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HomeMy WebLinkAboutHOME - Preliminary RequirementsMay 20, 2003 John E. Johnson, Mayor City of Laurel P. O. Box 10 Laurel, MT 59044 M NTANA Department of Commerce HOUSING DIVISION P.O. BOX200545 * Helena, Montana 59620-0545 * h~tp~l/cornrnerce,s~ate.rnt,us Pt~one:406-841-2820 * Fax;406-841-2821 * TDD:4( · ~ , RE: Preliminary Requirements Dear Mayor Johnson: Congratulations on your recent award of HOME Investment Partnerships Program (HOME) funds! We aro excited to be working with a groat group of people from many different organizations and local governments. The projects funded this year aro unique and will create and maintain affordable housing for many Montanans' for a long time. We know you aro anxious to get your project underway. However, you need to proceed with a measure of caution and set some of the operational requirements in place. As you aro probably aware, many Federal and State requirements directly affect the implementation of HOME projects. These requirements include, but are not limited to, the procurement of professional grant administrators, project engineers and architects, preparation of environmental reviews, and compliance with project publication and accounting requirements. Environmental Review HOME Regulations require all projects financed with HOME funds comply with U.S. Depadment of Housing and Urban Development Environmental Review Procedures contained in 24 CFR Parts 51 and 58. Each HOME grant recipient must complete an "Environmental Review Record" covering all project activities as one of the requirements prior to the State issuing a formal "Release of Funds". Until these steps aro completed, HOME grantees may not expend or encumber HOME funds. CHDOs must submit their environmental review to MDOC for review and approval. However, the Request for Release of Funds and certification must also be sent to HUD for approval and processing. If you are a CHDO, please contact your HOME program officer before proceeding with your environmental review. Contractor and Contracts Review Your HOME Program Officer must review any Request for Proposals or other similar bid documents prior to advertisement. The purpose of this review is to ensure all program requirements have been met. After you complete the competitive advertising and selection process for any consultant for your HOME project, the name of the firm tentatively selected and its principal owner must be checked to ensure that the proposed business entity has not been debarred from receiving federal funds. Once this has been done and approved, a contract may be signed. MDOC also must review and approve the content of any contract before it is signed. Public Relations The HOME program has awarded over 143 grants to local governments and Community Housing Development Organizations since 1992. For the most part, when we partner with our grantees, the HOME program is clearly identified as a source of funds. However, from time to time, we receive project articles that do not mention the funding sources at all or the HOME program is simply referred to as a HUD grant. Following Housing Division policy, your organization must clearly identify the HOME program as a specific funding source when you publicize your housing project. Start-up Requirements Several managerial items must also be in place pdor to the release of funds. These include but are not limited to: a fully executed contract with the MDOC a firm commitment from all funding sources an approved Management Plan other grant conditions must be met You will receive a draft contract between your local government or organization and MDOC. Please review this document carefully and contact your HOME program officer with questions or other issues. HOME Staff Assignments Julie Flynn (841-2818): AWARE, Inc., Terry, Laurel, RMDC Susan Harris (841-2816): Leslie Edgcomb (841-2817): Connie Onstad (841-2819) Missoula, Shelby, Hamilton, Helena Housing Authority Flathead Lake CHDO, Lewis and Clark County Lake County CDHO Thank you once again for participating in the HOME program, we look forward to the implementation and completion of your project! Connie Onstad HOME Program Manager M _NTANA- . s aox 200545 * Helena, Montana 59620-0545 * http://comrnerce.stal~i~ ~ ' ' ~ : Phc.ne: 40~1-2820 · Fax: 406-841-2821 · TOD: 406-841-27~' OF LAd L To: FROM: DATE: FFY 2003 Program (HOME) Applicantsl~ .,-J,~ Connie Onstad, HOME Program Mana~?r~)'~'' May 20, 2003 SUBJECT: Ranking Narratives for FFY 2003 Thank you for submitting an application for HOME funding. The Ranking Narrative covering your grant application is enclosed for your review and information. All HOME applicants, funded or unfunded, receive a ranking narrative. Our goal is to provide you with feedback that presents a "roadmap" to strengthen certain characteristics of your application for future competition and describe areas in the process where your application excelled. if you have questions about your Ranking Narrative, please call us at 841-2820. If you would like to go over your application in detail, I make the HOME staff and myself available to work with you personally by opening our files and going into the details of your application. Keep in mind your ranking narrative does not encompass every aspect of the ranking process however we have tried to comment on areas of particular interest. The next application deadline for the FFY 2004 HOME competition is tentatively set for March 2004. Thanks again for your interest in the HOME program and affordable housing issues. We look forward to working with you on current projects or in future grant competitions. HOME INVESTMENT PARTNERSHIPS PROGRAM RANKING NARRATIVE 2003 FFY GRANT COMPETITION CITY OF LAUREL (Homebuyer Assistance, Homebuyer Assistance with Rehab, and Homeowner Rehab) FINANCIAL MANAGEMENT (100 points) Average Response The applicant is providing gap financing for homeowner rehabilitation and homebuyer assistance for at least 40 Iow and very-low income ir~dividuals. The program targeting and assistance was determined using the 2000 City of Laurel Needs Assessment Survey. The applicant did not provide information about the number of homes available in the City or the price range of homes in Laurel, which should have been provided as a basis for the amount of assistance that would be provided to homebuyers. The applicant also did not provide the number of homes in the City that would need rehab nor the average amount of rehab work that would be performed. A better analysis of the need for the homebuyer assistance and homeowner rehab assistance would have resulted in a better score for the applicant. The issue of addressing the lead-based paint problems in existing homes was not discussed except to say that the City would be in compliance. Other applicants had outside documentation supporting the cost of the lead-based paint testing and abatement. The applicant is targeting 6 individuals/families at 0-50% AMI, 12 at 51-65%, and 22 at 66- 80% AMI which may be an unrealistic targeting strategy. It is strongly recommended that the applicant target individuals/families all at less than 80% AMI. By doing so, they will not be so restrictive. If they are able to help families in the lower income bracket, it will only reflect positively on their program. The applicant was successful in obtaining a special concession from the First Citizens Bank of Laurel that is committing funds for housing rehab at an interest rate 1% below the current home improvement loan products that they currently offer. Western Security Bank will limit its closing costs to $100.00 to be charged to the borrower. The City of Laurel has been working with Glacier Affordable Housing Foundation (GAHF) for their assistance in providing homebuyer assistance, and is contracting with them to manage the program income from this grant and a prior grant. The applicant is reporting $100,000 in program income that must be used before any additional HOME funds may be requested. PROGRAM MANAGEMENT (50 points) Average Response The management plan presented was incomplete and must be completed as a part of startup conditions. The Ongoing Project Management section was missing, as was the Program Income Plan. The applicant did include a letter from GAHF acknowledging they would be administering the program income for this project and previous projects. When completing the program management plan, the applicant will be required to select either 1 L:\Ranklng~2003 Ranking\Narratives\Laurel 2003 Narrative,doc the recapture or the resale provision for the homebuyer assistance funds. It is imperative that the program be consistent throughout. The applicant proposes to make direct loans with an interest rate of 0 to 5% depending on income, with a maximum payback period of 15 years. Deferred payment loans will be made in cases of extreme need and will carry no interest with a payback period of up to five years with 20% of the loan being forgiven each year the property remains the owner's principal residence. The applicant will be required to expand on these terms and to identify which will be used for homebuyer assistance projects and which will be used to homeowner rehabilitation projects. The management plan did not give a specific breakout for each individual portion of the program. The applicant also stated on page 66 of the application that they were including as a part of their application the Policies and Procedures Manual for their program, but failed to include it. ~ The applicant did include a listing of eligible rehabilitation improvements that will be allowed with HOME funds. However, the applicant failed to thoroughly address the lead- based paint issue other than to say that the "City of Laurel will comply with Title IV of the Lead-Based Paint Poisonin.q Prevention Act." HOME regulations are very specific about addressing LBP in any projects being undertaken with HOME funding. The applicant must determine policy to address potential lead-based paint as it pertains to homebuyer assistance and to homeowner rehab before this project is allowed to proceed. PROJECT PLANNING (50 points) Average ReSponse The City of Laurel Mayor and Council have been working with Big Sky EDA and are interested in getting their HOME program income spent. (The amount of program income reported to the HOME program is apProximately $25,000 but the minutes of the March 25, 2003 public hearing report that the "City of Laurel program income is $100,000." There is no explanation of the source of this program income.) The City has contacted GAHF and will find ways to work with local banks and financial institutions to use resale restrictions and recovering equity share. The applicant did not include the existing program income in any financial analyses that.were given in the application. Existing program income must be accounted for and expended before any new HOME funds are requested. The 2000 Needs Assessment indicates there is a need for homeowner rehab and homebuyer assistance; however, the applicant makes no indication of the number of houses in the community needing rehabilitation, how many homeowners would be willing to use homeowner rehab funds, or how many homebuyers are ready to use the homebuyer assistance funds. The applicant consistently states that the "demand exceeds the supply" but offers no solution for this problem, nor do they link it to the homebuyer assistance portion of this application. The applicant also states that the "HOME project will increase the overall number of affordable housing units in the community" but fails to provide an explanation of how this will be accomplished. The applicant does not include any kind of listing of homes available for sale in Laurel in the price range that would be affordable to their targeted population. Addressing the above-mentioned needs with 2 specific documentation to support these'statements would have resulted in a higher score for this criterion. Included, as part of the application is a copy of the 1995 Housing Plan with a 2002 cover sheet. This plan is outdated and does not take into account any specific event that happened in, or changed the community in the past seven years. The applicant may have a market for homeowner rehabilitation projects and homebuyer assistance but failed to demonstrate the need in their application. CAPACITY DETERMINATION (100 points) Average Response The applicant provided a very minimal response to this criterion. The applicant was recipient of a 1996 HOME grant with which they assisted 29 homeowners with $400,000. There was no discussion of the management experience of this grant or of any other grants that might have been received from any other programs such as the Community Development Block Grant Program. The applicant failed to list all housing-related projects with which it had been involved. The applicant is ready to begin this project with banks in the area that have a pool of funds ready to go. They have a loan advisory committee and other advisors with which they will work. Being near to Billings, it is assumed that a pool of contractors would be willing to do rehabilitation work in Laurel; however, the applicant did not discuss this in the application. All the cdteria in this section were not addressed as completely as they should have been. The answers that were given were very vague and sometimes did not even relate to the questions. COMMENTS: The ranking team is recommending that the amount of assistance be reduced from the $380,000 to $280,000 -- $250,000 for project activities and $30,000 for soft costs. The applicant has not justified a definitive need for all requested funding. There is at least $25,000 of HOME program income available for use by the applicant, and it must be spent before any more HOME funds are requested. In the public hearing minutes it was reported that there was $100,000 of program income that was available. The ranking team could not determine if this was program income from HOME funds only, or if it was a combination of program income from HOME and CDBG. The $100,000 of program income was not included in any of the financial analyses in the application where it should have been. The applicant must use the $100,000 for homebuyer assistance and use new HOME funds for homeowner rehabilitation. The applicant is working with the Big Sky Economic Development Authority and has the City of Billings HOME program staff that will be an asset to them in the implementation of 3 this project. It is also recommended that the state HOME Program Specialist assigned this project Provide technical assistance at the very beginning of the project to help with the stadup for the administration of the grant. With the incompleteness of the application, the missing documentation and weak justifications for the need of HOME funding, this application would not have been funded if it had been submitted in a competition round with mo.re applicants than dollars to be granted. In the future, the applicant must ensure that all questions are completely addressed and all relevant data is provided with the application. 4