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HomeMy WebLinkAbout07/19/1994, C-7 - UNREINFORCED MASONRY BUILDING LOAN PROGRAM �III�I�i�IIIIIfUIa���II MEETING DATE�p�u►I c� o san pais osispo �Q AlP COUNCIL AGENDA REPORT I NUMB FROM: Arnold Jonas, Community Development Director �o PREPARED BY: Tom Baasch, Chief Building Official f Sue Baasch, Administrative Analyst:5{4z SUBJECT: Unreinforced Masonry Building Loan Program CAO RECOMMENDATION: By motion, authorize the CAO to administer an interest-free deferred loan program for the strengthening of unreinforced masonry (URM) buildings. DISCUSSION: City Council approved the allocation of$120,000 of 1994-95 Community Development Block Grant (CDBG) funds for a loan program to encourage the strengthening of unreinforced masonry buildings on April 12, 1994. In drafting guidelines for administering a loan program, Federal CDBG regulations and a similar program in another jurisdiction were reviewed, and the draft was discussed with the Chamber of Commerce Seismic Task Force. Under the proposed guidelines, the owner of a URM building can apply for an interest-free deferred loan in an amount equal to 20% of the strengthening costs or $10,000, whichever is less. An owner of several URM buildings may apply for a loan for each building. With a limited loan pool, staff feels that a $10,000 maximum loan is an appropriate amount that balances the necessity for the assistance to be individually significant with the need to reach as many property owners as possible. The promissory note will require that the loan be paid in full on sale of the property or in 20 years, whichever occurs first. A procedural outline, answers to typical questions about the program, and an application form are included on the attached brochure (Exhibit B). It is anticipated that an escrow company will process the loan and provide a title report to ensure that the applicant is the actual owner of the property. Security documents (Exhibit A) will be executed prior to loan closing, with necessary recording by the County Recorder. An estimate from a local escrow company indicates that the fees for processing each loan will be approximately $500, which will be paid from the loan pool outside of the loan amount. This loan program is only one element of a total assistance package that will be available to URM building owners. The City has established a permit fee credit program and is committed to establishing an assessment district for financing improvements if there is sufficient interest on behalf of property owners for doing so. A conference scheduled for August 5, 1994 in the City/County Library Community Room will hopefully explore additional solutions to the "seismic financial dilemma" that could be implemented in San Luis Obispo (see attached announcement, Exhibit Q. �l�H�►�III(Vllllifilill��uli����U city Of San suis OBISPO am COUNCIL AGENDA REPORT Update on Mitigation Program There are 122 buildings on the list of URM buildings that are subject to the City's mitigation program. Approximately 35 structural analyses have been received. During the second week of July, letters reminding URM building owners of the September 4, 1994 due date will be sent to all owners who have not submitted an analysis. Receipt of all analyses is critical to the development of additional financial incentive programs. CONCURRENCES: The Finance Director and the City Attorney concur with the recommendation. This program has also been coordinated with the Assistant CAO as one component of the City's business retention efforts. The Chamber of Commerce supports this interest-free deferred loan program "for voluntary seismic retrofitting of URM buildings as one element of a larger assistance program". The BIA will consider this program during their meeting on July 13, and will forward their position to the Council prior to July 19. FISCAL IMPACT: The no-interest deferred loan program for URM strengthening is expected to expend the entire $120,000 CDBG allocation during the 1994-95 fiscal period. Program start-up is predicated on execution of funding agreements with HUD and availability of funds, which is expected by September of 1994. A report on loan repayment (known as "CDBG Program Income") will be made annually when Council considers CDBG allocations. Staff recommends that such repayments be reinvested in the loan program as long as seismic retrofits remain to be accomplished. Income during the early years of the program is expected to be small. Attachments: Exhibit A-CDBG Loan Agreement, Promissory Note Secured by Deed of Trust Exhibit B-Program Brochure Exhibit C-California Main Street Conference, Financing Seismic Retrofit EXHIBIT A aw of San Luis OBISPO UNREINFORCED MASONRY BUILDING LOAN PROGRAM Using Community Development Block Grant ("CDBG") Funds SECURITY DOCUMENTS I-3 RECORDING REQUESTED BY �IIIIIIIIII�����I I�Ill acy Of ftrA Shc1 LUIS OB1Sp0 WHEN RECORDED MAI.TO: BUILDING&SAFETY DIVISION CITY OF SAN LUIS OBISPO P.O.BOX 8100 SAN LUIS OBISPO,CA 93403-8100 This Space for Recorder's Use ONLY No Fee per Govern went Code Section 6103 UNREINFORCED MASONRY BUILDING LOAN AGREEMENT Community Development Block Grant Funds This Loan Agreement is made and entered into by and between the City of San Luis Obispo ("City" or "Lender"), and ("Borrower") with reference to the following: RECITALS A. WHEREAS,Borrower is owner of certain real property constructed in part of unreinforced masonry commonly known as (property address) which is legally described in Exhibit "A" attached hereto; and B. WHEREAS, Borrower desires to obtain partial financing for structural strengthening of said real property from City upon the terms and conditions contained herein; and C. WHEREAS, City has received certain Federal funds which may be used to provide financial incentives for the rehabilitation of buildings, owned by private parties, including for- profit businesses, where the rehabilitation is to strengthen the building to meet the approved seismic standards; and D. WHEREAS, Borrower has undertaken such work and has received final inspection approval from City of said strengthening improvements. NOW THEREFORE, in consideration of their mutual promises, the Borrower and the City hereby agrees as follows: Article 1. Deferred Payment Loan Subject to the conditions hereinafter set forth, City agrees to loan to Borrower the principal sum of$ (the "Loan") for the purpose of partially reimbursing the Borrower for the cost of said strengthening improvements of the building legally described in Exhibit "A". Upon City's transfer of the Loan to Borrower, as provided in Article 5 herein, City shall have no further obligation to Borrower, but shall have all of the rights and privileges 42-7-Al URM Loan Agreement Page 2 accorded to City pursuant to this Agreement. Said Loan amount, which cannot exceed $10,000 per building, is not more than 20% of the strengthening improvement costs, based on the construction cost estimate submitted with the initial structural analysis dated , as adjusted for CPI changes. Article 2. Promissory Note In evidence of Borrowers' indebtedness to City, Borrower shall execute and deliver to City a Promissory Note in the form approved by the City. Should Borrower be married on the date of this Agreement, and such spouse not be a party to this Agreement, Borrower shall cause his or her spouse to also execute the Promissory Note and bind any community interest in the Property such spouse may now or hereinafter hold. Article 3: Security Interest in Property Borrowers shall further execute and deliver to City a Deed of Trust on the Property in the form approved by the City. Such Deed of Trust shall secure City's interest in the Property for the full Loan, and shall be recorded by City. The Deed of Trust shall grant City the then best available lien on the Property and shall require the Borrower to maintain the Property in a good state of repair, to insure the Property; and to pay all taxes levied on the Property. Upon repayment or other termination of the Loan, Borrower shall assume all costs and responsibility of obtaining and recording a Deed of Reconveyance. Article 4. Interest Except as provided in Article 7 of this Agreement (relating to default in payment) interest shall not accrue on the Loan or any part thereof. Article 5. Transfer of Funds City and Borrower acknowledge and agree that loan proceeds obtained pursuant to this Agreement shall be used solely to reimburse Borrower for expenses related to strengthening of his or her unreinforced masonry building. Borrower hereby authorizes City to deposit the loan proceeds obtained pursuant to this Agreement directly to an escrow company selected by City. Prior to the deposit of loan proceeds Borrower shall satisfy all escrow conditions specified in the escrow instructions. Article 6. Repayment of Loan Principal Repayment of the Deferred Payment Loan principal shall be deferred until the Property is sold or twenty(20) years from the date of this agreement, whichever occurs first. Borrower shall immediately repay the loan, in full, upon the earliest occurrence of the Mowing: a) voluntary or involuntary sale of Borrower's legal or equitable interest in the Property; or b) involuntary transfer, disposition, conveyance, or other similar transfer of Borrower's legal or equitable interest in the Property; or C) the expiration of twenty(20)years from the date of this agreement. Borrower may repay this Loan at any time prior to sale or transfer of legal or equitable interest in the property, in full or in part, without penalty or premium whatsoever. o r-S URM Loan Agreement Page 3 Article 7. Default a) Without prejudice to any other remedy of City, should Borrower default in the repayment of this Loan, or otherwise default in any obligation arising out of or under this Loan Agreement, Borrower shall pay to City interest on the unpaid Loan from and after the date of default, which interest shall accrue, until paid, at the then current rate imposed under California Civil Code Section 3289(b), or any similar or successor provision thereof. b) Without prejudice to any other remedy of City, should Borrower default in any obligation arising out of or under this Loan Agreement, other than in the repayment of the Loan, City may, upon three (3) day written notice to Borrower, terminate this Loan Agreement. In the event City so terminates this Agreement, all unpaid sums due City shall immediately become due and payable in full. Article 8. Incorporation or Documents The proceeds of this Loan have been funded by City with Community Development Block Grant ("CDBG") moneys obtained by the City. Borrower acknowledges and agrees that this Loan is subject to the specific terms, conditions, restrictions, and obligations imposed by the Community Development Block Grant Program. This Agreement is further subject to, and hereby incorporates the terms and conditions of that certain contract respecting CDBG funds entered into by and between the City and the County of San Luis Obispo. In the event of any inconsistency in terms, the provisions of the CDBG Subservient Agreement shall control. Article 9. Rights of Inspection City shall have the right at any time and from time to time to enter the property for the purposes of inspection. Owner agrees to provide access to any such records pertaining to the project as the City may deem necessary to establish proper accounting of City loan amount. Article 10. Indemnification The Borrower agrees to indemnify, defend, and save harmless the City, its officers, agents and employees from and against any and all claims and losses , liability, expense from defense costs, and legal fees, accruing or resulting from any and all contractors, subcontractors, materialmen, laborers, and any other person, firm or corporation furnishing or supplying work, services, materials or supplies in connection with the performance of this Agreement, and from any and all claims or losses accruing or resulting to any person, firm or corporation who may be injured or damaged by the Borrower in the performance of this Agreement. Article 11. Agency It is understood and agreed that the Borrower is in no way the agent, employee or contractor for the City and the City will merely reimburse the Borrower on the basis set forth in this Agreement. Article 12. Miscellaneous a) This Agreement shall be governed in accordance with California law, and shall be binding upon the heirs, successors, and permitted assigns of the parties. b) Borrowers shall not assign, delegate or otherwise transfer any obligation arising hereunder without the express prior written consent of City. C-7-6 URM Loan Agreement Page 4 c) It is agreed that the obligation arising from this Agreement and the related Promissory Note may be subordinated to future financing obtained for this property. d) This Agreement may not be amended except in writing, signed by each of the parties hereto, and no oral understanding or agreement not incorporated herein, shall be binding on any of the parties hereto. e) If any action is brought to enforce or prevent the breach of any provision of this Agreement, the prevailing party shall be entitled to recover all costs incurred thereby, including reasonable attorney's fees. f) The Borrower, and the contractors, subcontractors, agents and employees of the Borrower, in the performance of this Agreement shall act in an independent capacity and not as officers or employees or agents of the City. g) The Borrower will not cause the displacement of any business, family or individual as defined under the Uniform Relocation Act as a result of the project. h) All building strengthening must comply with the City of San Luis Obispo's Building and Fire Codes, Seismic Ordinance, General Plan and Zoning Ordinances. IN WITNESS WHEREOF, this agreement has been duly executed by the undersigned as of the date set forth below. BORROWER(S): DATE DATE CITY OF SAN LUIS OBISPO BY JOHN DUNN, City Administrative Officer DATE e-7-7 URM Loan Agreement Page-5 EXPIIBIT "A" _ (Legal Description of Real,Property): d-7-4F cmy of san Us OBISpO UNREINFORCED MASONRY BUILDING LOAN PROGRAM Using Community Development Block Grant ("CDBG") Funds PROMISSORY NOTE SECURED BY DEED OF TRUST Borrower's Name Property Address FOR VALUE RECEIVED, the undersigned,jointly and severally, promise(s) to pay to the City San Luis Obispo (hereinafter referred to as "City") the sum of Interest shall not accrue on this Promissory Note. The principal sum shall become immediately due and payable, at the option of City, upon the earliest occurrence of the following: a) voluntary or involuntary sale of Borrower's legal or equitable interest in the Property; or b) involuntary transfer, disposition, conveyance or other similar transfer of Borrower's legal or equitable interest in the Property; or c) death of the last to die of the promisors; or d) the expiration of twenty(20)years from the date of this agreement; or e) the undersigned fails to comply with the provisions of the CDBG Unreinforced Masonry Building Loan Agreement; or In the event of default in the repayment of this Note, the undersigned shall pay to the City interest on the unpaid principal sum, from and after the date of default, which interest shall accrue until paid at the then current rate imposed under California Civil Code Section 3289(b), or any similar or successor provision thereof. The undersigned reserves the right at any time before default to pay all or part of the amount due on this note without penalty. Payment to be made hereunder shall be in lawful money of the United States to the City of San Luis Obispo. If this note is not paid in full when it becomes due, the undersigned agree(s) to pay all costs and expenses of collection, including reasonable attorney fees and court costs. Payment in due course of probate shall not incur these attorney fees and court costs. C-T- 9 This Note may be subordinated to other conventional financing obtained for this property. This Note is secured by a Deed of Trust, of even date, on the property identified as Assessor's Parcel Number _ to (name of Title Company), a California Corporation, as Trustee, which is duly filed for record in the Office of the County Recorder of the County of San Luis Obispo, State of California, described as follows: (Description of Real Property) Demand, protest and notice of demand and protest are hereby waived by the undersigned, and the undersigned hereby waive(s), to the extent authorized by law, any and all homestead and other exemption rights which otherwise would apply to the debt evidenced by this Note. M WITNESS WHEREOF, this Note has been duly executed by the undersigned as of the date set forth below. Signature Date Signature Date C-7-/O EXHIBIT B 1. 04 Z ci '� Y as 4.- W let V e `o a s g s 2 — u u € a n. y v ° h Eo 2 L E— a 3 0 0 e V R C V " U C C •7 V L ZaEi ° .5 • °' 1 0 C cn y N d 4r = N Z y cc .] C o L. 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'fir y �.• y• ...:;i.. _ e-' C W G- O• �• Vl• 7 O' C l9 d 3 7 0 CIC S n y CD co ~O d �• 3 i9 C CD d CA CD 4n 0 CO CD Z O Cr to NCD C O S n l7 y• CD A `•G MY Of LOAN APPLICATION san LEDs OBISPO �j Unreinforced Masonry Building Strengthening Program Property Address Loan Amount Requested Applicant's Name Mailing Address I hereby apply for a zero interest,deferred payment loan in the amount indicated above for the partial cost of strengthening the above unreinforced masonry building. I understand that loan approval is valid for six months from the date of application for the building permit and that failure to commence work within six months of permit issuance shall invalidate loan approval. Approved Date Applicant's Signature C—T 1*2- EXHIBIT C CALIFORNIA MAIN STREET CONFERENCE FINANCING SEISMIC RETROFIT AUGUST 5, 1994 CITY/COUNTY LIBRARY COMMUNITY ROOM SAN LUIS OBISPO, CA This conference was developed in response to the request from California Main Street communities for a solution to the seismic financial dilemma facing downtown's with URM buildings. 8:00 - 8:30 REGISTRATION Continental Breakfast 8:30-9:00 WELCOME Pam Copeland, President San Luis Obispo Downtown BIA Howard Carroll, Chair San Luis Obispo Seismic Task Force 9:00 - 10:00 ECONOMICS OF SEISMIC RETROFIT: FINANCIAL INCENTIVES Dari Barzel, Association of Bay Area Governments, Financial Services Ms. Barzel researched seismic incentive programs around the State and developed the Seismic Incentive handbook which lists incentives including density bonuses, transfer of development rights, and relief from non-conforming provisions. 10:00 - 10:15 Break 10:15 -12:30 FINANCIAL MODEL: HAYWARD PROGRAM Bob Clayton, Urban Financial Services Susan Moeller, Special Assistant to City Manager Cathedral City Herb Weiser, Senior Partner of King, Weiser, Edelman and Bazar This project team has been instrumental in assisting communities in developing financial programs to fund seismic retrofit requirements. In Hayward, a program was developed that made financing affordable and available to property owners and a negative business climate was turned around. 12:30 -1:30 Lunch Served C'-7- 8 1:30 - 3:00 RETROFIT STRATEGIES: A SURVEY OF BAY AREA COMMUNITIES James Burnes, Collaborative Design Architects Robert Desautels, ATT Engineering Services Joining forces to assist Bay area communities with the challenges of retrofitting hundreds of buildings, Mr. Burnes and Mr. Desautels have developed creative solutions to bothfinancial and structural challenges. Both presenters offer several years experience in their respective fields 3:15 - 4:00 FINANCING STRATEGIES FOR HISTORIC BUILDINGS William F. Delvac, Principal, Historic Resources Group Mr. Delvac's firrn has been instrumental in helping communities evaluate damaged historic buildings and formulate strategies to save them following the January 17, 1994 Los Angeles-area earthquake. He will share the lessons learned from that disaster as well as the preservation community's current seismic retrofit financing techniques. These include using FEMA hazard mitigation's funds, historic preservation tax credits, the Marks Historic Rehabilitation Bond Act, and other local tools. MEL,914G AGENDA DATE ITEM # 7 San LLil,:)- Obispo C -m-ibcr 1:4 July 19, 1994 Honorable Mayor and City Council Members City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93403-8100 Dear Mayor and Council Members-. The San Luis Obispo Chamber of Commerce respectfully requests that you reschedule Consent Item C-7 (Unreinforced Masonry Loan Program) to your July 26 consent agenda. While the Chamber is largely in support of the proposed program, a significant change has been made which neither the Seismic Task Force nor the Chamber Board has reviewed. The Chamber would like to present this change to its Board at the July 21 board meeting. Thank you for your consideration. Sincerely, Sheree Davis Director of Governmental Affairs San Luis Obispo Chamber of Commerce cc: John Dunn Ken Hampian Tom Baasch O'COUNCIL 2CDD DIR ef CAO 0 FIN DIA COUNCIL "R CAO IZ(ACAO 0 FIRE CHIEF G T g': I dATTORNEY 0 PW DIR 12rCLERKWORIG 0 POLICE]CHF 0 MGMT TEAM 0 REC DIR 0 C IL IR IV F. 0 C REAUILE 0 UTIL DIR 0 PERS DIR 1994 1/7-. BAA S ACCREDITED C...RF.'Or CO..'m1 LIME MEETING AGENDA DATE 22W ITEM #= MEMORANDUM Tom Baasch, Building Inspector FROM: Lynn Block, Administrator DATE: July 13, 1994 RE: Unreinforced Masonry Building Loan Program Tom, I wanted to clarify the BIA Board of Directors action at the July 12, 1994 Board meeting. The Board was supportive of the CDBG fund allocation to a loan program to encourage strengthening of URM properties. However, the BIA still feels that a long range comprehensive financing mechanism is needed to obtain the goal of retrofitting the 122 URM buildings. The Board agrees with the Chamber of Commerce that the loan program is only one component of a larger assistance program. Finally, the Board does not support any program which is tied to a mandatory retrofit ordinance and/or timeframe. I hope to see you and other City staff members at the August 5, 1994 seismic financing workshop hosted by the BIA. Please contact me if you have any questions at 541-0286. _ Iff COUNCIL W CDD DIR �AO ❑ FIN DIR CAO ❑ FIRE CHIEF ATTORNEY ❑ PW DIR 12(CLERWORIG ❑ POLICE CHF ❑ ^GWrT� ❑ REC DIR ;-� E C E p V E Q ;MWE ❑ UTIL DIR a1i 4s 1 I. , W, ❑ PERS DIR JUL 1 9 1994 CITY CLERK LUIS 013100,C-1 P.O.Bar 1902•Srm Grir ob*•CA•93406.80f/541-0186