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HomeMy WebLinkAboutAGENDA REPORT 1994 0316 CC REG ITEM 09A• TO: FROM: DATE: CITY OF MOORPARK AGENDA REPORT The Honorable City Council Donald P. Reynolds Jr., Administrative Services March 5, 1994 f;C � ON• By Manager,". SUBJECT: Consider the Re -Appropriation of 1991 and 1992 Community Development Block Grant ("CDBG") Funds for Affordable Housing Land Acquisition, Estimated to be $85,000 This report is intended to be considered in conjunction with the staff report to Council on this agenda which describes possible projects to be considered for the appropriation of the annual CDBG Entitlement grant. The City set funds aside for land acquisition to assist with an affordable housing project two years ago, and now that a housing project is materializing in the City without CDBG assistance, staff is asking that these funds be considered for uses other than land acquisition. Background In March, 1991, and again in March, 1992, funds were set -aside by the Council totalling $85,000 for affordable housing land acquisition. At that time, the City had no other available resources to buy land for affordable housing. In 1988, the City awarded a contract to Cabrillo Economic Development Corporation ("CEDC"), to search for and identify land available to the City for use as a new affordable housing project. The site recently acquired by the City commonly referred to as Gisler Field, was one of six different possible sites being evaluated by CEDC. A second site continues to be considered for use as an affordable housing project and has not progressed or been considered for the past 14 months. Recently, the Moorpark Redevelopment Agency acquired property for the development of a park, commercial property and an affordable housing project. CDBG can be used for many expenses related to developing affordable housing units at this site. It has been determined however, that CDBG cannot be used for this project until an environmental clearance is obtained that meets federal requirements. The County has notified the City that a complete environmental study cannot be considered until the project design has been finalized. On March 2, 1994, the Redevelopment Agency agreed to proceed with design using Redevelopment Agency funds to pay for the contract. Twice in the past four years, the County CDBG Entitlement program has been placed on "probation" for not using its CDBG grant in a timely manner. HUD requires that a surplus of funds not be greater than 1.5 grant years and is moving towards a one year surplus criteria. This year's probationary status was not caused by a lack of expenditures in Moorpark, because the City was on-line to expend funds related to Charles Street phases I and II. It is hopeful that the County's Entitlement program is removed from this status in the spring of this year. Although the City has worked through a second probationary period, it has been learned that holding funds for future use can place the program in jeopardy. Therefore, it is staff's recommendation, that the City make a decision this year to assist with the development of a current project rather than waiting for a second affordable housing land acquisition project to develop. Discussion It is an option to combine the $85, 000 with the 1994/95 project funds, (estimated to be $192,747), and this is why staff is presenting both reports together. Several options have been considered for the use of CDBG, including; the current Redevelopment housing project, the development of a new housing rehabilitation program, or additional street improvements. The funds proposed for re -programming are not eligible for administrative or public service funding. Therefore, as the Council considers whether or not to re -appropriate these funds, a specific public facilities construction project or housing project must be considered. Current Affordable Housina Proiect For the current housing project, the use of funds would not occur until after design is complete and environmental approval is received, which would most likely be the end of the 1994 calendar year. A quick use for funds once they are available, is one that may assist the City to avoid future problems meeting the HUD expenditure criteria. Pre -development permit fees (i.e., water, sewer and fire prevention), are estimated to cost between $600,000 and $700,000. This is a common use for CDBG. Any expenses related to the infrastructure improvements including engineering, (if procured per federal regulations), grading, right-of-way acquisition, and related permit fees. Housing Rehabilitation CDBG is frequently used for housing rehabilitation. When combined with Redevelopment funding, the program can combine CDBG grants to very low income persons, and use Redevelopment monies for loans to low and moderate income families. CDBG loan programs can be cumbersome to administer because it creates "program income" when interest is paid in addition to the principle loan amount. Prior to appropriating funds for this use with loans that earn interest, a careful consideration should be afforded to the impact it would have on current staffing levels. Public Facilities Street improvements are the simplest approach for the use of CDBG funds in Moorpark, when an identifiable project can be selected. As stated in a separate report to Council, staff is hopeful that First Street improvements will be eligible. This construction will easily exceed $300,000 to construct, and if supported by the 1994/95 grant appropriation available of $192,747, as well as the estimated $85,000 addressed in this report, it would allow CDBG to pay for $277,747 of the expenses. Staff Recommendation That the City Council: 1) Receive public testimony for consideration in appropriating the 1991 and 1992 Community Development Block Grant funds estimated to be $85,000 and close the public hearing; 2) Defer final appropriations to the April 6, 1994, City Council meeting; 3) Direct the Budget and Finance Committee to review proposals prior to the April 6, 1994, Council meeting and make a recommendation to the Council for final appropriation. KI