Agenda Item Title:
Approve Investment Committee's Recommendation to Council to Cancel Community Development Block Grant (CDBG) Funding for FY2015 ($120,721.56) and FY2017 ($75,000) Awarded to Freeland Ranch/Hagg for Non-Performance and Call the Irrevocable Letter of Credit Due for the FY2015 Funds (continued from the August 29, 2018 Legal and Finance Committee Meeting)
Origination Group:
Legal & Finance Committee
Origination Meeting Date:
08/29/2018
Stage 2 Group Name:
Legal & Finance Committee
Stage 2 Meeting Date:
09/12/2018
City Council Hearing Date:
09/17/2018
Staff Contact:
Barbara Garcia
Agenda Item Summary:
Freeland Ranch was awarded funding in a reallocation of FY 2015 funds and additional funds in FY2017 for engineering studies, plans and testing for installation of infrastructure for an affordable housing project for low-to-moderate income households. There has been a lack of meaningful progress since the completion of the studies (June 2017) and a failure to provide an extension on the Irrevocable Letter of Credit for the FY 2017 that expires on February 10, 2019. The extension is needed to ensure protection of the City should the project not be completed, with occupied low-moderate income units by July 2020, required to meet the HUD National Objective for the funding. Attached is the recommendation letter from the Investment Committee and the notification letter to Mr. Hagg, that show the requirements and progress timeline. To date, no project plan has been submitted, no permits have been pulled, financing for the infrastructure and housing has not been secured. The Committee feels that it is highly unlikely that a project can be completed with occupied units within the remaining HUD time frame, and more importantly, there would be no protection for the city to cover repayment of the funds to HUD without the extension of the Irrevocable Line of Credit.
June 12, 2018 a letter was sent to Mr. Hagg regarding the need for the ILOC for $75,000, the extension to July 2020 of the ILOC for $120,721.56, and submission of a signed project milestones timeline to meet the July 2020 deadlines. Mr. Hagg, to date, has not signed and returned the timeline provided or submitted an amended one.
The Committee feels that more than adequate time and extensions have been granted to allow Mr. Hagg to meet all the requirements and have the project underway.
The Committee recommends cancellation of both grants and calling the Letter of Credit due.
Funding Source & Fiscal Impact (if applicable):
Funding | Cost Center |
---|---|
If Irrevocable Letter of Credit is not extended for the FY2015 funds, City would be liable for repayment of the $120,721.56 with non-CDBG or federal funds. If the units are not completed and occupied by July 2020, the City would be liable for repayment for not meeting a HUD National Objective of the CDBG funding. | |
Recommendations:
Origination Recommendation Action:
Approve