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HomeMy WebLinkAbout1991-037-03/05/1991-WATER SERVICE LINE REPLACEMENT ZERO INTEREST LOAN PROGRAM RESOLUTION 91-37 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPROVING A ZERO INTEREST LOAN PROGRAM FOR WATER SERVICE LINE REPLACEMENT WHEREAS, by Resolution 90-147, the Council of the City of Fort Collins directed City staff to investigate the feasibility of a zero interest loan program for those customers with an inferior or corroded water service line that should be replaced at the time of the installation of a water meter pit; and WHEREAS, the staff has investigated such a zero interest loan program and has presented said program to the City Council in the form of a Procedures Information Memorandum for approval ; and WHEREAS, the Council has determined that said zero interest loan program is in the best interests of the citizens of the City and serves a valid and valuable public purpose. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1 . That the zero interest loan program for service line replacement as established by the Procedures Information Memorandum attached hereto, is hereby approved and adopted by the Council of the City of Fort Collins; and the City Manager is hereby directed to administer said program in accordance with its terms. The City Manager may amend the Program Guidelines and Processing Procedures from time to time to meet current needs. Section 2. That the Council hereby finds that provision of zero interest loans for service line replacement will benefit the City by conserving the raw water resources and the water treatment facilities of the City; by reducing water , leakage from inferior or corroded water service lines into the wastewater system of the City; by potentially lengthening the life of the City's transportation infrastructure; and by better enabling the City to meet the requirements of House Bill 90-1106, known as the "Water Metering Act" of the State of Colorado. Section 3. This zero interest loan program is contingent upon the appropriation by the City Council of sufficient funds to support the same. Passed and adopted at a regular meeting of the Council of the City of Fort Collins held this 5th day of March, A.D. 1991 . Ma or AI S � City Clerk Util Services _ Water & Wastewater City of Fort Collins PROCEDURES MEMORANDUM DATE: February 22, 1991 TO: Mike Smith, Water and Wastewater Utility Director Linda Burger, Support Services Manager FROM: Webb Jones, Utility Analyst RE: Procedures for Obtaining Loan for Service Line Replacement PURPOSE: The purpose of this memorandum is to document the process a customer follows to obtain a loan from the Utility to pay for replacement of their water service line. Resolution 90-147, approved by City Council on November 20, 1990, directed Utility staff "to investigate the feasibility of a zero interest loan program for customers with an inferior or corroded water service line that should be replaced at the time of the installation of the meter pit." Loans are intended to be made available to customers who, during the installation of a meter pit or curb stop resulting from a meter installation, learn that their water service must be replaced before contractors are able to install a meter. PROGRAM GUIDELINES: 1. Funds for loans are included in the Minor Capital budget of the Transmission and Distribution Division (Water Meter Installation - account no. 502-044006-529210). Requisitions for payments for service line replacement should be charged to this account. No loans shall be made unless sufficient funds have been appropriated therefor by the City Council. 2. Customers are eligible for a loan if the following criteria are met: (1) the customer owns a non-metered single family home or duplex and receives both water and sewer service from the City of Fort Collins, (2) the inferior or corroded service line is discovered by Water Utility representatives during installation of a meter pit, or repair of a curb stop to turn off water for installation of an interior meter setting, and (3) the customer has no delinquent charges due on any utility service provided by the City of Fort Collins. Customers who can have a meter setting installed inside their home without repair to the curb stop or service line are not eligible for a loan from the Utility. 1'.0. llos W • Furl Collins, CO 8012241580 • (303) 221-0081 3. Only costs associated with replacing the water service between the curb stop and structure can be included in the loan amount. Loans can not be used to fund the cost of replacing plumbing inside the structure. The Utility will pay for replacing the service line between the curb stop and main if it also needs to be replaced. 4. Loan amounts and maximum pay-off periods are as follows: LOAN AMOUNT MAXIMUM PAY-OFF MAXIMUM PERCENTAGE PERIOD MONTHLY ELIGIBLE PAYMENT less than $750 100% 24 months $31.25 $750 - $1,500 100% 48 months $31.25 up to $2,500 100% 60 months $41.67 5. Upon implementation of the new Customer Information System (CIS), loan payments will be added as installment charges on the customer's monthly utility bill. The charge will be shown separately and be labeled as "Loan Payment." Until CIS becomes operational, loan payment coupons will be provided to the customer. 6. The outstanding balance of the loan will be due upon sale of the property. 7. A $25 fee will be collected with the first loan payment to recover administrative costs associated with processing the loan. 8. Failure to remit payment when due may result in termination of water service until payment is made. PROCESSING PROCEDURE: 1. When, during installation of a meter pit or repair of a curbstop to allow installation of an interior meter setting, it is determined by a Water Utility representative that a customer's water service line must be replaced, the homeowner will be instructed to contact plumbing contractors to solicit bids for replacement of his/her service line. If the bid provided by the plumbing contractor installing the meter pit is acceptable to the homeowner, the contractor may repair the service line at the same time as the meter pit is being installed. Service Line Replacement February 22, 1991 Page 3 2. After accepting a bid from a plumbing contractor, the customer may apply for a loan from the Water Utility by completing a loan application (Attachment A). Customers do not have to obtain a loan from the Utility. They may choose to pay the contractor directly. 3. The customer retains a copy of the loan application and returns the remaining copies to the Water Utility. A copy of the contractor's bid for replacing the service line must be included with the application. If the application is complete, the customer may authorize the contractor to proceed. 4. The Utility will verify the legal description and ownership at the County Assessor's office, and the status of delinquent utility charges with the City Utility Billing office. The Utility will also prepare a lien agreement and promissory note (Attachment B and Q. The promissory note shall include the date of the first payment and provide that all other payments are due on the first of each following month (if coupons are issued), or with each month's utility bill (if installment charges are added to the CIS bill). The pay-off date shall also be indicated. 5. The Utility assigns a loan number to the application and prepares a payment summary and coupon book if necessary (Attachment D). 6. The Utility assists the customer in signing and notarizing the lien agreement and promissory note. Copies of each are provided to the customer. The payment summary and coupon book are given to the customer at this time. 7. The Utility prepares a payment authorization for the amount of the contractor's bid. Payment will be issued to the contractor. If paid receipts and a waiver of mechanic lien signed by the contractor (Attachment E) are presented, payment will be issued to the homeowner. The customer or contractor must provide a signed copy of the permit issued by the Building Inspection department before payment will be processed. Payment authorizations are charged to account#502-044006- 529210. 8. The Utility sends a transmittal memorandum (Attachment F) with the original lien agreement and promissory note to the City Clerk. The cost of filing the lien agreement with the County is charged to account #502- 044006-529210. Service Line Replacement February 22, 1991 Page 4 9. The Utility sends a transmittal form (Attachment G) and copies of the lien agreement, promissory note and loan application to the Finance Department. Finance will initiate an installment charge on the customer's account or a customer account in the miscellaneous billing system. 10. When the customer makes the final payment on the loan, the Finance department will initiate a release of lien (Attachment H). This form is sent to the City Clerk's office for processing. When the release is returned to the City, the Utility will keep a copy and return the original to the customer. Attachinent A LOAN APPLICATION FOR WATER SERVICE LINE REPLACEMENT RESULTING FROM INSTALLATION OF A WATER METER Name of Owner: Property Address: Owner Address: Telephone: Home Work Legal Description: Water Account No. I (we) certify that I (we) own the above property and do hereby apply for a loan from the City of Fort Collins Water Utility in the amount of$ ** to finance the replacement of the water service line for the above referenced property. I (we) certify that funds provided by the City shall be used solely to pay for replacing that portion of the water service line between the curbstop and structure and not for any other costs of replacement or repair of internal piping or plumbing fixtures. Homeowner's Signature Date Homeowner's Signature Date ** A copy of the bid from the licensed plumbing contractor chosen to perform the work must be attached. The amount of the loan can not exceed the amount of the contractor's bid. This loan program is contingent upon appropriation of funds sufficient to support the same by the City Council. Loan number: Attachment a LIEN AGREEMENT WHEREAS, the undersigned hereinafter referred to as the "Owner", is the owner of the following described real property situated in the City of Fort Collins, County of Larimer, State of Colorado to-wit: also known as said property being hereinafter referred to as the "Property"; and WHEREAS, pursuant to Resolution , approved by the City Council of the City of Fort Collins, Colorado (hereinafter referred to as the "City"), the City has created a zero interest loan program to provide funds for the replacement and repair of inferior or corroded water service lines that should be replaced at the time of the installation of a water meter; and WHEREAS, pursuant to the above referenced program, it is the responsibility of the Owner to reimburse the City for the funds so loaned; and WHEREAS, the Owner has accordingly executed his promissory note payable to the City, a true and correct copy of which is attached hereto and incorporated herein by this reference. NOW, THEREFORE, in consideration of the premises and the terms of this Agreement, it is agreed as follows: 1. The Owner acknowledges that the sum of $ is owed to the City pursuant to the attached promissory note and such amount shall be payable in installments as set forth in said promissory note. 2. The Owner hereby grants unto the City a lien against the property described above securing the payment of the amount owing to the City as set forth in said promissory note. The lien herein granted shall remain a lien against the property until the full amount owing to the City is paid. 3. In the event of the default of the Owner in the payments required pursuant to said promissory note, this lien may be enforced by the City either by foreclosure of this lien in the manner provided by law for foreclosure of mortgages or by certification to the County Treasurer of Larimer County for collection as in the case of other assessments. 4. The following events shall be referred to herein as a "Transfer": (i) a transfer or conveyance of title (or any portion thereof, legal or equitable) of the Property (or any part thereof or interest therein); (ii) the execution of a contract or agreement creating a right to title (or any portion thereof, legal or equitable) in the Property (or any part thereof or interest therein); (iii) or an agreement granting a possessory right in the Property (or any portion thereof), in excess of three (3) years; (iv) a sale or transfer of, or the execution of a contract or agreement creating a right to acquire or receive, more than fifty percent (50%) of the controlling interest or more than fifty percent (50%) of the beneficial interest in the Owner. Not to be included as a Transfer are: (i) the creation of a lien or encumbrance subordinate to this Lien Agreement; (ii) the creation of a purchase money security interest for household appliances; or (iii) a transfer by devise, descent or by operation of the law upon the death of a joint tenant. At the election of the City, in the event of each and every Transfer: (a) All sums secured by this Lien Agreement shall become immediately due and payable (Acceleration). (b) If a Transfer occurs and should City not exercise City's option pursuant to this paragraph 4 to Accelerate, Transferee shall be deemed to have assumed all of the obligations of Owner under this Lien Agreement, including all sums secured hereby, whether or not the instrument evidencing such conveyance, contract or grant expressly so provides. This covenant shall run with the Property and remain in full force and effect until said sums are paid in full. The City may, without notice to the Owner, deal with Transferee in the same manner as with the Owner with reference to said sums, including the payment or credit to Transferee of undisbursed reserve Funds on payment in full of said sums, without in any way altering or discharging the Owner's liability hereunder for the obligations hereby secured. (c) Should City not elect to Accelerate upon the occurrence of such Transfer then, subject to (b) above, the mere fact of a lapse of time or the acceptance of payment subsequent to any of such events, whether or not City had actual or constructive notice of such Transfer, shall not be deemed a wavier of City's right to make such election nor shall City be estopped therefrom by virtue thereof. The issuance on behalf of the City of a routine statement showing the status of the loan, whether or not City had actual or constructive notice of such Transfer, shall not be a waiver or estoppel of City's said rights. DATED at Fort Collins Colorado, this day of , 19_ Owner Owner State of Colorado ) County of Larimer ) Subscribed and sworn to before me this day of 19_, by and by Witness my hand and official seal. Notary Public My commission expires: ATTACHMENT C PROMISSORY NOTE FOR VALUE RECEIVED, I, we, or either of us, promise to pay to the order of the City of Fort Collins Water Utility, P. O. Box 580, Fort Collins, CO 80522, the sum of dollars ($ 1, at the rate of 0 percent per annum from date, until due. Said principal shall be payable as follows: First payment in the amount of$ due 19_ and successive payments each in the amount of$ due ***(the first day of each month)***(on the due date of each month's utility bill) thereafter with all remaining principal to be fully due and payable 19 Non-payment of any installment, when due, shall cause the entire indebtedness to become due and payable at once, at the option of the holder, notice of which option is hereby expressly waived. Borrower is hereby advised and agrees that the non-payment of any installment, when due, shall make borrower's water service subject to termination as provided in Article XII of the Code of the City of Fort Collins. In accordance with said Article, nonpayment may result in termination of water service, charges for turn-off, turn-on and service restoration fee. For purposes of termination of service, the billing date, as stated in said Article, shall be the due date for any payment provided for in this promissory note. Makers and endorsers hereon waive demand, protest, and notice of dishonor and all defenses on the grounds of any extension of the time of its payment that may be given by the holder or holders. All principal and accrued interest shall become immediately due and payable upon transfer of the property securing this note in accordance with paragraph 4 of the lien agreement of even date herewith. Dated at Fort Collins, Colorado, this day of , 19 Owner Owner State of Colorado ) County of Larimer ) Subscribed and sworn to before me this day of , 19 by Witness my hand and official seal. My Commission Expires: Notary Public *** Strike when not applicable. Attachment E LIEN WAIVER RELEASE (Contractor) TO: FROM: PROJECT: ADDRESS: 1. The undersigned does hereby release all claims, Mechanic's Liens Rights, Stop Notice, Equitable Liens and Labor and Material Bond Rights resulting from labor and/or materials, subcontract work, equipment or other work, rents, services or supplies heretofore furnished in and for the construction, design, improvement, alteration, additions to or repair of the above described project. 2. This release is given for and in consideration of the sum of$ and other good and valuable consideration. 3. The undersigned agrees to defend and hold harmless the Owner and lender from any claim or claims hereinafter made by the undersigned or its Suppliers, Subcontractors or employees, servants, agents or assigns of such persons against the Project. The undersigned agrees to indemnify or reimburse all persons so relying upon this release for any and all sums, including attorney's fees and costs, which may be incurred as the result of any such claims. 4. It is acknowledged that the designation of the above Project and Address constitutes an adequate description of the property and improvements for which the undersigned has received consideration for this release. 5. It is further warranted and represented that all such claims against the undersigned or the undersigned's Subcontractors or Suppliers have been paid or that arrangements, satisfactory to the Owner, have been made for such payments. 6. It is acknowledged that this release is for the benefit of and may be relied upon by the Owner, and lender on any labor and material bond for the Project. 7. In addition to the foregoing, this instrument shall constitute a full, final and complete release of all rights, claims and demands of the undersigned against the Contractor arising out of or pertaining to the above referenced Project. Dated this day of 19 FIRM Name of firm or person giving release BY TITLE STATE OF ) ) ss. COUNTY OF ) The foregoing release was subscribed and sworn to before me this day of 19 by (as of ). NOTARY PUBLIC My commission expires: