HomeMy WebLinkAbout1996 04-29 CCP Work Session 3 1,
City of Brooklyn Center
A great place to start. A great place to stay.
• d
To: Mayor Kragness and Council Members Carmody, Hilstrom, Mann, and Nichols
From: Michael J. McCauley
City Manager
Date: April 25, 1996
Re: CDBG WORK SESSION
1 C'54ereme rtbrm g
Attached please find an excellent review of CDBG programs prepared by Tom Bublitz. Also
included in the materials is the resolution that was adopted regarding the use of CDBG funds in
1996. As indicated when the resolution was adopted, that plan can be changed and in fact the
purpose of a work session is to determine what direction the council would like to take in that
regard.
As an over w f t questions:
ie o he issues for the council I would see these main
• 1. Does the council wish to continue the housing rehabilitation program?
Sub issues include:
A) If it is continued, at what level of contribution?
B) If it is continuted, we would propose considering having Hennepin
County administer the actual grants to free up staff time. Hennepin county
also has access to additional programs through the Minnesota Housing
Finance Agencv to assist persons with housing work.
C Should loans be repaid regardless of length of ownership
improvements?
2. Would the council like to focus our use of CDBG funds for targeted projects?
If we targeted the funds in the site acquisition and/or economic development area,
sufficient funds could be aggregated to make an impact on a given target block(s)
or project. This would be as opposed to scattered site dispersion of the monies.
There would of course remain individual scattered sites that would be acquired
• where the benefit would be to the remaining area. (As an aside, the house we tried
6301 Shingle Creek Pkwy, Brooklyn Center, MN 55430 -2199 • City Hall & TDD Number (612) 569 -3300
Recreation and Community Center Phone & TDD Number (612) 569 -3400 • FAX (612) 569 -3494
An Affirmative Action1Equal Opportunities Employer
• to purchase at 6645 Bryant was purchased for $5,000 more than our bid by a
private party.)
Among the many possible targets would be 53rd from 4th to Bryant, June Avenue
in the 6900 block, underwriting cost of curb and gutter in areas of low and moderate income
housing, etc.
As an outline of the money available:
1995 1996 1997
Total Allocation: $270,083 $250,045 $244,907
Proposed/Adopted Allocations
1995 996
Rehabilitaion Loans $100,777 $166,054
Elderly $ 9,306 $ 9,000
Scattered Site $160,000 $ 75,000
• Amounts remaining from 1995 as of et unexpended:
Y P
1995
Rehabilitaion Loans $100,000
Elderly $ 8,672
Scattered Site $130,000
Focusing the monies from 1995 and the 1996 allocation, a substantial amount of money is
available for a particular project. The Iimitations include the limits outlined in Mr. Bublitz's
memo on allowable expenditures and percentage limitations. However, we, feel that -we have a
fair amount of latitude given the potential target areas and the fact that the percentage limitations
apply on a county -wide basis. Monies are available in July of a given year and must be spent by
the end of December of the following year. Thus, the remaining 1995 funds must be spent by
December 31, 1996 and the 1996 funds by December 31, 1997.
The attached spreadsheet shows the magnitude of monetary impact that could be generated in the
next two years using the available CDBG monies.
•
Table of Funds Available
1995 196 199_7
• Rehab. Loans $100,777 $166,054 $50,000
Elderly $9,306 $9,000
Scattered Site $160,000 $75,000 $194,907
$270,083 $250,054 $244,907
Available
19-95 Remaining 1996 'L2ta1
I 1995 & 1996
Rehab. Loans $100,777 $100,000 $166,054 $266,054
Elderly $9,306 $8,672 $9,000
Scattered Site $160,000 $130,000 $75,000 $130,000
$270,083 $250,054 $396,054
Note: $75,000 in 1996 earmarked to reimburse EDA for previous acquisition
I11Q-c to Pro 'er Including 1997 impact 199 - 1997
S-cmado-A S- onario B_ $cu A Sc,en B
Rehab. Loans $65,000 $100,000 $115,000 $150,000
Elderly
Scattered Site _M1,054 $ 296,054 $525,96 $490,961
0
$396,054 $396,054 $640,961 $640,961.
Monies are also available from the EDA endowment for many activities including site acquisit
approximately $50,000 per year. A policy issue arise whether spending the principal
would generate more benefit than using it for minimal project funding.
•
I N T E R
ME-M-0
O F F I C E
To: Michael J. McCauley, City Manager
From: Tom Bublitz, Community Development Specialist
Subject: Information on Community Development Block Grant Program for
Council Work Session
Date: April 24, 1996
The information on the following pages has been prepared to assist with the City Council's
discussion of the City's CDBG progam and, specifically, the direction the Council would like to
take regarding the single- family rehabilitation program.
I have divided the report by topics, and for ease of reading I have tried to separate the various
topics with a separate section and heading in the report.
The report includes the history and background P ry of Community Development Block Grants
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including eligible CDBG activities and the ast usages of CDBG funds b the City f
p y ty o Brooklyn
Center. The report also includes current and future CDBG priorities and policies proposed by
Hennepin County for the CDBG program and the single - family rehab program in particular. The
report includes a review of the current status of the City's single - family rehabilitation program,
along with data that attempts to provide a picture of what the program is accomplishing. Finally,
the report includes a number of issues for discussion on the future of the CDBG program.
•
HISTORY AND NATIONAL OB JECTIVES OF THE
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
Title I of the Housing and Community Development Act of 1974 created the Community
Development Block Grant (CDBG) funding program. The CDBG program replaced eight former
categorical grant and loan programs under which communities competed nationally for funds. These
included urban renewal, neighborhood development grants, open space and urban beautification,
historic preservation grants, public facility loans for water and sewer, and neighborhood facilities
grants and model cities supplemental grants.
The primary objective of the CDBG program from the federal ers ective was to develop "viable
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urban communities b providing in decent housing Y s and suitable living environment P � g g e t and expanding
economic opportunities, principally for persons of low and moderate income."
In addition, all CDBG projects and activities must meet one of three national objectives. They must
either:
► Principally benefit low and moderate income persons;
► Aid in the prevention or elimination of slums or blight; or
► Meet other urgent community needs.
It should be noted that "urgent community needs" have been defined very narrowly and primarily
address natural disasters.
CDBG funds have
been used only nce in t e entire history of the program
in n Henne P i County or " t community tY � urgen needs". The use of funds for this need occurred after a
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tornado struck the city of Dayton.
In the early years of the CDBG program there was a debate over whether all three of the program
objectives were equal or whether low- and moderate - income benefit was the principal objective. In
1983, Congress effectively settled the issue by stipulating that at least 51% of a grantee's program
funds must be used for low- and moderate - income benefit activities. That percentage has since been
raised to 70 %. The 70% requirement must be met at the County level.
Eligible community development activities are spelled out in the following excerpts from federal
CDBG regulations:
► Acquisition of real property for public purpose and disposition of property through sale,
lease, donation, otherwise of the real property o e ac
P P rtY uired with CDBG funds or retention q
of property for public purposes, including reasonable costs of temporarily managing such
property or property acquired under urban renewal.
► Acquisition construction, reconstruction, rehabilitation or installation of public facilities
and improvements. Examples of public facilities include facilities for use in providing
shelter for persons having special needs, shelters for the homeless, convalescent homes,
hospitals, nursing homes, battered spouse shelters, halfway houses for runaway children,
drug offenders or parolees, group homes for mentally retarded persons, and temporary
housing for disaster victims.
History and National Objectives of the
Community Development Block Grant Program
Page 2
► Clearance activities, including demolition and removal of buildings and improvements,
including movement of structures to other sites.
► Public services which are directed toward improving the community's public services and
facilities, including but not limited to those concerned with employment, crime prevention,
child care, health care, drug abuse, education, fair housing counseling, energy
conservation, welfare or recreational needs. To be eligible for CDBG assistance, a public
service must be either a new service or a quantifiable increase in the level of an existing
service above that which has been provided by or on behalf of the unit of general local
government. The amount of CDBG funds used for public services shall not exceed 15%
of each grant.
► Interim assistance. The following activities may be undertaken on an interim basis in
areas exhibiting objectively determinable signs of physical deterioration where the
recipient has determined that immediate action is necessary to arrest the deterioration and
that permanent improvements will be carried out as soon as practicable:
a. The repairing of streets, sidewalks, parks, g
la rounds, publicly owned utilities
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and public buildings. and
b. The execution of special garbage, trash, and debris removal, including
neighborhood cleanup campaigns, but not the regular curbside collection of
garbage or trash in an area.
► Payment of the non - federal share required in connection with a federal grant and aid
program undertaken as part of CDBG activities.
► Urban renewal completi on. Payment of the cost of completing an urban renewal project
funded under Title I of the Housing Act of 1949, as amended.
► Relocation. Relocation payments and other assistance for permanently and temporarily
relocated individuals, families, businesses, nonprofit organizations, and farm operations.
► Removal of architectural barriers. Special projects directed to the removal of material and
architectural barriers which restrict the mobility and accessibility of elderly or handicapped
persons to publicly-owned/privately-owned buildings, facilities, and improvements.
► Privately -owned utilities. CDBG funds may be used to acquire, construct, reconstruct,
rehabilitate or install utilities, including the placing underground of new or existing
distribution facilities and lines.
► Construction of housing. CDBG funds may be used for the construction of housing
assisted under Section 17 of the U.S. Housing Act of 1937.
History and National Objectives of the
Community Development Block Grant Program
Page 3
Note: In general, CDBG funds cannot be used to construct housing. However, this
section refers to public housing where CDBG funds are used in conjunction with HUD
funds to build public housing.
Economic development. CDBG funds may be used to facilitate economic development
by:
a. Providing credit, including, but not limited to, grants, loans, loan guarantees and
other forms of financial support for the establishment, stabilization and expansion
of micro- enterprises.
b. Providing technical assistance, advice, and business support services to owners
of micro- enterprises and persons developing micro- enterprises.
c. Providing general support, including, but not limited to, peer support programs,
counseling, child care, transportation, and other similar services to owners of
micro- enterprises and persons developing micro- enterprises.
► Rehabilitation and preservation activities. CDBG funds may be used to finance
rehabilitation of
a. Privately -owned buildings and improvements for residential purposes.
b. Low - income public housing and other publicly -owned residential buildings and
improvements.
c. Publicly- or privately -owned commercial or industrial buildings, except that the
rehabilitation of such buildings owned by a private for -profit business is limited
to improvements to the exterior of the building and the correction of code
violations.
d. Manufactured housing when such housing constitutes part of the community's
permanent housing stock.
► Rehabilitation of property under this provision provides repair directed toward an
accumulation of deferred maintenance, replacement of principal fixtures and
components of existing structures, installation of security devices, including smoke
detectors and dead bolt locks, and renovation through alterations, additions to or
enhancement of existing structures, improvements to increase the efficient use of
energy in structures through such means as installation of storm windows and doors,
siding, wall and attic insulation, and conversion, modification or replacement of
heating and cooling equipment, including the use of solar energy equipment,
improvements to increase the efficient use of water through such means as water-
History and National Objectives of the
Community Development Block Grant Program
Page 4
saving faucets and shower heads and repair of water leaks.
CDBG funds may be used for rehabilitation services such as rehabilitation counseling,
energy auditing, preparation of work specifications, loan processing, inspections, and
other services related to assisting owners, tenants, contractors and other entities
participating or seeking to participate in rehabilitation activities.
► CDBG funds may be used for inspections and abatement of lead -based paint.
Code enforcement. Code enforcement in deteriorating or deteriorated areas where
such enforcement, together with public improvements, rehabilitation, and services to
be provided may be expected to arrest the decline of the area.
► Historic preservation. CDBG funds may be used for the rehabilitation, preservation
or restoration of historic properties, whether publicly or privately owned.
s Special economic development activities. CDBG funds may be used for special
economic activities where the recipient has insured that the appropriate level of public
benefit will be derived pursuant to those guidelines before obligating funds under this
authority. Activities include the acquisition, construction, reconstruction,
rehabilitation or installation of.commercial or industrial buildings, structures, and
other real property equipment and improvements, including railroad spurs or similar
extensions.
► Special activities by community -based development organizations (CBDOs). The
recipient may provide CDBG funds as grants or loans to any CBDO qualified under
this section to carry out a neighborhood revitalization, community economic
development, or energy conservation project. Neighborhood revitalization projects
include activities of sufficient size and scope to have an impact pact on the decline of a
geographic location within the jurisdiction of the recipient.
Community economic development projects include activities that increase economic
opportunity principally for persons of low and moderate income, or that stimulate or
retain businesses or permanent jobs.
Energy conservation projects which include activities that address energy
conservation, principally for the benefit of the residents of the recipient's jurisdiction.
► Eligible planning, urban environmental design and YP c oli planning-management-
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capacity building activities. Planning activities which consist of all costs of data
gathering, studies, analysis, and preparation of plans and the identification of actions
that will implement such plans, including, but not limited to:
History and National Objectives of the
Community Development Block Grant Program
Page 5
a. Comprehensive plans
b. Community development plans
c. Functional plans in areas such as:
1. Housing, including the development of a consolidated plan
2. Land use and urban environmental design
3. Economic development
4. Open space and recreation
5. Energy use and conservation
6. Flood plain and wetlands management
7. Transportation
3. Utilities
9. Historic preservation
d. Other plans and studies such as:
1. Small area and neighborhood plans
2. Capital improvements programs
3. Individual project plans (excluding engineering and design costs related
to a specific activity which are eligible as part of the cost of such activity)
4. The reasonable cost of general environmental/urban environmental design
and historic preservation studies
5. Strategies and action programs to implement plans, including the
development of ordinances and regulations
6. Analysis of impediments to fair housing choice
Program administration costs. CDBG funds may be used for the payment of reasonable
administrative costs and carrying out charges related to the planning and execution of
community development activities assisted in whole or in part with CDBG funds.
It should be noted that any or all of the activities in the preceding list of eligible activities must
meet one or more of the national objectives to be funded.
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HENNEPIN COUNTY PRIORITIES FOR CDBG EXPENDITURES
As part of the planning process for the Community Development Block Grant (CDBG) program,
Hennepin County is required to develop a plan for expenditure of funds which includes CDBG, the
federal HOME program, Emergency Shelter Grant (ESG) program, and the Comprehensive Housing
Affordability Strategy (CHAS). The plan is intended to guide communities in the preparation of a
comprehensive vision of housing and community development.
COUNTYWIDE HOUSING AND COMMUNITY DEVELOPMENT PRIORITIES
Below is a summary of the Consolidated Plan's countywide priorities.
HOUSING
Rental and Supportive Housing: Planning, site acquisition,. related infrastructure for development
of new units and rehabilitation of existing units for low - income households (less than 50% of median
income).
Homeownershi : Planning, site to
p g, acquisition, related infrastructures, down payment assistance for low
income first -time homebu ers and rehabilitation of existing
Y units occupied b low-income p y households.
COMMUNITY DEVELOPMENT
Neighborhood redevelopment/revitalization, senior centers rem removal o of architectural barriers /ADA
compliance, lead -based paint abatement and planning activities to address housing and community
revitalization needs.
PUBLIC SERVICES
Services to senior citizens, disabled persons and youth, child. care assistance and transportation
services.
In discussing the County's priorities with Hennepin County staff responsible for administering the
CDBG program at the Urban Hennepin County level, the following information and observations
were received:
Rehabilitation of single - family homes and acquisition of blighted properties and
redevelopment of the lots continues as a priority at the County. Scattered site acquisition
and single- family rehabilitation activities are increasing, particularly in the inner ring
suburban areas.
The general planning projects and handicap accessibility projects are decreasing. Many
of the outlying communities in Hennepin County have used CDBG funds to make their
parks and other public facilities accessible. Most of these projects are now complete.
Also, the County noted a shift away from general planning -type projects. The County is
encouraging this shift away from general planning activities.
Hennepin County Priorities for
CDBG Expenditures
Page 2
► In the outlying communities where new affordable housing is being developed, CDBG is
used as a "piece" of the development project.
► One of the needs indicated by Hennepin County staff is the need for multi - family
rehabilitation funds. The County is intending to start a pilot program for multi - family
housing rehab using federal HOME funds.
County staff indicated HUD's current priority at the national level is to promote economic
development with CDBG funds. At the national level, HUD is using a program called
"Section 108" which allows CDBG funds to be used as a pledge to repay bonds sold to
promote economic development. Additionally, loan proceeds from businesses benefitted
by the Section 108 program are also used to pay back the bonds sold to create the pool
of money for the loans. To date, no 108 projects have been done in the state of
Minnesota.
County staff indicated that at the national level there is the potential for Congress to
consolidate CI)BG with the federal HOME program and essentially funnel the money to
the states.
► One of the options the County is looking at is the possibility of expanding their ability to
address rehabilitation needs by tapping into existing programs. For example, the County
is looking at the possibility of becoming involved with the Minnesota Housing Finance
Agency's Fix Up Fund. The Fix Up Fund is along- standing MHFA program which
provides up to $15,000 as a loan to homeowners to do a wide variety of rehabilitation
projects on their homes. Homeowners with incomes as high as $43,000 can qualify for
these loans and the interest rates float between two and eight percent (2 -8 %), depending
on income. These loans are intended for homeowners that can afford to repay a loan and
target a different population than is targeted with CDBG funds. However, the reason the
County is looking at becoming more involved in the Fix Up Fund program is to provide
a wider range - of rehabilitation services to Hennepin County residents.
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SUMMARY AND COMPARISON OF CITY OF BROOKLYN CENTER AND "TOTAL
URBAN HENNEPIN COUNTY CDBG EXPENDITURES (1975 -1995)
Activity City of Brooklyn Center Percentage . Total Urhan Iiennepin : Percentage
:.Total Ezp6 ditures . County Expenditures'°
(1975 -1995) (1975- 1995) .
housing Rehabilitation $2,025,230 49.9 $20,733,607 30.2
Planning/Administration $197,697 3.7 $10,341,244 15.1
Public Services $38,306 .4 $5,160,577 7.5
Public Facilities $88,267 1.5 $9,249,566 13.5
Neighborhood Revitalization $1,566,660 38.6 $11,154,351 16.3
Handicap Access $199,429 6.0 $4,359,413 6.4
Assisted Mousing 0 0 $7,552,862 11.0
ot.rls $4 115 589 ::::: >:� >:;..
t $68,551,620..;.
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SUMMARY OF CITY OF BROOKLYN CENTER USE OF CDBG FUNDS
1975 THROUGH 1995
For the first four years of the CDBG program, the City of Brooklyn Center elected not to participate.
The City's participation in the CDBG program began in 1979.
In the early years of the CDBG program, unspent federal funds could be carried forward to future
years. This "rollover" of funds to future years makes it difficult to summarize CDBG expenditures
on an annual basis for those years of the program. A summary of the major components of each of
the activities described in the preceding table follows:
1. Housing Rehabilitation Rehabilitation of single- family owner- occupied homes was the
major activity carried out with CDBG funds from the start of Brooklyn Center's
participation in the program.
A small amount of the housing rehabilitation funding, approximately $180,000, was used
for solar demonstration projects on single - family homes in the early- 1980s. The
remainder of the housing rehabilitation funds were used for general rehabilitation items.
is 2. Planning/Administration This activity provided funds for City staff time spent on the
administration of CDBG programs, including the housing rehabilitation program.
Also included in this activity are funds for the development and preparation of plans,
including a handicap access plan, the City's share of the multi -city business retention
study and the Brooklyn Boulevard redevelopment plan.
3. Public Services This item reflects the CDBG funding of the Household Outside
Maintenance for the Elderly (H.O.M.E.) program.
4. Public Facilities This item includes a one -time expenditure of funds for the remodeling
and rehabilitation of a portion of the old Brooklyn Park City Hall for a Head Start facility
and in the amount of S30,000. The remainder of the funds'appear to have been used for
park improvements in the early years of the program when use of CDBG funds was less
restrictive.
5. Neighborhood Revitalization This activity includes costs related to the acquisition and
demolition of blighted single- family properties. Five single - family and 16 multi - family
units have been acquired and demolished with CDBG funds.
This activity also includes approximately $980,000 used towards acquisition of the Earle
Brown Farm site.
6. Handicap Access. This item reflects expenditures made over several years to make
public buildings and parks accessible to handicapped individuals.
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CURRENT ELIGIBILITY REQUIREMENTS FOR CITY OF BROOKLYN CENTER'S
CDBG DEFERRED LOAN PROGRAM
Income cannot exceed the following limits to uali for a deferred loan under q fy n er Brooklyn Center's
program:
Household Size/No. of Persons Income Limit*
I $22,900
2 526,200
3 529,500
4 532,750
5 535,350
6 538,000
7 $40,600
8 543,900
*Sixty percent (60 %) of area median income.
The Department of Housing and Urban Development uses the Section 8 income limits for
calculating income limits for CDBG program eligibility. These income limits are based on HUD
estimates of 1996 median household income. The U.S. median family income has increased to
$41,600. The Minn
eapolis/St. Paul MSA median income has increased from 551,000 to $54,600.
The
U. S. median family income is used as a cap in calculating income for households at 80% of
median income.
The maximum income individuals or families can earn and still qualify for CDBG programs is 80%
of median income adjusted for household size. The 80% maximum incomes for various
household sizes are shown below.
Household Size/No. of Persons Income Limits*
1 $29,100
2 533,300
3 537,450
4 541,600
5 $44,950
6 548,250
7 551,600
8 $54,900
*Eighty percent (80 1 /6) of area median income.
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HOUSING COMMISSION REVIEW OF CITY'S
CDBG SINGLE- FAIIILY REHABILITATION PROGRAM
In 1993, the City's Housing Advisory Commission reviewed the CDBG single - family rehabilitation
Program and recommended several revisions of the program to the City Council. The 1993 revisions
recommended by the Housing Commission and adopted by the City Council are shown below:
1. Length of residence shall not be an eligibility requirement for the rehabilitation deferred
loan program.
2. The grant repayment security lien shall be increased from five years to ten years and the
Hen amount shall be reduced five percent (5 %) per year for years one through five of the
Hen and fifteen percent (15 %) per year for ears five through ten of the lien.
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3. The housing rehabilitation deferred loan program shall include an exterior maintenance
standard which shall be made a requirement of the program. Adoption
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of an exterior
maintenance standard shall be adopted by a separate motion or resolution by the EDA.
4. No second deferred loans shall be awarded to applicants until there are no first time
applicants remaining on the waiting list. Exceptions will be made only in extraordinary
circumstances
umstances related to damage to the property as a result of events beyond the control
of the applicant or relating to health and safety concerns, such as failure of plumbing,
heating, or electrical systems, or as determined by program the ro am administrator..In such
circumstances, provided funding is available, the borrower, if still eligible, can receive
assistance limited to correcti in the damaged or failed t
i � g system(s) em(s) only. No other eligible
work can be
carried
out, t, in the extraordinary circumstances described in this
paragraph. This policy shall be applied to residents added to the waiting list after July 12,
1993.
5. On homes valued at $55,000 or less, as determined by the City Assessor, staff will prepare
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a cost repair estimate to determine if the roe can be brought u to Section 8
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standards with the funds available. Cost repair estimates shall also be made on properties
where repairs necessary to bring the property up to Section 8 standards involve major
repairs to the majority of the home's systems, including mechanical, plumbing, electrical,
windows and doors, and exterior, including roof and siding.
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PROPOSED REVISIONS TO CDBG SINGLE - FAMILY
REHABILITATION PROGRAM FROM HENNEPIN COUNTY
All CDBG dollars flow through Hennepin County to the 45 cities that are a part of the Urban
Hennepin County. Forty of these 45 cities fund single- family housing rehabilitation programs. The
County regulates the administration of these programs through procedural guidelines developed by
Hennepin County. The procedural guides set forth conditions including applicant eligibility,
administrative requirements, standards for repair, and application procedures, etc.
Municipalities may vary their own rehabilitation programs from the procedural guides and many do
have different eligible income and eligible improvement criteria. Hennepin County administers the
rehabilitation programs for many cities and administers portions of the program for others. For
Brooklyn Center, the County administers the application and income eligibility portion of the single -
family rehabilitation program.
The County is proposing to create more consistency for the rehabilitation program throughout the
County. The primary reason for this program change is to reduce administrative inconsistencies
between programs, but another perhaps more important reason is that federal funds are not likely to
increase and may decrease in the future. As a result, one of the primary changes proposed by the
County is to design a program to recapture the CDBG dollars used for rehabilitation. A summary
of the revisions proposed by the County follows:
1. The lien period for the zero percent deferred loans (maximum $15,000) will be extended
from 15 years to 30 years. Currently, Brooklyn Center's program provides a ten year lien
with the loan amount decreasing each year for a period of ten years at which time the loan
is completely forgiven.
2. For families with incomes greater than 50% of area median income ($25,000 for a family
of four), the loans will bear three percent simple interest for ten years and have a 30 year
Hen.
The implementation of these changes is scheduled for 1996.
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SUNKNURY OF REPAIR ITEivIS COMPLETED ON 30
CDBG DEFERRED LOAN PROJECTS
The following table is a summary of the work items in the last 30 home rehabilitation CDBG projects
completed in the City of Brooklyn Center. The table describes the number of times each type of
repair was done on each of the 30 projects, and organizes them from items most often included in
rehab projects and those done the least.
SU?vUgARY OF REPAIR ITEMS COMPLETED ON 30 CDBG LOAN PROJECTS
. Type dl Na 600 ect
1.. Plumbing 29
2. Electrical 27
3.::.':: Mechanical 27
4 House windows 2$
Exterior' doors 24
6::``a Ventilation 24
Exterior siding 21
8 > €( Finish floors 20
9 Miscellaneous 20
10'' .. Smoke detectors 20
T1:`! Insulation 19
12. Roofing 18
13' Exterior storm doors 17
14.' Gutters and down spouts 17
15 Walls 17
J&.::: Handrail 16
17.E ` Ceilings 14
18.. Interior /exterior stairs 13
19 Exterior storm and screen windows 10
20 Exterior concrete work 9
21 : Exterior painting 9
22. Interior doors 8
23 Kitchen and bathroom cabinets 7
24; » Post and beam 7
25 Grading 6
26: Chimney 4
27.: Foundation 4
28; Crawl space 3
29. Electrical mast 3
30. Basement floor 2
31. Accessibility improvements 1
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LOCATION OF CDBG SINGLE - FAMILY REHABILITATION PROJECTS
1979-1995
Approximately 230 CDBG rehabilitation projects were completed from the program start-up in 1979
through 1995. This represents an average of over 13 projects per year.
The map on the following page shows a breakdown of the 230 rehabilitation projects by
neighborhood.
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SUMMARY OF CDBG LOAN RECIPIENTS AND PROPERTIES ON
20 CDBG PROJECTS COMPLETED BETWEEN 1992 AND 1994
' :<::::;:: ><: � >r: » < >;:�;:�:; 7 lds person ouseolds
4 3 person households
3 4 P erson households
1 6 person household
ot? o
RAINGE OF VALUE NUMBER OF HOMES
$45,000 - 550,000 1
$50,001 - $55,000 4
$55,001 - $60,000 1
560,001 - $65,000 5
S65 - S70 -
$70,001- $75,000 3
575,001 - $80,000 1
AGE RAYGE NUMBER OF HOMES
Under 30 1
30 -35 1
36 -40 9
41-45 3
46 -50 2
51 -55 0
56 -60 2
Over 60 1
Over 70 1
Summary of CDBG Loan Recipients and Properties
on 20 CDBG Projects Completed Between 1992 -1994
Page 2
::,:.::;...:...:::
�ErRS OF RLIDENCY' O"ER..::.:..;.:;.;..;;:...
YEARS Nu.NIBER OF OWNERS
Under 5 4
5 -10 4
11 -15 2
16 -20 1
20-25 1
26-30 0
31-35 4
36-40 3
Over 40 1
::...:.............::. :.:::..::. ,:::::::::.:::::..
.:<'>
AGE Ra,INGE NU1[BER OF OWNERS
Under 30 2
31 35 3
36 - 40 4
41-45 1
46 -50 0
51-55 0
56 -60 1
61-65 2
66-70 2
Over 70 5
Summary of CDBG Loan Recipients and Properties
on 20 CDBG Projects Completed Between 1992 -1994
Page 3
:..
.:., HousSxoi`.D.Irr�cz��.ol «: >:<::< >:�..:::::::.:
INCOME RANGE NUbIBER OF OWN ERS
Under $10,000 4
$10,001 - $15,000 4
$15,001- $20,000 5
$20,001 - $25,000 3
$25,001 - $30,000 4
i
f ! depts ledalbublitz'iformslcdbgprop.sum
ISSUES FOR DISCUSSION OF FUTURE OF CDBG PROGRAM
IN BROOKLYN CENTER
One of the major issues raised by the EDA when it placed a moratorium on the single - family
rehabilitation program was whether or not the rehabilitation of single - family properties is a wise use
of CDBG funds in terms ofthe improvement to individual homes and the improvement of the City's
neighborhoods. The following list of issues, statements and questions is intended to provide a starting
point to discuss and evaluate the current activities and future direction of the CDBG program in
Brooklyn Center.
> There are no statistical studies that have demonstrated an active rehabilitation program
improves individual home values or has an influence on neighborhood housing values.
Anecdotal information is sometimes used to describe the value of rehabilitation programs, but
staff is not aware of any objective studies that have been done. Hennepin County is just
starting to look at their CDBG programs and, specifically, the single - family rehabilitation
program, from a cost/benefit standpoint. The County has no data, but is definiteI Y interested
in pursuing the question of whether single - family rehabilitation has any positive spinoffs for
a city other than repairing the individual homes rehabilitated.
Hennepin County is re- evaluating its role in terms of housing and neighborhood
redevelopment with regard to CDBG and housing and redevelopment in general. The County
Board has passed a resolution supporting several housing policies, one of which is "Hennepin
County's current supportive role for housing be continued, in cooperation with municipalities,
in promoting neighborhood and tax base stabilization and furthering affordable housing." A
copy of the complete resolution passed by the County Board is attached to this memorandum.
County staff is currently evaluating and pursuing options to provide expanded housing
support services to municipalities by tapping into housing resources that do not rely on
increased county or city expenditures. An example is the Ni finnesota Housing Finance Agency
(TVII3FA) Fix Up Fund. County staff is currently looking at how to provide better access to
this existing program for Hennepin County residents. The Fix Up Fund is a loan program that
provides up to $15,000 to do a wide variety of remodeling and rehabilitation for single- family
homes. The loans are for persons who can afford to pay back the loan at an interest rate
anywhere from two percent to eight percent, depending on income.
IMHFA Fix Up funds could be used in conjunction with CDBG by using CDBG funds to
"write down" or reduce the interest rates on the Fix Up Fund loans. However, the program
is primarily designed for families with more ability to pay back loans than many of the current
CDBG rehabilitation clients.
One of the options for chan ging the City's approach to the use of CDBG funds is to target
specific neighborhoods and provide a focus and concentration to neighborhood improvement
and redevelopment. A focused effort could include a wide variety of projects, including
Issues for Discussion of Future of CDBG Program
in Brooklyn Center
Page 2
rehabilitation loans, code enforcement efforts neighborhood cleanups, marketing
b , n of
P
g
purchase/rehabilitation or refmance/rehabilitation loans, acquisition of deteriorated properties,
and a concentrated focus on land use and zoning issues which may be problems in the
neighborhood.
► Another option is to put the CDBG rehabilitation funds into scattered site acquisitions, or
even target the acquisitions to a specific area.
Other options for rehabilitation could be pursued, including the possibility of the MHFA Fix
U Fund purchase/rehabilitation P , p ehabilitation a mort es and soliciting lender t i '
mortgages, g
s o assist in targeting
g g
rehabilitation loan funds for specific neighborhoods.
► If the EDA continues the EDA rehabilitation program substantially in its present form, there
are also a number of administrative issues which should be addressed. They are:
a. The proposed County changes in the rehabilitation program described previously are
scheduled to begin in 1996. One of the issues relative to these changes is should all
people le on the current waiting li ' r
P P Est for the City's program fiy P
o am have to comply with the new
regulations or should they be grandfathered in on the old regulations? Currently, there
are between 50 -60 households on the waiting list.
b. Should any specific areas of the City be excluded from the rehab program? For *example,
there are currently several individuals on the waiting list who live on Brooklyn Boulevard.
The question is whether or not homes that are nonconforming uses should be rehabilitated
under the CDBG program.
c. h
S ouId the EDA revisit the issue f h v rehabilitated?' o the glue of homes to be rehabilitated. In other
words, should homes at a certain value be evaluated in a different manner for
rehabilitation projects?
d. With regard to administration of the CDBG rehab program, currently the Hennepin
County staff does the income verification portion of the project with City staff doing the
inspection and project management. The County has indicated they could do the entire
project from start to finish for a 12% fee of the total amount of the rehabilitation project.
The fee would be paid with CDBG funds.
e. Another issue to better control and manage the waiting list would be to open up the
waiting list for a specified period each year and accept applications only during that
period.
f Vepas Ieddbubli,tzformslcdbgfut.iss.
RESOLUTION
NO.
The following resolution was offered
WHEREAS, members of the Hennepin County Board and the Board of the
Hennepin County Housing and Redevelopment Authority have received staff reports and
recommendations regarding county housing policy and have discussed housing needs and
potential county housing roles with municipal officials,
BE IT T' " ORE RESOLVED, that the HCHRA Board supports the following
housing policies and program directions and recommends their adoption by the Hennepin
County Board:
I. Hennepin County's housing policies and activities should be consistent with the
following goals and assumptions:
a. Housing is primarily a municipal responsibility.
b. County involvement in housing should complement, not supplant, existing
municipal responsibilities and resources.
c. Consistent with the county board's vision and mission, county housing activities
should achieve one or more of the following goals:
- Reduce county service costs or improve service results
- Reduce reliance on county services and promote self- reliance
- Stabilize neighborhoods and strengthen the tax base
d. No additional federal, state or county funds are expected to become available in the
foreseeable future to support housing activities.
e. Future county and municipal access to state and federal funds for housing,
community development a.rid transportation purposes are likely to be linked to
affordable housing performance.
2. Hennepin County's current supportive role for housing be continued, in cooperation
with municipalities, in promoting neighborhood and tax base stabilization and
furthering affordable housin;.
I Hennepin County will utilize and seek to maximize existing resources to assist
• communities in achieving locally established goals under the Livable Communities Acs,
including the preservation of ex housing units.
Resolution No.
4. County staff are authorized to prepare proposals for strengthening the county's
coordinating role and establishing countywide programs to address housing and tax base
concerns identified by communities subject to county funding constraints and Board
approval, as required.
BE IT FURTHER RESOLVED, that staff are authorized to present to suburban
communities proposed revisions in the method of allocating county CDBG funds. The goal
of such revisions should be to promote administrative efficiencies and assist communities in
addressing housing and community development needs. The following provisions for the
1997 -99 Joint Cooperation Agreement should be included among the proposed revisions:
1. Communities qualifying as entitlements (having populations of at least 50,CC0) will
receive annual funding allocations equal to the HUD formula entitlement or the
Hennepin County formula allocation, which ever is greater.
2. Non- entitlement communities with county formula allocations of S50,CC0 or more will
receive planning allocations.
3. N _ .
Non-entitlement '
ment communities with formula allocations of less than S�0,CC0 will have
their funds consolidated in a pool for award on a competitive basis. Representatives of
n
these communities will participate in a review committee to make fundin
recommendations to the County Board. Only the communities whose funding
pooled will be eligible b has be
P able to co mpete ete
p for these funds.
The question was on the adoption of the resolution, and there were YEAS and
NAYS as follows:
BOARD OF COMMISSIONERS
STONERS
HEN"NEPN COUNTY HOUSING AND
REDEVELOPMENT AUTHORITY YEA NAY OTHER
Commissioner Opat
Commissioner Andrew
Commissioner McLaughlin
Commissioner Johnson
Commissioner Tambornino
Commissioner Steele
Commissioner Hilary, Chair
_ ATTEST:
Hon. Mary Tambornino, Secretary
1997
PROJECTED PLANNING ALLOCATIONS
URBAN HENNEPIN COUNTY CDBG PROGRAM
1997
COMMUNITY ALLOCATION
Brooklyn Park 505,812
Minnetonka 225.800
Subtotal Entitlement Communities 731,612
St Louis Park 284,033
Richfield 250,935
Brooklyn Center 244,907
Edina 187,526
Eden Prairie 183,175
New Hope 165,925
Hopkins 151,272
Maple Grove 151,542
Crystal 138,626
Golden Va;;ey 1Go' 333
Robbinsdale 85,638
Champlin 77,469
Mound 65.638
Subtotal Formula Allocations 2,093,:.'74
Chanhassen 49,543
Wayzata 27,751
Osseo 23,633
• Corcoran 22,128
Orono 22,076
Dayton 20,369
Minnetrista 19,4
Rockford 19,145
Shorewood 17,460
SL Anthony
16
, 437
Excelsior 15,515
independence 14,649
Medina ?
1..,971
Deephaven 12,884
Spring Park 11,634
Hassan 11,331
Long Lake 10,248
Maple Plain 9,990
SL Bonifacius 7,545
Tonka Ha 7 X
Y , 66 �
Greenfield 7,028
Rogers 4,366
Loretto 3,791
Hanover 3,775
Greenwood Z,..
fiB
Minnetonka Beach 1,709
Woodland 1,502
Medicine Lake
811
Subtotal Consolidated Pool 379,114
TOTAL 3,204,000
Hennepin County 356,000
Total Allocation 33,560,000
Eased on 1996 estimated allocation
1997 allocation is not yet determined
u ccac=r.crrxLL3r
e7r. w<
MEMORANDUM
Date: March 6, 1996
To: Michael J. McCauley, City Manager
From: Tom Bublitz, Community Development Specialist 1
Subject: Resolution Approving Projected Use of Funds for 1996 Urban Hennepin
County Community Development Block Grant Program
The Urban Hennepin County 1996 Community Development Block Grant (CDBG) program
was first discussed at the February 12, 1996, City Council meeting. At that meeting, the City
Council authorized the public hearing for the March 11, 1996, City Council meeting. The
public hearing on the proposed use of funds for the City's 1996 CDBG program is a
requirement for participation in the Urban Hennepin County CDBG program. A copy of the
public hearing notice is included with this memorandum.
In order to comply with Hennepin County deadlines for submitting its 199¢ CDBG program,
the City must submit its 1996 program to Hennepin County by March 12, 1996. The Council
is being asked to approve a 1996 CDBG program with the knowledge that the program may be
completely changed after the City Council has reviewed the City's CDBG program more
thoroughly at its April work session.
The Council's priorities for the 1996 CDBG program may change significantly after the April
work session. If that is the case, the CDBG program presented and recommended in this
program can be changed by conducting another public hearing on the revised CDBG program.
OVERVIEW OF URBAN HENNEPLN COUNTY CDBG PROGRAM
Hennepin County has notified the City of Brooklyn Center that its share of the 1996 Urban
Hennepin County Community Development Block Grant (CDBG) entitlement will be
approximately $250,054. This amount is $20,029, or a seven percent decrease over last year's
allocation.
Brooklyn Center is one of 43 Hennepin County cities participating in the Urban Hennepin
County's CDBG program. In this program, federal dollars from the Department of Housing
and Urban Development (HUD) flow to the County and are disbursed to the 43 participating
cities. The 1996 allocation for the entire County is approximately $3,500,060, which is
$246,962 less than the 1995 allocation for the entire County.
FEDERAL CDBG OwEc ms
• Since the CDBG allocation represents federal dollars, the CDBG programs adopted by local
jurisdictions must meet one of the following national objectives:
Memorandum to Michael J. McCauley
March 5, 1996
Page 2
*Benefitting low and moderate income persons
-Prevention or elimination of slums or blight
*Meeting a particularly urgent community development need
COUNTY -WIDE HOUSLNG AND COrmIUNTry DEVELOPMENT PRIORITIES
In addition to the federal objectives, Hennepin County is also required to develop priorities for
CDBG funding under its Consolidated Plan Process. The Consolidated Plan Process has been
instituted by HUD, and provides for consolidated planning for all federal programs for which
the County and municipalities are eligible, including CDBG, HOME (the 1990 Cranston -
Gonzales Housing Act), and Emergency Shelter Grant programs.
The County-wide housing and community development priorities, as part of the Consolidated
Plan, include the following:
• Rental and supportive housing: Planning, site acquisition, related infrastructure for
development of new units and rehabilitation of existing units for low income
households (less than 50% of median income).
• 0 Home ownershi p : Planning site ac q i u'
srtion, related infrastructures, down payment
assistance for low income, first -time home buyers, and rehabilitation of existing
units occupied by low income households.
Community development: Neighborhood redevelopment/revitalization, senior
centers, removal of architectural barriers /ADA compliance, lead -based paint
abatement and planning activities to address housing and community revitalization
needs.
• Public services: Services to senior citizens, disabled persons and youth, child care
assistance and transportation services.
REVIEW OF BROOKLYN CEN'TER'S 1995 CDBG PROGRAM
There are a variety of actual activities and/or projects that fall under these national and county
objectives. Last year, the City of Brooklyn Center approved the following projects for its
1995 program:
Rehabilitation of Private Property
(EDA home rehabilitation deferred loan program) $100,777
Household Outside Maintenance for the Elderly (H.O.M.E.) 9,306
Scattered Site Redevelopment 160,0Q0
Total (1995) $270,083
Memorandum to Michael J. McCauley
r March 5, 1996
Page 3
REco,NsfENDATIoNs FOR 1996 CDBG PROGRAM
The public hearing notice included with this memorandum also includes a designation of
CDBG programs and activities and recommended funding levels for these projects and
activities. The CDBG projects and activities specified in the public hearing notice were
approved for publication at the February 12, 1996, City Council meeting. A summary of the
recommended activities are as follows:
Rehabilitation of Private Property
(EDA home rehabilitation deferred loan program) $166,054
Household Outside Maintenance for the Elderly (H.O.M.E.) 9,000
Scattered Site Redevelopment 75,000
Total (1996) $250,054
REVIEW OF CDBG PROGRAM AT APRIL 1996 WORK SESSION
At the February 12, 1996, Economic Development Authority (EDA) meeting, the Brooklyn
Center EDA directed staff not to process any additional CDBG loans until the EDA/City
Council has had an opportunity to review the entire CDBG program at an upcoming work
session in April.
Staff is in the process of preparing information for the April work session. Until such time as
the City Council /EDA has had an opportunity to review the total CDBG program, staff is
recommending the City Council approve the following program for 1996, keeping in mind the
projects and allocations can be changed at a future date upon the completion of an additional
public hearing process.
It should be noted that the 1996 allocation for deferred loan projects would be frozen until
such time as the Council authorizes, continuation of the deferred loan program or re- programs
the funds to some other project.
REco,NatENDED 1996 CDBG PROGRAM:
1. The City's home rehabilitation deferred loan program (rehabilitation of private
property) was budgeted at $100,777 for the 1995 CDBG program. The current
waiting list of applicants for this program is approximately 65. Presently, the EDA
is able to put up to $15,000 in each household to rehabilitate the structure. Staff is
recommending an allocation of $166,054 in CDBG funds for the 1996 home
• rehabilitation deferred loan program.
2. The scattered site redevelopment program was funded at $160,000 for the 1995
CDBG program. Two projects were established for the $160,000. One was to
purchase blighted single4amily homes; the other was a multi -year project to
Memorandum to Michael J. McCauley
. March 5, 1996
Page 4
reimburse the EDA reserve fund for the acquisition and demolition of four
fourplexes along Humboldt Avenue which were purchased and demolished with
EDA funds. This project was set up as a multi -year contract to repay the EDA
from CDBG funds for this project. Staff is recommending an allocation of $75,000
for this multi -year project. This amount would close out the multi -year project and
would be the final payment to the EDA.
3. Staff has received a request from Senior Community Services for the Household
Outside Maintenance for the Elderly (H.O.M.E.) program for $9,306. This project
has been part of the CDBG program for four years and has proved to be a
beneficial program. The H.O.M.E. program provides minor maintenance and
repair for persons 60 years of age and older and /or permanently disabled
individuals. The households are asked to pay a certain amount towards the rehab
based on a sliding fee scale according to their income. CDBG dollars are used to
bring down the overall cost of the repairs. Examples of the repairs included in this
program are installation of grab bars, painting (interior and exterior), minor roof
• and gutter repair, concrete repair, and carpentry (including door, window, and trim
repair). Staff is recommending an allocation of $9,000 for this program in 1996.
Senior Community Services has also submitted a usage report for 1995 for the
H.O.M.E. program, which is included in the list of attachments at the end of this
memo.
A representative from Senior Community Services will be present at the March 11,
1996, meeting to answer any questions the Council.may have regarding the
H.O.M.E. program.
REQUEST FOR CDBG FUNDS FROM COINIti1UI M ACTION FOR SUBURBAN HEM PIN (CASH)
The non - profit group, Community Action for Suburban Hennepin (CASH), has requested
$6,000 from the City's Community Development Block Grant' program to be used to support
the HOME Line, which is the housing services program of the Community Action for
Suburban Hennepin organization.. Two of the major components of the HOME Line are the
tenant hotline for multi - family residents and foreclosure prevention program for single - family
homeowners.
CASH has included a description of their HOME Line program, along with budget data and
data showing the usage of the HOME Line program by Brooklyn Center residents.
All information from CASH submitted with their CDBG request is included in the list of
attachments at the end of this memorandum. Also, a representative from CASH will be
present at the March 11 public hearing to address the City Council with regard to their CDBG
request.
Memorandum to Michael J. McCauley
• March 5, 1996
Page 5
Staff is not recommending approval of CASH's request for CDBG funding. The staff
recommendation is not a reflection on the quality of the services provided by CASH. Staff is
recommending a continuation of the long- standing history of the use of CDBG funds in
Brooklyn Center primarily for projects that address physical improvements to property,
including the rehabilitation of property under the EDA deferred loan program, minor repair
for senior citizens under the H.O.M.E. program, and elimination of blighted property under
the scattered site redevelopment program.
Staff recommends approval of the Resolution Approving Projected Use of Funds for 1996
Urban Hennepin County Community Development Block Grant Program.
7a,
�
Member introduced the following resolution and
moved its adoption:
RESOLUTION NO.
RESOLUTION APPROVING PROJECTED USE OF FUNDS FOR 1996 URBAN
HENNEPN COUNTY COMMUNITY DEVELOPMENT BLOCK GRANT
PROGRAM
WHEREAS, the City of Brooklyn Center, through execution of a Joint Cooperation
Agreement with Hennepin County, is cooperating in the Urban Hennepin County Community
Development Block Grant Program; and
WHEREAS, the City of Brooklyn Center has developed a proposal for the use of
Urban Hennepin County CDBG funds made available to it, and held a public hearing on March 11,
1996, to obtain the views of citizens on local and Urban Hennepin County g
housin and community
development needs and riorities regarding the City's proposed use se of 5250
� 054 from the 1996
g ty P F Urban
Hennepin County Community Development Block Grant.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of
Brooklyn Center approves the following projects for funding from the Urban Hennepin County
Community Development Block Grant Program and authorizes submittal of the proposal to Hennepin
County for review and inclusion in the 1996 Urban Hennepin County Community Development Block
Grant Program.
Project Budget
Rehabilitation of Private Property $166
Scattered Site Redevelopment 75
Household Outside Maintenance
for the Elderly (H.O.M.E.) 9,000
Date Mavor
ATTEST:
City Clerk
The motion for the adoption of the foregoing resolution was duly seconded by member
and upon vote being taken thereon, the following voted in favor thereof
and the following voted against the same:
• whereupon said resolution was declared duly passed and adopted.
CITY OF BROOKLYN CENTER Council Meeting Date 12116i9t
Agenda Item Number . =,
REQUEST FOR COUNCIL CONSIDERATION
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ITEM DESCRIPTION:
RESOLUTION ESTABLISHING ENDOWMENT ACCOUNT AND AUTHORIZING CERTAIN HOUSING ACTIVITIES AND
PROGRAMS TO BE UNDERTAKEN BY THE ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF
BROOKLYN CENTER, MINNESOTA
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DEPT. APPROVAL:
Assistant EDA Coordinator
Signature - title
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MANAGER'S REVIEW /RECOMMENDATION: , • ., �':.� >:
V
No comments to supplement this report Comments below /attached
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• SUMMARY EXPLANATION: (supplemental sheets attached Yes )
This Resolution provides for the creation of an endowment account whereby $1,000,000 will be transferred from
a City Special Assessment Debt Service account to the EDA, and the interest earnings from the 51,000,000 will be
used for housing activities and programs specified in the Resolution.
The Council Resolution referenced in the EDA Resolution is titled Resolution Closing the 1986 Special Assessment
Debt Service Fund and Transferring the Remaining Funds to the EDA Fund, the Capital Improvements Fund and the
Park Bonds of 1980 Debt Service Fund.
The housing activities specified in the EDA Resolution are those which are authorized under Minnesota Statutes
Chapter 469, which is the State Statute regulating housing and redevelopment authorities. Additionally, the activities
and programs described by the Resolution are divided into two categories as follows:
Paragraph number one in the Resolution describes activities carried out in the EDA's Scattered Site acquisition
program. Since this is an established ongoing housing program, the EDA would not need to seek review and approval
from the City Council to continue operation of this program.
Paragraph number two in the Resolution describes housing activities and programs authorized by Chapter 469 but
which are not programs currently undertaken by the EDA, and would require prior review and approval by the City
Council.
RECOMMENDATION:
Staff Recommends Approval of the EDA Resolution.
G�
Commissioner introduced the following
• resolution and moved its adoption:
EDA RESOLUTION NO.
RESOLUTION ESTABLISHING ENDOWMENT ACCOUNT AND AUTHORIZING
CERTAIN HOUSING ACTIVITIES AND PROGRAMS TO BE UNDERTAKEN
BY THE ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY
OF BROOKLYN CENTER, MINNESOTA
WHEREAS, the Economic Development Authority in and for
the City of Brooklyn Center desires to undertake housing programs
and activities in order to preserve existing housing and
neighborhoods, to eliminate g bli htin influences and to redevelop
substandard property in the City; and
WHEREAS, the Brooklyn Center City Council has, by
Resolution transferred $1,000,000 in funds to the Economic
Development Authority to be deposited in an endowment account and
the interest earnings from this account are to be used for the
implementation of programs and activities in the City of Brooklyn
Center conducted pursuant to Minnesota Statutes Section 469.012
Subdivision 1, Clause (7) or such other projects as may hereafter
be approved by the City Council; and
WHEREAS, it is the intent of the Brooklyn Center Economic
Development Authority to specify the types of housing programs and
activities for which the above described funds are to be used.
NOW, THEREFORE, BE IT RESOLVED by the Economic
Development Authority, in and for the City of Brooklyn Center that
the funds received from the above described transfer of funds be
deposited in an endowment account and that only the interest
earnings be used by the EDA for the housing activities and programs
described in this Resolution.
BE IT FURTHER RESOLVED by the Economic Development
Authority in and for the City Y of Brook Center that the
expenditure of the funds transferred to the EDA fund by Council
Resolution are hereby authorized for the following housing
programs and activities:
1. Activities authorized bv_ Minnesota Statutes Section
469.012, Subdivision 1, Clause 7, including but not
limited to the following:
a. Acquire real property, demolish, rehabilitate or
reconstruct buildings or improvements where said
buildings or improvements thereon are
substandard.
. b. Construct new buildings, and improvements on the
real property acquired or otherwise prepare the
site for improvements.
EDA RESOLUTION NO.
C. Sale of acquired properties, through advertised
sale for development or redevelopment of the
property or contract for development or
redevelopment for such uses as may be deemed to
be in the best interest of the City of Brooklyn
Center.
d. Expenditures authorized under Section 469.012,
Subdivision 1, Clause 7, may be undertaken by
the Brooklyn Center Economic Development
Authority without prior approval by the Brooklyn
Center City Council.
2. Activities and programs undertaken pursuant to
Minnesota Statutes, Chapter 469 including but not
limited to such activities and programs as the
following:
a. Develop and administer rehabilitation loan /grant
programs for housing redevelopment or
rehabilitation.
b. Develop and administer interest reduction or
down payment assistance programs for .persons of
low and moderate income desiring to purchase
housing in the City of Brooklyn Center.
C. Except for activities and programs authorized by
Section 469.012, Subdivision 1, Clause 7,
expenditures for all activities and programs
undertaken by the Brooklyn Center. Economic
Development Authority pursuant to Chapter 469
shall require prior approval by the Brooklyn
Center City Council.
Date Todd Paulson, President
The motion for the adoption of the foregoing resolution was duly
seconded by Commissioner and upon vote being
taken thereon, the following voted in favor thereof:
and the following voted against the same:
whereupon said resolution was declared duly passed and 'adopted.
Y P oP
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HOUNIES & GRAVEN
CHARTERED
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RIMICT 1.. DA1111�p\
December 12, 1991
Mr. Paul Holmlund
City of Brooklyn Center
6301 Shingle Creek Parkway
Brooklyn Center, MN 55430
Re: Transfer of Funds to the Economic Development Authority
Dear Paul:
• The City of Brooklyn Center has certain funds available in its 1976 Special
Assessment Debt Service Fund and has asked for my opinion on whether the City is
legally authorized to transfer a portion of such funds to the Brooklyn Center
Economic Development Authority. In my opinion, it would be lawful to transfer such
funds for certain purposes as described more fully in this letter.
The Economic Development Authority essentially has the same powers as a housing
and redevelopment authority. Minnesota Statutes 1 469.091. Housing and
redevelopment authorities have the power to undertake various activities. For
purposes of this letter, I have divided the activities into two categories. The first
category is the acquisition of substandard buildings pursuant to Section 469.012,
Subd. 1, clause (7) . This clause authorizes the EDA to acquire real property, and
to demolish, remove, rehabilitate, or reconstruct the buildings and improvements or
construct new buildings or improvements on the property. Under the authority of
this clause, the EDA may undertake these activities without the adoption of an Urban
Renewal Plan. Real property with buildings or improvements may only be acquired
when the buildings or improvements are substandard. Substandard buildings may
be buildings which are actually hazardous or buildings which are simply dilapidated
or obsolescent, faultily designed, lack adequate ventilation, light, or sanitary
facilities, or any combination of these or other factors that are detrimental to the
safety or health of the community. The powers of the City with respect to this
category of activity is set forth in Minnesota Statutes 1 469.041, clause (9), which
authorizes the City to furnish funds as a to it from any source to pay the cost
of such activities. In other words, the City may make a cash contribution to the EDA
for such acquisitions.
• The second category includes a broad range of activities such as housing, housing
development, redevelopment, mortgage assistance, rehabilitation, loans and grants,
and others - These activities generally require the adoption of a more formal plan,
and in many cases, approval by the City Council. The City Council is authorized by
C—" 26042
ER291 -9
• Mr. Paul Holmlund
December I°, 1991
Page 2
Minnesota Statutes ff 469.041, clause (6), to do any and all things necessary or
convenient to aid and cooperate in the planning, undertaking, construction or
operation of "projects." That is, the City is authorized to provide cash
contributions in aid of such projects once there is a project. However, because such
projects have not yet been formulated and approved, and because such projects
cannot be undertaken by the EDA without first taking such steps, I would not
recommend the City funds be transferred to the EDA for these activities.
That is not to say that funds contributed by the City for one purpose may not be
diverted to another authorized use if approved by both the City Council and the
EDA. Therefore, transfer of the City funds to the EDA could be made for activities
in the first category described above (i.e. acquisition of substandard buildings) ;
and later, if the EDA adopts a redevelopment project, for example, then funds
transferred to the EDA could be used for that purpose if both the EDA and the City
agreed to such use.
If you have any further questions, please give- me a call.
Very truly yours,
Charles L. LeFevere
CLL: rsr
0.:.26042
9r'1291 -9