Multi Family Apartment Rehab Loan

Major Features of the Grant

• Provides up to $10,000 per unit for a 5 year loan. (In target neighborhoods the maximum per unit is up to $14,500 per unit for a 7 year loan for repairs and rehab.) The maximum amount allowed per project is up to $100,000. The owner needs to contribute at least 10% of the total project cost.
• No monthly payments and no up front fees required, however 4% simple interest accrues and is deferred over the life of the loan.
• The entire loan amount and accrued, deferred interest is forgiven over time if conditions of the loan are met each year.
• Improved units need to remain "affordable" for the life of the loan.
• Improved units need to be rented to low and very low income tenants.

Type of Rehabilitation Work Covered by the Program

• Major systems repair or replacement, including heating and air conditioning, electrical and plumbing work.
• Safety improvements, such as GFI outlets and replacement of broken or inoperable windows.
• Exterior improvements including painting, siding, roofing
• For additional eligible improvements see List of Improvements Covered by Program.

Who is eligible for a multi-family apartment rehabilitation loan?

Property owners who:

• Improve 2 or more units on their property.
• In general, the value of all loans secured by the property should not exceed 100% of the value of the house.
• Credit is generally not an issue, however all utility bills, property taxes, and mortgage payments should be paid up to date.
• Property owners who agree to renter income restrictions and affordable rent levels for the length of the agreement. (See the Low and Very Low Household Income Table.)

How Much Does the Loan Cost the Apartment Owner and How is the Loan Repaid?

• A loan to cover the cost of repairs and improvements and closing costs is made by the City to the property owner. The owner must contribute 10% of the total project cost.
• The loan can be up to $10,000 per unit for a 5 year loan. (In a target neighborhood the maximum is up to $14,500 per unit for a 7 year loan.)* A maximum of up to $100,000 per project or site is permitted.
• Payments are made on a yearly basis. However, if the property is found to be in compliance with the terms of the loan agreement each year through annual monitoring, the annual payment is forgiven and not required. The entire amount may eventually be forgiven.
• If the property is sold or ownership is transferred within the 5 years, the buyer must assume and comply with the terms of the loan agreement. 
• Closing costs are approximately $400 and are included in the loan amount. They are not paid up front. Costs are disclosed in writing before any agreements or contracts are signed.

Rent and Renter Income Restrictions - As a condition of the loan, the following affordable housing restrictions are placed on the assisted rental units for a specific number of years. The limits are placed just on those units included that are improved or assisted through the project.

1. Maintain property in good physical condition so that they meet Housing Quality Standards.
2. Units must be rented to low income tenants (those at 80% of median household income or less) and very low income tenants (those at 60% of median or less). (See the Low and Very Low Household Income Chart) Generally, 80% of the assisted units need to be rented to low income renters and at least 20% of the assisted units need to be rented to very low income renters.
3. Assisted units must be rented for no more than affordable rents, or existing rent levels (whichever is lower), with a cost of living increase allowed each year. The rent levels are set each year according to the source of funds used for each project (HUD standards or State Redevelopment Fund standards). Because each project is unique, please call (818) 548-2060 for more information on Affordable Rent Levels that would apply.

Steps to Complete a Multi Family Apartment Rehabilitation Loan Project

1. Submit an application to HD&P staff. The property and project are determined to be qualified for the program by HD&P staff.
2. The property owner works with a City Rehabilitation Analyst to develop a description of the work, cost estimates, and a bid package.
3. The work is bid out to a minimum of 3 qualified building and/or home improvement contractors.
4. Loan agreement and mortgage documents are signed by the property owner and the City. Funds are held by the City to pay for the work.
5. A contract to complete the work is signed by the property owner and the chosen contractor.
6. The contractor is paid by the City as the work is completed and approved by the property owner.

Qualified Contractor Requirements

1. Contractor holds a valid, appropriate California State Contractor's License and Home Improvement Certification.
2. Contractor holds general liability insurance in the amount of one million dollars or more.
3. Contractor holds workers compensation insurance in the amount of one millions dollars or more.
4. If awarded the project, the Contractor agrees to carry the City of Glendale as an additionally insured on general liability insurance.
5. If awarded the project, the Contractor obtains a City Business License and obtains necessary permits to perform the work.

* If projects substantially increase the value of the property (greater than 125% increase), additional requirements for the term of affordability are required.

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