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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 01/20/2015 - RESOLUTION 2015-009 ADOPTING A REVISED COMPETITIVAgenda Item 9 Item # 9 Page 1 AGENDA ITEM SUMMARY January 20, 2015 City Council STAFF Beth Rosen, Affordable Housing Program Administrator SUBJECT Resolution 2015-009 Adopting a Revised Competitive Process for the Allocation of City Financial Resources to Affordable Housing Programs/Projects and Other Community Development Activities. EXECUTIVE SUMMARY The purpose of this item is to revise the competitive process for allocating affordable housing and human service funds. The changes combine all available housing funds into one spring cycle to allow for compliance with HUD requirements, stronger competition among projects and better alignment of funds to their intended uses. An optional fall process will be retained. Minor administrative changes would also be made. STAFF RECOMMENDATION Staff recommends adoption of the Resolution. BACKGROUND / DISCUSSION On January 18, 2000, City Council adopted Resolution 2000-013 Establishing the Competitive Process for the Allocation of City Financial Resources to Affordable Housing Programs/Projects and Other Community Development Activities. Exhibit "A" of the Resolution established that there would be two funding cycles: Community Development Block Grant (CDBG) funds would be allocated in the spring and HOME and Affordable Housing funds would be allocated in the fall. Since the adoption of the Resolution, the City has held back its annual allocation of HOME and Affordable Housing funds for the fall process. Historically, housing providers have applied for CDBG funds in the spring and HOME/Affordable Housing funds in the fall. This process is not in alignment with the program requirements of the Department of Housing and Urban Development (HUD). The City receives an annual Entitlement Grant from HUD every year, which has a start date of October 1. Prior to the commencement of the HUD Fiscal Year, the City is required to submit an Annual Plan to HUD no later than 45 days prior to the commencement of the Fiscal Year (August 15). This plan requires that the City identify all housing projects it plans to undertake during the next HUD Fiscal Year. Holding back the HOME and Affordable Housing funds into the fall prevents the City from identifying housing projects as required in the Annual Plan, and creates the requirement for City staff to submit a Substantial Amendment to the Annual Plan to HUD after the fall funding allocations. Because CDBG and HOME have different regulations related to eligible recipients and eligible uses of funds, it has become increasingly difficult to align funding sources to their best uses when the funds are split into two separate cycles. Combining all available housing funds into one spring cycle will allow for stronger competition among projects and allow for better alignment of funds to their intended uses. Retaining the optional fall process will create the opportunity to disburse excess available funding if there is a critical timeliness on either the part of the City or a housing provider. Agenda Item 9 Item # 9 Page 2 The process itself will continue to be run through the CDBG Commission, with the Affordable Housing Board ranking projects according to the Affordable Housing Strategic Plan. (Attachment 1) In addition to changing the funding cycle, the proposed revised competitive process reflects changes that have been made over the last 15 years to the application process and forms (which are now available and processed electronically) and the ranking criteria for applications. The Resolution would authorize the City Manager to administratively approve future changes to the application forms and ranking criteria. FINANCIAL / ECONOMIC IMPACTS The approval of this request will result in efficiencies of staff and City resources, as all housing funds are combined on one process. Staff believes the proposed changes will also have positive financial/economic impacts on local housing projects as funding commitments will be made available sooner in the year. The revised process will provide additional efficiencies by reducing the need for housing developers to apply in multiple funding cycles until they receive the cumulative funding necessary for the project. ENVIRONMENTAL IMPACTS None. BOARD / COMMISSION RECOMMENDATION Both the Affordable Housing Board and CDBG Commission recommend adoption of the Resolution (Attachments 2 and 3). At a public meeting held on December 4, 2014, the Affordable Housing Board voted to recommend a Resolution that would move all HOME and Affordable Housing Fund dollars into the Spring Competitive Process, retaining an optional Fall Competitive Process. At a public meeting held on December 11, 2014 the CDBG Commission made the same recommendation. PUBLIC OUTREACH On December 5, 2014 a memo was sent to the City’s affordable housing partners outlining the proposed changes and requesting feedback no later than December 31, 2014 (Attachment 4). Habitat for Humanity and the Larimer Home Improvement Program (LHIP) responded in support of the change. CARE Housing responded with questions seeking clarification, but did not offer a position on the proposed change, and Neighbor to Neighbor did not provide a response. Fort Collins Housing Authority did not provide a written response, but has been engaged in ongoing conversations with the Social Sustainability Department about the proposed changes. Social Sustainability Department staff is confident that any concerns can be addressed at an administrative level. ATTACHMENTS 1. Competitive Process Calendar (PDF) 2. Affordable Housing Board Minutes, December 4, 2014 (draft) (PDF) 3. Community Development Block Grant Commission minutes, December 11, 2014 (draft) (PDF) 4. Proposed Administrative Changes to Competitive Process - Memo to housing providers (PDF) Competitive Process Calendar Month Event January Applications available on ZoomGrants February Applicant Training - Optional February Technical Assistance - Optional February Applications due March Applications available to AHB/CDBG Commission March Presentations by Applicants March Presentations by Applicants / Priority Rankings presented by AHB April - May Deliberations May - June City Council Votes on Recommendations Optional Fall Process June Determine need for a Fall Process July Applications available on ZoomGrants August Technical Assistance - Optional August Applications due September Applications available to AHB/CDBG Commission September Presentations by Applicants and Priority Rankings presented by AHB October Deliberations November City Council Votes on Recommendations ATTACHMENT 1 CITY OF FORT COLLINS AFFORDABLE HOUSING BOARD BOARD MEETING MINUTES CIC Room, City Hall 300 Laporte Ave Fort Collins, Colorado December 4, 2014 4:00–6:00pm Excerpt from Draft Minutes: ITEM 3: FEDERAL SOURCE OF FUNDING CRITERIA—BETH ROSEN Beth requests a recommendation from the board to Council in support of having one grant allocation process in the spring, in which all housing funds are available, and an optional process in the fall in the event that excess or additional funds become available. If and when there is funding or a timelines need on the part of an applicant, there could be the possibility of funding in the fall. Currently we hold back HOME funds to allocate in the fall. In August we submit an annual plan to HUD for the dollars received in October. Then the fall process allocates funds from the previous HUD distribution. This year, Council just approved 2014 Affordable Housing Funds for use. All housing applicants could come in together, all the proposed applications for the year would be reviewed, and decisions could be made based on all projects and all available funds. This would allow better alignment of funding to projects. Sue added that the eligible expenses at the federal level shift, which makes it even harder to match funds to projects. Beth provided a hand out and reviewed the funding sources. CDBG funding’s focus is on community building, not housing. These funds must be used to benefit low and moderate income persons, aid in prevention of blight, or meet an urgent need, such as a disaster or emergency. CDBG funds can only be used by the local government or awarded to nonprofit or governmental entities. The City has identified housing as the most important need, so CDBG funds have never been used toward parks, streets, or other blight remediation. It is the responsibility of the City to verify the income eligibility of the person’s served. CDBG has limited eligible housing activities, such as homeowner rehab, down-payment assistance, closing costs, acquisition of property for rental housing, public improvements, etc. New construction is not eligible. CDBG funds can support the construction of new housing, but not pay for construction. An example is that Redtail Ponds got an allocation of CDBG funds, but Beth had to identify eligible costs for reimbursement, which is complicated. For planning purposes it is more sensible to have all projects and all funds reviewed at the same time. Sue added that the Affordable Housing Fund (AHF) is the most flexible funding source. HOME funds are used for housing for low and moderate income households and expanding the capacity of non- profit housing providers. Nonprofits and for-profits are eligible and anything that leads to getting a low income household into housing is an eligible expense. Projects must be vetted for feasibility and agency capacity. There is a requirement that 15% of the annual allocation be set aside for CHDOs. The only active CHDO in Fort Collins is Habitat for Humanity. There are federal regulations for HOME funds. Once funds are put into a development, additional HOME funds cannot be allocated to that project again. On the other hand, CDBG funds can be requested multiple times for the same project, such as in the rehabilitation of the property. HOME funds have additional restrictions that sometimes make them harder to use. For example, if HOME funds are used, the entire property must be brought up to HOME standards. Villages on Cunningham Corner received both CDBG and HOME funds, but a major rehab is being done and will bring the property up to standard. HOME also requires a 25% local match, underwriting criteria, property standard guidelines, and long-term monitoring and compliance. The City has an automatic allocation annually of HOME and CDBG funds based on a formula. Affordable Housing Fund (AHF) has no limits or restrictions, other than being used to support housing. It can be used for the local match, emergency repairs, administrative costs, rental repairs, etc. Discussion/Q & A:  Eloise asked if the flexibility provided by two cycles per year is worth keeping. Beth said this was based on the tax credit allocation process which had two cycles, but has recently condensed to one as well. It is reasonable to expect all applicants to come in once a year, so that we can submit a plan to HUD that covers what we actually plan to do, rather than submit a substantial amendment each year.  Curt asked about CDBOs. Beth said the city does not have any CDBOs now.  Curt asked about the definition of “viable urban community.” Beth said it is the CDBG definition. ATTACHMENT 2  Eloise asked if the green community that was proposed at Willox and College would have qualitied. Beth said it is being built by a for-profit developer and is therefore not eligible for CDBG funds.  Troy asked if there was a flood that damaged properties, would it still need to be a nonprofit or government agency that used the funds. Beth said yes. Tatiana said LHIP could apply for the funds and use them to help homeowners. Beth added that in the 1997 flood, the City requested and received disaster relief funds that were used immediately to help displaced people.  Diane asked why there is a minimum allocation for AHF. Beth said that is not per project, but a minimum allocation from the City to the fund. An enhancement offer was accepted in the 2015/16 BFO cycle, so there will be more funds available in the next two years.  Tatiana is concerned whether there will be a reserve put in place in case of a disaster. Sue added that there are always general fund dollars. If Council wanted something funded, we could have an additional competitive process.  Beth added that we may not allocate all $2 million if we do not have good projects. If all funds are not allocated, there would be a fall process as well.  Tatiana said this whole bank of funds is for human services as well. Beth said the human services are always funded in the spring already.  Tatiana asked the negative impacts of the change to the process. Beth said it streamlines the process and eliminates the need of applicants coming in over two or three cycles to get all the funds they need for a single project.  Diane asked if this will help in the bricks and sticks versus public services dilemma. Beth said you would not see more of this issue than previously. Diane added the board wants to make sure it is following its charge to review projects in an equal way. Does this process pull out the social projects?  Beth said it adds another lens for comparison.  Diane said comparing non-development to development is apples to oranges and is frustrating.  Beth said it could look very similar to what the board saw this fall; however, the board would also have $750,000 of CDBG funds. Troy moved the Affordable Housing Board recommend that Council put all grant funds in Spring Competitive Cycle and hold an optional fall cycle as funds are available. Terence seconded. Motion passed unanimously, 6- 0-0.  Tatiana said if you have an out of state developer come in to purchase land, and then the funds are all gone to do land acquisition, they will pull out and we lose a potential project.  Troy said the pros outweigh the cons in that potential scenario.  Diane said when we look at the history of who comes in the fall cycle, they are not generally new.  Sue asked what happened with Cunningham Corners. Beth said the amount of money available was due to a project going bankrupt, making the funds that had been allocated available again. In such a case, under the new process, there would be a fall cycle to allocate the recuperated funds.  Tatiana asked if the CDBG Commission is in support of this. Beth said yes. 1 COMMUNITY DEVELOPMENT BLOCK GRANT COMMISSION REGULAR MEETING AND PUBLIC HEARING 1221 Green Street, FORT COLLINS December 11, 2014, 6:30 P.M. DRAFT Excerpt from Draft Minutes: Staff Reports and Program Updates Sharon Thomas reported that the Social Sustainability Affordable Housing Administrator, Beth Rosen, is submitting to Council a resolution proposing that HOME and AHF be allocated in the spring, starting with the FY15 Competitive Process cycle. Thomas stated that staff feels as though doing so would ensure projects are better meeting federal regulations and also avoids a scenario where larger projects receive piecemeal funding. Thomas also said there will be an optional fall cycle if about $500,00 or more is available to allocate. Anita Basham said this means there will be more presentations in the spring, and Thomas said just one or two more related to housing. Basham said that Fort Collins Housing Authority had suggested having a rolling cycle, which would make it easier for them. Chair Bob Browning said that doing so eliminates the competitive nature of the process. Thomas said another benefit is that commission members could decide to set aside CDBG, HOME and AHF funds for another time, and that it would still remain a competitive process. She also said that staff is not moving forward with any recommendations that change the funding process made by the consultants. She added that one challenge for staff has been completing a report on activities for HUD each year by August when the funds haven’t been used yet, which creates the need for multiple amendments that have to be drafted, approved and published. Having one cycle in the spring eliminates this. Kay Rios moved to support the resolution. Margaret long seconded the motion. Motion passed unanimously. ATTACHMENT 3 Social Sustainability 321 W. Maple Street PO Box 580 Fort Collins, CO 80522 970.221.6812 www.fcgov.com M E M O R A N D U M TO: CARE Housing Fort Collins Habitat for Humanity Fort Collins Housing Authority Larimer Home Improvement Program Neighbor to Neighbor FR: Beth Rosen, Affordable Housing Administrator DT: December 5, 2014 RE: Proposed Administrative Changes to the Competitive Process On January 20, 2015 the Social Sustainability Department (SSD) intends to present Fort Collins City Council with a request to make administrative changes to the Competitive Process. Specifically, SSD will be requesting Council pass a Resolution moving HOME and Affordable Housing Fund (AHF) allocations into the Spring process, thereby retaining an optional Fall process in the event there are additional available funds and/or critical timeliness needs on either the part of the City or a housing provider. Having all housing funding sources available in the Spring allocation process will meet two critical needs for process improvement: 1. Allocation of all Federal funding prior to June 30 will allow the City to obtain compliance with the HUD requirement to have all housing projects identified and reported in the City’s Annual Plan, which is due no later than August 15, 45 days prior to the start of the new federal Program Year; and 2. Allow for the best use of funds by better aligning housing projects with appropriate funding sources Retaining an optional Fall process will also create an opportunity to disburse excess available funding when and if there is a critical timeliness need on either the part of the City or a housing partner. By June 1 of any program year, the City will determine if there is sufficient funding available and/or demand to warrant the initiation of a Fall process. Historically, our housing partners have valued two separate processes, in part because they provided opportunities to obtain funding commitments prior to CHFA’s semi-annual allocation of Low Income Housing Tax Credits. CHFA has moved to an annual process, with applications due May 1, 2015. Assuming the City receives timely notification from HUD regarding the annual allocation, housing applicants would benefit from having City funds awarded to their projects prior to the tax credit application deadline. Please contact me with any comments regarding this process prior to December 31, as I would like to be able address any concerns and accurately report feedback received to City Council. ATTACHMENT 4 - 1 - RESOLUTION 2015-009 OF THE COUNCIL OF THE CITY OF FORT COLLINS ADOPTING A REVISED COMPETITIVE PROCESS FOR THE ALLOCATION OF CITY FINANCIAL RESOURCES TO AFFORDABLE HOUSING PROGRAMS/PROJECTS AND OTHER COMMUNITY DEVELOPMENT ACTIVITIES WHEREAS, on January 18, 2000, the City Council adopted Resolution 2000-013, establishing a competitive process for allocating funds from the federal Community Development Block Grant and HOME programs, as well as City Affordable Housing funds (the “Competitive Process”); and WHEREAS, the Competitive Process established two funding cycles, with CDBG funds allocated in the spring and HOME and Affordable Housing funds allocated in the fall; and WHEREAS, having two funding cycles is not consistent with current program requirements of the federal Department of Housing and Urban Development (HUD); and WHEREAS, splitting the two sources of funding into two application cycles has also made it difficult for eligible recipients to align their projects with the most appropriate funding sources; and WHEREAS, City staff has therefore recommended that the Competitive Process be changed to include only one funding cycle in the spring, with the fall funding cycle being optional and used only when funds are available that were not allocated in the spring or were returned to the City; and WHEREAS, the Competitive Process also included application forms that agencies use to apply for funding and ranking criteria used to score funding applications; and WHEREAS, over time the application forms and criteria have been updated, and applications are now made online; and WHEREAS, the City Council wishes to authorize the City Manager to approve future changes to the application forms or method and ranking criteria; and WHEREAS, both the Affordable Housing Board and the CDBG Commission recommend that the Council adopt a revised funding process that would move all available funding into a spring funding cycle while retaining an optional fall cycle; and WHEREAS, a copy of the proposed revised and updated Competitive Process is attached as Exhibit “A” and incorporated herein by reference (the “Revised Process”); and WHEREAS, the Council has determined that the Revised Process should be adopted. - 2 - NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the revised competitive process for the allocation of City financial resources to affordable housing programs/projects and other community development activities, including, without limitation, the competitive process, funding cycles, funding cycle schedules and funding review criteria, all as shown in Exhibit “A”, is hereby adopted. Section 2. That the City Manager is hereby authorized to administratively approve future changes to the application forms or method of application and funding review criteria as necessary or appropriate to comply with regulatory changes or improve the funding process. Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 20th day of January, A.D. 2015. _________________________________ Mayor ATTEST: _____________________________ City Clerk Exhibit “A” Competitive Process Presented below is a description of the Competitive Process for making allocations of funding from the Federal Community Development Block Grant (CDBG) and HOME Programs, and the City’s Human Service Program (HSP), Keeping Fort Collins Great (KFCG) and Affordable Housing Fund. The description discusses the roles of the Affordable Housing Board and CDBG Commission. The Competitive Process also includes the following: 1. There will be two separate application forms: one for Human Service applications and one for Housing/Public Facility applications. 2. Applications are currently submitted on-line through ZoomGrants. 3. There will be a single set of Review Criteria used to evaluate human service applications. 4. There will be a single set of criteria used to evaluate Housing/Public Facility applications. 5. Housing Review criteria incorporate current City policies, guidelines and priorities outlined in the following documents: a. Consolidated Housing & Community Development Plan b. Affordable Housing Strategic Plan Role of the Affordable Housing Board The Affordable Housing Board reviews all affordable housing applications and provides a priority ranking of all proposals to the CDBG Commission. Role of the CDBG Commission The CDBG Commission makes the final recommendations for funding for all funds, including CDBG, HOME, Human Services Program, and the Affordable Housing Fund. HOME funds (by federal regulations) and Affordable Housing Fund dollars are restricted to affordable housing projects and programs. The majority, (65%) of CDBG funds are earmarked to support affordable housing, but also offer wider potentials for usage including: public facilities, and economic development. Up to 15% can be allocated to public service projects and programs. Funding Cycles There will be a minimum of one funding cycle. All available funds, CDBG, HOME, AHF, HSP and KFCG will be available for allocation in a spring cycle. An optional fall cycle will be implemented when there is approximately $500,000 or more in funds available for allocation and/or there is a critical timeliness need on the part of the City or a housing provider. Competitive Process Calendar Month Event January Applications available on ZoomGrants February Applicant Training - Optional February Technical Assistance - Optional February Applications due March Applications available to AHB/CDBG Commission March Presentations by Applicants March Presentations by Applicants / Priority Rankings presented by AHB April - May Deliberations May - June City Council Votes on Recommendations Optional Fall Process June Determine need for a Fall Process July Applications available on ZoomGrants August Technical Assistance - Optional August Applications due September Applications available to AHB/CDBG Commission September Presentations by Applicants and Priority Rankings presented by AHB October Deliberations November City Council Votes on Recommendations Review Criteria for Non-Housing Projects Impact/Benefit (maximum 30 points) 1. (0-10) 2. (0-5) 3. (0-5) 4. (0-10) Sub-total 0 Need/Priority (maximum 15 points) 1. (0-10) 2. (0-5) Sub-total 0 Feasibility (maximum 15 points) 1. (0-3) 2. (0-4) 3. (0-4) 4. (0-4) Sub-total 0 Leveraging Resources (maximum 20 points) 1. (0-10) A. Principal and interest (30 - year amortization or less) 10 points B. Principal and no interest or principal and balloon payment (repayment) 6 points C. Due-on-sale loan 4 points D. Grant (no repayment) 2 points 2. (0-10) A. Less than 1:1 0 points B. 1:1 to 1:3 4 points C. 1:4 to 1:6 7 points D. More than 1:7 10 points Sub-total 0 Capacity and History (maximum 20 points) 1. (0-10) 2. (0-10) 3. (0-20) Sub-total 0 GRAND TOTAL 0 The ranking criteria are divided into five major categories. Each category is given a total number of points that has been weighed according to its importance with respect to local and federal priorities. (all persons 0-30% of AMI = 10 pts; at least half of the persons at or below 30% of AMI and the remaining persons at 31-50% of AMI = 8 pts; at least half of the persons at 31-50% of AMI and at least half of the persons at 51-60% of AMI = 6 pts; all persons between 61-80% of AMI = 4 pts) Does the project provide long-term benefit or affordability? Does the project provide assistance for persons to gain self-sufficiency or maintain independence, or serve a special population? Primarily targets low income persons? Project produces adequate community benefit related to cost? Has the applicant documented a need for this project? The project will be completed within the required time period? Project budget is justified? (Costs are documented and reasonable.) The level of public subsidy is needed? (Private funds are not available.) (1-10 yrs = 3 pts, 11-19 yrs = 6 pts, 20 - 30 yrs = 8 pts, permanent = 10 pts) Meets a Consolidated Plan priority? Has the applicant documented efforts to secure other funding? If new, applicant has capacity to maintain regulatory compliance? Project leverages other financial resources? (Including in-kind) Applicant has the capacity to undertake the proposed project? If previously funded, has the applicant completed prior projects and maintained regulatory compliance? Does the project allow the reuse of our funding? Project ID: Primary Applicant: Secondary Applicant: Program/Project: Funding Request: Fiscal Yesr POLICIES AND STRATEGIES ALIGNMENT Affordable Housing Srtrategic/Consolidated Plan Priority Yes #? or No: Targets Low Income Persons Number of units serving households: 30% of AMI or lower: 31-50% of AMI: 51-60% of AMI: 61-80% of AMI: 81% of AMI or higher: Total Units: Percentage of units serving 50% of AMI or lower: Long Term/Benefit/Affordability Number of years of affordability: Serves Special Population Yes ( ? ) or No: PLANNING FRAMEWORK ALIGNMENT Location According to City Plan located within… …1/4 mile of a transit line (Yes or No): 1/4 mile of an employment district (Yes or No): 1/4 mile of a community commercial district (Yes or No): located in… ...the downtown (Yes or No): ...a targeted redevelopment area (Yes or No): Distribution Policies of City Plan distance to nearest AH project: nearest Affordable Housing project name: FINANCIAL HEALTH ALIGNMENT Justified Budget all costs documented: more then 1/2 costs documented: less than 1/2 costs documented: no costs documented: Attempt to Secure Other Funding Yes or No: Returns Funds to City principle and interest: principle, no interest, balloon: due-on-sale: grant: unknown: Leverage other Financial Resources Leveraging ratio (City funds vs. other funds) 1 / ?: PROJECT DEVELOPMENT ALIGNMENT "Ready to Go" Status "final" gap financing: some funding, but not all: "conceptual" project: Capacity to Undertake the Project Proven track record: some concerns with the capabilities: serious concerns with the capabilities: Previously Funded, Regulatory Compliance successfully adminstered previous funding: some administrative issues: serious administrative issues: New Applicant, Demonstrated Capacity proven administrative track record, no concerns: some administrative concerns: serious administrative concerns: COMPETITIVE PROCESS SELECTION CRITERIA GUIDANCE CHART - Housing