ACTION REQUESTED:
Title
Communication from the City Manager and the Community Development Director with a Request to Direct Staff to 1) REALLOCATE Funding from the Current CDBG Economic Development Program ($278,860.00) to Fund Public Infrastructure Projects (Sidewalks and ADA Ramps) Identified in the City’s 2016 Capital Budget; 2) Reserve the City’s Capital Funds Available from the Reallocation of CDBG Funds as a Financial Resource for the Attorney General / Peoria LISC Initiative in the East Bluff; and 3) REALLOCATE Funding from the Current HOME Down Payment Assistance Program ($110,705.39) as a Financial Resource for the Attorney General / Peoria LISC Initiative in the East Bluff. (District 3).
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BACKGROUND:
The City is a team member of the Partners for a Better East Bluff. This partnership was created as a result of the $3 million dollar grant award from the Illinois Attorney General Office (AG) to Peoria’s Local Initiatives Support Corporation (LISC) from the National Foreclosure Settlement funds.
Through the partnership, the City is able to provide various resources and assistance to accomplish neighborhood revitalization in the East Bluff, specifically in the East Village Growth Cell (EVGC) TIF. To date, the City has provided the following support to the Partners for a Better East Bluff initiative:
- Sold City owned, vacant land to Access Peoria, LLC for the development of new construction, rental duplexes. (Council Item # 14-432)
- Provided a HOME fund grant in the amount of $408,827 to Access Peoria, LLC for the development of new construction, rental duplexes. (Council Item # 14-434)
- Committed $75,000 in City Capital Funds for a down payment assistance program for the for sale units to be developed under the Initiative. (City Capital Budget Years 2014 and 2015)
- Through a subgrantee agreement with LISC that provided $170,000 in funding, demolished 13 properties in the EVGC TIF. A total of 20 properties will need to be demolished per the subgrantee agreement and the City will use local/CDBG funds for the remaining demolitions. (Council Item # 14-431)
- Encouraged other City partners to develop in the EVGC TIF to support the Initiative. The City awarded $300,000 to Habitat for Humanity (a Community Housing Development Organization - CHDO) to build 3 new construction, single family homes in the EVGC TIF. (Council Item # 15-150 and 15-151)
While there are many activities identified by LISC to be completed by the Partners for a Better East Bluff, two major objectives are the primary focus: 1) new construction of 16 units / 8 duplexes for low-income rental housing and 2) development of 14 homebuyer units (mix of new construction and rehab) to be sold to households earning up to 150% of Area Median Income (AMI).
The development of the new construction rental units is near completion and the tenant leasing process has started. These units will be owned by Access Peoria, LLC with the East Bluff Neighborhood Housing Services (EBNHS) as the property manager. A ribbon cutting ceremony is being scheduled for early 2016.
The development of the 14 for sale units has had a slower start. Although the grant award announcement was made in July 2013, the release of grant agreements and funds from the AG office to LISC was provided in late 2014. Additionally, upon review of the proposed development strategy for the units, LISC’s national office determined that the team partner identified as the potential developer did not have the experience necessary to complete the project. Therefore, a substitute developer was needed for the homebuyer units. The AG office would not allow any additional partners to be added once the grant agreement was executed. As such, Peoria LISC was reassigned as the developer for the Initiative.
Although Peoria LISC is the developer of the homebuyer units under the Initiative, they intend to partner with Peoria Citizens Committee for Economic Opportunity, Inc (PCCEO) as a development manager. Peoria LISC reviewed the projected development budget previously submitted and discovered a significant budget deficient, approximately $896,000. The AG office will not allow LISC to reduce the number of units to be developed under the executed agreement. Therefore, other resources needed to be identified to close the budget gap and begin the project. Under the AG agreement with LISC, the project must be completed on or before September 2017.
LISC and City staff discussed available resources and determined the following options. It should be noted that the request presented to Council is for the direction of staff to continue with the options as each requires a different process. Staff will present to Council a request to award funding to LISC for the project at a later date.
Request 1 - Reallocate funding from the current CDBG Economic Development Program ($278,860) to fund public infrastructure projects (sidewalks and ADA ramps) identified in the City’s 2016 Capital Budget
- On September 10, 2013, Council approved the allocation of $250,000 of CDBG funds to an Economic Development Program. Additionally, on October 14, 2014, Council approved the additional allocation of $163,860 of CDBG funds for a total of $413,860 to the Economic Development Program. On January 27, 2015, Council approved the Economic Development Program guidelines. The CDBG economic development program is focused on creating jobs for low-income people. For each full-time equivalent (FTE) job created, the applicant is eligible to receive $35,000 of assistance.
- To date, one grant has been awarded to Peoria SLF LP, LLC ($100,000; Council item # 15-196) for the development of a supportive living facility that will create 40 FTE positions. Additionally, there is a pending request to Council to approve a $35,000 grant to The Chef and The Baker for its restaurant relocation and expansion in the East Bluff.
- A total of $278,860 is remaining from the Program to reallocate to public infrastructure projects.
- The CDBG fund reallocation will require a substantial amendment to the City’s 2013 HUD Annual Action Plan to incorporate the sidewalks/ADA ramps activities. A substantial amendment is a detailed process that will require drafting the amendment, a public comment/publication notice, Council adoption and HUD approval. With Council’s approval and direction, staff will begin the substantial amendment process.
- Although the current funding is being reallocated, future grant awards (for example, 2016 or 2017 funds) could be allocated to continue the Program.
Request 2 - Reserve the City’s Capital Funds that are available from the reallocation of CDBG funds as a financial resource for the Initiative
- The use of City Capital funds for the project do not carry the 80% AMI / low income requirement similar to HUD funds. Therefore, the 150% AMI cap allowed by the AG office will remain for the homebuyer units.
- With Council’s approval and direction, staff will begin the process to amend the City’s Capital budget for 2016, determine which projects will be CDBG assisted and incorporate the CDBG requirements in the bidding documents for potential projects. A budget amendment will be presented to Council for approval at a later date.
Request 3 - Reallocate funding from the current HOME Down Payment Assistance (DPA) Program ($110,705.39) as a financial resource for the Initiative
- The City once had a popular DPA Program that provided $10,000 to first-time, low-income homebuyers. The Program has not been available since mid-2013 as HUD rewrote the entire HOME program requiring significant changes to the underwriting and procedures of the City’s DPA program. Additionally, other entities (IL Housing Development Authority/IHDA, Federal HOME Loan banks and other financial institutions) were offering down payment assistance to low-to-moderate income homebuyers and the City did not want to compete with these programs (layering of grants is not permitted).
- The reallocation of funds ($110,705.39) can be coupled with remaining 2014 and 2015 HOME funds from the Focus Housing Leverage Program ($157,834.18) and HOME recapture and program income funds (approximately $8,750) to provide a total of $277,289.57 for the project.
- With the investment of HUD funds into the project, the 80% AMI income cap, along will other federal grant requirements, will be applicable. To maximize the benefit of a higher income cap permitted by the AG Office (150% AMI), the City, LISC and PCCEO will strategically identify which units will be considered “HOME units” for the project.
- The HOME fund reallocation will require a substantial amendment to the City’s 2012 HUD Annual Action Plan to incorporate the Focus Housing Leverage Program activities. The Focus Housing Leverage Program includes a variety of activities (new construction or rehab) for the development of affordable housing. A substantial amendment is a detailed process that will require drafting the amendment, a public comment/publication notice, Council adoption and HUD approval. With Council’s approval and direction, staff will begin the substantial amendment process.
- Although the current funding is being reallocated, future grant awards (for example 2016 or 2017 funds) could be allocated to continue the Program.
With the identified options, the project budget gap is reduced from $896,000 to approximately $339,000. LISC and PCCEO will continue to negotiate project construction costs and investigate other resources.
FINANCIAL IMPACT: None at this time. The request presented to Council is for the direction of staff to continue with the options as each requires a different process. Staff will present to Council a request to award funding to LISC for the project at a later date.
NEIGHBORHOOD CONCERNS: Since the AG grant award announcement in 2013, the Partners for a Better East Bluff have actively engaged residents and community leaders in the planning and development of activities. Residents have been supportive of the Partners’ plans and proposed development.
IMPACT IF APPROVED: Staff will begin the requirements outlined underneath each option. Additionally, staff will continue to work with LISC and PCCEO to finalize development plans to ensure accurate funding and timely completion of the project on or before September 2017.
IMPACT IF DENIED: The project budget gap of $896,000 will not be reduced and LISC will have to discuss alternatives with the AG office regarding funding, agreement compliance and project completion.
ALTERNATIVES: None identified at this time.
EEO CERTIFICATION NUMBER: Not applicable.
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