CITY OF ANAHEIM RESIDENTIAL REHABILITATION PROGRAM
GUIDELINES, POLICIES AND PROCEDURES FOR LOANS AND GRANTS (RRP or PROGRAM)
Amended and Restated August 1, 2020
Amended and Restated May 16, 2023
Amended and Restated October 28, 2025
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Table of Contents
I. PROGRAM OVERVIEW ................................................................................................................
A. Purpose .................................................................................................................................
B. General Program Eligibility Criteria .....................................................................................
C. Overriding Limitations and Constraints................................................................................
D. Code Enforcement Referrals....................................................................................................
E. Program Funding Source ......................................................................................................
F. Program Administrator........................................................................................................
G. Program Manager................................................................................................................
H. Program Implementing Documents ....................................................................................
I. Activity Delivery Costs (ADC) ..........................................................................................
J. Program Appropriation; Funds for Improvements..............................................................
K. Decision on Participation in the Program............................................................................
L. Automatic Application Denial ............................................................................................
M. Program Files......................................................................................................................
II. PROPERTY ELIGIBILITY............................................................................................................
A. Type of Residential Property ..............................................................................................
B. Location...............................................................................................................................
C. Condition.............................................................................................................................
D. Property Title Status ...........................................................................................................
E. Occupancy Standards ..........................................................................................................
F. No Criminal Activity...........................................................................................................
III. APPLICANT QUALIFICATIONS ................................................................................................
A. Income Eligibility ...............................................................................................................
B. Ownership, Occupancy and Capacity .................................................................................
C. Ownership of Other Real Property and Asset Limit...........................................................
IV. DEFERRED CITY LOANS ...........................................................................................................
A. Major Loan..........................................................................................................................
B. Minor Loan....................................................................................................................................
C. Security for Loans ................................................................................................................
D. Default/Acceleration/Repayment of Loans//Heir of Loan Recipient...................................
E. Subordination/Refinancing Request for Loans....................................................................... iii
V. GRANTS...............................................................................................................................................
A. Eligibility and Terms of Assistance .....................................................................................
B. Eligible Rehabilitation Improvements..................................................................................
VI. ONGOING TERMS AND CONDITIONS OF PROGRAM ASSISTANCE.................................
A. Maintenance Requirements .................................................................................................
B. Annual Certification of Owner-Occupancy and Program Compliance...............................
C. Nondiscrimination. ..............................................................................................................
D. Compliance with Program Policies and Procedures............................................................
E. No Rental or Lease of Property...........................................................................................
F. Homeowner Insurance; Hazard Coverage...........................................................................
G. Property Taxes ....................................................................................................................
VII. ADDITIONAL STANDARDS FOR PROGRAM LOANS AND GRANTS.................................
A. Eligible Improvements ........................................................................................................
B. Ineligible Improvements......................................................................................................
C. Priority of Improvements ....................................................................................................
D. Accessibility Improvements ................................................................................................
E. Lead Hazards, Lead-Based Paint Requirements .................................................................
F. Asbestos Requirements...........................................................................................................
G. Standards for Rehabilitation of Historic Properties.............................................................
VIII. PROGRAM PROCEDURES..........................................................................................................
A. Initial Inquiry ......................................................................................................................
B. Waiting List ........................................................................................................................
C. Application/Interview .........................................................................................................
D. Ineligibility ..........................................................................................................................
E. Property Assessment/Initial Inspection/Estimated Cost ....................................................
F. Lead-Based Paint Review ...................................................................................................
G. Asbestos Review.................................................................................................................
H. Work Write-Up. ..................................................................................................................
I. Bid Solicitation ...................................................................................................................
J. Scope of Work Limitation ......................................................................................................
K. Loan/Grant Execution (Closing) Meeting ..........................................................................
L. Pre-Construction Conference..............................................................................................
M. Funding Request .................................................................................................................
N. Notice to Proceed. ............................................................................................................... iv
O. Start-Up/Field Inspections ..................................................................................................
P. Change Orders ....................................................................................................................
Q. Contractor Payments...........................................................................................................
R. Final Inspections/Notice of Completion/Final Payment.....................................................
S. Conflict Resolution .............................................................................................................
IX. REQUIRED RECORD KEEPING AND FILE RETENTION.......................................................
A. PA Maintains Files..............................................................................................................
X. PROGRAM CHANGES.....................................................................................................................
XI. PROGRAM DATABASE. .................................................................................................................
XII. OTHER PROVISIONS...................................................................................................................
A. Environmental Clearance. ...................................................................................................
B. Davis Bacon & Related Acts (DBRA)................................................................................
C. Section 3..............................................................................................................................
D. Equal Opportunity...............................................................................................................
E. Conflict of Interest. .............................................................................................................
F. Relocation............................................................................................................................
G. Applicability of Federal State and Local Regulations/Authority to Administer...... 1 | P a g e
I. PROGRAM OVERVIEW
A. Purpose
The City of Anaheim (City) is a participating jurisdiction in and has been awarded certain funds from the United States Department of Housing and Urban Development (HUD) under Title I of the Housing and Community Development Act of 1974, as amended, Public Law 93- 383, 42 U.S.C.
Section 5301, et seq., and the implementing regulations in 24 Code Federal Regulations 570 (CFR).
Online information about CDBG is found at:
http://www.hud.gov/offices/cpd/communitydevelopment/programs/entitlement/index.cfm City is currently implementing a coordinated multi-year strategy and program to carry out eligible housing activities to benefit persons, households and families of low to moderate income to improve housing opportunities in certain designated target areas in the community, and within the community as a whole. This multi-year strategy, as approved in the 2025-2029 City of Anaheim Consolidated Plan, includes without limitation the allocation of Community Development Block Grant (CDBG) funds in furtherance of the CDBG Program, and is described in the annual action plan.
The City Council established the Residential Rehabilitation Program (“RRP” or “Program”) to comply with the federal regulatory requirements of 24 CFR 570.202(c); to improve the quality of life for income-eligible households by assisting with necessary property repairs and improvements to existing single-family owner-occupied homes in the community, including detached houses, townhomes, condominiums, cooperatives, and owner-occupied mobile homes, to make the homes decent, safe and attractive; to preserve the City’s housing stock; to arrest and prevent the development of blighted areas; and, to identify, alleviate and/or arrest the decline of deteriorating/deteriorated areas.
These Residential Rehabilitation Program Guidelines, Policies and Procedures (together, “Guidelines”) summarize and describe the minimum administrative requirements for participation in the RRP by homeowners in the community and are intended to reinforce and not supplant prudent underwriting practices, when considering an owner’s application to participate in the Program by seeking and qualifying for financial assistance for the repair of a qualified owner- occupied residential property.
B. General Program Eligibility Criteria
This section outlines the general eligibility requirements that must be met in order to qualify for assistance. Criteria include property ownership, income limits based on HUD guidelines, property type, and restrictions on participation by City officials or employees. In addition, limitations apply to the frequency and type of assistance a household may receive under the Program.
1. Owner-occupants of single-family homes, condominiums, townhomes, and mobile homes are eligible to apply to participate in the Program.
2. Program assistance (City Loans or City Grants) for rehabilitation improvements is available only to Low-Income property owners defined as those whose gross household income does not exceed eighty percent (80%) of the Orange County Area Median Income 2 | P a g e
(AMI) adjusted for family size as published annually by the United States Department of Housing and Urban Development (HUD).
3. City Loans: Loans made through the Program are available to qualified owner-occupants of single-family homes, condominiums, and townhomes.
4. City Grants: Grants made through the Program are available to qualified owner-occupants of mobile homes.
5. No member of the City Council of the City of Anaheim and no other employee, official or agent of the City (or its Housing Authority or other associated entity) who exercises any policy-decision making function in connection with the Program can apply to the Program and shall not, directly or indirectly, be eligible for Program assistance.
6. Limitation on Participation: A household submitting an application for Program assistance (“Program Applicant”) upon approval of an application (“Program Participant”) may only receive one form of assistance in form of a City Loan or City Grant through—a grant, Major Loan, or Minor Loan—under these Guidelines during any ten (10) year period. No additional grants or loans may be awarded to the same Program Participant until ten (10) years have passed from the date of the original promissory note, grant agreement or other document committing the funds.
C. Overriding Limitations and Constraints.
The Program and these Guidelines are subject to modification, reduction, or discontinuance at any time by the City, without requirement of prior notice to any applicant. City resources available for the Program are limited. The City reserves the right to decline the participation of any Program Applicant and/or Program Participant in the program at any time.
D. Code Enforcement Referrals.
Code enforcement activities meet the national objective of benefit to low- and moderate-income persons on an area basis under CFR §570.208(a)(1) when carried out in deteriorated or deteriorating areas and when carried out in conjunction with public or private improvements, rehabilitation, or services that may be expected to arrest the deterioration of the area. The City carries out Code Enforcement activities in the deteriorating areas shown the Consolidated Plan and Annual Action Plan and the Program will assist in alleviating and/or arresting deterioration in those areas. The properties inspected by Code Enforcement are located in residential areas where a minimum of fifty- one percent (51%) of the residents in those areas are low- and moderate-income.
E. Program Funding Source.
The primary funding source for the Program is CDBG funds provided to the City by HUD as identified in the City’s Consolidated Plan and each Annual Action Plan while this Program remains in effect.
F. Program Administrator.
City staff and/or consultant(s) specializing in federally funded housing rehabilitation programs 3 | P a g e
will carry out implementation of the Program. The entity (City staff or consultant) acting in the capacity will be referred to as the Program Administrator (PA) for implementation of this Program.
Responsibilities of the PA include:
a. Application intake and Program Applicant qualification determination in accordance with these Guidelines and the established City policies and procedures. b. Construction management oversight including assisting qualified applicants with contractor selection, obtaining bids, initial and progress inspections and additional assignments necessary to carry out the rehabilitation activity to completion.
G. Program Manager.
The Program will be supervised by the Director of Housing & Community Development (Director) and their authorized designee(s) in implementing the Program (together, the Program Manager). At any time, the Program Manager may assume the responsibilities of the Program Administrator.
H. Program Implementing Documents
The implementation documents for each of the forms of financial assistance are as follows:
1. Major Loans originated by the City will include (Major Loan Documents):
a. Residential Rehabilitation Major Loan Agreement (Exhibit B-1), which incorporates the following:
i. Legal Description
ii. Scope of Work
iii. Promissory Note - Major Loan (Exhibit C-1)
iv. Deed of Trust - Major Loan (Exhibit D-1)
v. Buyer Disclosure (Major Loan) – Regulation Z (Exhibit E-1) vi. Loan Disclosure Statement - Major Loan (Exhibit F-1) vii. Request for Notice (Exhibit G)
2. Minor Loans originated by the City will include (Minor Loan Documents):
b. Residential Rehabilitation Minor Loan Agreement (Exhibit B-2), which incorporates the following:
i. Legal Description
ii. Scope of Work
iii. Promissory Note – Minor Loan (Exhibit C-2)
iv. Deed of Trust – Minor Loan (Exhibit D-2)
v. Buyer Disclosure (Minor Loan) – Minor Loan (Exhibit E-2) vi. Loan Disclosure Statement – Minor Loan (Exhibit F-2) vii. Request for Notice (Exhibit G)
3. Grants issued by the City will include (Grant Documents):
c. Residential Rehabilitation Grant Agreement (Exhibit B-3), which incorporates the 4 | P a g e
following:
i. Legal Description
ii. Scope of Work
Additional, Replacement or Modified documents: If in the judgment of the Program Manager the documents referenced herein require modification, replacement or additional documents are necessary or appropriate for the implementation of the Program, such documents may be added, replaced or modified by City from time to time. Also refer to part L of this section, below. 5 | P a g e
I. Activity Delivery Costs (ADC).
Activity Delivery Costs (ADCs) are the eligible costs directly related to carrying out a specific rehabilitation project, as permitted under [24 CFR § 570.202 and § 570.206 for CDBG] / [24 CFR § 92.206(d) for HOME]. Activity Delivery Costs (ADC) are reasonable and necessary expenses incurred by the City or the Program Participant in connection with the rehabilitation of the Property. At the direction of the Program Manager, one or more the ADC may be provided to the Program Participant in the form of a grant.
1. Standard ADC Limits
a. ADCs shall be limited to 25% of hard construction costs. b. For projects with hard costs under $20,000, a minimum Activity Delivery Cost (ADC) may be applied to reflect the fixed delivery activities required regardless of project size. The Program Manager shall establish this minimum based on prevailing market conditions, including current consultant and contractor rates.
2. ADC includes the following direct costs:
a. Staff salaries, benefits
b. Application processing and underwriting
c. Preparation of work specifications
d. Bid coordination, including estimate gathering and contractor selection e. Construction oversight, inspections, cost estimates, and payment processing f. Lead-based paint inspections, reports, and related oversight g. Environmental reviews
h. Project close-out
The following costs are generally included as part of the loan or grant amount. At the discretion of the Program Manager, these costs may, in certain cases, be granted to the Program Participant.
a. Appraisals, title reports, credit reports, escrow fees b. Architectural, engineering, or other professional services necessary to prepare plans and drawings
c. Building permit fees
d. HERS Report (Home Energy Rating System Report)
3. Ineligible Costs
The following costs may not be charged as ADCs:
a. General program marketing or outreach not tied to a specific property b. Training, travel, or meetings not specific to the project c. Administrative overhead not directly related to the project’s delivery 6 | P a g e
4. Extraordinary Circumstances
Additional ADC may be approved when documented circumstances substantially increase staff time required to complete a project. Examples include, but are not limited to:
a. Additional environmental requirements (e.g., floodplain 8‐Step process, historic preservation consultation, endangered species review).
b. Complex hazard abatement (e.g., lead‐based paint hazard control, asbestos mitigation).
c. Multiple re‐bids or contractor changes due to procurement challenges or non‐performance.
d. Repeated scope changes requiring re‐inspection or updated cost estimates. e. Extended coordination needs, such as:
a. Additional meetings or communications to resolve ownership, eligibility, or documentation issues.
b. Language assistance or reasonable accommodation for disability. c. Scheduling difficulties requiring multiple additional site visits. f. Prolonged dispute resolution involving contractors, subcontractors, or other project stakeholders.
J. Program Appropriation; Funds for Improvements.
CDBG funds will be budgeted annually through the City’s Consolidated Plan and Annual Action Plan updates and amendments, along with the City’s regular appropriation and budget process.
Program funds are not guaranteed and subject to availability; in the event funds are not appropriated or otherwise have been appropriated and encumbered, then no City Loans or City Grants will be issued thereafter for the Program during the City’s applicable fiscal year.
K. Decision on Participation in the Program.
The Program Manager reserves sole, reasonable discretion to, and may deny or defer action on an application for a City Loan and/or City Grant will if the Program Applicant does meet all criteria of the Program. Further, the Program Manager and PA will consult and cooperate in review of Program applications, whether resulting in approval or disapproval of each application.
L. Automatic Application Denial.
The City may deny an application for a City Loan and/or City Grant under the Program if the Applicant has provided false or erroneous information, or made material omissions or materially misleading statements, or failed to complete the application process, if the City Loan is not a first or second position loan, or if there are any unresolved clouds on title to the Property in connection with and/or at the time of the application to the Program. Examples of clouds to title include, but are not limited to, persons named on title who have not signed the loan Application, persons named on title who are deceased, judgment(s) or other lien(s) against the Property for nonpayment of taxes of any kind, and mechanics liens filed against the Property. 7 | P a g e
M. Program Files.
This checklist summarizes the minimum required documents that must be maintained in each Program Applicant/Participant file to comply with Community Development Block Grant (CDBG) regulations under 24 CFR 570.506.
Required Document CDBG Citation
1. Program Application & Intake Forms 570.506(b)(1)
2. Income & Eligibility Verification 570.506(b)(3)
3. Property Location Information 570.506(b)(1)
4. Environmental Review Records (if applicable) 570.506(b)(6); 24 CFR Part 58
5. Work Write-Ups, Specifications, Contractor Bids 570.506(b)(5)
6. Construction Contracts, Permits, Change Orders 570.506(b)(5)
7. Inspection Reports & Compliance with Property
Standards
570.506(b)(5)
8. Loan/Grant Agreements, Promissory Notes,
Mortgages
570.506(b)(5)
9. Final Inspection & Project Completion
Documentation
570.506(b)(5)
10. Financial Closeout Summary 570.506(h)
11. Audit & Financial Records 570.506(h)
12. Other Records as Required by HUD/City Audit 570.506(b)(13) 8 | P a g e
II. PROPERTY ELIGIBILITY.
Following determination of the Program Applicant’s eligibility as described above, the Program Applicant must demonstrate eligibility of the Property for the rehabilitation improvements in order to qualify for Program assistance. If approved for Program assistance, Program Applicant will be referred to as Program Participant. Real property will be evaluated and must meet each of the minimum requirements set forth below to be considered eligible Property.
A. Type of Residential Property.
The Property must be an owner-occupied single-family residence, including condominiums, townhomes, or mobile home (registered with the State Housing and Community Development Department, and subject to the financial feasibility policy described herein), and the principal residence of the eligible Program Participant.
B. Location.
Subsequent to the submittal of a complete Application with all supporting documentation as received from a Program Applicant, compiled and reviewed by the PA, and then submitted to the Program Manager, each Participant application and Program assistance, if any, shall be prioritized in the following order:
1. CDBG Target Areas
a. Emergency
b. Health, Safety and Accessibility
c. Other Critical Home Improvements
2. Citywide
a. Emergency
b. Health, Safety and Accessibility
c. Other Critical Home Improvements
C. Condition.
The Property must need repairs to correct (1) emergency, (2) health, safety, and accessibility, and (3) other critical home improvements, and eligible repairs must meet the City’s building and property rehabilitation standards. Types of needed improvements may include: (a) aid the mobility of the physically disabled and/or elderly, (b) correct existing nonconforming local and/or state code requirements, (c) correct existing local and/or state code violations, (d) correct existing nonconforming development standards, (e) protect the structural integrity of the Property, (f) promote neighborhood safety, (g) improve energy efficiency, or (h) refurbish exterior and/or interior improvements. The type of repairs approved in the Program will depend of the type of assistance (City Loans and/or City Grant) received by the Program Participant.
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D. Property Title Status.
1. The PA and/or Program Manager will obtain a preliminary report of title to the Property. The PA and/or Program Manager, as necessary, will review title including the scheduled exceptions, to evidence that the Program Applicant is not in default or has liens against the Property that evidence owner as ineligible for the Program.
2. The Property cannot have an outstanding Notice of Default or Notice of Sale filed against it.
3. Grant Consideration Due to Title Status: If the Program Participant has significant liens outside of a first or second purchase money mortgage(s), such as outstanding tax liens, liens for home repair, medical, and auto liens the Program Applicant is deemed ineligible for a City Loan under the Program and the application is deemed denied for a City Loan; nonetheless, depending on the physical condition of the Property and other qualifications of the Property owner, the Applicant may be considered for approval of a Program Grant, in the sole and absolute discretion of the Program Manager.
Notwithstanding the foregoing, the City reserves the right, in its sole and absolute discretion as exercised by the Program Manager or Director, to convert an approved Program Loan to a Program Grant if it is determined that such conversion is necessary or appropriate to further the objectives of the Program, to address extraordinary financial hardship of the Program Participant, or to ensure the preservation and rehabilitation of the Property.
E. Occupancy Standards.
The Property must be owner-occupied and must not be overcrowded. For purposes of the Program, the maximum occupancy permitted for eligible properties shall not exceed federal Housing Quality Standards (“HQS”) (24 CFR 882.109). These standards require that the residence contain at least one bedroom or living/sleeping room of appropriate size for each two persons residing on the Property. Therefore, the maximum occupancy for an eligible Property shall be two persons per bedroom and living/sleeping area; and the minimum occupancy for the Property shall be one person per bedroom (unless such minimum occupancy is waived in the sole and absolution discretion of the Director.) F. No Criminal Activity.
If a Property has been the site of repeated or ongoing drug-related arrests or arrests for other felonious criminal activity as evidenced by police records/reports, then the Property is ineligible for Program assistance unless and until the owner demonstrates that such activities have been fully abated.
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III. APPLICANT QUALIFICATIONS
A. Income Eligibility
All households applying for a City Loan and/or City Grant under the Program must qualify as a Low-Income Household, defined as having an annual gross income at or below 80% of the Orange County Area Median Income (AMI) based on the current income limits published by HUD. To determine income eligibility, the methodology set forth in HUD’s Part 5 definition (24 CFR § 5.609), including the treatment of income derived from assets shall be applied.
“Annual gross income” as defined in Part 5 means the total income anticipated to be received from all sources—including income from assets—by all adult household members during the 12-month period following the date of application, before any deductions are made. The determination of income shall be made by the PA with concurrence of the Program Manager.
All persons on title to the Property, all persons residing on the Property, and all persons within the household must be included in the income verification or prove to the satisfaction of the PA and Program Manager that they do not reside in the property and do not contribute to housing costs associated with the Property.
The income limits in effect on the date the application is submitted are used to assess eligibility. However, if the determination of income eligibility exceeds 180 days, the HUD published income limits as of the date of eligibility determination will be used. “Household” is defined as one or more persons who will occupy a housing unit. Unborn children count in family size determination.
B. Ownership, Occupancy and Capacity.
1. An eligible Program Applicant must own and occupy the Property to be rehabilitated as their principal residence, must be of legal age, and must have the capacity to competently enter into binding contractual agreements.
2. All persons on title, of the Property shall complete and sign the Program Application.
a. The PA and/or Program Manager will obtain a preliminary report of title to the Property (or, in the case of a mobile home, evidence satisfactory to the Program Manager and/or Director showing that the Program Applicant owns a mobile home which such Applicant uses as the Applicant’s sole residence); PA and Program Manager will review title including the scheduled exceptions, to evidence that ownership is held by the Program Applicant, that the Program Applicant is not in default or has liens against the Property that evidence owner as ineligible for the Program. i. The Property cannot have an outstanding Notice of Default or 11 | P a g e
Notice of Sale filed against it.
ii. If the Program Applicant has significant liens outside of a first or second purchase money mortgage(s), such as outstanding tax liens, liens for home repair, medical, and auto liens the Program Applicant is deemed ineligible for a City Loan under the Program and the application is deemed denied for a City Loan; nonetheless, depending on the physical condition of the Property and other qualifications of the Property owner, the Program Applicant may be considered for approval of a Program Grant, in the sole and absolute discretion of the Director.
3. Trusts. Property that is part of a trust and included in a trust for estate planning purposes may be eligible for Program participation so long as all beneficiaries of the trust (other than contingent beneficiaries who receive no benefit from the trust nor have control over trust assets) income-qualify and occupy the Property as the primary residence and the City’s policy regarding property held in trust is satisfied after review and approval by the Program Manager and counsel. Criteria for review of Property held in a trust include:
a. Submittal of a true copy of the fully executed trust agreement, including all amendments thereto (note: an Application will not be further reviewed or processed until copy received).
b. PA and/or Program Manager will review trust agreement to verify and determine:
i. Property is expressly referenced to be a part of the trust property, i.e., held/owned by the trust and ownership matches the lot/book report description;
ii. Program Applicant is the trustee with power to act, and if the trustees are husband and wife, just as with property held in joint tenancy or as community property, both husband and wife, as trustees, must be signatories;
iii. the trustee(s) must have the express power in the trust agreement to buy, sell, encumber, borrow against, and enter into contracts relating to the Property;
iv. review the signature block and certification of trust, and prepare a correct signature block for all subsequent Program
documents;
v. the Trust provides for ownership of real property and authorizes execution of promissory notes and deeds of trust secured by the Property.
C. Ownership of Other Real Property and Asset Limit.
Program Applicant cannot have an ownership interest in income-producing property or 12 | P a g e
assets of an amount exceeding $100,000, all as determined by the Program Manager or their designee.
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IV. DEFERRED CITY LOANS.
A. Major Loan
1. The City makes available to eligible Low-Income households that own and occupy an eligible single-family, condominium or townhomes satisfying the criteria herein (Property), a Major Loan of up to $100,000.00 for rehabilitation of the Property.
2. Major Loans will bear a simple interest rate of three percent (3%) per annum with repayment of the principal and interest deferred for a period of thirty (30) years from the date of the deed of trust and promissory note of the Major Loan, or accelerated upon default, all based on compliance with terms of the Program Loan Documents.
3. Major Loans are evidenced by a promissory note and secured by a deed of trust subordinate only to purchase money loan(s), and such loan has a 30-year term at which time the note, principal and accrued interest, shall be due in full, or repaid earlier due to default and acceleration as referenced in section C of this Section IV.
4. The Director may approve a Major Loan in excess of $100,000.00 as determined necessary for emergency health and safety repairs and correction of code violations, in their sole and absolute discretion, to complete the rehabilitation of an eligible Property. Actual loan amounts shall in no event exceed the lesser of:
a. the actual eligible costs of rehabilitation as described below, or b. such amount when added to the existing encumbrances does not exceed ninety percent (90%) of the current fair market value of the Property.
5. Loan to Value Ratio for Major Loans. For all Major Loans issued under the Program, the PA and/or Program Manager may deny a Program Applicant for participation in the Program if the loan-to-value (LTV) ratio of the Property currently exceeds ninety percent (90%).
a. The LTV is based on an appraisal, or valuation analysis, or review of comparable properties and recent sales value of the Property and other debt already secured by the Property plus the Program Loan.
b. In connection with review of the Application, the PA and/or Program Manager will review information regarding the valuation of the subject Property and determine if the LTV requirement is met by the Program Applicant, and if the LTV exceeds 90% then the Application will be denied
6. Title Review. The PA is required to pull and review a preliminary title report to determine eligibility for all Major Loans.
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B. Minor Loan.
1. The City makes available to eligible Low-Income households that own and occupy an eligible single-family, condominium or townhomes satisfying the criteria herein (Property), a Minor Loan of up to $15,000.00 for rehabilitation of the Property.
2. Minor Loans are evidenced by a promissory note and secured by a deed of trust subordinate only to purchase money loan(s), and such loan has a 10-year term at which time the note, principal and, if applicable accrued interest, shall be due in full, or repaid earlier due to default and acceleration as referenced in section C of this part.
3. A Minor Loan does not bear interest. There is no forgiveness during the first five (5) years of the loan. If the Program Participant remains in full compliance with all terms of the Minor Loan (including, without limitation, the deed of trust, promissory note, and related documents), forgiveness begins after the fifth year.
Starting on the sixth (6th) anniversary of the loan (date of the loan instruments) and on each anniversary date thereafter through the tenth (10th) anniversary, twenty percent (20%) of the original principal balance is forgiven. Forgiveness is applied only upon the completion of each full year.
Accordingly, by the end of the tenth (10th) year (the first day of the eleventh year), the Minor Loan will be fully forgiven and no repayment will be required, provided the Participant has remained in compliance throughout.
4. Loan to Value Ratio for Minor Loans: A loan-to-value (LTV) ratio of the Property does not apply.
5. Title Review. The PA is required to pull and review a preliminary title report to determine eligibility for all Major Loans.
C. Security for Loans.
Every Program Applicant approved for participation, referred to as Program Participant, shall execute all applicable Loan Documents, and other instruments related to issuance of the applicable Loan under the Program.
D. Default/Acceleration/Repayment of Loans/Heir of Loan Recipient.
In the event of repayment default by the Program Participant of the Property under the Loan Documents or any other implementing instrument thereto, default interest shall accrue from the date of default at the rate of ten percent (10%) simple interest per annum. The Program Manager may, but is not required to, waive loan acceleration in the event of Owner default and establish an amortization and monthly payment schedule and/or adjustment in the interest rate for repayment.
In any event of default or the Maturity Date of the Loan Note occurs, the entire amount of principal and accrued interest on the Loan shall be immediately due and payable. The Major Loan and Minor Loan shall be repaid in full or repaid earlier due to default and acceleration if one or more of the following actions occurs during the term of the loan.
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1. Sale or transfer of all or any part of the subject Property;
2. Upon transfer or change of title or ownership of the Property, except to a surviving spouse who was a co-Applicant and vested with title at application, and except in the case of marriage or death of a spouse, and except in the case of death of both Program Applicant and the sole heir qualifies as low income and intends to own and occupy the property as their primary personal residence;
3. Provided however, transfer of the Property into an inter vivos trust for estate planning purposes by the Program Participant is permissible as described above in section I.B.(6);
4. Renting or leasing out all or any part of the Property;
5. Failure to continuously own and occupy the Property as borrower’s primary, personal residence;
6. Refinancing without express prior written permission of Program Manager in their sole discretion;
7. Securing an additional loan or loans against the Property;
8. Withdrawal of cash or equity from the Property;
9. Upon default of senior lien mortgage(s) the Property;
10. Failure to pay property taxes, assessments or past due liens against the Property;
11. Failure to maintain insurance as required under the Program Loan Documents;
12. Making improvements to the Property that do not comply with applicable Uniform Codes, and local, state and federal laws and regulations, including as required obtaining building and other permits from issuance through final inspection; and
13. Other default under the Program Loan Documents;
Heir of A Deceased Loan Recipient
At the sole and absolute discretion of the City, through the Program Manager, one limited exception to the full repayment requirement may be considered. If a loan recipient dies, an heir who meets the following criteria may submit a formal written request to the City to assume the Major Loan in lieu of immediate repayment:
1. Qualifies as a Low-Income household;
2. Meets all Program requirements (as if applying to the Program at the time of the original recipient’s death, including income eligibility, occupancy, and property use restrictions);
3. Agrees to assume and comply with the terms of the original Major Loan, including all obligations such as annual certifications and any other continuing compliance requirements; and
4. Intends to own and occupy the subject property as their primary residence. 16 | P a g e
The request must be accompanied by supporting documentation that demonstrates:
A strong probability that title to the rehabilitated property will vest in the heir upon the conclusion of probate or other disposition of the deceased loan recipient’s estate; and The heir’s ability and willingness to comply with all Program terms.
The City expressly reserves the sole and absolute right to approve or deny such a request, and may reverse any preliminary decision to allow the exception at any time prior to title vesting in the eligible heir and confirmation that all Program requirements are met.
E. Subordination/Refinancing Request for Loans.
The City will consider subordinating its lien position to a refinanced purchase money mortgage only if all subordination criteria as established by the Program Manager are satisfied, including without limitation:
1. Program Participant is refinancing the senior lien purchase money mortgage to reduce the interest rate and there is no increase in the outstanding principal amount of such mortgage or monthly mortgage payment and there shall be no equity or cash withdrawal from the refinancing.
2. At the time of refinancing, the Program Participant shall certify to City its continued compliance with all Program requirements, its continued ownership and occupancy of the home, and Program Participant has not made or caused any improvement to the Property without first obtaining building and other Uniform Code permits, as and if applicable.
If the request for refinancing and re-subordination meets all criteria, the City will provide the form of the subordination agreement related to an eligible refinancing, which shall include notice and cure rights to the City and related protections to the benefit of the City for signature by the Director on behalf of the City, and by the Program Applicant and its new lender for the refinancing. 17 | P a g e
V. GRANTS.
A. Eligibility and Terms of Assistance.
1. The City makes available to eligible Low-Income households that own and occupy an eligible mobile home satisfying the criteria herein (Mobile Home), a Grant for rehabilitation of the Mobile Home.
2. The maximum amount available under the grant program shall be the lesser of:
a. that amount necessary to make essential repairs necessary to render the coach safe for occupancy; or
b. The reasonably estimated value of the mobile home, as rehabilitated; or c. Fifteen Thousand Dollars ($15,000.00).
3. A Grant is evidenced by a Residential Rehabilitation Grant Agreement.
4. The Mobile Home must be in immediate need of rehabilitation improvements.
5. The Grant must be used to correct existing local and/or state code violations.
6. Loan to Value Ratio for Grants: A loan-to-value (LTV) ratio of the Mobile Home is not required.
7. Title Insurance: While a demonstration of ownership and occupancy by such owner is required and necessary in connection with consideration and approval, or disapproval, of an Application by the owner of the Mobile Home, no title insurance policy is required in connection with a Grant.
8. Excess Grant Funds: The Director may in their sole and absolute discretion approve Program grants in excess of the limits set forth above to complete essential rehabilitation of eligible owner- occupied mobile home.
9. Limit on Number of Grants: Except as specifically provided in the Section C of this part eligible Mobile Homeowners may qualify for only one grant no more than once every 10 years. Additional grant funds may, however, be made available to previous grant recipients to cover the actual costs of correcting serious code or health and safety defects as determined by the PA and Program Manager and limited to the scope of work described in the table below.
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B. Eligible Rehabilitation Improvements.
The following describes the scope and type of improvements that may be eligible for funding for a Program Grant. Eligible repairs include those that correct immediate threats to the health and safety of homeowners and minor repairs determined to be necessary by the PA and/or Program Manager. Examples of repairs include the following:
1. Water heater repair/replacement
2. Grab Bars
3. Plumbing repairs
4. Repair/Replacement of heating unit
5. Roof repairs/replacement (leaking roofs)
6. Missing or non-working exterior door locks
7. Entry way porch subflooring replacement (deteriorated subflooring) 19 | P a g e
VI. ONGOING TERMS AND CONDITIONS OF PROGRAM ASSISTANCE.
A. Maintenance Requirements.
Each Program Participant that receives a City Loan or City Grant under this Program shall maintain the Property in good repair and working order and shall make, or cause to make, all necessary and proper repairs, renewals, and replacements in order to keep the Property in a decent, safe, and sanitary condition in accordance with community standards and as set forth in the applicable Program documents and subject to the Anaheim Municipal Code, Uniform Codes and other applicable laws and regulations. Each Program Participant of a Property assisted through the Program shall not permit criminal activities to occur on or about the Property; shall not permit the Property to suffer material deterioration or decline, or maintain, cause to be maintained, or permit to be maintained any public or private nuisance on or about the Property.
B. Annual Certification of Owner-Occupancy and Program Compliance.
For a term of five (5) years as to City Grants and for the entire term that a City Loan remains outstanding, the subject Property shall be and shall continue to be owned in fee by and occupied as the primary residence of the Owner and their household and that the Program Participant and their Property remain in compliance with the Program under the applicable City Grant Documents and/or City Loan Documents. Participant shall be obligated to execute and deliver to City an annual certification of ownership and occupancy of the Property in a form provided by the City. The Owner shall deliver to the City a Certificate of Annual Compliance (“Certificate”) each year by the due date specified in writing by the City. The Certificate shall cover the immediately preceding calendar year (or, in the case of the first reporting period, any partial year). The Certificate shall be in the form attached hereto as Exhibit J, or in such other form as the Director may prescribe from time to time.
The City reserves the right to establish or adjust the due date for submission of the Certificate of Annual Compliance each year. This flexibility ensures alignment with HUD reporting requirements, City audit schedules, and program monitoring needs. By allowing the City to identify the due date annually, the Program can maintain consistency with federal and local compliance cycles and reduce administrative conflicts with other reporting obligations.
C. Nondiscrimination.
There shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the selection of contractors to complete the rehabilitation work financed with Program assistance, or in the sale, leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the Property, and shall cause compliance with the HUD and State law non-discrimination and equal opportunity laws and regulations is required.
D. Compliance with Program Policies and Procedures.
Throughout the applicable term of Program assistance, each Program Participant shall comply with all Program requirements and procedures as set forth in these Guidelines, Policies and Procedures, 20 | P a g e
and as required by the Program Manager, and as set forth in the applicable City Grant Documents and City Loan Documents.
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E. No Rental or Lease of Property.
Throughout the applicable term of Program assistance, the Program Participant of the Property assisted through the Program, as a participant, shall not rent or lease all or any portion of the Property, nor enter into an agreement for the rental or lease of the Property. Further, the Program Participant shall not use the Property for short-term rental or as a vacation rental by Participant or through AirBnB, VRBO, HomeAway or other shared economy use for income or other compensation.
F. Homeowner Insurance; Hazard Coverage.
The Program Participant of the Property assisted through the Program shall maintain during the 30-year term of the City Loan, and for a period of not less than five (5) years as to a City Grant: (1) an all risk (including fire insurance coverage and flood insurance, where applicable) property insurance policy insuring the Property in an amount not less than the full replacement value of the structures on the Property, and (2) comprehensive general liability insurance. The policy shall name the City of Anaheim as an additional insured/loss payee.
G. Property Taxes.
The Program Participant shall be and remain current on all property taxes and assessments for the term of the City Loan and provide proof of payment upon request. A deferment of property taxes or property tax payment plan is acceptable as long as all required installment payments are current. 22 | P a g e
VII. ADDITIONAL REHABILITATION STANDARDS FOR PROGRAM LOANS AND GRANTS.
A. Eligible Improvements.
1. Subject to the limitations in the tables above, respectively, for City Loans and City Grants, Program funds for are available for rehabilitation improvements that are physically attached and permanent in nature as follows:
a. Modifications which aid the mobility of the elderly and physically disabled such as shower units with seats, lever hardware, retrofitting toilets to achieve adequate height, moving power points and light switches, ramping, reconstructing doorways, lowering sinks in kitchens and bathrooms;
b. Testing for the presence of lead hazards, lead-based paint and associated clearance, interim control or hazard abatement through clearance, as required, by applicable laws and regulations, including without limitation compliance with Title X of the 1992 Housing and Community Development Act, 42 U.S.C. §4800, et seq. and the implementing regulations that aim to take advantage of rehabilitation events as a cost-effective opportunity to reduce lead based paint (LBP) in existing housing. (See: 24 CFR Part 35, 69 FR 34271; 69 FR 40474; and, 82 FR 4166 (together, as existing and further revised from time to time, the LBP Regs.); c. Exterior work to help preserve or protect structures, roofing, siding (if significantly damaged), re-leveling, bracing (including earthquake bracing), repair/replacement of screens/windows, doors and door locks, structural and/or foundation damage, replacement of deteriorated attached porch and step structures; d. Interior work to make a structure more livable and repair/replace/restore important parts such as plumbing (i.e., re-pipe and replacement of fixtures), damaged flooring, faulty or inadequate heating/cooling systems, inoperable built-in appliances, damaged ceilings, water heaters, electrical wiring and service, painting (if walls are damaged);
e. Weatherization and energy conservation items such as insulation, caulking, weather-stripping.
f. Fumigation and treatment of termites and pest control; g. Repairs that remedy existing legal nonconforming uses such as garage conversions, previous additions that do not conform to current standards, including compliance with applicable Uniform Codes and other local and state laws and regulations, etc.; and
h. If repairs are required to address issues with lead-based paint, the amount to address such repairs shall be included within the amount of the City Loan or, if applicable, the City Grant.
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B. Ineligible Improvements.
1. Program funds in no event shall be allowed for certain rehabilitation improvements including:
a. Installation and/or repair of recreational items such as barbecues, bathhouses, greenhouses, swimming pools, saunas, television antennas, tennis courts; b. Luxury items such as carpeting (other than water-damaged or carpeting that is not decent, safe or sanitary), burglar alarms, burglar protection bars, dumbwaiters, kennels, murals, flower boxes, awnings, patios, decks and storage sheds/workshops. Any freestanding appliances such as microwave ovens, refrigerators, dishwashers, and fans;
c. New room additions, extensions of rooms, or garage conversions; or d. Other items deemed ineligible from time to time by the Director.
C. Priority of Improvements.
Improvements will be approved and made to the Property in the following order of importance:
1. Emergency repairs.
a. Eligible project work is only considered an emergency if not addressing the issue will adversely impact the health and safety of the residents. i. Examples of emergency work includes LBP abatement if a child age six years or under has documented elevated blood lead levels, no hot running water, blocked plumbing due to deteriorated pipes, and broken or unusable furnace. ii. Emergencies are handled on a case-by-case basis and can take precedence over households on the wait list. The PA, in communication and cooperation with the Program Manager and representatives of applicable City departments, are responsible for determining if a particular housing problem is an emergency.
2. All violations related to health/safety standards and code violations. a. At a minimum, at the completion of each project, all health and safety issues and all code violations shall be corrected.
b. The proceeds of each City Loan or City Grant, as applicable, shall be used to pay for rehabilitation work that addresses all health and safety issues and code violations, and no loan or grant can be approved that would permit a home after rehabilitation to be out of compliance with applicable codes. c. Applicable codes include the Anaheim Municipal Code, Uniform Building Code, the National Electrical Code, the Uniform Plumbing Code, the Uniform Mechanical Code, and Chapters 5-10 of the Uniform Housing Code, ADA Section 504, and 24 | P a g e
relevant sections of Title 24 that pertain to disability access. d. In addition to requiring that the building be brought into compliance with applicable codes, the Program requires specific additional upgrades in all projects, including:
upgrade of electrical equipment grounding and bonding system; GFCI replacement in kitchen, bathroom and exterior areas; fire extinguishers; smoke detector upgrade to current Uniform Building Code; and installation of carbon monoxide detectors; and exterior painting, if needed.
3. Repair or replacement of major systems including but not limited to roof, electrical, plumbing, and air conditioning/heating systems.
4. Energy efficient items such as new dual glazed windows, insulation, energy efficient light fixtures, low flow toilets.
5. Exterior and interior incipient deficiencies. An incipient deficiency exists if, at the time of inspection, it appears that the physical condition of an element in the structure may fail or deteriorate into an actual deficiency in the near future (within 1-2 years).
6. General property improvements.
D. Accessibility Improvements.
A Property occupied by disabled household member(s) qualifies for services aimed at removing architectural barriers.
Examples of eligible improvements that will alleviate architectural barriers include, but are not limited to:
1. Grab bars
2. Transitional floor coverings
3. Bathtubs or showers
4. Replacement of doorknobs with lever action handles
5. Plumbing alteration or modifications
6. Ramps
7. Sliding doors
8. Kitchen cabinet modifications
9. Widening doorways and hallways
10. Electrical switches and convenience outlet relocation
11. Toilet alteration or modifications
12. Flooring
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E. Lead Hazards, Lead-Based Paint.
1. As part of the Program application, Program Applicants are provided with information about the dangers of lead hazards, and lead-based paint (LBP). Evidence of receipt of this information is maintained in the project file.
2. The LBP requirements can have a significant impact on the final scope of work. If the housing unit in question was built prior to January 1, 1978, the LBP requirements apply.
3. In connection with the Application process and determining whether the Application will be approved, the PA will complete the Lead Safe Housing Requirements Screening Worksheet. In addition, PA will cause the Property to be inspected including evaluation of whether there are LBP and/or asbestos issues at, on or about the improvements at the Property.
a. Program Participant shall review and execute an authorization and right of entry to the City, the PA and its inspection contractor(s) to allow for inspection of the property and to evaluate the scope of work necessary to the Property. b. If after inspection, LBP hazards are found, then that work will be completed as part of the loan or grant scope of work; however, due to limited Program funds and evaluation of financial feasibility, an Application may still be denied if the scope or extent of work necessary to the Property is a basis to deny the Application. c. If after the inspection and LBP work completed, the Application is approved then the amount of funds expended for such LBP (and as applicable asbestos) inspection, hazard abatement and clearance shall be included in the principal amount of the City Loan, or, in the sole discretion of the Program Manager, may be paired with a City Grant that conforms to Section I. of these Guidelines.
4. Based on the amount of subsidy provided to the project, different levels of action are required by the PA and Program Manager, as shown in the following table:
<$5,000 $5,000-$25,000 >$25,0001
Approach to Lead
Hazard Evaluation
and Reduction
Do no harm Identify and control
Lead hazards
Identify and Abate
Lead Hazards
Notification Yes Yes Yes
Lead Hazard
Evaluation
Paint testing of
surfaces to be
disturbed by
rehabilitation
Paint testing of
surfaces to be
disturbed by
rehabilitation AND
Risk assessment
Paint testing of
surfaces to be disturbed
by
rehabilitation AND
Risk assessment
Lead Hazard
Reduction
Repair surfaces
disturbed during
rehabilitation, use
lead-safe work
practices, clearance
Interim controls,
lead- safe work
practices, clearance
test of unit upon
completion
Hazard abatement,
lead- safe work
practices, third party
clearance test of unit
upon completion
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test of work site upon
completion
1 Lead Hazard abatement/clearance work that is estimated to exceed $25,000 may be authorized on a case-by-case basis in the sole, absolution discretion of Anaheim through the Director.
5. Selection of LBP Testing Firm - The City shall ensure that all required inspections and testing services are performed by a Certified Lead-Based Paint (LBP) Testing Firm. The City may secure such services using one of the following methods:
Option 1 – PA Selection
The PA, acting as an outside consultant, may subcontract with a Certified LBP Testing Firm to conduct inspections and related services. The PA will ensure the firm is properly certified and qualified. While not subject to the City’s procurement process, the PA will make reasonable efforts to obtain cost-effective services consistent with HUD, EPA, and State requirements.
Option 2 – Direct City Procurement
At its discretion, the City may solicit proposals directly from Certified LBP Testing Firms and enter into a contract with the selected firm. Contracts may be for a term of up to one (1) year, renewable for up to two (2) additional one-year periods, subject to satisfactory performance, continuing certification, and availability of funds.
In all cases, the selected LBP Testing Firm must meet HUD, EPA, and State certification requirements.
6. Cost of LBP Testing Services
a. The cost of initial LBP testing, preparation of work specifications, and initial clearance inspections will be covered by the City Program as an activity delivery cost. These costs will not be an out-of-pocket expense to the Program Participant. b. The LBP Testing Firm engaged to perform LBP (and, where applicable, asbestos testing) will be paid by either the PA or the City, depending on whether the firm is contracted through the Program Administrator or directly by the City. Payment requires submittal of:
An invoice listing the homeowner’s name and address, description of services, and amount due; and
Evidence of LBP clearance in the form of a completed CDPH Form 8552 – Lead Hazard Evaluation/ Clearance Report.
c. If an initial LBP clearance test fails, the cost of all supplemental clearance inspections and related testing will be the responsibility of the Certified LBP Abatement Firm. The Abatement Firm must provide proof of payment to the LBP Testing Firm before final 27 | P a g e
payment for abatement work is approved. In limited circumstances, the Program Manager may authorize supplemental costs to be covered through a City Loan or paired with a City Grant in accordance with Section IV of these Guidelines.
7. Selection of LBP Abatement Firm - Based on the Work Specifications prepared by the LBP Testing Firm, the PA will obtain at least two (2) estimates from Certified LBP Abatement Firms. The lowest responsible bidder shall be selected.
8. LBP Abatement Contract - The selected LBP Abatement Firm shall enter into a City- prescribed contract directly with the homeowner. No work shall commence until a written Notice to Proceed has been issued.
9. Payment to LBP Abatement Firm - The City will pay the LBP Abatement Firm directly upon submission of:
a. An invoice listing the homeowner’s name and address, description of services, and amount due and
b. Evidence of final LBP clearance, documented on CDPH Form 8552.
10. Distribution of Reports - Copies of all LBP and asbestos inspection reports, risk assessments, and clearance results shall be provided to the homeowner and made available to contractors as an appendix to the Work Description.
F. Asbestos Requirements.
1. Under the City’s Residential Rehabilitation Program, properties undergoing renovation, rehabilitation, or demolition must comply with all applicable asbestos regulations. The City’s role is limited to funding and coordinating the initial asbestos inspection only. The City will not coordinate or contract for asbestos removal or abatement services. Those responsibilities rest with the Prime Contractor performing the rehabilitation work.
2. Per Cal/OSHA (Title 8 CCR § 1529 and § 5208) and CSLB guidance:
a. Buildings constructed in 1980 or earlier are presumed to contain asbestos- containing construction materials (ACM) unless laboratory testing proves otherwise .
b. For buildings constructed after 1980, testing is still required if:
o The material is known or suspected to contain asbestos, or o Work will disturb certain material types (e.g., flooring, insulation, roofing, textured ceilings, pipe wrap, siding).
3. Selection of Cal/OSHA-Certified Asbestos Consultant (CAC) Firm -A Cal/OSHA- Certified Asbestos Consultant (CAC) firm must conduct the inspection and sampling of suspect building materials in accordance with Cal/OSHA and applicable Air Quality Management District (AQMD) rules. The City may secure such services using one of the following methods:
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Option 1 – PA Selection: The PA, as an outside consultant, may subcontract with a CAC firm to conduct the initial inspection. The PA will ensure the firm is properly certified and qualified. While not subject to the City’s procurement process, the PA will make reasonable efforts to obtain cost-effective services consistent with HUD, EPA, and State requirements.
Option 2 – Direct City Procurement: At its discretion, the City may contract directly with a CAC firm for a term of up to one (1) year, renewable for up to two (2) additional one-year periods, subject to satisfactory performance, continuing certification, and availability of funds.
In either case, selected firms must meet all HUD, EPA, and State certification requirements
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4. Cost Allocation
The Initial ACM Inspection (inspection, lab analysis, and report) will be paid for by the City Program as an activity delivery cost. These costs will not be an out-of- pocket expense to the Program Participant.
Payment for the Initial ACM Inspection will be made by either the PA (if subcontracted) or the City (if directly contracted), upon submittal of:
o An invoice listing the homeowner’s name and address, description of services, and amount due.
o Applicable notifications and forms, including:
Cal/OSHA Asbestos Notification Form 1A (for projects over 100 sq. ft.) AQMD or Air District notifications (e.g., SCAQMD Rule 1403) Laboratory chain-of-custody documentation
Hazardous waste manifests (if applicable)
5. Distribution of Report - The PA will provide a copy of the asbestos inspection report to all contractors bidding on the project.
6. Prime Contractor Responsibilities
The Prime Contractor is responsible for procuring and paying for all asbestos removal/abatement services, if required. These costs must be incorporated into the contractor’s bid and scope of work.
The ACM abatement firm will act as a subcontractor to the Prime Contractor. The City will not be a party to any contract between the Prime Contractor and the abatement firm.
The ACM abatement firm will be paid directly by the Prime Contractor, subject to submission of:
o An invoice identifying the homeowner, description of services, and amount due. o Evidence of final clearance, including the CAC firm’s signed clearance letter, laboratory results, and visual inspection documentation.
7. Recordkeeping - Copies of all asbestos-related documents, including inspection reports, notifications, and final clearance results, must be provided to the homeowner and maintained in the Program file for HUD and State compliance.
G. Standards for Rehabilitation of Historic Properties.
Historic homes/structures are included in the Program, but special requirements must be met under the National Environment Policy Act and the National Historic Preservation Act of 1966, as amended. As part of the Environmental Review Record, RRP projects will be submitted for review to the State of California, Office of Historic Preservation, where a structure is within a designated Historic District, identified as a Historically Significant Structure, on the list of Structures of Historical Interest or is more than 50 years old. 30 | P a g e
a. In accordance with the 2014 State Historic Preservation Office (SHPO) guidance to the City of Anaheim, all mobile homes and any building less than 50 years in age will not be submitted for review.
b. Under direction from SHPO, historic properties shall be rehabilitated in accordance with the most appropriate standards based on the age and architecture of the structure.
c. The basic principle is to preserve the character of the exterior spaces and surfaces.
This generally entails the submission of the Work Description to SHPO for review and comment
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VIII. PROGRAM PROCEDURES.
A. Initial Inquiry.
Interested homeowners (“Prospective Applicant”) may contact the PA or the City about the Program. As a first step, the PA will conduct a pre-screening via telephone or in-person of the Prospective Applicant. During the pre-screening, the Prospective Applicant will be asked about the annual gross income of the household, the potential repairs and scope of work necessary to the Property.
B. Waiting List.
If a waiting list exists, in response to a Prospective Applicant’s initial screening, the Prospective Applicant is placed on the waiting list. Prospective Applicants are offered the opportunity to apply for assistance by waiting list priority [a first-come, first served basis with location priority shown in section II(B)]. If a waiting list does not exist, the Prospective Applicant will proceed to the Application stage.
C. Application/Interview.
The Prospective Applicant has 30 days to complete and return the Program Loan or Grant application along with required supporting documentation. Should a Prospective Applicant fail to respond to the initial contact for assistance or to provide any of the required documentation within the 30-day period, the Prospective Applicant’s name will be removed from the waiting list. If the Prospective Applicant desires assistance at a later time, he/she will be placed on the waiting list at that time.
An application packet is provided to the Prospective Applicant for completion and submittal to the PA, along with supporting documentation. An interview is scheduled with the Program Applicant.
The Program is fully explained; application forms and documentation are reviewed. Verifications are obtained for income, assets, employment, benefits, and mortgage. Title report and appraisals are also obtained.
If the PA or Program Manager encounter material discrepancies and/or misrepresentations, and/or there are income, asset, household composition, or other important questions that can't be resolved, the PA or Program Manager reserve the right to deny assistance to the household. In this case, the Applicant may re-apply after twelve months have elapsed from the time of written assistance denial.
D. Ineligibility.
If the Program Applicant is determined not eligible by the PA or the City, the PA will notify the Program Participant in writing. The letter will explain with general detail why the Program Applicant is ineligible for the Program. The PA shall file the application in the ineligible projects folder.
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E. Property Assessment/Initial Inspection/Estimated Cost.
The PA conducts a property assessment (Assessment) to document existing code violations, incipient code violations, otherwise eligible items and any requested home improvements. An explanation regarding what improvements are eligible and/or ineligible and priorities for the work to be accomplished occurs and includes the file for presentation to the Program Manager. If the PA believes the Prospective Applicant may be eligible and will proceed with the Program, then if the Property is a pre-1978 unit a LBP inspection and testing may be requested and undertaken.
Findings are noted on an inspection form and/or photo documented and later used by the PA to prepare the work write-up. Estimated costs are determined by the PA who has years of experience in the building industry, and in reviewing contractor bids and verifying cost with materials suppliers. The Program Participant reviews the completed work write-up and cost estimate, and the approved write-up is incorporated into bid documents.
F. Lead-Based Paint Review.
The PA shall ensure that each home or structure at the property that was constructed prior to 1978 is tested for LBP hazards. If LBP hazards are determined to be present, lead hazard abatement work will be completed by a licensed contractor in accordance with HUD requirements. The LBP testing and hazard abatement procedure is in place to comply with the Department of Housing and Urban Development (HUD) LBP Regs, including “Requirements for Notification, Evaluation, and Reduction of Lead-Based Paint Hazards in Federally Owned Residential Property and Housing Receiving Federal Assistance” and any updated or supplemental brochures and information promulgated under 24 CFR Part 35. The results of the LBP testing will be included as an attachment to the Scope of Work.
G. Asbestos Report Incorporated into Scope of Work.
The PA shall ensure that each home or structure undergoing rehabilitation, renovation, or demolition is tested for asbestos-containing material (ACM) by a Cal/OSHA-Certified Asbestos Consultant (CAC) firm. The City will pay only for the initial asbestos inspection and laboratory report, which will be provided to contractors as part of the bidding process.
If ACM is determined to be present, asbestos abatement work will be completed by a qualified asbestos abatement contractor retained by the Prime Contractor, in accordance with Cal/OSHA, U.S. Environmental Protection Agency (EPA), and local Air Quality Management District (AQMD) requirements. The asbestos testing and abatement procedures are in place to comply with applicable state and federal regulations governing the identification, handling, and disposal of asbestos-containing materials.
The results of the initial asbestos testing and laboratory analysis will be included as an attachment to the Scope of Work.
H. Scope of Work.
For each approved application, the PA prepares a Scope of Work for review and approval by the 33 | P a g e
owner and City.
1. The Scope of Work provides a detailed description of the work to be performed on the Property.
2. The Scope of Work must include work items that are mandatory health and safety items and may not be removed from the Scope of Work. These items are mandatory to correct health and safety violations and to preserve the value of the home.
Once the Scope of Work is completed, the PA submits a complete application package with all supporting documentation to the Program Manager for approval or disapproval. Program Applicant is considered a Program Participant upon application approval.
I. Contractor Eligibility and Bid Solicitation.
The City encourages participation from at least five (5) contractors for each project, with the goal of obtaining at least three (3) reasonable bids. While inviting five contractors is recommended, it is not required so long as three valid bids are received.
A bid walk-through will be scheduled by the PA on a set date and time. The Program Participant may either solicit their own bids or request that the PA solicit bids on their behalf. If the PA solicits bids, invitations will be emailed to at least five eligible contractors who have expressed interest in participating in the Program. The Program Participant will select the list of contractors to be invited to the bid walk- through.
Upon request, bid results will be shared with participating contractors. However, the names and contact information of other bidders will remain confidential.
Contractor Qualifications
Contractors must be licensed and bonded through the California Contractors State License Board (CSLB).
Contractors must provide the PA with proof of current Workers’ Compensation Insurance and Comprehensive General Liability and Property Damage Insurance with combined single limits of at least $1,000,000.
Bid Evaluation
Cost reasonableness is determined by comparing bids received with the cost estimate prepared by the PA.
Bids should generally be within ten percent (10%) of the PA’s cost estimate. If the selected bid exceeds this threshold, the Program Participant must provide written justification. Program Participants are encouraged to accept the lowest reasonable bid.
Contractor Eligibility Verification
The PA will verify contractor eligibility by:
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1. Confirming licensure with the California Contractors State License Board.
2. Checking the Federal List of Debarred Contractors.
3. Obtaining a self-certification from the contractor affirming they are not listed on the Federal debarred list (this certification is incorporated into the Construction Contract).
Once eligibility is confirmed, the contractor will be issued a provisional award of bid (pending loan approval). Notices of non-award will be sent to contractors not selected.
J. Scope of Work Limitation.
Program Participant shall not contract independently with the selected contractor to concurrently perform additional work on the property beyond the scope of the final work write-up until a Notice of Completion is issued by the PA and City and acknowledged by the Program Participant evidencing satisfactory completion of the improvements identified in the final work write-up and rehabilitation contract and final inspection has been obtained and approved for all outstanding building or other permits for the work. Until such Notice of Completion is issued and final inspection has been approved for the permits, an Program Participant shall not contract independently with any other contractor to undertake any other improvements or work on the property during the term the selected contractor is doing work.
K. Loan/Grant Execution (Closing) Meeting.
The PA shall schedule and hold the loan closing/preconstruction meeting at a designated location with the owner.
1. Program Participant executes all City Loan or City Grant Documents; or, as applicable described in Section I.
2. Copies of the executed documents will be provided to owner upon execution.
3. Applicable recordable original documents will be caused to be recorded by the City, and all other original documents will be placed in a file to be maintained by City.
4. For City Loans, the executed Promissory Note - Major Loan (or, in the case of a Minor Loan, the executed Promissory Note – Minor) shall be delivered by the PA to the City to be stored in the City Clerk’s vault.
L. Loan Signing and Pre-Construction Conference.
The City will prepare all required Loan or Grant Instruments (“Documents”) and meet with the Program Participant (Homeowner) to execute them before the pre-construction conference.
Following this step, a pre-construction conference will be scheduled with the Program Participant, the selected Contractor, and the PA. At this meeting:
The PA will review the Scope of Work, pay schedule, project start date, and anticipated completion date.
The PA will prepare and facilitate execution of the City-prescribed Construction Contract between the Program Participant (as Owner) and the selected Contractor. The Construction Contract shall incorporate the approved work write-up and all program requirements. 35 | P a g e
M. Funding Request.
After the Construction Contract has been executed, the PA will prepare a loan or grant funding package (“Funding Request”) on behalf of the Program Participant. This package includes:
The executed Loan or Grant Documents,
The fully signed Construction Contract, and
All supporting rehabilitation documentation.
The Funding Request package is then submitted to the Program Manager for review. If package is approved, City will issue direct payment(s) to the contractor through City’s Finance Department check request process or through the City established escrow account.
N. Notice to Proceed.
Once the Finance Department has completed contractor setup and all required documents have been approved and recorded (as applicable), the City will issue a Notice to Proceed authorizing the Program Participant’s selected Contractor to begin rehabilitation work. No work may commence before the Notice to Proceed is issued.
O. Start-Up/Field Inspections.
The PA shall monitor the project from start-up through completion. The PA will conduct regular site (typically at the time of a payment request) visits to:
Verify that work is consistent with the approved scope of work, Confirm that the project is on schedule and within budget.
During site visits, the PA will review progress with both the Program Participant and the Contractor. This provides an opportunity to resolve issues promptly and ensure that both parties are satisfied with the construction process.
At the completion of each phase of work, the PA will conduct an inspection to confirm satisfactory progress. Upon approval, the Program Participant will authorize payment to the Contractor. Each payment authorization shall then be submitted to the Program Manager for release of funds.
P. Change Orders.
1. Requirement for Written Change Orders
o Written change orders are required when the Program Participant requests any changes in the work write-up, such as:
Eliminating an item completely;
Eliminating one item and substituting another; or
Adding new items.
2. Content of Change Orders
o Each change order must state the change and the dollar value for the change. o The change order must be signed by both the contractor and the Program Participant and submitted to the PA and Program Manager for approval.
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o If approved, the PA will generate an official change order, which must be signed by both the owner and the contractor.
3. City Loan Contingency for Change Orders
o City Loans include a ten percent (10%) contingency to cover approved change orders. o Any change orders that exceed the ten percent (10%) contingency must be reviewed and approved by the Program Manager or Director.
o If additional funds are required, the City Loan may be increased and amended loan documents executed or the Program Participant must pay the difference directly.
4. Approval of Change Orders Exceeding Contingency
o No change order exceeding the ten percent (10%) contingency will be approved until either:
The City Loan is amended to include the additional amount; or The Program Participant provides sufficient personal funds to cover the excess cost. o Change orders cannot proceed until the financing method is finalized and the official change order is fully executed.
Q. Contractor Payments.
Funds for rehabilitation improvements included within the approved scope of work shall be administered by the Program Manager and caused to be disbursed as progress payments subject to a ten percent (10%) retention, with such retention to be released upon confirmation of satisfactory completion of the work, inspection and approval by the PA and Program Manager and by the Program Participant, issuance of a Notice of Completion (which in the case of mobile homes is not to be recorded) and submittal of lien waivers from all material suppliers and subcontractors in accordance with the requirements set forth below. City will issue direct payment(s) to the contractor through City’s Finance Department check request process or through the City established escrow account.
1. The PA is responsible for arranging a job site inspection by Program Manager and submitting evidence of completed work (photos) for payment. The Program Participant or their contractor, as designee, is also responsible for permit inspections. Program funds will not be disbursed for work completed without all necessary permits and required inspections, including, without limitation, building permits, or which does not meet the approval or standards of the City’s Planning and Building Department, applicable state and local codes, applicable permits, and these Program Guidelines.
2. The PA and/or Program Manager will visit the job site and verify that (a) the work included for payment is satisfactorily completed and within the scope of eligible work, and (b) all necessary inspections by the City’s Planning and Building Department or other responsible department or entity have been satisfactorily accomplished.
3. Upon such determinations, the PA and/or Program Manager will process a Payment Authorization Form, which includes the amount of disbursement, name and address of owner and their contractor, and a description of the work completed. The Program Participant must also approve the work completed and authorize payment. a. All checks shall be made payable to and issued to directly the contractor performing rehabilitation work at the property, except as determined by the Program Manager in their sole discretion that a joint check to the owner and the contractor may be necessary.
R. Final Inspections/Notice of Completion/Final Payment. 37 | P a g e
Upon favorable final site inspection by the PA, a Notice of Completion is prepared, signed by the Program Participant, and then recorded. The final ten-percent (10%) retention payment, if applicable, is released 35 days after the recording of the Notice of Completion. At the discretion of the Program Manager, a memo to file indicating the project is complete may substitute for a recorded notice of completion.
S. Conflict Resolution.
1. In the event of any dispute between the Program Participant (Owner) and the Contractor regarding the contracted work, either party may submit written notice of the nature of the dispute to the PA and the Program Manager. Within thirty (30) calendar days of such notice, the Owner and Contractor shall make good faith efforts to resolve the dispute. If the dispute is not resolved within that period, the matter shall be addressed in accordance with the dispute resolution provisions of the Owner/Contractor Rehabilitation Contract, which may include binding arbitration or other remedies available at law or in equity.
2. Program Concerns. Complaints concerning the Residential Rehabilitation Program must be in writing and addressed to the Program Manager; the Program Manager will contact the complainant and attempt to resolve the problem. A written response will be made within thirty (30) days of receipt of a written complaint. If the complainant is not satisfied after the written response, a complaint may be filed with the Director who will schedule a meeting with the Program Manager. A written response by the City’s Director or their designee will be made within fifteen (15) working days of the receipt of the complaint.
Disputes between the City and the Owner that are not resolved in accordance with these procedures shall be submitted to binding arbitration in accordance with the provisions of the City Loan Documents or City Grant Documents, as applicable IX. REQUIRED RECORD KEEPING AND FILE RETENTION.
A. City Maintains Files/Period of Retention.
All Prospective and Program Applicant files and all approved Program Participant files shall be maintained by PA until completion of the project. Files will be transferred to the City upon completion of the project and maintained according to the following prescribed time periods:
1. General Requirement (24 CFR 570.502(b) & 570.506)
All records pertinent to CDBG housing rehabilitation activities, including but not limited to homeowner applications, income documentation, environmental review records, work write-ups, contractor bids, contracts, inspection reports, asbestos/lead clearance reports, and payment records, must be retained for a minimum of four (4) years after the activity is determined to be complete. Loan and Grant Files (24 CFR 570.502 & 24 CFR 92.508)
Completion” means the final drawdown of CDBG funds for the activity
2. Loan Records
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For housing rehabilitation activities assisted through loans (amortized, deferred, or forgivable), records must be retained for the full term of the loan plus three (3) years after the loan is repaid, satisfied, or otherwise terminated.
3. Litigation, Audit, or Claims
If any litigation, audit, or claim is initiated before the expiration of the applicable retention period, records must be retained until the matter is fully resolved, even if this extends beyond the standard retention period.
B. Project Files must include at a minimum:
1. Application and Eligibility Documentation
Completed application and all supporting documentation verifying household income status.
Documentation of eligibility as a Low-Income Household. Evidence of owner-occupancy.
Property information reports.
2. Program and Environmental Records
Official correspondence related to the rehabilitation project. Completed environmental review documentation.
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3. Construction and Compliance Records
Inspection reports.
Lead-Based Paint (LBP) documentation, including:
o Lead Safe Housing Requirements Screening Worksheet (Exhibit K or other format designated by the Director).
o LBP testing results, as applicable.
o Contractor qualifications and renovation firm certification. o Property Owner/Rehab Contractor Contract Addendum for Reduction of Lead Paint Hazards (Exhibit L or other format designated by the Director). o LBP clearance certification.
Before and after photographs.
Work descriptions, internal cost estimate, and bid evaluations. Contractor clearances, insurance certificates, business license, and W-9. Recorded Notice of Completion.
4. Financial and Contractual Records
City Loan or Grant Documents, as applicable.
Executed owner-contractor construction agreement.
Logs of each disbursement.
All invoices, payment releases, and lien releases.
Notice to Proceed, Notice of Completion, and warranties. Copies of payment checks.
Finalized and signed City permits.
5. Loan Servicing Records
Documentation related to demands, reconveyances, subordinations, and defaults. 40 | P a g e
X. PROGRAM CHANGES.
The City Council has authorized the Program Manager and Director to make modifications to the Program as follows:
1. Program implementation procedures.
2. Program application and associated documents.
3. Program Loan Documents and Grant Documents with final approval by the City Attorney.
4. Other procedural changes necessary for the compliance with State and Federal regulations and effective and efficiency of the program.
City Council action is required to approve the following Program modifications:
1. Priority of assistance.
2. Participant eligibility criteria (income limits, ownership status, etc.).
3. Dollar amount of Loan or Grant assistance.
4. Terms of Loan or Grant assistance (e.g., interest rate, term length, and repayment conditions).
XI. PROGRAM DATABASE.
For each fiscal year, PA shall maintain a Program database containing the case number, name, address, telephone number, racial/ethnic data, census tract, block group, household size, household income, Low Income or Very Low Income status, housing cost burden percentage, year built, application date, inspection date, Work Write-ups, approval date(s), projected, estimated post- rehabilitation value, loan funds awarded, project soft costs (i.e. title, credit, asbestos/lead-based paint testing), construction contract amount, contractor payment information, contract award date, final inspection date, recordation of Notice of Completion Date, approval of completed work, and project phase (i.e. pre-construction, construction, complete). 41 | P a g e
XII. OTHER PROVISIONS.
A. Environmental Review Record (ERR).
The City will not approve projects that are considered substantial rehabilitation under the Program. Only minor rehabilitation projects are eligible. A Request for Release of Funds (RROF) is not required.
Use of HUD CDBG funds requires all activities to be cleared under 24 CFR Part 58. The Residential Rehabilitation Program (RRP) will not be cleared at the program level. Instead, each eligible minor rehabilitation project will be reviewed and cleared individually through completion of a HUD CEST (Categorical Exclusion Subject To 24 CFR 58.35(a)(3)(i)).
For purposes of the Program, minor rehabilitation means work that:
Does not alter the building footprint;
Does not increase the number of units by more than 20%; and Does not result in a substantial improvement (rehab cost ≥ 50% of the property’s market value).
Typical examples include roof replacement, window replacement, HVAC upgrades, and accessibility modifications.
Each project-specific CEST will address all required factors under 24 CFR 58.5, including historic preservation, floodplain, noise, toxic substances, and other site-specific conditions. Emergency repairs are not subject to SHPO concurrence.
B. Davis Bacon & Related Acts (DBRA).
Pursuant to 24 CFR § 570.603 – Other Federal Requirements:
(a) “The requirements of the Davis‐Bacon Act (40 U.S.C. 3141–3148) apply to construction work financed in whole or in part with CDBG funds, except that such requirements apply to the rehabilitation of residential property only if such property contains not less than 8 units.”.
For single‐family rehab programs, Davis‐Bacon is not triggered if:
a. One home at a time is being worked on; or
b. Multiple homes are being worked on at one time but each is contracted separately with its own scope or work and contractor agreement and the total units under one contract is fewer than 8 units.
C. Section 3.
Section 3 projects are housing rehabilitation, housing construction, and other public construction projects assisted under HUD programs that provide housing and community development financial assistance when the total amount of assistance to the project exceeds a threshold of $200,000. For Program Participants, this threshold is calculated by adding the loan or grant amount to any activity delivery costs. When this combined total exceeds $200,000, Section 3 requirements are triggered. 42 | P a g e
D. Equal Opportunity.
Program Applicant shall not be discriminated against on the basis of race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, creed, ancestry, national or ethnic origin, age, family or marital status, handicap or disability, genetic information, or any other arbitrary basis. In addition, Program Participant may not discriminate in the use, occupancy, and awarding of contracts with respect to the property to be rehabilitated with the assistance of an RRP City Loan.
E. Conflict of Interest.
The Conflict of Interest requirements of 24 CFR Section 570.611 shall be followed:
City staff, elected officials, consultants, agents, and subrecipients who are involved in the planning, approval, administration, or implementation of any CDBG-funded activity must avoid any personal or financial interest that may compromise or appear to compromise their objectivity or impartiality.
No individual covered by this policy may obtain a financial interest or benefit from a CDBG- assisted activity, or have a financial interest in any contract, subcontract, or agreement related to CDBG funding. This prohibition applies whether the benefit is direct or indirect and includes any interest held by an immediate family member, business associate, or organization with which the individual is affiliated.
This policy applies throughout the individual's period of involvement in the CDBG program and for two years following the end of their involvement.
F. Relocation.
Relocation is not contemplated as a part of this rehabilitation activity; provided however, if an unanticipated event occurs that requires temporary relocation, and such relocation is essential to the accomplishment of rehabilitation activity and is not the responsibility of the Program Participant, such relocation shall be performed in compliance with the provisions of the Uniform Relocation Assistance and Real Property Acquisitions Policies Act of 1970 and Section 104(d) and may be paid for using Program funds.
G. Applicability of Federal State and Local Regulations/Authority to Administer.
While all Program funds are subject to the requirements of these Guidelines, there may be additional special provisions and limitations depending on changing requirements of the funding source. Consequently, additional requirements not shown in these Guidelines may apply and, thus, the Housing & Community Development Director (Director) or their designee may amend these Guidelines from time to time to reflect changes in the requirements of the funding.