HomeMy WebLinkAbout2005 Ordinance No. 007•
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OR DINAN CE NO . 2.__
SE RI ES OF 2005
BY AUT HOR IT Y
COUNC IL BILL NO . 2
INTRODUCED BY COUNC IL
MEM BER BRADSH AW
AN ORDINANCE AUTHORIZING THE REDEMPTION AND SALE OF A HOUSING
REHABILITATION PROPERTY LOCATED AT 4231 SOUTH CHEROKEE
STRE ET IN THE CITY OF ENGLEWOOD , COLORADO .
WHEREAS, the City Council of the City of Englewood accepted assignment from
the Englewood Housing Authority of all rights, assets and liabilities associated with the
Housing Reh abilitation Loan Program by the passage of Ordinance No . 23, Series 1999;
and
WHEREAS , Englewood City Couucil authorized amending Title, 4, Chapter 3, with
the addition of a new Section 13 entillcd "Housing Rehabilitation Fund" by the passage
of Ordinance No . 26 , Series 1999 ; and
WHEREAS , the Englewood Housing Rehabilitation Program was created in I 976 to
pre se rve ·.he existing housing stock in Englewood and to address the problems of low-
in cora-1c families with the financing of major household repairs; and
WHEREAS, the Rehab Program approves home improvement loans that arc secured
by deeds of trust recorded on the property representing generally second or third
mongages; and
WHEREAS, occasiona lly homeowners default on their loans and the lien holder
initiates :he foreclosure process by filing the required document s with th e Public
Trustee's Office ; and
WHEREAS, the property located at 4231 South Cherokee ha s a Rehabilitation Loan
with the City holding a second mortgage ; and
WHEREAS, this property went to publi c sa le on October 13, 2004, and th e
property was so ld back to the first mortgagee who initiat ed th e foreclosure ; and
WHEREAS , th e Eng lewood Rehab Loan Committee was consulted at their
Novembe r 2004 meeting and they recommended filing the Int ent to Redeem No tice
with the public Trustee 's Office ; and
WHEREAS , the homeown er fai led lo redeem th e propert y, within their 75 -day
red emption period ; and
WHEREAS , the City (the seco nd mortgagee) was notified late on January 4 of the
amoun t needed to redeem the property no later than Janu ary 13, 2004; and
WHEREAS , the City redeemed the property on January 10, 2005 and requested that
the deed be is sued to th e Ci ty of Eng lewood Housing Rehabilitation Fund; and
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WHEREAS , th e redeemed propert y located at 4231 So uth Cherokee Stree t wi ll be
so ld to a private ow ner-occ upi ed party who has sec ured hi s ow n fin nncing an d th e Cit y
funds used to purcha se the property wi ll be returned to th e Hou sing Rehabi lit ation Fund
when th is pro pe rt y is so ld and !h e new owne rs loa n is clo sed; and
WHEREAS , if an offer to purchase is re ce ived from any City emp lo yee , their
fa mily members, or any bu si ness in which a Cit y employ ee has a financial inter est, the
offer wi ll be subm iucd to the Englewood City Co un cil fo r approv al;
NO W, TH EREFO RE, BE IT ORDAIN ED BY THE CITY COUNC IL OF THE CITY
OF ENG LEWO OD, COLORA DO , AS FOLLOWS:
~. The Cit y Co uncil of the City of Engl ewood hereby auth ori zes the
redemption and subsequent sa le of a Hou sin g Rehabilitation Propert y acquired th ro ugh
th e foreclosure proce ss lo cated at 4231 South Cherokee Street.
~2. The Mayor and the City Clerk arc au thorized to exec ute the proper form
of de ed for the conveyance of the property loca ted at 4231 South Chero kee Street,
Eng lewood, Colorado pursuant to Section 71 of the Englewood City Charter.
Introduced , read in full , and passed on first reading on the 7th day of Febru ary , 2005 .
Publi shed as a Bill for an Ordin ance on the I Ith day of February , 2005 .
Read by title and passed on final reading on the 22'' da y of February, 2005.
Publi shed by title as Ordinance No. J_, Series of 2004 , on the 25th day of
February, 20054.
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I, Louc ri shi a A. Elli s, Cit y Cler k of th e City of Eng lewoo d, Co lor o, here by
ce rtify th at the above and foregoing is a true co ip, of th e Ordinan p sscd on final
re ad ing and publi shed by title as Ordinance No . '.L_, Series 5.
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COUNC IL COMMUN ICATION
Date : Agenda Item : Subject :
Febru ary 7, 2005 11 a i Red emption and Sa le of Pr op erty acq uired
through lh e Housing Rehabi litation Fund
lniliated By: I Staff So urce :
Community D eve lopment D epartment Jan et Grimmett, H ousing Finance Specialist
COUN CIL GOAL AN D PREV IO US COUNC IL ACTIO N
Council p assed Ordinance No. 23, Se ri es 1999, accepting assignment from th e Engl ewood H ousing
Authority of all rights, assets and li ab ilities assoc iated with the Housing Rehabilitation Loan Program and
also passed Ordinan ce N o. 26 , Se ries 1999, amending Titl e 4, Chapter 3, by th e addition of a new
Section 13 entitl ed "H ousing Rehabilitation Fund ".
In March 20 01 , Council passed an o rdin ance approving redemption and sa le of anoth er property
acquired through the foreclosure process .
REC OMMEN DED ACTI O N
Approve a b ill for an ordinance fo r the redemption and subseq uent sa le of 4231 South Ch erokee Street
(a single-family home) acq uired through th e foreclosure process as defined by Colorado State Statutes .
BACK GR OUN D, ANA LYSIS, AN D ALTE RNATI VES IDENTI FIED
Th e H ousing Rehabilitat ion Pr ogra m was crea ted in 19 76 by the City of Englewood to preserve the
ex istin g housin g stock in Engl ewood, and to also address lh e problems that homeowners ex perience
wi th the financing of majo r house h old improve m ents . D uring 1h e 19 70's, th e En glewood School
Di stri ct expe rie nced a dramati c loss in student enrollm ent. Fo ur elementary sc hools closed during that
decade . Yo ung families were outgrowing their homes and movin g out of Englewood. School officials
approach ed th e City Comm uni ty Development Director (CDD ) for as sistan ce in so lvi ng this problem.
The Ci ty CDD m et w ith Continental Bank oh1cia ls (now Wells Fa rgo Bank) an d HUD staff 10 determin e
their levels of in tereSI in su pporting a new housin g rede velopm ent program th at would all ow
homeown ers to upgrade and rem odel th eir homes including th e buildin g of roo m additions and
garages. Th e Com munity D evelopment D epa rtm ent, at th at time, co nsi sted of thr ee divisions :
Planning and Zoning, Bu ildi ng, and H ousi ng Redeve lopmen t. Th e Housing Redeve lopment Division
director also acted as th e Exec ut ive Direc tor of th e En glewood H o usin g A uthority (EHA). Th e City
Attorney required tha t the n ew H ousi ng Rehab Program not be administered direc tly by th e City to
avoid any c onn,c ts with a State Statute that prohibited any muni ci pal government from mak ing loans to
its ci tiz ens. It wa s decided to use th e EHA as the conduit to manage and o p erate the Program . The
Reh ab Pro gram was crea ted w ith in itial funding fr om 1he City of Engl ewood, HUD and Continental
Bank usi ng Contin enta l Bank's in co me guidelines sin ce th ey were the least restri cti ve . When eli gible,
families would re c eiv e HUD fu nds if th ey m el HUD's stric ter income guidelin es. Operations for th e
Rehab Pr og ram were mana ge d th rough Ci ty Fund 72 (now Fund s 45 and 46) usi ng th e City's
ac co unt ing depar tm en t staff to main tain the financia l reco rds. In 1985, th e EH A Boa rd oi Dir ec tors
request ed autono my an d independence irom the City oi Englewood as all owed und er Stale Statu tes .
Th ey desired direc t control ove r their Exec utive Di rector and staff. Emp loyees who mana ge d EHA
prog rams harl th eir employ ment statu s tr ansfe rr ed from the City to th e EHA. Th e exce p iion wa s Jh e
Housin g Re hab Pr ogram staii. It was de termin ed th al th e Re hab Program wa s more appropriately.,
commu~ily redeve lopme nt projec t and retained control of th e program . Th e da y-l o-d ay manage ment
was still o uts our ce d to th e EHA to avoid an y confl ic ts.
Th e legal au thori ly to operat e and manage the Rehab Program was assigned to th e Ci ty i n 1999
through an ag ree m ent w ith th e EH A. It was determined at that time th at th e Program and city staff
sh ou ld be under th e direct management of Jh e Co mmun ity D eve lopment D irec tor. In ord er lo avoi d
any confl ic t wi th Colorado State Statut es, an ent erpri se fund wa s cre ated under TABOR reg ul ati ons
kn own as th e Housi ng Rehabilitatio n Fun d. Th e Rehab Program retain ed its own fundin g sources
desi gna ted as Fund 45 and Fund 46 th at are used to suppo rt th e operations of Jh e Pro gram . Th e
funding so ur ces that ma ke up th e ba lan ces of th ose Funds ha ve primarily been rec eive d fr om fede ral
HUD programs and thr ough various bank lin es of credit (LOC ). HUD programs require that funds musl
go to families at or below 80 percent of th e area median inco me and th at funds be recycl ed if repaid to
ben efi t affordab le ho usin g projects. Vec tr a Bank , our cu rr ent LOC provider, req uires th at th e
borrowers of th ei r mo nies are fa mili es at or below 100 percent of th e area median income or familie s
th at are not credit worth y ap pli cants under traditional bank fina nci ng. Th e Pr ogram requires th at th e
loans be coll atera li zed by a deed of tru st reco rded on th e home ensurin g repa yment. In addition,
Vec tra Bank requ ires th e bo rr ower's deed of tru st be assigned to them by the Rehab Program along
w ith a sepa rate pro miss ory no te l o Vect ra. A deficiency reserve account is als o required to be funded
in an acco unt at Vectra Bank. Th e balanc e on deposit in this account is eq ual to a minimu m eight
perce nt oi th e total o utstandin g loa n portfoli o balance.
In pas t yea rs, staff would re ce ive one or two noti fi cations of foreclosures every three to four yea rs .
H owever, during th e past fi ve years , fo reclos ure notifica ti o ns ha ve in creased due primaril y to eco nomic
conditions . In past ye ars , mos t Rehab borr owers had be en abl e to w ork thr o ugh th ei r delinquencies.
Th is has not bee n th e cas e fo r 2004. In a rece nt articl e in th e Den ver Bu siness Journa l , th e auth or states
"peo ple w ho have l os t th ei r jobs tend to turn lo credit ca rd debt and home equity loans to survive, and
eve ntuall y ma y end up in fo recl osure and bankr uptcy". Th at statem ent is supported by th e stati stics
from th e A rapah oe Coun ty Pu blic Tru stee's Office. Th e number of for ecl os ures has increase d in th e
co unty ove r 400 perce nt from th e yea r 2000 to 20 04. In 2000, 780 foreclos ures w ere processe d in
Arapah oe County w hil e in 2004 th e number was 3,125 fo reclos ures. Th e 2004 fo reclosu re total s were
a 39 percent increase over the 2003 totals . The Rehab Program has received fi ve fo recl os ure
notifi ca ti ons sin ce August :!004 .
Th e fo reclos ur e process is th e p rimary tool ior len ders to use to insure repa ymen t of thei r loans. W hen
a hom eowner defa ults, lh e li en holde r is ab le to ini ti ate th e fo reclosure proces s to coll ec t th e moni es
that are owed to th em. Thi s process is started by fili ng th e requ ired lega l docu ments w ith th e Publi c
Tru stee's Office. This filin g tr iggers a w hole se que nc e oi eve nts th at is dictated by stal e sta tu es. The
Public Tr ustee w ill se t a Pu blic Sa le da te fo r th e property and publi sh thi s informati on in a news pap er of
ge nera l ci rcul ation fo r a mi nimum of fo ur weeks. Ea ch rec o rded lien hold er rece ives a copy of that
adve rtis ement as we ll as a Publi c Trust ee 's Notice of Ri ph ts lo Cur e or Redee m. Ea ch ju nior li en holder
must fil e a Notice of Intent io n to Rede em with in 60 days of th e Publi c Sale date if they are interes ted in
redeeming th e pro perty to coll ec t th ei r own ind ebtedness . If th e Intention to Redeem is no t fil ed, th en
th e li en hold er loses th eir rights un de r th e deed o i tru st provisi ons and th e prope rty is no lo nge r
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co ll atera l fo r th ei r loa n. •
• Th e homeowner ca n c ure the default any time fr om th e initial notifi ca ti on through the 75-day peri od
fo ll owi ng th e Public Sale . This time frame represents approxima tely a fo ur-month time periou. If the
homeowner redeems th e property, then th e fo reclosu re process is end ed and there is nothing th e
jun ior lie n holder is required to do. All liens remain in full effect. If th e hom eowne r does not redeem
within th e 7 5-day time p eri od, th e first j unior lien holder has ten days fr om that date to act on th eir
Intention to Re~ee m and to pay th e Publi c Trustee 's Office th e total reden,ption amo unt in ce rtified
funds . Each subsequent junior lie n holder then has five days in which to red ee m . Thi s means th at a
juni or li en holder will not know if th ey n eed to ac t o n th ei r Intention to Redeem un til the homeow ner's
redemption peri od has ex p ired and th en o nl y when notifi ed by the Public Truste e as to the am ount
ne ce ssary to redee m th e property.
The Housing Rehabilitati on Loa n Pro gram approves home improve ment loans that are secured by
deeds of trust , generall y as seco nd or third m ortgages Uunior liens). The proce dures of the Pro gram
require staff to have all foreclosures re viewed b) the Rehab Loan Committe~ (RLC) after the property
has been sold at a public sale . Th e RLC consists ,f three members, currently: 1) Jea nnette Espinoz a,
Englewood Branch Manager, Vectra Bank; 2) Jennifer Nolan, Accountant, City of Engle wood
Accountin g Department; and 3) Bea tric e Lane , low-income ho meowner and Englewood resid ent.
Additional members to the RLC may be co nsidere d in the future.
Give n the very short time fram es of the junior lien holde r redemption period, properties red ee m ed
thro ugh the H ousing Rehab Prog,am are always brought to th e Council afte r the fact for ordinan ce
approva l. Sec tion 72 of the H o me Rule Charter requires th at real property may be sold , but only by
ordinance, not using th e emergen cy provis ion. Ea ch property w ill be brought before Council as ea rl y in
the process as possible so that marketing efforts ca n begin . This process will ex pedite th e subseq uen t
• sa le and cl osing of the property.
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The first foreclosure notification received by staff was for 423 1 South Cherokee Stre et. The
homeowner was also in default o n their Rehab Loa n . The Rehab loan was a blend of moni es from both
th e Vectra Bank lin e of c redit and HUD programs . This means that the Rehab Pro gram still had an
obl igation to pay Vectra Bank even if th e homeow ner defaulted. Th e Public Sale was se t for October
13, 2004. Th e property was so ld back to •~e first m ortgag ee w ho had initiated the fo reclos ure. The
RLC w as co nsulted at th ei r November 2004 meeting and th ey recommended filin g the Inten ti on to
Redeem noti ce with the Publi c Trustee's Oftke. That notice was filed in December. Th e homeowner's
final rede mption date was Jan uary 3, 2005 . The City of En glewood was no tified by the Publi c Trust ee's
Office of th e amount n eeded to redeem th e property no later than Janua ry 13, 2005. A wi re tr ansfer
fr om th e H ousing Rehabilitation Fund 46 was se nt o n January 10, 2005 to th e Public Trustee 's Offic e.
A faxed lett er requesting th at a Public Trustee's deed be issued in th e name of th e City of Englewood-
H ousing Rehabilitation Fund w as req uest ed that same day.
The redeem ed p rope rty w ill be so ld to a private own er-occupi ed party who has sec ured th eir own
financing . Th •, fund s that we re used to redeem th e p roperty w ill b e return ed to th e H ousin g
Rehabilitation fund 46 w hen th e property is •old . If an offer to purchase th e property is received from
an y City of En glewood empl oyee, th eir famil y memb ers, or an y business in which a City employee has
a financial in teres t, th en staff will submit th e o ffer to th e Ci ty Coun cil for approval.
FINANCIAL IMPACT
Fund 46 will cover all cos ts of th r ·edemption and th e subsequent sa le of 423 1 South Cheroke e Str ee t.
Th ere are no oth er fi nan c ial i,, '" to th e City.
LIST OF ATTACHMENTS
Notice of Int ention to Rede em and :\ffidavit of Amount Owed.
Letter requesting de ed for 423 1 Sou th Cherokee St ree t.
B111 fo r an Ordinance.
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NOTICE OF I NTENTION TO 111-:UEEM ANU Al'F"lll,\\'IT Of AMOUNT OWEU
TO THE PUOLIC TRU:-. TEE OF THE
______ County o( _~M~,~· •~nh~•~• ___ • S1:11c of C11loraJ11,
lnform111ion Rcguding Publlc TfuJi lCc '., F11rtl'lt1,urc Sale :
ln fonna 1ion Re11rdin1 Right 10 RNCcm :
City of Englewoud-llou ■in& neh:,bll ll .::i.t ion Fund
_1000 l:nglewood l'kvy, Enslewootl 1 CO 80110
JOJ 762 1 2349
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AJJruJi ,md P111111c Nu. uf R~tmptioncr
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Nov ember 10 200 1, ...
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C T y 0 F
COMMUNITY DEVELOPMENT
Janua ry 10, 2005
TO: Arapahoe County Publi c Trustee 's Office
FAX : 303 .730.0076
Attn: Billie
RE: Foreclosure #2000-2004
As a result of redeeming l~e Public Trustee's Foreclos ure #2000-2004, please issue an Public
Tru stee 's Deed to :
City of Englewood -Housing Rehabilitation Fund
1000 Englewood Pkwy
Englewood, CO 80110
The $36.00 fee was included in the w ire transfer redeeming the property . Please call me at
303.762 .2349 if yo u have any questions .
Sincerely,
0 --1-d:: / it __ k1-. ,'\.~)\,,\\ '-1\J...tt,
Janet M . Grimmett
Housin g Finance Speci li 5t
1000 Englewoo d Parkway Eng lewood, Colorado 80 110 PHONE 30 3-76 2-2342 FAX 303 -783-6895
www .enalfwoodaov.ora