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HomeMy WebLinkAboutCommunity Development Block Grant Commission - Minutes - 03/11/2004CITY OF FORT COLLINS COMMUNITY DEVELOPMENT BLOCK GRANT COMMISSION Meeting Minutes March 11, 2004 Phil Majerus, Chair Bill Bertschy, City Council Liaison Chair Phil Majerus called the meeting of the Community Development Block Grant Commission to order at 6:40 p.m., at 281 North College Avenue, Fort Collins, Colorado. Board members present included: Chair Phil Majerus, Bob Browning, Michael Kulischeck, Jennifer Wagner, Tia Molander, and Cheryl Zimlich. Staff present: Ken Waido, Maurice Head, Heidi Phelps, and Julie Smith. Discussion was held over quorum issues. CITIZEN COMMENTS No citizen comments were offered. APPROVAL OF JANUARY 8, 2004 MINUTES On page 2, the name of the director of DREAM, Inc., should be corrected. Discussion was held over the wording of "Legal residence status" on page 7; no changes suggested. Moved by Ms. Zimlich, seconded by Mr. Browning: To approve the minutes as amended. Motion approved unanimously. PRIORITY HOUSING NEEDS AND STRATEGY REPORT Mr. Head reported. The Needs and Strategy Report was originally completed in 1999. This document sets forth the allocation methodologies and priorities in support of affordable housing. The original purpose of the report was to consolidate and define the City's approach to affordable housing. The document distributed to the Commission is an update of the 1999 report. The original report had a target of 1,357 units to be produced or reserved between 1999 and 2002. The department has surpassed that goal, having achieved approximately 1,500. Changing conditions will affect goals and results. At the time of the first report, the vacancy rate was 5.3 percent. In February 2003, the vacancy rate was 13.7 percent. The vacancy rate remained high even in the under 50 percent AMI units, which were the City's highest priority. HUD predicts a turnaround by 2006; in the meantime, Staff recommends highest priority at under 40 percent Al. Community Development Block Grant Commission Meeting of March 11, 2004 Page 2 Housing costs have sharpened the market. In 1998, approximately 64 percent of housing stock was available to medium income level; that rate is now approximately 58 percent. The lower the income, the more difficult it becomes to find available housing. The housing needs are further complicated by a Fort Collins employment population heavily in service and retail sectors. All this has resulted in the down payment assistance program changing its subsidy from $5,000 to $9,000. Council has stated clearly that it supports an approximate 70/30 division, weighted toward support of multifamily rental projects over home ownership projects. The 10-year goal for rental at 50 percent below AMI is 2,863; for home ownership, 1,417 units. This is based on HUD data using the 2000 census and projected growth rate of 2 percent. Total cost for that goal is estimated at $36 million, with $19 million needed from the City's affordable housing funds. Currently, affordable housing funds are frozen through 2005 due to the City's budget issues. As the market turns around, those funds will rise again. The City Manager's projection is for those funds to go up again in 2006. Challenges exist in encouraging new and existing developers to produce affordable housing units. Land stock currently being negotiated would yield 380 to 450 units. At an initial cost of land of $1.6 million, cost per unit results in $3,634. The City will sell that land at a discounted rate that still yields a positive number for the City. Those funds will be rolled back into the Land Bank system. The discount is targeted at 10 percent but may run higher for lower levels of AMI served. On the current property under negotiation, a comment period for Housing and Human Services is running; then a report to Planning and Zoning; finalization of the plan; review by the Affordable Housing Board; then submittal to Council. In response to questions by the Commission, Staff stated that no projects are currently proposed. Volunteers of America is the only project under construction. COMMUNITY ASSESSMENT SUMMARY Fort Collins and Loveland were asked by the Colorado Division of Housing if a need existed for tenant -based rental assistance. Currently, 900 families are on a waiting list. The Division of Housing has not seen substantial numbers of applications for development or acquisition; conversely, they notice high vacancy rates in various areas, including Fort Collins and Loveland. The new executive director wishes to that the Division is responsive to market conditions and uses its HOME funds appropriately before the HOME funding deadline runs. Community Development Block Grant Commission Meeting of March 11, 2004 Page 3 The targeted areas are Colorado Springs, Denver Metro area, and Fort Collins/Loveland. The State Housing Board committed $2.8 million for a two-year pilot program, of which $465,000 is earmarked for Fort Collins/Loveland. However, the Board is looking for a match from local agencies. The program is meant to address families below 30 percent AMI, off the Section 8 list, and out of shelters. The program would provide rental assistance, deposit assistance, and intensive case management. This is seen as a tough time for affordable housing programs, where portfolios that serve below 30 percent AMI are struggling for profitability. With such a high vacancy rate, families with stable incomes are moving into more housing of choice, leaving marginal affordable projects strained. The residents who are left exist from paycheck to paycheck, and their ability to pay rent is constantly in question. The Colorado Housing Authority's demand for match can come in varying ways. The housing authorities in Fort Collins and Loveland are confident that they can contribute substantially in discounted rents and in -kind administrative work. Contribution to this effort has the following advantages: Helps to provide for underserved families. Could help in self-sufficiency. Funds received from outside source. Help reduce the vacancy rate in affordable units. Provide for better preservation of existing units. Contribution to this effort could bear the following disadvantages: Short-term time frame. Funds contributed might not recycle. At the end of the term, families may find themselves in the same position they see now. Councilmember Tharp has championed this effort and presented it to Council. Council has some wariness, particularly due to the fact that its own funding of affordable housing funds is frozen. At direction of Council, Diane Jones has her financial shovel out to unearth possible funding sources within the City. The Division of Housing has not been forthcoming about the amount it will accept in in -kind contributions as opposed to a cash match. The City's stock of affordable housing is currently approximately 6 percent outside of the Sleepy Willow project. Sleepy Willow is at approximately 30 Community Development Block Grant Commission Meeting of March 11, 2004 Page 4 percent vacancy. CARE is seeing high vacancy rates, perhaps from 12 to 25 percent. Case management is an important element of a contribution that has a limited term in order to help applicants to self-sufficiency before that term is up. The Colorado Division of Housing money cannot be used for case management, so municipal entities are looking for ways to absorb that cost. Fort Collins is quite concerned about its ability to absorb these extra costs. For funding, the Division of Housing's assumptions were 35 families with no income needing 100 percent subsidy. The number served would go up the more income that the targeted families have. Discussion was held whether the Division of Housing could simply fund without a match in place, given the concerns that the funds would have to be returned if not spent. The Council has not decided to fund from the general fund or simply rely on funding from the affordable housing funds set -aside. Discussion was held over tying funding to case management requirements. The Division of Housing feels that for its contribution in cash of $460,000, community commitment is desired. It was noted that Fort Collins has shown its community desires by establishment of its own voluntary Affordable Housing Fund, but that fund is not specifically earmarked as matching funds. Questions were raised whether tenants could find themselves in a relocation situation at the end of the two-year funding cycle. Worst -case scenarios need to be addressed in the event of relocations or economic downturns. BEAUCAIRE Heidi Phelps reported. There has been a noticeable disparity between claimed property values and a sales offer received. Ms. Phelps has ordered an independent appraisal from a highly respected firm. A tour by Staff turned up some unpleasantries, in the form of cleanliness issues and an apparent stay by some underage guests. The entity has not made its February interest -only payment. It will apparently miss the March payment. The entity is facing bankruptcy, and First National will begin foreclosure proceedings next week. Staff is looking at ways to maximize recovery of CDBG funds. One proposed method is to buy the property, renovate it, and add it to affordable stock. Work needs to be done to bring the property into compliance. Negotiations have been conducted with First National, but First National, not too surprisingly, will not agree to a proposal where they make less than the full recovery they could make otherwise. Community Development Block Grant Commission Meeting of March 11, 2004 Page 5 The City will make its own building inspection to evaluate the rehabilitation that is needed. The property is not presently well -maintained. That inspection will be factored into the City's options. COMPETITIVE PROCESS REVIEW The matrix was distributed for Commission members' review and explained in terms of dollars available, priorities applicable, and scoring applied. Staff has worked very hard on technical assistance with the applicants. Applicants were told not to apply if they neglected to avail themselves of the technical assistance. It is hoped that this will supply the Commission with prepared, responsive, and fully eligible requests. Various programs were reviewed for their applicability for funding. Referral agencies have been discouraged. Disabled Resource Services is an empowerment agency, not a referral agency. Due to dynamics of the programs, the child care collaborative effort has shifted somewhat to more independent applications. Care was given to the public service agencies in grouping them appropriately. The Commission will take a very analytic and unbiased look at the applicants in order to evaluate the requests properly and equitably. Feedback and critique are encouraged after the funding cycle has culminated. The ranking criteria is a guide and more helpful for housing applications. Even as a guide, there is clear value if applicants are scoring very high or very low, in terms of reaching an immediate preliminary opinion for a funding decision. Staff is unhappy about the extended time needed for the funding cycle meetings. Groupings were made of similar agencies. Further care was taken to achieve a level of equitable treatment for time allowed between agencies with one application and other agencies with more than one. The final schedule is pending applicants confirming their time slots. Ms. Phelps noted that the current economic environment has not been kind to a number of agencies. She asked the Commission to not back away from tough questions yet carry a certain level of diplomacy, in deference to the tough times that many applicants are facing from funding sources. Mr. Waido reviewed the spreadsheet, noting that the specific current year's allocation is not readily discernible in the combination of current funding, reprogrammed funds, and other funding. The spreadsheet also delineates which funds are applicable to which request, which further muddies the water on total Community Development Block Grant Commission Meeting of March 11, 2004 Page 6 CDBG funds available. However, the matrix does clearly set out by category the available funds for particular types of applicant. Housing proposals alone would account for 87% of all available funds, so the Commission will have hard choices to make. Staff presented specific items of advice The Commission does not have to exhaust available funds if applicants are not worthy of funding. No independent contacts should be made with applicants. Potential applicants who make contact should be referred to Staff. City policy and HUD limitations concerning percentages applicable to various categories may differ. Discussion was held over the value of getting an entity's full budget versus a program budget. Opinions have varied over the years. Presently, an entity's full budget is not reviewed because in the case of large organizations, many avenues of funding may look available that are not necessarily present for a particular program. Applicants have been advised that the efficiency of their efforts will be reviewed closely by the Commission. Reserves can be inquired into concerning a specific program. A fair query would be concerning the current or three months' operating reserves. OTHER BUSINESS In response to a question by a Commission member, the current staffing situation at Crossroads was reviewed. The new director appears to be coping well. Upon motion, second, and unanimous assent, the meeting adjourned at 7:55 p.m.