City Council Meeting Date: January 7, 2024
To: Mayor and City Council
City Administrator
From: Melissa Hanson, Housing Coordinator
Title
Community Development Block Grant - Consider Adopting Resolution in Support of Fiscal Year 2025 Allotment of Program Funds.
Body
Action Requested:
The Northfield City Council approves the attached Resolution in support of fiscal year (FY) 2025 (July 1, 2025 - June 30, 2026) program allotment for Community Development Block Grant (CDBG) funds.
Summary Report:
Community Development Department staff coordinated with City Administration and with the Housing and Redevelopment Authority to identify potential CDBG uses of funds, going forward. Staff is recommending the City Council adopt the Resolution in support of utilizing FY 2025 CDBG for Down Payment Assistance and updates to the Land Development Code. The allocation will provide $48,000 for Down Payment Assistance and $6,066 for update to the Northfield Land Development Code. (See attachments 2 & 3) This is a change from FY2024.
Housing Availability is a strategic priority of the City under the 2021-2024 Strategic Plan. The Down Payment Assistance program is an initiative whose outcome is intended to expand homeownership access to low- to moderate-income households.
Background
The CDBG program authority began under Title I of the Housing and Community Development Act of 1974. This Act consolidated eight categorical grant programs including Open Space, Urban Renewal, Neighborhood Development Programs, Historic Preservation, Model Cities supplemental, and Neighborhood Facilities, Water and Sewer and Public Facilities loans.
Title I Housing and Community Development Act of 1974 objective is to develop viable urban communities that provide decent, safe and sanitary housing, a suitable living environment and expanded economic opportunities primarily for persons of low and moderate income. The U.S. Department of Housing and Urban Development (HUD) administers the CDBG program and provides funds, or grants, to state and local governments, or grantees or recipients.
Dakota County participates in the CDBG program as an Entitlement County and receives funds each year directly from HUD. The Dakota County Community Development Agency (CDA) is considered a subgrantee or administrator of CDBG funds. Dakota County has several participating cities and townships that receive CDBG funds and implement CDBG activities. The City of Northfield is an eligible and participating city to receive CDBG funds as a portion of the city resides in Dakota County. The City of Northfield does not receive Federal CDBG funds via Rice County as the County is not eligible to receive a direct allocation.
The City of Northfield has a three-year Cooperation Agreement with the CDA to conduct and promote housing and other community enhancing programs using CDBG funds. Each year the City of Northfield has the opportunity to apply for CDBG funds to use for various HUD-approved programs. The estimated allocation for the City of Northfield for FY 2025 is $54,066.
The City Council is the responsible authority for determining the use of allocated CDBG funds. CDBG funds can be used for the following activities:
• Acquisition/Disposition
• Demolition/Clearance
• Economic Development Activities
• Rehabilitation
• Relocation
• Public Facilities/Improvements
• Public Services
• Planning
• Homeownership Assistance
The City of Northfield Community Development Department has assumed administrative responsibility for managing the CDBG program funds and coordinating with Dakota County CDA on behalf of the City. In the past, the City of Northfield has used some of the CDBG funds for park improvements, funding the Northfield Community Resource Center (NCRC) and commercial building rehabilitation improvements. In recent years, CDBG funds have been used exclusively for affordable housing related activities, including home rehab and down payment assistance programs for income qualifying households.
Alternative Options:
The City Council could explore alternative uses outside of housing-related activities for CDBG fund allocation.
Financial Impacts:
CDBG funds are accessed by the City of Northfield through a reimbursement process. The Dakota County CDA reimburses loans/grants made by the City of Northfield through the HRA for preapproved activities such as residential rehabilitation, including for manufactured homes; down payment assistance and aging in place grants. There is no financial impact to the City of Northfield, unless Dakota County CDA receives less than what is projected from HUD. In which case, the HRA or City would use funds from reserves to bridge the gap between projected and actual funds available to the City of Northfield through CDBG.
The City of Northfield’s participation in the CDBG program through Dakota makes us ineligible to receive funds through the State’s Small Cities Development Program.
Tentative Timelines:
The FY 2025 CDBG application deadline is January 17, 2025.
FY 2025 CDBG funds will be available after July 1, 2025 for allocation and available for reimbursement October 1, 2025.