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The Annual Action Plan Substantial Amendment - City of Pontiac

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THE CITY OF PONTIAC<br />

NEIGHBORHOOD STABILIZATION<br />

PROGRAM SUBSTANTIAL AMENDMENT TO<br />

THE 2005-2009 CONSOLIDATED PLAN AND<br />

FISCAL YEAR 2010 ANNUAL PLAN<br />

Jurisdiction(s): _<strong>City</strong> <strong>of</strong> <strong>Pontiac</strong>, Michigan<br />

Jurisdiction Web Address:<br />

• www.pontiac.mi.us<br />

NSP Contact Person: Patricia Lile<br />

Address: 47450 Woodward Ave.<br />

<strong>Pontiac</strong>, MI 48342<br />

Telephone: 248-758-3780<br />

Fax: 248-758-3775<br />

Email: plile@pontiac.mi.us<br />

EXECUTIVE SUMMARY<br />

<strong>The</strong> Neighborhood Stabilization Program III (NSP3) was created as a third one-time<br />

$907,000,000 appropriation, inclusion in the Dodd-Frank Financial Reform Act and was<br />

built on the frame work <strong>of</strong> NSP 1 and NSP 2, which were created under the Economic<br />

Recovery Act (HERRA) <strong>of</strong> 2008 and the American Recovery and Reinvestment Act<br />

(ARRA) <strong>of</strong> 2009, respectively. <strong>The</strong> purpose <strong>of</strong> NSP 3 is to<br />

• Mitigate the negative impact <strong>of</strong> the nation’s decline and housing market collapse.<br />

• Stabilize and revitalize communities/areas hit the hardest by economic decline<br />

and housing market collapse.<br />

• Assist in the redevelopment <strong>of</strong> abandoned and foreclosed homes under this<br />

emergency assistance for redevelopment <strong>of</strong> abandoned and foreclosed homes.<br />

• Benefit low, moderate, and middle income persons (LMMI) or 120% AMI and<br />

below.<br />

<strong>The</strong> grants are to be considered Community Development Block Grant (CDBG)<br />

funds. Exceptions are described in the Department <strong>of</strong> Housing and Urban<br />

Development Docket No. FR5255-N-01, statutory and regulatory provisions<br />

governing the CDBG program, including those at 24 CFR 570 Subpart I for States,<br />

for CDBG entitlement communities, including those at 24 CFR Part 570 Subparts A,<br />

C, D, J, K, and O as appropriate, shall apply to use <strong>of</strong> these funds.<br />

HUD is treating a grantee’s use <strong>of</strong> its NSP 3 grant to be a substantial amendment to its<br />

current approved consolidated plan and annual action plan.


AREAS OF GREATEST NEED<br />

This Section provides the summary needs data identifying the geographic areas <strong>of</strong><br />

greatest need in <strong>Pontiac</strong>’s jurisdiction.<br />

Note: An NSP substantial amendment must include the needs <strong>of</strong> the entire jurisdiction(s)<br />

covered by the program; states must include the needs <strong>of</strong> communities receiving their<br />

own NSP allocation. To include the needs <strong>of</strong> an entitlement community, the State may<br />

either incorporate an entitlement jurisdiction’s consolidated plan and NSP needs by<br />

reference and hyperlink on the Internet, or state the needs for that jurisdiction in the<br />

State’s own plan. <strong>The</strong> lead entity for a joint program may likewise incorporate the<br />

consolidated plan and needs <strong>of</strong> other participating entitlement jurisdictions’ consolidated<br />

plans by reference and hyperlink or state the needs for each jurisdiction in the lead<br />

entity’s own plan.<br />

HUD has developed a foreclosure and abandonment risk score to assist grantees in<br />

targeting the areas <strong>of</strong> greatest need within their jurisdictions. As a Grantee, <strong>Pontiac</strong><br />

Federal Programs sought the use <strong>of</strong> available data, in developing this section <strong>of</strong> the<br />

<strong>Substantial</strong> <strong>Amendment</strong>.<br />

Background<br />

Based on the 2000 Census Data, the <strong>City</strong> <strong>of</strong> <strong>Pontiac</strong> has over 63% households which<br />

qualify under 80% or below <strong>of</strong> Area Median Income. <strong>The</strong> <strong>City</strong> has consistently had a<br />

much higher rate <strong>of</strong> unemployment than surrounding communities and a lower housing<br />

value. In June 2010, the unemployment rate in the <strong>City</strong> was 29.5% and the housing<br />

values had declined by approximately 31% from the previous HUD review. In 2000, the<br />

median household income in <strong>Pontiac</strong> was $31,207 while the State <strong>of</strong> Michigan’s per<br />

capita income was $44,467 and Oakland County’s was $61,907. At $15,842, the per<br />

capita income is 48% <strong>of</strong> the per capita income <strong>of</strong> Oakland County.<br />

Using data from the Mortgage Bankers Association National Delinquency Survey as <strong>of</strong><br />

June 2010, HUD has calculated the approximate number <strong>of</strong> foreclosure starts for all <strong>of</strong><br />

2009 and the first six months <strong>of</strong> 2010. In <strong>Pontiac</strong>, this number is estimated at 1,678<br />

giving <strong>Pontiac</strong> a foreclosure rate <strong>of</strong> 21% based on HUD provided mortgage data. In<br />

reviewing the foreclosure and abandonment risk score, <strong>of</strong> which 1 is the lowest and 20 is<br />

the highest, there are ten (10) Block Groups in the <strong>City</strong> that have a risk score <strong>of</strong> 19. <strong>The</strong>se<br />

are clustered on the north side <strong>of</strong> the <strong>City</strong> in Census Tracts 1410 and 1411 and one other<br />

Census Tract 1426 which is located on the west side <strong>of</strong> the <strong>City</strong>. <strong>The</strong> remaining 60 Block<br />

Groups in the <strong>City</strong> have a risk score <strong>of</strong> 20, the highest and these cover the entire<br />

community. In addition, over 50% <strong>of</strong> persons who have a mortgage have what is<br />

considered to be a high-cost, high-risk sub prime mortgage. This represents over 4,000<br />

potential foreclosures due to the nature <strong>of</strong> these mortgages. In addition, there are over<br />

2,400 vacant housing units currently in the <strong>City</strong> and these are also located throughout the<br />

<strong>City</strong>.<br />

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Target Area<br />

In focusing on the idea <strong>of</strong> stabilization, the target area for some <strong>of</strong> the NSP-funded<br />

activities would actually be different from those revitalization neighborhoods. Using the<br />

concept <strong>of</strong> stabilization, the <strong>City</strong> has identified the following target area for the<br />

expenditure <strong>of</strong> the NSP3 funding.<br />

Under the NSP 3 activity for the ACQUISITION-REHABILITATION-RESALE or<br />

RENTAL <strong>of</strong> tax foreclosed or foreclosed bank owned properties, the <strong>City</strong> has identified<br />

one target area for the purpose <strong>of</strong> focusing on the stabilization <strong>of</strong> blocks in the<br />

neighborhoods just east <strong>of</strong> Telegraph and south <strong>of</strong> Elizabeth Lake Road down to just west<br />

<strong>of</strong> Crystal Lake. <strong>The</strong> target area was also the focus <strong>of</strong> the NSP 1 program and is being<br />

targeted again because <strong>of</strong> the large number <strong>of</strong> foreclosures that continues to destabilize<br />

blocks in the Seminole Hills, Ottawa Hills, Indian Village and Washington Park<br />

neighborhoods. Currently there are eight (8) tax and bank foreclosed homes that will<br />

undergo renovations this spring. <strong>The</strong> rationale for selecting this area was to continue to<br />

concentrate in neighborhoods where homes are being renovated via NSP1 funds to, in<br />

combination, enhance the marketing <strong>of</strong> those properties and the thirteen (13) homes to be<br />

renovated with NSP3 funds by a developer yet to be selected. NSP 3 places emphasis on<br />

the marketability <strong>of</strong> the properties selected for rehabilitation. To stabilize neighborhoods<br />

there must be focused investments.<br />

A map to the target area is posted on the <strong>Pontiac</strong> Web Site for review. <strong>The</strong> Map was<br />

done via a “mapping tool” available on a HUD web site at<br />

www.huduser.org/portal/datasets/NSP.html. <strong>The</strong> southern and western boundaries <strong>of</strong> the<br />

target area do not follow a street pattern. That is why the Map was made available for<br />

review. <strong>The</strong> boundaries <strong>of</strong> the target area are as follows:<br />

Target Area Boundaries<br />

West Border: Johnson Avenue from Huron Street (M-59) in a line south to Telegraph.<br />

South Border: Includes Washington Park down to Telegraph just west <strong>of</strong> Crystal Lake.<br />

East Border: Telegraph north to Voorheis Rd., east along Voorheis Street back to<br />

Telegraph and north on Telegraph to Elizabeth Lake Rd.<br />

North Border: Elizabeth Lake Rd. from Telegraph to Murphy Street, south to M -59<br />

(East Huron Street) east along M-59 to Johnson Avenue.<br />

NSP 3 Score & Area Demographics<br />

This area is in comprised <strong>of</strong> Census Tracts 1420 and 1426. <strong>The</strong> NSP 3 Score requires a<br />

minimum score <strong>of</strong> 17 which is the State minimum threshold score. <strong>The</strong> target area score<br />

is 19.14 and has a total <strong>of</strong> 2677 dwelling units. This means that the target area scores<br />

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etween the 19 th and 20 th percentile <strong>of</strong> the most needy census tracts in the State <strong>of</strong><br />

Michigan. USPS 2010 data indicates a vacancy rate <strong>of</strong> 10%. Of the 1226 mortgages<br />

made between 2004 and 2007, over 37% or approximately 460 were considered to be<br />

high cost and high leverage mortgages by the Home Mortgage Disclosure Act (HMDA<br />

data) and over 20% or approximately 250 <strong>of</strong> these homeowners were severely delinquent<br />

or were in foreclosure as <strong>of</strong> June 2010. From July <strong>of</strong> 2009 to June <strong>of</strong> 2010, it is estimated<br />

that another 127 homes started the foreclosure process and another 108 had completed<br />

the foreclosure process.<br />

<strong>The</strong> data source estimates that the number <strong>of</strong> dwelling units that must be renovated to<br />

make an impact would be 24. <strong>The</strong> percentage <strong>of</strong> persons whose income is at and below<br />

120% <strong>of</strong> the Area Median Income in the target area is estimated to be 72.11. <strong>The</strong><br />

percentage <strong>of</strong> persons at and below 80% <strong>of</strong> AMI is 49.66. <strong>The</strong> unemployment rate in<br />

June 2010 was 29.5. <strong>The</strong> drop in housing values in June 2010 was 31.1 %. A map from<br />

Oakland County provides a color representation the location <strong>of</strong> foreclosures occurring<br />

from January through December <strong>of</strong> 2010. <strong>The</strong>re the reader can see concentrations <strong>of</strong><br />

foreclosed properties, showing that during 2010, a total <strong>of</strong> 619 Sheriff Deeds were<br />

recorded in the <strong>City</strong> and 101 or 16% <strong>of</strong> these were in the targeted area. <strong>The</strong> map shows<br />

that the foreclosures are still continuing in our target neighborhood.<br />

Market Analysis<br />

An effective NSP 3 program responds to and reflects the local market conditions. <strong>The</strong><br />

following were those factors taken into account while analyzing the target areas market<br />

conditions:<br />

• Analyze market supply conditions as they relate to foreclosed and abandoned<br />

home in the target neighborhoods.<br />

• Understand demand characteristics, trends and what are the appropriate responses<br />

• Comprehend the interplay <strong>of</strong> supply and demand to design a successful project.<br />

<strong>The</strong>re are several factors or conditions at work in the target area contributing to the<br />

conclusion about the current marketplace for affordable rental and homes for sale.<br />

1. <strong>The</strong> target community has persistent high unemployment. <strong>The</strong>refore, serious<br />

consideration will be given to a lease with option to buy strategy in the marketing<br />

<strong>of</strong> the thirteen (13) homes.<br />

2. Those <strong>of</strong> us who have lived in southeast Michigan have seen several spikes in<br />

unemployment due to the struggling auto industry and those dependent upon that<br />

industry. This has undoubtedly contributed to the increase in foreclosures and<br />

falling housing values. However, there is a relatively low vacancy rate, which is<br />

at 10% in comparison to other areas <strong>of</strong> <strong>Pontiac</strong>. <strong>The</strong>refore, our strategy <strong>of</strong><br />

providing a lease with an option to buy and down payment assistance to the<br />

buyers when they buy should be a viable program.<br />

3. As mentioned, the vacancy rate continues to be low. It is believed, that the low<br />

vacancy rate is due to investors buying up foreclosed Bank REO’s and turning<br />

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them into low end rental houses. <strong>The</strong> selected neighborhoods have some <strong>of</strong> the<br />

most desirable properties in <strong>Pontiac</strong>, selling at “bargain-basement prices”. This<br />

creates a market where housing is already affordable.<br />

4. <strong>The</strong> fact that most <strong>of</strong> the neighborhoods in the target area have traditionally been<br />

stable has establish a base from which to stop the decline in housing values with<br />

strategic interventions to eliminate a build up <strong>of</strong> blighting influences.<br />

Stabilization through home renovations for new buyers could succeed in the<br />

current market.<br />

5. <strong>The</strong> current market could be characterized as having moderate demand and a<br />

moderate supply <strong>of</strong> housing that is not as yet considered substandard, requiring<br />

substantial renovations to make them marketable properties. Such a market in the<br />

more up scale sections <strong>of</strong> the target area could attract buyers whose income is<br />

between 80% and 120 % <strong>of</strong> AMI. When renovated the selected properties on<br />

those blocks will have more appeal especially if buyer subsidies are <strong>of</strong>fered.<br />

<strong>The</strong> <strong>City</strong> will be focusing its efforts on stabilizing the selected neighborhoods areas by<br />

purchasing foreclosed upon homes and investing funds to bring the homes up to current<br />

codes including energy efficiency to bring up the overall quality <strong>of</strong> the housing stock in<br />

these areas, and to get a family into the home to keep the population <strong>of</strong> these areas up and<br />

to stop the constant turnover in some <strong>of</strong> these homes by keeping the family in the home<br />

for the period <strong>of</strong> affordability.<br />

DEFINITIONS & DESCRIPTIONS<br />

As with HERRA, there are certain terms that are used for NSP3 that are not used in the<br />

regular CDBG program, or the terms are used differently in NSP3 and the Housing and<br />

Community Development Act.<br />

<strong>The</strong> following terms are defined as such under NSP3:<br />

Abandoned: A home is abandoned when mortgage or tax foreclosure proceedings have<br />

been initiated for that property, no mortgage or tax payments have been made by the<br />

property owner for at least 90 days, AND the property has been vacant for at least 90<br />

days.<br />

Blighted structure: A structure is blighted when it exhibits objectively determinable<br />

signs <strong>of</strong> deterioration sufficient to constitute a threat to human health, safety, and public<br />

welfare.<br />

A blighted property is a blighted/abandoned/uninhabitable property that meets any <strong>of</strong> the<br />

following criteria:<br />

• Declared a public nuisance in accordance with local housing, building, plumbing,<br />

fire or other related code or ordinance.<br />

• Attractive nuisance because <strong>of</strong> physical condition or use.<br />

• Fire hazard or is otherwise dangerous to the safety <strong>of</strong> persons or property.<br />

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• Has had utilities, plumbing, heating, or sewerage disconnected, destroyed,<br />

removed or rendered ineffective for a period <strong>of</strong> 1 year or more so that the property<br />

is unfit for its intended use.<br />

Current Market Appraised Value: <strong>The</strong> current market appraised value means the value<br />

<strong>of</strong> a foreclosed upon home or residential property that is established through an appraisal<br />

made in the conformity with the appraisal requirements <strong>of</strong> the URA at 49 CFR 24.103<br />

and completed within 60 days prior to an <strong>of</strong>fer made for the property by a grantee, subrecipient,<br />

developer, or individual homebuyer.<br />

Foreclosed: A property “has been foreclosed upon” at the point that, under state or local<br />

law, the mortgage or tax foreclosure is complete. HUD generally will not consider a<br />

foreclosure to be complete until after the title for the property has been transferred from<br />

the former homeowner under some type <strong>of</strong> foreclosure proceeding to transfer in lieu <strong>of</strong><br />

foreclosure, in accordance with state or local law.<br />

Affordable Rents: Definition <strong>of</strong> “affordable rents.” Note: Grantees may use the<br />

definition they have adopted for their CDBG program but should review their existing<br />

definition to ensure compliance with NSP program –specific requirements such as<br />

continued affordability.<br />

<strong>The</strong> <strong>City</strong> will use the HOME definition <strong>of</strong> “affordable rents” at 24 CFR 92.252 (a), (c)<br />

and (f).<br />

For those families at 66 to 120% <strong>of</strong> area median income, the <strong>City</strong> will use the recently<br />

issued final FY2009 Fair Market Rents for the Detroit-Warren-Livonia, MI HUD Metro<br />

FMR Area <strong>of</strong> which includes the <strong>City</strong> <strong>of</strong> <strong>Pontiac</strong> (24 CFR 92.252 (a) 1).<br />

For those families at 65% or below for area median income, the <strong>City</strong> will target rents that<br />

do not exceed 30% <strong>of</strong> the income eligible households adjusted income to insure<br />

affordability.<br />

Revenue for the purpose <strong>of</strong> Section 2301 (d) (4): Revenue has the same meaning as<br />

program income, as defined at 24 CFR 570.500(a) with the modifications in this notice.<br />

Ensuring Continued Affordability: Continued affordability shall be at minimum<br />

adherence to the HOME program standards as defined at 24 CRF 92.252 (a), (c), (e), and<br />

(f), and 92.254. Home program standards can be used as “safe harbor”, but if an<br />

alternative standard is applied, it must be equal to or exceed the HOME standard.<br />

<strong>The</strong> purpose <strong>of</strong> the NSP program is to help communities to stabilize their neighborhoods<br />

that have been negatively impacted by the high number <strong>of</strong> foreclosures. One <strong>of</strong> the ways<br />

to help stabilize the neighborhoods in <strong>Pontiac</strong> is to stop the constant turnover that these<br />

foreclosures create in our neighborhoods. Data from the Mortgage Bankers Association<br />

National Delinquency Survey as <strong>of</strong> June 2010 showed that there were over 1,678<br />

foreclosures in <strong>Pontiac</strong> in an 18-month period. In just reviewing the number in total, this<br />

6


had a huge impact on the <strong>City</strong> overall. But if you review the actual addresses that have<br />

been foreclosed on, many <strong>of</strong> the neighborhoods are being more severely undermined<br />

because many <strong>of</strong> the homes have been foreclosed on more than one occasion since 2004 -<br />

some up to four times.<br />

<strong>The</strong> <strong>City</strong> will feel a bigger impact from our homebuyer activities by creating a stable<br />

homebuyer population who will remain in their homes longer and help to stabilize their<br />

neighborhoods. <strong>The</strong> homes will be developed and sold at an affordable rate insuring an<br />

affordable first mortgage on the property. <strong>The</strong> <strong>City</strong> will provide a zero-interest deferred<br />

mortgage that reflects the amount <strong>of</strong> the owner’s equity that is unencumbered by an<br />

affordable mortgage. <strong>The</strong> deferred second mortgage will be in effect for a period <strong>of</strong> 15<br />

years. During this timeframe, the homebuyer will be subject to the <strong>City</strong> <strong>of</strong> <strong>Pontiac</strong>’s<br />

Subordination Policy and they will not be allowed to take out any equity on the home<br />

until after the period <strong>of</strong> affordability and the <strong>City</strong>’s lien has been discharged. This will<br />

help to prevent or stop many <strong>of</strong> the refinancing activities that created our current housing<br />

and foreclosure crisis. <strong>The</strong> <strong>City</strong> will also require within the terms <strong>of</strong> the deferred lien that<br />

the homeowner must maintain their home in good condition and keep their property taxes<br />

paid to current and maintain adequate homeowner’s insurance on their property<br />

throughout the 15-year affordability period.<br />

Applicable Housing Rehabilitation Standards: <strong>The</strong> <strong>City</strong> <strong>of</strong> <strong>Pontiac</strong> recently completed<br />

its Rehabilitation Standards Manual. <strong>The</strong> standards that will apply for the NSP 3<br />

rehabilitation activities are referenced in the Manual. <strong>The</strong> principle standards are:<br />

• Current Michigan Residential Building Code (single and two-family dwellings<br />

• Current Michigan Rehabilitation Code <strong>of</strong> Existing Buildings<br />

• Current Michigan Property Maintenance Code<br />

• Current <strong>City</strong> Zoning Ordinance<br />

• HUD minimum Housing Quality Standards<br />

• All applicable <strong>City</strong> <strong>of</strong> <strong>Pontiac</strong> codes and ordinances<br />

• Current State and Federal Lead-based Paint Laws and Regulations<br />

LOW- INCOME TARGETING<br />

<strong>The</strong> estimated amount <strong>of</strong> funds appropriated or otherwise made available under the NSP<br />

to be used to purchase and redevelop abandoned or foreclosed upon homes or residential<br />

properties for housing individuals or families whose incomes do not exceed 50 percent <strong>of</strong><br />

area median income will be $352,656.00.<br />

Note: At least 25% <strong>of</strong> funds must be used for housing individuals and families whose<br />

incomes do not exceed 50 percent <strong>of</strong> area median income.<br />

Of the available $1,410,621 Neighborhood Stabilization Program III funds available to<br />

the <strong>City</strong> <strong>of</strong> <strong>Pontiac</strong>, the <strong>City</strong> has set aside $352,656 for the development <strong>of</strong> housing<br />

opportunities for persons with incomes not exceeding 50% <strong>of</strong> area median income<br />

(AMI). In the <strong>City</strong> <strong>of</strong> <strong>Pontiac</strong>, a four-person household can earn up to $34,900 to be at<br />

7


50% <strong>of</strong> AMI. <strong>The</strong> <strong>City</strong> is proposing to provide both new rental and homeowner<br />

opportunities for these income targeted households. Selected developers will purchase<br />

vacant, tax or bank foreclosed homes to renovate. <strong>The</strong> <strong>City</strong> will create, at a minimum,<br />

three (3) units <strong>of</strong> renovated affordable housing units targeted at persons at 50% or below<br />

<strong>of</strong> median income. <strong>The</strong> <strong>City</strong> will also work with supportive housing agencies to identify<br />

potential special needs households who need handicapped accessible housing when<br />

purchasing and rehabilitating the housing.<br />

ACQUISITION & RELOCATION<br />

Developers will be instructed not to purchase homes where there are squatters or renters.<br />

We therefore don’t anticipate having any relocation issues. However, as was the case<br />

with NSP1, the Development agreements will have the appropriate federal language<br />

relating to the rights <strong>of</strong> tenants and all URA considerations that must be complied with.<br />

PUBLIC COMMENT<br />

As part <strong>of</strong> the <strong>City</strong>’s Citizen’s Participation <strong>Plan</strong>, the Federal Programs Division consults<br />

with the members <strong>of</strong> the Coordinating Council on all matters which pertain to the Federal<br />

Programs including the Community Development Block Grant (CDBG) program and<br />

HOME Investment Partnership program. <strong>The</strong> Coordinating Council is a 28 member body<br />

consisting <strong>of</strong> four (4) citizens from each <strong>of</strong> the seven (7) Citizen District Councils which<br />

represent the seven (7) <strong>City</strong> Council Districts. Information on the NSP3 application is<br />

provided to the members <strong>of</strong> the Coordinating Council for their review. <strong>The</strong> <strong>City</strong><br />

published a notice in the newspaper <strong>of</strong> local circulation – <strong>The</strong> Oakland Press – that the<br />

<strong>City</strong> was applying to HUD for NSP3 funding. <strong>The</strong> notice was published on Saturday,<br />

February 12 th and February 13 th notifying citizens <strong>of</strong> this funding opportunity and<br />

requested that they access the <strong>City</strong>’s website at www.pontiac.mi.us for information on the<br />

application, public hearing and where to submit their written comments.<br />

<strong>The</strong> NSP3 <strong>Substantial</strong> <strong>Amendment</strong> was published on the <strong>City</strong>’s website also during this<br />

time.<br />

Staff also held a public hearing on the proposed use <strong>of</strong> NSP 3 funds on February 24, 2011<br />

at 6:00 PM in Council Chambers. <strong>The</strong> <strong>City</strong> scheduled a special meeting for the public<br />

hearing. Staff made a presentation to the <strong>City</strong> Council members, Mayor and citizens <strong>of</strong><br />

the community on the proposed activities <strong>of</strong> the NSP3 program. This meeting is televised<br />

by the <strong>City</strong>’s local cable system so that it will be shown 3 times a day until after the<br />

submission <strong>of</strong> this document. During the public hearing, there were questions asked about<br />

the program. <strong>The</strong> first question was about how the program would be advertised in the<br />

Oakland Press. <strong>The</strong> citizen was concerned that any advertisements for the NSP3 program<br />

for either contractors or homebuyers would be in a large enough format for <strong>Pontiac</strong><br />

residents to notice and respond to. Mr. Hinton let the citizen know that the <strong>City</strong> would do<br />

everything possible to keep the citizens informed about any contracting opportunities or<br />

homeownership opportunities. <strong>The</strong> Federal Programs Division staff always tries to get the<br />

biggest format ads that it can possibly get within the budget. Mr. Hinton explained that<br />

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the Federal Programs Division would continue to do our best to get the information out to<br />

the citizens in the community.<br />

<strong>The</strong>re was also a question about what type <strong>of</strong> assistance would be provided to persons or<br />

families who would like to apply for these houses. Mr. Hinton stated that all potential<br />

homebuyers or renters would be provided with free counseling services by experienced<br />

nonpr<strong>of</strong>it housing agencies. Also, that any developer who was working with the <strong>City</strong><br />

would provide any assistance required by the potential homebuyer to complete their<br />

application to purchase a home.<br />

<strong>The</strong> last question asked at the public hearing involved the hiring <strong>of</strong> a Contract<br />

Compliance person to oversee the contracts signed under this program. Mr. Hinton stated<br />

that all contract compliance responsibilities would be handled by staff in house. Once the<br />

Federal Programs Division was fully staffed, there would be one person who would be<br />

responsible contract compliance.<br />

NSP 3 Program Design & Description<br />

To receive NSP3 funding, each CDBG grantee must submit an action plan / substantial<br />

amendment to HUD in accordance with the notice by March 1, 2011. <strong>The</strong> NSP3 funds<br />

are being treated as a “special allocation” <strong>of</strong> fiscal year 2010-2011 CDBG funding. Each<br />

grantee must expend 50% <strong>of</strong> the NSP3 funds within two (2) years and be 100% expended<br />

within three (3) years. Each grantee must publish the proposed amendment on the<br />

Internet for no less than 15 days <strong>of</strong> public comment. <strong>The</strong> final action plan / substantial<br />

amendment must be submitted to HUD by March 1, 2011. <strong>The</strong> earliest that funds would<br />

be available to the <strong>City</strong> to expend would be approximately June 2011.<br />

Due to the large number <strong>of</strong> foreclosures in the <strong>City</strong> and other influencing economic<br />

issues, the <strong>City</strong> <strong>of</strong> <strong>Pontiac</strong> is considering two activities under the Neighborhood<br />

Stabilization III program: Acquisition/Rehabilitation/Resale and Program Administration.<br />

<strong>The</strong> size <strong>of</strong> the <strong>Pontiac</strong> allocation <strong>of</strong> $1,410,621 will only fund the acquisition and<br />

renovation <strong>of</strong> approximately thirteen (13) homes and cover the costs to administer the<br />

Project by the Federal Programs Division.<br />

<strong>The</strong> program activities will fall inside the goals as defined by the <strong>City</strong>’s Consolidated<br />

<strong>Plan</strong> 2005-2009. <strong>The</strong> Five Year Strategy was developed from the information gathered<br />

from the public forums, 2000 Census information, data provided by HUD and<br />

information from service provider organizations.<br />

<strong>The</strong> <strong>City</strong> identified the following five goals:<br />

Increase and Improve Homeownership Opportunities: Including education for firsttime<br />

homebuyers, credit counseling, information for protection against predatory lenders,<br />

credit repair for first time homebuyers, construction <strong>of</strong> new affordable housing, new infill<br />

housing in older neighborhoods, downpayment assistance for first-time homebuyers,<br />

9


acquisition <strong>of</strong> deteriorated, vacant housing for rehabilitation and resale.<br />

Remove Barriers to Affordable Housing: Including downpayment assistance, increase<br />

supply <strong>of</strong> decent, safe and affordable rental housing, provide foreclosure prevention<br />

activities, reduction <strong>of</strong> lead-based paint hazards in the existing housing stock, provide<br />

permanent housing opportunities for persons moving out <strong>of</strong> transitional housing, and<br />

increase energy efficiency <strong>of</strong> existing housing and new construction<br />

Create Suitable Living Environments: Including improve quality <strong>of</strong> life in our<br />

neighborhoods, reduce crime, increase public safety including fire and police protection,<br />

increase recreational opportunities for residents, reduce blight in our neighborhoods,<br />

eliminate abandoned homes unfit for rehabilitation, increased code enforcement activity,<br />

improve deteriorated infrastructure in our neighborhoods, promote neighborhood<br />

stability, increase homeownership, help existing homeowners stay in their homes, and<br />

encourage income diversity in our neighborhoods<br />

Assist in the <strong>Plan</strong> to End Homelessness: Including continued participation in the<br />

Oakland County Taskforce on Homelessness, encourage collaboration between service<br />

providers, and participate in the Super NOFA for Targeted Homeless Assistance funds to<br />

address homeless persons and provide permanent housing opportunities.<br />

Empowerment and self-sufficiency for low-income persons to reduce generational<br />

poverty: Including provide appropriate and structured activities for youth, increase<br />

educational opportunities for youth, improve family literacy and self-sufficiency, provide<br />

services to seniors living in poverty in our community, and provide services to persons<br />

living in poverty to assist them in moving out <strong>of</strong> poverty.<br />

For the FY2010 <strong>Annual</strong> <strong>Plan</strong>, the <strong>City</strong> identified the need to continue the demolition <strong>of</strong><br />

blighting properties in our communities and funded this activity with CDBG funding.<br />

<strong>The</strong> <strong>Annual</strong> <strong>Plan</strong> also identified: the <strong>City</strong>’s commitment to the resurfacing <strong>of</strong> local<br />

streets; Local Street Signs refurbishing: installation <strong>of</strong> new Street Lights, <strong>Plan</strong>ting new<br />

trees; the renovation <strong>of</strong> Rotary Park; Youth recreational services; and, Foreclosure<br />

Prevention & home ownership counseling services by Lighthouse <strong>of</strong> Oakland County.<br />

<strong>Pontiac</strong> is also committed, through the housing renovation project, to the greening <strong>of</strong> our<br />

community by supporting the development <strong>of</strong> energy efficient, LEED Certified<br />

affordable housing in our community to further the affordability and sustainability <strong>of</strong> our<br />

housing stock. <strong>The</strong> <strong>Annual</strong> <strong>Plan</strong> also identified a home owner repair program and down<br />

payment assistance for home buyers. <strong>The</strong> additional NSP program dollars will allow the<br />

<strong>City</strong> to expand on some <strong>of</strong> these projects and target the large number <strong>of</strong> vacant,<br />

foreclosed upon homes in our communities.<br />

<strong>The</strong> Goals <strong>of</strong> <strong>Pontiac</strong>’s NSP 3 Program Activities<br />

<strong>The</strong> Goals <strong>of</strong> the following <strong>Pontiac</strong> NSP 3 program activities are as follows:<br />

10


1. Stabilize property values in the target neighborhoods.<br />

2. Decrease the number <strong>of</strong> vacant, abandoned and dilapidated residential structures<br />

on Blocks that have reached the obvious “tipping point”.<br />

3. Increase the level <strong>of</strong> home ownership<br />

4. increase the availability <strong>of</strong> quality rental housing<br />

5. Enhance the availability <strong>of</strong> structurally sound affordable housing units.<br />

6. Increase the taxable values through stabilization strategies that will increase<br />

income to the <strong>City</strong> <strong>of</strong> <strong>Pontiac</strong>.<br />

PROGRAM PARAMETERS<br />

Homebuyer Eligibility: <strong>The</strong> homebuyer must meet the targeted income limits for their<br />

household size and the targeted housing unit, WHICH IS UP TO 120% AMI and for a<br />

family <strong>of</strong> four persons that would be $83,800. Homebuyers do not need to be first time<br />

homebuyers but cannot currently own a home or have owned a home in the previous<br />

twelve months at the time <strong>of</strong> application to the <strong>City</strong>. Priority will be given to first time<br />

homebuyers in the case that more than one household is interested in purchasing a<br />

particular home. All homebuyers must be credit worthy enough to obtain a conventional,<br />

fixed rate mortgage, 20 to 30 years, from a conventional lender. No sub prime, high cost,<br />

adjustable rate mortgages will be allowed. All program participants must complete eight<br />

(8) hours <strong>of</strong> homebuyer counseling prior to closing on the purchase <strong>of</strong> their home.<br />

Overall the proposed activities would assist a minimum <strong>of</strong> thirteen (13) households with<br />

new housing opportunities. This includes both rental and homeownership opportunities.<br />

<strong>The</strong> program will focus on bringing these housing units up to current building codes and<br />

to Energy Star standards to promote long term affordability and sustainability to help<br />

stabilize our neighborhoods.<br />

DISTRIBUTION AND USES OF FUNDS<br />

In reviewing the eligible activities <strong>of</strong> the Neighborhood Stabilization Program, the <strong>City</strong><br />

went back to the Goals <strong>of</strong> the <strong>City</strong>’s Consolidated <strong>Plan</strong> 2005-2009 and looked at how<br />

these eligible activities fit into the <strong>City</strong>’s <strong>Plan</strong>. Based on the needs identified in the <strong>City</strong>’s<br />

Consolidated <strong>Plan</strong> and FY2010 <strong>Annual</strong> <strong>Plan</strong>, the <strong>City</strong> has identified the following budget<br />

for the allocation <strong>of</strong> NSP funds.<br />

Neighborhood Stabilization Program Allocation $1,410,621.00<br />

NSP Activity<br />

Budget Amount<br />

Administration $141,062.10<br />

25% set aside for 50% AMI & below $352,656.90<br />

(B) Purchase and Rehabilitate homes and residential<br />

properties that have been abandoned or foreclosed<br />

upon, in order to sell, rent or develop such homes and<br />

properties $916,902.00<br />

Total $1,410,621.00<br />

11


<strong>The</strong> <strong>City</strong> will use the allowable 10% <strong>of</strong> the NSP funds for the administration <strong>of</strong> the NSP<br />

program and activities. <strong>The</strong> <strong>City</strong> will hire additional staffing for the duration <strong>of</strong> the NSP<br />

program. <strong>The</strong>se positions will be contract/temporary positions including construction<br />

management, applicant intake and clerical assistance. <strong>The</strong> <strong>City</strong> will publish Request for<br />

Proposals for Pr<strong>of</strong>essional Services in the following areas including but not limited to<br />

Appraisal Services, Property Title Services, Real Estate and property management.<br />

<strong>The</strong> <strong>City</strong> is hoping that these actions will stabilize the neighborhoods and bring<br />

homeowners back into our housing. Getting families back into the homes will also help to<br />

stop the deterioration <strong>of</strong> our housing stock and prevent further demolition and loss <strong>of</strong> our<br />

housing stock.<br />

Vicinity Hiring - Section 3<br />

<strong>Pontiac</strong> Federal Programs launched a local contractor and laborers participation plan in<br />

the spring <strong>of</strong> 2010 as a component <strong>of</strong> the NSP1 programs activity for the<br />

Acquisition/Rehabilitation/Resale or Rental <strong>of</strong> nineteen (19) homes. A special session<br />

was held in <strong>City</strong> Council Chambers to explain the NSP program and gather information<br />

form local contractor, women & minority owned firms and local potential laborers. That<br />

information was passed on to one <strong>of</strong> <strong>Pontiac</strong>’s two NSP1 developers for recruiting and<br />

soliciting the participation <strong>of</strong> firms and individuals as the developer geared up to start the<br />

renovation process. When we are given permission to start rehabilitation activities<br />

Federal Programs will closely monitor the Section 3 compliance results.<br />

<strong>Pontiac</strong> will implement a similar approach with NSP3 to facilitate local hiring practices.<br />

After the selection <strong>of</strong> a developer to acquire, renovate and sale the proposed thirteen (13)<br />

properties, a special recruitment event will be again staged in Council Chambers to sign<br />

up interested parties. Hopefully, at that point in 2011, there will be enough experience<br />

during the NSP1 hiring process to refine our approach and make it more effective, if<br />

required. <strong>Pontiac</strong> federal Programs has already determined that if the event is well<br />

publicized and held in a familiar public place, the response <strong>of</strong> firms and persons wanting<br />

to participate is better. <strong>The</strong>refore, we will not just rely upon newspaper ads and list<br />

compiled in the past, but also the local government access cable channel will be utilized<br />

along with avenues for word-<strong>of</strong>- mouth and the <strong>City</strong>’s website will get the message out<br />

about the NSP3 program and the recruiting event . At the event information on existing<br />

ordinances and their requirements for local hiring.<br />

NSP INFORMATION BY ACTIVITY (COMPLETE FOR EACH ACTIVITY)<br />

<strong>The</strong> <strong>City</strong> is proposing to address the issue <strong>of</strong> vacant, blighting foreclosed upon properties<br />

in the <strong>City</strong> <strong>of</strong> <strong>Pontiac</strong> with the following activities:<br />

(1) Activity Name: Acquisition, Rehabilitation and Resale/Rental <strong>of</strong> Vacant, Foreclosed<br />

Properties – Low Income Set Aside – 25%<br />

12


(2) Activity Type: NSP Activity (B) Purchase and rehabilitate homes and residential<br />

properties that have been abandoned or foreclosed upon, in order to sell, rent or redevelop<br />

such homes and properties<br />

CDBG Activity 24 CFR 570.201 (a) Acquisition, (b) Disposition,<br />

(i) Relocation and (n) Direct homeownership assistance (as modified below); 570.202<br />

eligible rehabilitation and preservation activities for homes and other residential<br />

structures (Note that rehabilitation may includes counseling for those seeking to take part<br />

in the activity)<br />

(ii) NSP Activity (B) purchase and rehabilitate three properties that have been abandoned<br />

or foreclosed upon, in order to rent or leased with an option to buy to persons or families<br />

at and below 50% <strong>of</strong> AMI. <strong>The</strong>se homes will be renovated to be primarily leased with<br />

an option to purchase or, at least, that is the goal. It is anticipated that <strong>Pontiac</strong> Federal<br />

Programs will seek the cooperation <strong>of</strong> area counseling agencies and the <strong>Pontiac</strong> PHA to<br />

give lease purchase opportunities to persons graduating from their social support<br />

programs who are ready financially to assume the responsibilities <strong>of</strong> home ownership.<br />

Mortgages for these individuals will probably be in the range <strong>of</strong> $45,000 to $55,000. To<br />

develop these properties for the 50% and below buyers/renters will probably require<br />

deeper development subsidies from the $352,656.90, which is the 25% set aside program<br />

activity budget.<br />

(3) National Objective: (Must be a national objective benefiting low, moderate and<br />

middle income persons, as defined in the NSP Notice—i.e., ≤ 120% <strong>of</strong> area median<br />

income).<br />

Households with income equal to or less than 50% <strong>of</strong> area median income. This<br />

activity will meet the 25% set aside with $352,655 allocated to this activity.<br />

(4) Activity Description:<br />

Include a narrative describing the area <strong>of</strong> greatest need that the activity addresses; the<br />

expected benefit to income-qualified persons; and whether funds used for this activity<br />

will be used to meet the low income housing requirement for those below 50% <strong>of</strong> area<br />

median income.<br />

<strong>City</strong> <strong>of</strong> <strong>Pontiac</strong> Consolidated <strong>Plan</strong> 2005-2009 – Goal #2 Remove Barriers to<br />

Affordable Housing<br />

<strong>The</strong> <strong>City</strong> will purchase vacant, foreclosed upon bank-owned properties at a discount<br />

(minimum 1% as amended by the Bridge Notice dated June 19, 2009) <strong>of</strong> appraised value.<br />

<strong>The</strong> <strong>City</strong> will complete a team inspection and energy audit on each home and make<br />

necessary repairs to bring up to code and improve energy efficiency including appliances<br />

with Energy Star ratings. <strong>The</strong> homes will then be made available for rent/sale or leasepurchase<br />

to income eligible households up to 50% <strong>of</strong> Area Median Income for the<br />

amount <strong>of</strong> NSP assistance invested in the home (required by regulations). A lien will be<br />

placed on the home for the difference between the sales price and the after rehab<br />

13


appraised value to protect the affordability <strong>of</strong> the unit for a period <strong>of</strong> 15 years (HOME<br />

Final Rule standards). At the end <strong>of</strong> the affordability period, the lien will be released by<br />

the <strong>City</strong>. If the home is sold prior to the end <strong>of</strong> the affordability period, a prorated amount<br />

must be repaid to the <strong>City</strong>.<br />

In some instances the homes will be rented or leased with an option to purchase the<br />

home, pursuant to counseling and credit repairs. <strong>The</strong> <strong>City</strong> will lien the properties for the<br />

after rehab appraised value and to ensure a 20 year affordability period. <strong>The</strong> <strong>City</strong> will<br />

work with each for pr<strong>of</strong>it or nonpr<strong>of</strong>it developer to adapt to changes in the housing<br />

market.<br />

For this acquisition/rehab/resale program, the <strong>City</strong> is targeting three (3) properties. <strong>The</strong><br />

units will be rental units (if an income eligible purchaser cannot be found) for persons at<br />

50% <strong>of</strong> AMI or below. <strong>The</strong> <strong>City</strong> will solicit the participation <strong>of</strong> our nonpr<strong>of</strong>it partners to<br />

provide home buyer counseling to our renter households on a lease purchase path, if<br />

feasible for the renter household. Any program income generated from the production <strong>of</strong><br />

the first three (3) homes will be used to complete additional units following the NSP<br />

guidelines.<br />

(5) Location Description: (Description may include specific addresses, blocks or<br />

neighborhoods to the extent known.)<br />

<strong>The</strong> <strong>City</strong> has identified one target area for the purpose <strong>of</strong> focusing on the stabilization <strong>of</strong><br />

blocks in the neighborhoods just east <strong>of</strong> Telegraph and south <strong>of</strong> Elizabeth Lake Road<br />

down to just west <strong>of</strong> Crystal Lake. <strong>The</strong> target area was also the focus <strong>of</strong> the NSP 1<br />

program and is being targeted again because <strong>of</strong> the large number <strong>of</strong> foreclosures that<br />

continues to destabilize blocks in the Seminole Hills, Ottawa Hills, Indian Village and<br />

Washington Park neighborhoods. Currently there are eight (8) tax and bank foreclosed<br />

homes that will undergo renovations this spring. <strong>The</strong> rationale for selecting this area was<br />

to continue to concentrate in neighborhoods where homes are being renovated via NSP1<br />

funds to, in combination, enhance the marketing <strong>of</strong> those properties and the thirteen (13)<br />

homes (three under this activity) to be renovated with NSP3 funds by a developer yet to<br />

be selected. NSP 3 places emphasis on the marketability <strong>of</strong> the properties selected for<br />

rehabilitation. To stabilize neighborhoods there must be focused investments.<br />

<strong>The</strong> boundaries <strong>of</strong> the target area are as follows:<br />

Target Area Boundaries<br />

West Border: Johnson Avenue from Huron Street (M-59) in a line south to Telegraph.<br />

South Border: Includes Washington Park down to Telegraph just west <strong>of</strong> Crystal Lake.<br />

East Border: Telegraph north to Voorheis Rd., east along Voorheis Street back to<br />

Telegraph and north on Telegraph to Elizabeth Lake Rd.<br />

14


North Border: Elizabeth Lake Rd. from Telegraph to Murphy Street, south to M -59<br />

(East Huron Street) east along M-59 to Johnson Avenue.<br />

(6) Performance Measures (e.g., units <strong>of</strong> housing to be acquired, rehabilitated, or<br />

demolished for the income levels <strong>of</strong> households that are 50 percent <strong>of</strong> area median<br />

income and below, 51-80 percent, and 81-120 percent).<br />

Total Units Acquired/Rehabilitated: 13 single family homes<br />

Total Units – 50% or below<br />

3 single family units<br />

Total Units – 51% to 120)%<br />

10 single family units<br />

(7) Total Budget: (Include public and private components)<br />

25% Set Aside – Acquisition/Rehab $352,656.90<br />

3 rental units for households up to 50% <strong>of</strong> area median income<br />

Matching funds will be private mortgage financing for households who purchase<br />

NSP homes after the completion <strong>of</strong> the rehabilitation work.<br />

(8) Responsible Organization: (Describe the responsible organization that will<br />

implement the NSP activity, including its name, location, and administrator contact<br />

information)<br />

<strong>City</strong> <strong>of</strong> <strong>Pontiac</strong> Federal Programs Division<br />

47450 Woodward Avenue<br />

<strong>Pontiac</strong>, MI 48342<br />

Patricia Lile, Block Grant Administrator<br />

248-758-3780, Fax # 248-758-3775<br />

E-mail: plile@pontiac.mi.us<br />

(9) Projected Start Date: June 1, 2011<br />

(10) Projected End Date: May 31, 2014<br />

(11) Specific Activity Requirements:<br />

For acquisition activities, include:<br />

• discount rate<br />

<strong>The</strong> <strong>City</strong> or its selected developer(s) will purchase vacant, foreclosed upon bankowned<br />

properties at a discount (minimum 1% as amended by the Bridge Notice dated<br />

June 19, 2009) <strong>of</strong> appraised value.<br />

For financing activities, include:<br />

• range <strong>of</strong> interest rates<br />

15


For housing related activities, include:<br />

• duration or term <strong>of</strong> assistance;<br />

• tenure <strong>of</strong> beneficiaries--rental or homeownership;<br />

• a description <strong>of</strong> how the design <strong>of</strong> the activity will ensure continued affordability<br />

For those homes that are sold, a lien will be placed on the home for the difference<br />

between the sales price and the after rehab appraised value to protect the affordability <strong>of</strong><br />

the unit for a period <strong>of</strong> 15 years (HOME Final Rule standards). At the end <strong>of</strong> the<br />

affordability period, the lien will be released by the <strong>City</strong>. If the home is sold prior to the<br />

end <strong>of</strong> the affordability period, a prorated amount must be repaid to the <strong>City</strong>. <strong>The</strong><br />

deferred loan will have a zero percent interest rate.<br />

Because these homes will be targeted to families with incomes at 50% or below <strong>of</strong> area<br />

median income, these units will most likely be rental units and/or lease purchase units.<br />

Units that remain as either rental units or lease/purchase units will have liens to protect<br />

their affordability and managed by a local nonpr<strong>of</strong>it housing organization to insure<br />

compliance.<br />

NSP INFORMATION BY ACTIVITY (COMPLETE FOR EACH ACTIVITY)<br />

(1) Activity Name: Acquisition, Rehabilitation and Resale/Rental <strong>of</strong> Vacant, Foreclosed<br />

Properties – LMMI<br />

(2) Activity Type: NSP Activity (B) Purchase and rehabilitate homes and residential<br />

properties that have been abandoned or foreclosed upon, in order to sell, rent or redevelop<br />

such homes and properties<br />

CDBG Activity 24 CFR 570.201 (a) Acquisition, (b) Disposition,<br />

(i) Relocation and (n) Direct homeownership assistance (as modified below); 570.202<br />

eligible rehabilitation and preservation activities for homes and other residential<br />

structures (Note that rehabilitation may includes counseling for those seeking to take part<br />

in the activity)<br />

(ii) NSP Activity (B) purchase and rehabilitate ten (10) residential properties that have<br />

been abandoned or foreclosed upon, in order to sale to persons or families from 51%<br />

AMI to 120% AMI. <strong>The</strong>se homes will be renovated to be marketed primarily as sales or<br />

leased with option to purchase to persons or families in these income ranges. <strong>The</strong> budget<br />

for this specific activity will be $917,902.000 with an averaged Total Development Cost<br />

<strong>of</strong> $97,000. It is anticipated that persons from 80% to 120% will be the most likely<br />

candidates for mortgages from $60,000 to $80,000. From 51% to 70% <strong>of</strong> AMI the most<br />

likely candidates for those properties will probably require a longer lease/purchase period<br />

will becoming mortgage ready through effective financial counseling.<br />

(3) National Objective: (Must be a national objective benefiting low, moderate and<br />

middle income persons, as defined in the NSP Notice—i.e., ≤ 120% <strong>of</strong> area median<br />

income).<br />

16


Households with income equal to or less than 120% <strong>of</strong> area median income.<br />

(4) Activity Description:<br />

Include a narrative describing the area <strong>of</strong> greatest need that the activity addresses; the<br />

expected benefit to income-qualified persons; and whether funds used for this activity<br />

will be used to meet the low income housing requirement for those below 50% <strong>of</strong> area<br />

median income.<br />

<strong>City</strong> <strong>of</strong> <strong>Pontiac</strong> Consolidated <strong>Plan</strong> 2005-2009 – Goal #2 Remove Barriers to<br />

Affordable Housing<br />

<strong>The</strong> <strong>City</strong> will purchase vacant, foreclosed upon bank-owned properties at a discount<br />

(minimum 1% as amended by the Bridge Notice dated June 19, 2009) <strong>of</strong> appraised value.<br />

<strong>The</strong> <strong>City</strong> will complete a team inspection and energy audit on each home and make<br />

necessary repairs to bring up to code and improve energy efficiency including appliances<br />

with Energy Star ratings. <strong>The</strong> homes will then be made available for sale to income<br />

eligible households up to 120% <strong>of</strong> Area Median Income for the amount <strong>of</strong> NSP assistance<br />

invested in the home (required by regulations). A lien will be placed on the home for the<br />

difference between the sales price and the after rehab appraised value to protect the<br />

affordability <strong>of</strong> the unit for a period <strong>of</strong> 15 years (HOME Final Rule standards). At the end<br />

<strong>of</strong> the affordability period, the lien will be released by the <strong>City</strong>. If the home is sold prior<br />

to the end <strong>of</strong> the affordability period, a prorated amount must be repaid to the <strong>City</strong>. In<br />

some instances the homes will be rented or leased with an option to purchase the home,<br />

pursuant to counseling and credit repairs. <strong>The</strong> <strong>City</strong> will lien the properties for the after<br />

rehab appraised value and to ensure a 20 year affordability period. <strong>The</strong> <strong>City</strong> will work<br />

with each for pr<strong>of</strong>it or nonpr<strong>of</strong>it developer to adapt to changes in the housing market.<br />

For acquisition/rehab/resale program, the <strong>City</strong> is targeting ten (10) properties. <strong>The</strong>se units<br />

will be for sale to persons up to 120% <strong>of</strong> AMI. <strong>The</strong> <strong>City</strong> will solicit the participation <strong>of</strong><br />

our nonpr<strong>of</strong>it partners to provide home buyer counseling to our renter households on a<br />

lease purchase path, if feasible for the renter household. Any program income generated<br />

from the production <strong>of</strong> the these ten (10) homes will be used to complete additional units<br />

following the NSP guidelines.<br />

(5) Location Description: (Description may include specific addresses, blocks or<br />

neighborhoods to the extent known.)<br />

<strong>The</strong> <strong>City</strong> has identified one target area for the purpose <strong>of</strong> focusing on the stabilization <strong>of</strong><br />

blocks in the neighborhoods just east <strong>of</strong> Telegraph and south <strong>of</strong> Elizabeth Lake Road<br />

down to just west <strong>of</strong> Crystal Lake. <strong>The</strong> target area was also the focus <strong>of</strong> the NSP 1<br />

program and is being targeted again because <strong>of</strong> the large number <strong>of</strong> foreclosures that<br />

continues to destabilize blocks in the Seminole Hills, Ottawa Hills, Indian Village and<br />

Washington Park neighborhoods. Currently there are eight (8) tax and bank foreclosed<br />

17


homes that will undergo renovations this spring. <strong>The</strong> rationale for selecting this area was<br />

to continue to concentrate in neighborhoods where homes are being renovated via NSP1<br />

funds to, in combination, enhance the marketing <strong>of</strong> those properties and the thirteen (13)<br />

homes to be renovated with NSP3 funds by a developer yet to be selected. NSP 3 places<br />

emphasis on the marketability <strong>of</strong> the properties selected for rehabilitation. To stabilize<br />

neighborhoods there must be focused investments.<br />

<strong>The</strong> boundaries <strong>of</strong> the target area are as follows:<br />

Target Area Boundaries<br />

West Border: Johnson Avenue from Huron Street (M-59) in a line south to Telegraph.<br />

South Border: Includes Washington Park down to Telegraph just west <strong>of</strong> Crystal Lake.<br />

East Border: Telegraph north to Voorheis Rd., east along Voorheis Street back to<br />

Telegraph and north on Telegraph to Elizabeth Lake Rd.<br />

North Border: Elizabeth Lake Rd. from Telegraph to Murphy Street, south to M -59<br />

(East Huron Street) east along M-59 to Johnson Avenue.<br />

(6) Performance Measures (e.g., units <strong>of</strong> housing to be acquired, rehabilitated, or<br />

demolished for the income levels <strong>of</strong> households that are 50 percent <strong>of</strong> area median<br />

income and below, 51-80 percent, and 81-120 percent).<br />

Total Units Acquired/Rehabilitated: 13 single family homes<br />

Total Units – 50% or below<br />

3 single family units<br />

Total Units – 51% to 120)%<br />

10 single family units<br />

(7) Total Budget: (Include public and private components)<br />

Acquisition/Rehab $916,902.00<br />

10 for sale units for households up to 120% <strong>of</strong> area median income<br />

Matching funds will be private mortgage financing for households who purchase<br />

NSP homes after the completion <strong>of</strong> the rehabilitation work.<br />

(8) Responsible Organization: (Describe the responsible organization that will<br />

implement the NSP activity, including its name, location, and administrator contact<br />

information)<br />

<strong>City</strong> <strong>of</strong> <strong>Pontiac</strong> Federal Programs Division<br />

47450 Woodward Avenue<br />

<strong>Pontiac</strong>, MI 48342<br />

Patricia Lile, Block Grant Administrator<br />

18


248-758-3780, Fax # 248-758-3775<br />

E-mail: plile@pontiac.mi.us<br />

(9) Projected Start Date: June 1, 2011<br />

(10) Projected End Date: May 31, 2014<br />

(11) Specific Activity Requirements:<br />

For acquisition activities, include:<br />

• discount rate<br />

<strong>The</strong> <strong>City</strong> or its selected developer(s) will purchase vacant, foreclosed upon bankowned<br />

properties at a discount (minimum 1% as amended by the Bridge Notice dated<br />

June 19, 2009) <strong>of</strong> appraised value.<br />

For financing activities, include:<br />

• range <strong>of</strong> interest rates<br />

For housing related activities, include:<br />

• duration or term <strong>of</strong> assistance;<br />

• tenure <strong>of</strong> beneficiaries--rental or homeownership;<br />

• a description <strong>of</strong> how the design <strong>of</strong> the activity will ensure continued affordability<br />

A lien will be placed on the home for the difference between the sales price and the after<br />

rehab appraised value to protect the affordability <strong>of</strong> the unit for a period <strong>of</strong> 15 years<br />

(HOME Final Rule standards). At the end <strong>of</strong> the affordability period, the lien will be<br />

released by the <strong>City</strong>. If the home is sold prior to the end <strong>of</strong> the affordability period, a<br />

prorated amount must be repaid to the <strong>City</strong>. <strong>The</strong> deferred loan will have a zero percent<br />

interest rate.<br />

<strong>The</strong> 10 proposed homes will be marketed to families with incomes up to 120% <strong>of</strong> area<br />

median income as for sale units. Units that remain as either rental units or lease/purchase<br />

units will have liens to protect their affordability and managed by a local nonpr<strong>of</strong>it<br />

housing organization to insure compliance.<br />

NSP INFORMATION BY ACTIVITY (COMPLETE FOR EACH ACTIVITY)<br />

(1) Activity Name: NSP3 Program Administration<br />

(2) Activity Type: Up to 10% <strong>of</strong> the Neighborhood Stabilization Program funds can<br />

be used for the administration <strong>of</strong> this program<br />

administration<br />

Eligible under CDBG program at 570.200(g) program<br />

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(3) National Objective: (Must be a national objective benefiting low, moderate and<br />

middle income persons, as defined in the NSP Notice—i.e., ≤ 120% <strong>of</strong> area median<br />

income).<br />

Not applicable to <strong>Plan</strong>ning Administration<br />

(4) Activity Description:<br />

Include a narrative describing the area <strong>of</strong> greatest need that the activity addresses; the<br />

expected benefit to income-qualified persons; and whether funds used for this activity<br />

will be used to meet the low income housing requirement for those below 50% <strong>of</strong> area<br />

median income.<br />

<strong>The</strong> <strong>City</strong> will utilize the allowable 10% <strong>of</strong> the NSP3 funds for the administration <strong>of</strong> the<br />

NSP3 program. <strong>The</strong> funds will be used for the normal operating expenses <strong>of</strong><br />

administering and monitoring a federal program including staffing, fringes, supplies and<br />

appropriate services. <strong>The</strong> <strong>City</strong> may hire additional staff to oversee the activities <strong>of</strong> the<br />

program.<br />

(5) Location Description: (Description may include specific addresses, blocks or<br />

neighborhoods to the extent known.)<br />

<strong>The</strong> administration <strong>of</strong> the program will be located at <strong>Pontiac</strong> <strong>City</strong> Hall, 47450 Woodward<br />

Avenue, <strong>Pontiac</strong>, MI 48342.<br />

(6) Performance Measures (e.g., units <strong>of</strong> housing to be acquired, rehabilitated, or<br />

demolished for the income levels <strong>of</strong> households that are 50 percent <strong>of</strong> area median<br />

income and below, 51-80 percent, and 81-120 percent).<br />

Not applicable to program administration<br />

(7) Total Budget: (Include public and private components)<br />

Program Administration<br />

$141,062 NSP funds<br />

(8) Responsible Organization: (Describe the responsible organization that will<br />

implement the NSP activity, including its name, location, and administrator contact<br />

information)<br />

<strong>City</strong> <strong>of</strong> <strong>Pontiac</strong> Federal Programs Division<br />

47450 Woodward Avenue<br />

<strong>Pontiac</strong>, MI 48342<br />

Patricia Lile, Block Grant Administrator<br />

248-758-3780, Fax # 248-758-3775<br />

E-mail: plile@pontiac.mi.us<br />

20


(9) Projected Start Date: June 1, 2011<br />

(10) Projected End Date: May 31, 2014<br />

(11) Specific Activity Requirements:<br />

For acquisition activities, include:<br />

• discount rate<br />

For financing activities, include:<br />

• range <strong>of</strong> interest rates<br />

For housing related activities, include:<br />

• duration or term <strong>of</strong> assistance;<br />

• tenure <strong>of</strong> beneficiaries--rental or homeownership;<br />

• a description <strong>of</strong> how the design <strong>of</strong> the activity will ensure continued affordability<br />

<strong>The</strong>se issues are not applicable to program administration.<br />

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