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Home My WebLink About07-06-20 City Commission Packet Materials - C8. PSA w HRDC for Affordable Housing Services Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Tanya Andreasen, Community Housing Program Manager SUBJECT: Authorize the signature of the City Manager on the Professional Services Agreement for Affordable Housing Services. MEETING DATE: July 6, 2020 AGENDA ITEM TYPE: Consent RECOMMENDATION: Authorize the signature of the City Manager on the Professional Services Agreement for Affordable Housing Services. BACKGROUND: The City of Bozeman and Human Resource Development Council IX (HRDC) have been collaborating to deliver Affordable Housing Services under a Professional Services Agreement dated March 7, 2016. The agreement was extended three times, to terminate on June 30th of 2020. As the City of Bozeman’s Affordable Housing Program, now called the Community Housing Program, has undergone budgetary, staffing, regulatory, and policy changes since the writing of the initial contract in March of 2016, a new Professional Services Agreement has been drafted to reflect those changes. The new contract better reflects the process and procedures described in the current Administrative Manual and the services the City expects HRDC to provide. UNRESOLVED ISSUES: None. ALTERNATIVES: As suggested by the Commission. FISCAL EFFECTS: Agreement cost budgeted under Community Housing and does not exceed budget authorization. ATTACHMENTS: Professional Services Agreement HRDC for AHO services June 2020 Report compiled on: 6/24/2020 154 155 156 157 158 159 160 161 162 163 164 165 166 1 EXHIBIT A Professional Services Agreement for Community Housing Program • HUD Certified Homebuyer Education Class: $20,000 annually HRDC will provide a minimum of 18 homebuyers’ classes in the City of Bozeman (“City”) annually. HRDC’s homebuyer education provides an important first point of entry for many local residents seeking affordable housing and is a requirement of all potential homebuyers in the City of Bozeman’s Affordable Housing Program. HRDC will provide an 8-hour comprehensive homeownership education course directed by a HUD-approved housing counselor. Topics covered will include: advantages and disadvantages of home ownership; assessing homeownership readiness; understanding credit; managing finances; the mortgage process; special programs for first-time home buyers; shopping for a home, lender, and a realtor; closing the deal; home maintenance post purchase. HRDC will provide the course free of charge and allow all interested potential homebuyers to attend. The Homebuyer Education Class schedule and instructions for attending will be published on HRDC’s website, and via HRDC’s social media channels. It will also be sent by email to industry partners. HRDC will print flyers for this class, and distribute them locally to partners and businesses. The course flyer and schedule is also inserted into internal and external newsletters distributed by HRDC. • Pre-Purchase Counseling, Buyer Qualification, Buyer Waitlist, Marketing, and Record Keeping: $20,000 annually Pre-purchase counseling: HRDC’s HUD-certified counselors will provide pre-purchase counseling on a one on one basis to all persons interested in becoming buyers qualified to purchase a home under the City’s Affordable Housing Ordinance (“AHO”), Division 38.380, Bozeman Municipal Code (“BMC”). HRDC’s pre-purchase counseling will assist potential buyers better understand their specific home buyer readiness and identify any barriers to successful and sustainable home ownership. HRDC will assist potential buyers 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, HRDC will provide all participants in the counseling session with HUD required materials and disclosures. Buyer Qualification: During pre-purchase counseling, HRDC will evaluate and determine whether potential buyers meet the criteria in Section 38.380.150, BMC to be qualified to purchase a home under the City’s Affordable Housing Program (“Qualified Buyers”). HRDC will also assess potential buyers for eligibility for possible down payment assistance and secondary lending opportunities which may be available locally through the City of Bozeman’s Community Housing Program and the HOME Program Homebuyer Assistance Program in partnership with the Montana Department of Commerce. Buyer Waitlist: HRDC will maintain a waitlist of Qualified Buyers (“Waitlist”). HRDC will notify Qualified Buyers on the waitlist of new home ownership opportunities as they are approved by the 167 2 City. HRDC will include in a separate tier of the Waitlist a listing of other potential buyers who are working toward readiness to purchase but do not yet qualify as Qualified Buyers. HRDC will partner with developers and builders to develop marketing plans in accordance with the Affordable Housing Ordinance Administrative Manual, as revised (“Manual”), which is incorporated herein and made a part of this Agreement by this reference. Record Keeping and Reporting: HRDC must provide the City with the following records and reports within the timeframes shown. HRDC may also make the records available to the City Representative in the HomeKeeper or other tracking software it provides under this Agreement. Records and reporting requirements may be adjusted by the City in writing, and will be reflected in the Manual. 1. Records demonstrating buyer qualification in conformance with Section 38.380.150, BMC. - Buyer Certification completed – entered into shared HomeKeeper tracking software within one month of completion of verification process for all potential buyers of affordable homes under the AHO - Buyer Certification Letter - provided to the City for Qualified Buyers engaged in purchasing a home under the AHO - within 5 days of the Buy Sell Agreement signed by the buyer, their lender, and the property owner. 2. Verification of Purchase Transactions – within 5 days of closing unless otherwise noted - Home appraisal (will be available before closing from the lender) – within 5 days of receipt - Down Payment Assistance Approval Letter (If using City DPA) - Deed of Trust (recorded with Clerk and Recorder) – within 5 days of receipt from Clerk and Recorder - Deed Restriction Agreement (recorded with Clerk and Recorder) - – within 5 days of receipt from Clerk and Recorder - Occupancy Agreement (notarized) - Promissory Note (notarized) - Statement of Sale or Settlement Statement (proof of Affordable Home sale price) - Closing Disclosure - Mortgage Insurance Certification (if applicable) 3. Community Housing Fund Reimbursement forms – within 30 days of closing - Down Payment Reimbursement Form 4. Recapture documentation, including each recapture due, payment by the homeowner, and transfer of the payment to the City - annually 5. Reporting and invoices for services rendered - Quarterly - HRDC staff time spent on each category of work described in this Scope of Services – quarterly. - Number of Home Buyer Education classes - Number of participants in Home Buyer Education classes - Number of pre-purchase counsels - A point in time # of qualified homebuyers on the City’s waitlist 168 3 - Number of completed closings for qualified homebuyers, including date of closing and address. - Documents evidencing Owner Occupancy of Affordable Homes (done annually per home). - Number and amounts of re-conveyance/subsidy recapture 6. Other records as reasonably requested by the City’s Representative. • HomeKeeper System Management, Maintenance, and Data Sharing: $1,000 per year HRDC will provide and maintain a license for HRDC and the City to use HomeKeeper software (or such alternate software program City consents to in writing) to track applicant eligibility data, demographics, and waitlist placement. City’s license to use the software must allow the City to access information related to the Waitlist, Qualified Buyers, and other records HRDC is required by this Agreement to provide to the City that are stored in the software program. HRDC represents and warrants it has the right under its software license for the City’s use of the software as described in this Agreement, and City’s use will not infringe on the rights of any third party. • Loan Origination/Deed Restriction/Lien Documents: $1,200 per closing (Staff time of 32 hours per closing) HRDC will provide trained professionals to work with local real estate agents, lenders and title agents to ensure that the home purchase process requirements of the Affordable Housing Ordinance, including down payment assistance, is completed efficiently and in compliance with program regulations. HRDC will provide services related to loan origination, deed restriction, and lien documentation and recordation in accordance with the AHO and Manual. • Monitoring; Compliance: $100 per loan per year (staff time of 4 hours per household annually) HRDC will provide monitoring for and verify homeowner compliance with the ownership requirements of the AHO, including use as primary residence and occupancy requirements. HRDC will request home owners provide documentation proving compliance on an annual basis. • Deed Re-conveyance/Subsidy Recapture at Resale: $250 per re-conveyance/recapture (staff time of 7 hours per re-conveyance) Upon a recapture or re-conveyance event as described in the City’s recorded lien documents, HRDC will work closely with homeowners, lenders, realtors, and title agents to ensure that all the terms of the loans are met and a payoff amount is calculated, collected, and understood by all parties. In accordance with the Manual, HRDC will originate all documents necessary for closing the loan, provide the closing documents to the appropriate parties, and provide such other services on behalf of the City as are reasonably necessary to accomplish the recapture and re-conveyance. Copies of the finalized documentation will be sent digitally to the City’s representative for review at least seven days prior to closing. Funds obtained by HRDC in performing the recapture process described in the AHO and Manual will be transferred to the City within 90 days of receipt by HRDC. 169