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CDBG Timeliness Letter and Workout Plan 2016-20171 CITY OF NORTHAMPTON Community Development Block Grant Program Work Out Plan July 1, 2016 - June 30, 2017 1. Purpose_______________________________________________________ This plan lays out a strategy to bring the City of Northampton’s CDBG program into compliance with the CDBG timeliness standard. This standard requires that the City have no more than 1.5 times the amount of the last annual grant in the CDBG line of credit 60 days prior to the end of the current program year. As of May 2, 2016, the City had 1.56 times the amount. The PR 56 report indicated that the City needed to draw $38,256.00 in order to be compliant. Preparation of this plan has accomplished the following: • Lead the office through an analysis of the program which identified causes for expenditure delays and opportunities for spending funds more quickly • Focused attention on how to avoid this situation in the future by creating a baseline for program assessment. • Provided specific information to HUD outlining how the program will be brought into compliance 60 days prior to the end of the next program year. 2. Identification of Problem Projects________________________________ Is there a schedule for each project? In the standard CDBG project application, a timeline with milestones is required. For previously funded public service sub-recipients we know they will begin program operation immediately and will submit quarterly reports and invoices in a timely manner. For acquisition, construction, public facilities and infrastructure projects, we look at other funds needed for implementation and assess how quickly they will become available, before deciding to contract. 2 Which projects are behind schedule?  One affordable housing project and one for relocation assistance $300,000  New Housing Rehab Program $160,000  Slums and Blight Demolition Project $45,000  Affordable Housing Limited Development Project $40,000 We do not enter projects into IDIS until we have contracts. Due to these delays, we have very few projects actually entered into IDIS, although there is movement on many of them. We have approximately $600,000 committed, but not yet contracted. We have two large expenditures that comprise almost half of our grant. Neither one have been entered into IDIS because we haven’t done contracts yet. We have $150,000 allocated for each, but they are both 20 million dollar projects in the queue for State/Department of Housing and Community Development funding. The other large CDBG planned expenditure is to create a new housing rehabilitation program. We were also unable to move on a demolition project with the Northampton Housing Authority. There was also an allocation for a parcel acquisition for affordable housing development that did not come to fruition. What actions will be taken to move these projects along faster? See Course of Action section. Can any of the projects be restructured? Yes, see Course of Action section. Should projects be terminated and the funds reprogrammed? There were several complicating factors that lead to the timeliness issue during this program year: a.) Annually, the Planning Director proposes limited development projects that involve purchasing property for wildlife corridors, open space conservation, natural resource protection and affordable housing development. During the citizen participation/input phase of the Action Plan formulation, CDBG staff informs the Office of Planning and Sustainability about the funds that may be available. Sometimes those deals come to 3 fruition and sometimes they do not. Last year, $40,000 was allocated for the Cooke Ave. parcel but the seller did not accept the offer after several months of negotiation. Those funds were reprogrammed into a new “affordable housing development” line item for another acquisition being worked on now that would potentially produce 4 lots for Habitat for Humanity during the next program year. b.) In the 1990’s the Northampton Housing Authority was deeded 4 parcels from the decommissioning of the Northampton State Hospital. 2 were developed but the remaining 2 have languished. Two years ago, CDBG staff worked with the NHA and set aside $45,000 to demolish an old farmhouse on one of the remaining parcels. The site had been proposed to serve 10 clients of the Dept. of Developmental Services, was designed and permitted several years ago, but no State funding through an old Chapter 689 allocation has been forthcoming. (CDBG had funded the demolition of a farmhouse on the other parcel the year before). The NHA Executive Director then retired and the search process for the newly hired director took an entire year (it was posted, then re- posted). Now in place, the new director has determined there are significant internal operational issues to attend to and the Board is not interested in developing the parcels. The City is committed to production of affordable housing units and has proposed a change to the disposition legislation to name an alternate development entity. This has to occur at the State level and the process is taking time. However, the $45,000 remains in the plan so hopefully the City or a new entity identified through an RFP process can proceed with the demolition in this next program year. c.) The City and the Northampton Housing Partnership is anxious to create a housing rehabilitation program. CDBG staff conducted interviews with local vendors and created a program design. A significant amount of funding was set aside in the current year and the next program year, but the process took time and a contract was not issued in 2015-16 as planned. d.) Two very significant CDBG allocations, one for an affordable housing project and the other to provide relocation assistance did not move forward in the current year. The allocations of $150,000 each are large amounts for the City’s small program. The contracts for those have not yet been signed, two years later, because without other funding sources, the projects won’t happen. At 129 Pleasant Street, (70 new units) the project developers, HAP Housing have also been doing research over the last six months to determine whether they want to use the funds. They are purchasing an existing 58 unit SRO and have just received their funding from the State. They did not get funded in the first round of 2015, but did late in the year. They originally applied to 4 use the CDBG funds for acquisition but now are requesting the funds be used to assist with tenant relocation. The Valley CDC Lumberyard Project at 256 Pleasant Street will create 55 new affordable units. The project was not funded by the State in 2015 and is awaiting award announcements (anticipated for July 2016) for what will be the only round in 2016. Because projects are required to show local matches, CDBG funds need to be committed early in the process. In combination, these 2 projects tie up $300,000 of the available CDBG funds. The time it takes for projects to receive the State awards needed to implement projects is not within local control, but the local allocations must be made early in order for the State One Stop funding applications to be competitive. Are there other projects underway that can use reallocated funds quickly? Once the Housing Rehabilitation Program is up and running, yes, funds can be reallocated quickly into that program. To this point, however, we did not have that ability. Have all unprogrammed/surplus funds and program income been identified? Yes, the Assistant CDBG Administrator keeps track regularly. Is an amendment to the Consolidated Plan needed? Yes, see Course of Action section. 3. Identifying Systemic Problems___________________________________ Does the annual program schedule provide sufficient time to identify and refine prospective projects that can be carried out without delay? Except for larger affordable housing projects that require very competitive State funding awards, for which the timing is outside of local control, yes. With inter- departmental conversations occurring in the fall, and project applications coming in during January and February, that timing should be sufficient for bids, contracts and spring work to culminate prior to June 30. There is no issue with planning and administration or public services funded activities. 5 Are we working closely enough with sub-recipients? Yes. We are a small city and people are accessible and collaborative. We have a finite number of affordable housing development partners and work closely with the Valley CDC, HAPHousing and Pioneer Valley Habitat for Humanity. The Public Service sub- recipients attend meetings regularly and are in touch through quarterly reports and on- site monitoring. We have had primarily the same group of agencies carrying out services for years so we have built solid relationships over time. Are we getting sufficient information to keep track of expenditures? Yes. This is not an issue. The challenges are more along the lines of qeues for other funding sources and other situations beyond the City’s control. Are we regularly reviewing progress of each funded project against a projected schedule? Yes. Invoices are not paid if there are issues, either programmatically or financially, found with quarterly reports. All contracts have a scope of services attachment which articulates goals and objectives and time schedules for milestones. Is the backlog caused by the failure of sub-grantees? It should not be categorized as failure, per say, but more the nature of the process to secure the funding sources needed. Not getting the housing rehab program launched was a staff capacity time management issue, however. Do we require an operating agency to define sufficiently a project and a readiness to proceed before we fund the project? Yes, that information is required in the application and attached to the contract. However, as noted above, applications for affordable housing projects rarely get funded in the first round by the State, thus creating a year delay, but the CDBG funds have to be committed from the onset. Do we require site control before we include a project in the Consolidated Plan? No. But we do require a timeline establishing when site control will occur and the steps needed to achieve it. 6 Can we do a better job of phasing or staging large projects in order to commit funds only to the portion that can move ahead in the next year or two. Based on the experience of this past year, yes. Are we failing to anticipate large amounts of program income and are therefore unprepared to use it quickly when it is received? No. Program income is not a large part of our program and we have an up to date awareness of where it could come from. Households paying off housing rehab and home repair loans from an older program that operated for years cannot be anticipated. These types of repayments do not occur often (on the average, three per year). Other monthly loan payments for other types of activities are tracked regularly. Is there a substantial gap between when expenditures are made and funds drawn down from HUD? The warrant process can take up to two weeks once the Assistant CDBG Administrator has submitted it to the Auditor. Funds are drawn from HUD within one week after checks are sent to vendors. In most cases, funds are drawn the next day. Do we have adequately trained staff and the skill levels needed? The Assistant CDBG Administrator has been in this position for 23 years. The Housing and Community Development Planner has been with the City for 22 years and has been the CDBG Administrator since 2011. The Administrator has attended advanced CDBG training and training on monitoring sub-recipients. The City of Northampton’s CDBG Program is solely staffed by these two individuals. 4. Results of Assessment/ Lessons Learned __________________________ Summary of Analysis  When considering large funding awards (large related to the overall City CDBG budget, but small in comparison to other funds needed to implement the project that involves other competitive applications) for projects that may not happen right away, examine the potential impact on timeliness issues. 7  When considering CDBG allocations for acquisition of land for limited development projects, proactively create an award reallocation plan if the negotiations do not bear fruit.  Build in (additional) staff time for technical assistance when funding awards, particularly for construction/demolition/rehabilitation activities that activate bid processes, Davis Bacon wage rates, EEO compliance and a myriad of other Federal requirements, are given to agencies that lack experience utilizing Federal funds. 5. Course of Action/ Next Steps________________________ Action Date Results Expected Change VCDC Lumberyard CDBG activity from acquisition to pre- development Publish Plan Amendment Legal Ad June 7, 2016 Hold Public Hearing June 14, 2016 Comment Period thru July 15, 2016 $150,000 currently committed. Consider additional $50,000 for pre- dev. costs in 2016-17. Execute contract by 10/31/16. Expend CDBG funding by 3/31/17. Complete Environmental Review and do RRoFunds for Lumberyard Project With statutory comment and review periods Contract with VCDC by 10/31/16. Enter project into IDIS Draw funds by 3/31/17. Expend $200,000 of CDBG funds for Pre-Development Costs for new affordable housing development Change HAPHousing 155 Live/ Pleasant Street project CDBG allocation category from acquisition to a City Relocation Assistance Services program. Publish Plan Amendment Legal Ad June 7, 2016 Public Hearing June 14, 2016 Comment Period thru July 15, 2016 Contract with HAP by 10/31/16 Draw funds by December 31, 2016 Expend $150,000 of CDBG funds for a Relocation Assistance Services Program. Add Memorial Hall Publish Plan Amendment Create an additional project 8 Elevator Project to Plan Get Estimates Contract with City Dept. Bid Work Implement Project Legal Ad June 7, 2016 Hold Public Hearing June 14, 2016 Comment Period thru July 15, 2016 Contract by 9/30/16, enter into IDIS, complete project by 3/31/17, draw funds by 4/15/17 to expend CDBG funds and increase handicap accessibility in a public building Anticipate $40,000 range for cost estimate Limited Development Affordable Housing Project Planning Director has negotiated purchase and will be issuing RFP for development of 4 single family house lots/ Parcels to be conveyed to selected entity by March 31,2017 Expend $220,000 of CDBG funds for acquisition of land to achieve multiple City goals/ Glendale Road Contract with Vendor for Housing Rehab Program Complete Program Design June 15, 2016 Contract by 7/31/16 Enter into IDIS Implement Program by utilizing $160,000 carried over from current year, reallocating $40,000 from Cooke Ave. project & add $200,000 from next year $400,000 of CDBG funds to rehab. 8-10 single family homeowner occupied units with current year funds and next year funds. Expend funds out as admin. fees are submitted and contractor invoices are submitted with each rehab. project. Grove Street Inn Heating system Contract with Central Services by 8/30/16 Complete work by 10/31/16, draw funds by 11/30/16 Improve heating situation and reduce utility costs at City’s emergency shelter for individuals Alliance/ Gandara House Contract with Gandara by 8/31/16, work completed by 3/31/17, draw funds by 4/15/17 Rehab the facility for low/mod individuals in recovery, reduce energy costs Burts Pit Rd. Demolition Assess progress of State legislation change to new development entity/ 8/31/16 Reallocate funds if project appears delayed indefinitely - to housing rehab program or 9 affordable housing projects Use of Program Income All Program Income will be expended prior to using Entitlement Allocation Expend program income as required The Office of the Mayor and the CDBG administrative staff will work diligently to improve the management of this program. It is the goal of all involved to disperse these funds in a timely and efficient manner in order to improve the quality of life for residents in our community with low and moderate incomes. The end result is therefore, a healthy and diverse City of Northampton. CITY OF NORTHAMPTON Community and Economic Development Office City Hall, 210 Main Street Northampton, MA 01060-3199 (413) 587-1288 Fax: (413) 587-1275 Robert Shumeyko, Director September 28, 2016 U.S. Department of Housing and Urban Development Boston Regional Office Office of Community Planning and Development 10 Causeway Street 5th Floor Boston, MA 02222-1092 SUBJECT: CDBG Work Out Plan Quarterly Submission/ Northampton Dear Mr. Shumeyko; Please find enclosed the first quarterly progress report as required by the CDBG Program Work Out plan approved on June 23, 2016. We are monitoring projects closely to insure compliance with the CDBG timeliness standard and are making adjustments as necessary. If you require any additional information, do not hesitate to contact me at 413-587-1288 or via email at pkeller@northamptonma.gov Respectfully, Margaret Keller Housing and Community Development Planner/CDBG Administrator City of Northampton Enclosure CITY OF NORTHAMPTON Community and Economic Development Office City Hall, 210 Main Street Northampton, MA 01060-3199 (413) 587-1288 Fax: (413) 587-1275 Work Out Plan Progress Report July – September 2016 As of September 30, 2016, the City of Northampton has not drawn any funds. All public service activities and administration costs are paid on a quarterly basis. Other than a few bills for legal ads and two first time homebuyer down payment assistance grants recently received, the City has incurred no other CDBG expenses to date. Accomplishments this quarter included administrative functions such as closing out prior year activities, reconciliation of accounts and preparation of the CAPER. Environmental reviews were conducted for: Grove Street Inn heating system repairs; Gandara House/Summer Street roof repairs; the Housing Rehabilitation program and the two Pleasant Street housing projects. Notices of Intent to HUD to request the release of funds were issued for relevant projects. Contracts were executed for all public services sub-recipients. Meetings were held to discuss the housing rehab program design with Pioneer Valley Planning Commission and with Valley CDC regarding the Lumber Yard housing project. Considerable time was spent in developing a temporary relocation program for the City utilizing CDBG funds. A public hearing was held September 26, 2016 to solicit public comment on Amendments to the Action Plan. Comments will be accepted until October 28th. One project, Memorial Hall Accessibility, was unable to move forward and funds were reallocated to the Northampton Center for the Arts Accessibility Improvements. The second plan amendment was to permit the CDBG allocation of $200,000 for the Valley CDC Lumber Yard housing project to be used for either acquisition or pre-development. Also during this period, the CDBG administrative staff spent several days involved in the yearly single audit. All IDIS activities were entered into the system, funded and reconciled against City records in preparation for drawdowns in the second quarter. During the second quarter, the City will begin to draw funds as public service sub-recipients submit quarterly invoices and reimbursement to the City for CDBG personnel salaries is drawn. It is expected that contracts with HAP and Valley CDC for the housing projects on Pleasant Street will be executed in the second quarter, as well as, those for Grove Street heating repairs, the Center for the Arts accessibility project and Gandara for Summer Street repairs. Individual housing rehab projects are also expected to begin. Spreadsheets are attached showing projects and activity in a more condensed format. CITY OF NORTHAMPTON Community and Economic Development Office City Hall, 210 Main Street Northampton, MA 01060-3199 (413) 587-1288 Fax: (413) 587-1275 CITY OF NORTHAMPTON Community Development Block Grant Program Work Out Plan Progress Report October – December 2016 Contact: Margaret Keller, CDBG Administrator pkeller@northamptonma.gov Cam Leon, Assistant CDBG Administrator cleon@northamptonma.gov ___________________________________________________________________________ Summary As of December 31, 2016, the City of Northampton has drawn $66,586.16. A payment to HAPHousing in the amount of $90,509.74 for relocation assistance has been processed and will be drawn by January 13, 2017. A contract was executed for Grove Street Inn heating system improvements. Accomplishments this quarter included administrative functions such as review of sub-recipient quarterly reports and entry of accomplishments into IDIS; preparation and submission of the Annual CAPER Report; updating the City’s website to include the program year 2015 CAPER; reconciliation of accounts with the City and preparation of the program year 2017 Action Plan. The City is working to secure the deeds from the State to move forward on the Laurel St. and Burt’s Pit Road parcels, formerly owned by the Northampton Housing Authority. Projected January 2017 Activity Quarterly payments for public service activities and CDBG staff administrative expenses will be paid and drawn down in January. The $220,000 CDBG Contract for acquisition on Glendale Road for the construction of at least 4 affordable homeownership units will be signed. Closing on the transaction is scheduled for late January, early February. The $200,000 CDBG Contract with Valley CDC for the acquisition of a downtown vacant lot for the construction of 55 affordable housing units is scheduled for a late January, early February closing transaction. The first four homes participating in the housing rehab program will get underway, with projects going out to bid. The Grove Street Inn heating system repair project will be completed and funds drawn. HAPHousing will continue to submit invoices for tenant relocation expenses. Spreadsheets are attached showing project activity in a more condensed format. CITY OF NORTHAMPTON Community and Economic Development Office City Hall, 210 Main Street Northampton, MA 01060-3199 (413) 587-1288 Fax: (413) 587-1275 CITY OF NORTHAMPTON Community Development Block Grant Program Work Out Plan Progress Report #3 January – March 2017 Contact: Margaret Keller, CDBG Administrator pkeller@northamptonma.gov Cam Leon, Assistant CDBG Administrator cleon@northamptonma.gov ___________________________________________________________________________ Summary (numbers are rounded) As of March 31, 2017, the City of Northampton has drawn a total of $673,732. The program expended $607,146 this past quarter alone. As of this date, the ratio of fund balance to grant is 1.25. • A payment to HAPHousing in the amount of $90,509 for relocation assistance was drawn in January and an additional $21,478 for that project was drawn in March. • A payment of $200,000 was made and drawn in February to Valley CDC to purchase the LumberYard parcel at 256 Pleasant Street (55 units of affordable housing) • A payment of $220,000 was made to the Office of Planning and Sustainability and drawn in March for the purchase of a parcel for open space acquisition and affordable housing development ( four homeownership units) • The Grove Street Inn heating system improvements project was completed in January ($8,040) • Quarterly payments for public service activities and CDBG staff administrative expenses were drawn down in January, February and March. Additional activity included: • The first four homes participating in the housing rehab program have gone out to bid and work will begin on 3 in April. (the fourth needs to be re-bid) • The City is still working to secure the deeds from the State to move forward on the Laurel St. and Burt’s Pit Road parcels, formerly owned by the Northampton Housing Authority. Spreadsheets are attached showing project activity in a more detailed format.