HUD Lead Hazard Reduction GrantTHE CITY OF
DuB E
Masterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Amendment to HUD Lead Hazard Reduction Program contract
DATE: July 1, 2009
Dubuque
All-AmericaC~y
.~ .~
2007
Housing & Community Development Director David Harris is requesting approval for an
amendment to the current HUD Lead Hazard Reduction Program contract, increasing
the per-unit forgivable loan from $6,0000 to $12,000.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Mi hael C. Van Milligen
MCVM:Iw
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David Harris, Housing & Community Development Director
THE CTTY OF Dubuque
DT T ~ ~ All-America Cdit
(~ i 1
Masterpiece on the Mississippi
2007
TO: Michaean Milligen, City Manager
FROM: David Har is, Housing and Community Development Department
SUBJECT: Amendment to HUD Lead Hazard Reduction Program contract
DATE: 30 June 09
Introduction
The purpose of this memorandum is to request the City Council's approval of an
amendment to our current contract for the Lead Hazard Reduction Program, in order to
increase productivity, complete more high-cost rehabilitation projects and position
Dubuque for a successful application for renewal funding in Fiscal Year 2011.
Discussion
Our current grant was awarded in January 08 in the amount of $2.9 million. This is the
third Lead Hazard grant received from HUD since 1997, in the total approximate amount
of $10 million. Our three-year program design calls for completion of 400 units. At the
half-way mark in the contract, we are beginning to experience a decline in applications
and a corresponding fall-off in meeting our performance production goals.
We attribute this to the following factors:
1. We have completed lead reduction in almost 900 units since 1997, using the
maximum grant of $6000/unit. These rehabilitations have been accomplished
due to their relatively low cost. Landlords typically have little interest in the
program when costs exceed the grant subsidy. In other words, when we can
remove the lead paint for no more than $6000, owners participate. When the
landlord must pay additional funds toward the total cost (exceeding $6000), the
application is withdrawn.
What we are experiencing in this grant cycle is higher-cost rehabilitations. We
currently have aback-log of 61 applications, averaging more than $13100/unit.
For this reason, these jobs are not getting done.
2. Reasons for these escalating costs include the increased cost of building
materials. Windows locally have increased by up to 15%; interior millwork by
12%. Drywall and paint costs have correspondingly increased. Transportation
and labor costs have increased. And we are still using the same per-unit subsidy
we had in place ten years ago.
More importantly, it is the higher costs of rehabilitation in historically significant
structures that limits our ability to market this program to building owners. The
program design targets properties in the older, downtown Census Tracts as
eligible for the federal assistance. This is due to the higher incidence of lead
paint in this housing stock. The Planning Department estimates that 70% of the
housing in these target neighborhoods has been identified as
architecturally/historically significant.
In these properties, preservation and restoration of the original wood components
is a HUD requirement. This necessitates higher-cost labor and added time. As
noted, estimated rehab costs for these units is more than double the grant
subsidy we can offer. It appears our program design is not realistic in this
market.
Recommendation
We have discussed these issues with HUD Regional staff, including our program
technical advisor. We have received assurance that a modification of our program
design - to double the per-unit subsidy - is appropriate, more in-line with other grantee
programs, and will be approved.
Accordingly, we propose to amend the contract and provide up to a $12 000 forgivable
loan per unit for high-cost properties. We will also include required post-rehab cleaning,
at up to $400/unit, as an additional reimbursable cost. This will result in reduced
production. But without a marketable program, market forces will otherwise reduce our
productivity.
Finally, it is imperative to meet our program performance goals. If we do not, for the
final two quarters of the current grant, we will be disqualified from application for a new
three-year grant in FY2011. The proposal to increase subsidy should restore our loan
production to target levels and position us for a renewal application.
Action Step
The action requested of the City Council is to approve a request for an amendment to
the current HUD Lead Hazard Reduction Program contract, increasing the per-unit
forgivable loan from $6000 to $12 000.
cc:
Mary Rose Corrigan, Health Services Department