Vermont Community Development Program
Community Development Block Grant Project Description
Project Name: Rental Unit Rehab Pilot Program
Prepared By: NeighborWorks of Western Vermont
The Town of Bennington Vermont is applying to the Vermont Community Development Program (VCDP) for a Scattered Site Grant which will benefit the residents of the entire geographical area of Bennington County. NeighborWorks of Western Vermont (NWWVT) will be the administrator of the grant and will handle all program management, budgeting, and account duties for the grant and will be the author of the grant narrative and grant questions.
NWWVT intends to develop a pilot program for the Town of Bennington to address deteriorated and/or vacant rental housing. This program shall be designed to encourage smaller scale rental property owners to reinvest in their rental units by supplying incentives in the form of a rehabilitation grant. A qualifying rental owner shall offset rehab costs by applying through NWWVT for a combination grant/loan designed to upgrade the rental unit to achieve HUD “Quality Housing Standards”.
This program is not designed for a rental property owner to simply paint the exterior of a building or have vinyl siding installed to improve appearance. It is designed to help owners undertake a comprehensive assessment of their rental property and to supply guidance for improvements to mechanical systems, health and safety standards, weatherization and thermal envelop upgrades, and overall enhancements intended to ensure units perform better and last longer. The definition of a housing unit according to HUD standards is; “a house, apartment, group of rooms, or single room occupied or intended for occupancy as separate living quarters.” For the applicants of this grant, housing units not constructed on a foundation (mobile homes) shall be considered ineligible.
Small rental unit property owners may receive a grant of up to $8500/unit, with a maximum of four units per building and may be eligible for an additional $ 8500 grant if the entire building requires repairs of a significant nature. No one individual property owner may receive grant funding for more than eight units total. A property owner must have at least one half of the rental units of a building occupied by tenants having 80% or less average median county income (AMI) or, in the case of an unoccupied building, agree to a 50% occupancy rate of renters having 80% or less AMI. The property owner must also agree to a comprehensive building evaluation by a NWWVT Rehab Specialist and also must agree to a building energy audit by NWWVT HEAT Squad. The Rehab Specialist and HEAT Squad auditors are trained to assess conditions of the major mechanical systems of the building to include electrical, plumbing, heating, thermal performance, structural integrity, and to conduct a unit review of the 29 point healthy homes checklist provided by the Vermont Housing Conservation Board (VHCB). Finally, all building owners must agree to improve all rental units to HUD Housing Quality Standards.
Efficiency Vermont rebate incentives up to $2500 may be available to all property owners making weatherization and thermal shell improvements to their rental buildings.
Additional grant funding may be available through VHCB for the abatement of lead paint and through Vermont Center for Independent Living (VCIL). Units having renters below 80% AMI with small children under the age of six or children testing positive with high lead levels, may be eligible for lead-based paint abatement and removal grants through VHCB. Units requiring ADA access ramps and/or access bathroom modifications may be eligible to receive funding through VCIL’s Home Access Program to help fund the costs of a ramp and bathroom changes. A tenant must be income eligible and have a permanent physical disability which prevents them from participating in their community and moving freely in their home. Only occupied, ground floor rental units may be eligible for VCIL funding as long as the residents meet income requirements. If a non-profit housing unit property owner elects to modify a ground floor rental unit to be ADA compliant with a ramp or bathroom modifications, grant funding not to exceed $ 5000, may become available. Note: A non-profit rental property owner may receive a grant or a tenant may receive a grant, but not both.
Using the comprehensive building and unit(s) evaluations, a NWWVT Rehab Specialist shall decide which units qualify for the grant subsidy. Once the building owner agrees to participate in the program, the Rehab Specialist shall then develop scopes of work based on the evaluations and an estimate shall be developed for repairs through interactions between the owner and NWWVT specialist.
All repair grants shall be combined with a corresponding loan equal to a minimum of twice the amount of the grant. If a four unit building qualifies for $ 17,000 in grant repair subsidies, the building owner must be willing to borrow $ 34,000 in additional funds to invest in building/unit improvements as outlined in the evaluations. If a building owner wishes to contribute out of pocket funding, then said funding must be deposited along with the grant funding, into the construction escrow account to be managed by NWWVT. Additionally, the building owner must agree to maintain building conditions equal to the standards achieved post repair process; must agree to comply with the Town of Bennington rules and regulations designed to maintain property upkeep, and must continue renting the unit based on the grant criteria for a period equal to the life of the loan or a minimum of five years, whichever is greater. The owner also must agree to annual inspections by the NWWVT staff to assure building conditions are maintained as repaired by the grant program and that units continue to be rented as specified in the grant criteria.
To ensure that borrowers maintain compliance with the grant criteria the grant will be structured as a deferred loan, secured by a subordinate mortgage, with forgiveness after the greater of 5 years or loan repayment. Borrowers who are out of compliance with the covenants of this loan/grant will be given every opportunity to return to good standing with NeighborWorks, however if they do not comply within a reasonable period of time NeighborWorks has the right to require repayment of the grant.
NeighborWorks has a history of prudent underwriting leading to sound lending decisions, however typical of all our lending programs we will accommodate those with lower credit scores, higher loan to value ratios and temporary cash flow issues. We understand that due to the high level of risk we are the only lender willing to make second mortgages on investment properties, however because it is so closely aligned with our core mission of safe and affordable housing it is a risk we are willing to take.
Administration, management and enumeration of repairs to all units and buildings shall be conducted in a similar manner as the NWWVT scattered site rehab program. All funding shall be deposited into an escrow account to be managed by the rehab specialist and all work shall be completed in compliance with State of Vermont fire safety codes and local building codes and zoning regulations. After scopes of work are finalized and approved by the building owner, state and local permits shall be obtained. NWWVT shall provide construction management throughout the length of the project to include the finalization process with all contractors.
In keeping with the criteria and conditions listed above, NWWVT projects the upgrade of 20 rental units within the two-year grant period. Because this is a pilot program, NWWVT and the Town of Bennington shall create an advisory group to assist with identifying rental unit owners whose properties will qualify for the program, to assess progress and to help create an environment that will encourage owners to take action. This advisory group shall have, but not be limited to, at least one member from the Town of Bennington, BROC, Shires Housing of Southwest Vermont and NWWVT.
In order to manage the above activities, NWWVT will establish a satellite office located in the Town of Bennington which will include two full-time staff members for an initial period of two years. This office shall provide the residents of Bennington County with the full spectrum of NWWVT homeownership programs. The two staff members shall include one full-time homeownership specialist and one construction manager/rehab specialist to manage both the program outlined above and any scattered site residential rehab clients requiring our services. NWWVT Homeownership Center services fall into two categories; Preservation and Promotion.
In the category of Preservation, the NWWVT Bennington office shall also offer two additional programs designed to preserve and improve resident-owned housing. They are the NWWVT Home Repair Program mentioned above (rehab), and the NWWVT HEAT Squad weatherization program.
Our rehab program offers technical assistance, grants and loans for basic vital home repairs, health and safety improvements within the home, and energy efficiency improvements for warmer, healthier places to live. The program is available to households at or below 80% of area median income. Rehab Specialists perform an evaluation of the systems within the home, observe for health and safety improvements and calculate a basic assessment of the thermal efficiency of the house. Scopes of work are then drafted and a budget is created to complete the work. All this is completed with input from the homeowner as owner satisfaction is essential to our program.
The NWWVT HEAT SquadTM also offers technical assistance and customer service to homeowners for achieving significant energy cost saving measures to the home. The program starts with an energy audit of the home, which analyzes the thermal performance of the structure. The audit also defines a scope of work for weatherization improvements, calculates a budget to complete the energy saving measures, shows the incentive rebate for completing the work and indicates the amount of yearly energy cost savings after the work is complete. We offer loans to complete the weatherization upgrades and we will recommend area contractors skilled in completing the efficiency improvements.
Our Homeownership Promotion category offers counseling and training through nationally recognized NeighborWorks programs. NWWVT accredited Financial Capabilities and Homebuyer Education curricula covers everything one needs to know prior to buying a home. Workshops include guest speakers and individualized advice.
The NeighborWorks counseling services offer one on one meetings with HUD-certified counselors to review personal details and establish customized plans to accomplish one’s goals and obtain loans and grants appropriate to individual circumstances.
RealtyWorksTM is a fully licensed real estate office with an experienced commercial realtor now on staff to serve the home buyer; most often a first time home buyer, in search of the perfect home.
Our LoanWorksTM lending department includes a fully licensed lending staff with access to the NWWVT $12 M Revolving Loan Fund and loan products ranging from home improvement loans to down payment assistance to first and second mortgage loans for homeowners and buyers. Note that NWWVT is a Certified Community Development Finance Institution charged and funded by the US Treasury to deploy lending capital to underserved communities.