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HomeMy WebLinkAboutItem 04 Home Program Update AGENDA ITEM SUMMARY Meeting Date: 11/24/2014 Meeting Type: Work Session Staff Contact/Dept.: Molly Markarian Tom Boyatt Staff Phone No: 541-726-4611/744-3373 Estimated Time: 45 Minutes S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Provide Financially Responsible and Innovative Government Services ITEM TITLE: HOME PROGRAM UPDATE ACTION REQUESTED: Provide staff direction in working with the City of Eugene to transition the HOME Consortium from a Sub-recipient model to a Lead Entity model. ISSUE STATEMENT: Issues identified by Housing and Urban Development (HUD) staff in a recent HOME Program Monitoring, in combination with Rule changes to the HOME program that became effective last August and shrinking federal funding, have created a situation where HUD is no longer willing to continue the HOME Consortium on a Sub-recipient model. ATTACHMENTS: ATT 1 – Council Briefing Memo DISCUSSION/ FINANCIAL IMPACT: Springfield is not of sufficient size to receive HOME funds directly from HUD and for many years has joined with Eugene in a Sub-recipient HOME Consortium model where HUD allocates HOME Funding to Eugene on behalf of the Consortium and Eugene passes through 30% of the Consortium’s HOME funds to Springfield through a sub-recipient agreement to allocate based on its approved Action Plan and the Eugene-Springfield Consolidated Plan. In the Sub-recipient model, the City of Eugene is responsible to HUD for the proper use and tracking of all funds received, including those dispersed to Springfield. HUD’s recent Monitoring of the HOME program in Eugene-Springfield found multiple issues in the way that Springfield has managed funded projects and Eugene has provided program oversight. HOME is a complicated federal program that requires significant technical expertise and staff resources to manage effectively, and for many years Eugene has provided non-reimbursed staff time to oversee Springfield’s Sub-recipient activity. Eugene, Springfield and HUD staff are now considering a Lead Entity model for the HOME consortium. In this model Eugene staff would administer the entire program, and funds would be allocated regionally to projects that meet HOME regulatory and match requirements and are ready to proceed. Springfield now has the choice to work with Eugene in establishing a Lead Entity consortium or to instead rely on the statewide competitive process to fund projects with HOME dollars. If the City were to drop out of the Consortium, then annually distributed HOME funds would decrease by about 28%, and would only be expended in Eugene. Springfield could apply to the State for HOME program awards in Springfield, and this would be highly competitive and still carry all the restrictions of the HOME program. Staff from Eugene and Springfield are currently discussing what a Lead Entity arrangement might look like, including: a preferred governance structure between Eugene and Springfield, how to insure equity in fund distribution across the region over time, and how Springfield can access some portion of HOME administrative funding to cover a portion of staff costs associated with advancing HOME funded projects and activities. Attachment 1, Council Briefing Memo, describes a straw proposal currently on the table, and staff will be available at the work session to answer any questions. M E M O R A N D U M City of Springfield Date: 11/12/2014 To: Gino Grimaldi COUNCIL From: Len Goodwin Tom Boyatt Molly Markarian BRIEFING Subject: HOME Program Update MEMORANDUM ISSUE: Issues identified by Housing and Urban Development (HUD) staff in a recent HOME Program Monitoring, in combination with Rule changes to the HOME program that became effective last August and shrinking federal funding, have created a situation where HUD is no longer willing to continue the HOME Consortium on a Sub-recipient model. COUNCIL GOALS/ MANDATE: Provide Financially Responsible and Innovative Government Services BACKGROUND: Springfield is not of sufficient size to receive HOME funds directly from HUD and for many years has joined with Eugene in a Sub-recipient HOME Consortium model where HUD allocates HOME Funding to Eugene on behalf of the Consortium and Eugene passes through 30% of the Consortium’s HOME funds to Springfield through a sub-recipient agreement. In the Sub-recipient model, the City of Eugene is responsible to HUD for the proper use and tracking of all funds received, including those dispersed to Springfield. HUD’s recent Monitoring of the HOME program in Eugene-Springfield found multiple issues in the way that Springfield has managed funded projects and Eugene has provided program oversight. Further, recent changes to federal HOME Program rules have greatly reduce the utility of HOME funds for some purposes. HOME is a very complex federal program that requires significant technical expertise and staff resources to manage effectively, and for many years Eugene has also provided non-reimbursed staff time to oversee Springfield’s Sub-recipient activity. Eugene, Springfield and HUD staff are now considering a Lead Entity model for the HOME consortium. In this model Eugene staff would administer the entire program, and funds would be allocated regionally to projects that meet HOME regulatory and match requirements and are ready to proceed. Springfield now has the choice to work with Eugene in establishing a Lead Entity consortium or to instead rely on the statewide competitive process to fund projects with HOME dollars. If the City were to drop out of the Consortium, then annually distributed HOME funds would decrease by about 28%, and would only be expended in Eugene. Springfield could apply to the State for HOME program awards in Springfield, and this would be highly competitive and still carry all the restrictions of the HOME program. Staff is currently working with the City of Eugene to determine what a Lead Entity arrangement might look like, where Eugene is the Lead Entity managing HOME funds provided to the metropolitan region. Key issues for a new HOME Consortium arrangement are: 1) How project funding decisions will be made, 2) Eligibility for use of funds based on the newly revised HOME Rules, and 3) How Springfield will continue to support HOME activities with limited HOME administrative reimbursements. These are described more fully below. MEMORANDUM 11/20/2014 Page 2 HOME Funding Decisions in a Lead Entity Consortium In the past, 30% of HOME funds received by the HOME Consortium were sub-allocated to the City of Springfield. The City would typically use 10% of these sub-allocated funds for administrative cost reimbursement. The City would release its own RFP for HOME funding project requests, with the Community Development Advisory Committee (CDAC) recommending project awards to Council for approval. In Eugene the process was similar, with a subcommittee of the Housing Policy Board (HPB) reviewing and ranking funding requests and the HPB making final recommendations that were ultimately approved by the Eugene Council. Eugene and Springfield staff are discussing how to transition to regional project funding requests and awards, including developing a new system to review project requests and make funding decisions out of a regional pot of funds. At present staff is discussing a new structure where the HOME Program is staffed and managed by Eugene and overseen by a governing body that has equal representation from both cities. The HOME governing body could be the two Mayors, and might also include other elected officials such as those appointed by the Mayors to the Housing Policy Board. The new Governing Body would oversee the HOME program including the allocation of HOME Funds by type in the annual Action Plan, and make the final decision on the commitment of HOME funds to specific projects based on qualified applications submitted, reviewed and recommended by the Evaluation Committee. The Governing Body would also maintain a commitment to allocating 30% of available funding, over time, in the City of Springfield and would work with staff from both cities to insure this commitment was clear to the affordable housing providers. In this proposal a new Evaluation Committee would be appointed annually by the governing body to review and rank funding proposals and would include the two cities’ appointed Councilors from the HPB, technical expertise related to financing and delivering affordable housing projects, representation from the Springfield CDAC, and others as appropriate. The Housing Policy Board would continue to serve the community as it currently does with the one change being that it would no longer consider HOME funding. HPB’s membership could also be reevaluated in terms of representation, i.e. should HACSA be added to HPB. HOME Funding Eligibility Springfield staff has learned that recent changes to the HOME program rules have greatly reduced the feasibility of using HOME funds for certain purposes such as down payment assistance to homebuyers. Springfield has traditionally supported affordable rental projects, and has also placed a high value on promoting home ownership. To address this issue in Eugene, down payment assistance has been moved to the CDBG program, which has far fewer restrictions with respect to providing down payment assistance and is a more practical program venue for this important service. The evolution of the HOME program makes it clear that HOME funds are best used as last gap funding to projects that have most elements already lined up (e.g. balance of funding, infrastructure in place, property acquisition complete), and are to be spent within 18 months of award. Just to be clear, the changes to the HOME program do not impact the CDBG Program. HOME Staff Cost Reimbursement Springfield has traditionally recovered 10% of its HOME allocation as administration costs, and last year almost $30,000 was reimbursed to the City to cover a portion of HOME program staff expenses. In a Lead Entity Consortium the 10% Admin set aside would primarily go towards reimbursing Eugene’s program administration costs. It is expected that 10% admin funding would continue to cover most, but not all, staff costs and that the reminder of staff expense would not be reimbursed. In the Lead Entity model Springfield will also have work to accomplish with housing providers, like St. Vincent DePaul and Cornerstone, to develop projects to a point where they are suitable for HOME funding. The City will also be in a support MEMORANDUM 11/20/2014 Page 3 role to Eugene as past projects that have received funding are tracked and reported out to HUD. While the HOME program has not been able to adequately cover staff costs in either city, staff continues to discuss with Eugene how some portion of HOME Admin funds can reimburse a portion of Springfield staff time. Staff is also in the process of identifying non HUD funds to support staff costs to deliver these services. RECOMMENDED ACTION: Staff requests Council discussion and direction with respect to the evolving HOME Consortium options.