Council Communication

Public Hearing on the Modification of the Prior Year CDBG Action Plans and Reprogramming of Program Income
Meeting Date:	Novemeber 16, 2004		Primary Staff Contact:	Brandon Goldman 552-2076 goldmanb@ashland.or.us
Department:	Community Development		Secondary Staff Contact:	John McLaughlin, 552-2043 mclaughj@ashland.or.us
Contributing Departments:	none
Approval:	Gino Grimaldi

Statement: The proposed modification of the prior year Community Development Block Grant (CDBG) Action Plans and the reprogramming of Program Income generated from the City buy-out of the Community Works Teen Center (Grove) is intended to allow the Rogue Valley Community Development Corporation (RVCDC) to apply $274,000 in CDBG funds toward the purchase of property located adjacent to 795 Park Street for the development of 6 affordable housing units. Additionally, modification of the 2001-2002 Action Plan is intended to allow the Ashland Community Land Trust (ACLT) to apply $80,000 in CDBG funds toward the purchase of property located at 39 Garfield Street for the development of 2 affordable housing units.
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Background: The U.S. Department of Housing and Urban Development (HUD) awards approximately $250,000 in CDBG funds each year. Over numerous years (since 1995) the City has aimed to expend the entirety of these funds each year. However, due to projects not being completed, or being completed for less than the initial estimate, the City has accumulated $63,397.45 in carryover funds that are to be reallocated to CDBG eligible uses. Additionally, in 2004 the City used general fund money to "buy out" a CDBG contribution of $214,877.33 in the Community Works Teen Center (The Grove). This buy-out removed the CDBG requirement for the facility and the $214,877.33 is considered Program Income under the CDBG program. These funds, and the accumulated carryover are to be reallocated to an eligible use through a public hearing process. An additional $80,000 that was awarded to the Ashland Community Land Trust in the 2001-2002 program year has not yet been used to purchase property for the development of two units. The Ashland Community Land Trust (ACLT) was originally awarded $120,000 in Community Development Block Grant (CDBG) Funds during that program year to develop four affordable housing units. On June 17th, 2003 the Ashland City Council approved of a modification of that action to allow ACLT to develop or acquire three units instead of the original four proposed. ACLT had aimed to work collaboratively with RVCDC to relocate three homes from Southern Oregon University property to three parcels on Hersey and Patterson Streets. The lots were to be acquired by the ACLT with the $120,000 in CDBG funds, and the RVCDC was to renovate/restore these homes. Although all three homes were relocated to the parcels and renovated by the RVCDC, due to conflicts between the ACLT's land lease, and recapture requirements from the US Department of Agriculture (which provided low interest loans to 2 of the 3 homebuyers) the ACLT could purchase only one of the selected lots. All three homes were sold to qualified homebuyers and contribute to Ashland's affordable housing stock, however the ACLT can only be credited with one unit toward its CDBG award obligation. The current site change will allow ACLT to complete the final two units consistent with the previous (2003) modification of the 2001-2002 CDBG Action Plan. The ACLT has indicated that although their intention is to develop ownership units benefiting two low-moderate income households, the selected site could potentially be developed as two affordable rentals and they have requested flexibility in the new activity. The use as rentals would be a change in the intended beneficiaries as identified in the original activity. In August of 2004, the City solicited proposals for use of past CDBG carry over totaling $59,122.67 and $214,877.33 in program income for a combined total of $274,000.00. The City received one proposal and upon review of that proposal at a public hearing on September 22, 2004 the Housing Commission recommended that the full $274,000 be awarded to RVCDC and recommended that ACLT retain the $80,000 previously awarded to be used to acquire the property at 39 Garfield Street. Following the recommendation of the Housing Commission the City Council held a public hearing at their regular meeting on October 19th and directed Staff to proceed with the modification of prior year CDBG Action Plan process to reallocate the combined total of program income and identified past carry over of CDBG funds. Specifically the Council approved the award of $274,000 in CDBG funds to RVCDC for the purchase of property to develop six ownership units for low-moderate income households. Additionally the Council determined that the Ashland Community Land Trust could retain the $80,000 in previously awarded CDBG funds to be applied to purchase property for the development of two low-moderate income dwelling units. At the conclusion of this process there will remain $4274.78 in carryover that was not awarded in this process but will be combined with Ashland's 2005 CDBG allocation for distribution through that competitive award process.
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Related City Policies: The Ashland Consolidated Plan requires a public hearing for a modification of the annual CDBG Action Plan when there is a significant change in the scope of a project. The original use of the majority of these funds was a low-moderate teen Center which is no longer provided. The remainder of the carryover is the surplus from rehabilitation, sidewalk and accessibility projects, and administrative carryover due to a six month overlap in program years. The currently proposed use of funds to acquire property to develop low income housing is a new use and is considered a significant change from the originally identified uses. The Citizen Participation plan section of the Consolidated Plan requires that at least two public hearings will be held to obtain views of citizens, public agencies and other interested parties on the annual use of the CDBG funds and the activities to be undertaken to pursue the priorities in the Consolidated Plan. The public hearings noted above under the background section of this communication and this Public Hearing will satisfy this requirement.
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Council Options: The awarding of CDBG funds is essentially a two-part process. The first part involves the solicitation of proposals and the selection of the proposal(s) that best meets the goals outlined in the Consolidated Plan. Upon selection of a project, or projects, the City then completes the second part of the CDBG award process which involves the creation of the annual action plan outlining all the uses of CDBG funds for the subject program year. The City Council at the public hearing on October 19th, 2004 approved of the use of the program income and accumulated carryover to allow RVCDC to purchase property adjacent to 795 Park Street for the subsequent development of 6 low-moderate income dwelling units, and allow ACLT to apply $80,000 of the past CDBG award toward the purchase of 39 Garfield. The Council is now charged to formally approve of these activity as a modification of the past Action Plans. The Council can approve, deny or amend the proposed use of CDBG funds. In the case the Council were to deny the application of these funds they would be made available through a request for proposals fin addition to the funds for the 2005 program year.
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Staff Recommendation: Staff recommends approval of modification of prior year action plans and reprogramming of program income to award RVCDC $274,000 for the acquisition of property for the development of 6 low-moderate income housing units, and to allow the reallocation of $80,000 to the Ashland Community Land Trust for the acquisition of property at 39 Garfield Street for the development of two affordable rental or ownership housing units. The Ashland Housing Commission reviewed the RVCDC and ACLT proposals at their meeting on September 22nd and forwarded a recommendation to the City Council to approve these uses of CDBG funds. On October 27th the Housing Commission held a public hearing on the modification of past CDBG Action Plans and the use of program income and has forward a recommendation to council to approve the modification of prior year action plans.
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Potential Motions: Move to approve the modification of prior year Community Development Block Grant Action Plans for the reallocation of $59,122.67 in carry-over and $214,877.33 in program income to award RVCDC a total of $274,000 in CDBG funds for the purchase of property to develop six low-moderate income housing units, and to approve of the reallocation of $80,000 to the Ashland Community Land Trust for the acquisition of property at 39 Garfield Street for the development of two affordable rental or ownership housing units.
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Proposed Modification to the 2001-2002 CDBG Action Plan: The section of the 2001-2002 CDBG Action Plan (Goal 1 page 5) relating to the proposed modification is shown below. The modification will be clarify that 1 unit has been already completed and two addition units (rental or ownership) are to be provided. Additionally a change the original target date for completion is included to allow ACLT to purchase the property and complete construction of the units. Additions are indicated in Bold text and deletions are shown as text with a strikethrough. The elimination of the children's day care center was previously approved in 2003. (Goal 1 page 5) Ashland Community Land Trust Action to meet priority and time line: The City will provide CDBG funding to the Ashland Community Land Trust (Project 1). The funding will be utilized to purchase property for the construction of a total of 3 low-moderate income residential units with one unit being completed at 311 Hersey Street and two additional rental or ownership units to be completed at 39 Garfield Street. The Ashland Community Land Trust is a private non-profit corporation. The purpose of the land trust is to create and sustain long-term affordable housing in the city limits of Ashland for low and moderate income families. The land trust acquires and holds land, while the improvements are sold or rented to qualifying low-income residents. Funding sources for this project include: CDBG funds Projected Number Households to be Assisted: 3 low-income households Probable Funding Level: $40,000 for the acquisition of property at 311 Hersey Street (completed April 2004), and $80,000 for the acquisition of property at 39 Garfield Street. Target Date for Completion: June 30, 2006
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Attachments: • • Housing Commission Memo Excerpt from Oct. 27 Housing Minutes

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