| Synopsis: |
The City Council is charged with selecting the award recipient
for the 2004 Community Development Block Grant (CDBG) funds. A total of 75%
of Ashland's yearly allocation is available for the competitive award process
to serve the highest priority need established in the 2000-2004 Consolidated
Plan. Additionally the City Council reviewed the reallocation of past unexpended
CDBG funds on September 16,2003, and directed Staff to combine those available
funds with the 2004 allocation. HUD has not yet released the final amount
available for distribution, but we anticipate an award equal to the 2003
allocation.. Thus the City will have approximately $285,000 available for
the competitive award process available to the selected sub-recipient(s)
for use in developing affordable housing. This is the eleventh year that
the HUD has awarded CDBG funds to the City of Ashland. The primary purpose
of the CDBG Program is to fund community development projects and programs,
which benefit low and moderate-income people.
Through evaluating each of the proposals, and the recommendations of the
Housing Commission, the City Council is to determine which proposal(s) most
effectively use the limited Community Development Block Grant (CDBG) funds
available to address the needs of low- and moderate-income residents of Ashland.
Given Ashland's ongoing issue with the timely expenditure of funds and the
potential loss of future funding if projects are not completed expeditiously,
consideration of the ability to proceed within the program year is also of
importance when granting CDBG awards. |
| Recommendation: |
The Ashland Housing Commission examined the allocation of
Community Development Block Grant (CDBG) funds at a public hearing on October
22, 2003. The Housing Commission recommends that the Ashland Community Land
Trust receive the entire award allocation of $285,000 for the purchase of
an existing duplex at 264 Grant Street. Minutes from the Housing Commission
meeting are attached to this communication.
Staff supports the recommendation of the Housing Commission based upon a
determination that the proposed project is an eligible use of CDBG funds
and will address the highest priority need identified in the Affordable Housing
Action plan, the provision of affordable rental housing. Staff's full evaluation
of the proposals received is included as Exhibit A (Staff Evaluation). |
| Background: |
The City received two proposals for use of the $285,000 cumulative 2004
CDBG award ($192,000) and reprogrammed funds from 1995, and the 1999-2003
program years ($93,000). A request for proposals was issued on September
24th, with a submittal deadline of October 17th. The City received one proposal
from the Ashland Community Land Trust (ACLT) and one from the Rogue Valley
Community Development Corporation.
The ACLT proposal consists of purchasing an existing duplex at 264 Grant
Street to enable ACLT to maintain the units as affordable. The merits of
the project are outlined in ACLT's proposal, with an evaluation provided
by Staff in the Staff Evaluation.
The RVCDC proposal involves the acquisition of the rear of the property located
at 631 Clay Street for the development of 16 townhouse units to be developed
in conjunction with the USDA Self-Help Program. The merits of the project
are outlined in RVCDC's proposal, with an evaluation provided by Staff in
the Staff Evaluation.
These proposals were evaluated by the Housing Commission at a public hearing
during their regular meeting on October 22nd, 2003 in the Community Development
and Engineering Services building at 51 Winburn Way. At this hearing the
Commission deliberated on the merits and risks of each proposal and through
a 3-2 vote recommended that the City Council provide the full award to the
Ashland Community Land Trust.
The Housing Commission had voiced a number of concerns about each project
during the hearing, to which Staff has researched the issues to provide a
response for Council's evaluation.
ACLT
The Housing Commission voiced concern over the intended use of the rental
proceeds should ACLT be awarded the $285,000 for acquisition of the property.
Staff has determined through consultation with our regional field office
that HUD will not consider such income "Program Income" and the use of these
proceeds would not be held to CDBG requirements. Additionally members of
the Commission expressed concern whether the amount of subsidy into the ACLT
project would be in violation of CDBG requirements. This concern was relayed
to Ashland's HUD representative and it was determined that there is no per
unit cap regarding CDBG contribution to a project, therefore there is no
regulatory issue with the potential award of $285,000 for a 2 unit acquisition.
Staff further determined that to comply as an eligible use of CDBG funds,
only one of the two units would be required to be affordable to low-moderate
income households.
RVCDC
The Housing Commission raised the issue as to whether Ashland qualified as
a "Rural" community and could therefore qualify for the USDA Self-Help Program.
In consulting with the regional representative of the USDA, staff found that
the threshold for eligibility for rural assistance has changed from a population
of 20,000 to 25,000. Therefore Ashland is considered a rural area and will
continue to be considered rural by the USDA. The Commission also expressed
significant concern over the valuation of the subject property identified
in RVCDC's proposal. The proposal stated a land cost of $675,000 which was
considered high by members of the Commission and Staff. It is Staffs
understanding that RVCDC is endeavoring to provide a revised valuation by
either having an appraisal conducted or by evaluating more accurate comparable
land sales. It is important to note that the use of CDBG funds on the project
would require that "fair market value" be offered for the property, and that
the purchase not be in excess of this value as established by a certified
appraisal. Lastly the Housing Commission, and Staff, have expressed concern
over RVCDC's readiness to proceed. Of particular concern was that as the
Siskiyou/Faith project has yet to begin, it was of concern that this second
"phase" would not be undertaken during the upcoming program year. In consulting
with USDA, should a Self-Help grant be provided to RVCDC it was expressed
that a Self-Help project is typically conducted over a two year timeframe.
With a first set of homes constructed in the first year, with a second set
being undertaken in the following year. With this understanding Staff recommends
that RVCDC apply for CDBG funds in 2005 to accommodate the second phase of
the project. |
