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06&07 Housing Infrastructure Grant State Funding ProgramCITY OF PARIS, TEXAS CITY COUNCIL AGENDA REQUEST MEETING DATE: February 11, 2008 ❑ Action ❑ Discussion ■ Information ❑ Refer to: SUBMITTED BY: Lisa A. Wright, Director of Community Development DESCRIPTION: Advise City Council of status of the Housing Infrastructure Fund (HIF) Grant. The City of Paris is in receipt of a letter from the Office of Rural and Com he altmountlof (ORCA) advising of the potential required repayment of he nat onal housing objective $393, 520.00 for failure by the City s contraand UrbaneDevelopment. established by the Department of Housing BACKGROUND INFORMATION: In 1999, the City of Paris was awarded an HIF grant in the amount of ~veme00.00the ORCA. The grant was to fund water, sewer, street, and drainage impro Eastgate Subdivision. As a condition of the grant, the City was ere to be ownedtand thirty-eight (38) new single-family homes, of which at least 60 /o w occupied by low to moderate income persons. That number was later I estab shed1b~ after cities nationwide were having trouble meeting the national goa Y HUD. On December 9, 1999, the City awarded a contract to Housing Associates, Inc. of Allgeier) to develop the subdivision and sell the houses in acco d s ble forh mheet ng the the grant. The contract with the developer made him resp lowlmod occupancy requirements. The City entered into a separate agreer elin ibil th and Enterprises for consulting services to review paperwork to confirm buy g Y to submit all required reports to ORCA. Although a few homes were built rather quickly, none of the owners q ~a~rf ~er~ and mohe grant (a tour of the subdivision will show that the first homes were g ex ensive than homes built later). It was not until 2002 that the first homaima esui~n~ p q 9 a qualified home buyer. In 2004, the developer sold ten lo idualsa Althou h the City was that he sell at least 50% of those homes to qualifying ind 9 not initially aware of the sale, when we later learned the terms of the saect oauand Mre. builder to sell at least half of the homes to qualified buyers, we had no ob~ , Swaim did fulfill the terms of this agreement with the developer. In 2005, after only nine houses had been sold to qualified buyers of thain 9he Cit ewas be sold, the developer sold an additional 10 lots to Hayd~en When ogtacted to obtain not aware of this transaction until well after it occurre closing paperwork (after numerous failed attempts to contact Mr. Allg~ firsthmean~n r advised us that the second transaction did not include terms similar , 9 there was no requirement that any of the homes be sold to qualifying inWia dnotS o n to this second sa le o f lo ts by t h e d e v e l o p e r t h a t v i r t u a l l y e n s u r~ ~ te ~~it learned of ghe meet t he terms o f i t s g r a n t a g r e e m e n t w i t h O R C Ano o t ortunities for the City to recti fy sale, the subdivision was built-out and there were pp the matter by attempting to obtain vacant lots or enter into some kind of agreement with Mr. Swaim. _ _ _ _ , . ~ As part of the City's review of the ho o the ICi '~saponsult nt after the p opertya bsoldr is qualified or not is made available t Y Prior to learning of the additi from thle devleltopeh on he homes th~atlwe e obv o~sly attempts to obtain paperwork being constructed and sold in the subdivision. The developer became increasingly more difficult to reach and was ed Mr. Swaim ( t was at th sftimefwe learnedlabout thehse ond that the consultant contact sale). Although he was not tion nMrcSwahm d d'tslowlyhbegin s~ubmitting some provide the requested info , paperwork that allowed us to confirm a few qualified sales. One of the issues we havedeunder the program wou d~ Iose1thei qual f capon peor~ to owners who initially qualifi closing. We had some instances where a buyer qualified as a low to moderate income prior to closing, the person got person at the time he initially made application; however, a raise or found a better job. At th ha°house wasnnstan~tly aot Ialq~ual fi desaleadOt er a contract to buy the house, so t situations we encountered invol ~ thbs the bank from whic~h t ey hadhsought mortgage other large item. When they d , funding would no longer make the loan because their debt had increased. These and similar problems were common everywhere. Nationally, this entire program has been a fa'ilure, and the HI ugTexas~and one of th ee loctally (MtntPleasant~and one of many cities througho Mt. Pleasant and Pittsburg Pittsburg), that has been requested to repay funds. Paris, ~ have one major thing in coma~l had cons derable d ff cultg getting Mr. Allgeier to take any in all cities. They, too, have responsibility for the failurelt f if he far~s to meetphe ghantrequh et ent ) nThe on~e thi g r e q u i r e s t h a t h e r e p a y t h e C y they do not have in common WtldiPonallS,tPa s'sesubdiv s on s he only o tne of~the th ee guaranteed program failure. A Y that is fully built-out. One bright side is that the tax base expanded as a result of these new homes. I have been in contact with OR Ve S Affhoudh they're sympathetic, they' enadv sed that Paris to fail the national ob~ec 9 they have no choice but to reqeeuesteld apesponse letter by Feblruary 1pr andlthe City's national objective. They have q consultant, Bob Jones, and I are meeting next Tuesday to develop a response. Although we acknowledge Pae ost of the nfrast uctu e,l nbteatd repayplg atp ol rated the request to repay the ent portion based on the sales that e~ aament ~ Which were 15 of the required 19, resulting in an approximate $83,000.00 r p y But not for the action of the dee sl~phe City wogld ~ ave had at ~least an opport anity to that 5 be sold to qualified b y , comply with the terms of the 9r ociatOesvno longer exis~ts and M rAI geier has opened a Allgeier; however, Housing Ass new company, so we don't know how successful any collection attempts will be. As an additional step, we plan to takus n ate o rams.nFrom what we u~nderstand, plafic pat ng participating in other State ho g p 9 in these programs is essentially what he does for a living. Until we have responded to ORCA, requested appropriate appeals, and metwith agency officials, we don't know exactly W~ te funds n he event thelrepayment demand s made the City Council set aside approp final. . . . _T . .r. _ . T.. . _ . . . . . . _ . . _ , . _ . ~ . . . . . . _ . _ . . . . FISCAL AUTHORITY: BUDGETED: No Account GRANT: Account BOND / C O Account Other: See attached for recommended funding LEGAL REVIEW: MANAGER'S RECOMMENDATION: