HomeMy WebLinkAbout2.a. Community Development Block Grant 2002 PlanningCITY OF ROSEMOUNT
EXECUTIVE SUMMARY FOR DISCUSSION
COMMITTEE OF THE WHOLE MEETING DATE: Dec. 12, 2001
AGENDA ITEM: Community Development Block Grant 2002
AGENDA SECTION:
Planning
PREPARED BY: Jim Parsons
AGENDA NO.
Community Development Director
0.
ATTACHMENTS: Memo from Dakota Co. Community
APPROVED BY:
Development Agency
The purpose of this memo is to review the plan for the use of Community Development Block
Grant (CDBG) funds in the 2002 program year. In brief, the plan is for the City to add its 2001
CDBG funds (approximately $68,000) to its expected 2002 CDBG funds of about $65,000, so
that the City could purchase a house downtown for eventual re- development. Because the
CDBG program year begins on July 1 and ends on June 30, the City would wait to purchase the
house until after July 1, 2002.
There are several factors involved in the City's decision of when and how to spend CDBG funds.
• The U.S. Dept. of Housing and Urban Development (HUD) limits the amount of funds that
can be carried from one year to the next (see memo attached). This limit means that the
City would have to spend a significant portion of the 2001 and 2002 CDBG funds before
June 30, 2003, which is the end of the 2002 program year.
• The City's 2001 application identified a house on Burnley Avenue for purchase with CDBG
funds. In February, 2001, the house was appraised for the City at a value of $130,000. If
the City chose instead to purchase (from a willing seller) a different house, then the City
would have to amend its application. HUD would have to approve the amendment; this
process could take some time.
• Cities' activities with CDBG funds must meet one of three federal objectives. The objective
that redevelopment meets is the elimination of blighted structures. In order to qualify an
activity as meeting this objective, a city must demolish blighted structures at the time of
redevelopment. HUD does not consider the demolition of a structure months or years
before redevelopment to meet the federal objective. This means that the City would have
either to keep ther house standing, presumably renting it, or demolish the house and meet the
federal objective through other actions. To meet the objective through other actions, the
City would have to require the re- developer of the site to create housing units and /or jobs for
low- and moderate- income people.
Staff will request that the Council authorize the 2002 CDBG application for $64,921 at an up-
coming Council meeting.
NOTES:
Dakota County
D A Community Development Agency
......................
M E M O R A N D U M
DATE: December 5, 2001
To: Jim Parsons
City of Rosemount
FROM: Lee Smith
RE: FY 2002 CDBG Program
CC: Dan Rogness
We have been informed that the FY 2002 Community Development Block
Grant Program funding for Dakota County will be $2,058,000. The allocated amount
for District 4 will be $304,080, and Rosemount's share of this will be $64,921.
Decreased funding nationally, more set - asides of CDBG funding prior to allocation to
grantees, and increased costs of administering the program have combined to bring
about nearly a 5% reduction from the 2001 allocation amount.
At this time we also want to advise you of a new policy recently announced by
the Department of Housing and Urban Development relating to the requirement to
expend CDBG funds in a timely manner. As you may recall, CDBG grantees are
allowed to carry over no more than 1.5 times the prior year's grant amount from one
Program Year to the next. In the past HUD has not penalized grantees failing to meet
this standard only by requiring that they develop a plan and enter into an agreement as
to how to improve their spend -down rate. Effective in 2002, HUD will actually reduce
the next grant amount for any grantee failing to meet the timely spending requirement
when it is tested 60 days prior to the end of the grant year. For example, if Dakota
County failed to have expended enough CDBG funds so that the balance of unexpended
CDBG funds allocated to the County was less than the required level at the end of
April, 2002, HUD would reduce the 2002 County funding by 21 %.
We do not believe that Dakota County's program is in danger of being penalized
for the 2002 Program Year. However, the imposition of this immediate financial
consequence for failing to expend funds in a timely manner does pose a threat for future
funding, unless all Dakota County CDBG Program users make a diligent effort to select
projects that will be able to proceed in a timely manner, and promptly request funds
when expenses are incurred.
Please call me at (65 1) 423 - 8113 if there are questions or comments.
2496 145th Street West • Rosemount, MN 55068
tel 651- 423 -4800 fax 651- 423 -1273 TDD 651- 423 -8182