CITY OF CHARLOTTESVILLE, VIRGINIA. CITY COUNCIL AGENDA Agenda Date: June 15, 2020 Action Required: Resolution Staff Contacts: Dr. Tarron Richardson, City Manager John Sales, Housing Program Coordinator Brenda Kelley, Redevelopment Manager Hollie Lee, Chief of Workforce Development Strategies Chris Engel, Director of Economic Development Presenter: John Sales, Housing Program Coordinator Title: Allocation of FY20 Charlottesville Affordable Housing Funds Background: Currently, the City utilizes an annual competitive selective process in awarding Charlottesville Affordable Housing Fund (CAHF) monies. The City Council approved $1,370,000 for CAHF funding through the FY 2020 CIP budget and City Council year end appropriation. Before the COVID-19 pandemic a Notice of Funding Availability (NOFA) was issued but shortly after the pandemic began the NOFA was suspended. After the Governor issued a stay at home order, thousands of individuals in our community lost their employment which directly affects their living, including their ability to make rent and mortgage payments. In addition, the community has seen an increase in individuals that were previously incarcerated in a correctional facility released back into the community due to COVID-19. City staff clearly heard City Council concerns about assisting the community with immediate needs and prepared recommendations as to how to use existing CAHF funds to more immediately address basic quality of life needs in our community, especially addressing housing needs. These recommendations were provided to the HAC. Below you will locate the recommendations from City staff and the Housing Advisory Committee (HAC). Discussion: Staff proposes the creation and implementation of four (4) programs utilizing CAHF funding in response to immediate community needs due to the COVID-19 pandemic. Summaries of the proposals are as follows: Program: Short-Term Homeless Rental Assistance Program (ST-HRAP) Administrator: Economic Development Department CAHF Request: $264,000 Cap of Assistance: $9,000 The ST-HRAP is a citywide grant program that provides limited housing assistance (up to 6 months) to households residing in the City that are experiencing homelessness. The program goal is to reduce the number of households at risk of contracting COVID-19 due to their inability to social distance and follow CDC guidelines on hygiene. The funding is provided as a grant with no repayment required. The household must be income qualified. After 6 months the assistance may continue if funding is still available. Assistance will be provided to approximately 27 households with an average not to exceed $1,500 per household per month. Assistance is only provided for rental payments. ST-HRAP can only be used on hotels, apartments, condominiums, townhouses, duplexes, group homes, accessory dwelling units, and single-family detached homes. The administrator of the program must submit a monthly report identifying the funding spent, family size served and AMI level. The administrator will create an application and market the program. All individuals will be required to participate in the supportive services offered such as Bank On, Downtown Job Center, etc. Program: Short-Term Re-Entry Housing Assistance Program (ST-RHAP) Administrator: Economic Development Department CAHF Request: $264,000 Cap of Assistance: $9,000 The ST-RHAP program is a citywide grant program that provides limited housing assistance (up to 6 months) to individuals that were recently released from a correctional institution due to COVID-19. The program goal is to reduce the number of households at risk of contracting COVID-19 due to their inability to social distance and follow CDC guidelines on hygiene. The funding is provided as a grant with no repayment required. After 6 months the assistance may continue if funding is still available. Assistance will be provided to approximately 27 individuals with an average not to exceed $1,500 per individual per month. Assistance is only provided for rental payments. ST-RHAP can only be used on apartments, condominiums, townhouses, duplexes, group homes, accessory dwelling units, and single-family detached homes. ST-RHAP may also be used to pay for up to (2) months for an individual to live in a hotel, motel or extended stay. The administrator of the program must submit a monthly report identifying the funding spent, family size served and AMI level. The administrator will create an application and market the program. If the individual is reincarcerated for longer than (1) month the administrator will begin looking for a new individual to take over the unit. The landlord will be provided with up to (2) months of rental assistance if the tenant is reincarcerated. All individuals will be required to participate in the supportive services offered such as Bank On, Downtown Job Center, etc. Program: Short-Term Landlord Rental Assistance Program (ST-LRAP) Administrator: Economic Development Department CAHF Request: $264,000 CAHF Cost/Unit: $4,500 The ST-LRAP program is a citywide forgivable loan program that provides limited housing assistance (up to 3 months) to landlords who have rental tenants that reside in the City and are at risk of experiencing homelessness due to nonpayment of rent as a result of the COVID-19 pandemic. Landlords that are awarded funding will be required to forgive all late fees that have accrued since the Local Emergency Declaration and allow the household to stay in their unit. The program is designed to reduce household displacement due to the COVID-19 pandemic. The funding is provided as a loan that is forgiven if the landlord does not evict the family during the program plus allows a one-month grace period after the program ends. If the landlord evicts the household before the grace period ends all funding the landlord has received becomes due in full with 3% interest. The landlord may apply to receive assistance for units that have unpaid rent and no payment plan in place. Assistance will be provided to approximately 54 households with a cap of $1,500 per household per month. Assistance is only provided for rental payments. ST- LARP can only be used on apartments, condominiums, townhouses, duplexes, accessory dwelling units and single-family detached homes. The administrator of the program must submit a monthly report identifying the funding spent, family size served and AMI level. The administrator will create an application and market the program. Households that are receiving other forms of housing assistance are eligible for ST-LRAP. All individuals will be encouraged to participate in the supportive services offered such as Bank On, Downtown Job Center, etc. Program: Short-Term Homeowner Mortgage Assistance Program (ST-HMAP) Administrator: Reviewing Options CAHF Request: $363,000 CAHF Cost/Unit: $6,300 The ST-HMAP is a citywide loan program that provides limited housing assistance (3 months with the possibility to renew for 3 additional months) to homeowners that reside in the City and who are at risk of losing their homes due to nonpayment of mortgage as a result of the COVID- 19 pandemic. The program goal is to reduce displacement as a result of the COVID-19 pandemic. Assistance will be provided to approximately 27 families with a cap of up to $2,100 per household per month. The funds are provided as a deferred loan with a 60-month loan term with no set minimum payment, if the property transfers during the 60-month loan term the funds becomes due immediately. If the property is transferred through a non-sale and the individual cannot afford to pay the loan off, then it will continue to be deferred. The loan can be renewed for an additional 60-month term if the household can prove financial hardship. A flat 10% service fee is calculated up front when the funds are provided will be added to all funds provided upon repayment. After 3 months, the assistance may continue if funding is still available. A Deed of Trust (DOT) is recorded, and a Promissory Note is executed to secure the loan. The City Attorney’s office will draft the DOT and Promissory Note and the City will hold the DOT and Promissory Note. Assistance is only provided for mortgage payments and homeowners insurance. The administrator will be responsible with completing loan closing and collecting loan payments. The administrator of the program must submit a monthly report identifying the funding spent, family size served and AMI level. The administrator will create an application and market the program. Upon repayment of the loan it is the homeowner’s responsibility to get the certificate of satisfaction recorded. All individuals will be encouraged to participate in the supportive services offered such as Bank On, Downtown Job Center, etc. Community Engagement: The HAC met in a virtual public meeting on May 26, 2020 to examine the program proposals. HAC did recommend a revision to the Short-Term HMAP program to provide for the loan funds be due and payable at the end of the mortgage term, which could be 30-years. Staff does not concur with this revision because it defers all repayments when some of the community will rebound faster and will be able to pay off the loan. I believe the loans should all have a set loan term but have the flexibility to extend the loan terms as needed. The HAC approved all 4 programs with the suggested amendment to the Short- Term HMAP. Alignment with City Council Vision and Strategic Plan: All of the proposed programs align with City Council Vision “Quality Housing Opportunities for All”. All of the programs also align with Goal 1.3 of the Strategic Plan “Increase affordable housing options”. Budgetary Impact: The total amount of project funding requests equals $1,155,000. There is currently $1,370,000 in previously unappropriated funding in the Charlottesville Affordable Housing Fund that is available for allocation in FY20. Approval of any of the four (4) program proposals presented above will significantly impact CAHF and the City’s ability to fund further projects throughout FY20 and FY21. The staff recommendation below would nearly exhaust the remaining available CAHF funding, resulting in minimal means of funding any new projects that may come before City Council until additional dollars are appropriated to the Charlottesville Affordable Housing Fund. Recommendations: City staff and HAC recommend the following: 1. Fully fund the ST-HRAP, ST-RHAP, ST-LRAP and ST-HMAP programs in the amount of $1,155,000. Funding the programs at $1,155,000 will allow funds to move based upon the demand for the programs which will help respond to the community’s needs. The HAC recommends the following allocations: 1. HAC supports an amendment to the ST-HMAP proposal. The HAC supported adding the three (3) deferred loan payments to the end of the homeowner’s mortgage. 2. The HAC also recommended being prepared to utilize other funding sources to fund the programs in the future if other sources become available. The HAC understands the need to create the programs to help the community get through this tough time but they would like to also be prepared to act on potential development opportunities that arise throughout the year. Alternatives: Council could decide to not fund any of the proposed programs, or to provide the proposed programs with a different level of funding. The City Council may also choose to not fund the projects as grants but as zero interest loans with repayment terms to be determined with each approved program. Attachments: Table 1: CAHF Funding Proposed Programs Resolution for COVID-19 Housing Programs CAHF Balance: $1,370,000 Proposed Expenditure: $1,155,000 Reserve: $215,000 Housing Programs in Response to COVID-19 PROGRAM Short Term Homeless Rental Short Term Re-Entry Housing Short Term Landlord Rental Short Term Homeowner Mortgage Assistance Program (ST-HRAP) Assistance Program (ST-RHAP) Assistance Program (ST-LRAP) Assistance Program (ST-HMAP) AUTHORITY City Charter, §50.7 City Charter, §50.7 City Charter, §50.7 City Charter, §50.7 PROGRAM The ST-HRAP program is a The ST-RHAP program is a The ST-LRAP program is a citywide The ST-HMAP is a citywide loan DESCRIPTION citywide grant program that citywide grant program that forgivable loan program that program that provides limited provides limited housing provides limited housing provides limited housing assistance housing assistance (3 months with assistance (up to 6 months) to assistance (up to 6 months) to (up to 3 months) to landlords who the possibility to renew for 3 households residing in the City individuals that were recently have rental tenants that reside in the additional months) to homeowners that are experiencing released from a correctional City and are at risk of experiencing that reside in the City who are at homelessness. The program institution due to COVID-19. homelessness due to nonpayment of risk of losing their homes due to goal is to reduce the number The program goal is to reduce rent as a result of the COVID-19 nonpayment of mortgage as a result of households at risk of the number of households at pandemic. Landlords that are of the COVID-19 pandemic. The contracting COVID-19 due to risk of contracting COVID-19 due awarded funding will be required to program goal is to reduce their inability to social to their inability to social forgive all late fees that have accrued displacement as a result of the distance and follow CDC distance and follow CDC since the Local Emergency COVID-19 pandemic. guidelines on hygiene. guidelines on hygiene. Declaration and allow the household to stay in their unit. The program is designed to reduce household displacement due to the COVID-19 pandemic. FUNDING $264,000 includes 10% $264,000 includes 10% funding $264,000 includes 10% funding for $363,000 includes $48,000 in ALLOCATION funding for administration of for administration of the administration of the program. funding for administration of the the program. program. - $240,000 to fund the program program. - $240,000 to fund the - $240,000 to fund the - $24,000 administrative cost (*if - $315,000 to fund the program program program not administered by the City) - $48,000 administrative cost (*if - $24,000 administrative - $24,000 administrative cost not administered by the City) cost (*if not administered (*if not administered by by the City) the City) WHO The City would look into The City would look into The City would look into The City would look into ADMINSTERS administering the program “in- administering the program “in- administering the program “in- administering the program “in- house”. If a non-profit house”. If a non-profit house”. If a non-profit administers house”. If a non-profit administers administers the program, administers the program, quotes the program, quotes would need to the program, quotes would need to quotes would need to be would need to be solicited be solicited through a small-purchase be solicited through a small- solicited through a small- through a small-purchase procurement procedure, so the non- purchase procurement procedure, purchase procurement procurement procedure, so the profit(s) would be selected through a so the non-profit(s) would be procedure, so the non-profit(s) non-profit(s) would be selected competitive process. selected through a competitive would be selected through a through a competitive process. A contract for administration would process. competitive process. A contract for administration be procured through a simple quote A contract for administration would A contract for administration would be procured through a procedure; we would be looking for be procured through a simple quote would be procured through a simple quote procedure; we a nonprofit that already has procedure; we would be looking for simple quote procedure; we would be looking for a nonprofit experience administering a similar a nonprofit that already has would be looking for a that already has experience program. experience administering a similar nonprofit that already has administering a similar program. program. experience administering a similar program. WHO IT BENEFITS Homeless households who are Individual’s re-entering society Ultimately the program will benefit Households at 0-80% AMI who can 0-50% AMI. upon release from a correctional households at 0-80% AMI who are at demonstrate a financial hardship. institution. risk of becoming homeless. TERM OF 6 Months with the possibility 6 Months with the possibility to Each household that receive 3 Months with the possibility to PROGRAM to renew if funding is renew if funding is available. assistance is eligible to receive renew if funding is available. available. assistance for up to 3 months. A landlord may re-apply after the initial 3-month period ends depending on circumstances and availability of funding. GRANT OR LOAN The funding is provided as a The funding is provided as a The funding is provided as a loan The funds are provided as a grant with no repayment grant with no repayment that is forgiven if the landlord does deferred loan with a 60-month loan required. The household must required. not evict the family during the term with no set minimum be income qualified. program plus a one-month grace payment, if the property transfers period after the program ends. If the during the 60-month loan term the landlord evicts the household before funds becomes due immediately. If the grace period ends all funding the the property is transferred through landlord has received becomes due a non-sale and the individual cannot in full with 3% interest. afford to pay the loan off, then it will continue to be deferred. The loan can be renewed for an additional 60 month if the family can prove financial hardship. A flat 10% service fee is calculated up front when the funds are provided will be added to all funds provided upon repayment. NOTES After 6 months the assistance After 6 months the assistance The landlord may apply to receive After 3 months the assistance may may continue if funding is still may continue if funding is still assistance for units that have unpaid continue if funding is still available. available. Assistance will be available. Assistance will be rent and no payment plan in place. A Deed of Trust (DOT) is recorded, provided to approximately 27 provided to approximately 27 Assistance will be provided to and a Promissory Note is executed households with an average individuals with an average not approximately 54 households with a to secure the loan. Assistance will not to exceed $1,500 per to exceed $1,500 per individual cap of $1,500 per household per be provided to approximately 27 household per month. per month. Assistance is only month. Assistance is only provided families with a cap of up to $2,100 Assistance is only provided for provided for rental payments. for rental payments. ST-LARP can per household per month. The City rental payments. ST-HRAP can ST-RHAP can only be used on only be used on apartments, will hold the DOT and Promissory only be used on hotels, apartments, condominiums, condominiums, townhouses, Note. Assistance is only provided for apartments, condominiums, townhouses, duplexes, group duplexes, accessory dwelling units mortgage payments and townhouses, duplexes, group homes, accessory dwelling units, and single-family detached homes. homeowners insurance. The homes, accessory dwelling and single-family detached The administrator of the program administrator will be responsible units, and single-family homes. ST-RHAP can be used to must submit a monthly report with completing loan closing and detached homes. The pay for up to (2) months for an identifying the funding spent, family collecting loan payments, while the administrator of the program individual to live in a hotel, size served and AMI level. The City Attorney’s office will draft the must submit a monthly report motel or extended stay. The administrator will create an DOT and Promissory Note. The identifying the funding spent, administrator of the program application and market the program. administrator of the program must family size served and AMI must submit a monthly report Households that are receiving other submit a monthly report identifying level. The administrator will identifying the funding spent, forms of housing assistance are the funding spent, family size served create an application and family size served and AMI level. eligible for ST-LRAP. All individuals and AMI level. The administrator market the program. All The administrator will create an will be encouraged to participate in will create an application and individuals will be required to application and market the the supportive services offered such market the program. Upon participate in the supportive program. If the individual is as Bank On, Downtown Job Center repayment of the loan it is the services offered such as Bank reincarcerated for longer than and etc. homeowner’s responsibility to get On, Downtown Job Center and (1) month the administrator will the certificate of satisfaction etc. begin looking for a new recorded. All individuals will be individual to take over the unit. encouraged to participate in the The landlord will be provided supportive services offered such as with up to (2) months of rental Bank On, Downtown Job Center and assistance if the tenant is etc. reincarcerated. All individuals will be required to participate in the supportive services offered such as Bank On, Downtown Job Center and etc. *Funds may be moved between the different programs depending on the demand. * RESOLUTION Allocation of Charlottesville Affordable Housing Fund (CAHF) for programs in response to the COVID-19 pandemic. $1,155,000 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Charlottesville, Virginia that the sum of $1,155,000 be allocated from previously appropriated funds in the Charlottesville Affordable Housing Fund (CAHF) for the creation and implementation of four (4) programs utilizing CAHF funding in response to immediate community needs due to the COVID-19 pandemic. Fund: 426 Project: CP-084 G/L Account: 530670 Short-Term Homeless Rental Assistance Program (ST-HRAP) $264,000 Short-Term Re-Entry Housing Assistance Program (ST-RHAP) $264,000 Short-Term Landlord Rental Assistance Program (ST-LRAP) $264,000 Short-Term Homeowner Mortgage Assistance Program (ST-HMAP) $363,000