TO: W. Calvin Horton, Town Manager
FROM: Roger Waldon, Planning Director
SUBJECT: Potential Use of Community Development Funds
DATE: May 30, 2001
RESUBMITTED: June 13, 2001
The purpose of this working paper is to respond to a question raised about the potential use of Community Development funds for requests from El Centro Latino and Club Nova.
On March 28, 2001, the Council held a public hearing to receive comments on the budget, Capital Improvements Program, Community Development, HOME and Capital Fund Programs. Citizens were invited to present their ideas of how funds could be spent in these areas. Representatives from El Centro Latino requested $10,000 for operating expenses for its organization that provides social services.
In a letter dated April 5, 2001, Club Nova requested that the Council provide $10,000 to renovate a building that will be used as its Thrift Shop.
On April 23, 2001, the Council adopted the following budget for the 2001-2002 Community Development Program. At that time, the Council did not consider the use of Community Development funds for these two proposals.
Public Housing
Renovations (Pritchard Park) $115,000
Refurbishing Program $ 55,000
Meadowmont Affordable Condominiums $ 80,000
Neighborhood Revitalization $ 80,000
Habitat for Humanity (Rusch Road Subdivision) $ 50,000
Community Services $ 20,000
Administration $ 76,000
Total $476,000
At a Budget Work Session on May 2, 2001, the Council asked if Community Development funds could be used to fund the requests from El Centro Latino and Club Nova. We understand that the Human Services Advisory Board is also considering these requests.
DISCUSSION
Typically, the Council chooses to fund activities that emphasize the affordable housing objectives identified in the Consolidated Plan for Housing and Community Development Programs in Orange County. In the past, the Council has also funded public service projects that support other Community Development objectives and activities, especially those that support public housing resident initiatives and the Town’s Neighborhood Revitalization efforts.
We offer the following comments for consideration by the Council:
El Centro Latino
El Centro Latino, organization that provides social services has requested $10,000 for operating expenses. The organization currently provides educational, social, cultural and other resources and services to the Latino-Hispanic community of Orange County. According to its application to the Town for Human Services funding in 2000-2001, El Centro Latino provided services to 310 Carrboro residents (62%), 134 Chapel Hill residents (27%), 45 non-Orange County residents (8%), and 15 Orange County residents (3%). The application also states that approximately 57% of its clients are at or below the Federal Poverty Level.
We believe that this request could be consistent with a priority in the Consolidated Plan to support community service activities that benefit Chapel Hill residents earning less than 80% of the HUD published area median income by household size. This request could also qualify for funding under the current Community Development Neighborhood Revitalization Program that provides funds to qualified non-profit organizations for property acquisition and/or renovation (for homeownership or rental opportunities), second mortgage assistance or community services. Neighborhood Revitalization funds have been used recently only by EmPOWERment, Inc. to purchase and renovate houses for lower income homeownership and rental opportunities in the Northside and Pine Knolls neighborhoods.
The request from El Centro Latino could be considered a community service; however, we do not believe that the request is consistent with the Council’s focus to date. The majority of community service activities that have been funded by the Council support the Town’s current neighborhood revitalization efforts. For example, funds have been provided to the Chapel Hill – Carrboro YMCA to support the after school programs held at the South Estes Drive public housing community and for children living in the Pine Knolls neighborhood. It does not appear that this request would support a current neighborhood revitalization effort. Using Neighborhood Revitalization funds for El Centro Latino’s request would decrease our current affordable housing development efforts.
On April 23, 2001, the Council adopted a budget for the Community Development program that includes activities that emphasize affordable housing, including $80,000 for Neighborhood Revitalization activities. Though the Neighborhood Revitalization funds have not yet been earmarked for specific projects, both EmPOWERment and the Community Land Trust in Orange County have expressed interest in using this fund for acquisition and renovation activities for affordable housing purposes.
If the Council chooses to reallocate funds from a category other than Neighborhood Revitalization funds, an amendment to the Community Development program would be required. This amendment process would include a public hearing to receive citizen comments on the proposed amendment, review by the Housing and Community Development Advisory Board, and final approval by the Council.
We note that if the Council chooses to use Community Development funds for this request, El Centro Latino would be required to submit documentation to the Town that the clients served are Chapel Hill residents and that their total household income is less than 80% of the area median income.
Club Nova
Club Nova has requested the use of funds to rehabilitate a building that will be used as a Thrift Shop. Although the proposed Thrift Shop is located in Carrboro, next to the Club Nova offices, the Club reports that 35 active members live in Chapel Hill. Federal Community Development regulations allow funds to be used outside of the Town’s jurisdiction if the Council determines that, “such an activity is necessary to further the purposes of the Housing and Community Development Act and the recipient’s community development objectives, and that reasonable benefits from the activity will accrue to residents within the jurisdiction of the [Town].”
Though the rehabilitation of the building could be an eligible Community Development activity, at this time there is not a priority identified in the Consolidated Plan or an approved Community Development activity that could fund this request. Therefore, it would be more complicated to use CD funds for Club Nova than for El Centro Latino.
If the Council desires to consider using Community Development funds for this purpose, we believe that we would first be required to amend the Consolidated Plan, to include a priority so the activity could be eligible for assistance. Since the priorities of the Plan are approved by all four jurisdictions that participate in the HOME Consortium (Chapel Hill, Orange County, Carrboro and Hillsborough), a change to the priorities would have to be approved by all four governments. The Council could then consider an amendment to the Town’s 2001-2002 Community Development Plan to include this activity. This process would require a public hearing and approval by the Council.
If the Council chose to pursue this request, we would also recommend that the organization complete a Community Development application to provide additional details about the proposed use of funds including the total activity budget, and how the activity would serve lower income Chapel Hill residents.
If the Council desires to pursue using Community Development funds for the request from El Centro Latino, we suggest that we meet with the organization’s staff to determine more specifically how lower income Chapel Hill residents would be served by its programs. We also suggest that the Council delay making a decision about the use of Community Development funds for this request until the Human Services Advisory Board determines if and at what level they may fund this request.
We do not recommend using Community Development funds for the request from Club Nova. We do not believe that this project is consistent with the priorities identified in the Consolidated Plan or the 2001-2002 Community Development plan. In addition, Club Nova has not provided information about how this activity could benefit lower income Chapel Hill residents as required by federal regulations.