HOME Prog App - Five PointsMEMORANDUM
TO:
FROM:
December 26, 2001
The Honorable Mayor and City Council Members
Michael C. Van Milligen, City Manager
SUBJECT: HOME Program Application
Housing and Community Development Director David Harris is recommending approval
of an application to the Iowa Department of Economic Development for HOME Program
funds to provide for a comprehensive program of rehabilitation for properties located
near the "Five Points" intersection in Dubuque's North End.
From grant awards received in 1992, 1994, 1998 and 1999 the Housing Department
has been awarded HOME funds in the amount of $1,002,500 for programs subsidizing
rental rehabilitation activities. Forty loans have been made to rehab 93 units, matched
by more than $1,123,000 in private owner funds. Sixty-one units have been added to
the City's housing inventory, through rehabilitation of previously vacated buildings.
This application will include extensive improvements to approximately 25 properties,
both owner-occupied and rental units. The goal is to recruit 100% participation of
owners of all these properties, in order to create an impact on the appearance, value
and living conditions for housing in this neighborhood.
In order to achieve this goal, a program of incentives has been designed to induce
participation. Because of Iow incomes, Iow property values and marginal rental cash
flows, there has been little success in marketing the Housing Department's loan
programs to owners in this area, over the years. It is believed that additional incentives
are necessary in order to be successful in revitalizing this area.
This application is for HOME funds in the amount of $412,500. These will be offered to
owners as a combination of 0% - interest and forgivable loans, both for homeowners
and rental property owners. HOME Program regulations require a local match of no
less than 25%; in past applications Rental Rehab Program (RRP) repayment revenues
were used for this purpose.
For this application, the local match requires ear-marking existing CDBG and Lead
Hazard Reduction funds for properties in this area. This proposal commits $240,000 in
CDBG funds, as long-term, 0-3%-interest loans; and $150,000 from the lead paint
program funds, as 3-year forgivable loans. In addition, owners of rental properties will
be required to provide up to $8,500 per-unit financing. Estimated costs are $32,000 for
rehab of single-family homes and $30,000 per rental unit.
No new City funds are proposed for this activity. The program is projected to be
completed over a two-year period, beginning in early 2002.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Michael C. Van Miiligen
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
David Harris, Housing and Community Development Director
CITY OF DUBUQUE, IOWA
MEMORANDUM
21 December 01
To: Mike Van Milligen, City Manager
From: David Harris, Housing and Community Development Department
Re: HOME Program application
Introduction
The purpose of this memorandum is to request the City Council's approval of an
application to the Iowa Department of Economic Development for HOME
Program funds.
Background
The State of Iowa first received HOME Program funds in 1992. The HOME
Investment Partnership Program, created under the 1990 Cranston-Gonzales
National Affordable Housing Act, is designed to provide incentives for the
rehabilitation of affordable housing, among other eligible uses. The program is
administered in Iowa by the Department of Economic Development (IDED).
Dubuque and other Iowa "non-entitlement" cities may compete for award of these
funds, on an annual basis.
From grant awards received in 1992, 1994, 1998 and 1999 the Housing
Department has been awarded HOME funds in the amount of $1 002 500 for
programs subsidizing rental rehabilitation activities. Forty loans have been made
to rehab 93 units, matched by more than $1 123 000 in private owner funds.
Sixty-one units have been added to the City's housing inventory, through
rehabilitation of previously vacated buildings.
Discussion
Proposed is a fifth application for HOME funds, to provide for a comprehensive
program of rehabilitation for properties located near the "Five Points" intersection
in Dubuque's North End. This will include extensive improvements to approxi-
mately 25 properties, both owner-occupied and rental units. Our goal is to
recruit 100% participation of owners of all these properties, in order to create an
impact on the appearance, value and living conditions for housing in this
neighborhood.
In order to achieve this goal, a program of incentives has been designed to
induce participation. Because of Iow incomes, Iow property values and marginal
rental cash flows, we have had little success in marketing the Housing
Department's loan programs to owners in this area, over the years. We have
determined that additional incentives are necessary in order to be successful in
revitalizing this area.
Proposed is application for HOME funds in the amount of $412 500. These will
be offered to owners as a combination of 0% -interest and forgivable loans, both
for homeowners and rental property owners. HOME Program regulations require
a local match of no less than 25%; we have in past applications used Rental
Rehab Program (RRP) repayment revenues for this purpose.
For this application, the local match requires ear-marking existing CDBG and
Lead Hazard Reduction funds for properties in this area. We propose committing
$240 000 in CDBG funds, as long-term, 0-3%-interest loans; and $150 000 from
our lead paint program funds, as 3-year forgivable loans. In addition, owners of
rental properties will be required to provide up to $8500 per-unit financing.
Estimated costs are $32 000 for rehab of single-family homes and $30 000 per
rental unit.
No new City funds are proposed for this activity. The program is projected to
be completed over a two-year period, beginning in early 2002.
(Additional materials, including a summary excerpt from the IDED application,
Housing Commission resolution and area map, are attached for your review).
Recommendation
The project is recommended for the following reasons:
It will concentrate comprehensive rehabilitation activities in a small area
neighborhood, maximizing visual impact. It will encourage other neighborhood
owners to improve their properties, increase property values and increase owner
equity in their housing. Additional units and homes will be made "lead-safe,"
creating more healthy environments for young children. And it will serve to
stabilize a declining area by promoting reinvestment, reducing transiency and
crime, and encouraging neighborhood pride.
Action Step
The action requested of the City Council is to approve the proposed application
for HOME Program funds to the Iowa Department of Economic Development,
and to authorize the Mayor's signature on the application documents.
C~J
IDED General Fund Application
Part E. Activity Summary - Rehabilitation of Five Points area
The proposed activity is designed to create maximum impact on a small
neighborhood in need of extensive improvements. The "Five Points" name for
the area historically relates to the five-cornered intersection of four streets: 20th,
Elm, Rhomberg and Garfield, located in Dubuque's "North End" neighborhood.
While commercial development has occurred in the past twenty years at this
intersection, the residential area targeted for this activity has remained intact to
the north. It has, however, become an area with a high concentration of poorly-
maintained housing, generally agreed to be the closest approximation to a "slum"
in Dubuque.
The target area is a square block, bounded by 20th, Elm, 21st and Washington
Streets, containing 20 residential structures. A local entrepreneur has been
acquiring properties at the 20th Street side of the block (refer to map, attached),
intending to clear most of these and construct a retail center. This individual is
actively involved in Dubuque's historic preservation community and intends to
build this center in an architecturally sensitive manner, including construction of
affordable apartments on a second floor above the storefronts. This will result in
loss of approximately ten residential structures. One, however (identified as
"397" on the map), will remain.) This is an historic corner storefront which the
owner intends to rehabilitate as the "signature" building for the retail
development. Its second floor apartment is included as part of the proposed
project rehabilitation activities.
The north end of the block, containing the other ten residential structures, is the
primary target area for this project. In addition, 15 other residences on Elm, 21st
and Washington Streets - on the block faces adjacent to the primary target block
- comprise the balance of the target area, for a total of 25 residences. These
are a mix of owner-occupied homes and rentals. With the exception of a triplex
and two duplexes, all are single-family homes. While a survey of occupants has
not yet been completed, it is assumed that all of the households within this area
will be within the 80% standard for income-eligibility. A majority will be within
60% of area median income, the HOME Program standard for income-eligibility.
This housing is almost exclusively wood frame construction, built at the turn of
the century. This area of Dubuque was developed for the working people,"
while more expensive homes were built on the "bluffs" and in neighborhoods
located to the west of the downtown center. Those areas have today seen a
great deal of reinvestment and historic preservation efforts, attracting higher-
income homeowners and escalating property values. Within the Five Points
area, however- and particularly for the proposed target reinvestment block -
buildings are more typically characterized by deferred maintenance, conversion
to rental units and occupancy by lower-income households.
Proposed is a program offering financial incentives to both homeowners and
rental property owners to rehabilitate these properties. While the City's Housing
Department has offered rehabilitation-loan programs for the past twenty years -
and has accomplished some scattered-site rehabs throughout the adjacent
neighborhood - we have been unable to create an impact within the proposed
target area. The Department's programs offer long-term, Iow-interest loans,
requiring full repayment. For lowest-income homeowners, these terms are not
sufficiently affordable. Similarly, for landlords renting marginal properties to
lowest-income tenants - at bottom end rents - even interest-subsidized rehab
loans are not financially feasible. For these reasons, these properties have
continued to remain unimproved and have deteriorated in appearance and
function.
The proposed program will offer a combination of forgivable loans and repayment
loans, calculated to be affordable to individual owners. Available funds from the
Housing Department's lead paint hazard reduction program will be made as a
match; these are forgivable loans. In addition, after rental units are improved,
the Department's Section 8 Program rental assistance will be made available to
participating landlords and tenants.
Our goal is 100% participation of owners in this project. If successful, a
significant impact on building improvement activities in the adjacent area is
anticipated. This project will have a catalytic impact, encouraging other owners
in the North End to up-date their properties. The project is intended to be carried
out with the assistance of the local neighborhood association, whose
endorsement will reduce barriers to participation and help publicize the City's
efforts to improve this area.
Resolution No. 01-01
The City of Dubuque Housing Commission met on 18 December 2001 for the
purpose of conducting a public hearing in accordance with Iowa Code, Section
362.3, to receive public comment regarding a proposal from the Housing and
Community Development Department for application to the Iowa Department of
Economic Development for HOME Program funds.
The headng included a review of the following:
1. the need for proposed activities - to undertake a comprehensive
rehabilitation program of properties located in the "Five Points" area of the
North End of the city, bordered by 20th, Elm, 21st and Washington Streets -
and how that need was identified;
2. how the proposed activities would be funded and the proposed sources of
funds;
3. the date the application will be submitted;
4. requested amount of funds;
5. portion of funds to benefit Iow- and moderate-income persons;
6. location of proposed activities;
7. plans to minimize displacement of persons and businesses;
8. plans to assist displaced persons;
9. nature of the proposed activities.
A resolution of commitment of local funds was made as follows:
1. Community Development Block Grant funds in the amount of $180 000 for
homeowner rehabilitation activities, to be committed as available from the
City of Dubuque's FY2002-03-04 entitlement allocations;
Community Development Block Grant funds in the amount of $60 000 for
rental rehabilitation activities, to be committed as available from the City of
Dubuque's FY2002-03-04 entitlement allocations;
HUD Lead Hazard Reduction Grant funds in the amount of $150 000 for
homeowner and rental rehabilitation activities, to be committed as
available from the City of Dubuque's Round 4 grant; and as available from
Page Two
Dubuque Housing Commission
Public hearing - HOME Program application
18 December 01
future HUD funding from Round 10 Lead Hazard Reduction/Healthy
Homes Program funds for which the City intends to apply in May 2002.
Resolved, by the Dubuque Housing Commission:
1. To commit available CDBG.funds in the amount of $240 000, as stated in
paragraphs 2 and 3, above; and to commit available HUD Lead Hazard
Reduction Grants funds in the amount of $150 000, as stated in paragraph 3,
above; and
2. To recommend to the City Council that the proposed application to the
Iowa Department of Economic Development, for the rehabilitation activity
located in the "Five Points" North End neighborhood, be approved for the
Mayor's signature; and
3. That the required public hearing was held according to Iowa Code, Section
362.3; and
4. That the proposed activity is consistent with the City's 2001-2006
Consolidated Plan and current Annual Action Plan.
Passed, approved and adopted this 18th day of December, 2002.
James Holz, ChairPerson
Dubuque Housing Commission
Attest:
David Harris, Secretary