DATE: January 22, 2019
TO: Members of the Housing & Redevelopment Authority
FROM: Janine Atchison, Housing Coordinator
Title
2019 Community Development Block Grant Allocation
Body
SUMMARY AND ACTION REQUESTED:
The Housing & Redevelopment Authority (HRA) to review and determine the 2019 Fiscal Year (FY) application for Community Development Block Grant (CDBG) funds.
BACKGROUND:
At a special meeting on January 10, 2019 the HRA voted to commit 2019 CDBG funds as follows:
• Manufactured Home Repair $23,352.00
• Manufactured Home Demolition and Clearance $40,000.00
Staff recently learned that to use CDBG funds for demolition and clearance of occupied manufactured homes would trigger full relocation costs for affected families. Due partially to the federal government shut down, this information was received after the HRA’s 2019 CDBG application was submitted.
Previous contacts with a contractor, who specializes in relocation costs, had assured staff that relocation costs would apply only in rare circumstances and would be minimal at most. However, the Department of Urban Development (HUD) has ruled that full relocation costs would apply in every case.
In order to move forward with the CDBG request for Manufactured Home Demolition and Clearance, the HRA would have to provide a relocation plan which includes substantial financial backing from the HRA to cover relocation costs for each manufactured home removed Relocation costs can cost $50,000 or more per family. In addition, formal approval from the City and guarantees to pay the additional expenses would be required.
The Dakota County Community Action Agency (CDA) will allow the HRA to resubmit their 2019 application by Friday, January 25, 2019. In discussions with the CDA, the HRA is encouraged to make additional changes to their CDBG application.
ANALYSIS:
The 2019 CDBG application will not be approved by the Dakota County Community Action Agency (CDA) as submitted. The required relocation plan cannot be developed in the time allotted for resubmission. The additional relocation costs would be prohibitive.
OPTIONS:
The CDBG application can be resubmitted placing the full $63,352 into manufactured home repair. Staff received encouragement to make the following additional changes to the proposed manufacture home repair program.
• Change the maximum amount of assistance from $8,000 to $20,000. Other similar programs use the larger maximum so that all the problems in a manufactured home can be fully addressed. The costs of manufactured home repair has skyrocketed as fewer contractors are available for this type of work.
• Change the owner participation cost from 10% to 0%. The 10% requirement, although low, could keep qualified families from participating in the program.
The manufacture home repair program should continue as a 0% deferred loan forgivable after 3-5 years.
RECOMMENDATION:
Staff recommends the HRA consider allocating $63,352.00 in 2019 CDBG funds to the manufactured home repair program for Viking Terrace with maximum assistance of $20,000 per family/manufactured home, with no matching funds from the manufactured home owner.