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HomeMy WebLinkAbout03-25-19 City Commission Packet Materials - C6. Amendment 2 to PSA with HRDC for Homebuyer Education1 REPORT TO: Mayor and City Commission FROM: Martin Matsen, Director of Community Development SUBJECT: Approval of the professional services agreement in the amount of $40,000 with The Human Resource Development Counsel (HRDC) for Homebuyer Education and Certification, Pre-Purchase Counseling and Screening for Pre-Approval as well as authorization for the City Manager to sign the agreement on behalf of the City. MEETING DATE: March 25, 2019 AGENDA ITEM TYPE: Consent STRATEGIC PLAN ALIGNMENT: The Affordable Housing Administrative Manual supports item 4.5 (b) Housing and Transportation Choices – Develop a comprehensive Affordable Housing Action Plan. RECOMMENDATION: That the City Commission approve the professional services agreement with HRDC and authorize the City Manager to sign the agreement on behalf of the City. BACKGROUND: The City Commission funded a two-year Affordable Housing Program Services contract with the Human Resource Development Council in March of 2016. The contract was extended until March 7th, 2019 through a ratification of an extension to the professional services agreement on March 19th, 2018, available here. The City identified a need for assistance with the Affordable Housing program as it relates to home- buyer education, homeownership counseling, down-payment assistance, completion and tracking of required documentation and annual reporting for the purchase of affordable housing through the city’s Affordable Housing Program. This extension will expire on March 7th, 2020. The original Professional Services Agreement from March, 2016 can be viewed here. All terms except the duration remain the same. UNRESOLVED ISSUES: None determined at this time. ALTERNATIVES: As determined by the Commission. FISCAL EFFECTS: Contract cost of $41,000 plus: $20,000 for Homebuyer Education and Certification; $20,000 annually for Pre-Purchase Counseling and Screening for Pre-Approval, $1,000 for software license, and other costs per incident, requested in the workforce housing fund for fiscal year 2020. Final costs will be variable depending on the number of affordable homes for which services are required. Commission Memorandum 75 2 Attachment: Second Amendment Scope of Services Affordable Housing implementation description 76 Second Amendment to Professional Services Agreement for Affordable Housing Program Services FY 2019 -FY 2020 SECOND AMENDMENT TO PROFESSIONAL SERVICES AGREEMENT THIS SECOND AMENDMENT TO THE PROFESSIONAL SERVICES AGREEMENT FOR Affordable Housing Program Services dated the 7th day of March, 2016 (the "Agreement") is made and entered into this ___________ day of March, 2019, by and between the CITY OF BOZEMAN, MONTANA, a self-governing municipal corporation organized and existing under its Charter and the laws of the State of Montana, 121 North Rouse Street, Bozeman, Montana, with a mailing address of PO Box 1230, Bozeman, MT 59771, hereinafter referred to as "City," and, The Human Resources Development Council, hereinafter referred to as "Contractor." In consideration of the mutual covenants and agreements herein contained, the receipt and sufficiency whereof being hereby acknowledged, the parties hereto agree to amend the Agreement as follows: 1. Extension of Term. Section 30 of the Agreement is extended for an additional one (1) year period. The Agreement shall terminate on March 7th, 2020. 2. Agreement still valid. All remaining terms and provisions of the Agreement remain valid. ****END OF AGREEMENT EXCEPT FOR SIGNATURES **** 77 Second Amendment to Professional Services Agreement for Affordable Housing Program Services FY 2019 -FY 2020 IN WITNESS WHEREOF, the parties hereto have executed this instrument the day and year first above written. CITY OF BOZEMAN, MONTANA HRDC District IX, Inc. By: _________________________________ By: __________________________________ Andrea Surratt, City Manager Heather Grenier, President/CEO APPROVED AS TO FORM By: ____________________________ Greg Sullivan, Bozeman City Attorney 78 1 HRDC SCOPE OF SERVICES 2019 OVERVIEW 1. Administer Tenant-Based Section 8 Rental Assistance Program Contract: Montana Department of Commerce; Tenant Based Section 8 Voucher Assistance Units: 400 Service Area: Gallatin, Park, Meagher Counties (contract is for entire service area, and cannot be designated by community, however, traditionally, over 60% of vouchers are placed in Bozeman) Who: Households earning less than 50% AMI, and 25% vouchers restricted to households earning less than 30% AMI What: Ensures housing quality standards are met, rent is capped at 30% of household’s income, MDOC pays the remainder directly to the landlord, recertification of unit and household eligibility is conducted annually. 2. Administer CoC Grant Funds for Transitional Housing Contract(s): Housing & Urban Development, Continuum of Care, Supportive Housing Program Units: 6 Family (non-site specific), Service Area: Bozeman Who: Families and Individuals experiencing homelessness What: Housing unit with rent capped at 30% of household’s income up to 18 months (Family Transitional Housing). 3. Leverage resources and administer Emergency Shelter Our Warming Center is funded 100% by community donations. Units: 75 Beds across 2 sites Service Area: Bozeman Who: Families and Individuals experiencing homelessness (287 individuals in 2017-2018 season) What: A safe warm place to sleep from 7pm – 7am, 7 days per week, November 1 – March 31 79 2 4. Leverage Resources and Administer Homeless Prevention Activities Contracts: Housing & Urban Development, Emergency Solutions Grant, community donations Units: variable, contingent upon funding Service Area: Gallatin & Park Counties (cannot be separated by individual community) Who: Families and Individuals at risk of becoming homeless (facing eviction for non-payment of rent) What: Housing Assistance including: 1-3 month’s rent; negotiation of repayment agreement with current landlord if reconcilable, relocation services if not reconcilable. 5. Leverage Resources and Administer Homeless Placement Activities Contracts: Housing & Urban Development, Emergency Solutions Grant, community donations Units: variable, contingent upon funding Service Area: Gallatin & Park Counties (cannot be separated by individual community) Who: Families and Individuals experiencing homelessness What: Housing Assistance including: 1-3 month’s rent; housing search and placement, security deposit 6. Preserve and Administer Affordable Housing Preserve and Maintain affordable housing units (Resource Property Management) Units: 24 units Service Area: Bozeman Who: Families and Individuals earning below 60% AMI. What: Affordable housing properties – affordability periods up to 40 years 7. Preserve and Administer Land Trusts Ground Lease Payments – Preserve and Maintain affordable homeownership opportunities Units: 26 single family homes in Bozeman Service Area: Bozeman Who: Families and Individuals earning below 80% AMI. What: Affordable homeownership opportunities – affordability period in perpetuity 8. Administer Homeownership Center Contracts: Neighborworks Montana, City of Bozeman 80 3 Services: Homebuyer Education Coursework & Certification, Pre and Post Purchase Counseling, Down Payment Assistance, Foreclosure Prevention & Mitigation Units: 413 families completed Homebuyer Education, 290 families received pre purchase counseling, 32 families received down payment assistance (24 in Bozeman), and 10 families avoided foreclosure fiscal year 2014-15. Service Area: Gallatin, Park, and Meagher Counties Who: Families and Individuals earning below 80% AMI. What: Affordable homeownership opportunities 9. Community Development Contracts: Rural LISC, Community Services Block Grant Status: Certified Housing Development Organization, Community Development Corporation, Community Action Agency Services: community planning in relation to affordable housing development, consultant services, affordable housing development and preservation. Units: 350 units. Actively conducting feasibility analysis on Qualified Census Tract in Bozeman, Preservation of a mobile home park in Bozeman, redevelopment of Story Mill site in Bozeman, purchase of land for additional NSP phases in Bozeman, and three LIHTC developments comprising of over 350 units. Service Area: Bozeman What: Affordable housing development and preservation. 10. Developer Support Status: HRDC will support three tax credit proposals in 2019. Services: community planning in relation to affordable housing development, consultant services, affordable housing development and preservation. Units: 40 unit proposal, restricted to senior/disabled populations (Timber Ridge – Bozeman – Summit Housing Group); 250+ units (GMD, 4% tax credit), 41 units preservation (Boulevard Apartments) Service Area: Bozeman What: Affordable housing development and preservation. 11. Policy Development & Education Contracts: City of Bozeman Status: Certified Housing Development Organization, Community Development Corporation, Community Action Agency Services: community planning in relation to affordable housing development, consultant services, affordable housing development and preservation: - Assist with the annual update the City of Bozeman’s affordable housing goals/outcomes; 81 4 - Engage target populations in proposed activities; - Advise CAHAB on housing related issues from the consumer standpoint as ex-officio member; - Encourage collaboration across financing institutions, real estate, title companies, and building industry; - Create projects near employment, transportation, and services. - Assist City Affordable Housing staff Service Area: Bozeman 82 1 HRDC PROPOSAL FOR SERVICES For Affordable Housing Plan Implementation – City of Bozeman OVERVIEW HRDC is pleased to submit this proposal for services to support the City of Bozeman in achieving its goals for affordable housing development by providing an expanded version of our homeownership center services including pre-approval processes for new developments, loan originations, monitoring, deed re-conveyances at sale, and compliance components. The purpose of this proposal is to assist the City in administering Chapter 38, Article 43, Bozeman Municipal Code as created pursuant to Ordinance 1922, and to achieve the goals outlined in Affordable Housing Ordinance Administrative Manual. HRDC is certified by The US Department of Housing and Urban Development to provide housing counselling and education. Fee Structure • <Homebuyer Education and Certification: $20,000 annually HRDC’s homebuyer education provides an important first point of entry for many local residents seeking affordable housing. Our nine hour, comprehensive homeownership education course, directed by a HUD- approved instructor, helps potential homeowners to better understand the home purchase process. Topics covered include: the advantages and disadvantages of homeownership; assessing homeownership readiness; understanding credit; managing your finances; the mortgage process; special programs for first time buyers; shopping for a home, a lender, and a realtor; closing your deal; and maintaining your home and your finances after you purchase. Completion of homeownership education makes customers a smarter, better borrower, and may help them become eligible for down-payment assistance, low-interest mortgages, and matched savings programs. The course is open to everyone and is free of charge. HRDC commits to providing a minimum of 18 Homebuyer Education classes in the City of Bozeman annually with an anticipated participation of 300 local residents. • <Pre-Purchase Counselling and Screening for Pre-Approval: $20,000 annually Pre-purchase counselling is provided by HUD certified counselors on a one on one basis to local residents with the purpose of helping households better understand their specific home buyer readiness and identify any barriers to successful and sustainable homeownership. HRDC will assist clients with budgeting, credit, home search, financing, low-interest loan and other subsidy programs, home care and maintenance, purchase procedures, closing, RESPA, loan document review services, terms, and other necessary aspects to purchasing a home. As part of the initial counseling session, all clients receive the following materials, “For Your Protection, Get a Home Inspection”, and “Ten Important Questions to Ask a Home Inspector”, along with disclosure regarding housing quality standards. Anticipated participation in pre-purchase counseling is more than 200 households annually. HRDC will evaluate and determine eligibility for anyone interested in purchasing a home generated through the Inclusionary Housing Policy. Eligible applicants will be placed on a waiting list and notified of new developments as they are approved by the City of Bozeman. 83 2 Also included in pre-purchase counselling session is an assessment for eligibility for Down Payment Assistance and Secondary Lending opportunities which are available locally through the City of Bozeman’s affordable housing initiatives and the HOME Program Homebuyer Assistance Programs in partnership with the Montana Department of Commerce. Process for pre-approval for affordable building options: 1. Homebuyer Education 9 hour course, offered twice per month. 2. Pre-purchase counselling with HRDC’s HUD certified counselor 3. Determine eligibility pursuant to: a. between 65-80% of Area Median Income (qualified for down payment assistance); b. between 81-100% of Area Median Income (qualified for purchase of moderate priced homes); c. 1st time homebuyer as defined by HUD; d. Pre-qualification for 1st time mortgage from lending institution, pursuant to item (f) of Section 3, Pricing of Affordable Homes; e. Estimate housing ratios to ensure maximum housing expense ratio of 33%; f. Home will be purchaser’s primary residence; g. Full purchase price is below identified program limits; h. Unit must pass Uniform Physical Conditions Standards (as defined by MDOC); i. Household’s liquid assets projected at the time of closing not to exceed $25,000; 4. Meet with participating SWMIBIA builder to discuss potential locations, building options, pricing, etc. 5. Written pre-approval for secondary loan through down payment assistance program (if applicable) or written approval of income eligibility for moderate priced homes; 6. Placement on the waiting list for homes constructed via the Inclusionary Housing Program. Pre-approval will be conducted pursuant to Items (d) and (e) of Section 3, Pricing of Affordable Homes, and Section 6, Applying for, Qualifying, Buying, and Occupying Lower-Priced Homes • <HomeKeeper system management, maintenance and data sharing: $1,000 annually HRDC has invested in the HomeKeeper program management system. HRDC will provide City staff with one of our available licenses to assist in pipeline management and communications. HRDC will be responsible for maintaining the annual license (full cost totals $2,500) with City assistance. Both parties will utilize HomeKeeper to share information, track customer progress, and manage waitlists and pipeline. • <Loan Origination/Deed Restriction/Lien Documents: $1,000 per closing Trained professionals that hold certification in home ownership counselling, financial literacy training and foreclosure prevention act as a support and intermediary with local real estate agents, lenders and title agents to ensure that the home purchase process including down payment assistance, is carried out efficiently and in compliance with program regulations. Loan origination/Deed Restriction/Lien Document components will be conducted pursuant to Section 8, Recordation and Subsidy Recapture for Lower- Priced Homes. This will be verified pursuant to Section 6, Review of Sales Contract. • <Monitoring; Compliance: $100 per loan per year This ensures that Bozeman residents (who have participated in the affordable housing program) are utilizing the assisted housing unit as their primary residence. Each owner will sign an occupancy agreement upon closing and will be asked to provide documentation of owner occupancy on an annual basis. Staff time of 4 hours per household annually to document compliance. Owner-occupancy will be verified annually pursuant to Section 6, Owner-Occupancy Requirement, Method of Verification. • <Deed Re-conveyance/Subsidy Recapture at resale: $250 per re-conveyance/recapture When a homeowner has met one of the conditions of deed re conveyance (i.e. first mortgage paid in full, sale of the home, re-finance with cash back to borrower, default or no longer utilizing the unit as their primary residence) our staff work closely with customers, lenders, realtors and title agents to ensure that 84 3 all the terms of the loans are met and a payoff amount is reached and understood by all parties. Necessary documentation is originated by HRDC staff, provided to appropriate parties, and utilized to full close out the loan agreement. Staff time of 20 hours per re-conveyance. Deed Re-conveyance/Buyer subsidy Recapture Lien/Down Payment Assistance Lien Recapture will be conducted pursuant to Section 8, Recordation and Subsidy Recapture for Lower-Priced Homes. 85