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HomeMy WebLinkAboutBIL 591 Draft 03 1988-1992COUNTY OF HAWAII -: 7 7,TATE OF HAWAII BILL NO. 591 (DRAFT ORDINANCE 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 Pro ram X21-37. Findings and Purpose. Increasingly strict Federal and State government requirements springing from the Federal Water Pollution Control Act, P.L. 92-500, Commonly called the Clean Water Act, have been placed on local governments to upgrade the treatment of wastewater. The Count v 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 Kona and to expedite full utilization of the collector lines by requiring existinghousesadiacent 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 from $3,000 to over $30,000. Section 21-5, Article 2 of this chapter requires connection to the sewer of lots accessible to a sewer. Condition No. 14 of Grant No. C150062 02, Grant Amendment No. 1, requires the County to enforce the sewer use ordinance and require each and every existing dwelling or dwelling equivalent accessible to a sewer to connect to the collection system. The connection cost may be financially burdensome for man owners. Therefore, the Council finds that, in order to assure 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 assists owners to connect to the sewer by guaranteeing loans for this purpose. The guaranteed loan program would allowthe owner to get a County -guaranteed loan from the bank or other financial institution after it agrees that the County may Place a lien on the property at the time the loan closes. The lien would be for the hookup cost Plus interest. The County would guarantee the bank or otherfinancialinstitution that it will pay the balance of the loan in full should the owner default on the loan.. If the owner has no repayment ability, the County will Place a lien on the property, 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 Waiakea Houselots 110 February1993Waiakea Mill Pond 100 January 1994 Ainako "A" 114 January 1995 Kalanianaole Laterals 125 January 1996 Ainako "B" 93 Pre -1989 (Optional Hookups) 100 May 1993 -December 1996 Alii Drive "A - "F" 200 X21-38... Definitions. For Purposes of this article, the following words and Phrases, unless the context otherwise requires shall be defined as indicated.: "Default" shall mean the failure of the guaranteed borrower to make asequired payment to the designated bank within 90days of the date upon which the-payment..is due as stated in the contract between the designated bank and the guaranteed borrower. mcis The meaning of default shall -be clearly stated in -the contract executed by the designated bank and the guaranteed borrower. "Designated bank".means a bank or financial institutio selected 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, �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 the designated bank is guaranteed by the County of Hawaii in accordance with this articl "Increment" means any.one of the planned sewer construction proiects stated in S21-37_of the Hawaii County Code. "Owner" (a) a person..or Persons, including joint.tenants, tenants in common, tenants by the entirety and corporations who hold the fee title. -to real Property which is required to be connected to sewer. lines pursuant to Chapter 21, Article 2.., �21-5. of the Hawai County Code;. or (b) a.person or persons to whom has been entrusted Pursuant to law the legal and equitable tit.les to real Property which is required to be connected to sewer lines Pursuant to Chapter 21, Article 2, �21-5 of the Hawaii County Code, and who are empowere to act as trustees..of that real Property for the benefit o another or others. -4- §21-3g.. a) Before the chief engineer, Pursuant to Hawaii County Code q21-5,.notifies.property owners in an increment -of the requirement that they connecttheirproperties to the sewer line,. the directoroffinance shall be authorized to develop.a sewer connectionloanProgram 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 -&21-5 of the Hawaii County Code. b) After consultation, the director of finance shall designate a -bank or financialinstitution 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 availabletoothers borrowing money to pa for sewer hookup fees whose loans are not guaranteed by the County of Hawaii. c) The director of finance shall require that a designated bank agree that: 1) The loan to theguaranteedborrower will be at a rate of interest agreed upon at the inception of the program for that increment; -5- 2) The loan will beguaranteed . by the County of Hawaii; 3) In the event that a guaranteed borrower fails to -pay any 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, the designated bank shall accept payment in full from the County of. Hawaii as full satisfaction for the loan; and 5) The same .agreed -upon rate available to participants in the county guaranteed loan Program will be available to other persons borrowing money from the designated bank for sewer hookups whose loans are not guaranteed by the County of Hawaii. d) The director of finance shall inform the mayor and the county-council.of the selection of a..designated bank, and shall -provide them with copies of the agreement negotiated with_the designated bank and the contractwhichthe designated bank will execute with the guaranteed borrower. §21-40. Loan Application. a-) Any owner who is requiredto connect his property to a sewer pursuant to Hawaii County Code X21 -5 -may apply to a.designated bank for a loan under the Sewer Connection Loan Program. Any application which does not qualify for the loan under the normal business standards of the designated bank shall bereferredto the director of finance. Erin b) 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 the 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 pay any payment.on the loan.within 90 days of the -.date upon which -payment is due,_the loan shall be considered -in default and the County -of Hawaii will repay the loan in full to.the designa.ted bank, and will assume the designated bank's....statu.s as credit.or. 2) An a.greement with the County of Hawaii giving.the County of Hawaii a lien on the property -to be.conne.cted. -Should the owner be a corporation or an. -owner holding Property in trust, the County shallinitiate foreclosure Proceedings immediately upon default by the owner and Payment by the County. Upon -the death of the guaranteed -borrower, or. -the sale., exchange, transfer -or forced sale of the property, foreclosure action shall be brou 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. -7- c) For -the protection.of the -interest of the..County of Hawaii, a title -search for any.property u-pon which the County of Hawaii will have a lien. -shall be condu.cted Prior to execution of any agreements,.and the cost of the search shall he -paid.from th loan proceeds. §21-41. Default Procedure. In.the event of a default, after the County of Hawaii has paid. -the designated b.ank 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 negotiat.ing the loan..repayment, the disector of finance shall take into.consi deration 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 intexest, the director of finance may negotiate a smaller monthly -payment than the amount equal to the monthly interest. c) If no agreement on the plan. -for rei).ayment. is re.ached within 90 days of default, -the County of_.Hawali shall immediately initiate foreclosure p.roceedings against the.subiect Property. d) In_the event that the guaranteed borr.ower is a corporation or is an owner holding Property in trus.t, then the County of Hawaii shall..institute foreclosure proceedings immediately upon default and.._payment of the loan.by the County of ,�21-42.. Connection Contract. a) The chief engineer shall authorize a reguest for proposal (RFP) fo.r licensed contractors to connect all of.the Properties subi.ect to guaranteed lo.ans at a designated rate. b) The chief engineer shall inform the mayor'and..the county council of the -selected Prop.osal. c) All -guaranteed barrowers shall-have.their p.ropert.ies connected to the sewer.by the contractor.selected-.I?ursuant to this article. This -shall be a condition of any loan guaranteed by th County of Hawaii. ,q2l-43. Non-Oua.lifying.Applic.ants. a) Where an owner is unable to obtain a guaranteed loan from the des.ignated-bank,...the County of Hawaii shall.contract with the contractor selected and approved pursuant to this article to connect the unctual..ified owner'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. Hawai.i and the qualified, guaranteed borrowers. b) Upon connection of the unqualified owner'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, 921 44 Waiver of Liability. The contractor selected pursuant to this article, as well as the guaranteed borrowershall 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. q21-45. 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 shall at all times be not less than 250 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 250 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 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: -10- 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. §21-46..-- Loan Fund a) For the purposeoffunding loans to owners under X21-43, there shall be created a loan fund, to be known as the Sewer LoanFundand which shall be funded by the general fund or other available sources b) At least once everythreemonths the director of finance shall prepare and submit to the council a report on the status of the Sewer Loan Fund, including but not limited to the following: funding; 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. me SECTION 4. This ordinance shall take effect upon its approval. INTRODUCED BY: COUNCILMEMBER, COUNTY OF HAWAII Hilo, Hawaii Date of Introduction: May 20, 1992 Date of 1st Reading: May 20, 1992 Date of 2nd Reading: