IURA Neighborhood Investment Committee

Ithaca Urban Renewal Agency 108 East Green Street Ithaca, New York 14850 (607) 274-655 AGENDA IURA Neighborhood Investment Committee 8:30 AM, November 14, 2014 rd 3 Floor Conference Room, City Hall I. Call to Order II. Public comment III. Review of Minutes – October, 2014 IV. New Business 1. HOME Monitoring & Risk Assessment Policy – Resolution 2. HOME Underwriting & Subsidy Laying Policy – Resolution 3. Job training discussion and resolutions a. Hospitality Employment Training Program (project #8 CDBG 2013 & #8 CDBG 2014) funding adjustment – Resolution b. Learning Web Supported Employment (project #22 CDBG 2013 & #13 CDBG 2014) – recommendation on 2014 funding – Resolution c. October 24, 2014 Job Training Round Table – staff report d. HUD’s Basically CDBG May 2014 note re. job training programs V. Old Business 1. NI Committee vacancy. VI. Motion to Adjourn If you have a disability and require accommodations in order to fully participate, please contact the IURA at 274‐6559 at least 48 hours prior to the meeting.  Ithaca Urban Renewal Agency 108 East Green Street Ithaca, New York 14850 (607) 274-655 Draft Minutes IURA Neighborhood Investment Committee October 10, 2014 I. Call to Order The meeting was called to order at 8:35 with members Tracy Farrell, Chair; Teresa Halpert, and Karl Graham present. Staff member Lynn Truame was present. Committee member Fernando de Aragon arrived at 9:10. II. Public comment None. III. Review of Minutes – July 11, 2014 Moved by T. Halpert, seconded by K. Graham, approval of July 11, 2014 minutes as submitted. Carried unanimously. IV. Old Business 1. Update on Cliff Street demolition costs (project #6 CDBG 2013). A comparison of actual vs budgeted costs for the demolition of 701 Cliff Street was included in the meeting packet. L. Truame noted that the actual costs were significantly less than the budgeted costs, and that over $28,000 in unspent 2013 CDBG funds from the project would therefore be available to reprogram. 2. Update on Hospitality Employment Training Program costs (project #8 CDBG 2013 & #8 CDBG 2014). Copies of the 2013 project budget, original 2014 project budget, and revised 2014 project budget were included in the meeting packet, along with a copy of an e‐mail from project coordinated, Nagiane Lacka. Of the original $86,000 2013 budget, approximately $45,000 remains unspent, due primarily to N. Lacka having been hired part way through the program year and there being only one cohort of participants in 2013. L. Truame explained that N. Lacka proposes to increase the 2014 project budget by $26,370, for a total of $118,865, by adding $10,000 for a program assistant, increasing the stipend and training subsidy, and increasing the program/training costs line item. The balance of between $15,000 and $20,000 in unspent 2013 funds will be available to reprogram. IURA NIC Minutes10/10/14 Page 1 of 3  There was a brief discussion about the program, its success to date, and its future. L. Truame noted that the program has so far been quite successful un making placements and that numerous applications had been received for the first 2014 cohort. On the other hand, all funding for the program is currently coming from the IURA. Ideally, as the program continues to grow and develop, additional sources of funding will be identified. 3. Update on Learning Web Supported Employment results (project #22 CDBG 2013 & #13 CDBG 2014). The committee reviewed the August 31, 2014, interim report. As of that date, two participants had been placed at Cayuga Medical Center (CMC); another three are working on applications to CMC. One participant had been placed at Cornell Dining, which the committee agreed was equivalent to a CMC placement. K. Graham expressed the hope that the Learning Web would continue to work with participants who had secured other jobs to move them into the more career‐oriented placements. T. Halpert noted that many participants are identified as having numerous barriers to success, and that overcoming some of these barriers might require the involvement of agencies such as Tompkins County Mental Health. The project’s results to date and prospects for the future were discussed, with no firm conclusions reached. L. Truame noted that because the Learning Web’s project was designed to provide post‐ placement support, it did not include a stipend or other paid work component, unlike Work Preserve, HETP, and the Fingerlakes ReUse programs. The committee agreed that this could be an important difference and asked staff to research best practices in this regard. The committee will continue to monitor the project’s progress via interim reports. V. New Business 1. Job Training Round Table, October 24, 2014. L. Truame explained the purpose of the round table and listed the participants. The goal is to bring together staff from all of the job training programs that the IURA funds, along with staff from Work Force NY, so that successes, challenges, opportunities for collaboration, and unaddressed needs can be identified and discussed. K. Graham noted that other funders, including the Park Foundation, are looking for collaborative efforts and the potential for these programs to secure funding from sources other than the IURA would be enhanced by their working together. 2. T. Farrell asked for a brief update on the Fair Housing Choice Survey and Analysis of Impediments to Fair Housing. L. Truame reported that the two surveys had been completed, the data was being sorted, and the testing component was underway. Nearly 800 survey responses were received; double the amount anticipated. 3. 2015 CDBG/HOME funding round The new electronic application forms were reviewed and approved by the committee. In addition to the electronic versions, a small number of hard copies will be made available in various locations around town, including City Hall, the library, and GIAC. Hard copy applications will also be sent to anyone who calls to request one. IURA NIC Minutes10/10/14 Page 2 of 3  The committee prefers to continue to receive hard copy binders of all final applications for their review. 4. NI Committee vacancy, Chair and Vice‐chair elections. T. Farrell noted that the committee had a vacancy and asked if committee members had any thoughts about who might be invited to fill that vacancy. L. Truame mentioned Gary Bucci as one possibility. K. Graham asked whether there was a “job description” for committee members. L. Truame will distribute the committee charge via e‐mail, and committee members will give some thought to community members who might be appropriate to fill the existing vacancy. T. Farrell asked if anyone would be interested in serving as Chair of the committee and indicated that she would be willing to continue or to step down, as the committee preferred. L. Truame observed that there was currently no Vice‐chair. T. Farrell asked for volunteers to serve as Vice‐chair; K. Graham indicated his willingness. Moved by T. Halpert, seconded by F. de Aragon, T. Farrell was nominated as Chair of the Committee and K. Graham as Vice‐chair. Carried unanimously. 5. T. Halpert asked for an updated on Stone Quarry Apartments. L. Truame stated that HUD had finally approved the use of HOME funds for the project, and that INHS had acquired the property and begun site work, but that NYS Housing and Community Renewal (which controls the tax credit allocation but is not a permanent lender) had not yet provided their approval. T. Halpert inquired about the challenge to release of the building permit. L. Truame replied that the Building Division had received documentation of the efforts made by INHS to secure agreement from adjacent property owners for a pedestrian connection to Old Elmira Road, they accepted these efforts as having satisfied the condition placed on the project by the BZA, and the building permit had been released. 6. There was a brief discussion of the Commons Rebuild Project and its impact on merchants. T. Farrell noted that the IURA did allocate $100,000 to the Downtown Construction Loan Fund project to assist 4‐5 businesses affected by the rebuild with below‐market loans from the CD‐ RLF. These funds have not yet been utilized. VI. Motion to Adjourn The meeting was adjourned by consensus at 9:48. END Minutes prepared by L. Truame IURA NIC Minutes10/10/14 Page 3 of 3  2013 HOME Final Rule Effective Dates Summary In general, requirements apply to projects to which HOME funds are committed on/after August 23, 2013 Requirements w/ Delayed Effective Date Implementation Project-specific CHDO reservations October 22, 2013 (90 days after publication date) (§ 92.2, definition of commitment) HUD will implement for all deadlines on or after January 1, 2015 Homebuyer procedures January 24, 2014 (6 months after publication date) (§ 92.254(f)) Written policies, procedures, and systems July 24, 2014 (12 months after publication date) (§ 92.504(a)) Financial oversight July 24, 2014 (12 months after publication date) (§ 92.504(d)(2)) 5-year CHDO expenditure deadline HUD will implement for all deadlines on or after (§ 92.500(d)(1)(C)) January 1, 2015 Property standards January 24, 2015 (18 months after publication date) (§ 92.251)  Adopted: HOME Participating Jurisdiction Responsibilities Risk Assessment and Monitoring Policy Ithaca Urban Renewal Agency Draft July 31,2014 §92.504(a) of the 2013 HOME final rule requires the participating jurisdiction to adopt written policies, procedures, and systems to ensure that HOME requirements are met, including a system for assessing the risk of activities and projects and a system for monitoring entities. These policies and procedures apply to all entities receiving HOME funds through the participating jurisdiction, including State recipients, sub‐recipients, CHDOs, CBDOs, project owners, developers, contractors, and sponsors. Each entity’s compliance with HOME requirements must be evaluated at least annually. IURA Risk Assessment Procedure The purpose of the Risk Assessment and Monitoring Policy is to identify the relative risk of non‐compliance with HOME requirements for each Annual Action Plan activity and to establish an appropriate level of monitoring to reduce that risk to acceptable levels. The IURA will evaluate each Annual Action Plan activity for relative level of risk using the standards described below, assigning an overall Activity Risk level of A (low risk), B (moderate risk), C (elevated risk), or D (high risk) to each. Project Risk Assessment Project risk is increased by the inclusion of unique, unusual, or highly restrictive project elements that would tend to increase the potential for regulatory non‐compliance or negatively impact fiscal stability. Examples of such project elements include, but are not limited to: • a high number of special needs set‐asides; • unusual, and potentially incompatible, mix of set‐asides; • high percentage of extremely low income units; • assumed, rather than documented, need; • unusual location or site factors, such as known or suspected environmental issues; • non‐standard approaches to design or construction; and/or • an unusually complex or marginal financial structure. Project Risk Rating Scale: 4 – Project includes many risk elements that are of concern 3 – Project includes several risk elements that are of concern 2 – Project includes few risk elements that are of concern 1 – Project includes no risk elements that are of concern Sponsor Risk Assessment Sponsor risk is increased by a lack of prior experience with program requirements and/or the project type, a lack of staffing capacity or high rate of turn‐over, financial instability, poorly organized internal systems or a lack of checks and balances, and/or a history of prior performance issues. Sponsor Risk Rating Scale: 4 – Sponsor organization has no, or limited, prior experience with this project type or funding source; sponsor organization is financially unstable and/or there are concerns about the sponsor’s internal systems. 3 – Sponsor organization has prior experience with this project type and/or this funding source, but there are concerns about staff capacity or a previous history of performance problems. 2 – Sponsor organization has significant prior experience with funding source and a track record of acceptable performance, but may have limited prior experience with the particular project type, or there may be questions about the expertise of the particular staff assigned to the project. 1 – Sponsor organization is highly experienced with project type and funding source, with a long track record of acceptable performance and demonstrated staff expertise and capacity. Activity Risk Rating The assessment of activity risk combines the assessment of project and sponsor risk to identify the overall relative risk of each Annual Action Plan activity. In the grid below, Project Risk is shown along the horizontal axis and Sponsor Risk along the vertical axis, with Activity Risk being derived from the intersection of these two component elements. Project Risk 4 3 2 1 Sponsor Risk 4 D D C B 3 D C B B 2 C B B A 1 B B A A Potential consequences and associated risk ratings and monitoring requirements: D – Potential for failure to meet program requirements such that the City is required to repay funds to HUD. Increased monitoring to reduce risk to level C or B is required. C – Potential for failure to meet program requirements such that a contract amendment is required to maintain compliance with HUD. Increased monitoring to reduce risk to level B is required. B – Potential for failure to comply with significant IURA requirements, but unlikely to trigger HOME non‐compliance. Increased monitoring to reduce risk to level A is recommended. A – Potential for failure to comply with secondary IURA requirements that would not trigger HOME non‐compliance. Standard monitoring is sufficient. IURA Monitoring Policy Individualized monitoring plans will be established for each Annual Action Plan activity based on the identified Activity Risk rating and the type of activity. Construction activities, regardless of risk rating, will receive on‐site monitoring, at appropriate intervals, to review construction progress. Standard project monitoring (Risk Level A) will include: • Desk review of all vouchers, quarterly reports, and annual reports o Verify timeliness of reporting o Verify complete and accurate information provided o Verify appropriate and accurate supporting documentation • Progress tracking o Verify reasonable pro‐rata spend down of funds o Verify number of beneficiaries served to date and benefits received Moderate Risk project monitoring (Risk Level B) will include all Level A monitoring activities and will additionally include: • Initial on‐site meeting (the $1K meeting) to review compliance expectations, including reporting schedule and required documentation Elevated Risk project monitoring (Risk Level C) will include all Level A and B monitoring activities and will additionally include: • Mandatory on‐site meeting following submission of first quarterly report to review report contents, voucher submissions to date, and activity progress • Optional on‐site meeting following submission of second quarterly report to review report contents, voucher submissions to date, and activity progress High Risk project monitoring (Risk Level D) will include all Level A, B, and C monitoring activities and will additionally include: • Mandatory on‐site meetings following submission of first two quarterly reports to review report contents, voucher submissions to date, and activity progress • Optional on‐site meeting following submission of third quarterly report to review report contents, voucher submissions to date, and activity progress Should any of the above monitoring activities reveal concerns about compliance or progress toward required outcomes, additional on‐site meetings may be scheduled. Persistent concerns may move the activity into a higher risk category. Monthly updates on each Annual Action Plan activity will be provided to either the Neighborhood Investment Committee or the Economic Development Committee, depending upon the type of activity. If, in the opinion of IURA staff, it appears that any activity is at risk of failure to achieve contractually required outcomes, the activity sponsor will be required to meet with the applicable committee to discuss outstanding issues and concerns and devise an appropriate plan to address them. Proposed Resolution IURA Neighborhood Investment Committee November 14, 2014 HUD Entitlement Program – HOME Risk Assessment and Monitoring Policy Whereas, §92.504(a) of the 2013 HOME final rule requires participating jurisdictions to adopt written policies, procedures, and systems for assessing the risk of activities and projects and for monitoring entities, to ensure that HOME requirements are met, and Whereas, pursuant to an executed agreement dated 2/14/13, the City of Ithaca authorized the IURA to act as lead agency to plan, administer, implement and monitor HUD Entitlement grant funds awarded to the City of Ithaca, and Whereas, IURA staff have researched best practices in risk assessment and monitoring and have developed a draft Risk Assessment and Monitoring Policy based upon this research, and Whereas, the IURA Neighborhood Investment Committee reviewed and discussed this draft policy at its November 14, 2014, meeting, and recommend the following; now, therefore be it Resolved, that the IURA, acting in its capacity of lead agency on behalf of the City of Ithaca hereby adopts the HOME Risk Assessment and Monitoring Policy, dated July 31, 2014. 1  Adopted: Underwriting and Subsidy Layering Policy Ithaca Urban Renewal Agency Draft September 24, 2014 §92.250(b) of the 2013 HOME final rule requires the Participating Jurisdiction (PJ) to adopt underwriting and subsidy layering guidelines that establish standards to assess the experience and financial capacity of applicant developers; assess the market conditions of the neighborhood in which proposed projects will be located; examine the sources and uses for each proposed project and determine whether the costs are reasonable and whether there are firm financial commitments in place; and to assess the reasonableness of profit or return to the owner or developer for the size, type, and complexity of the proposed project. The purpose of the IURA’s Underwriting and Subsidy Layering policy is to determine the minimum amount of HOME funds necessary to be invested by the PJ to provide quality, affordable, and financially viable housing for a least the duration of the affordability period. Homeowner rehabilitation projects are exempt from the market analysis and developer capacity assessment requirements. All other underwriting requirements described in this policy apply to homeowner rehabilitation projects only if HOME funds are provided in the form of an amortizing loan. Projects that provide only down payment assistance are exempt from the market analysis and developer capacity assessment requirements; such projects are subject to the underwriting requirements specified in §92.254(f). Analysis of Developer and Project Teams’ Capacity The IURA will assess the experience and financial capacity of the developer and key members of the development team, including the architect, contractor, and property management entity, to determine the likelihood of successful project completion. In particular, the IURA will review: • The experience of the development team with projects of a similar size, type, and complexity, based upon submitted resumes and/or portfolios and project lists. • The capacity of assigned staff to carry out those project tasks for which they will be responsible, based upon an analysis of their prior experience and the number of competing projects to which they are or will be assigned. • The financial strength of the developer, including its liquidity and level of unrestricted assets or net worth, based upon the two most recent years of audited financial statements. • Whether the developer has had prior performance concerns on IURA‐funded projects. Analysis of Market Conditions Projects that include LIHTC and/or HCR funding will be required to submit a copy of their full market study. Projects that do not include such funding may provide evidence of the local need and market demand for the project through documentation of local market conditions and the demand for comparable developments in the same market area. To the extent feasible, the IURA strongly prefers to fund developments that are located close to employment opportunities, public services, health care, public transportation, and recreational areas; have no environmental impacts or none that cannot be mitigated; are consistent with sustainable design principles; and meet applicable accessibility standards as well as visit‐ability standards. A unit is considered visit‐able when a person with mobility impairments can enter the unit, navigate throughout the first floor, and have access to an accessible bathroom. Financial Feasibility and Reasonable Cost Analysis Applicants must provide a detailed Development Budget and Operating Pro‐forma prior to the IURA committing funds to the project. The Development Budget must include a complete statement of Sources and Uses, supported by appropriate documentation: • Sources: o Copies of all commitment letters or letters of interest from funders, lenders, and equity investors o Certification of federal assistance concerning governmental assistance provided, or to be provided, to the project. If no such governmental assistance is to be provide at the time of application or in the future, the applicant must certify to that fact. • Uses: o Acquisition: a third party appraisal that justifies the acquisition cost o Construction: a line item construction cost estimate that includes site work (including any required remediation of environmental conditions) and building construction. A construction contingency of 10% may be included. IURA staff will compare the overall per square foot cost of construction to the range of PSF costs of recent similar HOME projects. The analysis will note any unusual project factors that impact the cost estimate. o Soft costs: “reasonable and necessary” soft costs include such costs as title and escrow, financing fees, development period interest, real estate taxes during construction, legal fees, permits, appraisals, environmental studies, architectural and other related professional services, audit costs,  relocation costs, affirmative marketing expenses, and capitalized reserves. A soft cost contingency of up to 5% may be included. o Developer fee: the maximum allowable developer fee is 15% of total hard and soft costs. The IURA does not have a maximum per unit Total Development Cost limit; however, the IURA does have an obligation to use its limited HOME resources in the most efficient manner possible. Staff will review the project’s TDC in comparison with that of other recent, similar, HOME‐funded projects to make its assessment of the reasonableness of the project’s overall costs. The Operating Budget must include a projection of all rents and other revenue, all project expenses, and all debt service payments, with a calculation of the resulting net operating income and Debt Service Coverage Ratio. • Rental revenue: All HOME‐assisted units shall have rents that are at or below the published HOME rents for the unit size as of the date of the application. A vacancy rate of 5% is allowable. Applicable utility allowances and a reasonable escalation rate (typically in the range of 2‐3%) must be included. • Other revenue: the applicant must document the basis for its estimate of any additional project revenue, such as laundry income. • Operating costs: IURA staff will review both individual line item expenses and the overall per unit per year operating costs against other recent, HOME‐funded projects. Property management fees of 5‐7% of collected rents are allowable. Replacement reserves must be included at a level that is appropriate for the type of project (ie., new construction vs. rehabilitation, large family vs. seniors, etc.) A reasonable inflation rate (typically in the range of 3‐4%, and always in excess of the rental revenue escalation rate) must be included. • Debt service coverage ratio: The minimum acceptable debt service coverage ratio shall be 1.15 and the maximum allowable shall be 1.25. The applicant will be required to provide an analysis of revenues and expenses over at least a 15 year period. Maximum HOME Subsidy The HOME Program includes allowable subsidy limits for the amount of HOME funds that may be allocated to projects, based on the number and type of HOME units. While the amount of City HOME funding will likely not approach the allowable maximums, the IURA’s underwriting analysis will include this HOME required calculation. Subsidy Laying Analysis The HOME Program requires that the amount of HOME funds invested in a project be the minimum amount needed to ensure feasibility, taking into account other project funding sources, including other governmental funding sources. Based upon the results of the foregoing financial analysis, the IURA’s underwriting analysis will include a determination of the amount of HOME funding that satisfies the subsidy layering requirement. Subsidy laying analysis is mandatory when HOME funds will be combined with other governmental assistance, and is recommended in the absence of other governmental assistance. As allowed by HUD, the IURA will reply upon the guidelines developed and evaluation conducted by other agencies when the project includes Low Income Housing Tax Credits. Proposed Resolution IURA Neighborhood Investment Committee November 14, 2014 HUD Entitlement Program – HOME Underwriting and Subsidy Layering Policy Whereas, §92.250(b) of the 2013 HOME final rule requires participating jurisdictions (PJ) to adopt underwriting and subsidy layering guidelines that establish standards to assess the experience and financial capacity of applicant developers; assess the market conditions of the neighborhood in which proposed projects will be located; examine the sources and uses for each proposed project and determine whether the costs are reasonable and whether there are firm financial commitments in place; and to assess the reasonableness of profit or return to the owner or developer for the size, type, and complexity of the proposed project, for the purpose of determining the minimum amount of HOME funds necessary to be invested by the PJ to provide quality, affordable, and financially viable housing for a least the duration of the affordability period, and Whereas, pursuant to an executed agreement dated 2/14/13, the City of Ithaca authorized the IURA to act as lead agency to plan, administer, implement and monitor HUD Entitlement grant funds awarded to the City of Ithaca, and Whereas, IURA staff have developed a draft Underwriting and Subsidy Layering Policy based upon standards and practices established by HUD, and Whereas, the IURA Neighborhood Investment Committee reviewed and discussed this draft policy at its November 14, 2014, meeting, and recommend the following; now, therefore be it Resolved, that the IURA, acting in its capacity of lead agency on behalf of the City of Ithaca hereby adopts the HOME Underwriting and Subsidy Layering Policy, dated September 24, 2014. 1 Proposed Resolution IURA Neighborhood Investment Committee November 14, 2014 Hospitality Employment Training Program (project #8, 2013 CDBG, project #8 2014 CDBG) – Approval to Reallocate Funding Whereas, the Greater Ithaca Activities Center (GIAC), received $86,000 in Community Development Block Grant funds through the 2013 HUD Entitlement Program for the Hospitality Employment Training Program (HETP), a job training and placement program that would place 10‐ 15 young adults in positions in the hospitality industry, and Whereas, GIAC has also been allocated $92,495 through the 2014 HUD Entitlement Program for the HETP program, with the goal of placing 20 individuals in positions in the hospitality industry, and Whereas, the program exceeded their 2013 placement goal but expended only $48,266.69 of their 2013 allocation, largely due to a delay in hiring their program manager, leaving a remaining balance of $37,733.61 in unexpended funds from the 2013 program year, of which amount $7,733.61 were 2013 CDBG Entitlement Funds and $30,000 were Community Development Revolving Loan funds; and Whereas, due to the success of the program and its potential for expansion, GIAC wishes to increase staffing, training funds, and stipends for the 2014 program year by a total of $26,370, as indicated on the attached revised budget sheet; and Whereas the carryover of funds allocated for this activity under the 2013 Action Plan to the 2014 program year is allowable under HUD regulations, and Whereas, the Neighborhood Investment Committee reviewed this request at their meeting on November 14, 2014, and recommended the following, now, therefore be it Resolved, that the Ithaca Urban Renewal Agency hereby approves the following reallocation of funding for the Hospitality Employment Training Program: $7,733.61 in 2013 CDBG Entitlement Funds will be rolled over to the 2014 program year and $18,636.39 in Community Development Revolving Loan funds will be rolled over to the 2014 program year for a total increase in the 2014 HETP budget of $26,370.00, and de‐obligating $11,363.61 in Community Development Revolving Loan funds which may now be reprogrammed to another activity, and be it further Resolved, that the IURA Chairperson is hereby authorized, subject to advice of IURA legal counsel, to execute any and all necessary documents to implement this resolution. 1 Program Sponsor Description Goal Achievement Comments Work Preserve Historic Ithaca Provide training in 20 individuals would 21 individuals Placement was not entry level job skills receive training received training a specified goal, (focused on the however, 4 retail and building participants trades) to identified secured high-risk/high-need unsubsidized LMI persons employment after completing WP (2 of these 4 then went on to trade school); another participant went on to TC3 Hospitality GIAC Training resulting in 10 individuals would 11 completed Continued Employment certification in the receive training, 10 training, all received employment was Training Program hotel services field; would achieve at at least one not a specified goal, placement in least 1 certification, certification, 7 but it appears that unsubsidized 5 would secure secured permanent only 2 of the 7 that employment within unsubsidized employment (two were permanently the industry. Target employment in the outside the employed as of hard to employ hotel industry. hospitality industry) June 20 were still young people, employed as of July unemployed 10. /underemployed, women, & minorities. Learning by Doing Learning Web Apprenticeship 7 individuals would 2 individuals placed The program has followed by job be placed at CMC; at CMC. After evolved into placement with after 6 months 6 expanding the something quite post-placement would remain program to ensure different from what support for employed, and after beneficiaries, 10 was originally unemployed youth 12 months 5 would additional youth approved for who posses a GED remain employed. secured funding. Post- or high school employment (5 of placement support diploma the 10 with possible is no longer the advancement focus due to the potential) difficulty finding employment-ready candidates. Proposed Resolution IURA Neighborhood Investment Committee November 14, 2014 Learning By Doing Supported Employment Program (project #13, 2014 CDBG Entitlement Grant) – Termination of Funding Whereas, the Learning Web (LW), received an award of $39,000 in Community Development Block Grant funds through the 2014 HUD Entitlement Program for the Learning by Doing Supported Employment Program, a job placement program with post‐placement support that would place 10 young adults in unsubsidized employment at Cayuga Medical Center and its affiliates, and Whereas, disbursement of 2014 funds was conditioned upon successful attainment of the 2013 program year goal for this activity, namely the placement of seven City of Ithaca youth in unsubsidized employment with Cayuga Medical Center and its affiliates, and Whereas, despite diligent efforts, the 2013 program year goal has not been attained, now, therefore be it Resolved, that the Ithaca Urban Renewal Agency hereby terminates funding for the 2014 program year for activity #13, Learning By Doing Supported Employment, and be it further Resolved, that the IURA Chairperson is hereby authorized, subject to advice of IURA legal counsel, to execute any and all necessary documents to implement this resolution. 1 Proposed Resolution IURA Neighborhood Investment Committee November 14, 2014 Learning By Doing Supported Employment Program (project #13, 2014 CDBG Entitlement Grant) – Program Reconfiguration Whereas, the Learning Web (LW), received an award of $39,000 in Community Development Block Grant funds through the 2014 HUD Entitlement Program for the Learning by Doing Supported Employment Program, a job placement program with post‐placement support that would place 10 young adults in unsubsidized employment at Cayuga Medical Center and its affiliates, and Whereas, disbursement of 2014 funds was conditioned upon successful attainment of the 2013 program year goal for this activity, namely the placement of seven unemployed City of Ithaca youth in unsubsidized employment with Cayuga Medical Center (CMC) and its affiliates, and Whereas, a distinguishing characteristic of this program, as distinct from other job training programs funded by the Ithaca Urban Renewal Agency, was the ongoing post‐placement support provided to participants, the goal of which was to support them in maintaining employment for at least 6‐12 months, and Whereas, once the 2013 program was implemented it became apparent that it would not be successful as originally envisioned due to a lack of employment‐ready applicants, and Whereas, for that reason, a contract amendment was executed modifying the program to allow youth from outside the City and youth who are underemployed (as well as unemployed) to participate, and allowing placement with employers other than CMC, and Whereas, since these changes have been made to the 2013 program twelve youth have been placed in unsubsidized employment, satisfying the amended program goals for the year, and Whereas, the Ithaca Urban Renewal Agency wishes to continue to support the program in 2014, as it was modified during the 2013 program year and on condition that significant post‐placement support continue to be provided to youth who have secured employment, with the goal of moving them from entry‐level positions to positions that allow for advancement, now therefore be it Resolved, that the Ithaca Urban Renewal Agency hereby approves the use of 2014 CDBG Entitlement Grant funds for activity #13, Learning By Doing Supported Employment, as described above, and be it further Resolved, that the IURA Chairperson is hereby authorized, subject to advice of IURA legal counsel, to execute any and all necessary documents to implement this resolution. 1 ................... 8: Economic uevetooment &Section 108 ~ Commercial rehabilitation. These are activities that are designed to bring commercial structures up to code or improve their facades. - If the commercial structure is owned by a private, for-profit entity, the following limitations apply: • Rehabilitation is limited to the exterior of the building and the correction of code violations; and • Any other improvements are carried out under the special economic development activities category discussed above. ~ Public facilities and improvements. These are public works that support economic development endeavors. Public works facilities and improvements include infrastructure projects such as off-site water, sewer, roads, drainage, railroad spurs and other types of public facilities or improvements. ~ Job training. Job training involves providing skill building classes to employees or potential employees and can be an important part of an economic program. This activity can be undertaken: - As a part of a special economic development project; - As a public service; - Bya CBDO as a part of an eligible project; or - As a part of microenterprise assistance package to the owner of a micro business for his or her employees. 8.1.2 Ineligible Activities ~ Activities not described above are generally ineligible; however, Community Based Development Organizations (CBDOs) can undertake many otherwise ineligible activities when they retain direct and controlling involvement in a qualified project. ~ The following restrictions apply when a CBDO undertakes an activity: - CBDOs may not carry out otherwise ineligible activities (Le., general government buildings or expenses, or political activities); and - CBDOs cannot carry out special economic development activities that do not meet the grantee's underwriting guidelines for such projects and HUD's mandatory public benefit standards. ~ CBDOs are authorized to carry out public services that exceed the 15 percent public services cap when the services are specifically designed to increase economic opportunities through employment support services such as counseling, child care, transportation, and similar services, and job training that is linked to Job placement. NOTE: There has been much confusion with regard to job-training and job-placement services under the provision at § 570.204(b)(2)(i). Job training is an eligible CaDO activity under community economic development at § 570.204(a)(2), which requires job training associated with a permanent job. Therefore, job training must be linked to a permanent job - - a job, which upon completion of the training, will be filled by the trainee. For this reason, job training linked to permanent jobs is more appropriately carried out under the provisions of Basically CDBG (May 2014) 8-3 HUD, Office of Block Grant Assistance  ueverooment &Section 108 § 570.203(c), which is also not subject to the public service cap. HUD did not intend for caDOs to train and generate a "pool" of trained applicants standing by and ready to fill unidentified jobs. Nonetheless; job-training services not linked to permanent jobs are eligible under the provisions of § 570.204(b)(2)(ii), which concerns services of any kind carried out within a HUD approved NSRA. ~ CBDOs may also provide public services of any type outside of the public services cap if the services are undertaken as part of a HUD-approved Neighborhood Revitalization Strategy Area (NRSA). ~ CBDOs may not carry out program administration or planning activities that would result in the grantee exceeding the 20 percent limit on such expenditures. ~ Job pirating is prohibited under Section 588 of the Quality Housing and Work Responsibility Act of 1998. Job pirating refers to the use of federal funds to lure or attract a business and its jobs from one labor market to another. ~ CDBG funds may not be used to assist for-profit businesses, including expansions, as well as infrastructure improvement projects or business incubator projects designed to facilitate business relocation IF: - The funding will be used to assist directly in the relocation of a plant, facility or operation; and - The relocation is likely to result in a significant loss of jobs in the labor market area from which the relocation occurs. ~ The following are definitions to assist in determining if a business location falls under these provisions: - Labor Market Area (LMA): An LMA is an economically integrated geographic area where individuals can live and work within a reasonable distance or can readily change employment without changing their place of residence. Operation: A business operation includes, but is not limited to, any equipment, production capacity or product line of the business. Significant Loss of Jobs: [] A loss of jobs is significant if: • The number of jobs to be lost in the LMA in which the affected business is currently located is equal to or greater than one-tenth of one percent of the total number of persons in the labor force of that LMA ; OR in all cases • A loss of 500 or more jobs. [] A job is considered to be lost due to the provision of CDBG assistance if the job is relocated within three years of the provision of assistance to the business. o Notwithstanding the above definition, a loss of 25 jobs or fewer does not constitute a significant loss of jobs. ~ Before directly assisting a business with CDBG funds the grantee shall include appropriate language in the written agreement with the assisted business to ensure that no pirating has occurred. In addition to other programmatic clauses, the written agreement shall include: Basically COBG (May 2014) 8-4 HUD, Office of Block Grant Assistance  O Fundamentally, in order to use the authority provided under this category of Special Activities by CBDOs, the grantee must ensure that four key tests are met: • that the entity selected qualifies as a CBDO under §570.204(c), • that the project that the CBDO will undertake qualifies under §570.204(a)(1), (2) or (3), • that the CBDO will be “carrying out” the activities as defined at §570.204(a)(4), and • that the CBDO is not carrying out an activity specifically prohibited in §570.207(a). Eligible This category authorizes a grantee to designate certain types of entities to Activities carry out a range of activities that may include activities the grantee may otherwise not carry out itself. While the “otherwise ineligible” activities covered by this authority may take many forms, the most frequent use of this provision in the CDBG program has been to carry out new construction of housing. However, there are also other advantages of using a CBDO in the CDBG program: specifically, for the purpose of providing public services that in certain circumstances are not subject to the expenditures cap otherwise applicable to Public Services. This exception is explained in more detail in the following subsections. Eligible Under this category, a qualified CBDO can only carry out any or all of the Projects following three types of projects: O Neighborhood revitalization: Activities undertaken under this provision must be of sufficient size and scope to have an impact on the decline of a designated geographic location within the jurisdiction of the grantee (but not the entire jurisdiction of an entitlement community unless it has a population of 25,000 or less). The activities to be considered for this purpose are not limited to those funded (or to be funded) with CDBG assistance. O Community Economic Development: This type of project must include activities that increase economic opportunity, principally for low- and moderate-income persons, or that are expected to create or retain businesses or permanent jobs within the community. Housing activities may be included within this project type if they can clearly link the need for affordable housing accessible to existing or planned jobs, or otherwise address the Consolidated Plan’s definition of “expanded economic opportunity” at 24 CFR Part 91.1(a)(1)(iii). Community Development Block Grant Program Categories of Eligible Activities O 2-67  O Energy Conservation: Activities carried out under this provision are clearly designed to conserve energy for the benefit of residents within the grantee’s jurisdiction. An example of this type of project may involve the construction of energy efficient housing where substantial savings in heating and/or cooling costs can expect to be realized. Application Tips: The typical CDBG eligibility categories (e.g., public facilities and improvements, public services, rehabilitation) may appear either singly or in virtually any combination under any one of these three types of projects. CDBG funds do not have to constitute the only source of funding in the project. Note also that the definitions of these terms are not synonymous with the use of these terms in other parts of the CDBG regulations (see §570.201(p), 570.202(b)(4) and 570.203). Eligible In order to qualify as a CBDO, an entity must meet the criteria specified at Entities §570.204(c)(1), (2), or (3). Generally, this means that the entity must: O Be organized under State or local law to carry out community development activities. For entitled communities, the entity must operate primarily within an identified neighborhood within the grantee’s jurisdiction. O Maintain at least 51% of its governing body’s membership to be made up of any combination of the following: • low- and moderate-income residents of its area of operation, • owners or senior officers of private establishments and other institutions located in and serving its geographic area of operation, or • representatives of low- and moderate-income neighborhood organizations located in its geographic area of operation. O Require that members of the governing body must be nominated and approved by the organization’s general membership or by its permanent governing body (except as otherwise authorized in §570.204(c)(1)(v)). O Have as its primary purpose the improvement of the physical, economic, or social environment of its geographic area of operation, with particular emphasis on the needs of low- and moderate-income persons. 2-68 O Categories of Eligible Activities Community Development Block Grant Program  O Be either nonprofit or for-profit, but, if a for-profit, only incidental monetary benefits to its members are allowed. O Not be an agency or instrumentality of the grantee, and not permit more than one-third of its governing body to be appointed by or consist of elected or other public officials or employees of the grantee (or of any other entity that could not qualify as a CBDO), even if such persons would otherwise meet the requirements described above. O Not be subject to the reversion of its assets to the grantee upon dissolution (although a grantee may specify as a condition of providing CDBG funds to the entity that any assets related to the specific CDBG assistance being provided must revert to the grantee, whether or not the grantee designates the CBDO as a subrecipient. (Application of the reversion of assets clause under §570.503(b)(8) would be required for any CBDO designated as a subrecipient and would function to permit the specific assets purchased with the CDBG funds to revert back to the grantee. This would not constitute a violation of the §570.204 requirement.) O Be free to contract for goods and services from vendors of its own choosing (a sign that the entity is not an agent of the grantee). Application Tips: Entities which do not meet the CBDO requirements are not prohibited from establishing a subsidiary organization to carry out an activity under this category, but the subsidiary organization in such case would need to be in control of itself and not be merely a “front” for the parent organization. The regulations at §570.204(c)(2) also provide other ways that an entity may qualify as a CBDO (e.g., Small Business Administration Section 301(d) entity, Section 501, Section 502, or Section 503 Companies). Most notably, it qualifies as a CBDO any entity that has been designated by a HOME participating jurisdiction as a Community Housing Development Organization (CHDO), and which has a geographic area of operation that is not greater than one neighborhood and which has received, or expects to receive, HOME funding. This could include a CHDO that does not meet the standard 51% board membership requirements discussed above for CBDOs. It should also be noted that a CHDO that meets the standard requirements to qualify as a CBDO (and thus does not need to qualify under this exception) would not be subject to the single neighborhood limitation. §570.204(c)(3) of the regulations further allows the grantee an opportunity to show, to HUD’s satisfaction, that an entity that does not meet the specific criteria at §570.204(c)(1) or (2) is nevertheless sufficiently similar in purpose, function, and scope to those eligible entities to qualify as a CBDO. In reviewing such an entity’s charter and by-laws for this purpose, HUD will be looking for evidence that the organization’s principal purpose is consistent Community Development Block Grant Program Categories of Eligible Activities O 2-69  with the grantee’s objectives for improving the area in question and that key stakeholders in that area have substantial input in how the organization operates. Note: If a grantee is unsure whether a particular organization qualifies as a CBDO under this category, it should seek assistance from its local HUD field office. “Carry out” The authority conveyed under this category requires that the CBDO “carry out” the funded activities. This means that the CBDO will undertake the activity directly or through contracts with an entity other than the grantee. In any case where the CBDO provides CDBG funds to another entity, it must be clear that the CBDO has a direct and controlling interest in how and where the activities are undertaken. The purpose of this restriction is to ensure that the grantee itself is not playing a major and controlling interest in the funded activities. Perhaps the “litmus test” for this purpose is whether the entity has the authority, independent of the grantee, to stop the project if something is going wrong. Application Tips: The CBDO is not prevented from entering into a contract with another entity to assist in project implementation so long as the contract provides the CBDO with sufficient control over the project to ensure compliance with all program requirements (e.g., a CBDO can contract with a developer to build housing and not have to use CBDO staff to construct the units). Ineligible Special activities by CBDOs do not include: Activities O Any activity described in §570.207(a) as ineligible. That is, buildings for the general conduct of government, general government expenses, and political activities. O Any activity which would violate the specific limitations described below: • provision of public services in violation of the prohibition against substituting CDBG for State or local funds as set forth in §570.201(e), or that would exceed the dollar limitations described under §570.201(e)(1) and (2) unless the regulations otherwise provide that the services are exempt from that cost limitation (see discussion under Additional Considerations subsection, below). Reference: §570.204(b)(2) 2-70 O Categories of Eligible Activities Community Development Block Grant Program  • provision of assistance for a special economic development activity eligible under §570.203 that does not comply with the Public Benefit requirements of §570.209. References: §570.204(b)(3) and §570.209 • planning and administrative activities that are eligible under §570.205 or §570.206 which would result in the grantee exceeding the 20% cost limitation on such activities, unless the regulations specifically provide that the activity is exempt from that cost limitation. Reference: §570.204(b)(4) Complying Since the majority of activities carried out by a CBDO under this authority with National are also eligible under other categories covered in this Guidebook, refer to the applicable sections in this chapter concerning the considerations Objectives⎯ necessary to determine how to meet the CDBG national objectives. Where Special otherwise ineligible housing activities are being carried out, see the section Activities on Construction of Housing for guidance. by CBDOs Additional The use of CDBG funds by a grantee to fund CBDOs does not relieve the Considerations grantee of its responsibility for meeting program requirements on how those funds are used. Thus, even if the grantee does not designate the CBDO as a subrecipient, it should nevertheless give serious consideration to developing a written, contractual agreement with the CBDO that would be comparable to that required with subrecipients. Such an agreement would include the scope of work, the activity(ies) to be carried out, the national objective(s) to be met, time frames, termination criteria, reporting requirements, and applicability of other requirements (e.g., those specified in Subpart K of the CDBG regulations). It is important to note that when an activity is being carried out by a CBDO under this category and the activity is of such nature that it would also qualify under the category of Special Economic Development Activities at §570.203, that activity will be subject to the Public Benefit requirements set forth in §570.209 and further described in Appendix B of this Guide (although if the CBDO is carrying out any such activities pursuant to a HUD-approved Neighborhood Revitalization Strategy [NRS], the grantee may elect to exempt the activities from the aggregate public benefit standards.) See Appendix E for information on NRS and Appendix B for information on the aggregate standards. Community Development Block Grant Program Categories of Eligible Activities O 2-71  It should also be noted that, while as a general rule CBDOs cannot carry out public services that are not subject to the cost limitation on the amount that the grantee may obligate for public services (i.e.,15% cap), there are two exceptions to this rule. The exceptions include: O Any services provided by a CBDO that are specifically designed to increase economic opportunities through job training and placement and other employment support services (e.g., peer support programs, counseling, child care, transportation, and other similar services); and O Services of any type being provided by a CBDO pursuant to a Neighborhood Revitalization Strategy approved by HUD. (Reference: 24 CFR 91.215(e) and Appendix E of this Guide for further information on such strategies.) Note that, if a grantee does not designate the CBDO as a subrecipient, any revenue generated by its CDBG-funded activities is not classified as CDBG program income, since by definition, program income is money that is received by the grantee or a subrecipient. While this may be a way to help a high-performing CBDO secure ongoing funding to continue its mission following completion of the CDBG-funded project, it must be noted that, since such revenue is not program income, it cannot be included in the bases for calculating the public services or planning/administration caps. However, when the grantee provides funds to a CBDO in the form of a loan, any payments made by the CBDO to the grantee on that loan would be CDBG program income, whether or not the CDBO has been designated as a subrecipient. If a grantee intends to fund a CBDO that lacks capacity to carry out complex development activities without substantial “hand-holding,” careful consideration must be paid to the “carry out/control” aspect of §570.204 to ensure that program requirements are not violated. One solution may be to assist the CBDO in hiring professionals, such as a more experienced nonprofit, a general contractor, or an architectural and engineering firm, to provide needed expertise to complete the project. The grantee could also break a project into two parts and, in the first year, fund capacity building for the CBDO before the CBDO carries out the project. Note also that complex development projects may stretch the ablitity of grantees (or HUD field offices) to adequately monitor (e.g., carrying out multi-funded, low-income housing tax credit deals). In such cases, grantees should seek the appropriate expertise to ensure that program requirements are met. 2-72 O Categories of Eligible Activities Community Development Block Grant Program