|
||||
|
Date
|
June 22,
2009
|
||
|
Agenda
Item No. 22 Roll
Call No. 09-
Communication No. 09-423 Submitted by: Larry Hulse, Community Development
Director |
||||
AGENDA
HEADING:
Authorizing the City Manager to develop an
application to the State of Iowa for the Neighborhood Stabilization Program II funds.
SYNOPSIS:
Recommend approval to authorize the City Manager to
develop and submit an application in conjunction with the State of Iowa for
Neighborhood Stabilization Program II funds allocated from HUD.
FISCAL
IMPACT:
Amount: Up to
$6,000,000 in potential revenue
Funding Source: Community Development Block Grants (CDBG)
ADDITIONAL
INFORMATION:
The
American Recovery and Reinvestment Act of 2009 (ARRA) allocated $2 billion in additional
funding for the Neighborhood Stabilization Program. This additional funding is commonly referred
to as NSP2. The City has received $3.9 million of NSP1 funds through the Iowa
Department of Economic Development (IDED).
The City plans to utilize these funds to redevelop approximately 90
foreclosed and abandoned properties.
There
are several substantial differences between NSP1 and NSP2. Unlike NSP1, NSP2 is a competitive
application process. Because NSP2 was
created by the ARRA, Davis-Bacon labor standards apply to all NSP2 funded
activities; however, Congress is currently debating a bill which eliminates the
Davis-Bacon requirements on NSP2 funds.
Until clarification occurs, staff will proceed under the assumption that
Davis-Bacon requirements will apply to this funding.
There is
also a difference in the areas eligible to receive NSP2 funds. Unlike NSP1, where the City was able to
create a project area, HUD has created a vacancy and foreclosure index score
between 1-20, with 20 being areas with the most severe vacancy and foreclosure
concerns. In order to apply for NSP2
funds, the project area must have an average minimum index score of 18. This reduces the number of eligible Census
Tracts to receive NSP2 funds. NSP2 also
has a minimum program requirement of $5 million and redevelopment of 100
housing units.
After an
initial examination of the NSP2 program, the City’s best option moving forward
was to work with the State of Iowa on their application rather than submit an
application from the City of Des Moines.
The City’s portion of the State application will concentrate on two
items: redeveloping foreclosed homes in Distressed Neighborhoods and redevelopment
of multi-family housing along strategic corridors.
Foreclosed
homes in our Distressed Neighborhoods tend to be larger, older, and have more severe
structural concerns than houses in other areas.
Although there is currently funding available for redeveloping
foreclosed homes in Distressed Neighborhoods, there are many homes where the
subsidy levels of NSP1 are not enough to feasibly redevelop the site. Providing a larger subsidy to assist with the
redevelopment of homes in Distressed Neighborhoods can assist with the
stabilization and revitalization of the impacted neighborhoods.
Because
of the restrictions associated with the NSP2 funds and the limited capacity of
our non-profit housing agencies, these funds are best utilized to redevelop
strategic locations along commercial corridors.
Because the NSP2 program will assist individuals and families up to 120%
Area Median Income (AMI), we believe these funds could be allocated for several
larger scale residential and mixed use redevelopment opportunities.
Currently
staff is still examining ways to best utilize NSP2 funds. This is a difficult process as Congress and
HUD have been issuing several significant program amendments to both NSP1 and
NSP2 in the last few weeks. Staff is
also concerned about the capacity of our local housing agencies to implement
the NSP2 program. These concerns are magnified
by the Davis-Bacon requirements that are attached to the use of these
funds. Several non-profits are unable to
meet these requirements, which diminishes the capacity
to administer this program. Because of
the rule changes and the limited capacity to implement the program, it is
possible that staff may ultimately recommend to Council that these funds are
not suitable for the City to utilize.
PREVIOUS
COUNCIL ACTION(S):
Date: June 8, 2009
Roll Call Number: 09-996
Action:
Neighborhood
Stabilization Program Contract with the Iowa Department of Economic Development
(IDED). Moved by
Vlassis to adopt. Motion Carried
7-0.
Date:
February 23, 2009
Roll Call Number: 09-341
Action: On the City’s
plan to spend CDBG Neighborhood Stabilization Program Funds. (Council Communication No. 09-105) Moved by Coleman to
adopt. Motion carried 7-0.
Date:
December 8, 2008
Roll Call Number: 08-2159
Action: Authorizing the City
Manager to develop and submit a plan to the State of
BOARD/COMMISSION
ACTION(S): NONE
ANTICIPATED
ACTIONS AND FUTURE COMMITMENTS:
It is anticipated that future sub-agreements and funding
allocations may be approved by Council.
For more information on this and other agenda items,
please call the City Clerk’s Office at 515-283-4209 or visit the Clerk’s Office
on the second floor of City Hall,