Thursday, July 17, 2008, 2:30 p.m.
Community Development Committee Regular Meeting
City Commission Chambers, City Hall
1. Approve minutes
2. Review 2009 Community Development calendar and goals
3. Presentation from Beyond Shelter, Inc about the Cooper House
4. Other Business
5. Next meeting: August 21, 2008
The Community Development Committee Members present or absent were as shown following:
Present: John Paulsen, Dave Piepkorn, Lynn Fundingsland, Pat Zavoral, Steve Stoner, Tim Mahoney
Absent: Dan Fremling, Linda Klebe
Also Present: Rocky Schneider
Pat Zavoral called the meeting to order.
Item 1. Approval of Minutes: Rescheduled Meeting of May 1, 2008
Mr. Paulsen moved to approve the Minutes of the May 1, 2008 meeting as presented. Second by Mr. Fundingsland. All Members present voted aye and the motion was declared carried.
Item 2. Review 2009 Community Development Calendar and Goals
Dan Mahli explained to the Committee the yearly process for the Community Development grant program. He stated in order to receive the federal grants, the City commits to meeting the national priorities set by HUD. He stated each year the staff writes a plan which needs to be consistent with the existing 5-year Consolidated Plan. Mr. Mahli stated the City is required to report annually on the City’s projects and accomplishments.
Mr. Mahli stated a couple of years ago Mayor Furness assigned the CD Committee the task of overseeing the City’s Social Service fund on an annual basis. He stated funding is equivalent to one mil, or approximately $288,000 in 2008. The funding goes to arts and social service agencies.
Mr. Mahli reported that in September, staff will send applications to a CD mailing list and interested parties. He stated the applications will be due in November, reviewed by staff in December, and reviewed by this committee in January. The CD Committee will make a recommendation to the City Commission and there will be a 30-day public comment period. Mr. Mahli stated after the City Commission has approved the Action Plan, it will go to HUD for final approval. He stated once HUD has approved it, staff will begin the environmental review process and projects will begin around June or July. He stated the grant program fiscal year is May 1 to April 30.
Mr. Mahli stated the goals of the Community Development Committee are: affordable housing and homelessness, poverty reduction, community culture, and arts and entertainment. He stated only 30% of the grant can be used to eliminate slum and blight. He stated 70% needs to address low to moderate income individuals. Mr. Mahli stated the grant program has some flexibility on how to use the money, but the City is required to meet the National Objectives for Community Development (CD).
Mr. Zavoral stated in the past, CD funds have assisted projects that address community issues such as the Cooper House. He stated the City might need to give a higher priority to some on-going projects with regard to funding. He added the committee may need to allocate significant funds toward a particular project.
Item 3. Presentation from Beyond Shelter, Inc. Regarding the Cooper House
Lynn Fundingsland, Executive Director of the Fargo Housing and Redevelopment Authority (FHRA), stated the City has completed a 10-year Plan to End Long-Term Homelessness. He added, as part of that mission, the City created the Gladys Ray Shelter, which used Community Development Block Grant (CDBG) funds. He stated the FHRA wants to assist people that use the shelter to find housing.
Mr. Fundingsland stated one key strategy in the Plan is to create more units of permanent supportive housing. He stated, based on research and public input, the Cooper House apartments have been developed to provide permanent supportive housing for people who are coming out of homelessness or who are precariously housed.
Mr. Fundingsland stated MeritCare has agreed to provide a nurse for the building, at its cost, contingent on getting other financing in place. He stated the cost for the Cooper House is 3.7 million dollars and Beyond Shelter Inc. is within $400,000 to complete the financing. Mr. Fundingsland stated this project cannot carry any debt, so 100% financing is needed.
Mr. Fundingsland stated Beyond Shelter, Inc. (BSI) is at a point where it needs to be working with national syndicators but it can’t have serious conversations with them until all financing is in place. He stated that we are late in the process to not have the commitments. He stated BSI can complete or come close to completing the goals, but it is a timing issue. Mr. Fundingsland stated there needs to be discussion with prospective investors if the project is going to happen. He asked the City to give a conditional commitment of $400,000 of HOME Funds for the project.
Mr. Paulsen asked what the deadline date is. Mr. Fundingsland replied he needs commitments by October 1, 2008.
Mr. Fundingsland stated the property in question is located at 414 11th Street North. He stated there is currently a demolition contract for the larger warehouse. He said one neighboring house has been demolished already.
Mr. Zavoral asked Dan Mahli to explain the contributions the City has made to date.
Mr. Dan Mahli stated the City of Fargo used its Fannie Mae line of credit to purchase the land to serve as a bridge loan. He stated the City’s HOME grant requires 15% be given to a CHDO (Community Housing Development Organization) and Beyond Shelter Inc. is the only CHDO in Fargo. He stated the City has committed $100,000 in 2008 and is proposing another $100,000 in 2009. He further stated the Cooper House received a 2008 CDBG grant of $60,000 for demolition costs.
Mr. Zavoral stated there is an opportunity for the City to be a backstop for the financing. He asked if the request for funding is for $400,000. Mr. Fundingsland replied $400,000 would be adequate.
Mr. Mahli stated staff has checked on the status of the Green HOME grant. He stated getting the grant is based on how the City performed on grants in the past, and Fargo scored very high. He stated by September the City will find out if it will receive the Green HOME grant.
Mr. Zavoral stated the project clearly meets the City’s objectives that are in place. He stated the City doesn’t have a CHDO project besides Cooper House for next year, so it appears it will have funding available. He stated if other sources of funds come through, BSI wouldn’t need to use the grant money. Mr. Zavoral stated he feels this is a low risk deal for the City at this point.
Mr. Fundingsland stated if BSI doesn’t have the financing put together by October 1st, 2008, it will lose the tax credits and the project will be delayed for another year.
Mr. Zavoral stated in addressing homelessness, the first step was the plan, then the creation and implementation of the homeless shelter and now the Cooper House site. He stated the homeless shelter is the front door where people go but it can’t be their permanent home of residency. He stated the Cooper House is single rooms with the compliment of support that is both physical and programs. Mr. Zavoral stated the next step is moving the homeless out of this housing into public housing, or if they are lucky, acquisition of their own home.
Mr. Mahli stated Cooper House is permanent housing. He stated the way to end long-term homelessness is to house people. He said the cost of homelessness is great, especially with visits to emergency rooms and other services numerous times a week. Mr. Mahli stated the long-term homeless suffer from mental illness and substance abuse. He stated Cooper House will offer support on a 24-hour basis.
Mr. Fundingsland stated treatment is not a requirement but is promoted and suggested. He stated a group visited a model in Duluth which has seen a good recovery rate. He mentioned people from the project HART facility will move into this building and some will age out and die in this place.
Mr. Paulson asked about the Dakotah Foundation from Bismarck and its project in Fargo. Mr. Fundingsland replied the Dakotah Foundation’s role is to manage operators at the Pioneer building and is contracted through Southeast Human Services.
Commissioner Dave Piepkorn stated BSI is requesting an additional $400,000 from the City, above what has already been spent. Mr. Zavoral stated in Minnesota, the State puts up funding, but that does not occur in North Dakota. Mr. Fundingsland stated both Minnesota and South Dakota fund these types of projects, but not North Dakota. He stated they need to layer in 5 or 6 sources of funding to make the project work. He stated BSI has 10 potential sources now. He stated they are fairly confident funding for this project can be acquired.
Mr. Paulson questioned how many people will reside in the building. Mr. Fundingsland replied there will be 42 individuals. Mr. Paulson further questioned how many people are living on the streets and in shelters. Mr. Mahli stated the last count indicated 600 homeless people, one-third being long-term chronic homeless.
Mr. Fundingsland stated the Housing Authority operates the Graver which contains 60 units, normally comprised of all homeless, with 40 individuals on the waiting list.
Mr. Paulson questioned if this project comes to reality, how much is left as an unmet challenge. Mr. Mahli replied this isn’t the only answer and it won’t do it all. He stated staff has met with Landlord Association about renting to these clients and some of them are interested, but want an indemnification fund so that if they need to make repairs to the units, they aren’t stuck with the expenses. Mr. Mahli stated staff is working with the State of ND on this proposal.
Mr. Zavoral stated the necessity for no debt on this facility has been discussed. He questioned what happens with the rent money. Mr. Fundingsland replied there are two reasons for no debt. He stated the rents are set by people moving into the building that have very little or no income. He stated the tenants may receive Social Security or a disability payment, so they are all below 30% income and are eligible for housing vouchers. Mr. Fundingsland stated HUD will be paying the rent and have a maximum rent amount that will be allowed. He stated in a more conventional housing project, there would be a smaller percentage of units at the fixed lower rent level. He stated investors can be found, but the building cannot have debt. Mr. Fundingsland stated if something falls apart, the idea is to run it as a income based apartment building.
Mr. Zavoral stated the facility will require 24-hour security and surveillance. Mr. Fundingsland stated it is difficult to house the homeless population because of backgrounds and behaviors. He stated the facility will not allow tenants with serious violent backgrounds or sexual predators. He stated the bottom line component is having a front door checkpoint 24 hours a day.
Mr. Paulson questioned if this population varies from winter to summer. Mr. Fundingsland replied this population is higher in the summer and lower in the winter.
Mr. Zavoral stated there appears to be a shortfall on the capital end of construction, based on the timing of applications to various granting organizations. He stated the key is that tax credit equity will not make a commitment until all funding shortfalls are backed up. He stated the Housing Authority is asking the City to back up the shortfall of $400,000. Mr. Zavoral stated there has been discussion on how it can be done and how to identify the sources to go forward with the project. He stated the operational aspects of this facility have been discussed and indicated that there needs to be a commitment to the level of security to make this facility successful.
Mr. Fundingsland stated the State of North Dakota is one of seven states that doesn’t have a housing trust fund. He stated there is a statewide coalition to establish a trust fund in North Dakota. He stated, typically those funds would be a source for this type of project. Mr. Fundingsland stated he doesn’t know how successful the trust fund will be, but there is broad support for it. He stated there is a lot of support from the western part of the State. The support comes from Grand Forks, Minot, and Bismarck. Mr. Fundingsland stated the housing trust fund would be downstream as a potential source of operating funds. He stated 50% of the dollars in the trust fund would go to serve people below 30% Area Median Income (AMI).
Mr. Fundingsland stated it is a struggle to finance these types of projects. He stated a trust fund helps to make these projects work. He stated there are a lot of cities that have their own trust fund and added there is a significant surplus at the state of North Dakota right now, so that is in their favor.
Mr. Zavoral asked Dan Mahli to refresh the Committee on how the City allocates Community Development Block Grant (CDBG) and HOME funds.
Mr. Mahli expects the City to receive 1.4 million dollars in CDBG and Home Funds in 2009. $700,000 is required to be spent on low-income housing. He stated all of the HOME funds need to be used for housing. He stated $400,000 of CDBG funds can go toward capital expenditures and $200,000 can be used to eliminate slum and blight conditions in downtown Fargo.
Mr. Zavoral stated this committee needs to take action on whether or not to back the shortfall, as a backstop, using a variety of CDBG and HOME funds going forward into 2009.
Mr. Paulson moved to approve the use of CDBG and HOME funds in the amount of $400,000 as a backstop for the Cooper House project. Second by Mr. Zavoral.
Rocky Schneider stated he feels it is very important to reiterate that the cost of doing nothing costs a lot of money. He stated rarely there is talk about people in terms of economic development. He stated if these individuals can get steady in their lives, they become productive as well.
Mr. Stoner asked about the source of funds for the tax credits which are very volatile. Mr. Fundingsland stated a year ago the credits sold for 99 cents on a dollar. He stated this year they are estimated at 82 cents on a dollar. He further stated, in a project of this scale, they have taken a hit and the economy is in turmoil.
Mr. Zavoral stated an alternative is to wait a year to see if things stabilize. Mr. Stoner stated even at 82 cents, that is a high number. He stated the ten-year average is 76 to 78 cents. He asked what the 2.1 million dollars is based on.
Mr. Fundingsland replied it is based on 82 cents and talking with investors. He stated the tax credits are allocated based on population and since the state of North Dakota doesn’t have a high enough population, it is given a minimum amount of credits. He continued, stating the minimum credits go up 10% this year. Mr. Fundingsland said BSI is trying to meet the needs with external sources and doesn’t want to come to the City to request the funds.
Commissioner Piepkorn stated the price of the new emergency shelter went up which caused concern to the public. He stated he is concerned that the price of this facility will go up as well and cause additional public concern. He questioned if the time constraint is one of the main concerns.
Commissioner Piepkorn asked if it is critical to take action now. Mr. Fundingsland replied yes, it is critical. He stated it is a lengthy process to work with their investors.
Mr. Fundingsland stated if BSI doesn’t have the finances in order by October 1, 2008, the tax credits will be lost. He stated, if that happens, they can’t go back to the State for a two year period.
Mr. Stoner stated it is important that the committee approve it now and not wait. He stated he is comfortable Mr. Fundingsland has done everything he can to seek the funding sources.
Commissioner Mahoney stated if the federal government was more consistent, it would make it easier to plan. He stated for MeritCare to put a nurse in the facility at cost, speaks volumes. He stated, obviously it is cheaper than having these individuals come through the Emergency Room so frequently.
On call of the roll, all Members present voted aye, Fundingsland abstained, and the motion was declared carried.
Mr. Zavoral suggested the Committee discuss the security issue. Mr. Fundingsland stated the FHRA needs to be able to finance security at the front door and it is pursing a number of avenues to do that. He stated they are attempting to get in the Governor’s budget and Human Services budget, specific to this project. He further stated they are submitting other federal substance abuse and mental health grants.
Commissioner Piepkorn stated he feels the facility will need to have more than one person at the front door because of the risky population. He questioned if this could be a liability issue for the City. Commissioner Piepkorn stated they would need more than one person especially at night time. He stated the Housing Authority needs safety cameras for the tenants and staff.
Mr. Paulson agreed with Commissioner Piepkorn and stated he can see all sorts of times when one person would not be able to handle the situation. Mr. Fundingsland stated he agrees and added the Fargo Police Department has been involved throughout the entire process. He stated it comes down to how they finance the security. He stated the staff is trained and knows there are times when you need to call the Police Department. Mr. Fundingsland stated the Housing Authority currently deals with this population of tenants at the Graver Apts. and just last night the Police Department needed to remove someone from the building. Mr. Stoner stated the facility will always have police calls. He stated the tenants living there will value each other and the ability to move ahead. He stated the culture can become the real support network. Mr. Stoner stated he used to run group homes and seldom does it get out of control.
Mr. Fundingsland stated he and staff visited a similar facility in Duluth and it was interesting to see how calm the facility was. He stated the Housing Authority does not want to do something that gives it a black eye or endangers the community. Mr. Zavoral stated the security and staff is something they can work out later. He stated he just wants to make everyone is aware that to make this project successful, it has to be operating properly.
Mr. Schneider questioned if there was an option of having the Police Department supply an officer if it would save money. Mr. Zavoral replied after just coming off budget hearings, he’d say no. He stated instead of the people being all over town, the Police Department will know where it is located.
Commissioner Piepkorn stated the location of this facility is prime real estate and a growing area for new development. He stated the comment is neither a plus nor a minus, just a comment. Commissioner Mahoney stated it is also the prime area of where other agencies are located and where the people are located.
Commissioner Piepkorn stated he wants to make sure this facility is located on a bus route. Mr. Zavoral stated at the next Committee meeting he wants to have Mr. Fundingsland discuss the existing high rise and the issues with physical problems. He stated he feels the City will need to participate with that project.
Item 4. Other Business
There was no other business presented.
Item 5. Next meeting: August 21, 2008
The meeting was adjourned at 3:45 p.m.