City of Alexandria, Virginia
________________
MEMORANDUM
DATE: JUNE 5, 2013
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
FROM: RASHAD M. YOUNG, CITY MANAGER /s/
DOCKET TITLE:
TITLE
Consideration of Submission of a Grant Application to the Virginia Department of Housing and Community Development for Trust Stabilization Program Funding. THIS ITEM HAS BEEN REMOVED
BODY
_________________________________________________________________
ISSUE: Consideration of submission of an application to the Virginia Department of Housing and Community Development (DHCD) for Trust Stabilization Program funding.
BACKGROUND: Since 2009, the City, the Alexandria Housing Development Corporation (AHDC) and Rebuilding Together Alexandria (RTA) have participated in Virginia's Neighborhood Stabilization Program (NSP) which works to stabilize neighborhoods impacted by foreclosures by acquiring distressed properties for rehabilitation and resale to low and moderate income first-time homebuyers. As an indication of its commitment to the continued improvement of neighborhoods affected by foreclosure, in February 2013, the City of Alexandria allocated $1 million in local Community Development Block Grant (CDBG) and HOME Investment Partnerships Program funds to RTA to continue an NSP-like program on a City-wide basis. The City is continuing to work with RTA in implementing the new, locally-funded program, with primary responsibility for the identification of homebuyers.
Given the City and RTA's prior experience with the NSP Program and the newly allocated City support for these foreclosure-related activities, the City is now well-positioned to seek supplemental funding to further leverage local resources and to expand the impact of RTA's new initiative through a newly introduced element of the Virginia Trust Fund. In response to the ongoing effects of home foreclosures in Virginia, $1million has been set aside for a demonstration program, the Virginia Trust Stabilization Program, to assist in transforming previously foreclosed homes into community assets. Working with locally-based organizations meeting eligibility criteria, eligible homes, primarily lender-owned (REO) properties in the areas hardest hit by the foreclosure crisis, will be acquired, rehabilitated, and resold to first time homebuyers. The program will offer deferred, potentially forgivable, loans of up to $20,000 per unit for remediating deficiencies in the condition of the home and placing it in a marketable state. TSP funds used for rehabilitation purposes must be secured with the property for a term of no less than 10 years. The investment of TSP resources for rehabilitation will be forgiven proportionally over this 10-year period. If the home is sold before the ten year commitment, a proportional amount of funds must be returned to DHCD. These funds will be used to subsequently fund similar activities.
RECOMMENDATION: That City Council approve the submission of a grant application in the amount of $60,000 to the Virginia Housing Trust Fund's Trust Stabilization Program to support the rehabilitation element of the City's locally funded Neighborhood Stabilization Program (NSP).
DISCUSSION:
Grantees to the Trust Stabilization Program must have prior NSP experience or access to a line of credit with a minimum $500,000 limit. Grantees would be granted increased flexibility to utilize TSP funds outside of those areas targeted by NSP1, therefore making this a potential funding source to pair with the new locally funded program. As the grantee, the City would work directly with RTA in funding the rehabilitation of the acquired properties. RTA will then resell the property at fair market value with the net proceeds of the sale would be split 60/40; with 40% of the net proceeds being returned to DHCD as program income to continue this and other foreclosure initiatives.
Based on rehabilitation activity during the implementation of state-funded NSP Program, the average condominium rehabilitation cost was approximately $4,000 per unit. Therefore, staff proposes that the City request an allocation of $60,000 to support the rehabilitation of 15 units. Funding availability for this program was announced on May 14, and applicants must complete and submit a Request for Qualifications by May 31, 2013. Applicants invited to apply for funding will be contacted and must submit the complete application no later than June 14, 2013. The City will apply only if invited.
FISCAL IMPACT: None. Funding previously allocated to RTA through the City's CDBG and HOME will be used as a source of leverage in applying for the Trust Stabilization Program.
STAFF:
Mark Jinks, Deputy City Manager
Mildrilyn Davis, Director, Office of Housing
Helen McIlvaine, Deputy Director, Office of Housing
Shane Cochran, Program Implementation Division Chief, Office of Housing
1