09-715Council File #
Green Sheet # 30 �
RESOLUTION g
OF SAINT PAUL, MINNESOTA
Presented by
1 SUBMISSION OF APPLICATION TO UNITED STATES DEPARTMENT OF
2 HOUSING AND URBAN DEVELOPMENT FOR GRANT FUNDS THROUGH THE
3 NEIGHBORHOOD STABILIZATION PROGRAM 2 UNDER THE AMERICAN
4 RECOVERY APID REIWVESTMENT ACT OF 2009
5
6 WHEREAS, the Neighborhood Stabilization Program 2 is an allocation of funds provided
7 under the American Recovery and Reinvestment Act of 2009 for additional activities under
8 Division B, Title III of the Housing and Economic Recovery Act of 2008, as amended, for the
9 purpose of assisting in the redevelopment of abandoned and foreclosed homes; and
10
i l WHEREAS, the City Council did approve submission of an application for funding through
12 the first Neighborhood Stabilization Program on November 19, 2008; and
13
14 WHEREAS, activities funded by the first Neighborhood Stabilization Program are currently
15 underway; and
16
17 WIiEREAS, the appropriate public comment process regarding the proposed use of
18 Neighborhood Stabilization Program 2 funds was conducted in accordance with the requirements
19 of the United States Department of Housing and Urban Development, including a public hearing
20 on June 25, 2009.
21
22 NOW, THEREFORE, BE IT RESOLVED, that Mayor Chris Coleman, as Chief Executive
23 Officer of the City of Saint Paul or his designated representatives, is hereby authorized and
24 directed to submit the Neighborhood Stabilization Program 2 application to the United States
25 Department of Housing and Urban Development in such form as prescribed by regulations of
26 said Department; and
27
28 BE IT FURTHER RESOLVED, that the Mayor or his designated representatives are
29 further authorized to submit to the United States Department of Housing and Urban Development
30 any assurances, certifications, technical changes or additional information that may be required
31 by said Department during their review of the City's Neighborhood Stabilization Program 2
32 application; and
33
34 BE IT FURTHER RESOLVED, that upon notification of approval of the City of Saint Paul's
35 Neighborhood Stabilization Program 2 funding, the City Council does hereby authorize the
36 proper City officials to execute grant agreements and contracts between the United States
37 Department of Housing and Urban Development and the City of Saint Paul; and
38
39 BE IT FURTHER RESOLVED, that the proposed activities include acquisitions,
40 rehabilitations, demolitions, redevelopment, land-banking, providing financial incentives, and
41 program administration; and
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42
43 BE IT FINALLY RESOLVED, that the City will request approximately $45,860,000 to carry
44 out the proposed activities over three years.
Requeste by Department of:
Planytln & Ec omi D lopment
BY i
.-
Form
Sy:
Attorney
Adopted by Council: Date �� �/j�`'�/
Adoption Certified by Counc�l Secretary
By _____C/� i� �i <<
Approve y a r: Date �[ L- �
B
Forzn Approved by Mayor for Submission to Counci]
BY� �tC� ,c ,e`/ 9F1 AR.t.,.f.-._.o
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� Green Sheet Green Sheet
09
Green Sheet Green Sheet Green Sheet Green Sheet
�
oe,���,��,�ou��,�. o�e��,ua�d_ Green Sheet NO: 3071920
PE _Planning & Economic 2$-,JUN-09
Developme�t
Contact Person & Ph e:— Department Sent To Person InitiaUDate
Tom Sanch � 0 laonin & Economic Develo me 0
6-6617 I lannin & Economic Develo me De artmeni Director
�9 2 ' Attarne Pete McCall �
Must Be on Coun '1 Agenda by (Date): Number 3 uancial Services Director
08-JUL-09 For �
Routing 4 avor's Office MavodASSistant
Doc. Type: RESOLUTION Order 5 ouncil 0
6 i Cterk Citv Clerk
E-Document Required: Y
Document Contact:
Contact Phone:
ToWI # of Signature Pages (Ciip Ail Locations for Signature)
Action Requested:
Signature for City Council Resolution authorizing the submittal of an application to the U. S. Department of Housing and Urban
Development for approximately $45 million in Neighborhood Stabilization Program 2 grant funds to undertake eligible activities to
impact the effect of foreclosed and vacant housing in eligible neighborhoods. �
Recommendations: Approve (A) or Reject (R): Personal Service Contracts Must Answer the Following Questions:
Planning Commission 1. Has this personlfrm ever worked under a conVact for this department?
CIB Committee Yes No
Civil Service Commission 2. Has this person/frm ever been a city employee?
� S'rA„F�' Yes Na
3. Does this person/firm possess a skill not normally possessed by any
current city employee?
Yes No
Explain all yes answers on separate sheet and attach to green sheet.
Initiating Probiem, Issues, Opportuniry (Who, What, When, Where, Why):
The Ciry has a foreclosure and vacant housing crisis estimated at over 4000 properties. The federal government has made available,
on a competitive basis, funds to underhake acrivities to stabilize the affected neighborhoods by controlling and improving the vacant
housing stock for resale to eligible buyers.
Advantages If Approved:
The City, if successful in receiving NSP 2 funds, may affect approximately 700 foreclosed or vacant properties.
Disadvantages If Approved:
None, all prograzn acfivities are covered by the federal grant.
Disadvantages If Not Approvetl:
The opportunity to access federal funds to impact approximately 700 vacant properties may not present itself in the future.
Totai Amount of
Transaction: CosURevenue Budgeted:
Funding Source: /(� r/k,.� ���� �� Activity Number.
�,�
Financiallnformation: G�„p�
(Explain) !J �
June 25, 2009 2:56 PM Page 1
09-715
June 16, 2009
City of Saint Paul
Neighborhood Stabilization Program 2 (NSP2)
American Recovery and Reimbursement Act of 2009
NSP2: Pronosed Uses of Funds and Target Geographv
09-715
The City of Saint Paul (City) intends to apply for grant funds through the Neighborhood
Stabilization Program 2(NSP2) under the American Recovery and Reimbursement Act
of 2009.
This smnmary statement includes information regazding the proposed target geography,
the proposed budget, and the proposed uses of the funds. Tlus document has also been
posted on the City's website at www.stpaul.gov/nsp. Copies of ttris document are
available by calling 651-266-6658. Persons with questions about this document may call
Joe Musolf at 651-266-6594 or Tom Sanchez at 651-266-6617 for additional informauon.
The City will accept comments concerning this proposed NSP2 plan snmmary from 17
June 2009 through 29 June 2009. Written comments may be mailed to Joe Musolf, 1200
City Hall Annex, 25 West Fourth Street, Saint Paul, MN 55102 ar emailed to
joe.musolf@ci.stpaul.mn.us.ln addition, the City will accept comments in person at a
public hearing scheduled for Thursday 25 June 2009 from 3:00 to 5:00 pm in Room 1307
of the Ciry Hall Annex.
The City will submit the application for NSP2 funding to the United_States Department of
Housing and Urban Development (AUD) on July 17, 2009.
L Background on NSPZ
NSP2 is an allocation of funds provided under the American Reinvestment and Recovery
Act of 2009 (Public Law 111-005) (Recovery Act) for additional activities under
Division B, Tifle III of the Housing and Economic Recovery Act of 2008 (Public Law
110-289) (HERA), as amended, for the purpose of assisting in the redevelopment of
abandoned and foreclosed homes.
Recipients will use funds awarded under this program to stabilize neighborhoods whose
viability has been and continues to be damaged by the economic effects of properties that
have been foreclosed upon or abandoned.
Applicants will compete for up to $1.93 billion of NSP2 funds to carry out neighborhood
stabilization progrTms. HUD will select NSP2 programs that integrate the following
principles: retain Community Development Block Grant distinctive requirements; target
and reconnect neighborhoods with the economy, housing mazket and social network of
the community; rapidly arrest decline; assure compliance with NSP "deep tazgeting"
requirement that no less than 25% of the funds be used to benefit individuals and families
at or beIow 50% of t[ie azea median income; ensure Iongest feasible continued
affordability; support projects that optimize economic activity and number of jobs created
or retained or that will provide other long-term economic benefits; coordinate planning
and resources; leverage resources and remove destabilizing influences; set aggressive, but
achievable goals;and ensure accountability.
II. Pronosed Target Geo�ranhv
Figure 1 defines the census tracts wluch will be defined as "target geography" in the
Saint Paul NSP2 program. The tazget geography is tfie specific geography where the
NSP2 program activities will be carried out. The Saint Paul target geography selected
both (1) masimizes the average HUD "need score" to assure a competirive applicarion,
09-715
and (2) holistically builds upon and leverages the success of recent and current
neighborhood stabilizauon efforts undertaken by the City and its Housing and
Redevelopment Authority (HRA). A more detailed explanation of these two points
follows:
(1) HLTD has provided two foreclosure related "need scores" atthe census tract
level, one that is based on the estimated number and percentage of
foreclosures and another that combines estimated foreclosure rate with
vacancy rate. Both scores rank need from 1 to 20, with 20 being census tracts
with the HUD-estimated greatest need. At a minimum, the proposed target
geography must score an average of 18 using the higher of the two indices for
each census tract in the program. The census tracts in the proposed Saint Paul
target geography, as illustrated in Figure 1, have an average needs score of
19.4. Only those census tracts that scored either 19 ar 20 on either index were
chosen.
(2) Figure 2 illustrates the overlaps between the proposed NSP2 target geography
and two significant recent and current neighborhood stabilization efforts
undertaken by the City and its HRA: (a) the Invest Saint Paui (ISP) Iniriative,
and (b) an eazlier round of HUD-funded Neighborhood Stabilization Program
(NSPl) acriviries. These overlaps are significant because the establishment of
the two previous program areas was based upon similar demonstrated
geographic need indicators (see Figure 3), and because this overlap will allow
the City to continue to cany out and build upon these ongoing activiries. A
more detailed explanation of these two efforts follows:
a. Through strategic revitalizarion strategies, the ISP Initiative will
leverage an estimated $66,990,000 of public and private resources to
four lazger neighborhoods and four more concentrated focus areas (see
Figure 2) which aze disproportionately affected by recent economic
and social downturns and persistent disinvestment. This work
includes: organizational support and community outreach;
rehabilitation; mortgage financing and incentives; strategic property
acquisition; neighborhood commercial corridor revitalization; and
some lazge redevelopment projects. For more informarion see
www.stpaul.gov/isp.
b. Current NSPl activities underway aze funded by a direct awazd of $4.3
million from HUD and an additional awazd of $4.5 million through the
Minnesota riousing Finance Agency. Figure 2 iiiustrates the overlap
between the proposed NSP2 tazget geography and a subset of the
NSPl acrivity azea. This sub-geography (defined in NSPl as "market
destabilizaflon" and "market collapse" azeas) is currenfly the focus of
such acrivities as: acquisition; rehabilitation; demolirion; de-
conversion of housing back to singie-family; land-banking; financial
incentive tools; and a strong marketing partnership with lenders and
realtors. For more information see www.stpaul.gov/nsp.
09-715
III. Prouosed NSP2 Activities and Budeet
Within the Saint T'aul target geography, the City proposes to use NSP2 funds to rapidly
arrest the decline, then stabilize these neighborhoods and posirion them for a sustainable
role in a revitalized community. Measurable short term program outcomes will include,
but noY be &miYed Yo: airesting decline in home values based on average saies price in
targeted neighborhoods; and reducing or eliminating vacant and abandoned residential
properly in targete�neighborhoods. The long term outcomes may include, but aze not
limited to: increased sales of residential property in targeted neighborhoods; and
increased median mazket values of real estate in targeted neighborhoods.
The City will undertake the following activities in the following approximate quantities
during the first three yeazs of NSP2:
(i) Acquisition: 400 homes
(2) Rehabilitation: 300 homes
(3) Demolition of blighted siruciiues: 100 homes
(4) Land-bank vacant lots for future re-use: 100 pazceLs
(5) Provide financial incenrives to buyers: for 300 buyers
It is anticipated that program income will be generated via sales of rehabilitated homes
and developable lots. Therefore, a portion of NSP2 funds will be available for reuse in
future years. The above quantities of activity are for the first three years of the proposed
program. The full application will ontline projected total acrivity quantiues (re-use of
program income) including future years.
A summary of each activity and funding need follows:
(1) Acquisition . 400 homes C� $40,000 average =$16,000,000
The City will acquire approximately 400 abandoned or foreclosed upon homes during
the first three years of NSP2. Approumately 300 homes will be determined as
feasible for rehabilitation. The remainder (appmximately 100) will be acquired for
demolition and land-banldng. NSP2 guidelines require that any acquisition be at a
discount off the current mazket appraised value.
The City will acquire properties either via bulk purchase (through continued
participation in the Nalional Community Stabilization Tmst's "First Look" process)
or via other direct negotiations with property-owners.
(2) Rehabilitation . 300 homes C$100,000 average =$30,000,000
The City will designate approximately 300 of the above acquired homes as feasible
ior reuabilitation wituin the above-stated budget constraints within the first three
yeazs of NSP2. Rehabilitation activity will be cazried out primarily by Community
Development Corporations and other non- and for-profit development partners in the
community. The City will deternune a sensible financial structure to minimize the
risk and capital requirements of our development parhiers in ozder to expedite this
activity.
Rehabilitation activities will comply with all NSP and City requirements including
the Interim Saint Paul PED/HRA Sustainability Initiative.
(3) Demolition . 100 homes @ $15,000 average = $1,500,000
The City will designate approicimately 100 of the above acquired homes as blighted
and will remove these destaUilizing influences via demolition.
09-715
(4) Land-Banking Activities .$600,000 for land-bank operations and for holding
costs
The 100 vacant parcels ihat aze cleazed by NSP2 demolition acrivity will be held in
land-bank status for future re-use. The City will partner with the Twin Cities
Community Land Bank to carry out this activity. NSP2 funds will be used to fund the
establishment of the land-bank enrity and will be used to cover the ongoing cazrying
costs and maintenance of land-banked property.
(5) Financial Incentives . for 300 buyers C� $15,000 average
The City will establish financing mechanisms for purchase and redevelopment of
foreclosed upon homes and residential properties, including such mechanisms as soft-
seconds, contracts-for-deed, and shared-equity loans for low- and moderate-income
homebuyers. These products will be available for buyers of either NSP2 funded
properties or other addirional eligible foreclosed or abandoned properties.
In addirion to the acrivities summarized above, the City will also use NSP2 funds for
administrative costs.
It is anticipated that approximately 120 rehabilitated homes will be sold during the first
three years of NSP2 at an average sales price of $100,000, resulting in program income
of $12,000,000. This is reflected in the summazy budget below:
Summary budget statement
NSP2 ac5vities, including acquisirions, rehabilitafion and demoli6on will conanue
beyond the initial three-yeaz period. Sales of rehabilitated homes and developable lots
will continue to generate program income which wili be recycled to fund ongoing future
NSP2 activities.
IV. Focused Areas of Concentrated NSP2 Activitv
Within the lazger Saint Paul NSP2 tazget geography, activity will be concentrated within
approxunately ten small concentrated opportunity areas. Within each azea, NSP2 will
fund approximately 40 acquisitions, 30 for rehabilitation and 10 for demolition and
longer term land-bavking. These azeas of concentrated activity will be defined as two- or
three- or four-square block sizes. This concentrated acrivity will be market-changing in
these areas and the speciflc properties addressed in each area will more easily reinforce
09-715
and build upon each other and will provide for a more concise, focused marketing
approach.
These azeas will be defined through a comprehensive analysis wluch will consider at Ieast
the foIlowing facYors:
(i) results of ISP-funded community outceach reseazch
(2) concentrated acquisition opporlunities
(3) e�sting ueighborhood amenities
(4) pattems of recent reinvestment
(5) concentration of foreclosures and vacant buildings
V. Other NSP2 Considerations
(1) Affordability targeting - All NSP2 funds must provide benefit to persons
whose income does not exceed 120% of azea median income. Also, 25% of each
grant must be used for the purchase and redevelopment of abandoned or
foreclosed upon homes or residenfial pmperties that will be used to house
individuals or fauulies whose incomes do not exceed 50% of area median income.
(2) Timeline — NSP2 funds must be expended at a zate of 50% within the first two
yeazs of the pmgram and 100% within three years. The applications aze due to
HL7D by July 17, 2009. HUD will make funding selec6ons by December 1, 2009.
Funding could be under coniract by around January 1, 2010.
(3) City authorization process —
Public comment period 6/17/09 — 6/29/09
Public comment hearing 6/25/09
City Council action 7/8/09
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