Urban County Reallocates Housing Funds

Washtenaw Urban County executive committee meeting (Aug. 24, 2010): At just past 1 p.m., Leah Gunn told the gathered group, “We’re waiting for a quorum because we have important business to conduct – and I’m told the cats have been herded!”

A few minutes later more voting members of the Urban County‘s executive committee, which Gunn chairs, arrived. The group is a consortium of Washtenaw County, Ann Arbor, Ypsilanti and nine townships, responsible for allocating federal funding for low-income housing and other community development projects. The funds are managed by staff of the joint county/city of Ann Arbor Office of Community Development.

On Tuesday, the business they conducted included approval to reallocate federal funds for local housing programs, in an effort to identify how the money will be spent before a Sept. 18 deadline.

The group also got an update on state and federal emergency housing funds for the county, which have been cut by nearly 30%. In response to upcoming changes mandated by state and federal housing agencies, the Urban County executive committee approved several recommendations, including selecting the nonprofit SOS Community Services to coordinate housing crisis management in the county.

Those changes led to a discussion of the homeless situation in Washtenaw County, and the challenges of dealing with a spectrum of housing needs, from people seeking emergency shelter to those ready to buy a home.

Neighborhood Stabilization Program: More Funding

Jennifer L. Hall, housing manager for the Office of Community Development, told the Urban County members that there will be a third round of funding under the federal Neighborhood Stabilization Program (NSP) that will be awarded later this year or in early 2011. Hall expects that the local area will receive at least $1 million in the NSP3 round, but possibly more. The county applied, but did not receive, NSP2 funding.

The federal government will fund the NSP3 round in part from money that was previously awarded – but unspent – in the first round (NSP1). In that regard, Hall said they were working to make sure that all local NSP1 funds are “committed” by the Sept. 18 deadline. Being committed entails knowing the exact address where the funds will be spent, as well as exactly how much money will be used. A contract must be executed for the work by that deadline as well, Hall said.

There are some local NSP1 funds that won’t meet those requirements, Hall said, unless they are reallocated to other projects before the Sept. 18 deadline. The staff is working with local governments and agencies to identify what funds won’t be committed, and will need to be reallocated. That information will be gathered by Sept. 1, giving them time to reallocate funding before Sept. 18.

Because Tuesday’s meeting was the last one before the Sept. 18 deadline, staff of the Office of Community Development (OCD) wanted permission from the Urban County executive committee to reallocate NSP1 funds, depending on how much hasn’t been committed by Sept. 1. They would only move the funding to projects that are doing work similar to projects that had originally received NSP1 funding, Hall said.

Specifically, about $460,000 originally awarded to Community Housing Alternatives (CHA) for housing rehab and a down payment assistance program likely won’t be committed in time. Staff proposed awarding those funds instead to Ypsilanti and Ypsilanti Township for demolition of primarily residential properties, with the remaining amount going to Parkview Apartments, a 144-unit complex in Ypsilanti that’s been foreclosed on by the U.S. Dept. of Housing & Urban Development (HUD). Parkview has been acquired by the Ypsilanti Housing Commission, which previously received federal funding to buy and rehab the complex.

Mirada Jenkins, an OCD compliance analyst, told the Urban County committee that they shouldn’t think of this reallocation as a slight against Community Housing Alternatives. The nonprofit was able to complete five projects – all in Ypsilanti Township – with the NSP1 funds. But their program is set up so that the homebuyer selects the property, she said. And since NSP funds can only be used in certain low-income neighborhoods, it’s more difficult to find matches. There’s also more paperwork involved in the financing, and CHA homebuyers compete with people who can pay cash.

In contrast, Habitat for Humanity of Huron Valley – which received $1.2 million in NSP1 funds for its homebuyers program – is expected to use all of its funds. They pay cash upfront for the properties, Jenkins explained, then rehab the homes and sell to qualified buyers. With that approach, it’s been easier for them to spend the funds relatively quickly, she said.

Kevin Mitchell, an OCD management analyst, gave an update on demolition projects funded with NSP1 money. So far, 21 projects have been contracted or are out to bid, all of them in Ypsilanti or Ypsilanti Township. Four other demos – one in Ann Arbor (2900 Sharon), one in Ypsilanti (107 Cross) and two in Ypsilanti Township (101 Lamay and 2403 E. Michigan Ave.) – are completed. Another four in Ann Arbor are under review.

For several reasons, completing the demolitions has been a slower process than they anticipated, Mitchell said. It takes a while for the house to be declared a nuisance and then to get a court order allowing them to demolish it. In some cases, environmental abatement has to be done – when asbestos is found, for example – and that extends the work. They’ve had some issues related to the required Construction Unity Board (CUB) agreements, which call for contractors to use union labor, or to abide by the existing collective bargaining agreements of the appropriate labor unions.

There have also been delays because DTE and MichCon typically take six to eight weeks to remove their electrical wiring and to cut gas lines to the houses, Mitchell said.

He noted that in addition to the five residential properties in Ypsilanti that are owned by the city and currently out for bid to demolish, demolition is currently underway at the city-owned Water Street redevelopment project. About $75,000 of additional work is needed to remove footings and a parking lot, he said. With commercial buildings already removed, the property there “looks fantastic,” Mitchell said.

Both Mitchell and Hall commented on the fact that demolishing a building can make a huge difference in a neighborhood. Mitchell noted that it’s not uncommon for neighbors to come out and tell staff that they’re happy the building is being taken down. It not only looks bad, he said, but people break in and use the empty houses for illegal activity.

Barb Fuller, Pittsfield Township’s deputy supervisor, asked what was done to the empty lots. Mitchell said that the basement or crawlspace areas are filled in, and the land is reseeded with grass. He provided before and after images of two properties – at 2900 Sharon in Ann Arbor and 2403 E. Michigan Ave. in Ypsilanti Township – which showed the empty lots after the buildings had been removed. The property on Sharon looked park-like, and Leah Gunn noted that it was in her district. [Gunn represents District 9 on the Washtenaw County board of commissioners.]

Outcome: The Urban County executive committee voted unanimously to authorize staff to reallocate uncommitted NSP1 funds as needed from Community Housing Alternatives, shifting the funds to demolition projects in Ypsilanti and Ypsilanti Township, with the remainder going to Parkview Apartments.

Habitat for Humanity Waiver

Housing project guidelines call for a cap of $60,000 per homebuyer using NSP funds. Habitat for Humanity requested waiving that cap and allocating an additional $11,124 to a home at 915 Ottawa in Ypsilanti Township, Hall said. The nonprofit is rehabbing the home with two bedrooms and one bath for a single mother with three children. One of the children has special needs, and Habitat hopes to convert an attached garage into an additional two bedrooms and bath.

Outcome: The Urban County executive committee voted unanimously to waive the program guidelines and allocate $11,124 more than the $60,000 cap to a property at 915 Ottawa in Ypsilanti Township.

State, Federal Emergency Housing Funds

Andrea Plevek, human services analyst for the Office of Community Development, explained a somewhat complex recommendation for the distribution of state and federal housing funds, which required approval by the Urban County executive committee.

Washtenaw County receives annual funding for emergency shelter through the Michigan State Housing Development Authority (MSHDA). These are funds originally awarded by the U.S. Dept. of Housing and Urban Development (HUD) to the state, which the state then reallocates. Typically, that amount for Washtenaw County has been roughly $400,000. This year, however, the state used a new formula to award this funding, and the county’s funding was cut nearly 30%, to $286,509. In the past, the awards were based on grant proposals. The new formula uses poverty rates, incidences of homelessness and other factors to determine funding.

In addition to MSHDA funds, this year for the first time the county also received federal emergency housing funds of $97,539 directly from HUD. The funding was allocated because Ann Arbor has recently joined the Urban County group, Plevek explained.

Also this year, MSHDA is starting to roll out other funding changes that will be mandated within the next 12-24 months by HUD, in response to 2009 legislation called the HEARTH Act (Homeless Emergency and Rapid Transition to Housing). The changes include:

• Shifting at least 20% of emergency housing funds to homelessness prevention and re-housing activities (known as a “Housing First” model).
• Selecting a single fiduciary agency that’s responsible for all sub-contracting, financial documentation, monitoring and communication with MSHDA and HUD.
• Identifying a single “point of entry” agency that will coordinate all housing and utilities crises for residents of Washtenaw County.

Mary Jo Callan, OCD’s director, told the Urban County group that it made sense to combine these two funding streams into one process for awarding the state and federal grants.

This summer, OCD staff held several meetings with local nonprofts that have been funded from these grants, Plevek said. At an Aug. 12 meeting, the group reached consensus about selecting SOS Community Services as the “point of entry” agency, and that OCD would serve as the fiduciary. They also approved the following funding recommendations:

MSHDA 2010-11 Allocations

Catholic Social Services          $13,890
Interfaith Hospitality Network     17,818
Michigan Ability Partners          10,696
Ozone House                        36,505
Safehouse                          41,975
Salvation Army                     10,696
Shelter Association                38,866
SOS Community Services            101,738
Office of Community Development    14,325

TOTAL MSHD                        286,509

HUD 2010-11 Allocations

SOS Community Services             92,662
Office of Community Development     4,877

TOTAL HUD                          97,539
-

Plevek said that the executive committee of the Washtenaw Housing Alliance, made of up about two dozen groups that are working on housing and homelessness issues, subsequently approved the recommendations as well.

Ypsilanti mayor Paul Schreiber asked how SOS was selected as the “point of entry” agency. Plevek said that more than other agencies, SOS has the existing infrastructure – a housing crisis hotline, for example – from which to expand. They also had the willingness to take on the project, she said.

Darrell Fecho, manager of Scio Township, asked whether any of this funding would be used for emergencies like a house fire or weather-related events. Plevek replied that typically those efforts are handled by the local chapter of the American Red Cross, but that the county’s Barrier Busters program is working on ways to coordinate human services agencies for those kinds of emergencies.

Callan talked about the role of SOS in this new capacity. Currently, she said, the type of help that a homeless person receives depends mostly on who they call – services aren’t necessarily coordinated. In the future, anyone who calls the county’s 211 helpline will be referred to the housing crisis hotline managed by SOS. The staff answering the hotline will be familiar with the housing resources in the county, and can direct the caller to appropriate help. They’ll also have access to the Washtenaw Homeless Management Information System, a database of resources updated in real-time – for example, with information about available beds at homeless shelters in the county.

Fecho asked whether there was coordination with the county sheriff’s department. Callan said the short answer is yes. The long answer, she added, is that it’s a long process to engage everyone – like the sheriff’s department – who aren’t involved in the “shelter business,” but who need to know about the resources available.

Fecho said his question was prompted by a situation in Scio Township involving a homeless camp. Callan replied that members of the Washtenaw Housing Alliance were well aware of local homeless camps, and of Camp Take Notice and MISSION in particular. [Camp Take Notice is a homeless communty that relocated to Scio Township in April 2010. For background on the camp and its previous move in 2009, see Chronicle coverage: "Laws of Physics: Homeless Camp Moves"]

Callan said there’s no perfect solution to the homeless situation – there’s not enough housing or services to address it adequately. The community needs to figure out how to help people along the housing continuum, she added, from people who are homeless to those who are ready to buy a house.

Leah Gunn pointed out that the county’s JPORT (Justice Project Outreach Team) and HPORT (Homeless Project Outreach Team) programs try to help as well, and have reached out to Camp Take Notice in particular.

Outcome: The Urban County executive committee unanimously approved the recommendations related to allocating MSHDA and HUD emergency housing funding, selecting SOS Community Services as the “point of entry” agency, and selecting the Office of Community Development as fiduciary for this funding.

Gateway Apartments Update

As part of her update on rental developments that OCD is working on, Jennifer L. Hall reported that on Monday, the county had applied for a $2.5 million grant that includes funding to acquire Gateway Apartments in Ypsilanti Township. The funding would come through a HUD Community Challenge Planning Grant, part of the TIGER II round of funding.

The issue of Gateway Apartments had been discussed at length at the Urban County executive committee’s March 2010 meeting. From Chronicle coverage:

It was the first and largest rental project undertaken by the Urban County, which allocated $310,000 in 2002-03 to the Washtenaw Affordable Housing Corp. WAHC, which owns Gateway Apartments, had used the Urban County money to rehab the 43-unit property.

WAHC had taken out a $1 million loan to buy the property, but now the nonprofit is “essentially out of business,” Hall told the Urban County executive committee. Avalon Housing, an Ann Arbor nonprofit, has taken over WAHC’s operations, including management of Gateway. WAHC’s board will be deciding how to dispose of its properties, Hall said. And if Avalon isn’t interested in buying Gateway or continuing to manage it, another buyer or property manager will need to be found.

The loan to WAHC is held by three banks: National City, Michigan Commerce Bank and the Bank of Ann Arbor. If a sale is made, the bank loan would be paid first. And if the sale to a party other than Avalon isn’t sufficient to cover the remaining loan balance plus the $310,000 Urban County grant, then the county would be on the hook for repaying that amount to HUD.

Why would HUD need to be repaid? Because the HUD funding stipulates that all of the apartments must be offered at affordable housing rates through December 2012. If not, the Urban County would be considered out of compliance, and would have repay the entire $310,000 to HUD, according to Hall.

Avalon estimated that it would need roughly $3 million to buy, rehab and operate the complex with supportive services, Hall told the executive committee. To achieve that, OCD staff had originally recommended putting another $740,000 of HUD funds – from its Neighborhood Stabilization Program (NSP) – into the complex, which would trigger an additional five-year HUD-mandated affordability period.

Avalon had planned to kick in another $430,000 from the Federal Home Loan Bank, Hall said. But that left roughly $2 million to find from other sources. When they first got involved with the project, it seemed likely that the Michigan State Housing Development Authority (MSHDA) would contribute the remaining funds. But given the economic downturn, MSHDA has prioritized investments for properties in which it already has a stake – and that doesn’t include Gateway.

Another possibility had been to seek funds from the second phase of grants with the federal Neighborhood Stabilization Program. The county applied, but didn’t receive an NSP2 award, Hall said.

For these reasons, Hall said they were withdrawing OCD’s $740,000 funding recommendation, not wanting to make a long-term commitment to what has become an even more problematic property that might soon face foreclosure.

Depending on how much money is awarded to the county from the NSP3 grants, some of those funds might also be used for Gateway Apartments, Hall said. In addition, talks are still underway with a private developer that might buy and manage the property, she said.

In general, she said, the acquisition of WAHC properties “is giving us fits.”