CDBG Funds - HUD letterU.S. Department of Housing and Urban Development
Nebraska State Office
Executive Tower Centre
10909 Mill Valley Road
Omaha, Nebraska 68154-3955
May 2, 2001
Honorable Terrence M. DUggan
Mayor
City Hal
50 West 13m Street
Dubuque, IA 52201-4864
Dear Mayor Duggan:
On May 2, 2001, we verified the balance of Community Development Block Grant
(CDBG) funds remaining in the Line-of-Credit for the City of Dubuque. The funds available for
all grant years totaled $2,540,554.11.
The Code of Federal Regulations, Title 24, Part 570.902 states "Before the funding of the
next annual grant and absent contrary evidence satisfactory to HUD, HUD will consider an
entitlement recipient to be failing to carry out its CDBG activities in a timely manner if: sixty days
prior to the end of the grantee's current program year, the amount of entitlement grant funds
available to the recipient under grant agreements but undisbursed by the U.S. Treasury is more
than 1.5 times the entitlement grant amount for its current program year; and the grantee fails to
demonstrate to HUD's satisfaction that the lack of timeliness has resulted from factors beyond the
grantee's reasonable control."
Since 1.5 times Dubuque's current program year is $2,161,500 and the balance of
$2,540,554.11 falls outside the threshold, we are asking that the city provide at this tune the
reasons for its failure to carry out activities in a timely manner. Upon receipt of the city's
response, we will determine if the lack of timeliness resuked from factors beyond the city's
control, and if not, what corrective action should be taken.
Please provide the city's response within 15 days from the date of this letter. Include in
your response any actions that the city will take which would reduce the amount of unexpended
funds such that it will be at or below the 1.5 threshold by May 1, 2002, the amount of funds on
hand that is currently obligated by the city or any of its subreciPients for specific activities; and
any other relevant information.
2
If you have any questions in this regard, please contact Mr. Barry Linstrom, Public Trust
Specialist, at 402/492-3161.
Sincerely,
Gregory A. Bevirt
Community Planning and
Development Division
cc: David Harris
15 May 01
Greg Bevirt, Director
Community Planning & Development Division
Nebraska State Office
Dept of Housing & Urban Development
10909 Old Mill Valley Road
Omaha NE 68154
Re: Status of CDBG funds balance - City of Dubuque
Greg:
Thanks for your letter dated 2 May regarding our CDBG funds timely expenditure issue. This
letter responds to your requests for additional information.
1. Planned actions to reduce unexpended funds
The first action planned is to purchase the former Star Brewery, as part of the Citys efforts
toward $180 million in riverfront improvements now underway. The City Council has authorized
expenditure of $245 000 for this purchase, using Community Development Block Grant funds.
The City has initiated condemnation proceedings, in order to take ownership of this property and
direct its future use. The condemnation action is expected to be concluded by the end of June.
We expect to disburse the $245 000 by that date.
The second expenditure concerns the renovation of the Iowa Inn, the former YMCA planned for
conversion to affordable senior apartments. This project received a $2.3 million award of housing
tax credits, from IFA, and is ready to commence construction. We expect to close a $165 000
CDBG loan to MetroPlains Development, of St Paul, by the end of May, with expenditure of the
full amount no later than the end of June.
These two expenditures, totaling $410 000, should reduce our available balance to within
compliance with requirements at 24 CFR Part 570.
Additional planned expenditures include major renovations at two neighborhood parks, with
CDBG funds to be expended in the amount of $147 000. These parks are planned for completion
by 15 July.
2. Amount of funds on hand obligated for specific activities
A total of $123 898 is currently obligated, as follows:
Community Partnership Program $ 44 074
Senior Center 4 166
Neighborhood recreation program 62 548
Family Self-Sufficiency program 8 535
Project Concern 3 700
Washington Tool Library 875
Total $123 898 .
3. Reasons for failure to attain spend-down requirements
The primary reason for the timely expenditures failure concerns unanticipated revenues. Three
major loans were repaid during the past twelve months; none of these was anticipated. These
included:
Farmland Foods $ 968 010
Cooper Wagon Works 263 239
Iowa Inn 245 000
Total $1 476 249
Additionally, a primary reason for this situation was problems experienced with the Eagle
Window Company. The City made a $500 000 loan to this company in July 2000, to assist with
costs of construction of its new building in Dubuque. The new production facility opened in April
and Eagle continues to function profitably. However, Eagles parent company - American
Architectural - declared bankruptcy subsequent to the City Councils approval of the loan and put
Eagle up for sale. Until a sale is finalized, we are waiting to disburse the $500 000 loan. No
timetable has been established for that date.
We expect to conduct a thorough review of our program in the coming months, particularly in
regard to progress on spend-down of obligated funds and projections of unscheduled repayments.
I will keep your office informed of any irregularities. It is my expectation that we will quickly be
performing within compliance requirements and that this issue will not need to be addressed again
in the coming fiscal year.
Please contact me if I may provide you any additional information.
Sincerely
David Harris
Department Director
cc: Mike Van Milligen, City Manager
Housing Services Department
1805 Central Avenue
Dubuque, Iowa 52001-3656
(319) 589-4244 FAX
(319) 5894239
15MayO1
Greg Bevirt, Director
Community Planning & Development Division
Nebraska State Office
Dept of Housing & Urban Development
10909 Old Mill Valley Road
Omaha NE 68154
Re: Status of CDBG funds b~lance - City of Dubuque
Greg:
Thanks for your letter dated 2 May regarding our CDBG funds timely expenditure issue. This
letter responds to your requests for additional information.
1. Planned actions to reduce unexpended funds
The first action planned is to purchase the former Star Brewery, as part of the City's efforts
toward $180 million in riverfront improvements now underway. The City Council has authorized
expenditure of $245 000 for this purchase, using Community Development Block Grant funds.
The City has initiated condemnation proceedings, in order to take ownership of this property and
direct its future use. The condemnation action is expected to be concluded by the end of June.
We expect to disburse the $245 000 by that date.
The second expenditure co_ncems the renovation of the Iowa Inn, the former YMCA planned for
conversion to affordable senior apartments. This project received a $2.3 million award of housing
tax credits, from IFA, and is ready to commence construction. We expect to close a $165 000
CDBG.loan to MetroPlains Development, of St Paul, by the end of May. with expenditure of the
full mount no later than the end of Jane.
These two expenditures, totaling $4 I0 000, should reduce our available balance to within
compliance with requirements at 24 CFR Part 570.
Additional planned expenditures include major renovations m two neighborhood parks, with
CDBG funds to be expended in the amount of $147 000. These parks are planned for completion
by 15 July.
Service People Integrity Responsibility Innovation Teamwork
2. Amount of funds on hand obligated for specie activities
A total of $123 898 is currently obligated, as follows:
Community Partnership Program $ 44 074
Senior Center 4 166
Neighborhood recreation program 62 548
Family Self-Sufficiency program 8 535
Project Concern 3 700
Washington Tool Library 875
Total $123 898
3. Reasons for failure to attain spend-down requirements
The primary reason for the timely expenditures failure concerns unamicipated revenues. Three
major loans were repaid during the past twelve months; none of these was anticipated; These
included:
Farmland Foods $ 968010
Cooper Wagon Works 263 239
Iowa Inn 245 000
Total $1 476 249
Additionally, a primary reason for this situation was problems experienced with the Eagle
Window Company. The City made a $500 000 loan to th~ company in Jllly 2000, to assist with
costs of construction of its new building in Dubuque. The new production fac~flity opened in Apr~
and Eagle continues to function profitably. However, Eagle's parent company - American
Architectural - declared bankruptcy subsequent to the City Council's approval of the loan and put
Eagle up for sale. Until a sale is fl~ali?ed, we are waiting to disburse the $500 000 loar~ !'4o
timetable has been established for that date.
We expect to conduct a thorough review of our program in the com~g months, particularly in
regard to progress on spend-down of obligated funds and projections ofunscbeduled repayments.
I will keep your office informed of any irregularities. It is my expectation that we will quickly be
performing within compliance requirements and that this issue vo]l not need to be addressed again
in the com~g fiscal year.
Please contact me ifI may provide you any additioaal information~
~x~mcerely
David HanSs
Department Director
cc: Mike Van Mitligen, City Manager