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Annual Action Pl Amend 2, FY03MEMORANDUM November 22, 2002 TO:The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: FY 2003 Annual Action Plan - Amendment 2 Housing and Community Development Department Director David Harris recommends approval of Amendment 2 to the Fiscal Year 2003 Annual Action Plan for the City's Community Development Block Grant (CDBG) program. These changes will allow CDBG funds to be used to meet citizens' needs and facilitate the timely expenditure of funds as required by HUD. The Community Development Advisory Commission held a public hearing on October 9 and November 13 and took action to recommend the reallocation of CDBG fund. One of the amendments that was supported by City staff is not recommended by the Commission. The City had previously submitted a grant application to the State of Iowa to acquire six properties on Old Mill Road that have been damaged by recent flooding. The application for $563,171 in Federal Hazard Mitigation Grant Program funds required a $99,383 match. The application, as approved by the City Council, included using Community Development Block Grant funds to provide this match. The City has since identified another funding source, a $183,912 balance in the Storm Sewer Construction Fund, and does not need these CDBG funds. The most significant changes are an additional $16,000 for the Lead Paint Hazard Abatement Program to assist in 8 lead hazard reduction projects and $13,995 to fund the PERMITS tracking software for Housing Code Enforcement. I concur with the recommendation and respectfully request Mayor and City Council approval. Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager David Harris, Housing and Community Development Department Director CITY OF DUBUQUE, IOWA MEMORANDUM November 15, 2002 To:Michael C. Van Milligen, City Manager From:David Harris, Housing and Community Development Department Subject: FY 2003 Annual Action Plan - Amendment 2 INTRODUCTION The purpose of this memorandum is to request the City Council's approval of the attached resolution approving an amended and restated Fiscal Year 2003 Annual Plan for the City's Community Development Block Grant (CDBG) program. BACKGROUND Housing and Urban Development (HUD) regulations require that each year a city must prepare and file an Annual Plan prior to receipt of its CDBG entitlement. The Annual Plan is adopted following a public participation process that includes a published notice, a public comment pedod, and a public hearing. A city must follow its adopted plan as it expends entitlement funds. If its revenues or activities change, the city must amend. This requirement applies to plans for previous years as well as the current year. The City of Dubuque has been allocated CDBG funds that have been programmed for specific uses as per the adopted Annual Plan for Fiscal Year 2003. Since the funds from FY 2002 have not been completely expended, the previously adopted plan remains in effect unless amended to reflect the change in projects, activities or funding need. DISCUSSION The proposed amendment to the FY 2003 plan combines the allocations from the previous year with the current program year and redistributes the funds into programs which can be expended this fiscal year. These changes will allow us to respond to the needs of the community, improve community understanding of the programs and facilitate the timely use of funds as required by HUD. The Community Development Advisory Commission held a public hearing on October 9th and November 13th and took action to recommend the reallocation of CDBG funds. A public notice regarding the proposed changes was published prior to the public hearing in the Telegraph Herald and Dubuque Advertiser. These notices advised the public of the intent of the amendment, invited comment and noticed the public hearing. This initiated a 30-day public comment pedod as required in the Citizen Participation Plan. The Commission heard requests for funding the acquisition and demolition of four properties located on Old Mill Road that have been damaged by the recent flooding. The properties include 1620, 1650, 1695 and 1699 Old Mill Road. The City Public Works department has applied for $563,171 in Federal Hazard Mitigation Grant Program (HMGP) funds to assist in their acquisition. The Commission reviewed funding the required match of $55,563 with CDBG funds but denied the request due to concern with establishing a precedent if future acquisition of homes is necessary in the areas affected by the Bee Branch flooding. The Commission also reviewed and approved a request for an additional $16,000 for the Lead Paint Hazard Abatement program to assist in 8 lead hazard reduction projects and $13,995 to fund the PERMITS tracking software for Housing Code Enforcement. In addition to recommendations for reallocations of CDBG funds as described, the Commission took action to approve a consolidated amendment to the Fiscal Year 2003 Annual Plan. This amendment includes programs previously adopted in the FY 2002 and FY 2003 Plans. Carryover balances and encumbrances from FY 02 have been incorporated. Some programs have been increased to show prior year encumbrances and carryovers. Some have been decreased based on prior year expenditures and anticipated funding needs. All projects have been assessed by staff to meet the timely expenditure of funds as required by HUD. RECOMMENDATION It is recommended that the City Council approve the above-described amendment to the FY 2003 Annual Plan for the use of Community Development Block Grant funds. These changes will allow CDBG funds to be used to meet citizens' needs and facilitate the timely expenditure of funds as required by HUD. ACTION STEP The action requested of the City Council is to approve the Mayor's execution of the attached resolution, approving an amended and restated Fiscal Year 2003 Annual Plan for Community Development Block Grant activities. Prepared by Aggie Kramer, Community Development Specialist F:\U sers~AKRAM ER~CDB G',An n uaiPlan',Arnendrnents~Amend 2\03Amd2MVM.mem.doc RESOLUTION NO. -2002 RESOLUTION APPROVING AN AMENDED AND RESTATED FISCAL YEAR 2003 (PROGRAM YEAR 2002) ANNUAL PLAN FOR COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) FUNDS. Whereas, the City of Dubuque prepared and filed Annual Action Plans for Fiscal Years 2002 and 2003; and Whereas, the City of Dubuque now desires to amend said Annual Plans by incorporating them into one amended and restated plan as per the attached Exhibit A; and Whereas, said amendment is a substantial amendment as provided in the City's Citizen Participation Plan and must therefore be approved by resolution of the City Council after a public hearing by the Community Development Advisory Commission; and Whereas, the City advertised a public comment period beginning September 5 2002; and Whereas, the Community Development Advisory Commission reviewed the proposed amendment at a public hearing on October 9 2002, and has voted on November 13 2002 to approve said amendment and to recommend approval by the City Council. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the Annual Action Plans for Fiscal Years 2002 and 2003 are hereby rescinded and the balance of funds from these plans is incorporated into an Amended and Restated Fiscal Year 2003 (Program Year 2002) Annual Plan - Amendment 2, attached hereto as Exhibit A. Section 2. That said Amended and Restated Fiscal Year 2003 (Program Year 2002) Annual Plan - Amendment 2 attached hereto as Exhibit A is hereby approved. Section 3. That the City Manager is hereby authorized and directed to submit a copy of this resolution to the U. S. Department of Housing and Urban Development. Passed, approved and adopted this day of December, 2002. Attest: Terrance M. Duggan, Mayor Jeanne F. Schneider, City Clerk F:\Users~AKRAMER\CDBG~nnuatPlan\Amendments~Amend 2\03amend2.res,doc Exhibit A City of Dubuque, Iowa- Community Development Block Grant RESOLUTION NO. 630 -2002 RESOLUTION APPROVING AN AMENDED AND RESTATED FISCAL YEAR 2003 (PROGRAM YEAR 2002) ANNUAL PLAN FOR COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) FUNDS. Whereas, the City of Dubuque prepared and filed Annual Action Plans for Fiscal Years 2002 and 2003; and Whereas, the City of Dubuque now desires to amend said Annual Plans by incorporating them into one amended and restated plan as per the attached Exhibit A; and Whereas, said amendment is a substantial amendment as provided in the City's Citizen Participation Plan and must therefore be approved by resolution of the City Council al[er a public hearing by the Community Development Advisory Commission; and Whereas, the City advertised a public comment period beginning September 5 2002; and Whereas, the Community Development Advisory Commission reviewed the proposed amendment at a public hearing on October 9 2002, and has voted on November 13 2002 to approve said amendment and to recommend approval by the City Council. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That the Annual Action Plans for Fiscal Years 2002 and 2003 are hereby rescinded and the balance of funds from these plans is incorporated into an Amended and Restated Fiscal Year 2003 (Program Year 2002) Annual Plan - Amendment 2, attached hereto as Exhibit A. Section 2. That said Amended and Restated Fiscal Year 2003 (Program Year 2002) Annual Plan - Amendment 2 attached hereto as Exhibit A is hereby approved. Section 3. That the City Manager is hereby authorized and directed to submit a copy of this resolution to the U. S. Department of Housing and Urban Development. Passed, approved and adopted this 2nd day of December, 2002. Terrance M. Duggan, Mayor Attest: Jeanne F. Schneider, City Clerk MEMORANDUM November 6,2002 TO:Community Development Advisory Commission FROM:Deron Muehring, Civil Engineer SUBJECT: Request for CDBG Funds to Help Purchase Four (4) Substantially Flood Damaged Properties on Old Mill Road. INTRODUCTION The purpose of this memorandum is to request that the Community Development Advisory Commission allocate $55,563.30 of Community Development Block Grant budget to help the City purchase four (4) properties located on Old Mill Road. Three homes and one business have been declared substantially damaged by the following the rainstorm on June 5, 2002. BACKGROUND The Federal Emergency Management Agency (FEMA) administers the Hazard Mitigation Grant Program that provides funding to States and local governments to implement long- term hazard mitigation measures after a Presidential declared disaster. One of the common uses of this program is the voluntary purchase and demolition or relocation of buildings subjected to repeated flood damage and converting the property to open space. Located in the lO0-year floodplain at the confluence of the Caffish Creek and the Middle Fork of Catfish Creek, floodwaters repeatedly damage the three homes and one business. The properties: 1620, 1650, 1695, and 1699 Old Mill Road, experienced some flood damage in 1993, significant flood damage in 1999, and to the greatest extent to date in June of 2002, having been declared substantially damaged by the floodplain manager. Substantially damaged indicates that the damage to the structure exceeds fifty percent (50%) of the structures value. The owners of the four properties have requested that the City pursue funds to purchase their properties. The proposed buyout will remove the structures and create open space. DISCUSSION The Dubuque City Council has authorized City staff to pursue funding to purchase the four substantially damaged homes under the Federal Hazard Mitigation Grant Program (HMGP). The City Manager directed me to explore the possibility of using CDBG funds as the required fifteen percent (15%) local matching funds. The Iowa Emergency Management Division has deemed CDBG funds an acceptable matching funding source. Previously, I submitted a request of $99,383.00 to the Community Development Advisory Commission. With the help of Mark Schneider of East Central Intergovernmental Agency, the City has submitted an application to the Iowa Emergency Management Division to acquire funding for six (6) properties under the grant program, requesting $563,171.00. If allocated, the City must produce $99,383.00 in matching local funds. The current request is due to the immediate need of the substantially damaged properties. The Iowa Emergency Management Division reviews applications for substantially damaged properties first. The current request for $55,563.30 reflects the fifteen percent (15%) local match to purchase the three substantially damaged homes and one substantially damaged business. The breakdown of the costs is: Property 1620 Old Mill Rd. 1650 Old Mill Rd. 1695 Old Mill Rd. 1699 Old Mill Rd. Photo # 1 2 3 4 Owner Timmons Pancratz McDermott Laufenberg Fair Market Value $113,399 $57,838 $48,521 $61,875 Demolition Est, $10,000 $10,000 $10,000 $10,000 Relocation (Homesowners) $10,000 $10,000 $10,000 Moving Expenses $1,000 $1,000 $1,000 $1,000 Legal/Closing Costs $1,000 $1,000 $1,000 $1,000 Sub-Total $135,399 $69,838 $70,521 $83,875 Administration (3%) $4,062 $2,095 $2,116 $2,516 Total $139,46t $71,933 I $72,637 I $86,391 Grand Total $370,422 Required 15% Match $55,563 The City of Dubuque is not obligated to purchase a property even if the Iowa Emergency Management Division approves an application. A property owner is not obligated to sell his/her property even if the Iowa Emergency Management Division approves the application. Either party can end the process at any time. The purchase of any home under the Federal Hazard Mitigation Grant Program must be voluntary. As reflected in the table above, the City has included monies in the request for funds to help homeowners with the cost of relocation. However, a displaced homeowner need not be, and likely will not be, "made whole" as part of the program. However, if CDBG monies are used as the local match the Uniform Relocation Assistance Act would be required. Outlined above is the extent of the City's commitment to the pumhasing of the four substantially damaged properties. If there are other requirements of the Uniform Relocation Assistance Act beyond what the City is committed to do, that a property owner is unwilling to waive, the City will terminate the process of purchasing a property. ACTION REQUESTED I respectfully ask that the Community Development Advisory Commission amend the fiscal year 2003 Community Development Block Grant budget to include an appropriation for $55,563 to help the City of Dubuque purchase 1620 Old Mill Road, 1650 Old Mill Road, 1695 Old Mill Road, and t699 Old Mill Road. CC:Michael Koch, Public Works Director Gus Psihoyos, Assistant City Engineer David Hards, Director of Housing & Community Development Aggie Kramer, Neighborhood Development Specialist Laura Carstens, Planning Services Manager (City of Dubuque Floodplain Mgr.) Kyle Kritz, Associate Planner Photo #3. 1595 Old Mill Road taken May 17, 1999 Photo #4. 1599 Old Mill Road taken June 5, 2002 Photo #1. 1620 Old Mill Road taken June 4, 2002 Photo #2. 1650 Old Mill Road taken June 4, 2002 CITY OF DUBUQUE, OWA MEMORANDUM 13 November 02 To: Members Community Development Commission From: David Harris, Housing and Community Development Department Re: Request for CDBG funds for pumhase of flood-damaged properties on Old Mill Road The purpose of this memorandum is to provide the Commission additional information regarding the October meeting request from the Engineering Division for use of Block Grant funds to assist in Old Mill Road property acquisition. We have reseamhed this proposal and have several issues to bring to the Commission's attention. First, the Engineering Division has reduced the request for CDBG assistance, from $$99 383 to $55 563. Second, as the memorandum in the mailing packet explains, the contingency balance is currently $29 955, considerably less than the total of pending requests for amendment of the FY03 budget. If the Commission wishes to respond to the total of these requests, additional amendments will be necessary. Regarding questions and concerns mentioned by Commissioners at the October meeting, the following information is provided: We can fund this project under the designation of "urgent need." However, in order to satisfy the criteria for this designation, we must establish the following: 1. Existing conditions must pose a serious and immediate threat to the health or welfare of the community. 2. These conditions are of recent origin or recently became urgent. 3. We are otherwise unable to finance this activity. 4. Other sources of funding are not available. It is not clear if we can satisfy all these conditions, particularly those which pose questions regarding availability of other funds. It is possible, however, that we could qualify under Iow-moderate income activity, if we can establish the incomes of these homeowner households. As of this writing, that information has not been obtained or verified. As you all know, we have been "up against the cap" regarding the Block Grant requirement for minimum 70% Iow-moderate income benefit. This is because, for the past three years, we have allocated significant CDBG funds for "slum and blight" activities (which do not qualify as Iow-moderate income benefit). We have been advised by the HUD-Omaha office that the urgent need activity cannot count under the 70% LMI cap, meaning that we are further risking our ability to meet that requirement, if we fund the proposed Old Mill Road activity. Not meeting the 70% requirement is not negotiable. A significant issue raised at the October Commission meeting had to do with requirements for providing relocation benefits to these homeowners and whether the proposal had been budgeted to meet those costs. All acquisition activities resulting in displacement of owners or tenants, when using CDBG funds, must comply with Uniform Relocation Act (UP, A) requirements. Thus, the key criteria for determining whether UPA requirements apply in this case is whether the Old Mill Road homeowners are in fact "displaced." It was the position of the Engineering Division, quoting the FEMA representative, that these homeowners were not displaced by virtue of their voluntary agreement to sell. Further, it was represented that these owners had also agreed to waive their rights to additional relocation benefits, including any differential payment (between the value of the property being acquired by the City and the cost of the replacement dwelling). This may be the case. A concern the HUD-Omaha office expressed, however, is that no such agreements currently exist. No written document has been prepared or signed. At this point, then, these owners have not entered into any agreement with the City regarding their willingness to sell or to waive their rights to relocation benefits. The Engineering Division has refrained from negotiating with the homeowners, pending notification of the FEMA grant. A second issue the Omaha office raised with us related to the establishing of fair market value of the homeowner properties. No appraisals have been commissioned or conducted. The EClA staffworking with the Engineering Division has informed us that the acquisition prices were established by using the assessed values, plus 10%. It was represented to us that this is an acceptable method of determination of value, according to FEMA. It is likely not an acceptable method to HUD. It is our experience that this method would typically under-value a property in Dubuque. The ECIA representative also explained to us that a lump-sum $10 000 payment, for purchase and relocation expenses, was budgeted for each homeowner. We have no idea if this would be sufficient to cover the differential payment, toward the cost of the replacement dwelling. (Keep in mind, however, that this payment would not be required if it were determined that UPA provisions were not applicable). HUD also expressed a concern regarding the use of the CDBG funds as a match for the FEMA grant. The representative explained th, at, in some cases, federal funds may not be used by a grantee as a match for other federal funds. At this point, we have not been able to answer this concern. The last issue concerns the HUD-required environmental review process. Any recommendation by the Commission - and subsequent approval by the City Council - would be made contingent on this review, prior to release of funds. During that review process, the HUD office would review these issues for compliance with all relevant federal legislation. We have been assured by the HUD-Omaha office that this proposal will receive thorough scrutiny. If the Commission votes to fund this request, our recommendation would be to make reference to these unresolved issues, with direction to staff to continue to work with HUD, FEMA and ECIA staff to ensure their proper resolution. CITY OF DUBUQUE, IOWA MEMORANDUM October 11, 2002 To:Michael Van Milligen, City Manager From:David Harris, Housing and Community Development Department Subject: FY 03 Annual Action Plan - Amendment 2 This memo is to inform you of the action of the community Development Advisory Commission at their October 9 meeting. The Commission held a public hearing on an amendment to the FY 2003 Annual Plan for the use of CDBG funds. In addition to the reallocation of funds from the pdor year, they reviewed the following requests. The Commission heard requests for funding the acquisition and demolition of six properties located on Old Mill Road that have been damaged by the recent flooding. The properties include five homes at 1580, 1620, 1695, 1699 and 1711 Old Mill Road and one commercial business at 1650 Old Mill Road. The City Public Works department has applied for $563,171 in Federal Hazard Mitigation Grant Program (HMGP) funds to assist in their acquisition. The Commission reviewed funding the required match of $99,383 with CDBG funds but denied the request due to concern with establishing a precedent if future acquisition of homes is necessary in the areas affected by the Bee Branch flooding. Additional concerns were expressed regarding relocation of property owners and cost for grant management. The Commission requested additional information be presented to them at the November 13th meeting when notification of HMGP funding awards will have been received. The Commission also reviewed and approved a request for an additional $30,000 for the Lead Paint Hazard Abatement program to assist in 15 lead hazard reduction projects. A request for funding the Permits tracking software for the Housing and Community Development Department was deferred to the November meeting when specific funding costs would be available. In addition to recommendations for reallocaflons of CDBG funds as described, the Commission took action to approve a consolidated amendment to the Fiscal Year 2003 Annual Plan. This amendment includes programs previously adopted in the FY 2002 and FY 2003 Plans. Carryover balances and encumbrances from FY 02 have been incorporated. Some programs have been increased to show prior year encumbrances and carryovers. Some have been decreased based on prior year expenditures and anticipated funding needs. All projects have been assessed by staff to meet the timely expenditure of funds as required by HUD. These were approved as we discussed at a meeting in your office on 4 September. This amendment will be forwarded to the City Council for the October 21st meeting. A memo for that purpose will be forthcoming. F:\UsersV~KRAMER\CDBG~.nnualPlan~Amendments~Amend 2~MVM memo update.d~c