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Home My WebLink AboutAGENDA REPORT 2002 1204 CC REG ITEM 08AITEM Y. A . . e � -`r�-- MOORPARK CITY COUNCI ,, AGENDA REPORT To: Honorable City Council From: Nancy Burns Senior Management Analys Date: November 26, 2002 (CC Meeting of December 4, 2002) Subject: CONSIDER RE- ALLOCATING PROCEEDS FROM SALE OF 6479 -B PENN STREET (COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS) BACKGROUND This hearing has been continued from previous City Council meetings in order for the Budget and Finance Committee to meet and formulate a recommendation for the reallocation of CDBG funds. The Committee will meet Monday, December 2 at which time a recommendation will be prepared and provided to the City Council on Tuesday, December 3. A copy of the original Council Agenda Report is attached. STAFF RECOMMENDATION 1. Receive public testimony 2. Direct staff as deemed appropriate Attachment: Council Agenda Report - November 6, 2002 0G10009 ITEM 9 . A . MOORPARK CITY COUNCIL 54J,VPLC�rv►nvTA-L AGENDA REPORT To: Honorable City Council From: Nancy Burns, Senior Management Analyst Date: December 3, 2002 (CC Meeting of December 4, 2002) Subject: CONSIDER RE- ALLOCATING PROCEEDS FROM SALE OF 6479 -B PENN STREET (COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS) BACKGROUND At its November 20, 2002, Regular Meeting, the Moorpark City Council continued this item to its December 4, 2002, meeting and referred it to the Budget and Finance Committee for review. DISCUSSION In its Special Meeting of December 2, 2002, the Budget and Finance Committee met to discuss the reallocation of funds which will be added to the City's line of credit from the sale of 6479 -B Penn Street. The Committee's recommendations include the development and improvement of parks to serve low income neighborhoods, and property acquisition for the purpose of developing a dwelling unit in the downtown area for a low income household. (See Attachment "A".) Approximately $218,745 is expected to be added to the City's CDBG line of credit from the sale of 6479 -B Penn Street. Current funds in the City's line of credit total approximately $447,140. This means that the City's line of credit will soon total approximately $665,885. Staff estimates that approximately $160,535 of the current allocated funds are likely to be expended as appropriated within the current fiscal year. (See Attachment "B ".) If this expenditure level is achieved, the funds remaining will total $505,350, including $218,745 from the Penn Street property. Honorable City Council Date 12/03/02 Page 2 Developing a park to serve low income households is an eligible CDBG activity. In order to proceed with an allocation of CDBG funds for this purpose, the City will need to conduct a survey which demonstrates that the users of the park are primarily low income households. The survey methodology, questionnaire and results must be approved by HUD. HUD requires that the survey demonstrate that 51% of the total residents of the universe of park users be low income. This means that 51% of the total residents of this universe must be low income, as compared with typical survey methodology which utilizes sampling techniques (i.e., requiring 51% of the sample to be low income) . Census data at the block group level is not yet available from the 2000 Census. The public notice for this matter did not indicate that funds other than those recovered from the Penn Street purchase would be reallocated. If the Council wishes to authorize the Committee's suggested funding allocations, some funds currently allocated for projects (see Attachment "B ") will need to be re- allocated, following a noticed public hearing. The City anticipates approximately $200,000 in new CDBG funds for FY 2003/2004. STAFF RECOMMENDATION 1. Open the public hearing and take public testimony; and 2. Direct staff as deemed appropriate. Attachments: Attachment "A" Budget and Finance Committee Recommendations Attachment "B" Anticipated CDBG Expenditures and Funds Remaining Afterward Honorable City Council Date 12/03/02 Page 3 Attachment "A" Budget and Finance Committee Recommendations Activity Address Estimated Cost Comments Park development in low income neighborhood 296 Charles St. Land acquisition and demolition of structure $175,000 Equipment $50,000 Park improvements Virginia Colony Park $100,000 Property acquisition To be determined $275,000 Development of dwelling in Downtown area Honorable City Council Date 12/03/02 Page 4 Attachment "B" Anticipated CDBG Expenditures and Funds Remaining Afterward Project /Program Anticipated Expenditures Funds Remaining After Anticipated Expenditures Affordable Housing $0 $49,710 Street Lights (Downtown Residential) $75,000 $71,876 Public Park $0 $143,400 Boys & Girls Club Re- Roofing Project $20,000 $0 Code Enforcement $10,000 $10,999 RAIN $5,000 $0 Catholic Charities $8,535 $0 Senior Nutrition $10,000 $0 Senior Center Operations $12,000 $0 Senior Survivalmobile $0 $1,000 Administration $20,000 $9,620 Total $160,535 $286,605 ' C' MOORPARK CITY COUNCIL AGENDA REPORT To: Honorable City Council From: Nancy Burns, Senior Management Analyst U i Date: October 29, 2002 (CC Meeting of November 6, 2002) Subject: CONSIDER RE- ALLOCATING PROCEEDS FROM SALE OF 6479 -B PENN STREET (COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS) BACKGROUND At its October 2, 2002, Regular Meeting, the Moorpark City Council approved Resolution No. 2002 -2011, authorizing the sale of 6479 -B Penn Street. The unit has been sold, and escrow is expected to close November 8, 2002. Public notice of this matter has been published, as required by Community Development Block Grant (CDBG) regulations. DISCUSSION Funds from the proceeds of this sale may be re- allocated to any eligible Community Development Block Grant (CDBG) project. If the Council wishes to utilize the proceeds for Affordable Housing, the funds may be designated for that purpose, with a specific project to be identified at a later date. If CDBG funds are used for property acquisition or for a loan to enable a developer to purchase land, and affordable dwelling units are constructed on the property, the CDBG funds could be rolled over into deferred payment mortgages ( "Silent Second Mortgages "). These Silent Second Mortgages, in favor of the City, would thereby provide partial funding for the down payments needed for the affordable units. The funds would eventually be returned to the City, per resale restrictions developed by the City. '010010 Honorable City Council Date 10/31/02 Page 2 It is possible that prevailing wages might be required for a project with this type of assistance. However, staff believes that recently enacted legislation .(SB 972) may provide an exemption for this type of assistance, providing that all assistance is structured as a loan and not a grant. If Council desires to provide CDBG funds as assistance for Affordable Housing, this form of assistance would help the largest number of low income buyers. Staff recommends that the assistance per buyer be limited to twenty thousand dollars ($20,000) per household. Additional funds from other sources (developer contribution or public funds such as Housing Setaside) could be utilized to supplement CDBG. All public funding needs to be structured as a loan to qualify for the exemption referenced above. It is unclear at this time whether the sale of 6479 -B Penn Street will add approximately two hundred seventeen thousand dollars ($217,000) or two hundred fifty thousand dollars ($250,000) to the City's CDBG allocation of funds. The difference of thirty -three thousand dollars ($33,000) represents the gain on the sale of the property, over the purchase price and costs of the purchase transaction, plus the closing costs for the sale transaction. The City is awaiting a determination by HUD as to the disposition of the $33,000 in question (Attachment "A "). As shown on Attachment "B ", the City's unexpended funds currently total approximately $447,140. HUD regulations limit the unexpended funds in the City's line of credit to one and one half (1%) times the annual allocation, which is approximately two hundred thousand dollars ($200,000). This means that the City should carry no more than three hundred thousand dollars ($300,000) in its unexpended line of credit. When escrow closes on the subject property, the City's CDBG allocation will be increased by either $217,000 or $250,000, for a total line of credit of either six hundred sixty -four thousand one hundred forty dollars ($664,140) or six hundred ninety -seven thousand one hundred forty dollars ($697,140). Council action on the re- allocation of $250,000 is requested at this time. This will avoid the need to bring this item before the Council again, in the event that a funding decision is made 0106-®11 Honorable City Council Date 10/31/02 Page 3 for $217,000 and the City receives a favorable decision from HUD for the remaining $33,000 in question. STAFF RECOMMENDATION 1. Continue this item to the City Council meeting of November 20, 2002; and 2. Refer the matter to the Budget and Finance Committee for consideration prior to the Council meeting of November 20, 2002. Attachment "A ": 6479 -B Penn Street Transaction Costs Attachment "B ": Unexpended Community Development Block Grant (CDBG) Funds ®000121 Honorable City Council Date 10/31/02 Page 4 Attachment "A" 6479 -B Penn Street Transaction Costs Item Purchase Transaction Sale Transaction Sales Price $217,000 $250,000 Closing Costs $1,745 (Estimated) $16,402 Net Gain (Estimated) $14,853 Honorable City Council Date 10/31/02 Page 5 Attachment "B" Unexpended Community Development Block Grant (CDBG) Funds October 29, 2002 Project /Program Funds Available Affordable Housing $49,710 Street Lights (Downtown Residential) $146,876 Public Park $143,400 Boys & Girls Club Re- Roofing Project $20,000 Code Enforcement $20,999 RAIN $5,000 Catholic Charities $8,535 Senior Nutrition $10,000 Senior Center Operations $12,000 Senior Survivalmobile $1,000 Administration $29,620 Total $447,140 000014