05-18-09 Agenda PacketCITY OF RICHFIELD, MINNESOTA
MONDAY, MAY 18, 2009.
REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING
RICHFIELD CITY HALL COUNCIL CHAMBERS
6700 PORTLAND AVENUE
7:00 P.M.
AGENDA
Call to order
Roll call
1. Approval of minutes Regular HRA Meeting April 20, 2009
Notes:
2. HRA approval of agenda
3. Consideration of Foreclosure Purchase Incentive Program Down-Payment
Assistance Loan Agreement between HRA and Beth Voyles for purchase of 7532
Wentworth Avenue
Staff Report No. 19
Notes:
4. Consideration of Foreclosure Purchase Incentive Program Down-Payment
Assistance Loan Agreement between HRA and Lindsay Jacobs for purchase of
6810-11th Avenue
Staff Report No. 20
Notes:
5. Consideration of resolution authorizing purchase of real property at 7408 Sheridan
Avenue through Richfield Rediscovered Program, contingent upon finding of
consistency with Comprehensive Plan by Planning Commission
Staff Report No. 21
Notes:
6. Consideration of resolution authorizing HRA acceptance of funds for federal
Neighborhood Stabilization Program and execution of subrecipient agreement with
Hennepin County
Staff Report No. 22
Notes:
7. Executive Director report
8. Claims and payroll
Adjournment
Auxiliary aids for individuals with disabilities are available upon request. Requests must
be. made at least 96 hours in advance to the City Clerk at 612-861-9738.
~I
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING MINUTES
Richfield, Minnesota
Regular Meeting
April 20, 2009
CALL TO ORDER
The meeting was called to order by Vice Chair Gepner at 7:00 p.m.
ROLL CALL
HRA Members
Present: David Gepner, Vice Chair; Joan Helmberger; Doris Rubenstein; and
Steven Quam.
HRA Members
Absent: Sue Sandahl.
Staff Present: Steven L. Devich, Executive Director; John Stark, Community
Development Director; Karen Barton, Assistant Community Development
Director; and Nancy Gibbs, City Clerk.
Item #1 HRA APPROVAL OF MINUTES
Commissioner Quam amended the Regular HRA Meeting Minutes of March 16, 2009.
Included in Item #5 should be "Commissioner Quam asked about what provisions are in this
agreement to assure that the program be used for those who do not qualify for, the federal
programs."
M/Quam, S/Helmberger to approve the minutes of (1) Regular HRA Meeting of March 16,
2009 as amended.
Motion carried 4-0.
Item #2 HRA APPROVAL OF AGENDA
HRA Meeting
-2- April 20, 2009
M/Rubenstein, S/Quam to approve the agenda.
Motion carried 4-0.
Item #3 CONSIDERATION OF ACCEPTING URBAN LAND INSTITUTE HOUSING AUDIT
REPORT AND FINDINGS S.R. NO. 12
Assistant Community Development Director Barton presented Staff Report No. 12.
Cathy Bennett, Bennett Community Consulting, presented the Urban Land Institute Housing
Audit Report.
Vice Chair Gepner thanked Ms. Bennett for a job well done.
Commissioner Rubenstein congratulated Ms. Bennett for presenting such a thorough report.
Commissioner Quam asked Ms. Bennett what is her recommendation on importance.
Ms. Bennett suggested that a work plan be put together. She stated the communications
part is very important and suggested focusing on apartment renovation.
M/Rubenstein, S/Helmberger to approve acceptance of Urban Land Institute Housing Audit
Report and Findings.
Motion carried 4-0.
Item #4 CONSIDERATION OF CHANGE TO HRA SUBORDINATION AND SATISFACTION
POLICY FOR FORECLOSURE PURCHASE INCENTIVE PROGRAM LOANS
S.R. NO. 13
Community Development Director Stark presented Staff Report No. 13.
After much discussion by commissioners, the HRA recommended changing the policy to use
50% of the money to offset the loan to value ratio.
Community Development Director Stark stated that staff will return in May or June with a
chart to show loans and how it is working.
M/Gepner, S/Helmberger to approve change to HRA subordination and satisfaction policy
for Foreclosure Purchase Incentive Program loans.
Motion carried 4-0.
Item #5 CONSIDERATION OF AUTHORIZING CONSULTANT SERVICES AGREEMENT
WITH GREATER METROPOLITAN HOUSING CORPORATION S.R. NO. 14
HRA Meeting -3- April 20, 2009
Assistant Community Development Director Barton presented Staff Report No. 14.
M/Quam, S/Rubenstein to approve authorizing consultant services agreement with Greater
Metropolitan Housing Corporation for 2009.
Motion carried 4-0.
Item #6 CONSIDERATION OF SUBORDINATION REQUEST OF HRA TRANSFORMATION
HOME LOAN AT 7121 OAK GROVE BOULEVARD S.R. NO. 15
Assistant Community Development Director Barton presented Staff Report No. 15.
Commissioner Quam stated he is comfortable with an 80% loan to value ratio and will
oppose this particular subordination.
M/Rubenstein, S/Gepner to approve subordination request of HRA Transformation Home
Loan at 7121 Oak Grove Boulevard.
Motion carried 3-1. (Quam oppose)
Item #7 CONSIDERATION OF FORECLOSURE PURCHASE INCENTIVE PROGRAM DOW-
PAYMENT ASSISTANCE LOAN AGREEMENT BETWEEN HRA AND PAUL
SENKYR FOR PURCHASE OF 6514 -12TH AVENUE S.R. NO. 16
Assistant Community Development Director Barton presented Staff Report No. 16.
M/Helmberger, S/Quam to approve Foreclosure Purchase Incentive Program down-
payment assistance loan agreement between HRA and Paul Senkyr for purchase of 6514 - 12th
Avenue subject to the outstanding loan to value ratio requirements of the subordination policy.
Motion carried 4-0.
Item #8 CONSIDERATION OF FORECLOSURE PURCHASE INCENTIVE PROGRAM DOW-
PAYMENT ASSISTANCE LOAN AGREEMENT BETWEEN HRA AND JUAN
KOSAR FOR PURCHASE OF 6226 WASHBURN AVENUE S.R. NO. 17
Assistant Community Development Director Barton presented Staff Report No. 17.
M/Quam, S/Rubenstein to approve Foreclosure Purchase Incentive Program down-
payment assistance loan agreement between HRA and Juan Kosar for purchase of 6226
Washburn Avenue subject to the applicant meeting subordination policy requirements and staff not
bringing application back to HRA if applicant does not meet those requirements.
Motion carried 4-0.
HRA Meeting -4- April 20, 2009
Item #9 CONSIDERATION OF FORECLOSURE PURCHASE INCENTIVE PROGRAM
REHABILITATION LOAN AGREEMENT BETWEEN HRA AND TEDD HERMAN
AND JENNA LINDEMAN FOR REHABILITATION OF 7233 -10TH AVENUE
S.R. NO. 18
Assistant Community Development Director Barton presented Staff Report No. 18.
The HRA consensus was that this loan application will have to meet the same criteria as
the previous applicants.
M/Gepner, S/Quam to approve Foreclosure Purchase Incentive Program rehabilitation loan
agreement between HRA and Tedd Herman and Jenna Lindeman for rehabilitation of 7233 - 10th
Avenue subject to the applicant meeting subordination policy requirements and staff not bringing
application back to HRA if applicant does not meet those requirements.
Motion carried 4-0.
Item #10 EXECUTIVE- DIRECTOR REPORT
None.
Item #11 CLAIMS AND PAYROLL
Executive Director Devich stated that the Claims and Payroll will be sent to the HRA via e-
mail on the day of regular meetings for their review before voting on it at the meeting.
M/Helmberger, S/Quam that the following claims and payrolls be approved:
U.S. Bank 04-20-2009
Section 8 Checks: 116756 - 116896
-HRA Checks: 30532 - 30556
TOTAL
Motion carried 4-0.
ADJOURNMENT
$ 167,773.64
$ 47,271.31
$ 215,044.95
The meeting was adjourned by unanimous consent at 9:12 p.m.
HRA Meeting
Date Approved:
-5- April 20, 2009
David Gepner
Vice Chair
Nancy Gibbs
City Clerk
Steven L. Devich
Executive Director
AGENDA ITEM # 3
REPORT # j9
J STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
MAY 18, 2009
REPORT PREPARED BY:
KAREN BARYON, COMMUNITY
DEVELOPMENT ASSISTANT DIRECTOR
NAME, TITLE
REPORT PRESENTER:
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE
-/
KAREN BARYON, COMMUNITY
DEVELOPMENT ASSISTANT DIRECTOR
ITEM FOR HRA CONSIDERATION:
Consideration of aDown-Payment Assistance Loan Agreement between the Housing and
Redevelopment Authority and Beth Voyles for the purchase of 7532 Wentworth Avenue
through the Foreclosure Purchase Incentive Program.
I. RECOMMENDED ACTION:
By Motion: Approve and authorize execution of the attached
Foreclosure Purchase Incentive Program Down-Payment Assistance
Loan Agreement between the Housing and Redevelopment Authority
and Beth Voyles for the purchase of 7532 Wentworth Avenue.
II. BACKGROUND
In an effort to return foreclosed and vacant homes to owner-occupancy and reduce
the associated blighting effects, the Housing and Redevelopment Authority (HRA)
allocated $150,000 for the Foreclosure Purchase Incentive Program (FPIP) for
2009. On March 16, 2009 the HRA approved guidelines for the program. The
purpose of the program is to encourage the return of foreclosed and vacant single-
family homes to owner-occupancy as quickly as possible. Prospective buyers who
homestead the property are eligible for either a $10,000 down-payment assistance
loan or a $15,000 rehabilitation assistance loan. Both loans are deferred and will be
forgiven after five years of owner-occupancy.
05182009 FPIP 7532 Wentworth - Voyles.doc
Ms. Beth Voyles has submitted an FPIP application for down-payment assistance
for the purchase of 7532 Wentworth Avenue. The home is vacant and foreclosed.
Ms. Voyles' purchase offer has -been accepted and her closing date is scheduled for
May 28, 2009.
Ms. Voyles is in agreement with the terms of the Down-Payment Assistance Loan
Agreement and has signed the Agreement. Ms. Voyles' mortgage lender requires
their lien to be in first-position on the title and have request a subordination of the
HRA's lien. Ms. Voyles subordination request meets the HRA's guidelines and
therefore was approved administratively.
Staff has reviewed Ms. Voyles' FPIP application and has determined it meets all
HRA FPIP loan requirements. Staff is therefore recommending approval of Ms.
Voyles Down-Payment Assistance Loan Agreement for the purchase of 7532
Wentworth Avenue.
III. BASIS OF RECOMMENDATION
A. POLICY
• The stated goals of the FPIP loan program are to:
o Eliminate the blighting influence of foreclosed, vacant housing,
thus stabilizing and improving residential neighborhoods; and
to
o Off-sets costs associated with deferred maintenance and
property damage associated with foreclosure and vacancy.
B. CRITICAL ISSUES
• Foreclosed homes affect the stabilization of neighborhoods and
property values.
• Ms. Voyles' application meets the FPIP loan requirements as outlined
in the FPIP Procedural Guidelines.
C. FINANCIAL
• Funds have been budgeted in the HRA's 2009 Budget for this activity.
Agreement.
TERNATIVE
• - uo not approve the execution of the
I V . L-1TTACIiMENTS I
• roreciosure rurcnase inventive r
Agreement
• Photo of 7532 Wentworth Avenue
~ VI. PRINCIPAL PARTIES EXPECTED AT MEETING ~
as signed
reement.
nt Assistance
Down Payment Assistance Loan
• MS.
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FORECLOSURE PURCHASE INCENTIVE PROGRAM
REHABILITATION LOAN
AGREEMENT
Between
THE HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
and
at
This Instrument Drafted by:
Kennedy & Graven, Chartered
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, Minnesota 55402
Telephone: (612) 337-9300
34~293v1 JBD RC125-1
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AGREEMENT
THIS AGREEMENT, made and entered into as of this day of
200_, by and between the Housing and Redevelopment Authority in and for the City of
Richfield, a public body corporate and politic under the laws of the State of Minnesota, having its
principal office at 6700 Portland ,Avenue, Richfield, Minnesota (HRA), and
(Buyer).
WITNESSETH:
WHEREAS, the City of Richfield (City) and the HRA have previously created and
established a Redevelopment Project (Project) and Tax Increment Financing District (TIF
District) pursuant to the authority granted in Minnesota Statutes, Sections 469.001 through
469.047 and Sections 469.174 through 469.179 (collectively, the Acts); and
WHEREAS, pursuant to the Acts, the City and the HRA have previously adopted a
redevelopment plan (Redevelopment Plan) and a tax increment financing plan (TIF Plan) to
finance all or a portion of the public development costs of the Project; and
WHEREAS, in order to achieve the objectives of the Redevelopment Plan and TIF Plan
as hereinafter defined and particularly to make specified land in the Project available for
development by private enterprise for and in accordance with the Redevelopment Plan, the HRA
has determined to provide substantial aid and assistance to finance public development costs in
the Project; and
WHEREAS, the HRA has become concerned that within the Project there is an
increasing number of homes which have been foreclosed and are standing vacant, and, in many
cases are not being adequately secured or maintained; and
WHEREAS, under such circumstances, the properties themselves are subject to
deterioration; and the entire neighborhood is subject to the impacts caused by such conditions;
and
WHEREAS, the HRA, in recognition of the need to provide decent, safe and sanitary
housing in the community has established a deferred loan program which is designed to provide
assistance to individuals who are acquiring and doing rehabilitation to foreclosed properties
within the Project, and in furtherance of the goals and objectives of the plan for the Project; and.
WHEREAS, the Buyer has proposed a development as hereinafter defined within the
Project which the HRA has determined will promote and carry out the objectives for which the
Project has been undertaken, will assist in carrying out the obligations of the Redevelopment
Plan and TIF Plan, will be in the vital best interests of the City and the health, safety and welfare
of its residents and is in accord with the public purposes and provisions of the applicable state
and local laws and requirements under which development in the Project has been undertaken
and is being assisted.
345293v t JBD RC 125-I
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NOW, THEREFORE, in consideration of the mutual covenants and obligation of the
HRA and the Buyer, each party does hereby represent, covenant and agree with the other as
follows:
ARTICLE I.
DEFINITIONS, EXHIBITS, RULES OF INTERPRETATION
Section 1.1. Definitions. In this Agreement, the following terms have the meaning
given below unless the context clearly requires otherwise:
(a) Cam. The City of Richfield, Minnesota.
(b) Rehabilitation Plans. Collectively, the plans, drawings and related documents
related to the Improvements, which are listed on Exhibit D.
(d) Development. The Properly and the Improvements to be constructed thereon
according to the Rehabilitation Plans approved by the HRA.
(f) Closing The date on which Buyer closes on the Purchase. of the Property.
(h) Improvements. Each and all of the site improvements to be constructed on the
Property by the Buyer, as specified in the Rehabilitation Plans approved by the HRA.
(i) Guidelines. The guidelines adopted by the HRA as such are applicable to the
providing of rehabilitation assistance.
(,j) Mort~a~e and Holder. The term "mortgage" shall include the mortgages
referenced in Article VI of this Agreement and any deed of trust or other instrument creating an
encumbrance or lien upon the Property or any part thereof, as security for a loan. The term
"holder" in reference to a mortgage includes any insurer or guarantor (other than the Buyer) of
any obligation or condition secured by such mortgage or deed of trust.
(k) Pro e .The real property legally described as:
[Insert Legal]
Located on land having a street address of:
[Insert Address]
(r) Unavoidable Delays. Delays which are the direct result of strikes, labor troubles,
fire or other casualty to the Improvements, litigation commenced by third parties which results in
345293v1 JBD RC125-i
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delays or acts of any federal, state or local government, except those contemplated by this
Agreement, which are beyond the control of the Buyer.
Section 1.2 Exhibits. The following Exhibits are attached to and by reference made a
part of this Agreement:
A. Form of Certificate of Completion
B. Guidelines
C. The Note and Mortgage
D. Rehabilitation Plan
Section 1.3 Rules of Interpretation.
(a) This Agreement shall be interpreted in accordance with and governed by the laws
of the State of Minnesota.
(b) The words "herein" and "hereof' and wards of similar import, without reference
to any particular section or subdivision refer to this Agreement as a whole rather than any
particular section or subdivision hereof.
(c) References herein to any particular section or subdivision hereof are to the section
or subdivision of this Agreement as originally executed.
(d) Any titles of the several parts, articles and sections of this Agreement are inserted
for convenience and reference only and shall be disregarded. in construing or interpreting any of
its provisions.
ARTICLE II.
REPRESENTATIONS AND UNDERTAKINGS
Section 2.1 By the Buyer. The Buyer makes the following representations and
undertakings:
(a) The Buyer has the legal authority and power to enter into this Agreement and has
duly authorized the execution, delivery and performance of this Agreement;
(b) .The Buyer has the necessary equity capital or will obtain commitments for
financing the necessary for acquisition of the Property and construction of the Improvements;
(c) The Buyer will construct the Improvements in accordance with the terms of this
Agreement and all local, state and federal laws and regulations;
(d) The Buyer will obtain, in a timely manner, all required permits, licenses and
approvals, and will meet, in a timely manner, the requirements of all local, state and federal laws
and regulations which must be obtained or met before the Improvements may be constructed; and
345293v1 JBD RC125-1
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(e) The plans for the Improvements have been prepared by a qualified draftsperson or
architect, or other person acceptable to the HRA, as appropriate. If the proposed improvements
do not require a plan to be prepared, buyer agrees to submit a detailed list of the proposed
improvements to the Property, detailing the project and materials.
(f) Buyer intends to reside at the Property following the Closing and to use the same
as Buyer's principal residence; and is not acquiring the Property for the purpose of resale or
speculation.
Section 2.2 By the HRA. The HRA makes the following representations as the basis for
the undertaking on its part herein contained:
(a) The HRA is authorized by law to enter into this Agreement and to carry out its
obligations hereunder; and
(b) The HRA will, in a timely manner, subject to all notification requirements, review
and act upon all submittals and applications of the Buyer and will cooperate with the efforts of
Buyer to secure the granting of any permit, license, or other approval. required to allow the
construction of the Improvements.
ARTICLE III.
ACQUISITION OF PROPERTY; CONVEYANCE TO BUYER
Section 3.1 Purchase of Property by Buyer. The Buyer has, or will utilize its best
efforts to enter into a binding agreement to purchase the Property. Upon determination by the
HRA that Buyer has entered into a binding purchase agreement for the purchase of the Property,
the HRA will deliver to Buyer the Note described in Section 5.1. If no binding purchase
agreement is entered into within 15 days from the date of this Agreement, either the HRA or the
Buyer may declare this Agreement null and void, and the parties will thereby be released from
any further obligation hereunder.
Section 3.3 Closing. Closing must take place on or before ,
200_, or such other date as may be agreed to by the Buyer and HRA in writing. At Closing,
the Buyer will provide the HRA with a mortgage in recordable form (and pay for the cost of
recording). The mortgage will be a first lien on the Property and will act as security for
repayment of any of the Rehabilitation Loan advanced to the Buyer in the event that construction
of the Improvements is not completed on or before the date specified' in Section 4.3. The
Mortgage will be in substantially the form of the mortgage shown on the attached Exhibit C.
ARTICLE IV.
CONSTRUCTION OF IMPROVEMENTS
Section 4.1. Construction of Improvements. The Buyer shall construct the
Improvements on the Property in accordance with the Rehabilitation Plans and shall maintain,
preserve and keep the Improvements in good repair and condition.
34~293v1 JBDRC125-I
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Section 4.2. Building Plans. No building permit will be issued by the City unless the
building plans are in conformity .with the Rehabilitation Plans and all local, state and federal
regulations. The HRA shall, within 25 days of receipt of Rehabilitation Plans submitted in
application for a building permit, review such Rehabilitation Plans to determine whether the
foregoing requirements have been met. If the HRA determines such Rehabilitation Plans to be
deficient, it shall notify the Buyer in writing stating the deficiencies and the steps necessary for
correction. Issuance of the building permit by the City shall be a conclusive determination that
the Rehabilitation Plans have been approved and shall satisfy the provisions of this Section 4.2.
Section 4.3 Schedule of Construction. Subject to Unavoidable Delays, construction of
the Improvements shall be completed prior to , 200 .All construction shall be
in conformity with the approved Rehabilitation Plans. Periodically during construction the Buyer
shall make reports in such detail as may reasonably be requested by the HRA concerning the
actual progress of construction. If at any time prior to completion of construction the HRA has
cause to believe that the Buyer will be unable to complete construction of the Improvements in
the time permitted by this Section 4.3, it may notify the Buyer and demand assurances from the
Buyer regarding the Buyer's construction schedule. If such assurances are not forthcoming or are
deemed by the HRA at its sole discretion to be inadequate, the HRA may declare an Event of
Default and may avail itself of any of the remedies specific in Section 8.2 of this Agreement.
Section 4.4 Certificate of Completion. Promptly after notification by the Buyer of
completion of construction of the Improvements, the HRA shall inspect the construction to
determine whether the Improvements have been completed in accordance with the Rehabilitation
Plans and the terms of this Agreement, including the date of the completion thereof. In the event
that the HRA is satisfied with the construction, the HRA shall furnish the Buyer with a
Certificate of Completion in the form attached hereto as Exhibit A. Such certification by the
HRA shall be a conclusive determination of satisfaction and termination of the agreements and
covenants in this Agreement with respect to the obligation of the Buyer to construct the
Improvements. Issunce of the Certificate of Completion shall also serve' as a satisfaction of any
obligation of Buyer under the Note and Mortgage.
If the HRA shall refuse or fail to provide certification in accordance with the provisions
of this Section 4.4, the HRA shall within 15 days of such notification provide the Buyer with a
written statement, indicating in adequate detail in what respects the Buyer has failed to complete
the. Improvements in accordance with the provisions of this Agreement necessary, in the opinion
of the HRA, for the Buyer to take or perform in order to obtain such certification.
Section 4.5 Failure to Construct. In the event that construction of the Improvements is
not completed as provided in Section 4.3 of this Agreement, an Event of Default shall be deemed
to have occurred, and the HRA may proceed with its Remedies on Default under this Agreement.
345293v1 JBD RC125-I
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ARTICLE V.
REHABILITATION LOAN
Section 5.1 Issuance of the Note. As consideration for Buyer's covenant to construct
the Improvements, and subject to all of the conditions of this Agreement, the HRA agrees fo
provide the Buyer with a Rehabilitation Loan in the amount of $1 S,Q00. Upon the Buyer
providing the HRA with evidence that Buyer has entered into a purchase agreement for the
purchase of the Property, the HRA will deliver to Buyer a promissory note in substantially the
form of the attached Exhibit C. Payment of the Rehabilitation Loan will be exclusively subject
to and in accordance with the terms of the Note as such are contained in the Note or described in
this Agreement.
Section 5.2 Note Terms. The terms of the Note will include the following:
(a) Assuming the Buyer is in compliance with Buyers obligations, the Note will be
payable in three installments. The first installment of $3,750 will be due and payable at Closing,
the second installment of $3,750 will be due and payable not later than five days following
notification and verification of the issuance a building permit for construction of the
Improvements, and the final installment of $7,500 on the date of the issuance of a Certificate of
Completion showing full completion of all of the Improvements. In the event the Improvements
do not require a building permit, the second installment will be due and payable upon the
submission of receipts for the Improvements totaling $5,000 or more.
(b) The Note will be cancelled if the Closing does not occur by the last date provided
in Section 3.3; or if construction of the Improvements are not fully completed by the last date
provided in Section 4.3.
(c) The Note will not bear interest.
(d) The Note may be canceled by the HRA in the event that the: Buyer is in default of
any of its obligations under this Agreement.
(e) The Note may not be assigned or pledged unless the proposed recipient certifies to
the HRA that it is aware of and accepts to the conditions of the Note governing payment.
(f) The Note will provide for repayment of the any Rehabilitation Loan payments
paid to Buyer under the Note in the event that the.Buyer fails to meet the time requirements of
Sections 3.3 and 4.3. Such repayment obligation will be secured by a mortgage in substantially
the form shown in Exhibit C which will be delivered by Buyer to the HRA at Closing. Unless
the HRA agrees otherwise in accordance with Section 6.3, the Mortgage will be a first lien on the
Property.
(g) The Note will also provide that if the Buyer continues to observe all of the
covenants and requirements and obligations imposed on Buyer under this Agreement, any other
agreements between the HRA and Buyer with respect to the Property, and in the Note for a
period of five years from the date of Closing, then the Buyer's obligation to repay the
345293v1 JBD RC12~-I
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Rehabilitation Loan will be forgiven, terminate and be of no further force and effect; and an
instrument discharging the Mortgage will thereupon be provided to Buyer for recording at the
Buyer's request.
Section 5.3 Payments Under the Note. On the date payments are due under the Note,
the HRA will make such payments by delivering the amount due to either the lending institution
providing. financing for construction of the Improvements, or the title company servicing the
construction loan. Such lending institution or title company may then use the delivered funds to
make payment to any contractor or materialman for work or materials actually furnished in
connection with the Improvements
In the event that no lending institution or title company is available to serve in that
capacity, the HRA shall disburse the payments, when due, in any manner which in its reasonable
judgment will assure that the funds will be expended for construction of the Improvements.
ARTICLE VI.
FINANCING
Section 6.1 Financing. If additional financing is required for the Improvements, within
30 days of the date of execution of this Agreement by all the parties, the Buyer shall submit to
the HRA evidence of financing for the Improvements in compliance with the provisions of
Section 2.1(b) of this Agreement. If the HRA finds that the amount of such financing along with
the Rehabilitation Loan is adequate in amount to provide for the construction of the
Improvements, the HRA shall notify the Buyer of its approval.
If the HRA rejects the evidence of financing as inadequate, the Buyer shall have 30 days
or such additional period of time as the Buyer may reasonably require .from the date of such
notification to submit evidence of financing satisfactory to the HRA. If the Buyer fails to submit
such evidence or fails to use due diligence in pursuing financing, the HRA may terminate this
Agreement and both parties shall be released from any further obligation or liability hereunder,
except for the HRA's remedies pursuant to Section 4.5 of this Agreement.
Section 6.2 Copy of Notice of Default to Lender. Whenever the HRA shall deliver any
notice or demand to the Buyer with respect to any Event of Default by the Buyer in its
obligations or covenants under this Agreement, the HRA shall at the same time forward a copy of
such notice or demand to each Holder of any Mortgage authorized by the Agreement at the last
address of such Holder shown in the records of the HRA.
Section 6.3 Subordination. In order to facilitate obtaining financing for the purchase of
the Property or the construction of the Improvements by the Buyer, the HRA may agree to
modify this Agreement, the .Note or the Mortgage in the manner and to the extent the HRA
deems reasonable, upon request by the financial institution and the Buyer.
34~293v1 JBU RC125-1
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ARTICLE VII.
PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER
Section 7.1 Representation as to Redevelopment. The Buyer represents and agrees
that its undertakings pursuant to the Agreement, are for the purpose of development of the
Property and not for speculation in land holding. The Buyer further recognizes that, in view of
the importance of the Development to the general welfare of Richfield and the substantial
financing and other public aids that have been made available by the HRA for the purpose of
making the Development possible, the qualification and identity of the Buyer are of particular
concern to the HRA. The Buyer further recognizes that it is because of such qualifications and
identity that the HRA is entering into this Agreement, and, iri so doing, is further willing to rely
on the representations and undertakings of the Buyer for the faithful. performance of all
undertakings and covenants agreed by the Buyer to be performed.
Section 7.2 Prohibition Against Transfer of Property and Assignment of
Agreement. For the reasons set out in Section 7.1 of this Agreement, the Buyer represents and
agrees that prior to the issuance of the Certificate of Completion by the HRA:
(a) Except only by way of security for, and only for the purpose of obtaining
financing necessary to enable the Buyer or any successor in interest to the Property, or any part
thereof, to perform its obligations with respect to the Development under this Agreement, and
any other purpose authorized by this Agreement, the Buyer, except as so authorized, has not
made or created, and that it will not make or create, or suffer to be madeor created, any total or
partial sale, assignment, conveyance, or any trust in respect to this Agreement or the Property or
any part thereof or any interest therein, or any contract or agreement to do any of the same,
without the prior written approval of the HRA.
ARTICLE VIII.
EVENTS OF DEFAULT
Section 8.1 Events of Default Defined. The following shall be deemed Events of
Default under this Agreement and the term shall mean, whenever it is used in this Agreement,
unless the context otherwise provides, any one or more of the following events:
(a) Failure by the Buyer to pay when due the payments required to be paid or secured
under any provision of this Agreement;
(b) Failure by the Buyer to observe and substantially perform any covenant,
condition, obligation or agreement on its part to be observed or performed hereunder, including
the time for such. performance;
(c) If the Buyer shall admit in writing its inability to pay its debts generally as they
become due, or shall f le a petition in bankruptcy, or shall make an assignment for the benefit of
345293v1 JBD RC125-1
g
~~r~
its creditors, or shall consent to the appointment of a receiver of itself or of the whole or any
substantial part of the Property;
(d) If the Buyer, on a petition in bankruptcy filed against it, be adjudicated as
bankrupt, or a court of competent jurisdiction shall enter an order of decree appointing, without
the consent of the Buyer, a receiver of the Buyer or of the whole or substantially all of its
property, or approve a petition filed against the Buyer seeking reorganization or arrangement of
the Buyer under the federal bankruptcy laws, and such adjudication, order or decree shall not be
vacated or set aside or stayed within 60 days from the date of entry thereof; or
(e) If the Development is in default under any Mortgage and has not entered into a
work-out agreement with the Mortgagee.
Section 8.2 Remedies on Default. Whenever any Event of Default occurs, the HRA
may, in addition to any other remedies or rights given the HRA under this Agreement, take any
one or more of the following actions following written notice by the HRA to the Buyer as
provided in Section 9.5 of this Agreement:
(a) suspend its performance under this Agreement until it receives assurances from the
Buyer, deemed reasonably adequate by the HRA, that the Buyer will cure its default and continue
its performance under this Agreement;
(b) cancel or rescind this Agreement;
(c) cancel or rescind the Note;
(d) foreclose on the Mortgage;
(e) withhold the Certificate of Completion; or
(f) take whatever action at law or in equity may appear necessary or desirable to the HRA
to enforce performance and observance of any obligation, agreement, or covenant of the Buyer
under this Agreement; provided, however, that any exercise by the HRA of its rights or remedies
hereunder shall always be subject to and limited by, and shall not defeat,. render invalid or limit
in any way (a) the lien of any Mortgage authorized by this Agreement and (b) any rights or
interest provided in this Agreement for the protection of the Holders of a Mortgage; and provided
further that should any Mortgagee succeed by foreclosure of the Mortgage or deed in lieu thereof
to the Buyer's interest in the Property, it shall, notwithstanding the foregoing, be obligated to
perform the obligations of the Buyer under this Agreement to the extent that the same have not
therefore been performed by the Buyer.
Section 8.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the
HRA is intended to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power may be exercised from
345293v1 JBD RC125-1
9
~~~I
time to time and as often as may be deemed expedient. In order to entitle the HRA or the Buyer
to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such
notice as may be required in this Article VIII.
Section 8.4 No Additional Waiver Implied by One Waiver. In the event of the
occurrence of any Event of Default by either party, which Event of Default is thereafter waived
by the other party, such waiver shall be limited to the particular Event of Default so waived and
shall not be deemed to waive any other concurrent, previous or subsequent Event of Default.
ARTICLE IX.
ADDITIONAL PROVISIONS
Section 9.1 Conflict of Interests; Representatives Not Individually Liable. No HRA
officer who is authorized to take part in any manner in making this Agreement in his or her
official capacity shall voluntarily have a personal financial interest in this Agreement or benefit
financially there from. No member, official, or employee of the HRA shall be personally liable
to the Buyer, or any successor in interest, for any Event of Default by the HRA or for any amount
which may become due to the Buyer or successor or on any obligations under the terms of this
Agreement.
Section 9.2 Non-Discrimination. The provisions of Minnesota Statutes Section 181.59,
which relate to civil rights and non-discrimination, and any affirmative action program of the
City shall be considered a part of this Agreement and binding on the Buyer as though fully set
forth herein.
Section 9.3 Notices and Demands. Except as otherwise expressly provided in this
Agreement, a notice, demand or other communication under this Agreement by either party to the
other shall be sufficiently given or delivered if it is sent by mail, postage prepared, return receipt
requested or delivered personally:
(a) As to the HRA:
Richfield HRA
Executive Director
6700 Portland Avenue South
Richfield, MN 55423
(b) As to the Buyer:
or at such other address with respect to either such party as that party may, from time to time,
designate in writing and forward to the other as provided in this Section 9.3.
345293v1 JBDRC125-I
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Section 9.4 Counterparts. This Agreement may be simultaneously executed in any
number of counterparts, all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the HRA has caused this Agreement to be duly executed in
its name and behalf and its seal to be hereunto duly affixed and the Buyer has caused this
Agreement to be duly executed as of the day and year first above written.
THE HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY OF
RICHFIELD, MINNESOTA
By
Its Chairperson
BY
Its Executive Director
Buyer
~--
345293v1 JBD RCI2~-1
11
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STATE OF MINNESOTA )
SS
COUNTY OF )
The foregoing instrument was acknowledged before me this day of
200 , by ,the Chairperson of the Housing and
Redevelopment Authority in and for the City of Richfield, Minnesota (HRA), a public body
corporate and politic under the laws of Minnesota, on behalf of the HRA.
Notary Public
STATE OF MINNESOTA )
SS
COUNTY OF )
The foregoing instrument was acknowledged before me this day of
200 , by ,the Executive Director of the Housing
and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA), a public body
corporate and politic under the laws of Minnesota, on behalf of the HRA.
Notary Public
STATE OF MINNESOTA )
SS
COUNTY OF ~ ~ )
The foregoing instrument was acknowledged before me this S^ day of
)'1~1 a..~., , 200 ~ , by ~--. i h ~S ~ J C~ac~.S
-~~
,~''% ~4 NANCY K GtBBS Notary
~~ ~~ NOTARYPUBLIC--MINNESOTA
~<~ J~ My Commission Expires Jan. 3f, 20i0
345293v1 JBD RC125-I
12
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EXHIBIT A
FORM OF CERTIFICATE OF COMPLETION
The undersigned hereby certifies that ,has fully and
completely complied with its obligations under Article IV of that document entitled "Foreclosure
Purchase Incentive Program Rehabilitation I,Oa11 Agreement", between the Housing and
Redevelopment Authority in and for the City of Richfield, Minnesota and
dated filed
as Document No. with respect to the
construction of the approved construction plans at legally
described as and is released and forever discharged from its
obligations to construct under such above-referenced Article.
DATED:
By:
ItS:
STATE OF MINNESOTA )
SS
COUNTY OF HENNEPIN )
THE HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
RICHFIELD
By:
Its: Chairperson
Executive Director
The foregoing instrument was acknowledged before me this day of
20_, by and
the Chairperson and Executive Director of the Housing and Redevelopment Authority in and for
the City of Richfield, a public body corporate and politic under the laws of the State of
Minnesota on behalf of the public body corporate and politic.
This instrument was drafted by:
Kennedy & Graven, Chartered
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
Notary Public
345293v1 JBD RC125-1
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EXHIBIT B
GUIDELINES
[To be attached prior to execution]
JBD-236919v1
RC 125-240
3-1(0
EXHIBIT C
PROMISSORY NOTE
REDEVELOPMENT CREDIT NOTE
$15,000
20_
The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a
public body corporate and politic (the "Maker"), for value received, hereby promises to pay to
(the "Holder") the principal sum of Fifteen thousand and No/100
Dollars ($15,000), with no interest as hereinafter provided, in any coin or currency which at the
time or times of payment is legal tender for the payment of private debts in the United States of
America. The principal of this Note is payable as follows:
1. The principal amount of the Note is as provided for in that certain agreement by
and between Maker and Holder entitled: Foreclosure Purchase Incentive Program Rehabilitation
Loan Agreement dated (the "Agreement") and shall
bear no interest. Terms contained in this Note shall have the meanings given them in the
Contract unless a different meaning is clearly indicated.
2. The Note shall be due and payable the Note will be payable in three installments..
The first installment of $3,750 will be due and payable at Closing, the second installment of
$3,750 will be due and payable not later than. five days following the date a building permit for
construction of the Improvements is issued, and the final installment of $7,500 on the date of the
issuance of a Certificate of Completion showing frill completion of all of the Improvements. No
amount shall be due or payable prior to those dates.
3. This Note will be cancelled if the Closing does not occur by the last date provided
in Section 3.3 of the Agreement; or if construction of the Improvements are not fully completed
by the last date provided in Section 4.3 of the Agreement.
4. This Note is given pursuant to the Agreement. All of the agreements, conditions,
covenants, provisions, and stipulations and remedies contained in the Agreement are hereby
made a part of this Note to the same extent and with the same force and effect as if they were
fully set forth herein. It is agreed that time is of the essence of this Note. If a default by the
Maker or the Holder occurs under the Agreement, then the Holder or Maker may at its right and
option, exercise any rights it may have under law or at equity, under the Agreement, and under
the Note.
5. The remedies of the Maker or Holder as provided herein, and in the Agreement, or
any other instrument, shall be cumulative and concurrent and may be pursued singly,
successively, or together, and, at the sole discretion of the Maker or Holder, may be exercised as
often as occasion therefore shall occur; and the failure to exercise any such right or remedy shall
in no event be construed as a waiver or release thereof.
JBD-236919v 1
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The Maker or Holder shall not be deemed, by any act of omission or commission, to have
waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the
Maker. or Holder and then only to the extent specifically set forth in the writing. A waiver with
reference to one event shall not be construed as continuing or as a bar to or waiver of any right or
remedy as to a subsequent event. This Note may not be amended, modified, or changed except
only by an instrument in writing signed by the party against whom enforcement of any such
amendment, modifications, or change is sought.
6. This Note shall be governed by and construed in accordance with the laws of the
state of Minnesota without regard to its conflict of laws provisions. Any disputes, controversies,
or claims arising out of this Note shall be heard in the state or federal courts of Minnesota, and
all parties to this Note waive any objection to the jurisdiction of these courts, whether based on
convenience or otherwise
7. Holder may not assign, transfer or pledge .this Note without the prior written
consent of the Maker. Maker may condition consent on obtaining a certification from the
proposed assignee, transferee or pledgee acknowledging and agreeing to Maker's rights to cancel
the Note in accordance with the terms of the Note and the Agreement.
8. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts, and things
required to exist, happen, and be performed precedent to or in the issuance of this Note do exist,
have happened, and have been performed in regular and due form as required by law.
9. Any Foreclosure Purchase Incentive Program Rehabilitation Loan payments paid
to Buyer under the Note will be repaid to the HRA in the event that the Buyer fails to meet the
requirements of the Agreement. Such repayment obligation will be secured by a mortgage in
substantially tie form shown in Exhibit C of the Agreement which will be executed and
delivered by Buyer to the HRA at Closing. Unless the HRA agrees otherwise in accordance with
Section 6.3, the Mortgage will be a first lien on the Property.
IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed as of the
_ day of , 20,
HOUSING AND REDEVELOPMENT AUTHORITY IN AND
FOR THE CITY OF RICHFIELD, MINNESOTA
By:
Executive Director
ATTEST:
Board Secretary
Dated:
JBD-236919v 1
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P. O. Box 198
Kennedy & Graven
MORTGAGE
This Indenture made this day of 200_, between
Mortgagor, and THE HOUSING AND
REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD,
MINNESOTA, a Minnesota public body corporate and politic under the laws of the State of
Minnesota, Mortgagee. _
Witnesseth: That the said Mortgagor, in consideration of the sum of One ($1.00) Dollar and other
good, valuable and sufficient consideration, the receipt whereof is hereby acknowledged, does
hereby Grant, Bargain, Sell, and Convey unto the said Mortgagee, its successors and assigns,
Forever, all the tracts or parcels of land lying and being in the County of Hennepin and State of
Minnesota, described as follows, to-wit:
The separate tracts and parcels of land described in the attached Exhibit A. (The
"Property")
To Have and to Hold the Same, Together with the hereditaments and appurtenances thereto
belonging to the said Mortgagee, its successors and assigns, forever. And the said Mortgagor, for
itself, and its successors and assigns, does covenant with the said Mortgagee, its successors and
assigns, as follows: That it is lawfully seized of said premises and has good right to sell and convey
the same; that the same are free from all incumbrances, save and except reservations, restrictions
and easements of record; that the Mortgagee, its successors and assigns, shall quietly enjoy and
possess the same; and that the Mortgagor will Warrant and Defend the title to the same against all
lawful claims not hereinbefore specifically excepted.
Provided, Nevertheless, That if said Mortgagor, its successors and assigns, shall keep and perform
each and every one of its obligations with respect to completion of construction of the
Improvements to be constructed by Mortgagor under and pursuant to that certain Foreclosure
Purchase Incentive Program Rehabilitation Loan Agreement dated as of
(the "Agreement"), made and entered into between Mortgagor and
Mortgagee, and shall keep and perform all the covenants and agreements herein contained, then this
deed to be null and void, and to be released at the Mortgagor's expense. This Mortgage secures a
principal debt in the amount of $15,000 payable by Mortgagor to Mortgagee under the terms of the
Agreement, and amendments thereto, between Mortgagor and Mortgagee.
And the Mortgagor, for itself, and its successors and assigns, does hereby covenant and agree with
the Mortgagee, its successors and assigns, to perform its obligations as above specified, to pay all
taxes and assessments now due or that may hereafter become liens against said premises at least ten
(10) days before penalty attaches thereto; to pay, when due, both principal and interest of all prior
liens or incumbrances, and to keep said premises free and clear of all other liens or incumbrances;
JBD-236919v]
RC 125-240
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to commit or permit no waste on said premises and to keep them in good repair; to complete
forthwith any improvements which may hereafter be under course of construction thereon, and to
pay any other expenses and attorneys' fees incurred by said Mortgagee, its successors or assigns, by
reason of litigation with any third party for the protection of the lien of this Mortgage.
That• Mortgagor, does further covenant and agree that if any lien for labor, skill or material shall
be filed for record during the life of this Mortgage, upon or against the premises hereby mortgaged,
the said Mortgagor will, within thirty (30) days after the date of its filing for record, either pay off
the said lien and secure its satisfaction of record, or will protect the Mortgagee against any loss or
damage growing out of its enforcement, by furnishing a bond for the same amount in the form and
with the sureties to be approved by the Mortgagee.
In case of failure to pay said taxes and assessments; prior liens or incurnbrances, expenses and
attorneys' fees as above specified, or to insure said buildings and deliver the policies as aforesaid,
the Mortgagee, its successors or assigns, may pay such taxes, assessments, prior liens, expenses and
attorneys' fees and interest thereon, or effect such insurance, and the sums so paid shall bear interest
at the highest rate permitted by law from the date of such payment, shall be impressed as an
additional lien upon said premises, and be immediately due and payable from the Mortgagor, its
successors or assigns, to said Mortgagee, it successors or assigns, and this Mortgage shall from date
thereof secure the repayment of such advance with interest.
In case of default in any of the foregoing covenants, the Mortgagor confers upon the Mortgagee the
option of declaring a default and hereby authorizes and empowers said Mortgagee, its successors
and assigns, to foreclose this Mortgage by judicial proceedings or to sell said premises at public
auction and convey the same to the purchaser in fee simple in accordance with the statute, and out
of the money arising from such sail to retain all sums secured hereby, with interest and all legal
costs and charges of such foreclosure and the maximum attorneys' fee permitted by law, which
costs, charges and fees the Mortgagor herein agrees to pay.
In Testimony Whereof, The said Mortgagor has hereunto set its hand the day and year first above
written.
JBD-236919v1
RC 125-240
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~~a~
STATE OF NIINNESOTA )
COUNTY OF HENNEPIN
The foregoing instrument was acknowledged before me this day of 5~e1' "'_ lber,-Z893;
by ~~ ~, ~ Swv ~ r~ co~S
(Notary Stam~o~r yam,),.,,.. Notary Public
,~~ NANCY K. G1BBS
~~ NOTARY PUBLfC.. Nf1NNSSOTA
My Commission Expires Jan. 31, 2010
.,~
This Instrument was Drafted by:
Kennedy & Graven, Chartered
470 Pillsbury Center
Minneapolis, MN 55402
(612) 337-9300
JBD-236919v1
RC 125-240
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EXHII3IT A
LEGAL DESCRIPTION
The land referred to in this Agreement is described as follows:
Lot 019 Block 0000, Baumgartners 1St Addn N %2 of E %2
345293v1 JBD RC12~-I
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EXI-IIBIT D
LIST OF CONSTRUCTION PLAN DOCUMENTS
• Foreclosure Purchase Incentive Program Rehabilitation Loan Agreement, fully executed
• Improvements Plans, approved by the HRA and approved by the Building Official for
construction considerations if applicable
• Purchase Agreement for sale of Property from Buyer to Homeowner
345293v1 JBD RC12>-1
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3 -~ 3
,~
., _.
'.; ~'~;
7532 Wentworth Avenue South
AGENDA ITEM # L~
REPORT # 2O
STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
MAY 18, 2009
REPORT PREPARED BY:
KAREN BARYON, COMMUNITY
DEVELOPMENT ASSISTANT DIRECTOR
NAME, TITLE
REPORT PRESENTER:
KAREN BARYON, COMMUNITY
DEVELOPMENT ASSISTANT DIRECTOR
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW
~~
.SIGNATURE
REVIEWED BY EXECUTIVE
ITEM FOR HRA CONSIDERATION:
Consideration of a Rehabilitation Assistance Loan Agreement between the Housing and
Redevelopment Authority and. Lindsay Jacobs for the purchase of 6810 11th Avenue through
the Foreclosure Purchase Incentive Program.
I. RECOMMENDED ACTION:
By Motion: Approve and authorize execution of the attached
Foreclosure Purchase Incentive Program Down-Payment Assistance
Loan Agreement between the Housing and Redevelopment Authority
and Lindsay Jacobs for the purchase of 6810 11th Avenue.
II. BACKGROUND
In an effort to return foreclosed and vacant homes to owner-occupancy and reduce
the associated blighting effects, the Housing and Redevelopment Authority (HRA)
allocated $150,000 for the Foreclosure Purchase Incentive Program (FPIP) for
2009. On March 16, 2009 the HRA approved guidelines for the program. The
purpose of the program is to encourage the return of foreclosed and vacant single-
family homes to owner-occupancy as quickly as possible. Prospective buyers who
homestead the property are eligible for either a $10,000 down-payment assistance
loan or a $15,000 rehabilitation assistance loan. Both loans are deferred and will be
forgiven after five years of owner-occupancy.
05182009 FPIP 6810 11th Ave. - Jacobs.doc
Ms. Lindsay Jacobs has submitted an FPIP application for rehabilitation assistance
for the purchase of 6810 11th Avenue. The home is vacant and foreclosed. Ms.
Jacobs' purchase offer has been accepted and her closing date is scheduled for the
end of May.
Ms. Jacobs is in agreement with the terms of the Rehabilitation Assistance Loan
Agreement and has signed the Agreement. Ms. Jacobs has submitted a
rehabilitation plan for the use of the FPIP to upgrade the homes electrical service,
install smoke- and carbon-monoxide detectors, install a new furnace and central air-
conditioning, replace the water heater, bring plumbing up to code, replace
rotted/missing wood siding and trim on exterior of the home, and address other
point-of--sale inspection requirements. The total cost of the above improvements is
estimated to be $15,950.00.
Staff has reviewed Ms. Jacobs' FPIP application and has determined it meets all
HRA FPIP loan requirements. Staff is therefore recommending approval of Ms.
Jacobs Rehabilitation Assistance Loan Agreement for the purchase of 6810 11th
Avenue South.
III. BASIS OF RECOMMENDATION
A. POLICY
• The stated goals of the FPIP loan program are to:
o Eliminate the blighting influence of foreclosed, vacant housing,
thus stabilizing and- improving residential neighborhoods; and
to
o Off-sets costs associated with deferred maintenance and
property damage associated with foreclosure and vacancy.
B. CRITICAL ISSUES
• Foreclosed homes affect the stabilization of neighborhoods and
property values.
• Ms. Jacobs' application meets the FPIP loan requirements as outlined
in the FPIP Procedural Guidelines.
C. FINANCIAL
• Funds have been budgeted in the HRA's 2009 Budget for this activity.
D. LEGAL -
• Ms. Jacobs has signed the FPIP Rehabilitation Assistance
Agreement.
~ IV. ALTERNATIVE RECOMMENDATION(S) ~
• Do not approve
n of the Agreement.
~ V. ATTACHMENTS
• i-oreciosure Nurcnase ~ncer
Agreement
• Photo of 6810 11th Avenue
rogram Down-Payment Assistance Loan
~ VI. PRINCIPAL PARTIES EXPECTED AT MEETING ~
~' 1
FORECLOSURE PURCHASE INCENTIVE PROGRAM
DOWN-PAYMENT ASSISTANCE LOAN
AGREEMENT
Between
THE HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
and
at
This Instrument Drafted by:
Kennedy & Graven, Chartered
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, Minnesota 55402
Telephone: (612) 337-9300
345290v1 JBD RC125-1
~~
AGREEMENT
THIS AGREEMENT, made and entered into as of this day of s
200_, by and between the Housing and Redevelopment Authority in and for the City of
Richfield, a public body corporate and politic under the laws of the State of Minnesota, having its
principal office at 6700 Portland Avenue, Richfield, Minnesota (HRA), and
(Buyer).
WITNESSETH:
WHEREAS, the City of Richfield (City) and the HRA have previously created and
established a Redevelopment Project (Project) and Tax Increment Financing District (TIF
District) pursuant to the authority granted in Minnesota Statutes, Sections 469.001 through
469.047 and Sections 469.174 through 469.179 (collectively, the Acts); and
WHEREAS, pursuant to the Acts, the City and the HRA have previously adopted a
redevelopment plan (Redevelopment Plan) and a tax increment financing plan (TIF Plan) to
finance all or a portion of the public development costs of the Project; and
WHEREAS, in order to achieve the objectives of the Redevelopment Plan and TIF Plan
as hereinafter defined and particularly to make specified land in the Project available for
development by private enterprise for and in accordance with the Redevelopment Plan, the HRA
has determined to provide substantial aid and assistance to finance public development costs in
the Project; and
WHEREAS, the HRA has become concerned that within the Project there is an
increasing number of homes which have been foreclosed and are standing vacant, and, in many
cases are not being adequately secured or maintained; and
WHEREAS, under such circumstances, the properties themselves are subject to
deterioration; and the entire neighborhood is subject to the impacts caused by such conditions;
and
WHEREAS, the HRA, in recognition of the need to provide decent, safe and sanitary
housing in the community has established a deferred loan program which is designed to provide
assistance to individuals who are acquiring foreclosed properties within the Project, and in
furtherance of the goals and objectives of the plan for the Project; and.
WHEREAS, the Buyer has proposed to purchase and occupy such a property which the
HRA has determined will promote and carry out the objectives of the Project, will assist in
carrying out the obligations of the Redevelopment Plan and TIF Plan, will be in the vital best
interests of the City and the health, safety and welfare of its residents and is in accord with the
public purposes and provisions of the applicable state and local laws and requirements under
which development in the Project has been undertaken and is being assisted.
345290v1 JBDRC125-1
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NOW, THEREFORE, in consideration of the mutual covenants and obligation of the
HRA and the Buyer, each parry does hereby represent, covenant and agree with the other as
follows:
ARTICLE I.
DEFINITIONS, EXHIBITS, RULES OF INTERPRETATION
Section 1.1. Definitions. In this Agreement, the following terms have the meaning
given below unless the context clearly requires otherwise:
(a) Cam. The City of Richfield, Minnesota.
(b) Down Payment. The Buyer's equity contribution which is required by the lender
as a precondition to making the loan.
(c) Closing The date on which Buyer closes on the Purchase of the Property.
(d) Guidelines The guidelines adopted by the HRA as such are applicable to the
providing of down payment assistance.
(e) Pro er .The real property legally described as:
[Insert Legal]
Located on land having a street address of:
[Insert Address]
(f) Unavoidable Delays. Delays which are the direct result of strikes, labor troubles,
fire or other casualty to the Improvements, litigation commenced by third parties which results in
delays or acts of any federal, state or local government, except those contemplated by this
Agreement, which are beyond the control of the Buyer.
Section 1.2 Exhibits. The following Exhibits are attached to and by reference made a
part of this Agreement:
A.. Guidelines
B. The Note and Mortgage
Section 1.3 Rules of Interpretation.
(a) This Agreement shall be interpreted in accordance. with and governed by the laws
of the State of Minnesota.
345290v1 JBDRC125-1
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(b) The words "herein" and "hereof' and words of similar import, without reference
to any particular section or subdivision. refer to this Agreement as a whole rather than any
particular section or subdivision hereof.
(c) References herein to any particular section or subdivision hereof are to the section
or subdivision of this Agreement as originally executed.
(d) Any titles of the several parts, articles and sections of this Agreement are inserted
for convenience and reference only and shall be disregarded in construing or interpreting any of
its provisions.
ARTICLE II.
REPRESENTATIONS AND UNDERTAKINGS
Section 2.1 By the Buver. The Buyer makes the following representations and
undertakings:
(a) The Buyer has the legal authority and power to enter into this Agreement and has
duly authorized the execution, delivery and performance of this Agreement;
(b) The Buyer has the necessary equity capital or will obtain commitments for
financing necessary for acquisition of the Property;
(c) The Buyer is familiar with the Guidelines as they relate to down payment
assistance, and agrees to follow and be bound by them;
(f) Buyer intends to reside at the Property following Closing and to use the same as
Buyer's principal residence; .and is not acquiring the Property for the purpose of resale or
speculation.
Section 2.2 By the HRA. The HRA makes the following representations as the basis for
the undertaking on its part herein contained:
(a) The HRA is authorized by law to enter into this Agreement and to .carry out its
obligations hereunder; and
(b) The HRA will, in a timely manner, subject to all notification requirements, review
and act upon all submittals and applications of the Buyer.
ARTICLE III.
ACQUISITION OF PROPERTY; CONVEYANCE TO BUYER
Section 3.1 Purchase of Property by Buver. The Buyer has, or will utilize its best
efforts to enter into a binding agreement to purchase the Property. Upon determination by the
HRA that Buyer has entered into a binding purchase agreement for the purchase of the Property,
345290v1 JBDRC125-1
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the HRA will deliver to Buyer the Note described in Section 5.1. If no binding purchase
agreement is entered into within 30 days from. the date of this Agreement, either the HRA or the
Buyer may declare this Agreement null and void, and the parties will thereby be released from
any further obligation hereunder.
Section 3.3 Closing. Closing must take place on or before ,
200_, or such other date as may be agreed to by the Buyer and HRA in writing. At Closing,
the Buyer will provide the HRA with a mortgage in recordable form (and pay for the cost of
recording). The mortgage will be a first lien on the Property and will act as security for
repayment of any Down Payment funds provided to the Buyer at Closing in the event that Buyer
defaults on any of its obligations hereunder or under the Note. The Mortgage and Note will be in
substantially the form shown on the attached Exhibit B.
ARTICLE IV.
[Blank]
ARTICLE V.
DOWN PAYMENT ASSISTANCE
Section 5.1 Issuance of the Note. As consideration for Buyer's obligations, and subject
to all of the conditions of this Agreement, the HRA agrees to provide the Buyer with a Down
Payment Assistance in the .amount of $10,000. Upon the Buyer providing the HRA with
evidence that Buyer has entered into a purchase agreement for the purchase of the Property, the
HRA will deliver to Buyer a promissory note in substantially the form of the Note contained in
the attached Exhibit B. Payment of the Down Payment Assistance will be exclusively subject to
and in accordance with the terms of the Note as such are contained in the Note or described in
this. Agreement.
Section 5.2 Note Terms. In addition to terms contained in the Note, the Note will be
subject to the following:
(a) Assuming the Buyer is in compliance with Buyers obligations, the Note will be
payable at Closing.
(b) The Note will be cancelled if the Closing does not occur by the last date provided
in Section 3.3.
(c) The Note will not bear interest.
(d) The Note may be canceled by the HRA in the event that the Buyer is in default of
any of its obligations under this Agreement.
(e) .The Note may not be assigned or pledged unless the proposed recipient certifies to
the HRA that it is aware of and accepts to the conditions of the Note governing payment.
345290v1 JBD RC125-1
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(f) Repayment of the Down Payment Assistance paid to Buyer under the Note
is required in the event that the Buyer fails to meet the time requirements
of Sections 3.3 and 3.4. The Note will be subject to repayment if: (i) the
Buyer does not continue to own and occupy the property as its primary
residence for a period of at least five years following Closing; (ii) the
Buyer fails to obtain homestead classification for the Property as soon as
possible following Closing; or (iii) Buyer fails to continuously maintain
the homestead classification for the Property for five years following the
Closing. Such repayment obligation will be secured by a mortgage in
substantially the form shown in Exhibit B which will be delivered by
Buyer to the HRA at Closing. Unless the HRA agrees otherwise in
accordance with Section 6.3, the Mortgage will be a first lien on the
Property.
(g) If the Buyer shall continue to observe all of the covenants and requirements and
obligations imposed on Buyer under this Agreement and in the Note for a period of five years
from the date of Closing, then the Buyer's obligation to repay the Down Payment Assistance will
terminate and be of no further force and effect; and that an instrument discharging the Mortgage
will be provided to Buyer for recording at the Buyer's request.
ARTICLE VI.
FINANCING
Section 6.1 Financing. Within 15 days of the date of execution of this Agreement, the
Buyer shall submit to the HRA evidence of a commitment for financing for the purchase of the
Property in compliance with the provisions of Section 2.1(b) of this Agreement. The evidence
must include an acknowledgment by the proposed lender that it is aware of the terms of this
Agreement as they relate to the Note and Mortgage. Such evidence will also be sufficient to
determine the amount of Down Payment that will be required to complete the purchase. If the
HRA finds that the financing together with the Down Payment Assistance and other equity
available to Buyer is adequate in amount to provide for the purchase of the Property, the HRA
shall notify the Buyer of its approval.
If the HRA rejects the evidence of financing as inadequate, the Buyer shall have 30 days
or such additional period of time as the Buyer may reasonably require from the date of such
notification to submit evidence of financing satisfactory to the HRA. If the Buyer fails to submit
such evidence or fails to use due diligence in pursuing financing, the HRA may terminate this
Agreement and, if issued, cancel the Note, and both parties shall be released from any further
obligation or liability hereunder, or under the Note.
Section 6.2 Copy of Notice of Default to Lender. Whenever the HRA shall deliver any
notice or demand to the Buyer with respect to any Event of Default by the Buyer in its
obligations or covenants under this Agreement, the HRA shall at the same time forward a copy of
345290v1 JBD RC125-1
5
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such notice or demand to each Holder of any Mortgage authorized by the Agreement at the last
address of such Holder shown in the records of the HRA.
Section 6.3 Subordination. In order to facilitate obtaining financing for the purchase of
the Property by the Buyer, the HRA -shall agree to modify this Agreement, the Note or the
Mortgage in the manner and to the extent the HRA deems reasonable, upon request by the
financial institution and the Buyer..
ARTICLE VII.
PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER
Section 7.1 Representation as to Redevelopment. The Buyer represents and agrees
that its undertakings pursuant to the Agreement, are not for speculation in land holding. The
Buyer further recognizes that, in view of the importance of the Development to the general
welfare of Richfield and the substantial financing and other public aids that have been made
available by the HRA for the purpose of making the Development possible, the qualification and
identity of the Buyer are of particular concern to the HRA. The Buyer further recognizes that it is
because of such qualifications and identity that the HRA is entering into this Agreement, and, in
so doing, is further willing to rely on the representations and undertakings of the Buyer for the
faithful performance of all undertakings and covenants agreed by the Buyer to be performed.
Section 7.2 Prohibition Against Transfer of Property and Assignment of
Agreement. For the reasons set out in Section 7.1 of this Agreement, the Buyer represents and
agrees that prior to the issuance of the Certificate of Completion by the HRA:
(a) Except .only by way of security for, and only for the purpose of obtaining
financing necessary to enable the Buyer or any successor in interest to the Property, or any part
thereof, to perform its obligations with respect to the Development under this Agreement, and
any other purpose authorized by this Agreement, the Buyer, except as so authorized, has not
made or created, and that it will not make or create, or suffer to be made, or created, any total or
partial sale, assignment, conveyance, or any trust in respect to this Agreement or the Property or
any part thereof or any interest therein, or any contract or agreement to do any of the same,
without the prior written approval of the HRA.
ARTICLE VIII.
EVENTS OF DEFAULT
Section 8.1 Events of Default Defined. The following shall be deemed Events of
Default under this Agreement and the term shall mean, whenever it is used in this Agreement,
unless the context otherwise provides, any one or more of the following events:
(a) Failure by the Buyer to pay when due the payments required to be paid or secured
under any provision of this Agreement;
345290v1 JBDRC125-1
6
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(b) Failure by the Buyer to observe and substantially perform any covenant,
condition, obligation or agreement on its part to be observed or performed hereunder, including
the time for such performance;
(c) If the Buyer shall admit in writing its inability to pay its debts generally as they
become due, or shall file a petition in bankruptcy, or shall make an assignment for the benefit of
its creditors, or shall consent to the appointment of a receiver of itself or of the whole or any
substantial part of the Property;
(d) If the Buyer, on a petition in bankruptcy filed against it, be adjudicated as
bankrupt, or a court of competent jurisdiction shall enter an order of decree appointing, without
the consent of the Buyer, a receiver of the Buyer or of the whole or substantially all of its
property, or approve a petition filed against the Buyer seeking reorganization or arrangement of
the Buyer under the federal bankruptcy laws, and such adjudication, order or decree shall not be
vacated or set aside or stayed within 60 days from the date of entry thereof; or
(e) If the Development is in default under any Mortgage and has not entered into a
work-out agreement with the Mortgagee.
Section 8.2 Remedies on Default. Whenever any Event of Default occurs, the HRA
may, in addition to any other remedies or rights given the HRA under this Agreement, take any
one or more of the following actions following written notice by the HRA to the Buyer as
provided in Section 9.5 of this Agreement:
(a) suspend its performance under this Agreement until it receives assurances from the
Buyer, deemed reasonably adequate by the HRA, that the Buyer will cure its default and continue
its performance under this Agreement;
(b) cancel or rescind this Agreement;
(c) cancel or rescind the Note;
(d) foreclose on the Mortgage;
(e) withhold the Certificate of Completion; or
(f) take whatever action at law or in equity may appear necessary or desirable to the HRA
to enforce performance and observance of any obligation, agreement, or covenant of the Buyer
under this Agreement; provided, however, that any exercise by the HRA of its rights or remedies
hereunder shall always be subject to and limited by, and shall not defeat, render invalid or limit
in any way (a) the lien of any Mortgage authorized by this Agreement and (b) any rights or
interest provided in this Agreement for the protection of the Holders of a Mortgage; and provided
further that should any Mortgagee succeed by foreclosure of the Mortgage or deed in lieu thereof
to the Buyer's interest in the Property, it shall, notwithstanding the foregoing, be obligated to
perform the obligations of the Buyer under this Agreement to the extent that the same have not
therefore been performed by the Buyer.
345290v1 JBD RC125-1
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Section 8.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the
HRA is intended to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power may be exercised from
time to time and as often as may be deemed expedient. In order to entitle the HRA or the Buyer
to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such
notice as may be required in this Article VIII.
Section 8.4 No Additional Waiver Implied by One Waiver. In the event of the
occurrence of any Event of Default by either party, which Event of Default is thereafter waived
by the other party, such waiver shall be limited to the particular Event of Default so waived and
shall not be deemed to waive any other concurrent, previous or subsequent Event of Default.
ARTICLE IX.
ADDITIONAL PROVISIONS
Section 9.1 Conflict of Interests; Representatives Not Individually Liable. No HRA
officer who is authorized. to take part in any manner in making this Agreement in his or •her
official capacity shall voluntarily have a personal financial interest in this Agreement or benefit
financially there from. No member,. official, or employee of the HRA shall be personally liable
to the Buyer, or any successor in interest, for any Event of Default by the HRA or for any amount
which may become due to the Buyer or successor or on any obligations under the terms of this
Agreement.
Section 9.2 Non-Discrimination. The provisions of Minnesota Statutes Section 181.59,
which relate to civil rights and non-discrimination, and any affirmative action program of the
City shall be considered a part of this Agreement and binding on the Buyer as though fully set
forth herein.
Section 9.3 Notices and Demands. Except as otherwise expressly provided in this
Agreement, a notice, demand or other communication under this Agreement by either party to the
other shall be sufficiently given or delivered if it is sent by mail, postage prepared, return receipt
requested or delivered personally:
(a) As to the HRA:
Richfield HRA
Executive Director
6700 Portland Avenue South
Richfield, MN 55423
345290v1 JBD RC125-1
~_io
(b) As to the Buyer:
or at such other address with respect to either such party as that party may, from time to time,
designate in writing and forward to the other as provided in this Section 9.3.
Section 9.4 Counterparts. This Agreement may be simultaneously executed in any
number of counterparts, all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the HRA has caused this Agreement to be duly executed in
its name and behalf and its seal to be hereunto duly affixed and the Buyer has caused this
Agreement to be duly executed as of the day and year first above written.
THF. HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY OF
RICHFIELD, MINNESOTA
By
Its Chairperson
By
Its Executive Director
Buyer
34~290v1 JBD RC125-1
9
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STATE OF MINNESOTA )
SS
COUNTY OF )
The foregoing instrument was acknowledged before me this day of
200 , by ,the Chairperson of the Housing and
Redevelopment Authority in and for the City of Richfield, Minnesota (HRA), a public body
corporate and politic under the laws of Minnesota, nn behalf of the HRA.
Notary Public
STATE OF MINNESOTA
COUNTY OF
SS
The foregoing instrument was acknowledged before me this day of
200 , by ,the Executive Director of the Housing
and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA), a public body
corporate and politic under the laws of Minnesota, on behalf of the HRA.
Notary Public
STATE OF MINNESOTA )
SS
COUNTY OF ~Q~~t ~ ,~ / _ )
The foregoing instrument was acknowl d before is ~~ day of
1..~ , 200 "I , by
~~~
Notary Public
y~Y~~~ JUDITi-1 A. WOOD
i~,~4'
?~ NOTfiRY PUBLIC - MINNESQTA
~g.F!s~ My Commission Expires Jan. 31, 2010
345290v1 JBD RC12~-1
10
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EXHIBIT. A
GUIDELINES
[To be attached prior to execution]
JBD-236919v1
RC 125-240
11
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EXHIBIT B
PROMISSORY NOTE
$10;000
20
The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a
public body corporate and politic (the "Maker"), for value received, hereby promises to pay to
(the "Holder") the principal sum of Ten thousand and No/100
Dollars ($10,000), with no interest as hereinafter provided, in any coin or currency which at the
time or times of payment is legal tender for the payment of private debts in the United States of
America. The principal of this Note is payable as follows:
1. The principal amount of the Note is as provided for in that certain agreement by
and between Maker and Holder entitled: Foreclosure Purchase Incentive Program Downpayment
Assistance Agreement dated (the "Agreement") and
shall bear no interest. Terms contained in this Note shall have the meanings given them in the
Agreement unless a different meaning is clearly indicated.
2. The Note shall be due and payable the Note will be payable at Closing. No
amount shall be due or payable prior to that date.
3. This Note will be cancelled if the Closing does not occur by the last date provided
in Section 3.3 of the Contract.
4. This Note is given pursuant to the
Agreement. All of the agreements, conditions, covenants, provisions, and stipulations and
remedies contained in the Agreement are hereby made a part of this Note to the same extent and
with the same force and effect as if they were fully set forth herein. It is agreed that time is of the
essence of this Note. If a default by the Maker or the Holder occurs under the Agreement, then
the Holder or Maker may at its right and option, exercise any rights it may have under law or at
equity, under the Agreement, and under the Note.
5. The remedies of the Maker or Holder as provided herein, and in the Agreement, or
any other instrument, shall be cumulative and concurrent and may be pursued singly,
successively, or together, and, at the sole discretion of the Maker or Holder, may be exercised as
often as occasion therefore shall occur; and the failure to exercise any such right or remedy shall
in no event be construed as a waiver or release thereof.
The Maker or Holder shall not be deemed, by any act of omission or commission, to have
waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the
Maker or Holder and then only to the extent specifically set forth in the writing. A waiver with
reference to one event shall not be construed as continuing or as a bar to or waiver of any right or
JBD-236919v 1
RC 12>-240
12
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remedy as to a subsequent event. This Note may not be amended, modified, or changed except
only by an instrument in writing signed by the party against whom -enforcement of any such
amendment, modifications, or change is sought.
6. This Note shall be governed by and construed in accordance with the laws of the
state of Minnesota without regard to its conflict of laws provisions. Any disputes, controversies,
or claims arising out of this Note shall be heard in the state or federal courts of Minnesota, and
all parties to this Note waive any objection to the jurisdiction of these courts, whether based on
convenience or otherwise
7. Holder may not assign, transfer or .pledge this Note without the prior written
consent of the Maker. Maker may condition consent on obtaining a certification from the
proposed assignee, transferee or pledgee acknowledging and agreeing to Maker's rights to cancel
the Note in accordance with the terms of the Note and the Agreement.
8. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts, and things
required to exist, happen, and be perforned precedent to or in the issuance of this Note do exist,
have happened, and have been performed in regular and due form as required by law.
9. Any payments paid to Buyer under the Note will be repaid to the HRA in the
event that the Buyer fails to meet the requirements of the Agreement. Such repayment obligation
will be secured by a mortgage in substantially the form shown in Exhibit B of the Agreement
which will be executed and delivered by Buyer to the HRA at Closing. Unless the HRA agrees
otherwise in accordance with Section 6.3, the Mortgage will be a first lien on the Property.
IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed as of the
_ day of , 20_
HOUSING AND REDEVELOPMENT AUTHORITY IN AND
FOR THE CITY OF RICHFIELD, MINNESOTA
By:
Executive Director
ATTEST:
Board Secretary
Dated:
JBD-236919v 1
RC 125-240
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EXHIBIT B (cont'd)
P. O. Box 198
Kennedy & Graven
MORTGAGE
This Indenture made this day of 200_, between
Mortgagor, and THE HOUSING AND
REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD,
MINNESOTA, a Minnesota public body corporate and politic under the laws of the State of
Minnesota, Mortgagee.
Witnesseth: That the said Mortgagor, in consideration of the sum of One ($1.00) Dollar and other
good, valuable and sufficient consideration, the receipt whereof is hereby acknowledged, does
hereby Grant, Bargain, Sell, and Convey unto the said Mortgagee, its successors and assigns,
Forever, all the tracts or parcels of land lying and being in the County of Hennepin and State of
Minnesota, described as follows, to-wit:
The separate tracts and parcels of land described in the attached Exhibit A. (The
"Property")
To Have and to Hold the Same, Together with the hereditaments and appurtenances thereto
belonging to the said Mortgagee, its successors and assigns, forever. And the said Mortgagor, for
itself, and its successors and assigns, does covenant with the said Mortgagee, its successors and
assigns, as follows: That it is lawfully seized of said premises and has good right to sell and convey
the same; that the same are free from all incumbrances, save and except reservations, restrictions
and easements of record; that the. Mortgagee, its successors and assigns, shall quietly enjoy and
possess the same; and that the Mortgagor will Warrant and Defend the title to the same against all
lawful claims not hereinbefore specifically excepted.
Provided, Nevertheless, That if said Mortgagor, its successors and assigns, shall keep and perform
each and every one of its obligations to be performed by Mortgagor under and pursuant to that
certain Agreement dated as of (the "Agreement"), made and entered
into between Mortgagor and Mortgagee, and shall .keep and perforn all the covenants and
agreements herein contained, then this deed to be null and void, and to be released at the
Mortgagor's expense. This Mortgage secures a principal debt in the amount of $10,000. payable by
Mortgagor to Mortgagee under the terms of the Agreement, and amendments thereto; between
Mortgagor and Mortgagee.
And the Mortgagor, for itself, and its successors and assigns, does hereby covenant and agree with
the Mortgagee, its successors and assigns, to perform .its obligations as above specified, to pay all
taxes and assessments now due or that may hereafter become liens against said premises at least ten
JBD-236919v1
RC 125-240
14
~_~~
(10) days before penalty attaches thereto; to pay, when due, both principal and interest of all prior
liens or encumbrances, and to keep said premises free and clear of all other liens or encumbrances;
to commit or permit no waste on said premises and to keep them in good repair; to complete
forthwith any improvements which may hereafter be under course of construction thereon, and to
pay any other expenses and attorneys' fees incurred by said Mortgagee, its successors or assigns, by
reason of litigation with any third party for the protection of the lien of this Mortgage.
That Mortgagor, does further covenant and agree that if any lien for labor, skill or material shall
be filed for record during the life of this Mortgage, upon or against the premises hereby mortgaged,
the said Mortgagor will, within thirty (30) days after the date of its filing for record, either pay off
the said lien and secure its satisfaction of record, or will protect the Mortgagee against any loss or
damage growing out of its enforcement, by furnishing a bond for the same amount in the form and
with the sureties to be approved by the Mortgagee.
In case of failure to pay said taxes and assessments, prior liens or encumbrances, expenses and
attorneys' fees as above specified, or to insure said buildings and deliver the policies as aforesaid;
the Mortgagee, its successors or assigns, may pay such taxes, assessments, prior liens, expenses and
attorneys' fees and interest thereon, or effect such insurance, and the sums so paid shall bear interest
at the highest rate permitted by law from the date of such payment, shall be impressed as an
additional lien upon said premises, and be immediately due and payable from the- Mortgagor, its
successors or assigns, to said Mortgagee, it successors or assigns, and this Mortgage shall from date
thereof secure the repayment of such advance with interest.
h1 case of default in any of the foregoing covenants, the Mortgagor confers upon the Mortgagee the
option of declaring a default and hereby authorizes and empowers said Mortgagee, its successors
and assigns, to foreclose this Mortgage by judicial proceedings or to sell said premises at public
auction and convey the same to the purchaser in fee simple in accordance with the statute, and out
of the money arising from such sail to retain all sums secured hereby, with interest and all legal
costs and charges of such foreclosure and the maximum attorneys' fee permitted by law, which
costs, charges and fees the Mortgagor herein agrees to pay.
In Testimony Whereof, The said Mortgagor has hereunto set its hand the day and year first above
written.
JBD-236919v 1
RC 125-240
15
~~~~
STATE OF MINNESOTA
COUNTY OF HENNEPIN )
~~~ ~ ~
The foregoin ins ent was acknowledged before me this day of}~e~;-~98~,
by
/ ~~otary ~~i~r• Public
,~~ _, 9 ,
~ z.~~ NOTARY PUBLIC ieMJ .3S~10
\~ ~ ~f My Commis..ion Exp'
This Instrument was Drafted by:
Kennedy & Crraven, Chartered
470 Pillsbury Center
Minneapolis, MN 55402
(612)337-9300
JBD-236919v I
RC 125-240
16
~--I ~
EXHIBIT A
LEGAL DESCRIPTION
The land referred to in the Agreement is described as follows:
Lot 6, Block 6, Nicollet View Gardens, Hennepin County, Minnesota
34~290v1 JBDRCI2~-1
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6810 I 1 /1VC1 IUC JUUU I
AGENDA ITEM # rj
REPORT # 2 j
STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
MAY 18, 2009
REPORT PREPARED BY:
REPORT PRESENTER:
KAREN BARYON, COMMUNITY
DEVELOPMENT ASSISTANT DIRECTOR
NAME, TircE
KAREN BARYON, COMMUNITY
DEVELOPMENT ASSISTANT DIRECTOR
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE
/~
ITEM FOR HRA CONSIDERATION:
Consideration of resolution authorizing the purchase of real property located at 7408 Sheridan
Avenue with Richfield Rediscovered funds, contingent upon a finding of consistency with the
Comprehensive Plan b the Planning Commission.
I. RECOMMENDED ACTION:
By Motion: Approve the attached resolution authorizing the purchase
of real property located at 7408 Sheridan Avenue through the
Richfield Rediscovered Program, contingent upon a finding of
consistency with the Comprehensive Plan by the Planning
Commission.
II. BACKGROUND
7408 Sheridan Avenue is a foreclosed and vacant property owned by Fannie Mae.
Built in 1950 the house at 7408 Sheridan Avenue is a 972-square foot rambler and
is in need of considerable repairs. The lot is 10,088 square feet.
If approved, the Housing and Redevelopment Authority (HRA) would purchase the
property, demolish the existing building and prepare the lot for a new home to be
built at a future date under the Richfield Rediscovered Program.
05182009 7408 Sheridan Ave Acq.doc
The purchase price of the property is $94,000 and will be paid through the HRA's
Housing Fund. This expense is provided for in the 2009 Budget. $9,400 will be
used as the down-payment and the remainder to be paid at closing.
The Planning Commission must find the acquisition and disposition of the property
to be consistent with the Comprehensive Plan prior to purchase. The Planning
Commission is scheduled to consider this finding at their May 27, 2009 meeting.
III. BASIS OF RECOMMENDATION
• A stated policy of the Richfield Comprehensive Plan is to "Encourage the
creation of `move-up' housing through new construction and home
remodeling," Acquiring this property would allow the replacement of a
functionally obsolete and deteriorated property with a newly constructed
home that offers features desirable to households with larger families.
• The HRA has demonstrated success through its Richfield Rediscovered
Program in removing substandard, obsolete housing and facilitate the
development of move-up replacement housing for families.
• The purchase requires the Planning Commission to consider a finding of
consistency with the Comprehensive Plan. The Planning. Commission will
be asked to consider the finding at their May 27, 2009 meeting..
B. CRITICAL ISSUES
• The house has been foreclosed upon and is currently. vacant.
• Purchase of this property by the HRA will result in the replacement of
asub-standard, functionally obsolete house with a "move-up" house
that offers desirable features in today's market.
C. FINANCIAL
• Due to the current housing market, the HRA is able to acquire the
property at a very reasonable price. The current assessed value is
$176,000, with a land value of $86,000.
• Funding for this activity has been budgeted for in the HRA's 2009.
Budget..
D. LEGAL
• Legal Counsel. drafted the Purchase Agreement.
IV. ALTERNATIVE RECOMMENDATION(S~
• Do not authorize the purchase of the property.
V. ATTACHMENTS
• Resolution
• Photo of existing structure
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• N/A
,~-- I
HRA RESOLUTION NO.
RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY
LOCATED AT 7408 SHERIDAN AVENUE
WHEREAS, the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota ("the HRA") desires to purchase certain real property pursuant to and
in furtherance of the Richfield Rediscovered Program, said property being described as:
7408 Sheridan Avenue:.
As described in Attachment A; and
WHEREAS,.the HRA is authorized by Minnesota Statutes Section 469.012 to
acquire real property within its area of operation; and
WHEREAS, Housing Funds are available for acquisition purposes.
NOW THEREFORE, BE IT RESOLVED, by the City of Richfield Housing and
Redevelopment Authority:
1. The purchase price for the property identified is approved at $94,000
2. The Chairperson and Executive Director are authorized to execute a
Purchase Agreement and to take other actions necessary to purchase
the property for the amount set forth in this resolution.
Adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota on this 18th day of May, 2009.
Suzanne M. Sandahl, Chair
ATTEST:
Joan Helmberger, Secretary
~~
Attachment A
7408 Sheridan Avenue is described as follows:
Lot 2, Block 7, Penn Lake Terrace, 1st Addition, Hennepin County, Minnesota
,5-_ 3
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7408 Sheridan Avenue South
AGENDA ITEM #
REPORT #
STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
MAY 18, 2009
REPORT PREPARED BY:
KAREN BARYON, COMMUNITY
DEVELOPMENT ASSISTANT DIRECTOR
NAME, TITLE
REPORT PRESENTER:
KAREN BARYON, COMMUNITY
DEVELOPMENT ASSISTANT DIRECTOR
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE
/,
ITEM FOR HRA CONSIDERATION:
Consideration of an agreement between Hennepin County and the Richfield Housing and
Redevelopment Authority for the administration of federal Neighborhood Stabilization Program
grant funds.
I. RECOMMENDED ACTION:
By Motion: Approve and authorize the execution of an Agreement
between Hennepin County and the Richfield Housing and
Redevelopment Authority for the administration of the federal
Neighborhood Stabilization Program grant funds.
II. BACKGROUND
In response to the sweeping negative impacts associated with the mortgage
foreclosure epidemic, the Federal Government approved a $700 billion bailout to
assist financial institutions and communities directly impacted. Approximately $300
billion of those funds were allocated to the Department of Housing and Urban
Development (HUD) to disperse the funds to the hardest hit communities
throughout the nation.
The purpose of the funding is to stabilize neighborhoods in communities with
significant numbers of foreclosures.
05182009 NSP Grant Agreement.doc
Subsequently, Hennepin County and the State of Minnesota. were allocated
approximately $3.9 million and $39 million, respectively, to be targeted to
communities most significantly impacted.
Hennepin County and the State subrrritted their applications to HUD in December
2008, indicating how the funds would be allocated and for what types of projects.
The City of Richfield in turn submitted an application to Hennepin County and to the
State requesting a total of $1,500,000 in NSP funds.. Hennepin County coordinated
both the non-competitive and the competitive funding applications to the MHFA on
behalf of the cities.
Richfield was awarded a total of $1,041,541 from the MHFA's competitive pool.
Richfield was the only jurisdiction in the metro area to receive funding from the
MHFA's competitive pool. Because of the large award, Hennepin County elected
to redirect its NSP funding to the other cities comprising nine of the top zip codes.
MHFA awarded Richfield $291,541 in funding for down-payment and rehabilitation
direct-subsidy assistance, and $750,000 in funding for acquisition/rehabilitation of
foreclosed houses.
Because these funds are being administered by HUD, there are a number of
requirements attached to the use of these dollars, some of which are quite
significant:
• All expenditures of the NSP funds must serve households at or below 120%
of area median income (AMI) ($100,700 for a family of four);
• A minimum of 25% of the funds must be used to serve households at or
below 50%AMI ($41,950 for a family of four);
• Mechanisms must be put in place to ensure long-term affordability (from 5-20
years, depending on amount of subsidy provided);
• The property must be acquired at 5-15% below the current appraised value;
• All properties to be acquired must have a current appraisal (less than 60
days old), conducted by a Uniform Relocation Act-certified appraiser;
• All properties 50 years old or older must be reviewed by the State Historic
Preservation Office (SHPO);
• All properties to be acquired are required to have a lead risk assessment,
environmental review, energy audit, and property standards inspection
completed prior to acquisition;
• All properties to be acquired must be posted for public comment for a period
of 30 days prior to purchase;
• All properties receiving an NSP subsidy will be required to meet minimum
rehab standards;
• The re-sale price must be equal to or less than the cost to acquire and/or
rehabilitate;
• Properties receiving adirect-subsidy (i.e., down-payment assistance or
rehabilitation assistance) may be required to pay a portion of the appreciated
value at the time of sale, equal to the percent the NSP funds represented in
relation to the original purchase price, if the sale occurs during the
affordability period;
• Properties sold or transferred during the affordability period will be required
to be sold to a household at or below 120% of the area median income; this
may require additional monitoring and may involve future subsidy to the
property, which is unfunded.
• Funds can only be expended within a specific geographic area of the City
(roughly between 4th Avenue and Cedar Avenue, and Highway 62 and 494),
with priority given to targeted census blocks within that area; and
• Funds must be spent within 18 months of award.
Hennepin County has provided Richfield with an Agreement for the administration of
the NSP funds. Hennepin County would be responsible for the administration of the
down-payment and rehabilitation direct-subsidy assistance and would retain a ten
percent administration fee. The City of Richfield HRA staff would be responsible for
the acquisition and rehabilitation of up to four foreclosed, vacant houses, including
two to be sold to anon-profit for subsequent re-sale to households at or below 50%
AMI. The HRA will be able to recoup project-specific administrative costs for these
activities.
Additionally, Hennepin County will coordinate the income verifications, lead risk
assessments, environmental reviews, energy audits, appraisals, and property
standards inspections to facilitate the timely expenditure of the funds.
III. BASIS OF RECOMMENDATION
A. POLICY
• It is the City's policy to utilize grant funds for projects whenever
available and practicable.
• It is in the best interest of the City to ensure neighborhood stability and
reduce blight.
B. CxITICAL ISSUES
• Richfield has suffered a high number of foreclosures over the past two
years (over 270) and is expected to have more over the next several
years.
• Neighborhoods in which there are. one or more foreclosed and vacant
homes have detrimental impacts on the surrounding property values.
• All uses of NSP funds are subject to long-term affordability
requirements, meaning all subsequent sales of the property during the
affordability period must be made to households earning 120% of the
area median income, or less.
• No administrative funds are available for future administrative
expenses relating to long-term affordability requirements.
• Long-term affordability will range from a minimum of five years to a
maximum of 20 years, depending on amount of subsidy.
• All NSP funds directly allocated to the property owner may be subject
to an appreciation-sharing provision with HUD.
• All funds must be expended within 18 months of notice of award.
• Future subsidy may be required to re-sell the property to a household
at 120% AMI or1ess.
C. FINANCIAL
• Project-specific administrative fees may be charged to the program.
• Hennepin County will administer the direct-subsidy down-payment and
rehabilitation assistance loans fora 10% administrative fee.
D. LEGAL
• HRA Legal Counsel has reviewed the Agreement..
IV. ALTERNATIVE RECOMMENDATION~S~
• Do not approve the Agreement.
V. ATTACHMENTS
• Hennepin County NSP Sub-recipient Agreement
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• N/A
~°' 1
RESOLUTION NO.
RESOLUTION AUTHORIZING THE ACCEPTANCE OF FUNDS FOR THE
NEIGHBORHOOD STABILIZATION PROGRAM ("NSP") AND AUTHORIZING
EXECUTION OF SUBRECIPIENT AGREEMENT WITH HENNEPIN COUNTY
WHEREAS, the City of Richfield Housing and Redevelopment Authority ("HRA"),
Richfield, Minnesota, through execution of a Subrecipient Agreement with Hennepin
County, is participating in the Hennepin County Neighborhood Stabilization Program; and
WHEREAS, the HRA has been awarded NSP funds in the amount of $1,041,541to
assist in addressing issues associated with foreclosed and vacant residential properties in
the City of Richfield; and
WHEREAS, the HRA has the institutional, managerial and financial capability to
ensure adequate project administration; and
WHEREAS, the HRA certifies that it will comply with all applicable laws and
regulations as stated in the contract agreements; and
NOW, THEREFORE BE IT RESOLVED. that the HRA accepts the NSP grant funds
and authorizes the HRA Chair and City Manager to execute such agreements as are
necessary to implement the program.
Adopted by the Richfield .Housing and Redevelopment Authority of the City of
Richfield, Minnesota this 18th day of May, 2009.
ATTEST:
Suzanne M. Sandahl, Chair
Joan Helmberger, Secretary
~v~
SUBRECIPIENT AGREEMENT
HENNEPIN COUNTY NEIGHBORHOOD STABILIZATION PROGRAM
THIS AGREEMENT made and entered into by and between the COUNTY OF
HENNEPIN, STATE OF MINNESOTA, hereinafter referred to as "RECIPIENT," A-2400
Government Center, Minneapolis, Minnesota 55487, and the RICHFIELD HOUSING AND
REDEVELOPMENT AUTHORITY, 6700 Portland Avenue South, Richfield, MN 55423,
hereinafter referred to as "SUBRECIPIENT," said parties to this Agreement each being
governmental units of the State of Minnesota, and is made pursuant to Minnesota Statutes,
Section 471.59:
WITNESSETH
WHEREAS, RECIPIENT has received a grant from the Federal Department of Housing
and Urban Development (HUD) and is a subgrantee to the Minnesota Housing Finance Agency
under Title III of Division B of the Housing and Economic Recovery Act, 2008 (Public Law 110-
289) (the Act), as amended, for emergency assistance for redevelopment of abandoned and
foreclosed homes and residential properties. (Catalog of Federal Domestic Assistance (CFDA)
numbers 14.218, 14.225; and 14.228.) Unless the Act states otherwise, such grants are to be
considered Community Development Block Grant (CDBG) funds according to the implementing
regulations at 24 CFR Part 570. The grant program under Title III is commonly referred to as the
CDBG Neighborhood Stabilization Program (NSP): and
WHEREAS, RECIPIENT has approved use of $1,041,541 of NSP funds by the
SUBRECIPIENT for the implementation of eligible and fundable NSP activity/ies as set forth in
Exhibit 1 to this Agreement; and
WHEREAS, the SUBRECIPIENT agrees to assume certain responsibilities for the
implementation of the approved activities described in Exhibit 1 and the Certifications contained
herein as Exhibit 3, and
WHEREAS, except as otherwise provided in Title III and the October 6, 2008 Federal
Register Notice referred to as the "Notice" and statutory and regulatory provisions governing the
CDBG Program, as applicable, shall apply to the use of NSP funds.
NOW, THEREFORE, the parties do hereby agree as follows:
SCOPE OF SERVICES
A. Except as described in HUD Notice published in the Federal Register on October 6,
2008 and attached as Exhibit 2, statutory and regulatory provisions governing the
CDBG Program, including those at 24 CFR Part 570 Subparts A, C, D, J, K, and O,
as appropriate, shall apply to the use of NSP funds.
The SUBRECIPIENT shall expend all or any part of its NSP allocation only on those
activities identified in Exhibit 1, subject to the requirements of this Agreement and
the stipulations and requirements set forth in Exhibits 1 and 3 to this Agreement.
B. The SUBRECIPIENT shall take all necessary actions, not only to comply with the
stipulations as set out in Exhibit 1, but to comply with any requests by the
(~-3
RECIPIENT in that connection; it being understood that the RECIPIENT is
responsible to the Department of Housing and Urban Development (HUD) for
ensuring compliance with such requirements. The SUBRECIPIENT also will
promptly notify the RECIPIENT of any changes in the scope or character of the
activity/ies which it is implementing.
C. At the request of the RECIPIENT, on a form to be provided, the SUBRECIPIENT
shall submit a schedule, corresponding to the term of this Agreement, showing
milestones for activity implementation and timely expenditure of funds and will
provide other information as requested to assure compliance with HUD timeliness
requirements.
2. TERM OF AGREEMENT
The effective date of this Agreement is March 20, 2009. The Agreement will remain in
effect until the NSP funds and program income received are expended and the funded
activities completed. Upon expiration, the SUBRECIPIENT shall relinquish to the
RECIPIENT all program funds unexpended and uncommitted, and all accounts receivable
attributable to the use of CDBG funds for the activities described in Exhibit 1, as may be
amended.
3. TIMELINESS OF USE OF AND EXPENDITURE OF NSP FUNDS
SUBRECIPIENT must use (obligate) NSP funds within eighteen (18) months of the
effective date of this Agreement. `Use' for the purposes of the ACT section 2301(c)(1) is
when funds are used for a specific NSP activity; for example, for acquisition of a specific
property. Funds are obligated for an activity when orders are placed, contracts awarded,
services are received, and similar transactions have occurred that require payment by the
RECIPIENT or SUBRECIPIENT during the same or a future period. Funds are not
obligated for an activity when subawards are made. The 18-month expenditure period
applies to any program income earned under this Agreement except that a `use test' shall
apply based on whether the SUBRECIPIENT has expended or obligated NSP funds in an
aggregate amount at least equal to its NSP allocation. Refer to section 17 of this
Agreement for other program income requirements.
4. REPORTING
On a form to be provided by the RECIPIENT, SUBRECIPIENT shall submit a quarterly
performance report no later than 30 days following the end of each quarter, beginning 30
days after the completion of the first full calendar quarter after the effective date of this
Agreement and continuing until the end of the 15 month following the date of this
Agreement. SUBRECIPIENT shall report monthly on its NSP obligations and
expenditures beginning 30 days after the end of the 15 month and continuing until
reported total obligations are equal to or greater than the total NSP grant. After HUD has
accepted a report from the RECIPIENT showing such obligation of funds, the monthly
reporting requirement will end and quarterly reports will continue until all NSP funds
(including program income) have been expended and those expenditures are included in
a report to HUD.
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5. THIRD PARTY AGREEMENTS
The SUBRECIPIENT may subcontract this Agreement and/or the services to be
performed hereunder, whether in whole or in part, only with the prior consent of the
RECIPIENT and only through a written Third Party Agreement acceptable to the
RECIPIENT. The SUBRECIPIENT shall not otherwise assign, transfer, or pledge this
Agreement and/or the services to be performed hereunder, whether in whole or in part,
without the prior consent of the RECIPIENT.
6. AMENDMENTS TO AGREEMENT
Any material alterations, variations, modifications or waivers of provisions of this
Agreement shall only be valid when reduced to writing as an amendment to this
Agreement signed, approved, and properly executed by the authorized representatives of
the parties. An exception to this process will be in amending Exhibit 1 to this Agreement.
Exhibit 1 shall be deemed amended to conform to any amendments to the Consolidated
Plan, as such amendments occur.
Any amendments to the Consolidated Plan, which constitute substantial changes, require
public notice by the SUBRECIPIENT and an opportunity for public comment for 30 days
prior to action on the proposed amendment by the Hennepin County Board of
Commissioners. A substantial change amendment must follow the process described in
the 2005-2009 Consolidated Plan for the Hennepin County Consortium.
Substantial change is defined as a change that changes the purpose, scope or intended
beneficiaries of a project.
In order to ensure that all NSP funds are obligated as required, any changes to the Exhibit
1A budget will not be considered a substantial change amendment as defined in the
Consolidated Plan. Reallocations, if any, will be coordinated by County staff subject to the
review and approval of the Manager of Housing Development and Finance and the
Director of Housing, Community Works and Transit.
7. PAYMENT OF NSP FUNDS
The RECIPIENT agrees to provide the SUBRECIPIENT with NSP funds not to exceed the
Hennepin County authorized budget to enable the SUBRECIPIENT to carry out its CDBG-
eligible activity/ies as described in Exhibit 1. It is understood that the RECIPIENT shall be
held accountable to HUD for the lawful expenditure of NSP funds under this Agreement.
The RECIPIENT shall therefore make no payment of NSP funds to the SUBRECIPIENT
and draw no funds from HUD/U.S. Treasury on behalf of a SUBRECIPIENT activity/ies,
prior to having received a request for reimbursement for expenses incurred from the
SUBRECIPIENT on a form to be provided by the RECIPIENT. In addition to the request
form, SUBRECIPIENT shall provide copies of all documents and records needed to
ensure that the SUBRECIPIENT has complied with the appropriate regulations and
requirements. The RECIPIENT will provide reimbursement within 30 days of receipt and
approval of all documents required under this section.
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8. INDEMNITY AND INSURANCE
A. The SUBRECIPIENT does hereby agree to defend, indemnify, and hold harmless
the RECIPIENT, its elected officials, officers, agents, volunteers and employees
from and against all costs, expenses, claims, suits or judgments arising from or
growing out of any injuries, loss or damage sustained by any person or corporation,
including employees of SUBRECIPIENT and property of SUBRECIPIENT, which
are caused by or sustained in connection with the tasks carried out by the
SUBRECIPIENT under this Agreement.
B. In order to protect SUBRECIPIENT and RECIPIENT from liability and to effectuate
the indemnification provisions hereinabove, each SUBRECIPIENT that is not self-
insured agrees that during the term of this Agreement it will carry a single limit or
combined limit or excess umbrella commercial general liability policy in an amount
equal to, but shall not be required to carry coverage in excess of, claim limits
specified in Minnesota Statutes Section 466.04, as amended.
C. This section shall in noway be intended by the parties hereto as a waiver of the
liability limits specified in Minnesota Statutes Section 466.04, as amended.
9. CONFLICT OF INTEREST
A. In the procurement of supplies, equipment, construction, and services by the
SUBRECIPIENT, the conflict of interest provisions in 24 CFR 85.36 and OMB
Circular A-110 shall apply.
B. In all other cases, the SUBRECIPIENT shall comply with the conflict of interest
provisions of Minnesota~Statutes Sections 471.87-471.88, and subpart K of 24 CFR
570.611.
10. DATA PRIVACY
The SUBRECIPIENT agrees to abide by the provisions of the Minnesota Government
Data Practices Act and all other applicable State and Federal laws, rules, and regulations
relating to data privacy or confidentiality, and as any of the same may be amended. The
SUBRECIPIENT agrees to defend, indemnify and hold the RECIPIENT, its elected
officials, officers, agents, volunteers and employees harmless from any claims resulting
from the SUBRECIPIENT'S unlawful disclosure and/or use of such protected data.
11. SUSPENSION OR TERMINATION
A. If the SUBRECIPIENT materially fails to comply with any term of this Agreement or
so fails to administer the work as to endanger the performance of this Agreement,
this shall constitute noncompliance and default. Unless the SUBRECIPIENT'S
default is excused by the RECIPIENT, the RECIPIENT may take one or more of the
actions prescribed in 24 CFR 85.43, including the option of immediately canceling
this Agreement in its entirety.
B. The RECIPIENT'S failure to insist upon strict performance of any provision or to
exercise any right under this Agreement shall not be deemed a relinquishment or
waiver of the same. Such consent shall not constitute a general waiver or
4
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relinquishment throughout the entire term of the Agreement.
C. This Agreement may not be terminated or withdrawn without cause by either party
while this Agreement remains in effect.
D. NSP funds allocated to the SUBRECIPIENT under this Agreement may not be
obligated or expended by the SUBRECIPIENT following such date of termination.
Any funds allocated to the SUBRECIPIENT under this Agreement which remain
unobligated or unspent following such date of termination shall automatically revert
to the RECIPIENT.
12. REVERSION OF ASSETS
Upon expiration or termination of this Agreement, the SUBRECIPIENT shall transfer to
the RECIPIENT any NSP funds on hand or in the accounts receivable attributable to the
use of NSP funds, including NSP funds provided to the SUBRECIPIENT in the form of a
loan.
Any real property under the control of the SUBRECIPIENT or its designee that was
acquired or improved, in whole or in part, using NSP funds that will be held (land banked)
for future redevelopment shall comply with the applicable affordability period. New
financing documents and/or a new covenant will be filed at the close of the financing on
the redevelopment of the real property. At a minimum, the loan term will be based on
periods of affordability in the table below.
13. PROCUREMENT
The SUBRECIPIENT shall be responsible for procurement of all supplies, equipment,
services, and construction necessary for implementation of its activity/ies. Procurement
shall be carried out in accordance with the "Common Rule" Administrative Requirements
in 24 CFR 85 and all provisions of the ~CDBG Regulations in 24 CFR 570 (the most
restrictive of which will take precedence). The SUBRECIPIENT shall prepare, or cause to
be prepared, all advertisements, negotiations, notices, and documents, enter into all
contracts, and conduct all meetings, .conferences, and interviews as necessary to ensure
compliance with the above described procurement requirements. The RECIPIENT shall
provide advice and staff assistance to the SUBRECIPIENT to carry out its NSP-funded
activity/ies.
14. ACQUISITION, RELOCATION, AND DISPLACEMENT
A. The SUBRECIPIENT shall be responsible for carrying out all acquisitions of real
5
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property necessary for implementation of the activity/ies. The SUBRECIPIENT shall
conduct all such acquisitions in its name, or in the name of any of its public,
governmental, nonprofit agencies as authorized by its governing body, which shall
hold title to all real property purchased. The SUBRECIPIENT shall comply with
requirements under the Uniform Relocation Assistance and Real Property
Acquisition Act of 1970 (URA) (49 CFR Part 24), except where it conflicts with
section 2301(d)(1) or any other section of THE ACT, in which case THE ACT
requirements shall prevail over the URA for purposes of NSP-assisted acquisitions
of foreclosed-upon homes or residential properties. The RECIPIENT shall provide
advice and staff assistance to the SUBRECIPIENT to carry out its NSP-funded
activity/ies.
B. The SUBRECIPIENT shall comply with the acquisition and relocation requirements
of the URA as required under 24 CFR 570.606(a) and HUD implementing
regulations at 24 CFR 42; the requirements in 24 CFR 570.606(b) governing the
residential antidisplacementsnd relocation assistance plan under section 104(d)
(note exception in next paragraph) of the Housing and Community Development
Act of 1974; the relocation requirements of 24 CFR 570.606(c) governing
displacement subject to section 104(k) of the Act; and the requirements of 24 CFR
570.606(d) governing optional relocation assistance under section 105(a)(11) of
the Act.
As an exception under THE ACT to URA requirements set forth in 42 U.S.C.
5304(d)(2), as implemented at 24 CFR42.375, the SUBRECIPIENT will not be
required to meet the requirements for one-for-one replacement of low and
moderate income dwelling units demolished or converted in connection with
activities assisted with NSP funds.
15. ENVIRONMENTAL REVIEW
The RECIPIENT shall determine the level of environmental review required under 24 CFR
Part 58 and maintain the environmental review record on all activities. The
SUBRECIPIENT shall be responsible for providing necessary information, relevant
documents, and public notices to the RECIPIENT to accomplish this task.
16. LABOR STANDARDS. EMPLOYMENT, AND CONTRACTING
The RECIPIENT shall be responsible for the preparation of all requests for HUD for wage
rate determinations on NSP activities undertaken by the SUBRECIPIENT. The
SUBRECIPIENT shall notify the RECIPIENT prior to initiating any activity, including
advertising for contractual services which will include costs likely to be subject to the
provisions on Federal Labor Standards and Equal Employment Opportunity and related
implementing regulations. The RECIPIENT will provide technical assistance to the
SUBRECIPIENT to ensure compliance with these requirements.
No NSP funds shall be used directly or indirectly to employ, award contracts to, or
otherwise engage the services of, or fund any contractor or SUBRECIPIENT during any
period of debarment, suspension, or placement in ineligibility status under the provisions
of 24 CFR Part 24. Prior to awarding a contract the SUBRECIPIENT shall promptly notify
the RECIPIENT. The RECIPIENT shall be responsible for determining the status of the
contractor under this requirement, and shall notify SUBRECIPIENT if the contractor is or
6
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is not prohibited from doing business with the Federal government as a result of
debarment or suspension proceedings.
17. PROGRAM INCOME
If the SUBRECIPIENT generated any program income, as defined in 24 CFR 570.500(a),
as a result of the expenditure of NSP funds, the provisions of 24 CFR 570.504 shall apply,
except as modified under Title III Division B of THE ACT and any subsequent
amendments or in guidance provided by HUD or RECIPIENT, as well as the following
specific stipulations:
A. The SUBRECIPIENT will notify the RECIPIENT of any program income within ten
(10) days of the date such program income is generated. When program income is
generated by an activity only partially assisted with NSP funds, the income shall be
prorated to reflect the percentage of NSP funds used.
B. On a form to be provided by the RECIPIENT, the SUBRECIPIENT will document
amounts received as program income are properly determined, calculated and
supported. The RECIPIENT will subsequently review and verify documentation to
assure Federal requirements are met.
C. Any such program income must be paid to the RECIPIENT by the SUBRECIPIENT
as soon as practicable after such program income is generated unless the
SUBRECIPIENT is permitted to retain program income.
D. Program income returned to the RECIPIENT shall be credited to the grant authority
of SUBRECIPIENT, whose project generated the program income, and shall be
used for fundable and eligible NSP activities consistent with this Agreement.
E. The SUBRECIPIENT further recognizes that the RECIPIENT has the responsibility
for monitoring and reporting to HUD on the use of any such program income. The
responsibility for appropriate record keeping by the SUBRECIPIENT and reporting
to the RECIPIENT by the SUBRECIPIENT on the use of such program income is
hereby recognized by the SUBRECIPIENT. The RECIPIENT agrees to provide
technical assistance to the SUBRECIPIENT in establishing an appropriate and
proper record-keeping and reporting system, as required by HUD.
F. In the event of close-out or change in status of the SUBRECIPIENT, any program
income that is on hand or received subsequent to the close-out or change in status
shall be paid to RECIPIENT as soon as practicable after the income is received.
The RECIPIENT agrees to notify the SUBRECIPIENT, should closeout or change in
status of the SUBRECIPIENT occur.
18. USE OF REAL PROPERTY
The following standards shall apply to real property under the control of the
SUBRECIPIENT that was acquired or improved, in whole or in part, using NSP funds:
A. The SUBRECIPIENT shall inform the RECIPIENT at least thirty (30) days prior to
any modification or change in the use of the real property from that planned at the
time of acquisition or improvements, including disposition. The SUBRECIPIENT will
7
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comply with the requirements of 24 CFR 570.505 to provide affected citizens the
opportunity to comment on any proposed change and to consult with affected
citizens.
B. The SUBRECIPIENT shall reimburse the RECIPIENT in an amount equal to the
current fair market value (less any portion thereof attributable to expenditures of
non-NSP funds) of property acquired or improved with NSP funds that is sold or
transferred for a use which does not qualify under NSP requirements. Said
reimbursement shall be provided to the RECIPIENT at the time of sale or transfer of
the property referenced herein. Such reimbursement shall not be required if the
conditions of 24 CFR 570.503(b)(8)(i) (Reversion of Assets) are met and satisfied.
Fair market value shall be established by a current written appraisal by a qualified
appraiser. The RECIPIENT will have the option of requiring a second appraisal after
review of the initial appraisal.
C. Any program income generated from the disposition or transfer of real property prior
to or subsequent to the close-out, change of status or termination of the Agreement
between the RECIPIENT and the SUBRECIPIENT shall be repaid to the
RECIPIENT at the time of disposition or transfer of the property.
19. ADMINISTRATIVE REQUIREMENTS
The uniform administrative requirements delineated in 24 CFR 570.502 and any and all
administrative requirements or guidelines promulgated by the RECIPIENT shall apply to
all activities undertaken by the SUBRECIPIENT provided for in this Agreement and to any
program income generated therefrom.
20. AFFIRMATIVE ACTION AND EQUAL OPPORTUNITY
A. During the performance of this Agreement, the SUBRECIPIENT agrees to the
following: In accordance with the Hennepin County Affirmative Action Policy and the
Hennepin County Commissioners' Policies Against Discrimination, no person shall
be excluded from full employment rights or participation in, or the benefits of, any
program, service or activity on the grounds of race, color, creed, religion, age, sex,
disability, marital status, sexual orientation, public assistance status, or national
origin; and no person who is protected by applicable Federal or State laws against
discrimination shall be otherwise subjected to discrimination.
B. The SUBRECIPIENT will furnish all information and reports required to comply with
the provisions of 24 CFR Part 570 and all applicable State and Federal laws, rules,
and regulations pertaining to discrimination and equal opportunity.
21. NON-DISCRIMINATION BASED ON DISABILITY
A. The SUBRECIPIENT shall comply with Section 504 of the Rehabilitation Act of
1973, as amended, to ensure that no otherwise qualified individual with a handicap,
as defined in Section 504, shall, solely by reason of his or her handicap, be
excluded from participation in, be denied the benefits of, or be subjected to
discrimination by the SUBRECIPIENT receiving assistance from the RECIPIENT
under Section 106 and/or Section 108 of the Housing and Community Development
Act of 1974, as amended.
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B. When and where applicable, the SUBRECIPIENT shall comply with, and make best
efforts to have its third party providers comply with, Public Law 101-336 Americans
With Disabilities Act of 1990, Title I "Employment," Title I I "Public Services" -
Subtitle A, and Title .III "Public Accommodations and Services Operated By Private
Entities" and all ensuing Federal regulations implementing said Act.
22. LEAD-BASED PAINT
The SUBRECIPIENT shall comply with the Lead-Based Paint notification, inspection,
testing and abatement procedures established in 24 CFR Part 35 as referenced in 24
CFR Part 570.608.
23. FAIR HOUSING
To assure compliance with requirements of section 104(b) and section 109 of Title I of the
Housing and Community Development Act of 1974, as amended, including Title VI of the
Civil Rights Act of 1964, the Fair Housing Act, and, other applicable laws, by signing the
certification in Exhibit 3 SUBRECIPIENT certifies that it will affirmatively further fair
housing within its jurisdiction. Should HUD make a determination that the
SUBRECIPIENT has not affirmatively furthered fair housing or has impeded action by the
RECIPIENT to comply with its fair housing certification, the RECIPIENT shall exercise its
authority, as contained in the Joint Cooperation Agreement, to prohibit the
SUBRECIPIENT from receiving NSP funding for any activities until the violation has been
remedied.
24. LOBBYING
A. No Federal appropriated funds have been paid or will be paid, by or on behalf of the
SUBRECIPIENT, to any person for influencing or attempting to influence an officer
or employee of any agency, a Member of Congress, an officer or employee of
Congress, or an employee of a Member of Congress in connection with the
awarding of any Federal contract, the making of any Federal Grant, the making of
any Federal loan, the entering into of any cooperative agreement, and the
extension, continuation, renewal, amendment, or modification of any Federal
contract, grant, loan, or cooperative agreement.
B. If any funds other than Federal appropriated funds have been paid or will be paid to
any person for influencing or attempting to influence an officer or employee of any
agency, a Member of Congress, an officer or employee of Congress, or an
employee of a Member of Congress in connection with this Federal contract, grant,
loan, or cooperative agreement SUBRECIPIENT will complete and submit Standard
Form-LLL, "Disclosure Form to Report Lobbying," in accordance with its
instructions.
25. USE OF EXCESSIVE FORCE BY LAW ENFORCEMENT AGENCIES
SUBRECIPIENT has adopted and is enforcing a policy prohibiting the use of excessive
force by law enforcement agencies within its jurisdiction against any individuals engaged
in non-violent civil. rights demonstrations; and a policy of enforcing applicable State and
local laws against physically barring entrance to or exit from a facility or location which is
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~ ,- ~ i+
the subject of such non-violent civil rights demonstrations within its jurisdiction.
26. OTHER CDBG and NSP POLICIES
The SUBRECIPIENT shall comply with the applicable section of 24 CFR 570.200,
particularly sections (b) (Special Policies Governing Facilities); (c) (Special Assessments);
(f) (Means of Carrying Out Eligible Activities); and Q) (Constitutional prohibitions
Concerning Church/State Activities) and Title III Division B of the Housing and Economic
Recovery Act of 2008 (NSP).
27. TECHNICAL ASSISTANCE
The RECIPIENT agrees to provide technical assistance to the SUBRECIPIENT in the
form of oral and/or written guidance and on-site assistance regarding NSP procedures
and project management. This assistance will be provided as requested by the
SUBRECIPIENT and at other times at the initiative of the RECIPIENT when new or
updated information concerning the NSP Program is received by the RECIPIENT and
deemed necessary to be provided to the SUBRECIPIENT.
28. RECORD-KEEPING
The SUBRECIPIENT shall maintain records of the receipt and expenditure of all NSP
funds, such records to be maintained in accordance with OMB Circulars A-87 and the
"Common Rule" Administrative Requirements in 24 CFR 85 and in accordance with OMB
Circular A-110 and A-122, as applicable. All records shall be made available upon
request of the RECIPIENT for inspection/s and audits by the RECIPIENT or its
representatives. If a financial audits determines that the SUBRECIPIENT has improperly
expended NSP funds, resulting in the U.S. Department of Housing and Urban
Development (HUD) disallowing such expenditures, the RECIPIENT reserves the right to
recover from the SUBRECIPIENT such disallowed expenditures from non-NSP sources.
Audit procedures are specified below in Section 30 of this Agreement.
29. ACCESS TO RECORDS
The RECIPIENT shall have authority to review any and all procedures and all materials,
notices, documents, etc., prepared by the SUBRECIPIENT in implementation of this
Agreement, and the SUBRECIPIENT agrees to provide all information required by any
person authorized by the RECIPIENT to request such information from the
SUBRECIPIENT for the purpose of reviewing the same.
30. AUDIT
The SUBRECIPIENT agrees to provide RECIPIENT with an annual audit consistent with
the Single Audit Act of 1996, and the implementing requirements of OMB Circular A-133
"Audits of States, Local Governments and Non-Profit Institutions."
A. The SUBRECIPIENT agrees to provide RECIPIENT with an annual audit consistent
with the requirements as stated in the first paragraph of this section above. The
audit shall be completed and submitted to RECIPIENT within the earlier of 30 days
after receipt of the auditor's report(s), or nine months after the end of the audit
period.
10
(o ~/ ~.
B. RECIPIENT will issue a management decision on audit findings within six months
after receipt of the audit report and ensure that the RECIPIENT takes appropriate
and timely corrective action.
C. In those instances where less than $500,000 in assistance is received from all
Federal sources in any one fiscal year, and a single audit is not required, the
RECIPIENT requests the following information within the same timeframe as in A.,
above: (1) annual financial statements, (2) independent auditor's report on internal
control over financial reporting based on an audit of financial statements performed
in accordance with government auditing standards; and (3) the Management Letter.
D. The cost of the audit is not reimbursable from NSP funds.
E. The RECIPIENT reserves the right to recover from the SUBRECIPIENT'S non-NSP
funds any NSP expenses which are disallowed by an audit.
31. CERTIFICATIONS
To conform with changes under Title III of Division B of the Housing and Economic
Recovery Act of 2008 an alternative set of certifications to those contained in the current
Consolidated Action Plan, as amended, is required. The alternative certifications are
tailored to NSP grants and remove certifications and references that are appropriate only
to the annual CDBG formula program. By signing Exhibit 3 the SUBRECIPIENT certifies it
will utilize NSP funds provided by RECIPIENT in compliance with these requirements
identified.
32. WITHHOLDING
For State NSP funding awarded to the RECIPIENT and passed-through to the
SUBRECIPIENT, the SUBRECIPIENT must comply with Minnesota Statutes, Section
290.9705 by either:
A. Depositing with the State, 8 percent of every payment made to non-Minnesota
construction contractors, where the contract exceeds $100,000; or
B. Receiving a waiver from this requirement from the Minnesota Department of
Revenue.
33. SPECIAL ASSESSMENTS
NSP funds may not be used to pay any part of special assessments, except as
authorized by the Act and ANY subsequent notice from HUD, and approved by the
RECIPIENT.
34. WORKERS COMPENSATION
For State NSP funding awarded to the RECIPIENT and passed-through to the
SUBRECIPIENT, the SUBRECIPIENT certifies that it is in compliance with Minnesota
Statute 176.181 Subd.02, pertaining to worker's compensation insurance coverage. The
SUBRECIPIENT'S employers and agents will not be considered state employees. Any
claims that may arise under the Minnesota Worker's Compensation Act on behalf of
11
~ --- ( 3
these employees and any claims made by any third party as a consequence of any act
or omission on the part of these employees are in no way the State's obligation or
responsibility.
35. GOVERNING LAW. JURISDICTION AND VENUE
For State NSP funding awarded to the RECIPIENT and passed-through to the
SUBRECIPIENT; Minnesota law, without regard to its choice for law provisions, governs
this grant contract. Venue for all legal proceedings out of this grant contract, or its breach,
must be in the appropriate State or Federal court with competent jurisdiction in Ramsey
County, Minnesota.
36. TENANT PROTECTIONS
SUBRECIPIENT shall ensure that it and its subrecipients comply with tenant protections
specified in Division A, Title XII of the American Recovery and Reinvestment Act of 2009
(PL 111-5) under the heading "Community Planning and Development Community
Development Fund."
37. OPINION OF COUNSEL
The undersigned, on behalf of the Hennepin County Attorney, having reviewed this
Agreement, hereby opines that the terms and provisions of the Agreement are fully authorized
under State and local law and that the SUBRECIPIENT has full legal authority to undertake or
assist in undertaking essential community development and housing assistance activities,
specifically urban renewal and publicly-assisted housing.
Assistant County Attorney
12
~~~~
RECIPIENT EXECUTION
The Hennepin County Board of Commissioners having duly approved this Agreement on
2009 pursuant to Resolutions 08-0518 and 09-0115, and the proper County officials
having signed this Agreement, the RECIPIENT agrees to be bound by the provisions herein set
forth.
Approved as to form
and execution
COUNTY OF HENNEPIN
STATE OF MINNESOTA
Assistant County Attorney
Date:
By:
Chair of Its County Board
Date:
ATTEST:
Deputy/Clerk of County Board
Date:
And:
Assistant/Deputy/County Administrator
Date:
And:
Date:
Assistant County Administrator
Public Works
Recommended for Approval:
Department Director, Housing, Community
Works and Transit
Date
13
~~-~~
SUBRECIPIENT EXECUTION
SUBRECIPIENT, having signed this Agreement and the SUBRECIPIENT'S
governing body having authorized such approval and the proper officials having signed
this Agreement, SUBRECIPIENT agrees to be bound by the provisions of this
Agreement.
By entering into this Agreement the SUBRECIPIENT certifies that it is not
prohibited from doing business with either the Federal government or the State of
Minnesota as a result of debarment or suspension proceedings.
RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY
By:
Its:
And:
Its:
Attest:
Title:
Date:
~~
Exhibit 1
Activity Name: City of Richfield Neighborhood Stabilization Program
Activity Administration:
City of Richfield
Name of Applicant /Organization
6700 Portland Ave Karen Barton
Address Contact Person
Same kbarton@cityofrichfield.org
Contact Person Address Contact Person E-Mail
612-861-9777 612-861-8974
Contact Person Telephone Contact Person Fax Number
Number
Activity Description/ NSP Eligible Uses:
(A) Establish financing mechanisms for purchase and redevelopment of
foreclosed upon homes and residential properties:
1.) Homeownership Assistance
Centrally administered loan pool(s) for downpayment, closing cost, and/or contract for
deed assistance (loan pool programs will be administered by County staff or by
contracted nonprofit organizations with experience and capacity to deliver such loan
programs).
All homeownership assistance programs funded with NSP funds will serve households
at or below 120 percent AMI. An appraisal and inspection is required within 60 days of
closing. The final purchase price must be a minimum of 15% below the current
appraised value. Offers submitted before an appraisal is complete will require an
addendum. Hennepin County will coordinate appraisals; appraisal costs will be paid from
the Project Activity Budget. NSP funds will be structured as zero percent interest loans
due and payable if the property is sold, transferred or no longer owner occupied before
the end of the loan term. Depending upon the NSP funding level, loans may be payable
or forgivable; the loan term will be based on the HOME required periods of affordability
as shown in the following table:
~~~
Prospective buyers will be required to attend a minimum of one eight-hour pre-
acquisition HUD-certified homebuyer counseling session; where available, Hennepin
County will also encourage post-acquisition homeownership training.
Eligible homebuyers must obtain a prime, fixed-rate, first mortgage. The homebuyer's
principal, interest, taxes, insurance and. (if applicable) homeowner association fees shall,
to the greatest extent feasible, not exceed 30 percent of the family's adjusted gross
income. NSP funds will primarily serve to reduce the gap between the sales price-based
mortgage and 30 percent of the family's income.
In cases where a foreclosed home requires minimal rehabilitation, homebuyers may also
seek NSP funding through the Purchase Rehabilitation Loan Programs.
Homebuyers will be required to provide a minimum of fifty percent (50%) of any lender
required downpayment.
2.1 Purchase Rehabilitation Loan Program
Centrally administered loan pool(s) for homebuyer rehabilitation of foreclosed properties
(loan pool programs will be administered by County staff or by contracted nonprofit
organizations with experience and capacity to deliver such loan programs).
All purchase rehabilitation loan programs receiving NSP funds will serve households at
or below 120 percent AMI. Hennepin County will require an appraisal and inspections of
each property considered for acquisition; based on this information, any submitted offers
will be at least 5 percent below the current appraisal value. In aggregate, Hennepin
County will achieve a minimum discount rate of 15 percent for all NSP properties
acquired. NSP funds will be structured as zero percent interest loans due and payable if
the property is sold, transferred or no longer owner-occupied before the end of the loan
term. Depending upon the NSP funding level, loans may be payable or forgivable; the
loan term will be based on the HOME required periods of affordability as shown in the
table below:
Eligible homebuyers must obtain aprime, afixed-rate first mortgage. The homebuyer's
principal, interest, taxes, insurance and (if applicable) homeowner association fees shall
to the greatest extent feasible not exceed 30 percent of the family's adjusted gross
income. Should a gap exist between the sales price-based mortgage and 30 percent of
the family's income, homebuyers may also seek NSP funding through Homeownership
Assistance Programs.
Prospective buyers will be required to attend a minimum of one eight hour pre-
acquisition HUD-certified homebuyer counseling session; where available, Hennepin
County will also encourage post-acquisition homeownership training.
(~ --l 5'
Homebuyers will be required to make a minimum investment of $1,000
3.) Affordable Housing Acquisition/Rehabilitation
Centrally administered gap funding loan pool for public and/or nonprofit acquisition,
rehabilitation, and resale of foreclosed vacant single-family homes and/or multi-family
property to provide homeownership or rental opportunities serving low income (<50
percent AMI) and/or homeless persons.
NSP Affordable Housing Acquisition/Rehabilitation will provide NSP funding to cities, for-
profit developers, and nonprofit developers for the provision of affordable housing.
The County will seek opportunities to utilize properties acquired through this activity to
meet its affordable rental housing goals and goals under its Continuum of Care and
Heading Home Hennepin Plan to End Homeless.
Eligible properties may be purchased directly by Hennepin County, the Hennepin County
Housing and Redevelopment Authority, the city the property is located in, or a nonprofit
organization with experience and capacity providing housing to low-income households.
Hennepin County will require an appraisal and inspection of each property considered
for acquisition; based on this information, any submitted offers will be at least 5 percent
below the current appraised value. In aggregate, Hennepin County will achieve a
minimum discount rate of 15 percent for all NSP properties acquired.
The resale price for homeownership activities will be no greater than the total investment
including; acquisition, rehabilitation and associated program delivery costs for
homeownership activities. The resale price for rental activities will be based on the
market value of the property. To assist in meeting occupant affordability requirements,
some or all of the original NSP investment may remain in the property as a deferred loan
(rental) orsoft-second affordability loan (homeownership).. NSP assistance will be
provided in the form of a deferred, forgivable loan or grant. The loan term will be based
on the HOME required periods of affordability as shown in the table below:
Eligible homebuyers must obtain a prime, fixed-rate first mortgage. The homebuyer's
principal, interest, taxes, insurance and (if applicable) homeowner association fees shall
to the greatest extent feasible not exceed 30 percent of the family's adjusted gross
income. Should a gap exist between the sales price-based mortgage and 30 percent of
Prospective buyers will be required to attend a minimum of one eight-hour pre-
acquisition HUD-certified homebuyer counseling session; where available, Hennepin
County will also encourage post-acquisition homeownership training.
Cr -- l 9
the family's income, homebuyers may also seek funding through NSP Homeownership
Assistance Programs.
Homebuyers will be required to make a minimum investment of $1,000.
(B) Purchase and rehabilitate homes and residential properties that have been
abandoned or foreclosed upon, in order to sell, rent, or redevelop such homes
and properties.
1.) Acquisition/Rehabilitation Revolving Loan Program
City administered loan pool(s) to support private sector foreclosure rehabilitation. Funds
will be available on a competitive basis to nonprofit and private organizations or
individuals who demonstrate the capacity to acquire and rehabilitate foreclosed and
vacant properties: Developers must demonstrate the ability to undertake projects in a
timely fashion. Hennepin County will monitor outcomes at six month, nine month, and
12 month intervals. Timely expenditure requirements with a provision for
recapture/redistribution will be included in all Developer agreements.
To the extent private activity fails to meet projections, Hennepin County and/or local
municipalities may undertake direct acquisition/rehabilitation/resale under this activity:
All acquisition/rehabilitation revolving loan programs receiving NSP funds will serve
households at or below 120 percent AMI. Hennepin County will require an appraisal and
inspection of each property considered for acquisition; based on this information, any
submitted offers will be at least 5 percent below the current appraised value. In
aggregate, Hennepin County will achieve a minimum discount rate of 15 percent for all
NSP properties acquired.
Amount of assistance will be determined based on the cost of acquisition/rehabilitation.
NSP funds may be used for up to 100 percent of the acquisition/rehabilitation cost. NSP
funds will be structured as five (5) year, low-interest or zero percent-interest loans due
and payable when the property is sold. The affordability period, as shown in the table
below, will be based on the amount of NSP funds, if any, not repaid when the property is
sold.
The minimum affordability period is five (5) years.
ADDITIONALLY, UPON RESALE, prospective buyers will be required to attend a
minimum of one eight-hour pre-acquisition HUD-certified homebuyer counseling session;
where available, Hennepin County will also encourage post-acquisition homeownership
training.
NSP restricts the resale price of any NSP-assisted property to the cost of acquisition,
rehabilitation and transaction. Properties that are sold at a maximum NSP resale price,
but less than the fair market value, provide direct assistance to the homebuyer equal to
the difference between the NSP resale price and the fair market value. This assistance
will be structured in the form of a zero percent (0%) deferred loan for at least the term of
the required affordability period, or an equity sharing agreement for at least the term of
the required affordability period, or a resale restriction filed on the property requiring that
the property be resold to another eligible buyer for at least the term of the required
affordability period.
Properties that are sold for fair market value, but less than the cost of acquisition,
rehabilitation and transaction, do not cover the cost of the development. In this case,
there is no direct assistance to the homebuyer and a resale restriction will be filed on the
property requiring that the property be resold to another eligible buyer for at least the
term of the required affordability period.
Eligible homebuyers must obtain aprime, affixed-rate first mortgage. The homebuyer's
principal, interest, taxes, insurance and (if applicable) homeowner association fees shall,
to the greatest extent feasible, not exceed 30 percent of the family's adjusted gross
income. Should a gap exist between the sales price-based mortgage and 30 percent of
the family's income, homebuyers may also seek NSP funding through Homeownership
Assistance Programs. The affordability period will be based on the amount of
assistance provided as shown in the table below.
Homebuyers will be required to make a minimum investment of $1,000.
2.) FHA Rehabilitation
City administered loan pool(s) to support for-profit and. nonprofit developers for
acquisition, rehabilitation and resale of single family foreclosed properties.
Rehabilitation work will qualify the properties for FHA financing.
Developers must demonstrate the ability to undertake projects in a timely fashion.
Hennepin County will monitor outcomes at six month, nine month, and 12 month
intervals. Timely expenditure requirements with a provision for recapture/redistribution
will be included in all Developer agreements. Developers may access NSP funds to
acquire, rehabilitate and resell foreclosed single family properties to FHA qualified
buyers: NSP FHA Rehabilitation funding will be repaid by permanent financing and
recycled within this activity for more FHA rehabilitation.
To the extent private activity fails to meet projections, Hennepin County and/or local
municipalities may undertake direct acquisition/rehabilitation/resale under this activity.
All acquisition/rehabilitation revolving loan programs receiving NSP funds will serve
households at or below 120 percent AMI. Hennepin County will require an appraisal and
inspection of each property considered-for acquisition; based on this information, any
submitted offers will be at least 5 percent below the current appraised value. In
aggregate, Hennepin County will achieve a minimum discount rate of 15 percent for all
NSP properties acquired.
lp '' a-
The minimum affordability period is five (5) years.
ADDITIONALLY, UPON RESALE, prospective buyers will be required to attend a
minimum of one eight-hour pre-acquisition HUD-certified homebuyer counseling session;
where available, Hennepin County will also encourage post-acquisition homeownership
training.
NSP restricts the resale price of any NSP-assisted property to the cost of acquisition,
rehabilitation and transaction. Properties that are sold at a maximum NSP resale price,
but less than the fair market value, provide direct assistance to the homebuyer equal to
the difference between the NSP resale price and the fair market value. This assistance
will be structured in the form of a zero percent (0%) deferred loan for at least the term of
the required affordability period, or an equity sharing agreement for at least the term of
the required affordability period,. or a resale restriction filed on the property requiring that
the property be resold to another eligible buyer for at least the term of the required
affordability period.
Properties that are sold for fair market value, but less than the cost of acquisition,
rehabilitation and transaction, do not cover the cost of the development. In this case,
there is no direct assistance to the homebuyer and a resale restriction will be filed on the
property requiring that the property be resold. to another eligible buyer for at least the
term of the required affordability period.
Eligible homebuyers must obtain a FHA fixed-rate first mortgage. The homebuyer's
principal, interest, taxes, insurance and (if applicable) homeowner association fees shall
to the greatest extent feasible not exceed 30 percent of the family's adjusted gross
income. Should a gap exist between the sales price-based mortgage and 30 percent of
the family's income, homebuyers may also seek NSP funding through Homeownership
Assistance Programs. The affordability period will be based on the amount of
assistance provided as shown in the table below.
Homebuyers will be required to make a minimum investment of $1,000.
(C) Establish land banks for homes that have been foreclosed upon
(D) Demolish blighted structures
(E) Redevelop demolished or vacant properties
Amount of assistance will be determined based on the cost of acquisition/rehabilitation.
NSP funds may kie used for up to 100% of the acquisition/rehabilitation cost. NSP funds
will be structured as five (5) year, low-interest or zero percent-interest loans due and
payable when the property is sold. The affordability period, as shown in the table below,
will be based on the amount of NSP funds, if any, not repaid when the property is sold.
~p " ~~.
1.) Acauisition. Demolition. Redevelopment or Land Banking
Public acquisition and demolition of foreclosed vacant single-family homes that meet the
local definition of a blighted structure. The final blight determination will be made by the
Building Official for the municipality the property is located in. Demolition and land
banking activities will be limited to Hennepin County, the Hennepin County Housing and
Redevelopment Authority or a municipality, and title to any such properties will be held
by one of these entities. Subrecipients must demonstrate the ability to undertake
projects in a timely fashion. Hennepin County will monitor outcomes at six month, nine
month and 12 month intervals.
Hennepin County will require an appraisal and inspection of each property considered
for acquisition; based on this information, any submitted offers will be at least 5 percent
below the current appraised value. In aggregate, Hennepin County will achieve a
minimum discount of 15 percent for all NSP properties acquired. The resale price, if
required, will be no greater than the total investment, including acquisition, rehabilitation
and associated program delivery costs. A restrictive covenant will be filed on the land to
ensure that future property uses will comply with NSP eligible activities.
Following demolition, the property will be offered for sale to a nonprofit orfor-profit for
redevelopment and construction of new housing units as soon as feasible.
Redevelopment options include, but are not limited to: resale to Twin Cities Habitat for
Humanity (TCHFH) for new construction homeownership opportunities; or resale to a
nonprofit for special needs rental housing.
If redevelopment within a reasonable time period is not feasible, the land will be held
(land banked) by the acquiring agency or its designee. Redevelopment may include the
sale of the property at current fair market value, or below current fair market value based
on the degree of benefit to households below 120 percent AMI.
New financing documents and/or a new covenant will be filed at the close of the
financing on the redevelopment activity. At a minimum, the loan term will be based on
the HOME required periods of affordability as shown in the table below:
Activity Location:
As identified in the attached map (Exhibit 1 B), the area is bounded on the north by 62nd
Street, to the east by Trunk Highway 77 (TH-77), to the south by 78th Street, and to the
The rate and term of these loans are not known at this time and would be based on the
future activity (rental, homeownership, public facility) and what other funding sources are
used for the activity.
~-~ 3
west by 2nd Avenue. The area includes the following census tracts: 024700, 0224801,
024802, 024901, 024902, and 024903 and is located wholly within zip code 55423
NSP targeted to Households earnina 50% or less of Area Median Income:
City of Richfield will purchase and rehab two houses to be subsequently sold to a
qualified non-profit, such as West Hennepin Affordable Housing Land Trust, Habitat for
Humanity, or GMHC at a price that will facilitate re-sale to a household at or below 50%
AMI.
Activity Budget: Attached as Exhibit 1A
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EXHIBIT 1 B
Priority Neighborhaad ~tabiliz~tiar~ Ar~~
(~i~hfiald
-- Roads
Priority Neighborhoods
Hennepin County Housing Community Works and Transit
1 /24/2009
~~~
Minnesota Housing NSP
V~ NSP Tier2 Green
Q HC_Cifies
Hennepin County Housing Community Works and Transit
(Q~"c~~
Minnesota Housing NSP
Priority Neighborhood Stabilization Areas
Priorityfunding in Tier One areas first Tier Two second, and Tier 3 third as fundin
allows.
Tier One
Brooklyn Center Census Tract 020400 Block Group (s)1
Brooklyn: Center Census Tract 020500 Block Group (s) 1-4
BrooklXn Center Census Tract 020600 Block Group (s) 1-2
Brooklyn Park Census Tract 026811 Block Group (s) 2
Brooklyn Park Census Tract 026814 Block Group (s) 4
Brooklyn Park Census Tract 026816 Block Group (s) 5
Brooklyn Park Census Tract 026818 Block Group (s) 3
Champlin Census Tract 026908 Block Group (s)1-4
Crystal Census Tract 020801 Block Group (s)1-2
Crystal Census Tract 021300 Block Group (s) 3
New Hobe Census Tract 021502 Block Group (s)1-3
Richfield Census Tract 024802 Block Group (s)1-3
Robbinsdale Census Tract 021300 Block Group (s)1-2, 4
Robbinsdale Census Tract 021400 Block Group (s) 1-3
Tier Two
Brooklyn Center Census Tract 020400 Block Group (s) 2-4
Brooklyn Center Census Tract 026811 Block Group (s) 3
Brooklyn Park Census Tract 026807 Block Group (s) 6
Brooklyn Park Census Tract 026809 Block Group (s) 3
Brooklyn Park Census Tract 026810 Block Group (s) 1, 5
Brooklyn Park Census Tract 026814 Block Group (s) 5
Brooklyn Park Census Tract 026818 Block Group (s)1
Richfield Census Tract 024902 Block Group (s) 1-2
Tier Three
Brooklyn Park Census Tract 026814 Block Group (s)1-3
Brooklyn Park Census Tract 026816 Block Group (s)1-4
Brooklyn Park Census Tract 026819 Block Group (s) 2
Crystal Census Tract 020700 Block Group (s)1-4
Crystal Census Tract 020902 Block Group (s)1-2
Crystal Census Tract 021502 Block Group (s)1
Richfield Census Tract 024801 Block Group (s)1-2
Richfield Census Tract 024901 Block Group (s) 2-3
Richfield Census Tract 024903 Block Group (s)1-2
Robbinsdale Census Tract 021100 Block Group (s) 1-2
~P "o~
EXHIBIT 2
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Monday,
October 6, 2008
Part III
Department of
Housing and Urban
Development
Notice of Allocations, Application
Procedures, Regulatory Waivers Granted
to and Alternative Requirements for
Emergency Assistance for Redevelopment
of Abandoned and Foreclosed Homes
Grantees Under the Housing and
Economic Recovery Act, 2008; Notice
EXHIBIT 2 ~P°a
58330 Federal Register /Vol. 73, No. 194 /Monday, October 6, 2008 /Notices
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
[Docket No. FR-0255-N-01]
Notice of Allocations, Application
Procedures, Regulatory Waivers
Granted to and Alternative
Requirements for Emergency
Assistance for Redevelopment of
Abandoned and Foreclosed Homes
Grantees Under the Housing and
Economic Recovery Act, 2008
AGENCY: Office of the Secretary, HUD.
ACTION: Notice of allocation method,
waivers granted, alternative
requirements applied, and statutory
program requirements.
SUMMARY: This notice advises the public
of the allocation formula and allocation
amounts, the list of grantees, alternative
requirements, and the waivers of
regulations granted to grantees under
Title III of Division B of the Housing
and Economic Recovery Act of 2008, for
the purpose of assisting in the
redevelopment of abandoned and
foreclosed homes under the Emergency
Assistance for Redevelopment of
Abandoned and Foreclosed Homes
heading, referred to throughout this
notice as the Neighborhood
Stabilization Program (NSP). As
described in the SUPPLEMENTARY
INFORMATION section of this notice, HUD
is authorized by statute to specify
alternative requirements and make
regulatory waivers for this purpose. This
notice also notes statutory issues
affecting program design and
implementation.
DATES: Effective Date: September 29,
2008.
FOR FURTHER INFORMATION CONTACT:
Stanley Gimont, Director, Office of
Block Grant Assistance, Department of
Housing and Urban Development, 451
Seventh Street, SW., Room 7286,
Washington, DC 20410, telephone
number 202-708-3587. Persons with
hearing or speech impairments may
access this number via TTY by calling
the Federal Information Relay Service at
800-877-8339. FAX inquiries may be
sent to Mr. Gimont at 202-401-2044.
(Except for the "800" number, these
telephone numbers are not toll-free.)
SUPPLEMENTARY INFORMATION:
Authority To Provide Alternative
Requirements and Grant Regulatory
Waivers
Title III of Division B of the Housing
and Economic Recovery Act, 2008
(HERA) (Pub. L. 110-289, approved July
30, 2008) appropriates $3.92 billion for
emergency assistance for redevelopment
of abandoned and foreclosed homes and
residential properties, and provides
under a rule of construction that, unless
HERA states otherwise, the grants are to
be considered Community Development
Block Grant (CDBG) funds. The grant
program under Title III is commonly
referred to as the Neighborhood
Stabilization Program (NSP). When
referring to a provision of the
appropriations statute itself, this notice
will refer to HERA; when referring to
the grants, grantees, assisted activities,
and implementation rules, this notice
will use the term NSP.
HERA authorizes the Secretary to
specify alternative requirements to any
provision under Title I of the Housing
and Community Development Act of
1974, as amended, (the HCD Act) except
for requirements related to fair housing,
nondiscrimination, labor standards, and
the environment (including lead-based
paint), in accordance with the terms of
section 2301 of HERA and for the sole
purpose of expediting the use of grarit
funds. (Current and former disaster
recovery CDBG grantees should note
that this authority is substantially and
significantly more limited from that
generally provided with disaster
recovery CDBG supplemental
appropriations; therefore, waivers under
the NSP are much more limited. For
example, HUD does not have authority
to provide alternative requirements for
the National Affordable Housing Act
(NAHA) or for the Uniform Relocation
Assistance Real Property Acquisition
Policies Act of 1970 (URA). Unless this
notice describes how HERA has
superseded one of their provisions,
these statutes will apply as in the CDBG
program. Such regulatory relief as HUD
deemed necessary and was authorized
to provide under 24 CFR 5.110 and
91.600 to permit implementation of the
NSP is provided in this notice.)
The Secretary finds that the following
alternative requirements are necessary
to expedite the use of these funds for
their required purposes.
Under the requirements of HERA, the
Secretary must provide Congress written
notice of its intent to exercise the
authority to specify alternative
requirements not less than 10 business
days before such exercise of authority is
to occur. Under the HUD Reform Act,
regulatory waivers must be justified and
published in the Federal Register. The
Department is also using this notice to
provide grantees information about
other ways in which the requirements
for this grant vary from regular CDBG
program rules. Compiling this
information in a single notice creates a
helpful resource for grant administrators
and HUD field staff.
Except as described in this notice,
statutory and regulatory provisions
governing the CDBG program, including
those at 24 CFR part 570 subpart I for
states or, for CDBG entitlement
communities, including those at 24 CFR
part 570 subparts A, C, D, J, K, and O,
as appropriate, shall apply to the use of
these funds. (The State of Hawaii will be
allocated funds and will be subject to
part 570, subpart I, as modified by this
notice.) Other sections of the notice will
provide further details of the changes,
the majority of which deal with
adjustments necessitated by HERA
provisions, simplifying program rules to
expedite administration, or relate to the
ability of state grantees to act directly
instead of solely through distribution to
local governments. In a separate
guidance issuance, HUD also will
provide a simplified "crosswalk" of
NSP and State CDBG requirements for
state grantee administrators.
Table of Contents
I. Allocations
A. Formula: Allocation
B. Formula: Reallocation
II. Alternative Requirements and Regulatory
Waivers
A. Definitions for purposes of the CDBG
Neighborhood Stabilization Program
B. Pre-Grant Process ,
1. General
2. Contents of an NSP Action Plan
Substantial Amendment
3. Continued Affordability
4. Citizen Participation Alternative
Requirement
5. Joint Requests
6. Effect of Existing Cooperation
Agreements Governing Joint Programs
and Urban Counties
C. Reimbursement for Pre-Award Costs
D. Grant Conditions
E. Income Eligibility Requirement Changes
F. State Distribution to Entitlement
Communities and Indian Tribes
G. State's Direct Action
H. Eligibility and Allowable Costs
I. Rehabilitation Standards
J. Sale of Homes
K. Acquisition and Relocation
L. Note on Eminent Domain
M. Timeliness of Use and Expenditure of
NSP Funds
N. Alternative Requirement for Program
Income (Revenue) Generated by
Activities Assisted With Grant Funds
O. Reporting
P. Note That FHA Properties Are Eligible
for NSP Acquisition and Redevelopment
Q. Purchase Discount
R. Removal of Annual Requirements
S. Affirmatively Furthering Fair Housing
T. Certifications
U. Note on Statutory Limitation on
Distribution of Funds
V. Information Collection Approval Note
W. Duration of Funding
EXHIBIT 2 fP ~3~
Federal Register /Vol. 73, No. 194 /Monday, October 6, 2008 /Notices 58331
I. Allocations
A. Formula: Allocation
HERA provides $3.92 billion of funds
that are generally to be construed as
CDBG program funds for the
communities and in the amounts listed
in Attachment A to this notice.
Attachment A also includes a
description of the allocation formula
used to determine the grant amounts, as
required by HERA.
B. Formula: Reallocation
1.a. To expedite the use of NSP funds,
the Department is specifying alternative
requirements to 42 U.S.C. 5306(c). If a
unit of general local government
receiving an allocation of NSP funds
under this notice (as designated in
Attachment A) fails to submit a
substantially complete application for
its grant allocation by December 1, 2008,
or submits an application for less than
the total allocation amount, HUD will
simultaneously notify the jurisdiction of
the cancellation of all or part of its
allocation amount and proceed to
reallocate the funds to the state in
which the jurisdiction is located.
b. If a state or insular area receiving
an allocation of funds under this notice
fails to submit a substantially complete
application for its allocation by
December 1, 2008, or submits an
application for less than the total
allocation amount, HUD will
simultaneously notify the state or
insular area of the reduction in its
allocation amount and proceed to
reallocate the funds to the 10 highest-
need states based on original rankings of
need.
2. If any jurisdiction, state, insular, or
local area fails to meet the requirement
to use its grant within 18 months of
receipt of the amounts, as required,
HUD, on the first business day after that
deadline, will simultaneously notify the
grantee and restrict the amount of
unused funds in the grantee's line of
credit. HUD will allow the grantee 30
days to submit information to HUD
regarding any additional "use" of funds
not already recorded in the Disaster
Recovery Grant Reporting system
(DRGR). Then HUD will proceed to
recapture the unused funds. HUD will
reallocate these unused funds in
accordance with 42 U.S.C. 5306(c)(4).
II. Alternative Requirements and
Regulatory Waivers
This section of the notice briefly
provides a justification for alternative
requirements, where additional
explanation is necessary, and describes
the necessary basis for each regulatory
waiver. This section also highlights
some of the statutory items applicable to
the grants. This background narrative is
followed by the NSP requirement(s).
HUD's resources for implementing
HERA are limited and have other calls
upon them (for managing the regular
CDBG and HOME Investment
Partnership programs (HOME) and the
New York, Gulf Coast, and Midwest
disaster recovery grants), and the
Department wants to target the use of its
resources toward achieving NSP
program performance, and preventing
and eliminating fraud, waste, and
misuse of program funds. Because no
funds were available specifically for
tracking the use of NSP grants, HUD is
applying an existing system,
unmodified. This all militates toward
keeping standards simple or familiar,
wherever possible: Therefore,
throughout this notice, where HUD had
any choice of a standard to use to
measure compliance, HUD selected the
simplest one to administer, giving a
preference to a standard already in
common use. .
Each grantee eligible for an NSP grant
already receives annual CDBG
allocations, has carried out needs
hearings, has a consolidated plan, an
annual action plan, a citizen
participation plan, a monitoring plan,
an analysis of impediments to fair
housing choice, and has made CDBG
certifications. The consolidated plan
already discusses housing needs related
to up to four major grant programs:
CDBG, HOME, Emergency Shelter
Grants (ESG), and Housing
Opportunities for Persons With AIDS
(HOPWA). A grantee's annual action
plan describes the activities budgeted
under each of those annual programs.
HUD is treating a grantee's use of its
NSP grant to be a substantial
amendment to its current approved
consolidated plan and annual action
plan. The NSP grant is a special CDBG
allocation to address the problem of
abandoned and foreclosed homes.
HERA establishes the need, targets the
geographic areas, and limits the eligible
uses of NSP funds. Treating the NSP as
a substantial amendment will expedite
the distribution of NSP funds, while
ensuring citizen participation on the
specific use of the funds. HUD is
waiving the consolidated plan
regulations on the certification of
consistency with the consolidated plan
to mean the NSP funds will be used to
meet the congressionally identified
needs of abandoned and foreclosed
homes in the targeted areas set forth in
the grantee's substantial amendment. In
addition, HUD is waiving the
consolidated plan regulations to the
extent necessary to adjust reporting to
fit the requirements of HERA and the
use of the DRGR.
The waivers, alternative requirements,
and statutory changes apply only to the
grant funds appropriated under HERA
and not to-the use of regular formula
allocations of CDBG funds, even if they
are used in conjunction with NSP funds
for a project: They provide expedited
program implementation and
implement statutory requirements
unique to this appropriation.
A. Definitions for Purposes of the CDBG
Neighborhood Stabilization Program
Background
Certain terms are used in HERA that
are not used in the regular CDBG
program, or the terms are used
differently in HERA and the HCD Act.
In the interest of speed and clarity of
administration, HUD is defining these
terms in this notice for all grantees,
including states. For the same reason,
HUD is also defining eligible fund uses
for all grantees, including states. States
may define other program terms under
the authority of 24 CFR 570.481(a), and
will be given maximum feasible
deference in accordance with 24 CFR
570.480(c) in matters related to the
administration of their NSP programs.
Requirement
Abandoned. A home is abandoned
when mortgage or tax foreclosure
proceedings have been initiated for that
property, no mortgage or tax payments
have been made by the property owner
for at least 90 days, AND the property
has been vacant for at least 90 days.
Blighted structure. A structure is
blighted when it exhibits objectively
determinable signs of deterioration
sufficient to constitute a threat to
human health, safety, and public
welfare.
CDBG funds. CDBG funds means, in
addition to the definition at 24 CFR
570.3, grant funds distributed under this
notice.
Current market appraised value. The
current market appraised value means
the value of a foreclosed upon home or
residential property that is established
through an appraisal made in
conformity with the appraisal
requirements of the URA at 49 CFR
24.103 and completed within 60 days
prior to an offer made for the property
by a grantee, subrecipient, developer, or
individual homebuyer.
Foreclosed. A property "has been
foreclosed upon" at the point that,
under. state or local law, the mortgage or
tax foreclosure is complete. HUD
generally will not consider a foreclosure
to be complete until after the title for the
EXHIBIT 2 t~p ~3 j
58332 Federal Register /Vol. 73, No. 194 /Monday, October 6, 2008 /Notices
property has been transferred from the
former homeowner under some type of
foreclosure proceeding or transfer in
lieu of foreclosure, in accordance with
state or local law.
Land bank. A land bank is a
governmental or nongovernmental
nonprofit entity established, at least in
part, to assemble, temporarily manage,
and dispose of vacant land for the
purpose of stabilizing neighborhoods
and encouraging re-use or
redevelopment of urban property. For
the purposes of the NSP program, a land
bank will operate in a specific, defined
geographic area. It will purchase
properties. that have been abandoned or
foreclosed upon and maintain,
assemble, facilitate redevelopment of,
market, and dispose of the land-banked
properties. If the land bank is a
governmental entity, it may also
maintain abandoned or foreclosed
property that it does not own, provided
it charges the owner of the property the
full cost of the service or places a lien
on the property for the full cost of the
service.
Revenue for the purposes of section
2301(d)(4). Revenue has the same
meaning as program income, as defined
at 24 CFR 570.500(a) with the
modifications in this notice.
Subrecipient. Subrecipient shall have
the same meaning as at the first
sentence of 24 CFR 570.500(c). This
includes any nonprofit organization
(including a unit of general local
government) that a state awards funds
to.
Use for the purposes of section
2301(c)(1). Funds are used when they
are obligated by a state, unit of general
local government, or any. subrecipient
thereof, for a specific NSP activity; for
example, for acquisition of a specific
property. Funds are obligated for an
activity when orders are placed,
contracts are awarded, services are
received, and similar transactions have
occurred that require payment by the
state, unit of general local government,
or subrecipient during the same or a
future period. Note that funds are not
obligated for an activity when
subawards (e.g., grants to subrecipients
or to units of local government) are
made.
B. Pre-Grant Process
Background
With this notice, HUD is establishing
the NSP allocation formula, including
reallocation provisions, and announcing
the distribution of funds. CDBG grantees
receiving NSP allocations may
immediately begin to prepare and
submit action plan substantial
amendments for NSP funds, in
accordance with this notice. (Insular
areas should follow the requirements for
entitlement communities.)
To receive NSP funding, each CDBG
grantee listed in Attachment A must
submit an action plan substantial
amendment to HUD in accordance with
this notice by December 1, 2008.
HUD encourages each grantee to carry
out its NSP activities• in the context of
a comprehensive plan for the
community's vision of how it can make
its neighborhoods not only more stable,
but also more sustainable, competitive,
and integrated into the overall
metropolitan fabric, including access to
transit, affordable housing, employers,
and services.
HUD encourages each local
jurisdiction receiving an allocation to
carefully consider its administrative
capacity to use the funds within the
statutory deadline versus the capacity of
the state administrator. HUD expects
that after such consideration, some
jurisdictions may choose to apply for
less than the full amount, which will
allow the balance of their grants to pass
to the NSP administrator at the state
level.
Another way jurisdictions may
cooperate to carry out their grant
programs is through a joint request to .
HUD. HUD is providing regulatory
waivers and alternative requirements to
allow joint requests among entitlement
communities and to allow joint requests
between an entitlement community and
a state. Any two or more contiguous
entitlement communities (metropolitan
cities or urban counties) that are in the
same metropolitan area and that are
eligible to receive an NSP grant may
instead make a joint request to HUD to
implement a joint NSP program. A
jurisdiction need not have a joint
agreement with an urban county' under
the regular CDBG entitlement program
to request a joint program for NSP
funding. Similarly, any entitlement
community eligible to receive an NSP
grant may instead make a request for a
joint NSP program with its state. An
NSP joint request under a cooperation
agreement results in a single combined
grant and a single action plan
substantial amendment. Potential
requestors should contact HUD as soon
as possible (as far as possible in advance
of publishing a proposed NSP
substantial amendment) for technical
guidance. The requestors will specify
which jurisdiction will receive the
funds and administer the combined
grant on behalf of the requestors; in the
case of a joint request between a local
government jurisdiction and a state, the
state will administer the combined
grant. (Grantees choosing this option
should consider the Consolidated Plan
and citizen participation implications of
this approach. The lead entity's
substantial amendment will cover any
participating members. The citizen
participation process must include
citizens of all jurisdictions participating
in the joint NSP program, not just those
of the lead entity.)
Given the rule of construction in
HERA that NSP funds generally are
construed as CDBG program funds,
subject to CDBG program requirements,
HUD generally is treating NSP funds as
a special allocation of Fiscal Year (FY)
2008 CDBG funding. This has important
consequences for local governments
presently participating in an existing
urban county program, and for
metropolitan cities that have joint
agreements with urban counties. HUD
will consider any existing cooperation
agreements between a local government
and an urban county governing FY2008
CDBG funding (for purposes of either an
urban county or a joint program) to
automatically cover NSP funding as
well. These cooperation agreements will
continue to apply to the use of NSP
funds for the duration of the NSP grant,
just as cooperation agreements covering
regular CDBG Entitlement program
funds continue to apply to any use of
the funds appropriated during the 3-
yearperiod covered by the agreements.
For example, a local government
presently has a cooperation agreement
covering a joint program or participation
in an urban county for federal FYs 2007,
2008 and -2009. The local government
may choose to discontinue its
participation with the county at the end
of the applicable qualification period for
purposes of regular CDBG entitlement
funding. However, the county will still
be responsible for any NSP projects
funded in that community, and for any
NSP funding the local government
receives from the county, until those
funds are expended and the funded
activities are completed.
A third method of cooperating is also
available. A jurisdiction may choose to
apply for its entire grant, and then enter
into a subrecipient agreement with
another jurisdiction or nonprofit entity
to administer the grant. In this manner,
for example, all of the grantees
operating in a single metropolitan area
could designate the same land-bank
entity (or the state housing finance
agency) as a subrecipient for some or all
of their NSP activities.
Each grantee will have until
December 1, 2008, to complete and
submit a substantial amendment to its
annual action plan. A grantee that
wishes to initially submit its action plan
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Federal Register /Vol. 73, No. 194 /Monday, October 6, 2008 /Notices 58333
amendment to HUD electronically in the
DRGR system rather than via paper may
do so by contacting its local field office
for the DRGR submission directions.
Paper submissions to HUD also will be
allowed, although each grantee must set
up its action plan in DRGR prior to the
deadline for the first required
performance report after receiving a
grant.
HUD is using DRGR for the NSP
because no other application and
reporting system was sufficiently
flexible to deal with the alternative
requirements. The emergency nature of
this legislation and corresponding
statutory time frames do not give HUD
sufficient time to develop a new system
or modify an existing system to
perfectly fit NSP.
HUD encourages grantees, during
development of their action plan
amendments, to contact HUD field
offices for guidance in complying with
these requirements, or if they have any
questions regarding meeting grant
requirements.
Normally, in the CDBG program, a
grantee takes at least 30 days soliciting
comment from its citizens before it
submits an annual action plan to HUD,
which then has 45 days to accept or
reject the plan. To expedite the process
and to ensure that the NSP grants are
awarded in a timely manner, while
preserving reasonable citizen
participation, HUD is waiving the
requirement that the grantee follow its
citizen participation plan for this
substantial amendment. HUD is
shortening the minimum time for
citizen comments and requiring the
substantial amendment materials to be
posted on the grantee's official website
as the materials are developed,
published, and submitted to HUD.
Each grantee must use its NSP funds
within 18 months of receipt. A grantee
will be deemed by HUD to have
received its NSP grant at the time HUD
signs its NSP grant agreement (or
amendment thereof, in the case of a
state that later receives reallocated grant
funds).
Grantees are cautioned that, despite
the expedited application and plan
process, they are still responsible for
ensuring that all citizens have equal
access to information about the
programs. Among other things, this
means that each grantee must ensure
that program information is available in
the appropriate languages for the
geographic area served by the
jurisdiction. This will be a particular
issue for those states that this notice is
allowing to make grants throughout the
state, including into regular CDBG
entitlement areas. Because regular State
CDBG funds are not used in entitlement
areas, State CDBG staffs may not be
aware of limited English proficient
(LEP) speaking populations in those
metropolitan jurisdictions.
HUD will review each grantee
submission for completeness and
consistency with the requirements of
this notice and will disapprove
incomplete and inconsistent action plan
amendments. HUD will allow revision
and resubmission of a disapproved
action plan in accordance with 24 CFR
91.500 so long as any such resubmission
is received by HUD 45 days or less
following the date of first disapproval
and in no case later than the close of
business February 13, 2009.
In combination, the notice alternative
requirements provide the following
expedited steps for NSP grants:
• Proposed action plan amendment
published via the usual methods and on
the Internet for no less than 15 calendar
days of public comment;
• Final action plan amendment
posted on the Internet and submitted to
HUD by December 1, 2008 (grant
application includes Standard Form 424
(SF-424) and certifications);
• HUD expedites review,
• HUD accepts the plan and prepares
a cover letter, grant agreement, and
grant conditions;
• Grant agreement signed by HUD
and immediately transmitted to the
grantee;
• Grantee signs and returns the grant
agreements;
• HUD establishes the line of credit
and the grantee requests and receives
voice response system (VRS) access;
• After completing the environmental
review(s) pursuant to 24 CFR part 58
and, as applicable, receiving from HUD
or the state an approved Request for
Release of Funds and certification, the
grantee may draw-down funds from the
line of credit.
The action plan substantial
amendment and citizen participation
alternative requirement will permit an
expedited grant-making process, but one
that still provides for public notice,
appraisal, examination, and comment
on the activities proposed for the use of
NSP grant funds.
Requirement
1. General note. Except as described
in this notice, statutory and regulatory
provisions governing the CDBG program
for states and entitlement communities,
as applicable, shall apply to the use of
these funds.
2. Contents of an NSP Action Plan
substantial amendment. The elements in
the NSP substantial amendment to the
Annual Action Plan required for the
CDBG program under part 91 are:
a. General information about needs,
distribution, use of funds, and
definitions:
i. Summary needs data identifying the
geographic areas of greatest need in the
grantee's jurisdiction. (A state must
include the needs of the entire state and
not just the areas not receiving an NSP
allocation. To include the needs of an
entitlement community, the state may
either incorporate an entitlement
jurisdiction's consolidated plan and
NSP needs by reference and hyperlink
on the Internet, or state the needs for
that jurisdiction in the state's own plan);
ii. A narrative describing how the
distribution and uses of the grantee's
NSP funds will meet the requirements
of Section 2301(c)(2) of HERA that
funds be distributed to the areas of
greatest need, including those with the
greatest percentage of home
foreclosures, with the highest
percentage of homes financed by a
subprime mortgage related loan, and
identified by the grantee as likely to face
a significant rise in the rate of home
foreclosures. The grantee's narrative
must address the three need categories
in the NSP statute, but the grantee may
also consider other need categories;
iii. For the purposes of the NSP, the
narratives will include:
(A) A definition of "blighted
structure" in the context of state or local
law•
(B) A definition of "affordable rents;"
(C) A description of how the grantee
will ensure continued affordability for
NSP-assisted housing; and
(D) A description of housing
rehabilitation standards that will apply
to NSP-assisted activities.
b. Information by activity describing
how the grantee will use the funds,
identifying:
i. The eligible use of funds under
NSP;
ii. The eligible CDBG activity or
activities;
iii. The areas of greatest need
addressed by the activity or activities;
iv. The expected benefit to income-
qualified persons or households or
areas;
v. Appropriate performance measures
for the activity (e.g., units of housing to
be acquired, rehabilitated, or
demolished for the income levels
represented in DRGR, which are
currently 50 percent of area median
income and below, 51 to 80 percent, and
81 to 120 percent);
vi. Amount of funds budgeted for the
activity;
vii. The name and location of the
entity that will carry out the activity;
and
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viii. The expected start and end dates
of the activity.
c. A Description of the general terms
under which assistance will be
provided, including:
i. If the activity includes acquisition
of real property, the discount required
for acquisition of foreclosed-upon
properties;
ii. Range of interest rates (if any);
iii. Duration or term of assistance;
iv. Tenure of beneficiaries (e.g., rental
or homeownership); and
v. If the activity produces housing,
how the design of the activity will
ensure continued affordability; and
vi. If the funds used for the activity
are to count toward the requirement at
section 2301(f)(3)(A)(ii) to provide
benefit to low-income persons (earning
50 percent or less of area median
income).
d. Information on how to contact
grantee program administrators, so that
citizens and other interested parties
know who to contact for additional
information.
3. Continued affordability. Grantees
shall ensure, to the maximum extent
practicable and for the longest feasible
term, that the sale, rental, or
redevelopment of abandoned and
foreclosed-upon homes and residential
properties under this section remain
affordable to individuals or families
whose incomes do not exceed 120
percent of area median income or, for
units originally assisted with funds
under the requirements of section
2301(fJ(3)(A)(ii), remain affordable to
individuals and families whose incomes
do not exceed 50 percent of area median
income.
a. In its NSP action plan substantial
amendment, a grantee will define
"affordable rents" and the continued
affordability standards and enforcement
mechanisms that it will apply for each
(or all) of its NSP activities. HUD will
consider any grantee adopting the
HOME program standards at 24 CFR
92.252(a), (c), (e), and (f), and 92.254 to
be in minimal compliance with this
standard and expects any other
standards proposed and applied by a
grantee to be enforceable and longer in
duration. (Note that HERA's continued
affordability standard is longer than that
required of subrecipients and
participating units of general local
government under 24 CFR 570.503 and
570.501(b).)
b. The grantee must require each NSP-
assisted homebuyer to receive and
complete at least 8 hours of homebuyer
counseling from aHUD-approved
housing counseling agency before
obtaining a mortgage loan. The grantee
must ensure that the homebuyer obtains
a mortgage loan from a lender who
agrees to comply with the bank
regulators' guidance for non-traditional
mortgages (see, Statement on Subprime
Mortgage Lending issued by the Office
of the Comptroller of the Currency,
Board of Governors of the Federal
Reserve System, Federal Deposit
Insurance Corporation, Department of
the Treasury, and National Credit Union
Administration, available at http://
www. fdic.gov/regulations/laws/rules/
5000-5160.htm1). Grantees must design
NSP programs to comply with this
requirement and must document
compliance in the records, for each
homebuyer. Grantees are cautioned
against providing or permitting
homebuyers to obtain subprime
mortgages for whom such mortgages are
inappropriate, including homebuyers
who qualify for traditional mortgage
loans.
c. If NSP funds assist a property that
was previously assisted with HOME
funds, but on which the affordability
restrictions were terminated through
foreclosure or transfer in lieu of
foreclosure pursuant to 24 CFR part 92,
the grantee must revive the HOME
affordability restrictions for the greater
of the remaining period of HOME
affordability or the continuing
affordability requirements of this notice.
4. Citizen participation alternative
requirement. HUD is providing an
alternative requirement to 42 U.S.C.
5304(a)(2) and (3), to expedite
distribution of grant funds and to
provide for expedited citizen
participation for the NSP substantial
amendment. Provisions of 24 CFR
570.302 and 570.486 and those of 24
CFR 91.105(k) and 91.115(1), with
respect to following the citizen
participation plan, are waived to the
extent necessary to allow
implementation of the requirements
below.
a. To receive its grant allocation, a
grantee must submit to HUD for
approval an NSP application by
December 1, 2008. This submission will
include a signed standard federal form
SF-424, signed certifications, and a
substantial action plan amendment
meeting the requirements of paragraph b
below. (24 CFR 91.505 is waived to the
extent necessary to require submission
of the substantial amendment to HUD
for approval in accordance with this
notice.)
b. Each grantee must prepare and
submit its annual Action Plan
amendment to HUD in accordance with
the consolidated plan procedures for a
substantial amendment under the
annual GDBG program as modified by
this notice or HUD will reallocate the
funds allocated for that grantee. HUD is
providing alternative requirements to 42
U.S.C. 5304(a)(2) and waiving 91.105(k)
and 91.115(1) to the extent necessary to
allow the grantee to provide no fewer
than 15 calendar days for citizen
comment (rather than 30 days) for its
initial NSP submission, and to require
that, at the time of submission to HUD,
each grantee post its approved action
plan amendment and any subsequent
NSP amendments on its official website
along with a summary of citizen
comments received within the 15-day
comment period. After HUD processes
and approves the plan amendment and
both HUD and the grantee have signed
the grant agreement, HUD will establish
the grantee's line of credit in the amount
of funds included in the Action Plan
amendment, up to the allocation
amount.
5. Joint requests. To expedite the use
of funds, HUD is providing an
alternative requirement to 42 U.S.C.
5304(1) and is waiving 24 CFR 570.308
to the extent necessary to allow for
additional joint programs described
below.
a. Entitlement Community Joint
Agreements. Two or more contiguous
entitlement communities (metropolitan
cities or urban counties) that are eligible
to receive a NSP allocation and are
located in the same metropolitan area
may enter into joint agreements. All
members to the joint agreement must be
eligible to receive NSP funds, and one
unit of general local government must
be designated as the lead entity. The
lead entity must execute the NSP grant
agreement with HUD. Consistent with
24 CFR 570.308, the lead entity must
assume responsibility for administering
the NSP grant on behalf of all members,
in compliance with applicable program
requirements. The substantial
amendment to the lead entity's action
plan will include all participating
entitlement communities.
b. Joint agreements with a state. Any
entitlement community that is eligible
to receive an NSP allocation may. enter
into a joint agreement with its state. The
state shall be the lead entity and must
assume responsibility for administering
the NSP grant on behalf of the
entitlement community, in compliance
with applicable program requirements.
The substantial amendment to the
state's action plan will include any
participating entitlement community.
6. Effect of existing cooperation
agreements governing joint programs
and urban counties. Any cooperation
agreement between a unit of general
local government and a county,
concerning either a joint program or
participation in an urban county under
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24 CFR 570.307 or 570.308, and
governing CDBG funds appropriated for
federal FY 2008, will be considered to
incorporate and apply to NSP funding.
Any such cooperation agreements will
continue to apply to the use of NSP
funds until the NSP funds are expended
and the NSP grant is closed out.
Grantees should note that certain
provisions in existing cooperation
agreements that govern FY2008 CDBG
funding maybe inconsistent with parts
of HERA and this notice. For instance,
set minimum and/or maximum
allocation amounts may conflict with
priority distributions to areas of greatest
need identified in the grantee's action
plan substantial amendment.
Conforming amendments should be
made to existing cooperation
agreements, as necessary, to comply
with HERA and this notice.
C. Reimbursement for Pre-Award Cosfs
Background
NSP allocatees will need to move
forward rapidly to prepare the NSP
substantial amendment and to
undertake other administrative actions,
including environmental reviews, as
soon as allocations-are known.
Therefore, HUD is granting permission
to states and entitlement jurisdictions
receiving a direct allocation of NSP
funds (see Attachment A) to incur pre-
award costs as if each was a new grantee
preparing to receive its first allocation of
CDBG funds.
Requirement
24 CFR 570.200(h) is waived to the
extent necessary to grant permission to
entitlement jurisdictions receiving a
direct NSP allocation under this notice
to incur pre-award costs as if each was
anew grantee preparing to receive its
first allocation of CDBG funds.
Similarly, in accordance with OMB
Circular A-87, Attachment B, paragraph
31, HUD is allowing states to incur pre-
award costs as if each was a new grantee
preparing to receive its first allocation of
CDBG funds. As a new grantee, an NSP
allocatee will be allowed to incur costs
necessary to develop the NSP
substantial action plan amendment and
undertake other administrative actions
necessary to receive its first grant, prior
to the costs being included in the final
plan, provided that the other conditions
of 24 CFR 570.200(h) are met. (For units
of general local government (including
entitlements not receiving a direct NSP
allocation under this notice) applying to
the state, 24 CFR 570.489(b) applies
unmodified.)
D. Grant Conditions
For NSP grantees that HUD
determines are high risk in accordance
with 24 CFR 85.12(a), HUD will apply
additional grant conditions in
accordance with 24 CFR 85.12(b).
E. Income Eligibility Requirement
Changes
Background
The NSP program includes two low-
and moderate-income requirements at
section 2301(f)(3)(A) that supersede
existing CDBG income qualification
requirements. Under the heading "Low
and Moderate Income Requirement,"
HERA states that: "All of the funds
appropriated or otherwise made
available under this section shall be
used with respect to individuals and
families whose income does not exceed
120 percent of area median income."
This provision does two main things.
First, for the purposes of the NSP, it
effectively supersedes the overall
benefit provisions of the HCD Act and
the CDBG regulations, which allow up
to 30 percent of a grant to be used for
activities that meet a national objective
other than the low- and moderate-
income one. Thus, NSP allows the use
of only the low- and moderate-income
national objective. Activities may not
qualify under NSP using the "prevent or
eliminate slums and blight" or "address
urgent community development needs"
objectives.
Second, this provision also redefines
and supersedes the definition of "low-
and moderate-income," effectively
allowing households whose incomes
exceed 80 percent of area median
income but do not exceed 120 percent
of area median income to qualify as if
their incomes did not exceed the
published low- and moderate-income
levels of the regular CDBG program. To
prevent confusion, HUD will refer to
this new income group as "middle
income," and keep the regular CDBG
definitions of "low-income" and
"moderate income" in use. Further,
HUD will characterize aggregated
households whose incomes do not
exceed 120 percent of median income as
"low-, moderate-, and middle-income
households," abbreviated as LMMH. For
the purposes of NSP CDBG only, an
activity may meet the HERA low- and
moderate-income national objective if
the assisted activity:
• Provides or improves permanent
residential structures that will be
occupied by a household whose income
is at or below 120 percent of area
median income (abbreviated as LMMH);
• Serves an area in which at least 51
percent of the residents have incomes at
or below 120 percent of area median
income (LMMA);
• Creates or retains jobs for persons
whose household incomes are at or
below 120 percent of median income
(LMMJ); or
• Serves a limited clientele whose
incomes are at or below 120 percent of
area median income (LMMC).
HUD will use the parenthetical terms
above to refer to NSP national objectives
in program implementation, to avoid
confusion with the regular HCD Act
definitions.
Land banks are not allowed in the
regular CDBG program because of the
very high risk that the delay between
acquiring property and meeting a
national objective can be excessively
long, attenuating the intended CDBG
program benefits by delaying benefit far
beyond the annual or even the 5-year
consolidated plan cycles. In the regular
CDBG program (and in the NSP other
than in an eligible land-bank use), a
property acquisition activity is
dependent on the national objective met
by the subsequent reuse of the property
in order to demonstrate program
compliance. Given this, the HERA
direction that assistance to land banks is
an eligible use of NSP funds requires an
alternative requirement and policy
clarification.
For grantees choosing to assist land
banks or demolition of structures with
NSP funds, the change to the income
qualification level for low-, moderate-,
and middle-income areas will likely
include most of the neighborhoods
where property stabilization is required.
If an assisted land bank is not merely
acquiring properties, but is also carrying
out other activities intended to arrest
neighborhood decline, such as
maintenance, demolition, and
facilitating redevelopment of the
properties, HUD will, for NSP-assisted
activities only, accept that the
acquisition and management activities
of the land bank may provide sufficient
benefit to an area generally (as described
in 24 CFR 570.208(a)(1) and
570.483(b)(1)) to meet a national
objective (LMMA) prior to final
disposition of the banked property.
HUD notes that the grantee must
determine the actual service area
benefiting from a land bank's activities,
in accordance with the regulations.
However, HUD does not believe the
benefits of just holding property are
sufficient to stabilize most
neighborhoods or that this is the best
use of limited NSP funds absent a re-use
plan. Therefore, HUD is requiring that a
land bank may not hold a property for
more than 10 years without obligating
the property for a specific, eligible
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redevelopment of that property in
accordance with NSP requirements.
Note that if a state provides funds to
an entitlement community, the
entitlement community must apply the
area median income levels applicable to
its regular CDBG program geography
and not the "balance of state" levels.
Other than the change in the
applicable low- and moderate-income
qualification level from 80 percent to
120 percent, the area benefit, housing,
jobs, and limited clientele benefit
requirements at 570.208(a) and
570.483(b) remain unchanged, as does
the required documentation.
The other NSP low- and moderate-
income related provision states that:
"not less than 25 percent of the funds
appropriated or otherwise made
available under this section shall be
used for the purchase and
redevelopment of abandoned or
foreclosed homes or residential
properties that will be used to house
individuals or families whose incomes
do not exceed 50 percent of area median
income."
HUD advises grantees to take note of
this new threshold as they design NSP
activities. This provision does not have
a parallel in the regular CDBG program.
Grantees must document that an amount
equal to at least 25 percent of a grantee's
NSP grant (initial allocation plus any
reallocations) has been budgeted in the
initial approved action plan substantial
amendment for activities that will
provide housing for income-qualified
individuals or families. Prior to and at
grant closeout, HUD will review
grantees for compliance with this
provision by determining whether at
least 25 percent of grant funds have
been expended for housing for
individual households whose incomes
do not exceed 50 percent of area median
income.
Requirements
1. Overall benefit supersession and
alternative requirement. The
requirements at 42 U.S.C. 5301(c), 42
U.S.C. 5304(b)(3)(A), 24 CFR 570.484
(for states), and 24 CFR 570.200(a)(3)
that 70 percent of funds are for activities
that benefit low- and moderate-income
persons are superseded and replaced by
section 2301(f)(3)(A) of HERA. One
hundred percent of NSP funds must be
used to benefit individuals and
households whose income does not
exceed 120 percent of area median
income. NSP shall refer to such
households as "low-, moderate-, and
middle-income."
2. National objectives supersession
and alternative requirements. The
requirements at 42 U.S.C 5301(c) are
superseded and 24 CFR 570.208(a) and
570.483 are waived to the extent
necessary to allow the following
alternative requirements:
a. For purposes of NSP only, the term
"low- and moderate-income person" as
it appears throughout the CDBG
regulations at 24 CFR part 570 shall be
defined as a member of a low-,
moderate-, and middle-income
household, and the term "low- and
moderate-income household" as it
appears throughout the CDBG
regulations shall be defined as a
household having an income equal to or
less than 120 percent of area median
income, measured as 2.4 times the
current Section 8 income limit for
households below 50 percent of median
income, adjusted for family size. A state
choosing to carry out an activity directly
must apply the requirements of 24 CFR
570.208(a) to determine whether the
activity has met the low-, moderate-,
and middle-income (LMMI) national
objective and must maintain the
documentation required at 24 CFR
570.506 to demonstrate compliance to
HUD.
b. The national objectives related to
prevention and elimination of slums
and blight and addressing urgent
community development needs (24 CFR
570.208(b) and (c) and 570.483(c) and
(d)) are not applicable to NSP-assisted
activities.
c. Each grantee whose plan includes
assisting rental housing shall develop
and make public its definition of
affordable rents for NSP-assisted rental
projects.
d. An NSP-assisted property may not
be held in a land bank for more than 10
years without obligating the property for
a specific, eligible redevelopment of that
property in accordance with NSP
requirements.
F. State Distribution to Entitlement
Communities and Indian Tribes
Background
This notice includes an alternative
requirement to the HCD Act and a
regulatory waiver allowing distribution
of funds by a state to CDBG regular
entitlement communities and Tribes.
This is consistent with the provision of
HERA that specifically sets distribution
priorities for areas with the greatest
need, including "metropolitan areas,
metropolitan cities, urban areas, rural
areas, low- and moderate-income areas
* *" Therefore, states receiving
allocations under this notice may
distribute funds to or within any
jurisdiction within the state that is
among those with the greatest need,
even if the jurisdiction is among those
receiving a direct formula allocation of
funds from HUD under the regular
CDBG program or this notice.
Requirement
Alternative requirement for
distribution to CDBG metropolitan
cities, urban counties, and Tribes: In
accordance with the direction of HERA
that grantees distribute funds to the
areas of greatest need, HUD is providing
an alternative requirement to 42 U.S.C.
5302(a)(7) (definition of
"nonentitlement area") and waiving
provisions of 24 CFR part 570, including
24 CFR 570.480(a), that would prohibit
states electing to receive CDBG funds
from distributing such funds to units of
general local government in entitlement
communities or to Tribes. The
appropriations law supersedes the
statutory distribution prohibition at 42
U.S.C. 5306(d)(1) and (2)(A).
Alternatively, the state is required to
distribute funds without regard to a
local government status under any other
CDBG program and must use funds in
entitlement jurisdictions if they are
identified as areas of greatest need,
regardless of whether the entitlement
receives its own NSP allocation.
G. State's Direct Action
Background
In the State CDBG program, states
receiving CDBG funds may not directly
use the funds for activities, but must
distribute them to units of general local
government, which then use the funds
for program activities. States may still
use this"method of distribution"
program model under NSP, but HUD
reminds the states of the 18-month
"use" requirement. HUD also notes the
language of section 2301(c) that says, in
part, that:
Any State * * that receives amounts
pursuant to this section shall * * * use such
amounts to purchase and redevelop * * *.
This clearly speaks to the states using
funds directly for projects and
supersedes the HCD Act direction for
states to only distribute funds to
nonentitlement areas. Direct use of
funds by a state may also result in more
expeditious use of NSP funds.
Therefore, a state receiving NSP funds
may carry out NSP activities directly for
some or all of its assisted grant
activities, just as CDBG entitlement
communities do under 24 CFR
570.200(fj, including, but not limited to,
carrying out activities using its own
employees, procuring contractors,
private developers, and providing loans
and grants through nonprofit
subrecipients (including local
governments and other public
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nonprofits such as regional or local
planning or development authorities
and public housing authorities).
For those activities a state chooses to
carry out directly, HUD strongly advises
the state to adopt the recordkeeping
required for an entitlement community
at 570.506 and the subrecipient
agreement provisions at 570.503. Also,
in such cases, as an alternative
requirement to 42 U.S.C. 5304(1), the
state may retain and re-use program
income as if it were an entitlement
community.
HUD is granting regulatory waivers of
State CDBG regulations to conform the
applicable management, real property
change of use, and recordkeeping rules
when a state chooses to carry out
activities as if it were an entitlement
community.
Requirements
1. Responsibility for state review and
handling of noncompliance. This
change conforms NSP requirements
with the waiver allowing the state to
carry out activities directly. 24 CFR
570.492 is waived and the following
alternative requirement applies: The
state shall make reviews and audits,
including on-site reviews of any
subrecipients, designated public
agencies, and units of general local
government as may be necessary or
appropriate to meet the requirements of
42 U.S.C. 5304(e)(2), as amended, as
modified by this notice. In the case of
noncompliance with these
requirements, the state shall take such
actions as maybe appropriate to prevent
a continuance of the deficiency, mitigate
any adverse effects or consequences,
and prevent a recurrence. The state shall
establish remedies for noncompliance
by any designated public agencies or
units of general local governments and
for its subrecipients.
2. Change of use of real property for
state grantees acting directly. This
waiver conforms the change of use of
real property rule to the waiver allowing
a state to carry out activities directly.
For purposes of this program, in 24 CFR
570.489(j), (j)(1), and the last sentence of
(j)(2), "unit of general local
government" shall be read as "unit of
general local government or state.''
3. Recordkeeping for a state grantee
acting directly. Recognizing that the
state may carry out activities directly, 24
CFR 570.490(b) is waived in such a case
and the following alternative provision
shall apply: State records. The state
shall establish and maintain such
records as may be necessary to facilitate
review and audit by HUD of the state's
administration of NSP funds under 24
CFR 570.493. Consistent with applicable
statutes, regulations, waivers and
alternative requirements, and other
federal requirements, the content of
records maintained by the state shall be
sufficient to: (1) Enable HUD to make
the applicable determinations described
at 24 CFR 570.493; (2) make compliance
determinations for activities carried out
directly by the state; and (3) show how
activities funded are consistent with the
descriptions of activities proposed for
funding in the action plan. For fair
housing and equal opportunity
purposes, and as applicable, such
records shall include data on the racial,
ethnic, and gender characteristics of
persons who are applicants for,
participants in, or beneficiaries of the
program.
4. State compliance with certifications
for state grantees acting directly. This is
a conforming change related to the
waiver to allow a state to act directly.
Because a state grantee under this
appropriation may carry out activities
directly, HUD is applying the
regulations at 24 CFR 570.480(c) with
respect to the basis for HUD
determining whether the state has failed
to-carry out its certifications, so that
such basis shall be that the state has
failed to carry out its certifications in
compliance with applicable program
requirements.
5. Clarifying note on the process for
environmental release of funds when a
State carries out activities directly.
Usually, a state distributes CDBG funds
to units of local government and takes
on HUD's role in receiving
environmental certifications from the
grant recipients and approving releases
of funds. For this grant, HUD will allow
a state grantee to also carry out activities
directly instead of distributing them to
other governments. According to the
environmental regulations at 24 CFR
58.4, when a state carries out activities
directly, the state must submit the
certification and request for release of
funds to HUD for approval.
H. Eligibility and Allowable Costs
Background
Most of the activities eligible under
NSP represent a subset of the eligible
activities under 42 U.S.C. 5305(a). Due
to limitations in the reporting system,
DRGR, the NSP-eligible uses must be
correlated with CDBG-eligible activities.
The alternative to this approach, using
a paper-based action plan and reporting
process using NSP-eligible uses only
would be much slower to implement.
This correlation also reduces
implementation risks, because it will
ensure that the NSP grants are
administered largely in accordance with
long-established CDBG rules and
controls. The table in the requirements
paragraph below shows the eligible uses
under NSP and the corresponding
eligible activities from the regulations
for the regular CDBG entitlement
program that HUD has determined best
correspond to those uses. If a grantee
creates a program design that includes
a CDBG-eligible activity that is not
shown in the table to support an NSP-
eligible use, the Department is
providing an alternative requirement to
42 U.S.C. 5305(a) that HUD may allow
a grantee an additional eligible-activity
category if HUD finds the activity to be
in compliance with the NSP statute. As
under the regular CDBG program,
grantees may fund costs, such as
reasonable developer's fees, related to
NSP-assisted housing rehabilitation or
construction activities. NSP funds may
be used to redevelop acquired property
for nonresidential uses, such as a public
park, commercial use, or mixed
residential and commercial use.
The annual entitlement CDBG
program allows up to 20 percent of any
grant amount plus program income may
be used for general administration and
planning costs. The State CDBG
program is also subject to-the 20 percent
limitation, but within that cap up to 3
percent maybe used by the state for
state administrative cost and technical
assistance to potential local government
program grant recipients, with the
remainder available to be granted to
local government recipients for their
administrative costs. Because some of
the costs usually allocated under these
caps are not applicable to NSP grants
(for example, the costs of completing the
entire consolidated plan process), these
amounts seem excessive to HUD in the
context of the NSP program. On the
other hand, HUD wants to encourage
and support expeditious, appropriate,
and compliant use of grant funds, and
to prevent fraud, waste, and abuse of
funds. Therefore, HUD is providing an
alternative requirement that an amount
of up to 10 percent of an NSP grant
provided to a jurisdiction and of up to
10 percent of program income earned
maybe used for general administration
and planning activities as those are
defined at 24 CFR 570.205 and 206. For
all grantees, including states, the 10
percent limitation applies to the grant as
a whole.
The regulatory and statutory
requirements for state match for
program administration at 24 CFR
570.489 (a)(i) are superseded by the
statutory direction at section 2301(e)(2)
that no matching funds shall be required
for a state or unit of general local
government to receive a grant.
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Requirements
1. Use of grant funds must constitute
an eligible use under HERA.
2. In addition to being an eligible NSP
use of funds, each activity funded under
this notice must also be CDBG-eligible
under 42 U.S.C. 5305(a) and meet a
CDBG national objective.
3.a. Certain CDBG-eligible activities
correlate to specific NSP-eligible uses
and vice versa. 42 U.S.C. 5305(a) and 24
CFR 570.201-207 and 482(a) through (d)
are superseded to the extent necessary
to allow the eligible uses described
under section 2301(c)(3) of HERA in
accordance with this paragraph
(including the table and subparagraphs
below) or with permission granted, in
writing, by HUD upon a written request
by the grantee that demonstrates that the
proposed activity constitutes an eligible
use under NSP. All NSP grantees,
including states, will use the NSP
categories and CDBG entitlement
regulations listed below.
NSP-eligible uses I Correlated eligible activities from the CDBG entitlement regulations
(A) Establish financing mechanisms for purchase and redevelopment of
foreclosed upon homes and residential properties, including such
mechanisms as soft-seconds, loan loss reserves, and shared-equity
loans for low- and moderate-income homebuyers.
(B) Purchase and rehabilitate homes and residential properties that
have been abandoned or foreclosed upon, in order to sell, rent, or
redevelop such homes and properties.
(C) Establish land banks for homes that have been foreclosed upon ....
(D) Demolish blighted structures ..............................................................
(E) Redevelop demolished or vacant properties ......................................
24 CFR 570.206.
• Also, the eligible activities listed below to the extent financing mech-
anisms are used to carry them out.
• 24 CFR 570.201 (a) Acquisition
(b) Disposition,
(i) Relocation, and
(n) Direct homeownership assistance (as modified below);
• 570.202 eligible rehabilitation and preservation activities for homes
and other residential properties (HUD notes that rehabilitation may
include counseling for those seeking to take part in the activity).
24 CFR 570.201 (a) Acquisition and (b) Disposition.
• 24 CFR 570.201 (d) Clearance for blighted structures only.
• 24 CFR 570.201 (a) Acquisition,
(b) Disposition,
(c) Public facilities and improvements,
• As part of an activity delivery cost for an eligible activity as defined
(e) Public services for housing counseling, but only to the extent that
counseling beneficiaries are limited to prospective purchasers or ten-
ants of the redeveloped properties,
(i) Relocation, and
(n) Direct homeownership assistance (as modified below).
• 204 Community based development organizations.
b. HUD will not consider requests to
allow foreclosure prevention activities,
or to allow demolition of structures that
are not blighted, or to allow purchase of
residential properties and homes that
have not been abandoned or foreclosed
upon as provided in HERA and defined
in this notice. HUD does not have the
authority to permit uses or activities not
authorized by HERA.
c. New construction of housing is
eligible as part of eligible-use (E) to
redevelop demolished or vacant
properties.
d. 24 CFR 570.201(n) is waived and
an alternative requirement provided for
42 U.S.C. 5305(a) to the extent necessary
to allow provision of NSP-assisted
homeownership assistance to persons
whose income does not exceed 120
percent of median income.
4. Alternative requirement for the
limitation on planning and
administrative costs. 24 CFR 570.200(8)
and 570.489(a)(3) are waived to the
extent necessary to allow each grantee
under this notice to expend no more
than 10 percent of its grant amount, plus
10 percent of the amount of program
income received by the grantee, for
activities eligible under 24 CFR 570.205
or 206. The requirements at 24 CFR
570.489 are waived to the extent that
they require a state match for general
administrative costs. (States may use
NSP funds under this 10 percent
limitation to provide technical
assistance to local governments and
nonprofit program participants.)
I. Rehabilitation Standards
Background
HERA provides that any NSP-assisted
rehabilitation of a foreclosed-upon
home or residential property shall be to
the extent necessary to comply with
applicable laws, codes, and other
requirements relating to housing safety,
quality, and habitability, in order to sell,
rent, or redevelop such homes and
properties. This imposes a requirement
that does not exist in the CDBG
program. This means that each grantee
must describe or reference in its NSP
action plan amendment what
rehabilitation standards it will apply for
NSP-assisted rehabilitation. HUD will
monitor to ensure the standards are
implemented.
HERA defines rehabilitation to
include improvements to increase the
energy efficiency or conservation of
such homes and properties or to provide
a renewable energy source or sources for
such homes and properties. Such
improvements are also eligible under
the regular CDBG program. HUD
strongly encourages grantees to use NSP
funds not only to stabilize
neighborhoods in the short-term, but to
strategically incorporate modern, green
building and energy-efficiency
improvements in all NSP activities to
provide for long-term affordability and
increased sustainability and
attractiveness of housing and
neighborhoods.
J. Sale of Homes
Background
Section 2301(d)(2) of HERA directs
that, if an abandoned or foreclosed-upon
home or residential property is
purchased, redeveloped, or otherwise
sold to an individual as a primary
residence, then such sale shall be in an
amount equal to or less than the cost to
acquire and redevelop or rehabilitate
such home or property up to a decent,
safe, and habitable condition. (Sales and
closing costs are eligible NSP
redevelopment or rehabilitation costs.)
Note that the maximum sales price for
a property is determined by aggregating
all costs of acquisition, rehabilitation,
and redevelopment (including related
activity delivery costs, which generally
may include, among other items, costs
related to the sale of the property).
Requirements
1. In its records, each grantee must
maintain sufficient documentation
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about the purchase and sale amounts of
each property and the sources and uses
of funds for each activity so that HUD
can determine whether the grantee is in
compliance with this requirement. A
grantee will be expected to provide this
documentation individually for each
activity.
2. In determining the sales price
limitation, HUD will not consider the
costs of boarding up, lawn mowing,
simply maintaining the property in a
static condition, or, in the absence of
NSP-assisted rehabilitation or
redevelopment of the property, the costs
of completing a sales transaction or
other disposition to be redevelopment
or rehabilitation costs. These costs may
not be included by the grantee in the
determination of the sales price for an
NSP-assisted property.
3. For reporting purposes only, for a
housing program involving multiple
single-family structures under the
management of a single entity, HUD will
permit reporting the aggregation of
activity delivery costs across the total
portfolio of projects until completion of
the program or closeout of the grant
with HUD, whichever comes earlier.
K. Acquisition and Relocation
Background
Acquisition of Foreclosed-Upon
Properties. HUD notes that section
2301(d)(1) of HERA conflicts with
section 301(3) of the URA (42 U.S.C.
4651) and related regulatory
requirements at 49 CFR 24.102(d). As
discussed further, section 2301(d)(1) of
HERA requires that any acquisition of a
foreclosed-upon home or residential
property under NSP be at a discount
from the current market-appraised value
of the home or property and that such
discount shall ensure that purchasers
are paying below-market value for the
home or property. Section 301(3) of the
URA, as implemented at 49 CFR
24.102(d), provides that an offer of just
compensation shall not be less than the
agency's approved appraisal of the fair
market value of such property. These
URA acquisition policies apply to any
acquisition of real property for a
federally funded project, except for
acquisitions described in 49 CFR
24.101(b)(1) through (5) (commonly
referred to as "voluntary acquisitions").
As the more recent and specific
statutory provision, section 2301(d)(1)
of HERA prevails over section 301 of the
URA for purposes of NSP-assisted
acquisitions of foreclosed-upon homes
or residential properties.
NSP Appraisal Requirements. As
noted above, section 301 of the URA
does not apply to voluntary
acquisitions. While the URA and its
regulations do not require appraisals for
such acquisitions, the URA acquisition
policies do not prohibit acquiring
agencies from obtaining appraisals.
Appendix A, 49 CFR 24.101(b)(2)
acknowledges that acquiring agencies
may still obtain an appraisal to support
their determination of fair market value.
Section 2301(d)(1) of HERA requires an
appraisal for purposes of determining
the statutory purchase discount. This
appraisal requirement applies to any
NSP-assisted acquisition of a foreclosed-
upon home or residential property
(including voluntary acquisitions).
One for-One Replacement. HUD is
providing an alternative requirement to
the one-for-one replacement
requirements set forth in 42 U.S.C.
5304(d)(2), as implemented at 24 CFR
42.375. The Department anticipates a
large number of requests from grantees
for whom the requirements will be
onerous given the pressing rush to
implement NSP, and several of the
major housing markets affected by the
foreclosure crisis have a surplus of
abandoned and foreclosed-upon
residential properties. The additional
workload of reviewing requests under
42 U.S.C. 5304(d)(3) and 24 CFR
42.375(d) could cause a substantial
backlog at HUD and delay NSP program
operations. Therefore, the alternative
requirement is that an NSP grantee will
not be required to meet the
requirements of 42 U.S.C. 5304(d), as
implemented at 24 CFR 42.375, to
provide one-for-one replacement of low-
and moderate-income dwelling units
demolished or converted in connection
with activities assisted with NSP funds.
Alternatively, each grantee must submit
the information described below
relating to its demolition and
conversion activities in its action plan
substantial amendment. The grantee
will report to HUD and citizens (via
prominent posting of the DRGR reports
on the grantee's official Internet site) on
progress related to these measures until
the closeout of its grant with HUD.
As noted earlier, HUD does not have
the authority to waive or specify
alternative requirements to the URA's
acquisition policies or relocation
provisions. Those requirements that do
not conflict with HERA continue to
apply. HUD is not specifying alternative
requirements to the relocation
assistance provisions at 42 U.S.C.
5304(d). Guidance on meeting these
requirements is available on the HUD
Web site and through local HUD field
offices. HUD urges grantees to consider
URA requirements in designing their
programs and to remember that there are
URA obligations related to voluntary
and involuntary property acquisition
activities, even for vacant and
abandoned property. HUD reminds
grantees to be aware of the requirement
to have and follow a residential
antidisplacement and relocation plan
for the CDBG and HOME programs. This
requirement is not waived for those
programs and continues to apply to
activities assisted with regular CDBG
and HOME funds.
Requirements
1. The one-for-one replacement
requirements at 24 CFR 570.488,
570.606(c), and 42.375 are waived for
low- and moderate-income dwelling
units demolished or converted in
connection with an activity assisted
with NSP funds. As an alternative
requirement to 42 U.S.C.
5304(d)(2)(A)(i) and (ii), each grantee
planning to demolish or convert any
low- and moderate-income dwelling
units as a result of NSP-assisted
activities must identify all of the
following information in its NSP
substantial amendment:
(a) The number of low- and moderate-
income dwelling units reasonably expected
to be demolished or converted as a direct
result of NSP-assisted activities;
(b) The number of NSP affordable housing
units (made available to low-, moderate-, and
middle-income households) reasonably
expected to be produced, by activity and
income level as provided for in DRGR, by
each NSP activity providing such housing
(including a proposed time schedule for
commencement and completion); and
(c) The number of dwelling units
reasonably expected to be made available for
households whose income does not exceed
50 percent of area median income.
The grantee must also report on actual
performance for demolitions and
production, as required elsewhere in
this notice.
L. Note on Eminent Domain
Although section 2303 of HERA
appears to allow some use of eminent
domain for public purposes, HUD
cautions grantees that section 2301(d)(1)
may effectively ensure that all NSP-
assisted property acquisitions must be
voluntary acquisitions as the term is
defined by the URA and its
implementing regulations. Section
2301(d)(1) directs that any purchase of
a foreclosed-upon home or residential
property under NSP be at a discount
from the current market appraised value
of the home or property and that such
discount shall ensure that purchasers
are paying below-market value for the
home or property. However, the Fifth
Amendment to the U.S. Constitution
provides that private property shall not
be taken for public use without just
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compensation. The Supreme Court has
ruled that a jurisdiction must pay fair
market value for the purchase of
property through eminent domain. A
grantee contemplating using NSP funds
to assist an acquisition involving an
eminent domain action is advised to
consult appropriate legal counsel before
taking action.
M. Timeliness of Use and Expenditure
of NSP Funds
Background
One of the most critical NSP
provisions is the HERA requirement at
section 2301(c)(1) that any grantee
receiving a grant:
* * * shall, not later than 18 months after
the receipt of such amounts, use such
amounts to purchase and redevelop
abandoned and foreclosed homes and
residential properties.
HUD has defined the term "use" in
this notice to include obligation of
funds.
A further complication is that HERA
clearly expects grantees to earn program
income under this grant program. As
provided under 24 CFR 85.21 for
entitlements, grantees and subrecipients
shall disburse program income before
requesting additional cash withdrawals
from the U.S. Treasury. States are
governed similarly by 24 CFR 489(e)(3)
and 31 CFR part 205. This requirement
is reflected in the regulations governing
use of program income by States and
units of general local government under
the CDBG program. This means that a
grantee that successfully and quickly
deploys its program and generates
program income may obligate, draw
down, and expend an amount equal to
its NSP allocation amount, and still
have funds remaining in its line of
credit, possibly subject to recapture at
the 18-month deadline.
On consideration, the Department
chose to implement the use test based
on whether the state or unit of general
local government has expended or
obligated the NSP grant funds and
program income in an aggregate amount
at least equal to the NSP allocation.
HUD is also imposing a deadline for
expending NSP grant funds because the
intent of these grants clearly is to
quickly address an emergency situation
in areas of the greatest need.
Requirements
1. Timely use of NSP funds. At the
end of the statutory 18-month use
period, which begins when the NSP
grantee receives its funds from HUD, the
state or unit of general local government
NSP grantee's accounting records and
DRGR information must reflect outlays
(expenditures) and unliquidated
obligations for approved activities that,
in the aggregate, are at least equal to the
NSP allocation. (The DRGR system
collects information on expenditures
and obligations.)
2. Timely expenditure of NSP funds.
The timely distribution or expenditure
requirements of sections 24 CFR
570.494 and 570.902 are waived to the
extent necessary to allow the following
alternative requirement: All NSP
grantees must expend on eligible NSP
activities an amount equal to or greater
than the initial allocation of NSP funds
within 4 years of receipt of those funds
or HUD will recapture and reallocate the
amount of funds not expended.
N. Alternative Requirement for Program
Income (Revenue) Generated by
Activities Assisted With Grant Funds
Requirement
Revenue received by a state, unit of
general local government, or
subrecipient (as defined at 24 CFR
570.500(c)) that is directly generated
from the use of CDBG funds (which
term includes NSP grant funds)
constitutes CDBG program income. To
ensure consistency of treatment of such
revenue, the definition of program
income at 24 CFR 570.500(a) shall be
applied to amounts received by states,
units of general local government, and
subrecipients. However, Section
2301(d)(4) imposes certain limitations
and requirements that necessitate an
alternative requirement to govern the
use of program income generated by
activities carried out pursuant to
Section 2301(c). The limitations and
requirements are based on the NSP
activity that generated the program
income and on the date the income is
received. In addition, Section 2301(d)(4)
requires any revenue from the sale,
rental, redevelopment, rehabilitation or
any other eligible use of NSP funds to
be provided to and used by the state or
unit of local general government. This
includes revenue received by a private
individual or other entity that is not a
subrecipient.
1. Program income generated by
activities carried out pursuant to
Section 2301(c)(3)(B) and (E).
a. Program income received before
July 30, 2013, maybe retained by the
state or unit of general local government
if it is treated as additional CDBG funds
and used in accordance with the
requirements of Section 2301.
b. Program income received on or
after July 30, 2013-Return to the
Treasury.
Any program income received by a
state, unit of general local government,
or subrecipient on or after July 30, 2013,
that is generated by activities carried out
pursuant to Section 2301(c)(3)(B) and
(E) (e.g., proceeds from the sale of rental
housing by a state, unit of general local
government, or subrecipient) and is not
authorized to be retained as described
below must be remitted to HUD for
deposit in the Treasury. Any program
income received by a state, unit of
general local government, or
subrecipient on or after July 30, 2013,
that is.generated by activities carried out
pursuant to Section 2301(c)(3)(B) and
(E) and that is in excess of the cost to
acquire and redevelop or rehabilitate an
abandoned or foreclosed-upon home or
residential property maybe retained if
HUD approves a request to use the
funds for other NSP purposes. Note that
no profit can be earned on the sale of
an abandoned or foreclosed-upon home
or residential property to an individual
as a primary residence; as provided
under Section 2301(c)(3), the sale must
be in an amount equal to or less than the
cost to acquire and redevelop or
rehabilitate the home or property up to
a decent, safe, and habitable condition.
Example: A unit of general local
government acquires aforeclosed-upon
multi-family residential property for
$100,000, spends $100,000 to redevelop the
property, and sells the property for $225,000.
If the sale occurs on or after July 30, 2013,
the amount to be remitted to HUD by the
state or unit of general government is
$200,000 if HUD authorizes the profit of
$25,000 to be used for other NSP. purposes,
or $225,000 if HUD does not authorize such
use.
c. Revenue received by a private
individual or other entity that is not a
subrecipient.
i. Any revenue generated by activities
carried out pursuant to Section
2301(c)(3)(B) and (E) that is in excess of
the cost to acquire and redevelop
(including reasonable development fees)
or rehabilitate an abandoned or
foreclosed-upon home or residential
property must be provided to the state
or unit of general local government and
treated as program income. The
disposition of the program income by
the state or unit of general local
government is governed by a. and b.
above.
ii. Any revenue that is generated by
activities carried out pursuant to
Section 2301(c)(3)(B) and (E) and is
received on or after July 30, 2013, shall
be provided to the State or unit of
general local government and treated as
program income. The disposition of the
program income by the state or unit of
general local government is governed by
b. above.
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Example: A unit of general local
government uses NSP funds to make a loan
(or grant) to a developer to finance the
acquisition and rehabilitation of a foreclosed-
upon multi-family residential property. The
developer uses $200,000 in NSP funds (loan
or grant) from the unit of general local
government to pay the total costs of
acquisition and rehabilitation (including
reasonable development fees) and
subsequently sells the property for $225,000.
The developer is required to provide
$225,000 to the unit of general local
government. (If the NSP funding was a loan,
the sale proceeds would be used to repay the
NSP loan.) If the sale occurs on or after July
30, 2013, the unit of general local
government must remit $225,000 to HUD for
deposit in the United States Treasury, unless
HUD approves a request to use $25,000 of
that amount for other NSP purposes. If in this
same example, the developer received
$100,000 of NSP funding and used $100,000
of its own funds for eligible costs, the
revenue to be provided to the local
government would be $125,000.
2. Program income generated by
activities carried out pursuant to
Section 2301(c)(3)(A), (C) and (E).
Program income received may be
retained by the State or unit of general
local government if it is treated as
additional CDBG funds and used in
accordance with the requirements of
Section 2301. Revenue received by a
private individual or other entity that is
not a subrecipient must be returned to
the State or unit of general local
government.
3. Cash management. Substantially all
program income must be disbursed for
eligible NSP activities before additional
cash withdrawals are made from the
U.S. Treasury.
4. Agreements with subrecipients and
other entities. States and units of
general local governments must
incorporate in subrecipient agreements
such provisions as are necessary to
ensure compliance with the
requirements of this paragraph,
including the requirement that program
income described in N.1.(b) be remitted
to HUD for deposit in the Treasury,
States, units of general local
government, and subrecipients must
incorporate in agreements with private
individuals and other entities that are
not subrecipients such provisions as are
necessary to ensure compliance with the
requirements governing disposition of
revenue generated by activities carried
out pursuant to Section 2301(c).
O. Reporting
Background
HUD is requiring regular reporting on
each NSP grant in the DRGR system to
ensure the Department gets sufficient
management information to follow-up
promptly if a grantee lags in
implementation and risks recapture of
its grant funds. For NSP only, HUD is
waiving the annual reporting
requirements of the consolidated plan to
allow HUD to collect more regular
information on various aspects of the
uses of funds and of the activities
funded with these grants. HUD will use
the reports to exercise oversight for
compliance with the requirements of
this notice and for prevention of fraud,
waste, and abuse of funds.
The regular CDBG performance
measurement requirements will not
apply to the NSP funds. To the extent
feasible, HUD will configure DRGR
performance measures to fit the NSP
activities and will provide additional
guidance on NSP performance
measures.
To collect these data elements and to
meet its reporting requirements, HUD is
requiring each grantee to report on its
NSP funds to HUD using the online
DRGR system, which uses a
streamlined, Internet-based format. HUD
will use grantee reports to monitor for
anomalies or performance problems that
suggest fraud, waste, and abuse of
funds; to reconcile budgets, obligations,
fund draws, and expenditures; to
calculate applicable administrative and
public service limitations and the
overall percent of benefit to LMMI
persons; and as a basis for risk analysis
in determining a monitoring plan.
The grantee must post the NSP report
on a Web site for its citizens when it
submits the report to HUD (DRGR
generates a version of the report that the
grantee can download, save, and post).
Requirements
1. Performance report alternative
requirement. The Secretary may specify
the form and timing of reports provided
by the grantee under both 42 U.S.C.
5304(e) (the HCD Act) and 42 U.S.C.
12708 (NAHA). Therefore, the
consolidated plan regulation at 24 CFR
91.520 is waived and the alternative
reporting form and timing for the NSP
funds is that:
a. Each grantee must enter its NSP
Action Plan amendment into HUD's
web-based DRGR system in sufficient
detail to meet the NSP action plan
content requirements of this notice and
to serve as the basis for acceptable
performance reports. (Because DRGR
was not specifically redesigned for the
NSP, HUD field staff will provide
grantees with specific technical
assistance on where in DRGR the
required NSP narrative and data
elements must be placed.)
b.i. Each grantee must submit a
quarterly performance report, as HUD
prescribes, no later than 30 days
following the end of each quarter,
beginning 30 days after the completion
of the first full calendar quarter after
grant award and continuing until the
end of the 15th month after initial
receipt of grant funds. In addition to this
quarterly performance reporting, each
grantee will report monthly on its NSP
obligations and expenditures beginning
30 days after the end of the 15th month
following receipt of funds, and
continuing until reported total
obligations are equal to or greater than
the total NSP grant. After HUD has
accepted a report from a grantee
showing such obligation of funds, the
monthly reporting requirement will end
and quarterly reports will continue until
all NSP funds (including program
income) have been expended and those
expenditures are included in a report to
HUD, or until HUD issues other
instructions pursuant to paragraph b.ii.
below. Each report will include
information about the uses of funds,
including, but not limited to, the project
name, activity, location, national
objective, funds budgeted and
expended, the funding source and total
amount of any non-NSP funds, numbers
of properties and housing units,
beginning and ending dates of activities,
and numbers of low- and moderate-
income persons or households
benefiting. Reports must be submitted
using HUD's web-based DRGR system
and, at the time of submission, be
posted prominently on the grantee's
official Web site.
ii. During the winter of 2008-2009;
HUD is undertaking a major
enhancement of DRGR, initiated as part
of a series of improvements designed to
prevent fraud, waste, and abuse of funds
in the Gulf Coast CDBG disaster
recovery programs, whose grantees are
reporting on the uses of more than $19
billion of CDBG disaster recovery funds
through DRGR. Prior to roll-out of the
enhancement, NSP grantees will use the
Voice Response System (VRS) to access
the line of credit and will prepare and
submit action plans and performance
reports through DRGR. After this
enhancement is complete, grantees also
will be able to access their lines of
credit through DRGR. At that time, HUD
will issue updated guidance on all
DRGR reporting and require most
activity data to be updated on a
transactional basis.
P. Note That FHA Properties Are
Eligible for NSP Acquisition and
Redevelopment
The Department notes that it is an
eligible use of CDBG grant funds to
acquire and redevelop FHA foreclosed
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properties. The Department strongly
urges every community to consider and
include such properties under their NSP
programs because the nature and
location of many of these homes will
make them very compatible with the
eligible uses of grant funds, the areas of
greatest need, and the income eligibility
thresholds and limits. Furthermore, in
many areas, FHA foreclosed properties
will be available for purchase at below-
market value to meet HERA
requirements. FHA provides quick
access to location, condition, and sales
price information; FHA may also offer
expedited closing time frames. These
factors may help expedite NSP fund use.
HUD will provide technical assistance
on its Web site regarding how these
programs can effectively interact.
Grantees may also contact their local
HUD FHA field office for further
information.
Q. Purchase Discount
Background
Section 2301(d)(1) limits the purchase
price of a foreclosed home, as follows:
Any purchase of a foreclosed upon home
or residential property under this section
shall be at a discount from the current market
appraised value of the home or property,
taking into account its current condition, and
such discount shall ensure that purchasers
are paying below-market value for the home
or property.
To ensure that uncertainty over the
meaning of this section does not delay
program implementation, HUD is
defining "current market appraised
value" in this notice. For mortgagee
foreclosed properties, HUD is requiring
that grantees seek to obtain the
"maximum reasonable discount" from
the mortgagee, taking into consideration
likely "carrying costs" of the mortgagee
if it were to not sell the property to the
grantee or subrecipient. These likely
carrying costs are different from market
to market, and the "maximum
reasonable discount" is likely to be
higher in markets where homes are
taking many months to more than a year
to sell as compared to markets with
shorter average time to sell a property.
In recognition of the need for flexibility
in administering the purchase discount
requirement, HUD has adopted an
approach that requires a minimum
discount of 5 percent for each
residential property purchased with
NSP funds and a minimum average
discount for all properties acquired with
NSP funds over the 18-month HERA use
period. The minimum average discount
for the "portfolio" of properties
acquired with NSP funds depends upon
how the purchase discount for an
individual property is determined. If the
state, unit of general local government,
or subrecipient determines the discount
through use of a methodology that
incorporates the factors discussed above
(keeping in mind that the discount must
be at least 5 percent), then the minimum
average discount for the NSP portfolio is
10 percent. If not, the minimum average
discount is 15 percent. Recipients and
subrecipients are cautioned that a
purchase discount negotiated with the
seller on an individual property that is
below the minimum average discount
requirement must be offset by a
purchase discount that is above the
minimum average discount.
Requirements
1.a. Individual purchase transaction.
Each foreclosed-upon home or
residential property shall be purchased
at a discount of at least 5 percent from
the current market-appraised value of
the home or property.
b. Purchase transactions in the
aggregate. Except as set forth below, the
average purchase discount for all
properties purchased with NSP funds
during the 18-month use period shall be
at least 15 percent. The average
purchase discount shall be at least 10
percent if the state, unit of general local
government, or subrecipient determines
the maximum reasonable discount for
each purchase transaction through use
of a methodology that results in a .
discount equivalent to the total carrying
costs that would be incurred by the
seller if the property were not
purchased with NSP funds (provided
the discount is at least 5 percent). Such
methodology shall provide for an
analysis of the estimated holding period
for the property and the nature and
amount of the carrying costs of holding
the property for this period. Such
carrying costs shall include, but not be
limited to: Taxes, insurance,
maintenance, marketing, overhead, and
interest. The procedures to implement
such methodology shall be in writing
and applied consistently to all
purchases. The analysis for each
purchase transaction shall be
documented in the grantee's program
records.
2. An NSP recipient may not provide
NSP funds to another party to finance
an acquisition of tax foreclosed (or any
other) properties from itself, other than
to pay necessary and reasonable costs
related to the appraisal and transfer of
title. A property conveyed in this
manner to a subrecipient, homebuyer,
developer, or jurisdiction will be NSP-
assisted and subject to all program
requirements, such as requirements for
NSP-eligible use and benefit to income-
qualified persons.
3. The address, appraised value,
purchase offer amount, and discount
amount of each property purchase must
be documented in the grantee's program
records.
R. Removal of Annual Requirements
Requirement
Throughout 24 CFR parts 91 and 570,
all references to "annual" requirements
such as submission of plans and reports
are waived to the extent necessary to
allow the provisions of this notice to
apply to NSP funds, with no recurring
annual requirements other than those
related to civil rights and fair housing
certifications and requirements.
S. Affirmatively Furthering Fair Housing
Nothing in this notice may be
construed as affecting each grantee's
responsibility to carry out its
certification to affirmatively further fair
housing. HUD encourages each grantee
to review its analysis of impediments to
fair housing choice to determine
whether an update is necessary because
of current market conditions or other
factors.
T. Certifications
Background
HUD is substituting alternative
certifications. The alternative
certifications are tailored to NSP grants
and remove certifications and references
that are appropriate only to the annual
CDBG formula program.
Requirements
Certifications for states and for
entitlement communities, alternative
requirement. Although the NSP is being
implemented as a substantial
amendment to the current annual action
plan, HUD is requiring submission of
this alternative set of certifications as a
conforming change, reflecting
alternative requirements and waivers
under this notice. Each jurisdiction will
submit the following certifications:
1. Affirmatively furthering fair
housing. The jurisdiction certifies that it
will affirmatively further fair housing,
which means that it will conduct an
analysis to identify impediments to fair
housing choice within the jurisdiction;
take appropriate actions to overcome the
effects of any impediments identified
through that analysis, and maintain
records reflecting the analysis and
actions in this regard.
2. Anti-lobbying. The jurisdiction
must submit a certification with regard
to compliance with restrictions on
lobbying required by 24 CFR part 87,
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together with disclosure forms, if
required by that part.
3. Authority of jurisdiction. The
jurisdiction certifies that the
consolidated plan is authorized under
state and local law (as applicable) and
that the jurisdiction possesses the legal
authority to carry out the programs for
which it is seeking funding, in
accordance with applicable HUD
regulations and other program
requirements.
4. Consistency with plan. The
jurisdiction certifies that the housing
activities to be undertaken with NSP
funds are consistent with its
consolidated plan.
5. Acquisition and relocation. The
jurisdiction certifies that it will comply
with the acquisition and relocation
requirements of the Uniform Relocation
Assistance and Real Property
Acquisition Policies Act of 1970, as
amended (42 U.S.C. 4601), and
implementing regulations at 49 CFR part
24, except as those provisions are
modified by the notice for the NSP
program published by HUD.
6. Section 3. The jurisdiction certifies
that it will comply with section 3 of the
Housing and Urban Development Act of
1968 (12 U.S.C. 1701u), and
implementing regulations at 24 CFR part
135.
7: Citizen participation. The
jurisdiction certifies that it is in full
compliance and following a detailed
citizen participation plan that satisfies
the requirements of Sections 24 CFR
91.105 or 91.115, as modified by NSP
requirements.
8. Following a plan. The jurisdiction
certifies it is following a current
consolidated plan (or Comprehensive
Housing Affordability Strategy) that has
been approved by HUD.
9. Use of funds. The jurisdiction
certifies that it will comply with Title III
of Division B of the Housing and
Economic Recovery Act of 2008 by
using all of its grant funds within 18
months of receippt of the grant.
10. The Jurisdiction certifies:
a. that all of the NSP funds made
available to it will be used with respect
to individuals and families whose
incomes do not exceed 120 percent of
area median income; and
b. The jurisdiction will not attempt to
recover any capital costs of public
improvements assisted with CDBG
funds, including Section 108 loan
guaranteed funds, by assessing any
amount against properties owned and
occupied by persons of low- and
moderate-income, including any fee
charged or assessment made as a
condition of obtaining access to such
public improvements. However, if NSP
funds are used to pay the proportion of
a fee or assessment attributable to the
capital costs of public improvements
(assisted in part with NSP funds)
financed from other revenue sources, an
assessment or charge maybe made
against the property with respect to the
public improvements financed by a
source other than CDBG funds. In
addition, with respect to properties
owned and occupied by moderate-
income (but not low-income) families,
an assessment or charge maybe made
against the property with respect to the
public improvements financed by a
source other than NSP funds if the
jurisdiction certifies that it lacks NSP or
CDBG funds to cover the assessment.
11. Excessive force. The jurisdiction
certifies that it has adopted and is
enforcing:
a. A policy prohibiting the use of
excessive force by law enforcement
agencies within its jurisdiction against
any individuals engaged in nonviolent
civil rights demonstrations; and
b. A policy of enforcing applicable
state and local laws against physically
barring entrance to, or exit from, a
facility or location that is the subject of
such nonviolent civil rights
demonstrations within its jurisdiction.
12. Compliance with anti-
discrimination laws. The jurisdiction
certifies that the NSP grant will be
conducted and administered in
conformity with Title VI of the Civil
Rights Act of 1964 (42 U.S.C. 2000d),
the Fair Housing Act (42 U.S.C. 3601-
3619), and implementing regulations.
13. Compliance with lead-based paint
procedures. The jurisdiction certifies
that its activities concerning lead-based
paint will comply with the requirements
of part 35, subparts A, B, J, K, and R of
this title.
14. Compliance with laws. The
jurisdiction certifies that it will comply
with applicable laws.
U. Note on Statutory Limitation on
Distribution of Funds
Section 2304 of HERA states that none
of the funds made available under this
Title or title IV shall be distributed to an
organization that has been indicted for
a violation under federal law relating to
an election for federal office; or an
organization that employs applicable
individuals. Section 2304 defines
applicable individuals.
V. Information Collection Approval
Note
HUD has approval from the Office of
Management and Budget (OMB) for
information collection requirements in
accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501-
3520). OMB approval is under OMB
control number 2506-0165. In
accordance with the Paperwork
Reduction Act, HUD may not conduct or
sponsor and a person is not required to
respond to, a collection of information,
unless the collection displays a valid
control number.
W. Duration of Funding
The appropriation accounting
provisions in 31 U.S.C. 1551-1557,
added by section 1405 of the National
Defense Authorization Act for Fiscal
Year 1991 (Pub. L. 101-510), limit the
availability of certain appropriations for
expenditure. Such a limitation may not
be waived. The appropriations acts for
NSP grants direct that these funds be
available until expended. However, the
Department is imposing a shorter
deadline on the expenditure of NSP
funds in this notice.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic
Assistance numbers for grants made
under NSP are as follows: 14.218;
14.225; and 14.228.
Finding of No Significant Impact
A Finding of No Significant Impact
with respect to the environment has
been made in accordance with HUD
regulations at 24 CFR part 50, which
implement section 102(2)(C) of the
National Environmental Policy Act of
1969 (42 U.S.C. 4332(C)(2)). The
Finding of No Significant Impact is
available for public inspection between
8 a.m. and 5 p.m. weekdays in the
Office of the Rules Docket Clerk, Office
of General Counsel, Department of
Housing and Urban Development, 451
Seventh Street, SW., Room 10276,
Washington, DC 20410-0500.
Establishment of Formula
I hereby establish the funding formula
set out in Attachment A to this notice.
Dated: September 29, 2008.
Steven C. Preston,
Secretary.
Attachment A
HERA calls for allocating funds "to
States and units of general local
government with the greatest need, as
such need is determined in the
discretion of the Secretary based on-
(A) The number and percentage of
home foreclosures in each State or unit
of general local government;
(B) The number and percentage of
homes financed by a subprime mortgage
related loan in each State or unit of
general local government; and
(C) The number and percentage of
homes in default or delinquency in each
EXHIBIT 2 (p-~~
58344 Federal Register /Vol. 73, No. 194 /Monday, October 6, 2008 /Notices
State or unit of general local
government."
It further directs that "each State shall
receive not less than 0.5 percent of
funds". The allocation formula operates
as follows. In this formula, the primary
data on foreclosure rates, subprime loan
rates, and rates of loans delinquent or in
default come from the Mortgage Bankers
Statewide Allocation = $3.92 billion*
{ [0.70
0.15
0.10
0.05
Association National Delinquency
Survey (MBA-NDS). Because the MBA-
NDS may have uneven coverage from
state-to-state in respect to the total
number of mortgages reported, the total
count of mortgages is calculated as the
number of owner-occupied mortgages
from the 2006 American Community
(State's number of foreclosure starts in last 6 quarters)*
Survey increased with data from the
Home Mortgage Disclosure Act to
capture the proportion of total
mortgages made within a state made to
investors between 2004 and 2006. The
first step of the allocation is to make a
"statewide" allocation using the
following formula:
(Percent of all loans in state to enter foreclosure last 6 quarters)
National number of foreclosure starts in last 6 quarters Percent of all loans in nation to enter foreclosure last 6 quarters
(State's number of subprime loans)*
National number of subprime loans
(State's number of loans in default (90+ days delinquent)*
National number of loans in default
(State's number of loans 60 to 89 days delinquent)*
(Percent of all loans in state subprime)
Percent of all loans in nation subprime
(Percent of all loans in state in default)
Percent of all loans in nation in default
(Percent of all loans in state 60 to 89 days delinquent) ]*
National number of loans 60 to 89 days delinquent National percent of all loans 60 to 89 days delinquent
(Pct of all addresses in state vacant in Census Tracts where more than 40% of the 2004 to 20061oans were high costs) }
Pct of all addresses in nation vacant in Census Tracts where more than 40% of the 2004 to 2006 loans were high cost
This formula allocates 70 percent of
the funds based on the number and
percent of foreclosures, 15 percent for
subprime loans, 10 percent for loans in
default (delinquent 90 days or longer),
and 5 percent for loans delinquent 60 to
90 days. The higher weight on
foreclosures is based on the emphasis
the statute places on targeting foreclosed
homes. The percentage adjustments, the
rate of a problem in a state relative to
the national rate of a problem, are
restricted such that a state's allocation
based on its proportional share of a
problem cannot be increased or
decreased by more than 30 percent.
Because HERA specifically indicates
that the funds are needed for the
"redevelopment of abandoned and
foreclosed upon homes and residential
properties", HUD has included a
variable to proxy where abandonment of
homes due to foreclosure is more likely,
specifically each state's rate of vacant
residential addresses in neighborhoods
with a high proportion (more than 40
percent) of loans in 2004 to 2006 that
were high cost. Information on vacant
addresses is based on United States
Postal Service data as of June 30, 2008
aggregated by HUD to the Census Tract
level. The residential vacancy
adjustment factor reflects a state's
vacancy rate relative to the national
average and cannot increase or decrease
a state's proportional share of the
allocation based on foreclosures,
subprime loans, and delinquencies and
defaults by more than 10 percent.
Finally, if a statewide allocation is
less than $19.6 million, the statewide
grant is increased "to $19.6 million.
Because this approach will result in a
total allocation in excess of
appropriation, all grant amounts above
$19.6 million are reduced pro-rata to
make the total allocation equal to the
total appropriation.
From each statewide allocation, a
substate allocation is made as follows:
• Each state government is allocated
$19.6 million.
• If the statewide allocation is more
than $19.6 million, the remaining funds
are allocated to FY 2008 CDBG
entitlement cities, urban counties, and
non-entitlement balance of state
proportional to relative need.
• If a local government receives less
than $2 million under this sub-
allocation, their grant is rolled up into
the state government grant.
Note that HUD has determined that
HERA's direction that a minimum of
$19.6 million be allocated to the state
means that a minimum grant must be
provided to each state government of
$19.6 million. As a result, this approach
provides state governments with
proportionally more funding than their
estimated need. As such, state
governments should use their best
judgment to serve both those areas not
receiving a direct grant and those areas
that do receive a direct grant, making
sure that the total of all funds in the
state are going proportionally more to
those places (as prescribed by HERA):
• "With the greatest percentage of
home foreclosures;
• With the highest percentage of
homes financed by a subprime mortgage
related loan; and
• Identified by the State or unit of
general local government as likely to
face a significant rise in the rate of home
foreclosures."
For the amount of funds above each
state's $19'.6 million, the remaining
funds are allocated among the
entitlement communities and non-
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entitlement balances using the following
formula:
Local Allocation = (Statewide allocation - $19,600,000)*
[(Local estimate number of foreclosure starts in last 6 quarters)*
State total number of foreclosure starts in last 6 quarters
(Local vacancy rate in Census Tracts with more than 40% of the loans High-cost)]
State vacancy rate in Census Tracts with more than 40% of the loans High-cost
Where the residential vacancy rate
adjustment cannot increase or reduced a
local jurisdiction's allocation by more
than 30 percent and the estimated
number of foreclosures is calculated
based on a predicted foreclosure rate
times the estimated number of
mortgages in a community. HUD
analysis shows that 75 percent of the
variance between states on foreclosure
rates can be explained by three variables
available from public data:
• Office of Federal Housing
Enterprise Oversight (OFHEO) data on
change in home values as of June 2008
compared to peak home value since
2000.
• Percent of all loans made between
2004 and 2006 that are high cost as
reported in the Home Mortgage
Disclosure Act (HMDA).
• Unemployment rate as of June 2008
(from Bureau of Labor Statistics).
Because these three variables are
publicly available for all CDBG eligible
communities and they are good
predictors of foreclosure risk, they are
used in a model to calculate the
estimated number of foreclosures in
each jurisdiction within a state. The
formula used is as follows:
Predicted Foreclosure Rate = - 2.211
- (0.131 * Percent change in MSA
OFHEO current price relative to the
maximum in past 8 years)
+(0.152* Percent of total loans made
between 2004 and 2006 that are
high cost)
+(0.392*Percent unemployed in the
place our county in June 2008).
This predicted foreclosure rate is then
multiplied times the estimated number
of mortgages within a jurisdiction
(number of HMDA loans made between
2004 and 2006 times the ratio of ACS
2006 data on total mortgages in state /
HMDA loans in state). This "estimated
number of mortgages in the
jurisdiction" is further adjusted such
that the estimated number of
foreclosures from the model will equal
the total foreclosure starts in the state
from the Mortgage Bankers Association
National Delinquency Survey.
As noted above,. for entitlement cities
and urban counties that would receive
an NSP allocation of less than $2
million, the funds are allocated to the
state grantee. The District of Columbia
and the four Insular Areas receive direct
allocations and are not subject to the
minimum grant threshold.
Because this funding is one-time
funding and the eligible activities under
the program are different enough from
the regular program, HUD believes that
a grantee must receive a minimum
amount of $2 million to have adequate
staffing to properly administer the
program effectively. In addition, fewer
grants will allow HUD staff to more
effectively monitor grantees to ensure
proper implementation of the program
and reduce the risk for fraud, waste, and
abuse.
State Grantee name NSP grant
amount
AK ............ ALASKA STATE PROGRAM ..........................................:......................................................................................... $19,600,000
AL ..:.......... ALABAMA STATE PROGRAM ..:.............................................................................................................................. 37,033,031
AL ............. BIRMINGHAM .............................................................................................:............................................................. 2,580,214
AL ............. JEFFERSON COUNTY ............................................................................................................................................. 2,237,876
AR ............ ARKANSAS STATE PROGRAM .............................................................................................................................. 19,600,000
AZ ............. PHOENIX .................................................................................................................................................................. 39,478,096
AZ ............. ARIZONA STATE PROGRAM .................................................................................................................................. 38,370,206
AZ ............. MARICOPA COUNTY ............................................................................................................................................... 9,974,267
AZ ............. MESA ........................................................................................................................................................................ 9,659,665
AZ ............. TUCSON ................................................................................................................................................................... 7,286,911
AZ ............. GLENDALE ............................................................................................................................................................... 6,184,112
AZ ............. PIMA COUNTY ......................................................................................................................................................... 3,086,867
AZ ............. AVONDALE CITY .........................:........................................................................................................................... 2,466,039
AZ ............. CHANDLER ............................................................................................................................................................... 2,415,100
AZ ............. SURPRISE TOWN .................................................................................................................................................... 2,197,786
CA ............ CALIFORNIA STATE PROGRAM ............................................................................................................................ 145,071,506
CA ............ RIVERSIDE COUNTY ............................................................................................................................................... 48,567,786
CA ............ LOS ANGELES ......................................................................................................................................................... 32,860,870
CA ............ SAN BERNARDINO COUNTY ................................................................................................................................. 22,758,188
CA ............ SACRAMENTO COUNTY ......................................................................................................................................... 18,605,460
CA ............ LOS ANGELES COUNTY ......................................................................................................................................... 16,847672
CA ............ SACRAMENTO ......................................................................................................................................................... 13,264,829
CA ............ STOCKTON .............................................................................................................................................................. 12,146,038
CA ............ MORENO VALLEY ................................................................................................................................................... 11,390,116
CA ............ KERN COUNTY ................................:....................................................................................................................... 11,211,385
CA ............ FRESNO ......................:............................................................................................................................................ 10,969,169
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State Grantee name NSP grant
amount
CA ............ STANISLAUS COUNTY ............................................................................................................................................ 9,744,482
CA ............ SAN DIEGO .............................................................................................................................................................. 9,442,370
CA ........:... SAN JOAQUIN COUNTY ......................................................................................................................................... 9,030,385
CA ............ BAKERSFIELD .......................................................................................................................................................... 8,982,836
CA ............ SAN BERNARDINO .................................................................................................................................................. 8,408,558
CA ............ OAKLAND ................................................................................................................................................................. 8,250,668
CA ............ MODESTO .................................................................................:.............................................................................. 8,109,274
CA ............ PALMDALE ............................................................................................................................................................... 7,434,301
CA ............ FRESNO COUNTY ................................................................................................................................................... 7,037,465
CA ............ LANCASTER ............................................................................................................................................................. 6,983,533
CA ............ RIVERSIDE ............................................................................................................................................................... 6,581,916
CA ............ CONTRA COSTA COUNTY ............:........................................................................................................................ 6,019,051
CA ............ FONTANA ................................................................................................................................................................. 5,953,309
CA ............ SANTA ANA .............................................................................................................................................................: 5,795,151
CA ............ SAN JOSE ................................................................................................................................................................ 5,628,283
CA ............ RIALTO ............................................................................................................................................................:........ 5,461,574
CA ............ VICTORVILLE ........................................................................................................................................................... 5,311,363
CA ............ SAN DIEGO COUNTY .............................................................................................................................................. 5,144,152
CA ............ LONG BEACH ........................................................................................................................................................... 5,070,310
CA ............ HESPERIA ................................................................................................................................................................ 4,590,719
CA ............ ANTIOCH .................................................................................................................................................................. 4,049,228
CA ............ CORONA ................................................................................................................................................................... 3,602,842
CA ............ POMONA ................................................................................................................................................................... 3,530,825
CA ............ RICHMOND ..............................................................:................................................................................................ 3,346,105
CA .........:.. ORANGE COUNTY ...................................................:.............................................................................................. 3,285,926
CA ............ COMPTON ................................................................................................................................................................ 3,242,817
CA ............ APPLE VALLEY ........................................................................................................................................................ 3,064,836
CA ............ HEMET ................................................................................................................................................................:..... 2,888,473
CA ............ CHULA VISTA ..........................................................:................................................................................................ 2,830,072
CA ............ ONTARIO .............................:.................................................................................................................................... 2,738,309
CA ............ VALLEJO ..........................................................................................................:.................................................:...... 2,657,861
CA ............ ANAHEIM ................................:................................................................................................................................. 2,653,455
CA ............ ELK GROVE ............................................................................................................................................................. 2,389,651
CA ............ VISALIA ..........................................:.......................................................................................................................... 2,388,331
CA ............ RANCHO CUCAMONGA .......................................................................................................................................... 2,133,397
CA ............ ALAMEDA COUNTY .............:................................................................................................................................... 2,126,927
CO ............ COLORADO STATE PROGRAM ............................................................................................................................. 34,013,566
CO ............ DENVER ..................................................................................................::............................................................... 6,060,170
CO ............ ADAMS• COUNTY ..................................................................................................................................................:.. 4,600,211
CO ............ AURORA ................................................................................................................................................................... 4,474,097
CO ............ COLORADO SPRINGS ............................................................................................................................................ 3,904,989
CT ............ CONNECTICUT STATE PROG ................................................................................................................................ 25,043,385
DC ............ WASHINGTON .......................................................................................................................................................... 2,836,384
DE ............ DELAWARE STATE PROGRAM .............................................................................................................................. 19,600,000
FL ............. FLORIDA STATE PROGRAM .................................................................................................................................. 91,141,478
FL ............. MIAMI-DADE COUNTY ............................................................................................................................................ 62,207,200
FL ............. ORANGE COUNTY .................................................................................................................................................. 27,901,773
FL ............. PALM BEACH COUNTY ........................................................................................................................................... 27,700,340
FL ............. JACKSONVILLE-DUVAL ....................................................................................................................:..................... 26175,317
FL ............. PASCO COUNTY ..................................................................................................................................................... 19,495,805
FL ............. HILLSBOROUGH COUNTY ..................................................................................................................................... 19,132,978
FL ............. LEE COUNTY ........................................................................................................................................................... 18,243867
FL ............. BROWARD COUNTY ............................................................................................................................................... 17,767,589
FL ............. POLK COUNTY .......................:................................................................................................................................ 14,586,258
FL ............. TAMPA ...................................................................................................................................................................... 13,600,915
FL ............. PORT ST LUCIE ....................................................................................................................................................... 13,523,132
FL ............. MIAMI ........................................................................................................................................................................ 12,063,702
FL ............. ST PETERSBURG ...........................................................................................:........................................................ 9,498,962
FL ............. MIRAMAR ....................:............................................................................................................................................ 9,312,658
FL ............. PINELLAS COUNTY ................................................................................................................................................. 8063,759
FL ............. HOLLYWOOD ........................................................................................................................................................... 7,534,603
FL ............. COLLIER COUNTY ...........................:....................................................................................................................... 7,306,755
FL ............. SARASOTA COUNTY .............................................................................................................................................. 7,140,861
FL ............. CAPE CORAL ............................................................................................................................................:.............. 7,065,484
FL ............. SEMINOLE COUNTY ............................................................................................................................................... 7,019,514
FL ............. MIAMI GARDENS CITY :........................................................................................................................................... 6,866,119
FL ............. ORLANDO ..............................................................................................'................................................................... 6,730,263
FL ............. DELTONA ................................................................................................................................................................. 6,635909
FL ............. MARION COUNTY .................................................................................................................................................... 6,324,055
FL ............. HIALEAH ................................................................................................................................................................... 5,385,046
FL ............. MANATEE COUNTY ................................................................................................................................................. 5,283,122
FL ............. BREVARD COUNTY ................................................................................................................................................. 5,269,667
FL ............. VOLUSIA COUNTY .................................................................................................................................................. 5,222,831
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State Grantee name NSP grant
amount
FL ............. PALM BAY ..................................................................................................................,............................................. 5,208,104
FL ............. TAMARAC ..............................................................................:.................................................................................. 4,772,218
FL ............. ESCAMBIA COUNTY ............................................................................................................................:.................. 4,565,918
FL ............. PEMBROKE PINES .................................................................................................................................................. 4,398,575
FL ............. POMPANO BEACH .................................................................................................................................................. 4,366,157
FL ............. WEST PALM BEACH ............................................................................................................................................... 4,349,546
FL ............. LAUDERHILL ............................................................................................................................................................ 4,293,288
FL ............. FT LAUDERDALE ..................................................................................................................................................... 3,700,096
FL ............. SUNRISE .................................................................................................................................................................. 3,494,986
FL ............. CORAL SPRINGS ..................................................................................................................................................... 3,378,142
FL ............. LAKE COUNTY .............................................................................................................................:........................... 3,136,967
FL ............. BOYNTON BEACH ................................................................................................................................................... 2,963,311
FL ............. HOMESTEAD CITY .................................................................................................................................................. 2,887,010
FL ............. NORTH MIAMI .......................................................................................................................................................... 2,847,089
FL ............. KISSIMMEE ................................................................................................................................................:............. 2,371,749
FL ............. FT MYERS ................................................................................................................................................................ 2,297,318
FL ............. MARGATE .......................................,......................................................................................................................... 2,106,555
FL ............. PLANTATION ..........................................................:................................................................................................. 2,016,309
FL ............. LAKEL,e,ND ................................................................................................................................................................ 2,005,781
FL ............. DEERFIELD BEACH ................................................................................................................................................. 2,005,699
GA ............ GEORGIA STATE PROGRAM ................................................................................................................................. 77,085,125
GA ............ DE KALB COUNTY ................................................................................................................................................... 18,545,013
GA ............ ATLANTA .................................................................................................................................................................. 12,316,082
GA ............ GWINNETT COUNTY ...........................................:................................................................................................... 10,507,827
GA ............ FULTON COUNTY .................................................................................................................................................... 10,333,410
GA ............ CLAYTON COUNTY ................................................................................................................................................. 9,732,126
GA ............ COBB COUNTY ....................:................................................................................................................................... 6,889,134
GA ............ COLUMBUS-MUSCOGEE ........................................................................................................................................ 3,117,039
GA ............ AUGUSTA ...............................................................................:................................................................................. 2,473,064
GA ............ SAVANNAH ......................:.................................................................:...................................................................... 2,038,631
HI .............. HAWAII STATE PROGRAM ...................................................:................................................................................. 19,600,000
IA .............. IOWA STATE PROGRAM ........................................................................................................................................ 21,607,197
ID .............. IDAHO STATE PROGRAM ........................................................................:............................................................. 19,600,000
IL .............. CHICAGO ...............................:.................................................................................................................................. 55,238,017
IL .............. ILLINOIS STATE PROGRAM .........................................................................................................................:......... 53,113,044
IL .............. COOK COUNTY ....................................................................................................................................................... 28,156,321
IL .............. DU PAGE COUNTY .......................................................:.......................................................................................... 5,176,438
IL .............. WILL COUNTY .......................................................................................................................................................... 5,160,424
IL .............. .LAKE COUNTY ......................................................................................................................................................... 4,600,800
IL .............. JOLIET ...................................................................................................................................................................... 3,531,810
IL .............. MCCHENRY COUNTY ............................................................................................................................................. 3,085,695
IL .............. AURORA ........................................................................................................................................:......:................... 3,083,568
IL .............. KANE COUNTY ............:..............:............................................................................................................................ 2576,369
IL .............. ROCKFORD .....:........................................................................................................................................................ 2,287,004
IL .............. ST CLAIR COUNTY .................................................................................................................................................. 2,262,015
IL .............. ELGIN ..........;..............................:.............................................................................................................................. 2,159,623
IL .............. CICERO .................................................................................................................................................................... 2,078,351
IN .............. INDIANA STATE PROGRAM ................................................................................................................................... 83,757,048
IN .............. INDIANAPOLIS .............................................................................................:........................................................... 29,051,059
IN .............. FORT WAYNE .......................................................................................................................................................... 7,063,956
IN .............. LAKE COUNTY ......................................................................................................................................................... 5,738,024
IN .............. SOUTH BEND ........................................................................:.................................................................................. 4,098,521
IN .............. HAMMOND ............................................................................................................................................................... 3,860,473
IN .............. GARY ........................................................................................................................................................................ 3,836,758
IN .............. EVANSVILLE ..................................................................:......................................................................................... 3,605,204
IN .............. HAMILTON COUNTY ......:........................................................................................................................................ 2,343,868
IN .............. ELKHART ................................................,................................................................................................................. 2251,346
IN .............. KOKOMO .................................................................................................................................................................. 2,181,088
IN .............. ANDERSON .............................................................................................................................................................. 2,141,795
IN .............. MUNCIE .................................................................................................................................................................... 2,007,356
KS ............ KANSAS STATE PROGRAM ....................................................:.............................................................................. 20,970,242
KY ............ KENTUCKY STATE PROGRAM ........................................................................................................:..................... 37,408,788
KY ............ LOUISVILLE .............................................................................................................................................................. 6,973,721
LA ............. LOUISIANA STATE PROGRAM ............................................................................................................................... 34,183,994
LA ............. BATON ROUGE ........................................................................................................................................................ 2,308,848
LA ............. NEW ORLEANS .........................................................................................................................................:.............. 2,302,208
MA ............ MASSACHUSETTS STATE PROG ..........................................................................................~.............................. 43,466,030
MA ............ BOSTON ................................................................................................................................................................... 4,230,191
MA ............ SPRINGFIELD .........................................................:................................................................................................ 2,566,272
MA ............ WORCESTER ........................................................................................................................................................... 2,390,858
MA ............ BROCKTON .............................................................................................................................................................. 2,152,979
NID ............ MARYLAND STATE PROGRAM .............................................................................................................................. 28,778,469
MD ............ PRINCE GEORGES COUNTY ..................:...............................:.............................................................................. 10,883,234
EXHIBIT 2 ~p ~- ~ "~
58348 Federal Register /Vol. 73, No. 194 /Monday, October 6, 2008 /Notices
State Grantee name NSP grant
amount
MD ............ BALTIMORE ..................................................................................................................................................:........... 4,112,239
MD ............ BALTIMORE COUNTY ........: .................................................................................................................................... 2,596,880
ME ............ MAINE STATE PROGRAM ...................................................................................................................................... 19,600,000
MI ............. MICHIGAN STATE PROGRAM ................................................................................................................................ 98,653,915
MI ............. DETROIT ....................................................................................................................;.............................................. 47,137,690
MI ............. WAYNE COUNTY ..................................................................................................................................................... 25,909,153
MI .....:....... OAKLAND COUNTY ................................................................................................................................................. 17,383,776
MI ............. MACOMB COUNTY .................................................................................................................................................. 9,765,375
MI ............. GENESEE COUNTY ................,................................................................................................................................ 7,506,343
MI ............. GRAND RAPIDS .........................................................................................................:............................................. 6,187,686
MI ............. LANSING ......................................,............................................................................................................................ 5,992,160
MI ............. WARREN .................................................................................................................................................................. 5,829,447
MI ............. FLINT ........................................................................................................................................................................ 4,224,621
MI ............. KENT COUNTY ........................................................................................................................................................ 3,912,796
MI ............. PONTIAC .................................................................................................................................................................. 3,542,002
MI ............. SOUTHFIELD ............................................................................................................................................................ 3,241,457
MI ............. REDFORD ............................................:.................................................................................................................... 3,041,364
MI ............. WASHTENAW COUNTY .......................................................................................................................................... 3,024,719
MI ............. TAYLOR .................................................................................................................................................................... 2,495,056
MI ............. STERLING HEIGHTS ....................................:.......................................................................................................... 2,454,961
MI ............. DEARBORN ...................................................................................................................................,,......................... 2,436,246
MI ............. LINCOLN PARK ........................................................................................................................................................ 2,417,688
MI ............. CANTON TWP .....................................,.................................................................................................................... 2,182,988
MI ............. CLINTON TWP ................:........................................................................................................................................ 2,147,608
MI ............. WESTLAND ........................:...................................................................................................................................... 2,061,722
MI ............. WATERFORD TOWNSHIP ....................................................................................................................................... 2,014,489
MN ............ MINNESOTA STATE PROGRAM ............................................................................................................................ 38,849,929
MN ............ MINNEAPOLIS ........................:................................................................................................................................. 5,601,967
MN ............ ST PAUL ................................................................................................................................................................... 4,302,249
MN ............ HENNEPIN COUNTY ......: ..................................................................................................:..................................... 3,885,729
MN ............ DAKOTA COUNTY ....................................................................................................................:....................:......... 2,765,991
MN ............ ANOKA COUNTY ..........................:.......................................................................................................................... 2,377,310
MO ........... MISSOURI STATE PROGRAM ................................................................................................................................ 42,664,187
MO ........... ST LOUIS COUNTY ................................................................................................................................................. 9,338,562
MO ........... KANSAS CITY .......................................................................................................................................................... 7,323,734
MO :.......... ST LOUIS .........................................................................................................:........................................................ 5,532,792
MS ............ MISSISSIPPI STATE PROG .................................................................................................................................... 43,151,914
MS ............ JACKSON ................................................................................................................................................................. 3,116,049
MT ............ MONTANA STATE PROGRAM ..............................:................................................................................................. 19,600,000
NC ............ NORTH CAROLINA STA PROG .............................................................................................................................. 52,303,004
NC ............ CHARLOTTE ...........................................................:................................................................................................. 5,431,777
ND ............ NORTH DAKOTA STATE PROG ............................................................................................................................. 19,600,000
NE ............ NEBRASKA STATE PROGRAM .............................................................................................................................. 19,600,000
NH ............ NEW HAMPSHIRE STATE PROG ........................................................................................................................... 19,600,000
NJ ............. NEW JERSEY STATE PROGRAM .......................................................................................................................... 51,470,620
NJ ............. NEWARK .....................................................................:............................................................................................. 3,406,849
NJ ............. UNION COUNTY ...................................................................................................................................................... 2,601,755
NJ ............. PATERSON .................................................................................:............................................................................. 2,266,641
NJ ............. JERSEY CITY ........................................................................................................................................................... 2,153,431
NJ ............. BERGEN COUNTY ........................................................................................................................................,.......... 2,096,194
NM ............ NEW MEXICO STATE PROGRAM .................................................:.......................................................:................ 19,600,000
NV ............ NEVADA STATE PROGRAM ................................................................................................................................... 24,287,240
NV ............ CLARK COUNTY ...................................................................................................................................................... 22,829,062
NV ............ LAS VEGAS ......................:....................................................................................................................................... 14,775,270
NV ............ NORTH LAS VEGAS ................................................................................................................................................ 6,837,736
NV ............ HENDERSON .............................................................................................................................................:............. 3,205,044
NY ............ NEW YORK STATE PROGRAM .............................................................................................................................. 54,556,464
NY ............ NEW YORK CITY ..................................................................................................................................................... 24,257,740
NY ............ NASSAU COUNTY ................................................................................................................................................... 7767,916
NY ............ SUFFOLK COUNTY ................................................................................................................................................. 5,681,443
NY ............ (SLIP TOWN ............................................................................................................................................................. 3,720,392
NY ............ BABYLON TOWN ..................................................................................................................................................... 2,170,909
NY ............ ORANGE COUNTY .................................................................................................................................................. 2,163,744
OH ............ OHIO STATE PROGRAM ......................................................................................................................................... 116,859,223
OH ............ COLUMBUS .............................................................................................................................................................. 22,845,495
OH ............ CLEVELAND ............................................................................................................................................................. 16,143,120
OH ............ TOLEDO .................................................................................................................................................................... 12,270,706
OH ............ CUYAHOGA COUNTY ...................................................................................................................................:......... 11,212,447
OH ............ AKRON ...................................................................................................................................................................... 8,583,492
OH ............ CINCINNATI .............................................................................................................................................................. 8,361,592
OH ............ HAMILTON COUNTY ............................................................................................................................................... 7,970,490
OH ............ MONTGOMERY COUNTY ....................................................................................................................................... 5,988,000
OH ............ DAYTON ................................................................................:.................................................................................. 5,582,902
EXHIBIT 2 ~ .-~
Federal Register /Vol. 73, No. 194 /Monday,- October 6, 2008 /Notices 58349
State Grantee name Namountnt
OH ............ FRANKLIN COUNTY ................................................................................................................................................ 5,439,664
OH ............ BUTLER COUNTY .................................................................................................................................................... 4,213,742
OH ............ STARK COUNTY ...................................................................................................................................................... 4,181,673
OH ............ SUMMIT COUNTY ................................................................................:................................................................... 3,767,144
OH ............ CANTON ................................................................................................................................................................... 3,678,562
OH ............ LAKE COUNTY .........................................:............................................................................................................... 3,402,859
OH ............ LORAIN ..................................................................................................................................................................... 3,031,480
OH ............ YOUNGSTOWN ........................................................................................................................................................ 2,708,206
OH ............ EUCLID ..................................................................................................................................................................... 2,580,464
OH ............ ELYRIA ...................................................................................................................................................................... 2,468,215
OH ............ HAMILTON CITY ...................................................................................................................................................... 2,385,315
OH ............ SPRINGFIELD .......................................................................................................................................................... 2,270,009
OH ............ MIDDLETOWN .......................................................................................................................................................... 2,144,379
OK ............ OKLAHOMA STATE PROGRAM ............................................................................................................................. 29,969459
OK ............ OKLAHOMA CITY ..................................................................................................................................................... 2,882,282
OR ............ OREGON STATE PROGRAM ............................................................................................................:..................... 19,600,000
PA ............ PENNSYLVANIA STATE PROG ....................................................:......................................................................... 59,631,318
PA ............ PHILADELPHIA ......................................................................................................................................................... 16,832,873
PA ............ ALLEGHENY COUNTY ............................................................................................................................................ 5,524,950
PA ............ ALLENTOWN ............................................................................................................................................................ 2,113,456
PA ............ YORK COUNTY .......................................................................:................................................................................ 2,017,253
PA ............ PITTSBURGH ........................................................................................................................................................... 2,002,958
PR ............ PUERTO RICO STATE PROG .......:......................................................................................................................... 19,600,000
RI .............. RHODE ISLAND STATE PROG .......................................................................................:....................................... 19,600,000
SC ............ SOUTH CAROLINA STA PROG .............................................................................................................................. 44,673,692
SC ............ GREENVILLE COUNTY ........................................................................................................................................... 2,262,856
SC ............ RICHLAND COUNTY ................................................................................................................................................ 2,221,859
SD ............ SOUTH DAKOTA STATE PROG ..............:..............................................................................................:............... 19,600,000
TN ............ TENNESSEE STATE PROGRAM ............................................................................................................................ 49,360,421
TN ............ MEMPHIS .................................................................................................................................................................. 11,506,415
TN ............ NASHVILLE-DAVIDSON ........................................................................................................................................... 4,051,398
TN ............ SHELBY COUNTY .................................................................................................................................................... 2,752,708
TN ............ KNOXVILLE ...................................................................................................................................:.......................... 2,735,980
TN ............ CHATTANOOGA .....................................................:................................................................................................. 2,113,727
TX ............. TEXAS STATE PROGRAM ..........................................................................:........................................................... 101,996,848
TX ............. HARRIS COUNTY .................................................................................................................................................... 14,898,027
TX ............. HOUSTON ................................................................................................................................................................ 13,542,193
TX ............. SAN ANTONIO ......................................................................................................................................................... 8,635,899
TX ............. DALLAS ..................................................................................................................................................................... 7932,555
TX ............. FORT WORTH ...................:...................................................................................................................................... 6,307,433
TX ............. DALLAS COUNTY .................................................................................................................................................... 4,405,482
TX ............. TARRANT COUNTY ........................................................................................................................................:........ 3,293,388
TX ............. EL PASO ................................................................................................................................................................... 3,032,465
TX ............. HIDALGO COUNTY .................................................................................................................................................. 2,867,057
TX ............. FORT BEND COUNTY ............................................................................................................................................. 2,796,177
TX ............. GRAND PRAIRIE .................................................................................................................................:.................... 2,267,290
TX ............. MESQUITE ..........................................................................:............................................................:........................ 2,083,933
TX ............. ARLINGTON ............................................................................................................................................................. 2,044,254
TX ............. GARLAND ................................................................................................................................................................. 2,040,196
UT ............ UTAH STATE PROGRAM ........................................................................................................................................ 19,600,000
VA ............ VIRGINIA STATE PROGRAM .................................................................................................................................. 38,749,931
VA ............ PRINCE WILLIAM COUNTY ......................:............................................................................................................. 4,134,612
VA ............ FAIRFAX COUNTY ................................................................................................................................................... 2,807,300
VT ............. VERMONT STATE PROGRAM ................................................................................................................................ 19,600,000
WA ........... WASHINGTON STATE PROGRAM ......................................................................................................................... 28,159,293
WI ............. WISCONSIN STATE PROGRAM ............................................................................................................................. 38,779,123
WI ............. MILWAUKEE ............................................................................................................................................................. 9,197,465
WV ........... WEST VIRGINIA STATE PROG .............................................................................................................................. 19,600,000
WY ........... WYOMING STATE PROGRAM ................................................................................................................................ 19,600,000
XX ............ INSULAR AREAS ..................................................................................................................................................... 1,144,289
[FR Doc. E8-23476 Filed 10-3-08; 8:45 am]
BILLING CODE 4210-67-P
((1'- l 1
EXHIBIT 3
CERTIFICATIONS
(1) Affirmatively furthering fair housing. The jurisdiction will affirmatively further fair
housing, which means that it will conduct an analysis to identify impediments to fair housing
choice within the jurisdiction, take appropriate actions to overcome the effects of any
impediments identified through that analysis, and maintain records reflecting the analysis and
actions in this regard.
(2) Anti-lobbying. The jurisdiction will comply with restrictions on lobbying required by
24 CFR part 87, together with disclosure forms, if required by that part.
(3) Authority of Jurisdiction. The jurisdiction possesses the legal authority to carry out
the programs for which it is seeking funding, in accordance with applicable HUD regulations
and other program requirements.
(4) Consistency with Plan. The housing activities to be undertaken with NSP funds are
consistent with its consolidated plan, which means that NSP funds will be used to meet the
congressionally identified needs of abandoned and foreclosed homes in the targeted area set
forth in the grantee's substantial amendment.
(5) Acquisition and relocation. The jurisdiction will comply with the acquisition and
relocation requirements of the Uniform Relocation Assistance and Real Property Acquisition
Policies Act of 1970, as amended (42 U.S.C. 4601), and implementing regulations at 49 CFR
part 24, except as those provisions are modified by the Notice for the NSP Program published
by HUD.
(6) Section 3. The jurisdiction will comply with section 3 of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701u), and implementing regulations at 24 CFR part
135.
(7) Citizen Participation. The jurisdiction is in full compliance and following a detailed
citizen participation plan that satisfies the requirements of Sections 24 CFR 91.105 or 91.115,
as modified by NSP requirements.
(8) Following Plan.. The jurisdiction is following a current consolidated plan (or
Comprehensive Housing Affordability Strategy) that has been approved by HUD.
(9) Use of funds in 18 months. The jurisdiction will comply with Title III of Division B
of the Housing and Economic Recovery Act of 2008 by using, as defined in the NSP Notice,
all of its grant funds within 18 months of receipt of the grant.
~~-5 ~
(10) Use NSP funds <_ 120 of AMI. The jurisdiction will comply with the requirement that
all of the NSP funds made available to it will be used with respect to individuals and families
whose incomes do not exceed 120 percent of area median income.
(11) Assessments. The jurisdiction will not attempt to recover any capital costs of public
improvements assisted with CDBG funds, including Section 1081oan guaranteed funds, by
assessing any amount against properties owned and occupied by persons of low- and
moderate-income, including any fee charged or assessment made as a condition of obtaining
access to such public improvements. However, if NSP funds are used to pay the proportion of
a fee or assessment attributable to the capital costs of public improvements (assisted in part
with NSP funds) financed from other revenue sources, an assessment or charge may be made
against the property with respect to the public improvements financed by a source other than
CDBG funds. In addition, with respect to properties owned and occupied by moderate-
income (but not low-income) families, an assessment or charge may be made against the
property with respect to the public improvements financed by a source other than NSP funds
if the jurisdiction certifies that it lacks NSP or CDBG funds to cover the assessment.
(12) Excessive Force. The jurisdiction certifies that it has adopted and is enforcing: (1) a
policy prohibiting the use of excessive force by law enforcement agencies within its
jurisdiction against any individuals engaged in non-violent civil rights demonstrations; and
(2) a policy of enforcing applicable State and local laws against physically barring entrance
to or exit from, a facility or location that is the subject of such non-violent civil rights
demonstrations within its jurisdiction.
(13) Compliance with anti-discrimination laws. The NSP grant will be conducted and
administered inconformity with title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d),
the Fair Housing Act (42 U.S.C. 3601-3619), and implementing regulations.
(14) Compliance with lead-based paint procedures. The activities concerning lead-
based paint will comply with the requirements of part 35, subparts A, B, J, K, and R of this
title.
(15) Compliance with laws. The jurisdiction will comply with applicable laws.
Signature/Authorized Official
Date
Title