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: