HomeMy WebLinkAbout06.22.1972 Memo In Support of The Resolution on Federally Subsidized HousingMEMORANDUT4 FROI.I THE MAP LEI.IOOD
HUI\IAN RELATIONS COI4i"{ISSIoN To THE VILLAGE
COUNCIL IN SUPPORT OF ITS RESOIUTION
ON FEDERATLY SUBSIDIZED HOUSING
Jlune 22, 1972
Submitted in behalf of the MHRC
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by John Broady, Chairman, MHRC andDwight Jessup, Chairman, Housing Committee, MHRC
r REASONS
HOUS I NG
FOR FEDERALTY SUBSIDIZED LOW AND MODERATE INCOT,IErN MAPIEI,IOOD
A. To Serve Maplewoodrs present Hous j-ng Needs
According to 1970 census data, 5,121 people inVillage live in over crowded housing (more thin oneson per room per unit). That's 20.32 or over 1/5thour present population of 25,222.
theper-
of
. According to 1970 census data, only l-6.3t of ourexisting housing units are affordable to ]ow and mod.erateincome housing. Of the seventeen Ramsey County suburbsonly four - N6rth Oaks, New Brighton, nisevilll, andShorevierv - have a lesser percentage of l-ow to moderateincome housing (and all those four have higher averageincomes per unit than trtapl-ewood) .
The 1970 census also indicates that 180 l.laplewoodfamifies (994 total indivj.duals or 3.9? of our lota1population) live on incomes beLow the federa.I povertyIevel. T*v/enty percent of Maplcr,vood's residents who ire65 or older live on incomes below the poverty level.
A market study conducted in late 1971 indicatedthat there are near.Ly 7,000 famiLies now living inthe communities of Maplewood, l.lorth St. pau1, and Oak-dale that are eligible for #236 1ow and moderate incomehousi.ng.
Maplewood last year condeinned and toreto eighteen (vacant) dilapidated homes fastpractice which is. 1ike1y to increase in the
down fifteenyear, ayears ahead.
Some suburban families are being forced to moveback to the central cities because of the lack of 1owto moderate j-ncome housing in the suburbs. The l4ay, 1972
Community Line Housing Report to the I'letropolitan Councilof the I\arin Cities states:
"The most frustrating problem ... is the suburbanfamily who because of a l-ay-of f or other economic problem,
needs to move into a l-ess expensive dwelling unit but onesti11 big enough for a family. These families donrt wantto have to move from their communj-ty or their schools.
They want to stay but they seldom get to ..... Theincidence of the central- cities having to take on respon-sibilities that the suburban communities ignore is fargreater than suburban communities having to house familiesthe central cj-ties turn arvay. " Experience in a #236housing development in Hopkins affirms this need for .Lowto moderate income housing to rneet the needs of suburbanresidents. It is reported that. in that particular develop-
ment, 508 of the residents were originalfy from Hopkins,18t from Minneapolis, and most of tie others from Lther'suburbs. Likewise, a significant number of those movinginto #236 housing in St. paul came from the suburbs oroutstate. There is no reason to believe that Maplewoodis an exception to this suburban housing need,.
In order to insure an inte grated balance of hous j.ngfacilities for all people and i n order to achieve a res-
l-dential mosaic of aI1 creeds ,. races, and socioeconomicbackgrounds , it is necessar y to make positive provisionsfor fow to moderate income hous in g .The "mosaic concept "has been championed by the llHRC, widely accepted byvillage residents (see rrlHRC housing attitudes survey ofMay, 1970), supported by are a journalists (see editorial ,Maplewood Review 1.,1a y 26,72 and periodic ',East l{ind"columns i-n atch , and endorsed b y severalvillage officiafE ana tn e Plann 1ng Commiss ion ( see l,lPC"Housing Goals" in its proposed Pl-an for Maplewood.Hovrever; impl ementation of the ',mosaic concept,, demandsIocal plannin g. The average value of owner occu pi edsingle fami ty dlelling units in Mapfewood in 197 0 was
$23 ,495 not in cluding the value of the land on which the
the St. PauI Dis
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unit is focated, and the average value of new homes beingbuilt now j-s even higher. Mil. r4a 1 costs of single-familidwellings built today in cofrptlEnce with preseni i,tapte- -
wood requirements, probably exceed $24,OOb to $25,0b0including land purchase. If the ,,mosaic,, is to remain(or become) a real-ity in the vil]age, it appears thatsome subsidized housing facilities are absolutelynecessary.
To Serve Maplewoodrs needs as a part of, a Growing Metro-pol,i tan Community
ft is inappropriate and unreasonable to perceive
Maplewood simply as an isolated island communl-ty, givenits metropolitan setting. It must be placed r,zilhin itsreaL context - that of a first tier suburb in a modernurban complex in which it is becoming increasinglydifficult for low and moderate income peopl-e to-moveoutside the central cities due to economic discri-minationin the suburbs in terms of housing facilities. I,Iith thisin-mind, the t'tetropolj-tan Council in its housing policy#13 reflects the HUD priority in favoring the disirj-fuiionof federal funds under j.ts control to conununities pro-viding low and moderate income housing. fhe federalgovernment is in thj.s way simply supporting trulyoperational "open" housing. Or to put it another way, ifwe wish to be an economically exclusive community, rveought not do it with federal government assistance.
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C To Demonstrate a Humani.tarian Concern for Justice and
Eguality
Everyone has a right to decent housing, not only
because he needs adequate shelter, but also because the
housing in which he lives is an indication of his rank
in society. "A place a man lives is more than just
another comroodity, service, or possession: it is a
symbol of his status, a part of his identity, an ex-
t-ension of his personality, a determinant of many of
the benefits - and disadvantages - of society. The
place a person lives also affects job opportu"i!19:
6pen to him, the quality of education for his children,
and th" amenities enjoyed by the entire family. "
During the t96C's, over 808 of aII new jobs in
metropolitan regions were created l" !h" suburbs.
The aLsence of fiousing for Iow and-frodEiaEE-iiddme
persons has restricted the opportunity and ability of
such persons to fill these jobs.
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HOUSING F'ACILITIES I}I MAPLEWOOD UNDER FEDERALLY SUBSIDIZED
PROGRAI'IS
A. Such facilities must meet I'laplewood standards before
they can receive federal funds. These standards include
uuiiding codes, zoning provisions, minimum lot sizes,
minimum square footage, etc.
B. The MHRC has suggested that such facifities that need
specific village approvar (#236, etc') should be in
alcordance wit[ sound social development. A tentative
criteria for determining that aspect has been establish-
ed by the I4HRC to measure feasibility in relation to
resi3ent population, social dimensions, design, mainten-
ance, management, and facilities available to occupants'
C. The MIIRC believes that federally subsidized housing
facilities can be built in Maplewood that will not detract
from the community, but will enhance it even as it meets
the need of 1ow and moderate income residents. Examples
from other T'win City l'letropolitan municipalities indicate
that federally subsidizecl facilities have been successful
.in both regards.
D. Four options for federally subsidized housing are now
available; three appear possible for Ivlaplewood under
existing regulation- - public housing under a village-
establ-iihed Housing and RedevloPment Authority, FHA 236
rental and co-op housing, and the rent supplement pro-
gram in conjunciion with FHA 236. Due to high land and
ionstruction costs, FHA 235 (single-famj-1y dwelling-
home ownership) does not aPPear feasible under existi'ng
regula tions
III.QUESTIONS USUALLY ASKED ABOUT LOW AND MODERATE I}{COME
p ro gr ams
HOUS ING
(orIs there rea1ly a need for these federalsimilar ones if coiliEs s modifies them) ?
B
Yes. (See previous pages )
Should federally subsidized housing facilities be con-structed anywhere a federal of ficj.al or a contractor be-lieves one oughl to be. without regard for who fives there
now or what it wilL do to exis.ting neighborhood conditions?
No, Even the IUHRC, which as a special interest inthis area because of its human rights task, believesalf the people have an interest in this matter,especially those who presently live in the neighbor-hood. A "social cri-teria" has been esta-bl,ished forthis purpose, and the IIHRC refusal- to back a major
$236 proposal on the basis of that criteria in-dicates its sensitivity to these problems and
conce rn s
Shou1d the federal government be playing this role inthe area of hous ing?
C
In some situations, yes. The "ear1y,, public housinghigh-density concentrations built in already',b1ighled,,
neighborhoods in the 195)'s in Chicago and St. Louisclearly failed. P,ecelr-1y scandafs involving FHA 235rehabilitated housing have been uncovered by HUD.
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Yes, at least all Republican and Democratic admj.n-istrations since l{orl-d War II have beli-eved the
problems in housing to be of significant national
concern - enough so as to justify several FHA, cI,. and public housing programs. The government has
been forced to assume this role because housingcosts have risen much faster than personal income,
and because adequate housing facilities have not
been equal to population needs.
D. Doesn't housi.ng of this type attract Iow-income peopte
and ultimately become detrimental to the total community?
No, not necessarily. Slum conditions, higher crimerates and a depression of property values are not1ike1y to occur when structures are buJ-1t accordingto village regulations, when they are managedefficiently,when the majority of residents are ofmoderate income, and when the majority of residentsalready l-ive in that community.
E. Hasntt the government done a poor job in operating these
Programs ?
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A few 235 progra:ns have been hampered by inexperienceddevelopers. Each of these unsuclessful- experiences. has forced the federal government to revieiv its pro-gram, modi.fy its guidelines, and tighten its screeningprocess. On the other hand, most of the federal. programs have met with a positive response, supplyingprovisions for a housing need that was not otheiwise-being met. In our metropolitan region, federatlysponsored housing programs have general-1y met wiih ahigh 1eveI of success. fle Skyline Towers in St.Paul is an example of how a federal- program can bemisused, but it appears to be a sj-ngu1a; situation,improperly conceive<l for the kind oi residents thaioccupied it. (A practice of close examination byMaplewood officials ought to avoid these problem;) .
Doesnrt a Municipalj.ty lose money (tax revenues) whenfederally subsj-dized units are buit.t ana/or occupied?
In comparison rvith fu11, private development on thatland, yes; in view of other factors,. this is not socl,ear cut. property tax rates for such housing varyfrom 10? of total rental income in HRA owned public-housing units, to 50? of the normal- taxes i.n Fna Z:Orental units, to fuI1 taxes for I'HA #235 units andfor HRA leased, public housing units. ff the housingoccupies previously undeveloped 1and, the tax returnfor that property increases enormously. For examplea current FHA #236 proposal would reportedly increasethe current tax return on an undeveloped parcel ofl-and from 9200 annual1y to approximately $SO,OOO peryear. It should also be kept in mind that rentalapartment structures are taxed at a higher rate thanhomsteaded single-family dwellings. In addition,the new Minnesota school aid formul_a has shifted thebulk of revenue to school districts from 1ocal prop-erty taxes to state-wide tax resources. This changemeans that subsidized housing is no longer a financialhindrance to schools. ',Under the school tax equali-zation formula, " says Brookfyn Center uayor ehil Cohen,its generally to our advantage and to the school'sadvantage to get more bodies into the communj-ty',.fn addition, the majority of residents in subsidized
FHA #236 housing are either elderly or families withpredominantly pre-school children. The number ofbedrooms per unit is an important factor in this re-gard and can usually be control,led by municipalityin accepting #236 proposals.
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IV THE PROPOSAL OF THE HUMAN RELATIONS COMMISSION
A. I.Iha t it i-s not.
It does not build a housing project. ft does notauthorize construction. It doei not authorize anyproject. It does not enable llaplewood to build-anything. It does not set quotas.
B. I{hat it is.
ft makes clear that we as a village are not unsym_pathetic with this housing need. It says that irewill support federally suisidized housing proposalswhen they are in accordance with sound pnys:"ci:. anasocial- development criteria and promote tie vil1age,sgoals and well-being. It pLaces Maplewood on recordas -supporting the Federal Rent Supplement program iffederally subsidized units are Uuiit. rt tom6s to.:the I,laplewood Council in partial fulfil,lment of theoffical task.given to the I,{HRC to advise the Mayorand Council in the area of human relations and inthis case in the specific area of housing. It isa proposal that carries with j-t the willingness ofthe MHRC to continue to pursue this effort, as the,:,Iayor and Council may wish to direct it.
V ATTAC}U.IENTS
Propos a 1Social Criteria
HUD Fact Sheets on Federal programs
1)
2)
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VILLAGE PLEWOOD
I38O FROST AVEN UE MAPLEWOOO, MINNESOTA 55I09
4120/72
l.lhereas, the l,lapl ewood Human Relations Commission supports thedevelopment of Iow and moderate income housing in the Vi llage of
Maplevrood when these devel opments are in accordance rvith sound,physical and social devel opment cri teri a, and
Whereas, the I'letropolitan Council Interim Housing A1 iocationProposal dated December .]5, ,l971, lists the Village of l,lapl evrood asa high priority area for the development of low and moderate income
hous i ng, and
Whereas, Secti on 236 and 235 of the National Housing Act of 1968provides for the construction of hous'i ng units for sale or rent tofamilies of individual.s rvith limited income, andllhereas, under the provision of Section l0l of the Housing &
Urban Devel opment Act of .l965, the Secretary of H
Deve 1o pme n t is authori zed to enter into contractsrent supplement p ayme n ts to certai n qual i fi ed houof qualified lorv income families and individuals
handi capped, di s pl aced by public acti on, victimsor occupants of substandard hous ing, and
l,lhereas, provisions of said Section l0l cannot be made availablbto housing owners in certain localities unless the governing body ofthat I ocal ity has by resol ution given approval for such participationin the Federal Rent Suppiement Program, and
l,lhereas, both the Department of Housing & Urban Deveiopment andthe Metropol itan Counc i l , wh ich al so s c reens a1l appl i cants forthe Housing & Urban Developnrent fund allotments in the Trvi n Citiesarea, give priority to communities providing lot/ and moderate income
housing uhen they evaluate any request for Housing & Urban Development
moni es, for any purpo s e e.g. hous i ng, utilities, open space, pub)ic
servi ces, publ ic faci l ities;
Now therefore, be it resolved by the Maplewood Human Relations
Commi ss i on as fol Iows :
The Maplewood Human Relations Commission hereby recommends theadoption of a resolution by the 14aplewood Village Council approving:1. The development of federal ly subsidized housing in theYiilage of l.lapl ewood when the housing proposals are in
accordance vri th sound, physical and social developmentcriteria;2. Participation in the Federal Rent Supplement Program in
order to make a portion of these federal ly subsidized unitsavailable to families and individuals of low income.
ous
to
sin
who
of
ing & Urban
make addi ti onalg or^/ners on beha lf
are el derly,naturaj di saster,
COMMISSION
R IGHTS
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HUMAN
MA PLEI.'OOD }ruIIAN REI,ATT ONS COM}ITSSS TON
TENTATTVE CRITERTA FOR DETERMINTNG FEASTBTLTTY OF TIOUS ING
DEVEL OPI,EfllS FOR TIIE VILLAGE OF I,lAPLEWOOD
The Maplewood Human Relations commission believes that the bestpossib)-e community is a culturar mosaic that includes residentsof a11 races, creeds and socio-economic backgrounds. ft seemsparticularly important that this concept of neighborhood barancebe implemented in the ptanning and deveropment of housing facili-ties in suburban communities where improved riving conditions arepossible. With its qeographic positron as a first-tier suburband with its large amount of undeveloped land, Maplewood is uni-query suited to provide this integrated barance of housing facilitiesfor aIl people .
The Commission be lieves
this goa1, at this point
adequate and suffic ient
ate income.
that one of the primary needs in fulfilling
in the village's development, is to insure
housing for aII residents of low and moder-
With that interest in mind, and in fulf il.lment of its officialfunction as advisor to the mayor and council in the broad area of
human relations (and in this case in the specific area of housing),the Human Relations Commission suggests the following social cri-teria for determining feasibility of housing developments in
Maplevrood:
I. RES IDE}CT POPUI,ATTON
The proposed development should make provision for 1ow to
moderate to high-moderate income residents.
In any development, I0 per cent of the units should be
made available for low and moderate income housing.
Needs of the low income and elderly citizens of Maplewood
should be given priority in occupancy.
Family units should be spaced or scattered rather thanhigh density.
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A.An effective educational process should be initiated so
that Map}ewood residents are prepared to absorb people ofdifferent cultural and social backgrounds into the community.
The development should not physically segregate residents
of different cultural and social backgpounds from the rest
of the commun ity.
The development should avoid the concentration of PeoPIe
representing the same cultural and economic background.
B
A
B
c
D
SOCIAL DIMENS IONS
c
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ff. SOCfAL DIMENSfONS (continued)
fnformation about the development shouldto encourage community residents to availimproved hou s ing .
ITI. DESTGN AND I{ATMTENANCE
A. The development should be compatible with the
it i-s planned .
existing
sanitary and maintenance serv ices
a physical asset to the community.
D
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area in wh i. ch
be adequate
should be
be disseminated
themselves of
B
c
and proposed
There shou Id
provided.
The s tru cture
IV. TA.CTLITIES AVATLEBLE TO OCCUPAMIS
A
B
c
D
The provision should be made fo:: year-round recreationaland open-space areas for the children.Indoor recreational facilities should be envisioned forthe development,s senior citizens and pre_school children.Appropriate transportation facilities (regarding cost andtype) shourd be avairabre to the residents of the deveropnent.Schools, shopping facilities and other public servicesshould be convenient to the residents of the housing
deve Iopment
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H E, m-FI-lA ASS ISTED FiSE GHAirrl
F8ffi row-RENT puBLrc HousrNG pRoGBAM
CONVENTIONAL COr{STR UCTION
! The LHA acquires a site and contracts with architects
and planners to prepare plans and specifications
covering tlrs p'oDosed projcct.r Compedtive bidding is done on the LHA ptans, andlhe lowest responsible bidder is awarded the
construction contract.
TURNKEY CONSTRUCTION
r A private developer or builder who has a site or a
site option may either approach an LHA with a pro-
posal to build, or respond to an advertisement for
proposals published by the LHA. ln all cases, LHA,s
will ad',/ertise to ensure fair competition.t Proposals are evaluated by the LHA and HUD with
respect to site, design and construction plans, the
developer's credentials, and costs.t lf a developer's proposal is acceptable to the LHA and
HUO, the LHA enters into a Contract of Sale with the
developer under which it agr?es to purchase the
completed development when it is finished.
COST LIMITATIONS
! Cost limitations are established on a per.room basis
according to regulations esrablished under the United
States Housing Act. They ditfer with respect to
elderly and nonelderly projects and with respect to
higher and lower cost areas.
FINANCING
-. Proiects are financed through the sale of bonds and
notes by the LHA. Federal annual contributions are
provided by HUD and are adequate to cover the debt
service on the bonds and noles issued.r HUD financial assistance is also provided in the {ormof preliminary loans to the LHA for planning
pu rposes.
MANAGEMENT
! Overall responsibility for management of proiects iswith the LHA; however, LHA's may contract with
other organizations such as privale mana_,rement
corporations ror tlte operation of specific projects.! Proiects may also be administered under a nuntber of
programs wlrich offer the tenants an opportunity for
homeownership.
TENANTS
E Occupants must meel specified income limits and one
of the follo!,,,ing: be a "family" as defineci br LHA(there must be concept of familv life), or a singJeperson at least 62 years of age, disabled or
handicapped, or be dtsplacecl by urban renc /,,/al or
other governmental action, or natural cjisaster.
E Applicants must meet other standards and priorities at
admission, as adopted by the LHA; i,e., housing need,
assets, displaced status, elderly, disability, etc.
Consideration is to be given to achieving sociel and
economic mix.
WHAT IT IS
. A r.ogram to help public agencies to provide decent,
safe and sanitary housing for low-income families at
rents they can afford.
NATURE OF PROGRAM
. Financial and technical assistance is provided by HUDto local housing authorities (LHAt) to plan, build or
acqutre, olvn and operate low_rent public housingproiects. These housing projecrs are provided through
a. number of melhods including construction underthe conventional and Turnkey mertoOs unJ ucqrisi-tion wilh or without rehabilitation. proposed pro-
grams must be approved by the local governing body.
INCOME LIMITS
u Limits are established by the LHA and appr<.rved by
HUD for admission and continued occupancy. They
must meet requirements of local, State, and Federal
lau,/s.r An annual reexaminarion of the elioibitity sratus of
tenants is made; for elderly families, at the option oJ
the LHA, it may be biennial.
RENTS
I Rents are established by the LHA and dpproved by
HUD taking into account factors arfecting rent-paying
ability of families and financial stability and solvency
of thc project. Some LHA's establish special rents tor
welfare recipients and ceiling .ents ior continued
occupancy,
r lncome for rent (including allowable deducrions and
exemptions) is established by the LHA and approved
by HUD.
r The HUD Act of 1969 provides that rents sha not
exceed 25ok of the family income as defined hy the
Secr€tary.
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LOW.RENT PUBLIC HOUSING_LEASING (SECTION 23)
NATURE OF PROGRAM
r Annual contributions made to authorized local public
agencies enable them to work with real estale
agencies, owners, and developers in providing housing
for low.income families. Local housing authorities
(LHA's) lease dwellings frorn private owners and
make them available 10 low-income Jamilies at rents
they can aflord. The local governing body must have
passed a resolution approving the application of the
housing program to the locality.
ELIGIBLE HOUSING
i Single tamily houses, row houses, apartment units in
multi-family structures, mobile homes, and, for the
elderly or handicapped, congregate housing, or a
combination of these may be used.I All dwellings must be decent, sa1e. and sanitary, or
improved 10 that condition by the owner prior to
leasing and contorm to local code requi.ements.
r Housing must be situated in a satisfactory resrdential
neighborhood accessible to public facilities.
MANAGEMENT
r Over-all program management is the responsibility of
LllA's; however, arrangements for management and
maintenance of specific propenies is in accordance
with lease terms.. Prbperties are to be leased at an amount not higher
than their fair rental value.
! Leases are to be for terms of one to five years and
may be renewable.
TENANTS
! Leases may provide for owner selection of tenants, for
owner selection from lists of eligible applicants
supplied by an LHA, or for selection by the LHA.
Eligibility determinations must be made by the LHA.
a
INFORMATION SOURCE
tlUD Area Off ice or HUD-FHA lnsuring Office
ADIVIINISTER ING OFFICE
Assistant Secretary for Housing Production and
Mbrtgage Credit-FHA Commissioner.
HUD-92-F{3)
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January 1971
GP O 912-3C6
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FI tD D-F;"3.,1 AS$ ISTED i3I: 0 G Fl..i;U
F0ffi RENTAL AND c0-0p H,usrNG F,R L,wER-rNc.ME FAMTLTES
SECTION 236, NATIONAL HOUSING ACT
WHAT IT IS
! Privately built rental and cooperative housing forlow- and moderate.income families.a Provides assistance in the form of monthly Federalpayments to mortgJgce. reducing cost to o.cupdntDy payrng part of interest on market rate proleci.
ELIGIBLE PROJECT
it, Five or more units,detached (need not be contig.uous), semi-detached. row, walk-up or elevatrirstructures
s Only new structures or existing ones involving ma,ior rehabilitation.
a May. include non+Jr^relling commercial-must be pre_dominantly residential.a Designed so that basic rent is less rhan 25 percentof maximum income limits.It An insured l;mir.d dividend prol.ect purchased bynonpro{it organizalion or co-op.
ELIGIBLE SPONSORS AND IT1ORTGAGORS
E Private, nonprofit organization, limitecl dividendmorlgagor, or cooperative housing corporation.
Er Consideration given to qualifications o{ sponsor,scharactcr, integrity, motivation, past successful par.licipation in housing, demoitstrallle interest in thistype of housing, recognition of continuing responsi-bility, financial ability, capacity to provide com-petent manegement.
PROJECT MANAGEMENT
E Sponsors must have managemenl program - realisticplan {or providing socially oriented management
and related human services.I Housing owner expected to assisl tenants in applica-tion preparation.
E Management has fiscal responsibilities - monthly
statements, re-certifications of inconresI Management program must be approved by FHA atleast 30 days prior to initial endorsement.
FINANCING -..
I By private lenders, (nonprofit mortgagors eligiblefor GNIMA Tandem ptan).
t.By State or local governments through loans, orunder State or local program of loan insurance orTax abatement.
MORTGAGE LIMITS
Lesser of the following:
I $12.500.000 {maximum)I 90 percent of FHA esrimate of cost (rOO percentfor nonprofit or cooperative mortgagor).E The sum of the per unit.limit under Section 22.1.
TENANTS AND COOPERATIVE OCCUPANTS
E Must mect specified incomc requirements and oneof the following: be a family (two persons relatedby blood, marriage or operation ot larrt, o. sinsle(at lcast 62 years of age), or hanOicappeO perso"ni(no age rcquirement).
a 10 percent of dwelling units may be for singlepeople under 62 years of age.! Prioriries to those displaced by urban renewal,govcrnmcnt action, national disastcr.
TENANT INCOME LIMITS
tt A.liusred income cannot exceed l35 percent oflirnits appllcable to prrblic housing locally.E Adjusted income is current income from all sourcesbelore taxes of all members of thc family occu-pying unit excluding a E pcrcent dcduction forunusual or temporary income, lcss 5300 for eachminor and less earnings of each minor.
E lncome recertified every two years and needed ad-justment in rental charges made.n During initial rent-up tenants over.income are re-quired to pay tair market rental.
MONTHLY RENTAL CHABGES
r Arter the initial rent,up eligible tenant pays basicrenlal or 25 percent of income whichever is greater;
over.income tenant pays 25 percent of income butnot in excess of fair market rental.A Basjc monthly rental charge is based on operationat 1 percent interest rate mortgage.E HUD-FHA makes monthly assistance payments to
mortgagee to reduce mortgage payments from mar-ket rate to an amount required for a I percent
mort9age.
! Eligible tenant pays greater of basic rental charge or25 percent of adjusted income (a limited numbir oftenants may also receive rent supplement assis.
tance).
B Fair market rental (over.income tenants) based onoperation at market interest rate.
D Will include all uritities except telephone.
INFORMATION SOURCE
HUD Area Office or HUD.FHA lnsuring OIfice
January 197'l GPO 9I t.3r6 HUD.90.F(3)
I
ADMINISTERING OFFICE
Assistant Secretary for Housing production and
Mor tgage Credit-F HA Commissioncr.
F! Ai f -f i-:,+ ASti iST:: 3 iri: il G ;T
FE;:I THE RENT SUPPLEMENT PROGRAM
r+i.il
WHAT IT IS
! Privately built housing for low-income families andindividuals eligible fo. public housinq and who areeither displaced by governmenral action, 62 years ofage (or older), physica y handicapped, tiving insubslandard housing- or whose unit was damageid ordestroyed by natural disaster.! Provides assislance in the torm of monthly Federalpayment to owner in behalf o{ low-income tenants.
ELIGIBLE PROJECTS
Ir Only nevt housing projects or existing ones involving
maior rehabilitation.r Five or more units-ietached. semi-detached, row,
walk-up, or elevator slructurcs.r Modest design suitable to the market and location.! Must be built in conformity with FHA minimum
property standards.
r Regulatcd by FHA established maximum rcnts, rateof return, me'ihods of operation. rent suoplementI paymenls.
Must be eithcr part of a workable program forcomn]unity improvement or have local officialapproval.
ELIGI BLE SPONSORS AND I\,'ORTGAGORS
! Private nonprofit organization, limited dividend
mortgagor, or cooperative housing corporation.r Consideration given to qualifications ofsponsors-character, integrity, motivation, past
successful participation in housing, demonstrable
interest in this type of housing, recognition ofcontinuing responsibilily, financial ability, capacity toprovide competent management.
PROJECT MANAGEMENT
r Success depends on competent project management.r Housing owner expected to assist tenants in
application preparation.
.Management has fiscal responsibilities_monthly
statements, re-certifications of incomes.r Management program must be approved by FHA at
least 30 days prior to inilial endorsement-
FINANCED BY
! Privale lenders (nonprofit
GNMA Tandem Ptan).
mortgagors eligible for
INFORMATION SOURCE
HUD Area Olfice or HUD.FHA lnsuring Office.
! By State or local governments. through loans. orunder State or local program of loan insurance or lax
abatement.
MORTGAGE LIMITS
. Limits and tern]s applicable io Section 221 (t)ll3l.t Maximum amount-not in excess of Sl2,50O,OOO.r nepaymenl-level annuity monthly plan (equal
monthly payments to principal & interest).
HOW ONE BEGINS
! Preliminary conlercnce wiih local HUD-Fl.lA area or
insuring office-identifying localiry. general site, pro.
posed type and number of living units, need lor
housing, type of people to be scrved, plans for
mana0ement.
E lf pro,ect ap1:ears feasible-sponsor rvill be asked to
submit application for analysis.r Feasibiliry anaiysis and other fornts and exhibitswrll not be execLlted until sponsor has been aclr.,isedlhat rent sUppleme,.it funds have tleen ?rlocaiecl.r Favorable clecision resulting from teasibility analysiswiil resull in reservation o, rent supplement Iunds if
i:vailable.
F:ormal application wi,l be invited (accompanied b
required fee).
ABOUT THE TENANTS
E Eligiblc tenants described in opening paragraph.
t lncome limits comparable to those of public housing
locally.
r Total assels cannot exceed 52.000 unless applicant is62 years or older, in which case assets may total
$5,000 (personal property excluded).E Supplement Ior any tenant may not exceed 7096 and
must represent at least 10% of the FHA-approved rent
for the unit.
RENT SUPPLEMENT AMOUNT
I Difference between 2S9i, of gross income andFHA-approvcd rental for unit rcpresents rent
supplement amount.t Re-certification of income required yearly (except for
elderly).
r Local HUD-FHA area or insuring ofrice wilt negotiate
rent supplement contracts-
! ll will provide that payment oI rent supplcments Ior- eligible tenants will be made monthly, by voucher
initiated by housing olvner.
ADMINISTERING OFFICE
Assistant Secretary for Housing produclion and
l,4ortgaqc Credit-FHA Commissioner.
January I97l HUD.91.F13l
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