Small Rental Rehab Loan

Program Announcement:

The Small Rental Rehabilitation Loan (SRRL) provides financing for the rehabilitation or repairs of small rental properties with up to four units. This is an assumable, deferred-payment loan with below-market interest rates and other flexible terms in order to make projects with repair needs feasible while retaining affordable rent levels. The SRRL is assumable if sold to a new owner who agrees to continue to rent to eligible tenants or if sold to an eligible tenant or an income eligible homebuyer. Funding for the program is currently limited to the Lents Town Center Urban Renewal Area.

The SRRL will have an open application process. Applications will be accepted and processed on a first come, first served basis so long as funds are available.

Purpose

Removal of blight in Urban Renewal Areas through the renovation and repair of existing rental housing.
To minimize displacement of existing residents
To encourage existing landlords to maintain and improve their rental properties by providing financial incentives for maintaining affordable rental units for the term of the loan.
To maintain safe, affordable and attractive rental housing options in existing neighborhoods.
To facilitate homeownership for current eligible tenants if and when borrower chooses to sell the rental units.

Guidelines

Service Area:	All Urban Renewal Areas, and citywide, subject to availability of funds.
Maximum Loan:	$20,000 single unit; $30,000 duplex; $40,000 triplex; $50,000 four-plex.
Loan-to-Value:	Combined amount of SRRL and all senior debt cannot exceed 90% of the appraised value of the rental property after the repairs and Improvements have been completed.
Interest Rate:	3.00% simple interest
Term:	15 years
Monthly Payments:	This is a deferred payment loan so long as borrower leases the unit(s) to an income-eligible tenant at the designated HUD rent level (see below.)
Repayment:	Upon refinance or sale to an ineligible buyer the principal plus accrued interest is due and payable. Upon leasing any restricted unit(s) to an ineligible tenant or at an amount higher than the designated HUD rent level, the principal balance and all accrued and unpaid interest will be amortized over the remaining term of the loan and the note rate will increase to 14% fixed interest.
Fees:	$500.00 processing/closing fee, recording fees, and any other third party costs.

Eligible Borrowers:

Title to the property must be held in the name of the borrower(s) as an individual(s) or a non-profit organization.
Borrower must have owned the property for a minimum of six months prior to the SRRL application.
Borrower must live within 50 miles of the Portland Metropolitan Area or the property must be managed by a licensed property management company knowledgeable and experienced in the rental housing industry approved by PDC at its sole discretion. If self- managed, borrower must be a current member of a landlord association and attend a landlord education program both subject to the approval of PDC at its sole discretion.
Borrower must have no more than collectively $60,000 principal outstanding under the SRRL to PDC at any one time.
Individual borrowers must be US citizens or permanent residents.
Borrower must be current on any outstanding PDC debt.
Borrowers must meet the following credit standards: no outstanding liens, judgments, collections, all debt must be current, and no negative mortgage payment history

Eligible Properties:

An existing 1-4 unit residence or mixed-use project with residential units attached.
Rented/Leased to an income eligible tenant at the HUD designated income and rent levels.

Required Renovation:

Property repairs must address any major and minor code violations and deteriorating conditions, and may also include general property improvements. Such improvements include, but are not limited to, upgrades to electrical wiring, plumbing, heating systems, structural improvements, roofing, siding, stairway or step improvements, room or living space additions to existing units, as well as general property improvements including windows, carpeting, fencing, etc. and may include retrofitting measures to protect against flooding (as required in floodplain).
SRRL funds are limited to unit improvements and not management services. Repairs must conform to the habitability section of the Oregon Landlord/Tenant Law. (See Oregon Revised Statutes Chapter 90.)

Affordability Agreement
In order to receive the SRRL, eligible applicants shall enter into an Affordability Agreement with PDC that includes the following:

Identifies the number of affordable units in the property and the SRRL amount based on the following schedule:

SRRL Amount	Affordable Units Required
$0-20,000	1
$20,000 – 30,000	2
$30,001 – 40,000	3
$40,001 – 50,000	4

Affordability. To qualify as affordable, a unit must be rented at an amount no greater than the HUD designated rent level (including utilities) for a unit of comparable size for a 60% median family income (MFI) unit (for updated income and rent guidelines, visit www.pdc.us/mfi).
Eligible Tenants. To qualify as a lease, the unit must be rented to a tenant(s) whose total household income (including income from all occupants of the unit) does not exceed 60% MFI adjusted for family size.

Borrower’s Assets Limit Before/At Closing

Borrower shall have no more than $50,000 in liquid assets (cash –and equivalent -, stocks, bonds and bank deposit; excluding retirement accounts), unless borrower is a non- profit organization.
Borrower shall own no more than 8 rental units, unless borrower is a non-profit organization.

Debt to Income Ratios

Borrower shall have no greater than a 1.25% debt -to- income ratio on the subject property, or a maximum total debt ratio of 50% including all sources of income and all debts subject to underwriters discretion.

Tenant Displacement and Relocation
PDC does not intend to permanently displace any tenants as a result of the SRRL Program, though there may be instances where tenants are required to move temporarily as part of the repairs and improvements. If tenants are temporarily moved as a result of rehabilitation under this program PDC’s Relocation and Procedures Policy must be followed.

The information contained on this web page is only a summary of the SRRL program requirements. Additional program and funding requirements will apply. Contact staff for a complete copy of the SRRL Program Guidelines and to request an application.