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HomeMy WebLinkAboutBIL 591 Draft 02 1988-1992AN 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. 1 .3 � so WEQ :4 67,011 �1 1:8 PM 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 X21-37. Findings and Purpose. Increasingly strict Federal and State aovernment reauirements sprinaina 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 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 Kona and to expedite full utilization of the collector lines by requiring existina 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 houseto the lateral, andthe topography and improvements between the house and the lateral. Many of the houses mandated for sewer hookup are owned by elderly people on fixed incomeswhomay 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 accessibletoa sewer. .-Condition No. 14 of Grant No. C150062 02, Grant Amendment No. 1, requires the County to enforce the sewer use ordinance and requireeachand every existing dwelling or dwelling equivalent accessible to a sewer to connect to the collection system. The connection cost may be financially burdensome for many 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 DY guaranteeing loans for this Purpose. The guaranteed loan Program would allow the 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 other financial institution 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, ..charge ..the same interest rate as the bank or financial institution that handles the County guaranteed loan Program, and agree not to foreclose until the title of the property is transferred. This law shall cover the sewer connections which will be required in the following increments: Summer 1992 Waiakea Houselots 110 February 1993 Waiakea Mill Pond 100 January 1994 Ainako "A" 114 January 1995 Kalanianaole Laterals 125 January 1996 Ainako "B" 93 Pre -1989 (Optional Hookups) 100 May 19.93 -December 1996 Alii Drive "A - 'IF." 200 X21-38. Definitions. For purposes of this article, the following words and phrases, unless the context otherwise requires shall be defined as indicated: "Designated bank" means the bank or financial institution 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., X21-5 of the. -Hawaii. -County -Code. "Guaranteed borrower" means an owner who has executed the appropriate agreements with the County of Hawaii required by this -3- article and whose loan with the designated bank is guaranteed by the County of Hawaii in accordance with this article. "Increment" means any one of the planned sewer construction proiects stated in §21-37 of the Hawaii County Code., "Owner" means the person or persons, including joint tenants. tenants in common, and tenants by the entirety, who hold the fee title to real property which isrequiredto be connected to sewer lines Pursuant to Chapter 21, Article 2, X21-5 of the Hawaii County Code. S21-39.. a) Before the chief engineer, pursuanttoHawaii County Code X21-5, 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 programforthe 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 o financial institutions about participation in.a program of loan guarantees for owners of Properties who are required to connectto sewers Pursuant to X21 -w-5 of the Hawaii County Code. b) After consultation, the director of finance shall designate a single bank or financial institution to handle the county guaranteed loan program. In designating the 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 oftheloan, and the willingness of the . institution.to make -the same favored terms 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. c) The director of finance shall-..recfuire that the designated bank agree that: 1) The loan...to the quarante.ed borrower will be at a rate of interest agreed upon at the inception of the program for that increment; 2) The loan will b.e quaranteed..by the County of Hawaii;. 3) In the event.of a default of any guaranteed lo.an, the designated -bank shall immediately notify the director of finance of the County.of Hawaii, as_well as the guaranteed 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 favorable terms available to participants in the county -guaranteed loan Program wil.1 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_counci-1 of the selection of the bank or....financial institution and the details and structure of. the program. �21-40. Loan Application. a). Any owner who is required to -5- q2l-5 may apply to the designated bank -for a -loan under the Sewer Connection Loan Progr.am. Any 6pplication which does not qualify for the loan under the normal business standards of t.he designated bank shall be referred to the director of finance. b) Any owner whose application for ... a sewer connection loan is referred to the director of..finance by the designated bank ma 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 Pai.d by the bank. -directly to the contractor Performing.the connection; and B) In the event of default by the guaranteed borrower, the County of Hawaii will repay the loan in.. -full to_the designate bank, and will assume the designated bank's status as creditor. The meaning of a default will -be agreed upon. -by the..County.and the designated bank at the inception -of the.loan -program for the increment. 2) An agreement with the County of Hawaii giving the County of Hawaii a lien on the property to be connected. The.agreeme.nt shall Provide that no foreclosure action shall be brought unless the amount due ... has not been Paid in full by the time of the death of the origin . al applicant or the sale.or transfer of the title of. the property, whichever happens..first;.except that should the owner be a corporation, the County shall initiate -foreclosure proceedings immediately upon default by the owner and payment by the County. Upon the death of the guaranteed borrowe.r, or the sale, exchange, transfer or forced sale of the property, foreclosure action may 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) A t.itle 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.. �21-41.. Default Procedure. In the event of a default, after the County of Hawaii has paid the designated bank or financial instit.ution,.the director of finance shal.1 have the discretion to negotiate with the applicant a....Plan fo.r repayment of.the loan to the County of Hawaii. ..In negotiating the loan repayment, the director of finance shall take into consideration the following ouidelines: 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 quaranteed..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 inte.rest. c) In the event that the guaranteed borrower cannot pay any amount at all, no Payments need be made. At -.the time of the guaranteed borrower's death or of the sale or transfer of the property, the entire loan -amount, including Principal and simple interest shall be paid to the--.County._.of Hawaii. d) In the event that t.he quar.anteed..-borrower is corporation, th.en the County of Hawaii shall institute foreclosure proceedings immediately upon default and Payment of -the lo.an by the County of.Hawai §21-42..-. Connection Contract, a) The chief engineer shall authorize a request for proposa.1 (RFP)..for licensed contractors to connect all of the Properties subiect to guaranteed loans at a designated rate. b) The --.Chief engineer. -shall inform the mayor and the count council of the selected Proposal. c) All quaranteed borrowers shall have . heir 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. �21-43. Non-Oualifying Applicants. a) Where -.an owner is unable to obtain a guaranteed loan from the designated bank, the County of Hawaii shall contract with the contractor selected and approved Pursuant to this article to connect the unqualified owner's Premises to the sewer. The applicant shall execute an agreement with the County.of Hawaii giving the County of H.awaii 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 t.he uncfua.lified-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. U1-44. Waiver.of Liability. The contractor selected pursuant to this article, as..well as the guaranteed 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 Pers.onal injury or property.damage resultin from the connection of.the Property to the sewer. �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 shall at all times be not less than 25% 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. 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 ma.intain 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 thestatusof 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; an 4) The number of hookups to be required in the next increment. X21-46... Loan Fund a) For the purpose of funding loans t ownersunder§21-43,..there shall be created a -loan fund, to be known as the Sewer Loan Fund and which shall befundedby 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 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 intheSewer Loan Fund." SECTION 2. New material is underscored. In printing this ordinance, the underscoring need not be included. -10- SECTION 3. If any provision of this ordinance or the application thereof -to any person or circumstance: is held invalid, such invalidity shalI 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 approval. COUNCIL MEMBER, COUNTY OF HAWAII Hilo, Hawaii Date of Introduction: May 20, 1992 Date of lst Reading: May 20, 1992 Date of 2nd Reading: Effective Date: sm