City Council
MEETING DATE: 6/22/2015
TITLE:
Title
Discussion on ADFAP & SHARP Sewer Assessment Assistance Programs
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FROM:
Tami E. Scott, Administrative Services Director
RECOMMENDATION:
Recommendation
Staff recommends the City Council discuss and provide direction on funding options for two programs- the Assessment District Financial Assistance Program (ADFAP) and Sewer Hook-up Assistance Residential Program (SHARP)
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BACKGROUND:
Both ADFAP and SHARP programs provided assistance in the form of a deferred zero-interest loan, to low and moderate income homeowners who are subject to sewer assessments. The intent of the programs was to assure that income eligible homeowners not be in danger of losing their homes based solely on the imposition of the sewer assessment.
During the initial assessment formation meetings, residents were informed of the availability of both ADFAP and SHARP programs through the Redevelopment Agency Housing Fund. No expectation of funds being available indefinitely was conveyed.
Under State Law, residents in the Cove were required to be connected to the sewer by January 1, 2012. Under the City's Municipal Code, residents in the remainder of the City that are subject to sewer assessments are also required to connect by January 1, 2012 if sewer is available within 200 feet of the residence.
DISCUSSION:
Both Programs commenced in FY 2005/2006. Only pre-2006 home owners were eligible (post January 1, 2006 homeowners would have been aware their property was located in an assessment district and of the requirement that the property be connected to sewer). Assistance was provided on a first-come, first-served basis until funds were exhausted. Participants were required to execute a note and deed of trust, which is recorded against their property to ensure recovery of assistance when the property is sold. Assistance was only provided to homeowners who were current on their existing mortgages, had no outstanding late charges and were current on their property taxes or property tax payment plan.
Since RDA Dissolution, 02/01/2012, there are no available funds to offer these same programs. CDBG funds are currently committed; however, in 2012 City Council approved the allocation of approximately $224,292 for a revolving loan program specifically for SHARP. The loan program carried a 1% interest rate and the payback period was 3-7 years depending on Income Level qualifications. Significant outreach was done to the community resulting in 10 loans. Generally, there was not a desire by the public to pay back interest or have monthly loan payments for this purpose. Due to lack of interest in the program, the funds were subsequently reallocated to CDGB qualified programs presented annually to the City Council for approval.
The current issue at hand is there are a number of residents requesting assistance from the City for ongoing Assessment District obligations as well as assistance with hooking up to the sewer as required under the City's Municipal Code.
Options to Consider- Direct the use of general funds for this purpose; however, we would not have a balanced budget. The funds would have to come from reserves.
Reverse Mortgage- (not offered by the City) although among individual property owners who may be unable to make their annual tax levy or sewer hookup, some have been in their homes for over 30 years and their mortgage is paid off. This could be a source of income for the property owner. This would be an education component. The City could host a presentation.
Assembly Bill 2231- possible source of funds-
-Reinstates the Senior Citizens and Disabled Citizens Property Tax Postponement Program that was eliminated in 2008
-Allows low-income homeowners over the age of 62 or qualified low-income disabled individuals to postpone their Ad-Valorem property tax payments until they choose to sell the property.
-In exchange, the State places a lien on the property, which is payable with interest when the property is sold.
-Effective July 1, 2016
-Household income limit- $35,000
-Equity Requirement in Home - 40%
-No Cap as long as the amount of postponement does not exceed equity requirement
-Fee not to exceed $30
-Interest Bearing at 7%- not compounded
-Administered by State Controller's Office
-Applications for Postponement must be submitted to the State Controller's Office after Sept 1 and before April 10 of the tax year. Controller pays the County Tax Collector on your behalf and liens the property in favor of the State of California.
-Excludes Mobile Homes & Houseboats
-Since Special Assessments are not Ad Valorem Property Taxes there is a question not yet clarified if they will qualify for postponement.
Conclusion-
Option 1- Provide assistance One (1) Time for Property Tax FY 15/16 under established program guidelines to assist while waiting for the implementation of AB2231- Funds to come from General Fund Reserves.
Option 2- Provide assistance One (1) Time for Property Tax FY 15/16 under modified program guidelines.
Option 3- Participate/Sponsor an Educational Forum on Reverse Mortgages or other Financial Options
Option 4- Not pursue anything at this time and wait for AB2231 to commence July 1, 2016.
FISCAL IMPACT:
Option 1 or Option 2- General Fund not to exceed $45,000 for FY 2015/2016
Option 3- Staff Time
ATTACHMENTS: