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HomeMy WebLinkAboutIV.A.2 - LAHA Collaboration Memo HastingsTo: City of Hastings From: Dakota County Community Development Agency Date: September 30, 2024 Re: Local Affordable Housing Aid (LAHA) Collaboration Opportunity Dakota County Community Development Agency (CDA) staff were invited to nine Dakota County cities from June – September 2024 to discuss the Local Affordable Housing Aid (LAHA) funds and potential collaboration opportunities. CDA staff appreciated learning more about the housing needs within your communities and how we can work together to make a difference with this new funding source exclusively for affordable housing. The first portion of 2024 LAHA funds have been distributed to the metro cities and counties. LAHA recipients have three years to commit the funds and another year to fully spend the funds. If the funds are not spent within those four years, the funds will be returned to the State. Annual reporting will begin December 1, 2025, with the reporting instrument yet to be developed by the Minnesota Housing Finance Agency (MHFA). Based upon the well-received LAHA conversations, the CDA is formally requesting to collaborate with the cities to administer two programs: 1) an expansion of the CDA’s existing Home Improvement Loan Program (rehab program); and 2) a new radon mitigation grant program that will be paired with the rehab program. The CDA will continue to have conversations with cities about utilizing LAHA funds for preservation and new construction gap financing, but we are not requesting cities commit to participating in that program at this time. We are only asking for a decision to collaborate on the rehab program and radon mitigation program so that we can add staff capacity to effectively deploy city LAHA funds. LAHA funds cannot currently be used to pay for administrative expenses. At its September 25 meeting, the CDA Board of Commissioners approved the use of CDA levy funds to pay for a full-time home improvement advisor to administer and deploy city LAHA funds. The use of LAHA for administration dollars will be tracked, evaluated, and advocated for at the State to be an eligible use. If statutory authority ever allows LAHA to be used for administrative expenses, the CDA will determine a formula and will amend agreements with cities. With the additional staff capacity, we estimate that we could deploy approximately $1.2 million of LAHA on the expanded rehab program and the new radon mitigation grant program. We are asking for cities to commit a minimum amount to the programs for a three-year term. Those cities that choose not to participate in 2024 may, of course, decide to collaborate with the CDA in the future. As an administrator of LAHA funds on behalf of the city partners, the CDA will be responsible for: administering the programs; appropriately allocating and expending LAHA funds on eligible uses; hiring and supervising staff; providing regular updates to city staff; and completing reporting requirements for the LAHA funds administered by the CDA. See the attached CDA/City LAHA Partnership Proposed Term Sheet for additional information. The CDA is requesting a formal response from cities no later than Monday, December 2, 2024, stating if the city will collaborate with the CDA on the two programs offered for the 2024 LAHA funds. A formal response must be taken by the city elected officials in the form of a resolution. A sample resolution is attached for your consideration. After responses are received, CDA staff will work with city staff to draft joint powers agreements (JPA). Approving a resolution in support of collaborating does not mean a city must sign the JPA if the CDA and the city cannot agree upon the terms. We look forward to working with your community on this important resource to improve existing housing stock in Dakota County. Please contact Lisa Alfson at lalfson@dakotacda.org or 651- 675-4467 if you have any questions. Best regards, Tony Schertler Executive Director Dakota County CDA-City Local Affordable Housing Aid (LAHA) Partnership PROPOSED Term Sheet The Dakota County CDA (CDA) provides housing and economic development assistance to residents and cities in Dakota County. As a leader in affordable housing and community development, the CDA seeks to partner with interested Dakota County municipalities to use their LAHA funds for three programs that are considered qualifying projects as defined in Minnesota Statutes 477A.35. The CDA will enter into Joint Powers Agreements (JPAs) with each city for the administration of the LAHA funds. Here are the proposed terms for the partnership between the cities and CDA for the administration of the LAHA dollars. The CDA is open to discussing these proposed terms and how they can be improved to best serve the needs of the cities and the CDA. 1. Expanded Home Improvement Loan Program (Rehab Program): LAHA funds will be administered in accordance with the Home Improvement Loan Program policy and procedures handbook. Households at or below the 80% Area Median Income (AMI) will be prioritized. If/when there are no priority households on the waiting list to be served, the CDA will then consider serving households above 80% AMI to the maximum LAHA income limit of 115% AMI. See attached program summary for details. 2. Radon Mitigation Grant Program: This newly created grant program will pay for the radon testing and installation of a mitigation system, if needed. At this time, this program will only be for clients of the Rehab Program. See attached program summary for details. 3. Timeframe: The CDA is requesting to enter into a multi-year agreement (3-5 years) on agreed terms. Each city will decide annually whether it wants to continue providing its LAHA funds to the CDA for the proposed programs. Each city’s annual allocation for the proposed programs will be an addendum to the agreement. Previous years’ funds will remain with the CDA under the terms of the agreement. 4. Reporting: The CDA will provide data and will complete reporting forms for city partners that the cities will need to submit to the Minnesota Housing Finance Agency (MHFA). Because the CDA is not a direct recipient of LAHA funds, we do not believe we can submit the forms to MHFA. However, we will provide all requested information related to the CDA-administered programs in whatever form is required by MHFA. The CDA will provide quarterly reports to the cities regarding project pipeline, project start and completion dates, amount spent on project, and other information as requested. Identifying data for individual clients for the Rehab and Radon programs will be aggregated by city. 5. Funding Commitment: If your community chooses to allocate funds to the Rehab and Radon mitigation programs, the CDA respectfully requests cities commit the same amount of funding or more each year for a minimum of three years. Having a baseline funding amount and a funding commitment creates stability for the programs and allows rehab staff to work through waiting lists for the programs. Additionally, a stable funding source gives the CDA the confidence to hire additional staff to administer the cities’ LAHA funds. 6. Program Income: As loans from the Rehab program are paid back, the CDA could retain these funds in individual city accounts and reuse the funds for other affordable housing projects. The CDA anticipates recycling Rehab loan payoffs for future single-family home loans. 7. Administrative Costs: Because the legislation does not allow LAHA to be used for administrative costs, the CDA Board has committed CDA levy funds to support an additional home improvement advisor to assist with the deployment of the cities’ LAHA funds. However, if/when there is a change in the LAHA legislation to allow these funds to be used for administrative costs, the CDA will request that a portion of the LAHA funds be used for administrative costs rather than the CDA’s levy. 8. Withdrawal: Either the city or the CDA may withdraw from the JPA at the end of the term of the agreement or when committed LAHA funds have been expended on qualifying projects. Neither the city nor the CDA may withdrawal from the agreement until the end of the term unless mutually agreed upon. 9. Finances: The CDA is proposing to hold and track CDA-administered LAHA funds on behalf of the cities.