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HomeMy WebLinkAboutmemoCITY OF MIAMI, FLORIDA INTER -OFFICE MEMORANDUM 20' To: FROM : The Honorable May Mem ' of The Ci1'y CQnlmission c) Joe •��la City ru . ager DATE: SUBJECT REFERENCES: FfLE : 29h Year CDBG and HOME Funds: Housing Development Policy, District 4 PiIot and Little Havana Home Ownership Trust APR 2 9 2003 ENCLOSURES:City Commission Agenda May 8, 2003 RECOMMENDATION: It is respectfully recommended that the City Commission adopt the attached Resolution, with attachment, allocating 29th Year Community Development Block Grant (CDBG) Program funds of $1,500,000 to create the Little Havana Home Ownership Zone Trust and 29th Year HOME Investment Partnerships (HOME) Program funds of $500,000 to create the District 4 Housing Pilot Project for the development of affordable housing and further adopting policies related to the Housing Development category of the 29th Year CDBG Program and the homeownership activities of the HOME Program, as per the attachment, for the balance of the available funds, in the amount of $503,600 and $3,355,685, respectively. BACKGROUND: Under the entitlement formula, the U.S. Department of Housing and Urban Development (U.S. HUD) has advised the City that the projected 29th Program Year entitlement for Community Development Block Grant (CDBG) Program will be approximately $10,132,000 and for HOME Investment Partnerships (HOME) Program will be approximately $5,140,914. Approximately $2,003,600 in 29th Year CDBG Program funds is earmarked for the Housing Development category and $3,855,685 in HOME Program funds, representing 75% of the 29th Year entitlement, is earmarked for homeownership activities. The Administration recommends that the City Commission approve the allocation of $1,500,000 from the 29th Year CDBG Program funds to create the Little Havana Home Ownership Zone Trust and the allocation of $500,000 from the 29th Year HOME Program funds to create the District 4 Housing Pilot Project for the development of affordable housing. The allocation to the Little Havana Home Ownership Zone Trust represents the first year of a five (5) year commitment, with each subsequent year's funding source to be determined at the time of allocation. The allocation to the District 4 Housing Pilot Project represents the first year of a three (3) year commitment, with each subsequent year's funding source to be determined at the time of allocation. For the allocation of the remaining 29th Year CDBG and HOME Program funding, the Administration recommends that the City Commission establish a policy for funding housing development activities that continues to encourage public/private partnerships through the Request for Proposal (RFP) process. To provide focus to the competitive RFP process, the Administration recommends that proposals for 29th Year CDBG Program funding of housing development activities and HOME Program funding of homeownership activities be limited to programs designated as a District priority, according to the chart below. District Priority Activities District 1 - (1) Down payment Assistance / Second Mortgage (2) New Construction, Homeownership District 2 - (1) New Construction, Homeownership (2) Down payment Assistance / Second Mortgage District 3 - (1) Down payment Assistance / Second Mortgage (2) Multi -family Rehabilitation (3) New Construction, Homeownership District 4 - (1) Multi -family Rehabilitation (2) Down payment Assistance / Second Mortgage (3) New Construction, Homeownership District 5 - (1) New Construction, Homeownership (2) Down payment Assistance / Second Mortgage Housing is one of the funding priorities set forth in the City's Action Plan for the 29th Program Year. It is recommended that the City Commission continue the policy of directing 75% of HOME Program funds for Brick and Mortar housing development activities to new construction of homeownership units and 25% to rehabilitation and new construction of rental housing. Under this scenario, there will be a single RFP published for 29th Year CDBG and HOME Program funding covering the activities designated above by District. Housing administrative costs on Brick and Mortar activities of affordable housing projects will be covered through developer fees of funded projects, thereby eliminating the use of U.S. HUD funds for housing administration. Priority will be given to Community Housing Development Organizations (CHDOs) in all funded activities. Funding of down payment assistance and second mortgages must be project -driven. New construction of homeownership projects and projects requesting down payment assistance and second mortgages will be considered in all Districts. Multi -family Rehabilitation projects will be considered only in District 3 and District 4. For a project to be eligible for funding, construction must be ready to begin within six (6) months of executing an agreement with the City and the project must be able to be completed within twenty-four (24) months of executing the agreement. Brick and Mortar housing development proposals submitted outside the RFP process seeking gap financing due to unforeseen cost overruns for projects which are consistent with the City's Action Plan and policy may be considered for funding pending availability of funds from other projects which have been deobligated or which are suffering significant delays. Current procedure, as per the settlement of the Audit Report issued by the Office of the Inspector General March 27, 1998, requires funding approval of all housing development projects by the Housing and Commercial Loan Committee. The Administration further recommends that developers be required to leverage City funds using other public and/or private funding at a minimum of 5:1 for rental housing projects and 2:1 for homeownership projects. This represents an amendment to Resolution No. 98-587, adopted by the City Commission on July 9, 1998, which required leveraging of 5:1 for rental housing projects and 3:1 for homeownership projects. The down payment assistance and second mortgage programs for CDBG and HOME funding • will be project -driven. The maximum funding per eligible home purchase will be $30,000. Homebuyer eligibility will be based on the City's State Housing Initiatives Partnership (SHIP) Homebuyer Financing program, except where CDBG or HOME Program requirements are more restrictive. Funding will be in the form of 0% interest deferred loans which will come due and payable, in full, at sale or in the event that the property is Leased or rented during the term of the loan. In the event that the homebuyer seeks to refinance the home prior to the termination of the loan, the City Manager or designee will determine what portion of the loan must be repaid. It is recommended that the City Commission adopt the attached Resolution, with attachment, allocating 29th Year Community Development Block Grant (CDBG) Program funds of $1,500,000 to create the Little Havana Home Ownership Zone Trust and 29th Year HOME Investment Partnerships (HOME) Program funds of $500,000 to create the. District 4 Housing Pilot Project for the development of affordable housing and further adopting policies related to the Housing Development category of the 29th Year CDBG Program and the homeownership activities of the HOME Program, as per the attachment, for the balance of the available funds, in the amount of $503,600 and $3,355,685, respectively, The proposed Resolution does not have a budgetary impact on the General Fund.