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					 Long-Term Recovery from Disaster



                                      IX. Housing
Objective:              To help victims repair or replace their housing and to revitalize the
                        housing stock and tax base of the community; and to incorporate hazard
                        mitigation principles in the recovery effort.

Types of Disasters:     The amount and type of assistance that will be available for housing
                        recovery depends on the extent of the disaster. This section describes
                        some of those scenarios.

                        Local disaster: In a small, localized disaster, housing repair or
                        replacement is financed with individual insurance and assistance from
                        voluntary agencies such as the Red Cross or churches. If your
                        jurisdiction has a revolving loan fund for housing rehab or new
                        construction, it may be an excellent source of assistance for victims.
                        Contact state or local housing agencies to see if existing programs can
                        provide any assistance.

                        SBA Declaration: When a disaster is not large enough to receive a
                        presidential declaration, it may still qualify for an SBA declaration. The
                        types of housing assistance available through the SBA are discussed in
                        Chapter V.

                        Presidential declaration: When a Presidential Declaration is declared,
                        FEMA and the SBA may provide housing assistance as discussed in
                        Chapter V.

                        Presidential declaration (major disaster): On rare occasions, a
                        disaster causes such extensive damage that Congress and/or the state
                        Legislature appropriates additional funds to help with the long-term
                        recovery. In such cases, state agencies will set parameters for the use of
                        funds and work with local communities to tailor the assistance.

General Principles      This section applies primarily to cases of major disasters/Presidential
                        Declarations. However, the suggestions may be helpful in other
                        situations as well.

                        Don’t rush into the long term housing recovery. Assumptions
                        about the effect of the disaster on the housing market may be wrong.
                        Don’t assume that because your community has lost many housing units
                        there will be a strong market for new housing development. Learn
                        about the potential market – people’s financial capacity and their
                        personal preferences – before deciding on your long term new
                        construction strategy. (Tool Kit, P. 1 - Free Market Solves Housing
                        Needs-Breckenridge's Solution to Restoring Housing a Success; P. 7 -
                        Sample - City of East Grand Forks Housing Needs Survey)


 State of Minnesota                                                              Chapter IX - 1
 Long-Term Recovery from Disaster


                        .
                        The objective of the housing recovery strategy should be to help restore
                        people to their pre-disaster condition and address health and safety
                        concerns, not enrich their living situation.

                        Housing recovery should incorporate hazard mitigation principles so
                        that in the rebuilding process you’re helping prevent future damage. A
                        community that is rebuilding after a tornado, for example, should
                        encourage residents to use wind resistant construction techniques in the
                        rebuilding. Mitigation can be addressed through enforcement of
                        floodplain management, building codes and ordinances.

                        Households must understand that they are responsible for their own
                        recovery. The role of public funds is to fill in the gaps after people
                        have made a reasonable effort to meet their own needs, including
                        applying any insurance proceeds to the rehab of their home or to a new
                        home.

                        Depending on the type of the disaster and who is affected, you may
                        need to develop priorities for rehabilitation projects. For example, first
                        fixing up homes that offer family day care or adult foster care may help
                        facilitate the recovery for the whole community.

                        Meeting the housing needs of individual victims and helping rebuild the
                        community’s housing stock are two different objectives. If many of the
                        people who lost homes are lower income and one of your community’s
                        greatest needs is new housing, then your target audience may not be
                        people who were victims of the disaster. For example, a new
                        construction strategy – given the costs of new housing development –
                        may need to be targeted to households who want to buy up, not to
                        households who were victims of the disaster. Such a strategy may allow
                        for the more affordable existing homes to be made available to the
                        victims.

                        Programs may be designed so that they not only help victims who were
                        homeowners prior to the disaster, but they also may help pre-disaster
                        renters become homeowners. Incentive programs can provide the down
                        payment. (Tool Kit, P. 5 - Incentive Programs Helping Housing Stock;
                        P. 16 - City of EGF Home Ownership Incentive Loan Programs)

                        There will be considerable citizen focus on fairness and whether people
                        are treated the same as their neighbors. It is important to strike a
                        balance between standardization and program flexibility.

What To Do and          The city or county should first develop a housing rebuilding strategy
Who Can Help:           and then design and implement the housing recovery programs. The


 State of Minnesota                                                               Chapter IX - 2
 Long-Term Recovery from Disaster


                        housing strategy and program/s are usually designed by a group and
                        then presented to the city council or county commission for discussion
                        and approval.

                        There are many possible organizations and individuals that can be
                        involved depending on what exists in your area. The first place to look
                        is to organizations that delivered housing programs before the disaster.
                        You may want to consider requesting help from organizations from
                        other parts of the state whose jurisdictions weren’t affected; these
                        organizations are often willing to help.

                        Following is a list of possible organizations, all of which have been
                        used by one or more communities in Minnesota to administer housing
                        recovery programs:

                         Housing and Redevelopment Authorities – city, county, or multi-
                          county
                         Community Action Agencies
                         Economic Development Agencies
                         Non-profit Housing Organizations
                         Regional Development Commissions
                         Private Consultants

                        Lenders and Realtors will probably not be involved in administration of
                        publicly funded housing programs, but they may be very helpful in
                        developing the overall strategy. Your housing team should stay in touch
                        with these individuals because they know a lot about the community
                        and may be able to help in many ways.

                        If a community has lost considerable housing, bringing in a private land
                        development company or housing developer to consult on strategies and
                        programs, land use, infrastructure redevelopment and housing
                        construction issues can be helpful. They will have a different
                        perspective that can help with the success of long term recovery.

                        Volunteers and donations are a great source of help in rehab and
                        construction. They will need to be managed; a non-profit organization
                        may be willing to do this. See Chapter XI. Volunteers.

Housing Program         Value Gap. A value gap occurs when it costs more to build a house
Issues and Possible     than it is worth after construction. The value doesn’t equate to the
Strategies              cost due to local market conditions. This will affect the ability of local
                        banks to make loans for rehab or new homes. This can affect owner-
                        occupied or multifamily rehab and new construction. A Loan program
                        can be designed to help fill the value gap.




 State of Minnesota                                                               Chapter IX - 3
Long-Term Recovery from Disaster


                       Affordability Gap. An affordability gap occurs when a household’s
                       income is not sufficient to afford the purchase or rehabilitation of the
                       house. This can affect owner-occupied or multifamily rehab and new
                       construction. Programs can be designed which help address the
                       affordability gap.

                       Buy-out not sufficient to rebuild. This situation occurs when the pre-
                       disaster market value, which is the price offered in a buyout, is lower
                       than the cost to construct or purchase a new house. The worst situation
                       occurs when the household is not capable, based on typical lending
                       standards, of taking on the additional debt necessary to finance the
                       difference.

                       The strategy for these households may be to help them purchase
                       existing houses or manufactured housing rather than build new house.

                       Rehabilitation of owner-occupied homes.

                       Design a program that provides financing in the form of a deferred loan
                       to fill the gap between the household incurring reasonable debt and the
                       cost of returning the property to pre-disaster condition and correcting
                       health and safety deficiencies. (Tool Kit, P. 12 - Breckenridge Second
                       Mortgage Programs)

                       New construction of homes for ownership.

                       Develop programs that encourage citizens to build new homes and to
                       remain living in the community. Offer incentives to the potential
                       owners, not to builders.

                       New construction of rental housing.

                       If a market study indicates a need, assist developers interested in
                       building new apartments.

                       Unwillingness to assume debt. Some people simply do not want to
                       have any debt.

                       If a household can afford it, they should be expected to incur reasonable
                       debt prior to receiving other forms assistance. A formula can be
                       developed for use in housing programs.

                       Lower income households vs. cost of new construction.

                       A household whose income is not sufficient to finance a new home
                       may be capable of financing an existing home. Design a program that



State of Minnesota                                                               Chapter IX - 4
    Long-Term Recovery from Disaster


                           encourages current homeowners to sell their existing home and build a
                           new house in the community.

                           Length and terms of assistance. You should ensure that public funds
                           are used to help with rebuilding and not to provide a windfall to those
                           who sells their new or fixed-up home within a few years.

                           Structure assistance as a deferred, no-interest loan, which is forgiven
                           after a period of time or due on sale to the extent that there are sufficient
                           sale proceeds.

                           Rehabilitation of rental property. If the owner needs to incur debt,
                           which is recovered by increased rents some tenants will not be able to
                           afford the increased rent.

                           Design a program that provides the gap financing necessary to rehab the
                           apartment without increasing the tenant’s rent. All insurance proceeds
                           would need to be applied toward the cost of rehabilitation.

                           Insurance as a condition of receiving assistance.

                           Require that households receiving housing rehab assistance that are
                           located in the 100-year flood plain participate in the National Flood
                           Insurance Program. Make sure they understand that if they let their
                           policy lapse and their property is damaged again, they will not be
                           eligible for any assistance.

                           Current on taxes.

                           It is prudent public policy to require that households receiving
                           assistance are current on their property taxes or have entered into an
                           agreement with their county for payment and are current on their
                           payments.

                           Property Acquisition/Buyouts.

                            Hazard Mitigation Grant Program funds can be used to buyout
                           damaged properties in the 100 year floodplain. It may be possible to
                           use Block Grant or DNR funds to buyout damaged properties outside of
                           the 100-year floodplain.

                            FEMA has developed a very good manual called the Property
                           Acquisition Handbook for Local Communities. The handbook can be
                           downloaded from FEMA’s web site at www.fema.gov or ordered from the
                           FEMA Publications Warehouse.
.



    State of Minnesota                                                                Chapter IX - 5
 Long-Term Recovery from Disaster


                        Damaged mobile homes are a unique problem. If the first floor of
                        the unit becomes wet, it is considered destroyed. A more insidious
                        problem occurs when water stands under the structure for extended
                        periods; the moisture wicks up into the wall/floor boards and causes
                        mold to develop.

                        As part of your public information effort, inform people about the need
                        to thoroughly dry out the ground under a mobile home by removing the
                        skirting. Also, see that the mobile home residents receive information
                        about mold, the problems it can cause, what to look for and how to deal
                        with it. The Red Cross, U of M Extension and the MN Dept. of Health
                        all have excellent brochures.

Special Topics:         Temporary Housing. Temporary housing is interim housing that
                        people occupy between the time they leave the emergency shelter and
                        the time they are able to move back into their homes. Possibilities for
                        temporary housing include:

                         Vacant rental units. The MN Housing Finance Agency will identify
                          vacant units within a 30-mile radius. This will be done in
                          conjunction with HUD, Rural Development and the Minnesota
                          Multi Family Housing Association. Within a few days of the
                          disaster, this information will be sent to the local jurisdiction.

                         Travel Trailers. When victims need housing for a relatively short
                          duration a travel trailer can fill the temporary housing need. This
                          appeals to victims because they can protect their property, are able
                          to work on their house, and sleep and eat in the trailer. The trailer
                          can be connected to the home's utilities. There needs to be an
                          ordinance in place that allows for this and a date should be
                          established by which people have to vacate the travel trailers.

                         Mobile Homes. The absolute last resort for FEMA, when there has
                          been a Presidential declaration, is to bring in mobile homes for
                          people to occupy for up to 18 months. When this is necessary,
                          existing mobile home pads will be used, if available. If a mobile
                          home park needs to be constructed, FEMA’s standard procedure is
                          to install the infrastructure in a temporary manner and remove it
                          once people are out of the units. If the jurisdiction is going to need
                          additional lots for housing, an option is for the jurisdiction to pay
                          the difference to have the infrastructure installed permanently.
                          When the mobile homes are removed, two lots can be combined to
                          form one permanent lot for new construction. When the lots are
                          sold, the cost of permanent infrastructure installation will be
                          recouped.



 State of Minnesota                                                             Chapter IX - 6
    Long-Term Recovery from Disaster


.                           Financing Temporary Housing. People with “loss of use” coverage
                             included in their homeowners insurance should be properly covered
                             for financing temporary housing. The Red Cross may be able to
                             help those without “loss of use” coverage and renters. If a
                             Presidential Declaration is obtained, FEMA may assist with the
                             expense.

                           Mortgage Default. Financing existing mortgage payments for victims
                           is not a big issue. As part of the public information efforts after a
                           disaster, urge homeowners to contact their mortgage companies to
                           negotiate a workout agreement. Most mortgage companies are willing
                           to work with borrowers through a recovery period. If a Presidential
                           Declaration is made (including individual assistance) and homeowners
                           in the designated area receive a notice of foreclosure as a result of the
                           disaster, they may be eligible for assistance from FEMA to cover
                           mortgage payments. (Tool Kit, P. 28 - Mortgage Assistance Resources
                           for Homeowners Facing Mortgage Default)

                           Historic Preservation. The MN Recovers Task Force is interested in
                           preserving the historical significance and quality of buildings as owners
                           begin to make repairs. The effects of recovery projects on historic
                           properties must be evaluated. (Chapter XII. Historic Preservation)

                           Rehab vs. Buyout. During the recovery from the '97 floods a situation
                           arose due to the fact that a lot of homes in rural areas pre-flood value
                           was very low. This resulted in the houses being categorized as
                           substantially damaged (according to NFIP definition). The amount that
                           the households would have received in a buyout was no where near
                           what they would have needed to build or purchase a different house. A
                           decision tree was developed to assist local and state staff determine
                           what solution was best in each of a variety of situations. (Tool Kit, P.
                           13-16 Rehab/Buy-out Decision Tree)


Tool Kit:                  Free Market Solves Housing Needs (Article)
                           Matrix – Breckenridge Rebuilding Programs
                           Rehab/Buy-out Decision Tree
                           City of East Grand Forks Homeownership Incentive Loan Programs
                           Mortgage Assistance Resources for Homeowners Facing Mortgage
                           Default
                           Valuation Techniques
                           Proposal and Contract for Building and Home Repair
                           Hassle-Free Home Building and Remodeling
                           Selecting a Contractor
                           Outline of New Housing and Home Improvement Warranties
                           Short Form Residential Remodeling/Construction Contract



    State of Minnesota                                                              Chapter IX - 7
Long-Term Recovery from Disaster


                       UREA Formaldehyde Disclosure of Contractor
                       Pre-Lien Notice to Owner by Subcontractor
                       Locating a Builder/Remodeler, Negotiating a Contract and Generally
                       keeping Yourself out of Trouble
                       Definitions – for Decision Tree




State of Minnesota                                                          Chapter IX - 8

				
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