Agenda 03/27/2012 Item #11Hn
3/27/2012 ft�n I I.H.
Recommendation to accept the staff report and provide direction regarding the proposal:
Neighborhood Stabilization Program 3 (NSP 3) alternative strategy and associated implementation
actions.
OBJECTIVE: To respond to the Board of County Commissioner's desire to fwther refine the NSP Exit
strategy by considering a maximization of the amount of funding available for competitive procurement
and for higher income levels.
CONSIDERATIONS: On December 14, 2011, an NSP Exit Strategy was approved. Staff has been
executing that ttittegy, with the final component due to be heard in April 2012, which is approval of the
associated developer agreements. On March 13, 2012, during general communications, the County
Manager agreed to bring back for discussion further. options for the use of NSP -3 funds that would
involve competitive procurement and would provide for a greater allocation of funds to be available to
serve eligible clients earning between 80% and 1201/6 of the Area Median Income (AMI), as defined by
the U.S. Department of Housing and Urban Development (HUD).
The alternative strategy summary included with this item provides details of the alternative strategy,
including important considerations for a potential developer /partner.
Staff recommends no changes to the previously approved strategy and a continued focus of implementing
such strategy with the goal of exiting the NSP in prudent and timely fashion.
However, should the -Board prefer the alternative option presented herein, the following actions would be
required:
1. Negotiate a developer agreement in the amount of $1,747,875 with Habitat for Humanity for
Board approval for NSP -3 to be spent by March 2013.
2. Prepare a Request for Information WI) to determine if there is interest in the project among
local not- for -profit and for -profit developers.
3. If sufficient interest is received, develop a solicitation to designate not-for-profit organization(s)
or for -profit developer(s) to acquire homes and residential properties, rehabilitate or redevelop
such properties for use and resale, including demolition if required, for an eligible end use of
providing housing for low- and moderate income households.
4. If no interest exists following an RFI then allow an addendum to the existing NSP -3 developer
agreement with Habitat for Humanity to allow for the inclusion of the remaining unallocated
farads including the stipulation that $600,000 of that funding will be dedicated to serve eligible
participants earning between 800/o and 120% of AMI.
5. Amend and bring back to the Board for approval, the Action Plan for NSP-3 (this action must
occur prior to the competitive procurement and has been factored into the timeline)
Staff will evaluate and respond to any compliance needs that may arise throughout the implementation of
this alternative strategy. Should the grantor agency make any changes to the program or guidance,
including, but not limited to, areas that affect compliance, such changes will be brought to the Board of
County Commissioners for consideration.
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COLLIER COUNTY
Board of County Commissioners
Item Number: 11.1-1.
3/27/2012 Item 11.H.
Item Summary: Recommendation to accept the staff report and provide direction
regarding the proposed Neighborhood Stabilization Program 3 (NSP -3) alternative strategy and
associated implementation actions. (Steve Carnell, Public Services Administrator)
Meeting Date: 3/27/2012
Prepared By
Name: AlonsoHailey
Title: Administrative Assistant,Domestic Animal Services
3/20/2012 11:19:45 AM
Submitted by
Title: Interim Director, HHVS
Name: GrantKimberley
3/20/2012 11:19:47 AM
Approved By
Name: AlonsoHailey
Title: Administrative Assistant,Domestic Animal Services
Date: 3/20/2012 11:42:39 AM
Name: AlonsoHailey
Title: Administrative Assistant,Domestic Animal Services
Date: 3/20/2012 11:42:50 AM
Name: SonntagKristi
Date: 3/20/2012 1:51:13 PM
Name: AckermanMaria
Title: Senior Accountant, Grants
Date: 3/20/2012 3:54:35 PM
Name: CarnellSteve
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Title: Director - Purchasing/General Services,Purchasing
Date: 3/20/2012 4:32:30 PM
Name: WhiteJennifer
Title: Assistant County Attorney,County Attorney
Date: 3/20/2012 4:53:23 PM
Name: StanleyTherese
Title: Management/Budget Analyst, Senior,Office of Management & Budget
Date: 3/20/2012 5:00:10 PM
Name: KlatzkowJeff
Title: County Attorney
Date: 3/21/2012 8:45:50 AM
Name: PryorCheryl
Title: Management/ Budget Analyst, Senior,Office of Management & Budget
Date: 3/21/2012 11:21:46 AM
Name: OchsLeo
Title: County Manager
Date: 3/21/2012 3:48:04 PM
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3/27/2012 Item 11.H.
3/27/2012 Item 11.H.
Exhibit A
NSP ALTERNATIVE STRATEGY DISCUSSION PAPER
Prepared by: F. Ramsey, K. Grant, K. Sonntag
March, 2012
BACKGROUND
APPROVED NSP RECOMMENDATION AND STATUS
Staff brought forward a recommendation that met the objectives of the Board to quickly,
efficiently, and in full compliance, exit the NSP program. The strategy, in summary, was to
partner with Habitat for Humanity for both programs.
The following major advantages were identified within the recommended strategy:
1. Collier County out of the property management business
2. Collier County out of the direct acquisition and rehabilitation business
3. Collier County, nor the developer, will be required to track program income
4. NSP will not fund any additional construction or rehabilitation on properties transferred
to Habitat for Humanity, thereby leveraging funding with an investment from the
organization
5. The NSP- assisted properties will further the mission of local not - for - profit organizations
6. Collier County will lawfully meet its obligations under both grant programs
7. Habitat for Humanity has a proven track record of success in acquiring, rehabilitating,
and selling affordable homes and can bring this expertise to bear in the execution of the
required activities; thereby reducing the risk of audit findings and reimbursement issues
8. Habitat for Humanity has the mechanisms already in place to meet other compliance
requirements such as monitoring affordability for the required 15 year period
9. Successful implementation of the recommended strategy may prevent a reduction or
loss of current or future grant resources from other sources
10. Upon full execution of the recommended strategy, Collier County's role is reduced to
monitoring for compliance, for which there are adequate grant dollars to fund
Staff is working all elements of the implementation strategy, and is on track to bring the
developer agreements to the Board on April 10, 2012, and recommends continuing with full
implementation of this strategy.
Habitat for Humanity has already agreed, as part of the existing approved strategy, to a
substantial concession to take $600,000 of the NSP3 funds and assure the homes involved are
occupied by eligible participants in the desired AMI category. This would likely equate to
approximately 5 homeowners.
Since Board approval, the Board has sought options or variations that would provide for as
much of NSP3 funding to be allocated to eligible participants whose Area Median Income (AMI)
r is between 80% and 120 %. For the Naples -Marco Island Metropolitan Statistical Area (MSA),
for a family of four, that is household income between $58,250 and $87,360 (effective 12/1/11
and subject to change).
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3/27/2012 Item 11.H.
In addition, there is some interest on the part of the Board to consider competitive
procurement for the NSP3 funds. Review of HUD written guidance, and research by the County
Attorney's office, have confirmed that selecting a developer without competitive procurement
is perfectly allowable.
Staff has prepared the following alternative strategy as a variation to that already approved, for
the Board's consideration. Once again, staff recommends continuing with the current strategy
for the above noted reasons.
ALTERNATIVE NSP STRATEGY
PURPOSE
This alternative NSP strategy has been designed to equitably distribute benefits across income
categories, infuse capital into the residential construction and real estate industries, support
local not - for - profit charitable organizations, and ensures compliance with the expenditure
requirements of the NSP.
NSP -1
Under this alternative NSP strategy, no change is proposed to the current plan for
administration of the NSP -1. In short, minor rehabilitation shall be completed and homes sold,
non - rehabilitated homes will be transferred to Habitat for Humanity of Collier County, Inc., and
not - for - profit organization(s) shall be procured to own and operate affordable rental housing.
NSP -3
This alternative NSP strategy equally supports households earning less than 80 percent of area
median income ( "AMI ") and those earning between 80 and 120 percent AMI. Furthermore, this
model ensures the County complies with two non - negotiable requirements of the NSP -3: (1) 25
percent of funds awarded must be used to benefit persons or households earning not greater
than 50 percent AMI ( "low- income set aside" or "LH25 "), and (2) 50 percent of program funds
must be spent by March 2013 and 100 percent of funds must be spent by March 2014.
This strategy proposes splitting the NSP funding into two separate components. The first is
selecting Habitat for Humanity as a developer for 50% of the NSP funding that must be spent by
March 2013. Awaiting a competitive process outcome would eliminate the possibility of
achieving the non - negotiable requirements noted above and provides for Habitat to stay within
their charter guidelines. Of significant importance, this is the lowest risk solution for Collier
because this partner already has the exact experience required to effectively meet all grant
requirements and ensure the program is executed in a compliant manner.
While these activities get underway, Collier could consider a competitive process for the
remaining 50% of the NSP3 funds.
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3/27/2012 Item 11.H.
HABITAT FOR HUMANITY PRIVATE or NOT FOR PROFIT
DEVELOPER /COMPETITIVE
$418,419 $1,942,082 Budget
$1,942,083 Budget
Acquisition ■ County
W/ $194,207 Administration $194,208
Developer
Admin Admin 6 County Fee . ■ Low Income Set Administration
Aside
M Land Bank
■Acquisition w/ 40 Developer Fee
$388,415 $941,041 ■ Acquisition w/
Land Bank Low Developer Fee $1,747,875
Income Acquisition/
Developer Fee
• Funds must be spent by March 2013
• Estimated 15 units (including land
bank)
• Satisfies low- income set aside
requirement
• Satisfies 50 percent expenditure
deadline
• No County funded rehabilitation
• Leverages experience
DEVELOPER CONSIDERATIONS
• Funds must be spent by March 2014
• Estimated 12 units
• Satisfies 100 expenditure deadline
• No County funded rehabilitation
• Must benefit 80 -120 percent AMI
• Competitively procured
• Creates opportunities for local
businesses
A developer fee has always been contemplated with both NSP1 and NSP3. A fee has not yet
been negotiated with Habitat and will require Board approval. However, staff work to date
indicates we will likely end up in the $10,000 - $15,000 range per home (or parcel). If we
assume $15,000 * 12 units, the gross developer fee would be in the range of $180,000. It is
prohibited to make a profit on the sale of these homes, so this would be the only remuneration.
Also, not yet determined is when the developer fee would be paid. It is likely to either to be
paid when the rehabilitation work is completed, or when an individual is occupying the
rehabilitated home; in either event the developer would bear all risk until that time. The below
is a list of many, but not necessarily all, of the activities or requirements of the developer.
These are the same requirements of an arrangement with Habitat for Humanity.
1. Purchase, own and maintain property
2. Spend all NSP grant funds by March 2014
3. Allocate own funds to complete rehabilitation or redevelopment (using the maximum
allowed for program of $50,000 /property as an estimate, this could be as much as
$600,000)
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3/27/2012 Item 11.H.
4. Properly locate and income qualify prospective purchasers within the income categories as
directed by the BCC (i.e. 80% - 120% AM 1)
5. Have on staff or hire a technical assistance provider to ensure compliance with federal grant
regulations
6. Have on staff or partner with a realtor to sell completed homes (and handle any
commission)
7. Comply with applicable federal regulations, and cooperate during Collier required
monitoring visits
8. Submit monthly, quarterly, and annual reports
9. Monitor and ensure compliance with longterm affordability (15 years)
10. Must only assist eligible housing (vacant, foreclosure, abandoned)
It is possible Collier may not locate a developer partner that finds benefit in this arrangement.
Should the Board direct staff to pursue this, the first major task will be a Request for
Information (RFI) to determine the feasibility of this approach and to identify potential partners
in this market.
TIMELINE (for splitting NSP3 into two components)
This chart illustrates the high level timeline should staff be directed to pursue the alternative
strategy outlined. Should this be approved, the first step of the competitive process would
involve developing and issuing a Request for Information (RFI) to determine if there is interest
and prospective capability among developers and other sources in the community to perform
the required work. The work would include, but not necessarily be limited to, acquiring
residential properties to rehabilitate for use and resale for residential purposes or construction
of new housing with the redevelopment of demolished or vacant properties. The RFI will advise
the prospective sources of the general requirements of the program and ask them to affirm
that they are interested and able to meet these requirements.
The results of the RFI process will enable staff to determine if there is sufficient competition to
formally solicit competitive proposals for the developer work. Responses to the RFI will also be
used to clarify and enhance the language for the subsequent RFP. Should the response to the
RFI indicate that there is not sufficient competition for the developer work, staff will advise the
Board accordingly and bring forward a negotiated amendment with Habitat for Humanity for
action at that time.
NSP 1 April 2012
Habitat Developer Agreement
Approved
I NSP 3 (First 50 %) April 2012
Developer Agreement Approved
(H4H - First 50 %)
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3/27/2012 Item 11.H.
NSP3 H4H
December 2012
Complete Property Purchases
' NSP3 H4H
March 2013
Closeout (meet 50% spending deadline)
NSP3 (Second 50%) Request for
April — May 2012
information
NSP3 (Second 50 %) Competitive
September 2012 6
I Procurement: Board Selects Developer
NSP3 Competitive Procurement:
December 2013 j
Complete Home Purchases
NSP3 Competitive Procurement:
March 2014
Closeout (meet 100% spending)
On -going monitoring of all 3
15 years
components
5 Gage
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