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HomeMy WebLinkAbout15163 ORD - 10/10/1979jkh:9-25-79;lst r T % AN ORDINANCE AUTHORIZING THE CITY MANAGER TO`EXECUTE A CONTRACT WITH THE COMMUNITY DEVELOPMENT CORPORATION OF CORPUS CHRISTI FOR $38,000 FOR ASSISTANCE IN PROVIDING HOUS- ING AND COUNSELING SERVICES FOR LOW AND MODERATE INCOME FAMILIES, ALL AS MORE FULLY SET FORTH IN THE CONTRACT, A SUBSTANTIAL COPY OF WHICH IS ATTACHED HERETO AND MADE A PART HEREOF, MARKED EXHIBIT "A"; AND DECLARING AN EMERGENCY. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI, TEXAS: SECTION 1. That the City Manager be authorized to execute a contract with the Community Development Corporation of Corpus Christi for $38,000 for assistance in providing housing and counseling services for low and *moderate income families, all as more fully set forth in the con- tract, a substantial copy of which is attached hereto, marked Exhibit "A", and made a part hereof. SECTION 2. The necessity to authorize execution of the afore- said contract at the earliest practicable date in order that adequate hous- ing and counseling services may be made available for low and moderate income families creates a public emergency and an imperative public neces- sity requiring the suspension of the Charter rule that no ordinance or resolution shall' be passed finally on the date of its introduction but that such ordinance or resolution shall be readrat three several meetings of the City Council, and the Mayor having declared that such emergency and necessity exist, and having requested the suspension of the Charter rule and that this ordinance be passed finally on the date of its introduction and take effect and be in full force and effect from and after its passage, IT IS ACCORDINGLY SO ORDAINED, this themil /0 day of c^moo^^, 1979. ATTEST: City -Secretary ` MAYO APPROVED: • -25th DAY OF SEPTEMBER, 1979: J. BRUCEYCOCKK/+ CITY ATTORNEY Z. t { By Assistant Ci orney E CI Y OF CORPUS CHRISTI, TEXAS 15163 MICROFILMED AUG 2 8198.0 CONTRACT THE STATE OF TEXAS 1 COUNTY OF NUECES X WHEREAS, the City of Corpus Christi, hereinafter called "City", desires to attract more low and moderate income housing to Corpus Christi; and WHEREAS, the City benefits from more economic activity, increased pro- perty tax and direct employment, and material purchases developed by such housing; and WHEREAS, the Community Development Corporation of Corpus Christi, a nonprofit corporation organized under the laws of the State of Texas, hereinafter called "CDC", is desirous of planning and constructing low and lower middle income single and multi -family housing within the City, assisting in the administering of the Community Development Block Grant Fund Loan Program, providing assistance for economic development programs, providing budgeting and default counseling, and conducting a demonstration rehabilitation program; and WHEREAS, CDC, under Article IV of its Articles of Incorporation, is expressly .empowered to, among other things, acquire, hold or dispose of land, funds, or other mixed or personal property, tangible or intangible, furnish outright grants, loans or investments to either public authorities or private individuals and corporations and to enter into contracts with public authorities for the furtherance of the foregoing stated purposes, including renting, leasing, sale or encumbrance of residential housing; and WHEREAS, CDC has been carrying out a service program to help insure better housing for low income families in the City, and other programs to stimulate and increase economic activity in the City; and WHEREAS, the City is empowered, under Article 11, Sec. 5, Texas Con- stitution, Article 1175 VATS, generally, and City Charter Art. IX, Sec. 1, particularly, but without limitation, to contract for the promotion of the public welfare, health and safety in furtherance of necessary and proper use and occupancy of property of the City (Art. IX, Sec. 6(a)) and to promote in reasonable connection therewith the quality and quantity of housing available in the City, and general economic development, there being, this Council finds a genuine need therefor in the City at this time, and that CDC is a proper agency to serve as the City's independent contractor hereunder for the purposes heretofore expressed herein: NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE COVENANTS, TERMS AND UNDERTAKINGS EXPRESSED, WITNESS THIS CONTRACT entered into between the City and CDC. CDC agrees: 1. To provide professional housing services to City through consulta- tion, packaging, and promotion of safe, sanitary housing for low to moderate income families, the elderly and the handicapped, and to assist in creating con- ditions which will encourage construction of new or rehabilitated apartment com- plexes or single family homes. 2. To make assistance available to all organizations that wish to be nonprofit sponsors, to any private individual seeking a personal residence for himself and/or his family and for all types of individual and multi -family projects in all sections of City with special consideration being given to changing existing growth patterns which may tend to segregate people by socioeconomic levels. 3. To assist City in the administration of the Community Development Block Grant Fund Loan Program, including operating a CDC Loan Committee to review, screen and approve or disapprove all loan applications. 4. To implement and operate a demonstration rehabilitation program under the Community Development Block Grant Program in accordance with applicable Department of Housing and Urban Development Regulations and the Demonstration Housing Rehabilitation Handbook of the City of Corpus Christi as approved by the City Council and attached as exhibit "A" to this contract and made a part thereto. 5. To provide to the extent possible home ownership counseling, including budgeting and money management, to families that are planning to purchase homes and to those who are experiencing payment difficulties with major emphasis on FHA mortgage insured homes. CDC will assist and direct to proper resources those families who have home maintenance problems and provide information concerning other specific family needs. 6. To provide advice and assistance in the planning and execution of economic development projects, upon request from the City. 7. To maintain a paid staff, including a Director, with said staff to provide not less than one and one-half man years of time toward fulfillment of this contract. 8. That the professional services provided under this contract will be supervised by the Board of Directors of CDC. 9. That it will record financial transactions according to approved accounting procedures and provide an independent audit for such expenditures. CDC will provide access to its records during regular business hours for the purposes of City and/or HUD conducted audits or monitoring. 10. That it will render a detailed written monthly activity report to the City Manager no later than the 15th calendar day of the following month together with a request for payment according to Sec. II, paragraphs la, lb, and lc below, and provide such other information pertinent to this agreement as the City Manager may from time to time request. II City agrees: -1. That for the services performed by CDC hereunder, the City will compensate CDC as follows: a. For all loan review and assistance provided for the local Community Development Loan Program, a total amount of $2,500 annually paid at the rate of one -twelfth (1/12) or $208.33 per month, from Community Develop- ment Block Grant monies. b. For the implementation and operation of a demonstration reha- bilitation program, a total amount of $17,500 annually paid at the rate of one -twelfth (1/12) or $1,458.33 per month, from Community Development Block Grant funds. c. For both multi -family and single family housing stimulation and housing counseling, a total of $18,000 annually paid at the rate of one -twelfth (1/12) or $1,500.00 per month, from the City's General Fund. ` 2. All funds distributed to CDC by the City shall be in conformity with the terms and conditions outlined under III and IV below. III The parties further agree that: 1. In no event shall the City be liable for any contracts whatever made by CDC with any person, firm, corporation, association or governmental body, other than City itself. 2. In no event shall the City be liable for any damages, injuries, or losses charged to or adjudged against the CDC arising from its operation, use, or maintenance of facilities. 3. Either party may terminate this contract as of the last day of any month upon thirty (30) days prior written notice to the other party. Notice shall be deemed given to commence as of the deposit date in U.S. Certified Nail properly stamped for and addressed for delivery to City at City Hall, Corpus Christi, Texas, and to CDC, P. 0. Box 5205, Corpus Christi, Texas 78405. 4. Nothing herein shall be construed as prohibiting CDC from entering into contracts with additional parties for the performance of services similar or identical to those enumerated herein, and nothing herein shall be construed as prohibiting CDC from receiving compensation therefor from such additional parties, provided that all other terms of this contract are fulfilled. IV CDC and the City agree that all funds expended under this contract shall be solely for the activities outlined under this contract and further; 1. CDC agrees to conduct its activities in accordance with Federal Management Circular 74-4 and 74-7 and HUD's Applicability to Community Development Block Grants with reference to attachments B, C, N, and 0, thereof. 2. CDC agrees to comply with paragraphs 570.506 Federal Register with reference to Program Income. 3. CDC agrees to comply with all applicable Equal Opportunity Regulations and specifically, Executive Order 11246, as amended, and Section 3 of the Housing Act of 1965, as amended, both of which are on file and available from the office of the Director of Housing and Community Development. 4. CDC agrees to comply with any other rule or regulation promulgated by HUD during the life of this contract, which is directly related to and covering Community Development Block Grant funded activities when so informed in writing by the City Manager or his representative. 5. During the performance of this contract, the CDC agrees as follows: a. The CDC will not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. The CDC will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, or national origin. Such action shall include, but not be limited to the following: Employment, upgrading, demotion, or transfer; recruitment or recruitment advertising, layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The CDC agrees to post in conspicuous places, available to employees and applicants for employ— ment, notices to be provided setting forth the provisions of this nondis— crimination clause. b. The CDC will, in all solicitations or advertisements for employees placed by or on behalf of the CDC, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, or national origin. c. The CDC will send to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding, a notice to be provided by the Contract Com— pliance Officer advising the said labor union or worker's representatives of the CDC's commitment under this section, and shall post copies of the notice in conspicuous places available to employees and applicants for employment. d. The CDC will comply with all provisions of Executive Order 11246 of September 24, 1965, and of the rules, regulations, and relevant orders of the Secretary of Labor. e. The CDC will furnish all information and reports required by Executive Order 11246 of September 24, 1965, and by rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit access to his books, records, and accounts by the Department and the Secretary'of Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders. f. In the event of the CDC's non-compliance with the non- discrimination clauses of this contract or with any of the said rules, regulations, or orders, this contract may be cancelled, terminated, or suspended in whole or in part and the CDC may be declared ineligible for further Government contracts in accordance with procedures authorized in Executive Order 11246 of September 24, 1965, or by rule, regulation, or order of the Secretary of Labor, or as otherwise provided by law. g. The CDC will include the provisions of the sentence immediately preceding paragraph (a) and the provisions of paragraphs (a) through (g) in every subcontract or purchase order unless exempted by rules, regulations, or orders of the Secretary of Labor issued pur- suant to Section 204 of Executive Order 11246 of September 24, 1965, so that such provisions will be binding upon each subcontractor or vendor. The CDC will take such action with respect to any subcontract or purchase order as the Department may direct as a means of enforcing such provi- sions, including sanctions for non-compliance: Provided, however, that in the event a contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the Department, the CDC may request the United States to enter into such litigation to protect the interest of the United States. 6. CDC agrees that pursuant to Section 130.20(a) of the regu- lations the following assurance of compliance entitled "Training, Employ- ment, and Contracting Opportunities for Businesses and Lower Income Persons" shall be included in each Section 3 covered contract or agreement resulting from this contract. a. The project assisted under this contract is subject to the requirements of Section 3 of the Housing and Urban Development Act of 1965, as amended, 12 U.S.C. 1701u. Section 3 requires that to the greatest extent feasible, opportunities for training and employment be given lower income residents of the project area and contracts for work in connection with the project be awarded to business concerns which are located in or owned in substantial part by persons residing in the area of the project. b. Notwithstanding any other provision of this contract, CDC shall carry out the provisions of said Section 3 and_the regulations issued pursuant thereto by the Secretary set forth in 24 CFR Part 135 (published in 38 Federal Register 29220, October 23, 1973), and all applicable rules and orders of the Secretary issued thereunder prior to the execution of this contract. The requirements of said regulations include but are not limited to development and implementation of an affirmative action plan for utilizing business concerns located within or owned in substantial part by persons residing in the area of the project; the making of a good faith effort, as defined by the regulations, to provide training, employment, and business opportunities required by Section 3; and incorporation of the "Section 3 clause" specified by Section 135.20(b) of the regulations in all contracts for work in connection with the project. The CDC certifies and agrees that it is under no contractual or other disability which would prevent it from complying with these requirements. c. Compliance with the provisions of Section 3, the regulations set forth in 24 CFR Part 135, and all applicable rules and orders of the Secretary issued thereunder prior to approval by the Government of the appli- cation for this contract, shall be a condition of the Federal financial assistance provided to the project, binding upon the CDC, its successors and assigns. Failure to fulfill these requirements shall subject the CDC, its contractors and subcontractors, its successors, and assigns to the sanctions specified by this contract, and to such sanctions as are specified by 24 CFR Section 135.135. V If for any reason any section, paragraph, subdivision, clause, phrase, word or provision of this contract shall be held invalid or uncon- stitutional by final judgment of a court of competent jurisdiction it shall not affect any other section, paragraph, subdivision, clause, phrase, word or provision of this contract, for it is the definite intent of the parties hereto that every section, paragraph, subdivision, clause, phrase, word or provision hereof be given full force and effect for its purpose. This agreement shall become effective August 1, 1979 and the services herein contracted shall begin as of that date, on a month to month basis and terminate on July 31, 1980. Executed in DUPLICATE ORIGINALS, this the day of 1979. CITY OF CORPUS CHRISTI ATTEST: By: City Secretary R. Marvin Townsend, City Manager APPROVED: DAY OF September , 1979: J. BRUCE AYCOCK, CITY ATTORNEY By: COMMUNITY DEVELOPMENT CORPORATION OF CORPUS CHRISTI Assistant City Attorney President Director of Finance Director of Planning and Urban Development Vice President ATTEST: Secretary Treasurer Stanley J. Martinez, Executive Director DEMONSTRATION HOUSING REHABILITATION HANDBOOK CITY OF CORPUS CHRISTI, TEXAS THE DEMONSTRATION HOUSING REHABILITATION PROGRAM IS FUNDED BY THE CITY QF RPUS CHRI TI UNDER IT§ CQMMUNITY pEVELOPMENT BLOCK GRANT PROGRAM, IHE UNITY EVELOPMENT LOCK -RANT ROGRAM IS FUNDED IN PART BY THE DEPARTMENT OF OUSING AND URBAN DEVELOPMENT. EJ CITY OF CORPUS CHRISTI HOUSING REHABILITATION PRL...,,M TABLE OF CONTENTS CHAPTER 1 INTRODUCTION 1 CHAPTER 2 DEFINITIONS 2 CHAPTER 3 PURPOSE - SCOPE 3 CHAPTER 4 ' FINANCIAL REQUIREMENTS 4 LEGAL AUTHORITY 4 FUNDING 4 FUNDS DISBURSEMENT, REQUEST FOR: 4 CHAPTER 4 MANAGEMENT ESCROW ACCOUNT 5 ACCOUNTING 5 DISBURSEMENT, PROJECT FUNDS 5 CHAPTER 4 UNUTILIZED FUNDS, DISBURSEMENT 6 LATENT DEFECTS, ESCROW ACCOUNT 6 LATENT DEFECTS ESCROW, OPTION 6 CHAPTER 5 AUTHORITY TO PURCHASE 7 PROPERTY APPRAISAL 7 CHAPTER 5 APPRAISAL PROCESS 8 ACQUISITION FEASIBILITY 8 ACQUISITION 8 CHAPTER 6 CONTRACTING FOR REHABILITATION 9 COST ESTIMATES 9 SPECIFICATIONS 9 CONTRACTOR, GENERAL 9 PROCUREMENT OF BIDS 9 CHAPTER 6 FORM OF CONTRACT 10 CONTRACTOR REQUIREMENTS 10 ASSURANCE OF COMPLETION 10 CHANGE ORDER 11 CERTIFICATION OFCOST 11 ELIGIBLE COSTS 11 ELIGIBLE COSTS, ITEMIZED 12 • 4/79 IDCITY OF COMIS CHRISTI HOUSING REHABILITATION PROD • TABLE OF CONTENTS CHAPTER 7 INSPECTION OF REHABILITATION 13 INSPECTION DURING CONSTRUCTION 13 • INSPECTION FINAL 13 PERIODIC PAYMENTS 13 FINAL PAYMENT 13 LATENT DEFECTS 13 LATENT DEFECTS, CONTINUED 14 CHAPTER 8 MARKETING 15 PRE -SALE ' 15 PROPERTY DISPOSITON - CDC 15 ELIGIBLE MORTGAGOR 15 CHAPTER 8 INCOME CRITERIA 16 QUALIFYING - APPLICANT 16 QUALIFYING - APPLICANT, CONTINUED 17 PURCHASERS INVESTMENT 17 • PRE -PURCHASE ASSISTANCE 17 LOAN APPROVAL 18 PROPERTY DISPOSITION - OWNER 18 CHAPTER 9 TRUTH IN LENDING REQUIREMENTS 19 PURPOSE 19 BACKGROUND 19 RESCISSION PROVISION 19 NO DISBURSEMENT, 19 PROMPT RECORDING 19 CHAPTER 10 LOAN TRANSACTION 20 LOW INTEREST LOAN 20 MARKET INTEREST LOAN, DISCOUNTED 20 MARKET INTEREST LOAN, NON -DISCOUNTED 20 MORTGAGE CONVEYANCE 20-A MORTGAGE CONVEYANCE, CONTINUED 20-B SECURITY INSTRUMENT 21 MORTGAGE PLACEMENT '-- " " " 22 CHAPTER 11 FORECLOSURE 23 DISPOSITION OF ASSIGNED PROPERTY 23 4/79° CITY OF CORPUS CHRISTI HOUSING REHABILITATION CAM CHAPTER 1 INTRODUCTION: This Handbook contains processing instructions for the purchase and rehabilitation of housing units for subsequent resale to qualified pur- chasers. This Program is designed to encourage rehabilitation of housing for low-income families in stable neighborhoods and to assist in the improvement of a neighborhood in order to create a stable environment. Financing of the Demon- stration Housing Rehabilitation Program is authorized under agreement between the Community Development Corporation and the Housing Improvement Corporation of the City of Corpus Christi, utilizing Community Development Block Grant Funds from the Department of Housing and Urban Development. Initial financing will enable the Community Development Corporation of Corpus Christi, a non-profit organization, to purchase, rehabilitate and market the individual dwelling. The amount of the mortgage will be the sum of acquisition cost, plus the cost of rehabilitation or market value after rehabilitation; whichever is less. To qualify as a mortgagor for a low interest loan, a purchaser's income must be within the limits which would make him/her eligible for assistance under the Federal Rent Supplement Program and must be an acceptable credit risk. For the low-income purchaser the individual mortgage will bear interest at permissible below market interest rate, which is determined by the family income. Mortgages bearing market interest rate may be discounted to local financial institutions. If a low-income mortgagor does not continue to occupy the property, the interest rate will increase to the highest rate per- missible for Section 221(d)(3) BMIR under prevailing regulations at the time the purchaser relinquishes occupancy, unless the property is sold to the original non-profit mortgagor or another qualified low-income purchaser. Purchasers of rehabilitated property under market interest rate must declare and agree to continue to occupy the property for a period of not less than 5 years, and shall certify annually, upon request, the occupancy and possession of the dwelling. In the event cessation of occupancy -possession occurs prior to expiration of the 5 years occupancy -possession requirement the property will revert, through repurchase, to the original non-profit mortgagor, specifically the Community Development Corporation of Corpus Christi, for disposition to another qualified purchaser. -1- 4/79 4/79 CITY OF CORPUS CHRISTI HOUSING REHABILITATION PRe CHAPTER 2 DEFINITIONS AS USED IN THIS HANDBOOK: A. The City of Corpus Christi, Texas: Being empowered by the City Charter and acting through the City Council to contract for the promotion of the public welfare, health and safety in furtherance of necessary and proper use and occupancy of property of the City and to promote in reasonable connection therewith General Economic Development and the quality and quantity of Housing available in the community; hereinafter called the City. B. Housing Improvement.Corporatiori'of the City of Corpus Christi (HIC): A non-profit body chartered under state statute whose Board of Directors are the City Council of the City of Corpus Christi. This corporation contracts with the City of Corpus Christi for Housing and Community Development related activities. C. Neighborhood Improvement'Division (N.I.D.): An agency of the City of Corpus Christi, responsible for the administration of the Com- munity Development Block Grant (CDBG) Funds and monitoring of the Demonstration Housing Rehabilitation Project. Hereinafter referred to as N.I.D. D. The Community Development Corporation'of'Corpus Christi (CDC): A private non-profit agency whose Board of Directors are composed of Officers of Local Financial Institutions other Business sectors and the general public. The Board of Directors assisted by its staff have the general authority and the final responsibility for the - implementation and execution of the Demonstration Housing Rehabilita- tion Project. In conformity therewith, assumes the responsibility for property acqusition, preparation of estimates, plans and specifi- cations for rehabilitation; securing contractors, inspection of com- pleted work; marketing, processing of application and loan documents; and provision of counseling services as deemed necessary. Referred to throughout this handbook as CDC. E. Program: A sequence of operation, dissemination and execution of a Demonstration Housing Rehabilitation Project in conformance and as specifically defined in HIC Handbook entitled; DEMONSTRATION REHAB- ILITATION PROJECT, Community Development Block Grant, City of Corpus Christi, in conjunction with the Community Development Corporation of Corpus Christi. -2- CITY OF CORPUS CHRISTI HOUSING REHABILITATION PRO CHAPTER 3 PURPOSE: The objective of the Program is to provide better housing for those in need, at a reasonable cost. To assist in creating a stable en- viroment in the Community Neighborhhod through acquisition of deteriora- ting and/or sub -standard properties by direct purchase, and to improve the quality of such structures through rehabilitation and subsequent marketing to eligible low -moderate income purchasers at a modified rate of interest for an extended period of time. SCOPE: Acquisition and rehabilitation activity will be performed in eligible Community Development Block Grant Areas as designated for this program. The original construction of the acquired property shall be rehabilitated to ensure that: A. The dwelling is structurally sound and safe for habitation. B. The building meets all applicable local code requirements. C. All plumbing, electrical, and other mechanical equipment is operable and functions in a satisfactory manner and does not endanger the health and safety of the occupants. D. The interior of dwelling is clean, attractive and livable with all surfaces painted, varnished or otherwise treated,. and resilient floors replaced as logic dictates. E. All exterior wall and roof surfaces of the building and surfaces in contact with the ground assure adequate pro- tection from weather, moisture and insects; and to assure that exterior and interior materials are in reasonably good condition and afford economy in maintenance. F. The kitchen and bath equipment meets established standards for local market acceptance and includes adequate kitchen counter and storage space. -3- 4/79 ()CITY OF CORPUS CHRISTI HOUSING REHABILITATION PR`- 14 CHAPTER 4 FINANCIAL LEGAL AUTHORITY: The Demonstration Housing Rehabilitation Program is authorized under The Department of Housing and Urban Development (HUD) Community Development Block Grant (CDBG) Fund Program. The City of Corpus Christi being the principal recipient of the grant; sub -grants to The Community Development Corporation of Corpus Christi. FUNDING: The principal source of Funding for the project will be The Department of Housing and Urban Development, Community Development Block Grant (CDBG) Fund. More specifically a revolving subgrant allocated and made available under agreement by and between the HIC and the CDC. CDBG Funds will be accounted for by The City Finance Department and disbursed to The CDC on a case-by-case basis or as may be appropriate. FUNDS DISBURSEMENT, REQUEST FOR: The CDC shall prepare and submit a request, to The City Finance Department, for funds disbursement for the individual project on a case-by-case basgs. The amount being requested shall be de- termined by the cost of "Property Acquisition" and the estimated "Probable Cost" of property rehabilitation. For practical fund disbursement, the sum of the cost of purchase acquisition, plus the costs related to the individual property rehabili- tation presupposes the selling price and may be considered the "Probable Cost." All requests for funds disbursement shall be fully supported by comprehensive documentation. i.e.; Property Appraisal, Property Cost and a Detailed Estimated Cost of Property rehabilitation -and other re- lated costs. Should the funds drawn, in any individual case, exceed the certi- fied actual project costs, the excess shall be applied to prepayment on the principal amount of the mortgage at time of closing the individual loan. -4- 4/79 4/79 CITY OF'CORPUS CHRISTI HOUSING REHABILITATION P CHAPTER 4 MANAGEMENT OF ESCROW ACCOUNT: The Community Development Corporation of Corpus Christi shall maintain a separate and individual project bank account as depository for all acquisition and rehabilitation funds dis- bursed from the CDBG Fund Program by The City of Corpus Christi, as well as the supplemental funds, identified as "Purchaser's Investment" pro- vided by the applicant at the time of purchase. Each individual account shall be for the sole purpose of depositing property acquisition and rehabilitation escrow account funds initially received from The City Finance Department. All receipts and disbursements made for each in- dividual project shall be recorded in the Project Books of Accounts. ACCOUNTING: The CDC will be responsible for receipt of all:Project Funds and all Project Bookkeeping; and will maintain complete journals of accounts upon receipt'of such funds from The City.; and the deposit thereof into individual construction escrow accounts for subsequent release in payment of goods and/or services received. Costs of acquisition, construction and marketing will be maintained in separate individual accounts on a case-by- case basis. In support of cost certification The CDC shall maintain for the purpose of verifying such costs; Books of Records, contracts, invoices, material receiving memoranda, particulars of material, labor and facilities entering into the construction or rehabilitation of the Project; and other records appropriate to such accounts. All books and records will be avail- able in The CDC Office and open for • inspection by The Department of Housing and Urban Development (HUD), and The City during normal working hours. DISBURSEMENTS, PROJECT FUNDS: Disbursement by The CDC from the individual escrow account shall be by check, bearing dual signatures, drawn on the specific project account for the following purpose and/or as may be appropriate; 1. Pay off initial property acquisition, within 3 days of funding. 2. Make progress payment to contractor. 3. Pay for insurance binder. 4. Payment for construction on completion. 5. Pay other obligation relative to project. 6. Close out the rehabilitation escrow account by appropriately disbursing any unutilized funds remaining in the account. -5- CITY OF CORPUS CHRISTI HOUSING REHABILITATION Pi CHAPTER 4 UNUTILIZED FUNDS, DISBURSEMENT OF: Where a cost certification indicates a cost underrun, thereby; establishing a property cost less than the "Probable Mortgage" amount established previously by the cost of Pro- perty Acquisition plus the estimate cost of Property Rehabilitation and other related costs, on which basis the Project was initially funded, the unutilized funds remaining in the individual escrow account, because suchcertifiedcosts were less than anticipated, shall be disbursed by The CDC to apply to the principal amount of the mortgage at closing of the loan. This action in effect will zero the individual escrow account and the Project shall be considered closed. LATENT DEFECTS, ESCROW ACCOUNT: cstperformed under his contract for ah periodroftor onem(1) year. To the work o this guarantee the sum of.$200.00, or % of the total contract shall e be held in escrow for a period of one (1) year. Monies retained by The CDC, to cover possible defects in construction, shall be placed into an interest bearing account, in the name of The Community Development Corporation of Corpus Christi, identified as, contractor's "Latent Defects Escrow"; and further identified and related in The CDC Books of Accounts, to the individual contractor in whose name the construction contract has been executed. Upon satisfactory correction of all significant defects and in- adequacies in the work performed under his contract, escrow funds in the amount retained plus any interest accrued shall be disbursed in final settlement of construction contract. A release shall be obtained by The CDC from the contractor upon dissolution of his account and dis- position of such escrow funds. _ LATENT DEFECTS ESCROW, OPTION: In Lieu of an escrow deposit of cash The CDC may accept an unconditional, irrevocable letter of credit issued, to The Community Development Corporation of Corpus Christi, by a Banking Institution. -6- 4/79 OF CORPUS CHRISII HOUSING REHABILITATION PRO CHAPTER 5 AUTHORITY TO PURCHASE: ' The CDC Director is authorized by the Board of Directors and acting through The CDC Committee on Construction and Pro- perty Development, has the responsibility to seek out and the authority to execute purchases of vacant substandard housing units located within eligible CDBG "Census Tracts," in conformance with requirements and the purpose of the Rehabilitation Program. The CDC Director shall exercise due care and respect that all property acquisition is in strict confor- mance with The Uniform Relocation and Real Property Acquisition Policies Act of 1970. Housing units under consideration may be detached, semi- detached or row construction, and in need of substantial rehabilitation due to deteriorated or substandard condition. A. Deteriorating'dwelling is one needing repair or replacement which if not performed would shorten the physical life otherwise ex- pected for a dwelling of a kind and character. Property exhibit- ing the need for repair or replacement beyond ordinary customary maintenance will be considered as being deteriorating. B. A sub -standard property is one of inadequate original construction which is dilapidated and does not provide safe adequate shelter, and in its present condition endangers the health, safety; or well-being of the occupants. Such a dwelling has no hot running water, water closet facility, nor tub or shower, and has one or more critical defects, or has a combination of intermediate de- fects in sufficient number or extent to require considerable re- pair or rebuilding. The defects are either so critical or so widespread that the structure should be extensively repaired, rebuilt, or torn down. PROPERTY APPRAISAL: An "as -is" appraisal shall be required for every property considered for rehabilitation. An "as -is" appraisal is defined as the highest price which a property will bring, if exposed for sale in the open market, allowing a reasonable time to find a purchaser who buys with knowledge of all the uses to which it is adapted and for which it is capable of being utilized. The value sought presupposes all cash to the seller, with the purchaser financing the transaction by the most ad- vantageous means and terms available throughout the City. The appraised value must also take into consideration the neighborhood upgrading ex- pected as a result of contemplated improvements. The appraisals shall take into account the value of the property after rehabilitation. -7- 4/79 7 (!!) CITY OF' CORPUS CHRISTI HOUSING REHABILITATION PR CHAPTER 5 APPRAISAL PROCESS: Upon comprehensive inspection and analysis, by CDC Director, of the property being considered for purchase, an appraisal of the property shall be performed by a Licensed Appraiser together with a minimum of one (1) CDC staff and one (1) CDC member of the Construction, Property and Development Committee; or two (2) qualified outside appraisals prior to the offering of a purchase price. ACQUISITION FEASIBILITY: Acquisition of property will not be considered if initial inspection, appraisal and preliminary cost estimates indicate ex- treme or excessive costs as compared with prices.being obtained in the market' for equivalent properties. If the cost of acquisition is reasonable and if the total, plus the total cost of rehabilitation, does not produce a mortgage amount in excess of the purchasers ability to amortize, the transaction will be considered feasible. ACQUISITION: Property acquisition shall be in conformance with The Uniform Relocation and Real Property Acquisition Policies Act of 1970, no purchase of occupied housing units shall be.considered for purchase. All properties acquired under this Program shall be acquired in fee simple and Title shall be vested in the Community Development Corporation of Corpus Christi.. CDC shall originate and maintain a complete property history file from acquisi- tion through subsequent disposition of property. -8- 4/79 CITY OF CORPUS CHRISTI • HOUSING REHABILITATION PR(J) CHAPTER 6 CONTRACTING, FOR REHABILITATION COST ESTIMATES: From a comprehsensive on-site The CDC inspection and evaluation of property and determining the scope of rehabilitation work to be undertaken, the CDC staff will prepare simple plans of work being considered and final work write-up and construction cost estimates; to provide the basis from CDBG Fund draw -down from the City, for:the establish- ment of a construction escrow account for each property on a case-by-case . basis. The cost estimates shall be reasonable as prevailing in the locality for comparable work. Final accounting shall reflect actual cost of ser- vices, labor and material expended and/or attributed to the rehabilitation of such property. SPECIFICATIONS: The CDC staff shall be responsible for the preparation and provision of all specifications related to rehabilitation work. Each specification in a construction contract document shall be so written that it provides a clear understanding of the nature and scope of the work to be done and sufficiently comprehensive to form a basis for carefully determined bids and/or proposals from contractors. .CONTRACTOR, GENERAL: Under the Program concept and Program Regulations the CDC is empowered, through its Board of Directors and staff personnel to act as General Contractor in the execution of all rehabilitation work. Construction work•for rehabilitation financed under the Demonstration Program shall be undertaken only through written contract between the con- tractor and the CDC. Upon previously determined feasibility, plans, speci- fications and cost estimates, the project shall be advertised for bids. PROCUREMENT OF BIDS: - Based on General Requirements, plans and specifications showing the nature, scope and location of work to be performed, proposals from qualified sub -contractors shall be solicited through local advertise-- ment. Bids so obtained shall be considered on a competitive basis. In the event bids appear unreasonable or excessive, all proposals shall be returned at the discretion of the CDC. However, if the cost of the work to be per- formed is estimated at less than $2,000.00, the construction contract. may be in all cases negotiated with one or more prospective Bidders. -9- 4/79 ( 4/79 0 •CITY OF CORPUS CHRISTI HOUSING REHABILITATION PR CHAPTER 6 CONTRACTING, FOR REHABILITATLON• continued FORM OF CONTRACT: Upon selection of contractor based on acceptable bid and/or proposal a contract will be issued. The construction contract shall contain a bid and/or proposal by the contractor, general require- ments, as well as plans and specifications of work to be performed. The contractor shall abide by Federal and Local Regulations pertaining to equal employment; including adherence to executive order 11246 when applic- able. CONTRACTOR REQUIREMENTS: Prior to commencing work to be performed under his contract the contractor shall, at his own expense, specifically provide and/or perform the following: 1. Furnish evidence of comprehensive public liability insurance coverage protecting The CDC for not less than $300,000.00 in the event of bodily injury including death, and $50,000.00 in the event of property damage arising out of the work performed by the contractor; and evidence of insurance or other coverage required by State Law, governing Workman's Compensation: 2. Obtain and pay for all permits and licenses necessary for the completion and execution of the work and labor to be performed. 3. Perform all work in conformance with Local Codes Requirements, whether or not covered by the specifications and drawings for the work to be performed. 4. Guarantee the work performed for a period of one (1) year from the date of final acceptance of all the work required by the contract. 5. Keep the premises clean and orderly during the course of work and remove all debris at the completion of work. ASSURANCE OF COMPLETION: At initial endorsement of contract, the con- tractor must furnish The CDC with assurance of the completion of work to be performed. This assurance will be in the form of cashier check in the amount of $200.00, payable to The Community Development Corporation of Corpus Christi. In Lieu of an escrow deposit of such cash The CDC may accept an unconditional, irrevocable letter of credit issued by a Banking Institution. Upon completion of construction contract the escrow thus established may be retained for a period of one (1) year, as guarantee and assurance for correction of latent defects. -10- Imp CITY OF CORPUS CHRISTI HOUSING REHABILITATION PRF CHAPTER 6 • CONTRACTING, FOR REHABILITATION: continued CHANGE ORDERS:' The initial work write-up and cost estimate, prepared by The CDC based on the property inspection, itemizes all the rehabilitation work to be performed on the property. The work write-up and cost estimates reasonably identify those items and costs which may be included only on the basis to generally improve the conditions of the properties; to provide a safe, sanitary and a marketable dwelling. A field change order shall be issued when structural conditions not readily observed during inspection nor considered in the original cost estimate become evident during construction and considered to be an obvious fault detrimental to the quality of the finished structure. Consideration, as merit dictates, shall first be exercised in effecting a swap -out of con- struction items before a change order, increasing the cost of rehabilitation, is approved. All change orders considered shall be in written form and shall be reviewed and/or approved by The N.I.D. prior to endorsement by The CDC Director. In the event approved change orders, cause an increase in the cost of rehabilitation, the AMOUNT by which the cost exceeds the original "Probable Mortgage" amount, shall be requested from The City Finance Department, and shall; when received and added to the escrow funds already drawn; constitute "Maximum Probable Mortgage Amount." CERTIFICATION OF COST: The "SELLING PRICE" of rehabilitated -property shall be determined by the actual cost of acquisition plus related rehabilitation costs. The purpose of cost certification is to establish the "ACTUAL COST" of the individual project; as opposed to the estimated "probable cost." Upon completion of individual project, and prior to allocation of selling price or individual mortgage amount, actual "HARD" costs incurred in the acquisition and rehabilitation shall be certified. The certification must be supported by facts and figures taken from records maintained by The CDC for each individual property. No profit or risk element shall be included in the costs thus determined. The cost certification shall be performed by a qualified accountant on The CDC staff and reviewed by The N.I.D. staff, prior to final endorsement. ELIGIBLE COSTS: For the purpose of cost certification, costs shall include, but not limited to amounts appropriately paid as followSS -11- 4/79 • CITY, OF CORPUS CracSTI HOUSING REHABILITATION P" '4M CHAPTER 6 CONTRACTING, FOR REHABILITATION: continued ELIGIBLE COSTS: 1. Property acquisition, within 3 days of Funding 2. Appraisal 3. Plans, Design, if required 4. Taxes and Insurance 5. Legal and Organizational 6. Title and Recording 7. General requirements expense —12— 4/79 CITY OF CORPUS CHRISTI HOUSING REHABILITATION PR( CHAPTER 7 INSPECTION OF REHABILIATION INSPECTION DURING CONSTRUCTION: CDC construction coordinator will main- tain close liason with the site and the contractor during the rehabili- tation process, and shall also be accomplished by the City Building In- spectors. Corrective measures will be taken as conditions dictate. INSPECTION, FINAL: Upon completion of the rehabilitation work and receipt of contractors invoice containing his certification of satisfactory com- pletion of all work in accordance with the contract and his warranty;_ The CDC and N.I.D. staff shall conduct a final inspection prior to approval for final payment. PERIODIC PAYMENTS: Progress construction draws may be made only in accor- dance with agreement at initial endorsement of contract documents and shall not exceed 80% of working place for any given period of time. A record of such payments shall be maintained by The CDC staff on an in- dividual case-by-case basis. FINAL PAYMENT: Disbursement in payment for completionof work required by the contract will be made within ten (10) days after final inspection determines that the work is satisfactorily- completed in accordance with the contract. Furthermore, only after receipt of a release of lien, in- cluding releases from all sub -contractors' and suppliers'; and receipt of all manufacturers and suppliers.writtenguarantees arid warranties covering materials and/or equipment furnished under the contract, will final payment be made. Additionally, contractor must provide funds, to be held in escrow for satisfaction of latent corrective work. LATENT DEFECTS: To cover possible defects, the contractor must guarantee the work performed for a period of one (1) year from the date of comple- tion and final acceptance of all the work required by the contract. To assure this guarantee the sum of $200.00 or 3.0% (whichever is greater) of the total contract shall be held in escrow for a period of one (1) year as specifically identified as an item in final disbursement of monies due contractor upon satsifactory completion. The amount in escrow shall -13- 4/79 CITY CO CORPUS CHRISTI HOUSING REHABILITATION PR CHAPTER 7 LATENT DEFECTS: continued be returned to the contractor provided; however, that all significant de- fects and inadequacies in the work preformed under his contract have been corrected. This will be determined, prior to the expiration date of the guarantee period, by a joint inspection conducted by the contractor and The CDC. -14- 4/79 CITY OF CORPUS CHRISTI HOUSING REHABILITATION PR04. CHAPTER 8 MARKETING PRE -SALE: • Prior to commencement of rehabilitation of an individual pro- perty and/or concurrently with the performance of such rehabilitation, the CDC shall invite pre -sale interest by placing a sign on the job site informing the public of the nature and purpose of the activity; and the availability of the property upon completion, for purchase by an eligible purchaser; and where they may obtain more information or make application. PROPERTY DISPOSITION, BY CDC: During construction and upon completion of rehabilitation of the property the CDC shall undertake the responsibility to market rehabilitated housing through local news media, to individuals or families residing within the City of Corpus Christi, with primary priority going to low -moderate income purchasers meeting the family income criteria for receiving rent supplement assistance. The selling price of the rehabilitated properties shall be determined by the sum of original acquisition, plus construction -rehabilitation and other on-site costs in- cidental to producing a complete and useful commodity. The amount'appor- tioned to each dwelling must not create mortgage financing and prospective monthly housing expense in excess of the low-income purchasers ability to pay, giving consideration to the family income limits prescribed -for the area under the HUD Rent Supplement Program. In the event the economics of a particular situation are such that 1001 of cost, sales requirement, will place undue hardship on the purchaser, the sales transaction may be dis- counted by a maximum of 301 of the sales price of the property. The dollar amount of discount, in this instance shall be recorded and retained as a first lien position for a period not to exceed five (5) years. The first (1st.) lien position may be subordinated to the permanent lending institution. ELIGIBLE MORTGAGOR: The CDC shall solicit purchasers, for rehabilitated dwellings, from the Corpus Christi community. Such purchasers shall be individuals or families meeting the income criteria for receiving rent supplement payments; that the borrower is not.required to pay more than 251 of his total monthly income for mortgage payment; purchasers who have an established credit and who possess a reasonable financial ability to assume a long terns obligation; and the purchaser -mortgagor, shall have paid a minimum of four hundred ($400.00) dollars in cash, which shall be applied to prepaid expenses and/or closing costs. This amount may be re- duced or waived at the discretion of the CDC Loan Committee. -15-' 4/79 0 CITY OF CORPUS CHRISTI HOUSING REHABILITATION P CHAPTER 8 INCOME CRITERIA: The income of the purchaser, for eligibility shall not exceed 120% of the 221(d)(3) BMIR income limits established by the Depart- ment of Housing and Urban Development for the Area and as amended from time to time by HUD. The interest rate on Loans for rehabilitated properties shall be determined by the family "Effective Income" and the ability to repay such Loan at a reasonable rate within a given period of time; usually 20 years. The interest rate on Loans may be as low a 3% and scaled upward to market interest rate. The income criteria for eligibility for the Project is as follows: A. Section 8, Income Limits, 1 Per 2 Per 3 Per 4 Per 5 Per 6 Per 7 Per 8 Per 9 Per 10 Per 8000 9150 10300 11450 12150 12850 13600 14300 14300 14300 B. Section 221(d)(3) BMIR Income Limits, 1 Per 2 Per 3 Per 4 Per 5 Per 6 Per 7 Per 8 Per 9 Per 10 Per 9500 10850 12200 13600 14450 15300 16150 17000 17000 17000 C. 120% of 221(d)(3) BMIR Income Limits, 1 Per 2 Per 3 Per 4 Per 5 Per 6 Per 7 Per 8 Per 9 Per 10 Per 11400 13020 14640 16320 17340 18360 19380 20400 20400 20400 QUALIFYING -APPLICANT: The CDC staff shall prepare documentation and secure appropriate applicant income verifications prior to qualifying a purchaser. Income verification includes; the gross family income from all sources, be- fore taxes or withholding, of all members of the household who propose to live in the dwelling will be counted. The income of children or other de- pendents shall not be counted. No deductions from gross income will be allowed for dependents. The total gross income must come within the limits established for the area rent supplement program. All such qualified buyers will form a pool of applicants from which the CDC Loan Committee may choose an eligible purchaser. To qualify as an individual mortgagor, a purchaser -16- 4/79- CITY OF CORPUS CHRISTI HOUSING REHABILITATION P CHAPTER 8 QUALIFYING -APPLICANT: continued must have a family income which would make him/her eligible under the rent supplement program, have a stable income which can be considered "Effective Income" by the Department of Housing and Urban Development (HUD) standards, in an amount sufficient to support the mortgage obligation and have accep- table credit characteristics evidencing satisfactory credit behavior and the ability to manage income. In applying the foregoing credit criteria, consideration shall be given to pre -purchase guidance and assistance to the prospective home owner which shall be provided by the CDC housing counselor. Sound judgement should be exercised by the application processor considering the income level this program is intended to assist in acheiving homeownership. Mar- ginal credit patterns which existed in the past should be weighed against the purchasers present circumstances, taking into account the counseling assistance provided by the CDC, as well as against any recent trend toward improvement of the individual's credit picture. PURCHASERS INVESTMENT: The rehabilitated dwelling shall be sold for an amount representing original acquisition cost; plus construction -rehab- ilitation and other costs incidental to producing a habitable structure. In addition, as initial investment, the purchaser shall pay a minimum of 5400.00 dollars which shallbe applied to prepaid expenses; closing costs, or prepayment on the mortgage at closing. No portion of this sum may be refunded to the purchaser. In the event closing costs are less than $400.00, the excess shall be applied to a prepayment on the mortgage. This will be accomplished at the time of closing of the individual loan. The purchasers investment may be reduced or waived at the descretion of the CDC Loan Committee. PRE -PURCHASE ASSISTANCE: Success of the Program will depend, to a large degree, on the selection of a qualified purchaser; and on the CDC;s in- volvement as a guiding influence. In consideration thereof and in view of the income level of the individual's this Program is intended to benefit, the Community Development Corporation as sponsor, shall provide appropriate pre -purchase and financial counseling for the individual purchasers in order to strengthen the ability of the purchasers to properly meet their long term obligations under the mortgage. After completion of sale of a property the CDC staff shall maintain close liason and provide counseling assistance and guidance to the homeowners until such time as stablization of the individual purchasers has been achieved.- 4/79 4/79- CITY OF CORPUS CHRISTI. HOUSING REHABILITATION PR CHAPTER 8 LOAN APPROVAL: The CDC staff shall prepare all documents qualifying in- dividual purchasers of rehabilitated properties. The CDC Board of Directors, through its Loan Committee assisted by its staff will have the final respon- sibility and authority for the review and approval of all rehabilitation loans made under this Program. Documents included, but not limited to, shall be: • 1. Loan Application 2. Verification of Employment 3. Verification of Deposit 4. Statement of earnings 5. Credit Roting Data 6. Property Appraisal 7. Property Cost Allocation 8. Permit to occupy PROPERTY DISPOSITION, BY PURCHASER -BORROWER: • The resale or other disposition of rehabilitated property, by purchaser -borrower shall be a violation of the purpose and intent of the Program and the premise on which it is founded. Failure of the purchaser to retain possession and continued occupancy shall be cause for reversion to original seller, specifically the Community Development Corporation of Corpus Christi. All individual purchasers shall declare and agree to retain possession and occupancy of dwelling for a given period of time. Further, the purchaser shall declare and agree to certify annually, his/her occupancy and possession of the dwelling for the required period of time. This penalty is more specifically defined in, Loan Transaction, Individual Mortgage, page 20 and Mortgage Conveyance, page 20-A, of this Handbook. -18- • T`( OF CORPUS CHRISTI HOUSING REHABILITATION PROGR t7) CHAPTER 9 TRUTH IN LENDING REQUIREMENTS PURPOSE: This chapter describes the Truth in Lending Act and its pro- cedural and disclosure requirements which must be followed in the settle- ment of loans on residential and mixed-use property. BACKGROUND: The Truth in Lending Act is Title I of the Consumer Credit Protection Act (Public Law 90-321; Title 15, U.S. Code 1601 et seq.), enacted by Congress on May 29, 1968. The act requires that borrowers in "consumer credit transactions" be vested with certain rights and pro- tections in connection with the transaction and receive specified written information from their lenders. The disclosures must be made before credit is extended and before the borrower becomes obligated in connection with the transaction; i.e., before execution of a note or mortgage. Among the required disclosures are: (A) The amount of credit a borrower will have for his actual use (the AMOUNT FINANCED); and The FINANCE CHARGE (consisting primarily of interest but also other fees and charges) expressed both as a dollar amount and as an ANNUAL PERCENTAGE RATE. (8) RESCISSION PROVISION: In addition, the act enables a borrower, within three (3) business days following the loan transaction, to rescind the transaction, if the loan is secured by a lien on the borrower's residence. The loan transaction shall be considered cancelled if the borrower's notice to that effect is given within the required period. NO DISBURSEMENT: The CDC shall make no disbursement from the escrow account, with respect to the borrower, during the three (3) days rescission period. PROMPT RECORDING: The Title Company of Record shall record promptly after loan settlement, the mortgage, Deed of Trust, and all instruments necessary to perfect the loan security without delay. -19- 179 (2)CITY OF CORPUS CHRISTI b iY HOUSING REHABILITATION PIIM CHAPTER 10 LOAN TRANSACTION INDIVIDUAL MORTGAGE: LOW INTEREST LOAN, CARRIED BY THE CITY: For the purpose of retaining the con- • cept of the rehabilitation program, the low-income family "Homeowner" it is designed to benefit; the individual mortgage must provide that THE LOW-INCOME, LOW INTEREST RATE MORTGAGOR SHALL CERTIFY ANNUALLY, at the request of the CDC and/or the mortgagee, that he continues to occupy the property; further, it • shall provide that if the low-income purchaser does not continue to occupy the property, the interest rate shall increase to the maximum rate in effect under Section 221(d)(3) BMIR, beginning the first day of the month following such cessation. The requirement is more specifically defined in mortgage conveyance; security instrument. MARKET INTEREST LOAN, DISCOUNTED: The purchaser of rehabilitated property, THE SALES PRICE OF WHICH HAS BEEN DISCOUNTED, shall declare and agree to continue to occupy the property for a period of not less than 5 years from the date of execution of the. loan transaction; and shall certify annually, upon request, his occupancy and possession of the dwelling. Should the purchaser/borrower cease to occupy the property prior to expiration of 'the 5 years occupancy requirement, the discounted portion of sales price of property shall be added to the then outstanding loan balance and become due and payable on the first day of the month following such cessation. Language to this effect shall be contained in the Mortgage Conveyance; Security Instrument. MARKET INTEREST LOAN, NON DISCOUNTED: The sale or other disposition, by the purchaser of rehabilitated property, THE SALE PRICE OF WHICH HAS• NOT BEEN DIS- COUNTED, and on which there exists a loan, bearing full market interest rate, shall declare and agree to continue to occupy the property for a period of not less than 5 years from the execution of the loan transaction; and shall certify annually, upon request, his occupancy and possession of the dwelling. Should the purchaser/borrower cease to occupy and/or retain ownership of the property prior to the expiration of the 5 years occupancy/ownership requirement,the original seller, the Community Development Corporation of Corpus Christi, shall have the first recourse to recovery of the property through outright re- purchase at the then outstanding loan balance. Language to this effect shall be contained in the Mortgage Conveyance; Security Instrument. -20- 4/79 - (::2)CITY OF CORPUS.CHRISTI HOUSING REHABILITATION PR CHAPTER 10 MORTGAGE, CONVEYANCE: A mortgage shall constitue an instrument reflecting precisely the entire loan transaction and shall comply with the following requirements: A. Involve a principal obligation in an amount not exceeding the sum which is allocated to the dwelling as a result of the original acquisition, plus the costs of rehabilitation, and other costs incidental to the production of a habitable dwelling. B. Be limited to a term not exceeding 20 years; except that a term of 25 years may be granted if it is determined, by the CDC Loan Committee, that the purchaser is unable to make required payments under a mortgage having a shorter amortization period. C. Bear interest at a rate as determined by eligibility commensurate with family income; and approved by the CDC Loan Committee. D. Provide that purchaser_shall occupy the dwelling and shall certify annually, at the request of the CDC and/or the mortgagee, that he continues to occupy the property for a specific period of time. E. Provide that if THE LOW -INCOME -IOW TNTFRFGT RATF PURCHASER does not continue -to occupy the property the interest shall increase, to the maximum in effect and/or permissible for Section 221(d)(3)Bi1IR under prevailing regulations, for the remaining term of the mortgage, unless the property is sold to: 1. The Non -Profit Organization, specifically the Community Develop- ment Corporation of Corpus Christi; which executed the original sale. 2. Another qualified purchaser, whose credit and other qualifications have been examined, approved and processed by the CDC Loan Com- mittee prior to such sale. F. Provide that if the purchaser of property, THE SALES PRICE OF WHICH HAS RFFN DTSCOUNTFQ, under a loan bearing market interest rate, does not continue to occupy and/or own the property for a period of 5 years, the discounted portion, (the CDC first (1st.) lien amount) shall be added to the then outstanding loan balance, and become due and payable on the first (1st.) day of the month following such cessation, unless the property is sold to: continued next page -20A- 4/79• 9/79 - CITY OF CORPUS CHRISTI HOUSING REHABILITATION PRO'72) . CHAPTER 10 MORTGAGE, CONVEYANCE: continues 1. The Non -Profit Organization, specifically the Community Develop- ment Corporation of Corpus Christi, Texas; the original seller. 2. Another qualified purchaser, whose credit and other qualifications have been examined, approved and processed by the CDC Loan Com- mittee prior to such sale. G. Provide that if the purchaser of property, THE SALES PRICE OF WHICH HAS NOT RFFN DTSCOO NTFD, under a loan bearing market interest rate, does not continue to occupy and/or own the property for a period of 5 years, the then outstanding loan balance shall become dyne and pay- able on the first(J.st.) day of the month following such cessation, unless the property is sold to: 1. The Non -Profit Organization, specifically the Community Develop- ment Corporation of Corpus Christi, Texas, the original seller. 2. Another qualified purchaser, whose credit and other qualifications have been examined, approved and processed by the CDC Loan Com- mittee prior to such sale. -20B- 4/79 - CITY OF CORPUS CHRISTI HOUSING REHABILITATION P CHAPTER 10 MORTGAGE, CONVEYANCE: continued The Security Instrument: The low interest rate (under 5%) loan, Mortgage/Deed of Trust shall contain the following language: Subject to the provisions which are incorporated herein and made a part hereof; the rate of interest and the amount of each install- ment specified on the face hereof shall remain effective only for so long as the condition be met without interruption that the pro- perty be owned and occupied by a low income purchaser as that term is used in Section 221(d)(3) BMIR of The National Housing Act, as amended, or be owned through repurchase by the non-profit organization from which the maker hereof or purchase by a public housing agency haveing jurisdiction under the United States Housing Act of 1937 over the area in which the property is located. In the event that the foregoing condition ceases to be met, the rate of interest payable on this Note shall be increased to per centum ( %) per annum beginning on the first day of the month following such cessation, and continuing until the indebt- edness is paid in full. The monthly installment of principal and interest payable hereon shall be increased in accordance with amortization tables published by The Federal Housing Administration, as applied to the principal balance hereof on said beginning date, the aforesaid increased rate of interest, and the remaining term of the indebtedness. The undersigned hereby promise(s) to pay the holder hereof, or order, the aforesaid increased monthly installment on the first day of the month following the afore- said beginning date, and a like amount on the first day of each month thereafter until the said indebtedness is paid in full. -21- CITY .OF CORPUS CHRISTI HOUSING REHABILITATION PRO CHAPTER 10 LOAN TRANSACTION: continued MORGAGE PLACEMENT: Mortgages will be carried either by The City or will be discounted to financial intermediaries within The City of Corpus Christi. Principal consideration and emphasis shall be on the discounting of mortgage papers to Financial Institutions. All mortgages shall be of a nature com- mensrate with the program, with adequate safeguards to protect the interest of The City of Corpus Christi and The Department of Housing and Urban Develop- ment. { -22- 4/79 CITY OF CORPUS CHRISTI HOUSING REHABILITATION PRC CHAPTER 11 FORECLOSURE: Should the mortgage account become delinquent, the mortgagee/ servicing agent shall notify the CDC at the first sign of impending default. To assist the mortgagor at the outset of apparent problem, the CDC shall con- tact the mortgagor to seek the cause and discuss the problem. Should hard- ships exist the CDC counselor shall assist and be responsible for directing the mortgagor to the appropriate agency for available assistance. In the . event there is a complete unwillingness, on the part of the mortgagor, to continue making payments or in the event the property is abandoned, the CDC shall so notify the mortgagee/servicing agent. The mortgagee/servicing agent will then proceed with execution of foreclosure as specifically set forth in Deed of Trust. DISPOSITION OF ASSIGNED PROPERTY: In the event the mortgagor ceases to meet his/her obligation, and foreclosure is imminent, the CDC shall ex- ercise its option to re -purchase the property for the mortgage balance then owing. After.regaining ownership of such property, the CDC shall 'be responsible for effecting reasonable repairs; locating another qualified purchaser for the property; and processing such purchaser as a new case; in accordance with applicable guidelines established and promulgated in this handbook. -23- 4/79. Corpus Christi, Texas j ©day of ark4On , 19 0 C( TO THE MEMBERS OF THE CITY COUNCIL Corpus Christi, Texas For the reasons set forth in the emergency clause of the foregoing ordinance, a public emergency and imperative necessity exist, for the suspension of the Charter rule or requirement that no ordinance or resolution shall be passed finally on the date it is introduced, and that such ordinance or resolution shall be read at three meetings of the City Council; I, therefore, request that you suspend said Charter rule or requirement and pass this ordinance finally on the date it is introduced, or at the present meeting of the City Council. Respectfully, THE CITY OF CORPUS CHRISTI, TEXAS The Charter rule was suspended by the following vote: Luther Jones Edward L. Sample Dr. Jack Best David Diaz 6/1/P Jack K. Dumphy Betty N. Turner Cliff Zarsky `""7" Q The above ordinance was passed by the following vote: Luther Jones Edward L. Sample Dr. Jack Best David Diaz Jack K. Dumphy Betty N. Turner Cliff Zarsky 15163