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TO: Mayor Robert J. O’Connor
FROM: Daniel Barreiro, Chief Community Services Officer
DATE: January 4, 2017
SUBJECT:
Resolution Authorizing an Annual Action Plan Substantial Amendment (2016 - #4) to Reflect Funding Re/Allocations and Programming Revisions for the City's Proposed U.S. Department of Housing and Urban Development's (HUD) Section 108 Loan Guarantee Program.
PURPOSE:
Staff requests authorization of an Annual Action Plan Substantial Amendment (2016 - #4) to provide for funding re-allocations and revisions to program objectives for the City's Section 108 $6 Million Loan Guarantee Application which is currently pending HUD approval. The Block Grant Working Committee (BGWC) met on December 7, 2016 to make the following recommendations for Section 108 funding re-allocations and updates to the application's three respective program objectives:
1. Economic Development Loan Pool: Increase from $2,000,000 to $4,000,000.
Program Objective: Increase number of jobs from 50 to 100.
2. Housing Loan Pool: Decrease from $2,000,000 to $1,000,000.
Program Objective: Decrease number of housing units from 100 to 50.
3. Public Services/Facilities Loan Pool: Decrease from $2,000,000 to $1,000,000.
Program Objective: Decrease number of households from 800 to 400.
Section 108 Loan Guarantee Application Total Request: $6,000,000.
The BGWC will hold a public hearing on the above proposed Substantial Amendment on Monday, January 9, 2017 at 5:00 PM in the City Hall Council Chambers.
BACKGROUND:
The City’s Section 108 Loan Guarantee Application was approved by City Council via R15-286 on October 13, 2015. The City formally submitted the application on October 29, 2016, and it is currently under review by HUD. Additionally, since the time of the City’s application submittal, the following amendment was recently approved by City Council via R16-386 on December 13, 2016: removal of $5,000 minimum and $100K maximum thresholds to allow for additional gap financing opportunities for large scale development projects, with the understanding that micro and small business development projects will also be considered for funding, provided that they meet the program's HUD eligibility/qualification requirements.
The City’s first proposed Section 108 project (contingent upon HUD approval) is the Aurora Arts Centre Development project. The estimated project total is $35M, and several financing sources have been identified for this development project, including a $3M Section 108 loan from the City (as well as other HUD funds in the amount of $700,000 in CDBG funds [approved by City Council on December 13, 2016, R16-386] and $600,000 in HOME funds [pending HUD approval, HOME funds will be requested at a future date]).
When NRD staff discussed the proposed Section 108 funds for the Aurora Arts Centre Development with the BGWC in fall 2016, it was anticipated that the $3M loan funds would be allocated from the City's three Section 108 loan pools as follows: $1M from economic development, $1M from housing, and $1M from public facilities. However, upon further analysis of the Aurora Arts Centre Development Project’s proposed funding mechanisms and associated subsidy layering regulatory requirements, Staff has determined that it would be of benefit to instead allocate Section 108 funds solely from the economic development loan pool to the Project. As a result, staff is proposing that the Section 108 application’s original activity allocations in the amount of $2M per activity be amended. This Substantial Amendment, while formally amending the allocations under each activity, will have minimal impact to the allocations as had been originally anticipated under the Aurora Arts Centre development project. However, it should be noted that the loan pool activity performance objectives will be modified as per the proposed reallocations.
All required public notification and hearing requirements have been met as described above. To date, no public input or comments have been received.
DISCUSSION:
Pending HUD approval of the City's Section 108 Application, it is anticipated that accounts will be created to place the Section 108 HUD funds into the City's revenue account 222-1330-393-30-XX series, with specific project loans to be funded through the expense account 221-1330-802-01-XX series.
IMPACT STATEMENT:
No impact.
RECOMMENDATIONS:
Staff recommends approval of a Resolution Authorizing an Annual Action Plan Substantial Amendment (2016 - #4) to Reflect Funding Re/Allocations and Programming Revisions for the City's Proposed U.S. Department of Housing and Urban Development's (HUD) Section 108 Loan Guarantee Program and authorization for the Mayor, Chief Community Services Officer or their designee(s) to execute the Section 108 agreement along with any other documents associated with the agreement and this Substantial Amendment, including but not limited to HUD's program administration requirements.
cc: Alderman Saville, Chairman
Alderman Donnell
Alderman Irvin
Alderman Hart-Burns, Alternate
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution Authorizing an Annual Action Plan Substantial Amendment (2016 - #4) to Reflect Funding Re/Allocations and Programming Revisions for the City's Proposed U.S. Department of Housing and Urban Development's (HUD) Section 108 Loan Guarantee Program.
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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, (the City of Aurora has initiated numerous community development and housing activities through funding by the U. S. Department of Housing and Urban Development (HUD); and
WHEREAS, the City of Aurora has a Consolidated Plan and Annual Action Plan which have been adopted by the City Council and which have defined priorities for CDBG, HOME, and Section 108 funding; and
WHEREAS, the City of Aurora’s Block Grant Working Committee recommended adoption of the Annual Action Plan Substantial Amendment to reflect Section 108 funding reallocations at its December 7, 2016 meeting; and
WHEREAS, upon receipt of HUD Approval of the City's Section 108 Loan Application, funding would be placed in the 2017 City Budget Section 108 revenue account 222-1330-393-30-XX series, with loan amounts made available through the expense account 221-1330-802-01-XX series; and
WHEREAS, the City of Aurora’s Block Grant Working Committee recommended
adoption of the Annual Action Plan Substantial Amendment to reflect revisions to the City's Section 108 Program Allocations and Objectives by amending the City's economic development, housing, and public services/facilities loan pool activities at its December 7, 2016 meeting.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Aurora, Illinois, finds as facts all of the preamble recitals of this Resolution and hereby authorizes an Amendment Authorizing an Annual Action Plan Substantial Amendment (2016 - #4) to Reflect Funding Re/Allocations and Programming Revisions for the City's Proposed U.S. Department of Housing and Urban Development's (HUD) Section 108 Loan Guarantee Program and therefore the Mayor, Chief Community Services Officer or their designee(s) are hereby authorized to execute the Section 108 agreement along with any other documents associated with the agreement and this Substantial Amendment, including but not limited to HUD's program administration requirements.