HomeMy WebLinkAboutAgenda Report - January 7, 2009 I-01 PHAGENDA ITEM ergo# I
CITY OF LODI
IV COUNCIL COMMUNICATION
TM
AGENDA TITLE: Conduct a public hearing to solicit feedback on potential uses of Neighborhood
Stabilization Program funds being made available by the California Department of
Housing and Community Development.
MEETING DATE: January 7,2009
PREPARED BY: Community Development Department
RECOMMENDED ACTION: Conduct a public hearing to solicit feedback on potential uses of
Neighborhood Stabilization Program funds being made available by
the California Department of Housing and Community Development.
BACKGROUND INFORMATION: In July 2008, Congress passed the Housing and Economic
Recovery Act of 2008, which appropriated $3.92 billion for the Neighborhood Stabilization Program
(NSP). The goal of the NSP funding isto promote investment in neighborhoods suffering from high rates
of foreclosure and abandonment.
NSP Fundina Sources
NSP funds are being distributed by both the U.S. Department of Housing and Urban Development (HUD)
and the California Department of Housing and Community Development (HCD). Funds may be received
from each source without effect on the other source.
San Joaquin CountyAllocation
San Joaquin County received a $9 million allocation directly from HUD to address problems being faced
throughout the County. San Joaquin County designated approximately $578,000 for the City of Lodi. On
November 18, the Council recommended those funds be used for the acquisition, rehabilitation, and
resale of foreclosed properties. The City also may have an opportunity to secure a portion of the $2.2
million set-aside for very low-income housing.
HCD Allocation
On December 1. HCD submitted its NSP Plan to HUD. Because HCD felt that HUD's formula did not
adequately factor foreclosure rates in certain cities whose counties received direct funding, HCD
allocated additional funds to many of these cities. HCD's NSP Plan requires that jurisdictions with
preliminary allocations partner with other cities within the same county in order to receive funding. In
order to receive $871,252 in NSP funding, Lodi has the option of partnering with the following cities in
order to submit an application totaling at least $1 million (the minimum to apply):
Escalon
$146,043
Lathrop
$696,139
Ripon
$221,478
APPROVED:
Blair i Manager
Conduct Public Hearing for NSP Funding from HCD
January 7,2009
Page 2 of 3
Additionally, HCD will have approximately $37 million available for housing projects that serve very low-
income households and meet NSP requirements. These funds will be made available in an over-the-
counter application process.
NSP Eligible Uses
The eligible NSP uses are the same for both the San Joaquin County and HCD allocations. They include
the following activities:
• Acquisition, rehabilitation, and resale or rental of abandoned and foreclosed homes;
• Demolition of existing abandoned and foreclosed homes;
• Redevelopment of demolished andlor vacant propertiesthat were the subject of foreclosure;
• Financing mechanisms (e.g,, down payment or closing cost assistance)for low- to moderate -
income purchasers of foreclosed properties; and
• "Land banking" to assemble, temporarily manage, and dispose of vacant land.
All activities must directly or indirectly benefit low- and moderate -income households (those earning at or
below 120 percent of the area median income). Foreclosure prevention is not an eligible activity.
HCD NSP Process
The process for receiving HCD NSP funding is somewhat different than the process for securing funds
through the County. HCD requires that all applicant jurisdictions hold two public hearings: one to solicit
public comment on potential uses of funds and a second to approve the application. Feedback received
at this first public hearing is intended to assist in identifying activities for the application that will be
brought back before Council at the second public hearing in February.
HCD anticipates releasing a Notice of Funding Availability in January 2009, with applications due in
February 2009. The quick timeframe is driven by the need to expend funds within 18 months, roughly by
June 2010, a deadline set forth by HUD. In order to secure the funds and increase the City's ability to
expend them quickly, staff is currently working with Escalon, Lathrop, and Ripon to complete a
Memorandumof Understanding.
Decisionsfor Use of NSP Fundsfrom HCD
Council will have a number of options available for determining how and where the NSP funding from
HCD can and will be used within Lodi. During this public hearing, staff recommends that the Council
considerthe following:
Area of Greatest Need
As noted in previous staff reports, over 70% of the foreclosed properties in Lodi are within the 95240 zip
code area, predominantly in Lodi's east -side neighborhoods. Accordingly, our first allocation of NSP
funding through the Urban County has been targeted to that area specifically. If the allocation of NSP
funding from HCD were to be designated for use citywide, we would be supplementing the initial funding
designated for Lodi's eastside through the Urban County allocation and also be making NSP funding
available for any opportunities that may present themselves in the 95242 zip code area, west of Ham
Lane.
Selected Uses for NSP Funds
When application for the NSP funds is made to HCD, each jurisdiction will need to designate a certain
amount of their funding to an eligible use. In our first allocation through the Urban County, all funds were
allocated to the acquisition, rehabilitation, and the resale or rental of abandoned and foreclosed homes.
That specific eligible use was identified as the most immediate need that could allow for the expeditious
Conduct Public Hearing for NSP Funding from HCD
January 7,2009
Page 3 of 3
use of the initial funding allocation, with the understanding that if an opportunity for one of the other uses
came about, action could be taken then to reallocate funding accordingly.
While the acquisition, rehabilitation, and the resale or rental of abandoned and foreclosed homes still
remains the greatest need, we may also consider designating a portion of our funding allocation from
HCD to address at least one of the other eligible uses. Keeping in mind the 18 -month timeframe in which
to use these initial allocations of NSP funding, our funding allocations will be monitored very closely and if
we get further into the program and find that those opportunities for alternative uses are not coming to
fruition, the funding would be moved back into the primary use to allow the funds to be used.
FISCAL IMPACT: Any future allocations of NSP funds will have no impact on the City General
Fund.
FUNDING AVAILABLE: N/A
Konradt Bartlam
Interim Community Development Director
Neighborhood
Stabilization Program
Public Hearing
Community Development Dept.
January 7, 2009
Summary
■ Housing & Economic Recovery Act of 2008
Adverse impact the foreclosures have had on
communities.
$3.92 Billion —Neighborhood Stabilization Program
. Intended for the redevelopment of abandoned,
foreclosed homes and residential properties.
• Provide affordable housing to very low- to moderate
income residents.
• Provide opportunity to preserve affordability over a
long term.
Neighborhood Stabilization Program
■ Funding to State and local jurisdictions.
Buy, rehabilitate and resell abandoned and foreclosed
homes;
Demolish existing abandoned, foreclosed homes;
Rebuild residential homes/units on those demolished
and/or vacant properties that foreclosed upon;
Provide down -payment and closing cost assistance to
homebuyers;
Provide for the reuse of foreclosed properties for
affordable rental housing;
"Land banking" to assemble, temporarily manage and
dispose of vacant land.
Neighborhood Stabilization Program
■ Funding to States from HUD
$19.6 million minimum.
. California's allocation: $145 million received.
State must distribute funds to areas of greatest need,
including jurisdictions receiving NSP funds from HUD
■ Funding to Local Jurisdictions from HUD
$2 million threshold for cities and counties.
. Those jurisdictions under that threshold would be served
through the State allocation.
NSP — San Joaquin County
■ $9 million Allocation to SJ Urban County
25% Set-aside to serve 50% AMI (Very low-income)
. $2.257 million
Distribution to Cities/County
Escalon
Lathrop
Lodi
Manteca
Ripon
Tracy
SJ County
$657762
$6457663
$577,908
$171167956
$1197567
$17888;164
$17455;730
NSP - California HCD
■ $145 Million Allocation From HUD
25% Set-aside to serve 50% AMI (Very low-income)
. $3632673876.50
Distribution to Cities in San Joaquin County
• Tier 1 —Direct Allocation
Tracy $1,882,000
Manteca $1,5101449
• Tier 2 — Joint Allocation
Escalon $146,043
Lathrop $696,139
Lodi $871,252
Ripon $221,478
NSP - California HCD
■ Tier 2 — Joint Allocation Requires:
Cities to partner together to apply for funds.
$1 M minimum.
Lathrop, Ripon and Escalon all willing.
Cities must be "contiguous".
Originally... Non-contiguous cities must have County join
partnership to make the contiguous connection.
SJC is willing to join to facilitate the allocation of
funding to the four Tier 2 cities.
HCD has revised their definition of "contiguous" to include
cities within the same county.
One agency must be designated and serve as the
"lead agency" for interaction with HCD.
Lodi taking lead role.
NSP — Eligible Uses - Activities
■ Establish financing mechanisms for purchase and rehabilitation
of foreclosed upon homes and residential properties.
Activity delivery costs for an eligible activity;
• Designing and setting up the program/project.
Financing of an NSP eligible activity;
■ Purchase and rehabilitate abandoned and foreclosed homes, in
order to sell, rent or redevelop the properties.
Acquisition, Disposition, Rehabilitation;
Includes Homeownership Assistance & Housing Counseling
Services.
NSP — Eligible Uses - Activities
■ Demolish existing abandoned, foreclosed homes.
Clearance for blighted structures only.
■ Rebuild residential homes/units on those demolished
and/or vacant properties that foreclosed upon.
Acquisition & disposition;
New housing construction;
Public facilities and improvements;
Homeownership Assistance & Housing Counseling
Services.
NSP — Eligible Uses - Activities
■ Establish land banks
to
assemble,
temporarily
manage and
dispose
of
properties
that
have
been
foreclosed upon.
Acquisition and disposition.
• Includes maintenance costs.
NSP — Eligible Uses - General
■ All activities must directly benefit low- to moderate -
income households.
Those earning at or below 120% of the area median income.
■ Each activity must also CDBG eligible and meet a LM
national objective.
■ HUD/HCD must grant written approval for any CDBG
activities not listed for that eligible use.
■ Preserving affordability is a key element.
Shared Equity Homeownership
• Resale price restrictions, Deed restrictions.
NSP — Ineligible Uses
■ Generally, if activity is ineligible under CDBG, it is
ineligible under NSP.
■ Specifically...
Foreclosure prevention;
Demolition of non -blighted structures;
Purchase of properties not abandoned or foreclosed
upon.
HCD Funding Process
■ 2 Public Hearings
1St - Solicit public comment.
• Feedback received at this meeting will assist in
identifying activities to be included in application.
2nd - Approve the application.
■ NOFA in January.
Applications due in February.
■ Memorandum of Understanding
Agreement amongst all participating jurisdictions.
Will be brought back to Council for authorization.
NSP Challenges
■ Initial allocations of funding must be obligated to a
specific project within 18 months from execution of
the grant agreement.
Any unobligated funding at that date is recaptured and
reallocated.
Once obligated, funding remains available for 5 years.
• After June 30, 2013, all funding reverts back to HUD.
NSP Challenges
■ Homes/Properties must be acquired at least 15%
below their appraised value for an individual
purchase.
More restrictive than Urban County allocation.
■ Beginning to see movement in resale market for
foreclosed properties.
• More competition.
■ Will banks be willing to take additional losses?
Program Implementation
■ Seeking input.
Preferences for...
• What you want the HCD funds used for.
• Where in Lodi you want the HCD funds used.
Keeping in mind the need to expedite the expenditure of
funds.
As with Urban County, the Plan can be amended to include
additional eligible uses;
Once the initial allocation has been spent,
On a case-by-case basis if an opportunity presents
itself.
■ Those preferences will be included in the joint
application.
Program Implementation
■ We can use the proposals from area non-profit developers
that were solicited through Urban County.
■ City Staff is
in contact
with other
affordable housing
developers
who have
an interest
in participating in the
program.
Approved non-profit developers will have access to the
funding to carry out the program.
■ For-profit developers can be partnered with non -profits.
Expand our capacity to engage in these activities and
expend the NSP funding.
Options for Consideration
■ How and Where Funds Used
Eligible Uses
• Acquisition, rehab and resale or rental of abandoned,
foreclosed homes.
Quickest way of obligating the funds.
• Other uses can be considered.
Where Funds Used
. City-wide
Urban County funding focused on 95240 (Eastside)
HCD funding would supplement that and also allow for
opportunities elsewhere in Lodi.
Questions — Public Comments
Please immediately confirm receipt
d this fax by calling 333-6702
CITY OF LODI
P. O. BOX 3006
LODI, CALIFORNIA 95241-1910
ADVERTISING INSTRUCTIONS
SUBJECT PUBLIC HEARING TO SOLICIT FEEDBACK ON POTENTIAL USES OF
NEIGHBORHOOD STABILIZATION PROGRAM FUNDS BEING MADE
AVAILABLE BY THE CALIFORNIA DEPARTMENT OF HOUSING AND
COMMUNITY DEVELOPMENT
PUBLISH DATE: SATURDAY, DECEMBER 20, 2008
TEAR SHEETS WANTED: One (11 please
SEND AFFIDAVIT AND BILL TO: RANDI JOHL, CITY CLERK
City of Lodi
P.O. Box 3006
Lodi, CA 95241-1910
DATED: THURSDAY, DECEMBER 18,2008
ORDERED BY: RANDI JOHL
CITY CLERK
1
MFER ' . PERRIN, CMC
SSISTANT CITY CLERK
MARIA BECERRA
ADMINISTRATIVE CLERK
Faxed to the Sentinel at 369-1084 at : "" is) on �> .` (date) .,, a'L: (pages)
LNS Phoned to Confirm receipt of all pages at (time} CM JMP (initials)
formsladvins doc
N04
DECLARATION OF POSTING
PUBLIC HEARING TO SOLICIT FEEDBACK ON POTENTIAL USES OF
NEIGHBORHOOD STABILIZATION PROGRAM FUNDS BEING MADE AVAILABLE
BY THE CALIFORNIA DEPARTMENT OF HOUSING AND COMMUNITY
DEVELOPMENT
On Friday, December 19, 2008, in the City of Lodi,
Notice of Public Hearing to solicit feedback on
Stabilization Program funds being made available
Housing and Community Development (attached and
at the following locations:
Lodi Public Library
Lodi City Clerk's Office
Lodi City Hall Lobby
Lodi Carnegie Forum
San Joaquin County, California, a
potential uses of Neighborhood
by the California Department of
marked as Exhibit A) was posted
I declare under penalty of perjurythat the foregoing is true and correct.
Executed on December 19, 2008, at Lodi, California.
NIFER f# PERRIN, CMC
ASSISTANT CITY CLERK
N:1Administration\CLERK1FormsIDECPOSTCD.DOC
ORDERED BY:
RANDIJOHL
CITY CLERK
MARIA BECERRA
ADMINISTRATIVE CLERK
DECLARATION OF MAILING
PUBLIC HEARING TO SOLICIT FEEDBACK ON POTENTIAL USES OF NEIGHBORHOOD
STABILIZATION PROGRAM FUNDS BEING MADE AVAILABLE BY THE CALIFORNIA
DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT
On Friday, December 19, 2008, in the City of Lodi, San Joaquin County, California, I deposited
in the United States mail, envelopes with first-class postage prepaid thereon, containing a
Notice of Public Hearing to solicit feedback on potential uses of Neighborhood Stabilization
Program funds being made available by the California Departmentof Housing and Community
Development, attached hereto marked Exhibit A. The mailing list for said matter is attached
hereto marked Exhibit B.
There is a regular daily communication by mail between the City of Lodi, California, and the
places to which said envelopes were addressed.
declare under penalty of perjury that the foregoing is true and correct.
Executed on December 19, 2008, at Lodi, California.
4NIFER PERRIN, CMC
ASSISTAN ITY CLERK
Forms/decrnai l.doc
ORDERED BY:
RANDI JOHL
CITY CLERK, CITY OF LODI
MARIA BECERRA
ADMINISTRATIVE CLERK
CITY OF LODI
Carnegie Forum
305 West Pine Street, Lodi
NOTICE OF PUBLIC HEARING
Date: January 7,2009
Time: 7:00 p.m.
For information regarding this notice please contact:
Randi Johl
City Clerk
Telephone: (209) 333-6702
NOTICE OF PUBLIC HEARING
EX H if br-. i T A
NOTICE IS HEREBY GIVEN that on Wednesday, January 7, 2009, at the hour of
7:00 p.m., or as soon thereafter as the matter may be heard, the City Council will
conduct a public hearing at the Carnegie Forum, 305 West Pine Street, Lodi, to consider
the following item:
a) Solicit feedback on potential uses of Neighborhood Stabilization
Program funds being made available by the California Department
of Housing and Community Development.
Information regarding this item may be obtained in the Community Development
Department, 221 West Pine Street, Lodi, (209) 333-6711. All interested persons are
invited to present their views and comments on this matter. Written statements may be
filed with the City Clerk, City Hall, 221 West Pine Street, 2id Floor, Lodi, 95240, at any
time prior to the hearing scheduled herein, and oral statements may be made at said
hearing.
If you challenge the subject matter in court, you may be limited to raising only those
issues you or someone else raised at the public hearing described in this notice or in
written correspondence delivered to the City Clerk, 221 West Pine Street, at or prior to
the close of the public hearing.
By Order of the Lodi City Council:
Dated: December 17,2008
FAT# • -• . 02 fell
LQ�KW�fr,'-M
M&
D. Stephen Schwabauer
City Attorney
CiERK1PUBHEARINOTICES\NOTCDD,DOC M17=
Mailing List for NSP Public Hearing — January 7
Pete Gibson
FCB Homes
10100 Trinity Parkway, Suite 420
Stockton, CA 95219
Suzanne Mangum
Lodi House
801 S. Washington St
Lodi, CA 95240
Kathy Hari n g
552 Kirst Dr.
Woodbridge, CA 95258
Habitat for Humanity - Lodi
c/o Pete Chadwick
15000 Juniper Avenue
Lockeford. CA 95237
Habitat for Humanity — San Joaquin
2050 E. Fremont Street
Stockton, CA 95205
Tracy Williams
LOEL Center & Gardens
105 S Washington Street
Lodi, CA 95'240
EXHIBIT B