HomeMy WebLinkAboutItem 15 Community Development Block Grant Interim Loan AGENDA ITEM SUMMARY Meeting Date: 9/16/2019
Meeting Type: Regular Meeting Staff Contact/Dept.: Erin Fifield / DPW Staff Phone No: 541-726-2302
Estimated Time: 10 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: COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) INTERIM LOAN
ACTION REQUESTED:
1) Allocate $300,000 in CDBG funds as an interim loan to Homes for Good for the Hayden Bridge Meadows project 2) Authorize the City Manager Pro Tem to negotiate and execute a CDBG loan agreement with Homes for Good
ISSUE STATEMENT: Due to federal requirements, a portion of the City’s CDBG funds are at risk of being lost if not spent by May 2020. City Council has prioritized CDBG funds
toward St. Vincent de Paul (SVDP)’s concept for a new Manufactured Dwelling Park; however, SVDP will not be able to acquire land by the May 2020 deadline.
As a way to maintain the CDBG funds for SVDP to use in the future, and to meet the CDBG timeliness test, Homes for Good is willing to work with the City to borrow the funds as a loan on an interim basis.
ATTACHMENTS: ATT1: Council Briefing Memo ATT2: Hayden Bridge Meadows summary
DISCUSSION/ FINANCIAL IMPACT:
There is about $750,000 in prior year CDBG funds which have been allocated toward the strategy to “increase the supply of affordable housing” and have not been drawn down. Staff would like authorization to be able to lend up to $300,000 to Homes for Good for their affordable housing Hayden Bridge Meadows project, 70 new units on 5th
Street, north of Fred Meyer. City Council has already reviewed and approved the Hayden Bridge Meadows project for the allocation of HOME funds. A loan of up to $300,000 would give the City certainty to meeting the HUD timeliness test, allowing a buffer in case other programs do not meet their projections. Terms of the loan would follow past practice:
CDBG funds given as reimbursement for eligible expenses
Loan due as a lump sum payment one year from the loan agreement
0% interest
This loan would also leave $450,000 in CDBG funds available now in case Council wanted to approve a concept that was ready to proceed within the next year.
The terms of the CDBG loan would allow the funds to be accessible next year when it is anticipated a project will be ready to proceed, in addition to any other CDBG
funds (past or future) which Council could choose to allocate toward the project.
M E M O R A N D U M City of Springfield
Date: 9/16/2019
To: Mary Bridget Smith COUNCIL
From: Tom Boyatt, DPW Community Development
Division Director
Erin Fifield, Community Development Analyst
BRIEFING
Subject: CDBG Interim Loan MEMORANDUM
ISSUE: Due to federal requirements, a portion of the City’s CDBG funds are at risk of being
lost if not spent by May 2020. City Council has prioritized CDBG funds toward St. Vincent de
Paul (SVDP)’s concept for a new Manufactured Dwelling Park; however, SVDP will not be able
to acquire land by the May 2020 deadline.
As a way to maintain the CDBG funds for SVDP to use in the future, and to meet the CDBG
timeliness test, Homes for Good is willing to work with the City to borrow the funds as a loan on
an interim basis.
COUNCIL GOALS/
MANDATE:
Provide Financially Responsible and Innovative Government Services
BACKGROUND:
CDBG is funding many programs, yet has funds to spend
The CDBG program funds multiple programs, including the Emergency Home Repair (EHR)
program, SHOP down payment assistance program, social service programs awarded through
the Lane County Human Services Commission (HSC) and, in FY2020, Safe Routes to School
crosswalk improvements.
However, there is about $750,000 in prior year CDBG funds which have been allocated toward
the strategy to “increase the supply of affordable housing” that have not been drawn down.
With these other CDBG programs moving forward as projected, staff estimate the City’s CDBG
program will need to spend at least an additional $200,000 toward an eligible project(s) by May
2020 to meet the CDBG timeliness test.
CDBG 2019 Request for Concepts
In Spring 2019, the City issued a Request for Concepts, looking to award existing CDBG funds
toward projects that would increase the supply of affordable housing. Five concepts were
received. No project was ready to proceed at the time, though Council indicated their priority for
the funds to be awarded to the SVDP concept for a new Manufactured Dwelling Park,
particularly if the state legislature awarded funds to the project.
SVDP has since sought out available land for purchase, and has identified a site that could
possibly work. However, there is a considerable amount of due diligence that will need to occur
prior to purchase, and SVDP will not be in a position to buy the property by the May 2020
deadline. It is anticipated that SVDP may be in a position to buy property in Fall 2020,
following federal and state environmental review and mitigation requirements, but that has not
Attachment 1, Page 1 of 2
MEMORANDUM Page 2
yet been determined.
Other housing concepts may be ready to proceed by the May 2020 deadline, but again, there is
no certainty this will occur by the deadline.
Loaning CDBG funds to meet the timeliness test
Staff would like authorization to lend up to $300,000 to Homes for Good for their affordable
housing Hayden Bridge Meadows project, 70 new units on 5th Street, north of Fred Meyer. City
Council has already reviewed and approved the Hayden Bridge Meadows project for the
allocation of HOME funds. A loan of up to $300,000 would give the City certainty to meeting
the HUD timeliness test, allowing a buffer in case other programs did not meet their projections.
As noted above, Homes for Good does not need this loan to complete the Hayden Bridge
Meadows project, nor did they ask for the loan. However, they are willing to work with the City
to borrow the CDBG funds in order to help us meet our May 2020 timeliness test. Given
environmental review and due diligence requirements, City staff believe loaning CDBG funds to
an approved, existing HUD project is the best means to ensure the timeliness test is met, while
maintaining the use of the funds for a future project.
Terms of the loan would follow past practice:
CDBG funds given as reimbursement for eligible expenses
Loan due as a lump sum payment one year from the loan agreement
0% interest
This loan would also leave $450,000 in CDBG funds available now in case Council wanted to
approve a concept that was ready to proceed within the next year.
Ensuring a new Manufactured Dwelling Park is built in Springfield
Staff will continue to work with SVDP to ensure a site is suitable and ready to proceed. The
terms of the loan would allow the funds to be accessible next year when it is anticipated a
project will be ready to proceed, in addition to any other CDBG funds (past or future) which
Council could choose to allocate toward the project.
Staff is also working with SVDP to identify other sources of funds which may be suitable for
land acquisition, including HOME funds.
RECOMMENDED ACTION: Allocate up to $300,000 to be loaned to Homes for Good for the
Hayden Bridge Meadows affordable housing project in order to meet the CDBG May 2020
timeliness test, and maintain those funds for use in the future.
Attachment 1, Page 2 of 2
Hayden Bridge Meadows
Homes for Good Housing Agency
1975 5th Street, Springfield
New construction
70 units: 17 one bedroom, 19 two-bedroom, 34 three bedroom
52 units for 50% AMI, 17 units for 60% AMI & 1 on-site manager
52 RAD households pay no more than 30% of income for rent
Part of the Homes for Good Rental Assistance Demonstration (RAD) conversion from scattered single family rentals to consolidated developments
Five units targeted to persons with HIV/AIDS and other special needs
12 residential buildings, community building, playground, bike storage, 105 parking spaces
Community building with large meeting room, kitchen, laundry, and offices
HOME funds : $750,000
Total development cost: $18,090,164
Cost per unit: $258,431
Other funding sources: 4% Low-Income Housing Tax Credits, state residential subsidy preservation bonds, private bank loan, single family home sales proceeds, deferred developer fee
Attachment 2, Page 1 of 1