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HomeMy WebLinkAboutVIII-11 Authorize Signature - Joint Powers Agreement for Use of LAHA Funds - Dakota County Community Development AgencyCity Council Memorandum To:Mayor Fasbender and City Council From:John Hinzman, Community Development Director Date:March 17, 2025 Item:Authorize Signature: Local Affordable Housing Aid (LAHA) Agreement –Dakota CDA Action Requested: Authorize signature of the attached Local Affordable Housing Aid (LAHA) Agreement establishing the terms and conditions for the Dakota County Community Development Agency (CDA)to administer LAHA funds. On October 21, 2024 the City Council adopted a resolution approving CDA to administer LAHA funding for a Home Improvement Loan Program and Radon Testing and Mitigation Grant Program until December 31, 2027. A simple majority of Council is necessary for action. LAHA: In 2024, Metro Area counties and cities began to receive two installments of sales tax dollars that are dedicated to constructing, maintaining, and providing affordable housing options. Two annual payments are scheduled for July 20th and December 26th. The funding comes from a 0.25% sales tax and the amount distributed to each county and city is determined by a “distribution factor”. The City’s distribution factor is 0.7257% of the total revenue from that tax. The total 2024 payment is estimated to be $114,387.44 which represents tax revenue collected for five months between October and February. The annual amount in forthcoming years will be higher. Funds must be spent by December 31 of the fourth year that the aid was received. Dakota County CDA: The CDA currently provides several housing programs and aid for communities within the County including Hastings. Programs identified by the CDA for potential use of the City’s LAHA dollars are summarized below. Home Improvement Loan Program Purpose: “Provide low-and moderate-income households the means to maintain the safety and integrity of existing homes, to remove architectural barriers in homes to allow independent living for the handicapped, and to reduce lead-based paint hazards.” •Program started early 1980s •Current program: 0% interest, deferred loan to qualified low-and moderate-income homeowners o Max loan = $35,000 o Min loan = $15,000 •Loan payable when property homeowner no longer occupies, sold, refinanced o CDA puts 30-year mortgage against property to retain legal rights •Repayment is required Radon Mitigation Grant •Pair with Enhanced Home Improvement Loan Program •HUD now requires radon testing for all federally funded programs o Radon mitigation required if test is over 4 pCi/L o Dakota County has higher than average radon, many homes over the limit •~$3,000-$3,500 for testing and mitigation system Attachments: •Resolution Approving Dakota CDA to Administer Funds •LAHA Agreement VIII-11 HASTINGS CITY COUNCIL RESOLUTION NO. ________ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HASTINGS APPROVING THE DAKOTA COUNTY COMMUNITY DEVELOPMENT AGENCY TO ADMINISTER CITY LOCAL AFFORDABLE HOUSING AID FUNDS WHEREAS, the City of Hastings is a recipient of newly created sales taxed-funded Local Affordable Housing Aid (LAHA) dollars from the State of Minnesota; and WHEREAS,the purpose of LAHA is to develop and preserve affordable housing and help persons experience homelessness find housing; and WHEREAS,the City’s first annual allocation of LAHA funds were received in 2024; and WHEREAS, the City has three years to commit the funding (no later than December 31 of the third year) and must spend the funds by December 31st of the fourth year; and WHEREAS, if the City’s LAHA funds are not committed or spent the in the required timeframe, funds will be returned to Minnesota Housing Finance Agency for statewide housing needs; and WHEREAS,the Dakota County Community Development Agency (CDA) is the housing and economic development authority for the County that has well established, successful housing programs that are LAHA eligible; and WHEREAS,the CDA has formally requested to partner with the City (and other Dakota County communities) on the administration of LAHA funds for two CDA programs: 1) the Home Improvement Loan Program, and 2) the Radon Mitigation Grant Program (together “the Programs”); and WHEREAS, the CDA has requested a formal response from the City by December 2, 2024, on whether the City agrees to partner with the CDA on the administration of the City’s LAHA funds and the allocation of those funds on the Programs. NOW THEREFORE BE IT RESOLVED by HEDRA hereby approves the following: 1.The Dakota County CDA is designated as the entity to carry out certain administrative duties related to the local Affordable Housing Aid (LAHA) program on behalf of the City of Hastings, subject to a future joint power agreement to be executed between the two parties 2.The City wishes to commit its entire LAHA funds for an initial period of three years, ending December 31, 2027 3.The City wishes to allocate its LAHA funds to two CDA programs in the minimum percentages listed below: i.Home Improvement Loan Program, 50% ii.Radon Mitigation Grant Program, 25% 4.HEDRA is authorized to execute the joint powers agreement related to partnership with the Dakota County CDA ADOPTED BY THE HASTINGS CITY COUNCIL THIS 21ST DAY OF OCTOBER 2024 10-16-24 Kelly Murtaugh,City Clerk Mary Fasbender,Mayor VIII-11 LOCAL AFFORDABLE HOUSING AID AGREEMENT between CITY of HASTINGS and DAKOTA COUNTY COMMUNITY DEVELOPMENT AGENCY THIS LOCAL AFFORDABLE HOUSING AID AGREEMENT (the “Agreement”) is entered into as of the ________ day of , 2025 by and between the City of Hastings,Minnesota (the “City”), 101 East 4th Street, Hastings, Minnesota 55033, a municipal corporation and political subdivision of the state of Minnesota, and the Dakota County Community Development Agency (the “CDA”), 1228 Town Centre Drive, Eagan, Minnesota 55123, a public body politic and corporate; also referred to as “Party” or “Parties.” WHEREAS, the State of Minnesota created Local Affordable Housing Aid (“LAHA”) under Minnesota Statutes, Section 477A.35, as may be amended, which established distributions to metropolitan area counties and tier I cities located in a metropolitan county for qualifying projects as defined in Section 477A.35, subd. 4 (“Qualifying Projects”). WHEREAS, the City desires to engage the CDA to receive the City’s LAHA funds and administer Qualifying Projects on behalf of the City. WHEREAS,the CDA desires to serve in this role with its experience in and staffing of housing finance, preservation, and development. NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement, the sufficiency is hereby acknowledged, it is agreed by and between the Parties as follows: 1.TERM. This Agreement shall commence as of the date written above and shall continue until all duties are fulfilled, unless sooner terminated under the terms of the Agreement. 2.DUTIES OF THE CDA. 2.1 Authorized to Act on Behalf of the City.The CDA shall act as the agent for the City to administer LAHA funds according to state statutes, laws, and rules.The CDA shall assume all duties and obligations that would otherwise be imposed upon the City, specifically: a.Spending the funds received under this Agreement on Qualifying Projects, including disbursements to the CDA, eligible individuals and subrecipients, as well as to contractors, affordable housing developers, and vendors, all after determining that the use meets all requirements of Qualifying Projects. 2 b.Maintaining complete and accurate records of funds received and all disbursements. c.Ensuring timely expenditure of LAHA funds by December 31 in the fourth year following the allocation of the funds by the Minnesota Department of Revenue. If funds cannot be spent on Qualifying Projects by the deadline due to factors outside of the control of the CDA, the CDA will work with the City to transfer funds to a local housing trust fund. d.Preparing an annual report, as required starting December 1, 2025, under Minnesota Statutes, Section 477A.35, subd. 6(b). 2.2 Compliance.The CDA shall comply with all applicable state and local LAHA requirements. 2.3 Identification and Use of LAHA Funds. a.All LAHA funds received and expended under this Agreement will be spent solely on Qualifying Projects defined under Minnesota Statutes, Section 477A.35, subd. 4. b.CDA will be responsible for the administration of those Qualifying Projects identified in Exhibit A, in a manner satisfactory to the City and consistent with any required standards. 3.USE OF FUNDS. 3.1 Qualifying Projects. Per Minnesota Statutes, Section 477A.35, a broad list of LAHA uses are defined as Qualifying Projects. The CDA has offered to administer on behalf of the City the LAHA collaboration Qualifying Projects identified in Exhibit A.Exhibit A will be amended if there are changes to the list of Qualifying Projects in Minnesota Statutes or the CDA and the City agree to changes in the Qualifying Projects. 3.2 Allocation of LAHA Funds to CDA. The City will annually take formal action by resolution to allocate LAHA funds to the CDA for one, two, or all LAHA collaboration Qualifying Projects. These changes will be reflected in Exhibit B, which the CDA will update annually and deliver to the City. The CDA reserves the right to update the adjustment of the LAHA collaboration Qualifying Projects, as needed, including ongoing activities from previous fiscal years. 4.TRANSFER OF FUNDS. 4.1 Transfer by the City.The City shall transfer the LAHA funds received from the State to the CDA. Upon receipt of the annual authorizing City resolution, the CDA will submit a written request for the LAHA funds to the City. The 3 Parties shall cooperate and mutually agree upon the amount, timing,and transfer of LAHA funds to the CDA. 4.2 Retention of Funds.The CDA shall deposit and maintain the LAHA funds received under this Agreement in a separate internal account. The CDA shall maintain appropriate records of LAHA funds.The CDA shall administer and disburse all LAHA funds in accordance with this Agreement. 4.3 Program Income. Program income is the gross income received by the CDA that was generated from the use of the City’s LAHA funds. The primary example is the payment of principal on loans made using LAHA funds. Any program income generated from LAHA funds will be classified and distributed based on rules and guidance issued from the State as it becomes available. Any program income on hand at the end of the expiration of this Agreement or received after expiration of this Agreement shall be paid over to the City unless the City and the CDA have entered into subsequent agreements. 4.4 Funding Contingency.The CDA’s obligations under this Agreement are specifically contingent upon the disbursement of LAHA funds by the State and the City’s transfer of LAHA funds to the CDA. 4.5 CDA Expenses.Unless allowable as a Qualifying Project, administrative and salary expenses incurred by the CDA will be paid by the CDA’s special benefit levy and/or program service fees. If/when administrative and salary expenses are eligible, such costs will be assessed proportionally amongst the City and other CDA LAHA collaboration parties. 5.RECORDS AND REPORTS. 5.1 Records. The CDA shall maintain complete and accurate records of LAHA funds received and all disbursements. 5.2 Reports. The CDA shall prepare quarterly progress reports on the Qualifying Projects regarding project pipeline, project start and completion dates, amount spent on Qualifying Projects, and other information as requested. Identifying data for individual clients will be aggregated.The CDA shall prepare the annual report for the City to submit to the Minnesota Housing Finance Agency. 5.3 Access to Records. The CDA agrees to provide the City, its designated auditors, or any of its authorized representatives access to any financial reports, documents, papers, and records of the CDA that are directly pertinent to this Agreement for the purposes of making audits, examinations, excerpts, and transcriptions. 4 5.4 Record Retention. Pursuant to Minnesota Statutes, Section 16C.05, subd.5, Minnesota Statutes, Section 16B.98, subd. 8 and applicable requirements, the CDA shall maintain records under this Agreement for a minimum of six (6) years from the end of this Agreement. 6.INDEMNIFICATION. 6.1 The CDA agrees to hold harmless, indemnify, and defend the City, its officials, agents,and employees against any and all third-party claims of whatever nature, expenses (including attorneys’ fees), losses, damages or lawsuits for damages that arise as a result of the willful misconduct, negligent acts, errors, and/or omissions of the CDA in the performance of this Agreement. 6.2 Nothing in this Agreement (including, but not limited to, indemnification or insurance provisions) shall be deemed a waiver by either Party of the limits of liability set forth in Minnesota Statutes, Section 466.04 or a waiver of any available immunities or defenses. The CDA’s obligation to hold and save harmless in this Agreement shall be limited by the limitations on liability set forth in Minnesota Statutes, Section 466.04, as may be amended from time to time. 6.3 The CDA shall notify the City within five (5) business days of actual receipt of any of the potential claims against the CDA that may arise as a consequence of any of the work or services performed or furnished by the CDA under the terms of this Agreement. 7.TERMINATION.If the CDA materially fails to fulfill its obligations under this Agreement, the City may suspend or terminate this Agreement upon written notice to the CDA specifying the reason for termination.If the Agreement is terminated, the CDA shall pay over any unexpended funds and program income to the City. The CDA shall no longer be responsible for reporting on LAHA funds. 8.DATA PRIVACY.All data collected, created, received, maintained, disseminated, or used for any purposes in the course of the CDA’s performance under this Agreement is governed by the Minnesota Government Data Practices Act, Minnesota Statutes, Chapter 13 or any other applicable state statutes and any state rules adopted to implement LAHA, as well as state statutes and federal regulations on data privacy. The CDA agrees to abide by these statutes, rules, and regulations as they may be amended. 9.DISPUTE RESOLUTION.In the event that a dispute arises between the Parties as to the interpretation or performance of this Agreement, then upon written request of either Party, representatives with settlement authority for each Party shall meet and confer in good faith to resolve the dispute. If the Parties are unable to resolve the dispute, they shall make every effort to settle the dispute through mediation or other alternative dispute resolution methods. If the Parties are unable 5 to resolve the dispute through these methods, either Party may commence an action in Dakota County District Court. 10.GENERAL PROVISIONS. 10.1 Compliance with Laws. The Parties shall abide by all applicable federal, state, or local laws, statutes, ordinances, rules, and regulations now in effect or hereunder adopted pertaining to activities governed by this Agreement. The CDA shall be responsible for the performance of any contractors unless otherwise agreed in writing. 10.2 Minnesota Law to Govern.This Agreement shall be governed by and construed in accordance with the substantive and procedural laws of the State of Minnesota, without giving effect to the principles of conflict of laws. 10.3 Independent Contractor. The CDA is an independent contractor and nothing herein shall be construed to create the relationship of employer and employee or joint venture between the City and the CDA. The CDA shall at all times be free to exercise initiative, judgment,and discretion as to how best to provide the services pursuant to this Agreement. The CDA acknowledges and agrees that the CDA is not entitled to receive any of the benefits received by City employees and is not eligible for workers or reemployment compensation benefits. 10.4 Modifications.Any alternations, variations, modifications,or waivers of the provisions of this Agreement shall only be valid when they have been reduced to writing and signed by authorized representatives of the Parties. 10.5 Severability.The provisions of this Agreement shall be deemed severable. If any part of this Agreement is rendered void, invalid, or unenforceable, such rendering shall not affect the validity or enforceability of the remainder of this Agreement unless the part or parts which are void, invalid, or otherwise unenforceable shall substantially impair the value of the entire Agreement with respect to either Party. 10.6 Survival of Terms.The following components of this Agreement will survive the termination or expiration of this Agreement:4.4, 5.1, 5.2, 5.3, 6, 7, and 8. 10.7 Assignment.Neither Party may assign any interest in this Agreement without prior written consent of the other Party. Any non-approved transfer, assignment or conveyance shall be void. 10.8 Certification and Signatures. a.Each Party certifies and warrants that it has the legal authority to enter into and perform under this Agreement and that its governing 6 body has authorized the execution and acceptance of this Agreement. b.Each person executing this Agreement on behalf of a Party certifies and warrants that such person is duly and validly authorized to legally execute and bind the Party to the terms of this Agreement. c.The Parties agree that electronic signatures to this Agreement shall be as valid as original signatures of the Parties and shall be effective to bind the Parties to this Agreement. 10.9 Rights and Remedies.All rights and remedies available to either the City or the CDA under the terms of this Agreement or by law are cumulative and may be exercised concurrently or separately, and the exercise of any one remedy shall not be deemed an election of such remedy to the exclusion of other remedies. 10.10 Notices.Notices required to be provided pursuant to this Agreement shall be provided to the following named persons and address unless otherwise stated in this Agreement or in an amendment to this Agreement. 10.11 Liaison.To assist the Parties in the day-to-day performance of this Agreement, liaisons shall be designated by the City and the CDA. The Parties shall keep each other continually informed. At the time of the execution of this Agreement, the following persons are the designated liaisons: For the City: John Hinzman, Community Development Director 101 East 4th Street Hastings, MN 55033 jhinzman@hastingsmn.gov (651) 480-2378 For the CDA: Lisa Alfson Director of Community & Economic Development 1228 Town Centre Drive Eagan, MN 55123 lalfson@dakotacda.org (651) 657-4467 7 IN TESTIMONY WHEREOF, the Parties hereto have caused these presents to be executed. City of Hastings, Minnesota By:Dated: By:Dated: Dakota County Community Development Agency By:Dated: Chair, Board of Commissioners By:Dated: Executive Director 8 EXHIBIT A TO SUBRECIPIENT AGREEMENT DAKOTA COUNTY COMMUNITY DEVELOPMENT AGENCY (CDA) AND THE CITY OF HASTINGS (City) Local Affordable Housing Aid (LAHA) funds will be committed to the following Qualifying Projects. CDA has offered to administer the following LAHA Collaboration Qualifying Projects on behalf of the City. 1.Expanded Single-Family Home Improvement Loan Program. Increase the number of loans made through the CDA’s Home Improvement Loan Program, which provides zero percent, deferred loans up to $35,000 for home improvement projects that prioritize health, safety, and structural integrity concerns. LAHA funds will be administered in accordance with the Home Improvement Loan Program policy and procedures handbook, as periodically amended. Households at or below 80% of the 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. 2.Radon Testing and Mitigation Grant Program. This grant program will provide free testing services to clients of the CDA’s Home Improvement Loan Program and will provide free mitigation systems for those clients whose homes have radon levels exceeding allowable levels, as determined by the US Environmental Protection Agency. The CDA will discuss with City the expansion of the program to other eligible homeowners if there is interest and CDA staff capacity. As the Home Improvement Loan Program and the Radon Testing and Mitigation Grant Program serve the same clients, the CDA reserves the right to combine the funding for these two programs into one account to best serve the needs of clients. 3.Residential Preservation and New Construction Gap Financing Program. This program will expand the existing CDA-administered gap financing resources for affordable residential multi-family and single-family preservation and new construction. The CDA will work with the City to identify potential projects that need gap financing. 9 EXHIBIT B TO SUBRECIPIENT AGREEMENT DAKOTA COUNTY COMMUNITY DEVELOPMENT AGENCY (CDA) AND THE CITY OF HASTINGS Local Affordable Housing Aid (LAHA) funds will be committed to the following Qualifying Projects. Exhibit B will be amended on an annual basis, or as needed, through the term of this Agreement. CURRENT YEAR ALLOCATION –2024 All funds must be committed by December 31, 2027, and fully expended by December 31, 2028 ➢Qualifying Project 1: HOME IMPROVEMENT LOAN PROGRAM –Administered by CDA •Description:The Home Improvement Loan Program assists low and moderate- income homeowners in improving and maintaining their homes in a decent, safe, and sanitary condition. The program offers deferred loans up to $35,000 with zero percent interest rates to homeowners earning 115 percent or below area median income, and prioritizing homeowners with incomes at or below 80 percent area median income. •Schedule:Ongoing •Budget:$57,193.72 (50 percent of City’s certified total LAHA amount) ➢Qualifying Project 2: RADON TESTING AND MITIGATION GRANT PROGRAM – Administered by CDA •Description:The Radon Testing and Mitigation Grant Program assists clients of the Home Improvement Loan Program with free radon testing and installation of a mitigation system, if needed. Clients will receive free radon tests to be performed by professional radon testing providers. Clients whose homes have radon levels greater than 4.0 pCi/L (picocuries of radon per liter of air) will receive a mitigation system. Every effort will be made to ensure the radon levels in the subject homes post-mitigation will not exceed 2.0 pCi/L. •Schedule:Ongoing •Budget:$28,596.86 (25 percent of City’s certified total LAHA amount)