The City of Ashland received one proposals for the allocation of approximately $274,000 in Community Development Block Grant (CDBG) funds. These funds originated primarily from the City's purchase of the Grove facility, thereby generating over $214,000 in program income to be redistributed through the CDBG program. Additionally approximately $60,000 in past carryover is being incorporated into the award of Reprogrammed 2004 CDBG funds. Proposals requested were limited to affordable housing projects, the highest priority need identified in the 2000-2004 Consolidated Plan. The City received one proposal for land acquisition to construct 6 affordable housing which benefit low and moderate-income people as part of a phased SELF-Help program administered by the Rogue Valley Community Development Community

The City of Ashland Housing Commission will review the grant requests on Sept 22, 2004, and make a recommendation for grant awards to the City Council. Subsequently, the City Council will hold a public hearing on October 19th, 2004 to make a final decision on the grant award(s). The City Council may choose to allocate all the resources available to a project, or carry funds over to re-solicit proposals.

Proposals Received
One proposals was received and is listed below:

Organization	Proposed Project	CDBG Funds Requested
Rogue Valley Community Development Corporation (RVCDC)	Acquisition of land for 6 affordable housing units at 795 Park Street	$274,000

Funding Requested/Available
The $274,000 in CDBG funds being made available through this award process are currently in Ashland's Line of Credit with the Department of Treasury. The US Department of Housing and Urban Development (HUD) must review the Action (proposal) selected by the City through a modification of past Action Plans to ensure the Activities funded are constant with federal requirements, and with the local Consolidated Plan. In brief, Ashland's Consolidated Plan sets forth spending priorities in the following order of importance; housing, homelessness, poverty, other special needs, and community development. Upon a favorable review and approval by HUD of the modified Action Plan(s), and the completion of regulatory requirements such as an Environmental Review, these funds can be distributed to the selected subrecipient.

Assessment
Staff has assessed each proposal received to determine whether it meets the federal CDBG regulations, and if the proposals comply with the City of Ashland 2000-2004 Consolidated Plan. Three areas are evaluated for each proposal regarding compliance with federal regulations. First the proposed projects must meet the national objective of the Community Development Block Grant program. Second, all CDBG funded projects must be an "eligible" use under the CDBG federal regulations. Finally, if the proposals meet all federal requirements, then many federal regulations must be met throughout the course of the project. For instance, all projects funded , in whole or in part, with CDBG dollars require an environmental review in accordance with the National Environmental Policy Act (NEPA), construction projects must use federal Davis-Bacon wage rates, and housing involving structures built prior to 1978 must undergo lead-based paint abatement. Areas of concern are described for the proposal received by RVCDC. The Housing Commission, and City Council, can only award CDBG funds to projects that meet all federal requirements.

Rogue Valley Community Development Corporation
The Rogue Valley Community Development Corporation (RVCDC) proposal is to use $274,000 in CDBG funds to assist in purchasing a property located at 795 Park Street and fronting on Siskiyou Blvd as shown in the attached map. The intended use of the property would be for the construction of 6 low income purchase townhomes. The property is .35 acres in size and is zoned R-3 allowing for the intended density. The R-3 zone allows 20 units per acre, meaning the .35 acres would have a base density of 7 units.

The application for CDBG funds states that the proposal meets the national objectives. Staff concurs that the proposed housing units will meet the national objective of primarily benefiting low- and moderate-income households. The proposal states that the all the ownership unit households would all qualify as meeting HUDs low-moderate income limits with 3 units targeted at the 80% median income limit, and 3 units being directed to households earning less than 50% of the area median income.

The acquisition of land for affordable housing is an eligible use of CDBG funds and is a relatively straightforward use of funds.

Of concern on this site includes access and lead based paint. The application (option agreement) includes provisions for access through the adjoining property, which will be useful in gaining access to the property. The issue of lead based paint involves the existing garage structures as they were built prior to 1978 (built 1969). RVCDC is familiar with Lead based paint abatement and if selected would be prepared to undertake those mitigation/removal efforts on this property.

A primary component of the RVCDC proposal is the use of the USDA Rural Development Mutual Self Help Housing Program (Self-Help). This program involves selecting qualifying households to construct the individual homes through a "sweat equity" approach. The program offers interest rates to the prospective homeowners as low as 1% their 502 Loan Program. It is staffs understanding that the individual families would apply for and receive loans from the 502 loan program to cover the construction costs. This Self-Help Program also awards technical assistance grants to help cover operating costs and technical assistance to the families participating in the program. RVCDC has indicated in their application that they will be seeking these additional grants to assist in the development.

RVCDC 795 Park St. Property (Siskiyou frontage)

strengths	weaknesses
· Meets one of highest priorities in Consolidated Plan - provision of affordable housing.	· Inconsistency and lack of detail in project costs and funding sources. Form B shows total project costs as $1,072,000 although the narrative states a 1.2 million cost (summary). Form C indicates a total of $1,225,500 (when adding $274K in CDBG) of funding sources.
· The target group for this 6 unit proposal is families making less than 80% of median income. With approximately 3 households earning less than 50% median,	· 6 unit development as town-homes does not maximize density of parcel that if constructed as apartments could provide up to 8 units including affordable housing density bonuses.
· Self-Help Program is a comprehensive approach to providing home ownership opportunities while building skills and self sufficiency. USDA low interest 502 loan (1%) to households to cover construction costs	· Staff questions whether the "phasing" proposed implies that Phase 1 (Siskiyou site) is contingent upon a Phase 2 being part of the total project.
· Proposed location adjacent to transit (Siskiyou Blvd)	· Application for USDA Self-Help program yet to be completed.
· Leveraging of limited CDBG contribution. The Proposal indicates a contribution a project cost of 1.2 million with only $274,000 in CDBG contributions Thus the CDBG contribution proposed would be 14.6% of the total project cost.	· Period of affordability unclear. Units to remain affordable for a 20 year period, then the units could be sold at full market value. However the application notes "equity share" and/or a land lease which are not detailed to demonstrate future resale values.
	· Administrative capacity issues, the large scale proposal is substantially larger than any endeavor RVCDC has completed to date. In Ashland, RVCDC is also to be engaged in a 9 unit "Self Help" development on Siskiyou and Faith during the coming year. RVCDC has not yet initiated the Self-Help Program and therefore has no proven successes. The application states additional staffing, however new staff without prior experience are typically considered a risk when evaluating capacity through a risk analysis.

CDBG Project Proposal Rating Criteria
The final step in the process of evaluating the proposal is for the Housing Commission to apply the following compliance criteria to determine which project(s) best meet the City's spending priorities. Each application is to be rated on a high-medium-low scale for each criterion. Staff has provided anevaluations for the RVCDC.

A. The Project provides benefit to a demographic group that has a need documented in the City of Ashland CDBG Consolidated Plan
B. The project assists low and moderate-income households in substantially improving their living conditions. The proposed project must have or be part of a comprehensive approach that takes clients from the beginning to the end of the process that improves their living conditions. "Safety net" services, or services that meet basic needs shall only be funded if it can be demonstrated that clients receiving those benefits are part of a program that will eventually help them obtain self sufficiency. Exceptions to this requirement are projects targeted at helping people with special needs.
C. The project is a proven effective strategy to improve conditions or solve an identified problem.
D. If the project is related to affordable housing, the project retains the units as affordable. The longer the period of time the units remain affordable, the higher ranking the project shall be given
E. If the project is related to economic development for jobs for low and moderate-income people, at least 51% of the jobs shall be held by low and moderate income people. The longer period of time the jobs are held by low and moderate-income persons, the higher the ranking the project shall be given. The larger percentage of jobs held by low and moderate-income persons the higher the ranking the project shall be given.
F. The project maximizes partnerships in the community
G. The project has at least 10% of the total project in matching funds. The larger the amount of matching funds the higher the ranking the project shall be given
H. The project utilizes already existing resources in effective and innovative ways. The project shall not duplicate service provided by another organization
I. The agency submitting the proposal has the capacity to carry out the project
J. The budget and time line are well thought out and realistic
K. The project is ready for implementation
L. The proposal demonstrates CDBG funds are the most appropriate funding source for the project
M. The project is ready for implementation within a year of a CDBG award notification
N. The organization proposing the project has the experience and capacity to undertake the proposed activity.

RVCDC Project Rating Criteria
Increasing the supply of rental housing units and opportunities for home ownership for low and moderate-income households are both ranked the highest priority in the 2000-2004 Consolidated Plan.

A. The Project provides benefit to a demographic group that has a need documented in the City of Ashland CDBG Consolidated Plan.

HIGH: The need for low-and moderate-income ownership households is clearly identified as needed in the Consolidated Plan. Specifically reserving 3 units for low income ownership opportunities benefits a demographic group that does not otherwise have such an option.

B. The project assists low and moderate-income households in substantially improving their living conditions. The proposed project must have or be part of a comprehensive approach that takes clients from the beginning to the end of the process that improves their living conditions. "Safety net" services, or services that meet basic needs shall only be funded if it can be demonstrated that clients receiving those benefits are part of a program that will eventually help them obtain self sufficiency. Exceptions to this requirement are projects targeted at helping people with special needs.

HIGH: Permanent housing is an essential element in improving living conditions, and is not considered a safety net service.

C. The project is a proven effective strategy to improve conditions or solve an identified problem.

HIGH: The formation of RVCDC began in 1990 to introduce a Community Development Corporation (CDC) to the Rogue Valley. CDCs are a proven means of addressing community needs, specifically the creation of affordable housing. The USDA Self-Help program is also a program that has demonstrated successes in providing affordable housing.

D. If the project is related to affordable housing, the project retains the units as affordable. The longer the period of time the units remain affordable, the higher ranking the project shall be given

MEDIUM: The RVCDC proposal states that a deed restriction would be placed on the property requiring the proposed units remain affordable for a minimum of 20 years, but perhaps as long as 99 years. Staff does recognize that any longer period of required affordability (beyond 20 years) would reduce the incentive for households to participate in the Self-Help program. Further the Medium ranking is provided as staff is aware that Lease issues between the USDA Rural Development Program (502 loans) and the project on Hersey Street recently precluded a 99 year lease as proposed by the applicant. Staff is unsure why this project would have a different outcome.

E. If the project is related to economic development for jobs for low and moderate-income people, at least 51% of the jobs shall be held by low and moderate income people. The longer period of time the jobs are held by low and moderate-income persons, the higher the ranking the project shall be given. The larger percentage of jobs held by low and moderate-income persons the higher the ranking the project shall be given.

N/A

F. The project maximizes partnerships in the community

HIGH: The proposal involves local property owners, individuals (households) to help contribute labor to constructing the units, and the USDA program.

G. The project has at least 10% of the total project in matching funds. The larger the amount of matching funds the higher the ranking the project shall be given

HIGH: The proposal identifies a project cost of $1.2 Million. The request is for $274,000 in CDBG funds for land acquisition.

H. The project utilizes already existing resources in effective and innovative ways. The project shall not duplicate service provided by another organization

HIGH: The need for affordable housing is substantial, thus there is no "duplication in services". The project utilizes CDBG for an eligible use and proposes an innovative approach to providing ownership opportunities while building skills and self sufficiency.

I. The agency submitting the proposal has the capacity to carry out the project

MEDIUM: RVCDC has demonstrated success in Ashland. However, staff has concern over the number of projects they will be undertaking in the program year based on past awards (Ashland 8 units, Medford 8 units). RVCDC was given awards from Ashland's CDBG program in 2002 and 2003, however have not yet completed the development of affordable housing with those prior awards. Given the recent lack of demonstrated successes staff has concerns over RVCDCs ability to take on yet another project. However, to address this concern RVCDC has indicated one new staff position has been added with new staff positions (2) created to increase their capacity accordingly. The number of RVCDC staff members is less a concern than is their experience with this type of project.

J. The budget and time line are well thought out and realistic

MEDIUM:: The proposal does provide details regarding the estimated project costs as well as anticipated dates for development benchmarks. However there is inconsistency between the Uses of Funding Form (B) and the Sources of Funding Form (C) and the narrative of the application. Staff is unclear regarding actual project costs.

K. The project is ready for implementation

MEDIUM: Land acquisition is an expedient process and thus that aspect of the project is likely ready for impementation. However as the ultimate development of the units is the actual measure of completion, given the applicant has yet to begin "Phase I" (development of the Siskiyou Faith Site), Staff has concerns over the readiness to proceed on "Phase II" on this site.

L. The proposal demonstrates CDBG funds are the most appropriate funding source for the project

HIGH: One of the goals of the CDBG program is to provide decent housing for low- and moderate-income families. This need is clearly identified in the Consolidated Plan

M. The project is ready for implementation within a year of a CDBG award notification.

MEDIUM: As stated previously staff has concern regarding the "phasing" of projects proposed by RVCDC in terms of how it will effect the ultimate build-out of the identified property.

N. The organization proposing the project has the experience and capacity to undertake the proposed activity.

MEDIUM: Staff believes that RVCDCs proposal to increase staffing to accommodate the proposed project is essential to creating the capacity to undertake an additional project within the program year (considering the 8 unit development in Ashland and an 8 unit development in Medford that would be concurrent to this proposal). Staff also has concern regarding RVCDC's lack of experience with the USDA Self-Help program although the organization does have experience and demonstrated successes with self sufficiency programs and working with unskilled construction workers (students).

Recomendation
Staff upon review of the proposal from RVCDC believes it is a viable and CDBG eligible project. Although the projects success is contengent upon RVCDC's successful application for USDA funding, and selection of qualified and interested households, RVCDC's success in receiving USDA funds to complete Pre-development activities is promising.

Staff recommends selection of the RVCDC proposal for land acquisition with the $274,000 in CDBG funds available.

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