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HomeMy WebLinkAboutBIL 159 Draft 01 2010-2012COUNTY OF HAWAII ORDINANCE NO. STATE OF HAWAII BILL NO. 159 AN ORDINANCE AMENDING CHAPTER 21, ARTICLE 5, VARIOUS SECTIONS OF THE HAWAII COUNTY CODE 1983 (2005 EDITION), RELATING TO SEWER CONNECTION LOAN PROGRAM. BE IT ORDAINED BY THE COUNCIL OF THE COUNTY OF HAWAII: SECTION 1. The purpose of this measure is to update and amend Article 5 relating to the Sewer Connection Loan Program. SECTION 2. Chapter 21, Article 5, Section 21 -38 of the Hawai`i County Code 1983 (2005 edition), is amended to read as follows: Section 21 -38. Definitions. For purposes of this article, the following words and phrases, unless the context otherwise requires, shall be defined as indicated: "Default" means the failure of a guaranteed borrower to make a required payment to a designated bank within ninety days of the date upon which the payment is due as stated in the contract between a designated bank and a guaranteed borrower. "Designated bank" means any bank or financial institution approved by the director of finance pursuant to this article to provide loans to owners who are required to connect property to sewers by section 21 -5. "Guaranteed borrower" means an owner who has executed the appropriate agreements with the County of Hawai`i required by this article and whose loan with a designated bank is guaranteed by the County of Hawai'i in accordance with this article. "Increment" means any one of the planned sewer construction projects stated in section 21 -37. "Owner" means: (1) A person or persons, including joint tenants, tenants in common, tenants by the entirety, corporations, and partnerships who hold the fee title to real property which is required to be connected to sewer lines pursuant to section 21 -5; or (2) A person or persons, including joint tenants, tenants in common, tenants by the entirety, corporations and partnerships to whom has been entrusted pursuant to law the legal or equitable titles to real property which is required to be connected to sewer lines pursuant to section 21 -5, and who are empowered to act as trustees of that real property for the benefit of another or others, or as trustees of a self -trust revocable living trust; or (3) A person or persons who hold equitable title pursuant to an agreement of sale of real property which is required to be connected to sewer lines pursuant to this chapter; or (4) A person or persons who hold, under a lease for a term of five years or more [for residential purposes], real property which is required to be connected to sewer lines pursuant to this chapter. "Self- directed revocable living trust" means a trust formed for the purpose of management and administration of real property and in which the owner(s) of an interest in real property becomes settlor(s) and trustee(s) of the trust by making said real property the trust res, and administering said property for the benefit of the owner(s). SECTION 3. Chapter 21, Article 5, Section 21 -39 of the Hawai`i County Code 1983 (2005 edition), is amended to read as follows: Section 21 -39. Sewer connection loan program. (a) Before the director, pursuant to section 21 -5, notifies property owners in an increment of the requirement that they connect their properties to the sewer line, the director of finance shall be authorized to develop a sewer connection loan program for the purpose of guaranteeing loans used to connect lots which are a part of that increment to the sewer lines. The director of finance may consult with any banks or financial institutions about participation in a program of loan guarantees for owners of properties who are required to connect to sewers pursuant to section 21 -5. (b) After consultation, the director of finance shall designate with one or more banks or financial institutions to handle the County - guaranteed loan program. In designating a bank or financial institution, the director shall consider the interest rates offered on the loans by the bank, the number of months and monthly payments of the loan, and the willingness of the institution to make the same agreed -upon rate offered on the County - guaranteed loans available to others borrowing money to pay for sewer hookup fees whose loans are not guaranteed by the County of Hawai`i. Any bank or financial institution which complies with the terms of the loan program shall qualify as a designated bank. (c) The director of finance shall require that a designated bank agree that: (1) The loan to a guaranteed borrower will be at a rate of interest and terms agreed upon at the inception of the program for that increment; 2 (2) The loan will be guaranteed by the County of Hawai`i up to the assessed value of the parcel to be connected and any improvements at the time of the loan application; (3) In the event that a guaranteed borrower fails to pay the required payment on the loan within ninety days of the date upon which the payment is due, the loan shall be considered in default and the designated bank shall immediately notify the director of finance of the County of Hawai`i, as well as the guaranteed borrower; (4) In the event of a default of any guaranteed borrower, a designated bank shall accept payment in full from the County of Hawai`i as full satisfaction for the loan; [ate] (5) The loan amount shall be limited to hook up and cost for the reasonable restoration of the parcel and improvements to the condition existing at the time of the loan application plus loan fees and costs; and (d) The director of finance shall inform the mayor and the County council of the names of banks and financial institutions which are designated banks, and shall provide them with copies of the agreement negotiated with the designated banks and the contract which the designated banks will execute with guaranteed borrowers. SECTION 4. Chapter 21, Article 5, Section 21 -40 of the Hawai`i County Code 1983 (2005 edition), is amended to read as follows: Section 21 -40. Loan application. (a) Any owner who is required to connect such owner's property to a sewer pursuant to section 21 -5, and who has been rejected by any two banks or financial institutions for any type of [a] loan to pay for the sewer connection, based on insufficient ability to repay said loan, may apply to a designated bank for a sewer connection loan which is guaranteed by the County of Hawai`i. Any application for a guaranteed loan must be submitted to a designated bank no more than [forty] sixty calendar days after the date of the notification by the director requiring the owner to connect to the sewer. (b) All such timely applications for guaranteed loans shall be sent by any receiving designated bank to the director of finance. Any owner whose application for a sewer connection loan is referred to the director of finance by a designated bank and is deemed to have a reasonable ability to repay the loan may participate in a loan guaranteed by the County of Hawai`i and become a guaranteed borrower. As conditions of participation, the applicant shall execute: (1) A loan agreement with a designated bank, with the County of Hawai`i as guarantor of the loan, providing that: (A) The money will be paid by the bank directly to the contractor performing the connection; and (B) In the event the guaranteed borrower fails to pay the required payment on the loan within ninety days of the date upon which 3 payment is due, the loan shall be considered in default and the County of Hawai`i will repay the loan in full to the designated bank, and will assume the designated bank's status as creditor. (2) An agreement with the County of Hawai`i giving the County of Hawai`i a lien on the property to be connected. [In situations in which the guaranteed borrower is a corporation or an owner holding property in a trust other than a self directed revocable living trust, the] The County of Hawai`i may [shall] initiate foreclosure proceedings immediately upon default by the owner and any non - payment of a payment required by a payment plan under section 21 -41. [by the County of Hawai`i. In situations in which the other situations, upon the death of the guaranteed borrower, or the sale, exchange, transfer or forced sale of the property, or the death of the last surviving settlor of a self directed revocable living trust, foreclosure action to the County of Hawai`i.] Upon execution, the loan agreement and the lien document shall be recorded at the bureau of conveyances. (c) For the protection of the interest of the County of Hawai`i, a title search for any property upon which the County of Hawai`i will have a lien shall be conducted prior to execution of any agreements, and the cost of the search shall be paid from the loan proceeds. SECTION 5. Chapter 21, Article 5, Section 21 -41 of the Hawai`i County Code 1983 (2005 edition), is amended to read as follows: Section 21 -41. Default procedure. In the event of a default, after the County of Hawai`i has paid the designated bank or financial institution, the director of finance shall have the discretion to negotiate with the guaranteed borrower a plan for repayment of the loan to the County of Hawai`i. In negotiating the loan repayment, the director of finance shall take into consideration the following guidelines: (a) In the event that the guaranteed borrower is capable of paying the monthly interest on the loan, the repayment plan shall include a minimum monthly payment at least equal to the amount of monthly interest, and at the same rate of interest charged by the designated bank. (b) In the event that the guaranteed borrower is unable to pay an amount equal to the monthly interest, the director of finance may negotiate a smaller monthly payment [than the amount equal to the monthly interest, provided that in every case the guaranteed borrower in default shall pay no less than $1 per month]. (c) If no agreement on the plan for repayment is reached within ninety days of default, the County of Hawai'i shall immediately initiate foreclosure proceedings against the subject property. 4 (d) In the event that the guaranteed borrower is a corporation or is an owner holding property in a trust, then the County of Hawai`i [shall] may initiate foreclosure proceedings immediately upon default by the owner and payment of the loan by the County of Hawai`i. the death of the guaranteed borrower, or the sale, exchange, transfer, forced sale of the property, or termination of a trust created pursuant to chapter 558, Hawai`i amounts owed to the County of Hawai`i. eety, then upon the d th of the surviving spouse, or the sale, exchange, concerning any amounts owed to the County of Hawai`i.] SECTION 6. Chapter 21, Article 5, Section 21 -43 of the Hawai`i County Code 1983 (2005 edition), is amended to read as follows: (a) Where an owner is unable to obtain a guaranteed loan from any designated bank, the County of Hawai`i shall contract with the contractor selected and approved pursuant to this article to connect the nonqualifying applicant's premises to the sewer. The applicant shall execute an agreement with the County of Hawai`i giving the County of Hawai`i a lien on the property. This agreement shall be identical to those executed between the County of Hawai`i and the qualified, guaFanteed-beFFewer-s, (b) Upon connection of the nonqualifying applicant's premises to the sewer, the a default on the loan. SECTION 7. Chapter 21, Article 5, Section 21 -44 of the Hawai`i County Code 1983 (2005 edition), is amended to read as follows: Section 21 - _{44]. Waiver of liability. The contractor selected pursuant to this article, as well as the guaranteed borrower shall execute agreements with the County of Hawai`i in which each of them agrees to defend, indemnify and hold harmless the County of Hawai`i in the event of any personal injury or property damage resulting from the connection of the property to the sewer. SECTION 8. Chapter 21, Article 5, Section 21 -45 of the Hawai`i County Code 1983 (2005 edition), is amended to read as follows: Section 21- _[45]. Reserve fund. 5 (a) For the purpose of payment of guaranteed loans in default, there shall be created a reserve fund, to be known as the sewer connection reserve fund, which shall at all times be not less than fifteen percent of the total amount of loans guaranteed and shall be funded by the general fund or other available sources. If a guaranteed borrower defaults on a loan, the bank shall be paid from this reserve fund without further council action. If this repayment of the loan causes the reserve fund to fall below fifteen percent of the total amount of loans guaranteed, the director of finance will then submit to the council a bill for an ordinance to transfer the money from the general fund or other available sources if such a transfer is necessary to maintain the required level of the fund. All interest generated by the fund shall be deposited into the County of Hawai`i general fund. (b) At least once every three months the director of finance shall prepare and submit to the council a report on the status of the loan program, including but not limited to the following: (1) The number of guaranteed loans outstanding; (2) The total dollar value of all guaranteed loans outstanding; (3) The balance in the reserve fund; and (4) The number of hookups to be required in the next increment. SECTION 9. Chapter 21, Article 5, Section 21 -46 of the Hawai`i County Code 1983 (2005 edition), is amended to read as follows: funded by the general fund or other available sources. (b) At least once every three months the director of finance shall prepare and submit limited to the following: (1) The number of loans which the sewer loan fund is funding; (2) The total dollar value of all such loans; and (3) The balance available in the sewer loan fund.] SECTION 10. Material to be repealed is bracketed and stricken. New material is underscored. In printing this ordinance, the brackets, bracketed material and underscoring need not be included. 6 SECTION 11. If any provision of this ordinance, or the application thereof to any person or circumstance, is held invalid, such invalidity shall not affect other provisions or applications of the ordinance which can be given effect without the invalid provision or application, and to this end, the provisions of this ordinance are declared to be severable. SECTION 12. This ordinance shall take effect upon its approval. , Hawai`i Date of Introduction: Date of 1st Reading: Date of 2nd Reading: Effective Date: REFERENCE. Cane. 505 INTRODUCED BY: COUNCIL MEMB UNTY OF HAWAII 7