of costs to bring each residence up to code standards prior to purchase. This program will
make more homes available to low-moderate income families and will result in more homes being rehabilitated,
thus reducing blight from unoccupied, boarded-up homes. The cycle of blight will be stopped because homes
will be repaired before being sold. Without expansion of the ARR Program, a HUD-owned home could be
sold and the new owners not know what code deficiencies exist prior to purchase.
MH:mkf/5167
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03/23/1997 01-:59 504-589-6747 HUD SF DIV PAGE 02
U.S.Department of Housing and Urban Development
Santa Ana Area Office
sufte 500
3 Hutton Centre ATTACHMENT A
Santa Ana, CA 92707-5764
September 10, 1997
Mayor Tom Minor
City of San BernW*00,Ca.
300 North D Street
San Bernardino,Ca.92415
Dear Mayor Minor:
I am pleased to write this letter approving the expansion of the City of San Bernardino's(City's)
Acquisition,Rehabilitation, and Resale(ARR)program.
Enclosed are three(3)attachments which have been developed for the implementation of the expansion of
the City's ARR program. These attachments are the result of a collaborative effort on the part of your
EcoRomjc Development stag Code Enforcement stalf, Safety and Pernlits staff,Teri Rubi of
Congressman George Brown's Office and myself,representing)Emelda Johnson,Deputy
Assistant Secretary for Single Family Housing Yvith the U.S.Department of Housing and Urban
Development-
These attachments represent a procedure which enhances HUD's ability to assist your administration in
better serving all of our constituents and customers. We simply built upon something your administration
had already successfully designed and implemented.
Attachment I explains the City's current ARR program and how HUD and the City will work together to
expand this program.
Attachment 2 is an expansion of the city's revitalization zone being approved by IRJD.
Attachment 3 simply outlines the details of the implementation process and the responsibilities of the
City,HUD and HUD's contractors to make this expanded prograrn a success.
I will continue to be available to you and your staff and the HUD Santa Ana office as we move forward
with the expansion of this worthwhile program.
Sincerely,
41011-tj
Byi66 D.Duplantier
Special Assistant to Emelda Johnson,
Deputy Assistant Secretary for Single
Family Housing
Enclosures
cc: Congressman George Brown
03/23/1997 02:59 504-589-6747 HUD SF DIV PAGE 03
Attachment 1
page 1 of 2
San Bernardino's Current ARR Program:
Under the current Acquisition,Rehabilitation and Resale(ARR)program administered by the City of San
Bernardino,where the city purchases uninsurable properties from HUD at a 30%discount in revitalization
areas,the city has committed to and will continue to commit to the following:
• Sales are done as pass through sales to contractors who are monitored by the City. Pass through sales
contain a deed restriction requiring the property to be resold to owner occupants. Contractors are
limited to a 10%to 15%profit on the resale of the properties once rehab is completed.
• The City is providing loan guarantees to banks for the purchase and rehab financing provided to the
Contractors.
• Contractors are monitored by the City to assure quality rehab and energy elriciency of the properties.
The City has committed $2,000,000 in down payment assistance for first time home buyers at
$7,000 per property or even up to 15%of the purchase price. The City requires the properties to be
resold to low and moderate income individuals and families. Current first time home buyers are
renters in the community.
• Contractors are required to provide 1 year of customer service to the purchasers of the property to
address problems that may be encountered by the purchaser
Expansion of the City's ARR. Program
• The City will be allowed to purchase uninsurable properties at the 30%discount level in
revitalization areas plus an additional$2,500 discount on each property,provided the city can close
to or more properties simultaneously and within 45 days of execution of the sales contract. This
additional discount on each property will serve as an incentive to purchase in bulls,helping to reduce
HUD's inventory and decreasing the Departments daily holding cost of $27.50 per day.
(Revitalization area is shown in attachment 2)
• The City will be allowed to request,on a case by case exception basis, the purchase of uninsurable
properties outside of the revitalization area at a 30%discount-
• Regarding the appraisal process on all HUD owned properties:
A. HUD's REAM will notify the City when properties are assigned into HUD's inventory;
03/23/1997 02:59 504-589-6747 HUD SF DIV PAGE 04
Attachment X
page 2 of 2
B. HUD agrees to pay the$120.00 per unit inspection, which is the current agreement between
the City and HUD,and the City will provide HUD's REAM with a pre permit report for
each property inspected;
C. ,A specification writer will be secured by HUD to prepare cost estimates when estimated cost
of repairs exceed$5,000.00;
D. The estimated cost of repairs,prepared by the specification writer will be used to derive the
property's as is value by deducting that amount from the appraisers as repaired value to
determine the list price of the property.
E. The City can then purchase unirxsurable properties located in revitalization areas at a 30%
discount off of the list price established in D.above.
F. A copy of the inspection report and cost estimates will be provided to buyers prior to closing
when a specification writer is utilized.Otherwise the purchaser will be provided the
appraisal which contains the appraisers cost estimates when estimates are less than$5,000.
The process to be utilized to implement the above is outlined in attachment 3.
Finally,the HUD office will put out a circular letter to all lenders reminding them of their responsibilities
to provide controls to assure that mortgagors under the 203 b program will be owner/occupants.
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03/23/1997 02:59 504-589-6747 HUD SF DIV PAGE 06
Attachment 3
CITY OF SAN BERNARDINO
EXPANSION OF ARR PROGRAM
IMPLEMENTATION PROCESS
The following process will be followed by the Department of HUD,the City of San Bernardino,HUD's
REAM contractor,HUD's appraisal contractor and HUD's specification writer Contractor in the expansion
of the City's ARR program:
Step 1: IRM will notify it's REAM of a property assignment to HUJ);
Step 2: RI.AM will notify city of a property assignment to HUD;
Step 3: REAM conducts inspection of HUD assigned properties and City begins research
of property files;
Step 4: REAM notifies appraiser to begin appraisal process;
Step S: City conducts inspection and submits pre permit report to REAM within 2-3 days;
Step 6: "ere estimated repairs exceed 15,000:
REAM notifies specification writer of property assignment for contract and provides
spec writer with copy of City's pre permit report;
Step 7: Spec writer submits report of repair cost estimates to REAM within 7 days of assignment;
Step 8: Appraiser submits appraisal to REAM with as repaired value;
Step 9: REAM submits appraisal,pre permit report and spec writers report to HUD;
Step 10.-HUD list properties for sale at the as repaired value less spec writers estimate of repair
cost;
Step 11:City expresses interest in properties within 5 days of sales listing,
Step 12:City submits executed sales contract to HUD within 10 days of expressing interest:
Step 13:City closes sale within 45 days of executing sales contract
*BOLD ITALIC LETTERING INDICATES'THE ETITT REQUIRED TO PERFORM THAT STEP*
Attachment B
Expansion of City's Acquisition, Rehabilitation,
and Resale (ARR) Program with HUD
Building Inspection Services
Proposed Budget
Estimated
FY98-99 FY97-98 (8.5 mos.)
(1) Building Inspector I
annual salary w/benefits $42 , 000 $29, 300
(1) Typist Clerk II
annual salary w/benefits 24 ,500 17, 200
Overtime 5, 000 5, 000
Increase 001-174-50xx
Personnel Services $71, 500 $51, 500
(supplies, training,
postage, copy machine, etc. )
Increase 001-174-51xx
Maintenance & Operations 6, 000 4 , 500
Internal Service Charges
(MIS charges,
telephones) 7, 500 5, 500
Fleet Division
(1 new vehicle,
garage charges) 2 , 000 17 , 000
Increase 001-174-56xx
Internal Service Charges* 15, 500 27, 000
TOTAL BUDGET NEEDS $871000 $78 , 500
*NOTE: Internal Service Funds budgets will also be modified to reflect
these charges.
mkf/5167