HomeMy WebLinkAboutFY23 Housing Rehabilitation Programs Manual Eff June 15 2022.doc
Administrative Policy & Procedural Manual for Federally-Funded
Housing Rehabilitation Programs
City of Iowa City
Prepared by
Neighborhood and Development Services
adopted by City Council on June 22, 1993
Administrative Review and Revision effective March 1, 1996
Administrative Review and Revision effective July 1, 1998
Administrative Review and Revision effective February 1, 2000
Administrative Review and Revision effective August 10, 2001
Administrative Review and Revision effective November 21, 2005
Administrative Review and Revision effective August 20, 2009
Administrative Review and Revision effective February 6, 2013
Administrative Review and Revision effective October 19, 2016
Administrative Review and Revision effective June 28, 2019
Administrative Review & Revision effective November 1, 2019
Administrative Review & Revision effective April 30, 2020
Table of Contents
Page
Preface ............................................................................................................................ 1
Chapter 1 Eligibility Requirements .......................................................................... 2
Chapter 2 Assurance that Rehabilitation Project will be Completed ....................... 5
Chapter 3 Eligible Costs .......................................................................................... 6
Chapter 4 Financial Assistance Categories, Loan Terms, Limitations
and Conditions ....................................................................................... 9
Chapter 5 Processing and Submission of Rehabilitation Cases ............................. 12
Chapter 6 Loan Summary Settlements/Account Management ............................... 14
Chapter 7 Rehabilitation Agreements ..................................................................... 17
Chapter 8 Recapture of Rehabilitation Assistance .................................................. 20
Chapter 9 Determining Work to be Done ................................................................ 21
Chapter 10 Contracting for Rehabilitation Work ........................................................ 22
Chapter 11 Inspection of Rehabilitation Work ........................................................... 26
Chapter 12 Complaint Procedure.............................................................................. 28
Chapter 13 Definitions ............................................................................................. 29
Appendix Exhibit 1 – Calculating Annual Gross Income ........................................ 33
Exhibit 2 - Program Priorities .................................................................. 34
Exhibit 3 - Table of Median Income ........................................................ 35
Exhibit 4 – Policy for Housing Rehabilitation
Subordination Agreements ................................................... 36
Exhibit 5 – Inspection Documentation..…………………………………… 37
Exhibit 6 – Payout Authorization…………………………………………… 38
Exhibit 7 – Targeted Neighborhood Area Maps…………………………... 39
Preface
This handbook serves as the technical guide to the City's owner-occupied housing rehabilitation
programs administered by Neighborhood Services.
The Housing Rehabilitation Programs include:
I. Comprehensive Home Rehabilitation (CDBG and HOME)
II. Exterior Repair Program
III. Residential Accessibility
IV. Emergency Repair
V. Manufactured Home Repair
VI. Energy Efficiency Program
Funding for the various program components under the Housing Rehabilitation Program is
authorized by the City Council and provided by U.S. Department of Housing and Urban
Development. Both Community Development Block Grant (CDBG) and the HOME Investment
Partnerships Program (HOME) may provide funding for this program. The 1990 National Affordable
Housing Act, as amended, authorizes the use of these HOME funds.
While the CDBG program allows cities considerable flexibility in developing rehabilitation programs
to meet the housing needs of their citizens, the HOME program is considerably more restrictive. In
this manual, regulations and procedures listed apply to both programs with additional requirements
of the HOME program specifically noted.
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Chapter 1. Eligibility Requirements
General. This chapter sets forth property and owner eligibility requirements for a rehabilitation loan
or grant. The property must need rehabilitation to meet the Iowa City Housing Code Standards
(section 14-5E of the City Code).
A. Location
All programs are available for properties that are within Iowa City’s city limits for
homeowners that meet federal eligibility requirements.
B. Ownership
1. Owner-Occupied Dwellings, Condominiums and Cooperatives. The owner-occupant
of a single-family dwelling, condominium or cooperative unit must meet the definition
of a homeowner and must have held legal title or a land sales contract. An applicant
may only receive assistance up to the maximum dollar amount, which is $24,999 for
a Comprehensive Rehab project. This maximum amount will not include project
delivery costs (e.g. title/lien search, recording cost, etc.).
a. Applicants for rehabilitation assistance are ineligible if there are unpaid
federal, state, or local tax liens on the property.
2. Contract Holder. A land sales contract purchaser must, at a minimum, meet all of
the following requirements to be eligible for rehabilitation assistance to cover
rehabilitation costs.
a. The contract shall be a written, legally binding instrument involving property
that will be for continued residential use after rehabilitation.
b. The seller may not convey any interest in the property to any other party
unless the conveyance is subject to the land sales contract, except that the
seller may retain the right to mortgage the property for an amount that does
not exceed the unpaid portion of the contract purchase price.
c. Under the contract, the seller and any subsequent holder of the title to the
property must be obligated, without qualification, to deliver a warranty deed
to the property to the purchaser upon full payment of the contract price, or
some lesser amount.
d. Under the terms of the contract, the purchaser shall have:
Full use, possession, and quiet enjoyment of the property.
Equitable title to the property.
e. The purchaser shall have possession and use of the property under the con-
tract for twelve months prior to applying for rehabilitation assistance and
must be a homeowner as defined herein.
f. The title holder must sign an addendum to the land sales contract which will
allow rehabilitation to proceed.
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C. Occupancy
A homeowner shall verify that the property to be rehabilitated is the homeowner's principal
place of residence.
D. Income Eligibility
1. Income Limits
HUD annually determines the median income levels for Iowa City as shown in
Exhibit 3 attached to this manual. The income of an applicant may not exceed 80%
of the median family income for Iowa City. Please note that the terms of repayable
loans may vary for different income levels (See Chapter 4). The Housing
Rehabilitation application form lists sources included to determine gross annual
income. (See also Exhibit 1).
2. Assets
If the applicant has net assets in excess of $5,000, the excess amount is multiplied
by the current passbook savings rate and counted as earned income. If a household
has over $100,000 in assets (not including equity in the property to be rehabilitated
or retirement assets) as defined in this Manual, the household is not eligible for
assistance.
E. Ownership & Income Verification
1. Ownership Verification
For all applications, the applicant must provide written documentation that has been
recorded, such as a copy of a deed to the property or a title certificate. For mobile
homes, such documentation may be in the form of a tax certificate. If uncertainty
exists as to the adequacy of documentation, the case shall be referred to the City
Attorney's Office which may require additional supporting documentation.
2. Income Verification
For housing rehabilitation assistance totaling over $5,000, the applicant must provide
documentation in support of their income eligibility. The City shall review the
information prior to application approval. For projects estimated to cost $5,000 or less,
the applicant must sign an income/asset verification statement, an incurred expenses
acknowledgement and a current mortgage statement. For income eligibility, the
applicant's gross income is computed as per the HUD Section 8 program (See Exhibit
I).
F. Additional Requirements for ALL Assisted Units under the Comprehensive
Rehabilitation Program
For HOME-funded projects the value of the property after rehabilitation must not exceed
95% of the average purchase price of Iowa City property sales as determined by HUD
203B limits.
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G. Additional Requirements for Manufactured Home Repair Program
1. An applicant may receive rehabilitation assistance up to a maximum of $6,000.
Assistance will be in the form of a grant.
2. This maximum assistance threshold cannot exceed $6,000 over a 7 year period and
applies to the address assisted and/or the owner assisted with the funds. Any additional
assistance after the 7 year period will be approved by the housing rehabilitation
specialist based on need on a case-by-case basis.
3. An applicant shall have title to the unit or a valid contract for sale prior to the date of
application for Rehabilitation Assistance.
H. Additional Requirements for the Energy Efficiency Program
1. An applicant may receive rehabilitation assistance from a minimum of $300 .00 to a
maximum of $6,000. Assistance will be in the form of a no-interest loan.
2. The program is available to qualified applicants from September 1st through March 1st
each year.
3. Proof of a free energy assessment is required thru the Green AmeriCorp
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Chapter 2. Assurance that Rehabilitation Will be Completed
A. General
Before the City can reserve funding for any rehabilitation project, the applicant must
assure that all work included in the work write-up and subsequent change orders will be
completed by signing a contract covering the work to be completed. In cases where the
proposed rehabilitation costs exceed the amount of assistance, the City will not provide
funds unless the applicant can provide the additional amounts needed to assure
completion of the work.
B. Rehabilitation Assistance on Residential Property
If the applicant is obtaining supplemental financing, the City will not approve a loan
application until the City receives evidence (a letter) that the applicant has obtained an
adequate and satisfactory supplemental loan commitment from the lender. If the
applicant obtains the loan from a recognized lending institution, evidence furnished to
the Rehabilitation Specialist or Program Assistant shall consist of a bona fide
commitment to lend money for the rehabilitation work. The loan shall be in an amount
which, when added to the rehabilitation assistance and any other funds furnished by the
applicant, will be sufficient to complete the required work. All sof the applicant's
supplemental funds shall be expended prior to the rehabilitation funds. A verification of
these expenditures shall be provided to the Rehabilitation Specialist or Program
Assistant.
C. Failure to Complete Rehabilitation Work
If the applicant receiving assistance fails to complete rehabilitation work in the time
determined by the Rehabilitation Specialist or Program Assistant or fails to comply with
the terms and conditions of the Rehabilitation Agreement, the City may elect to cancel
the loan or, in the case of projects other than “self-help projects”, may complete the
rehabilitation. Except for extenuating circumstances, as solely determined by the
Neighborhood Services Coordinator, work shall be completed within 270 days from the
date the Rehabilitation Agreement was signed.
If the City elects to cancel the loan, it shall provide written notice of cancellation to the
applicant by certified mail. Upon cancellation, the full amount of rehabilitation assistance
provided prior to the cancellation date becomes due and payable.
If the rehabilitation on projects other than “self-help projects” can be completed with the
funds escrowed for the project, the City may, but is not obligated to, finish the work by
whatever method it deems expedient. The cost of completing the rehabilitation shall
become part of the loan on the rehabilitated property.
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Chapter 3. Eligible Costs
A. General Eligible Costs for CDBG Owner-Occupied Rehab Programs include labor and
materials; replacement of principal fixtures and components of existing structures; water
and sewer connections; installation of safety devices, including smoke detectors, carbon
monoxide detectors, radon systems; conservation costs for water and energy efficiency;
sidewalks, garages (see Section K for ineligible garage expenses), and driveways when
accompanied with other rehabilitation needed on the home; and evaluating and treating
lead-based paint. The City restricts costs by program.
B. Eligible Costs for the Comprehensive Rehabilitation Program include the costs of
satisfying the requirements of the Iowa City Housing Code and HUD Housing Quality
Standards, correcting incipient violations, energy conservation, accessibility modifications,
fire safety measures (Section 14-5E-17 of the City Code) and related fees as described
below:
1. Requirements of Housing Code Standards Costs of meeting a specific requirement
of housing standards regarding:
a. Rehabilitating, removing, or replacing elements of the dwelling structure, in-
cluding basic systems, and other improvements to the property such as
window, door, roof replacement, entry ways, walkways and driveways. The
term "basic systems" includes such items as furnaces, water heaters, fixed
electrical equipment, sanitary fixtures and other appliances required to meet
Iowa City Housing Code Standards.
b. Providing sanitary facilities, including expanding and finishing space nec-
essary to accommodate those facilities if required by Iowa City Housing
Code Standards.
c. Grading, filling or landscaping of the ground, if required by Iowa City Housing
Code Standards.
d. In cases of limited funds, work will be prioritized to ensure basic systems and
life safety items are addressed first.
2. Accessibility Modifications Any bathroom and kitchen modifications, ramps, grab
bars, doorway widening, etc. which enable an elderly/person with disabilities to
remain independently in their home.
3. Energy Conservation and Fire Safety The purchase and installation of furnaces,
insulation, storm windows and doors, caulking, Energy Star appliances and related
energy saving measures. Eligible costs also include the installation of smoke/fire
detectors, other related fire safety items, carbon monoxide detectors.
4. Incipient Violations The correction of incipient violations so that a property may be
brought up to and maintained to Iowa City Housing Code Standards.
C. Eligible Costs for the Exterior Repair Program include all costs associated with the
protection of exterior surfaces that meet the Iowa City Housing Code. Eligible costs include
caulking materials, paint, stain, siding, roofing, and window replacement. Costs may also
include the repair, replacement or removal of wood elements such as soffit, fascia, porch
work, gutter repair as needed to prevent damage to paint or siding.
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D. Eligible Costs for Residential Accessibility Program are limited to improvements making
the property accessible and permitting the elderly/person with disability to remain
independently in the home. Eligible items include ramps, doorway widening, grab bars, high
rise toilets.
Some of these accessibility improvements or modifications may not be feasible for mobile
homes. The Neighborhood Services Coordinator will make determinations of feasible
modifications on a case-by-case basis.
E. Eligible Costs for the Emergency Repair Program include the correction of major
violations of the Iowa City Housing Code Standards which make a structure uninhabitable.
Repairs which exceed local codes are not normally eligible for funding.
F. Eligible Costs for Manufactured Home Repair repairs are limited to life safety issues
(including accessibility improvements). Repairs include windows (if missing), doors (if
inoperable), furnace, water heater, plumbing, electrical, flooring (if unsafe) and steps. If the
home is located in the floodplain, the costs of elevation and a permanent foundation are
eligible.
G. Eligible Costs for the Energy Efficiency Program Funds are limited to costs associated
with the replacement or upgrade of heating/furnace systems and air conditioning systems;
window and door replacement and costs for insulating the structure.
H. Other Eligible Costs
Certain additional costs related to all rehabilitation projects are also eligible.
1. Reasonable Loan Application Processing Costs. Appraisal (if needed), title reports,
recording, termite inspection, architectural fees, lead-based paint analysis (structural
or for individuals), and radon testing.
2. Building Permits and Related Fees. A rehabilitation loan may provide funds to cover
the cost of building permits and related fees required to carry out the proposed
rehabilitation work. However, since the construction contract documents requires
the contractor to pay these costs, the contract amount ordinarily includes the costs.
3. Lead-based Paint Hazard Elimination. The regulations implementing 24 CFR Part
35, Subpart B, consisting of 35.100 through 35.175, and Subpart J consisting of
35.900 through 35.980. Eligible costs also include any associated relocation costs
incurred by the homeowner as per the Lead Hazard Reduction Relocation Policy.
Different levels of rehabilitation assistance will determine treatment.
Financial Assistance Per Unit Treatment Required
Up to $5,000 Paint testing, safe working practices
More than $5,000, less than
$25,000
Standard treatment used:
A. Stabilization of painted surfaces
B. Correct conditions causing rubbing,
bending, and crushing
C. Treatment of bare soil
$25,000 or more Abatement of lead-based paint hazards
Effective 8/10/2001
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For all programs, additional assistance (above the maximum permitted) may be
provided to correct a lead-based paint hazards. If the property is not in a Targeted
Neighborhood, up to 50% of lead paint-related costs specified in the work write-up
will be forgiven to a maximum of $10,000. This assistance will be forgiven after a full
5-year period has elapsed.
4. Radon Mitigation. Funds are available for radon mitigation if upon testing the
structure is found to have a high rate of Radon emission within the following
parameters:
Below 4 pCi/L - no action required
Between 4 and 20 pCi/L - action should be taken to reduce level within two years.
Between 21 and 200 pCi/L - action should be taken to reduce level within two
months.
Greater than 200 pCi/L - action should be taken immediately.
5. Decks. Funds are available to replace an existing deteriorated deck if it is a safety
issue. However, deck replacement shall be same size or less with total cost not
exceeding $4,000.00.
I. Advance Of Funds. As necessary, the City may advance funds to pay for appraisal fee,
termite inspection, lead-based paint analysis prior to formal commitment on the rehabilitation
loan application. Before these funds are advanced, the homeowner is required to sign an
agreement accepting full responsibility for any incurred expenses. If the loan is not
approved, the applicant shall reimburse City the spent funds.
J. Death Of Applicant. No project funds shall be used to reimburse for repairs commenced
after the death of an applicant who is not survived by a spouse or other person that is listed
on the deed. Should the death of such an applicant occur after commencement of work for
which project funds have been approved, reimbursement shall be made for all work
necessary to complete that phase of the work in progress at the time of the applicant's death.
Reimbursement shall be pro-rated based on the completed work.
K. Ineligible Costs. Except as otherwise provided in this manual, rehabilitation assistance
shall not be provided for:
1. New construction, substantial reconstruction, expansion of a structure (unless required
by the Iowa City Housing Code), or finishing unfinished spaces.
2. Materials, fixtures, equipment or landscaping of a type or quality which exceeds that
customarily used for properties of the same general type as the property to be
rehabilitated.
3. Acquisition of land.
4. Refinancing of existing debt.
5. Detached garages if HOME funds are used, except for demolitions and is included with
other home issues that promote health and safety of the property.
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Chapter 4. Financial Assistance Categories, Loan Terms,
Limitations and Conditions
A. General. This chapter sets forth the assistance categories, terms, and limitations for
providing rehabilitation assistance to owner-occupants under the following programs:
Comprehensive Home Improvement Program
Exterior Repair
Emergency Repair Program
Manufactured Home Repair
Residential Accessibility
Energy Efficiency Program (September - March)
B. Assistance Categories and Loan Terms. The City will determine eligibility for home
improvement loans by certain "Assistance Categories." The annual gross income of the
applicant defines the categories for the CDBG and HOME programs.
The City will determine loan terms on a case-by-case basis as described in Sections C and
D of this chapter. All federally-funded loans will be financed at a 0% interest rate.
HUD annually establishes the median income for the Iowa City Metropolitan Statistical Area
(MSA) based on the number of persons per household. The current income chart is
attached as Exhibit 3.
C. Loan Conditions. The City determines loan financing based upon the applicant's ability to
make payments on additional housing debt.
According to HUD, total housing expense shall not exceed 30% of the total monthly gross
income. Housing debt includes mortgage payments and mortgage insurance, basic utilities
(electric, gas, water, sewer), property taxes, lot rent (mobile homes only) and insurance.
Ongoing medical expenses, other than monthly health insurance premiums, can also be
combined with all other monthly housing debt. A homeowner with expenses exceeding 30%
of their gross monthly income is eligible for a Conditional Occupancy Loan, provided the
homeowner meets other conditions of eligibility.
The City determines loan conditions as follows: "Available monthly income" for the
rehabilitation loan payment is determined by subtracting total housing deb t from 30% of
gross monthly income. The amount of rehabilitation costs to be repaid through a no-interest
loan is then determined according to the interest rate category, listed in “B” above, and the
term of the loan, which may range from 3-20 years. However, if the available monthly income
for the rehabilitation loan payment is $50.00 or less, the applicant would be eligible for a
Conditional Occupancy Loan. All loans are based on ability to pay.
The Conditional Occupancy Loan (COL) has a one-time service charge of 2% which is due
along with the principal amount at the time the homeowner transfers title, rents the property
or terminates occupancy.
The minimum loan terms are as follows:
Loan Amount Loan Term
$3,000 or less up to 3 years
$3,001-$6,000 3 - 5 years
$6,001-$10,000 10 - 15 years
$10,001-$24,999 15 - 20 years
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D. Special Loan Conditions for all Federally-Funded Rehabilitation Programs.
a. CDBG/HOME Comprehensive Rehab (not in Targeted Neighborhood area)
When an applicant is participating in a comprehensive federally-funded rehabilitation
program, the first 15% of assistance will be in the form of a loan that is forgiven after five full
years from the date of the loan closing. The remaining balance will continue to be a lien on
the property.
b. Targeted Neighborhood Programs (see Exhibit 7)
When an applicant participating in a federally-funded rehabilitation program lives in a
targeted neighborhood, 50% of assistance will be a declining balance loan where 20%
(1/5th) of the loan is forgiven each year over five full years from the date of the loan
closing. The remaining balance will continue to be a lien on the property.
E. Chronic Illness Clause for Accessibility Work Only
A monthly loan payment may be waived if a medical professional provides written
documentation of an applicant’s chronic illness that will cause medical expenses to increase
as the illness progresses.
F. Assistance Limitations. The following levels of assistance are available for each program.
If the original bid price exceeds the program limitations, the Director of Neighborhood and
Development Services may waive the (non-federal) rehabilitation policy and requirements,
when they are coupled with the City's affordable housing program, on a case-by-case basis.
Program Minimum Assistance Maximum Assistance
Comprehensive Rehab $3,000 $24,999*
Exterior Repair $1,000 $15,000
Emergency Repair $100 $6,000
Residential Accessibility $1,000 $16,000
Manufactured Home Repair $100 $6,000
Energy Efficiency Program $300 $6,000
* The $24,999 limit applies to all homes built before 1978 unless they are certified as lead
free. All homes built in 1978 or later are subject to a limit of $38,000 in assistance.
In addition:
1. Funds provided through the City's Rehabilitation programs may not exceed 50% of
the assessed value of the property. For a single family owner-occupied property, the
Neighborhood Services Coordinator may grant an exception to this limitation if the
National Register of Historic Places or a state or local inventory of Historic Places
lists the structure, or if an appropriate law or ordinance designates the structure as
a state or local landmark or historical district.
2. Housing rehabilitation loans must be secured within the value of the property. As
such, no rehabilitation loan may exceed the difference between the dollar value of
the first mortgage(s) and the after-rehabilitation value of the property.
3. In extraordinary emergency circumstances, the Neighborhood Services Coordinator
may waive the equity requirement. Situations where this may be allowable: include
replacement or repair of a broken furnace in the winter, leaking or nonfunctioning
water heater, storm damage that prevents the owner from occupying the home, or
other necessary improvements that would allow the homeowner to remain in their
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property. A mortgage would be placed on the home for a period of five full years
and then will be forgiven.
G. Assignability.
1. Title Holder. The borrower shall not assign a rehabilitation loan. The balance of a
loan becomes due immediately if the property is rented, or upon sale or transfer of
any interest in the property. If the borrower ceases to occupy the property during the
course of the lien/mortgage, the City will call the loan due. The borrower must notify
(see Chapter 8.C.) the Housing Rehabilitation Specialist or Program Assistant of the
sale, transfer, or rental of the property.
2. Land Contract Holder. When there is a land sales contract for a property, both the
owner and the contract holder must approve and sign a mortgage against the
property in the amount of the rehabilitation loan. Assignment or transfer of an interest
in the land sales contract is considered a transfer of property and the loan shall be
paid in full at the time of the assignment or transfer, unless the seller mortgages the
property for an amount that does not exceed the unpaid portion of the contract pur-
chase price.
3. Surviving Spouse, Heirs or Devisees. If the property owner dies, the surviving
spouse, heirs or devisees may refinance the loan under program guidelines in effect
at the time they inherit the property if they are income eligible for the Iowa City
Rehabilitation Program and if they intend to occupy the home as its owners.
H. Loan Instruments. Rehabilitation loans shall be secured by instruments commonly used
for loans of like kind and terms, and will be subordinate to other primary lender mortgages
already of record. Mortgages, and if necessary other supporting documents, shall be
recorded in the Johnson County Recorder's Office.
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Chapter 5. Processing and Submitting Rehabilitation Applications
A. General. This chapter outlines the functions performed in connection with rehabilitation
financial assistance and sets forth the policies and procedures followed in preparing,
processing and approving an application.
B. Outline of Staff Functions. The rehabilitation staff or their designees perform the following
functions in connection with rehabilitation financial assistance.
1. a. Pre-application (interview and advise applicant of program objectives and
benefits), complete applications
b. In take application and determination of applicant's priority. See Exhibit 2.
2. Inspect property.
3. Verify ownership and verify income, as necessary. If listed as a historic structure, in
a Historic or Conservation District, the work to be done on the structure is submitted
for preliminary historical/architectural significance review and clearance with the
local Historic Preservation Commission.
3. Prepare bid document. Send verification forms to homeowner to fill out and return.
4. Unless this is an emergency project, a report provided by the State of Iowa will be
fill out and sent to them (SHPO). A time frame of 30 day response is the norm for
final clearance.
5. Prepare a project non-feasibility analysis if the expected project cost exceeds 50%
of the assessed or appraised value of the property.
6. Review bid document with homeowner and receive approval to proceed.
7. Provide bid packet and review with the homeowner who then solicits bid proposals.
Owner shall secure a minimum of two responsible bids.
8. Request a post-rehabilitation appraisal if needed.
9. Order title and lien search.
10. Deliver case file to Neighborhood Services Coordinator. The case includes the
following:
a. Pictures
b. Loan Summary Evaluation
c. Verifications
d. Environmental Review
e. Contractor Certification
f. SAMS Registry
g. Anti-kickback Statement
h. Copy of bid tabulation(s) and bid(s)
11. Notify owner of approval and schedule loan closing.
12. Close loan and record mortgage loan document.
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13. Hold preconstruction conference with contractor who was awarded the bid, issue
proceed to work orders, and execute contract(s).
14. Inspect work in progress and authorize release of partial payments.
15. Final inspection, punch list and certification. Contractor provides manufacturers' and
suppliers' warranties and release of liens.
16. Issue inspection certificate, authorize final payment and close file. Provide amended
lien as necessary.
17. Prepare releases following payment in full or forgiveness of the loan under the terms
of the Promissory Note.
C. Processing and Preliminary Approval of Assistance Application. Processing consists
of completing a preliminary application and submitting all supporting documents. Staff
reviews the file to determine eligibility. All comprehensive rehabilitation, exterior repair,
residential accessibility and emergency repair loans must receive approval from the
Neighborhood Services Coordinator or his/her designee. If the original bid price exceeds
program guidelines, the Director of Neighborhood and Development Services will review
any such proposals for a policy waiver as necessary.
1. If the rehabilitation assistance supplements a private loan, the private loan must
receive approval prior to approval of the rehabilitation assistance.
2. Projects meeting eligibility criteria can be approved unless extenuating circum-
stances prevail. If it is determined that an application cannot be approved, a written
statement of the reasons for the determination shall be provided to the applicant and
a copy placed in the case file.
D. Cancellation. An approved application may require cancellation because the applicant
requests cancellation, the applicant denies access to the contractor to complete the work,
the applicant is unwilling or unable to proceed with the rehabilitation work or for other
reasons. Upon cancellation, the applicant will be liable for certain fees associated with the
processing of a loan (e.g. appraisal, title and lien search, etc.).
1. To cancel an approved application, the rehabilitation staff or designee shall prepare
a letter of cancellation which shall be provided to the:
a. Applicant
b. Case file
c. Lender, if necessary
d. Contractor
E. Rejection of Application. To insure the efficient use of funds and staff resources the
homeowner is responsible for providing necessary information to the city in a timely fashion.
In the event a project becomes delayed due to inaction by the homeowner, the City shall
notify the homeowner in writing, and if an oral or written response is not received within 15
days, the City may reject a pending application or cancel a project that is underway.
F. Conditions for Providing Assistance. An applicant shall agree, in writing, to the terms
and conditions with respect to rehabilitation assistance as stated in the Rehabilitation
Agreement and Lead Hazard Reduction Relocation Policy.
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Chapter 6. Loan Settlement / Account Management
A. General. This chapter sets forth Housing Rehabilitation staff responsibilities with respect to
loan settlement for Rehabilitation Loans.
B. Loan Summary Statement.
1. This section describes the Loan Summary Statement and the procedural and
disclosure requirements which govern the settlement of City of Iowa City
rehabilitation loans.
2. Background.
a. The Truth in Lending Act. On May 29, 1968, Congress enacted the Truth
in Lending Act, Title I of the Consumer Credit Protection Act (Public Law
90-321); Title 15, U.S. Code 1601 et seq.). The act requires that borrowers
in "consumer credit transactions" be vested with certain rights and
protection in connection with the transaction and receive specified written
information from their lenders. A lender must make certain disclosures prior
to extending credit and before the borrower becomes obligated in connec-
tion with the transaction; i.e., before execution of a note or mortgage. The
required disclosures include the amount of credit a borrower will have for
the project and any interest charged.
b. Three-day Rescission Provision. In addition, the act enables a borrower to
rescind the transaction within three business days following the loan
transaction, if the loan is secured by a lien on the borrower's residence.
3. Loan Summary Statement
a. Applicability. All borrowers of rehabilitation loans shall receive a complete
Loan Summary Statement.
b. Time of Furnishing Loan Summary Statement to Borrower. The borrower
must receive the Loan Summary Statement at loan settlement but prior to
his/her execution of the promissory note obligating repayment of the loan.
c. Receipted Copy of Loan Summary Statement Retained by Rehabilitation
Specialist or Program Assistant.
When the borrower receives the Loan Summary Statement, he/she shall
sign and date an identically completed Loan Summary Statement in the
presence of a City employee or other authorized representative who shall
also sign as witness. The City will retain the signed and witnessed copy of
the Loan Summary Statement in the loan application file.
4. Borrower's Right of Rescission: Secured Loans. All borrowers have the right under
law to rescind the entire loan transaction within a period of three business days.
5. Notice of Opportunity to Rescind Transaction. Borrowers entitled to rescind the loan
transaction shall receive a properly completed Notice of Opportunity to Rescind
Transaction.
a. Furnishing Notice to Borrower at Loan Settlement. The Rehabilitation
Specialist or Program Assistant shall give the borrower two copies of the
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Notice at loan settlement prior to execution of the note. The Rehabilitation
Specialist or Assistant shall explain the Notice's nature and purpose. The
borrower must sign a third copy of the Notice to evidence his/her receipt of
the two copies. The City will retain the signed copy in its loan application
file.
b. Three-day Rescission Period. To compute the running of the three-day
rescission period for entry on the notice, the date on which the borrower
receives the notice shall be treated as Day Zero and the next business day
thereafter as Day 1, etc. Three business days must elapse following loan
settlement date to complete the rescission period. A business day is any
calendar day except Saturday and Sunday and the following holidays on
the dates established by Federal law: New Year's Day (January 1); Martin
Luther King, Jr. Day (third Monday in January); Washington's Birthday (third
Monday in February); Memorial Day (last Monday in May); Independence
Day (July 4); Labor Day (first Monday in September); Veterans Day
(November 11); Thanksgiving (fourth Thursday in November) and the
Friday after Thanksgiving; and Christmas Day (December 25) and a 2nd day
assigned by the City Manager. Borrowers have until midnight on the third
day to rescind.
c. No Disbursements. The Rehabilitation Specialist or Program Assistant shall
not disburse funds to the project from the rehabilitation account during the
three-day rescission period.
d. Prompt Recordation. The Rehabilitation Specialist or Program Assistant
shall promptly record the mortgage and all other instruments necessary to
perfect the loan security after the three-day rescission period expires.
6. Cancellation of Loan Transaction by Borrower. The City will consider the loan transaction
cancelled if the borrower provides notice within the required three-day period.
Notification by mail shall be considered given at the time mailed as indicated by the
postmark; and notification by any other writing shall be considered given at the time
delivered to the Iowa City Hall. Notification by e-mail or fax is also acceptable. Oral
communications cannot accomplish rescission.
C. Preparing for Loan Settlement. The rehabilitation staff will take the following actions in
preparation for loan settlement:
1. Establish a date for loan settlement.
2. Prepare a promissory note and mortgage in accordance with the forms approved by
the City Attorney's office. Also prepare the following documents:
a. Right to Rescission
b. Rehabilitation Agreement
c. Loan Summary Statement, Promissory Note(s), Mortgage
d. Contract with Contractor along with Proceed to Work, Non-Collusion, Anti-
Kickback and Contractor Certification forms
e. Lead-based Paint – notification and relocation policy (if applicable)
3. Instruct the borrower to obtain:
a. Original and memorandum copy of insurance policies for fire and extended
coverage that provides coverage in accordance with the City's require-
ments. Where appropriate, the binder shall show that the City is
mortgage/lien holder.
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b. If a business is operated out of the home (e.g., computer consultant, child
care, etc.), the borrower shall provide copies of the past three years' tax
reports.
D. Advise the borrower with regard to:
1. The name of the financial institution to whom monthly payment checks shall be
deposited. Monthly payments to the City of Iowa City will either be made in the form
of an auto withdraw deposit or the use of mail in payment coupons.
2. The need to make all monthly payments on the date due to avoid collection and/or
legal action. See Chapter 8.D.
E. Proceed to Work. Obtain borrower's signature on proceed order and hold until the
borrower's three-day rescission period expires.
F. Recording Loan Instruments. The rehabilitation staff or their designees shall record the
recordable instruments after expiration of the three-day rescission period.
G. Disposition of Funds Statement. After the rehabilitation staff disburses all funds from the
rehabilitation escrow account and closes the account, they shall prepare a Disposition of
Funds Statement or "Case Account" which accounts for the disposition of the full loan
amount.
H. Transmittal Requirements. After final payment for all rehabilitation costs, the rehabilitation
staff or their designees shall transmit the following documents to the applicant:
1. Final Case Account (owner's acceptance of completed rehabilitation project and the
dispersion of funds)
2. Certificate of Final Inspection.
I. Adjustment and Closeout of Rehabilitation Escrow Account. If unutilized funds remain
in the rehabilitation account because the actual rehabilitation costs were less than
anticipated or for other reasons, the unutilized funds shall be returned to the CDBG and/or
HOME General Account if no eligible rehabilitation items remain to be addressed.
J. Adjustment of Lien/Loan Documents. At the conclusion of the project, the rehabilitation
staff shall prepare a new promissory note if the actual cost of the project was less than or
more than the total amount of the loan filed against the property. The original final
promissory note(s) will be retained by the rehabilitation staff and a copy will be in the project
file and the applicant will have a copy.
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Chapter 7. Rehabilitation Agreements
A. General. This chapter sets forth City requirements with respect to terms and conditions
detailed in the Rehabilitation Agreement which an applicant must execute in order to obtain
rehabilitation assistance in the form of a grant or loan.
B. Conditions for Rehabilitation Assistance. The mortgage or other security instruments
as applicable, and the promissory note incorporate the specific terms and conditions with
respect to rehabilitation assistance for a residential property.
1. Cancellation Provision. The City has a right to cancel assistance if the borrower does
not commence rehabilitation work (by giving the approval for the contractor to start)
or if the contractor does not commence work within 60 days of executing the
Promissory note. The City may extend the 60-day period by not more than 30 days
due to unforeseen and extenuating circumstances.
2. Additional Extension. The Rehabilitation Specialist or Program Assistant shall not
grant any further extensions of time without prior written concurrence of the
Neighborhood Services Coordinator. If the City cancels assistance due to
borrower's failure to begin anticipated rehabilitation work within the allowed time
period, the Rehabilitation Specialist or Program Assistant shall initiate cancellation.
C. Interest Rate. Chapter 4 sets forth the interest rate to the borrower.
D. Term of Loan. Chapter 4 identifies the maximum term for the City rehabilitation loan(s).
E. Points of Agreement. The applicant shall agree to abide by the following terms and
conditions:
1. Applicable Laws. Comply with all applicable federal, state, and local laws as well as
all regulations governing the funds provided under the Rehabilitation Agreement.
2. Civil Rights. Comply with all Federal and City requirements with respect to the Civil
Rights Act of 1964 and 1968, and the 1988 Fair Housing Amendments Act, as
amended, to not discriminate upon the basis of race, color, creed, religion, national
origin, age, sex, marital status, disability, gender identity, sexual orientation, familial
status, presence or absence of dependents, or public assistance source of income
in the sale, lease, rental, use or occupancy of the subject property.
3. Use of Proceeds. Use the loan proceeds only to pay for costs of services and
materials necessary to carry out the rehabilitation work for which the loan is
approved. If unauthorized materials or services are purchased or contracted for by
the homeowner, the City shall have the right to terminate the agreement and
demand immediate payment for any funds expended.
4. Completion of Work. Enter into written contracts to assure prompt and efficient
performance and completion of rehabilitation work. Chapter 2 outlines the City's
actions in case of failure to complete the rehabilitation. The homeowner must
exercise reasonable cooperation or the City shall have the right to terminate the
agreement and demand immediate repayment of any funds expended.
5. Ineligible Contractors. The City and homeowners shall refuse to award a contract
for rehabilitation work to be paid for in whole or in part with the funds provided, to
any contractor ineligible to receive an award of such contract under any applicable
regulation issued by the Secretary of Labor.
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6. Inspection. Permit inspection of the property, the rehabilitation work, and all
contracts, materials, equipment, payments, and conditions of employment
pertaining to the work by the City or its designee.
7. Records. Keep such records as the City may require with respect to the
rehabilitation work for a period of five (5) years after the completion of the work.
However, projects receiving HOME funds shall be kept five years past the
affordability period which will be documented in the file.
8. Bonus, Commission, or Fee. Homeowner shall not pay any bonus, commission, or
fee for the purpose of obtaining the City's approval of the application, or any other
approval or concurrence required by the City or its designee to complete the
rehabilitation work financed in whole or in part with the rehabilitation assistance.
9. Interest of the City. Prohibit members of the City's governing body who exercise any
functions or responsibilities in connection with the administration of the rehabilitation
project, and other City officers or employees who exercise such functions or
responsibilities from having any direct interest in the proceeds of the rehabilitation
assistance, or in any contract entered into by the applicant for the performance of
work financed, in whole or in part, with the proceeds of the rehabilitation assistance.
10. Preservation of the Security. Homeowner shall maintain the property according to
the requirements of the Iowa City Housing Code and permit the City or its designee
to inspect the property during the term of the loan.
11. Hazard Insurance. Homeowner shall maintain hazard insurance on the property with
a loss payable clause to the City as applicable.
12. Transfer of the Property. Homeowner shall repay such portions of the loan/lien upon
sale, rental or transfer the property, unless prior written consent of the City is sought
and obtained prior to the rental, sale or transfer. If homeowner fails to notify the City
of as rental, sale or transfer of property, the City shall have the right to call the
outstanding balance of the loan due, as well as, any expenses incurred with
collection of said loan funds.
13. Loan Security Requirements. Homeowner shall provide security for the loan in the
form of a mortgage on the property, if applicable.
14. Flood Insurance. If property is located in a designated flood hazard area, the owner
agrees to:
(1) Purchase the requisite flood insurance coverage.
(2) Renew and maintain the coverage so that the flood insurance policy does
not lapse during the term of the loan.
(3) Provide proof of insurance coverage to the City.
15. Lead-based Paint. Federal conditions require correction of any lead-based paint
hazard. This may involve an additional loan or change order to correct the
lead-based paint hazard.
16. Non-Discrimination in Contracting. All parties shall encourage the use of minority
and women's business enterprises and locally owned businesses for the
rehabilitation work financed with the rehabilitation funds.
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17. Historic Preservation. Homeowner shall cooperate with the City in complying with
applicable federal, state and local historic preservation laws, ordinances, and/or
requirements.
18. Special Provisions. a) The City may retain 10% of its contribution to the rehabilita-
tion project as an assurance that the applicant and contractor(s) will complete all the
work in a timely manner. Following a satisfactory final inspection, the City will release
the 10% retainage. b) The owner is encouraged to request bids from contractors
not on the City's list. If bids from such contractors are received, the City has the right
to reject such bids if the contractors are deemed unqualified or ineligible.
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Chapter 8. Recapture of Rehabilitation Assistance
A. General. This section sets forth policies for recapturing funds from any loan as provided
herein in the event the recipient sells, transfers or ceases to occupy the dwelling during the
specified period.
B. Applicability. The City will recapture all loans pursuant to the terms and conditions of the
rehabilitation agreement.
C. Terms and Conditions. Recapture of funds shall be subject to the following:
1. Loan documents shall be recorded in the Johnson County Recorder's Office
following expiration of the three-day rescission period.
2. The City may subordinate its loans to any private lender's home improvement loan
or mortgage. Subordination will only be done as per the attached policy in Exhibit 4.
3. Chapter 4 sets forth conditions for the loans.
4. Upon sale, transfer or termination of occupancy, all outstanding City-held loans shall
be repaid to the City and a satisfaction of the loan shall be provided to the agency
handling the transaction. For units assisted with loans, the proposed surviving
spouse, heirs or devisees may assume the loan if he/she qualifies as income eligible
for the program.
5. The loan document shall provide that it is the recipient's duty to notify the City of any
sale, transfer or rental, of the property and to satisfy any outstanding obligation for
reimbursement, and that failure to do so shall result in the entire amount of the
financial assistance becoming due.
D. Delinquent Loan Payments. Where a recipient cannot make monthly payments because
of some catastrophic event not under his/her control, the recipient shall notify the City as
soon as possible and the City will consider temporary or permanent amendments to the
loan. For those loans which are 60 days delinquent the following steps will be followed:
1. Rehab staff shall send a late payment notice. (30 days delinquent)
2. Rehab staff shall report late payment notice to City Attorney for collection. (60 days
delinquent)
3. Rehab office shall report owner to credit bureau for delinquent payment. (90 or more
days delinquent)
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Chapter 9. Determining Work to be Done with
Rehabilitation Financial Assistance
A. General. This chapter sets forth the responsibilities of the Rehabilitation Specialist for
determining the extent of rehabilitation work necessary to bring a property into conformance
with Iowa City Housing Code Standards and for providing assistance in rehabilitating
property. In carrying out these responsibilities, the Rehabilitation Specialist shall:
1. Inspect the property and document conditions.
2. Identify the required home repairs and consult with the homeowner regarding
additional work as appropriate.
3. Review the proposed work and bid proposals with the owner. Consult with and
advise the owner regarding the work and the bidding process.
4. Inspect work in progress prior to owner approving payments to contractors.
B. Initial Inspection. During the initial inspection, the Rehabilitation Specialist identifies
deficiencies needing correction in order to meet Iowa City Housing Code standards. The
inspection is documented using the Housing Rehab Initial Inspection Checklist (Exhibit 5),
which is adapted from HUD-52580. The Rehabilitation Specialist reviews and discusses the
inspection findings with the owner.
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Chapter 10. Contracting for Rehabilitation Work
A. Introduction. This chapter sets forth requirements and procedures with respect to
construction contracts for rehabilitation work financed with a rehabilitation loan. The
contractor and the loan recipient must enter into a written contract for all rehabilitation work.
The Rehabilitation Specialist or Program Assistant shall assist each applicant, as needed,
in obtaining an acceptable construction contract.
1. Procurement of Bids. The owner must obtain at least two responsible contractor’s bids
and proposals before the City will approve the rehabilitation loan. If two bids can not be
obtained, the homeowner must provide a written statement explaining the lack of a
second bid.
2. Form of Contract. The City will provide the construction contract which the Contractor
and homeowner must sign following approval of the rehabilitation loan. The contract
shall include:
a. Exhibit A – Deficiency List (Bid Document).
b. Exhibit B – General Terms and Conditions.
c. Proceed to Work Order.
d. Non-Collusion Affidavit of Prime Bidders.
e. Anti-Kickback Statement.
f. Lead Paint form (either #1 – Work Done or #5 – Emergency)
B. General Conditions. The Rehabilitation Specialist or Program Assistant shall prepare
“General Terms and Conditions” (Exhibit B, as provided by the Department of Neighborhood
and Development Services) for use in all construction contracts for the rehabilitation of the
property. Such contracts shall include hold harmless provisions relating to the contractor(s)
and owner(s).
C. Specifications and Drawings. The Rehabilitation Staff or a designated professional shall
prepare a deficiency list and illustrative sketches, if any, covering the specific rehabilitation
work for each property for which the recipient obtains a rehabilitation loan. Drawings shall
be prepared only when essential to show the scope of the work involved so that a fair bid
for the work can be obtained, and to avoid misunderstandings with the bidder. The
Rehabilitation Specialist or a designated professional shall base the deficiency list and
drawings on the inspection of the property and interviews, as indicated, with the owner. The
deficiency list shall clearly establish the nature of the work to be done and the material and
equipment to be installed in accordance with the construction and rehabilitation
specifications provided by the Rehabilitation Specialist.
D. Invitation to Contractors for Bid and Proposal.
1. Contractor Selection. Upon request the Rehabilitation Office will provide the owner with the
list of City-approved contractors maintained at the Department of Neighborhood and
Development Services. Said list shall include the names of minority and women contractors
in the area who have requested to be on the list. The owner may request bids from
contractors not on the City’s list. If bids from such contractors are received, the City has the
right to reject such bids if the contractors are deemed unqualified or ineligible.
2. Invitation to Bid. Once the owner selects contractors according to paragraph D.1 above,
the owner shall contact the selected contractors and invite them to submit bids for the
proposed rehabilitation work that must be received by the Rehabilitation Office in sealed
envelopes by the due date noted on the bid documents. The owner shall negotiate with the
contractors to obtain an acceptable bid. A minimum of two written bids is required. If two
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bids cannot be obtained, the owner shall provide in writing, the reasons two bids were not
obtained and a listing of contractors contacted to bid on the project.
3. Bid Review. Upon receipt of all bid proposals from the bidding contractors, the Rehabilitation
staff shall review bids for completeness and accuracy with special attention given to
ensuring adherence to the deficiency list.
4. Acceptable Bid. An acceptable bid fulfills the requirements of D.3 above, includes a current
copy of the contractor’s certificate of insurance, unless it is on file with the housing rehab
office, and is within 15% or less of the Rehabilitation Specialist’s estimate. The bidding
contractor shall provide a cost for each repair item. If the costs are not acceptable, the
Rehabilitation Specialist or Program Assistant shall work with the owner and contractor to
negotiate a cost that is reasonable and acceptable to all parties.
5. Maintenance of the Contractor’s List. The Rehabilitation Specialist or Program Assistant
shall maintain a list of contractors, including minority and female contractors, who have
expressed an interest in bidding on repair and construction projects and provide the
following as contained on Form CDR-7946 (Prospective Bidder’s Registration Form):
a. Adequate, active liability insurance.
b. The name of his/her company bank.
c. The names of his/her usual subcontractors.
d. The names of his/her principal suppliers.
e. The names and addresses of at least two residential repair or
construction jobs completed within the last six months.
f. Iowa City contractor’s license as applicable.
g. Federal tax ID number (this number will not be public record).
6. The Neighborhood Services office shall maintain the Contractor list, open to public review.
The contractor list will be reviewed by the Housing Rehabilitation Specialist or
Neighborhood Services Coordinator to make additions or removals to the list of contractors
at the sole discretion of the City. At the City’s discretion, a contractor may be removed
from the City’s contractor’s list for one or more of the following causes:
a. Failure to complete a project within the prescribed contract period.
b. Failure to complete warranty repairs within a reasonable time period, not
to exceed 45 days.
c. Failure to use licensed plumbing and electrical subcontractors.
d. Failure to complete work in accordance with program specifications
and/or accepted standards or workmanship.
e. Failure to obtain proper permits for work in progress.
f. Failure to treat applicants with respect and courtesy.
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g. Failure to accept an awarded project with an estimated cost of less than
$10,000 three (3) times in succession.
h. Failure to provide any information required for Form CDR-7946
(Prospective Bidder’s Registration Form) that is needed to keep the
contractor information current or updated.
7. Award of Construction Contract. The owner shall award the contract by properly executing
the contract, with the assistance of the Rehabilitation Specialist or Program Assistant,
unless the project is under $10,000 and awarded by the Rehabilitation Office.
a. Award within 60 days of Cutoff Date. In order for the bid and proposal to be
binding, the award shall be made within a period of 60 days from the cutoff date
established by the Housing Rehabilitation Office for the receipt of the bid and
proposal, unless a later date is agreed upon in writing by the Housing
Rehabilitation Office and homeowner.
b. Contract Award. The Housing Rehabilitation Office shall award a construction
contract by executing the original and two copies of the contract documents
within 15 days of bid closing or contractor selection. The homeowner shall
distribute the executed contract documents as follows:
1. Executed original retained by homeowner.
2. Executed copy to contractor.
3. Executed copy to the City of Iowa City in care of the Rehabilitation
Specialist or Program Assistant.
8. Issuance of Proceed to Work Order. At the time of the award, the Rehabilitation
Specialist or Program Assistant shall notify the applicant and the successful contractor
that the performance of the work covered by the contract is subject to the Rehabilitation
Specialist or Program Assistant issuing a proceed to work order within the number of
days stated in the general conditions of the contract from the date of the award. Upon
award of the contract, the Rehabilitation Specialist or Program Assistant shall notify
unsuccessful bidders that they have not been awarded the contract.
E. Labor Performed by Owner in Repairing Property.
1. Type of Work and Skill of Owner. A property owner may complete some or all
of the tasks required to repair the property if the property was built in 1978 or
later and if the owner has the degree of skill required to perform the work
involved. Self-help is also allowed in pre-1978 properties if the home has been
inspected and been certified as lead-free. Self-help is usually appropriate to
accomplish general tasks such as general clean-up, demolition of small buildings
on a property, removal, cartage, and disposal of the debris, and for work that
involves minimal use of costly materials and equipment. Work of a skilled nature
and work involving the extensive installation of costly materials and equipment
are appropriate only if the Rehabilitation Specialist is satisfied that the property
owner possesses the ability and experience required to do the work. The
property owner must be capable of working unsupervised and must possess
sufficient skill to properly perform the work with some technical advice and
guidance from the Rehabilitation Specialist.
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2. Provision for Self-Help in Loan. Whenever self-help is necessary or desired and
the Rehabilitation Specialist considers that, with or without technical assistance
and guidance, a property owner can perform the work in a reasonably
acceptable and expeditious manner, the Rehabilitation Specialist may process
an application for a loan on that basis. In such a case, the amount of the loan
would include funds to pay for the materials and equipment to be installed by
self-help, as well as any additional funds needed to pay for other work to be
performed by a contractor. The loan shall not include funds to pay the owner or
members of the owner’s family for their labor. Further, the Rehabilitation
Specialist must exercise judgement and prudence in order to avoid a situation in
which an owner could place himself or herself in financial difficulty through
improper use, installation or even destruction of the materials purchased with
loan funds. For this reason, the staff will disburse payment to the supplier for
materials and equipment involved in a self-help project from the loan account,
only after the materials have been properly installed. The owner must obtain
appropriate liability insurance.
F. Right to Terminate Contract and Complete the Work.
If the party to the contract refuses or fails to supply enough properly skilled workers or proper
materials; fails to promptly pay the subcontractors for materials or labor; or disregards laws,
ordinances, or the instructions of the Rehabilitation Specialist or Program Assistant; or
otherwise violates any provision of the Contract, then the Owner, upon the certification of
the Rehabilitation Specialist or Program Assistant that sufficient cause exists to justify such
action, may, without prejudice to any other right or remedy and after giving the Contrac-
tor/Owner seven days’ written notice, terminate the employment of the Contractor and/or
terminate the Rehabilitation Agreement with the Owner. In such case, the Owner or City
may finish the work by any reasonably expedient method. When work is completed, the
Contractor will be paid the amount remaining in the contract after cost of completion is
deducted.
G. Change Orders. If, in the course of the rehabilitation, additional repairs become
necessary, a formal change order to the contract write-up will occur. Change orders
requested by any party require signature approval from the homeowner, the contractor, a
and a staff member from the Rehabilitation Specialist.
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Chapter 11. Inspection of Rehabilitation Work
A. General. This chapter sets forth the requirements for the inspection of rehabilitation work
financed in whole or in part with rehabilitation funds.
B. Responsibility for Making Inspections. The Rehabilitation Specialist and/or designee
shall inspect construction work in cases involving a rehabilitation loan including:
1. A final inspection to determine that the construction work has been completed in
accordance with the construction contract. The Inspector and any staff from Housing
and Inspection Services, may accompany the Rehabilitation Specialist on the final
inspection and provide the Rehabilitation Specialist with a written report of their
findings.
C. Inspections for Payment. The Rehabilitation Specialist shall inspect the construction work
in accordance with the following:
1. Upon partial and total completion of the repair work and receipt of the contractor's
invoice and appropriate lien waivers, the Rehabilitation Specialist or Program
Assistant shall arrange for inspection of the completed work.
2. If the Rehabilitation Specialist finds that the contractor satisfactorily completed the
work according to bid documents, the contractor can request a partial payment.
Partial payment requests shall be accompanied by lien waivers for work that was
completed. When processing partial payments, the City may retain 10% of the
invoice until final payment.
4. The Rehabilitation Specialist must prepare and sign a Rehab Payout Authorization Form
(Exhibit 6) and submit said form with the payment request. The Neighborhood Services
Coordinator will verify that this form has been completed prior to approval of the payment
in City’s online accounting system.
5. After receipt of a release of liens, including releases from all subcontractors and
suppliers and a copy of any warranties to the homeowner, the contractor can request
final payment. The release of the final payment shall not be unreasonably withheld by
the owner. Once all rehabilitation work has been satisfactorily completed, the
Rehabilitation Specialist shall prepare and sign the Certificate of Final Inspection. The
Neighborhood Services Coordinator will verify that this form has been completed prior
to approval of the final payment in the City’s online accounting system.
D. Certification of Final Inspection. After the Rehabilitation Specialist determines that the
contractor satisfactorily completed the rehabilitation work and the final inspection report
obtained, the staff shall prepare an original and one copy of Certificate of Final Inspection
for the homeowner.
Distribution. Certificate of Final Inspection shall be distributed as follows:
1. Signed original to the property owner.
2. Signed copy retained in the property file.
E. One-Year Guarantee on Work by Contractor. All work performed by a contractor shall
be covered by a one-year guarantee and other terms according to Iowa law. Property
owners are not, however, always aware that for a period of one year following date of final
inspection, they may require the contractor to correct significant defects and inadequacies
in the work performed under this contract.
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Due to the nature of groundwater, soil and construction conditions, the success of any efforts
to any water problems cannot be guaranteed.
The owner must give the contractor written notice of any defects with reasonable
promptness. If the contractor fails to answer or correct the defect(s) within a reasonable
time, the City, at owner's request, will assist owner in the following manner:
1. Staff members of the Department of Neighborhood and Development Services will
investigate the complaint.
2. Staff will notify the owner if it finds the complaint to be invalid.
3. If the staff finds the complaint to be valid, the homeowner and/or rehabilitation staff
will direct the contractor to take necessary corrective action within a specified length
of time.
4. If the contractor complies, the rehabilitation staff will re-inspect the work and, if
satisfactory, the owner will be expected to sign a written statement withdrawing the
complaint.
5. If the contractor fails to respond to the request within the specified length of time,
the staff, upon owner's request, will help prepare a letter for owner's signature,
notifying the contractor a second time that unless the defect is corrected by a
specified time, staff will refer the matter to the City Attorney for appropriate action.
Staff will then locate a new Contractor to correct the problem. The cost will then be
forwarded to the Contractor responsible for defective work.
6. If the contractor fails to respond to the request within the time specified:
a. The homeowner will take any necessary action to correct the defects
including, but not limited to, paying the reasonable costs of correcting work
or materials determined by the homeowner and the Rehabilitation Specialist
to be defective.
b. The City may prohibit the contractor from contracting any other repair work
under any City program.
F. Rehabilitation Specialist - Owner - Contractor Relations.
The Rehabilitation Specialist or designee observes the work on behalf of the City and
provides general assistance regarding proper interpretation of the program requirements
during construction.
The Rehabilitation Specialist and owner decide, when necessary, any and all questions
which arise as to the quality and acceptability of materials furnished, work performed,
interpretation of work items on the bid document and all questions as to the Contractor's
performance of the Contract.
The Rehabilitation Specialist or designee is not responsible for the acts or omissions of the
contractor or his/her employees. The City's or homeowner's acceptance of the Contractor's
work does not release the contractor from the responsibility to provide quality performance
on all contract specifications.
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Chapter 12. Complaint Procedure
It is the policy of the Department of Neighborhood and Development Services to make every effort
to resolve complaints prior to the filing of a formal complaint. Please call the Rehabilitation Office at
356-5233 or 356-5128 for assistance.
A. Complaints
The City Manager for the City of Iowa City or designee shall review and hear the complaint
of any person aggrieved by the Division of Neighborhood Services, Department of
Neighborhood and Development Services in the administration of any federal, state, or local
assistance programs. This review shall include, but not be limited to complaints concerning:
1. the sufficiency of an application for assistance,
2. eligibility for assistance under the program,
3. the dollar amount of the assistance,
4. the scope of services provided under the program,
5. the adequacy of information and assistance furnished by the Neighborhood
Services Division.
B. Filing the Complaint
A person may file a complaint in the Office of the City Clerk for the City of Iowa City.
Complaint forms are available in the office of the Department of Neighborhood and
Development Services, located in City Hall at 410 E. Washington St., Iowa City, IA 52240.
The complaint must be received in a timely manner which is
1. within 90 calendar days from the date of the event causing the complaint, or
2. for housing rehabilitation programs, within 90 calendar days from the Certificate of
Final Inspection and the signed Case Account.
C. Notice and Hearing
Within thirty (30) calendar days of receiving the written complaint, the Department of
Neighborhood and Development Services will give the Complainant written notice of the
time and place the City Manager will hear the complaint. The Complainant will be given at
least ten (10) calendar days notice before the hearing. The City Manager will inform the
Complainant of his decision at the time of the hearing or in writing within ten (10) calendar
days following the hearing.
D. Appeal
Appeals of complaints on any federally assisted housing rehabilitation project may be made
to: Manager, U.S. Department of Housing and Urban Development, Omaha Office,
Executive Tower Centre, 10909 Mill Valley Road, Omaha, NE 68154-3955. The
complainant also has any other remedies available under Iowa law.
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Chapter 13. Definitions
1. Definitions. Following are definitions of various terms as used with respect to rehabilitation
activities.
a. Abatement- A measure or a set of measures designed to eliminate lead-based paint
hazards or lead-based paint permanently. (Permanent is defined by HUD regulation
as at least 20 years effective life.) Abatement requires a certified, licensed
abatement contractor.
b. Annual Gross Income for Assisted Units - Gross income as defined for the Section
8 Program. See Exhibit 1.
c. Appraisal – An evaluation of the value of real property by a certified appraiser. A
recent appraisal will be considered if it less than 6 months old and no significant
changes to the property have been made.
d. Architectural Barrier - A structural condition, existing in a housing unit, that places a
physical hardship on the mobility of a person with disabilities in the performance of
normal self-care activities.
e. Asset - Resource with an exchange value, including but not limited to equity in real
property other than the applicant's primary residence. It also includes gold, precious
metals, cash, checking and savings accounts, savings bonds, Certificates of
Deposit, mutual funds, money market funds, stocks, IRA or Keogh accounts that are
not in a bona fide retirement program.
f. CDBG-Assisted Projects - Units within a CDBG-funded rehabilitation project.
g. Children-Minor - Individual under age of 18 and not head of household or spouse.
h. Community Development Block Grant (CDBG) Program - A federal program
administered by the U.S. Department of Housing & Urban Development which
provides Community Development Block Grant (CDBG) funds for programs that
benefit low-moderate income residents.
i. Conditional Occupancy Loan - A lien against real property which is repaid only upon
transfer of title, rental of the property, or termination of occupancy, or housing as
outlined in the applicable rehabilitation agreement.
j. Condominium - A condominium is defined as joint ownership of common areas and
facilities by the separate owners of single dwelling units in the project (Section 234,
National Housing Act (12 U.S.C. 17154)) and in compliance or conformance with the
requirements of the Code of Iowa, as amended.
k. Cooperative - An association formed to own multi-family housing organized under
Chapter 499A of the Code of Iowa (2005).
l. Declining Balance Loan - A self-depreciating loan against real property for a
specified term. The loan will provide supplemental assistance or serve as a subsidy
to lower the effective rate of interest on a home improvement loan.
m. Director - The Director of the Iowa City Department of Neighborhood and
Development Services.
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n. Dwelling Unit - Any room or group of adjoining habitable rooms located within a
dwelling and forming a single habitable unit with facilities, including a bathroom,
which are used or intended to be used for living, sleeping, cooking and eating.
o. Elderly - For purposes of these programs, a property title holder at least sixty-two
(62) years of age is considered elderly.
p. Emergency Repair - Correction of a major violation of housing standards that creates
an immediate threat to the health and safety of the occupant. Such violations include
unsafe or hazardous electrical service or wiring; unsanitary plumbing; inoperative or
dangerous furnace; unsafe structural or roof condition where the roof is actively
leaking or the ceiling is water-damaged and in danger of collapse; and other such
emergency conditions that, from time to time, the Rehabilitation Specialist, in
consultation with a Building Inspector, identifies.
q. Equitable Interest - Owner shows sufficient value in the property to provide security
for an additional lien.
r. Family – The Bureau of Census defines a family as a householder (head of
household) and one or more other persons living in the same household who are
related by birth marriage, or adoption. The National Affordable Housing Act of 1992
adds: “Family” includes but is not limited to (a) An elderly family or single person, (b)
the remaining member of a tenant family, and (c) a displaced person.
s. First-Time Home Buyer - An individual or family who has not owned a home during
the three-year period preceding the HUD-assisted (or otherwise assisted) purchase of
a home that must be used as the principal residence of the homebuyer, except that
any individual who is a displaced homemaker or a single parent (as defined in 24 CFR
92) may not be excluded from consideration as a first-time homebuyer on the basis
that the individual, while a homemaker or married, owned a home with his or her
spouse or resided in a home owned by the spouse.
t. Flood Insurance - Insurance coverage available to those areas participating in the
National Flood Insurance Program. This coverage compensates for damages
incurred due to flooding, thus reducing the overall impact and financial loss to
affected property owners or tenants. The amount of flood insurance coverage must
be at least equal to the project cost.
u. Grant - A direct subsidy for home improvement to a homeowner requiring no lien or
payback.
v. Historic Preservation- A procedure undertaken when any home in the rehabilitation
program is over 50 years old whereby a historical review is conducted. If the property
is found to be in a historical district or a contributing structure, steps must be taken
to preserve the historical integrity of the home according to the standards of the Iowa
State Historical Preservation Office and/or Secretary of the Interior Standards
(Section 106)..
v. HOME - The HOME Investment Partnerships Program, which is authorized by Title
II of the National Affordable Housing Act.
w. HOME Assisted Projects - Units within a HOME project where HOME funds are used
for rehabilitation. Resale restrictions apply.
x. Homeowner or Owner - A person who both owns the property for which assistance
is sought and occupies that property as the principal place of residence. Ownership
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is determined by legal or equitable title or by a land sales contract.
y. Household - One or more persons occupying a housing unit (U.S. Census
definition). See also "Family".
z. Housing Code Standards – Section 14-5E of the City of Iowa City Code.
aa. HUD - U.S. Department of Housing and Urban Development.
bb. HUD - 203B Limits - 95% of the median sales price in the metropolitan statistical
area (Johnson & Washington Counties) as required in 24 CFR Part 203. The 203B
limit is periodically adjusted by HUD.
cc. Incipient Violation - The state or physical condition of an element of the structure
required to meet a HUD Housing Quality Standard or the Iowa City Housing Code,
that at the time of inspection is in such a state of deterioration that if left uncorrected,
it will further deteriorate into an actual violation within the next two years.
dd. Income - The total annual gross income of a family or tenants from all sources for
the 12 month period following the date of income verification.
ee. Income Guidelines - The median and associated income levels as determined by
the U.S. Department of Housing and Urban Development for the City of Iowa City.
See Exhibit 3.
ff. Interim Controls- A set of measures designed to temporarily reduce human exposure
or likely exposure to lead-based paint hazards. Requires contractor(s) with Lead-
Based Paint Safe Work Practices certification.
gg. Land Sales Contract - Any transaction in which the purchaser obtains a warranty
deed from the seller upon completion of installment payments over a term of years.
The form of a land sales contract may vary according to the circumstances of each
sale.
hh. Lead Safe Work Practices- Work practices that are used to protect workers and
residents from the affects of lead-based paint hazards. Contractors must have a
training certificate to perform activities associated with lead-based paint correction.
ii. Major Code Violation - A housing standards violation involving the following
categories of deficiency: electrical, heating, plumbing, roofing and structural.
Structural violations are considered as deficiencies only when they involve the major
structural systems of the property, including roof, floor girders and joists, and the
foundation.
jj. Manufactured Home - A structure, transportable in one or more sections, which in
the traveling mode, is eight body feet or more in width or forty body feet or more in
length, or, when erected on site, is three hundred twenty or more square feet, and
which is built on a permanent chassis and des igned to be used as a dwelling with or
without a permanent foundation when connected to the required utilities, and
includes the plumbing, heating, air conditioning, and electrical systems contained
therein (MHCSS 24 CFR 3280).
kk. Neighborhood Services Coordinator - The Coordinator for Neighborhood Services,
which is a division of the Iowa City Department of Neighborhood and Development
Services, that oversees the use and expenditure of funds in the Community
Development Block Grant (CDBG) and HOME Program for the City of Iowa City.
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ll. Person with Disabilities - For purposes of these programs, a person shall be
considered disabled/handicapped if that person has a physical or mental impairment
expected to be of long, continued or indefinite duration or suffers from a disability as
defined in Section 223 of the Social Security Act (42 U.S.C. 423) or in Section 102
of the Development Disabilities Services and Facilities Construction Amendments of
1970 [42 U.S.C. 269(1)]. A disabled or handicapped family member qualifies the
family as a disabled/handicapped family.
mm. Principal Place of Residence- Residing in the property at the time of application for
assistance (except where extraordinary circumstances have made the property
temporarily uninhabitable) and for at least one hundred eighty five (185) days of
each calendar year.
nn. Program Assistant- An employee or designee of the City's Department of
Neighborhood and Development Services charged with the duties of administering
the specific aspects of the rehabilitation program.
oo. Rehabilitation Agreement - An agreement the applicant must execute which
specifies the terms and conditions for obtaining a rehabilitation loan or grant.
pp. Rehabilitation Cost - The total cost of repairs, improvements and other costs for
rehabilitation incurred by the applicant that are eligible for rehabilitation assistance,
regardless of whether the costs are financed in part with funds from other sources.
qq. Rehabilitation Specialist - An employee or designee of the City's Department of
Neighborhood and Development Services charged with the duties of administering
the specific aspects of the rehabilitation program.
rr. Retirement Asset – Financial assets whose liquidity is limited or penalized until a
person reaches retirement age, including, but not limited to 401(k)s, IRAs, pension
accounts, IPERS, and TIAA-CREF.
ss. Single Family Home - Structure containing one dwelling unit.
tt. Termination of Occupancy – If an owner(s) does not reside or occupy the property
according to the terms of the Rehabilitation Agreement. Also see “Principal Place of
Residence”.
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EXHIBIT 1
HUD SECTION 8 REGULATIONS FOR CALCULATING ANNUAL GROSS INCOME
FOR APPLICANTS REQUESTING ASSISTANCE
Annual Income. The anticipated income for all adult members of the family, even members
temporarily absent, from all sources for a twelve-month period following the date of income
determination. This includes but is not limited to, the following:
A. The full amount, before any payroll deduction, of wages and salaries, including
compensation for overtime and other compensation for personal services such as
commissions, fees, tips, and bonuses.
B. Net income from operation of a business or profession. The expenditures for business
expansion or amortization of capital indebtedness shall not be deducted to determine net
income from a business.
C. Interest, dividends, and other net income of any kind from real or personal property.
Expenditures for amortization of capital indebtedness and an allowance for depreciation of
capital assets shall not be deducted to determine the net income from real or personal
property. Where the family has Net Family Assets in excess of $5,000, Annual Income shall
include the greater of the actual income derived from all Net Family Assets or the value of
such assets multiplied by the current passbook savings rate.
D. The full amount received from annuities, periodic payments from insurance policies,
retirement income, pensions, periodic benefits for disability or death, and other similar types
of periodic receipts to include lump sum payment for a delayed start of a periodic payment.
E. Payments in lieu of earnings, such as unemployment and disability compensation, social
security benefits, workers compensation, and dismissal wages (vacation and sick leave).
F. Welfare assistance payments including those amounts withheld as payment for food
coupons or stamps. The value of food stamps is not included in income.
G. Periodic and determinable allowances, such as, alimony and regular contributions or gifts.
H. The value of in-kind gifts and services from public and private sources to the extent that
these gifts or services are given on a regular and ongoing basis.
I. All regular pay, special payments and allowances received by a member of the Armed
Forces, whether or not living in the dwelling, who is head of the family, spouse, or other
person whose dependents reside in the unit.
J. Payments to the head of the household for support of a minor or payments nominally to a
minor for his support but controlled for his benefit by the head of the household, or a resident
family member other than the head, responsible for his support.
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EXHIBIT 2
PRIORITY LIST FOR HOUSING REHABILITATION PROGRAMS
Only complete applications for rehabilitation assistance will be accepted by staff and entered to the
waiting list. Staff will process applications for all owner-occupied rehabilitation programs according
to the following priorities:
Priority
1. Need as defined by income level
2. Elderly and or Disabled status.
3. Family status.
4. Self sufficiency efforts.
5. Date of application
The waiting list will be compiled according to a point system related to the priorities list above as
follows:
Income: Points are assigned in inverse proportion to income.
(e.g. Household at 38% of median will receive 62 points.
Household at 55% of median will receive 45 points.)
Family Characteristics Points
Income Up to 100 (based on household median
income)
Elderly 30
Disabled 30
Large Family 25
Single Parent 25
Household Member
(full-time employment)
10
Each month on waiting list 5
Households will receive points in all categories for which they are eligible. Within each program,
applications having the highest number of points as determined by the waiting list will be processed
first for assistance.
When a household reaches the top of the waiting list for rehabilitation, staff will notify the household
as to the next step. At this time staff may request an updated application if the original application
is more than six months old.
To ensure access to these resources by all qualified homeowners, an applicant will not be
considered for additional rehabilitation assistance, excluding emergency assistance, if they have
entered into a Rehabilitation Agreement within the last three calendar years. Notwithstanding the
previous sentence, additional assistance may be considered if there are no other applications
pending for a specific program. Staff reserves the right to deny assistance to homeowners who
did not complete a previously funded housing rehabilitation project (regardless of funding source)
in a timely manner. Timely manner means within six months of the date the Rehabilitation
Agreement was signed or nine months of the date the Rehabilitation Agreement was signed if due
to weather delays.
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EXHIBIT 3
TABLE OF INCOME LIMIT GUIDELINES FOR IOWA CITY
BASED ON AREA MEDIAN INCOME (AMI)
Family Size 30% AMI 50% AMI 80% AMI
1 $22,900 $38,150 $61,050
2 $26,200 $43,600 $69,800
3 $29,450 $49,050 $78,500
4 $32,700 $54,500 $87,200
5 $35,350 $58,900 $94,200
6 $37,950 $63,250 $101,200
7 $40,550 $67,600 $108,150
8+ $43,200 $71,950 $115,150
Effective date 6/15/2022; Subject To Change Annually
U.S. Department of Housing & Urban Development
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EXHIBIT 4
POLICY FOR HOUSING REHABILITATION SUBORDINATION AGREEMENTS
General
The City of Iowa City Housing Rehabilitation Program provides financial assistance in the form of
many types of loans (Forgivable Loan, Conditional Occupancy Loan, and No Interest Loan) to
Iowa City homeowners. These housing rehabilitation loans are frequently in a second position
behind the primary lender. Due to the public nature of these funds and changing financial
conditions, this subordination policy has been adopted.
Applicability
This policy would apply to projects that have received or will receive Housing Rehabilitation
assistance.
Terms and Conditions
The City may subordinate its housing rehabilitation loans to a private lender. The City charges a
fee of $100.00 for entering into a subordination agreement to cover staff cost and legal fees. In
addition to this fee, the property would need to have adequate equity to protect the City’s interest.
This value is verified by a recent appraisal.
Eligible Conditions
1. Refinance to lower the interest rate and/or change the term of the primary loan.
2. To undertake a home improvement.
3. Emergencies, such as to pay medical bills. The Neighborhood Services Coordinator will
determine eligibility for emergency requests.
Ineligible Conditions
1. To pay off or consolidate credit card or other debt (including college loans).
2. To take cash out of the property for personal use.
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To: City of Iowa City Finance Department___
Client Name: ____________________________
Address: ________________________________
PAYOUT AUTHORIZATION
You are hereby authorized to issue a payment to
_________________________________________
in the amount of $ _________ _________ for work completed and/or materials purchased for
_________________________________ at _______________________________ Iowa City,
Iowa as part of the City of Iowa City Housing Rehabilitation program.
Description of work completed/materials purchased:
Amount of Contract: $ 0.00
Previous Payments: $ 0.00 Project #: ______________________
Balance: $ 0.00 Object #: ______________________
Current amount: $ 0.00
NEW BALANCE: $ 0.00
I hereby certify that all work was inspected on __________________ and found to be satisfactory
and in compliance with City of Iowa City Housing Code standards and the project’s scope of work.
________________________________________ _______________
Housing Rehab Specialist Date
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