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TO: Mayor Thomas J. Weisner
FROM: Chuck Nelson, Director of Neighborhood Standards
DATE: March 15, 2016
SUBJECT:
Requesting approval for the Mayor to sign all documents to participate in and to administer the Blight Reduction Program (BRP) Round 2 through the Illinois Housing Development Authority (IHDA).
PURPOSE:
On February 19, 2016, the City received notification from IHDA that it had been selected to participate in Round 2 of IHDA's Blight Reduction Program and awarded $525,000 in BRP Program funds. The City, together with its two non-profit program partners, Joseph Corporation and Northern Lights Development Corporation, applied for this funding opportunity in September 2015.
To move forward in the program, IHDA has provided a conditional commitment letter (received by the City on March 2, 2016) for signature by the City and its program partners, Joseph Corporation and Northern Lights Development Corporation. The City will also receive and be required to sign a Tri-Party Agreement along with supporting documents within the next few weeks.
The program will provide funding to cover costs related to property acquisition, demolition, and greening of 15 blighted properties that have been identified by the City. Under this program, the City will transfer title of the blighted properties to its non-profit program partners (NFPs) and in turn, the NFPs will demolish and redevelop the properties. As part of the Program requirements, the NFPs will agree to a note for each acquired property (maximum of $35,000 loan for each property). The note will be structured as a zero percent (0%) non-amortizing loan, secured by a recorded lien. The loan will be subject to a 3-year recapture period, during which NFP will agree to repay the loan if a recapture event occurs.
BACKGROUND:
In 2015, the City was awarded $280,000 under Round 1 of the Blight Reduction Program and is currently administering the Program.
Similar to Round 1, Round 2 of the BRP will be managed by the Department of Neighborhood Standards who will continue to work to achieve the City's objective of reducing blighted and abandoned properties.
DISCUSSION:
The Blight Reduction Program (“BRP”) was created in 2014 by the Illinois Housing Development Authority (“IHDA”) under the Hardest Hit Fund Program, a U.S. Treasury funded resource dedicated to foreclosure prevention and neighborhood stabilization. The Blight Reduction Program is awarded to Local Units of Government and their identified Not-For-Profit agencies. The City's participation is limited to being the administrating unit of local government and to assist its NFPs as a collaborative partner towards the implementation of the program. The intended program implementation includes the acquisition, demolition, greening and maintaining certain blighted properties until the eventual reuse or redevelopment of the properties by its NFPs.
According to the terms of IHDA’s Blight Reduction Program the Redevelopment of the properties and proposed end-uses: “should support the revitalization efforts within the BRP Target Area. Revitalization initiatives can vary and may include such strategies as neighbor side lot purchase programs, community garden initiatives, redevelopment plans for affordable housing, market rate purchase and reuse. IHDA supports any interim use activities for the vacant lots while revitalization plans are being implemented.”
BRP funds will reimburse/refinance costs in an amount not to exceed $35,000 per property which are incurred by the City and its NFPs as follows:
- $30,250 for Acquisition, Demolition, Lot treatment/greening
- $3,000 for Maintenance
- $1,750 for Administrative expense.
As part of the application process, the City was required to identify a minimum of fifteen potential properties. The City identified sixteen properties as shown in Exhibit A. Given the time lapse between the City's September 2015 application submittal and February 19, 2016 notice of funding award as well as potential changing property conditions and unanticipated title transfer delays, there may be a need to seek substitute properties. To ensure the BRP's timeliness objectives, in addition to seeking Council approval for program participation and for the Mayor to sign all related documents to its administration, including interim and long term revitalization plans/end uses for each property subject to the BRP Program Guidelines, Staff also seeks Council authorization to permit the execution of all documents related to the real estate acquisition and title transfer of BRP properties subject to the Program Guidelines and without further City Council approval.
IMPACT STATEMENT:
The Blight Reduction Program will have impact in various neighborhoods where a project will occur due to the reduction of blight. The impact administratively will be through city staff in the Mayor's Office, Neighborhood Redevelopment, Neighborhood Standards, Legal Counsel and Finance.
RECOMMENDATIONS:
To complete the guidelines for acceptance in the program and to move forward in its administration, I recommend council approval and that the resolution be adopted.
cc: Alderman O’Connor, Chairman
Alderman Mervine
Alderman Bohman
Alderman Mesiacos, Alternate
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution Authorizing the Mayor to sign all documents for participation in the Blight Reduction Program through the Illinois Housing Development Authority
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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 Illinois Housing Development Authority (IHDA) has created the Blight Reduction Program Round 2 (BRP) to decrease preventable foreclosure and stabilize neighborhoods by supporting Illinois units of government and their Not-For-Profit Partners as they target blighted, vacant residential properties for demolition, greening and eventual reuse or redevelopment; and
WHEREAS, the City, as an Illinois Unit of Local Government, was awarded funds as a loan in the amount of up to $525,000 to participate collaboratively with Joseph Corporation and Northern Lights Development Corporation ("Not-for-Profit Partners") to remediate blight through strategic demolitions in the community as a part of IHDA’s Blight Reduction Program Round 2; and
WHEREAS, as a requirement of the IHDA BRP Loan, the City must also enter into a tri-party agreement with Not-for-Profit Partners and IHDA outlining the roles and responsibilities of each entity (the “Agreement”).
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: The City is hereby authorized to participate in the Blight Reduction Program Round 2; and
BE IT FURTHER RESOLVED, that the City of Aurora will utilize the IHDA BRP funds to make the Loan to its Not-for-Profit Partners for the acquisition, demolition, greening and maintenance of specific blighted/vacant residential units for the eventual reuse and redevelopment of those properties, and will work with its Not-for-Profit Partners to obtain the Refinancing; and
BE IT FURTHER RESOLVED, that the Mayor is hereby authorized and empowered to execute and deliver in the name of or on behalf of the City of Aurora, the Conditional Commitment Letter, the Tri-Party Agreement, and any and all amendments, modifications and supplements thereto, and to execute and deliver such additional documents, instruments and certificates, as may be necessary or desirable for the City to perform its obligations under the Tri-Party Agreement, including, but not limited to Environmental Indemnity and Service Agreements with its Not-For-Profit Partners in order to fulfill the BRP Program Requirements; and
BE IT FURTHER RESOLVED, that the Mayor is hereby authorized and empowered to execute and deliver in the name of or on behalf of the City of Aurora, all documents related to the acquisition and title transfer of the Blight Reduction Round Two properties subject to the Program Guidelines and to execute and deliver such additional documents, instruments and certificates, as may be necessary or desirable for the City to perform its obligations which shall include the approval of each property’s interim and long term revitalization plans/end uses under the Tri-Party Agreement and the other Program documents, without further City Council Approval; and
BE IT FURTHER RESOLVED, that the Mayor be and hereby is authorized and directed to take such additional actions, to make further determinations, to pay such costs and to execute and deliver such additional instruments (including any amendments, other agreements or supplements) as he deems necessary or appropriate to carry into effect the foregoing authorized acts; and
BE IT FINALLY RESOLVED, that the City of Aurora hereby ratifies, authorizes and confirms and approves all documents, agreements and instruments executed in connection with the Loan and the Agreement(s), including those acts taken prior to the date hereof.