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HomeMy WebLinkAboutIR 10121 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10121 To the Mayor and Members of the City Council March 27, 2018 h�T�i7 Page 1 of 2 �i �i7 Y *a SUBJECT: REDUCTION OF $7,859.25 IN AVAILABILITY OF HOME rrn INVESTMENT PARTNERSHIPS PROGRAM GRANT FUNDS The purpose of this report is to advise the City Council of an upcoming reduction of $7,859 in HOME Investment Partnerships Program (HOME) grant funds available to the City in its Treasury Line of Credit with the U.S. Department of Housing and Urban Development (HUD). This reduction will occur due to a shortfall in the reporting of the total funds under contract required to meet HUD's November 30, 2017 commitment deadline for HOME Community Housing Development Organizations (CHDO) funds. The City receives approximately $2 million per year in HOME funds which the City must commit by entering into contracts for affordable housing projects within 2 years of receipt. HUD measures the City's commitment through the Integrated Disbursement and Information System (IDIS), its grant reporting software. Prior to 2015, HUD allowed local governments to measure HOME commitment cumulatively which allowed the City to "overcommit" funds in some years but still be "covered" if there was a shortfall in the most recent year. However, starting with 2015-16 grant funds, HUD required that each grant year be measured separately instead of on a first in, first out basis (FIFO). The reporting shortfall in IDIS occurred because revisions had to be made at the same time to the IDIS activity budgets of 2 CHDO projects with Housing Channel (formerly Tarrant County Housing Partnership, Inc.). Housing Channel obtained a commercial loan for a portion of the cost of building 6 houses in Phase II of the Hardy Street Single Family Infill project, with the City providing HOME funds for the rest of the construction costs. The City was able to decrease its commitment of HOME funds to the Hardy project by approximately $745,000 because of the commercial loan, and these funds were then used to increase the amount committed to Housing Channel's rehabilitation of the Beaty Street Apartments, which will now include 25 permanent supportive housing units when completed. However, in the process of reducing the budgets of the 6 Hardy houses in IDIS, the amount budgeted from 2015 HOME funds for each house was inadvertently reduced by $7,859.25. In making the required IDIS revisions, Staff applied the Neighborhood Services Department's standard FIFO policy of committing the available "oldest funds first" rather than using the 2015 funds. Under the FIFO system, the overall commitment requirement would have been met because the City had significantly exceeded its commitment requirements for the 2013 and 2014 HOME funding years. Upon discovering the error, Staff immediately contacted the local HUD office and provided it with a copy of the executed HOME contract for the Beaty project to show HOME commitment. The local HUD office forwarded the issue to HUD headquarters in Washington D.C. for review. HUD headquarters subsequently requested extensive additional information regarding the Beaty project. After additional consultation, local HUD staff advised that it is unaware of a local government in similar circumstances which successfully proved to HUD headquarters' satisfaction that the HOME commitment requirement had been met. Based on the small amount of funds in question, the extent of Beaty records that would be subject to review and the project's complexity, as well as the amount of Staff time likely to be required in preparing documentation and answering further questions from HUD headquarters, Staff has determined that it would ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10121 To the Mayor and Members of the City Council March 27, 2018 r Page 2 of 2 SUBJECT: REDUCTION OF $7,859.25 IN AVAILABILITY OF HOME r ,a INVESTMENT PARTNERSHIPS PROGRAM GRANT FUNDS not be cost effective to pursue retaining the $7,859.25 in question. This means that the total 2015 HOME grant amount will be reduced from $1,934,447 to $1,926,587.75, a .4% reduction. This reduction will not have any effect on existing projects since the City has received $346,691 in HOME program income since October 2017 that can be used to replace this reduction in funding. Staff is instituting additional cross-checks and procedures for the HOME commitment process in IDIS to prevent re-occurrence of this issue. For further questions, please contact Aubrey Thagard, Director of the Neighborhood Services Department, at 817-392-8187. David Cooke City Manager ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS