Title
One Stop Homeless Assistance Center (B)
This item is a follow-up to the August 20, 2009 City Commission referral authorizing the City Manager to prepare a U.S. Department of Housing and Urban Development Section 108 Loan Guarantee Application to use as a potential funding source for the gap financing needed to move forward with the development of the One Stop Homeless Assistance Center. This is a request to authorize the City Manager to submit a loan application in an amount of $2,100,000 to the U.S. Department of Housing and Urban Development (HUD) to participate in the Section 108 Loan Guarantee Program; and to amend the City of Gainesville FY 2008-2009 Annual Action Plan to reallocate an equal transfer of CDBG-R and CDBG funding between two projects, the One Stop Homeless Assistance Center and the Booker T Washington Subdivision Roadway and Drainage Improvement project which is located between NE 8th and 10th Avenues, and 15th and 16th Terraces.
Explanation
The One Stop Homeless Assistance Center project is a proposed 12,000 +/- square foot, 60-bed facility that will be developed for the purpose of providing services to include, but not limited to, shelter, medical, meal distribution, counseling and other supportive services, such as case management, educational and life skills training, and to promote opportunities for homeless persons to obtain self-sufficiency.
As approved by the City Commission, staff is continuing to negotiate the purchase of the ADC Development Group, LLC. (ADC) site for the One Stop Homeless Assistance Center located at the 800 Block of NW 53rd Avenue and is continuing to work with the GRACE Marketplace collaborative, the Office on Homelessness and other local providers (the Group) to identify potential financial resources for the development and operation of the One Stop Homeless Assistance Center.
Initially, the City and ADC agreed in principal to a tentative offer of $633,500 for the purchase of the 12.67 acre site. The City's appraisal of the property came in at $610,000. However, due to unforeseen wetlands conditions, the developable acreage of the site acreage was reduced to approximately 10 acres. The City and ADC continue to negotiate easement ownership issues, construction and permitting of the entranceway, and access to the new water/sewer infrastructure. The purchasing agreement is subject to the City Attorney's approval and is anticipated to be complete by December 31, 2009.
As discussed at the August 20, 2009 City Commission Meeting, the project has significant funding gaps for which sources of funds need to be secured in order for the development of the One Stop Homeless Assistance Center to proceed. Staff has estimated the related project costs associated with the development of Phase I of the One Stop Homeless Assistance Center. Given the tentative and available funds on hand, at this time, the Section 108 Loan Guarantee Program is the most viable potential funding source available to use for the gap financing to move forward with the development of the Center. As a result, the Group is recommending for the City to apply for a HUD Section 108 loan from HUD provide the gap financing needed to move forward with the project.
Section 108 is the loan guarantee provision of the Community Development Block Grant (CDBG) program. Section 108 provides communities with a source of financing for economic development, housing rehabilitation, public facilities, and large-scale physical development projects. It will permit the City to utilize a small portion of its CDBG funds over a specified period of time to cover the loan amount as security for the loan to develop the One Stop Homeless Assistance Center. The program activities for the One Stop Homeless Center must meet CDBG Program requirements and the loan must meet Section 108 underwriting criteria. The loan repayment will be made in equal installments over a 20-year period. The annual payments are estimated at $166,941 per year. HUD will require for the City to guarantee the repayment of the Section 108 loan with the City's current and future CDBG funds, and pledge additional security to serve as collateral against the borrowed funds. Staff continues to work with the City Attorney's Office and the Budget/Finance Department in the preparation of the Section 108 loan application to ensure compliance with HUD regulations and to structure the loan to minimize the City's risk to undertake this type of debt financing for this project.
If the application is approved by HUD, the City will be required to amend its FY 2009-2010 Annual Action Plan to include the One Stop Homeless Assistance Center project under the new Section 108 Loan program. Staff anticipates submitting the Section 108 Loan Application to HUD by November 30, 2009. The length of time for the Section 108 loan application process could take up to a year or longer depending on the content of the City's loan application. Attached for reference is a draft copy of the City's HUD Section 108 Loan Guarantee Application.
The City of Gainesville received $371,003 in CDBG-R Program funding from HUD through the American Recovery and Reinvestment Act of 2009 (ARRA) that was signed into law on February 17, 2009, and appropriated funding for measures that will modernize our nation's infrastructure, enhance energy independence, expand educational opportunities, preserve and improve affordable health care, provide tax relief and protect those in greatest need. On May 7, 2009, the City amended its FY 2008-2009 Annual Action Plan, to allocate the CDBG-R Program funds to the One Stop Homeless Assistance Center project. However, after researching the potential funding sources for the Center project, it was determined that the City could not combine CDBG-R and Section 108 Loan Guarantee Programs funds for this project. Therefore, the City must amend its Fiscal Year 2008-2009 Annual Action Plan to reallocate the CDBG-R Program funds to a public infrastructure project, The Booker T Washington Subdivision Roadway and Drainage Improvement project is located between NE 8th and 10th Avenues, and 15th and 16th Terraces. The proposed project is to provide roadway pavement restoration/reconstruction with concrete curbs & gutter, including a stormwater management system. The CDBG-R Program funding is separate a allocation from the regular, CDBG Program funds that the City of Gainesville receives on an annual basis from HUD. In lieu of allocating the CDBG-R funds to the Booker T Washington Subdivision Roadway and Drainage Improvement project, the City would then transfer $371,003 in CDBG funds reserved for this project to the One Stop Homeless Assistance Center. This would equate to an equal transfer of the CDBG and CDBG-R funding for these two projects. This amendment will have no adverse impact on any of the projects and activities currently funded in the FY 2008-2009 Annual Action Plan. All of the elements of the City's current FY 2008-2009 are hereby incorporated into this Amendment.
As required by HUD, staff presented the proposed Section 108 Loan Application and Substantial Amendment to the City of Gainesville FY 2008-2009 Annual Action Plan to the Citizen Advisory Committee for Community Development (CACCD) at a Public Hearing held on October 20, 2009. Additionally, a notice of the proposed Section 108 loan application and Substantial Amendment was published in the Gainesville Sun newspaper on October 5, 2009. A copy of the proposed Section 108 loan application and Substantial Amendment was made available to the public and for public comment at the offices of the City's Housing & Community Development Division.
As further discussed at the August 20, 2009 City Commission Meeting, the City will be responsible for the construction of the Center and will continue to provide funding to the Office on Homelessness to coordinate the services related to the implementation of the City/County 10-Year Plan to End Homelessness as approved by the City Commission. After the construction of the Center is completed, the City will not be responsible for the on-going administration and operation of the shelter component of the Center. It will be the responsibility of the local non-profit agencies to provide the necessary funding for the on-going administration and operations of shelter component of the Center. Some grant programs include assistance with the operational costs of the shelter facility, and for the administration of the grant. Through the Group's partnership, the other potential funding sources may be available to leverage funding for the operational costs of the shelter after the development of the One Stop Homeless Assistance Center is completed.
Fiscal Note
The total funding that is available in the City's Homeless Initiative to date is $964,700 for the development of the proposed One Stop Homeless Assistance Center, which includes City General Funds in the amount of $345,200 and CDBG funds in the amount of $619,000. Staff is negotiating with GRU to receive funding in the amount of $423,500 from the Connect Free Program, which would equate to a total of $1,387,700 in City funds for the development of the Center.
The City will be required to repay the principal and interest on the loan in equal annual installments for a period of up to 20 years. Loan repayment from the City's Community Development Block Grant fund allocation would reduce the amount of funds available for other community development activities for this 20-year period. The final Section 108 loan amount may be reduced as other potential funding sources are identified by the Group for the project.
The repayment from CDBG funds will not affect the 15% set-aside for Public Services.
Recommendation
The City Commission: 1) authorize the City Manager to submit a loan application to the U.S. Department of Housing and Urban Development (HUD) to participate in the Section 108 Loan Guarantee Program in the amount of $2,100,000; 2) commit CDBG grant funds, as appropriate by HUD, in amount to cover the annual installment payment to repay the Section 108 Loan over the next 20 years; 3) authorize the City Manager to execute any and all instruments, documents, agreements and any amendments necessary to secure the HUD Section 108 Loan for the One Stop Homeless Assistance Center, subject to approval by the City Attorney for form and legality; 4) authorize the City Manager to take other actions necessary to facilitate the development of the One Stop Homeless Assistance Center; 5) approve the substantial amendment to the City's FY 2008-2009 Annual Action Plan to reallocate the CDBG-R and CDBG funds for the One Stop Homeless Assistance Center and the Booker T Washington Subdivision Roadway and Drainage Improvement project is located between NE 8th and 10th Avenues, and 15th and 16th Terraces; and 6) authorize the City Manager or designee to prepare and submit the substantial amendment to the FY 2008-2009 Annual Action Plan, including all understandings and insurances contained, to HUD.