STATEMENT OF ISSUE
On June 25, 2008, as part of the Housing and Urban Development (HUD) Annual Action Plan, the City Commission approved the use of a total of $1,121,000 in funding from Home Investment Partnership, State Housing Initiatives Partnership, and Community Development Block Grant for owner-occupied rehabilitation. This program serves households at 80% area median income or lower throughout the City. The action requested in this item is to authorize a contract with the Bethel Community Development Corporation (CDC) for the rehabilitation of five homes and Home Rehabilitation and Development Inc. (HRD) for the rehabilitation of eight homes. Both of these agencies have experience in housing rehabilitation.

RECOMMENDED ACTION
Option 1: Authorize the City Manager to execute contracts with the Bethel CDC for up to five owner-occupied rehabilitation projects for a total amount not to exceed $195,000 and with HRD for up to eight owner-occupied rehabilitations for a an amount not to exceed $312,000.

FISCAL IMPACT
No additional impact, as $1,121,000 has already been approved for this activity as part of the Annual Action Plan. This will reduce the funding remaining available for that activity to $614,000 that will fund approximately 15 additional owner-occupied rehabilitation projects. This agenda item has been reviewed by the Budget Office, which concurs with the fiscal impact.

Thomas H. Lewis, Director, Economic & Community Development

Anita Favors Thompson, City Manager

For information, please contact: Joyce Martinez, 850-891-6526

SUPPLEMENTAL MATERIAL/ISSUE ANALYSIS
HISTORY/FACTS & ISSUES
Each year the Annual HUD Action Plan is submitted to the City Commission identifying the activities to be carried out during that year with the available funding. On June 25, 2008, the City Commission approved the Annual Action Plan for FY 08-09. $1,121,000 in funding was identified in that plan for “major rehabilitation”. This program serves income-eligible households (80% AMI or lower). A 10-year (120 month) lien is placed on the properties with 1/120th forgiven for each month the home is owner occupied. Since the beginning of FY 1999-2000, owner-occupied rehabilitation services have been provided by HRD (25 homes), the Frenchtown Community Development Corporation (19 homes), and the Tallahassee Urban League (163 homes). City staff currently processes the homeowner application and income qualification process for HRD and will do so for Bethel CDC as well. Therefore, contracts with these two organizations will reflect a total maximum rehabilitation cost of $39,000 for each home.

Bethel CDC receives Community Housing Development Organization (CHDO) funding each year from the City and is a very successful CHDO partner. Bethel has not provided owner-occupied rehabilitation for the City, but has completed six owner-occupied rehabilitation projects for Leon County. The Bethel CDC will provide rehabilitation activities on the Southside of the City with a focus on the Bond, Providence, and Elberta Empire neighborhoods. The CDC believes that it can make a bigger impact in these Southside communities by adding housing rehabilitation to the services they already offer, most notably construction of new homes sold to income-eligible families with a primary focus in the Bond Community. To date, the CDC has successfully constructed and sold 57 new homes in Southside areas. In addition, they have completed six owner-occupied rehabilitation projects for Leon County.

HRD has been providing owner-occupied rehabilitation services Citywide since 2000. To date HRD has completed rehabilitation of 19 homes. This organization received a contract (#1703) from FY 07-08 funding at the end of March for rehabilitation of up to five homes. To date three of these homes have been completed and one more is underway. Therefore, HRD will request an extension on the current contract to allow completion of the rehabilitation that is underway. Staff meets with HRD bi-weekly to evaluate their performance under contract 1703 and believes that progress is acceptable. Contract 1703 has been reduced from five to four units and the remaining balance of funding will be recaptured and returned to the appropriate master accounts (HOME and/or SHIP) for reprogramming. The recommended action will allow for a new contract to be executed with HRD to undertake the rehabilitation of eight home using FY08-09 funds.

The City also annually contracts with the Tallahassee Urban League for housing rehabilitation. The Urban League is currently working to complete the twenty-four rehabilitations authorized under its Fiscal Year 2007-2008 contract with the City. Once the Urban League has successfully completed those prior year units, staff will present the Commission with a recommendation regarding current year funding for that organization.

CHARITABLE CONTRIBUTIONS
Not applicable as these are non-profit organizations.

OPTIONS

Option 1: Authorize the City Manager to execute contracts with the Bethel CDC for up to five owner-occupied rehabilitation projects for a total amount not to exceed $195,000 and with HRD for up to eight owner-occupied rehabilitations for an amount not to exceed $312,000.

Pros: Up to 13 owner-occupied rehabilitations will be completed serving low-income households. This will partially meet our goal of 28 owner-occupied rehabilitations using FY 2008-2009 funding as set forth in the Annual Action Plan.

Cons: Funding for this activity will be reduced by $507,000, leaving $614,000 remaining for this activity as approved in the 2008-2009 Annual Action Plan. Depending on future costs, the City may not be able to meet anticipated goal of 28 owner-occupied rehabilitations.
Funding already approved for this activity in the 2008-2009 may not be expended in a timely manner.

Option 2: Authorize the City Manager to execute a contract with Bethel CDC for up to five (5) owner-occupied rehabilitation projects for a total not to exceed $195,000, but do not authorize execution of a contract with HRD for up to eight (8) owner-occupied rehabilitations for a total of $312,000.

Pros: Up to five owner-occupied rehabilitations will be completed serving low-income households. This will partially meet our goal of 28 owner-occupied rehabilitations using FY 2008-2009 funding as set forth in the Annual Action Plan.

Cons: Funding for this activity will be reduced by $195,000, leaving $926,000 for this activity as approved in the 2008-2009 Annual Action Plan.
Funding already approved for this activity in the 2008-2009 may not be expended in a timely manner.
The goal set forth in the Annual Action Plan of completion of 28 owner-occupied rehabilitations may not be met.

Option 3: Authorize the City Manager to execute a contract with HRD for up to eight (8) owner-occupied rehabilitations for a total of $312,000, but do not authorize execution of a contract with Bethel CDC for up to five (5) owner-occupied rehabilitation projects for a total not to exceed $195,000.

Pros: Up to eight owner-occupied rehabilitations will be completed serving low-income households. This will partially meet our goal of 28 owner-occupied rehabilitations using FY 2008-2009 funding as set forth in the Annual Action Plan.

Cons: Funding for this activity will be reduced by $312,000, leaving $809,000 for this activity.
Funding already approved for this activity in the 2008-2009 may not be expended in a timely manner.
The goal set forth in the Annual Action Plan of completion of 28 owner-occupied rehabilitations may not be met.

Option 4: Do not authorize staff to enter into a contract with Bethel CDC or HRD for housing rehabilitations.

Pros: Funding for this activity will not be reduced by $507,000 for this activity as approved in the 2008-2009 Annual Action Plan

Cons: No low-income households will be served.
Funding already approved for this activity in the 2008-2009 may not be expended in a timely manner.
The goal set forth in the Annual Action Plan of completion of 28 owner-occupied rehabilitations may not be met.