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HomeMy WebLinkAboutBIL 591 Draft 07 1988-1992..... . . . . . . 511 WILL NO . (Dratt-7) AN ORDINANCE AMENDING CHAPTER 21, HAWAII COUNTY CODE 1983, ENABLING THE COUNTY OF HAWAII TO GUARANTEE LOANS AND EXTEND LOANS TO PROPERTY OWNERS REQUIRED TO CONNECT TO SEWERS. BE IT ORDAINED BY THE COUNCIL OF THE COUNTY OF HAWAII: SECTION 1. Chapter 21 of the Hawaii County Code, 1983 is amended by adding a new article to the chapter, to read as follows: "Article 5: Sewer Connection Loan Program Section 21-37. Findings and Purpose. Increasingly strict FederalandState government requirements springing from the Federal water Pollution Control Act, P.L.. 92 -500, --. commonly _called the Clean Water Act, have been Placed onlocalgovernments to upgrade the treatment of wastewater. The County of Hawaii, as a condition of receiving federal construction grants for wastewater treatment facilities, has been mandated by the Environmental Protection Agency to construct sewer lines and laterals in Hilo and Konaandto expedite full utilization of the collector lines by requiring existing houses adiacent to those sewer lines and laterals to connect to the sewer system. While sewer connections to future new subdivisions can be Planned to minimize the cost and the cost can be amortized in the mortgage., sewer connections to existing houses are more problematic. The cost of connecting an existing house to the sewer can be very expensive and varies greatly with the geology (soil or rock), the elevation of the house in relation to the lateral, the distance from the house to the lateral, and the topography and improvements between the house and the lateral. Many of the houses mandated for sewer hookup are owned by elderly people on fixed incomes who may find it financially difficult or impossible to pay for the connection at an estimated cost ranging �E- 111 • • - I Section 21-5, Article 2 of this chapter requires connection to the sewer of lots accessible to a sewer. Conditions of Federal Environmental Protection Agency grants for construction of wastewater facilities in Hilo and Kailua-Kona also require the County of Hawaii to ensure full utilization of those facilities by mandating connection of existing houses to the sewer systems. For the Hilo Wastewater Treatment and Conveyance Project, Federal EPA Grant No. C150062 02, Condition No. 14 of Grant Amendment No. 1 requires the County of Hawaii to enforce the sewer use ordinance and require each and every existing dwelling or dwelling, equivalent accessible to a sewer in Hilo to connect to the collection system. For the Kailua-Kona Sewerage System, Federal EPA Grant No. C150080 06, Condition No. 8 requires the County of Hawaii to assure the timely hookup of residences to collection sewers. The connection cost may be financially burdensome for many owners. Therefore, the Council finds that, in order to assure m that all possible lots are connected to the sewer to meet Federal and State requirements, it is in the public interest to create, in cooperation with a bank or other financial institution, a program by which the County of Hawaii assists owners to connect to the sewer by guaranteeing loans for this purpose. The guaranteed loan program would allow the owner to get a County-auaranteed loan from thebankor other financial institution after it agrees that the County of Hawaii shall place a lien on the property at the time the loan closes. The lien would be for the hookup cost, interest, loan fees and loan costs, The County of Hawaii would guarantee the bank or other financial institution that it will pay the balance of the loan in full should the owner default on the loan. If the owner cannot qualify for a loan, the County of Hawaii will pay a contractor for the hookup,. and charge the same interest rate as the bank or financial institution that handles the County -guaranteed loan program. This law shall cover the sewer connections which will be required in the following increments: Summer 1992 February 1993 January 1994 January 1995 January 1996 Pre -1989 May 1993 -December 1996 Waiakea Houselots 110 lots Waiakea Mill Pond 100 lots Ainako "A" 114 lots Kalanianaole Laterals 125 lots Ainako "B"- 93 lots (optional Hookups) 100 lots Alii Drive "A - "F" 200 lots Section 21-38. Definitions. For purposes of this article, the following words and phrases, unless the context otherwise requires, shall be defined as indicated: 0910 "Default" shall mean the failure of a guaranteed borrower to make a required payment to a designated bank within 90 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 Chapter 21, Article 2, Section 21-5 of the Hawaii County Code. "Guaranteed borrower" means an owner who has executed the appropriate agreements with the County of Hawaii required by this article and whose loan with a designated bank is guaranteed by the County of Hawaii in accordance with this article. "Increment" means any one of the planned sewer construction projects stated in Section 21-37 of the Hawaii County Code. "Owner" means: (a) 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 Chapter 21, Article 2, Section 21-5 of the Hawaii County Code; or (b))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 Chapter 21, Article 2, Section 21-5 of the Hawaii County Code, and who are empowered to act as trustees of that real Property for the benefit of another or others; or (c) )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 Chapter 21; or (d) 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 Chapter 21. Section 21-39. Sewer Connection Loan Program. a) Before the chief engineer, pursuant to Hawaii County Code 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 of the Hawaii County Code. b) After consultation, the director of finance shall designate 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 aareed-uDon 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 Hawaii. 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) The loan will be guaranteed by the County of Hawaii; 3) In the event -that a guaranteed borrower fails to pay the required payment on the loan within 90 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 Hawaii, 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 Hawaii as full satisfaction for the loan; 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 21-40. Loan Application. a) Any owner who is required to connect his or her property to a sewer nursuant to Hawaii Countv Code Section 21-5, and who has been refected by anv bank or financial institution for anv 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 Hawaii. Any application for a guaranteed loan must be submitted to a designated bank no more than 40 calendar days after the date of the notification by the chief engineer 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 may participate in a loan guaranteed by the County of Hawaii 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 Hawaii 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 pa the required payment on the loan within 90 days of the date upon -7- which payment is due, the loan shall be considered in default and the County of Hawaii 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 Hawaii giving the County of Hawaii a lien on the property to be connected. In situations where the guaranteed borrower is a corporation or an owner holding property in a trust other than a trust created pursuant to Chapter 558, Hawaii Revised Statutes, as amended, the County of Hawaii shall initiate foreclosure proceedings immediately upon default by the owner and payment by the County of Hawaii. Upon the death of the guaranteed borrower, or the sale, exchange, transferor forced sale of the Property, or the termination of a trust created pursuant to Chapter 558, Hawaii Revised Statutes, as amended, foreclosure action shall be brought concerning any amounts remaining on the amount owed to the County of Hawaii. 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 Hawaii. a title search for any property upon which the County of Hawaii 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 21-41. Default Procedure. In the event of a default, after the County of Hawaii 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 Hawaii. 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 auaranteed borrower in default shall pay no less than one dollar 1.00) per month. c) If no agreement on the plan for repayment is reached within 90 days of default, the County of Hawaii shall immediately initiate foreclosure proceedings against the subject property. d) In the event that the guaranteed borrower is a corporation or is an owner holding property in a trust other than a trust created pursuant to Chapter 558, Hawaii Revised Statutes, as amended, then the County of Hawaii shall initiate foreclosure proceedings immediately upon default by the owner and payment of the loan by the County of Hawaii. e) In the event that the guaranteed borrower is an owner holding property in trust pursuant to Chapter 558, Hawaii Revised Statutes, as amended, or is any type of owner described in the definition of "owner," with the exception of those described in Section 21-41(d), then upon 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, Hawaii Revised Statutes, as amended, foreclosure action shall be brought concerning any amounts owed to the County of Hawaii. f) In the event that the guaranteed borrowers are owners holding as tenants in the entirety, then upon the death of the surviving spouse, or the sale, exchange, transfer or forced sale of the property, foreclosure action shall be brought concerning any amounts owed to the County of Hawaii. Section 21-42. Connection Contract. a) Prior to notification of the owners within an increment Pursuant to Section 21-5, the chief enaineer shall authorize a request for proposal (RFP) for licensed contractors to connect all of the properties subiect to guaranteed loans. Such a proposal shall require the contractor to give the chief engineer an estimate for the cost of connection for each property in the increment. b) As a condition of selection by the county of a proposal, a contractor submitting a proposal shall agree to connect the property of any owner who becomes a guaranteed borrower to the sewer at the price estimated in the proposal. c) The chief engineer shall inform the mayor and the county council of the selected proposal. -10- d) All guaranteed borrowers shall have their properties connected to the sewer by the contractor selected pursuant to this article. This shall be a condition of any loan guaranteed by the County of Hawaii. Section 21-43. Nonqualifying Applicants. a) Where an owner is unable to obtain a guaranteed loan from any designated bank, the County of Hawaii 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 Hawaii giving the County of Hawaii a lien on the property. This agreement shall be identical to those executed between the County of Hawaii and the qualified, guaranteed borrowers. b) Upon connection of the nonqualifying applicant's Premises to the sewer, the County of Hawaii shall -proceed in the same manner provided for in the event of a default on the loan. Section 21-44. Waiver of Liability. The contractor selected ursuant to this article, as well as the quaranteed borrower shall execute agreements with the County of Hawaii in which each of them agrees to defend, indemnify and hold harmless the County of Hawaii in the event of any personal injury or property damage resulting from the connection of the property to the sewer. Section 21-45. Reserve Fund. 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 -11- shall at all times be not less than 15% 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 15% 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 Hawaii 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 21-46. Loan Fund a) For the purpose of funding loans to owners under Section 21-43, there shall be created a loan fund, to be known as the Sewer Loan Fund and which shall be funded by the general fund or other available sources. b) At least once every three months the director of finance shall prepare and submit to the council a report on the status of 4-1, - C! T V- - A I - A 4 1- 4- 4- 1 4 m4 4-A 4- 4-1- -P � I 1 n r.t 4 • 1) The number of loans which the Sewer Loan Fund is 2) The total dollar value of all such loans; and 3) The balance available in the Sewer Loan Fund." SECTION 2. New material is underscored. In printing this ordinance, the underscoring need not be included. SECTION 3. 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 4. This ordinance shall take effect upon its COUNCIL MEMBER, COUNTY OF HAWAII COUNCIL MEMBER, COUNTY OF HAWAII COUNCIL MEMBER, COUNTY OF HAWAII COUNCIL MEMBER, COUNTY OF HAWAII Hilo, Hawaii Date of Introduction: Date of lst Reading: Date of 2nd Reading: Effective Date: