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HomeMy WebLinkAboutBIL 591 Draft 01 1988-1992I AN ORDINANCE AMENDING CHAPTER 21, HAWAII COUNTY CODE 1983, ENABLING THE COUNTY OF HAWAII TO GUARANTEE LOANS FOR MANDATORY SEWER CONNECTIONS. BE IT ORDAINED BY THE COUNCIL OF THE COUNTY OF HAWAII: SECTION 1. Purpose. With the increasingly strict Federal and State government requirements placed on the treatment of wastewater by local governments, it has become imperative that the County of Hawaii move quickly to assure that as many water users as possible are connected to a primary or secondary wastewater treatment facility. In view of this need, this bill creates the Sewer Connection Loan Program which will assist those who are required by Hawaii County Code Chapter 21, Article 2, to connect their residences to the sewer system, but may find it financially burdensome to do so. Pursuant to this bill, the County of Hawaii will arrange with a bank to provide County -guaranteed loans to qualified homeowners. In this loan, the County guarantees the bank that it will pay the balance of the loan in full should the homeowner default on the loan. In order to protect the County's interest, the County will place a lien on the subject property at the time the loan is closed. Should a default occur and the balance is paid by the County, the homeowner will repay the County according to a mutually acceptable repayment plan. In this plan, the interest rate shall be no less than what Is currently being paid by the homeowner to the bank. The County will agree that should foreclosure be necessary, it shall not take place until after the death of all of the original homeowners or the transfer of title of the property, whichever happens first. At that point, the County may bring a foreclosure action for any unpaid principal or interest or both. SECTION 2. 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. §21-A Loan Program. a) The director of finance is hereby authorized to develop a sewer connection loan -program for the purpose of guaranteeing loans used to connect lots to sewerlines where so directed by the chief engineer Pursuant to Chapter 21, Article 2 of the Hawaii County Code, as amended. The director o.f. finance may consult with any banks or financial institutions about participation in a program of loan guarantees for Qualified resident owners of Properties who are required to connectto .. sewers Pursuant to Chapter 21, Article 2 of the Hawaii County Code, as amended. b) After consultation, the director of finance shall, designate a single bank or financial institution to handle the county guaranteed loan Program. Inselectingthe bankor -2- 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 ofthe institution to make the same favored terms offered on the county guaranteed loans available to others borrowing money to pay for sewer hookup fees who do not qualify for the county -guaranteed F�e ! c) The director of finance shall require that the bank or financial institution chosen to administer the loan program agree that: 1) The loan to the qualified guaranteed borrower will be at a rate of interest agreed upon at the inception of the 2 The loanwillbe guaranteed by the County of Hawaii; 3) In the event of a default of any qualified, guaranteed loan, the bank or financial institution shall immediately notify the ..director .of finance of the County of Hawaii, as well as the qualified guaranteed borrower; 4) In the event of a default of any qualified guaranteed borrower, the bank or financial institution shall acceptpayment... in full from the CountyofHawaii as full satisfaction for the County; and 5) The same favorable terms available to participants in the county -guaranteed loan program will be available to other. persons borrowing money from the selected bank or financial institution for sewer hookups who do not qualify for the program. mcm d) The director of finance shall inform the mayor and the county council of the selection of the bank or financial institution and the details and structure of the program. X21 -B Loan Application.. a) Any resident -owner who is required to connect his property to a sewer Pursuant to Hawaii County Code X21.-5 may apply to the 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 be referredtothe director of finance. b) Any resident -owner whose applicationfora sewer connection loan is referred to the director of finance by the designated bank may participate in a loan guaranteed bytheCounty 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, and Providing that: A) The money will be -paid 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 designated 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. 2) An agreement with the County of Hawaii giving the County of Hawaii a lien on the property to be connected. The agreement shall Provide that no foreclosure action shall be brought unle.ss the amount due has not been paid in full by the time of the death of the original applicant or the.sale or transfer of the title of the property, whichever happens first. Upon the.death of the guaranteed borrower, or the sale exchange, tr ansfer 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 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. ,�21-C 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 applicant 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 a) In the event that the applicant is capable of paying the monthly interest on the loan, the repayment Plan shall include a minimum monthly Payment at least egual to the amount of monthly interest, and at the same rate of interest charged by the designated bank. -5- b) In the event that the applicant 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. c) In the event that the applicantcannotPay any -amount -at all, no. -payments need be made. At the time of the resident owner'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. N21 -D. Connection Contr..act. a) The chief engineer shall authorize a request for proposal (RFP) forlicensed contractors to connect all of the properties subject to guaranteed loans at a designated rate.. b) The chief engineer shall inform the mayorandthe county council of the selected Proposal. C) All guaranteed borrowers shall have their Properties connected tothe sewer by thecontractorselected Pursuant to this article. This shall be a condition of any loan guaranteed by the County of Hawaii. ,q21-E...Non-4ualifying Applicants. a) Where an applicant is unable to obtain a guaranteed loan from the designated bank or financial institution, the County of Hawaii shall contract with the contractor selected and approved pursuant to this ... articleto connect the unqualified 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 unqualified 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 lo.an. q2l-F. 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 ha.rmless the County of Hawaii in the event of any personal iniury or property.damage resulting from the connection of the property to the sewer. ,�21-G. ..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 ofloans guaranteed and shall be funded by the general fund or otheravailable sources. If a qualified, guaranteed borrower defaultson a loan, the bank shall be paid from this trust fund withoutfurther council action. The director of finance will then submitto the council a bill for an ordinance -to transfer the money fromthe general fund or other available sources if such a transfer isnecessary to maintain the required level of the fund. Allinterest generated by the fund shall be deposited into the Countygeneral fund. -7- b) At least once every three months the director of finance shall Prepare and submit to the council a report onthestatus 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 fundi and 4) The number of hookups to be required in the next increment. SECTION 3. New material is underscored. In printing this ordinance, the underscoring need not be included. SECTION 4. 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 5. This ordinance shall take effect upon its approval. INTRODUCED BY: X� NUMIPAQW-5 COUNCIL/`MEMBER, COUNTY)OF HAWAII Hilo, Hawaii Date of Introduction: May1992 Date of lst Reading: May j�/,11992 Date of 2nd Reading: Effective Date: