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HomeMy WebLinkAbout08-16-2012 Housing & Community Development Commissionuleumm HOUSING AND COMMUNITY DEVELOPMENT COMMISSION DALE HELLING CONFERENCE ROOM, CITY HALL THURSDAY, AUGUST 16, 2012 6:30 P.M. 1. Call Meeting to Order 2. Approval of the May 17, 2012 Minutes 3. Public Comment of Items Not on the Agenda 4. Staff/Commission Comment 5, New Business Discuss Requiring Davis Bacon Requirements for All CDBG/HOME Assisted Projects 6. Old Business CDBG/HOME Allocation Process Committee — Update 7. Monitoring Reports • FYI Emma Goldman Clinic (Bacon Curry) • FY12 Iowa City Housing Rehabilitation (Staff) • FYI Iowa City Economic Development (Staff) • FYI Visiting Nurse Association (Bacon Curry) • FYI IC Parks and Recreation (Bacon Curry) 8. Adjournment CITY OF IOVVA CITY MEM 0"I RAN DUM Date: August 10, 2012 To: Housing and Community Development Commission From: Community Development Staff Re: August Meeting The following is a short description of the August agenda items. If you have any questions about the agenda or if you are unable to attend the meeting, please contact Tracy Hightshoe at 356-5244 or by email at tracy-hightshoe@iowa-city.org. Discuss Requiring Davis Bacon Requirements for All HOME/CDBG Assisted Businesses The commission will discuss requiring Davis Bacon provisions for all HOME and CDBG assisted projects, primarily housing rehabilitation and housing projects that currently do not require Davis Bacon. Please review the request submitted by HCDC member, Jim Jacobson, and staff's response. HOME/CDBG Allocation Process Committee - Update The committee will provide an update and review the survey responses received from prior applicants. Monitoring Reports • Emma Goldman Clinic— Operations (Bacon Curry) Contact Jennifer Price (337.2111) • Visiting Nurse Association — Acquisition (Bacon Curry) Contact Suellen Novotny (337.9686 or novotny@vnaic.org) • IC Parks and Recreation — Parkland Acquisition (Bacon Curry) Contact Mike Moran (356.51 04 or mike-moran@iowa-city.org) • IC Housing Rehabilitation — Owner -occupied Housing Rehab. (Staff) • IC Economic Development (Staff) MINUTES PRELIMINARY HOUSING AND COMMUNITY DEVELOPMENT COMMISSION MAY 17, 2012 — 6:30 PM DALE HELLING CONFERENCE ROOM, CITY HALL MEMBERS PRESENT: Michelle Bacon Curry, Andrew Chappell, Cheryll Clamon, Scott Dragoo, Jarrod Gatlin, Holly Hart, Jim Jacobson MEMBERS ABSENT: Charlie Drum, Rachel Zimmermann Smith STAFF PRESENT: Tracy Hightshoe, Steve Rackis OTHERS PRESENT: None RECOMMENDATIONS TO THE CITY COUNCIL: The Commission voted 7-0 to recommend to City Council approval of the proposed amendments to the Iowa City Housing Authority's Housing Choice Voucher (HCV) Administrative Plan and Admissions and Continued Occupancy (ACOP) Plan. CALL TO ORDER: The meeting was called to order by Chappell at 6:30 p.m. APPROVAL OF THE APRIL 19. 2012 MINUTES: Jacobson moved to approve the minutes Gatlin seconded. A vote was taken and the motion carried 7-0. PUBLIC COMMENT FOR ITEMS NOT ON THE AGENDA: None. STAFF/COMMISSION COMMENT: Hightshoe announced the grand opening of Trumpet Blossom Cafe, a CDBG assisted business. The opening invite had coupons/reduced cost menu items that were available. The business was distributing to the general public as a way to advertise the store. The Council also just approved the CDBG application for Molly's Cupcakes. The original business is based out of Chicago and this will be their first franchise. It is a full -service bakery, specializing in cupcakes. HOUSING AND COMMUNITY DEVELOPMENT COMMISSION May 17, 2012 PAGE 2 of 8 She also announced that staff just completed a staff recommendation for another CDBG application from IBLITZ Boxing and Fitness, LLC. The fitness club, to be located in Sycamore Mall, specializes in boxing and kickboxing techniques. She said the FY13 Annual Action Plan was approved by City Council. She said that, like previous years, there were requests during that public comment period for changes to the HCDC recommended allocation. She said this year the requests came from Habitat for Humanity and the Crisis Center for increased funding; however the Council approved as HCDC recommended. She reminded the Commission that several of the member's terms will be expiring soon and provided the date by which they must reapply if interested. Chappell recounted for the Commission his experience as a representative of HCDC at the City Council meeting of the previous night. He said Council was quite deferential regarding the Commission's recommendations for funding allocations. He said the allocations were approved with very little discussion other than to affirm that they were comfortable with the way the recommendations were reached. Chappell said there was talk at the last meeting of putting some discussion on the agenda about possibly requiring Davis -Bacon for all projects instead of just when required by federal law. He said he wants to talk to the legal department about it and see how it fits into the Commission's purview and whether there are other things they should talk about requiring as far as wages and benefits are concerned. Jacobson asked Rackis to clarify discussion from last night's Council meeting about selling public housing. Rackis said the issue dates back to about six months ago when Connie Champion asked what had happened to the Housing Authority's Home Ownership Program. He said the Housing Authority gave the Council a report and an update and explained that due to the funding mechanisms of HUD, the Housing Authority decided that they would retain no less than 80 public housing units. He said that Champion then asked if they could sell units in a particular neighborhood and replace them elsewhere, which led to the discussion of whether or not they could sell all of them. Rackis said the Housing Authority talked to HUD and then issued a memo to Council about what could and could not be done. He said at that point the Mayor said he wanted to sell 10-12 public housing units and use those proceeds to fund the UniverCity Program. He said that although this wasn't stated at the meeting, in the memo the Housing Authority said that they could support the UniverCity Program without selling any public housing units. He explained how that was possible. He said that City Council wants the Housing Authority to show them the numbers, and no action was taken at the meeting last night. Rackis said that one of the goals of CITY STEPS is permanent, affordable housing and that's what public housing is. He said it doesn't cost the City anything, and with those units the City has control, which means neighborhood stabilization. Jacobson asked if the Mayor gave any rationale at the meeting for why he wanted to sell off 12- 20 units of public housing. Rackis said the only rationale he gave was to put money into the UniverCity Program so the City didn't have to use General Funds. Bacon Curry asked about the status of the Housing Fellowship's application for funding to build units along Muscatine. Hightshoe said the Housing Fellowship was not approved for City financial assistance for these units. The City selected a different proposal for the IEDA multi- HOUSING AND COMMUNITY DEVELOPMENT COMMISSION May 17, 2012 PAGE 3of8 family rental housing program submitted by Skogman Realty for seven townhomes along First Ave. in northeast Iowa City. IEDA has not awarded funding so the City's application is pending. PUBLIC MEETING Review of the FY13 CDBG/HOME and Aid to Agency Allocation Process Hightshoe explained that each year the Commission reviews the just finished allocation process. Some years they make comments; other years they form a subcommittee to do a more comprehensive review. Chappell asked members what they'd like to discuss or investigate further. He said he would like to have some feedback from the applicants about the process through confidential conversations with the Commission. He asked for discussion about how the Commission might look into the best way to solicit the feedback. Clamon said she liked the idea of a subcommittee, but that she had not been through this process before. Hart asked why the feedback would be confidential. Chappell said he would want them to have the opportunity to talk without considering how they present themselves and what they say may have an effect on how much funding they get the next year. Hightshoe said they could use an online survey, but because IT charges back, it could get quite expensive. She said they could send out a survey to last year's applicants and include a postage paid envelope so the source would not be known. She said the Commission could develop a survey tool and the questions they want to ask. Chappell suggested that they include applicants from the last three fiscal years. Bacon Curry asked if it would helpful to declare a focus when they ask for applications, for instance, rental housing applications that are diverse in location. Hightshoe said in the City's year-end report to HUD she has to summarize what the accomplishments were compared to the stated goals in the Five Year Plan. She said they start to solicit applications in December, so that would be a good time to notify applicants if they are short in certain areas and have not met an identified need. HUD requires the City to explain why the stated goals have not been met. Chappell said he is interested in seeing what the numbers are regarding the Action Plan and what they have actually done. He said he personally didn't start out the year with any pre- conceived ideas about what to fund, but there did seem to be a trend toward rental housing. He said he thought perhaps the applications revealed to the Commission what the focus should be. Bacon Curry said that was her question, whether the applicants reveal the focus to the Commission or the Commission tells the applicants what they would like to focus on. Gatlin said he would like to stay away from pushing people to tailor their applications. He said he thinks the Commission should fund what they think is appropriate and he wouldn't want to give any guidance to anyone. HOUSING AND COMMUNITY DEVELOPMENT COMMISSION May 17, 2012 PAGE 4of8 Chappell said that adjustments to CITY STEPS would tell people what applications they should be looking to produce. Hightshoe explained that HUD is asking for more detailed justifications and recommends spending more time when reviewing the Five Year Plan as to what the community needs are within that time period. Bacon Curry said the timing issues are becoming increasingly important so it would be helpful if people could have a reminder from an already established plan that says what the Commission is looking for. Hightshoe said when they did the Five Year Plan they anticipated more money; however the funds have been cut by about 30%. The City won't be able to complete as many projects with reduced funds and will have to adjust our goals when reviewing CITY STEPS this fall. Chappell asked for members interested in serving on subcommittees for the above referenced project as well as the survey. Clamon, Dragoo and Gatlin volunteered to serve on a subcommittee looking into a survey and evaluations of the funding process, with Dragoo serving as Chair. Hightshoe said it would be beneficial to make the formal recommendation to the full commission in September. Hart and Jacobson volunteered to review CITY STEPS goals vs. accomplishments. Hightshoe explained that the Community Development division began administering Aid to Agencies as of July 1'` so there might be some staff recommendations regarding changes in the Aid to Agencies process or notifying agencies that it might not be the same allocation process in subsequent years. Chappell said he got the impression that City Council wanted a closer review of the Aid to Agency allocations. He said he never felt that he had sufficient information to draw distinctions about the funding that Council seemed to want. Review of the Iowa City Housing Authority Administrative Plan and Admissions & Continued Occupancy Plan Rackis said that HUD requires the Housing Authority to have the Housing Choice Voucher Program, which requires that you have an administrative plan that states how you are going to operate the program. He said in some of the selection and termination criteria, HUD has things that you must do and things that you may do. As there is room for discretion, it must be identified in the plan. He said what they want to do is to add burglary in the 2nd degree or higher as a criminal activity for which they can deny an application. He said their focus right now is primarily violent criminal activity, drug -related activity, and anything that leads to fraud and forgery. Rackis said that disorderly house was carrying a three year period of ineligibility, which may be excessive, so they want to change that to a one-year period of ineligibility. He said if the activity constitutes violent criminal behavior, there will be a three-year period of ineligibility, but if the activity does not constitute violent criminal activity, the period of ineligibility will be one year. Rackis said that prior to 2010 the only way the Housing Authority could deny an application was if someone owed another housing authority money. He said in the proposed changes they are HOUSING AND COMMUNITY DEVELOPMENT COMMISSION May 17, 2012 PAGE 5of8 covering every type of federally assisted housing that's mentioned in the 1937 act as amended and everything that's in the definitions in 24.CFR 5.100. He explained that they are including all projects in CITY STEPS and city financing so that if a person owes money based on any type of federal, state or city loan or obligation, then the Housing Authority can deny them assistance. Chappell asked if there was a reason they didn't have the same hold true if they owed a private landlord money. Rackis cited an instance of a landlord in town who would charge whichever family that was in residence the complete replacement charge when it was time for the carpet replacement cycle. He said those people don't necessarily go through the small claims process and end up owing a large amount of money. He explained that federally assisted housing has oversight. He explained that some of the impetus for this change was that the Housing Authority has a residency preference and Pheasant Ridge doesn't. He said that Pheasant Ridge will not rescind a lease. He said that they also felt it was coming out of the same pot of money and they didn't feel they should be assisting someone while they owe another agency that same money. Bacon Curry asked about someone like The Housing Fellowship who receives federal funds but is a private landlord as well. Rackis said they would be included as federal funds assisted that unit under an affordable housing program. Bacon Curry asked about home ownership and if this proposal applies to foreclosures. She said she wants to know if the language is clear enough that the UniverCity Program would be excluded. Rackis said it applies more to the rental side. He said the Housing Authority has time before its public hearing to have further discussion about private landlords. Hightshoe, in response to Chappell's query, said that the UniverCity Program would be considered an affordable housing program as there are state and/or city funds involved. Rackis explained to the Commission how the hearing process works if the Housing Authority denies an application. Rackis said they want to change the language regarding preferences to restrict it to federally declared disasters in the State of Iowa. He gave one example of why staff has to spend excessive time on cases where someone claims they are displaced by government action or by a disaster and the facts don't back them up. He said this change will make it easier to verify information. Rackis said he is not pleased with the quality of referrals they are getting for the Family Unification Program because they don't meet the intent of the program. He gave several examples of such cases. He said he's had several meetings with DHS in the past years and they still are getting inappropriate referrals. He said for these reasons they want to remove this program from the Plan. Bacon Curry expressed her frustration that the goal is always family unification whether the caseworker thinks the family will ever be reunified and every case where the children are removed is classified eligible. Rackis agreed and said there are cases where they have been assisting a family with a three - bedroom voucher for two or three years and the children have not been released yet. HOUSING AND COMMUNITY DEVELOPMENT COMMISSION May 17, 2012 PAGE 6of8 Chappell asked for a motion. Dragoo moved to recommend to City County approval of the proposed amendments to the Iowa City Housing Authority's Housing Choice Voucher (HCV) Administrative Plan and Admissions and Continued Occupancy (ACOP) Plan. Bacon Curry seconded. A vote was taken and the motion carried 7-0. Rackis asked if anyone had questions about the Housing Authority's Annual Report. Dragoo asked about the numbers and timeframes of the terminations listed in the report. Rackis explained that those figures are for the last year only. He explained the differences between the numbers of those in good -standing and those terminated for cause. Chappell, the Commission and staff discussed the summer meeting schedule. The Commission agreed to meet before the Community Development Celebration on June 20. Staff will notify the Commission if there are agenda items that necessitate a July meeting. It was agreed not to have a meeting in August. Monitoring Reports • The Housing Fellowship — Chappell said the operating grant was used to support the salary of the finance manager. • Big Brothers, Big Sisters — Chappell said this organization uses the funds to support Iowa's efforts of matching youth with adult mentors in long-term friendships with positive outcomes. In the past year, offerings of group learning activities have increased and community service projects for children and their mentors. The funding from Iowa City is directly responsible for matching over 60 youth in the mentoring program. • Habitat for Humanity — Chappell said that $210,000 of the allocation was spent on the purchase of a property in December, 2011. Bids are out for digging and the water and sewer, approximately $7,000, and two overhead doors, approximately $3,000. The remainder will be on adding restrooms and a new entrance. The facility is to be rented in August for teaching, with Kirkwood using it five days per week for area high schools and Habitat using it on weekends and in the evenings to teach youth. The rest of the allocation will go toward purchasing five lots for $28,500 each in the Saddlebrook 2 addition in the next 30-45 days. An additional lot was purchased at 316 Fourth Avenue for $25,000 in December 2011, and the house and outbuildings are being torn down. • United Action for Youth — Dragoo said they spent most of the year looking for properties. They found an eligible property on 1221 — 1231 Bloomington St., and the purchase offer has been accepted subject to a number of contingencies. They expect the property to close in early September. • The Crisis Center — Dragoo made a site visit there. The work on the floors in the Food Bank and the roof for the whole center has been completed. They are trying to hire a small, local contractor to do the work on the parking lot. That work was delayed because of the purchase of the property next door. • Mayor's Youth Empowerment — Dragoo got a tour of that facility. He said it's really nice; however it's not completed yet. • Old Brick — Dragoo said that they will have the work done next week. They will spend around $15,300 on it. HOUSING AND COMMUNITY DEVELOPMENT COMMISSION May 17, 2012 PAGE 7of8 ARC — Dragoo had a tour of that facility. The bathroom and kitchen are done nicely. They are almost done with the sprinkler system. ADJOURNMENT: Clamon moved to adjourn. Jacobson seconded. A vote was taken and the motion carried 7-0. z O U) O 73 73 O U z W a O J W W 0 F Z O U 0 ¢0- 7 NN z � new > (D 0 < z O fA N_ O U H z W 2 a O J W W 0 } H z O U 0 z Q U' z N O 0 O U W w W N U� z c Q N 0 z W H H Q r N X X X X 0 X X X 0 m v X O O O X X X X X N M X X LU 0 X X X X X X 00LU M X X 0 X X X X X X f0 N X X LU 0 X X X X i X m S X X 0 X X X X X d W v 0 N 0 v 0 Cl) 0 Cl) 0 N 0 Cl) 0 v 0 N 0 N N N N N N N N N W rn rn rn rn rn rn rn rn rn F J W J J W 2 w = Qw Z U V z O U m z J w a Q U J W U O ^2 Q U O N O U' Q O J Q U ^2 7 0 O Q z J F O w z J O X F K X ' O m O U � N z Z w w � N ii ii ii w_ YXOz To: Members of the Housing and Community Development Commission From: Jim Jacobson Re: Proposal for Ensuring Good Wages on CDBG/HOME Projects Date: August 1, 2008 IN'1RODUCTION At a meeting a few months back I raised the possibility of requiring grant and loan recipients who undertake construction projects that fall outside the purview of Davis -Bacon to engage contractors who must meet some sort of local wage/hiring requirements. The basic idea was that the City, as the agent disbursing the funds, should not contribute to the ongoing "race -to -the -bottom" in terms of worker wages. Doing so would run counter to the whole reason behind the CDBG and HOME programs at the local and federal levels. My thinking at the time was that such guidelines would help ensure grant/loan recipients to hire contractors that might exploit workers for the sake of winning the contract for the construction. In no way am 1 saying that the recipients intentionally do that. In fact, they might have their own hiring guidelines that could be more stringent than anything the city can come up with. But creating such an ordinance would go a long way to demonstrating Iowa City's commitment to ensuring that people get an honest day's pay for an honest day's work. Moreover, given the fact that Davis -Bacon applies in many (but not all) cases of construction and construction -related activities associated with CDBG and HOME funds, we can look at an ordinance as a gap -filler. Since that initial suggestion, I have done some additional research and believe that as a Commission, we can and should recommend to the City Council that it pass something along these lines. Obviously, we do not have the authority to pass anything like this, but I believe a recommendation from the Commission would put the idea in a better position to get a fair hearing. This memorandum is designed to open a discussion. Much remains to be done if we agree to move ahead with this. Below I will present: A brief backgrounder on Davis -Bacon, the federal prevailing wage law; The rationale for why the Commission can and should recommend an ordinance like this; • Potential obstacles to achieving the goal; and • Possible frameworks and/or ideas for structuring the ordinance. DAVIS-BACON (Applicability to CDBG and HOME) The Davis -Bacon Act requires contractors hired with federal funds to pay the prevailing wage for certain job categories in a particular geographic area to those people they hire. It applies to those CDBG construction contracts worth more than $2,000 for construction, rehabilitation, and/or in some cases installation of equipment. It can also be triggered when all or part of the construction work is using CDBG money to pay interest to reduce overall rate on construction. There are exceptions, however. For instance, Davis Bacon does not cover rehabilitation projects of seven traits or less. In the case of HOME funds, D-B applies in more cases because the standard of coverage is "assisted" rather than financed. Consequently, construction and non - construction projects are covered. According to material from the Michigan State Housing Development Authority, if we are talking about a HOME -funded rental rehabilitation or development, the trigger level is a 12 or more HOME -assisted units. Consequently, a building has 20 units, but only 11 will receive HOME assistance, Davis -Bacon is not triggered. Mixed -Use Buildings. D-B applies when HOME funds are also used for purchases of land, services or down payment assistance. There are also reporting requirements that are not addressed here. I have no illusions about being any kind of expert on Davis -Bacon and it is way more complex than what I describe here. But the purpose is to identify some of the gaps that a city ordinance could fill. The goal I have in mind is something basic and simple to administer from both the city's side and the grantee's side. FOUNDATION FOR RECOMMENDATION The Housing and Community Development Commission has as part of its mission to "assess and review policies and planning documents related to the provision of housing, jobs • and services for low and moderate income residents, [and] to review and make recommendations to the City Council regarding the use of public funds to meet the needs of low and moderate income residents." Bringing an ordinance to the Council and recommend its passage is very much within the purview of the Commission, even though it may not have been something the Commissioners have done in the past. The City Steps Plan is filled with references to improving the employment outlook of the city s most vulnerable residents. Creating an ordinance to ensure livable wages for at least the CDBG and HOME projects will help fulfill that aspect of the plan. What are these funds for if not poverty reduction, which is a central theme of the City Steps Plan? As the plan notes on page 80, "poverty is a function of income." The best way to reduce poverty is to raise people's wages. I will not bore you with the various studies that support this position, but it is really not rocket science. The Plan also notes correctly that City has only limited influence on the root causes of poverty. Despite that inability to fix the problem in its entirety, is it not incumbent on as, as the citizen commission charged with assisting the elected leaders in doing what the city can to reduce poverty, to do so? Lastly, the City Council recently adopted a "Buy Local" policy to encourage that to the extent possible the city purchase goods and services here at home. The idea is to strengthen our city's economy. Ensuring that contractors pay decent wages to people working in Iowa City, wages that will be spent here in town, also furthers the sentiment behind that policy. POTENTIAL OBSTACLES Even something seemingly (in my mind anyway) as positive as ensuring CDBG and HOME projects pay workers decently will undoubtedly run into opponents. Should this Commission see fit to recommend the Council undertake passage of an ordinance, it seems important to send forward the recommendation having thought through as many of the challenges that lie ahead as possible. There are likely others I have not considered, but the two big problems that one could imagine stopping passage of something along these are: 1) The notion that requiring wages will raise the costs associated with construction and its affiliated activities, and 2) The attendant legal issues it raises. Wage Requirements Increase Costs The Economic Policy Institute, in a 2008 study of the literature that examined prevailing wages, determined that paying prevailing wages does not increase government contracting costs. In fact, the study pointed to the social benefits of requiring such wages, including improved workplace safety. The long and widely held assumption that all additional costs are passed through to the government on these project turned out not to be true. They cite a number of possible reasons such as, the fact that wages only account for Y4 of a project's cost (therefore a 10% increase in wages only raises overall costs by 2.5%), costs are kept in check through the improved productivity of more skilled I labor, encouraging contractors to source materials better to find lower costs, or possibly contractors simply not taking those dollars as additional profits. The State of Iowa recognizes the social and economic benefits of creating better paying jobs. For instance, Iowa ranked 4r11 in the nation in a report from an organization called Good Jobs First when it looked at overall job quality resulting from economic development programs. One of the reasons is Iowa's High Quality Job Creation Program. In exchange for the incentives the state provides, such as tax refunds or credits of anywhere from 1% to 10%, the recipient company must put up anywhere from $500,000 to $10 million and create from 30 to 101 or more jobs and ]seep those jobs in the state for at least two years. According to the report, the jobs pay anywhere from $11.44 to $23.75 per hour, depending on what county they are located in. When the economic development project is completed, the jobs must pay 130% of the county's average wage. At the outset it must pay 100% of the average wage. The program also requires the employer to pay 80% of single health care coverage and 50% of family. If encouraging quality jobs is good for the state, it ought to be good for Iowa City. Legal Issues Overall, I believe that an ordinance that requires CDBG and HOME grant recipients to hire contractors that pay a certain wage is going to pass legal muster. That by no means implies that it is without some legal grounds on which it could be challenged. The most likely legal hurdle that I see would be Governor Terry Branstad's Executive Order#69, which outlaws all project labor agreements, or PLAs. PLAs are simply pro -hire agreements between clients (in this case the state or its subdivisions) and the labor organizations that establish the terms and conditions of employment for the people hired by the contractor that wins the bidding process. They are specific to each project, and typically include provisions that prevent strikes and lockouts, that workers are hired through union hiring halls, establish the wages and the benefits workers get while employed on the project. Executive Order # 69 says that the state or its subdivisions cannot enter into a PLA for a public works project, defined as a building or other project constructed for the government or under the control of the government, which is paid for in whole or in part with state funds of funds from any federal source. While the last part of the definition may sound troublesome, the federal court for the Southern District of Iowa, in its ruling on a challenge to the order, made clear that it was state funds (or locally collected funds) that were the subject of the order. °EO #69 is not overbroad because it only concerns state -funded or state-owned projects and does not attempt to regulate or influence other projects." Central Iowa Building and Construction Trades Council v. Branstad, No. 4:11-cv-000202-JAj-CFB (2011). The CDBG and HOME funds that Iowa City disburses are all federal as far as I know. In fact, the order makes allowances for Davis -Bacon, recognizing its inability to encumber federal funds. Obviously, any money that comes from State coffers would be subject to the order. Moreover, in the event the Iowa City Housing Authority or other government entity receives federal CDBG and HOME funds, the projects would probably fall "under the control of the state and its subdivisions and would be beyond the reach of the city ordinance. The only exception would be if Davis -Bacon were triggered. The City could possibly consider (and probably does) if a low bidder is the most responsible bidder. For instance, has any employment -related violations that might influence whether that a bidder is indeed a responsible bidder. The Master Builders of Iowa, not a particularly liberal group, has recognized that "Iowa courts give governmental bodies considerable latitude when determining a bidder's responsibility. In Istari Construction Inc. v. Muscatine, Department of Housing and Urban Development (HUD) had determined a contractor to be responsible on a HUD funded city project. Despite this determination, the city rejected the contractor's bid based on the contractor's lack of responsibility. The Iowa Supreme Court held that the city was not prevented from denying that the contractor was responsible, even though IIUD had determined otherwise. This discretion must be exercised objectively and decisions deemed to be arbitrary or based on favoritism will be voided by the court." The city may already have its own definition, but the above is simply a suggestion. Another legal question might be whether a court would conclude that the City in enacting something like the ordinance proposed here the city is creating a de facto PLA. That then leads to analysis of whether the ordinance is proprietary or regulatory. A Project Labor Agreement is proprietary if the government is acting as a player in the market. If so, the regulation is generally upheld as not violative of the National Labor Relations Act, the grounds on which the trade unions challenged Governor Branstad's executive order. If it is considered regulatory, then they cannot enact it. Although I cannot predict the outcome on such a question, I would argue that the City is not creating a PLA because it is not the entity (in most cases) hiring the contractor. The City is merely requiring the private entity to impose the rule on its contractors who are free to bid or not, knowing the parameters of the project. The grant seekers are also free to bid or not as they see fit. POSSIBLE, WAYS TO STRUCTURE AN ORDINANCE There are any number of ways to go about designing the ordinance I have proposed. Here are some ideas to facilitate discussion: 5 Set a floor on wages for all employees on the project, perhaps based on the levels in Iowa's Quality Job Creation Program, and require the contractor (and subcontractors) to submit a report at the end of the project indicating compliance. Give extra consideration to those applicants willing to hire contractors who pay prevailing wage and/or offer health insurance and/or some other criteria such as a clean employment record in terms of wage and OSHA violations for example. Utilize the elements of Davis -Bacon, including prevailing wage, that the Commission or Council deem appropriate. CONCLUSION I am sure that there are other items to consider if this idea is to move forward. Also, I am more than happy to answer questions, assuming I have an answer. From my perspective, this is a great opportunity for the City to demonstrate its commitment to working Iowans in a concrete way. I look forward to the discussion. CITY OF IOWA CITY Date: August 10, 2012 To: Housing and Community Development Commission From: Steve Long, Community Development Coordinator Re: Response to Proposal for Ensuring Good Wages on CDBG/HOME Projects This memo is in response to Jim Jacobson's August 15t memo to the Housing and Community Development Commission that requests that the City require Davis -Bacon regulations to projects that fall outside of the purview of Davis - Bacon requirements. As you may know, Davis -Bacon regulations apply to all CDBG public facility construction projects that cost over $2,000 and to affordable housing construction projects with more than eight units. The regulations apply to HOME assisted construction projects with 12 or more units. So, the regulations apply to a majority of the CDBG and a portion of the HOME assisted projects annually funded by City Council. The largest segment of funding where the regulations do not apply is for the Iowa City Housing Rehabilitation program. The Housing Rehabilitation program provides financial assistance and guidance to homeowners for emergency repairs, exterior repairs, accessibility improvements, energy efficiency improvements and comprehensive rehabilitation to their home. The homeowner signs a city approved contract with the contractor and most often the assistance is in the form of a payback loan to the City. Housing Rehabilitation staff members interviewed five contractors that do a majority of the Housing Rehabilitation projects. The contractors represented the roofing, electrical, plumbing and general contracting trades. After explaining the Davis -Bacon regulations to each contractor, it was determined that labor costs would increase from 35%-50% for most housing rehab projects in order to meet the current Davis -Bacon wages. The labor costs make up approximately 40%- 50% of the total project costs. For example, if a bid is received for $10,000, the project cost with these new wage requirements would be increased to $11,750- $13,750 which means an increase of at least 18 - 38% in overall costs to each project. Several of these contractors stated that they would be hesitant to continue to work for our program under these requirements. The estimates from contractors do not take into consideration the extra administrative time of the contractors, the housing rehabilitation staff and community development staff to complete, review and comply with HUD requirements. The increased time and paperwork includes pre -construction meetings with the contractors and City Staff, completion of HUD forms by contractors, weekly submission and review of time sheets and contractor payroll August 10, 2012 Page 2 forms, on -site employee interviews by City Staff, follow-up by City Staff due to inaccurate or missing information and enforcement of minimum wages when an underpayment by a contractor is found. In addition to the increased labor costs, increased administrative costs will also add to the cost of each project. While economic development and maintaining jobs for local contractors has been a benefit of our program, the primary emphasis has always been ensuring safe and decent housing for low -to -moderate income homeowners in Iowa City. Increasing the costs to our homeowners decreases the amount of housing rehabilitation and also decreases the amount of equity they have in their homes. When fewer improvements are completed for the same amount of financial assistance; for example, replacing a roof vs. replacing a roof and installing a high efficiency furnace or windows, the long term benefit to the homeowner is reduced and the City's goal of maintaining the housing stock and neighborhood stabilization is reduced. There is a delicate balance between higher wages for people working on the homes and increased costs for safe, decent housing for low -moderate income homeowners. According to CITY STEPS, low -to -moderate income homeowners who are cost burdened need assistance with maintenance and upkeep of their units in order to prevent further deterioration. Keeping the repair costs affordable enables the owners to stay in their homes independently. Additionally, the City often awards CDBG and HOME funds to entities such as The Housing Fellowship, Iowa Valley Habitat for Humanity, Isis Investments and HACAP for affordable housing projects that do not trigger Davis -Bacon regulations because of the small scale of the projects. If the proposed policy proceeds, these projects would also see an increase in construction costs and staff would see an increase in administrative costs. Because of the financial impact on homeowners and affordable housing developers and with the dwindling CDBG and HOME funds, Community Development Staff does not support the request that the City require Davis - Bacon regulations to projects that fall outside of the purview of the Davis -Bacon requirements. Survey Outcome - Detailed Summary 30 questionnaires were sent out and seven were returned and reviewed. A summary of the responses received are found below for your review. Question 1: Do you feel that any part of the application is particularly good or bad? Please list those parts and provide any suggestions to help improve the application. • Only one respondent reported dissatisfaction, stating: Skewed priority list and it needs to be reviewed and modified. • "OK the way it is." • "...easy and understandable." • "Good: length; generally easy to complete." • Fine. • Sometimes overwhelming but fair • A good application, staff has been helpful. Respondent Suggestions: #10.a. Equity from the sale of tax credits is private financing. IFA reserves the credits, The developer sells the credits to large investors who in turn provide equity to the project. #10.b. Cost per bedroom doesn't appear to provide valuable information for commissioners to evaluate an application. #18. Redundant to ask for need again/subjective to ask worthiness. #23. The answer should match the HOME Program income targeting requirements. #24. If the city determines property tax exemption that appears to be a negative thing for commissioners. Question 2: What is your interpretation of the fairness and accuracy of the ranking sheets that the Housing and Community Development Commission utilizes in its decision making process? Only one respondent reported dissatisfaction, stating; not consistent and favors one group over another based on that years whims. No penalties for those who do not maintain their properties. • The ranking sheet is a good and sound tool. • The ranking items are good. Assigned point spreads seem reasonable. Difficult to comment on fairness and accuracy of interpretation due to inherent biases/personal preferences. • Perceive no guidelines: answers/rankings are arbitrarily determined; • Generally Fair: Some commissioners seem to not understand different funding streams and this may affect their ability to accurately apply the criteria. • One respondent reported no comment either way. Respondent Suggestions: Increasing panels knowledge of human service agencies • "An interview and internal look is necessary." • Question IV.3. On application is unfair to entities who have received the tax exemption from the City Attorney. Question 3: Do you feel that the input and assistance that the City Staff provide to the Housing and Community Development Commission Members is effectively used? • Two responded with 'Yes' • Very useful! Very helpful! • Too dependent on staff input; differs widely year to year. • Staff appear "conciliatory during the process" • "Staff's help was much appreciated and welcome." "...their insight was very beneficial" • "Generally Yes." Overall: staff does an outstanding job assisting the HCDC members. Some HCDC members do not fully understand review criteria — staff provides them with concise summary. Respondent Suggestions: • Might be helpful if staff ranked projects also. "CPD staff are much more aware of applicants ability to be good stewards" Question 4: It has been suggested that more and perhaps different information might be helpful to assist the Housing and Community Development Commission Members in their decision making process. For example: it has been suggested that on -site visits are bene- ficial. Do you have any comments in regard to providing the Housing and Community De- velopment Commission with additional, pertinent information? • "On site visits would be excellent." • "I would be in favor of more on site visits." • The application has (understandably) a limited number of pages allowed. The opportunity to present my case was flawed because of so many presentations that meeting. • "I think it is generally good information that they get" On site visits can vary widely unless the entire commission is involved. Respondent Suggestions: • Need a strong look at some type of benefit/cost ratio to number of people to be served. • "On site visits would be very welcomed." More weight should be given to what the monthly cost of housing for families ($700 renting vs $650 owning) and benefits to the neighborhood and city. • The commission already spends a lot of time during the process. Short presentations would be helpful, or monitoring that is "more detailed than a phone call." • Additional info may have helped our presentation/explanation for need of funds. • Site visits may not be necessary for "proposed" projects. Question 5: The MOST important suggestion to improve the application process: • Help HCDC become as informed as possible as to the workings of not -for -profit agencies. • Dig deeper; rationalize the impact and number of people to be served for the dollars spent in greater detail. • Review and amend CITY STEPS & priorities to encourage and incent home ownership which is affordable. • More staff input/recommendations to commissioners. Much less personal bias on part of commissioners. • Come up with a list of funding priorities and present them before the application process. Let the applicants know what they will be evaluating the forms on. • Commissioners to discuss their own views about ranking and what is uniquely important to them individually so they have a better idea of each others ranking. • One respondent had no specific comment/idea for Q5. CITY OF I O WA CITY MEMORANDUM Date: July 12, 2012 To: Housing & Community Development Commission From: Jeff Vanatter, Housing Rehabilitation Office Re: Housing Rehabilitation program overview and update The Housing Rehabilitation program provides guidance and financial assistance to help residents maintain and update their homes. This assistance provides low and moderate income homeowners the opportunity to make repairs to their homes that enable them to stay living in their homes and helps to maintain Iowa City's housing stock. The Housing Rehabilitation Program administers two major programs: 1) the federally -funded (CDBG & HOME) housing rehabilitation program, and 2) the General Rehabilitation and Improvement Program (GRIP). An additional program that staff is administering is the UniverCity Neighborhood Partnership program. Staff is also conducting salvage inspections and final walkthrough inspections of all flood buyout properties, as well as, providing code inspection and lead inspection services to all sub -recipients of the City of Iowa City's CDBG and HOME funds. As of June 30, 2012, we have expended $165,988 in project costs and administration on 25 CDBG-funded projects, with the average median income for these households being 41%. We have committed approximately $95,000 to other projects that are started or are about to begin. The Rehab Office has expended $112,565 in project costs and administration on 6 HOME - funded projects, with the average median income for these households being 44%. We have committed approximately $217,000 to other projects that are started or are about to begin. Under GRIP, we have expended $200,437 in project costs on 13 projects. The average median income for these households was 68%. In addition, we have committed approximately $197,000 to other projects that are started or are about to begin. Following are some examples of projects funded through the GRIP, CDBG and HOME Programs over the past year: • Building and installation of entrance ramps and many bathroom and other modifications to enable those with disabilities to continue to live in their homes as independently as possible. • Emergency repairs such as furnace replacements, water heater replacements, roof repairs and electrical repairs to remove safety hazards and to limit the damage to the property. • Replacement of windows, doors, and heating and ventilation systems with more energy efficient systems and materials to help reduce energy costs. • Assorted other repairs that address code or historic preservation issues. Since the flood buyout program began, staff has provided salvage valuation inspections and final walkthrough inspections on 90 properties that have been or will be purchased as part of one of the various flood buyout programs. Staff have completed the first phase of the UniverCity Neighborhood Partnership and are currently working on the second phase. The first phase consisted of 26 homes purchased for a total of $3,688,500. Renovation and improvement projects utilizing local contractors and suppliers totaling $1,455,232 were completed on all of the homes with the help of a $1,250,000 State of Iowa I -Jobs grant. As of July 12, 2012, 23 of the homes have been sold, 1 has an offer pending, and 2 remain available for sale. Sale prices for homes in the first phase ranged from $72,000 to $214,000. The average increase in value from assessment to final appraisal for sold homes was $18,078. The City has purchased 2 of the 4 homes for the UniverCity Neighborhood Partnership's second phase with possession of the remaining 2 homes scheduled for August. All work included in the second phase will be completed in the current fiscal year. Work to be done on the 4 homes in the second phase will be similar to work completed in the first phase, some of which includes but is not limited to: • Updating of kitchens and bathrooms • Updating of electrical and plumbing systems • Installation of high -efficiency heating and air conditioning systems Interior and exterior painting • Re -grading of yards to ensure proper drainage away from the home The Rehab Office has also just started offering a new housing repair program made possible by additional HOME and CDBG funds obtained through a successful application for funds through the City's annual allocation cycle. The Targeted Neighborhood Improvement Program will provide $200,000 in funding to assist homeowner's in targeted areas of Iowa City with repairs to their homes, with up to 50% of the loan being forgivable. As of July 12, 2012, demand for this program has been very high and all of the funds are committed to projects. r p ,y CITY OF IOVVA CITY MEMORAiN Date: August 10, 2012 To: Housing and Community Development Commission From: Tracy Hightshoe, Community Development Planner Re: CDBG Economic Development Fund — FY12 Summary The CDBG Economic Development Fund was created to stimulate private sector investment that results in the creation of permanent, private sector jobs with living wages for low -to - moderate income persons in Iowa City. The Economic Development Fund provides assistance through low interest loans with interest rates ranging from 0 to 2% and repayment terms set at 5 or 7 years. The loans approved are typically for permanent working capital and often in conjunction with a private lender who provides a majority of the funds needed for the business to open or expand. All the 2012 CDBG economic development recipients met the National Objective of benefiting low to moderate income persons. The program rule requires that 51% of the jobs created or retained must be held or made available to low -to -moderate income persons based on family size or the business must qualify as a micro -enterprise. A micro -enterprise is a commercial enterprise that has five or fewer employees, one or more whom owns the enterprise. At least 51% of the employees and owners of a micro -enterprise business must be low to moderate income. The CDBG Economic Fund had a balance of $182,757 at the start of FY12. The City received seven applications in FY12 requesting $239,331 in CDBG funds to start or expand businesses in Iowa City. Trumpet Blossom Cafe, Molly's Cupcakes and IBlitz Boxing and Fitness were each awarded $35,000 as low interest loans to be repaid over seven years. The three businesses will create 16.0 FTE jobs that will be held by primarily low -moderate income persons. Three applications were denied due to poor credit history, previous judgments or unrealistic sales projections. One was deferred until the applicant submits complete information. There is $77,757 remaining in the CDBG Economic Development Fund. On July 1, 2012 an additional $67,000 was placed in the fund for a total balance of $144,757. Staff estimates that the fund will be able to assist four businesses in the upcoming year. In FY11, the City hired the National Development Council (NDC) to review economic development and housing proposals, assist in the creation of new financial incentives and assist in the marketing efforts to reach businesses and potential entrepreneurs to create or expand businesses. NDC reviews the business plans and projections for CDBG assisted businesses upon staff request. NDC has experience working with cities and communities in all 50 states to help them create, design, finance and execute their housing, economic and community development projects.