The housing rehabilitation loan program rules and regulations state that City financing is to be used mainly to correct housing code violations and other substandard conditions; these funds are not intended for general property improvements, new construction, or what amounts to redecorating.
To be eligible for an owner occupied loan you must:
- Live in the program area
- Be the owner of record of the property
- have a gross household income within program income guidelines
Eligible Rehabilitation Costs
Most eligible rehabilitation costs can be divided into five areas:
- Health and safety issues: conditions that are hazardous to the people living there--fire hazards, lack of fire escape routes, missing or non-functioning smoke alarms, electric shock hazards, falling hazards, lead-based paint hazards, asbestos hazards, sanitation problems, vermin, etc. Security problems also may need to be addressed in some situations.
- Structural issues: problems with the foundation, the framing, the flooring, the decking, or roof covering that threaten to shorten the useful life of the house. This can include settling, termite damage, water damage, or structural failure due to inadequate original construction.
- Functional issues: problems with the layout and built-in features of the house--privacy, trafficways, clothes storage, food storage, dining space, kitchen work area. In some cases the size of the house or of particular rooms may be a functional problem, and limited remodeling or add-on construction may be considered.
- Heating and energy efficiency: excessive utility bills, drafty living quarters, uneven heat distribution, etc., which may be addressed through a combination of weather- stripping, insulation, door/window repair/replacement, and redesign/ replacement of obsolete heating systems. Central air conditioning generally is not a priority in this program, but it may be considered as part of a new central heating system in cases where adequate climate control cannot be achieved through natural ventilation alone and if the project budget allows.
- Appearance issues: Although City financing is not available for merely cosmetic changes, removal of serious eyesores that detract from the value of the property and neighborhood should be included in a rehabilitation plan. These include junk cars, trash, dead trees, dilapidated outbuildings, and nuisances as defined by the City health code.
Solutions to the kinds of problems listed above may turn out to be relatively simple and inexpensive in some cases, or may require expensive and complicated remodeling and reconstruction in other cases. There is usually a range of choices to consider, depending on how much money is available, the over-all condition of the house, and how the problem fits into the property owner's list of priorities.
For example, a property owner who has only a small amount of equity to work with and who may be planning to sell the property in the foreseeable future may prefer to repair and weatherstrip existing windows; another owner may see a long- range benefit in replacing all the windows and doors with modern, energy-efficient units.
After considering limited solutions to individual problems it may be decided that a more comprehensive approach is needed in some cases. For example, gutting and completely modernizing a room or area that has multiple health, safety, structural, functional, heating, or appearance problems may turn out to be more cost-effective than a piecemeal solution to each problem.
It may be a smart move to repair or replace some items, such as worn shingles or old water heaters that are still functional but will need to be replaced in the near future, when City financing may not be available.
Priority will be given to essential repairs that must be carried out as part of a contract for improvements under a general contractor. When borrowing capacity is limited, changes which are less crucial and which can be done at any time, such as replacement of worn carpeting, will be given lower priority.
In some cases, the homeowner may want to upgrade a part of the house beyond what the City determines is eligible for this program. However, the improvement might still be accomplished through the contract work as long as the additional cost is calculated and the owner agrees to deposit personal funds in the loan escrow account to pay for it.