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COUNTY OF MONTEREY HOUSING REHABILITATION PROGRAM

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COUNTY OF MONTEREY HOUSING REHABILITATION PROGRAM Powered By Docstoc
					          APPENDIX 3:
 COUNTY OF MONTEREY, HOUSING
REHABILITATION PROGRAM MANUAL




                                1
                                                                 Table of Contents




1. INTRODUCTION ......................................................................................................1
2. PROGRAM OBJECTIVES ........................................................................................1
3. GENERAL PROGRAM POLICIES ...........................................................................1
   a. rehabilitation standards 1
           .....................................................................................................
   b. eligible and ineligible improvements .................................................................................3
       Eligible Improvements ................................. ......... ......... ......... ......... ......... ......... ........... 3
       Ineligible Improvements: ................................................................................................................. 4

   c. insurance requirements . .....................................................................................................4
      Fire Insurance ................................................................................................................................. 4
      Flood Insurance ............................................................................................................................... 4

   d. conflict of interest provisions ............................................................................................. 4

   e. fair housing ........................................................................................................................ 5

   f. contracting Procedures ...................................................................................................... 5

   g. calculation of household income ........................................................................................6
   h. loan approval ..................................................................................................................... 6

   i. program complaint and appeal procedure ......................................................................... 6

   j. grievances between participants and construction contractor ......................................... 6

   K. Warranties and Repair Callbacks ....................................................................................7
   1. amendments and exceptions ...............................................................................................7

   m. procedures manual ...........................................................................................................7

4. HOMEO WNER REHABILITATION ........................................................................ 7
   a. eligibility .............................................................................................................................7
      Income ............................................................................................................................................ 7
      Occupancy ...................................................................................................................................... 7
      Property Requirements .................................................................................................................... 8
      Property Title .................................................................................................................................. 8
      Assets ............................................................................................................................................. 8

   b.              financial                                                   assistance                                                           8
       Maximum Amount .......................................................................................................................... 8
       Types of Financing and Terms ......................................................................................................... 8
       Grants and/or Forgivable Loans ....................................................................................................... 9
       Determining Eligibility .................................................................................................................... 9

   c. underwriting criteria ........................................................................................................10
   d. ongoing residency requirements ......................................................................................10
   e. temporary relocation ........................................................................................................11
5. RENTAL REHABILITATION .................................................................................11
   a. eligibility ...........................................................................................................................11
      Tenant's Income ............................................................................................................................ 11
      Owner Investor Income ................................................................................................................. 11
      Asset Limitations .......................................................................................................................... 11
      Property Requirements .................................................................................................................. 11

  b.             financial                                                 assistance                                                      12

   c. rents and occupancy .........................................................................................................12
      Units rehabilitated with HOME funds ............................................................................................ 12
      Units rehabilitated with CDBG funds ............................................................................................. 12
      Units rehabilitated with Redevelopment funds to be counted as Agency production units ................ 12

   d. temporary relocation .......................................................................................................13
6. HOUSING REHABILITATION PROCEDURES ......................................................, 13

   a. outreach and marketing ...................................................................................................13
  b. intake and eligibility ........................................................................................................ 14
   c. work write - ups and cost estimates ...................................................................................15
   d. investor - owner properties only .................................................................................... 18

  e. Housing loan committee ...................................................................................................18
  f. financial assistance documents 19
                 ........................................................................................
   g. construction contract ....................................................................................................... 19
  h. preconstruction conference ............................................................................................. 20
  i. course of construction management ................................................................................ 20
       Inspection Procedures ....................... ......... ......... ......... ......... ......... ......... ......... ......... 20
       Progress Payments ........................................................................................................................ 20
       Change Orders .............................................................................................................................. 21
       Final Inspection............................................................................................................................. 21
       Close Out ...................................................................................................................................... 21

7. LOANMANAGEMENT .......................................................................................... 22

   a. loan set-up ........................................................................................................................22
  b. period of affordability. .....................................................................................................22
   c. monitoring ........................................................................................................................23
   d.           subordination 23
                     ...................................................................................................................
       General Procedures ....................................................................................................................... 23
       Amortized Loans: .......................................................................................................................... 24
       Deferred Loans: ............................................................................................................................ 24

  e. loan modifications /forebearance 25
                            ......................................................................................
  f. loan assumptions . ............................................................................................................. 25
   g. loan repayment/payoffs and recapture. ...........................................................................25
      Loan Repayment ........................................................................................................................... 25
      Loan Payoff Procedures ................................................................................................................. 26
      Recaptured Funds .......................................................................................................................... 26
   h. default and foreclosure ....................................................................................................26
      County as Junior Lien holder: ........................................................................................................ 26
      Default on Loan Repayment: ......................................................................................................... 27
      Non-Monetary Defaults/Acceleration of Note: ............................................................................... 28

Appendix 1 - definitions ............................................................................................... 29
Appendix 2 - income, Asset and Underwriting Standards ........................................... 31
   income determination and income limits 31
                     ...........................................................................
   income verification requirements ........................................................................................34
   income worksheet                                                                                                                                   35
   income limits                                                                                                                                      35
   underwriting standards .......................................................................................................37
     Credit History ............................................................................................................................... 37
     Stability of Income ........................................................................................................................ 37
     Debt Ratios ................................................................................................................................... 38
     Other Compensating Factors .......................................................................................................... 38
     Determining Loan Amount ............................................................................................................ 39

Appendix 3 - maximum assistance ............................................................................... 40
   maximum loan limits 40
       ...........................................................................................................
   maximum after rehabilitation value limits 2008 43
                             .................................................................
Appendix 4 - reconstruction ......................................................................................... 44
Appendix 5 CalHome Program Guidelines .................................................................. 46
Appendix 6 - state prevailing wage procedures ............................................................ 49
Appendix 7 - RELOCATION AND DISPLACEMENT POLICIES ............................. 51
   temporary relocation during housing rehabilitation .......................................................... 51

   temporary relocation of residential tenants ........................................................................52
     Temporary Relocation of Owner Occupied ... ......... ......... ......... ......... ......... ......... ......... 53
     Displacement Activities Requiring Long-term Relocation Assistance ............................................. 53
     Economic Displacement of Tenants ............................................................................................... 54
     Record Keeping 54
     Notices .......................................................................................................................................... 55

Appendix 8 - SUMMARY OF REHABILITATION RESPONSIBILITIES ................. 56
   initial                                                   contact                                                                56

   qualification of applicant .....................................................................................................56
   determination of project viability ........................................................................................56
   project write-up and selection of contractor...................................................................... 56
   construction period ..............................................................................................................57
   completion of construction .................................................................................................. 58

   project closeout ....................................................................................................................59
Appendix 9 - Self Help Housing Rehabilitation ........................................................... 60
Appendix 10 - Lead Based Paint Requirements ........................................................... 61
    introduction                                                                                                                        61
    responsibilities , ..................................................................................................................... 61
    critical laws or regulations pertaining to lbp ......................................................................61
        Federal ......................................................... ......... ......... ......... ......... ......... ......... ......... 62
        State .............................................................................................................................................. 62

    significant exemptions (24 CFR 35.115) ..............................................................................62

    working safely with lead (24 CFR 35.1350) .........................................................................63
      Qualifications to Perform Safe Work Practices ......... ......... ......... ......... ......... ......... ......... 63
      Occupant Protection ...................................................................................................................... 63

    lead hazard evaluation (24 CFR 35.110 and 35.1320) ......................................................... 65

    lead hazard reduction methods (24 CFR 35.1330, 35.1325 , and 35.1335) .......................... 66
       Interim Controls ............................................................................................................................ 66
       Standard Treatments (24 CFT 35.1335) ......................................................................................... 67
       Abatement (24 CFR 35.1325) ........................................................................................................ 68
       Qualifications To Perform Lead Hazard Reduction ........................................................................ 68

    federal rehabilitation assistance categories (24 CFR 35.930) ............................................. 68
       Rehabilitation Projects Less Than Or Equal To $5000 .................................................................... 68
       Rehabilitation Projects Over $5,000 to $25,000 Per Unit ................................................................ 68
       Rehabilitation Projects Over $25,000 Per Unit ............................................................................... 69

    calculating federal rehabilitation assistance (24 CFR 35.930) ............................................70
      Examples of Single Family Dwelling Calculations ......................................................................... 71

    lead-based paint intent: abatement, rehab . or weatherization ...........................................71

    Notification (24 CFR 35.125) ...............................................................................................72

    acquisition , leasing, support, & operation requirements (24 CFR 35.1000) ......................73
      Acquisition .................................................................................................................................... 74

    maintenance and record keeping . ........................................................................................75
      Record Keeping ............................................................................................................................ 75

    lead-based paint definitions .................................................................................................76

    noticing forms ......................................................................................................................85
  references ............................................................................................................................. 90
Appendix 11 - Standards for Room Additions, .....................................................................91
             HOUSING REHABILITATION PROGRAM
                     Policies and Guidelines


1. INTRODUCTION
Monterey County is fortunate to have a wide range of different housing types and styles. The
overall goal of the housing rehabilitation program is to improve and conserve this existing
housing stock, especially those units that are occupied by lower income households.

The Housing Rehabilitation Program is authorized by the Board of Supervisors of the County of
Monterey and is administered by the County's Environmental Resource Policy Division,
Redevelopment and Housing Office.

Funding for the program is derived from a variety of resources. Included within these resources
are State of California Community Development Block Grant (CDBG), Joe Serna Farmworker
Housing Grant and HOME funds, federal USDA Housing Preservation Grant funds, local
Redevelopment housing tax increment funds, program income and/or other funding sources.
From time to time the County may apply for other grants and loans for the Housing
Rehabilitation Program. The program also encourages leveraging of other public and private
resources such as financing from other federal/state programs, donations from private
organizations and contributions from local businesses.

2. PROGRAM OBJECTIVES
The specific objectives of the rehabilitation program are to:
       Preserve and enhance the existing housing stock;
       Further neighborhood conservation efforts; and
       Improve housing units occupied by eligible households.

3. GENERAL PROGRAM POLICIES
A. REHABILITATION STANDARDS
    Rehabilitation Standards set forth a procedure for ensuring that a consistent and basic level
    of rehabilitation is achieved for each unit assisted in the rehabilitation program. The
    standards serve two purposes:

      e The standards are used during the inspection process to evaluate the condition of
        the property and its suitability for rehabilitation.

      e They serve as a minimum level to which residential property should be
        improved upon completion of rehabilitation.




Housing Rehabilitation Program Manual December 2008                                1
   The Rehabilitation Standards to be utilized in order to determine the scope, eligibility, and
   completion of rehabilitation work are:

            • Federal Housing Quality Standards
            • State of California, Health and Safety Code
            • If unit was built prior to 1978, Lead-Based Paint Regulations as provided in
                 Title X of the Housing and Community Development Act of 1992 (see
                 Appendix 10)
            • Cost Effective Energy Conservation and Effectiveness Standards
            • Section 504 Standards (applicable to multi-family structures)

   The following codes adopted by Monterey County as they relate to:

            • Repairs/replacement and rehabilitation completion in existing housing or new
               construction
            • Uniform Building Code
            • Uniform Mechanical Code
            • Uniform Plumbing Code
            • National Electrical Code
            • Uniform Housing Code

   In addition to the above codes and standards, the following is a list of the major priorities
   that will be accomplished within the rehabilitation process.

            • A sound, watertight roof, with the expectation of at least ten years weather
               protection.
            • An adequate and safe heating system serving all the living space, with a
               heating unit in good operating order and the expectation of a relatively long
               operating life.
            • Plumbing in good working order, safe, and sanitary.
            • Electrical service of a minimum of 100 amps, with no unsafe conditions.
            • Exterior surfaces must be in an adequate state of repair, sufficient paint on all
                surfaces needing weather protection, no rotted materials, and a general stable
                condition with no threat of further deterioration.
            • Foundation and floor support system should provide adequate support to
                maintain the structural integrity of the building; correction of signs of undue
                settlement, i.e., installation of foundation systems.
            • Structural components must be sound, and considered serviceable for the
                expected useful life of the building.
            • Removal of any threat of water penetration into the house, or of any condition
               which might affect structural integrity.



Housing Rehabilitation Program Manual December 2008 2
          • Adequate kitchen facilities, including sink, cooking and refrigeration
             equipment, sanitary food preparation and storage space.
          • Adequate rain-carrying system or controlled method of disposal of water from
             the roof and subfloor area to prevent moisture damage.
          • Inspection of building for termite infestation and other woodboring insects
              and fungus damage, fumigation for removal of infestation as needed.
          • Domestic hot water provided for the kitchen, bath, and laundry facility if
             possible.
          • All interior surfaces (walls, floors, ceiling) must be in a finished condition
             which will not impair normal usage of the space or create health hazards.
          • Sufficient storage space for normal storage of clothes, household utensils, and
              other family items.
          • Optimally, the house should be weather proofed (insulation and weather
             stripping), including attic spaces and all exposed exterior wall cavities.
          • All openings to the exterior must be weather-tight, in proper working order,
             with locks, and, where appropriate, screens for windows; all habitable rooms
             must have proper light and sufficient ventilation.
          • The house must be safe from fire hazards between dwellings with shared walls
              or attached garages. Smoke detectors shall be required according to code.
          • Health hazards must be removed or contained, including lead-based paint,
             mold, asbestos, unsafe stairs, etc.
          • After rehabilitation, the unit should meet locally adopted codes to the extent
             feasible within program assistance limits.


B. ELIGIBLE AND INELIGIBLE IMPROVEMENTS

ELIGIBLE IMPROVEMENTS
       Eligible improvements include any work necessary to meet the rehabilitation
       standards as identified above . All improvements must be physically attached to the
       property and have a useful life of at least 10 years. In addition , the following
       improvements are eligible:

          • Removal of architectural barriers to comply with the Americans with
             Disabilities Act (ADA) when a household member is disabled and submits
              documentation such as a physician ' s statement.
          • Room addition in (bedroom (s) and/or baths) to relieve overcrowding. (See
             Appendix 11 for guidelines)

       The following general property improvements are eligible in combination with
       rehabilitation work as incidental activities; however, the cost may not exceed 10% of
       the overall rehabilitation budget:
          • drainage and landscape improvements


Housing Rehabilitation Program Manual December 2008 3
            • driveway and sidewalk improvements
            •   installation/repair of shutters and window screens
            • debris removal


INELIGIBLE IMPROVEMENTS:
            •   Appliances : clothes washers/dryers
            • Barbecues
            • Furniture , drapes or area rugs
            • Swimming pools and spas
            • Accessory buildings
            • Room additions other than listed above


C. INSURANCE REQUIREMENTS

FIRE INSURANCE
        The owner shall maintain fire insurance on the property for the duration of the
        loan(s). This insurance must be an amount adequate to cover all encumbrances on the
        property . The insurer must identify the County as Loss Payee for the amount of the
        loan(s). In situations of financial hardship where the owner does not have insurance
        at the time the loan is made, the County may include the cost of such insurance in the
        loan. An insurance certificate or binder shall be provided to the County . In the event
        the owner fails to make the insurance premium payments in a timely fashion, the
        County at its option may make such payments for a period up to 12 months. The
        County may, in its discretion and upon the showing of special circumstances, make
        such premium payments for a longer period of time. Should the County make any
        payments, it may, in its sole discretion, add such payments to the principal amount
        that the owner is obligated to repay the County under this program.


FLOOD INSURANCE
        In areas designated by HUD or the Federal Emergency Management Agency (FEMA)
        as within a 100 year flood plain, the owner is required to maintain flood insurance in
        an amount adequate to secure the Rehabilitation Loan and all other encumbrances.
        This policy must designate the County as Loss Payee . The premium may be paid by
        the County as described above.


D. CONFLICT OF INTEREST PROVISIONS
   No member of the governing body of the locality and no other official, employee, or agent
   of the County government who exercises policy, decision-making functions, or
   responsibilities in connection with the planning and implementation of the program shall
   directly or indirectly be eligible for this program , unless the application for assistance has


Housing Rehabilitation Program Manual December 2008 4
   been reviewed and approved according to applicable guidelines for the source of funding.
   This ineligibility shall continue for one year after an individual's relationship with the
   County ends.

   A contractor with a vested interest in the property or who performs other services such as
   inspection, drawings or work write up cannot bid on a rehabilitation job. A contractor may
   act as owner/builder, subject to standard procedures.
   See Appendix 9 Self Help Rehabilitation for more information.


E. FAIR HOUSING
   This program will be implemented consistent with the Monterey County's commitment to
   Fair Housing. No person shall be excluded from participation in, denied the benefit of, or
   subjected to discrimination under any program or activity funded in whole or in part with
   Rehabilitation Program funds on the basis of his or her religion or religious affiliation, age,
   race, color, ancestry, national origin, sex, marital status, familial status (children), physical
   or mental disability, sexual orientation, or other arbitrary cause.

F. CONTRACTING PROCEDURES

             • All housing rehabilitation work must be carried out using the adopted housing
                rehabilitation guidelines.
             • The County will prepare, advertise the bid package and assist the homeowner
                in negotiating the contract.
             • The homeowner will select the contractor.
             • All contractors must be checked and cleared with HUD's federal debarred list
                 of contractors.
             • All contractors must be actively licensed and bonded with the State of
                 California.
             • All contractors must have public liability insurance to the County's required
                limits, Workmen's Compensation Insurance, unemployment and disability
                insurance.
             • All contractors must comply with CDBG and HOME federal and state
                regulations.
             • Utilize State certified lead based paint inspectors, workers and supervisors as
                 appropriate.
             • A Notice of Completion must be recorded with the County Recorder.


   Contractors who are interested in participating in the program shall complete an application
   and provide letters of reference or referrals from prior clients. Staff shall maintain a list of
   all approved contractors but homeowners may suggest additional contractors as long as
   they meet the criteria established above. Staff and the owner may arrange for a "walk-
   through" appointment so contractors can inspect the property. After bids have been
   submitted according to established deadlines, staff and owner will review bids and the
   owner will select the contractor.

Housing Rehabilitation Program Manual December 2008 5
   When initially participating in program, contractors shall be limited to one rehabilitation
   job. If contractor successfully completes that job, then contractor will be allowed in future
   to undertake simultaneous jobs.

G. CALCULATION OF HOUSEHOLD INCOME
   Household income is defined as the income of all persons 18 years of age and older who
   occupy the housing unit as a place of residence. Income shall be determined using CFR
   Part 5 (Section 8) Income Guidelines. Income limits shall be based on the annual median
   income limits, as adjusted for household size, for Monterey County. The current income
   limits are included in Appendix 2, Income Determination and Loan Underwriting Criteria.
   The income limits vary by funding source and range between 50 and 120 percent of
   median. Loans will not be made to households with income that exceeds Housing
   Rehabilitation Program limits.

H. LOAN APPROVAL
   All loans must be approved by the Housing Loan Committee. In order to obtain financing,
   owners must meet all property and eligibility guidelines in effect at the time of loan
   approval. Priority for funding loans is based on criteria approved by the Board of
   Supervisors in the Annual Housing Report and the requirements of the source of funding.
   The owner will be provided written notification of approval or denial. The reason for
   denial will be provided to the owner in writing.


1. PROGRAM COMPLAINT AND APPEAL PROCEDURE
   Complaints concerning the Housing Rehabilitation Program should be made to the Housing
   staff and contractor, as appropriate. If unresolved in this manner, the complaint or appeal
   shall be made in writing and filed with the Housing Program Manager. The Program
   Manager will schedule a meeting with the owner and/or contractor. A written response will
   be made within fifteen (15) working days of the meeting. Appeals of the Program Manager
   response are made to the Housing Loan Committee. If the applicant is not satisfied with
   the Committee's decision, an appeal may be filed with the Office of the County Counsel
   for consideration by the Board of Supervisors.


J. GRIEVANCES BETWEEN PARTICIPANTS AND CONSTRUCTION
CONTRACTOR
   If complaints cannot by resolved by the complaint and dispute resolution process described
   above, the arbitration procedure included in the construction contract will apply. Contracts
   signed by the contractor and the participant include the following clause, which provides a
   procedure for resolution of grievances: Any controversy regarding the contract, or the
   breach thereof, shall be submitted to binding arbitration in accordance with the provisions
   of the California Arbitration Law, Code of Civil Procedure 1280 et seq., and the rules of
   the American Arbitration Association. The arbitrator shall have the final authority to order
   work performed, to order the payment from one party to another, and to order who shall
   bear the costs of arbitration. Costs to initiate arbitration shall be paid by the party seeking

Housing Rehabilitation Program Manual December 2008 6
    arbitration. Notwithstanding, the party prevailing in any arbitration proceeding shall be
    entitled to recover from the other all attorney's fees and costs of arbitration.


K. WARRANTIES AND REPAIR CALLBACKS
    All rehabilitation work shall have a one year warranty unless longer warranty periods are
    provided by the manufacturer or offered by the contractor. The contractor shall provide the
    owner with all manufacturers' warranties upon filing of the Notice of Completion. In the
    event that a contractor must be called back to make corrections on rehabilitation work
    items that are not covered by warranty, the County has the option to cover the costs.
    HOME assisted units may not receive additional HOME program funding unless the work
    is undertaken within one year of original project completion.


L. AMENDMENTS AND EXCEPTIONS
    Amendments to these policies for HCD or other funded programs may be made by the
    County and submitted to HCD or other funding agency for approval. Any amendments
    required by State or Federal law or regulations shall be implemented by the date specified
    by such law or regulation without requiring further approval by the County or HCD.
    Adjustments to income and property valuation limits promulgated by HUD, HCD or other
    funding agency shall become effective upon notice to the County. Exceptions to these
    guidelines require Monterey County Board of Supervisors and funding source approval
    unless required by law or changes to State or Federal regulations or regulations of the
    funding source for new grants. The guidelines shall be reviewed for conformance with
    current regulations at least annually and in conjunction with the acceptance of new grants
    or loans that provide program funding.


M. PROCEDURES MANUAL
    The Housing Rehabilitation Procedure Manual of administrative procedures for operation
    of the Housing Rehabilitation Program is incorporated in these guidelines in Section 6 and
    Appendices 1-11. The Housing Loan Committee may revise the provisions of the
    Procedures Manual as necessary to enhance the effectiveness of the Housing Rehabilitation
    Program for day-to-day management of the Program.

4. HOMEOWNER REHABILITATION
A. ELIGIBILITY

INCOME
         Owner will be required to provide income documentation. (See Appendix 2 for
         income determination rules and limits.)

OCCUPANCY
         Households must own and occupy the unit to be rehabilitated and use it as their
         primary residence for at least 10 months each year.

Housing Rehabilitation Program Manual December 2008 7
PROPERTY REQUIREMENTS
         The property must be located within the unincorporated limits of Monterey County.
         Units assisted with, HOME 2004 grant funds and USDA Housing Preservation Grant
         funds must be within areas designated as Rural by USDA. Refer to Appendix 11 for
         eligible census tracts . Units assisted with Redevelopment funds must be in a
         redevelopment project area unless the Agency Board has made a finding of benefit in
         accordance with California Redevelopment Law. Eligible properties include stick
         built housing and mobile homes . HOME assisted units after rehabilitation value may
         not exceed 95% of area median as approved by the Department of Housing and Urban
         Development for Monterey County. For HOME Program funding the property must
         be in need of at least $1 , 000 of rehabilitation assistance.

PROPERTY TITLE
         In the event that there are additional people who share title to the property but do not
         reside on the property , those persons may have incomes that exceed the income limit
         if the property is rented under a recorded rent limitation agreement when the income
         eligible owner no longer occupies the unit.

         The unit will be monitored annually to identify change in occupancy and/or use.

ASSETS
         The description of what constitutes an "asset" is located in Appendix 2 of this
         document which is Attachment B, 24CFR Part 5.

         The maximum asset limit is the total of
            • 25% of current median income and
            • 6 months of living expenses based on household size.

B. FINANCIAL ASSISTANCE

MAXIMUM AMO UNT
         An eligible owner may qualify for the full cost of the rehabilitation work needed in
         order to comply with the rehabilitation standards . Maximum assistance under current
         financing sources is shown in Appendix 3. Rehabilitation costs may be supplemented
         with personal financing or with other loan or grant programs , which are sources of
         leverage for the County . The maximum HOME program assistance will not exceed
         the subsidy limit promulgated by HUD (Section 221 (d) (3) for Monterey County.


TYPES OF FINANCING AND TERMS
         Amortized Loans - Interest bearing loan, secured by a Deed of Trust, with payback
         required on a monthly basis until loan is paid off. The term of the amortized loan is
         set by the Housing Loan Committee depending on the borrowers financial
         circumstances. The maximum term is 30 years.



Housing Rehabilitation Program Manual December 2008 8
        Deferred Payment Loans (DPL) - Loan, secured by a Deed of Trust, with no payback
        required until the participant sells, transfers title or discontinues residence in the
        dwelling, unless sold or transferred to a household with income at or below 80% of
        median area wide income depending on the terms of the original funding source(s), or
        until the household income is sufficient to cover debt service. Payments may be
        made voluntarily on a DPL . If interest is charged, that interest shall accrue as simple
        interest . Deferred payment loans will be reviewed every five years to determine
        whether the applicant has the ability to begin repaying the loan. Exceptions will be
        made for Ca1HOME and Farmworker Housing Grant loans, which are deferred for a
        longer period.



GRANTS AND/OR FORGIVABLE LOANS
        In general, the County will not provide grants unless funding is provided by new
        grants . Exceptions may be made for emergency repairs (funds other than HOME
        funds) or in situations where the rehabilitation work is minimal and the cost of loan
        servicing would be likely to exceed the amount for the proposed work . The Joe Serna
        Farmworker Housing Program provides loans that are forgivable after the first 10
        years at a rate of ten per cent per annum.

DETERMINING ELIGIBILITY
        Every owner occupant who is determined to be eligible for Monterey County's
        Rehabilitation Program may have either an amortized loan, deferred payment loan or
        a grant/forgivable loan, based on the type of household, ability to repay the loan, lead
        based paint requirements and emergency repair needs . If the household ' s pre-rehab
        loan debt to income ratio (including housing costs and all fixed debts exceeding 12
        months to repay) exceeds 40 % of income, the household does not have an ability to
        repay the loan on a monthly basis . For projects where lead based paint abatement
        regulations apply, the household may qualify for 0% to 3% interest for that portion of
        the loan depending on financial circumstances.




                           Loan Eligibility Table

      ELIGIBLE HOUSEHOLD                        TYPE OFLOAN          INTEREST RATE
      Elderly Household                             Deferred         0% - 3% Interest
      Handicapped Household                         Deferred         0% - 3% Interest
      Household with Debt to Income                 Deferred         3% Interest
      Ratio Exceeding 40%
      Household with Debt to Income         Amortized or partially   0% - 3% Interest
      Ratio Less Than 40%                        amortized
      Household with lead based paint       Amortized or deferred    0% - 3% Interest
      abatement requirements or
      emergency repair needs.



Housing Rehabilitation Program Manual December 2008 9
C. UNDERWRITING CRITERIA
   As part of the eligibility determination process, the rehabilitation staff shall review the
   applicant's financial status in regards to debt to income ratio. That ratio shall be
   determined by comparing all fixed debts (including housing costs and debts with
   repayments extending longer than 12 months) to the household's income. As part of this
   evaluation process, the staff shall also request a credit report for the applicant(s). Refer to
   Appendix 2 for additional Underwriting Criteria and Appendix 3 for Maximum Assistance
   Limits.


D. ONGOING RESIDENCY REQUIREMENTS
        2. Owner occupants will be required to submit to Monterey County each year for
            the term of the Loan:
            • Proof of occupancy in the form of a copy of a current utility bill.
            • Statement of unit's continued use as owner occupant's primary residence.
            • Declaration that other titleholders do not reside on the premises.
        3. In the event that an owner occupant sells, transfers title, or discontinues residence
             in the rehabilitated unit for any reason, the loan is due and payable. See
             Appendix 15 for CalHome repayment provisions.
        4. If the owner occupant sells or otherwise transfers title of the property to
             household with income at or below 50% to 80% of median income depending on
             the criteria of the original funding source(s), the County will consider
              subordinating the loan and continuing all or part of the lien as a DPL or
             amortized loan.
         5. If the owner occupant dies, and if the heir to the property lives in the house and
              has an income at or below 50% to 80% of median income depending on the
              criteria of the original funding sources(s), the heir may be permitted, upon
              approval of the Housing Loan Committee to assume the loan at the rate and
              terms the heir qualifies for under current participation guidelines.
        6. If the owner occupant dies and the heir is not income eligible, the loan is due and
             payable.
        7. If an owner occupant wants to convert the rehabilitated property to a rental unit,
             the loan is due and payable unless the owner records an affordability agreement
             restricting residency to households with incomes less than 60% of County AMI.
              The unit(s) must have rents not exceeding the lesser of Section 8 Fair Market
             Rents (FMR) for existing housing, minus tenant paid utilities or rents established
              at 30 percent of 60 percent of area median income, as determined by HUD.
         8. If an owner wants to convert the rehabilitated property to any commercial or non-
              residential use, the loan is due and payable.




Housing Rehabilitation Program Manual December 2008 10
E. TEMPORARY RELOCATION
    Owner occupants are eligible for temporary relocation benefits, if health and safety threats
    are determined to exist by the Housing Inspector/Analyst. Temporary relocation may be
    necessary if reconstruction or lead paint abatement work is required. Relocation benefits
    will be provided in accordance with Monterey County's Relocation Plan and State and
    Federal regulations. More information is included in Appendix 7.


5. RENTAL REHABILITATION
A. ELIGIBILITY

TENANT'S INCOME
         Units assisted with HOME Funds:
             • On initial occupancy, tenant's income must be at or below 60% percent of the
                Area Median Income as adjusted for household size for Monterey County.
             • Upon turnover of a unit after rehabilitation has been completed, tenants'
                income must not exceed 60% of Area Median Income.
             • In projects of 5 or more units, at least 20% of the units must be occupied by
                 tenants with incomes at or below 50% of Area Median Income.
         Units assisted with CDBG: Tenant's Income must be at or below 80% of Area
         Median Income for Monterey County.

         Units Assisted with Redevelopment Funds: Tenant's income must be at or below
         80% of Area Median income as adjusted for household size. In order to be counted
         towards very low- income production credits, Agency assisted units must be occupied
         by households at 50% of AMI.


OWNER INVESTOR INCOME
         There are no income limitations for the owner of the property.

ASSET LIMITATIONS
         There are no asset limitations for the owner of the property.


PROPERTY REQUIREMENTS
         Property must be in need of at least $1 , 000 of rehabilitation assistance per unit. The
         property must be located within the unincorporated limits of Monterey County.
         Eligible properties include stick built housing and mobile homes.
         Redevelopment assistance is limited to units in designated Redevelopment Project
         areas unless the Board of Supervisors, acting as the Board of Directors of the
         Redevelopment Agency makes a finding that such assistance is necessary and
         appropriate in other areas.


Housing Rehabilitation Program Manual December 2008 11
B. FINANCIAL ASSISTANCE
     An owner investor may qualify for the full cost of the rehabilitation work needed in order
     to comply with the rehabilitation standards (up to the maximum standards as defined in
     Appendix 3 of this document). Total indebtedness against the property will not exceed 100
     percent of after rehabilitation value.

     Rental rehabilitation applicants will be eligible for deferred payment loans at 0% to 6%
     interest. Deferred loans will be reviewed every five years to determine whether the income
     from the property can support full or partial amortization of the loan amount.


C. RENTS AND OCCUPANCY
       Owner-investors must execute agreements with the County which restrict rents. For
       CDBG funding, the document is known as a Rent Limitation Agreement (RLA). For
       HOME funding, an affordability period restriction is executed. Rent restrictions remain
       in place for the affordability period even if the property is sold or title is transferred.
       Affordability periods for HOME units are as follows:
              Less than $15,000 in HOME funds/unit 5 years
              $15,000-$40,000 in HOME funds/unit 10 years
              More than $40,000 in HOME funds/unit 15 years
During the affordability period, rents must conform to the following:

UNITS REHABILITATED WITH HOME FUNDS
       Units must have rents not exceeding the lesser of
               • Section 8 FMRs for existing housing, minus tenant paid utilities; or
               • Rents established at 30 percent of 60 percent of area median income (LOW
                  HOME rent), minus tenant paid utilities; or
               • Maximum high HOME rents as adjusted annually by HUD or HCD, minus
                  tenant paid utilities.



UNITS REHABILITATED WITH CDBG FUNDS
           Units must have rents not exceeding the lesser of
               • Section 8 FMRs for existing housing, minus tenant paid utilities; or
               • Rents established at 30 percent of 80 percent of area median income, minus
                  tenant paid utilities.



UNITS REHABILITATED WITH REDEVELOPMENT FUNDS TO BE COUNTED AS
AGENCY PRODUCTION UNITS
           "Substantially rehabilitated" units are defined as units where the value of
           rehabilitation work exceeds 25% of the after rehabilitation value of the property,
           inclusive of land value.



Housing Rehabilitation Program Manual December 2008 12
           For substantially rehabilitated units the rent limitation agreement must run for the
           longest feasible time with a minimum period of 55 years. Maximum rents are as
           follows:


           Tenant's Income Level Allowable Rent
            Income 0-50% of median income 30% of 50%
            Income 51-80% of median income 30% of 60%
            Income 81%-110% of median income 30% of 110%


           For units that do not qualify as substantially rehabilitated, units must have rents not
           exceeding the greater of
               • Section 8 FMRs for existing housing, minus tenant paid utilities (only if there
                   is a Section 8 tenant in the unit) or
               • Rents established at 30 percent of 65 percent of area median income, minus
                  tenant paid utilities.
           Owner investors will be required to submit annual proof that units are rented to
           income-eligible tenants and that rents are affordable as previously described.


D. TEMPORARY RELOCATION
       Tenants are not eligible for temporary relocation benefits, unless health and safety threats
       are determined to exist by the project coordinator/construction supervisor (see Appendix
       7). Relocation will be in accordance with Monterey County's Relocation Plan.




6. HOUSING REHABILITATION PROCEDURES
Following is a general summary of the typical tasks that need to be undertaken to process and
complete rehabilitation assistance for an eligible property. It is not intended to be a complete and
exhaustive description of all actions.


A. OUTREACH AND MARKETING
               • Program staff will make every effort to provide information about the
                   program to members of the community. All materials will be made available
                   in Spanish.
               • Marketing should not be a one-time effort but rather be continuous and
                  ongoing.
               • Examples of marketing and outreach activities include:
                       Brochures;
                       Posters at Community Meeting Places;
                       Churches, stores, schools, libraries, etc.;

Housing Rehabilitation Program Manual December 2008 13
                     Press releases and Public Service Announcements.
                     Outreach efforts at Citizen Advisory Committee, senior centers, volunteer
                     organizations.
                     Participation in Citizen Advisory Committee, public and other community
                     meetings and events.
                     "Open Houses" or signs at houses that have been rehabilitated.
                     Flyers inserted into newsletters at local schools or in grocery bags.
                     Monterey County Website at www.co .monterey/housing/


             • Satisfied owners are the best marketing tools. The program form evaluation
                 will ask for testimonials.
             • Marketing also includes customer service . Housing staff will respond to
                applicants ' questions or concerns quickly and thoroughly.
             • A record of all inquiries including names , addresses and phone numbers will
                 be maintained.


B. INTAKE AND ELIGIBILITY
    After initial contact with applicant by phone or mail, the Analyst will set up an
    appointment to explain the program and to complete the initial application. Ask applicant
    to bring all information to the appointment that would help to expedite the eligibility
    process, such as:
             • Income Verification (e.g. paycheck stubs, social security award letter,
                 verification of child support/alimony etc.)
             • Bank statements and other asset verifications.
             • Mortgage payment records.
             • Hazard insurance policy.
             • List of other fixed debts (debts with repayments expected to continue past 12
                 months).
             • 2 years Federal tax returns with all schedules, names and birth dates of all
                 household members.
             • California Drivers License, "Alien Registration" card, passport or other
                picture identification to document the identity of the applicant.
             • List of repairs needed and cost estimates, if available.

    If applicant is an owner-investor, also request following information:
             •   Names and addresses of tenants in units to be rehabilitated.
             •   Tenants household size and number of bedrooms in the unit.
             •   Rents currently charged.
             •   Income and expense statements for property.
             •   Federal tax returns including real estate schedule.

Housing Rehabilitation Program Manual December 2008 14
            • Documentation of tenant(s) income.
            • Copies of current leases.


   At scheduled appointment with applicant, complete following tasks:
            • Program application completed and signed.
            • Authorization to release information signed.
            • Fair Lending and Privacy Act Notice, signed.
            • Provide applicant with pamphlet, "How to Protect Your Family from Lead in
                Your Home" and lead based paint notice, if applicable and obtain signed
                statement of receipt of notice.
            • Complete an evaluation of age and condition of major systems and applicant
               needs such as handicapped accessibility improvements or room addition to
               alleviate overcrowding as needed in the housing unit
            • For investor owners also review tenant relocation rules and Rent Regulatory
                Agreement. Obtain certification from owner that he/she will not evict any
                tenants in anticipation of rehabilitation (except for lawful cause such as failure
                to pay rent).
            • Provide applicant with list of additional documentation necessary for
                eligibility determination.

   After appointment with applicant, the Analyst and support staff will complete following
   tasks:
            • Set up an application file and send out requests for verifications to appropriate
                agencies.
            • Request preliminary title report and credit report.
            • Check environmental records for flood plain and/or historic structure.
               Complete environmental review sheet and insert in applicant file. Send letter
               to State Office of Historic Preservation describing proposed scope of work if
               exterior repairs or exterior painting are required. Allow 30 days for State
               response.
            • After receipt of verifications, determine appropriate income standards, and
               document household income in file. Complete Income Determination
               Worksheet. Utilize methodology in Appendix 2, Income Determination and
               Underwriting Standards.
            • Contact Housing Inspector. Provide Inspector with applicant's list of repairs,
               property evaluation and reports.
            • The County contracts with qualified property inspection and or architectural
               firms for inspection service.

C. WORK WRITE - UPS AND COST ESTIMATES
   The inspector will conduct an inspection of property and complete a written evaluation
   according to Rehabilitation Program guidelines. The inspection will include:


Housing Rehabilitation Program Manual December 2008 15
            • Complete "Visual Assessment for defective lead paint on all pre - 1978
               dwellings.
            • The inspector will take "before" pictures of property.
            • As necessary contact Analyst to arrange for any additional inspections such as
               structural engineer, architect, environmental engineering firms or others.

   Overcrowded conditions - If the Inspector determines that over-crowded conditions exist
   (see Appendix 11) and there is a request for the construction of an additional bedroom or
   bathroom, or conversion thereof, a Justification Report for the aforementioned action shall
   be written and included in the file. Such report shall include:

            • Number of occupants in household.
            • Age and gender of occupants in household.
            • Existing number of and size of sleeping quarters.
            • Location of structure (zoning/environmental issues).
            • Rehabilitation costs are under the maximum allowed by program guidelines.
            • Type of improvements.
            • Type of structure.

   Reconstruction - Dwellings that are severely deteriorated may be reconstructed rather than
   rehabilitated. Refer to Appendix 4 for reconstruction guidelines. The Inspector shall
   evaluate the condition of the unit and determine if it meets the criteria for reconstruction.

   Mobile Homes - Funds may be used for the rehabilitation of a mobile home. An alternative
   to rehabilitation of a deteriorated mobile home is to replace the unit with a used mobile
   home. To be considered eligible for rehabilitation costs, the used mobile home must have
   been occupied and not used as a demonstration model. Should the residential dwelling or
   existing mobile home that is being considered for rehabilitation meet the criteria for
   reconstruction discussed in the Appendix 4, purchase and transportation costs can be added
   to the applicant's loan.

   Historic Structures - The Secretary of the Interior Standards for Rehabilitation of Historic
   Structures must be considered if historically significant structures are to be rehabilitated as
   part of the rehabilitation program. If historic structures are included in a rehabilitation
   program, special requirements must be met under the National Environmental Policy Act
   and the National Historic Preservation Act of 1966, as amended. The State Office of
   Historic Preservation must be consulted regarding the proposed scope of work. The
   County of Monterey has entered into a Memorandum of Understanding with the State
   Office of Historic Preservation. - See Appendix 12.

   Obtain prevailing wage determination from Analyst, if applicable (see Appendix 6 for State
   Prevailing Wage Procedures and HUD website for rental projects subject to federal Davis
   Bacon Labor Standards).


Housing Rehabilitation Program Manual December 2008 16
   The Work Write-Up or Deficiency List is the central management document for the
   housing rehabilitation program. The inspector or analyst will review work write up with
   owner and obtain their approval of the scope of work. Among its specific objectives are:
            • To prioritize code deficiencies (especially life threatening and health and
                safety deficiencies) over general property improvements;
            • To document that financed improvements are eligible under the Program
                Guidelines;
            • To assure mutual understanding between homeowner/applicant and the
                contractor regarding work to be performed;
            • To serve as a basis for obtaining reliable and comparable bids from
                contractors and subcontractors based on a written cost estimate;
            • To serve program staff as a tool and basis for estimating costs of individual
               proposed work items;
            • To serve as a checklist in reviewing work performed;
            • To honor claims for materials and performance; and to serve as a dispute
               resolution instrument.

   Bids - The owner will be directed to obtain at least three (3) bids. Upon request, the
   County will provide a list of approved contractors to owner. At the owner's request the
   County may send out bid packets to contractors and the Builder's Exchange.
   The inspector or analyst will evaluate completed bid packages with owner. The inspector or
   analyst will complete a bid sheet listing all bids received against cost estimates. The Loan
   Committee will review the bid information and cost estimates and make a determination of
   cost reasonableness. Bids should not exceed (either positively or negatively) the staff's
   cost estimate by 10%. If awarded bid does exceed 10% rule, document reason in file. The
   owner makes the bid selection. Notify bidders of bid award.

   Performance bond - Contractor submits performance bond:
            • A Performance Bond in an amount equal to the total amount of the
                construction contract, or
            • A Cash Bond in an amount equal to 25% of the total amount of the
                construction contract. The Cash Bond may be in the form of a Certificate of
               Deposit with the County named as payee or a cashier's check made out to the
                County. The cashier's check or Certificate of Deposit is held in the Financial
               Manager's Office and released when all work has been accepted, the Notice of
                Completion is issued and all lien releases are submitted.
            • With the approval of the owner and Program Manager, retention equal to 20%
               of each progress payment shall be accepted in lieu of cash or performance
               bonds.

   Determining Rehabilitation Assistance
            • The Analyst will document the status of contractor ' s license and that
               contractor is not on HUD's debarred or suspended list.



Housing Rehabilitation Program Manual December 2008 17
            • The Analyst will determine total rehabilitation assistance to owner including
               total bid cost (allowing 20% to 25% contingency) and all loan costs (title
               policy, escrow fees, architects & engineering fees, inspections, etc.).
            • The Analyst will document "after - rehabilitation" value of property (in-house
                staff estimate) and document that value does not exceed HOME limits for
               projects to be funded by HOME program (see Appendix 3).
            • The Analyst will document that loan to value ratio of property does not
                exceed 100% of property value; and
            • The Analyst will document that proposed assistance does not exceed Home
               program maximum subsidy limits.


D. INVESTOR - OWNER PROPERTIES ONLY
   The Analyst will ensure that tenants are informed of potential rehabilitation process, rent
   changes, etc. and begin preliminary arrangements for any temporary relocation that may be
   necessary in accordance with federal and state relocation procedures.


E. HOUSING LOAN COMMITTEE
   The Housing Loan Committee (HLC) consists of representatives from the Office of the
   County Counsel, Revenue Division and Housing and Redevelopment Division. The
   Committee reviews and approves individual loan applications, subordination requests,
   default, foreclosure and modification proposals. In addition, the HLC reviews
   Rehabilitation Program policy issues and procedures as necessary to enhance the
   effectiveness of the Program. The HLC meets monthly or more frequently as required.
   Project evaluation criteria to be considered include:
            • The cost estimate and reasonableness of bids received, proposed scope of
               work, applicant's or project occupant's income status, and project
                characteristics to verify that program eligibility and loan requirements have
               been met.
            • Credit report information, loan to value ratio, debt coverage ratio, preliminary
               title report and any other information that may be required to minimize the
               risk of loss to the County in the event of a foreclosure.
            • Priority in approving funding will follow housing policies adopted by the
                Board of Supervisors in the Annual Housing Report. Currently the priorities
                are:
                   Preference for projects that address the needs of targeted areas, including
                   Chualar, Boronda, Castroville, Pajaro, Las Lomas and other urbanized
                   areas where the project will substantially benefit unincorporated residents.
                   Preference to projects that provide new housing or access to housing for
                   large low and very low-income families.
                   Preference to projects that preserve existing housing when that housing is
                   sound and is affordable to current low and very low-income residents.



Housing Rehabilitation Program Manual December 2008 18
   All applicants and borrowers will be notified in writing of the Loan Committee decisions.
   Loan Committee decisions may be appealed.


F. FINANCIAL ASSISTANCE DOCUMENTS
   The Analyst will prepare documents for Loan Committee approval and obtain approval,
   notify accounting staff of loan amount and request transfer of funds to escrow account and
   document loan committee decision in file.

   The Analyst will prepare or authorize Title Company to prepare all loan documents
   including:
            • Rehabilitation Assistance Agreement.
            • Rehabilitation Contract.
            • Promissory Note.
            • Truth in Lending Statement.
            • Right of Rescission.
            • Deed of Trust.
            • Request for Notice of Default (if applicable).
            • Privacy Act Notice.
            • Fair Housing Lending Notice.
            • Arrange to have County listed as "loss payee" on property insurance policies.
            • Complete loan settlement with all documentation included in applicant file.
            • If amortized loan, set up loan payment procedures.
            • Set up Vault file with recorded documents and original Promissory Note.
            • Set up financial file and master file.

   The Analyst will prepare rent limitation agreements (for owner-investor properties only):
            • Ensure that property owner understands terms and conditions of limitation
                agreement.


G. CONSTRUCTION CONTRACT
   The Analyst and support staff will prepare the construction contract. The construction
   contract shall include the following:
            • Bid proposal and contract form.
            • Deficiency List or Work Write-Up.
            • General conditions.
            • Lead-based paint notice (see Appendix 10).
            • Documentation of contractor licenses, insurance, and Workers'
               Compensation.
            • Labor Standards or State Prevailing Wage Requirements, if applicable.


Housing Rehabilitation Program Manual December 2008 19
            • Non-discrimination/E.E.O. Certifications.
            • Payment Procedures.
            • Debarment Self Certification.
            • Subcontractor Schedule.


H. PRECONSTRUCTION CONFERENCE
   The Inspector and/or Analyst will schedule a pre-construction conference with the owner
   and contractor. The pre-construction conference will provide an opportunity to:
            • Ensure both the owner and contractor understand that only items on the
                deficiency list will be accepted and paid for under the loan (unless there is a
                change order approved by the County).
            • Review performance and payment schedule.
            • Review change order procedure and emphasize that no extra work is to be
               performed until a change order is approved by the County and the owner.
            • Review and discuss lien release forms.
            • Emphasize contractor responsibility for obtaining permits and calling for
               inspections.
            • Explain, "Notice to Proceed". The Notice specifies the agreed upon "start
                date" and gives an agreed upon number of calendar days, thereafter for
                completion of the job (60 days is a common figure). Work performed prior to
               "start date" is not reimbursable under the program.
            • Review contract. Call attention to liquidated damages, arbitration and
               cancellation sections of the document.
            • The Borrower and Contractor then will execute the construction contract.


1. COURSE OF CONSTRUCTION MANAGEMENT

INSPECTION PROCEDURES
        Housing Rehabilitation work will be monitored by the Inspector for compliance with
        specifications set forth in the work write -up and drawings (if applicable). The
        Contractor and Inspector will coordinate inspection appointments with the owner.
        Work not performed to specifications will not be accepted . The project file narrative
        will include a record of all inspections and any findings.


PROGRESS PAYMENTS
        Upon receipt of a contractor ' s request for payment , the Inspector and the borrower or
        her/his representative must inspect the work and determine if it is acceptable. In
        addition, staff must determine if the percent of work claimed has been completed and
        if the progress payment schedule has been met. The steps to be followed are:



Housing Rehabilitation Program Manual December 2008 20
           1. Contractor submits invoice and calls for inspection.
          2. Inspector coordinates with borrower and contractor to schedule inspection.
          3. Inspection is performed and quality and amount of work verified.
          4. Contractor, Inspector and borrower sign payment authorization.
          5. Disbursement Request is approved by the Analyst and Program Manager and
              forwarded to the Title Company.
          6. The Title Company issues a check in the amount authorized and contacts
              contractor for mailing or pickup instructions.

CHANGE ORDERS
          No changes may be made in the Scope of Work authorized in the contract unless prior
          approval is obtained in the form of a Change Order signed by the Contractor, Borrower,
          Inspector and Analyst. The Change Order must contain:


              • Description of modifications.
              • Change in contract price.
              • Description of how additional costs (if any) will be covered.
              • Certification of need for additional work and cost reasonableness by the
                 Inspector and Analyst.
              • The Loan Committee must authorize change orders that necessitate additional
                 funds.


FINAL INSPECTION
          The Inspector will complete a final inspection on each project. The final inspection
          follows the general procedures listed above with the following additional steps:
          1. Conduct final inspection of property. Prepare "punch list" of items still needing
               attention.
          2. Ensure that all punch list items are completed.
          3. Prepare "Final Inspection" sign off form for owner to acknowledge that they are
              satisfied that all work has been completed.
          4. File "Notice of Completion" and collect all lien releases from contractor and
              ensure that owner has all warranties.
          5. Approximately 30 days after "Notice of Completion" is filed, release retention
              holdback funds.
          6. Ask owner to complete and return an evaluation form for contractor performance
              and an evaluation assessment of housing rehabilitation program.


CLOSE OUT
        The Analyst and support staff are responsible for the following project close out
        procedures:

Housing Rehabilitation Program Manual December 2008 21
             • Reconcile funds distributed with total rehabilitation assistance and adjust as
                necessary.
             • Reconcile funds distributed with total rehabilitation assistance and adjust as
                necessary.
             • Unused funds are credited against the principal balance.
             • Review owner's file and make sure that all documentation is included and that
                checklists are completed.
             • Set up tickler system to monitor; 30-60 day "call back" to make sure owner is
                 satisfied with work.
             • 10 month "call back" to make sure that any needed work is completed before
                 expiration of 12 month contractor warranty.

7. LOAN MANAGEMENT
A. LOAN SET-UP:
         HOME funded projects
         1. County prepares the Project Set-Up Report, Funding Source Detail, Draw
             Request and Project Completion Report and sends to State HCD.
         2. Upon receipt of the Draw down Request the State will set up the request with
             HUD and send the County a reimbursement check within approximately sixty
             (60) days.
         3. The County prepares a loan set-up form and forwards to the Revenue Division
             along with copies of the Promissory Note and the Deed of Trust. The loan is
             added to the Loan Log and flagged for annual and 5-year review as appropriate.
         4. The Original Promissory Note, Deed of Trust, title policy and insurance binder
             are set up in a Vault File and stored in a fireproof file cabinet. A financial file
             consisting of copies of the security documents, draw down request, match
             documentation, loan approval and related matters is set up for the Fiscal Officer's
             records. The Master loan file shall, in addition to the previously related
             information, contain income and asset verification and other eligibility related
             documentation.


B. PERIOD OF AFFORDABILITY
           HOME assisted units

    Each loan funded by HOME is required to meet the following period of affordability based
    on the amount of HOME assistance:

         Less than $15,000 - 5 years
         $15,000 to $40,000 - 10 years
         More than $40,000 - 15 years

         Loans funded through HPG, FWHG etc. do not have an affordability requirement.

Housing Rehabilitation Program Manual December 2008 22
        Homeowner Rehabilitation
        During the period of affordability, the homeowner is required to document occupancy
        and certify that the home is the primary residence of the household. If the house is
        sold and the loan is not assumed, the period of affordability ends and funds are
        recaptured. If the loan is assumed by an eligible household, the original term of
        affordability applies.

        Rental Rehabilitation
        Rent restrictions remain in place for the affordability period even if the property is
        sold or title is transferred.


C. MONITORING:
   Annual: The County will perform an annual monitoring of the properties, which have
   been assisted with rehabilitation loan to determine that:
            • the unit has not been rented or sold.
            • the unit is the primary residence of the borrower.
            • adequate hazard and or fire insurance is in place
            • for rental projects: rent, occupancy and property standard conditions are
                monitored.

   Five-Year Reviews:
            • At the conclusion of five years from the loan closing date and at five-year
               intervals thereafter, the County will evaluate the Borrowers ability to repay
               based on income and housing expenses and total long-term debt to income
               ratios.
            • The Housing Loan Committee shall review and approve any proposed
               modifications to the terms of the loan including continued deferral of
               payments.


D. SUBORDINATION:
   Requests for subordination will be processed in accordance with the following guidelines.

GENERAL PROCEDURES:
        1. Borrower completes Subordination Request form and submits the form along
            with any required documentation of special circumstances to the Housing and
            Redevelopment Division . Copies of the Subordination Request Forms, lender
            letters and sample letters are included in the Forms Binder.
        2. Borrower has lender forward copies of the credit report , loan application,
            appraisal, income verification , preliminary title report and preliminary loan
            closing statement.
        3. Staff reviews information and determines conformance with the subordination
             guidelines for the type of loan. See Appendix 2 for the method of determining

Housing Rehabilitation Program Manual December 2008 23
              household income. Subordination requests can be approved at the staff level
              when the proposed loan to value ratio is under 90% of the current appraisal value
              of the property.
       4. The Housing Loan Committee reviews all requests where the proposed loan to
           value ratio exceeds 90% of the current appraised value of the property.
       5. Subordination requests will generally be approved when the new loan results in a
           lower interest rate, reduces loan payments or otherwise improves the borrower's
           or the County's position and no cash is taken out.
       6. The borrower will be notified in writing of the approval/denial of the
           Subordination Request.
       7. The Subordination Agreement is prepared by the Title Company and forwarded
           to the County for execution after the borrowers have signed and the document is
           notarized. The Housing Program Manager or designee is authorized to sign the
           documents on behalf of the County. Upon execution, the Agreement is returned
           to the Title Company for recording. The recorded Agreement is copied and the
           original document is removed to the vault file for the loan.

AMORTIZED LOANS:
       The borrower' s payment record will be reviewed to determine if payments have been
       made in a timely manner. Subordination will not be approved when the borrower has
       a record of chronic late payments to the County unless loan proceeds are to be used to
       bring the County ' s loan current.

       The proposed debt to income ratio shall not exceed 50%.

       A borrower may be allowed to take equity out with the new loan when there are
       special circumstances, such as, medical or educational expenses or necessary home
       repairs.


DEFERRED LOANS:
          •      The proposed debt to income ratio shall not exceed 40%.
          • The borrower's ability and willingness to make payments on the County's
             loan, in addition to the proposed loan will be determined and considered by
             the Housing Loan Committee in reviewing the proposed subordination.
          • Borrowers will be allowed to take equity out when there are special
              circumstances as described above , however, the Loan Committee may require
             the borrower to begin making full or partial payments on the County ' s loan as
              a condition of approval of the subordination. Borrower will be required to
              sign a Modification of Promissory Note with the terms approved by the
             Housing Loan Committee and execute a Memorandum of Modification of
             Deed of Trust that will be recorded concurrent with the Subordination
              Agreement.




Housing Rehabilitation Program Manual December 2008 24
E. LOAN MODIFICATIONS/FOREBEARANCE
    Loan modifications and forbearance are considered by the Housing Loan Committee in
     connection with the Five-Year Review and upon request by a borrower who is temporarily
     or permanently unable to make scheduled loan payments due to financial hardship.

     The borrower is required to submit updated information on household composition,
     documentation of current income, assets, insurance, mortgage and long-term debts for
     evaluation. Two years federal tax returns with all schedules are required.

     In the case of financial hardship, the type of documentation required will depend on the
     basis of the hardship. For example, a claim of disability would necessitate review of
     amount of disability benefits, doctor's statements estimating term of disability and
     documentation of medical expenses not covered by insurance.

     Loan modification will be recommended if the hardship is expected to continue for more
     than one year or the household debt to income ratio exceeds 40% excluding the County
     loan. A new five-year review term is established and payments are deferred for one to five
     years depending on the term the hardship is expected to continue.

     If the financial hardship is short-term in nature, payments will be temporarily suspended.
     A forbearance plan will be developed to allow the borrower to bring the loan current over a
     reasonable time period.


F. LOAN ASSUMPTIONS
     The County Loan may be assumed by an income-eligible purchaser, (household income is
     less than or equal to the criteria of the original source of funding for the loan) who meets
     all other criteria for the Rehabilitation Program, including:
               • The purchase price may not exceed the limit for Monterey County as
                    approved by the Federal Department of Housing & Urban Development State
                    Department of Housing and Community Development or other source of
                    funding.
               • Primary financing must be a fixed rate conventional loan.
    The Housing Loan Committee will review all Loan Assumption requests. The HLC shall
    have the ability to deny such requests if it determines that Housing Program objectives and
    grant funding milestones would be better served by loan recapture (prior to expiration of the
    minimum affordability period) or repayment.


G. LOAN REPAYMENT/PAYOFFS AND RECAPTURE

LOAN REPAYMENT
         • Borrowers may make voluntary payments of principal and interest without
           penalty.
         • Payments are first applied to accrued interest.


Housing Rehabilitation Program Manual December 2008                           25
            •   The remaining payment amount reduces the principal balance.
            • The Housing Office maintains records of all payments and issues an annual
                statement of interest paid.
            • Borrowers may request a payment history and principal balance remaining by
                contacting the Housing Office.


LOAN PAYOFF PROCEDURES
        • Borrower or borrower's representative requests payoff demand - refer to Fiscal
            Officer.
        • Fiscal Officer completes demand calculation form copy.
        • Housing Staff reviews loan files to confirm number of loans, terms, balances and
           regulatory agreements.
        • The Housing and Redevelopment fiscal officer Division shall be consulted in each
           case involving discrepancies and shall initial the final demand calculation form.
        • Staff prepares a payoff demand for Title Company and sends via fax and mail.
        • Upon receipt of payment in full, staff prepares Reconveyance of Deed of Trust
           and forwards to Recorder ' s Office for recording and returns the recorded
           document to the Housing and Redevelopment Office.
        • Housing and Redevelopment Office will make copies for file. The original is
           forwarded to the owner.


RECAPTURED FUNDS
        With the exception of County Inclusionary units and units with other re-sale
        restrictions borrowers are permitted to sell their home at market rate at any time.
        HOME Program loans that are repaid before expiration of the affordability period due
        to sale or transfer of the property are "recaptured".

            • Recaptured funds may not be used for program administration.


H. DEFAULT AND FORECLOSURE:
   Foreclosure actions must be reviewed and approved by the Housing Loan Committee.

COUNTYAS JUNIOR LIEN HOLDER.-
        It is the County ' s policy to prepare and record a "Request for Notice" on all senior
        liens placed on properties financed by a loan with notification to come to the
        Rehabilitation Program Housing and Redevelopment Program Manager.

        This document requires any senior lien holder to notify the County of initiation
        (recordation of "Notice of Default") of a foreclosure. The junior lien holder (County)
        may cancel the foreclosure proceedings by "reinstating" the senior lien holder. The
        reinstatement amount must be obtained by contacting the senior lien holder. This

Housing Rehabilitation Program Manual December 2008 26
       amount will include all delinquent payments, late charges, advances (fire insurance
       premiums, property taxes, property protection costs, etc.), and foreclosure costs (fees
       for legal counsel, recordings, certified mail, etc.).

       Once the County has the information on the reinstatement amount, staff must then
       determine if it is cost effective to protect the County's position by reinstating the
       senior lien holder, keeping the first loan current by submitting a monthly payment
       thereafter, foreclosing on the property possibly resulting in owning the property at the
       end of foreclosure, protecting the property against vandalism and paying marketing
       costs (readying the home for marketing, paying for yard maintenance, paying a real
       estate broker a sales commission).

       If the County decides to reinstate, the senior lien holder will accept the amount to
       reinstate the loan up until five (5) days prior to the set "foreclosure sale date". This
       "foreclosure sale date" usually occurs about four (4) to six (6) months from the date
       of recording of the "Notice of Default". If the County fails to reinstate the senior lien
       holder before five (5) days prior to the foreclosure sale date, the senior lien holder
       would then require a full payoff of the balance, plus costs, to cancel foreclosure. If
       the County determines the reinstatement and maintenance of the property not to be
       cost effective and allows the senior lien holder to complete foreclosure, the County's
       lien may be eliminated due to insufficient proceeds from the sale of the property.


DEFAULT ON LOAN REPAYMENT:
       When the Borrower is in default on the County loan, active collection efforts will
       begin on any loan that is 31 or more days in arrears . Attempts will be made to assist
       the borrower in bringing and keeping the loan current . These attempts will be
       conveyed in an increasingly urgent manner until loan payments have reached 60 days
       in arrears, at which time the County may consider foreclosure. An appointment will
       be scheduled to discuss the reason for the arrearages. If due to job loss , reduction in
       income or other financial hardship , the Housing Loan Committee will consider
       forbearance or modification of the loan terms . County staff will consider the
       following factors before initiating foreclosure:

           • Determine if the borrower is willing to refinance with a commercial lender or
              to sell the property to pay off the County loan.
           • Review the loan balance; if the balance is under $5,000, the expense to
              foreclose may exceed the loan amount.
           • Determine if the home "as is," will be sufficient to cover the principal balance
              owing, necessary advances, (maintain fire insurance, maintain or bring current
              delinquent property taxes, monthly yard maintenance, periodic inspections of
              property to prevent vandalism, etc.) foreclosure, and marketing costs.
           • If the balance is substantial and all of the above factors have been considered,
                the County may opt to initiate foreclosure. The owner must receive, by
                certified mail, a thirty-day notification of foreclosure initiation. This


Housing Rehabilitation Program Manual December 2008 27
              notification must include the exact amount of funds to be remitted to the
              County to prevent foreclosure.

       At the end of thirty days, the County will contact a reputable foreclosure service or
       local title company to prepare and record foreclosure documents and make all
       necessary notifications to the owner and junior lien holders. The service will advise
       the County of all required documentation to initiate foreclosure and funds required
       from the owner to cancel foreclosure proceedings.

       When the process is completed, and the property has "reverted to the beneficiary" at
       the foreclosure sale, the County would then contact a real estate broker to market the
       home.


NON-MONETARY DEFAULTS/ACCELERATION OF NOTE:
       The County may issue a Demand for Repayment in situations where the Borrower has
       breached the terms of the Promissory Note , Deed of Trust, Rehabilitation Agreement
       or Regulatory Agreement . Examples include: failure to maintain adequate insurance
       coverage; no longer occupying the property as primary residence (owner occupant
       loan); failure to document occupancy and rents (rental-property owners ); sale,
       transfer or assignment of the property; failing to cooperate with monitoring process
       and/or death of the borrower.




Housing Rehabilitation Program Manual December 2008 28
Appendix 1 - definitions
   Annual (Gross) Income: Annual Income is used to determine homeowner and tenant
   eligibility. Annual income is defined using 24 CFR Part 5 (Section 8) income definitions.
   See Appendix 2- Income Determination and Underwriting Criteria for methodology.


   Ca1HOME: State bond funding allocated through the Department of Housing and
   Community Development. Funds are awarded on a competitive basis for housing
   rehabilitation and first time homebuyer activities benefiting lower income households.
   Loan payments are deferred for 30 years.

   Community Development Block Grant (CDBG): Federal funding allocated through the
   State of California, Department of Housing and Community Development. Funds are
   awarded on a competitive basis to communities to assist in funding public services, public
   infrastructure, housing, economic development and other community development needs.

   Debt to Income Ratio : A ratio used to determine the type of loan received by a program
   applicant. Debt to income ratio includes all fixed debts of the applicant, including housing
   costs and debts in which repayment is expected to extend longer than 12 months. The total
   fixed debts are compared to the annual income of the household and stated in a ratio format
   (i.e. 30% debt to income, 45% debt to income, etc.)

   Elderly: A household in which one of the owners or tenants is at least 62 years of age.

   Farmworker Household : Household that derives the majority of its income from
   agricultural employment when at least one member of the household is employed in the
   cultivation and tillage of the soil; the production, cultivation, growing and harvesting of
   any agricultural or horticultural commodities; the raising of livestock, bees, fur bearing
   animals, or poultry; dairying, forestry, and lumbering operations; and any work on a farm
   as incident to or in conjunction with such farming operations, including the delivery and
   preparation of commodities for market or storage.

   HOME Program : Federal funding allocated through the State of California on a
   competitive basis to communities. HOME funds can be used for housing rehabilitation,
   homeownership, rental development and tenant assistance.

   Household : All persons residing in a housing unit together.

   Housing Preservation Grant Program : Program administered by USDA Rural
   Development which provides grants to local jurisdictions for housing rehabilitation. Funds
   are restricted to very low income rural homeowners.

   Household Income: Household income is the income derived from household members
   18 years of age and older. Household income does not include the income of persons who
   may share in title to the property but who do not reside on the property.

Housing Rehabilitation Program Manual December 2008 29
   HUD: United States Department of Housing and Urban Development.

   Joe Serna Farmworker Housing Program : State funded program that provides low
   interest loans to qualifying farmworker homeowners for housing repairs. Loan payments
   are deferred for 20 years. The loan may be forgiven after the first 10 years at 10 percent
   per annum.

   Low Income Household : A household whose income is between 51-80% of median
   income, as adjusted for household size.

   Median Income : Median income is the median gross annual income for a household in
   Monterey County as published by the State of California. Median income varies according
   to the number of persons in the household.

   Moderate Income Household : a household who annual income is between 81%-120% of
   median income, as adjusted for household size. For Redevelopment assisted units
   moderate income is defined as 51-120% of AMI.

   Principal or Primary Residence : The housing unit in which the homeowner resides on a
   permanent, full time basis at least 10 months of each year.

   Program Income : Revenue from loan re-payments.

   Redevelopment Housing Funds : Tax increment funds generated in Redevelopment
   project areas. A minimum of 20% of these funds must be used for activities that support
   affordable housing.

   Rent : As defined in this rehabilitation program, maximum rent levels are the amount paid
   monthly for housing costs by tenants to a property owner, less any tenant paid utility costs.
   Maximum rent levels vary by funding source (CDBG, HOME or Redevelopment funds).

   SRO: Single Room Occupancy . A unit that does not include cooking facilities or a
   bathroom.

   Substantial Rehabilitation : The term used to define rehabilitation work when the
   expenditure for rehabilitation exceeds 25% of the post rehabilitation value of the property
   inclusive of land costs.

   Targeted Income Group : Those households who have been defined as very low or low-
   income households according to the definitions in this glossary.

   Very Low Income Household : A household whose annual income is 50% or less of
   median income, as adjusted for household size.

   USDA: United States Department of Agriculture.


Housing Rehabilitation Program Manual December 2008 30
Appendix 2 - Income, Asset and Underwriting Standards
INCOME DETERMINATION AND INCOME LIMITS
                   24 CFR Part 5 ANNUAL INCOME INCLUSIONS AND EXCLUSIONS
                                                         Part 5 Inclusions
This table presents the Part 5 income inclusions as stated in the Code of Federal regulations.
General Category Statement from 24 CFR 5 . 609 paragraph ( b) (April 1, 2004)

1. Income from
                     The full amount, before any payroll deductions, of wages and salaries, overtime pay, commissions,
wages ,    salaries,
                     fees, tips and bonuses, and other compensation for personal services.
tips, etc.

                         The net income from the operation of a business or profession. Expenditures for business
                         expansion or amortization of capital indebtedness shall not be used as deductions in determining
                         net income. An allowance for depreciation of assets used in a business or profession may be
2. Business Income deducted, based on straight-line depreciation, as provided in Internal Revenue Service
                  regulations. Any withdrawal of cash or assets from the operation of a business or profession will
                  be included in income, except to the extent the withdrawal is reimbursement of cash or assets
                  invested in the operation by the family.

                         Interest, dividends, and other net income of any kind from real or personal property. Expenditures
                         for amortization of capital indebtedness shall not be used as deductions in determining net
                         income. An allowance for depreciation is permitted only as authorized in number 2 (above). Any
3. Interest &withdrawal of cash or assets from an investment will be included in income, except to the extent
Dividend Income the withdrawal is reimbursement of cash or assets invested by the family. 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 a percentage of the value of such assets based on the current
                    passbook savings rate, as determined by HUD.
   ........ ......... ........ ......... ........ ........ ......... ........ ......... ........ ........ ....... ........ ...............
                         The full amount of periodic amounts received from Social Security, annuities, insurance policies,
4. Retirement &ietirement funds, pensions, disability or death benefits, and other similar types of periodic
Insurance Income receipts, including a lump-sum amount or prospective monthly amounts for the delayed start of a
                         periodic amount (except as provided in number 14 of Income Exclusions).
5. Unemployment &Payments in lieu of earnings, such as unemployment and disability compensation, worker's
Disability Income compensation, and severance pay (except as provided in number 3 of Income Exclusions).

                         Welfare Assistance . Welfare assistance payments made under the Temporary Assistance for Needy
                         Families (TANF) program are included in annual income:

                           I Qualify as assistance under the TANF program definition at 45 CFR 260.31; and
                           k Are otherwise excluded from the calculation of annual income per 24 CFR 5.609(c).

                         If the welfare assistance payment includes an amount specifically designated for shelter and
6. Welfare               utilities that is subject to adjustment by the welfare assistance agency in accordance with the
Assistance               actual cost of shelter and utilities, the amount of welfare assistance income to be included as
                         income shall consist of:

                           P' the amount of the allowance or grant exclusive of the amount specifically designated for
                              shelter or utilities; plus
                           h the maximum amount that the welfare assistanceagencycould in fact allow the family for
                              shelter and utilities. If the family's welfare assistance is reduced from the standard of need
                              by applying a percentage , the amount calculated under 24 CFR 5.609 shall be the amount
                              resulting from one application of the percentage.


7. Alimony, Child=Periodic and determinable allowances, such as alimony and child support payments, and regular
Support, & Gift contributions or gifts received from organizations or from persons not residing in the dwelling.
Income

8. Armed Forces 'All regular pay, special day and allowances of a member of the Armed Forces (except as provided
Income in number 7 of Income Exclusions).




Housing Rehabilitation Program Manual December 2008 31
                                                             Part 5 exclusions
This table presents the Part 5 income exclusions as stated in the Code of Federal
Regulations.
..................... ...................................................................................
General Category Statement from 24 CFR 5 . 609 paragraph ( c) (April 1, 2004)

1. Income
                            ncome from employment of children (including foster children) under the age of 18 years.
Children

2. Foster Care             Payments received for the care of foster children or foster adults (usually persons with disabilities,
Payments                   unrelated to the tenant family, who are unable to live alone).
3. Inheritance and         Lump-sum additions to family assets, such as inheritances, insurance payments (including
Insurance Income           payments under health and accident insurance and worker's compensation), capital gains and
                           settlement for personal or property losses (except as provided in number 5 of Income Inclusions).
4. Medical Expense Amounts received by the family that are specifically for, or in reimbursement of, the cost of
Reimbursements     medical expenses for any family member.
5. Income of Live-
                           Income of a live-in aide ( as defined in 24 CFR 5.403).
Aides

6. Disabled Persons        Certain increases in income of a disabled member of qualified families residing in HOME- assisted
                           housing or receiving HOME tenant-basedrental assistance (24 CFR 5.671(a)).

7. Student Financial The full amount of student financial assistance paid directly to the student or to the educational
Aid                  institution.
8. Armed Forces
                 The special pay to a family member serving in the Armed Forces who is exposed to hostile fire.
Hostile Fire Pay

9. Self-Sufficiency a.                 Amounts received under training programs funded by HUD.
Program Income                   b.    Amounts received by a person with a disability that are disregarded for a limited time for
                                       purposes of Supplemental Security Income eligibility and benefits because they are set
                                       side for use under a Plan to Attain Self-Sufficiency (PASS).
                                 c.    Amounts received by a participant in other publicly assisted programs that are
                                       specifically for, or in reimbursement of, out-of-pocket expenses incurred (special
                                       equipment, clothing, transportation, childcare, etc.) and which are made solely to allow
                                       participation in a specific program.
                                 d.   Amounts received under a resident service stipend. A resident service stipend is a
                                      modest amount (not to exceed $200 per month) received by a resident for performing a
                                      service for the PHA or owner, on a part-time basis, that enhances the quality of life in
                                      the development. Such services may include, but are not limited to, fire patrol, hall
                                      monitoring, lawn maintenance, resident initiatives coordination, and serving as a
                                      member of the PHA's governing board. No resident may receive more than one such
                                      stipend during the same period of time.
                                 e. Incremental earnings and benefits resulting to any family member from participation in
                                      qualifying state or local employment training programs (including training not affiliated
                                      with a local government) and training of a family member as resident management staff.
                                      Amounts excluded by this provision must be received under employment training
                                      programs with clearly defined goals and objectives, and are excluded only for the period
                                      during which the family member participates in the employment training program.


10. Gifts Temporary, nonrecurring, or sporadic income (including gifts). $,

11. Reparations ',Reparation payments paid by a foreign government pursuant to claims filed under the laws of that
                    government by persons who were persecuted during the Nazi era.

12. Income from Earnings in excess of $480 for each full-time student 18 years old or older (excluding the head of
Full-time Students household or spouse).
   ........ ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ..................
13. Adoption
Assistance Adoption assistance payments in excess of $480 per adopted child.
Payments

14. Social Security Deferred periodic amounts from SSI and Social Security benefits that are received in a lump sum
& SSI Income amount or in prospective monthly amounts.

15. Property Tax Amounts received by the family in the form of refunds or rebates under state or local law for


Housing Rehabilitation Program Manual December 2008 32
Refunds property taxes paid on the dwelling unit.
..................... ....................................................................................... ........
16. Home Care Amounts paid by a state agency to a family with a member who has a developmental disability
Assistance and is living at home to offset the cost of services and equipment needed to keep this
                     ',developmentally disabled family member at home.
17. Other Federal
                  iAmounts specifically excluded by any other federal statute from consideration as income for
Exclusions
                  ,purposes of determining eligibility or benefits under a category of assistance programs that
                  ,includes assistance under any program to which the exclusions of 24 CFR 5. 609(c ) apply,
                   including:

                       1 The value of the allotment made under the Food Stamp Act of 1977;
                           Payments received under the Domestic Volunteer Service Act of 1973 (employment through
                           VISTA, Retired Senior Volunteer Program, Foster Grandparents Program, youthful offender
                           incarceration alternatives, senior companions);
                           Payments received under the Alaskan Native Claims Settlement Act;
                           Income derived from the disposition of funds to the Grand River Band of Ottawa Indians;
                           Income derived from certain sub-marginal land of the United States that is held in trust for
                           certain Indian tribes;
                           Payments or allowances made under the Department of Health and Human Services' Low-
                           Income Home Energy Assistance Program;
                           Payments received under the Maine Indian Claims Settlement Act of 1980 ( 25 U.S.C. 1721);
                       1 The first $2,000 of per capita shares received from judgment funds awarded by the Indian
                          Claims Commission or the U.S. Claims Court and the interests of individual Indians in trust
                          or restricted lands, including the first $2,000 per year of income received by individual
                          Indians from funds derived from interests held in such trust or restricted lands;
                       ^   Amounts of scholarships funded under Title IV of the Higher Education Act of 1965, including
                           awards under the Federal work study program or under the Bureau of Indian Affairs student
                           assistance programs;
                       ^   Payments received from programs funded under Title V of the Older Americans Act of 1985
                           (Green Thumb, Senior Aides, Older-American Community Service Employment Program);
                       F Payments received on or after January 1, 1989, from the Agent Orange Settlement Fund or
                          any other fund established pursuant to the settlement in the In Re Agent Orange product
                          liability litigation, M.D.L. No. 381 (E.D.N.Y.);
                           Earned income tax credit refund payments received on or after January 1, 1991, including
                           advanced earned income credit payments;
                       1 The value of any child care provided or arranged (or any amount received as payment for
                          such care or reimbursement for costs incurred for such care) under the Child Care and
                          Development Block Grant Act of 1990;
                           Payments received under programs funded in whole or in part under the Job Training
                           Partnership Act (employment and training programs for Native Americans and migrant and
                           seasonal farm workers, Job Corps, veterans employment programs, state job training
                           programs and career intern programs, AmeriCorps);
                       1 Payments by the Indian Claims Commission to the Confederated Tribes and Bands of Yakima
                          Indian Nation or the Apache Tribe of Mescalero Reservation;
                           Allowances, earnings, and payments to AmeriCorps participants under the National and
                           Community Service Act of 1990;
                       1 Any allowance paid under the provisions of 38 U.S.C. 1805 to a child suffering from spina
                          bifida who is the child of a Vietnam veteran;
                         Any amount of crime victim compensation (under the Victims of Crime Act) received through
                          crime victim assistance (or payment or reimbursement of the cost of such assistance) as
                          determined under the Victims of Crime Act because of the commission of a crime against the
                          applicant under the Victims of Crime Act; and
                           Allowances, earnings, and payments to individuals participating in programs under the
                           Workforce Investment Act of 1998.



                                                 ATTACHMENT B

                   24 CFR Part 5 ASSETS INCLUSIONS AND EXCLUSIONS



Housing Rehabilitation Program Manual December 2008 33
This presents the Part 5 asset inclusions and exclusions as stated in the Code of Federal
Regulations.
Statements from 24 CFR Part 5 - April 1, 1998
Inclusions
   1. Cash held in savings accounts, checking accounts, safe deposit boxes, homes, etc. For savings accounts,
       use the current balance. For checking accounts, use the average 6-month balance.
   2. Cash value of revocable trusts available to the applicant.
   3. Equity in rental property or other capital investments. Equity is the estimated current market value of the
       asset less the unpaid balance on all loans secured by the asset and all reasonable costs (e.g., broker fees)
       that would be incurred in selling the asset. Under HOME, equity in the family's primary residence is not
       considered in the calculation of assets for owner-occupied rehabilitation projects.
   4. Cash value of stocks, bonds, Treasury bills, certificates of deposit and money market accounts.
   5. Individual retirement and Keogh accounts (even though withdrawal would result in a penalty).
   6. Retirement and pension funds.
   7. Cash value of life insurance policies available to the individual before death (e.g., surrender value of a whole
       life or universal life policy).
   8. Personal property held as an investment such as gems, jewelry, coin collections, antique cars, etc.
   9. Lump sum or one-time receipts, such as inheritances, capital gains, lottery winnings, victim's restitution,
        insurance settlements and other amounts not intended as periodic payments.
   10. Mortgages or deeds of trust held by an applicant.
Exclusions
   1. Necessary personal property, except as noted in number 8 of Inclusions, such as clothing, furniture, cars
       and vehicles specially equipped for persons with disabilities.
   2. Interest in Indian trust lands.
   3. Assets not effectively owned by the applicant. That is, when assets are held in an individual's name, but the
       assets and any income they earn accrue to the benefit of someone else who is not a member of the
       household and that other person is responsible for income taxes incurred on income generated by the asset.
   4. Equity in cooperatives in which the family lives.
   5. Assets not accessible to and that provide no income for the applicant.
   6. Term life insurance policies (i.e., where there is no cash value).

   7. Assets that are part of an active business. "Business" does not include rental of properties
       that are held as an investment and not a main occupation.

INCOME VERIFICATION REQUIREMENTS
     The procedures for verifying income are as follows:

            1. Third-Party Verification.
            Through this method, the Analyst contacts outside sources in writing to provide
            information. Before requesting information from the third-party entity, a written
            release must be signed by the owner or tenant household. The forms for these
            requests are listed below:
                 • Verification of Employment;
                 • Verification of Social Security;
                 • Verification of Pension and Annuities;


Housing Rehabilitation Program Manual December 2008 34
              •   Verification of Veterans Benefits;
              •   Verification of Unemployment Benefits;
              •   Verification of Public Assistance; or


          2. Review documentation provided by the applicants, including the following:
              • Current 30-day consecutive pay stubs;
              •   Last three years of Federal Tax returns with all applicable schedules;
              •   Last two years of W2's;
              •   Last two months of bank statements;
              • If self employed, a current profit and loss statement;
              • Divorce documents showing child support and alimony received;
              • Benefits statements (pension, Social Security, etc.); and
              •   Documentation of income from assets.


INCOME WORKSHEET
    The Housing Analyst prepares an Income Worksheet using household income as projected
    for the next twelve months.

     It is important when assessing the information, to note whether the employee is paid
     hourly, weekly, or monthly, and note average overtime pay. If an employee gets paid twice
     a month, that is 24 times per year, whereas if an employee is paid every two weeks, that is
     26 times per year. It is also important to determine if overtime is continuous or sporadic.
     Documentation must be included in the Borrower's file.

     In cases where the net assets are below $5,000 use actual income. If net assets are in
     excess of $5,000, use the higher of income generated by those assets or use the current
     passbook savings rate, which is currently 2%.


INCOME LIMITS
     The income limits are revised yearly and typically published in early spring of each year.
     The limits are available on the State of California, Department of Housing and Community
     Development web site (www.hcd.ca.&ov). The following page lists the income limits for
     the current year. Generally, CDBG and HOME program limit household incomes to 80%
     of areawide median income, adjusted for household size. The Redevelopment program
     funds can assist households up to 120% of areawide median income, adjusted for
     household size.




Housing Rehabilitation Program Manual December 2008                           35
HUD and HCD Median Income Information                                   2009 Income Limits

                                      Number in Household
                               1        2      3      4           5          6        7          8
Very low Income      30%    14,150   16,150 18,200 20,200      21.800     23,450   25,050    26,650
Very low income      50%    23,550   26,900 30,300 33,650      36,350     39,050   41,750    44,400
Low income           60%    28,300   32,300 36,400 40,400      43,600     46,900   50,100    53,300
Low income           70%    32,988   37,713 42,394 47,119      50,881     54,644   58,406    62,213
Low income           80%    37,700   43,100 48,450 53,850      58,150     62,450   66,750    71,100
Median*              100%   47,100   53,850 60,550 67,300      72,700     78,050   83,450    88,850
Low/Moderate         110%   51,825   59,225 66,625 74,025      79,950     85,850   91,800    97,725
Moderate**           120%   56,550   64,600 72,700 80,750      87,200     93,650   100,150   106,600

*median incomes calculated by dividing 30% income by.30 xc family of 4, which is HUD
**moderate income calculated by taking 120% of median




       Housing Rehabilitation Program Manual December 2008 36
UNDERWRITING STANDARDS

CREDIT HISTORY
        Past credit history and credit patterns are verified and a copy of the report is included
        in the loan package.

        1. Previous rental or mortgage payment history covering the most recent twelve-
            month period must be documented if not included in the credit report.
        2. Collections & Judgments: Court ordered judgments must be paid off prior to
            close of escrow unless a payment agreement is in effect and documentation of
            acceptable payments is made available.
        3. In the case of bankruptcy:
            • Chapter 7 Liquidation - At least two years must have passed since the
               bankruptcy was discharged.
            • Chapter 13 - A borrower paying off debts under Chapter 13 may be qualified
               if the Bankruptcy Court approves the additional proposed debt and monthly
               payments.
        4. Borrowers Without Credit History:
               Utility payment records, insurance payments, non-commercial loan receipts
               and other documentation may be accepted when a borrower's Credit Report
               does not reflect adequate credit history.
        5. Borrowers with Poor Credit History:
            • In general, poor credit history more than two years past will not affect the
                credit review. More recent derogatory information will require written
                explanation from the borrower that is consistent with other credit information.
            • Borrowers with continuous slow payments and delinquent accounts within the
               last two years will not be eligible unless a co-borrower or co-signer with a
               compensating excellent credit history is willing to co-sign. The co-borrower
               or co-signer must sign the loan application and provide documentation of
               income, assets and credit history.
        6. Previous Mortgage Foreclosure:
           If foreclosure on the borrowers home was
            • more than 3 years past;
            • the result of extenuating circumstances beyond the borrowers control; and
            • the borrower has since established good credit, then the foreclosure will not
                adversely affect eligibility under the Loan Underwriting Standards.

STABILITY OF INCOME
        Borrowers must demonstrate at least two years of income stability unless there are
        extenuating circumstances such as recent entry into the job market after college, trade



Housing Rehabilitation Program Manual December 2008 37
        school, staying out of the workforce to care for children or other family members; or
       job changes within the same industry or line of work.

       Self-Employed borrowers are considered to have stable income if the borrower has
       been self-employed for two years with a 25% or greater interest in a business and is
       able to provide tax returns and a profit and loss statement to document income and
       expenses.


DEBT RATIOS

       Housing Expense to Income Ratio
       In general, the total of principal and interest payments, real estate taxes, hazard
       insurance premiums and homeowner's association dues should not exceed 30% of the
       household's income. Higher ratios are acceptable if the household has a co-signer,
       low recurring expenses or other compensating factors described in the next section.


       Total Debt to Income Ratio
           • In addition to housing costs, the following types of liabilities are to be
               included in the calculation of total debt to income: installment loans,
               revolving charge accounts, child support, alimony and any other debt lasting
               more than 12 months.
           • Revolving accounts are calculated at 5 per cent of the current balance unless
              the account shows a specific minimum payment.
           • Contingent liabilities are included unless a 12 to 24 month history
              demonstrating payment by another party is provided.
           • The total debt to income ratio should not exceed 40 per cent unless there are
               substantial compensating factors. However, the Housing Loan Committee
              may approve higher ratios of up to 50% upon review of the borrowers credit
              history, projected income and assets and compensating factors.


OTHER COMPENSATING FACTORS

       Non Taxable Income:
       Income that is not subject to federal taxes may be considered as an
       adjustment/compensating factor when a borrower's credit history or income stability
       is otherwise less than desired. Adjustments of up to 20% can be considered.

       Housing Expenses:
       Borrower has successfully paid housing expenses, nearly equal to, equal to or greater
       than the proposed monthly expense over the last 12 months.

       Equity:
       Borrower has or will have equity in excess of 30% of property value.


Housing Rehabilitation Program Manual December 2008 38
       Co-signer
       Co-signer or co-borrower has excellent credit history, substantial assets and/or low
       debt to income ratios. Co-signers contribution to the borrower's housing expense can
       be factored into the housing expense ratio with written documentation of the planned
       contribution including the period for which the co-signer will contribute.

       Debt Paydown
       Borrower agrees to paydown existing debts in order to lower the total debt to income
       ratio and submits verification prior to final approval.

       Energy Efficient Homes
       Higher ratios are allowed for homes built after April 1994 under the Model Energy
       Codes or otherwise determined to be energy efficient by the FHA, a home energy
       rating system or energy consultant (generally, up to 2%).



DETERMINING LOAN AMO UNT
       The Housing staff will analyze the proposed loan utilizing the underwriting criteria
       described in previous sections above and:

       1. Review the projected income including income from assets and complete the
           Income Worksheet.
       2. Calculate debt to income ratios based on documentation in the Credit Report and
           loan application. Confirm principal and interest payments and estimated
           property tax and hazard insurance premiums.
       3. Contact borrower to discuss potential assistance from mortgage lenders,
           employers, family members, and co-signers.
       4. Review compensating factors to determine if the borrower meets criteria for
           higher debt to income ratios.
       5. Calculate maximum loan based on total costs, funds from borrower and standard
           maximum ratios.
       6. Calculate maximum loan based on higher ratios if compensating factors are
           significant.
       7. Prepare a staff report for the Housing Loan Committee detailing the underwriting
            process and presenting standard and exception loan alternatives.
       8. The Loan Committee will evaluate the proposed loan alternatives and approve
           the amount and terms of the loan.




Housing Rehabilitation Program Manual December 2008 39
Appendix 3 - maximum assistance
MAXIMUM LOAN LIMITS
   The Monterey County Housing Rehabilitation Program is intended to provide the minimum
   gap financing to enable an owner to rehabilitate a home or rental unit in the unincorporated
   areas of the County. The actual loan amount is determined based on underwriting criteria
   and rehabilitation costs.

   The standard loan limits shown below are the maximums that will be allowed unless the
   Housing Loan Committee determines that it is appropriate to approve a larger loan to
   relieve overcrowded conditions or reconstruct severely dilapidated dwellings.

   Exceptions may also be approved based on, but not limited to, the following adopted
   Monterey County affordable housing priorities:

        1. Preference for projects that address the needs of targeted areas, including
            Chualar, Boronda, Castroville, Pajaro, Las Lomas and other urbanized areas
            where the project will substantially benefit residents.
        2. Preference to projects that provide new housing or access to housing for large
             low and very low-income families.
        3. Preference for projects that preserve existing housing when that housing is sound
             and is affordable to current low and very low-income residents.
  In no event will the Exception Limit exceed the HUD limits for maximum subsidy per unit
  adjusted for the number of bedrooms for any HOME assisted units. The HOME subsidy
  limits are revised annually and the current limits are listed on the following page.




Housing Rehabilitation Program Manual December 2008 40
     Source : Housing and Community Development HOME Subsidy Limits (Section 221 (d) (3)


                                  HOME PROGRAM
                      SUBSIDY LIMITS PER UNIT - SECTION 221(D)(3)
      (All limits are effective 5/28/08 except those which are highlighted and were effective 1/1/08)

COUNTY NAME                     O-BDR       1-BDR         2-BDR         3-BDR         4-BDR
Alameda                         $133,250    $152,746      $185,739      $240,285      $263,760
Alpine                          $131,216    $150,414      $182,903      $236,616      $259,733
Amador                          $131,216    $150,414      $182,903      $236,616      $259,733
Butte                           $128,164    $146,916      $178,650      $231,114      $253,693
Calaveras                       $125,621    $144,001      $175,105      $226,528      $248,659
Colusa                          $129,181    $148,082      $180,068      $232,948      $255,706
Contra Costa                    $132,233    $151,580      $184,321      $238,451      $261,747
Del Norte                       $125,113    $143,418      $174,396      $225,611      $247,653
El Dorado (not including        $134,776    $154,495      $187,866      $243,036      $266,780
Lake Tahoe Area)
Fresno                          $119,010    $136,422      $165,889      $214,606      $235,572
Glenn                           $129,181    $148,082      $180,068      $232,948      $255,706
Humboldt                        $125,113    $143,418      $174,396      $225,611      $247,653
Imperial                        $122,061    $139,920      $170,143      $220,108      $241,612
Inyo                            $122,061    $139,920      $170,143      $220,108      $241,612
Kern                            $122,061    $139,920      $170,143      $220,108      $241,612
Kings                           $111,889    $128,260      $155,964      $201,766      $221,478
Lake                            $116,975    $134,090      $163,053      $210,937      $231,545
Lassen                          $129,181    $148,082      $180,068      $232,948      $255,706
Los Angeles                     $122,061    $139,920      $170,143      $220,108      $241,612
Madera                          $110,872    $127,094      $154,546      $199,932      $219,464
Marin                           $130,199    $149,248      $181,486      $234,782      $257,720
Mariposa                        $111,889    $128,260      $155,964      $201,766      $221,478
Mendocino                       $110,872    $127,094      $154,546      $199,932      $219,464
Merced                          $110,872    $127,094      $154,546      $199,932      $219,464
Modoc                           $129,181    $148,082      $180,068      $232,948      $255,706
Mono                            $122,061    $139,920      $170,143      $220,108      $241,612
Monterey                        $126,130    $144,584      $175,814      $227,445      $249,666
Napa                            $124,095    $142,252      $172,978      $223,777      $245,639
Nevada                          $130,199    $149,248      $181,486      $234,782      $257,720
Orange                          $122,061    $139,920      $170,143      $220,108      $241,612
Placer (not including Lake      $132,741    $152,163      $185,030      $239,368      $262,753
Tahoe Area)
Plumas                          $132,741    $152,163      $175,030      $239,368      $262,753



Source : Housing and Community Development HOME Subsidy Limits (Section 221 (d) (3)

                                         HOME PROGRAM

Housing Rehabilitation Program Manual December 2008 41
                    SUBSIDY LIMITS PER UNIT - SECTION 221(D)(3)
     (All limits are effective 5/28/08 except those which are highlighted and were effective 1/1/08)




COUNTY NAME                    O-BDR       1-BDR         2-BDR         3-BDR         4-BDR
Riverside                      $122,061    $139,920      $170,143      $220,108      $241,612
Sacramento                     $137,319    $157,410      $191,411      $247,622      $271,814
San Benito                     $123,078    $141,086      $171,561      $221,943      $243,626
San Bernardino                 $122,061    $139,920      $170,143      $220,108      $241,612
San Diego                      $122,061    $139,920      $170,143      $220,108      $241,612
San Francisco                  $137,319    $157,410      $191,411      $247,622      $271,814
San Joaquin                    $134,776    $154,495      $187,866      $243,036      $266,780
San Luis Obispo                $122,061    $139,920      $170,143      $220,108      $241,612
San Mateo                      $131,216    $150,414      $182,903      $236,616      $259,733
Santa Barbara                  $122,061    $139,920      $170,143      $220,108      $241,612
Santa Clara (not including     $130,199    $149,248      $181,486      $234,782      $257,720
City of San Jose)
San Jose (City of)             $133,250    $152,746      $185,739      $240,285      $263,760
Santa Cruz                     $122,061    $139,920      $170,143      $220,108      $241,612
Shasta                         $137,319    $157,410      $191,411      $247,622      $271,814
Sierra                         $129,181    $148,082      $180,068      $232,948      $255,706
Siskiyou                       $137,319    $157,410      $191,411      $247,622      $271,814
Solano                         $125,113    $143,418      $174,396      $225,611      $247,653
Sonoma                         $123,078    $141,086      $171,561      $221,943      $243,626
Lake Tahoe Area*               $137,319    $157,410      $191,411      $247,622      $271,814
Stanislaus                     $111,889    $128,260      $155,964      $201,766      $221,478
Sutter                         $128,164    $146,916      $178,650      $231,114      $253,693
Tehama                         $137,319    $157,410      $191,411      $247,622      $271,814
Trinity                        $137,319    $157,410      $191,411      $247,622      $271,814
Tulare                         $111,889    $128,260      $155,964      $201,766      $221,478
Tuolumne                       $125,621    $144,001      $175,105      $226,528      $248,659
Ventura                        $122,061    $139,920      $170,143      $220,108      $241,612
Yolo                           $128,164    $146,916      $178,650      $231,114      $253,693
Yuba                           $125,621    $144,001      $175,105      $226,528      $248,659

* Lake Tahoe Area is defined as all area (within California) that are under the jurisdiction of the
Tahoe Regional Planning Agency (TRPA).




Housing Rehabilitation Program Manual December 2008 42
       MATCHING FUNDS/SUBSIDY LAYERING

• Housing Preservation Grant

       Up to $10,000 per unit may be used as match for very low income homeowners in rural
       areas.

• Joe Serna Farmworker Housing Grant

       Up to $20,000 per unit may be used as match for qualifying farmworker homeowners.
       Larger loan amounts are subject to approval by HCD.

• Ca1HOME

       Up to the amount approved in an application to HCD will be made available to qualifying
       low income owners.

• CDBG and Redevelopment regulations do not set maximum loan limits for housing
rehabilitation. In general, the HOME Exception limits will apply unless reconstruction, room
additions or historic preservation requirements impose higher costs.


MAXIMUM AFTER REHABILITATION VALUE LIMITS 2008
     For projects funded through HOME, the value of the property after rehabilitation may not
     exceed the HOME Program limit of $569,050 for a single family dwelling in 2008. These
     limits change annually, are known as the Section 203 (b) limits and are available on the
     HCD web site.

     After rehabilitation value will be established by an appraisal, analysis provided by the
     County Assessors office or by comparable sales information obtained from the Board of
     Realtors.

     Adjustments in maximum values approved by USDA, HUD or HCD (as determined by the
     source of funding), will be utilized in the Housing Rehabilitation Program.




Housing Rehabilitation Program Manual December 2008 43
Appendix 4 - reconstruction
The Housing Staff will apply the criteria and standards described below when evaluating
requests to reconstruct existing residential dwelling structures. A "dwelling" means a structure
or unit within a structure with cooking, eating, sleeping and sanitation facilities, which has been
legally occupied as a residence within the preceding 12 months.

State HCD Policy Guidelines will be followed. The reconstruction of existing dwellings owned
and occupied by a Targeted Income Group (TIG) household or with TIG tenants may be
authorized when:
               • The dwelling is considered unsuitable for rehabilitation because the dollar
                   amount of code work exceeds the current appraised value of the occupied
                   dwelling including the value of the land.
               • The estimated cost of the reconstruction, including demolition and site
                  preparation, is less than the fair market value of the reconstructed housing.
               • The dwelling unit is in such disrepair that removing and rebuilding the unit is
                  less costly than rehabilitating it.
               • Relocation benefits have been planned for and budgeted in cases requiring
                  temporary relocation.
               • Reconstruction of a unit is categorically excluded from the National
                  Environmental Policy Act (NEPA see chapter 3) if the project is four or fewer
                  units per NEPA 58.35 (a) (7).
               • Reconstruction may be approved for up to an additional 100 square feet per
                  unit. When the existing unit was determined to be overcrowded, bedroom and
                  bath addition shall not be limited by this provision


The request for reconstruction of TIG occupied residential structures should be completed and
must include the following:
               • Name(s) of legal property owner(s) and the address of the property.
               • Appraisal (including the after reconstruction value including land and at least
                  one comparable sale) prepared by a licensed appraiser. The cost of such
                  appraisal may be either added to the loan or charged to activity delivery.
               • The sales price of at least one comparable newly constructed home (including
                  land) sold within the preceding 12 months within the jurisdiction.
               • A staff cost estimate for:
               • Reconstruction and
               • Rehabilitation using comparable materials and workmanship
               • Certification by the jurisdiction that a TIG household owns the structure and
                  that a TIG household will reside in the reconstructed dwelling after
                  completion; and
               • Certification that the dwelling has been occupied during the preceding 12
                  months, unless the dwelling was ordered vacated by the order of the local


Housing Rehabilitation Program Manual December 2008 44
                   building official within the last six months . Utility bills will be used as proof
                   of occupancy.


Building plans for reconstruction should meet new construction building and zoning standards
for room size, setbacks, and off street parking areas to the maximum extent that is feasible within
site constraints. As a general rule, rehabilitation funds may not be used to construct or replace
garages or other non-residential buildings.




Housing Rehabilitation Program Manual December 2008 45
Appendix 5 CALHOME PROGRAM GUIDELINES
      A. The Ca1HOME Program loan amount cannot exceed the amount required
         to fund eligible rehabilitation costs in accordance with program
         requirements and as published in the current NOFA.

      B. An owner-occupied rehabilitation loan for home shall be secured by the
         real property and improvements. A manufactured home in a mobile home
         park or on leased land that is not on a permanent foundation will be
          secured by an HCD 480.7 or a HCD 484 Statement of Lien.

      C. The Ca1HOME program loans shall have the following terms and
          conditions:

         1. Principal and interest payments shall be deferred for the term of the
         loan.

         2. Cal-HOME Program loans shall be repayable upon sale or transfer of
         the Property when the property ceases to be owner-occupied upon the loan
         maturity date or upon repayment. However, if it is determined that
         repayment of the Ca1HOME Program loan at the maturity date causes a
         hardship to the homeowner; the County may:

             a. Amend the note and deed of trust to defer repayment of the amount
         due at loan maturity: that is the original principal and the accrued interest,
         for up to an additional 30 years (at 0% additional interest), this may be
         offered one time; or:

           b. Convert the debt at loan maturity, that is the original principal
         balance and any accrued interest, to an amortized loan, repayable in15
         years at 0% additional interest.
       3. Cal-HOME Program loans are not assumable.


       4. The following transfers of interest shall not require the repayment of the
          loan:

         a. Transfer to a surviving joint tenant by devise, descent, or operation of
          law on the death of a joint tenant:
         b. A transfer, in which the transferee is a person who occupies or will
          Occupy the property, which is:

         (i) a transfer where the spouse becomes an owner of the property;

         (ii) a transfer from a decree of dissolution of marriage , legal separation
          agreement, or form an incidental property settlement agreement by which


Housing Rehabilitation Program Manual December 2008 46
              the spouse becomes an owner of the property;

              (ii) a transfer into an inter vivos trust in which the borrower is and
              remains the beneficiary and occupant of the property.
          5. The term for owner-occupied rehabilitation Ca1HOME Program loans
              shall be 30 years.
          6. A borrower may pay a portion of or the entire deferred payment loan
              Amount at any time without penalty.


IX. Other Ca1HOME Requirements
   A. The loan-to-value ration for an owner-occupied rehabilitation loan, when
      combined with all other indebtedness secured by the property, shall not exceed
       105% of the estimated after-rehabilitation-value.
   B. No financing, junior or senior to the Ca1HOME loan, may have a balloon payment
       due before the maturity date of the Ca1HOME loan.
   C. Any cash out of escrow to the homeowner is prohibited. This is to ensure that
      Ca1HOME Program funds are spent only in the amount required to pay for actual
      rehabilitation and non-recurring closing costs.
   D. Prior to commencement of rehabilitation work, a loan-to-value ratio shall be
       determined for all existing and proposed encumbrances including the proposed
       Ca1HOME loan. The after-rehabilitation-value cannot be over the Ca1HOME
      program Sales Price/Value Limits. Where staff can determine value-using
      information from comparable sales, an appraisal from a fee appraiser is not
      necessary. An appraisal shall be required if the loan-to-value percentage of
       existing encumbrances exceeds 80 % of value (based on comparable sales).
   E. The Ca1HOME Program does not require an appraisal in the case of rehabilitation
       work of a manufactured home not on a permanent foundation. The County will
       inspect the manufactured home to ascertain if the manufactured home should be
       repaired or replaced.
   F. Title insurance in the amount of the Ca1HOME Program loan is required at close
       of escrow.
   G. Fire insurance (and Flood insurance where applicable) requirements are as
           follows:
           1. Borrowers must maintain insurance on the property in the amount at least
           equal to the replacement value of the improvements; and

          2. County must be named as additional loss payee on the policy.


Rehabilitation Construction Requirements


      A. The County shall determine the rehabilitation work to be performed on the
         property by conducting an initial property inspection.




Housing Rehabilitation Program Manual December 2008 47
    B. The County shall ensure that the rehabilitation work funded pursuant to the
       program guidelines shall be performed in a competent, professional manner at
       the lowest reasonable cost consistent with market conditions.
    C. The County shall ensure that all general contractors and subcontractors
       selected by the borrower are licensed by the California State License Board
       and that they maintain Worker' s Compensation and Employer Liability
       insurance to the extent required by State law. The contractor selected shall
       complete the work in accordance with a construction contract executed
       between the contractor and the borrower and approved by the County. The
       homeowner may be allowed to do his own work if he has a valid California
       Contractor' s license.
    D. The County shall monitor construction for compliance with the construction
       contract and program requirements , and establish practices to ensure that
       payment to the contractor are properly disbursed by, or on behalf of, the
       homeowner.




Housing Rehabilitation Program Manual December 2008 48
Appendix 6 - state prevailing wage procedures
Housing rehabilitation projects funded by Community Development Block Grant or
HOME funds, including Program Income generated by such sources of funds are subject
to State Prevailing wage regulations. Projects funded exclusively with Redevelopment
Housing Set-Aide funds may be exempt from State Prevailing Wage requirements.
Projects which combine Redevelopment Housing Set-Aside funds with federal funds, are
required to comply with State Prevailing Wage regulations. Rehabilitation of single-
family homes is exempt from State Prevailing Wage provisions. In addition, rental
rehabilitation projects where at least 40 percent of the units are restricted to occupancy by
low-income households for a minimum of 20 years are exempt from State Prevailing
Wage requirements.

Federal Labor Standards apply to rehabilitation projects where 12 units or more are
assisted with HOME funds (See Section 3 in the Contract Management Manual for more
information). CDBG funded projects with 8 units or more are referred or follow Federal
Labor Standards requirements. (See the CDBG Contract Management Manual.)

           1. Staff downloads General Wage Determination from Department of
               Industrial Relations (DIR Website. www.dir.ca.gov/dlse.
           2. Staff prepares bid packet:
               • Prevailing Wage Notice.
               • Instructions to Bidders.
               • Scope of Work.
               • Bid Document.
               • General Wage Determinations.
               • Payroll Report and Certification Form A-1-131.
               • Statement of Employer Payments.
               • Sub-Contractor Schedule.
           3. Contractors submit Bid Document, Statement of Employer Payments
               (PW 26), if applicable and Sub Contractor Schedule.
           4. Staff reviews DIR Debarment List and excludes bids from contractors on
                list.
           5. Staff reviews insurance and Workers' Compensation documentation and
                verifies contractor's license status.
           6. Owner selects contractor.
           7. Owner and contractor execute contract.
           8. Contractor posts wage determinations at the job site.
           9. Staff issues Notice to proceed.
           10. Contractor submits Payroll Reporting and certification Form A-1-131 for
               Contractor's employees and each Sub contractor to county each week.




Housing Rehabilitation Program Manual December 2008 49
         • Staff reviews form for conformance with Wage Determination pay
             rates.
         • Contractor submits Request for Payment and Lien Releases and calls
            for inspection.
         • In the event of underpayment, staff will provide Notice to the
             Contractor allowing seven working days for corrective action and the
             documentation of appropriate payments.
         • If the contractor or sub-contractor fails to take corrective action staff
              will notify the Division of Labor Standards Enforcement (DLSE) at
              the address below and withhold payments.


                        Division of Labor Standards Enforcement (DLSE)
                        Bureau of Field Enforcement - Public Works
                        100 Paseo de San Antonio, Suite 126
                        San Jose, Ca 95113


      11. Upon receipt of a DLSE Citation to Withhold Funds, staff will direct the
          Title Company to maintain the specified amount in escrow pending
          resolution of the matter.
      12. The Contractor has the right to appeal the withholding to an
          administrative law judge at DIR.
      13. Inspector and owner review work and endorse Request for Payment,
           inspector verifies posting of Wage Determination.
      14. Staff faxes Authorization for payment to Title Company.
      15. Title Company issues check to contractor.
      16. State Prevailing Wage Records are maintained in a separate file by the
          Labor Standards Coordinator. Copies are included in the individual
          project construction file. Records must be retained for a minimum of five
          years from project completion.




Housing Rehabilitation Program Manual December 2008 50
Appendix 7              -    RELOCATION AND DISPLACEMENT
POLICIES
The County of Monterey will provide relocation assistance to household displaced from
dwelling units, which are rehabilitated, demolished, or converted to a use other than
Targeted Income Group housing as a direct result of activities assisted with program
funds. Relocation assistance will be provided as described in the Federal Register, 24
CFR 570.496(a), Relocation, Displacement and Acquisition: Final Rule dated July 18,
1990 (Section 104(d)) and 49 CFR Part 24, Uniform Relocation Assistance and Real
Property Acquisition Regulations Final Rule and Notice (URA) dated March 2,1989.
When Redevelopment funds are used for a project, any additional requirements under
California Relocation law shall also be followed.

This project will be implemented in ways consistent with the County's commitment to
Fair Housing. Participants will not be discriminated against on the basis of race, color,
religion, age, ancestry, national origin, sex, familial status, or handicap. The County will
provide equal relocation assistance available 1) to each household displaced by the
demolition or rehabilitation of housing or by the conversion of a Targeted Income Group
dwelling to another use as a direct result of assisted activities; and 2) to persons
temporarily relocated as a direct result of program assisted activities.


TEMPORARY RELOCATION DURING HOUSING REHABILITATION
     Consistent with the goals and objectives of activities assisted under the Act, the
     County will take the following steps to minimize the displacement of persons from
     their homes during housing rehabilitation:

            1. Stage rehabilitation of assisted housing to allow owner occupants and/ or
                tenants to remain during rehabilitation.
           2. Encourage temporarily displaced owner occupants to move in with family
               or friends during the course of rehabilitation, since they are voluntarily
               participating and not entitled to relocation benefits, unless health and
               safety threats exist, as explained below.
           3. Encourage owner investors to relocate tenant to available vacant units
               during the course of rehabilitation or pay expenses on behalf of replaced
               tenants.
           4. Require owner investors who participate in assisted rehabilitation to agree
               to continue to rent to Targeted Income Group tenants and agree to rent
               limitations, for a period of at least five years.
           5. Provide counseling and referral services to assist displaced persons to
               find alternate housing in the neighborhood.
           6. Work with area landlords, real estate brokers, and/or hotel/motel
               management to locate vacancies for households facing displacement.




Housing Rehabilitation Program Manual December 2008 51
        7. When necessary, use public funds, such as CDBG funds, to pay moving
            costs and provide relocation payments to households displaced by
            assisted activities.


TEMPORARY RELOCATION OF RESIDENTIAL TENANTS
   If continued occupancy during rehabilitation is judged to constitute a substantial
   danger to health and safety of the tenant or the public, or is otherwise undesirable
   because of the nature of the project, the tenant may be required to relocate
   temporarily. Determination of the need for temporary relocation will be made by
   the program administrator or construction supervisor. The relocation period will
   not exceed 90 days. All conditions of temporary relocation will be reasonable.
   Any tenant required to relocate temporarily will be helped to find another place to
   live which is safe, sanitary and of comparable value. He or she may move in with
   family and friends and still receive full or partial temporary assistance. A tenant
   receiving temporary relocation shall receive the following:

        Increased housing costs (e.g. rent increase, security deposits).

        Payment for moving and related expenses, as follows:
            • Transportation of the displaced persons and personal property within
                50 miles, unless grantee determines that farther relocation is justified;
            • Packing, crating, unpacking, and uncrating of personal property;
            • Storage of personal property, not to exceed 12 months, unless the
                grantee determines that a longer period is necessary;
            • Disconnection, dismantling, removing, reassembling, and reinstalling
               relocated household appliances and other personal property;
            • Insurance for the replacement value of personal property in connection
                with the move and necessary storage;
            • The replacement value of property lost, stolen or damaged in the
               process of moving (not through the fault of the displaced person, his or
               her agent, or employee) where insurance covering such loss theft or
                damage is not reasonably available;
            • Reasonable and necessary costs of security deposits required to rent
               the replacement dwelling;
                    Any costs of credit checks required to rent the replacement
                    dwelling.
                    Other moving related expenses as the grantee determines to be
                    reasonable and necessary, except the following ineligible expenses:
                    Interest on a loan to cover moving expenses; or
                    Personal Injury; or
                    Any legal fee or other cost for preparing a claim for a relocation
                    payment or for representing the claimant before the Grantee; or



Housing Rehabilitation Program Manual December 2008 52
                  Costs for storage of personal property on real property already
                  owned or leased by the displaced person before the initiation of
                  negotiations.


TEMPORARY RELOCATION OF OWNER OCCUPIED
       Since all rehabilitation work for owner occupants is voluntary , an owner
       occupant may only be eligible for temporary relocation benefits when his or
       her residential rehabilitation would endanger the health and safety of
       occupants if they remained in the house during rehabilitation. Determination
       of the need for temporary relocation will be made by the program
       administrator or construction supervisor . Allowable temporary relocation
       expenses are the same as those listed above for tenants.


DISPLACEMENT ACTIVITIES REQUIRING LONG-TERM RELOCATION
ASSISTANCE
       Persons displaced by projects assisted in whole or in part with funds provided
       under the Housing and Community Development Act of 1974, as amended,
       are eligible for permanent relocation assistance and benefits under either
       section 104 (d) or URA, depending on which relocation assistance regulations
       are applicable . Persons within the Targeted Income Group are eligible to
       receive assistance and benefits under section 104(d ) and have the option of
       choosing benefits under URA. Persons who are outside the Targeted Income
       Group may receive assistance and benefits only under URA. There are no
       income or need criteria.

       All replacement housing will be provided within three years of the
       commencement of the demolition or conversion. Before obligating or
       expending funds that will directly result in such demolition or conversion, the
       County will make public and submit to the California Department of Housing
       and Community Development the following information in writing:

          • A description of the proposed assisted activity;
          • The location on a map and approximate number of dwelling units by
              size (number of bedrooms) that will be demolished or converted to a
             use other than Targeted Income Group dwelling units as a direct result
              of the assisted activity;
          • A time schedule for the commencement and completion of the
              demolition or conversion;
          • The location on a map and approximate number of dwelling units by
              size (number of bedrooms) that will be provided as replacement
              dwelling units. If such data is not available at the time of the general
              submission, the County will identify the general location on an area
             map and the approximate number of dwelling units by size and



Housing Rehabilitation Program Manual December 2008 53
               provide information identifying the specific location and number of
               dwelling units by size as soon as it is available;
           • The source of funding and a time schedule for the provision of the
              replacement dwelling units;
           • The basis for concluding that each replacement dwelling unit will
              remain a Targeted Income Group Dwelling unit for at least 10 years
              from the date of initial occupancy; and
           • Information demonstrating that any proposed replacement of dwelling
               units with smaller dwelling units (e.g., a 2-bedroom unit with two 1-
               bedroom units) is consistent with the housing needs of Targeted
               Income Group households in the County.

       The County of Monterey is responsible for tracking the replacement of
       housing and ensuring that it is provided within the required period. The
       County is responsible for ensuring requirements are met for notification and
       provision of relocation assistance, as described in §570.496, to any Targeted
       Income Group displaced by the demolition of any dwelling unit or the
       conversion of a Targeted Income Group dwelling unit to another use in
       connection with an assisted activity.


ECONOMIC DISPLACEMENT OF TENANTS
       No tenant shall be considered economically displaced if his or her rent does
       not increase after rehabilitation. If the rent does increase after rehabilitation,
       they may be evaluated for economic displacement if the new rent exceeds
       30% of their adjusted annual income . The County will make every effort to
       ensure that tenants are not economically displaced.


RECORD KEEPING
       The County will maintain records of occupants of federally funded
       rehabilitated, reconstructed or demolished property from the start to
       completion of the project to demonstrate compliance with section 104(d),
       URA and applicable program regulations . Appropriate advisory services will
       include reasonable advance written notice of (a) the date and approximate
       duration of the temporary relocation; (b) the address of the suitable , decent,
       safe and sanitary dwelling to be made available for the temporary period; (c)
       the terms and conditions under which the tenant may lease and occupy a
       suitable, decent, safe and sanitary dwelling . Notices shall be written in plain,
       understandable language . Persons who are unable to read and understand the
       notice (e.g., illiterate, foreign language , or impaired vision or other disability)
       will be provided with appropriate translation/ communication . Each notice
       will indicate the name and telephone number of a person who may be
       contacted for answers to questions or other needed help. The Advisory
       notices to be provided are as follows:



Housing Rehabilitation Program Manual December 2008 54
NOTICES

          General Information Notice
          As soon as feasible when an owner investor is applying for financing for
          rehabilitation, reconstruction or demolition, the tenant of a housing unit will
          be mailed or hand delivered a General Information Notice that the project has
          been proposed and that the tenant will be able to occupy his or her present
          house (or another owned by the owner investor) upon completion of
          rehabilitation. The tenant will be informed that rent after rehabilitation will
          not exceed current rent or 30 percent of his or her adjusted household income.
          The tenant will be informed that if he or she is required to move temporarily
          so that rehabilitation can be completed, suitable housing will be made
          available and he or she will be reimbursed for all reasonable extra expenses.
          The tenant will be cautioned that he or she will not be provided relocation
          assistance if he or she decided to move for personal reasons.


          Notice at Time of "Initiation of Negotiations"
          As soon as feasible when the rehabilitation application has been approved, the
          tenant of a housing unit scheduled for rehabilitation, reconstruction, or
          demolition will be informed of the Initiation of Negotiations and again
          informed of the above reasonable terms and conditions under which the
          person may lease and occupy the property upon completion of the project.
          The tenant will also again be cautioned not to move for personal reasons
          during rehabilitation, or risk losing relocation assistance.


          Notice for Persons to be Displaced
          After a comparable replacement dwelling has been made available, the tenant
          will be given a 90-day advance written notice of the earliest date he or she
          may be required to move. If the tenant's continued occupancy of the property
          would constitute a substantial danger to health or safety, less than 90 days'
          advance notice may be provided. Justification of such and urgent need will be
          documented in the participant's job file. Another instance where the 90-day
          notice is not required is if the tenant makes an informed decision to relocate
          and vacates the property without prior notice.




Housing Rehabilitation Program Manual December 2008 55
Appendix 8 - SUMMARY OF REHABILITATION RESPONSIBILITIES
            ACTIVITY RESPONSIBILITY

INITIAL CONTACT
   Outreach Web site/Clerical/Analyst

   Initial contact by applicant Clerical

   Add to prospective client list, mail application & flyer Clerical

QUALIFICATION OF APPLICANT
   Initial contact and application
   interview with applicant. Analyst

   Applicant qualifies according to
   eligibility criteria and program
   guidelines.                                                Analyst

   Loan application packaged, mortgage
   and income verified, preliminary
   title and credit report ordered.                    Applicant/Analyst

DETERMINATION OF PROJECT VIABILITY
   Property inspected, lead hazard visual
   inspection completed on pre-1978
   construction dwellings, all necessary
   reports ordered, deficiency list prepared.          Analyst/Inspector

   Zoning, lead hazard and other evaluation
   reports reviewed . Analyst/Inspector

   A completed SHPO letter. Analyst

   Deficiency list and Lead Hazard Notice
   reviewed with applicant. Applicant/Analyst

   Applicant reviews proposed financial
   package and determines amount of
   resources, if any, to commit to the project.        Applicant/Analyst


PROJECT WRITE - UP AND SELECTION OF CONTRACTOR
   Bid Packet created; Prevailing Wage
   Determination and Lead Paint Notices included. Analyst/Clerical


Housing Rehabilitation Program Manual December 2008 56
   Bid Packet sent to builder's exchange, minority
   contractor's exchange, contractor's
   list and Borrower.                                    Clerical

   Borrower solicits at least 3 bids from contractors
   and lead abatement firms, if applicable.              Borrower

   Open house scheduled (optional).                      Borrower

   Bids returned by date specified. Contractors

   Bids reviewed for cost reasonableness, Inspector, Analyst
   responsiveness and contractor's eligibility. and Loan Committee
   Insurance and worker's compensation
   coverage verified. Lead Paint Certification
   and contractor's license status verified.

   Contractor selection.      Borrower

   Loan documents prepared. Borrower signs
   loan documents; title policy and insurance Borrower/Analyst/
   binder ordered; loan documents recorded. Clerical/Title Co.

   Construction contracts signed. Borrower/Contractor

   Submittal of Performance Bond or Cash in-lieu
   of bond. Contractor

   Notice to Proceed issued. Analyst


CONSTRUCTION PERIOD
   Contractor obtains necessary permits. Contractor/Building Dept.

   Contractor begins work. Contractor

   Building inspection. Building Inspector

   Contractor requests progress payments. Contractor

   Project inspected, deficiency list prepared Borrower/Inspector
   and payment processed and adjusted, if
   necessary.




Housing Rehabilitation Program Manual December 2008 57
   Lead Hazard Clearance Report filed.
    Analyst

   Payment authorization approval.
    Applicant/Inspector/Borrower

                                                         Program Manager

   Change order requested and price quoted, Contractor
   as needed.

   Inspection, determination of need for Borrower/Inspector/ additional work
   and cost reasonableness;
   Written change order issued or request disapproved Program Manager



COMPLETION OF CONSTRUCTION
   Contractor completes construction and Contractor/Build.
                                               Inspec.
   requests final inspection for open building
   permits.

   Contractor requests final Rehabilitation Program Contractor
   inspection.

   Final walk through inspection completed Inspector/Borrower/Contractor
   deficiency list prepared and submitted to
   Borrower and Contractor.

   Contractor completes items on deficiency Contractor
   punch list and requests final payment.

   Final inspection and Notice of Completion filed. Inspector/Borrower

   Contractor is issued final payment after
   Notice of Completion (10% of final payment
   and performance bond will be withheld until
   contractor's lien releases have been provided). Borrower

   Contractor supplies executed Lien Releases Borrower/Analyst/Contractor/

   Final payment issued. Title
   Company




Housing Rehabilitation Program Manual December 2008 58
PROJECT CLOSEOUT
   Evaluation form mailed and results tabulated.         Clerical

   Disbursement accounting reviewed.               Financial Manager

   Loans recorded as accounts receivable.          Revenue Division




Housing Rehabilitation Program Manual December 2008 59
Appendix 9 - Self Help Housing Rehabilitation
A homeowner or rental property owner may request approval to act as the general
contractor or to provide labor on a rehabilitation project. In no event will the borrower
receive compensation for his/her labor on the job. Costs incurred for materials and
subcontractors may be reimbursed upon submittal of receipts and after the quality of
materials and workmanship is determined to be acceptable by the Housing inspector,
Alternatively, the owner-builder may make arrangements with the suppliers.
Subcontractors for credit terms and submit invoices along with mechanics lien releases
for payment. In addition to standard procedures, the following will apply:

Self Help Certification
Persons requesting approval for Self Help owner-builder designation must certify that
they have the skills, tools and time available to complete the project within a reasonable
schedule.

Self Help Agreement
The owner -builder will be required to execute a Self Help Agreement that will include a
scope of work to be performed, a materials list and schedule for completion.

Lead Based Paint Requirements
The owner will be required to complete a Lead Based paint safe work class unless the
unit was built after 1978 or has been certified lead based paint free. Proof of class
completion will be maintained in the project file.

Reimbursement Limitations
Borrowers will not be reimbursed for the cost of materials or subcontracted work
completed prior to loan closing.




Housing Rehabilitation Program Manual December 2008 60
Appendix 10 - Lead Based Paint Requirements
INTRODUCTION
   The purpose of this Appendix is to provide information and guidelines on the
   Federal lead-based paint (LBP) regulations.

   HUD has issued these regulations to protect young children from LBP hazards in
   housing built prior to 1978 and is financially assisted or sold by the Federal
   government. For children six and under, lead poisoning can cause significant
   injury, including permanent brain damage, reduced intelligence, and behavioral
   problems. A large percentage of children with lead poisoning are in low-income
   families living in older homes with heavy concentrations of LBP.

   Adults and older children may experience other health problems as a result of lead
   exposure. The most common source of lead exposure is dust from deteriorated LBP
   and lead contaminated soil. Due to increased understanding of the harmful effects
   of lead exposure on children and adults, Federal LBP requirements have become
   more stringent.


RESPONSIBILITIES
   The County of Monterey is required to follow the Federal LBP regulations as listed
   in 24 CFR 35 in implementing Housing Rehabilitation activities. The County is
   required to inform residents of the potentials of LBP hazards in their homes,
   evaluate the degree of LBP hazards, mitigate these LBP hazards (using the
   appropriate hazard reduction method), provide clearance that the LBP hazards have
   been appropriately mitigated, and provide all appropriate noticing of these steps.

   Regulations are in effect for houses and residences built prior to January 1, 1978
   (As of January 1, 1978, LBP was banned nationwide for residential use). These
   regulations largely apply to housing rehabilitation. The regulations may be found in
   Title 24, Part 35 of the Code of Federal Regulations (24 CFR 35). A copy of the
   regulations may be downloaded from the Internet at
   www.access.gpo.gov/nara/cfr/waisidx_01/24cfr35_01.html or obtained by mail
   from the National Lead Information Center at 1-800-424-Lead.


CRITICAL LAWS OR REGULATIONS PERTAINING TO LBP
   If other Federal, State, tribal or local law, ordinance, code or regulation are
   applicable to the housing rehabilitation activity, the more protective definition shall
   apply. Following are critical state and federal laws and regulations pertaining to
   LBP hazards.




Housing Rehabilitation Program Manual December 2008 61
FEDERAL
           • 24 CFR Part 35 - Lead Based Paint Prevention in Certain Residential
               Structures (HUD)
           • Toxic Substances Control Act Section 406 - Requirements of Hazard
              Education Before Renovation for Target Housing
           • 40 CFR Part 745 - Identification of Dangerous Levels of Lead (EPA)


STATE
           • Title 17 Sec. 35000 - Accreditation, Certification, and Work Practices
               for LBP and Lead Hazards (DHS)
           • Ca1OSHA Title 8 Sec. 1532.1 - Construction Safety Orders - Lead
           • Ca1OSHA Title 8 Sec. 5194 - Hazardous Communication
           • Civil Code 1102-1102.16 -Real Estate Lead Hazard Disclosure
               Requirements (HUD also has its own disclosure requirements. See
               next section.)
           • Proposition 65 - Safe Drinking Water and Toxic Enforcement Act of
               1986


SIGNIFICANT EXEMPTIONS ( 24 CFR 35.115)
        HUD's LBP requirements do not apply to:
           • Dwellings completed on or after 1/1/78,
           • Housing exclusively for the elderly or person with disabilities, unless a
              child under age six resides (100 days or longer) or is expected to reside
              there,
           • Zero bedroom dwellings, including efficiency apartments, single-room
               occupancy housing, dormitories, or military barracks,
           • Housing found by certified inspection to be free of LBP,
           • Housing in which all LBP has been properly identified, removed, and
              cleared (This does not apply where enclosure or encapsulation has
              been used as a method of abatement),
           • Unoccupied reconstruction housing that will remain vacant until it is
              demolished to the foundation,
           • Non-residential property: Property or part of a property that will not
              be used for human residential habitation. Not exempt are common use
              areas, such as entryways, hallways, corridors, passageways, stairways
              or building exterior in a mixed-use building.
           • Rehabilitation that does not disturb a painted surface,
           • Emergency repair action, which are those needed to safeguard against
              imminent danger to human life, health or safety, or to protect property
              from further structural damage, and



Housing Rehabilitation Program Manual December 2008 62
             • Historical sites/dwellings may use interim controls instead of
                 abatement, under certain conditions.

         For a complete list of exemptions see 24 CFR Part 35.115.



WORKING SAFELY WITH LEAD (24 CFR 35.1350)
    The new regulations establish safe work practices. While federal regulations allow
    an exemption if LBP hazards are below the minimum level, State regulations
    mandate safe work at all times in addressing LBP. The intent of work safe methods
    is to minimize the spread of lead paint dust, paint chips, and debris. The following
    are the major provisions in the safe work practices regulations:


,QUALIFICATIONS TO PERFORM SAFE WORK PRACTICES
         Workers must be trained in Safe Work Practices . For additional information
         on this training, contact : http ://www.leadlisting.org/.


OCCUPANT PROTECTION
         The occupant and the environment must be protected from lead-contaminated
         or lead-containing materials during hazard reduction activities . The areas of
         concern are:

         No occupants at worksite:
         Occupants shall not be permitted to enter the worksite during hazard reduction
         activities until after hazard reduction work has been completed and clearance,
         if required, has been achieved.

         Protection of Occupants Belongings:
         The dwelling and worksite shall be secured against unauthorized entry, and
         occupants' belongings shall be protected from contamination during hazard
         reduction activities by relocating or covering and sealing them.
         Temporary Relocation: Occupants shall be temporarily relocated before and
         during hazard reduction activities to a suitable, decent, safe, and similarly
         accessible unit free of LBP hazards, except if:
             • Treatment will not disturb LBP, dust-lead hazards or soil lead hazards.
             • Interior: Treatment of the interior will be completed within one period
                 in eight daytime hours, the site will be contained, and the work will
                 not create other safety, health, or environmental hazards.
             • Building exterior: The windows, doors, ventilation intakes and other
                openings near the worksite are sealed during hazard control work and
                cleaned afterward; and a lead free entry is provided.




Housing Rehabilitation Program Manual December 2008 63
         • Treatment will be completed within five calendar days; the work area
             is sealed; the area within 10 feet of the containment area is cleared of
             debris at the end of the day; occupants have safe access to sleeping
             areas, bathroom, and kitchen facilities; and treatment does not create
             other safety, health, or environmental hazards.

      Worksite Preparation and Containment
      WORKING SAFELY WITH LEAD (24 CFR 35.1350) The worksite for lead
      hazard reduction activities must be prepared to prevent the release of leaded
      dust and debris.
         • Workers must use practices that minimize the spread of leaded dust,
            paint chips, soil, and debris.
         • Warning signs are required at each entry to a room where lead hazard
            reduction activities are conducted when occupants are present, at the
            main and secondary entryways to a building from which occupants
            have been relocated, and at exterior worksites at a size and type
            readable from 20 feet (six meters) from the edge of the worksite.
            Signs need to be in the occupants' primary language to the extent
            practicable.


      Prohibited Methods:
      The methods identified below may not be used at any time for work on
      surfaces known or suspected to contain LBP.
          • Open flame burning or torching.
         • Machine sanding or grinding without a high-efficiency particulate air
            (HEPA) local exhaust control.
         • Abrasive blasting or sandblasting without HEPA local exhaust control.
         • Heat guns operating above 1,100 degrees Fahrenheit, or those that
            operate high enough to char the paint.
         • Dry sanding or dry scraping.
         • Paint stripping in a poorly ventilated space using a volatile stripper
             that is a hazardous substance in accordance with regulations

      Worksite Cleanup
      Worksite cleanup removes dust and debris from the work area. Good cleanup
      is critical to passing clearance and leaving the unit safe for habitation. The
      worksite shall be cleaned using methods, products, and devices that are
      successful in cleaning lead-contaminated dust, such as vacuum cleaners with
      HEPA filters or equivalent equipment and household or lead specific
      detergents or equivalent products.

      Safe Work Practice Exemptions
         • Safe work practices are not required if paint has been tested and found
             to be lead-free.


Housing Rehabilitation Program Manual December 2008 64
            •   Safe work practices are not required in houses completed after 1978.

        Visual Assessment
        The results of the visual assessment should indicate that no deteriorated paint
        exists and there are no visible amounts of dust, debris, paint chips or other
        residues still present.

        Clearance (24 CFR 35.1340)
        Clearance is performed to determine whether the lead hazard reduction
        process is complete and that no lead-dust or soil hazards remain in the areas of
        concern . The clearance report requires DHS Form 8552. A clearance
        examination involves a visual assessment , dust, and soil testing to determine if
        the unit is safe for occupancy . A certified inspector/risk assessor must
        perform clearance.

        Clearance Failure
        If during the clearance examination deteriorated paint is present and/or visible
        amounts of dust, debris, paint chips, or other residue are still present, the
        clearance automatically fails . Lab samples should not be taken until the unit
        passes the visual examination . After failing the visual examination the areas,
        which failed, must be cleaned and another visual examination is performed.

        Clearance Report
        The clearance examiner must prepare a clearance report in accordance with
        (24 CFR Part 35.1340) if lead hazard reduction activities other than abatement
        are performed . If abatement is conducted, a certified supervisor or project
        designer must prepare an abatement report in accordance with 40 CFR
        745.227(e)(10). The clearance notice must note each failed clearance.


LEAD HAZARD EVALUATION ( 24 CFR 35.110 AND 35.1320)
   Lead Hazard Evaluation methods involve an examination of a dwelling to check for
   lead hazards for every activity. Evaluation methods include risk assessments, lead
   hazard screenings, visual assessments, presumption of LBP, and paint testing. Only
   certified personnel may perform lead hazard evaluations . In California, the
   Department of Health Services certifies workers/supervisors/inspectors/risk
   assessors . Refer to the Department ' s website, www.dhs. ca.gov/childlead/ for more
   information. Below is a brief description of each evaluation method.

        Risk Assessment
        Risk Assessment is a comprehensive investigation of a dwelling to identify
        LBP hazards that includes paint testing, dust and soil sampling, and a visual
        evaluation. Risk assessment results are summarized in a written report with
        recommendations for actions . Risk assessments are conducted by
        inspectors/risk assessors certified by California's Program authorized by EPA,
        the Department of Health Services.




Housing Rehabilitation Program Manual December 2008 65
       Lead Hazard Screening
       Lead Hazard Screening is similar to a risk assessment. While the sampling is
       less extensive, the requirements are more stringent. If LBP hazards are
       detected, a full risk assessment must then be conducted. Lead hazard screens
       are conducted by certified risk assessors.

       Visual Assessment
       A Visual Assessment of deteriorated paint consists of a visual search for
       cracking, scaling, peeling, or chipped paint. A visual assessment does not
       require notification of lead hazard evaluation since the assessment does not
       evaluate lead-based paint and/or lead hazards. However, if hazards are
       discovered and addressed, the contractor must still meet the hazard reduction
       activity notification requirement. Visual assessments are conducted those
       who have taken the HUD online test at:
       http://www.hud.gov/offices/lead/training/section8housing/HUDSECTION8 VISUAL
       CHAPTER5.PDF

       Presumption
       Presumption of LBP and/or LBP Hazards is an alternative to performing lead
       hazard evaluation activities. In some cases, by presuming LBP and/or LBP
       hazards, hazard evaluations may not be required, but contractors must still
       conduct lead hazard reduction activities as required.

       Paint Testing
       Paint Testing entails testing painted surfaces to determine if they contain LBP
       using methods such as an x-ray fluorescence (XRF) analyzer or laboratory
       analysis. Paint testing must be conducted by certified inspectors/risk
       assessors.


LEAD HAZARD REDUCTION METHODS ( 24 CFR 35.1330, 35.1325, AND
35.1335)

INTERIM CONTROLS
       Interim controls temporarily reduce exposure to LBP hazards through repairs,
       painting, maintenance, special cleaning, occupant protection measures,
       clearance, and education programs . A detailed description of interim controls
       is in 24 CFR 35.1330. Interim control methods include , but are not limited to:
            • Paint stabilization . Repairing any physical defect in the substrate of a
                painted surface that is causing paint deterioration, removing loose
                paint and other material from the surface to be treated, and applying a
                new protective coating or paint.
          • Treatment for friction and impact surfaces . If LBP is found and
              exceeds acceptable
          • levels or is presumed , the conditions creating friction or impact with
              surfaces with LBP such as those that rub, bind , or crush must be


Housing Rehabilitation Program Manual December 2008 66
               corrected. Examples of this work include hanging/binding doors,
               installing doorstops, or reworking windows.
           • Safe work practices: All interim controls shall incorporate the use of
               safe work practices.
           • Treatment for chewable surfaces. If a child under age six has chewed
               surfaces known to contain LBP or if LBP is presumed, these surfaces
               must be enclosed or coated, so they are impenetrable.
           • Lead-contaminated dust control. All horizontal surfaces that are
              rough, pitted, or porous such as bare floors, stairs, windowsills, and
              window troughs must be covered with a smooth, cleanable covering or
               coating such as metal coil stock, plastic, polyurethane, or linoleum.
               Carpeting must be vacuumed, or rugs must be removed and vacuumed
               on both sides. Vacuuming must be done using HEPA vacuums.
        Lead-contaminated soil control. If soil is lead-contaminated, interim controls
        that may be used include impermanent surface coverings such as gravel, bark,
        and sod as well as land use controls such as fencing, landscaping, and warning
        signs.


STANDARD TREATMENTS (24 CFT 35.1335)
        Under certain conditions , if LBP is presumed, then the standard treatment
        method is triggered . Standard treatments apply to all applicable surfaces,
        including soil, to control LBP hazards that may be present . These methods
        include:
           • Paint Stabilization: All deteriorated paint on exterior and interior
               surfaces must be stabilized through repairs, safe paint removal, and
               repainting . Or abatement may be performed.
           • Smooth and Cleanable Horizontal Surfaces : All horizontal surfaces
              that are rough, pitted, or porous such as bare floors, stairs,
              windowsills, and window troughs must be covered with a smooth,
              cleanable covering or coating such as metal coil stock, plastic,
              polyurethane, or linoleum.
           • Correcting Dust-Generating Conditions : All conditions that generate
              lead-contaminated dust such as those that rub, bind, or crush surfaces
              with LBP must be corrected. Examples include re-hanging doors,
              installing doorstops, or reworking windows.
           • Bare Residential Soil: Soil is addressed using interim control methods
               including impermanent surface covering such as gravel , bark, and sod
               as well as land use controls such as fencing, landscaping, and warning
               signs.
           • Safe work practices : All standard treatments shall incorporate the use
               of safe work practices.
           • Clearance : A clearance examination shall be performed at the
              conclusion of lead hazard reduction activities.



Housing Rehabilitation Program Manual December 2008 67
           • Qualifications: An individual performing standard treatments must
              meet the training and/or supervision requirements.


ABATEMENT (24 CFR 33.1323)
        Abatement permanently (for at least 20 years) removes lead based paint and
        LBP hazards by a variety of measures , including removing LBP and its dust,
        encapsulating or enclosing the LBP , replacing components containing LBP, or
        removing or covering lead-contaminated soil. All abatement methods shall
        incorporate the use of safe work practices . Abatement shall then be conducted
        on all applicable surfaces , including soil, and completed when clearance is
        achieved.

,QUALIFICATIONS TO PERFORM LEAD HAZARD REDUCTION
           • Paint Stabilization, Interim Controls, and Standard Treatments require
              training that meets OSHA and/or Cal/OSHA requirements, and
              certification as workers or supervisors.
           • Abatement must be conducted by certified workers and supervisors
              certified under California ' s Department of Health Services, as
              authorized by the EPA.


FEDERAL REHABILITATION ASSISTANCE CATEGORIES ( 24 CFR 35.930)

REHABILITATION PROJECTS LESS THAN OR EQUAL TO $3000
        Rehabilitations of Residential property receiving an average of up to and
        including $5,000 per unit in Rehabilitation Assistance are required to
        complete the following:
           • Lead Hazard Evaluation. Paint testing must be conducted to identify
               lead based paint on all painted surfaces that will be disturbed or
               replaced.
                   The grantee may presume that LBP exists on all painted surfaces
                   that will be disturbed or replaced and skip paint testing.
           • Lead Hazard Reduction . Grantees must repair all paint that will be
               disturbed during rehabilitation . If LBP is detected or assumed, safe
              work practices must be used during rehabilitation.
           •   Noticing is required . See section 13.
           •   Clearance is required only for the work area.


REHABILITATION PROJECTS OVER $3,000 TO $23,000 PER UNIT
        Performing a Lead Hazard Evaluation : There are two requirements for the
        Lead Hazard Evaluation:




Housing Rehabilitation Program Manual December 2008 68
        Paint testing
        Paint testing must be conducted to identify lead based paint on all painted
        surfaces that will be disturbed or replaced. Interim controls are used on LBP
        hazards.

        Risk Assessment:
        A risk assessment must be conducted prior to rehabilitation to find LBP
        hazards in assisted units, in common areas that service those units, and on
        exterior surfaces.

        There are four options in determining the hazards of LBP:
            • In lieu of paint testing, the grantee is permitted to presume that LBP
                hazards exist on all painted surfaces to be disturbed or replaced and
                use interim controls. A risk assessment is still required.
            • In lieu of paint testing, the grantee is permitted to presume that LBP
                hazards exist on all painted surfaces. The grantee must perform
                standard treatments. A risk assessment is not required.
            • When using interim controls, the grantee is permitted to conduct paint
               testing on all non-intact paint surfaces. If no LBP is detected, then no
               interim controls are required on that surface. A risk assessment is still
               required.
            • The grantee is permitted to conduct a lead hazard screen instead of a
               risk assessment. If the lead hazard screen indicates that there is no
               lead contamination, no lead hazard reduction is required. If the lead
               hazard screen indicates the presence of lead levels that exceed interior
               lead dust standards, then a risk assessment must be conducted.

        Lead Hazard Reduction:
        If LBP or LBP hazards are detected during the evaluations on interior surfaces
        in the dwelling units, and the common areas that service those units or on
        exterior surfaces to be disturbed by rehabilitation, interim controls must be
        implemented to reduce LBP hazards. See options above for exemptions.

        Notice is required:
        Lead-based paint notification must be given to rehabilitation property
        occupants.

        Clearance:
        Clearance is required when lead hazard reduction activities are completed in
        the unit, common areas servicing the unit, and exterior surfaces where hazard
        reduction took place.


REHABILITATION PROJECTS OVER $25,000 PER UNIT
        There are two requirements for the Lead Hazard Evaluation:



Housing Rehabilitation Program Manual December 2008 69
            • Paint testing must be conducted to identify lead based paint on
                deteriorated painted surfaces or surfaces that will be disturbed or
                replaced.
            • A risk assessment must be conducted prior to rehabilitation to find
               LBP hazards in assisted units, in common areas that service those
               units, and on exterior surfaces, or grantees may assume that LBP
                hazards exist.



        There are three options in the Lead Hazard Evaluation:
            • In lieu of paint testing, the grantee is permitted to presume that LBP
                hazards exist on all painted surfaces to be disturbed or replaced and
                abate these surfaces.
            • In lieu of paint testing, the grantee is permitted to assume that LBP or
                LBP hazards are present on all painted surfaces. Abatement is
                required on these surfaces. In such cases, evaluation is not required.
            • The grantee is permitted to conduct a lead hazard screen instead of
                conducting a risk assessment. If the lead hazard screen indicates that
               there is no lead contamination, no lead hazard reduction is required. If
               the lead hazard screen indicates that lead is present, then a risk
                assessment must be conducted.

        Lead Hazard Reduction.
            • If LBP hazards are detected during the evaluations on interior surfaces
                 in the dwelling units and the common areas that service those units or
                 on exterior surfaces, including soil, to be disturbed by rehabilitation,
                 abatement must be completed to permanently reduce LBP hazards.
            • If LBP hazards are detected on the exterior surfaces that are not
                 disturbed by rehabilitation during the risk assessment, interim controls
                 may be completed instead of abatement to reduce these hazards.
            • Noticing is required: See Section 12.
            • Clearance is required when lead hazard reduction activities are
                completed in the unit, common areas servicing the unit, and exterior
                surfaces where hazard reduction took place.


CALCULATING FEDERAL REHABILITATION ASSISTANCE ( 24 CFR 35.930)
   The lead hazard evaluation and reduction activities required for rehabilitation
   projects depend on the level of Federal Rehabilitation Assistance (FRA) projected
   for each project. The FRA breaks up into three categories:
            • FRA of up to and including $5,000 per unit,
            • FRA of more than $5,000 per unit, up to and including $25,000,
            • FRA of more than $25,000 per unit.




Housing Rehabilitation Program Manual December 2008 70
   The FRA is determined by comparing the per unit rehabilitation hard costs and the
   overall per unit Federal Assistance. The lower of these calculations is used as the
   FRA amount.

   Hard Costs: Rehabilitation hard costs are calculated using the actual costs
   associated with the physical development of a unit, regardless of the source of these
   funds. These do not include soft costs, administration costs, relocation costs,
   environmental review costs, acquisition costs. Soft costs include financing fees,
   credit reports, title binders and insurance, recordation fees, transaction taxes, impact
   fees, legal and accounting fees, appraisals, and architectural and engineering fees.

   Federal Assistance : Federal Assistance is determined by tabulating all Federal
   funds provided to the project for housing assistance. This also includes funds from
   program income, but excludes funding such as low -income housing tax credit funds
   (LIHTC) or non-Federal Home Program match funds which are not consider
   housing assistance.


EXAMPLES OF SINGLE FAMILY DU ELLING CALCULATIONS
        Compare rehabilitation hard costs with Federal Assistance costs.
            • The hard cost for rehabilitation of a single -family home is $6 , 000. The
               family received $7,500. Of this amount, $3,000 is from a nonprofit
                source, $ 1,000 is owner contributions, and $3 , 500 from the city's
                CDBG program. The soft costs are $1,500. Since the FRA amount is
                $3,500 (the lesser of $3,500 and $6,000), the project falls into the
               lowest category, rehabilitations up to $5,000.
            •   The hard costs for rehabilitation of single family home is $15,000.
                The family received $ 18,000 . Of this amount, $13,000 are Federal
                funds, $3,000 are private funds, and $2,000 are nonprofit funds. The
                soft costs are $3 , 000. In this case, the FRA is $ 13,000, the lesser of
                $13,000 and $ 15,000, and this rehabilitation falls in the second
                category, rehabilitations over $5 , 000 and less than $25,000.

        For determining which level is used in multiple family units to be
        rehabilitated, an average is used. See 24 CFR 35.915 and HUD's April 2001
        Interpretive Guidance for specific details.


LEAD-BASED PAINT INTENT :                        ABATEMENT,             REHAB. OR
WEATHERIZATION
   Pursuant to a joint letter from HUD and EPA, dated April 19, 2002, jurisdictions
   have an additional option when rehabilitating dwellings in which LBP may be
   present. This provision impacts dwellings below the $25,000 Federal rehabilitation
   assistance category.




Housing Rehabilitation Program Manual December 2008 71
    If a jurisdiction ' s "intent" is to rehabilitate or weatherize a dwelling without
    mitigating any LBP hazards , then it is not required to perform interim controls in
    the area to be rehabilitated. Intent is shown in the work write up. If only
    rehabilitation aspects are included in the write up, then the intent is to rehabilitate
    and not mitigate LBP hazards. However, "work safe" practices must still be used.
    If LBP mitigation measures are included in the work write up, then the intent is to
    mitigate LBP hazards, and all usual mitigation rules apply.


NOTIFICATION ( 24 CFR 35.125)
         Notification is comprised of the pamphlet disclosure and two notices. It is
         required on all rehabilitation activities, regardless of the level of assistance.
              • Lead Hazard Information Pamphlet: Contractors must provide to
                 residents and purchasers of a residential property the
                 EPA/HUD/Consumer Product Safety Commission Lead Hazard
                 Information Pamphlet, "How to Protect your Family from Lead in
                  Your Home." It is a good idea to have the recipient acknowledge
                 receipt of this pamphlet in writing and retain this acknowledgment in
                 the rehabilitation files.
              • Disclosure of LBP and Hazards: The current disclosure regulations
                 are not affected by the new regulations. Contractors need to ensure
                 that property owners provide purchasers and lessees with available
                 information or knowledge regarding the presence of LBP and hazards
                 prior to selling or leasing a residence. In the contract or lease, sellers
                 and leasers of pre-1978 housing must include disclosure and
                 acknowledgement language and a warning statement about the dangers
                 of LBP. Sellers must allow purchasers 10 days to inspect the dwelling
                 for LBP or lead based paint hazards.


         Notice of Lead Hazard Evaluation or Presumption:
         When an evaluation results in findings of LBP hazards or if a presumption of
         LBP hazards is made , then contractors must provide to the residents or post
         notice no later than 15 days after this report has been received . These notices
         shall be posted for four weeks and contain at a minimum:
              • A summary of the nature , scope and results of the
                  evaluation/presumption;
              • A contact name, address, and telephone number for more information,
              • Instructions to obtain access to the evaluation report, and
              • A date of notice


         Notice of Lead Hazard Reduction Activity:
         When lead hazard reduction activities have been completed (clearance has
         been achieved), a contractor must provide to the residents or post a notice of


Housing Rehabilitation Program Manual December 2008 72
        these lead hazard reduction activities no later than 15 days after completion.
        The notices shall be updated if additional work is required. Any failed
        clearances must be described in the notice. These notices shall be posted for
        four weeks and contain at a minimum:
            • A summary of the nature, scope and results (including clearance), of
               the hazard reduction activities,
            • A contact name, address and telephone number for more information,
                an
            • Available information on the location of any remaining LBP in the
               rooms, spaces or areas where hazard reduction activities were
               conducted, on a surface-by-surface basis.

        Availability of Notices:
        Notices of evaluation, presumption, and hazard reduction shall:
            • Be of a size and type easily read by occupants.
            • To the extent practicable, be made available upon request in a format
                accessible to persons with disabilities (e.g., Braille, large type,
                computer disk, audio tape).
            • Be provided in the occupants' primary language or in the language of
               the occupants' contract or lease.
            • Be provided to the occupants by posting and maintaining it in centrally
               located common areas and distributing it to any dwelling unit, if
               necessary, because the head of household is a person with a known
               disability.
            • Be distributed to each occupied dwelling affected by the evaluation. If
               the notice is for a lead hazard in a common area that is used by those
               in the dwelling unit, the occupants of the dwelling unit shall also
               receive notice.

        State Notices:
        Maintain a copy of the notices is the in rehab file.
            • California Department of Health Services requires the filing of the
               following forms under Title 17, California Code of Regulations
            • Notification of Lead hazard Evaluation (DHS #8552). This is a
               requirement of a California certified Risk Assessor.
            • Notification of Lead Hazard Abatement (DHS #8551). This is a
               requirement of the California certified Project Designer or Supervisor.


ACQUISITION , LEASING , SUPPORT, & OPERATION REQUIREMENTS (24
CFR 35.1000)
   The lead-based paint requirements for acquisition, leasing, support services or
   operations is found in 24 CFR Part 35, Subpart K.




Housing Rehabilitation Program Manual December 2008 73
ACQUISITION
       These regulations are intended to provide assurances that the LBP paint in
       homes purchased with CDBG funds have been stabilized , and that the unit is
       "lead safe" when it is occupied by the assisted household . Acquisition (or
       leasing) of residential property is often done for the purpose of providing
       housing for people with special needs. For example , a housing provider may
       purchase a 12-unit building to provide transitional housing for the homeless or
       special needs housing for the disabled . A housing provider may also choose
       to lease a single -family home for use as a homeless shelter . If a housing
       acquisition program provides the potential homeowner with funds for
       rehabilitation activities , the regulations for Rehabilitation LBP hazards apply.
       See Sections 6 through 12. Some key requirements for LBP in Housing
       Acquisition, Leasing, Support Services, and Operation are:

       LBP Hazard Evaluation, Treatment, Clearance:
       The following is required to identify deteriorated paint in homes:
          • Visual Assessment. An inspection of all interior painted surfaces,
             including common areas such as hallways, laundry rooms or garages,
             and exterior surfaces of the building in which the dwelling unit is
             located must be conducted to identify deteriorated paint. Notification
             is only required if LBP hazards are identified.
          • Paint Stabilization. All deteriorated paint surfaces must be stabilized
             before the homebuyer moves into the home. If paint testing of a
             deteriorated surface reveals no LBP, then paint stabilization is not
             required on that surface.
          • Safe Work Practices. The owner/contractor must use safe work
             practices when conducting paint stabilization. Safe work practices
             include safe work methods, occupant protection, worksite preparation,
              and cleanup.
          • Clearance. After the completion of work, the home must pass
             clearance. Clearance must happen before occupancy if the home is
             vacant or immediately after receipt of Federal assistance for a home
             currently occupied.
          • Ongoing Maintenance. Maintenance is required for rental units
             rehabilitated under the Housing Rehabilitation Program.
          • Costs. In order to provide maximum flexibility, the party responsible
             for paying for lead hazard evaluation and reduction in homebuyer
             programs depends upon program design and local requirements. Costs
             may be borne by the administering agency, the seller, the homebuyer,
             or a combination of the preceding.
          • Notification. The notification process is the same as for rehabilitation
             activities.




Housing Rehabilitation Program Manual December 2008 74
MAINTENANCE AND RECORD KEEPING
      Maintenance
      The rental property owner is required to inspect the units for evidence or
      deteriorated paint each year or upon the unit being vacated. HOME assisted
      rental units will be inspected by the County for HQS deficiencies and
      defective lead based paint surfaces annually.

      RECORD KEEPING
      Notices, evaluation, clearance and abatement reports must be kept at least
      three years.

      Records must be kept for at least three years, but it is recommended that lead-
      based paint records be kept indefinitely. The following records should be
      kept:
         • Information on age of property, age of children living at property,
             existing information on Children's blood lead levels, existing
             information on lead-based paint,
         • Inspection report or documentation of Visual Assessment,
         • Disclosure statement,
         • Clearance report,
         • All notifications,
         • Documentation of required certifications or training, and
         • Documentation indicating receipt of the pamphlet.




Housing Rehabilitation Program Manual December 2008 75
LEAD - BASED PAINT DEFINITIONS
    Abatement: Any set of measures designed to permanently eliminate lead-based
    paint or lead-based paint hazards (see definition of "permanent"). Abatement
    includes the removal of lead-based paint and dust-lead hazards, the permanent
    enclosure or encapsulation of lead-based paint, the replacement of components or
    fixtures painted with lead-based paint, and the removal or permanent covering of
    soil-lead hazards.

    Bare soil: Soil or sand not covered by grass, sod, other live ground covers, wood
    chips, gravel, artificial turf, or similar covering.

    Certified: DHS licensed or certified to perform such activities as risk assessment,
    lead-based paint inspection, or abatement supervision.

    Chewable surface: An interior or exterior surface painted with lead-based paint that
    a young child can mouth or chew. A chewable surface is the same as an accessible
    surface" as defined in 42 U.S.C. 485 lb(2)). Hard metal substrates and other
    materials that cannot be dented by the bite of a young child are not considered
    chewable.

    Clearance Examination: An activity conducted following lead-based paint hazard
    education activities to determine that the hazard reduction activities are complete
    and that no soil-lead hazards or settled dust-lead hazards exist in the dwelling unit
    or worksite.

    Common Area: A portion of a residential property that is available for use by
    occupants of more than one dwelling unit. Such an area may include, but is not
    limited to, hallways, stairways, laundry and recreational rooms, playgrounds,
    community centers, on-site day care facilities, garages and boundary fences.

    Containment: The physical measures taken to ensure that dust and debris created or
    released during lead-based paint hazard reduction are not spread, blown or tracked
    from inside to outside of the worksite.

    Deteriorated Paint: Any interior or exterior paint or other coating that is peeling,
    chipping, chalking or cracking, or any paint or coating located on an interior or
    exterior surface or fixture that is otherwise damaged or separated from the substrate.

    Dwelling Unit : (1) Single-family dwelling, including attached structures such as
    porches and stoops; or (2) Housing unit in a structure that contains more than 1
    separate housing unit , and in which each such unit is used or occupied , or intended
    to be used or occupied , in whole or in part , as the home or separate living quarters
    of 1 or more persons.




Housing Rehabilitation Program Manual December 2008 76
   Encapsulation: The application of a covering or coating that acts as a barrier
   between the lead-based paint and the environment. Encapsulation may be used as a
   method of abatement if it is designed and performed so as to be permanent (see
   definition of "permanent").

   Enclosure: The use of rigid, durable construction materials that are mechanically
   fastened to the substrate in order to act as a barrier between lead-based paint and the
   environment. Enclosure may be used as a method of abatement if it is designed to
   be permanent (see definition of "permanent").

   Evaluation: A risk assessment, a lead hazard screen, a lead-based paint inspection,
   paint testing, or a combination of these to determine the presence of lead-based
   paint hazards or lead-based paint.

   Federal Assistance: The amount of federal funds received by a dwelling/project.

   Federally Rehabilitation Assistance: The amount used to determine which
   rehabilitation category used to address LBP hazards. This figure is calculated by
   taking the lower of the total federal assistance in a dwelling and the total hard costs
   to rehab the dwelling.

   Hazard reduction: Measures designed to reduce or eliminate human exposure to
   lead-based paint hazards through methods including interim controls or abatement
   or a combination of the two.

   HEPA vacuum: A vacuum cleaner device with an included high-efficiency
   particulate air (HEPA) filter.

   Housing for the elderly: Retirement communities or similar types of housing
   reserved for households composed of one or more persons 62 years of age or more,
   or other age if recognized as elderly by a specific Federal housing assistance
   program.

   Housing Receiving Federal Assistance: Housing which is covered by an
   application for HUD mortgage insurance, receives housing assistance payments
   under a program administered by HUD, or otherwise receives more than $5,000 in
   project-based assistance under a Federal housing program administered by an
   agency other than HUD.

   Impact Surface: An interior or exterior surface that is subject to damage by
   repeated sudden force, such as certain parts of doorframes.

   Interim Controls: A set of measures designed to reduce temporarily human
   exposure or likely exposure to lead-based paint hazards. Interim controls include,
   but are not limited to, repairs, painting, temporary containment, specialized




Housing Rehabilitation Program Manual December 2008 77
   cleaning, clearance, ongoing lead-based paint maintenance activities, and the
   establishment and operation of management and resident education programs.

   Lead-Based Paint: Paint or other surface coatings that contain lead equal to or
   exceeding 1.0 milligram per square centimeter or 0.5 percent by weight or 5,000
   parts per million (ppm) by weight.

   Lead-Based Paint Hazard: Any condition that causes exposure to lead from dust-
   lead hazards, soil-lead hazards, or lead-based paint that is deteriorated or present in
   chewable surfaces, friction surfaces, or impact surfaces, and that would result in
   adverse human health effects.

   Lead-Based Paint Inspection: A surface-by-surface investigation to determine the
   presence of lead-based paint and the provision of a report explaining the results of
   the investigation.

   Lead Hazard Information Pamphlet : "How to Protect Your Child From Lead in
   Your Home ." The HUD pamphlet used to notice a resident who is about to
   participate in a LBP activity.

   Lead Hazard Reduction Activity: The activity chosen to address the existence of
   LBP and/or LBP hazards.

   Lead Hazard Screen: A limited risk assessment activity that involves paint testing
   and dust sampling and analysis. If lead hazards are found, then a full risk
   assessment is required.

   Multifamily property: A residential property containing five or more dwelling
   units.

   Maintenance: The regular, ongoing follow up of a dwelling that has undergone
   LBP treatment. This pertains to rentals only. (See re-evaluation)

   Noticing: Notifying the occupants (or potential occupants) of a dwelling of LBP
   related actions or history pertaining to that dwelling. This noticing may take the
   form of a pamphlet or posted notices regarding LBP hazards found, treated, and
   cleared in a dwelling.

   Occupant: A person who inhabits a dwelling unit.

   Owner: A person, firm, corporation, nonprofit organization, partnership,
   government, guardian, conservator, receiver, trustee, executor, or other judicial
   officer, or other entity which, alone or with others, owns, holds, or controls the
   freehold or leasehold title or part of the title to property, with or without actually
   possessing it.




Housing Rehabilitation Program Manual December 2008 78
   Paint Stabilization: Repairing any physical defect in the substrate of a painted
   surface that is causing paint deterioration, removing loose paint and other material
   from the surface to be treated, and applying a new protective coating or paint.

   Paint Testing: The process of determining, by a certified lead-based paint inspector
   or risk assessor, the presence or the absence of lead-based paint on deteriorated
   paint surfaces or painted surfaces to be disturbed or replaced.

   Permanent : An expected design life of at least 20 years.

   Play Area: An area of frequent soil contact by children of less than 6 years of age,
   as indicated by the presence of play equipment (e.g. sandboxes, swing sets, sliding
   boards, etc.) or toys or other children's possessions, observations of play patterns, or
   information provided by parents, residents or property owners.

   Presumption: An administrative decision to presume LBP is present. At times, this
   presumption may not require a risk assessment.

   Reevaluation: A visual assessment of painted surfaces and limited dust and soil
   sampling conducted periodically following lead-based paint hazard reduction where
   lead-based paint is still present.

   Residential Propert y: A dwelling unit, common areas, building exterior surfaces,
   and any surrounding land, including outbuildings, fences and play equipment
   affixed to the land, belonging to an owner and available for use by residents, but not
   including land used for agricultural, commercial, industrial or other non-residential
   purposes, and not including paint on the pavement of parking lots, garages, or
   roadways.

   Risk Assessment: An on-site investigation to determine the existence, nature,
   severity, and location of lead-based paint hazards; and the provision of a report by
   the individual or firm conducting the risk assessment explaining the results of the
   investigation and options for reducing lead-based paint hazards.

   Risk Assessor/Inspector: This person performs risk assessments and clearance
   examinations. This person must take and pass the 40-hour Risk Assessor/Inspector
   class. DHS registration AND testing is required. Significant education/previous
   related LBP experience is required.

   Safe Work Practices: A system of working to remove LBP that minimizes
   spreading LBP dust and debris which would contaminate the workers and residents
   of a dwelling.

   Single Family Propert y: A residential property containing one through four
   dwelling units.




Housing Rehabilitation Program Manual December 2008 79
   Single Room Occupancy (SRO) Housing: Housing consisting of zero-bedroom
   dwelling units that may contain food preparation or sanitary facilities or both (see
   Zero-bedroom dwelling).

   Soil-Lead Hazard: Bare soil on residential property that contains excessive
   amounts of lead.

   Standard Treatments: A series of hazard reduction measures designed to reduce all
   lead-based paint hazards in a dwelling unit without the benefit of a risk assessment
   or other evaluation.

   Substrate: The material directly beneath the painted surface out of which the
   components are constructed, including wood, drywall, plaster, concrete, brick or
   metal.

   Supervisor: This person supervises certified and non-certified LBP workers. This
   person must have taken and passed the 40 hour LBP Supervisor class. DHS
   registration AND testing is required. Previous related LBP experience is required.

   Visual Assessment: Looking for deteriorated paint, visible surface dust, debris and
   residue which may be a part of a risk assessment or clearance examination. A
   person must have taken the HUD VA test on the web.
   http://www.hud.gov/offices/lead/training/section8housing/HUDSECTION8_VISU
   AL CHAPTER5.PDF

   Worker: There are two types of workers, certified and non-certified.

   Certified: A person who has taken the 24-hour certified LBP certified worker class.
   While no DHS test is required, DHS registration is required. This person may work
   on any LBP project, but only under supervision. No previous LBP work experience
   is required.

   Non-Certified: A person who has taken the 8-hour "Work Safe" class. This worker
   may not work on abatement projects. No previous LBP work experience is
   required.

   Zero-Bedroom Dwelling: Any residential dwelling in which the living areas are not
   separated from the sleeping area. The term includes efficiencies, studio apartments,
   dormitory or single room occupancy housing, military barracks, and rentals of
   individual rooms in residential dwellings (see Single room occupancy (SRO)).




Housing Rehabilitation Program Manual December 2008 80
              Lead-Based Paint Housing Rehabilitation Matrix




                              Rehabilitation                   I
                 04$5,000 $5,0014 $25,000 $25,001+




Housing Rehabilitation Program Manual December 2008 81
Approach to LBP            Do no harm                         Identify and control lead       Identify and abate lead
Hazards                                                       hazards                         hazards
                                                              -Visual Assessment (VA) only    -Visual Assessment (VA) only
                           -Paint Testing on surfaces
                                                              to determine mitigation         to determine mitigation
                           affected by rehab.
 s. C                                                         method                          method
         Type              -Visual Assessment (VA)            -Paint Testing on surfaces      -Paint Testing on all
                           only to determine mitigation        affected by rehab.              surfaces affected by
                           method                                                              rehab.
                                                              -Risk assessment (RA)           -Risk assessment
         Level of          -VA: HUD Online test               -VA: HUD Online test            -VA: HUD Online test
         Cert.             -Paint Testing: Cert.              -Paint Testing: Cert.           -Paint Testing: Cert.
         Required           RA/Inspector                       RA/Inspector                    RA/Inspector
                           -Pamphlet                          -Pamphlet                       -Pamphlet
                           -Evaluation                        -Evaluation                     -Evaluation
                           -Presumption (opt.)                -Presumption (opt.)             -Presumption (opt.)
      Notification         -DHS Form 8551                     -DHS Form 8551                  -DHS Form 8551
                           -Hazard Reduction                  -Hazard Reduction               -Hazard Reduction

                           -VA: Report                        -VA Report                      -VA Report
                           -Paint Testing                     -Painting Testing               -Paint Testing
      Reports              -DHS Form 8552                     -Risk Assessment                -Risk Assessment
                           -Clearance                         -DHS Form 8552                  -DHS Form 8552
                                                              -Clearance                      -Clearance
                                                                                              -Interior/Exterior paint
                                                                                              disturbed by HR: Abatement
              Type         Safe work practices                Interim Controls
                                                                                              -Exterior paint not disturbed
                                                                                              by HR: Interim Controls
                                                                                            Int/Ext: Required
              .0   - None, but must                           Optional, but at a minimum, m
                   ° work safe                                work safe.                    Ext. w/Interim: Optional, but a
          u
                                                                                            minimum, must work safe

 .a       U                    None, but must                                                 Int./Ext.: Required
                     fl
                      ,                                   I Required
                       I       work safe                  I
                   c                                                                          Ext. w/Interim: Required

Clearance Required                               Certified Risk Assessor or Project Monitor on all clearances




Housing Rehabilitation Program Manual December 2008 82
                                   LBP Checklist for Rehabilitation
Name of Applicant Date

Address of House

I If the house was completed prior to I/l/78, go on to #2. If the house was completed
   on or after I/l/78, STOP, you are done w/your LBP. Provide proof of age. Use
   certificate of insurance, final sign off, or occupancy date.

2. Does the dwelling meet any of the exemptions listed in chapter 20 of the Grant
     Management Manual? If So, STOP, you are done w/your LBP requirements. List
     exemption here:                                . If not, proceed to #3.

3.    Provide "How to Protect Your Family From Lead" pamphlet to recipients/occupant.
      Retain signed receipt from recipients/occupants stating that pamphlet was received.
      (See pg.31 for web links.)

4. Obtain work write up and do LBP visual assessment. Retain copy of visual
     assessment report. Use this report to determine if a presumption strategy is
     beneficial for this dwelling. If presuming LBP, then obtain and retain a copy of the
     presumption notice. Presumption options used and
     where:

5.    Determine if risk assessment (RA) is needed. If so, then:
         •    Retain copy of Lead Hazard Screen (LHS), if applicable. If LHS results
              are negative for LBP, then perform the HUD and DHS noticing
              requirements (DHS form 8552) and begin the rehab w/o LBP concerns. If
              the LHS results are positive for LBP, then perform an RA.
         •    Procure DHS certified LBP risk assessor/inspector for risk assessment and
              clearance.
         •    Retain copy of risk assessor's certification.
         •    Retain copy of RA.

6.    Retain copy of evaluation notice.

7.    Retain copy of DHS form #8552, Lead Hazard Evaluation Report.

8.    Retain copies of paint testing results.

9.    Retain copy of DHS Abatement Notice (DHS form #855 1).

10.   Determine which LBP methods to use.
11.   Procure the DHS certified LBP contractor for hazard mitigation.




Housing Rehabilitation Program Manual December 2008                           83
12. Retain copy of LBP certification for supervisor and all workers (including
     homeowners using sweat equity). (This should include any safe work course if
     using safe work practices.) Certified training is suitable substitute for safe work
     course.

13. For sweat equity workers, note which option used to satisfy LBP rules. (One day
     course, work on non-LBP impacted tasks, etc.)

14. Retain copy of Hazard Reduction Notice (should match LBP mitigation method
     selected).

15. Retain copy of Clearance Report to be filled out by certified risk assessor/inspector.




Housing Rehabilitation Program Manual December 2008 84
NOTICING FORMS
                                     Sample Visual Assessment Report


                   LEAD-BASED PAINT VISUAL ASSESSMENT REPORT
DATE OF REPORT:
Address/location of property or structure(s) this summary notice applies to:


Lead-based paint inspection description:

Date(s) of inspection:

Summary where deteriorated paint was found . List at least the housing unit numbers and common areas
(for multifamily housing), and building components (including type of room or space, and the material
underneath the paint):




Contact person for more information about the ins pection:
Printed name:
Organization:
Street and city:

State: ZIP : Phone number: ( )


Person who reared this summary notice:
Printed name:

Signature:                                              Date:
Organization:
Street and city:

State: ZIP:                                 Phone number: ( )




Housing Rehabilitation Program Manual December 2008 85
                                         Sample Notice of Presumption
                              Notice That Lead-Based Paint or
                    Lead-Based Paint Hazards Are Presumed to be Present
Date of Notice:
Address/location of property or structure(s) this summary notice applies to:



Type of presumption (check all that apply):
(a) Lead-based paint is presumed to be present.

(b) Lead-based paint hazard (s) is (are) presumed to be present.

Summary of presumption. List at least the housing unit numbers and common areas (for multifamily
housing), bare soil locations, dust-lead locations, and or building components (including type of room or space,
and the material underneath the paint), and types of lead-based paint and/or hazards presumed to be present:




Contact person for more information about the presumption:
Printed name:
Organization:
Street and city:

State: ZIP:                                     Phone number: ( )


Verson who prepared the notice of presumption:
Printed name:

Signature:                                                 Date:
Organization:
Street and city:

State: ZIP:                                    Phone number: ( )



                                        Sample Risk Assessment Notice




Housing Rehabilitation Program Manual December 2008 86
                           Notice of Lead-Based Paint Risk Assessment
DATE OF NOTICE
Address/location of property or structure(s) this summary notice applies to:



Lead-based p aint insp ection: Risk Assessment u                             Lead Hazard Screen u

Date(s) of risk assessment/screen:

 Lead-based paint hazards were found . Yes: u                                No: u
Summary of types and locations of lead-based paint hazards. List at least the housing unit numbers and
common areas (for multifamily housing), bare soil locations, dust-lead locations, and or building components
(including type of room or space, and the material underneath the paint), and types of lead-based paint hazards:




Contact person for more information about this risk assessment /screen:
Printed name:
Organization:
Street and city:

State: ZIP:                                     Phone number: ( )


                e
Verson who pr pared this notice:
Printed name:

Signature:                                                 Date:
Organization:
Street and city:

State: ZIP:                                 Phone number: ( )




Housing Rehabilitation Program Manual December 2008 87
                                Sample Notice of Hazard Reduction Activity


                     Notice of Lead-Based Paint Hazard Reduction Activity

Address/location of property or structure(s) this summary notice applies to:


Initial Hazard Reduction Activity Notice? Yes: No:
Start and completion date(s):
If no, dates of previous Hazard Reduction Activity Notices:
Activity locations and types, List at least the housing unit numbers and common areas (for multifamily
housing), bare soil locations, dust-lead locations, and or building components (including type of room or space,
and the material underneath the paint), and types of lead-based paint hazard reduction activities performed at
the locations listed:




Initial clearance? Yes: El       No: El If no, provide dates of previous clearances:
Date(s) of clearance testing and/or soil analyses:
Locations of building components with lead-based paint remaining in the rooms, spaces or areas where
activities were conducted:




Contact person for more information about the hazard reduction activity:
Printed name:
Organization:
Street and city:

State:              ZIP:                        Phone number:

Person who prepared this summary notice:
Printed name:

Signature:                                                 Date:
Organization:
Street and city:
State:              ZIP:                       Phone number:
APPENDIX 11
Eligible Census
Tracks by Program


Housing Rehabilitation Program Manual December 2008                                          88
         Grant                      Eligible Census                    Eligible Place       Description in Grant
                                         Tracts                                                  Application
HPG - 2003                1.01, 10, 101.01, 101.02,            Boronda                   Rural census tracks with
Rehabilitation            102.01, 102.02,                      Bradley                   populations less than 5,000.
                          103.02,                              Carmel Valley Village
                          103.03, 103.04,                      Chualar                   Use USDA description
                          105.04,                              Elkhorn                   of rural for rural, and verify
                          106.06, 107.02,                      Las Lomas                 population is less than 5,000
                          108.01,                              Moss Landing              and recipients are very-low
                          114, 115, 132, 140,                  Pajaro                    income
                          141.02, 143.01,                      San Ardo
                          143.02                               San Lucas
                                                               Spreckles

Joe Serna - 2003          Any unincorporated                   Any unincorporated        Unincorporated areas of the
Rehabilitation                                                                           County, mostly low and very
                                                                                         low-income farm workers, a
                                                                                         few moderate farm workers.
HOME 2003                 102.01, 102.02,                      Boronda, (only partial)   Rural unincorporated census
Rehabilitation and FTHB   103.02, 103.03,                                                tracks for low and very low-
                          103.04, 103.05, 104,                 Bradley                   income households.
                          105.03, 105.04,                      Carmel Valley Village
                          106.03, 106.04,                      Castroville
                          106.05, 106.06,                      Chualar
                          107.01, 107.02,                      Elkhorn
                          108.01, 108.02, 109,                 Las Lomas
                          110, 111.01, 111.02,                 Moss Landing
                          112.01, 112.02,                      Pajaro
                          113.01, 113.02, 114,                 Prunedale (partial)
                          115                                  San Ardo
                                                               San Lucas
                                                               Spreckles
CaIHOME - 2004            101.01*, 101.02*,                    Aromas (only partial)     Eligible rural census tracks
FTHB                      102.01*, 102.02*.                    Bradley                   in the unincorporated area of
                          105.01*, 105.04*,                    Carmel Valley Village     the County. These tracks are
                          106.06*, 107.01,                     Las Lomas                 taken from Ca1HOME 2003
                          107.02, 110*, 111.01*,               Moss Landing              NOFA Training Manual
                          111.02*, 113.01*,                    Pajaro
                          114*, 116*, 117*,                    Prunedale (partial)       *Tract number with
                          132*, 141.01*                        San Ardo                  asterick(s) any portion of
                                                               San Lucas                 the tract which is RHS
                                                               Spreckles                 eligible as rural is eligible,
                          * Tract number with asterisk(s).                               the balance is not.
                          any portion of the tract which is
                          RHS eligible as rural is eligible,
                          the balance is not.
CDBG                      Any unincorporated                   Any unincorporated        Unincorporated areas of the
Program Income                                                                           County, low income benefit
                                                                                         required
HOME                      Any unincorporated                   Any unincorporated        Unincorporated areas of the
Program Income                                                                           County; low income benefit
FTHB & Rehabilitation                                                                    required




Housing Rehabilitation Program Manual December 2008 89
REFERENCES
         •   Federal Register, 24 CFR Part 35, et. al. Final Rule
         •   HUD's lead website at www.hud.gov/offices/lead/,
         •   Lead Listing's website at www. leadli sting. or , and
         •   HUD's April 2001 Interpretive Guidance: The HUD Regulation on
             Controlling LBP Hazards in Housing Receiving Federal Assistance
             and Federally Owned Housing Being Sold regulations
             www.hud.gov/utilities/intercept.cfm?/Iea/1012q,a-2001.pdf)




Housing Rehabilitation Program Manual December 2008                 90
APPENDIX 11 - STANDARDS FOR ROOM ADDITIONS

                         Standards for Room Additions


                                               Maximum No. Persons
              Unit Size in the Household




              SRO (Single Room Occupancy) 2
              0-BR (Studio) 2
              1-BR                                3
              2-BR                                5
              3-BR                                7
              4-BR                                9
              5-BR                           11
              6-BR                           13


     NOTES:
              • Opposite sex children under 6 years of age may share a bedroom
              • Opposite sex children 6 years of age and older may have their own
                 bedroom
              • Children shall be permitted a separate bedroom from their parents.
              • Same sex children of any age may share a bedroom
              • 5 or more people - a second bathroom may be added.
              • 10 or more people - a third bathroom may be added.
              • The same rules apply to mobile home units.

The property value after the addition may not exceed 95% of the median home price for
Monterey County as determined by HUD for additions funded in whole or is part by
HOME Program funds.




Housing Rehabilitation Program Manual December 2008 91

				
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