ACTION REQUESTED:
Title
Communication from the City Manager and Community Development Director with a Request to APPROVE an AMENDMENT of the HUD HOME FUNDS Award of $300,000.00 to HABITAT FOR HUMANITY GREATER PEORIA AREA for the Construction of Three (3) New, Affordable, Single-Family, Owner-Occupied Homes Located at the 1000 Block of Northeast Monroe St, Peoria, IL (Council District 1).
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BACKGROUND:
On March 22, 2016, City Council approved the HUD HOME funds award of $300,000 to Habitat for Humanity Greater Peoria Area for the construction of four (4) new, affordable, single-family, owner-occupied homes located at the 1000 block of Northeast Monroe (Council Item # 16-092). Additionally, City Council approved the lot donation at 1019, 1021 and 1023 NE Monroe for the development (Council Item # 16-093). The $300,000 in funding was from the Community Housing Development Organization (CHDO) set aside funds from 2015. Habitat is certified by the City as a CHDO. Per HUD HOME regulations, a CHDO is a private, nonprofit, community-based, service organization that have paid staff with the capacity to develop affordable housing for the community it serves.
Upon Council approval on March 22, 2016, City and Habitat staff began to finalize the development plans and budget in order to commit the HOME funds to the project. In consultation with the Chicago HUD Field Office regarding the final underwriting of the development project to commit the funds, the City’s HUD representative stated there could be a potential violation of The Hatch Act of 1939 and The Copeland “Anti-Kickback” Act for one of the homes to be sponsored by Congresswoman Cheri Bustos. The Hatch Act of 1939, officially An Act to Prevent Pernicious Political Activities, is a federal law whose main provisions prohibits employees or officials from engaging in some forms of political activity. The Copeland “Anti-Kickback” Act is an act of Congress that supplemented the Davis-Bacon Act of 1931 and prohibits a federal building contractor or subcontractor from inducing an employee into giving up any part of the compensation that he or she is entitled to under the terms of employment.
As a part of the development, Habitat is hosting a Women’s Build. This build is scheduled for the lot at 1009 NE Monroe; vacant property currently owned by Habitat. As outlined in Habitat’s development plans, the Women’s Build is a wonderful opportunity to bring together women in leadership of Peoria to help build a home for a woman and her children. Congresswoman Bustos is garnering the help of the three other Illinois Congresswomen as well as the Lt. Governor and Illinois Attorney General.
Although a relatively small amount of HUD HOME funds, from the $300,000 grant award, were going to be invested in the Women’s Build home as gap financing for construction costs, HUD representatives believe the violations could occur because the home would be endorsed by Congresswoman Bustos. HUD would require the City to complete a conflict of interest review on the property before construction could begin. A full conflict of interest review would take between 30 to 60 days to complete. This review and time frame would significantly delay the construction schedule for the Habitat development.
City and Habitat staff reviewed the total development budget and found an alternative solution. Using the private and operating funds Habitat has on reserve, the CHDO designation and funds could be removed from the Women’s Build. The $300,000 of awarded funds would be invested in the remaining three homes and would carry the CHDO designation. The end result would be four homes constructed on the 1000 block of NE Monroe - one privately funded home (Women’s Build) and three CHDO homes.
FINANCIAL IMPACT: The financial impact would remain the same from Council original action on March 22, 2016. Habitat for Humanity, a certified CHDO, will be awarded $300,000 the 2015 CHDO set aside funds.
NEIGHBORHOOD CONCERNS: None at this time. Numerous members of the Peoria community are involved throughout the projects and efforts are made by Habitat to invite and include the neighborhood in the development process of the properties. Once approved by Council, Habitat intends to continually engage the neighborhood residents in their development plans.
IMPACT IF APPROVED: Three, instead of four, will be designated as CHDO homes and the $300,000 of awarded funds will be used for the properties’ construction costs. The development will reflect a total of four homes to be constructed on the 1000 block of NE Monroe - one privately funded home (Women’s Build) and three CHDO homes. Approval of the amendment will not affect Council’s action for the lot donation at 1019, 1021 and 1023 NE Monroe approved on March 22, 2016 (Council item # 16-093).
IMPACT IF DENIED: Construction of the properties will be delayed and City staff will begin the conflict of interest process to invest HUD HOME funds into the four homes at the
1000 block of NE Monroe.
ALTERNATIVES: None identified at this time.
EEO CERTIFICATION NUMBER: 03135-150630
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL’S 2014 - 2029 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Attractive Neighborhoods with Character: Safe and Livable
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Reinvest in neighborhoods.
DEPARTMENT: Community Development