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HomeMy WebLinkAboutRES 85-080 R E S O L U T I O N BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the guidelines for the Commercial Rehabilitation Loan Program be amended and the guidelines as amended are attached hereto as Exhibit "A" . PASSED BY THE CITY COUNCIL of the City of Beaumont this the / day of 1985. r �//,0 Mayor - PROGRP21 DESCRIPTION CUB03CIAL MIABILITATION handing Source Commercial Rehabilitation is an eligible activity under the Community Development Block Grant Program and is the source of funding for this program. One hundred thousand dollars ($100,000.00) will be made available for this program. Purpose and Intent Beaumont has participated in The C umnity Development Program since its inception in 1975. The City's Rehabilitation Loan Program is primarily designed to provide low interest rehabilitation loans to property owners in Neighborhood Strategy Areas. The survey taken by the Community Development Block Grant (CDX,', staff of the Charlton-Pollard Neighborhood Census Tract Seventeen (17) revealed a need for a program to stimulate the neighborhod's commercial revitalization. This program is intended to provide financial assistance for rehabilitation of commerical businesses such as laundror!kats, cleaning establishments, drugstores, convenient stores or service establishments. Exhibit "A" Terms and Conditions A. General 1. The Rehabilitation Loan Agency will consider such loans - that would be legal loans as defined by Ordinance No. 79.4. The Rehabilitation Agency cannot accept applications to finance any type of new construction. Neither can the Agency accept an application on a property situated outside the boundaries of a ccmnunity develognent designated strategy area. 2. The City of Beainont shall have the authority to collect delinquent loans through any reasonable means permitted by law, including foreclosure and sale, upon the direction of the City Manager. 3. Leery loan applicant will be required to furnish proof of nondelinquent taxes before loans will be approved by the Rehabilitation Agency. 4. Applicant denied a loan by the Rehabilitation Loan Agency may not submit another application for a period of six months unless the applicant's application is affected by changes in the program policies. B. Strategy Areas The Strategy Areas, designated by the Citv of Beaumont, are Census Tracts 7, 8, 9, 10, 15, 17, 18, 22, 23 and portions of Census Tracts 19 and 20. -2- Amended April 3, 1984 loan Advisory Board Authority 1. The Loan Advisory Board is composed of five members appointed at large. Members of the Advisory Board shall be appointed by the City Council for two-year terms and shall serve without canpensation. 2. This Board will be responsible for making determinations on all rehabilitation loans. Advisory Board meetings will be held as the case load dictates. Due to the confindential nature of the information disclosed at these meetings, the Board meetings will not be open to the public. However, quarterly and annual status reports will be available to the public and citizen advisory committees. 3. The Loan Advisory Board shall be provided with a comprehensive financial packet for each applicant which will include: Employment status, mortgage and appraisal data, credit data, loan amount, repair specifications, and loan recommendations. (The entire rehabilitation file will be available at the Board meetings and any information within that file will be presented upon request.) 4. The Loan Advisory Board will receive recommendations or suggestions from the Rehabilitation Loan Office. The Loan Advisory Board may accept of formulate their ovm recommendations as long as they coincide with eligibility criteria. 5. The Loan Advisory Board shall act on each loan case presented. The Board shall have the right to approve, deny, table-, or reject any loan for sound and sufficient reason. 6. The Loan Advisory Board shall not approve any loan the terms of which exceed the remaining economic life of the property to be approved. The terms of any loan shall not exceed the following: (a) Maximum term- 20 years. (c) Remaining economic life shall be equal to or greater than the maximum term. 7. All action on loan applications shall be certified by the Chairman of the Board and the Superintendent of the Rehabilitation Loan Office. Applicant Eligibility A. Owner of a business such as a laundromat, drugstore, cleaners, neighborhood convenience store or service establishment. The following are examples of service establishments: Hardvmxe Store Gas Station Grocery Store Furniture Store Restaurant Washateria Florist Barker Shop Appliance Repair -4- Amend Bowling Alley Upholstery and Furniture Repair Movie Theatre Shoe Repair Professional Offices All establishments whose primary income is generated from the sale of alcoholic beverages are ineligible. B. Purchaser(s) of a business location must have ownership and/or management experience in an existing eligible establishment. C. Owner must hold a general warranty deed and/or a deed of trust to property. D. Owner cannot be delinquent in the payment of mortgage or land contract payments by more than sixty (60) days. E. The applicant must evidence adequate capacity to repay the loan and have a satisfactory record of fulfilling previous obligations. F. Business owners will not be eligible for loan payment subsidies. G. Maximum amount that can be borrowed for any one construction project will be established by the Loan Advisory Board upon the recommendation of the Rehabilitation Division. II. Property owner may provide a qualified cosigner who will assume responsibility for pa�Tlient of the rehabilitation loan. _r� Property Eligibility Rehabilitation loan may be made only to properties meeting the following requirements: 1. Rehabilitation work needed in order to physically improve or correct an existing structure so that it will comply with the intended usage - laundroniat, cleaning establishment, drugstore, neighborhood convenient store or service establishments. The following are examples of service establishments: hardware Store Gas Station Grocery Store Furniture Store Restaurant Washateria Florist Barber Shop Appliance Repair Bowling Alley Upholstery and Furniture Repair Movie Theatre Shoe Repair Professional Offices All establishments whose primary income is generated from the sale of alcoholic beve-rages are ineligible 2. Located within Census Tracts 7, 8, 9, 10, 15, 17, 18, 22, 23 and portions of Census Tracts 19 and 20. 3. The appraised value exclusive of land must exceed $10,000.00. Loan Limitations A. The Commercial Rehabilitation Program will not refinance existing debt. the program will accept a second lien position on structures that are to be rehabilitated. B. Funds may not be used to refinance existing or future debts on the business inventory. C. Rehabilitation i rk required to comply with intended usage must meet the Standard Building Codes for the City of Beaumont. Security for Rehabilitation Loan A. All rehabilitation loans will be secured by a properly executed real estate lien note and deed of trust in favor of Ibe City of Beaumont. B. Adequate hazard insurance must be maintained for the duration of the loan. Terms of Loan A. The interest on rehabilitation loans shall be figured at five percent. -7- Amended April 3, 19S4 B. The maximum term of the rehabilitation loans shall not exceed twenty (20) years. C. Owner must agree to an annual review during the length of the loan by The Rehabilitation Division of The City of Beaumont. A financial statement prepared by a Certified Public Accountant (CPA) containing a statement of operations will be required. D. If the business does not remain financially sound, the owner will be required to seek financial counseling or The City of Beaumont will declare the note due and payable. Cost Includable in Rehabilitation Loan Rehabilitation loan may include amounts for the following purposes: 1. Rehabilitation loan must cover tlxe cost of correcting, rearranging and rehabilitation of the existing structure in order to conform with the intended usage. 2. The cost of certain expenses related to the processing of the application and to obtain sefurity for the loan is included. Such expenses are: (a) Title report and policy (b) Attorney certificates (c) Recording and other fees (d) Appraisals e) Bid packages Cancellation of Lien To prevent inappropriate windfall profits from the resale of the property, The City of Beaumont will place a lien upon the property for the amount of the loan. If any of the following events occur during the term of the loan, the remaining balance must be repaid: 1. The sale of all or any interest in the subject property. 2. The death of the original loan recipient (in the case of a husband and wife). If both parties to this loan shall decease during its term, the heirs/or executor for the estate would then be required to assume and pay the ranaining balance. 3. A breach of any of the terms of the lien. Applicant Responsibilities A. The applicant must allow The City of Beaumont rehabilitation loan specialist(s) to examine the building to be rehabilitated. The needs and cost of rehabilitation will be developed by the rehabilitation specialist and the property owner. B. The appl-icant can encourage- his own contractor to participate in the competitive bidding. All contractors must meet the requirements of the Community Development/Housing and Neighborhood Conservation Department.