HARTFORD HOUSING AUTHORITY
CFR § 906.20 5 (h) Homeownership Plan
The Hartford Housing Authority is in the process of constructing one hundred and thirty (130) units [a combination of 110 duplex units and 20 single family homes] in the "D" Section of Charter Oak Terrace. The intent is to sell all 130 units over the next five years under this 5(h) Homeownership Plan.
The twenty (20) single family homes will be sold immediately upon completion of construction.
The 110 duplex units (under the rent to own provisions) will be leased with the option to buy within a five year window after first occupancy and be administered under the Campus of Learners Program.
The single family homes will be sold to families ready and able to purchase immediately.
The Duplexes will be rented under a lease with the option to buy to families who are not ready or able to purchase and who agree to participate in the Campus of Learners Program.
All units will be in new condition upon completion of construction. These units will be ideal candidates for sale because the repair and maintenance cost to future owners will be very low over the next fifteen (15) to twenty (20) years.
The Rent to Own Lease (see Tab) states that the family members will strive to get and retain a job, will achieve a family income of $15,000, and will buy their own unit within the five year window as provided below.
No repairs will be necessary as the units sold will be newly constructed with Public Housing development funds.
(c ) Purchaser eligibility and selection The standards and procedures to be used for homeownership applications and the eligibility and selection of purchasers, consistent with the requirements of § 906.8. If the homeownership plan allows application for purchase of vacant units by families who are not presently public housing or Section 8 residents and not already on the PHA's waiting lists for those programs, the plan must include an affirmative fair housing marketing strategy for such families, including specific steps to inform them of their eligibility to apply, and to solicit applications from those in the housing market who are least likely to apply for the program without special outreach.
RE: Twenty (20) Single Family Homes
There will be no existing tenants in the first 20 units to be sold – the 20 single family homes.
RE: 110 Duplexes
The 110 duplex units sold under the five year lease – with - an - option – to - buy program are to be sold to the families who live in those units as they qualify for purchase under the conditions set forth below.
PRIORITY CATEGORIES
The Housing Authority will select prospective buyers in the following order:
2. Hartford Housing Authority Low Rent Public Housing Residents.
- Families living in Section 8 units managed by the Hartford Housing Authority.
- Residents living in the Hartford Housing Authority's State Moderate Rental Developments.
An initial list will be set up from the pool of applications received.
Initial List
To be eligible for placement on the initial list, an applicant must meet three (3) basic criteria. The criteria are as follows: 1) attend at least one orientation session. Applications will be handed out by both the Tenant Association in advance of the orientation sessions and at the orientation sessions. If an applicant does not attend one of these sessions they will not be able to submit an application; 2) an applicant must earn a minimum of $15,000 and qualify for a $20,000 mortgage; and 3) an applicant must fall into one of the five categories listed above.
Final List / Lottery
All applicants on the initial list will be screened regarding rent history and income to determine if they are eligible to participate in a series of homeownership workshops. If not, they are referred to the Rent to Own Option to Purchase through the Campus of Learners Concept.
The applicant must complete the workshop and be pre-qualified for a first mortgage to be included on the final list.
Families will be invited to purchase in the order of the five (5) categories stated above. If there are more families in a given category than available homes, a lottery will be instituted. For example if there are 25 families currently living in Charter Oak Terrace or recent relocatees who are eligible to buy the 20 single family homes, there will be a lottery to identify the 20 families who will be invited to continue to closing.
If there are not sufficient families in the first category to buy all the available homes, the Housing Authority will move to the names in similar fashion from Category #2 listed above (Hartford Housing Authority Low Rent Public Housing Residents), and continue in category sequence until all the homes are purchased.
Thirty five Percent rule
All applicants desiring to purchase a unit under the 5 (h) Program must be able to afford a minimum of a $20,000 first mortgage loan from a bank or other financial institution. No prospective buyer will be allowed to spend more than 35% of their adjusted gross income for mortgage principal, interest, insurance taxes and utilities.
Selection of Families for the 110 Duplexes
Families for the 110 Duplexes will be chosen based on their tenant history and indication of participation in the Campus of Learners. All current and recent relocatees of Charter Oak Terrace will be given first priority for leasing the 110 units, Low Income Public Housing residents will be given second priority, and so on as described above.
Within a five year window from the commencement of their first lease, the families who lease with the option to buy may purchase the unit in which they live based upon meeting the threshold criteria of a $15,000 minimum annual family income and be able to obtain a $20,000 first mortgage.
In each instance (both single family and duplex homes), the units will be sold at the fair market value with the Authority taking a silent second mortgage on a sliding scale. The prospective home buyer, as previously stated, must be able to afford, at a bare minimum, a $20,000 mortgage. If the prospective home buyer can afford more than a $20,000 mortgage, then they must take out the largest mortgage affordable to them based on their family income, but limited by HUD’s 35% maximum as mentioned earlier. The Authority will take a silent second mortgage for the difference between the prospective buyer's first (1st) mortgage and the sales price less an agreed upon down payment. The second mortgage will be paid to the Housing Authority upon resale of the property.
The Authority will also have the first right of refusal with regard to any subsequent sale of the property. The unit purchased must be occupied by the family who purchased it. The property may not be rented to another family. The Authority will file on the land records of the City of Hartford, a Mortgage Deed and Promissory Note for the amount of its second mortgage. (See later Tabs)
The units will be in "as new" condition when turned over to the buyers, and as such will not need extensive repairs for several years.
The attached larger notebook provides ample testimony to the unprecedented involvement of residents in the development of this 5 (h) Homeownership Plan. Countless hours of planning sessions with the Homeownership Committee, Orientation Sessions, the monitoring of the Training Sessions, personal calls and home visits, among other efforts are well imbedded in the strategy and clearly articulated in the wording of this Plan.
All potential applicants listed in the five categories outlined in Section C are to be notified of the proposed 5 (h) Homeownership Program and how they may qualify for the program. After consultation with the Hartford Tenants Rights Federation and the Charter Oak Tenants' Association, all residents in Categories 1-4 will receive a brochure advising them of the 5 (h) Program. This brochure will either be hand delivered or mailed via Certified Mail, Return Receipt Requested. Potential applicants in Category 5 (any resident in the City of Hartford who is eligible for public housing) will be notified by an advertisement placed in a newspaper which serves the City of Hartford. The Authority will hire outside consultants, namely the Urban League, H.A.R.T. and the Christian Activities Council to provide services with regard to family finances, money management, home repairs and maintenance. The residents who qualify will also be instructed in the area of housekeeping. The Authority will take into account any comments from all potential applicants with regard to 5 (h) Program implementation.
As previously stated, counseling for financial and maintenance responsibilities of homeownership will be provided by outside consultants (see paragraph above). In addition, detailed presentations will be given to prospective homeowners with regard to specific purchase and financing options. Appropriate training and technical services will also be provided to all residents interested in purchasing units under the 5 (h) Program. The following workshops will be provided:
- A workshop providing instruction in the area of housekeeping and general property maintenance.
- Other workshops as may be needed or requested.
This section is not applicable because no other entity will be used.
The first 20 units upon sale will be vacant. The remainder of the units will be rented with a required option to buy under a 5 year time limit.
An estimate of $20,000 per unit will be received upon the initial sale of each unit. The $20,000 per unit for twenty (20) units will net a sum of $400,000. In addition, over time, the Authority will receive other funds upon the resale of units. These funds are difficult to estimate. The method of sale the Authority has detailed in previous sections of the plan leads us to believe that we will receive an additional amount of funds in excess of $600,000 over an approximate period of twenty-five (25) years.
These sale proceeds will be used for various housing related activities. A fund will be set up to repurchase units at the time of resale if the right of first refusal is exercised. As specified in the previous sections of the plan, the Authority has the first right of refusal on any sale. Funds will also be used to administer the Program (Administrative Staff time). These funds will also be used to facilitate the operations of the low income public housing program in the area of resident services, protective services, maintenance and modernization, and self sufficiency.
(j) A replacement housing plan § 906.16
Based on current HUD guidelines, there is at this time no one-for-one replacement. HUD has already provided Section 8 Certificates to assist in the relocation of Charter Oak residents. (k) An administrative plan, including estimated staffing requirements.
(k) An administrative plan, including estimated staffing requirements
(a.) Application Taking
Any resident listed in the five (5) categories in Section C will be invited to submit an application for homeownership. The application will contain all necessary information for the HHA to determine whether the applicant is eligible for homeownership. Incomplete applications will not be processed.
(b) Notification
All residents in Categories 1-4 will receive a brochure which will be hand delivered or sent by registered mail explaining the Homeownership Program and inviting them to submit a statement of interest in the Program. Residents in Category #5 will be notified by a newspaper advertisement. The applicants will then be invited to attend a mandatory orientation session. Applications will be handed out at these sessions. When the applications are received they will be reviewed and a determination of the applicant's preliminary eligibility status will be made and the applicant notified in writing.
Selection for 5 (h) Homeownership Program
Each applicant shall be assigned an appropriate place on the initial list. A final list will also be developed. To be placed on the final list you must attend all workshops and receive a mortgage pre - qualification. Selection of applicants will be then based on a lottery.
Orientation of Qualified Potential Homeowners
A full opportunity shall be provided to these potential homeowners to ask and receive answers to their questions. In addition, the following orientation / training previously mentioned in the plan will be provided:
(1) Financial training in the area of budgeting and money management.
(3) Other workshops as may be needed or requested.
General Property Maintenance
All homeowners will be required to maintain their property in a condition that is acceptable to the Authority. This will insure that property values remain stable which is a concern of the Authority, as we will be holders of large second mortgages on all properties.
Estimated Staffing Requirements Staff Time
Special Assistant to Executive Director/
Planning & Development 10%
Program Assistant 10%
The Hartford Housing Authority will maintain the 5 (h) accounting records along with the accounting records of the entire Authority. The 5 (h) accounting records, however, will be separate and distinct.
The Authority's accounting system meets the following criteria:
2. Provide cost and property control to assure optimal use of funds;
3. Control funds and other resources to assure that the expenditure of funds are in conformance with any Federal and State regulations.
4. Meet the prescribed requirements for periodic financial reporting of operations;
5. Provide financial data for planning, control, measurements, and evaluation of direct costs;
6. Report on annual sales of the project.
Each year the Authority is required to have its records audited by a qualified Certified Public Accounting firm pursuant to the Single Audit Act of 1984.
Preliminary costs for implementing the 5 (h) Program will be paid for by Low Income Public Housing reserve funds and reimbursed from the sale under the 5 (h) Program. The Proposed Budget below includes costs for closings, surveys, appraisals, property inspections and consulting fees, etc:
Administrative Salaries $30,000
Administrative Sundry $6,500
Office Supplies $1,000
Copying $1,500
Advertising $4,000
Legal $30,000
Contract Costs, Apprai
(inc counseling) $90,000
Total $156,500
The following implementation schedule and time table will be used to carry out the 5 (h) Homeownership Program. New construction of units will occur concurrently with the following:
1. Timeframe – 60 Days A brochure will be mailed certified mail, return receipt requested, or hand delivered at the Authority's option to all Category 1-4 residents, Category 5 residents will be notified through a newspaper advertisement, informing them of the homeownership program, explaining it and asking them if they are interested in participating in the Program. All residents will be asked to return a portion of the brochure stating their interest, or not, in the Program, to the Hartford Housing Authority within fourteen (14) days.
2. Timeframe – 60 Days A second notice will be sent Certified Mail, Return Receipt Requested, or hand delivered at the Authority's option, to all interested residents inviting them to attend an informational meeting (orientation session) to discuss the 5 (h) Homeownership Program, all pre-screening requirements, and the mandatory homeownership courses which must be attended. The notice will state the time and place of the informational meetings. At these meetings, applications for the Homeownership Program will be handed out. Interested residents will receive five (5) days to submit their applications. All applications received will be put on an initial list of applicants. At the informational meetings (orientation session) assistance will be provided to all residents in completion of their applications. If a resident wishes to do so they may complete their application at that time and return it to the Housing Authority later. In addition, the Charter Oak Tenants' Association will provide home assistance to any resident who requires additional help in completing their application.
3. Timeframe 60 Days. A pre-screening process by the professional counseling agencies will be conducted to determine if applicants on the initial list are eligible to attend the homeownership workshops based on previous criteria outlined in the Plan. Letters of eligibility, or non-eligibility, will be sent to all applicants on the initial list. The letters will be sent Certified Mail, Return Receipt Requested, Regular Mail or hand delivered at the option of the Housing Authority.
4. Timeframe 60 Days. Homeownership workshops for all eligible applicants will be conducted.
5. Timeframe 60 Days. Applicants, upon completing the workshops, will be aided in applying for a mortgage commitment which may be provided by a variety of lenders.
6. Timeframe 60 Days. All applicants who have completed the homeownership workshops and received a mortgage pre - qualification will be placed on a final list. A lottery will then be held based on the criteria previously listed in the Plan and a closing will be set up and take place.
The entire process with take approximately one year.
SUPPORTING DOCUMENTATION TO
5 (h) HOMEOWNERSHIP PLAN
CFR § 906.21
a) An estimate of the fair market value of the property,, including the range of fair market values of individual dwellings, supported by such information as HUD finds sufficient to support the estimate. (The purpose of this data is merely to assist HUD in determining whether, taking into consideration the estimated fair market value of the property, the plan adequately addresses any risks of fraud and abuse pursuant to §906.13 and of windfall profit upon resale, pursuant to § 906.14. A formal appraisal need not be submitted with the proposed homeownership plan.)
The Authority will construct twenty (20) single family homes and 110 Duplexes in Section D of Charter Oak Terrace as outlined in the homeownership plan. The sales prices will range between $80,000 and $93,000.
(b) An assessment of the physical condition of the property, based on standards specified in § 906.6
As stated in the Homeownership plan, the units will be newly constructed with public housing funding. All units for sale will be in excellent condition.
(c) A statement demonstrating the practical workability of the plan, based on analysis of data on such elements as purchase prices, costs of repair or rehabilitation, homeownership costs, family incomes, availability of financing, and the extent to which there are eligible residents who are expected to be interested in purchase. (See § 906.4(a)).
As previously stated, the purchase price should range between $80,000-$93,000. A minimum of a $20,000 first mortgage will be required to purchase any property. The Authority will take a silent second mortgage for the difference between the sales price and the $20,000 mortgage or any mortgage of a greater amount if affordable less any down payment. A $20,000 mortgage at 8% for a term of thirty (30) years will cost an eligible participant $172.00 per month including principal, interest, and insurance (insurance estimated at $25.00/month). In addition, taxes will be approximately $100.00 per month and utilities another $145.00 per month, the total being $417.00. A person would need an adjusted gross income of approximately $15,000 to afford this at a rate of 35% of their gross income. The costs of repairs will be basically zero (0) as the units will be in new condition. All homeownership costs are included in the $437.00. Financing will be, in all likelihood, provided by local lending institutions, however, the State of Connecticut Department of Economic and Community Development and the Connecticut Housing Finance Authority (CHFA) will be contacted with regard to any funding availability. The Authority believes that there will be more than a sufficient number of public housing residents from Charter Oak Terrace interested in the Program.
(d) Information to substantiate the commitment and capability of the PHA and any other entity with substantial responsibilities for implementing the plan.
The Hartford Housing Authority has an operating budget of $15 M per year and puts in place over $10 M in new construction each year. It has undertaken several major modernization programs and is a national model in addressing the self-sufficiency needs of its residents. The 5 (h) Homeownership plan described herein is a continuation of its on – going efforts to reinvent all of public housing within the City of Hartford by the year 2000.
(e) A description of resident consultation activities carried out before submission of the plan with a summary of the views and recommendations of residents and copies of any written comments that may have been submitted to the PHA by individual residents and resident organizations, and any other individuals and organizations.
The attached (larger) notebook submitted with this 5 (h) Homeownership Plan provides extensive material regarding meetings, attendance, minutes, brochures developed and circulated, selection processes and reports. All of this was done by the Homeownership Committee made up of Housing Authority staff and residents of public housing.
This larger notebook provides evidence that the Tenants' Association and residents in general are in favor of the 5 (h) Homeownership Plan as part of a comprehensive approach to addressing the needs of Charter Oak residents.
As the construction progresses, weekly on site meetings are held with the input of Charter Oak residents.
The Authority continues to work jointly with the Tenant Association and residents in the implementation of the Homeownership Plan.
(f) The PHA's certification that it will administer the plan on a nondiscriminatory basis, in accordance with the Fair Housing Act, Title VI of the Civil Rights Act of 1964, Executive Order 11063 and implementing regulations, and will assure compliance with those requirements by any other entity that may assume substantial responsibilities for implementing the plan.
Attached (see Tab) is the required certification from the Authority.
(g) An opinion by legal counsel to the PHA, stating that counsel has reviewed the plan and finds it consistent with all applicable requirements of Federal, State and local law, including regulations as well as statutes. In addition, counsel must identify the major legal requirements that remain to be met in implementing the plan, if approved by HUD as submitted, indicating an opinion about whether those requirements can be met without special problems that may disrupt the timetable or other features contained in the plan.
The legal opinion is attached (see Tab).
A resolution evidencing approval of the 5 (h) Homeownership plan passed by the Housing Authority Board of Commissioners is enclosed (see Tab).
(i) Any other information that may reasonably be required for HUD review of the plan. Except for the PHA-HUD agreement, HUD approval is not required for documents to be prepared and used by the PHA in implementing the plan (such as contracts, applications, deeds, mortgages, promissory notes, and cooperative or condominium documents), if their essential terms and conditions are described in the plan. Consequently, those documents need not be submitted as part of the plan or the supporting documentation.
All required information is part of the 5 (h) Homeownership plan is enclosed. Please see items listed in the
5 (h) Plan Table of Contents
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