Miami-Dade County's Proposed Policies for Community Development and Affordable Housing and Comments Submitted by the Coalition PROPOSED OCED POLICIES EXECUTIVE SUMMARY: Proposed FY 2005 Consolidated Planning Process Policies The Office of Community and Economic Development (OCED) offers the following changes for the FY 2005 Consolidated Planning Process Policies. These changes are being proposed based on the development of new management strategies, implementation of management by objectives, analysis of the 2000 Census and consultation with the community. Ultimately, these changes will improve the efficiency and effectiveness of OCED and participating agencies, which will continually increase the quality of services provided. 1. Neighborhood Revitalization Strategy Area (NRSA) reconfigurations. These reconfigurations are based on an in depth analysis of the 2000 Census and reflect US HUD guidelines for NRSA, poverty levels and needs of the community. Unfortunately, Miami-Dade County has an overabundance of eligible block groups that qualify for NRSA designation. OCED is recommending the following changes, which more than doubles the population that is currently being served by a NRSA: Addition of NRSA: Kendall West District 11 Census tracts; 101.55, Block group I & 2, 101.56, Block group 2 Coral Terrace District 6 Census tracts; 59.02, Block group I &2, 59.03,Block group 1 Additional NRSA are still under consideration, including North Miami Beach and eligible block groups including and surrounding the City of Sweetwater. However, OCED does not have adequate staff to support additional NRSA at this time. Should staffing levels increase, the aforementioned areas may be considered for designation as a future strategy area. Expansion of Existing NRSA: Leisure City will be expanded to include Naranja and Princeton Opa-locka will be expanded to include contiguous eligible block groups W. Little River will be expanded to include Pinewood and contiguous eligible block groups Consolidation of Existing NRSA: 1. Goulds and Perrine will be merged and expanded to include South Miami Heights Elimination of Existing NRSA, due to ineligibility: Coral Gables in which previous commitments will be honored and a phase out plan has been established to meet current community needs. 2. Multi-Year Funding for Public Service Activities. In an effort to be more efficient and effective OCED proposed to change the funding cycle for CDBG public service activities from one year funding to multi year funding. Multiple year funding is contingent on an annual assessment of the agencies deliverables to determine that accomplishments have been met and are scheduled to increase per year. Yearly monitoring of each activity will remain. The basis for the decision comes from the agencies desire to anticipate and plan for funding adequately versus applying every year and waiting six-months to eight months to determine if they were funded and for how much. By transitioning to multi year funding agencies will be able to leverage CDBG dollars more effectively through the proper planning and budgeting of funds. Some contracts may be executed for multiple years, however scopes and budgets will be required yearly. The entire amount, to be funded, will not be available, but distributed, according to their scopes proportionately during the multi year funding phase. There is a possibility of OCED, in order to remain within HUD regulatory requirements, will have to issue contracts with annual renewal provisions on performance guidelines. Additionally, agencies who do receive multiple year funding contracts will be required to aggressively pursue outside funding sources during the first year of funding, which will enable them to leverage their CDBG allocation. This will assist the agencies to get a jumpstart on becoming self-sufficient and less dependent solely on CDBG funds. Departmentally, having multiyear funding contracts will help expedite the contract development process on the off years. Also, funding will be directly tied to accomplishment units and timelines as identified in each activities scope of services. USHUD mandates that OCED reports on each activity by accomplishment units, therefore it is necessary to strengthen this requirement to ensure compliance with USHUD reporting standards. It is anticipated that OCED will work very closely with the Alliance for Human Services on this component. To maximize on the public service cap exemption, as per US HUD guidelines, public service activities will be funded, as permissible, through Community Based Development Organizations (CBDO) based in a NRSA. 3. Development of a two-part consolidated Request for Qualifications applications for CDBG, HOME, SHIP, SURTAX and ESG programs. FY 2005 funding requests will be accepted in two phases. The first phase, will be an abbreviated application whereby staff will be able to ascertain whether the agency has the capacity to perform the activity and whether that activity is suited for that community. Agencies that meet the initial criteria will then be asked to submit a more detailed second-phase application. Being asked to submit a full application does not imply that the agency will be recommended for funding; rather it determines who is qualified for funding under the established criteria. 4. Enhance agency capacity through required training sessions. Each agency that receives an allocation for Housing related activities will be required to attend a training certification program that will be offered through a collaborative effort between Miami-Dade County, Local Initiative Supportive Corporation (LISC) and Florida International University (FlU). The training offered is designed specifically to help non-profits build their capacity for real estate development projects. 5. Establishment of an allocation minimum. Due to the complexity of monitoring and managing each contract OCED will be establishing a $25,000 minimum threshold per allocation. Amounts smaller than $25,000 can usually be obtained by private funding sources. CDBG funds should be used as gap financing for agencies that may be unable to receive conventional financing to make their projects feasible. COALITION'S COMMENTS On 4/22/04 a committee of the Coalition met to discuss OCED's draft Policy Paper (copy attached). This memo is an outline of the comments that emerged by consensus from that meeting. The headings below correspond to the headings in the "Executive Summary" section of OCED's proposed Policies. 1. Neighborhood Revitalization Strategy Area (NRSA) reconfigurations. The Coalition has no objection to the proposed changes in the NRSA's. The Coalition does object, however, to using the NRSA mechanism as a means to routinely exceed the 15% cap on expending CDBG funds for "public services". CDBG should be focused on community development and not used as a generalized funding source for human services programs. CDBG "public services" spending should be allowed to exceed the 15% cap only if such services are directly related to an identifiable housing development project. In cases were public services expenditures are directly related to housing development the criteria for exceeding the 15% cap should not be whether the service provider's offices are physically located in an NRSA but, instead, whether the activity itself is based in the NSRA. 2. Multi-Year Funding for Public Service Activities. The Coalition has no objection to multi-year contracts for public service activities when it makes sense. This concept, however, should be broadened. All multi-year activities, including housing and economic development, should be considered for multi-year contracts where appropriate. All worthy projects that are going to take more than one year to complete should be candidates for multi year contract. 3. Two-part application process The idea of adopting a pre-application is a good one provided that it is implemented properly and the process is transparent. In adopting such a program the County should: clearly communicate what types of projects are being looked for. clearly communicate how projects are to be measured adopt clear criteria for funding adopt a clear scoring system actually use the scoring system as the primary basis for making funding decisions adopt an informal appeal process at both the 1st and 2nd tier level of the application process (so as to provide an opportunity for applicants to meet with staff to go over their scoring) implement a consolidated decision making process. There needs to be one County decision making process as to which projects get funded regardless of the funding source. There needs to be inter agency agreement between OCED, MDHA, and the Homeless Trust on implementing a unified decision making process. Additional Comments: 1. Projects that are rejected by staff at the pre-application stage should be deemed to be eligible to compete for any reprogrammed funds that might become available later on (the current practice is that re-programmed funds can be allocated only to projects that had previously submitted an application during the normal RFP cycle). 2. The Coalition requests an opportunity to comment on the proposed pre-application form. Give us a chance to sit down and informally discuss this document with you. 3. The RFQ, itself, should be as simple as is reasonably possible. 4. Enhance agency capacity through required training sessions. Participation in a particular training program should not be used as a prerequisite for an organization being qualified for County contracts. Clearly the County should not be entering into contracts with organizations that do not have a staff capable of carrying out the scope of services. Certain organizations, however, may have gained such capacity without having participated in any particular County funded training program. The Coalition urges the County to fund sophisticated training on regularly scheduled basis in a manner making it easily accessible to organizations that having County contracts. The Coalition believes that if such trainings are made to be directly relevant to the work that these organizations are doing there will be broad participation without the need for coercive attendance.   5. Establishment of an allocation minimum The idea appears to be a good one. The Coalition does not have any particular comments. ADDITIONAL RECOMMENDATION: PROVIDE A FRAMEWORK FOR FUNDING NON-PROFIT HOUSING DEVELOPERS The County should fund housing development deals sponsored by nonprofits in a way that takes into account total project costs. Nonprofits should be allowed to draw down developer fees in a manner similar to the way such fees are paid in unsubsidized private sector deals. It is recommended that the County adopt the policy of Florida Housing Finance Corporation (FHFC) with regard to establishing the development fee. FHFC sets the developer's fee at 16% of the development cost and 4% of the acquisition.  This is the standard for "affordable housing" generally. Usually, these projects have 200-400 units and run into the millions.  Nonprofit, public purpose developments are generally more difficult and more varied. Therefore, if anything, the costs to implement these projects is higher. Outlined below is a method by which the County could fund non-profit housing developers in a more predictable and workable way reflecting the scope of work of each organization. It is based on two premises: Project management funding should be based on the total project cost and it needs to be disbursed over the development period.  Successful non-profits need stable, predictable funding.  Specific major project development thresholds could be set forth and percentages of the development fee paid accordingly. Here is an example (the actual thresholds and the percentages will vary depending on the project):   * Site control and due diligence 20% * Project planning and securing funding required 20% * Permitting, Closing on funding, Bidding construction 20% * Construction oversight & operating start-up 20% * Completion  (like a construction retainage) 20%   This will eliminate the need for separate project management applications and will ensure that organizational funding directly relates to project development funding. The pace of releasing the funding would be tied to the progress of the project.  No further funding would be released until the threshold is achieved.   The County's project funding should be used for the costs incurred toward the beginning of the development process for acquisition and pre-development costs required to leverage State and Federal funds in order to have the greatest impact and leverage. This will also ensure that the funds are put to use quickly, a HUD goal. It will reduce the cost of borrowing money for these necessary steps. This will free organizational borrowing capacity to expand the scope of their efforts.