City Council Meeting Date: August 5, 2019
To: Mayor and City Council
City Administrator
From: Janine Atchison
Title
Consider Approving Subrecipient Agreement with Three Rivers Community Action.
Body
Action Requested:
The Northfield City Council approves the subrecipient agreement with Three Rivers Community Action, Inc., for the rehabilitation of Northern Oaks Townhomes.
Summary Report:
The City of Northfield receives an annual allocation of Community Development Block Grant (CDBG) funds. The Dakota County Community Development Agency (CDA) serves as the program administrator for CDBG funds dispersed to the City of Northfield.
In 1998, Three Rivers Community Action, Inc., constructed Northern Oaks, an eight-unit rental townhome development in Northfield that included significant investment from the local community as well as deferred funding from Greater Minnesota Housing Fund (GMHF) and Minnesota Housing Finance Agency (MHFA). Northern Oaks contains four (4) three-bedroom and four (4) four-bedroom units; the rent rate for three-bedroom units is $735 and $785 for the four-bedroom units. The property serves households with an income at or below 50% of the Area Median Income and due to the demand for affordable housing in Northfield, Northern Oaks remains full with a waiting list.
After over 20-years of providing safe, decent affordable housing to households Northfield, Northern Oaks requires rehabilitation in order to ensure that it continues to be a quality rental housing option for low-income households in the community. CDBG funds will play an important role in addressing several key rehabilitation needs of the property such as replacing kitchen countertops, new sinks & faucets, A/C system repairs/replacement, selected flooring replacement, front exterior door replacement, interior garage door replacement, overhead garage door replacement, remove and replace exterior concrete, and exterior handrail replacement & repair.
The CDA has approved the expenditure of $106,537.68 in CDBG funds for the rehabilitation of Northern Oaks Townhomes. In order to move forward with rehab project, the City of Northfield must enter into a subrecipient agreement with Three Rivers Community Action, Inc. The project utilizes unspent CDBG funds from 2016 ($28,595.68) and 2017 ($20,090), along with 2018 funds of $57,852.
The unspent CDBG funding for FY 2016 includes $28,595.68 originally intended for the Downtown Rental Rehabilitation Program. The City received only one application to utilize these funds between July 1, 2016 and December 31, 2018. The funds were subject to be recaptured by the CDA if not used by June 30, 2019. Rental property owners in the target area were notified that applications must be received no later than December 31, 2018 to keep the program viable. A “Substantial Activity Amendment” was submitted to the CDA in January 2019. The CDA approved moving these funds to the Northern Oaks Rehab Project.
The unspent CDBG funding for 2017 included $20,090.00 for accessibility improvements for a sidewalk to be built on Greenvale Ave along Greenvale Apartments. The project required funding for the actual sidewalk to come from the property owner through the acceptance of a street assessment. The property owner decided not to participate and no additional funds were available through the City for the project. Rather than have unused funds which would be recaptured by the CDA and HUD, a substantial Activity Amendment was submitted to the CDA in September 2018. The CDA approved moving these funds to the Northern Oaks Rehab Project.
Fiscal years 2018 CDBG funds totaling $57,852.00 were also allocated to the Northern Oaks Rehabilitation Project. The total CDBG allocation to the Northern Oaks Rehab Project is $106,537.68.
The Department of Housing & Urban Development requires a subrecipient agreement be in force for projects exceeding $100,000, before bids can be awarded and the project move forward. The competitive bid process was reviewed and accepted by the CDA. The proposed subrecipient agreement has been reviewed and accepted by the CDA. Three Rivers Community Action, Inc. has reviewed and accepted the subrecipient agreement.
With the City Council approval of the subrecipient agreement, the rehab work should commence by mid-August, 2019. All work is expected to be complete by June 30, 2020.
Alternative Options:
CDBG funds can be reallocated to the down payment assistance and/or homeowner residential rehabilitation programs. Those programs currently have sufficient funding through FY 2019, which ends on June 30, 2020. The 2016 CDBG funds would be subject to immediate recapture by the CDA. 2017 CDBG funds, not spent by June 30, 2020, would also be recaptured.
Financial Impacts:
There are no budget impacts for the Northern Oaks Rehabilitation Project. Expended HRA funds for the project would be reimbursed by the CDA usually within 2 weeks.
Tentative Timelines:
The project work should commence by mid-August, 2019, in order to avoid recapture of 2016 and 2017 allocated CDBG funds.