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TO: Mayor Thomas J. Weisner
FROM: Dan Barreiro, Chief Community Services Officer
DATE: September 11, 2015
SUBJECT:
Resolution Authorizing Annual Action Plan Substantial Amendments (2014 - #6) and (2015 - #2) to Reflect Funding Re/Allocations for the HOME Investment Partnerships Act (HOME) Programs and Application to the U.S. Department of Housing and Urban Development's (HUD) Section 108 Loan Guarantee Program
PURPOSE:
Staff requests authorization of Annual Action Plan Substantial Amendments (2014 - #6) and (2015 - #2) to provide grant funding for the projects listed below. The Block Grant Working Committee (BGWC) met on September 2, 2015 and made the following recommendations for funding re/allocations and Section 108 application projects:
|
HOME PROJECT |
Funding Source |
Comments |
Prior funded amount (2014 AAP) |
Amended Funding Amount |
|
City of Aurora Neighborhood Redevelopment Division - HOME Administration (10%) |
2014 - Entitlement Funds |
Unallocated Entitlement |
$ 44,918.50 |
$ 53,253.00 |
|
Community Housing Development Organizations (CHDO) Direct Project Activities (15%) |
2014 - CHDO Reserve/Entitlement Funds |
Re-allocated Entitlement Funds to Reflect Actual CHDO Entitlement |
$404,266.50 |
$ 79,879.50 |
|
Boreas, LLC - Aurora Impact Initiative |
2014 - Unallocated Funds |
Unallocated Entitlement |
$ 0.00 |
$ 7,092.76 |
|
VeriGreen St. Charles Hospital Project - Senior Housing Rental Units |
2014 - Unallocated/ Entitlement + 2014 CHDO Direct Activity Prior Allocation Funds |
Unallocated/Reallocated/Entitlement |
$ 0.00 |
$392,304.74 |
|
Total HOME: |
$449,185.00 |
$532,530.00 |
|
HOME PROJECT |
Funding Source |
Comments |
Prior funded amount (2015 AAP) |
Amended Funding Amount |
|
VeriGreen St. Charles Hospital Project - Senior Housing Rental Units |
2015 - Entitlement Funds |
Unallocated/ Entitlement |
$ 0.00 |
$107,695.26 |
|
Total HOME: |
$ 0.00 |
$107,695.26 |
|
SECTION 108 LOAN APPLICATION - $6,000,000 LOAN REQUEST |
|
Section 108 Project Area |
Funding Source |
Comments/Proposed Activities |
Prior funded Project Amount in 2015 AAP (CDBG funds only) |
Amended Funding Amount |
|
Economic Development Help smaller businesses create or retain full time jobs at a living wage |
Section 108 Loan |
Business Loans/Revolving Loan Pool (NRSA and Low/Mod Target Areas) |
$200,000.00 |
$2,200,000.00 |
|
Housing Redevelop or create rental units. Replacement scattered site housing, elderly, special needs or homeless |
Section 108 Loan |
Low-Income Tax Credit Projects for Affordable Housing And Supportive Housing Development Acquisition/Rehabilitation/Rental Project Gap Financing for Low-Income Projects Work force housing |
$0.00 |
$2,000,000.00 |
|
Public Services/Facilities Increase/Improve quality of facilities (including public service facilities) |
Section 108 Loan |
Community Center Project within NRSA or other Low-Moderate Income Census Tract Area |
$300,000 |
$2,300,000.00 |
|
Total: |
$500,000.00 |
$6,500,000.00 |
The BGWC chose the above items for funding as they represent new initiatives to support the City's 2015 - 2019 CDBG Consolidated Plan Community Development Goals and Objectives related to senior citizen rental housing, economic development, and public services/facilities. The BGWC will hold a Public Hearing on the recommendations on Monday September 28, 2015, at 5:30 PM in the City Hall Council Chamber.
BACKGROUND:
As a Community Development Block Grant (CDBG) entitlement community, the City of Aurora annually receives CDBG and HOME funds to eliminate slum and blight; provide decent, safe, and sanitary housing; and provide services and projects to low-to-moderate income persons (defined as earning at or below 80% of the Area Median Income, or $60,800 for a family of four in 2015). In 2014, HUD allocated $532,530 in HOME Funds and in 2015, HUD allocated $494,914. By federal law, the City must allocate HOME funds to eligible projects in order to ensure that the funds are spent in a timely and efficient manner. All of the projects listed above meet the City’s Consolidated Plan objectives.
As a CDBG entitlement community, the City of Aurora is also is permitted to apply for up to five times as much as its most recent (approved) CDBG grant amounts (Aurora’s 2015 CDBG allocation was $1,462,042), minus any outstanding Section 108 commitments, at a maximum repayment period of 20 years.
DISCUSSION:
The City of Aurora receives an annual HOME entitlement allocation. The funding must be allocated as follows: 15% Community Housing Development Organization activities, 10% administration, with the remainder committed to direct project activities. Although the City estimates for its 2014 HOME program were approved in November 2013 (R13-319), due to an unanticipated increase in the City's 2014 HOME funds (based upon updated Census numbers), the City must amend its Annual Action Plan (2010 - 2014) to reflect the updated program allocations. (Beginning with the 2015-2019 Consolidated Plan, the City has incorporated a contingency statement to address any decrease/increase in set funding amounts which alleviates formal changes via an Amendment or Substantial Amendment).
To date, the City has not committed its 2014 HOME funds to any direct project activities. Through the proposed Substantial Amendment (2014-#6), the City will commit $7,092.76 to make up the difference for an unanticipated NSP budget shortfall for the City’s prior approved HOME and NSP funded Aurora Impact Initiative project. Although the use of the 2014 funds has been approved by the local HUD office, the inclusion of the funding allocation formalizes this approval. Substantial Amendment (2014 - #6) also includes the allocation of $392,304.74 of 2014 HOME Direct Project Activity Funds towards the VeriGreen St. Charles Senior Rental Housing Project. The HOME VeriGreen request totals $500,000 and approval for the remainder of the applicant's funding proposal is sought under Substantial Amendment (2015-#2) which would use $107,695.26 of the City's 2015 HOME Direct Project Activity Funds to finance the project.
One of the City's Consolidated Plan Housing Goals establishes that between 2015-2019, the City should expend commit 85% of its HOME funds (an estimated total of $1.6 million between 2015-2019) towards rental housing development for the elderly, special needs and homeless residents and replacement scattered site housing. The VeriGreen - St. Charles Senior Rental Housing Project addresses the respective Consolidated Plan Goal in its senior rental housing development through its proposed HOME funded development of 12 LMI units. The project location is within the city's NRSA and the proposed 12 HOME funded units are part of an overall 60-unit senior rental housing project. Of note, 56 of the units (includes the 12 HOME units) will be targeted towards LMI residents; 44 of the units will receive Project Based Vouchers from the Aurora Housing Authority. The Developer is also coordinating efforts with the DuPage County Veterans Center to provide housing to veteran referrals. The total project budget is approximately $22 million, which includes various funding sources including tax credits and private capital.
In addition to the proposed 2015 HOME funded VeriGreen direct project activity allocation, the (2015 - #2) Substantial Amendment will also provide the City, through its Neighborhood Redevelopment Division, the opportunity to apply to HUD for authorization to utilize the Section 108 Program to create a Six Million Dollar ($6,000,000) loan pool, pursuant to the National Objectives outlined in 24 CFR 570.208. This loan pool will establish a funding source for City projects where funding might otherwise be unavailable.
In the past, the City applied for and received a $6.5 million Section 108 Loan which allowed the City to create a low interest commercial loan program for Aurora NRSA business owners for projects which included the acquisition of property, equipment or inventory as well as the demolition or rehabilitation of a building. The program also offered Brownfield redevelopment loan incentives to developers interested in developing contaminated sites within the NRSA for the same economic development purposes. The City's proposed Section 108 Loan application projects differ from its prior program participation in that the loan will create a loan pool specifically targeted on three different areas: economic development, housing, and public services/facilities. It is anticipated that the Section 108 loan can be used to leverage low interest loans to assist with economic development, housing and public service/facility activities. It is anticipated that the Section 108 Loan will provide funding opportunities to bridge tax credit funds for affordable housing development, establish a community center, and create/retain 50 jobs (both temporary and permanent).
Funding for the HOME projects will be available in the 2015 City Budget, through budget amendments to program account 213-1330-801-43-22.
HUD's Section 108 Loan Program requires a 2.42% loan origination fee on the principal of all loans. Based upon the City's $6,000,000 loan request, it is anticipated that the loan origination fees will total approximately $145,200. Payment of this fee would be required upon funding disbursement. The loan origination fees can be paid from CDBG funds or guaranteed loan proceeds; however, HUD has recommended that the City pays the fees from guaranteed loan proceeds and utilize its CDBG dollars for other community development projects.
IMPACT STATEMENT:
Although additional staff or equipment resources will not be required for the HOME projects, the Section 108 Program will be require additional staff time, and possibly consultant time for loan underwriting, and other program administration and development responsibilities (loan agreement execution, monitoring, reporting, etc.). The Section 108 Program will also require the City to front fund the loan origination fees (with the expectation that any fees would be written into a loan participant's agreement).
RECOMMENDATIONS:
Staff recommends approval of a Resolution authorizing Annual Action Plan Substantial Amendments (2014 - #6) and (2015 - #2) to reflect funding allocations for the HOME Investment Partnership Act programs and a Section 108 Loan Application to HUD and to authorize the City's Mayor and Chief Community Services Officer to sign contracts and documents associated with Substantial Amendments (2014 - #6) and (2015 - #2).
cc: Alderman Saville, Chairman
Alderman Donnell
Alderman Irvin
Alderman Hart-Burns, Alternate
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution Authorizing Annual Action Plan Substantial Amendments (2014 - #6) and (2015 - #2) to Reflect Funding Re/Allocations for the HOME Investment Partnerships Act (HOME) Programs and Application to the U.S. Department of Housing and Urban Development's (HUD) Section 108 Loan Guarantee Program.
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, (the City of Aurora has initiated numerous community development and
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 which have defined priorities for CDBG funding; and
WHEREAS, the City of Aurora’s Block Grant Working Committee recommended
adoption of the Annual Action Plan Substantial Amendment # 2014 - 6 and Annual Action Plan Substantial Amendment # 2015- 2 to reflect CDBG funding re/allocations at its September 2, 2015 meeting; and
WHEREAS, the 2015 City Budget for the HOME program account 221-1330-801-43-22 will be amended to reflect additional funding allocations for the Substantial Amendment HOME funded activities identified in the attached Exhibit A; and
WHEREAS, the City of Aurora's Block Grant Working Committee recommended Annual Action Plan Substantial Amendment # 2015-2 included application to the U.S. Department of Housing and Urban Development to create a Six Million Dollar ($6,000,000) loan pool, pursuant to the National Objectives outlined in 24 CFR 570.208. This loan pool will establish a funding source for City projects where funding might otherwise be unavailable in the following project areas: economic development, housing, and public services/facilities as identified in the attached Exhibit A; and
WHEREAS, Section 108 loan origination fees are required by HUD will be due upon funding disbursement and paid from guaranteed loan proceeds.
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 approves a Resolution Authorizing Annual Action Plan Substantial Amendments (2014 - #6) and (2015 - #2) to Reflect Funding Re/Allocations for the HOME Investment Partnerships Act (HOME) Programs and Application to the U.S. Department of Housing and Urban Development's (HUD) Section 108 Loan Guarantee Program and authorizes the City's Mayor and Chief Community Services Officer to sign contracts and documents associated with Substantial Amendments (2014 - #6) and (2015 - #2).