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TO: Mayor Richard C. Irvin
FROM: Chris Ragona, Director of Community Services, Community Services Department
DATE: February 13, 2025
SUBJECT:
A Resolution Authorizing the Execution of a Modification to a Redevelopment Agreement Between the City of Aurora and Association for Individual Development (AID) to Modify Loan Terms for Project HOME-2013-02.
PURPOSE:
The City of Aurora receives approximately $500,000 annually in Home Investment Partnership (HOME) funds to create, preserve, and further affordable housing opportunities throughout the City. Since the City received HOME funding, nine projects have been completed, all of which required numerous legal documents to be executed and, in some cases, recorded against the properties assisted.
BACKGROUND:
As part of a re-examination of these legal documents, Community Development staff is recommending modifications to update the language to meet HOME regulations and to match the HUD required completion dates in each legal document.
DISCUSSION:
City of Aurora Agreement HOME-2013-02 was adopted by Resolution R14-316 on December 9, 2014, in the amount of $67,378 for the acquisition and rehabilitation of 843-845 Bowditch Aurora, Illinois 60506.
In many properties invested with HOME funds, affordability periods longer than the HUD requirement were placed on projects. This creates additional long term monitoring requirements as well as additional risk to the City if these developments underperform or fail to meet the requirements of the HOME program.
In an effort to reduce the risk and additional monitoring burden by Aurora, Community Development staff is actively reviewing the affordability periods of the City's portfolio while still maintaining and preserving affordable housing. This can be accomplished in a number of ways depending on the partner agency, types of other funds invested, and revised language of the agreement, mortgage, note, and land use restriction agreement. For this project, staff is proposing to adjust the affordability period to a minimum of 10 years, which is the HUD-required minimum, down from the current 15-year period. This will reduce HUD’s ability to recapture funds should the project underperform or fail to meet the requirements of the HOME program. While this change reduces HUD's ability to recapture funds if the project underperforms or fails to meet HOME program requirements, staff recommends implementing an additional protective measure by placing an extended use requirement on the property for an additional 5 years beyond the 10-year affordability period. An extended use period will preserve the units of the project as affordable and allow the City to complete a reduced review of the project on an annual basis. This has been common practice for other local recipients of HOME funds including DuPage and Kane County.
As noted below, this project will also require a modification to the Agreement, Mortgage, Note, and Regulatory Land Use Restriction Agreement (RLURA) to correctly state the revised HOME affordability period and City extended use period.
|
Project No. |
Developer |
Project |
Expiration Date of HUD Affordability Period |
RLURA |
|
HOME-2013-02 |
AID Community Housing |
2 units |
9/28/2026, with extended use expiring 9/28/2031 |
RLURA Drafted to expire 9/28/2026 |
IMPACT STATEMENT:
This action will have a positive impact on the City's community development efforts and reduce the long-term financial risk to the City.
RECOMMENDATIONS:
Staff recommends that the affordability periods and required modifications for the properties in the above table be recommended for approval by the Public Health, Safety, and Transportation Committee and that the Mayor, Chief of Community Services, Director of Community Services, Community Development Manager, or their designees be authorized to execute any contracts as well as any other documents associated with Modification One to Agreement HOME-2013-02, including but not limited to HUD's program administration requirements.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution Authorizing the Execution of a Modification to a Redevelopment Agreement Between the City of Aurora and Association for Individual Development (AID) to Modify Loan Terms for Project HOME-2013-02.
body
WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, housing activities through funding by the U.S. Department of Housing and Urban Development; and
WHEREAS, the City of Aurora has a Consolidated Plan and Annual Action Plan which
have been adopted by the City Council and have defined priorities for HOME; and
WHEREAS, the 2020-2024 Consolidated Plan and all substantial amendments and proposed 2025-2029 Consolidated Plan define priorities for community development funding and obligations to inform the public on the proposed changes; and
WHEREAS, the HOME Investment Partnerships Program established guidelines that the City would enter into an agreement with Developers to assist the City in implementing its programs in an effective and efficient manner; and
WHEREAS, the City approved a Redevelopment Agreement for a HOME Program loan between the City of Aurora and Association for Individual Development (AID) for the purpose of providing HOME funding for affordable housing; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: finds as facts all of the preamble recitals of this Resolution and hereby approves an agreement modification for Project HOME-2013-02 between the City of Aurora and Association for Individual Development (AID) to provide Home Investment Partnerships Program (HOME) for affordable housing; and authorizes the City's Mayor, Chief Community Services Officer, Director of Community Services, Community Development Manager, or their designees to execute any agreements, contracts and other documents associated with these approvals, including but not limited to HUD's program administration requirements.