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Home My WebLink About5.a. 2022 CDBG Allocation EXECUTIVE SUMMARY Port Authority Meeting Date: November 16, 2021 AGENDA ITEM: 2022 CDBG Allocation AGENDA SECTION: New Business PREPARED BY: Adam Kienberger, Community Development Director AGENDA NO. 5.a. ATTACHMENTS: Rosemount Dashboard, Estimated Funds Letter APPROVED BY: LJM RECOMMENDED ACTION: Motion to recommend City Council adopt a resolution approving the 2022 CDBG application and reallocating existing funds as discussed. BACKGROUND Annually, the City receives federal Community Development Block Grant (CDBG) funds which are distributed by the Dakota County CDA. The City was recently informed by the Dakota County Community Development Agency (CDA) that our estimated allocation for Program Year 2022 (July 1, 2022 – June 30, 2023) is $60,625. In 2021 we received $60,783 in Community Development Block Grant (CDBG) funds which were allocated between Home Improvement Loan Program and Economic Development Grant Program activities. To secure the grant money that is available, the city must prepare and submit an application that specifies eligible activities or projects to which the city intends to allocate the available funding. A completed application is due in January accompanied by an approved City Council resolution. The final allocation amount may change as HUD finalizes their budget process over the next several months. Proposed Activities City staff is proposing that the estimated $60,000 be allocated to a single activity for 2022 while we work with the CDA to reallocate existing CDBG funds for a Zoning Code Analysis and Update this winter. Home Improvement Loan Program The Home Improvement Loan Program is a program administered by the CDA to benefit low/moderate income households in Rosemount making eligible improvements to their homes. This program was funded last year and grants us the maximum opportunity to benefit a wide audience in Rosemount and meet HUD’s spenddown requirements in a timely manner. Some program details include: The Home Improvement Loan Program assists low- and moderate-income homeowners with making repairs and improvements to their homes. 2 Home Improvement Loans are commonly used for: • Roof replacement • Furnace replacement • Electrical and plumbing repairs • Insulation • Improvements for special needs, such as ramps, bathroom or kitchen modifications Home Improvement Loans feature: • Zero percent interest • No monthly payments • Repayable when ownership changes or you move from the property. You may be required to repay the loan if you refinance your home or take out a home equity loan. • $15,000 loan minimum; $25,000 loan limit The attached CDBG status report shows existing funds and to which year they were allocated. In order to ensure we continue to receive our allocation, cities are required to spend down these funds within four years or they can revert to the CDA for reallocation to active programs. Rosemount’s 2021 application allocated $40,783 to “Economic Development Grant Program” for the creation of a downtown grant program. Due to the complexity of utilizing federal funds for these types of projects, staff created a pilot program that utilized Port Authority marketing dollars to allow for additional flexibility and local control over the administration of the funds. With a wide array of business inquiries occurring in 2021, we have identified the need to revamp significant sections of the city’s zoning code. Many cities’ codes are written and have evolved over several decades to be reactionary to the market and current business trends. At some point it makes sense to have a third party provide a comprehensive analysis and recommend changes to the code so that staff can provide clear, concise, and defendable guidance to prospective businesses about how and where they can invest and grow in Rosemount. Staff recommends reprogramming up to $50,000 of our CDBG funds to accomplish the zoning code re- write in early 2022. If acceptable, this would then align with the recommendation to allocate the city’s entire 2022 allocation to the Home Improvement Loan Program activity which would be effective in July of 2022. CONCLUSION AND RECOMMENDATION Staff is requesting discussion by the Port Authority on the allocation of Rosemount’s 2022 CDBG allocation and reallocation of existing CDBG dollars for a zoning code analysis and update. A resolution approving the City’s 2022 CDBG would be brought to the City Council in either late December or early January. ROSEMOUNT CDBG STATUS REPORT --- FUND BALANCES 18-Oct-21 Years Subject to Recapture 6/30/2022 6/30/2023 6/30/2024 6/30/2025 Activity 2018 2019 2020 2021 Revolving Loan Funds Total Percent by Activity Home Improvement Loan Program -$ 24,281.71$ 48,917.00$ 17,600.00$ -$ 90,798.71$ 69.0% Economic Development -$ -$ -$ 40,783.00$ -$ 40,783.00$ 31.0% TOTAL (by year)-$ -$ -$ 40,783.00$ -$ 131,581.71$ 100.0% TOTAL BUDGET 51,463.00$ 44,294.30$ 59,668.00$ 48,917.00$ PERCENT TO BE EXPENDED BY YEAR 100.0%100.0%100.0%16.6% NOTE: Project administration costs for CDA-run Home Improvement Loan program have been subtracted from the allocation shown above. FY2021 Timeliness Ratio*2.69 Timeliness Ratio of 1.5 is no more than** 73,375.50$ $0.00 Amount that needs to be spent by June 30, 2022 $58,206.21 Amount that needs to be spent to reach 1.5 Timeliness Ratio Rosemount Residential Rehab RST Loans Completed CDBG City Allocation CDBG HOPE MHFA Total 0 17,600.00$ -$ -$ -$ -$ Loans in Process 0 Residents on Waiting List 4 * This ratio needs to be below 1.5 by May 2, 2022. ** This amount is the maximum amount that the City can have available in order to meet timeliness. 4-Year Expenditure Deadline PY2021 Expenditures November 9, 2021 Ms. Adam Kienberger City of Rosemount 2875 145th Street W. Rosemount, MN 55068 RE: CDBG Fiscal Year 2022 Allocation Estimate Dear Mr. Kienberger, Dakota County receives an annual allocation of Community Development Block Grant (CDBG) funds, which is a federal program administered by the Department of Housing and Urban Development (HUD). The program is designed to assist local governments with various community development projects and programs that primarily aid low- and moderate-income residents. Dakota County is considered an “Entitlement County”, and, as such, receives an annual allocation of federal CDBG funds. The Dakota County Board of Commissioners has chosen to allocate the CDBG funds amongst the various cities and townships in the County, as well use the funds for particular County programs. The Dakota County Community Development Agency (CDA) administers this program on behalf of Dakota County. Each year, the city’s CDBG allocation is rebalanced to account for updated information in the American Community Survey provided by the Census Bureau for each city. Per HUD rules, the CDBG allocation is based on three factors: a community’s population, people in poverty, and overcrowded housing units. Each city receives a percentage of the annual Dakota County CDBG allocation based on the three factors. Because these factors change over time, the allocation each city receives will change over time. The CDBG allocation Dakota County will receive for the 2022 Program Year is not yet known. However, we believe it is prudent for each city to anticipate the County will receive a similar amount to what was received for the 2021 Program Year, which was $1,938,727. The amount each city will actually receive for the upcoming 2022 Program Year won’t be known until the federal budget is approved. This amount may be more or less than what your city received for 2021. With that in mind, the estimated allocation for Rosemount for FY 2022 is $60,625. Please provide a contingency plan in your 2022 Program Year application that specifies which program will receive more or less funds based on the final allocation. If you have any questions, please feel free to contact me at (651) 675-4464 or mdykes@dakotacda.state.mn.us. Best Regards, DAKOTA COUNTY COMMUNITY DEVELOPMENT AGENCY Margaret M. Dykes Asst. Director of Community and Economic Development